Morning Preview: June 19, 2018

Scott GreenDaily Market Report

Early Look

Tuesday, June 19, 18

Stock futures are down sharply, with the Dow falling as much as over -300 points, as trade concerns ratchet up after President Trump slapped new tariffs on China overnight. President Donald Trump escalated trade tensions with China late Monday, announcing plans for an additional $200 billion that will face an additional 10% in tariffs on Chinese imports, and threatening another $200 billion in tariffs on top of that. The new tariffs are in response to China’s retaliatory tariffs announced after the $50 billion in tariffs that the U.S. put into effect Friday. A spokesperson from China’s Ministry of Commerce said China will have no choice but to take comprehensive measures in response to the U.S.’s trade moves, the state-run Xinhua News Agency reported. Following the response from the U.S., Asian markets came under pressure, with the Nikkei Index falling -401 points (1.77%) to settle at 22,278, the Shanghai Index dropped -114 points (3.78%) to close at 2,907 and the Hang Seng Index plunged -841 points to end at 29,468. In Europe, the German DAX is down over -160 points around 12,650, while the FTSE 100 is down over -30 points under 7,600. Also adding to tensions, the Senate passed legislation on Monday to reinstate a ban on sales of U.S. components to ZTE Group, despite efforts by Trump to spare the Chinese telecommunications company.

Market Closing Prices Yesterday

· The S&P 500 Index dropped -5.91 points, or 0.21%, to 2,773.75

· The Dow Jones Industrial Average fell -103.01 points, or 0.41%, to 24,987.47

· The Nasdaq Composite inched higher 0.65 points, or 0.01%, to 7,747.03

· The Russell 2000 Index advanced 8.55 points, or 0.51% to 1,692.46

Events Calendar for Today

· 7:00 AM EST ECB’s Lane and St Louis Fed Bullard speak in Portugal

· 7:45 AM EST ICSC Weekly Retail Sales

· 8:30 AM EST Housing Starts MoM for May…est. 1.311M

· 8:30 AM EST Building Permits MoM for May…est. 1.35M

· 8:55 AM EST Johnson/Redbook Weekly Sales

· 4:30 PM EST API Weekly Inventory Data

Earnings Calendar:

· Earnings Before the Open: None

· Earnings After the Close: EQH, FDX, LZB, ORCL

Other Key Events:

· Morgan Stanley 11th Annual Shipping Conference, in New York

· JPMorgan Financial Services Conference in New York

· JPMorgan Energy Equity Conference, 6/18-6/20, in New York

· Jefferies Global Consumer Conference, 6/19-6/20, in Nantucket

· Oppenheimer 18th Annual Consumer Conference, 6/19-6/20 in Boston

World News

· North Korean leader Kim Jong Un is expected to arrive in China Tuesday for a two-day trip, just days after his summit with Trump.

· The eurozone’s current-account surplus eased further in April, registering its third-straight monthly decline, as net income from abroad eased to 28.4 billion euros ($32.9 billion) from a revised surplus of EUR32.8 billion in March.

Sector News Breakdown

Consumer

· Colgate-Palmolive Co. (CL) said that it would spend $5 billion to buy back shares

· Housing related stocks upgraded at Citigroup, raising the rating on Beacon (BECN) and Masco (MAS) to buy from hold and upping KB Homes (KBH) and Pulte (PHM) to neutral from sell

· A disgruntled Tesla Inc. (TSLA) employee broke into the company’s manufacturing operating system and sent highly sensitive data to unknown third parties, according to an email Elon Musk sent to staff – Bloomberg

Energy

· Helmerich & Payne (HP) upgraded to Buy from Hold at Jefferies

· First Solar (FSLR) upgraded to Neutral from Underperform at Credit Suisse

· Tellurian (TELL) 12M share Spot Secondary priced at $9.90

Financials

· Jefferies Group (JEF) reports Q2 net earnings of $98Mand total revs $823M

· Intuit (INTU) upgraded to Buy from Hold at Stifel

· Easterly Government Properties (DEA) has agreed to acquire from affiliates of an independent third party a 1,479,762-square foot portfolio of 14 properties, 94% leased to the U.S. Federal Government and 99% leased overall, for a purchase price of approximately $430.0 million

· Easterly Government Properties (DEA) files to sell 15.5M shares of common stock

Healthcare

· Roche Holding AG (RHHBY) agreed to buy the rest of Foundation Medicine Inc. (FMI) it didn’t already own for $2.4 billion; Roche said that it will pay $137 per share in cash, which represents a premium of 29% to Foundation Medicine’s closing price on Monday https://on.mktw.net/2JPxOQ3

· Alexion (ALXN) announced the submission of a Biologics License Application, or BLA, FDA for approval of ALXN1210, the Company’s investigational long-acting C5 complement inhibitor, for the treatment of patients with paroxysmal nocturnal hemoglobinuria, or PNH.

· Biohaven Pharmaceutical (BHVN) and Royalty Pharma announced that Biohaven has sold tiered, sales-based participation rights on future global net sales of products containing rimegepant or BHV-3500 and certain derivative compounds thereof to Royalty Pharma for $100 million

· Rhythm Pharmaceuticals (RYTM) files $150M common stock offering

Industrials & Materials

· Alcoa (AA) said that it will make a $62.4 million payment under an electricity supply agreement for its smelter in Wenatchee, Washington, and will permanently close one of four potlines at the fully curtailed facility

· The U.S. Senate has passed the National Defense Authorization Act banning the transfer of Lockheed (LMT) F-35s to Turkey until the secretary of defense submits a plan to remove Turkey from participation in the program

· Chemours (CC) announced a global price increase of up to 15% for all grades of Vazo, the company’s product line of free radical initiators. The price increase is effective July 1, 2018 or as contracts allow

Technology, Media & Telecom

· Apple (AAPL) suppliers (SWKS, AVGO, QRVO, CRUS) weakened after a report that the company’s chief executive, Tim Cook, had visited the White House last month to warn that imposing tariffs on Chinese goods could hurt the iPhone maker.

· The Senate passed legislation to reinstate a ban on sales of U.S. components to ZTE Corp. in a shot against President Donald Trump, who had taken steps to revive the Chinese telecommunications company. The measure was wrapped in a larger, must-pass defense bill that cleared the Senate on an 85-10 vote Monday

· KKR (KKR) is near a deal to purchase a stake in the telecom towers business of Altice (ATCEY), Reuters reports. Under the terms of the transaction KKR will use its infrastructure fund to buy a minority stake in Altice’s towers subsidiary in France https://reut.rs/2JKMzng

· Verizon (VZ) upgraded to Buy from Hold at Deutsche Bank

· The CEO of AT&T’s (T) newly formed Warner Media unit John Stankey tells Reuters that the company can bring lighter ad loads as part of its new vision for new media entertainment, Reuters reports

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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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