Morning Preview: June 6, 2018

Terrie AmengualDaily Market Report

Early Look

Wednesday, June 6, 2018

Stock futures are moving higher, lifted by signs of easing trade tensions ahead of a major weekend gathering of global leaders. Reports that Treasury Secretary Steven Mnuchin reportedly urged President Donald Trump to exempt Canada from metals tariffs at a meeting Tuesday helping sentiment. That adds to a report Wednesday that China had offered to buy some $70 billion of U.S. goods to get the Trump administration to cool its tariff threats. Leaders of the Group of Seven nations will likely discuss trade as they hold talks in Canada on Friday and Saturday. U.S. stocks closed mixed on Tuesday, with the Nasdaq Composite notching a record for a second straight day, as large technology stocks advanced. Gains in consumer discretionary, materials and technology sectors slightly overshadowed losses in financials, utilities and consumer staples shares to help the S&P 500 index notch a small gain. The Small Cap Russell 2000 index posted another record high, while oil prices bounced off 2-month lows and both gold and bonds advanced. In Asian markets, The Nikkei Index rose 86 points to settle at 22,625, the Shanghai Index inched higher a point to 3,115 and the Hang Seng Index gained 165 points to finish at 31,259. In Europe, the German DAX is up around 50 points at 12,830, while the FTSE 100 is up around 30 points at 7,715. In news overnight, Facebook confirmed it had shared user data with at least four Chinese tech companies, while Tesla CEO Musk said the company was “quite likely” to meet its production goal of 5,000 Model 3 cars per week.

Market Closing Prices Yesterday

· The S&P 500 Index gained 1.93 points, or 0.07%, to 2,748.80

· The Dow Jones Industrial Average fell -13.71 points, or 0.06%, to 24,799.98

· The Nasdaq Composite jumped 31.40 points, or 0.41%, to 7,637.86

· The Russell 2000 Index advanced 11.25 points, or 0.68% to 1,664.63

Events Calendar for Today

· 7:00 AM EST MBA Mortgage Applications Data

· 8:30 AM EST Nonfarm Productivity, Q1-F…est. 0.6%

· 8:30 AM EST Unit Labor Costs, Q1-F…est. 2.8%

· 8:30 AM EST Trade Balance for April…est. (-$49.0B)

· 10:30 AM EST Weekly DOE Inventory Data

Earnings Calendar:

· Earnings Before the Open: BF/B, SCWX, SIG, VRA

· Earnings After the Close: ABM, CLDR, FIVE, GEF, MDB, MIND, OKTA, REVG, SEAC, THO, UNFI, ZS

Other Key Events:

· Macquarie Global Metals & Mining Conference, 6/4-6/6, in NY

· Bank of America Global Tech Conference, 6/5-6/7, in San Francisco, CA

· Baird Global Consumer, Technology and Services Conference, 6/5-6/7, in NY

· REITWeek 2018, 6/5-6/7, in New York

· Jefferies Global Healthcare Conference, 6/5-6/8, in NY

· Deutsche Bank Industrials Conference, 6/6-6/7, in Chicago

World News

· Investor Intelligence poll shows newsletter writers classified as bulls rises for a fourth week; 52.9% reading remains at highest since mid-March; was at 50.0% last week (the 4-week string of gains for bulls is longest since four-week streak from Sept. 20 to Oct. 11 last year); bearish sentiment sinks to 17.7% from 19.2%, at lowest since March 28 and those expecting a correction tumbles a fourth week to 29.4% from 30.8%, remains at lowest since March 21

· Treasury Secretary Steve Mnuchin urged President Donald Trump to exempt Canada from metals tariffs during a trade meeting Tuesday, according to a report by ABC News

Sector News Breakdown

Consumer

· Tesla (TSLA) CEO Elon musk said the company will “quite likely” meet its goal of making 5,000 Model 3 cars in a single week by the end of the month; Musk also signaled Tesla is close to announcing details of a China factory for building cars and batteries, perhaps next month.

· Ollie’s Bargain (OLLI) Q1 EPS 41c/$275.7M vs. est. 37c/$267.9M; Q1 comp sales up 1.9%; raises year EPS to $1.69-$1.72 vs. est. $1.68 and sees FY comparable sales +1% to +2%; sees FY net sales $1.21B-$1.22B vs. est. $1.21B

· NCI Building (NCS) Q2 adjusted EPS 25c/$457.1M vs. est. 18c/$437.91M; sees Q3 revs $525M-$545M vs. est. $505.2M; sees Q3 adjusted Ebitda $56M-$66M

· Southwest Airlines (LUV) flew 11.7b revenue passenger miles in May, up 4.2% y/y; May capacity rose 5.2% to 13.8b y/y and May load factor was 84.6%

Energy

· The American Petroleum Institute (API) reported that U.S. crude supplies fell by 2 million barrels for the week ended June 1; data also showed a rise of nearly 3.8 million barrels in gasoline stockpiles, while inventories of distillates fell 871,000 barrels

· Devon Energy (DVN) to sell ownership interests in EnLink Midstream Partners (ENLK) and EnLink Midstream LLC (ENLC) to Global Infrastructure affiliate for $3.125B; DVN boosts repurchase plan by $1B

Financials

· FXCM Group reports May 2018 trading metrics from continuing operations: Customer trading volume 15% higher vs April and 0.5% lower y/y; Average customer trading volume/day 6% higher vs April and 1% lower y/y; Average client trades/day up 2% vs April; Active accounts down 0.1% vs April 30, and down 14% y/y

Healthcare

· VBL Therapeutics (VBLT) announces knockout of MOSPD2 can reduce metastasis by up to 95%; data shows MOSPD2 is needed for directional movement of tumor cells and some immune cells, and therefore appears to play a central role in both oncology and inflammation

· ImmunoGen (IMGN) files to sell 12M shares of common stock

· Madrigal Pharmaceuticals (MDGL) files automatic mixed securities shelf; to sell $200M of stock, insiders to offer 364K shares

· Ionis Pharmaceuticals, Inc. (IONS) said it closed its expanded strategic collaboration with Biogen (BIIB) to discover and develop novel antisense drugs for a broad range of neurological diseases following receipt of clearance under the Hart-Scott-Rodino (HSR) Antitrust Improvements Act of 1976. Biogen paid Ionis $1 billion in cash

Industrials & Materials

· Covenant Transportation (CVTI) said it sees Q2 EPS 45c-53c vs. est. 38c; says the truckload freight environment has been favorable during Q2-to-date, leading to operating results exceeding the company’s expectations (watch comps JBHT, LSTR, KNX, WERN, WNC, CGI, MRTN, HTLD, USAK)

· Northrop Grumman (NOC) won U.S. antitrust approval to buy solid rocket motor supplier Orbital ATK Inc (OA) with conditions, the Federal Trade Commission said. The $7.8 billion deal was approved on condition that Northrop supply the solid rocket motors to competitors for missile contracts and to separate the two companies’ operations with a firewall,

· United Parcel Service Inc. (UPS) workers voted overwhelmingly to authorize a strike, a negotiating tactic that gives the company’s 280,000 Teamsters members an option to walk out if the current contract talks fail.

· U.S. Steel Corp. (X) said late Tuesday it plans to restart another blast furnace in Granite City, Illinois, and hire more workers.

Technology, Media & Telecom

· Facebook Inc. (FB) shares fall -1%; said it had data-sharing partnerships with four Chinese consumer-device makers, including Huawei Technologies Co., escalating concerns that the social network has consistently failed to tell users how their personal information

· Ambarella (AMBA) shares fall -10%; Q1 EPS 13c/$56.9M vs. est. 9c/$56.14M; Q1 gross margins 61.8%; sees Q2 revs $60M-$64M, below est. $68.2M; sees 2Q adjusted gross margin +59% to +61% vs. Bloomberg estimate +61.3%

· ZTE Corp. signed agreement in principle that would lift U.S. Commerce Dept. ban on buying from U.S. suppliers, Reuters said, citing people familiar. Commerce Dept. spokesman told Reuters “no definitive agreement has been signed by both parties” (was reported late day Tuesday – AAOI, ACIA, LITE, OCLR all get revs from ZTE Corp.)

· Guidewire (GWRE) Q3 EPS 5c/$140.5M vs. est. loss (1c)/$137.4M; sees Q4 EPS 72c-77c vs. est. 74c; raises year EPS to $1.05-$1.11 from 98c-$1.04 and raises year revs to $647M-$653M from $644M-$650M vs. est. $1.01/$648.9M

· Tronc Inc’s (TRNC) top shareholder said in a filing here on Wednesday that it had terminated the sale of a stake in the company after the prospective buyer, investor group McCormick Media, breached its obligations https://reut.rs/2Lry2Jt

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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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