Morning Preview: June 27, 2018

Terrie AmengualDaily Market Report

Early Look

Wednesday, June 27, 2018

U.S. stock futures are lower, giving back all of yesterday’s gains, as global equities sold off on revived fears about a full-scale U.S-China trade war. Asian markets tumbled as the Nikkei Index dipped -70 points to settle at 22,271, the Shanghai Index dropped another -31 points to settle at 2,813 and now down more than 20% from its January high (in correction territory), and the Hang Seng Index plunged -525 points to settle at 28,356. In Europe, the German DAX is up around 20 points at 12,250, while the FTSE 100 is up slightly at 7,540. President Trump showed himself as committed to protectionist policies, though he did back off from tough new curbs on Chinese investment in technology. China’s Ministry of Commerce said Wednesday that is closely watching the U.S.’s plan to restrict Chinese investment as trade hostilities escalate. There was one big deal this morning as Conagra agreed to buy Pinnacle Foods in a $10B transaction. U.S. stocks posted modest gains on Tuesday, in a partial rebound from the previous session’s sharp decline, with technology stocks among the biggest gainers of the day. The Dow Jones Industrial Average closed slightly under its 200-day moving average, which it closed beneath on Monday for the first time in a little less than two years.

Market Closing Prices Yesterday

· The S&P 500 Index gained 5.99 points, or 0.22%, to 2,723.06

· The Dow Jones Industrial Average rose 30.31 points, or 0.12%, to 24,283.11

· The Nasdaq Composite climbed 29.62 points, or 0.39%, to 7,561.63

· The Russell 2000 Index advanced 11.02 points, or 0.66% to 1,668.53

Events Calendar for Today

· 7:00 AM EST MBA Mortgage Applications Data

· 8:30 AM EST Durable Goods Orders, May-P…est. (-1.0%)

· 8:30 AM EST Advance Goods Trade Balance for May…est. (-$69.0B)

· 10:00 AM EST Pending Home Sales MoM for May…est. 0.5%

· 10:30 AM EST Weekly DOE Inventory Data

· 12:15 PM EST Fed’s Rosengren speaks on ethics and economics

Earnings Calendar:

· Earnings Before the Open: GIS, PAYX, UNF

· Earnings After the Close: BBBY, CAMP, FC, IRET, PIR, PRGS, RAD, WOR

World News

· In its Financial Stability Report, the Bank of England noted on Wednesday that the U.K. has announced some steps toward a solution, including a pledge to grant interim permissions if necessary, and highlighted that as yet, the EU hasn’t reciprocated

· Mitt Romney overwhelmingly won the Republican Senate nomination in Utah, beating back a conservative primary challenge in the contest to succeed retiring GOP Sen. Orrin Hatch.

· French consumer confidence unexpectedly fell in June, hitting its lowest level in nearly two years as the confidence indicator sank to 97 from 99 in May, well short of analysts’ expectations of 100 and is the indicator’s lowest reading since August 2016.

· Longtime lawmaker and the head of the Queens Democratic machine, Rep. Joe Crowley, lost his bid for re-election in a stunning upset to 28-year-old political newcomer and liberal activist Alexandria Ocasio-Cortez. Ocasio-Cortez identifies as a Democratic socialist

· Investor Intelligence Poll shows newsletter writers classified as bulls falls a second week, as tumbles to 47.6% — lowest since May 16 — from 52.0% last week, while bears rise to 4-week high 18.4% vs 17.6% last week and those looking for a correction rises to 6-week high 34.0% from 30.4%

Sector News Breakdown


· Conagra Brands (CAG) to acquire Pinnacle Foods (PF) in $10.9 billion cash and stock deal; Pinnacle Foods shareholders will receive $43.11 per share in cash and 0.6494 shares of Conagra Brands common stock for each share of Pinnacle Foods held for a total price of $68. Separately, Conagra Brands (CAG) Q4 EPS 50c/$1.97B vs. est. 44c/$1.93B

· Brunswick Corporation (BC) said that the previously-announced restructuring of Sea Ray and winding down of yacht production will include the termination of about 800 employees; sees restructuring and wind down costs $50M-$60M

· Sonic (SONC) Q3 EPS 52c/$118.3M vs. est. 49c/49c/$118.9M; 3Q franchise comparable sales down (-0.2%), vs. estimate 0% and Q3 system-wide comparable sales also down (-0.2%), estimate 0%; sees FY system-wide comparable sales -1% to 0%; narrows FY18 adjusted EPS view to $1.45-$1.49 from $1.43-$1.50 (est. $1.47)

· Lovesac (LOVE) 3.3M share IPO priced at $16.00


· The American Petroleum Institute (API) reported U.S. crude supplies dropped by -9.2M barrels for the week ended June 22, while showed a rise of nearly 1.2M barrels in gasoline stockpiles, while inventories of distillates rose by 1.8M barrels

· Mozambique expects its first gas mega-project, which a consortium led by Eni is developing, will begin production by 4Q 2022, the government said. Anadarko Petroleum (APC), which plans to build a bigger project costing more than $20 billion, should make a final investment decision by the end of March next year

· Mammoth Energy (TUSK) 4M share Spot Secondary priced at $38.20

· Royal Dutch Shell (RDS/A) has withdrew from the Majnoon oilfield in Iraq and gave its operations to the state-run Basra Oil, according to Reuters, citing Iraqi oil officials

· CNX Midstream Partners (CNXM) 6.5M share Spot Secondary priced at $18.30


· A joint FDA panel has voted against approval for Pain Therapeutics’ (PTIE) Remoxy ER treatment. The two committees voted 14-3 against approval of the drug (oxycodone extended-release CII). The company had gotten a CRL in September 2016 requesting more clinical data. Also watch shares of Durect (DRRX) which licensed Remoxy ER to Pain Therapeutics in December 2002

· Lab companies Quest Diagnostics (DGX) and LabCorp (LH) both downgraded to hold from buy at Deutsche Bank

· AstraZeneca PLC (AZN) and partner Merck (MRK) said that a phase 3 trial of its cancer drug Lynparza showed that the treatment was successful in improving progression-free survival for women with advanced ovarian cancer with a mutation in the BRCA gene.

· Biogen (BIIB) announced Jeffrey Capello, the company’s Executive Vice President and Chief Financial Officer since December 2017 is stepping down (and will serve as Chief Accounting Officer) while Gregory Novino is stepping down as Vice President and Chief Accounting Officer both effective July 11th

· Amicus Therapeutics (FOLD) says it will incorporate the Scientific Advice Working Party (SAWP) feedback on the key elements of the AT-GAA study for Pompe disease

· Community Health Systems (CYH) agrees to sell its 291-bed AllianceHealth Deaconess hospital in Oklahoma City and related businesses, including physician clinic operations and outpatient services, to a subsidiary of Integris Health; financial terms are not disclosed

· Neon Therapeutics (NTGN) 6.25M share IPO priced at $16.00

Industrials & Materials

· Canadian steel producers told lawmakers Tuesday they are already facing lower sales because of U.S. tariffs and warned of more problems ahead should Ottawa escalate its trade row with the U.S. Janco Steel Ltd. said sales to the U.S. plummeted by 60% in June from earlier months after U.S. steel tariffs were imposed on June 1.

· AeroVironment (AVAV) Q4 revs $117.4M vs. est. $116.2M; sees FY revenue $290M-$310M below the $336.8 M est.; Q4 backlog $174.3M

· The European Commission has opened an in-depth investigation into BASF SE’s (BASFY) proposed takeover of Solvay SA’s nylon business, according to a statement

· Boeing (BA) and Safran withdrew a request for the EU to approve their joint venture to design and build auxiliary power units, according to an EU filing

Technology, Media & Telecom

· WWE Corp. (WWE) said it has signed a new 5-year deal for its most prominent wrestling programming, “Monday Night Raw” and “Smackdown,” with USA Network and Fox Sports. The new deal will keep Monday Night Raw on Comcast Corp. (CMCSA) owned USA, while Smackdown Live will air on the Fox broadcast network on Friday nights.

· Leading gaming headset and audio accessory brand Turtle Beach (HEAR) announced another significant partnership as the official audio partner for Australian esports organization Tainted Minds, furthering the company’s global esports expansion


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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