Morning Preview: July 25, 2018

Terrie AmengualDaily Market Report

Early Look

Wednesday, July 25, 2018

U.S. stock futures are struggling for direction, as markets brace for another round of corporate earnings as well as prepare for a key trade-related meeting between President Donald Trump and European Union chief Jean-Claude Juncker. President Donald Trump said that the U.S. and the European Union should drop all tariffs, barriers and subsidies, as the EU trade chiefs set to present him with proposals in that direction in a crunch meeting at the White House later Wednesday. “I have an idea for them. Both the U.S. and the E.U. drop all Tariffs, Barriers and Subsidies!” Trump said in a Tuesday night tweet. In addition to the talks with the EU, NAFTA talks are expected to resume this week as Canadian Foreign Affairs Minister Chrystia Freeland will discuss NAFTA on Wednesday when she meets in Mexico City with officials from the incoming and outgoing Mexican administrations. On Thursday, Mexican Economy Minister Guajardo is traveling to Washington to discuss the status of Nafta talks with U.S. Trade Representative Robert Lighthizer. Several macro factors which will likely play a role in currencies and bond market moves over the next day along with the busy quarterly earnings results. In Asian markets, The Nikkei Index rose 103 points to settle at 22,614, the Shanghai Index slipped -1 point to 2,903 and the Hang Seng Index gained 258 points to settle at 28,920. In Europe, the German DAX is down about -30 points at 12,660, while the FTSE 100 is down around -40 points at 7,665. In stock news, markets closely watching the results of the NXPI/QCOM merger ahead of today’s deadline approval.

Yesterday, Bonds edged slightly higher with the 10-year Treasury note yield slipping 1.5 bps to 2.949%, a day after marking its largest one-day rate jump since June 1 and hitting a six-week high. Meanwhile, the 30-year bond yield fell 2.4 bps to 3.077%, following its largest rate climb since May 15 and hitting a roughly six-week rate peak. Meanwhile, the 2-year note yield touched 10-year highs above 2.64%.

Market Closing Prices Yesterday

· The S&P 500 Index jumped 13.42 points, or 0.48%, to 2,820.40

· The Dow Jones Industrial Average rose 197.65 points, or 0.79%, to 25,241.94

· The Nasdaq Composite slipped -1.11 points, or 0.01%, to 7,840.77

· The Russell 2000 Index declined -18.22 points, or 1.07% to 1,680.20

Events Calendar for Today

· 7:00 AM EST MBA Mortgage Applications Data

· 10:00 AM EST New Home Sales MoM for June…est. (-3.1%) to 668K

· 10:30 AM EST Weekly DOE Inventory Data

Earnings Calendar:

· Earnings Before the Open: ANTM, AOS, APH, AVX, BA, BSX, CHKP, DAN, DB, EVR, FCX, FCAU, GD, GLW, GM, GRUB, HBAN, HCA, HES, HLT, IR, KDP, LH, LW, NDAQ, NOC, NSC, NYCB, PII, PNR, ROK, SAN SC, SIRI, SIX, SLAB, STM, TEL, TUP, UPS, VOD, WIX, WSO, WM.

· Earnings After the Close: AGNC, ALGT, AMD, CLGX, CTXS, DDR, DLB, ETH, F, FB, FFIV, GILD, IMAX, KNX, LM, LSTR, LVS, MAR, MDLZ, MHK, NOW, PYPL, QCOM, RJF, STAY, V, VAR, VRTX, XLNX

Sector News Breakdown

Consumer

· Hilton (HLT) Q2 EPS 70c/$2.29B vs. est. 70c/$2.47B; Q2 system-wide comparable RevPAR increased 4.0% on a currency neutral basis YoY, driven by U.S. RevPAR growth of 3.5% and international RevPAR growth of 5.9%

· Polaris Industries (PII) Q2 EPS $1.77/$1.50B vs. est. $1.62/$1.45B; raises FY18 adjusted EPS view to $6.48-$6.58 from $6.00-$6.20 (est. $6.53) and raises FY18 sales growth view to 11%-12% from 3%-5%

· iRobot (IRBT) shares rose 21%; Q2 EPS 37/$226.3M vs. est. 18c/$219.74M; raises FY18 EPS view to $2.30-$2.50 from $2.15-$2.40 (est. $2.37) and raises FY18 revenue view to $1.06B-$1.08B from $1.05B-$1.08B (est. $1.07B)

· lululemon athletica (LULU) announced the board has appointed Calvin McDonald to serve as Chief Executive Officer, effective August 20, 2018. For the past five years, Mr. McDonald served as President and CEO of Americas for Sephora

· Hawaiian Holdings (HA) Q2 EPS $1.44/$715.45M vs. est. $1.31/$716.88M; sees Q3 ASMs up 7.5%-9.5% and sees FY18 ASMs up 5.5%-7.5%

· Robert Half (RHI) Q2 EPS 89c/$1.46B vs. est. 85c/$1.43B

· Sergio Marchionne, who combined Chrysler and Fiat, dies aged 66

Energy

· The American Petroleum Institute (API) reported that U.S. crude supplies slid by -3.16M barrels for the week ended July 20, also showed supplies of gasoline fell by -4.87M barrels, while distillate stockpiles slid -1.32M barrels.

· Bloom Energy (BE) 18M share IPO priced at $15.00

· Continental Resources (CLR) prelim Q2 production 284,059 BOE/Day and Q2 avg daily oil production 157k barrels per day, up 25% YoY; 1H of July estimated to have averaged 296k-298k BOE/day; oil production averaged ~166k barrels per day; expects production toward top end of the range for previously stated full year production and 2018 exit rate guidance

· Holly Energy Partners (HEP) said it hired AECOM (AEM) to perform a feasibility study on a potential refined product pipeline from Orla, TX to Midland, TX.

· Superior Energy (SPN) Q2 EPS loss (17c)/$535.5M vs. est. loss (22c)/$534.6M

Financials

· Ameriprise (AMP) Q2 adjusted EPS $3.60/$3.15B vs. est. $3.50/$3.12B; said they continue to generate strong free cash flow that we invest in the business and return to shareholders at a high level

· Chubb (CB) Q2 EPS $2.68 vs. est. $2.62; reports Q2 net premiums written $8B, up 5.7%; P&C current accident year combined ratio excluding catastrophe losses was 88.1% compared with 87.5% prior year; Q2 book value per share growth was hurt by realized and unrealized losses of $407 million after-tax in the firm’s investment portfolio

· Comerica (CMA) raises dividend to 60c, announces $500M repurchase plan

· RenaissanceRe (RNR) Q2 operating EPS $5.23/$479.2M vs. est. $2.94/$562.27M; reported an annualized return on average common equity of 18.6% and an annualized operating return on average common equity of 20.3% in Q2, compared to 15.2% and 10.3%, respectively, in Q2 of last year; 2Q net premiums written $604.5M and 2Q net premiums earned $429.4M

· CoStar Group (CSGP) Q2 non-GAAP EPS $1.66/$297M vs. est. $1.31/$293.65M; sees Q3 non-GAAP EPS $2.02-$2.10 on revs $304M-$307M vs. est. $2.12/$305.85M

· Equity Residential (EQR) Q2 FFO 81c/$639.8M vs. est. 80c/$637.14M; Q2 revenues increased 2.2%, expenses increased 3.2% and NOI increased 1.8%; sees Q3 FFO 81c-85c vs. est. 82c and year $3.22-$3.28 vs. est. $3.21; Residential raises midpoint of FY18 same-store revenue to 2.1% from 1.6% and raises FY18 same-store occupancy view to 96.1% from 96.0%

· Blackstone Mortgage (BXMT) Q2 core EPS 83c vs. est. 66c; Q2 book value per share $27.08

· Chemical Financial (CHFC) Q2 EPS 96c vs. est. 95c; 2Q return on average equity 10.2%, 2Q return on average assets 1.39%, 2Q provision for loan losses $9.57 million

· Navient (NAVI) reports Q2 core EPS 49c vs. est. 47c; 2Q FFELP loans segment core profit $148 million and 2Q FFELP Loans Segment NIM +0.68%

· Sallie Mae (SLM) Q2 core EPS 25c vs. est. 23c; backs FY18 core EPS view of 99c-$1.01 vs. est. $1.02 and backs FY18 private education loan originations view of $5B

· Trustmark (TRMK) Q2 EPS 59c vs. est. 54c; 2Q net interest margin 3.46%, 2Q net charge-offs $1.62 million and 2Q provision for loan losses $3.17M

· United Community Banks (UCBI) Q2 EPS 53c/$130M vs. est. 54c/$133.2M; 2Q return on assets 1.30%

· W. R. Berkley (WRB) Q2 EPS $1.40/$1.91B vs. est. 84c/$1.85B; reports Q2 combined ratio 94.9% vs. 95.1% last year; reports Q2 gross premiums $1.95B vs. $1.89B last year; returns Q2 ROE 13.3% vs. 8.6% last year

Healthcare

· Stryker (SYK) Q2 EPS $1.76/$3.32B vs. est. $1.73/$3.31B; es FY18 adjusted EPS $7.22-$7.27, vs. consensus $7.23; sees FY18 organic net sales growth, which excludes the impact related to adoption of the new revenue recognition standard, to be in the range of 7.0%-7.5%

· Anthem (ANTM) Q2 EPS $4.25/$22.7B vs. est. $4.16/$22.7B; raises FY18 adjusted EPS view to greater than $15.40 per share from prior view was greater than $15.30 per share (est. $15.41)

· Boston Scientific (BSX) Q2 EPS 41c/$2.49B vs. est. 34c/$2.47B; sees FY EPS $1.37-$1.41 vs. est. $1.39

· GlaxoSmithKline Plc (GSK) raised its projection for 2018 profit growth to up 7%-10% this year if no generic competitor to its Advair asthma drug hits the U.S. market, up from as much as 7% view

· Aquestive Therapeutics (AQST) 4.5M share IPO priced at $15.00

· Bluebird Bio (BLUE) 3.385M share Secondary priced at $162.50

· Catalent (CTLT) 9.94M share Secondary priced at $40.24

· Merit Medical (MMSI) files to sell 3.5M shares of common stock

· Verastem (VSTM) files $200M mixed securities shelf

· Veracyte (VCYT) files to sell 5M shares of common stock

Industrials & Materials

· Ingersoll-Rand (IR) Q2 EPS $1.85/$4.36B vs. est. $1.73/$4.21B; raises FY18 EPS to about $5.50 from $5.00-$5.20 and raises FY18 reported revenue growth view to 9.0%-10.0% from 5.0%-5.5%

· Northrop Grumman (NOC) Q2 EPS $3.93/$7.1B vs. est. $3.83/$7.1B and raises year outlook

· Canadian National (CNI) Q2 adjusted EPS C$1.51/C$3.63B vs. est. C$1.38/C$3.57B; sees FY18 adjusted EPS C$5.30-C$5.45 up from prior C$5.10-C$5.25 and vs. est. C$5.25; also boosts year cap-ex view to C$3.5B

· Carlisle (CSL) Q2 EPS $1.87/$1.236B vs. est. $1.62/$1.18B

· IDEX (IEX) Q2 EPS $1.40/$634.4M vs. est. $1.31/$623.24M; raises FY18 EPS view to $5.27-$5.35 from $5.05-$5.20 vs. est. $5.18; raises FY18 organic revenue view to roughly 7%

· Rush Enterprises (RUSHA) Q2 EPS 72c/$1.35B vs. est. 73c/$1.29B

· Waste Connections (WCN) Q2 EPS 65c/$1.24B vs. est. 62c/$1.23B; raises FY18 revenue view to approx. $4.88B from $4.825B (est. $4.9B); sees adjusted EBITDA to be approximately $1.555 billion, or about 31.9% of revenue, as compared to original adjusted EBITDA outlook of $1.55B

· Costamare (CMRE) Q2 EPS 10c/$90.6M vs. est. 8c/$92.94M

Technology, Media & Telecom

· AT&T (T) Q2 adjusted EPS 91c/$39B vs. est. 85c/$39.39B; raises FY18 adjusted EPS view to high end of $3.50 range vs. est. $3.40 and raises FY18 free cash flow view to high end of $21B range; sees FY18 capital investment of roughly $25B

· Texas Instruments (TXN) Q2 EPS $1.40/$4.02B vs. est. $1.32/$3.97B; sees Q3 EPS $1.41-$1.63 on revs $4.11B-$4.45B, vs. est. $1.48/$4.27B

· Benchmark Electronics (BHE) Q2 EPS 30c/$661M vs. est. 30c/$605M; sees Q3 adjusted EPS 28c-36c on revs $610M-$650M vs. est. 36c/$629.45M

· Inphi (IPHI) Q2 EPS 15c/$69.8M vs. est. 13c/$69.72M; sees Q3 EPS 28c-30c on revs $75.5M-$79.5M vs. est. 28c/$77.06M

· Knowles (KN) Q2 EPS 18c/$188.4M vs. est. 14c/$179.9M; sees Q3 EPS 27c-33c on revs $205M-$235M vs. est. 29c/$214.8M

· Manhattan Associates (MANH) Q2 EPS 47c/$141.9M vs. est. 41c/$140.42M

· MKS Instruments (MKSI) Q2 EPS $2.33 vs. est. $2.21; sees 3Q adjusted EPS $1.60-$1.86 on sales $470M-$510M vs. est. $1.98/$522.5M

· Total System Services (TSS) Q2 EPS $1.11/$1.01B vs. est. $1.07/$985.4M; Q2 adjusted Ebitda $345.0M

· Teradyne (TER) Q2 adjusted EPS 59c/$527M vs. est. 49c/$507.51M; sees Q3 adjusted EPS 59c-66c on revs $540M-$570M vs. est. 52c/$518.22M

· Qualcomm (QCOM) is unlikely to get Chinese approval for its NXP Semiconductors (NXPI) purchase by today’s deadline and is making preparations to pay NXPI the $2b termination fee, Reuters said, citing a person close to QCOM, though the person said it was a toss-up whether deal could be approved at last minute

· Ultra Clean Holdings Inc. (UCTT) said it plans to acquire the chipmaker-industry services company Quantum Global Technologies LLC. Under the agreement, Ultra Clean will pay about $342 million in cash for Quantum Global. https://on.mktw.net/2NIcqtP

 

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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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