Morning Preview: August 20, 2018

Scott GreenDaily Market Report

Early Look

Monday, August 20, 2018

U.S. stocks futures are pointing to a higher open, tracking European and Asian markets higher amid hopes for an easing trade wars between the U.S. and its foreign trading partners. The S&P 500, Dow and Nasdaq all pointing to a positive open after advances across most Asian equities, though Japan’s gauge bucked the trend. In Asian markets, The Nikkei Index fell -71 points to settle at 22,199, the Shanghai Index gained 29 points to end at 2,698 and the Hang Seng Index jumped 384 points to settle at 27,598. In Europe, the German DAX is higher by around 120 points at 12,330, while the FTSE 100 is up over 30 points around 7,600. The dollar firmed after two days of declines and the 10-year Treasury yield was little changed. Earnings season is now mostly behind us with only one big story overnight in stocks, with beverage giant Pepsi agreeing to buy SodaStream in a $3B deal announced overnight. Another highlight this week will be the Jackson Hole symposium in a meeting of central bankers for clues on monetary policy, and to see whether central bankers can do anything to help bring back stability.

Market Closing Prices Yesterday

· The S&P 500 Index climbed 9.44 points, or 0.33%, to 2,850.13

· The Dow Jones Industrial Average rose 110.59 points, or 0.43%, to 25,669.32

· The Nasdaq Composite gained 9.81 points, or 0.13%, to 7,816.33

· The Russell 2000 Index advanced 7.19 points, or 0.43% to 1,692.95

Events Calendar for Today

· No Economic Data Released Today

Sector News Breakdown


· PepsiCo Inc. (PEP) agreed to buy SodaStream International Ltd. (SODA) for $3.2 billion; PEP will pay $144 a share in cash for the Israeli company, an 11% premium to Friday’s closing price

· Mulberry Group PLC (MUL.LN) warned that its full-year profit will be materially reduced if sales from its concessions in House of Fraser department-stores continue to be affected by the tough U.K. market conditions

· Estee Lauder (EL) Q4 EPS 61c/$3.30B vs. est. 56c/$3.25B; sees year EPS $4.62-$4.71 vs. est. $5.00

· Elon Musk is hoping an investment from Saudi Arabia’s sovereign wealth fund can help take Tesla Inc. (TSLA) private, but it may strike an investment deal with a Tesla rival, according to a report Sunday. The fund, called PIF, is in talks to invest in electric-car startup Lucid Motors Inc., according to Reuters.

· BrightView’s (BV) mentioned positively in Barron’s noting the stock trades for nine times earnings before interest, taxes, depreciation, and amortization estimates for the next 12 months, a 31% discount to commercial service peers and says the company could pursue another $2 billion in acquisitions to double its size

· Barron’s notes that while Walmart’s (WMT) online division is growing like Amazon (AMZN) and sparking big gains for shares, the giant retailer could soon begin exhibiting another Amazon trait, namely increased earnings risk as it sacrifices profit margins for growth; suggests investors should “ring the register and look elsewhere for bargains”

· Wal-Mart (WMT) and Flipkart announced the closing of the agreements for Walmart to become the largest shareholder in the Flipkart

· Nike Corp. (NKE) upgraded to overweight at Piper with $93 target

Energy, Industrials & Materials

· CF Industries (CF), Mosaic (MOS) and Nutrien (NTR) shares got a lift in early August after second quarter earnings but the stocks still have a way to go, according to Barron’s; says fertilizer companies will do quite well, even if their products’ prices do not reach the crazy levels seen in 2008

· AngloGold Ashanti Ltd. (AU) reported a swing to net profit in the 1H of 2018 and said it expected to meet the top end of its production guidance for the full year

· Air Products (APD) announced it has been awarded a long-term onsite contract to supply syngas to Jiutai New Material for their multi-billion-dollar mono-ethylene glycol project in Hohhot, China

· Terex (TEX) upgraded to Neutral from Underperform at Baird


· State Street (STT) mentioned positively in Barron’s saying although it’s the worst performing major bank stock this year, State Street sell-off is overdone as investors digest the deal and the bank resumes buybacks; notes State Street has said it would repurchase as much as $600 million of its shares in the first half of 2019


· Alexion (ALXN) announced that the U.S. FDA has accepted for review the company’s Biologics License Application for approval of ALXN1210, the company’s investigational long-acting C5 complement inhibitor, for the treatment of patients with paroxysmal nocturnal hemoglobinuria

· Roche Holding AG’s (RHHBY) Alecensa cancer drug has been granted marketing authorization in China, the company said Monday. The approval is as a monotherapy treatment for patients with a type of ALK-positive lung cancer

Technology, Media & Telecom

· The U.S. government is trying to force Facebook Inc (FB) to break the encryption in its popular Messenger app so law enforcement may listen to a suspect’s voice conversations in a criminal probe, three people briefed on the case said,

· Barron’s says that Verizon (VZ) has been pretty quiet and, mostly, is just selling phone service, which turns out to be a pretty good business right now. Verizon remains reasonably priced and its shares come with a 4.3% dividend yield

· Black Box (BBOX) announced that it has entered into a definitive agreement to sell its Federal Government IT Services Business to a private equity firm for a cash purchase price of $75M. The buyer has agreed to purchase 100% of the equity interests of the Federal Business on a debt-free, cash-free basis


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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