Monday, July 16, 2018
U.S. stock futures are little changed ahead of a busy week of quarterly earnings (BAC, BLK, JBHT report this morning, with NFLX tonight) and key world leader meetings. Oil prices edged down Monday morning, ahead of a highly anticipated meeting between President Donald Trump and his Russian counterpart, Vladimir Putin (price dip comes after Brent fell -2.3% last week and WTI crude -3.8%). The two leaders are expected to discuss arms control, alleged Russian meddling in the U.S. 2016 election and Ukraine. Analysts said the summit will be eyed for any hints that the U.S. sanctions against Russia will be lifted. Recall last Friday, Trump said ahead of the summit that he’s going into the meeting “with low expectations.” There are a few economic data points with monthly retail sales and empire manufacturing at 8:30 AM EST today, but earnings should grab headlines this week. In Asian markets, The Nikkei Index rose 409 points to settle at 22,597, the Shanghai Index fell -17 points to end at 2,814 and the Hang Seng Index inched higher 14 points to end at 28,539. In Europe, the German DAX is up about 20 points at 12,560, while the FTSE 100 is down around -40 points at 7,615.
On Friday, the Nasdaq finishes up less than 0.1%, but enough to notch a fresh all-time high while the Dow closed up 0.4% holding above 25K and the S&P 500 ends up 0.1%, above the round-number level at 2,800. For the week, the Nasdaq posts 5-session advance of 1.8%, while the Dow Industrial recorded a weekly gain of 2.3% and the S&P 500 logs a weekly rise of 1.5%. IN bonds, the difference between two-year and 10-year Treasury yields dropped further this week, hitting its lowest level since August 2007.
Market Closing Prices Yesterday
· The S&P 500 Index climbed 3.02 points, or 0.11%, to 2,801.31
· The Dow Jones Industrial Average rose 94.52 points, or 0.38%, to 25,019.41
· The Nasdaq Composite inched higher 2.06 points, or 0.03%, to 7,825.98
· The Russell 2000 Index declined -3.20 points, or 0.19% to 1,687.08
· 8:30 AM EST Retail Sales MoM for June…est. 0.5%
· 8:30 AM EST Retail Sales Ex: Autos MoM for June…est. 0.3%
· 8:30 AM EST Empire Manufacturing for July…est. 21.0
· 10:00 AM EST Business Inventories for May…est. 0.4%
· Earnings Before the Open: ACI, BAC, BLK, JBHT, LUB
· Earnings After the Close: CDMO, NFLX, RIO
· President Donald Trump prepared to meet Vladimir Putin in Helsinki this morning, in a highly anticipated event scheduled to include 90 minutes in which they will meet one-on-one, with only their respective translators in attendance.
· European Union President Donald Tusk called on Donald Trump to reform the world order rather than bring it down, warning that trade wars can lead to “hot conflicts.”
· China’s economic growth slowed as expected in the second quarter, as the economy grew 6.7% from a year earlier, cooling slightly from the first quarter, the National Bureau of Statistics said
· China industrial output for June matched the slowest growth rate in over two years at 6.0% and missed forecasts centered on 6.5% expansion.
· China’s Ministry of Commerce said on Monday it had filed a complaint to the World Trade Organization over the U.S.’s plans to slap tariffs on another $200 billion of Chinese imports, according to Reuters
Sector News Breakdown
· Hasbro (HAS) downgraded to Underperform from Market Perform at BMO Capital
· Brown-Forman (BF/B) announces $200M share repurchase program
· Scana (SCG) announced that it has increased the size of its board by two members and that two new independent directors, John Bachman and Patricia Galloway, have been elected to the board
· Utility stocks like American Electric Power (AEP), NextEra Energy (NEE) and Xcel Energy (XEL) look like an attractive place for yield hunters right now according to Barron’s
· Bank of America (BAC) Q2 EPS 63c/$22.6B vs. est. 57c/$22.27B
· Deutsche Bank AG (DB) reported Q2 earnings above consensus (one-week ahead of its scheduled earnings) said it sees net income of about 400 million euros ($468 million) and income before income taxes of about 700 million euros, “considerably” above estimates
· BlackRock (BLK) Q2 adjusted EPS $6.66/$3.605B vs. est. $6.55/$3.59B; 2Q iShares net inflows $17.81 billion vs. $34.65 billion q/q; 2Q long-term inflows $14.50 billion vs. $54.63 billion q/q; 2Q net inflows $20.02 billion vs. $56.95 billion q/q; 2Q retail net inflows $5.50 billion vs. $16.69 billion q/q
· American Express (AXP) June write-off rate 2.0% vs. 2.2% last month and reports June 30 days past due loans 1.3% vs. 1.3% last month
· JPMorgan (JPM) June Credit-Card Charge-Offs 2.39% vs 2.56% Mom: while June delinquencies 1.11%
· Indivior PLC (INDV.LN) a U.S. court has granted the company a preliminary injunction against Dr. Reddy’s Laboratories Ltd. over a product that treats opioid dependence
· Cellectar Biosciences (CLRB) announces 1-for-10 reverse stock split
Industrials & Materials
· Arconic (ARNC) has received takeover interest from private-equity firms, including Apollo Global Management (APO), the Wall Street Journal report, citing people familiar with the matter. A deal for the aerospace parts maker could be worth over $10B
· General Electric Co.’s (GE) aviation arm head, David Joyce, said he expects to book more than $15 billion in deals at the Farnborough Air Show taking place this week outside London
· The Pentagon said Sunday that it had reached a multi-billion-dollar “handshake deal” with Lockheed Martin Corp. (LMT)on buying the next batch of F-35 combat jets after months of wrangling over price and other terms.
· U.S. soybean futures slid to fresh lows on Friday and the most-active contract closed at the lowest in nearly a decade after a government report reinforced concerns that the trade dispute with China will dent exports and lead to a build-up in stocks.
· Ryder (R) raises quarterly dividend to 54c from 52c per share
Technology, Media & Telecom
· ZTE Corp surged more than 12% in Hong Kong after the U.S. lifted a ban on American companies selling parts to the telecommunications equipment maker that had crippled its business
· Apple’s (AAPL) next iPhone may debut something called the “eSIM” according to Barron’s, which could have very big implications for AT&T (T), Verizon Communications (VZ), Sprint (S) and T-Mobile (TMUS). The eSIM is not a card, but a chip that can be soldered to the circuit board of the phone at the factory,
· The U.S. House Judiciary Committee will hold a hearing on Tuesday to take testimony from Facebook (FB), Alphabet (GOOGL) YouTube unit and Twitter (TWTR) on whether social media companies are filtering content for political reasons
· Now might be the time to position for a rebound in Alibaba Group Holding (BABA) shares, according to Barron’s, with the company due to report earnings in August. MKM Partners derivatives strategist suggests purchasing a call option targeting $200, while simultaneously selling one targeting a breach of $220