Morning Preview: August 06, 2018

Scott GreenDaily Market Report

Early Look

Monday, August 6, 18

After a week of gains, major U.S. stock futures are pointing to a slightly as markets prepare for another very busy week of corporate earnings and remain leery of any trade related issues between the U.S. and its counterpart trading rivals. Last week, the Dow, S&P 500 logged their 5th straight weekly gain (longest win streak since November 2017) while the Nasdaq Comp booked a 1% weekly rise. On Friday, the S&P 500 and Dow ended the session with 0.5% gain while the Nasdaq eeked out a 0.1% rise. On Friday, China announced tariffs on $60 billion of U.S. products, in response to the U.S.’s planned 25% tariffs on $200 billion of Chinese imports. On Sunday, President Donald Trump tweeted that tariffs are “working big time.” The headlines continue to keep markets on edge. Overnight, data showed German manufacturing orders plunged 4% in June, showing the potential impact of the global trade. In Asian markets, The Nikkei Index slipped -17 points to settle at 22,507, the Shanghai Index declined -35 points to end at 2,705 and the Hang Seng Index rose 143 points to end at 27,819. In Europe, the German DAX is up over 40 points at 12,660, while the FTSE 100 up around ten points at 7,670. There are no major U.S. economic data points today after a very busy week last with the jobs data and FOMC meeting.

Market Closing Prices Yesterday

· The S&P 500 Index gained 13.13 points, or 0.46%, to 2,840.35

· The Dow Jones Industrial Average rose 136.42 points, or 0.54%, to 25,462.58

· The Nasdaq Composite climbed 9.33 points, or 0.12%, to 7,812.01

· The Russell 2000 Index declined -8.73 points, or 0.52% to 1,673.37

Events Calendar for Today

· No major economic data

Earnings Calendar:

· Earnings Before the Open: BID, CAH, CRNT, CTB, JEC, SEAS, TSN

· Earnings After the Close: ANDV, ANDX, ANSS, BHF, BRKS, CMP, ETSY, FIVN, HTZ, IMI, MAR, NCMI, NPTN, PI, RNG, RPD, SREV, THC, TWLO, WTW, ZG

World News

· German manufacturing orders plunged in June, led by a sharp drop in demand from outside the eurozone, as the economics ministry said that total manufacturing orders dropped 4.0% compared with May (vs. estimate for a -0.5% drop)

· Venezuela’s President Nicolas Maduro is unharmed after a drone carrying explosive charges detonated near a stage where he was speaking during a military parade in Caracas on Saturday

· Saudi Arabia suspended diplomatic ties and new trade dealings with Canada in response to Canada’s call for the release of women’s rights activists. Saudi Arabia recalled its ambassador to Ottawa and ordered the Canadian envoy to Riyadh to leave within 24 hours.

· An economic recession doesn’t necessarily have to hit the U.S. in the next two or three years, says St. Louis Federal Reserve President James Bullard

Sector News Breakdown

Consumer

· Newell Brands (NWL) Q2 EPS 82c/$2.2B; sees 2018 normalized EPS $2.45-$2.65, which adjusts for estimated negative 20c/share impact in 2H related to divestiture of Waddington and Rawlings

· LGI Homes (LGIH) announced 538 homes closed in July 2018, compared to 591 home closings in July 2017; ended the first seven months of 2018 with 3,597 home closings, a 25.6% increase over 2,863 home closings during the first seven months of 2017

· SeaWorld (SEAS) Q2 EPS 26c/391.9M vs. est. $369.2M; Q1 change in attendance up 4.8%

Energy

· Kosmos Energy (KOS) announced that the company has entered into an agreement to acquire Deep Gulf Energy, or DGE, a deepwater company operating in the Gulf of Mexico, from First Reserve

· Devon Energy (DVN) upgraded to Buy from Neutral at UBS

Financials

· Berkshire Hathaway (BRK/A) Q2 operating earnings $6.89B vs. $4.12B last year; Q2 net earnings of $12B from $4.26B in the year-earlier period; book value per Class A equivalent share was $217,677; insurance float was approximately $116B, an increase of $2B since year-end 2017

· Synchrony Financial (SYF) mentioned positively in Barron’s saying after shares fell 9% over the past two weeks shares looks attractive, especially considering that the company’s loan-loss reserves are moderating, boosting profitability

· Higher operating expenses continued to bite at HSBC’s (HSBC) profitability in the first half of 2018 as the bank invested in its retail and investment banking operations

· Wells Fargo (WFC) said that “An internal review of the company’s use of a mortgage loan modification underwriting tool identified a calculation error that affected certain accounts that were in the foreclosure process between April 13, 2010, and October 20, 2015, when the error was corrected

Healthcare

· Barron’s said the gene-editing technology space called CRISPR has worked such wonders in laboratories that Wall Street values the technique’s three pioneers at a collective $5B. However, a concern ran through Crispr Therapeutics (CRSP), Editas Medicine (EDIT), and Intellia Therapeutics (NTLA) shares after a few scientific studies raised concerns that gene-editing therapy might have serious side effects. The CRISPR crew said the studies were false alarms, and diagnostics suppliers like Roche (RHHBY), Thermo Fisher Scientific (TMO), Illumina (ILMN), and Qiagen (QGEN) are keeping a close eye on CRISPR Barron’s said

· Regeneron Pharmaceuticals, Inc. (REGN) and bluebird bio, Inc. (BLUE) announced a collaboration to apply their respective technology platforms to the discovery, development and commercialization of novel immune cell therapies for cancer; REGN to make $100M investment

· Gilead’s (GILD) Genvoya approved by China National Drug Administration for treatment of HIV-1 infection.

· BioCryst (BCRX) announced that the company has been granted Fast Track Designation by the U.S. FDA for BCX7353 for the prevention of angioedema attacks in patients with hereditary angioedema

· Intercept (ICPT) upgraded to Buy from Sell at Goldman Sachs

· Tesaro (TSRO) downgraded to Neutral from Buy at Bank America

· Pacira (PCRX) downgraded to Neutral from Buy at Bank America

Industrials & Materials

· Linde (LNEGY) and Praxair (PX) $42B merger is facing an unexpected hurdle from the U.S. antitrust regulator that could derail the deal, according to Bloomberg. The Federal Trade Commission indicated it wants the companies to sell more assets before it approves the deal, the report noted

· Boise Cascade (BCC) Q2 EPS $1.06/$1.41B vs. est. $1.06/$1.31B;

· Colfax (CFX) Q2 EPS 61c/$925.29M vs. est. 52c/$940.49M; raises FY18 adjusted EPS view to $2.15-$2.30 from $2.05-$2.20 (est. $2.13) and expects its seasonally highest profits in the Q4

· Air Lease (AL) initiates sale of a portfolio of 18 aircraft to Thunderbolt II Aircraft Lease.

· Jacobs Engineering (JEC) Q3 EPS $1.35/$4.16B vs. est. $1.20/$3.99B; sees year EPS $5.00-$5.40 vs. est. $5.05

Technology, Media & Telecom

· Apple (AAPL) shares hit a milestone this week as the company became the first in the U.S. with a market capitalization exceeding $1 trillion. Some investors might see that as a signal to take profits, but shares may have more room to run according to Barron’s

· CBS Corp, (CBS) cautious mention in Barron’s noting CEO Moonves has been accused of sexual harassment, and his sudden vulnerability is reason enough to be wary of the stock. While CBS stands to grow earnings faster than its TV peers, the shares trade at depressed levels, a situation made worse by its CEO’s me-too moment

· Taiwan Semiconductor Manufacturing Co. (TSM) says virus attack suffered on Aug. 3 will cause shipment delays and additional costs, according to an emailed statement Sunday, but said expects a full recover on Monday

· Applied Materials (AMAT) upgraded to Outperform from Market Perform at Cowen

· Qualcomm (QCOM) upgraded to Outperform from Market Perform at Cowen

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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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