Morning Preview: July 09, 2018

Scott GreenDaily Market Report

Early Look

Monday, July 9, 2018


Stock futures in the U.S. are on track for a strong open, helped by strong gains in Asia overnight, with the Chinese Shanghai index rising about 2.5% as investors take a break from trade-related concerns. Stocks closed higher on Friday following the better headline total jobs headline on Friday. Thought he U.S. 10-year Treasury yields fell to their lowest levels in 5-1/2 weeks on Friday after jobs data for June showed that wage pressures were below economists’ expectations, and the Treasury yield curve flattened to its tightest since 2007. After last week’s gains, the Dow is down by 1.1% for the year, while the S&P and tech-heavy Nasdaq have advanced 3.2% and 11%. There are no Fed speakers today or economic data, with news relatively quiet on the trade front, with corporate earnings around the corner, as top banks JPM, WFC and Citi expected to kick things off this Friday.


In Asian markets, The Nikkei Index advanced 264 points to settle at 22,052, the Shanghai Index surged 67 points (2.5%) to settle at 2,815 while the Hang Seng Index jumped 372 points to close at 28,688. In Europe, the German DAX is higher by 30 points at 12,530, while the FTSE 100is up over 20 points around 7,650. In the UK, the British pound rallied following the resignation of Brexit official David Davis. Davis, who until late Sunday had been the minister in charge of negotiating Britain’s exit from the European Union, reportedly said he wanted May to stay on.

Market Closing Prices Yesterday

· The S&P 500 Index jumped 23.21 points, or 0.85%, to 2,759.82

· The Dow Jones Industrial Average rose 99.74 points, or 0.41%, to 24,456.48

· The Nasdaq Composite spiked 101.96 points, or 1.34%, to 7,688.39

· The Russell 2000 Index advanced 14.57 points, or 0.87% to 1,694.05

Events Calendar for Today

· 3:00 PM EST Consumer Credit for May…est. $12.0B

World News

· Secretary of State Mike Pompeo weekend visit in North Korea ended with the country accusing the U.S. of “gangster-like tactics” and increasing the “risk of war,” but saying it retained confidence in President Donald Trump to reach an agreement on denuclearization

· China will continue to overhaul and open up its economy, Premier Li Keqiang said, as trade tensions with the U.S. escalated. “China will focus on keeping its economy stable and improving, irrespective of external shocks,” Mr. Li said Friday

· German exports rose in May compared with April, as U.S. trade tensions with Europe and China continue mounting. The Federal Statistical Office said exports increased 1.8% from the month before, while imports ticked up 0.7%, taking into account seasonal swings and calendar effects.


Sector News Breakdown

Consumer

· Helen of Troy (HELE) Q1 EPS $1.87/$354.7M vs. est. $1.46/$332M; sees FY EPS $7.45-$7.70 vs. est. $7.40; Q1 Ebitda $59.4M vs. est. $48M

· Toll Brothers (TOL) mentioned positively in Barron’s saying shares could climb 24%, according to an RBC Capital Markets analyst saying the company appears significantly undervalued next to its peers after dropping 23% this year

· Nissan (NSANY) has admitted that it falsified exhaust emission and fuel economy data on more than 900 passenger vehicles sold in Japan, marking its second scandal in less than a year.

· Procter & Gamble (PG) downgraded to Hold from Buy at Jefferies and lowered his price target for the shares to $79 from $83

· Havertys Furniture (HVT) Q2 revenue $198.8M vs. est. $195.55M; reports Q2 comp sales up 1.3%

· United Continental (UAL) expects to record a special charge of $105M ($82M net of taxes) related to an expected non-cash impairment associated with its Brazil routes

· Royal Caribbean (RCL) and the cruise industry concerns seem overdone according to Barron’s noting industry bears argue too many ships will come on-line in the next few years, a stronger dollar will hurt sales outside the U.S., that higher fuel prices will trim profits and that Caribbean bookings will be soft as a result of last year’s bad hurricane season…but fears appear overdone


Energy, Materials & Industrials

· AK Steel (AKS) downgraded to hold from buy

· BP PLC (BP) is the front runner to acquire BHP Billiton PLC’s (BHP) U.S. onshore shale oil-and-gas assets and has made an offer worth more than $10 billion, Reuters reports

· Suncor (SU) provided an update on the Syncrude Oil Sands facility following the site wide power disruption on June 20; said prelim investigation results indicate that the cause of the disruption was a transformer trip in Syncrude’s power house resulting in a rapid site wide loss of power and steam generation. As a result, all process units were brought down

· Gold miner Centamin said production fell by 25% in Q2 due to low grades of the metal at its mine in Egypt


Healthcare

· The Trump administration halted billions of dollars in payments to health insurers under the Obamacare healthcare law, saying that a recent federal court ruling prevents the money from being disbursed. The Centers for Medicare and Medicaid Services, which administers programs under the Affordable Care Act, said the action affects $10.4B in risk adjustment payments.

· Cellectar Biosciences (CLRB) treatment of Ewing’s Sarcoma granted FDA orphan status designation by the FDA

· Johnson & Johnson (JNJ) early stage data regarding an investigational mosaic-based preventive vaccine regimen against HIV-1 “elicited a robust HIV antibody response in all healthy volunteers receiving active vaccine,” citing data published in the weekly medical journal, The Lancet


Technology, Media & Telecom

· Groupon (GRPN) shares up 11%; executives have contacted several public companies in the past month to try to drum up interest in acquiring the company, according to Recode. Groupon has made it known for some time to potential acquirers that the company is open to the idea of a sale, but have gotten more aggressive over the last month https://bit.ly/2KGh4v1

· Twitter (TWTR) suspended over 70M accounts in May and June, Washington Post said as Twitter has dramatically escalated its fight against phony and suspicious accounts. Twitter confirmed to the Post that the rate of account suspensions has more than doubled since October

· Baidu (BIDU) upgraded to Overweight from Sector Weight at KeyBanc

· Walt Disney Co.’s (DIS) “Ant-Man and the Wasp” posted a healthy $76 million in the U.S. and Canada, up 33% from the debut of the original “Ant-Man,” which opened to $57 million and went on to collect $180 million at the domestic box office in July 2015

· Photronics (PLAB) announces $20M stock repurchase program

· Univision Communications is exploring a sale of Fusion Media Group as it pursues restructuring following a leadership change, WSJ reports, citing people familiar with the matter

· Tencent Holdings Ltd (TCEHY) has submitted a proposal to the Stock Exchange of Hong Kong to seek a separate listing of its online music entertainment business on a recognized stock exchange in the United States

 

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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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