Morning Preview: November 11, 2019

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Early Look

Monday, November 11, 2019

Futures

Up/Down

%

Last

DJ Industrials

-118.00

0.43%

27,513

S&P 500

-11.50

0.38%

3,078

Nasdaq

-38.50

0.47%

8,218

 

 

U.S. stock-index futures are pulling back from record highs reached on Friday following a decline in Asian and European markets as well as violence in Hong Kong adds to the risk-off mood. In Asian markets, The Nikkei Index fell -60 points to 23,331, the Shanghai Index fell -54 points (1.83%) to settle at 2,909 and the Hang Seng Index plunged over 2.6% or 725 points to settle at 26,926. In Europe, the German DAX is lower by about -60 points to 13,170, while the FTSE 100 is down about -80 points to 7,275. U.S. Treasury markets are closed for Veteran’s Day holiday and there is no U.S. economic data. US stocks finished their multi-week winning streaks in style, with the three main equities gauges simultaneously closing at record highs on Friday. In positive news in Asia, Chinese e-commerce giants Alibaba (BABA) and JD.com (HD) reported nearly $60 billion in sales Monday part way through Singles Day, an annual marketing event that is the world’s busiest online shopping day. On the trade front, President Donald Trump on Friday shot down speculation of a rollback on tariffs, saying he has not yet agreed to remove tariffs on Chinese goods, though Beijing would like him to. Earnings season is now nearing the tail end with the bulk of companies having reported over the last month.

Market Closing Prices Yesterday

·     The S&P 500 Index gained 7.90 points, or 0.26%, to 3,093.08

·     The Dow Jones Industrial Average rose 6.44 points, or 0.02%, to 27,681.24

·     The Nasdaq Composite jumped 40.79 points, or 0.48%, to 8,475.31

·     The Russell 2000 Index advanced 4.87 points, or 0.31% to 1,598.86

 

Events Calendar for Today

·     No major economic data released today

·     8:15 AM EST      Fed’s Rosengren speaks in Ohio

 

Earnings Calendar:

·     Earnings Before the Open: BATRA, CRR, FOLD, FWONA, LSXMA, NINE

·     Earnings After the Close: DXC, FGEN, GLIBA, GO, RMTI, UGI

 

Other Key Events:

·     Credit Suisse 28th Annual Healthcare Conference, 11/11-11/13, in Scottsdale, AZ

·     The Edison Electric Institute (EEI) Financial Conference, 11/10-11/12, in Orlando, FL

 

 

Macro

Up/Down

Last

WTI Crude

-0.85

56.39

Brent

-0.78

61.73

Gold

3.30

1,466.20

EUR/USD

0.0015

1.1033

JPY/USD

-0.31

108.95

10-Year Note

closed

1.941%

 

 

World News

·     Moody’s lowered the UK’s credit outlook to negative, saying Brexit “paralysis” has made policymaking less predictable

·     Clashes broke out across Hong Kong after police shot a protester on Monday, as calls for a general strike from anti-government demonstrators led to a heavy police presence.

·     Hong Kong police on Monday shot at least one protester as demonstrators blocked subway lines and roads during the morning commute

 

Sector News Breakdown

Consumer

·     Tesla (TSLA) tgt raised to $400 from $300 at Jefferies reflecting higher earnings, improved balance sheet and expectation that the electric-car manufacturer will maintain its edge in product, affordability and technology

 

Energy

·     Iran has discovered a new oil field in the country’s south with over 50 billion barrels of crude, its president said Sunday, a find that could boost the country’s proven reserves by a third as it struggles to sell energy abroad over U.S. sanctions.

·     SunPower (SPWR) said it would split into two separate publicly traded companies; the companies will be called SunPower and Maxeon Solar Technologies, and Tom Werner will continue as the chief executive officer of SunPower, it said

·     Carbo Ceramics (CRR) reports Q3 EPS ($1.03)/$43.5M vs. est. loss (50c)/$47.84M; said given market conditions, including expectations for these headwinds to persist going forward, they continue to be laser focused on initiatives to preserve, and improve, our cash position

 

Financials

·     Goldman Sachs (GS) is to focus on wider range of targets, to be outlined by CEO David Solomon’s management team in January 2020 at Goldman’s investor day – Reuters reports

·     Bank of New York Mellon Corp. (BK) upgraded to buy from neutral at UBS

·     Green Dot (GDOT) downgraded to Neutral from Buy at Guggenheim

 

Healthcare

·     The Society for Immunotherapy of Cancer (SITC) is holding its Annual Meeting from 6-10 November in National Harbor, MD

·     Nektar Therapeutics (NKTR) announced this weekend updated results from the first-in-human Phase 1a study of NKTR-358, a novel T regulatory (Treg) cell stimulator in development for the treatment of autoimmune and other chronic inflammatory conditions.

·     Alnylam (ALNY) said it has initiated ILLUMINATE-C, a new global Phase 3 study of lumasiran, an investigational, subcutaneously administered RNAi therapeutic in development for the treatment of primary hyperoxaluria type 1. NKTR also announced new positive efficacy results from the ongoing Phase 2 open-label extension study of lumasiran, which were presented at the American Society of Nephrology 2019 Annual Meeting on Saturday, November 9

·     Gilead Sciences (GILD) and Galapagos NV (GLPG) announced detailed results from the companies’ clinical research program evaluating filgotinib, an investigational, oral, selective JAK1 inhibitor, in adults with moderately-to-severely active RA

·     Replimune (REPL) announced data from the phase I/II trial (NCT03767348) of HSV-1-based oncolytic virus (OV) therapeutic RP1 +/- nivolumab in advanced solid tumors, demonstrating 1) tolerability, 2) biomarkers of immune activation, and 3) signals of anti-tumor activity at an investor event at the Society for Immunotherapy of Cancer (SITC) Annual Meeting

 

Industrials & Materials

·     Matthews International (MATW) sees Q4 adjusted EPS 96c-$1.01 below est. $1.14 and initiated a project to reduce costs and improve the profitability of the SGK Brand Solutions segment; sees FY19 adjusted EPS $3.26-$3.31 vs. est. $3.43 and sees FY19 adjusted EBITDA $219M-$221M

·     Oshkosh (OSK) positively mentioned in Barron’s saying shares could rise another 20% from its current price of $89-per-share, even after rising from the low $80’s in October as Baird analyst said by the time you have evidence that things are getting better, cyclical stocks will be higher than where they currently are

·     Honeywell (HON) mentioned positively in Barron’s noting CEO Darius Adamczyk is transforming the company into an industrial-software company, with a business closer to Salesforce.com (CRM) than its industrial conglomerate peers. The plan is getting traction, noting that total software sales over the past year were about $4B, with $1.5B of that coming from new Industrial Internet of Things, or IIoT, applications

·     Southwest Airlines (LUV) and American Airlines (AAL) both said they intend to extend Boeing (BA) 737 MAX cancellations until early March, according to Reuters. Southwest had previously pulled all its 737 MAX flights until February 8 and now anticipates a return to service on March 6, while American said it intends to resume commercial flights on the 737 MAX on March 5

·     Air Lease Corporation (AL) said the Company initiated the sale of a portfolio of 19 aircraft to Thunderbolt III Aircraft Lease, a newly formed entity, and Thunderbolt III has now completed its equity and debt financing transaction

 

Technology, Media & Telecom

·     The New York Department of Financial Services is opening a probe into the new Apple Card’s (AAPL) algorithms which determine credit limits after a series of tweets from a technology entrepreneur in the past few days alleged gender discrimination. The Apple Card is a joint venture between Apple Inc and investment bank Goldman Sachs (GS)

·     Uber (UBER) mentioned cautiously in Barron’s noting the company reported better-than-expected Q3 sales and EBITDA, but still fell 10% due to a quarterly net loss Barron’s said the company should focus on its core ride-hailing business, either spinning out, divesting, or shutting down its money-losing e-bike, e-scooter, and autonomous-driving bets

·     Disney (DIS) $7-a-month Disney+ service featuring most of the company’s best films and TV shows debuts Tuesday. The new streaming service will be available on Amazon, Samsung, LG, Apple and Roku devices

·     Qualcomm (QCOM) was downgraded to equal-weight from overweight at Morgan Stanley

·     Baidu (BIDU) upgraded to Outperform from Perform at Oppenheimer

·     Cisco (CSCO) downgraded to Neutral from Overweight at Piper Jaffray

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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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