Morning Preview: October 14, 2019

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Early Look

Monday, October 14, 2019





DJ Industrials




S&P 500










Stock futures are slipping after a bit of last week’s trade talk euphoria and optimism wears off amid reports that Beijing will insist on more talks with the U.S. before signing any deal. With trade tensions easing a bit late last week between the U.S. and China, as each side made concessions to appease one another/and stock markets, attention is likely to turn to corporate profits this week with earnings season unofficially getting started tomorrow. Trade talks went better than media outlets had expected Friday as Treasury Secretary Mnuchin said Chinese tariffs will not go up on October 15 (though no decision made on the December levies) while reports indicated that China has agreed to increase its ag purchases and roll back some of its tariffs. There will be a phase 2 part of the talks, after phase 1 is completed, and possibly a phase 3 according to reports as well. As for earnings, all is quiet today given the Columbus Day holiday, but kicks into gear tomorrow with big banks reporting results (JPM, C, WFC, among others). In Asian markets, The Nikkei Index rose 246 points to 21,798, the Shanghai Index gained 34 points to move back above the 3,000 level and the Hang Seng Index gained 213 points to 26,521. In Europe, the German DAX is fell over -100 points to 12,400, while the FTSE 100 fell -40 points to 7,200.

Market Closing Prices Yesterday

·     The S&P 500 Index gained 32.14 points, or 1.09%, to 2,970.27

·     The Dow Jones Industrial Average rose 319.92 points, or 1.21%, to 26,816.59

·     The Nasdaq Composite surged 106.26 points, or 1.34%, to 8,057.04

·     The Russell 2000 Index advanced 26.54 points, or 1.79% to 1,511.90


Events Calendar for Today

·     None Today due to Columbus Day Holiday






WTI Crude















10-Year Note





World News

·     Bloomberg reported that China wants further discussions as soon as the end of October, to smooth out details of the so-called “Phase 1” trade deal announced by President Donald Trump that will delay a tariff hike, boost Chinese agricultural purchases and address foreign currency levels. The agreement was not set out in writing, and only in principle.

·     President Donald Trump’s administration is set to impose economic sanctions on Ankara, potentially as early as this week, for its incursion into northern Syria, one of the few levers the United States still has over NATO-ally Turkey.

·     China’s exports in yuan terms dropped 0.7% from a year earlier last month, reversing a 2.6% gain in August, data from the General Administration of Customs showed Monday. Imports fell 6.2% on year in September in yuan terms


Sector News Breakdown


·     Bed Bath & Beyond (BBBY) mentioned cautiously in Barron’s saying while the company may offer some good bargains, its stock doesn’t look like a bargain after soaring following the appointment of a new CEO, noting same-stores sales have dropped by more than 6% in the past two quarters, while revenue is expected to decline by 5.7% in fiscal 2020

·     Kellogg (K) mentioned positively in Barron’s saying after the stock fell over 20% from 2017 to 2018 as the food company struggled with declining cereal sales but shares have improved with shares up about 12% on the year including dividends and is starting to show signs of improving

·     Nike (NKE) upgraded to Neutral from Underperform at Bank America Merrill



·     Syria’s Kurds said Syrian government forces agreed Sunday to help them fend off Turkey’s invasion, a major shift in alliances that came after President Donald Trump ordered all U.S. troops withdrawn from the northern border area amid the rapidly deepening chaos.

·     ConocoPhillips (COP) said it had agreed to sell most of its Australian assets to rival Santos Ltd for $1.39 billion, with the deal expected to close in the first quarter of 2020.

·     Sempra Energy (SRE) is near an agreement to sell its Chilean business to State Grid Corporation of China for close to $3 billion, the latest deal in its bid to shed non-core assets – Reuters

·     PG&E Corp (PCG) rejected a $2.5 billion offer from San Francisco to buy the bankrupt Californian company’s power lines and other infrastructure within the city, calling the offer inadequate.

·     Total SA (TOT) will acquire 37.4% stake in Adani Gas Ltd. allowing the French oil major to expand its gas business in India.



·     Incyte (INCY) announced positive 52-week results from its Phase 2 study evaluating ruxolitinib cream, a nonsteroidal, anti-inflammatory, JAK inhibitor therapy, in adult patients with vitiligo,

·     Varian Medical (VAR) upgraded to Buy from Neutral at BTIG


Industrials & Materials

·     Boeing (BA) announced that its board of directors has separated the roles of chairman and chief executive officer. Dennis A. Muilenburg continues as CEO, president and a director. The board elected David L. Calhoun, current independent lead director, to serve as non-executive chairman

·     Volkswagen AG is weighing options for its Lamborghini supercar brand, as the German manufacturer moves ahead with an overhaul aimed at more than doubling its market value and getting ahead of an expected industry shakeout, Bloomberg reported

·     Five dividend-paying stocks for a low-rate world are in the Barron’s cover story: health care giant Johnson & Johnson (JNJ); steel producer Nucor (NUE); Illinois Tool Works (ITW), water company Pentair (PNR); and W.W. Grainger (GWW), maker of motors, HVAC equipment

·     The World Trade Organization has formally authorized the U.S. to impose tariffs on up to $7.5B of imports of EU goods after a decision earlier this month by a WTO arbitrator over subsidies to Airbus (EADSY) – Reuters

·     Fastenal (FAST) downgraded to Equal Weight from Overweight at Stephens


Technology, Media & Telecom

·     Video gamers Activision (ATVI) and Take-Two (TTWO) may benefit from the next videogame cycle according to Barron’s noting Sony (SNE) has announced that its new console will be named PlayStation 5 and will launch in time for the 2020 holidays, while Microsoft (MSFT) saying its next console – code-named Project Scarlett – will also arrive in time for the 2020 holiday season

·     SoftBank Group Corp. has prepared a financing package for WeWork Companies Inc that would give it control over the shared office space company, the Wall Street Journal reported.

·     Xilinx (XLNX) upgraded to Buy from Neutral at Nomura Instinet

·     Thoma Bravo said it would take the British cybersecurity company Sophos Group private in a $3.8 billion deal, with Sophos shareholders will receive $7.40 in cash (583 pence) per share, a 37.1% premium to the company’s closing share price on Friday


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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