Morning Preview: October 11, 2019

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Early Look

Friday, October 11, 2019

Futures

Up/Down

%

Last

DJ Industrials

246.00

0.93%

26,730

S&P 500

27.50

0.94%

2,968

Nasdaq

82.50

1.06%

7,842

 

 

Global stocks are surging into top trade talks later this morning, as hopes rise with President Trump expected to meet China’s top negotiator later this morning. Investor optimism is high into the next round of trade talks after President Trump said talks “went well” yesterday, raising hopes for progress for some form of resolution in the longstanding tariff conflict. Stocks gained and Treasury yields rose on Thursday as well despite conflicting signs of progress during U.S.-China trade talks in Washington. Also worth watching today include a reading of consumer sentiment at 10:00 AM EST and the Fed’s Rosengren set to talk at 1:15 PM EST. Oil prices jumped after reports of an Iranian tanker explosion in the Red Sea raised the possibility of tensions in an already simmering Middle East after reports the tanker was hit by missiles that were launched from the Saudi Arabian port of Jeddah. In Asian markets, The Nikkei Index jumped 246 points to 21,798, the Shanghai Index gained 25 points to 2,973 and the Hang Seng Index spiked 600 points (2.34%) to settle the week at 26,308. In Europe, the German DAX is surging over 235 points as it tops the 12,400 level, while the FTSE 100 is up around 20 points just above the 7,200 level. For the week, however, the Dow is poised to slip -0.3%, while the S&P 500 and Nasdaq are on pace to post -0.5% and -0.4% declines, respectively, as of Thursday’s close.

Market Closing Prices Yesterday

·     The S&P 500 Index gained 18.73 points, or 0.64%, to 2,938.13

·     The Dow Jones Industrial Average rose 150.67 points, or 0.57%, to 26,496.67

·     The Nasdaq Composite jumped 47.04 points, or 0.60%, to 7,950.78

·     The Russell 2000 Index advanced 5.90 points, or 0.40% to 1,485.36

 

Events Calendar for Today

·     8:30 AM EST             Import Price MoM for September…est. 0.0%

·     8:30 AM EST             Export Prices MoM for September…est. (-0.1%)

·     10:00 AM EST           University of Michigan Sentiment, Oct-P…est. 92.0

·     1:00 PM EST             Baker Hughes Weekly Rig Count

 

Earnings Calendar:

·     Earnings Before the Open: FAST, INFY

 

Other Key Events:

·     Fed’s Kashkari speaks on Economy in New York

·     Fed’s Rosengren speaks at event in Wisconsin

·     Fed’s Kaplan speaks at an event in San Francisco

 

 

Macro

Up/Down

Last

WTI Crude

0.97

54.52

Brent

0.96

60.06

Gold

-3.00

1,497.90

EUR/USD

0.0026

1.1031

JPY/USD

0.29

108.27

10-Year Note

+0.012

1.68%

 

 

Sector News Breakdown

Consumer

·     JELD-WEN (JELD) lowers year rev outlook to down about -2% from prior view of flat and says 2019 adj Ebitda margin neg impact 60 bps citing reduced demand in residential new construction channels, and the impact of continued erratic order patterns in North America windows retail channel

·     Nike (NKE) said it will shut down its Oregon Project after the head coach of the US sportswear’s training program and the doctor who worked with the athletes received bans for doping violations

·     GoPro Inc. (GPRO) says it has begun fulfilling pre-orders of its HERO8 Black cameras for GoPro.com customers ahead of the announced shipping date of Oct. 15.

·     Alaska Air (ALK) said Sept traffic +6.4%, capacity +3.5%, load factor 83% (+2.2%)

·     Spirit Airlines (SAVE) sees Q3 total rev ASM down 2% YoY and sees Q3 RASM up 8.5% YoY

·     Renault said it’s dismissing Thierry Bollore as its chief executive and president. Clotilde Delbo, the chief financial officer, will be interim CEO as it searches for a replacement

 

Energy, Industrials & Materials

·     Oil prices jump overnight on reports an Iran tanker sustained damages after being hit by missiles that were launched from the Saudi Arabian port of Jeddah

·     The International Energy Agency (IEA) said it expects global demand of 1 million barrels a day in 2019 and 1.2 million barrels a day, in the following year. IEA attributed the downgrades of about 100,000-a-barrel-a-day from previous estimates for demand that has shaped up to be the weakest since 2016

·     BP PLC (BP) said it plans on selling some $10 billion in assets by the end of 2019, a year earlier than it had expected. BP said it has been selling oil assets in Alaska at a faster clip than had been anticipated, with those divestitures expected to result in a non-cash after-tax charge of $2-3B

·     China National Offshore Oil and Gas Company (CEO) is on the hunt for liquefied natural gas (LNG) tankers to charter, several industry sources told Reuters, looking to replace ships it had previously hired that are linked to a Chinese company sanctioned by the United States for allegedly transporting Iranian oil

·     Coeur Mining (CDE) reports Q3 production of 99,782 ounces of gold, 3M ounces of silver, 4.2M pounds of zinc and 4.5M pounds of lead.

·     PolyOne (POL) increases quarterly dividend to 20.25c per share

·     EQT Corporation (EQT) files automatic mixed securities shelf

 

Financials

·     AXIS Capital Holdings (AXS) announced a preliminary pre-tax loss estimate for Hurricane Dorian, Japanese typhoons and other weather-related events in the range of $150M-$175M

·     HBT Financial (HBT) 8.3M share IPO priced at $16.00

·     Square (SQ) upgraded to positive from neutral at Susquehanna

 

Healthcare

·     Aclaris Therapeutics, Inc. (ACRS) said it has divested RHOFADE cream, 1% and related intellectual property assets to EPI Health, LLC. The divestiture of RHOFADE is a key component of Aclaris’ recently announced strategic plan to refocus resources on the development of its immuno-inflammatory development programs

·     Five Prime Therapeutics, Inc. (FPRX) announced a corporate restructuring to extend the company’s cash runway without impacting or delaying the data timelines of its clinical programs. The company will retain a small research group focused on advancing three wholly-owned, late-stage research assets and will increasingly rely on outsourcing and contracted capabilities

·     Johnson & Johnson (JNJ) was upgraded to Outperform from Market Perform at Bernstein

 

Technology, Media & Telecom

·     SAP (SAP) shares rise 7%; said that Bill McDermott has decided not to renew his contract and is stepping down from his position as CEO and SAP Executive Board Members Jennifer Morgan and Christian Klein have been appointed co-chief executive officers, effective immediately

·     Slack Technologies Inc. (WORK) said it had more than 12 million people “actively using Slack every day” in September, up about 37% year-on-year. The company also reported more than 6 million paid seats and said it had nearly 600,000 daily active registered developers

·     Roku (ROKU) upgraded to outperform from sector perform at RBC Capital and raise tgt to $155 from $107

·     Trade Desk (TTD) upgraded to outperform from sector perform at RBC Capital

·     ExOne (XONE) guides lower as sees Q3 revs $10M-$11M vs. est. $16.7M

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Content is provided by Hammerstone Inc., which has no affiliation with Regal Securities, Inc. (“Regal”) This commentary is provided for information purposes only, and is not a recommendation, offer or solicitation by Regal to buy or sell securities or to adopt any investment strategy. Regal has not participated in the creation of the Hammerstone content and does not directly or indirectly endorse the content. Any reliance on this material is at the sole discretion of the reader.

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