Early Look

Thursday, June 6, 2019

Futures	Up/Down	%	Last
DJ Industrials	74.00	0.29%	25,632
S&P 500	8.50	0.29%	2,836
Nasdaq	28.50	0.39%	7,256

 

 

Stocks in the U.S. are on track to rise for a third straight day, building on recent gains amid hopes of lower interest rates from the Fed this year as well as bets that the U.S. will reach a deal with Mexico this week to avoid getting hit with tariffs. However, meetings did not go well overnight between the two countries after President Trump said that “not nearly enough,” progress was made during the meeting at the White House between Mexico’s foreign minister and top American officials. Trump tweeted this morning, “If no agreement is reached, Tariffs at the 5% level will begin on Monday, with monthly increases as per schedule,” Trump tweeted Wednesday. “The higher the Tariffs go, the higher the number of companies that will move back to the USA!” President Trump also reiterated that the U.S. is prepared to place tariffs on another $300 billion of imports from China if necessary and asserted that Beijing “wants to make a deal badly.” Gold futures are on track for a seventh straight day of gains while WTI crude rose above $52 a barrel after plunging into a bear market yesterday (defined a 20% decline from recent highs in April). In Asian markets, The Nikkei Index was little changed at 20,774, the Shanghai Index dropped -33 points to 2,827 and the Hang Seng Index rose 69 points to 26,965. In Europe, the German DAX is higher by over 90 points to 12,070, while the FTSE 100 rose over 40 points to 7,260. The European Central Bank meets later this morning and ECP President Mario Draghi is widely expected to maintain a dovish stance in his post meeting news conference as well. Note the ECB has pledged to leave interest rates at present levels at least through the end of 2019

Market Closing Prices Yesterday

·     The S&P 500 Index gained 22.88 points, or 0.82%, to 2,826.15

·     The Dow Jones Industrial Average rose 207.39 points, or 0.82%, to 25,539.57

·     The Nasdaq Composite jumped 48.36 points, or 0.64%, to 7,575.48

·     The Russell 2000 Index declined -1.77 points, or 0.12% to 1,506.79

 

Events Calendar for Today

·     7:30 AM EST      Challenger Job Cuts YoY for May

·     8:30 AM EST      Weekly Jobless Claims…est. 215K

·     8:30 AM EST      Continuing Claims…est. 1.66M

·     8:30 AM EST      Nonfarm Productivity for Q1-F…est. 3.5%

·     8:30 AM EST      Unit Labor Costs for Q1-F…est. (-0.9%)

·     8:30 AM EST      Trade Balance for April…est. (-$50.7B)

·     8:40 AM EST      Fed’s Kaplan speaks at Boston College

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

·     12:00 PM EST    Household Change in Net Worth for Q1

·     1:00 PM EST       Fed’s Williams discusses International Economics

 

Earnings Calendar:

·     Earnings Before the Open: CIEN, HOME, HOV, KIRK, MIK, SAIC, SIG, SJM

·     Earnings After the Close: BYND, DOCU, DOMO, GES, MTN, OLLI, PD, SEAC, ZM, ZUMZ

 

Other Key Events:

·     European Central Bank (ECB) rate decision at 7:45 AM EST and press conference 8:30 AM EST

·     Baird Global Consumer & Technology Service conference, 6/4-6/6, in New York

·     Bank America Global Technology Conference, 6/4-6/6, in San Francisco

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

·     Jefferies 2019 Healthcare Conference, 6/4-6/7, in New York

·     Piper Consumer Marketplace Conference, 6/6 in New York

·     REITWeek 2019 Investor Conference, 6/4-6/6, in New York

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

·     UBS Global Industrials and Transportation Conference, 6/5-6/6, in New York

·     William Blair Growth Stock Conference, 6/5-6/6, in Chicago

 

 

Macro	Up/Down	Last
WTI Crude	0.10	51.78
Brent	0.42	61.05
Gold	6.40	1,336.80
EUR/USD	0.0016	1.1237
JPY/USD	-0.29	108.17
10-Year Note	-0.026	2.104%

 

 

World News

·     Investor Intelligence Poll showed equity newsletter writers classified as bullish fell for a fifth week to 42.7% from 49.0% last week, the largest decline since the first week of January while those expecting a correction rises a fifth week to 38.8% from 33.7% (highest reading this year). Those considered bearish bounced from 14-month lows to 18.5% from 17.3% last week

·     Moody’s Investors Service cut Mexico’s outlook to negative from stable, and then Fitch lowered the nation’s sovereign rating to BBB from BBB+

 

Sector News Breakdown

Consumer

·     BJ Wholesale (BJ) reports 17.5M share follow-on-offering by holders

·     Costco (COST) May total comp sales up 4.2% vs. est. 4.6% and May U.S. comp sales ex gas and FX up 4.4% vs. est. 4.6%

·     Five Below (FIVE) Q1 EPS 46c/$364.7M vs. est. 35c/$363.9M; Q1 comp sales up 3.1% vs. est. 3.8%; sees Q2 EPS 48c-51c on revs $417M-$422M vs. est. 49c/$421.09M; sees Q2 comp sales up 2%-3%

·     Fiat Chrysler (FCAU) has withdrawn its offer to merge with Renault after the French company’s board failed for a second day to reach a conclusion on the proposal

·     La-Z-Boy (LZB) said it sees FY19 sales of $1.75B vs. prior estimate of $1.76B; sees fiscal 2019 EPS $2.13-$2.15 vs. est. $2.21; said all segments delivered sales increases for the full year; 4Q sales declined versus the prior-year quarter in wholesale Upholstery and Case goods segments

·     Scotts Miracle-Gro (SMG) raises FY19 EPS view to $4.20-$4.40 from $4.10 -$4.30 while company-wide sales now expected to improve 13-14% from 2018

·     United Natural Foods (UNFI) Q3 adjusted EPS 61c/$5.96B vs. est. 52c/$6.22B; Gross margin for Q3 was 13.22% of net sales compared to 15.41% YoY

 

Energy

·     Chart Industries (GTLS) announced that it has received commitments for $1.1B of financing, consisting of a revolving credit facility which will replace and extend Chart’s existing $550M revolver, and a new term loan, both of which were oversubscribed

·     Regarding OPEC – a meeting between Russia’s Alexander Novak and Saudi counterpart Khalid Al-Falih on June 10 is upcoming and closely watched given the recent plunge in global oil prices

 

Financials

·     Avalara (AVLR) 3.59M share Secondary priced at $69.40

·     i3 Verticals (IIIV) 4.49M share Secondary priced at $22.75

 

Healthcare

·     Orchard Therapeutics (ORTX) 9M share Secondary priced at $14.25

·     Insys (INSY) agreed to pay $225 million to settle U.S. claims that it illegally sold opioid-based painkillers/the payment will be stretched over five years, the Justice Department said.

 

Industrials & Materials

·     ABM Industries (ABM) Q2 EPS 47c/$1.59B vs. est. 41c/$1.61B; narrows FY adjusted EPS from continuing operations to $1.95-$2.05 (prior $1.90-$2.05) vs. est. $1.99

·     Greif (GEF) Q2 adjusted EPS 81c/$1.21B vs. est. 79c/$1.25B; Q2 adjusted Ebitda $162.0M, up 31% YoY; guides 2019 EPS before special items $3.70-$4.00 vs. prior view $3.60-$4.00 and raises year adjusted free cash flow view

·     REV Group (REVG) Q2 adjusted EPS 24c/$615M vs. est. 25c/$626.28M.; backs FY19 revenue view $2.4B-$2.6B (est. $2.5B) and backs FY19 adjusted EBITDA view $150M-$170M

 

Technology, Media & Telecom

·     Cloudera (CLDR) shares fell -27%; Q1 adjusted EPS loss (13c)/$187.5M vs. est. loss (23c)/$188.48M; sees Q2 adjusted EPS loss (11c)-(8c) on revs $180M-$183M vs. est. loss (9c)/$203.29M and sees Q2 subscription revenue in the range of $155M-$157M; Sees FY20 revenue $745M-$765M below consensus $844.71M and prior guidance of $835M-$855M

·     Elastic (ESTC) Q4 EPS loss (28c)/$80.6M vs. est. loss (28c)/$75.28M; Q4 billings up 57% at $115.4M; sees FY20 EPS loss ($1.49)-($1.33) on revs $397M-$403M vs. est. loss ($1.24)/$365.13M

·     MongoDB (MDB) Q1 EPS loss (22c)/$89.4M vs. est. loss (24c)/$83.08M; 1Q cash and cash equivalents $158.1M and Q1 subscription revs $84.0M; lowers FY adjusted EPS loss ($1.04-$1.11) more than the loss of (98c-$1.06) prior; raises year revs to $375M-$381M from prior $363M-$371M

·     Smartsheet (SMAR) Q1 EPS loss (12c)/vs. est. loss (18c)/$54.57M; sees Q2 loss (16c-15c) on revs $63M-$64M vs. est. loss (13c)/$61.09M; sees FY20 EPS loss (59c-54c) vs. est. loss (57c) while raises FY20 revenue view to $262M-$265M from $253M-$257M (est. $255.46M); Q1 average ACV per customer up 48% at $2,675

·     Stitch Fix (SFIX) shares rose 25%; Q3 EPS 7c/$408.9M (up 29% YoY) vs. est. loss (3c)/$394.85M; said Q3 active clients of 3.1M, an increase of 17% YoY; raises year rev outlook to $1.57B-$1.58B from prior view $1.53B-$1.56B and guides year Ebitda $38M-$43M; sees Q4 revenue $425M-$435M vs. est. $421.27M

·     Comtech (CMTL) Q3 EPS 31c/$170.4M vs. est. 22c/$162.3M; raises FY19 revenue view to $660.0M from $645M-$660M (est. $655.18M), though guides Q4 EPS and revs below views

·     Descartes Systems (DSGX) 6M share Secondary priced at $35.50

·     Q2 Holdings (QTWO) 2.52M share Secondary priced at $69.50

·     Verra Mobility (VRRM) 15M share Secondary priced at $12.50