Morning Preview: September 8, 2017

Regal HelpdeskDaily Market Report

tocks futures are lower, along with weakness in Europe, an investors appetite for risk wanes into the weekend ahead of catastrophic Hurricane (Irma) that is expected to hit the Florida coast over the weekend after devastating the Caribbean the last few days. Markets are also fearful of another possible launch by North Korea, which has conducted tests two of the last three weekends. The dollar continued its decline Friday, with the Dollar Index (DXY) falling to a low of 91.011, its lowest level in more than two-and-a-half years (dollar fell to 107.42 low vs. yen). Certain sectors have remained under pressure this week due to the trajectory and expected massive economic devastation of the category 5 Hurricane Irma, with reinsurers (XL, RE, RNR), cruise lines (RCL, CCL, NCLH), and airlines (AAL, UAL, LUV) falling sharply. Bonds and gold prices are extending their weekly gains as the 10-yr yield falls to its lowest levels of 2017 (2.02%), while markets also await a Fed speaker and a few data points.
In Asian markets, The Nikkei Index fell -121 points to 19,274, the Shanghai Index was little changed to finish at 3,365, while the Hang Seng Index rose 145 points to settle at 27,668. In Europe, the German DAX is down only a few points at 12,290, while the FTSE 100 fell around -20 points at 7,375. European stocks declined Friday, with euro strength and geopolitical worries leading to broad-based losses and driving the regional benchmark deeper into the red for the week.
For the week, all three major benchmarks were set for losses, with the Dow average down -0.9%, the S&P 500 index off -0.5% and the Nasdaq Composite Index lower as of Thursday’s close. The S&P and Dow ended slightly lower on Thursday, while the tech-heavy Nasdaq eked out a slight gain. The weakness this week follows the increasing geopolitical threat from North Korea and the most powerful ever Atlantic storm barreling toward the U.S.
Market Closing Prices Yesterday
·      The S&P 500 Index slipped -0.44 points, or 0.02%, to 2,465.10
·      The Dow Jones Industrial Average fell -22.86 points, or 0.10%, to 21,784.78
·      The Nasdaq Composite gained 4.55 points, or 0.07%, to 6,397.87
·      The Russell 2000 Index dropped -3.52 points, or 0.25% to 1,398.67
Events Calendar for Today
·      8:45 AM EST       Fed’s Harker speaks on Consumer Finance in Philadelphia
·      10:00 AM EST     Wholesale Inventories MoM for July…est. 0.4%
·      1:00 PM EST        Baker Hughes Weekly Rig Count
·      3:00 PM EST        Consumer Credit for July…est. $15.0B
World News
·      China’s exports increased 5.5% from a year earlier in August, according to customs data. Some economists said the pace was lower than July’s 7.2% rise and the 6.0% forecast in a poll
·      The faster growth of China imports, coupled with a moderating rise in exports, narrowed China’s surplus to $41.99 billion in August, from $46.74 billion in July
·      New York Fed President William Dudley signaled he still supports another interest-rate hike this year, saying in speech to the Money Marketeers of New York University that he was surprised that inflation has stayed low, but expects the domestic price level will rise and stabilize around the Fed’s 2% target.
·      U.K. manufacturing picked up in July, but overall industrial output fell short of analysts’ expectations. Factory output grew by 0.5% on the month in July–the first monthly increase this year—and topping estimates of 0.3%. However, overall industrial production grew only modestly in July, by 0.2% on the month, falling short of market expectations of a 0.4% growth.
·      Mexico was hit by its strongest earthquake in a century, a temblor of magnitude 8.1 that shook buildings in the capital and left at least 15 people reported dead in southern states
Sector News Breakdown
·      American Outdoor Brands (AOBC) shares fell -19%; Q1 EPS 2c/$129.0M vs. est. 11c/$147.38M; sees FY18 non-GAAP EPS $1.04-$1.24 on revs $700M-$740M vs. est. $1.52/$772.4M; Q1 gross margin 31.5% vs. est. 33.5%; guides Q3 below views as well
·      Hawaiian Holdings (HA) reports August traffic up 2.8% year-over-year; RPMs in August were up 1.0% and ASMs down 1.1% compared with August 2016; load factor was 86.2%, up 1.8 points
·      National Beverage (FIZZ) Q1 EPS 82c/$260M vs. est. 75c/$248.91M
·      REV Group (REVG) Q3 adjusted EPS 33c/$595.6M vs. est. 31c/$619.08M; backs FY17 revenue view $2.3B-$2.4B (est. $2.31B) and backs FY17 adjusted EBITDA view $157M-$162M
·      Tailored Brands (TLRD) Q2 EPS $1.19 (with gain) on sales $850.8M vs. est. 88c/$868.3M; raises FY17 adjusted EPS view to $1.65-$1.85 from $1.60-$1.90 and said continues to expect comparable sales for Men’s Wearhouse to be down low-single digits
·      Zumiez (ZUMZ) shares rose 15%; Q2 EPS loss (2c)/$192.2M vs. est. loss (6c)/$192.1M; Q2 comp sales increased 4.7% and August comps rose 7.4%; sees Q3 EPS 43c-48c on revs $236M-$241M vs. est. 43c/$228.2M and sees Q3 comparable sales growth between 4%-6%
·      Chipotle (CMG) downgraded to underperform from market perform at Cowen and lower tgt to street low $250 from $370 saying that CMG is prioritizing improving in-store operations over unit growth and that co.’s 2018-unit growth targets may estimates
·      Southwest Airlines (LUV) said August traffic was up 5.3%; reported that its Aug. capacity was up 4.9% and reaffirmed forecast for 3Q RASM
·      Hackers used a website vulnerability to breach credit-reporting firm Equifax Inc. (EFX), possibly accessing personal data from up to two-thirds of the adult population of the U.S. The hackers had access from mid-May until July of this year, and the breach may have compromised data from 143M Americans including Social Security numbers, driver’s license numbers and credit cards
·      After Equifax Inc. (EFX) discovered a massive data breach that may have endangered the personal information of up to two-thirds of Americans, but before the company divulged the information, three executives sold their Equifax stock, according to SEC filings
·      Redfin (RDFN) Q2 EPS 6c/$104.9M vs. est. 6c/$104.78M; said market-share growth accelerated in the second quarter, in part because so many people have been visiting our website; sees Q3 revenue $108.5M-$110.5M vs. est. $107.05M
·      BCB Bancorp (BCBP) files to sell $40M in common stock
·      Global Payments (GPN) files to sell 6.36M shares of common stock for holders
·      Kura Oncology (KURA) announced positive topline results from a Phase 2 trial for its lead product candidate, tipifarnib, in patients with HRAS mutant relapsed or refractory squamous cell carcinomas of the head and neck, HNSCC; Phase 2 trial achieved its primary endpoint prior to the completion of enrollment
·      Kaman Corporation (KAMN) announced a restructuring plan resulting from its ongoing effort to improve capacity utilization and operating efficiency to better position the company’s AeroSystems business for increased profitability and growth; announces restructuring, sees $8M-$10M in pretax charges
Industrials & Materials
·      Amcor is weighing an acquisition of rival Bemis (BMS) Bloomberg reported, citing people familiar with the matter. Amcor is working with advisers to explore an offer for the packaging company, which has a market valuation of approximately $4.3B
·      Sealed Air Corporation (SEE) announced that Jerome Peribere, CEO and president, has advised the company’s board of his intent to retire at the end of December
·      Mueller Water (MWA) announced its strategic reorganization plan designed to accelerate its product innovation and revenue growth
·      Kratos Defense (KTOS) 14M share Secondary priced at $12.25
Technology, Media & Telecom
·      Finisar (FNSR) shares fell -7%; Q1 EPS 40c/$341.8M vs. est. 40c/$341.2M; Q1 adjusted gross margin 34.9%; sees 2Q revenue $322M-$342M on EPS 27c-33c, below est. $369.2M-50c (shares of other optical makers such as LITE, OCLR, AAOI moved after the close)
·      Verifone (PAY) Q3 EPS 36c/$467M vs. est. 36c/$464.23M; sees Q4 adjusted EPS 43c on revs $470M-$473M vs. est. 46c/$474.68M; cuts FY17 adjusted EPS view to $1.30 from $1.32-$1.34 while raises FY17 revenue view to $1.864B-$1.867B from $1.861B-$1.866B
·      Bazaarvoice (BV) Q1 EPS 4c/$52.2M vs. est. 0c/$49.86M
·      Cloudera (CLDR) Q2 EPS loss (17c)/$89.8M vs. est. loss (25c)/$85.46M; sees FY18 EPS loss (95c)-(93c) on revs $355M-$360M vs. est. loss ($1.05)/$347.91M
·      SAIC Inc. (SAIC) Q2 EPS 80c/$1.08B vs. est. 90c/$1.08B; results for Q2 reflect near term margin challenges but positive forward indicators are encouraging as the company executes its long-term strategy in alignment with market demands
·      Sigma Designs (SIGM) Q2 EPS loss (23c)/$39.5M vs. est. loss (19c)/$39.63M
·      Okta (OKTA) Q2 EPS loss (16c)/$61M vs. est. loss (26c)/$55.9M; sees Q3 adjusted EPS loss (25c)-(24c) on revs $62M-$63M vs. est. loss (29c)/$60.33M; raises FY18 EPS view to (98c)-(95c) from ($1.15)-($1.11) and raises FY18 revenue view to $243M-$245M from $233M-$236M
·      Tintri (TNTR) Q2 EPS loss (91c)/$34.9M vs. est. loss (93c)/$35.68M; sees Q3 adjusted EPS loss (81c)-(77c) on revs $36M-$37M vs. est. loss (79c)/$42.82M
·      SoftBank has announced it is looking to raise new dollar and euro bonds, with the Japanese telecoms and technology group scheduling an investor call for Friday afternoon – Financial Times
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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