Morning Preview: May 30, 2018

Scott GreenDaily Market Report

Early Look

Wednesday, May 30, 18

U.S. stock futures are pointing to a stronger open, looking to rebound from its worst trading session in over 2-months yesterday, as over the Italian political crisis subsided helped by a better round of Italian bond auctions overnight and better data in the EuroZone. Italian bonds rebounded, with the 10-year yield falling as much as 19 bps as the country successfully sold five- and 10-year bonds. German jobs data also topped estimates. After falling to lowest levels since July on Tuesday, the euro bounced. US bonds also paring recent gains, with the yield on the 10-year back to 2.87% in volatile swings, up more than 10-bps from yesterday lows below 2.76%. Outside of Europe, China hit back at U.S. President Donald Trump’s plan to push ahead with tariffs on $50 billion of Chinese imports despite a recent truce in the trade fight, saying it damages America’s standing. In Asian markets, The Nikkei Index dropped -339 points to settle at 22,018, the Shanghai Index declined -79 points to finish at 3,041 and the Hang Seng Index dropped -427 points to end at 30,056. In Europe, the German DAX is up around 40 points above 12,700, while the FTSE 100 is up a few points around 7,650.

Stocks ended sharply lower Tuesday, with financial and energy stocks leading the declines, as U.S. markets followed European markets lower as political turmoil in Italy sparked fears of new elections that could serve as a referendum on the country’s commitment to the euro. The fears led to heavy bond buying, sending yields lower and in turn crushing bank and insurance related stocks. Cautious comments about Q2 trading from Dow component JP Morgan at a conference yesterday also weighed on sentiment. The Dow Jones Industrial Average dropped nearly -400 points lower (after falling over 500 points earlier).

Market Closing Prices Yesterday

· The S&P 500 Index dropped -31.47 points, or 1.16%, to 2,689.86

· The Dow Jones Industrial Average fell -391.64 points, or 1.58%, to 24,361.45

· The Nasdaq Composite dropped -37.26 points, or 0.50%, to 7,396.59

· The Russell 2000 Index declined -3.28 points, or 0.20% to 1,623.65

Events Calendar for Today

· 7:00 AM EST MBA Mortgage Applications Data

· 8:15 AM EST ADP Employment Change for May…est. 190K

· 8:30 AM EST Gross Domestic Product (GDP) Annualized, Q1-S…est. 2.3%

· 8:30 AM EST Personal Consumption for Q1-S…est. 1.2%

· 8:30 AM EST GDP Price Index for Q1-S…est. 2.0%

· 8:30 AM EST Core PCE QoQ, for Q1-S…est. 2.5%

· 8:30 AM EST Advance Goods Trade Balance, for April…est. (-$71.0B)

· 2:00 PM EST Fed Beige Book released

· 3:00 PM EST Fed to hold Board Meeting to discuss Volker rule changes

· 4:30 PM EST API Weekly Inventory Data

Earnings Calendar:

· Earnings Before the Open: ADI, CHS, CMCO, CSWI, DAKT, DKS, DSW, DXLG, KORS, MOV, ROLL

· Earnings After the Close: BOX, ENS, GES, KEYS, NGL, PVH, QADB, SMTC, TLYS, UHAL

Other Key Events:

· Craig Hallum Institutional Investor Conference, 5/29-5/30 in Minnesota

· Deutsche Bank Financial Services Conference, 5/29-5/30, in New Yok

· Bernstein 34th Annual Strategic Decisions Conference, 5/30-6/1 in New York

· Cowen Tech, Media & telecom Conference, 5/30-5/31, in New York

· KeyBanc Industrials Conference, 5/30-5/31, in Boston

World News

· Investor Intelligence Poll shows newsletter writers classified as bulls rises to 50.0% from 49.1% last week, remains at highest since March 28; the bulls snap streak of below 50% readings recorded in 12 of the prior 14 weeks; those bearish unchanged at 19.2%, remain at lowest since April 11 and those looking for a correction tumble to 30.8% from 31.7% last week

· German jobless claims dropped by 11,000 compared with April, compared to a forecast for a decline of 10,000

Sector News Breakdown


· Polaris Industries (PII) a company focused on motorcycles, all-terrain vehicles and snowmobiles, is now entering motorboat field after agreeing to buy Boat Holdings for $805 million in cash (watch shares of MBUU, MCFT, BC)

· SpartanNash (SPTN) Q1 EPS 55c/$2.39B vs. est. 53c/$2.38B; reaffirms forecast for the year

· Cavco Industries (CVCO) Q4 EPS $2.40/$242.5M vs. est. $1.62; 4Q total factory-built homes sold 4.06 million

Energy & Industrials

· CVR Refining (CVRR) downgraded to Neutral from Buy at Citi

· HighPoint Resources (HPR) files100M share common stock shelf for Fifth Creek Energy

· Heico (HEI) Q2 EPS 55c/$430.6M vs. est. 52c/$425.4M; sees FY net sales change +13% to +14%; sees FY net income growth +30% to +32%

· Safe Bulkers (SB) Q1 EPS 3c/$43.5M vs. est. 2c/$41.7M; sees using cash from operations to further improve its capital structure and deleverage in forthcoming quarters

· The White House’s surprise decision to move forward with tariffs and other sanctions against China threatens to scuttle trade talks scheduled for this weekend, The Wall Street Journal reports

· Columbus McKinnon (CMCO) Q4 EPS 36c/$214.1M vs. est. 49c/$210.64M


· Ocwen Financial (OCN) reports resignation of Michael Bourque as CFO as accepts a position with another financial services company

· Stock-exchange operators Nasdaq Inc. (NDAQ) and Cboe Global Markets Inc. (CBOE) have accused the SEC of exceeding its legal authority with a proposal to limit the rebates they pay traders to attract stock orders and may sue the SEC to block the proposal.


· WellCare Health Plans, Inc. (WCG) announced it has entered into a definitive agreement to acquire Meridian Health Plan of Michigan, Inc., Meridian Health Plan of Illinois, Inc., and MeridianRx, a pharmacy benefit manager (PBM), (collectively, “Meridian”) for $2.5 billion in cash.

· AstraZeneca PLC (AZN) said that the Terranova phase 3 trial of Fasenra, its first respiratory biologic treatment, didn’t meet its primary endpoint of reducing exacerbations in patients who have chronic obstructive pulmonary disease

· T2 Biosystems (TTOO) files to sell 5.65M shares of stock

· Exelixis (EXEL) said the U.S. FDA determined its Cabometyx application is sufficiently complete to permit a substantive review for previously treated advanced hepatocellular carcinoma

Technology, Media & Telecom

· Salesforce (CRM) Q1 adjusted EPS 74c/$3.01B vs. est. 46c/$2.94B; Q1 billings growth 17% vs. est. 12%; sees Q2 adjusted EPS 46c-47c on revs $3.22B-$3.23B vs. est. 52c/$3.11B; raises FY19 adjusted EPS view to $2.29-$2.31 from $2.25-$2.27 (est. $2.13) and raises FY19 revenue view to $13.075B-$13.125B from $12.66B-$12.71B (est. $2.75B)

· HP Inc. (HPQ) Q2 EPS 48c/$14.0B vs. est. 48c/$13.57B; sees Q3 EPS 49c-52c vs. estimate 49c; boosts FY 18 EPS view to $1.97-$2.02, from prior $1.90-$2.00 (est. $1.96); Q2 Personal systems revenue up 14% y/y and Printing net revenue up 11% y/y; said Lesjak, a 32-year veteran, was stepping down as CFO and would take on the role of interim COO until her retirement next year.

· Three new Pokémon video games are coming to Nintendo’s (NTDOY) Switch this year, potentially providing an important boost to sales as the company looks to avoid the kind of thin slate of releases that doomed the Wii U, The Wall Street Journal reports

· Vivendi SA’s (VIVHY) pay-television channel lost its three-decade hold on the broadcasting rights to French soccer


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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