Morning Preview: June 15, 2018

Scott GreenDaily Market Report

Early Look

Friday, June 15, 18

Stock futures are trading lower on this final day of the week, falling as trade war fears were reignited after President Donald Trump approved tariffs between $50 billion and $100B of Chinese goods (citing different reports), as the U.S. ratchets up its trade fight with Beijing. It wasn’t clear when the tariffs would go into effect. Reuters report said that the U.S. is getting ready for a second wave of tariffs on China, having nearly finished a list of levies on $100 billion worth of Chinese goods. That follows the first round of $50-billion tariffs on Chinese goods. Beijing responded to the approval by saying it will impose levies of its own on $50 billion in U.S. products. News out of the Bank of Japan having little effect so far after they stuck to its easing policy, keeping short-term interest rate at minus 0.1% and its target for the yield on 10-year government bonds at around 0%. In Asian markets, The Nikkei Index gained 113 points to settle at 22,851, the Shanghai Index dipped -22 points to finish at 3,021 and the Hang Seng Index fell -130 points to end at 30,309. In Europe, the German DAX is flat around the 13,100 level, while the FTSE 100 is down roughly -50 points at 7,715. There are a few data points today in the U.S. with Empire Manufacturing at 8:30 AM and Industrial Production at 9:15, then Confidence data at 10:00 AM.

U.S. equities ended mostly higher on Thursday, paced by strength in technology shares as the Nasdaq Composite closed back at another record all-time high, while strong retail sales data increased optimism about the strength of the U.S. economy. The euro plunged more than 1.5% as the European Central Bank announced that it plans to end its bond-buying program at the end of the year but pledged to keep rates at present levels until at least next summer. Media companies climbed a second day as the bidding war between Comcast and Disney for 21st Century Fox’s entertainment assets heated up.

Market Closing Prices Yesterday

· The S&P 500 Index gained 6.86 points, or 0.25%, to 2,782.49

· The Dow Jones Industrial Average fell -25.89 points, or 0.10%, to 25,175.31

· The Nasdaq Composite spiked 65.34 points, or 0.85%, to 7,761.04

· The Russell 2000 Index advanced 8.19 points, or 0.49% to 1,684.72

Events Calendar for Today

· 8:30 AM EST Empire Manufacturing for June…est. 19.0

· 9:15 AM EST Industrial Production MoM for May…est. 0.2%

· 9:15 AM EST Capacity Utilization for May…est. 78.1%

· 10:00 AM EST University of Michigan Confidence, June-P…est. 98.5

· 1:00 PM EST Baker Hughes Weekly Rig Count

· 4:00 PM EST Total Net TIC Flows for April

Other Key Events:

· Bank of Japan policy rate decision (Thursday night)

· China new home prices for May

World News

· President Donald Trump approved tariffs on about $50 billion of Chinese goods, people familiar with the decision said, as the U.S. ratchets up its trade fight with Beijing. It wasn’t clear when the tariffs would go into effect.

· The average price of new homes in 70 Chinese cities rose 0.8% in May from the month before, excluding government-subsidized housing

· France’s central bank said it now expects GDP to expand 1.8% this year instead of the 2% it forecast just three months ago.

Sector News Breakdown


· Alaska Air (ALK) cuts outlook for 2Q capacity growth to about 8%, down from prior 8.5% view; cuts year capacity growth outlook to 6.2%-6.5%, had seen about 7.5% in January; sees 2Q RASM down 4%-5% y/y vs prior view for decline of 2.75%-3.75%; said May traffic rose 7.4% y/y; capacity rose 8.8% and load factor decreased 1.1 points to 85.4%

· BorgWarner Inc. (BWA) said financial statement for FY16 and FY15 to be restated citing re-evaluation of accounting for liabilities

· Canada Goose (GOOS) Q4EPC C9c/C$124.8M vs. est. loss C9c/$C77.0M

· Philip Morris (PM) announces the positive results from a new clinical study on IQOS, the company’s most advanced smoke-free product

· Griffon (GFF) 4.855M share Secondary priced at $18.00

· Puxin Limited (NEW) 7.2M share IPO priced at $17.00

Energy & Industrials

· Transocean (RIG) sees non-cash charge about $520M on scrapping rigs; reported that it would retire four rigs: the ultra-deepwater floaters Deepwater Discovery, Deepwater Frontier, and Deepwater Millennium and the midwater floater

· Schnitzer Steel (SCHN) guides Q3 EPS $1.22-$1.28 vs. est. 98c

· Genco Shipping (GNK) has commenced a public offering of common stock; says it plans to use the proceeds for future vessel acquisitions.

· British aircraft-engine maker Rolls-Royce Holdings PLC pledged to boost cash flow even as it grapples with the rising costs of fixing one of its flagship engines powering Boeing Co. (BA) 787 Dreamliners


· Capital One (COF) May Credit Card Charge-Offs 4.72% vs. 5.04% the prior month and reported May credit card delinquencies 3.22% vs 3.33% in April

· JPMorgan (JPM) said May Credit Card Write-Offs 2.56% vs 2.63% the prior month and reports May delinquencies 1.11% vs 1.17% in April

· Brighthouse Financial (BHF) 23.16M share Secondary priced at $44.50

· Synchrony (SYF) reports May net charge-off 5.26% vs. 5.64% last month and reports May 30-plus day delinquency rate 2.73% vs. 2.84% last month

· DDR Corp. (DDR) files automatic mixed securities shelf

· Life Storage (LSI) files automatic mixed securities shelf


· Bluebird Bio (BLUE) says all four patients treated with its gene therapy LentiGlobin and followed for at least three months are making over 30% anti-sickling hemoglobin cells.

· Atara Biotherapeutics (ATRA) announced positive long-term outcomes including durable remissions and encouraging safety findings from two Phase 2 studies of tab-cel, Atara’s most advanced off-the-shelf T-cell immunotherapy

· Verrica Pharmaceuticals (VRCA) 5M share IPO priced at $15.00

· The U.S. FDA said it approved the first generic version of a Suboxone under-the-tongue film for the treatment of opioid addiction. Mylan Technologies Inc., a subsidiary of Mylan (MYL) and drugmaker Dr. Reddy’s Laboratories SA received FDA approval to make the generic

Technology, Media & Telecom

· Adobe (ADBE) Q2 adjusted EPS $1.66/$2.2B vs. est. $1.54/$2.16B; sees Q3 EPS about $1.68 vs. an estimate of $1.61; Q3 views do not include Magneto Commerce deal effects; sees 2019 GAAP, Non-GAAP effective tax rates to stabilize at about 14%

· Finisar (FNSR) Q4 EPS 5c/$310.1M vs. est. 12c/$310.0M; Q4 adjusted gross margin +24.7%, vs. estimate +27.6%; sees 1Q revenue $305M-$325M on EPS 10c-16c vs. est. $316.6M/15c; sees 1Q adjusted gross margin +26% to +27%,

· Jabil Circuit (JBL) Q3 core EPS 46c/$5.4B vs. est. 45c/$4.92B; sees Q4 core EPS 56c-80c on revs $5.2B-$5.6B vs. est. 70c/$5.21B; reaffirms EPS Targets for FY18-FY19; authorizes $350M share buyback

· Chinese regulators have approved Qualcomm Inc.’s (QCOM) acquisition of NXP Semiconductors NV (NXPI), according to a report from the South China Morning Post, which would knock over the final hurdle to approval for the $44 billion deal.

· Systemax (SYX) declares special dividend of $1.00 per share

· Verisign (VRSN) announced that the first quarter of 2018 closed with approximately 333.8 million domain name registrations across all top-level domains, an increase of approximately 1.4 million domain name registrations, or 0.4% YoY

· Avalara (AVLR) 7.5M share IPO priced at $24.00

· Cision (CISN) 12M share Secondary priced at $15.00

· Cognizant (CTSH) launches $600M accelerated share repurchase


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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