Morning Preview: June 26, 2018

Scott GreenDaily Market Report

Early Look

Tuesday, June 26, 18

After global stocks plunged on Monday, with major U.S. averages recording their largest one-day drop in about 2-months, the sell-off seems to have eased for now as traders digest the latest news in trade tensions between the U.S. and China. The pause comes on signs of disagreement within the White House as Treasury Secretary Steven Mnuchin said the investment-control effort could pull in other countries, while White House trade adviser Peter Navarro late Monday played down the idea of immediate investment restrictions, which eased market angst slightly. The market has solely moved on trade issues between the U.S. and its top trading partners (China, EU, Canada) over the last few weeks after President Donald Trump’s latest threats against America’s trade partners, as well as the potential for more regulatory measures targeting China.

U.S. stocks dropped on Monday as the S&P 500 and Nasdaq posted their biggest one-day drop in about two months and the Dow Industrials fell for the 10th time in the last eleven trading session as further threats from the Trump administration against U.S. trading partners weighed on sentiment. Technology and consumer discretionary sectors led yesterday’s losses, while the Dow Jones Industrial Average closed below its 200-day moving average for the first time since June 2016. Stocks pared losses late day after White House trade adviser Peter Navarro tried to ease investor concerns about U.S. trade policy, indicating that a Treasury Department report later this week on American restrictions on Chinese investments won’t be as damaging to growth as markets are anticipating.

In Asian markets, The Nikkei Index inched higher 3 points to settle at 22,342, the Shanghai Index fell -14 points to end at 2,844 and the Hang Seng Index fell -79 points to close at 28,881. In Europe, the German DAX is up around 20 points at 12,300, while the FTSE 100 is up around 30 points at 7,550. The small advance in Europe comes after they closed lower by 2% yesterday for the largest fall in more than 3 months, as the Stoxx Europe 600 Index ended at 377.17, adding to last week’s drop of 1.1%.

Market Closing Prices Yesterday

· The S&P 500 Index dropped -37.81 points, or 1.37%, to 2,717.07

· The Dow Jones Industrial Average fell -328.09 points, or 1.33%, to 24,252.80

· The Nasdaq Composite dropped -160.81 points, or 2.09%, to 7,532.01

· The Russell 2000 Index declined -28.07 points, or 1.67% to 1,657.51

Events Calendar for Today

· 7:45 AM EST ICSC Weekly Retail Sales

· 8:55 AM EST Johnson/Redbook Weekly Sales

· 9:00 AM EST S&P CoreLogic CS 20-City index for April…est. 0.4%

· 10:00 AM EST Richmond Fed Manufacturing Index for June…est. 15

· 10:00 AM EST Consumer Confidence for June…est. 128.0

· 1:00 PM EST Fed’s Bostic speaks in Alabama

· 1:45 PM EST Fed’s Kaplan speaks in Houston

· 4:30 PM EST API Weekly Inventory Data

Earnings Calendar:

· Earnings Before the Open: FDS, INFO, JKS, LEN, SCHN

· Earnings After the Close: AVAV, DTRM, KEQU, SONC

Sector News Breakdown


· Lennar (LEN) reported 2Q revs. $5.46B vs. est. $5.11B, as new orders up 62% vs. Bloomberg est. 55%; gross margin on home sales 16.8%, or 21.6% ex. backlog/construction in progress write-up related to purchase accounting, vs 21.5% y/y

· S&P MidCap 400 constituent Copart (CPRT) will replace Dr. Pepper Snapple Group (DPS) in the S&P 500

· MGM Resorts (MGM) downgraded to Neutral from Buy at Goldman Sachs citing the delays experienced at Park MGM along with a slower than anticipated recovery at Mandalay Bay


· JinkoSolar (JKS) Q1 revs $728M vs. est. $713.1M; Q1 EPS 4.8c and Q1 solar module shipments 2,015 mw while sees 2Q solar module shipments 2.4 to 2.5 GW

· Kinder Morgan Texas Pipeline LLC, a subsidiary of Kinder Morgan, Inc. (KMI), EagleClaw Midstream Ventures, LLC (EagleClaw), a portfolio company of Blackstone Energy Partners, and Apache Corporation (APA) signed a letter of intent for the development of the proposed Permian Highway Pipeline Project, which will provide an outlet for increased natural gas production from the Permian Basin to growing market areas along the Texas Gulf Coast. The approximately $2 billion PHP Project is designed to transport up to 2.0 billion cubic feet per day (Bcf/d) of natural gas through approximately 430 miles of 42-inch pipeline

· Oasis Petroleum (OAS) has signed two separate purchase and sale agreements to sell an estimated 4.4K barrels of oil equivalent per day of net production and approximately 65,000 net acres of non-core assets in the Williston Basin for $283M


· Exelixis (EXEL) will replace Copart (CPRT) in the S&P MidCap 400 effective prior to the open of trading on Monday, July 2

· Bio-Techne Corporation (TECH) said it has reached agreement to acquire Exosome Diagnostics, Inc. for $250 million in cash plus contingent consideration of up to $325 million due upon the achievement of certain future milestones

· Heron Therapeutics (HRTX) files to sell $200M in common stock

· Aerpio Pharmaceuticals (ARPO) files to sell $40M in common stock

· Rocket Pharmaceuticals (RCKT) files $300M mixed securities shelf

· Senseonics (SENS) files to sell $80M in common stock

· Orthofix International N.V., (OFIX) announced the realignment of its strategic business units and the promotion of Brad Niemann to President of Global Orthofix Spine

· Xeris Pharmaceuticals, Inc. (XERS) announced the presentation of positive results from two of its Phase 3 clinical studies on its investigational ready-to-use, room-temperature stable liquid glucagon rescue pen during oral and poster sessions at the American Diabetes Association’s (ADA) 78th Scientific Sessions, June 22-26, 2018.

Industrials & Materials

· Vale SA (VALE) and BHP Billiton Ltd. (BHP), the owners of Brazilian mining company Samarco Mineracao SA, agreed with Brazilian authorities to suspend for two years a 155 billion real ($41 billion) civil claim over the catastrophic 2015 collapse of a tailings dam while talks continue, though markets may have hoped for a final settlement of the suit.

· General Electric (GE) on Tuesday said it plans to spin-off its healthcare unit and also sell its Baker Hughes (BHGE) energy division as the US industrial conglomerate slims down its operations. The company will maintain its dividend through the health spinoff, GE said. After that, the company “expects to adjust the GE dividend with a target dividend policy in line with industrial peers

Technology, Media & Telecom

· Eutelsat Communications (ETL.FR) said Tuesday that it doesn’t plan to make an offer for Inmarsat PLC (ISAT.LN), less than one day after the company said it was evaluating a possible bid. The French satellite company said it reserves the right to announce a firm or possible offer for its U.K. rival

· MercadoLibre (MELI) was upgraded to overweight from sector weight at KeyBanc, more bullish on the company’s prospects in payments after visiting with several FinTech firms

· Intel (INTC) downgraded to Underperform from Market Perform at Bernstein

· Micron (MU) upgraded to Neutral from Sell at UBS

· Lam Research (LRCX) upgraded to Buy from Neutral at UBS



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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