***The “Early Look” will resume next Wednesday June 26^th

***No notes next Monday and Tuesday (6/24, 6/25)

 

 

 

 

 

 

Early Look

Friday, June 21, 2019

Futures	Up/Down	%	Last
DJ Industrials	-34.00	0.13%	26,740
S&P 500	-5.50	0.19%	2,954
Nasdaq	-28.50	0.36%	7,744

 

 

Stock futures are down slightly, taking a breath after another historic run for stocks that saw the S&P 500 post a new record closing higher yesterday. Meanwhile, media reports indicate (both the NYT and ABC News) that U.S. airstrikes against Iran were called off at the last-minute overnight, according to the New York Times. The Times reported President Donald Trump had approved attacks against limited Iranian targets, such as radar stations and missile batteries, and planes were in the air before they were ordered to stand down. Gold topped the $1,400 an ounce for the first time since 2013 following the reports before pulling back, while oil adds to its gains. In Asian markets, The Nikkei Index dropped -204 points to 21,258, the Shanghai Index rose 14 points to move back above the 3,000 level and the Hang Seng Index slipped -76 points to settle at 28,473. In Europe, the German DAX is flat at 12,350, while the FTSE 100 is also little changed at 7,430.

 

The S&P 500 closed at its first record high in seven weeks, while also setting a new intraday all-time high (2,958.06) as stocks rose for a 4^th session led by interest rate cut expectations and hopes for a positive meeting between President Trump and Chinese leader Xi next week at the G20. The Nasdaq Composite posted its first close above 8,000 since May 6. Markets rallied this week after Federal Reserve Chairman Jerome Powell signaled that the central bank may cut benchmark interest rates as early as the July meeting if U.S.-China trade tensions doesn’t show signs of improvement. The Fed removed the word “patient” from its updated policy statement, suggesting that it is ready to act soon. Energy stocks were the big winners on Thursday led by a near 6% jump in oil prices.

Market Closing Prices Yesterday

·     The S&P 500 Index gained 27.72 points, or 0.95%, to 2,954.18

·     The Dow Jones Industrial Average rose 249.17 points, or 0.94%, to 26,753.17

·     The Nasdaq Composite spiked 64.02 points, or 0.80%, to 8,051.34

·     The Russell 2000 Index advanced 7.92 points, or 0.51% to 1,563.49

 

Events Calendar for Today

·     9:45 AM EST      Markit US Manufacturing OMI, Jun-P…est. 50.5

·     9:45 AM EST      Markit US Services PMI, Jun-P…est. 51.0

·     10:00 AM EST    Existing Home Sales MoM for May…est. 5.27M

·     1:00 PM EST       Baker Hughes Weekly Rig Count

 

 

Macro	Up/Down	Last
WTI Crude	0.54	57.61
Brent	1.02	65.47
Gold	4.55	1,393.00
EUR/USD	0.0022	1.1315
JPY/USD	0.17	107.47
10-Year Note	+0.007	2.032%

 

 

World News

·     U.S. airstrikes against Iran were called off at the last-minute Thursday night, according to the New York Times. The Times reported President Donald Trump had approved attacks against limited Iranian targets, such as radar stations and missile batteries, and planes were in the air before they were ordered to stand down. ABC News confirmed Trump called off the attack abruptly, reportedly against the advice of Secretary of State Mike Pompeo and National Security Adviser John Bolton.

·     The Federal Aviation Administration on Thursday night prohibited U.S.-registered aircraft from flying in Iranian-controlled airspace over the Persian Gulf and the Gulf of Oman, as tensions between the U.S. and Iran continue to escalate

·     St. Louis Federal Reserve bank president James Bullard said he dissented at this week’s Federal Open Market Committee meeting because he felt weak inflation and uncertainties about the outlook for economic growth warranted an interest rate cut. “Inflation measures have declined substantially since the end of last year and are presently running some 40 to 50 basis points below the FOMC’s 2% inflation target,” Bullard said in a statement released Friday morning.

·     Japan consumer prices excluding fresh food rose by 0.8% in May from a year earlier, with weaker gains in electricity prices among the largest factors slowing inflation, which compared to estimate of 0.7% and a reading of 0.9% in April.

·     Chinese President Xi Jinping visited North Korea for a two-day summit with Kim Jong Un, with both leaders seeking to bolster their leverage in separate negotiations with the U.S

 

Sector News Breakdown

Consumer

·     Korn/Ferry (KFY) Q4 adjusted EPS 88c/$502.5M vs. est. 88c/$499.45M; guides Q1 EPS 73c-81c on revs $466M-$486M below est. 82c/$488.5M

·     SeaWorld (SEAS) upgraded to Buy from Neutral at Goldman Sachs

 

Energy, Industrial and Materials

·     July natural gas futures fell as low as $2.159 mln btu on Thursday (over 5%) before paring losses to down 3% at $2.207 mln btu which was its lowest level in several years and followed bearish inventory data earlier in the day

·     Chevron Phillips Chemical Company, a joint venture between Chevron (CVX) and Phillips 66 (PSX), has offered to acquire Nova Chemicals for more than $15B including debt, Reuters reports

·     Forward Air Corporation (FWRD) says it sees Q2 EPS to be approximately 15% below the low end of its previous EPS guidance range as a result of a $5.0M reserve recorded in June 2019 for pending vehicular claims

 

Financials

·     LPL Financial (LPLA) said May total brokerage and advisory assets served at the end of May were approximately $677B, a $22B decrease, or 3.1% compared to the end of April 2019; total net new assets for May were an inflow of $1.4B

·     PayPal Holdings Inc. (PYPL) said COO Bill Ready will leave at the end of 2019 to pursue entrepreneurial interests outside the digital payments company.

·     Alexandria Real Estate (ARE) 3.85M share Spot Secondary priced at $145.00

·     Blackstone Mortgage (BXMT) 7.5M share Spot Secondary priced at $36.00

 

Healthcare

·     UnitedHealth Group Inc. (UNH) has agreed to buy health-care payments firm Equian LLC from its private-equity owner for about $3.2 billion according to reports https://on.mktw.net/2FomrdJ

·     Canopy Growth (CGC) reported Q4 revenue C$94.1M vs. C$22.8M a year ago and were up sequentially from C$83M in Q3 (est. C$95.2M); Canopy said it took in C$68.9M in Q3 from sales of recreational pot, down from C$71.6M the quarter before, when legal sales began two weeks into the quarter.

·     Regeneron Pharmaceuticals (REGN) and Sanofi (SNY) announce that a Phase 2 trial evaluating the investigational IL-33 antibody REGN3500 met the primary endpoint of improvement in loss of asthma control

·     ContraVir Pharmaceuticals, Inc. (CTRV) announced positive feedback from the U.S. FDA in response to its pre-Investigational New Drug meeting with respect to the development of CRV431 in NASH

 

Technology, Media & Telecom

·     Red Hat (RHT) – (acquired by IBM in Oct ‘18) Q1 EPS $1.00/$934M vs. est. 86c/$931.7M; Q1 Application Development-related and other emerging technology subscription revs of $235M, up 24% year-over-year in USD, or 29% in constant currency; Q1 training and services revenue of $119 million, up 17% year-over-year in USD, or 22% in constant currency; quarter-end deferred revenue balance of $2.8 billion, up 14% year-over-year in USD, or 17%

·     Nuance (NUAN) said it has accelerated the exit of its non-core Subscription Revenue Services business, which provides services to mobile consumers in emerging markets, primarily Brazil and India; lowers Q3 EPS and rev outlook to reflect this move