Morning Preview: July 11, 2018

Terrie AmengualDaily Market Report

Early Look

Wednesday, July 11, 2018

U.S. stock futures sunk, following weakness in Europe and Asia, as the White House late last night said it would assess 10% tariffs on a further $200 billion in Chinese goods adding to the levies on $34 billion in goods last week against Beijing (which retaliated with tariffs of the same amount vs. the U.S.) A final decision on the products to be hit with the new tariffs is expected after a consultation period in late August. The news weighed heavily on stocks around the globe that had shifted its attention to upcoming quarterly earnings results the last few days. China’s Ministry of Commerce said in a statement that the new levies are “totally unacceptable” and that the behavior is hurting not just China, but the whole world. The news sent global bonds higher (yields lower) in addition to the pullback in stocks. Oil prices are down over 2% after Libya indicated it would resume export activities at its eastern ports, helping allay fears over tight global supplies. Libya’s state-run National Oil Corp. lifted force majeure on eastern oil ports on Wednesday after the ports were handed back from an armed faction.

U.S. stocks extended gains to close higher for a fourth session Tuesday as investors turned defensive, snapping up consumer staples and utilities shares while financial shares turned south ahead of big bank earnings later this week. The Russell 2000 fell 0.5% after briefly touching an intraday record, while the S&P 500 index marched to 4-month highs. Treasury prices extend their slide Tuesday, pushing up yields for a second session, after a tepid showing in an auction of short-dated government paper.

In Asian markets, The Nikkei Index dropped -264 points to settle at 21,932, the Shanghai Index plunged -49 points to settle at 2,777 and the Hang Seng Index declined -370 points to end at 28,311. In Europe, the German DAX is down over -175 points at 12,430, while the FTSE 100 is down around -100 points trading just under 7,600.

Market Closing Prices Yesterday

· The S&P 500 Index climbed 9.67 points, or 0.35%, to 2,793.84

· The Dow Jones Industrial Average rose 143.07 points, or 0.58%, to 24,919.66

· The Nasdaq Composite gained 3.00 points, or 0.04%, to 7,759.20

· The Russell 2000 Index declined -8.99 points, or 0.53% to 1,695.62

Events Calendar for Today

· 7:00 AM EST MBA Mortgage Applications Data

· 8:30 AM EST Producer Price Index (PPI) MoM for June…est. 0.2%

· 8:30 AM EST PPI Ex: Food & Energy MoM for June…est. 0.2%

· 8:30 AM EST PPI Ex: Food & Energy YoY for June…est. 2.6%

· 10:00 AM EST Wholesale Inventories MoM for May…est. 0.5%

· 10:30 AM EST Weekly DOE Inventory Data

· 4:30 PM EST Fed’s Williams speaks with Community Leaders in Brooklyn

World News

· The White House said it would issue tariffs on a further $200 billion in Chinese goods, deepening the dispute with Beijing. The new round of tariffs comes on top of two others announced over the last few weeks (most recent $34B in tariffs on Friday)

Sector News Breakdown


· Burberry (BURBY) said Q1 comp sales rose 3% compared with the 4% growth recorded in the same period a year earlier; Q1 revenue was largely unchanged at 479 million pounds ($635.3 million) compared with GBP478 million the previous year.

· E-cigarette maker Juul Labs Inc. has raised $650 million as part of a fundraising round that values the fast-growing but controversial startup at about $15 billion, according to reports – WSJ

· JetBlue Airways Corp. (JBLU) plans to order around 60 CSeries jetliners from Airbus SE (EADSY), Bloomberg reported, in a deal that could be worth up to $5B, saying the carrier had considered upgrading or replacing its fleet of small jets made by Brazil’s Embraer SA rather than purchasing the rebranded CSeries that Airbus took control of on July 1 in a partnership with Bombardier Inc.

· Hawaiian Airlines (HA) said it had over 1.04M guests in June, a record for that month and up 2.9% vs year ago.; said load factor increased 0.2 points to 87.8%; Q2 traffic up 5.7%, with capacity up 6.0%, as Hawaiian had over 3.01m guests during that quarter and Q2 load factor down 0.3 points to 86.3%

· WD-40 (WDFC) Q3 EPS $1.15/$107M vs. est. $1.05/$103.33M; cuts FY18 EPS view to $4.05-$4.10 from $4.07-$4.14 (est. $4.09) and cuts FY18 sales growth view to 6%-8% from 7%-9%; said net sales expected to be between $403M-$411M, down from prior view of $407M-$415M; reports new $75M share buyback plan


· Brent oil prices slumped as Libya’s national oil company lifted supply restrictions after it regained control of key ports from a splinter faction

· The American Petroleum Institute (API) reported U.S. crude supplies fell by -6.8M barrels for the week ended July 6, showed supplies of gasoline down -1.6M barrels, while distillate stockpiles climbed by nearly 2M barrels

· Sempra Energy (SRE) 9.75M share Spot Secondary priced at $113.75


· Franklin Resources, Inc. (BEN) preliminary month-end assets under management of $724.1 billion at June 30, 2018, compared to $732.8 billion at May 31, 2018. The decrease in assets under management was attributable to net market declines and modest net outflows.

· Cohen & Steers (CNS) reports preliminary AUM $602B as of June 30th, an increase of $938M from May 31, 2018. The increase was due to market appreciation of $1.1B and net inflows of $273M, partially offset by distributions of $465M

· Saratoga Investment (SAR) Q1 EPS 61c vs. est. 55c; raised its assets under management to $343.4M, an increase of 0.2% from $342.7M as of February 28, and an increase of 4.1% from $329.7 million as of May 31, 2017

· National Storage (NSA) announces offering of 5.9M shares of common stock


· Pfizer (PFE) said will organize into three businesses creating a new hospital unit and that the changes are not expected to impact 2018 financial guidance

· Pfizer Inc. (PFE) said that it would “defer” some recent drug-price increases, reversing course after President Donald Trump criticized the company. Pfizer faced criticism from President Trump and others after raising the prices of more than 40 drugs last week.

· BioCryst Pharmaceuticals (BCRX) announced that it has terminated the previously announced merger agreement with Idera Pharmaceuticals, Inc. (IDRA) following the BioCryst stockholders’ failure to approve the adoption of the merger agreement at the BioCryst Special Meeting of Stockholders held today

· Assembly Biosciences (ASMB) announces offering of 3M shares of common stock

· CytomX Therapeutics (CTMX) files to sell $125M in common stock

· Natera (NTRA) files to sell $75M in common stock

· Scynexis (SCYX) announced positive results from its Phase 2b, dose-finding study evaluating oral SCY-078 for the treatment of vulvovaginal candidiasis, or VVC

· Reata Pharmaceuticals (RETA) said the European Commission granted orphan drug designation for omaveloxolone for the treatment of Friedreich’s ataxia.

Industrials & Materials

· AAR (AIR) Q4 EPS 54c vs. estimate 51c and reaffirms forecast for the year

· Glencore PLC (GLNCY) said that Non-Executive Chairman Tony Hayward, the former CEO of BP PLC (BP), is heading a new board committee to oversee the company’s response to a subpoena by the U.S. Department of Justice.

· MSC Industrial (MSM) Q3 EPS $1.41/$828.3M vs. est. $1.40/$833.9M; sees Q4 sales $829M-$844M vs. est. $848.7M

Technology, Media & Telecom

· 21st Century Fox Inc. (FOXA) significantly lifted its offer price to consolidate ownership of Sky PLC, heating up a bidding war with Comcast Corp. for the British TV broadcaster. Fox raised its bid for the roughly 61% of Sky it doesn’t already own by more than 30%, to GBP14 a share, in a deal that values all of Sky at GBP24.5 billion ($32.5 billion).

· Nvidia (NVDA) announced a partnership with German car maker Daimler AG (DDAIF) and auto-parts giant Bosch Ltd. to test robot taxis in California.

· Voxx International (VOXX) Q1 sales of $100.9M vs. $114.8M YoY saying the sales decline was expected as expects new programs and product introductions to generate revenue growth in the second half of the year; Q1 operating loss was $5M vs. operating loss of $9.1M YoY

· EXFO (EXFO) Q3 EPS loss (11c) with items on revs $72.2M; IFRS net loss in the Q3 included $4.1M in after-tax amortization of intangible assets, $400,000 in stock-based compensation costs, $900,000 million for acquisition-related fair value adjustment of deferred revenue; sees Q4 revenue $68.0M-$73.0M vs. est. $76.65M

· Analog Devices (ADI) announced that it has signed a collaboration memorandum of understanding with Baidu (BIDU) to jointly advance autonomous driving

· Adesto Technologies (IOTS) 6.7M share Secondary priced at $6.00


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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