Friday, June 29, 2018
U.S. stocks are currently higher, looking to build on its gains from Thursday, after reports China eased foreign investment limits, but underlying sentiment remained soft over trade friction concerns as U.S. and Chinese tariffs were set to take effect next week. After falling to fresh two-year lows on Thursday, shares in China rebounded Friday. U.S. futures have pared gains after Axios reported President Donald Trump has repeatedly told top White House officials he wants to withdraw the U.S. from WTO, according to recent reports. The euro climbed against major rivals on Friday, after the European Union reached a deal over the divisive issue of refugees, removing some political risk. U.S. markets are on track for declines this week, while bonds have gained, while both oil prices and the dollar spiking. In Asian markets, The Nikkei Index rose 34 points to settle at 22,304, the Shanghai Index gained 60 points to end at 2,847 and the Hang Seng Index jumped 457 points to settle at 28,955. In Europe, the German DAX is higher by about 150 points at 12,330, while the FTSE 100 is up over 60 points at 7,685. Bitcoin prices dropped below the $6,000 level, falling over 2% to its lowest levels since November.
Market Closing Prices Yesterday
· The S&P 500 Index jumped 16.68 points, or 0.62%, to 2,716.31
· The Dow Jones Industrial Average rose 98.46 points, or 0.41%, to 24,216.05
· The Nasdaq Composite spiked 58.60 points, or 0.79%, to 7,503.68
· The Russell 2000 Index advanced 4.56 points, or 0.28% to 1,645.02
· 8:30 AM EST PCE Core MoM for May…est. 0.2%
· 8:30 AM EST PCE Core YoY for May…est. 1.9%
· 8:30 AM EST Personal Income for May…est. 0.4%
· 8:30 AM EST Personal Spending for May…est. 0.4%
· 8:30 AM EST PCE Deflator MoM for May…est. 0.2%
· 8:30 AM EST PCE Deflator YoY for May…est. 2.2%
· 9:45 AM EST Chicago PMI for June…est. 60.0
· 10:00 AM EST University of Michigan Sentiment, June-F…est. 99.0
· 1:00 PM EST Baker Hughes Weekly Rig Count
· The Senate passed a five-year bill to reauthorize farm programs by a vote of 86-11, though omits controversial food-stamp work requirements passed in the House’s version of the bill. The farm bill, estimated to cost $867 billion over a decade, next moves to a conference between the two chambers to work out before President Trump can sign it into law
· The U.K. economy expanded in Q1 at a faster clip than initially thought, as the Office for National Statistics said the economy expanded 0.2% on the quarter in the first three months of the year, compared with a preliminary estimate of 0.1%.
· Japan’s Industrial output fell 0.2% in May from a month earlier, following April’s 0.5% gain, and was smaller than a 1.1% drop expected by economists
· China’s service-trade deficit widened in May to $27.6 billion from April’s deficit of $24.1 billion, official data showed Friday. The country had a surplus of $25 billion in trade of goods last month, compared with a $29.4 billion surplus in April
· German jobless claims in June fell by 15,000 from May, while Germany’s adjusted jobless rate remained at 5.2%, unchanged from May, and the lowest rate since the beginning of the data series in January 1992
· Brazil’s central bank cut its forecasts for economic growth and increased inflation projections as the economy deteriorated in the second quarter. In its quarterly inflation report released Thursday, the bank forecast gross domestic product growth of 1.6% this year, down from the 2.6% forecast in the March report. In both cases, the figures were in line with market projections.
Sector News Breakdown
· Nike (NKE) Q4 EPS adjusted 69c/$9.79B vs. est. 64c/$9.41B; announces new $15B stock repurchase program; Q4 gross margin up 60bps to 44.7%; Q4 effective tax rate was 6.4%, compared to 13.7% for the same period last year; Q4 North America sales $3.88B, up 3%, Q4 EMEA sales $2.47B, up 24% and Q4 Greater China sales $1.47B, up 35%; raises FY19 revenue growth rate view to high single digits
· KB Home (KBH) Q2 EPS 57c/$1.10B vs. est. 48c/$1.04B; reports Q2 ASP up 4% at $401.8Kand reports Q2 deliveries up 5% at 2.7K homes; said for Q2, produced double-digit revenue growth, expanded our operating margin and significantly improved our profitability; Q2 net orders up 3% at 3.5K; net order value decreased 2% to $1.36B. Ending backlog value grew 3% to $2.24B; narrows FY18 housing revenue view to $4.6B-$4.8B from $4.55B-$4.85B
· Walgreens Boots Alliance (WBA) downgraded to Hold from Buy at Jefferies
· Zillow (ZG) 5.702M share Secondary priced at $57.00
· EQT Corporation (EQT) announced that it has entered into a definitive agreement to sell approximately 2.5M non-core, net acres in the Huron Play located in Southern Appalachia to Diversified Gas and Oil PLC, for $575M cash
· Greenbrier (GBX) Q3 EPS $1.01/$641.4M vs. est. $1.14/$662.19M; said new railcar backlog as of May 31 was 24,200 units with an estimated value of $2.3B and new railcar deliveries totaled 5,600 units for Q3; backs year EPS view and narrows rev outlook
· Several banks announced plans to return capital to shareholders late Thursday after the Federal Reserve released results of its annual stress test.
· J.P. Morgan Chase & Co. (JPM) said it will increase its quarterly dividend to 80c a share from 56c and buy back up to $20.7 billion in stock
· American Express Co. (AXP) said it will hike its quarterly dividend 11% to 39c share and buy back up to $3.4 billion in shares
· Bank of America Corp. (BAC) said it will increase its quarterly dividend by 25% to 15c a share and buy back up to $20.6 billion in shares.
· Citigroup Inc. (C) said it will increase its quarterly dividend to 45c a share from 32c a share and buy back up to $17.6 billion in shares
· Deutsche Bank AG’s (DB) U.S. subsidiary failed on Thursday the second part of the U.S. Federal Reserve’s annual stress tests due to “widespread and critical deficiencies” in the bank’s capital planning controls.
· Wells Fargo & Co. (WFC) said it will increase its quarterly dividend to 43c from 39c a share and buy back up to $24.5 billion in stock
· Capital One Financial Corp. (COF) maintained its quarterly dividend at 40c and said it would buy back up to $1.2 billion in shares.
· Fifth Third Bancorp (FITB) raised its quarterly dividend to 22c from 18c a share, and said it would buy back up to $1.65 billion in shares
· Huntington Bancshares Inc. (HBAN) said it will hike its quarterly dividend 25% to 14c a share and announced up to $1.07 billion in buybacks.
· KeyCorp (KEY) boosted its quarterly dividend 42% to 17c a share and announced up to $1.23 billion in buybacks.
· PNC Financial Services Group Inc. (PNC) said it will hike its quarterly dividend by 27% to 95c a share and buy back up to $2 billion in stock.
· Regions Financial Corp. (RF) said it would raise its quarterly dividend to 14c a share and buy back up to $2.03 billion in shares.
· State Street Corp. (STT) said it will raise its quarterly dividend to 47c from 42c a share and buy back up to $1.2 billion in stock.
· The Fed limited the capital plans of Morgan Stanley (MS) as they hike their quarterly dividend to 30c from 25c and buy back up to $4.7 billion in stock, and also limited Goldman Sachs (GS), which will boost its quarterly dividend to 85c from 80c and announced a $5 billion stock buyback
· California’s attorney general, said Thursday he’ll file a lawsuit against Navient (NAVI) alleging that the student-loan servicer threw roadblocks in the way of borrowers successfully repaying their loans in violation of California law.
· Novartis (NVS) will spin off its Alcon eye-care unit while using proceeds from the $13 billion sale of its stake in a consumer-health joint venture with GlaxoSmithKline Plc to repurchase as much as $5 billion in shares
· Galapagos NV (GLPG) shares declined -7% after the company said that AbbVie Inc. (ABBV) was pulling out of development plans for a potential cystic fibrosis drug. Galapagos announced that AbbVie would not proceed with a previously contemplated study of a combination therapy for cystic fibrosis, and that “Galapagos was reviewing the future of its CF collaboration with AbbVie.”
· Biogen Inc (BIIB) said it would buy additional shares of Samsung Bioepis Co Ltd worth $700 million to raise its stake in the biosimilar company to 49.9%; BIIB previously owned a 5.4% in the company, following a joint venture between the two companies
· Intrexon (XON) 7.479M share Secondary priced at $13.37
Technology, Media & Telecom
· SYNNEX Corp (SNX) said it would buy Convergys Corp (CVG) in a $2.43 billion cash-and-stock deal, paying $26.50 per share offer, which represents a 4% premium to yesterday’s close; deal includes $13.25 per share in cash and 0.1193 SYNNEX common shares
· SYNNEX (SNX) Q2 adjusted EPS $2.38/$4.97B vs. est. $2.30/$4.67B; sees Q3 adjusted EPS $2.42-$2.52 on revs $4.8B-$5B vs. est. $2.56/$4.87B
· Domo Inc. (DOMO) priced its 9.2M shares IPO at $21 a share, near the top of its range of $19-$22 a share range, raising about $193 million
· Verizon Communications Inc. (VZ) said it is shutting down its mobile video unit called Go90. Go90, which was launched in 2015, has cost Verizon hundreds of millions of dollars in content costs and marketing expenses
· 21st Century Fox (FOXA) announced that it has set July 27, 2018 as the new date for the special meeting of its stockholders to, among other things, consider and vote on a proposal to adopt the amended merger agreement with The Walt Disney Company (DIS)and certain of its subsidiaries that was announced on June 20, 2018, which amends and restates the previously announced merger agreement between the company and Disney