Morning Preview: January 16, 2020

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Early Look

Thursday, January 16, 2020

Futures

Up/Down

%

Last

DJ Industrials

77.00

0.27%

29,106

S&P 500

10.50

0.33%

3,304

Nasdaq

35.75

0.39%

9,095

 

 

Stocks futures are moving higher, on track for new record highs for U.S. stocks a day after record setting territory for major averages as Donald Trump signed a US-China trade deal that has allayed fears of an extended trade year. The Dow Jones Industrial Average closed above the 29,000 level for the first time, only taking 40-days since its last milestone of 28,000 on November 2018 and the 2nd fastest 1,000 move to reach a milestone since January of 2018 when it took only eight trading sessions to close at 26,000 (took 372 trading days to reach the 27,000 level). President Trump said the deal restored “economic justice” as China committed to $200B in additional purchases of U.S. goods and pledged to “enhance” intellectual property protections. All U.S. tariffs on Chinese imports will be removed as soon as the two countries complete a “Phase Two” trade pact. In Asian markets, The Nikkei Index gained 16 points to 23,933, the Shanghai Index dipped -15 points to 3,074 and the Hang Seng Index rose 109 points to 28,883. In Europe, the German DAX is down about -15 points to 13,415, while the FTSE 100 is down over -35 points to hold just above 7,600. Markets also preparing for the onslaught of quarterly earnings in the coming weeks.

Market Closing Prices Yesterday

·     The S&P 500 Index added 6.14 points, or 0.19%, to 3,289.29

·     The Dow Jones Industrial Average climbed 90.55 points, or 0.31%, to 29,030.22

·     The Nasdaq Composite gained 7.37 points, or 0.08%, to 9,258.70

·     The Russell 2000 Index advanced 12.79 points, or 0.77% to 1,682.40

 

Events Calendar for Today

·     8:30 AM EST      Weekly Jobless Claims…est. 218K

·     8:30 AM EST      Continuing Claims…est. 1.75M

·     8:30 AM EST      Import Prices MoM for December…est. 0.3%

·     8:30 AM EST      Retail Sales MoM for December…est. 0.3%

·     8:30 AM EST      Retail Sales Less-autos for December…est. 0.5%

·     8:30 ZAM EST    Philly Fed Survey for January…est. 3.6

·     10:00 AM EST    Business Inventories for November…est. (-0.2%)

·     10:00 AM EST    NAHB Housing Market Index for January…est. 74

·     10:30 AM EST    Weekly EIA Natural Gas Inventory Data

·     4:00 PM EST       Net Long-term TIC Flows for November

 

Earnings Calendar:

·     Earnings Before the Open: BK, HOMB, IIIN, MS, PPG

·     Earnings After the Close: CSX, INDB, OZK, PBCT

 

Other Key Events:

·     Citigroup European Utilities & Infrastructure Conference, 1/15-1/16, in England

·     JPMorgan Healthcare Conference, 1/13-1/16, in San Francisco, CA

 

 

Macro

Up/Down

Last

WTI Crude

0.10

57.91

Brent

0.25

64.25

Gold

2.00

1,556.00

EUR/USD

0.0007

1.1157

JPY/USD

0.07

109.97

10-Year Note

+0.001

1.784%

 

 

World News

·     German consumer prices were up in December in line with forecasts, rising 0.5% compared with November and 1.5% compared with the same month a year earlier, which were in line with the forecasts of economists. The European Union-harmonized inflation index grew 0.6% compared with November and 1.5% compared with the previous December.

 

Sector News Breakdown

Consumer

·     Tesla (TSLA) downgraded to Underweight at Morgan Stanley on valuation after 105% rally

·     American Outdoors (AOBC) James Debney is replaced as president and CEO after board determined he “engaged in conduct inconsistent with a non-financial company policy.”

·     Pilgrim’s Pride (PPC) and Tyson Foods (TSN) both downgraded to equal-weight at Stephens

·     Magna (MGA) and Lyft (LYFT) have decided to concluding their partnership to co-develop self-driving technology; said they expect to continue to collaborate in several areas related to autonomous developments, including aspects of hardware development and potential joint opportunities in software and hardware manufacturing.

·     Caesars Entertainment Corporation (CZR) and VICI Properties Inc. (VICI) announced they have signed an agreement to sell Harrah’s Reno Hotel and Casino to an affiliate of CAI Investments for $50 million

 

Energy

·     EnLink Midstream (ENLC) announced a reduced capital spending plan for 2020 and a distribution cut it says will provide financial flexibility and contribute to excess free cash flow generation during H2 2020 and beyond; is slashing investor payouts by 34%; expects FY 2020 growth capex of $275M-$375M, a ~50% decrease from expected 2019 growth capex

·     The IEA said growth in oil production from the US and other countries outside of Opec will outpace global demand, reducing the need for barrels from the producer group, the International Energy Agency has said.

·     ExxonMobil (XOM) tgt cut to $70 from $75 at RBC Capital citing continued weakness in its chemicals segment

·     Ring Energy (REI) said net estimated production for Q4 was approximately 1,049,200 BOEs, as compared to net production of 623,000 BOEs for Q4 of 2018, a 68.4% increase, and net estimated production of 1,015,000 BOE for Q3 of 2019, an approximate 3.4% increase

·     Renesola (SOL) cuts Q4 rev view to $20M-$25M and year to $115M-$120M

 

Financials

·     Bank of New York Mellon (BK) Q4 EPS $1.02 vs. est. $1.01 with NIM 1.09% vs. est. 1.04% saying continue to be negatively impacted by lower rates, a flat yield curve and low foreign exchange volatility; Q4 provision for losses $8M

·     Qudian Inc. (QD) withdrew its guidance for fiscal 2019 because of regulatory uncertainty (had previously guided for total adjusted net income for 2019 of CNY4 billion); the company also said it wouldn’t issue additional guidance in the near term while announced a $500M share buyback of shares

·     Eagle Bancorp (EGBN) Q4 EPS $1.06/$87.4M vs. est. $1.07/$80.23M; 4Q non-interest income rose 11% YoY to $6.73M and Q4 provision for credit losses +13% YoY to $2.95M

·     Hancock Whitney (HWC) Q4 EPS $1.03 was in-line with consensus and down from $1.10 YoY with Q4 core net interest margin 3.43%

 

Healthcare

·     GeneTx Biotherapeutics and Ultragenyx Pharmaceutical (RARE) announced that GeneTx’s Investigational New Drug, or IND, application for GTX-102, an experimental antisense oligonucleotide being evaluated for the treatment of Angelman syndrome

·     Tandem Diabetes Care (TNDM) announced its commercial launch of the t:slim X2 insulin pump with Control-IQ technology, an advanced hybrid-closed loop feature designed to help increase time in range.

 

Industrials & Materials

·     Alcoa (AA) Q4 EPS loss (31c) vs. est. loss (21c) and adjusted Ebitda down -54% YoY to $346M (vs. est. $334M); guides 2020 global aluminum demand to up 1.4%-2.4%; reported Q4 revenue of $2.4B vs. est. $2.47B; takes actions aligned with strategic priorities to reduce complexity, drive returns and advance sustainably, including closing one fully curtailed alumina refinery as part of multi-year asset review process and announcing the first planned sale of non-core assets

·     XPO Logistics Inc. (XPO) is considering strategic options including selling most of its operating units, according to Bloomberg

 

Technology, Media & Telecom

·     Taiwan Semiconductor (TSM) said Q4 net profit rose 16% to 116.04 billion New Taiwan dollars (US$3.88 billion), compared with NT$99.98 billion a year earlier, and Q4 revenue rose 9.5% from a year ago to NT$317.24 billion; said it sees Q1 revs $10.2B-$10.3B vs. est. $10.09B and sees gross profit margin of 49% to 51%

·     Pearson PLC (PSO) said Thursday that its 2019 performance met its recently lowered guidance and its chief financial officer is leaving

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Market commentary provided by Hammerstone Markets, a division The Hammerstone Group, a firm separate from and not affiliated with Regal Securities L.P. Regal Securities L.P. has not participated in the creation of the content, and does not explicitly or implicitly endorse the content.

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