Mid-Morning Look: November 07, 2019

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Mid-Morning Look

Thursday, November 07, 2019






DJ Industrials




S&P 500








Russell 2000






U.S. equities sprinting higher to new record levels amid reports overnight that China’s Ministry of Commerce said it has agreed with the U.S. on removing tariffs at the same time and by the same amount when the two countries sign the phase one accord. Following the headlines, stocks took their cue, rising to news record while U.S. Treasury prices slide lower, driving the two-year yield 5 bps higher to 1.65% and the 10-year yield up 8 bps to 1.89% while lifted the dollar and oil prices. Energy and Financial sectors are pacing the early gains along with trade sensitive industrials, technology and IT while defensive staples, REITs and utilities. Overall record highs across the board for major averages given the trade news overnight, with the Dow Industrials, Dow Transports, S&P 500 and Nasdaq Comp all surging. Weak spots in online travel as EXPE and TRIP both fall over 20% on disappointing results/guidance overnight (ahead of BKNG results tonight), while media stocks rally behind DISCA, FOXA results and ahead of Dow component DIS earnings tonight. The Bank of England voted by a majority of 7-2 to maintain Bank Rate at 0.75% (in-line with expectations). Right now, all going smoothly for markets with strong earnings season, improved trade talk and an accommodative Fed lifting global stock markets.


Treasuries, Currencies and Commodities

·     In currency markets, the dollar slowly pushing to the highs as the dollar index (DXY) reclaims the 98 level (first time since Sept 17th) on better economic data of late, getting another boost today vs. the yen as it rises above the 109 level. Commodity prices mixed as gold prices fall amid the further bounce in the dollar and rotation out of safe-haven assets while oil prices gained as China and the U.S. made progress in resolving the trade dispute that has weighed on global markets, offsetting signs that OPEC and its partners won’t make deeper cuts to supply. Treasury market’s lower as the yield on the 10-year approached 1.9%, its highest in roughly 6-weeks. Natural gas data showed a smaller than expected weekly build of stockpiles (34 bcf vs. est. 45 bcf).


Economic Data

·     In the lone piece of U.S. economic data today, weekly jobless claims fell 8K to 211K, better than the expected 215K economic estimate (prior week raised to 219K from 218K); the 4-wk avg rose to 215,250 from 215,000 prior week; continuing claims fell to 1.689M vs. est. 1.683M







WTI Crude















10-Year Note





Sector Movers Today

·     Media & Telecom; DIS earnings tonight after the close; FOXA Q1 revs topped consensus driven by growth in its affiliate and television and cable-network programming businesses and announced a $2B stock buyback; AMC reports admissions revenue was up 6.1% to $797M in Q3 and food/beverage revenue increased 9.1% to $420M. U.S. average ticket price grew 3.3% to $4.95 and U.S. food/beverage spending per patron rose 4.7% to $5.35; DISH Q3 EPS beat on in-line revenue of $3.17B while adding 148K Pay-TV sub adds and Sling subs rise 14% YoY to 2.69M; NLSN to separate into two publicly traded companies after activist pressure; DISCA with Q3 EPS, Oibda beats and in-line quarterly revs of $2.68B

·     Internet; online travel sector under pressure after EXPE and TRIP shares fall over 20% on earnings disappointments; EXPE top and bottom line results missed estimated for Q3 soft gross bookings and room night trends for VRBO and disappointing results at Trivago also weighed on the Q, while TRIP Q3 adj EPS 58c/$428M vs. est. 68c/$458.7M/3Q adjusted Ebitda down 12% YoY to $129M below views; BIDU rose as company beats revenue expectations as App traffic continues to grow robustly with DAUs reaching 189 million, up 25% YoY; GDDY jumped as Q3 beat (EPS 42c/$760.5M vs. est. 21c/$761.39M) and ARPU of $155, up 7.1% YoY; CVNA stock falls after wider-than-expected quarterly loss; TWTR downgraded to underperform at Evercore/ISI saying that it believes Wall Street expectations on co’s operating margins are far too aggressive while separately, the U.S Department of Justice has accused two former Twitter employees of spying for Saudi Arabia, a complaint filed on Wednesday showed; IQ rises after topping profit expectations with double-digit user growth

·     E&P sector; DNR reportsQ3 EPS and revs slightly better ($315M vs. $307M est.) as expenses were down from a year ago and says on track to reach midpoint of previously raised 2019 production outlook; BCEI Q3 EPS slightly above consensus due to slightly lower costs, capex was 0.9% below its prior estimate while 3Q19 production and 3Q19 oil production were exactly in line; EOG Q3 EPS beat but 4Q19 oil production guidance was 1.1% below consensus/tightened its 2019 capex guidance range and raised its 2019 production guidance by around 1%; APA was downgraded to hold from buy at Argus following the company’s Q3 results and reduced FY production guidance; AM downgraded to market perform from outperform at Wells Fargo, citing heightened risk of midstream gathering rates being re-negotiated.

·     Consumer Staples; ELF shares rose after another strong quarter with net sales of $68 Million, up 11% excluding e.l.f. stores and raises FY20 adjusted EPS and revenue views; KDP posts strong quarter lifting shares as sales growth was 5% in Q3 to $2.87B on higher gross margin and saw underlying sales growth of 3.1%, driven by increased volume/mix of 1.5% and higher net price realization of 1.6%/reaffirms year outlook; THS missed on both lines of its Q3 report and sets full-year guidance below expectations/guide full-year EPS to land in a range of $2.30-$2.50, which has a midpoint below the consensus mark of $2.49; FIZZ slipped as KO said it is launching new flavored seltzer brand (AHA), will have caffeinated versions

·     Casino & Leisure movers; WYNN posted a miss on the top and bottom line but shares rallied on positive analyst comment; ERI reported EBITDA that came in slightly ahead of consensus; SEAS posted lower-than-expected Q3 revenue as visitor count to its parks fell/revs were $473.7M vs. est. $489.8M and said attendance fell 2.6%, to 8.1 million guests from a year earlier; PLYA drops after cutting its FY adjusted Ebitda outlook after larger quarterly loss



·     CAH +5%; reported F1Q EBIT ($577M v. $488M) and EPS ($1.27 v. $1.10) all coming in ahead of consensus, though company reaffirmed its EPS guidance

·     DXCM +25%; after Q3 results come in well above consensus and raises year rev view to $1.43B-$1.45B from $1.33B-$1.38B/ Q3 results that handily topped expectations on nearly every metric according to Piper/ CGM adoption trends strong with the US +53% and OUS +39%

·     GDDY +15%; better results as posted its fifth consecutive quarter of bookings acceleration, and margin improvement/EPS 42c/$760.5M vs. est. 21c/$761.39M

·     LVGO +21%; after the company reported stronger than expected 3Q19 revenues of $46.7M (est. $42.7M) and guided Q4 revs of $49.0M-$49.5M (est. $45.2M)

·     NVRO +20%; said the FDA approved its spinal cord stimulation (SCS) system, Omnia while also reported Q3 rev beat of $100.2M vs. est. $92.3M and raised its full-year rev forecast

·     QCOM +8%; delivered a strong quarter, with EPS above the high end of their guidance range with upbeat Q1 guidance (guides Q1 EPS 80c-90c on revs $4.8B vs. est. 77c/$4.78B)

·     RL +13%; after adjusted Q3 profit and revenue beat amid strong demand for its apparels in Europe and China and cost controls/guides FY rev growth in the low-end of its 2%-3% forecast

·     SBH +23%; on Q4 EPS and sales beat and comp sales rising 1.1% vs. expected decline

·     SQ reported a top and bottom line beat as Q3 gross payment volume of $28.2B increased from $26.8B in Q2 and $22.5B in Q3 2018, but issued lower than expected Q4 revs



·     AAOI -11%; dropped as Q3 revs of $46.1M missed the $47.9M est. and guided next quarter revs below views $46M-$49M vs. est. $52.3M)

·     AERI -22%; after Q3 revs of $18.5M beat $15.8M estimate but very weak guidance sunk shares, guiding year revs to $61M-$66M from $70M-$80M

·     EXPE -24%; 3Q results weak with a 5% EBITDA miss, the first miss since 1Q18/soft gross bookings and room night trends for VRBO and disappointing results at Trivago also weighed on the Q

·     FOSL -26%; after Q3 sales missed estimates, and lowered its Q4 gross margin, revenue and operating margin outlooks while also lowering year sales view (downgraded at KeyBanc)

·     OBSV -35%; after the company scraps its pivotal trial of nolasiban, its experimental oral drug aimed at boosting pregnancy chances following IVF, after the drug failed to show effectiveness

·     PCG -5%; posted better than expected quarterly earnings but still reported a $1.6B loss for the quarter, driven by a $2.5B pre-tax charge for fire claims and said it expects as much as $6.3B in after tax costs from the fire

·     PRTY -60%; cut its full-year profit outlook alongside Q3 earnings report that fell well-short of expectations/saw year EPS 84c-91c well below the prior $1.26-$1.36 view and $1.26 consensus

·     ROKU -15%; after Q3 Ebitda forecast missed and Q3 customer accounts missed/active accounts 32.3Mm up 1.7m from last quarter (est. 32.6m)


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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