Morning Preview: December 03, 2019

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Early Look

Tuesday, December 3, 2019

Futures

Up/Down

%

Last

DJ Industrials

-89.00

0.32%

27,700

S&P 500

-8.50

0.27%

3,105

Nasdaq

-30.50

0.37%

8,285

 

 

Stock futures are tumbling, on track for a third straight session decline on trade talk concerns after President Trump told reporters in London that it might be better to wait until after the 2020 election to reach a trade deal with China, according to CNBC. “In some ways, I like the idea of waiting until after the election for the China deal, but they want to make a deal now and we will see whether or not the deal is going to be right.” When asked if he had a deadline for the deal, he added: “I have no deadline, no … In some ways I think it is better to wait until after the election, if you want to know the truth.” The commentary already adds to a tense situation, with tariff increases still on track at this point to be enacted on December 15th by the U.S. against China. Also overnight, more tariff news, this time for the EU as the Trump administration is proposing tariffs on up to $2.4 billion worth of French imports in retaliation for France’s tax on American tech giants like Google (GOOGL) and Facebook (FB). The Office of the U.S. Trade Representative charged that France’s new digital services tax discriminates against U.S. companies. In Asian markets, The Nikkei Index dropped -149 points to 23,379, the Shanghai Index gained 8 points to 2,884 and the Hang Seng Index fell -53 points to 26,391. In Europe, the German DAX is higher by 50 points to move above 13,000, while the FTSE 100 is down over -80 points to slide below the 7,200 level. U.S. stocks are coming off their biggest one-day fall in nearly eight weeks yesterday (since Oct 8th), as major averages declined for a second consecutive session following manufacturing data in the U.S. that showed a continued contraction in November and fresh trade jitters put investors on the defensive. News that President Donald Trump said he would restore tariffs on metal imports from Brazil and Argentina also hurt sentiment as European stocks ended the day 1.6% down for its worst single-day drop in two months. Defensive assets are higher with gold and Treasuries edging higher while two M&A deals grab headlines in the biotech and industrial metals sectors.

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -27.11 points, or 0.86%, to 3,113.87

·     The Dow Jones Industrial Average fell -268.37 points, or 0.96%, to 27,783.04

·     The Nasdaq Composite plunged -97.48 points, or 1.12%, to 8,567.99

·     The Russell 2000 Index declined -16.92 points, or 1.04% to 1,607.58

 

Events Calendar for Today

·     7:45 AM EST      ICSC Weekly Retail Sales

·     8:55 AM EST      Johnson/Redbook Weekly Sales

·     4:30 PM EST       API Weekly Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: DCI, LE

·     Earnings After the Close: ATGN, AVAV, CRM, HQY, MRVL, WDAY, ZS

 

Other Key Events:

·     Monthly auto sales data for November

·     Barclay’s Global, Lodging, Leisure & Restaurant Conference, 12/3-12/4, in New York

·     BMO Capital Boston Growth Conference, 12/3-12/4, in Boston, MA

·     Citigroup Basic Material Conference, 12/2-12/4, in New York

·     Credit Suisse 7th Annual Industrials Conference, 12/3-12/5, in Palm Beach, FL

·     Credit Suisse 23rd Annual Technology Conference, 12/2-12/5, in Scottsdale, AZ

·     Fashion Footwear Association of New York, 12/2-12/6, in New York

·     Morgan Stanley Global Consumer & Retail Conference, 12/3-12/4, in New York

·     Piper Jaffray 31st Annual Healthcare Conference, 12/3-12/5, in New York

 

 

Macro

Up/Down

Last

WTI Crude

0.11

56.06

Brent

0.03

60.95

Gold

6.80

1,476.00

EUR/USD

-0.0002

1.1077

JPY/USD

-0.12

108.86

10-Year Note

-0.027

1.793%

 

 

World News

·     Japan is preparing an economic stimulus package worth $120 billion to support fragile economic growth, two government officials with direct knowledge of the matter said on Tuesday, complicating government efforts to fix public finances – Reuters

 

Sector News Breakdown

Consumer

·     Boston Beer (SAM) upgraded to Buy from Neutral at UBS and raise tgt to $440 from $415

·     Wyndham Hotels & Resorts (WH) announced that David Wyshner has decided to step down as CFO, effective immediately, and move into a senior advisory role reporting to president and CEO Geoff Ballotti until March 1, 2020

·     International Game Technology (IGT) said CFO Alberto Fornaro has resigned to pursue other professional opportunities.

·     PepsiCo (PEP) entered into a definitive agreement to buy BFY Brands, which will report into PepsiCo’s Frito-Lay North America unit upon closing of the deal

 

Energy, Industrials & Materials

·     Cleveland-Cliffs (CLF) to acquire AK Steel (AKS) for $3.36 per share, or about $1.1B in stock; under terms, AK Steel shareholders will receive 0.40 shares of CLF stock https://on.mktw.net/2Ll1gMO

·     Clearway Energy (CWEN) 5.4M share Spot Secondary priced at $18.70

·     PG&E Corp. (PCG) failed to adequately inspect and maintain its transmission lines for years before a faulty line started the deadliest fire in California history, a state investigation has found

·     Old Dominion Freight Line (ODFL) will replace SunTrust Banks (STI) in the S&P 500

·     Ferroglobe (GSM) Q3 adjusted EPS loss (10c)/$381.7M vs. es.t loss (18c)/$397.17M; Q3 adjusted EBITDA ($7.2M) vs. $43.9M last year and Q3 total shipments down 3.8% from Q2 and 12.4% from last year.

·     General Dynamics (GD) was awarded a $22.21B fixed-price-incentive, multi-year modification to a previously-awarded contract for construction of nine Virginia-class submarines, eight with Virginia payload module, or VPM, from FY19 to FY23

 

Financials

·     CBL Properties (CBL) shares fell over 30% after saying it is suspending all future dividends on its common stock; sees decline in net operating income in 2020

·     Bank of Montreal (BMO) 4Q adjusted EPS C$2.43 vs. estimate C$2.41; 4Q Basel III common equity Tier 1 ratio 11.4% vs. 11.3% YoY and 4Q return on equity +9.9% vs. +16.1% YoY

·     UniCredit said it will cut 8,000 jobs in a further restructuring as Italy’s largest bank seeks regulatory approval for its first share buyback in a decade

 

Healthcare

·     Audentes Therapeutics (BOLD) agrees to be acquired by Astellas Pharma (ALPMF) for $60 per share in cash, representing a total equity value of ~$3B as Astellas touts the near-term growth opportunity of Audentes’ lead program AT132 for the treatment of X-Linked Myotubular Myopathy https://reut.rs/2Lg8qSm

·     Puma Biotechnology (PBYI) said that its licensing partner Specialised Therapeutics Asia gets marketing approval of Nerlynx in Singapore from the Health Sciences Authority. Indicated for the extended adjuvant treatment of adult patients with early stage HER2-overexpressed/amplified breast cancer, to follow adjuvant trastuzumab-based therapy

·     UnitedHealth (UNH) ahead of its investor meeting this morning, said it sees 2020 adjusted EPS $16.25-$16.55 vs. estimate $16.47 and sees 2020 revenue $260B-$262B vs. est. $260.97B; sees 2020 cash flows from operations $19.0 billion to $19.5 billion

·     Amgen (AMGN) announces data being presented at ASH 2019; Amgen-phase 3 candor study evaluating Kyprolis® with Darzalex® in relapsed or refractory multiple myeloma patients accepted as late-breaking abstract; data from aall1331 evaluating Blincyto vs. chemotherapy in first relapse of childhood b-all were accepted as a late-breaking abstract

·     Axsome Therapeutics (AXSM) said AXS-12 (reboxetine) phase 2 trial met the primary endpoint and significantly reduced the number of cataplexy attacks as compared to placebo in patients with narcolepsy

·     ViewRay, Inc. (VRAY) signs non-binding memorandum of understanding for collaboration with Elekta AB regarding use of MR-guided radiation therapy, according to a statement; Elekta has committed to invest capital for up to a 9.9% minority interest in ViewRay; VRAY files to sell $75M of common stock

·     NantKwest, Inc. (NK) said Phase 1 QUILT-3.064 trial of its tumor-targeted PD-L1.t-haNK cell therapy in patients with locally advanced or metastatic solid tumors showed no dose-limiting toxicities in six subjects treated as out-patients

·     Amneal Pharmaceuticals, Inc. (AMRX) said it has received final FDA approval on its Abbreviated New Drug Applications for generic versions of Revatio® (sildenafil citrate) for Oral Suspension 10 mg/ml and Amicar Tablets USP, 500 mg

 

Technology, Media & Telecom

·     Coupa Software (COUP) Q3 adjusted EPS 20c/$101.8M vs. est. 6c/$96.19M; raises FY20 adj. EPS view to 34c-37c from 11c-16c (est. 16c) and ups FY20 revenue view to $379.8M-$380.8M from $369M-$372M (est. $372.15M)

·     Tenable (TENB) announced that it has acquired Indegy Ltd., a leader in industrial cybersecurity which provides visibility, security and control across operational technology (OT) environments

·     Twitter (TWTR) to offer $600 million of senior unsecured notes due in 2027 in a private placement

·     Cabot Microelectronics (CCMP) will replace Old Dominion Freight Line in the S&P MidCap 400

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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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