Morning Preview: June 25, 2018

Scott GreenDaily Market Report

Early Look

Monday, June 25, 18

U.S. stock futures are trading lower, on track to add to last week’s declines after President Trump made new trade threats over the weekend. Trump called on trading partners to remove their “trade barriers and tariffs or be met with more reciprocity by the U.S.” Oil prices remain pressured, with Brent crude falling below $74 overnight, adding to last week’s losses after the Opec oil cartel agreed this weekend to ramp up oil production by as much as 1m barrels a day. Banks will be in focus again this week after last week, all banks passed the first round of stress tests, showing they were strong enough to withstand a severe downturn and may now receive approval from the Federal Reserve to increase dividends and share repurchase. Results of second round, which take into account planned distributions to shareholders, will be released after markets close on Thursday. Note last week, the Dow snapped an eight-day losing streak on Friday, but it marked its biggest weekly decline since March 23, with a loss of 2%. The S&P 500 and Nasdaq Composite Index fell 0.9% and 0.3%, respectively. The Nasdaq ended a streak of weekly gains at four straight, while the Russell 2000 Index rose for an 8th straight week. In Asian markets, The Nikkei Index dropped -178 points to settle at 22,338, the Shanghai Index fell -30 points to finish at 2,859 and the Hang Seng Index dropped -377 points to end at 28,961. In Europe, the German DAX is down sharply around -180 points at 12,400, while the FTSE 100 is down around -80 points around 7,600.

Market Closing Prices Yesterday

· The S&P 500 Index climbed 5.12 points, or 0.19%, to 2,754.88

· The Dow Jones Industrial Average rose 119.19 points, or 0.49%, to 24,580.89

· The Nasdaq Composite dropped -20.13 points, or 0.26%, to 7,692.82

· The Russell 2000 Index declined -3.37 points, or 0.20% to 1,685.58

Events Calendar for Today

· 8:30 AM EST Chicago Fed Nat Activity index for May…est. 0.30

· 10:00 AM EST New Home Sales MoM for May…est. 667K

· 10:30 AM EST Dallas Fed Manufacturing Activity for June…est. 23.0

World News

· In Turkey, the Turkish lira surrendered the gains it posted in the aftermath of Recep Tayyip Erdogan’s election victory and turned slightly negative. Muharrem Ince, the primary presidential challenger to incumbent Recep Tayyip Erdogan, formally conceded defeat in Turkey’s election

· German business confidence resumed its decline in June as trade risks intensified and economic data remained mixed. The Ifo institute’s closely watched gauge has now fallen for six of the past seven months, as the German Ifo business confidence stood at 101.8 vs 102.3 in May.

· The People’s Bank of China said Sunday it will cut the amount of reserves banks are required to keep with the central bank, which will free up more than $100 billion for commercial banks to boost lending and restructure debt

Sector News Breakdown

Consumer

· Kraft Heinz (KHC) is very interested in buying Campbell Soup (CPB) after the soup and snack company announced last month it was reviewing all aspects of its strategic plans and portfolio composition, the NY Post reported https://nyp.st/2K1HEyx

· Barron’s noted an ominous stat: the 17 stocks added to the Dow Industrials Average index since 1999 have dropped 8% in the year after their inclusion, on average. (The 17 companies removed were almost flat.) Walgreens (WBA) shares are already near a 52-week low, and Barron’s argues the drug store chain’s heyday was a decade or more ago.

· Harley Davidson (HOG) implementing plan to shift production citing retaliatory EU tariffs

Energy

· SM Energy (SM) boosted its 2Q total company production 10.1 MMBoe to 10.4 MMBoe, up from 9.7 MMBoe to 10.1 MMBoe, with about 41% oil in the commodity mix; reaffirmed its 2018 capital spending forecast and overall activity level

· Northern Oil and Gas (NOG) files to sell 108.8M shares of common stock for holders

· South Jersey Industries (SJI) announced that New Jersey Board of Public Utilities approval has been granted to complete the acquisition of New Jersey-based Elizabethtown Gas from Pivotal Utilities Inc., a subsidiary of Southern Company Gas

Financials

· Discover Financials (DFS) files automatic mixed securities shelf

· Senior Housing (SNH) files automatic mixed securities shelf

Healthcare

· Mednax (MD) mentioned cautiously in Barron’s saying the network of medical practices is embroiled in disputes with hospitals, Barron’s says. Hedge fund manager Jim Chanos has recommended shorting the stock because profit may shrink as doctors demand higher pay.

· Array BioPharma (ARRY) announced updated safety and efficacy results, including OS, from the safety lead-in of the Phase 3 BEACON CRC trial evaluating the triplet combination of encorafenib, a BRAF inhibitor, binimetinib, a MEK inhibitor and cetuximab, an anti-EGFR antibody, in patients with BRAFV600E-mutant metastatic colorectal cancer

· Merck (MRK) says the U.S. FDA has accepted for standard review a new supplemental Biologics License Application for Keytruda as adjuvant therapy in the treatment of patients with resected, high-risk stage III melanoma; FDA grants PDUFA date of February 16

· Ironwood Pharmaceuticals (IRWD) presented additional data from an exploratory Phase IIa study of Praliciguat in patients with type 2 diabetes and hypertension during an oral session at the American Diabetes Association’s 78th Scientific Sessions in Orlando, Florida. Praliciguat

Industrials & Materials

· General Electric Co. (GE) is nearing a deal to sell a unit that makes large industrial engines to private-equity firm Advent International for $3 billion or more, people familiar with the matter said, a move that would bring in needed cash https://on.mktw.net/2tu4V1N

· Norfolk Southern (NSC) upgraded to Buy from Neutral at Citi

· Scorpio Tankers (STNG) announced that it has agreed to sell and leaseback two MR product tankers and two LR2 product tankers in two separate transactions to an international financial institution.

· Bombardier (BDRDF) mentioned positively in Barron’s saying it may have more upside after better than doubling from last year. The maker of planes and trains is rolling out new jets, and Goldman Sachs says margins could increase.

· Barron’s noted corn futures are down 9% MTD and soybeans have lost almost 14%, as a trade war between the U.S. and China looms. That may present an opportunity — grain demand is largely inelastic, because the crops are needed for food and fuel, though prices could still fall

Technology, Media & Telecom

· Before AT&T (T) CEO Randall Stephenson set sights on Time Warner, he expressed interest in acquiring CBS (CBS) and met with Shari Redstone, whose family controls the media company, WSJ reports, citing people familiar with the situation https://on.wsj.com/2MVLd75

· Twitter (TWTR) mentioned favorably in Barron’s saying it could be the biggest winner at soccer’s World Cup, which will show off its video-streaming strategy. It could be a catalyst for the stock, which is up 146% over the past year on increased video ad revenue.

· Intel (INTC) downgraded to neutral from buy at Nomura

· Ciena (CIEN) upgraded to Overweight from Equal Weight at Morgan Stanley

· The SEC has completed its investigation into Toshiba’s accounting practices, according to the Japanese industrial group, with no penalty

_______________________________________________________

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.

Live Trading

Open an Account

Paper Trading

Register