Early Look

Monday, June 3, 2019

Futures	Up/Down	%	Last
DJ Industrials	-91.00	0.37%	24,729
S&P 500	-10.50	0.38%	2,742
Nasdaq	-40.50	0.57%	7,092

 

 

U.S. stock futures are pointing to another lower open, adding to last week’s sharp declines as markets deal with the economic impact of levied tariffs by the U.S. against trading counterparts after Trump said the U.S. would target Mexico imports last Friday. U.S. Treasuries add to last week gains as investors have rushed into haven bonds in recent sessions as trade tensions returned, sending the yield on the 10-year to fresh multi-year lows under 2.10%. Oil prices are looking to rebound after falling roughly 16% in May. More tensions with China as the country issued a report this weekend that blamed the conflict on the Trump administration but refrained from escalating the trade war. The report from the Cabinet spokesman’s office said China won’t back down on “major issues of principle,” but offered no sense of whether or how the country might retaliate against U.S. tariffs on goods manufactured in China. In Asian markets, The Nikkei Index fell -190 points to 20,410, the Shanghai Index dipped -8 points to settle at 2,890 and the Hang Seng Index was little changed, down 7 points at 26,893. In Europe, the German DAX is down a few points to 11,720, while the FTSE 100 is down about -0.25% to 7,140. Meanwhile President Trump begins his weekly visit to the UK this morning.

 

U.S. stock markets were punished late last week, with major averages plummeting Friday after President Trump, in an unexpected move, said the U.S. would impose escalating tariffs on Mexican imports. The headlines hit the auto sector particularly hard, with many of which having significant manufacturing operations south of the U.S. border. This weekend however, top administration officials said that President Donald Trump’s proposed tariffs on Mexican imports would not interfere with the finalization of a North American trade pact (NAFTA) and were designed to force Mexico’s hand in immigration talks.

 

For the month, the Dow Industrial Average fell -6.69%, the S&P 500 dropped -6.58%, and the Nasdaq Composite declined -7.93% as the three major averages posted their first monthly losses of 2019. For the week, the Dow fell -3.01%, the S&P 500 dropped -2.62% (biggest weekly slide since December), and the Nasdaq Comp declined -2.41%. The Dow fell for a 6th straight week, longest streak since 2011 and both the S&P and Nasdaq fell for a 4th straight week.

Market Closing Prices Yesterday

·     The S&P 500 Index plunged -36.80 points, or 1.32%, to 2,752.06

·     The Dow Jones Industrial Average fell -354.84 points, or 1.41%, to 24,815.04

·     The Nasdaq Composite sunk -114.57 points, or 1.51%, to 7,453.15

·     The Russell 2000 Index declined -20.04 points, or 1.35% to 1,465.49

 

Events Calendar for Today

·     9:45 AM EST      Markit US Manufacturing PMI, May-F…est. 50.6

·     10:00 AM EST    ISM Manufacturing for May…est. 53.0

·     10:00 AM EST    Construction Spending MoM for April…est. 0.4%

·     12:40 PM EST    Fed’s Barkin speaks to Charlotte Economics Club

·     1:25 PM EST       Fed’s Bullard speaks in Chicago

 

Earnings Calendar:

·     Earnings Before the Open: none

·     Earnings After the Close: BOX, CAL, COUP

 

Other Key Events:

·     American Society of Clinical Oncology (ASCO) 5/31-6/4, in Chicago

·     Annual Worldwide Developers Conference, 6/3-6/7, in San Jose, CA

·     Roth Capital 6th Annual China Solar Tour, 6/6-6/6, in Shanghai

·     Monthly Auto sales data released for May

·     China Caixin manufacturing PMI for May

·     Eurozone manufacturing PMI for May

 

 

Macro	Up/Down	Last
WTI Crude	0.59	54.09
Brent	0.50	62.49
Gold	11.75	1,317.20
EUR/USD	0.0012	1.1181
JPY/USD	0.04	108.33
10-Year Note	-0.033	2.097%

 

 

World News

·     China May Caixin Manufacturing PMI 50.2vs. est. 50.0

·     Kevin Hassett will quit as head of the White House Council of Economic Advisers. Trump tweeted that Hassett, “who has done such a great job for me and the Administration, will be leaving shortly.”

·     President Trump unleashed a Twitter tirade against London Mayor Sadiq Khan, leader of the world city where Trump will stay for two nights while partaking in a state visit full of pomp and circumstance.

 

Sector News Breakdown

Consumer

·     Kraft Heinz (KHC) mentioned in Barron’s saying it is shaping up as a reputational and financial black eye for Berkshire Hathaway (BRK.A) CEO Warren Buffett, as shares continued their slide this past week after hitting their lowest level since the merger of Kraft Foods and H.J. Heinz in 2015, Barron’s noted shares could be near a bottom after the latest downdraft

·     Beyond Meat (BYND) stock has been one of the best-performing initial public offerings of the year according to Barron’s having shot up 310% from their May 1 issue price of $25, and about 125% from the stock’s opening trade of $46—a sizzling debut. Barron’s said even if the market for alternative meat explodes and Beyond Meat outsells rivals, it is no sure thing that the company can maintain the growth required to justify today’s valuation

·     Gross gaming revenue for Macau casino operators was 26 billion patacas ($3.2 billion) in May, up 1.8% from a year earlier, according to data from the Gaming Inspection & Coordination Bureau on Saturday. That was slightly worse than the median analyst estimates of a 3% increase, and follows declines in March and April. (watch shares of WYNN, MLCO, LVS, MGM)

·     Brinker (EAT) upgraded to Neutral from Sell at UBS

 

Financials

·     Blackstone Group LP (BX) is buying a network of U.S. industrial warehouses from Singapore-based GLP for $18.7B, including debt, in the largest private real-estate transaction ever. The deal, culminating an auction, could be announced as soon as Sunday as they outbid real-estate company Prologis Inc. (PLD) for the roughly 180-million-square-foot portfolio https://on.mktw.net/2ERMwBQ

·     Welltower (WELL), Ventas (VTR) mentioned positively in Barron’s saying with the population of those 65 and over set to nearly double in the next 30 years, senior housing represents an enormous business opportunity, but the stocks of companies in the industry aren’t growth investments as they trade like other real estate companies (CTRE, SNH, SBRA other names)

·     A group of financial firms led by UBS Group AG plans to start using a bitcoin-like token to settle cross-border trades. The 14 firms — a group that includes big banks in the U.S., Europe and Japan — have created a new company to control development of the token, called the utility settlement coin, or USC. They have collectively invested GBP50 million ($63.2 million) in the company.

 

Healthcare

·     Humana (HUM) confirms it will not propose combining with Centene (CNC)

·     Nektar’s (NKTR) shares are higher after its bempegaldesleukin combined with Bristol-Myers Squibb’s (BMY) Opdivo spurred more remissions of skin cancer, according to data presented at the American Society of Clinical Oncology meeting. Updated results from an early-stage study showed four additional patients out of 38 were cleared of their cancer, for a total of 13

·     Other highlights from the 2019 American Society of Clinical Oncology Annual Meeting in Chicago:

·     Amgen (AMGN) Phase I, first-in-human dose-escalation trial of AMG 420 in patients with R/R multiple myeloma showed overall response rate at 400 µg/d of 70%, with median duration of response of 9 months and median time to response of one month.

·     AstraZeneca PLC (AZN) said phase 3 results from a trial of its Lynparza cancer treatment, developed with Merck & Co. Inc. (MRK), demonstrated that the drug nearly doubled the time patients lived without disease progression.

·     Celgene Corporation (CELG) results from phase 1/2 study of iberdomide in combination with dexamethasone in patients with relapsed and refractory multiple myeloma showed overall response rate of 32%, with 29% achieving partial response and two patients achieving a very good partial response.

·     Corvus Pharmaceuticals (CRVS) said initial results from Phase 1/1b trial of CPI-006 in patients with advanced, refractory cancer show doses of 12 mg/kg achieved complete and sustained occupancy of CD73 on peripheral blood lymphocytes.

·     Iovance (IOAV) presented 2 posters (1,2) with patient-level data from its phase II trials of autologous tumor infiltrating lymphocyte (TIL) therapies in melanoma (NCT02360579) and cervical cancer (NCT03108495) at ASCO

·     Moderna (MRNA) presented interim phase I data for mRNA personalized cancer vaccine, mRNA-4157, in patients with both resected (adjuvant) and unresected (advanced) solid tumors. Moderna reported that mRNA-4157, given alone or in combination with pembrolizumab (Keytruda, pembro): (1) elicited neoantigen-specific T-cell responses; (2) was associated with clinical activity in some patients; and, (3) was well-tolerated and produced no vaccine-related SAEs.

 

Industrials & Materials

·     The Federal Aviation Administration’s Sunday statement indicated the manufacturing problem by Boeing (BA) doesn’t pose an imminent accident hazard. But the move comes during heightened global scrutiny of the 737 Max’s safety and amid separate efforts by the FAA and plane maker to agree on a software fix to prevent misfires of a potentially dangerous flight-control system

·     Europe’s Airbus (EADSY) is close to a deal to sell A330neo wide-body passenger jets to Virgin Atlantic, Reuters reported. The Britain-based airline has been evaluating the upgraded A330 model against the Boeing 787 Dreamliner

·     DowDuPont (DWDP) board approves a $2B share buyback plan

 

Technology, Media & Telecom

·     Cypress Semiconductor (CY) will be acquired by Germany’s Infineon Technologies for an enterprise value of 9 billion euros ($10.1 billion), which is equal to $23.85 per Cypress share in the latest chip deal https://on.mktw.net/316d0sv

·     Broadcom (AVGO) now mentioned positively in Barron’s noting that semiconductor demand has been soft, U.S. antitrust officials are looking into Broadcom’s dominance in some market, and Trump administration blacklisting Huawei will pinch the company’s bottom line right away…but says investors should still buy Broadcom’s shares noting the promise of speedy 5G capability, Broadcom could supply more than offset revenue lost to a ban on shipments to Huawei

·     Amazon.com (AMZN) could face heightened antitrust scrutiny under a new agreement between U.S. regulators that puts it under closer watch by the Federal Trade Commission – Washington Post

·     The Department of Justice is preparing an antitrust investigation of Alphabet’s (GOOGL) Google, Wall Street Journal reported saying the instigation is expected to probe Google’s practices related to search and other businesses