Morning Preview: August 21, 2018

Scott GreenDaily Market Report

Early Look

Tuesday, August 21, 2018

Stock futures are pushing higher, extending the recent market uptrend following three straight days of gains and with major indexes near records. Helping markets early are comments out of China as the Peoples Bank of China (PBOC) says China won’t use yuan rates as a tool in trade tensions, while saying will make policies more forward looking, flexible & effective and will step up policy co-ordination. The commentary helping push Asian markets higher along with the U.S. At current levels, the S&P is less than 0.6% below all-time highs while the Nasdaq is 1.4% below its record, while the Dow is 3.2% under its own record. The Russell SmallCap 2000 is only a few points away from its record close and the Dow Transports also approaching all-time bests. Homebuilders get a lift early after Toll Brothers (TOL) reported stronger quarterly results. Investors now turn their attention to upcoming news from the Federal Reserve as the minutes from the central bank’s latest meeting will be released on Wednesday, and on Friday, Fed Chairman Jerome Powell will give a speech at the Fed’s annual summer retreat in Jackson Hole (along with other central bankers). In Asian markets, The Nikkei Index gained 20 points to settle at 22,219, the Shanghai Index jumped 35 points (1.3%) to settle at 2,733 and the Hang Seng Index rose 154 points to close at 27,752. In Europe, the German DAX is up around 70 points above the 12,400 level, while the FTSE 100 is down a few points at 7,580.

U.S. stocks gained on Monday, rising for a 3rd day as S&P 500 index neared its all-time high ahead of potential major events scheduled this week, including the Jackson Hole central bankers meeting this week which may shed light on the outlook for the global economy and monetary policy. There were also broad dollar index declines after President Trump said he expected Jerome Powell to be a cheap-money Fed chairman while 10-year yields fell after Jeffrey Gundlach warned of a short squeeze in Treasuries. The 10-year Treasury note yield slid 5.1 basis points to 2.823%, its lowest since May 29.

Market Closing Prices Yesterday

· The S&P 500 Index climbed 6.92 points, or 0.24%, to 2,857.05

· The Dow Jones Industrial Average rose 89.37 points, or 0.35%, to 25,758.69

· The Nasdaq Composite gained 4.68 points, or 0.06%, to 7,821.01

· The Russell 2000 Index advanced 5.75 points, or 0.34% to 1,698.69

Events Calendar for Today

· 7:45 AM EST ICSC Weekly Retail Sales

· 8:55 AM EST Johnson/Redbook Weekly Sales

· 4:30 PM EST API Weekly Inventory Data

Earnings Calendar:

· Earnings Before the Open: COTY, KSS, MDT, TJX, TOL

· Earnings After the Close: KEYS, LZB, PSTG, URBN

Other Key Events:

· EnerCom Oil & Gas Conference, 8/19-8/22, in Denver, CO

· Raymond James SMID Cap Growth Conference in Chicago, IL

· Piper’s 11th Annual MedTech & Diagnostics California Bus Tour, 8/21-8/22

Sector News Breakdown


· Toll Brothers (TOL) shares rise 12%; Q3 EPS $1.26/$1.91B vs. est. $1.03/$1.81B; Q3 home deliveries up 18% to 2,246 units; Q3 backlog value up 22% to $6.48B and backlog units up 13% to 7,100; now estimates it will deliver between 8,100 and 8,400 homes in FY18, compared to previous guidance of 8,000 and 8,500 units; sees FY18 revenue $6.76B-$7.22B vs. est. $7B

· Coty (COTY) Q4 EPS 14c/$2.3B vs. est. 13c/$2.32B; Q4 gross margins 61.9% vs. Bloomberg est. 62.5%; sees year EPS 74c-78c vs. est.

· Hertz Global Holdings, Inc. (HTZ) said CFO Kennedy has resigned to pursue the next chapter of his career.

Energy, Industrial and Materials

· The Trump administration moved to overturn Obama-era environmental rules on power-plant emissions, a long-telegraphed action designed to help coal-burning plants compete with natural gas and other cleaner alternatives as a national energy source

· Lennox (LII) cuts FY18 adjusted EPS view to $8.90-$9.30 from $9.95-$10.35 (est. $10.25) as announced the estimated financial impacts and insurance offsets expected for the company following the tornado that damaged its manufacturing facility in Marshalltown

· Bombardier Transportation (BDRBF) and CD Cargo, the freight subsidiary of Czech Railways, have signed a purchase agreement for up to 50 of the newest generation of BOMBARDIER TRAXX Multi-System1, or MS, locomotives

· BHP Billiton Ltd. (BHP) said fiscal-year net profit fell 37% because of one-time charges, but recorded a 33% rise in underlying profit and a record final dividend; reported a net profit of $3.71 billion for the year through June, down from $5.89 billion in the 12 months prior

· Nordson (NDSN) Q3 EPS $1.61/$581M vs. est. $1.60/$590.9M; sees Q4 EPS $1.38-$1.54 vs. est. $1.53 and Q4 sales down 4% to unchanged

· The Greenbrier Companies, Inc. (GBX) and Watco Companies, LLC have entered an agreement to discontinue their GBW Railcar Services railcar repair joint venture


· A unit of Interactive Brokers Group (IBKR) was hit with a $5.5M fine by a Wall Street regulator for alleged violations of rules involving naked short selling


· Medtronic (MDT) Q1 EPS $1.17/$7.38B vs. est. $1.11/$7.24B; sees year EPS growth up 9%-10% as still sees EPS$5.10-$5.15 vs. est. $5.11

· U.S. Health and Human Services Secretary (HHS) Alex Azar said it was within his agency’s power to eliminate rebates on prescription drug purchases, a key element of the Trump administration’s plan to lower prescription medicine costs – Reuters

· Merck (MRK) said the FDA has approved an expanded label for KEYTRUDA, Merck’s anti-PD-1 therapy, in combination with pemetrexed and platinum chemotherapy for the first-line treatment of patients with metastatic nonsquamous non-small cell lung cancer, with no EGFR or ALK genomic tumor aberrations, based on results of the KEYNOTE-189 trial

Technology, Media & Telecom

· Fabrinet (FB) Q4 EPS 81c/$345.3M vs. est. $75c/$338M; sees Q1 EPS 80c-83c on revs $347M-$355M vs. est. 79c/$348.25M

· Apple Pay (AAPL) is now accepted at all Costco (COST)warehouses in the U.S. at in-store checkouts, MacRumors reports, citing Costco

· Appian (APPN) 2M share Spot Secondary priced at $35.15

· Symantec (SYMC) upgraded to Positive from Neutral at Susquehanna

· Sito Mobile (SITO) Q2 EPS loss (23c)/$8.4M vs. est. loss (15c)/$10.08M; said decrease in YoY total revenue was primarily due to a decrease in the average spend per customer in addition to a decrease in lower margin TV revenue spend

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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