Morning Preview: August 27, 2018

Scott GreenDaily Market Report

Early Look

Monday, August 27, 2018

Stock futures are on track to start the week higher, looking to add to record gains for major averages on Friday on this final week of the summer. Stocks are getting a boost on trade hopes amid reports U.S. and Mexican trade negotiators are “hours” away from squaring away bilateral differences on the North American Free Trade Agreement (NAFTA) but work with Canada is likely to stretch into September, a top Mexican official said on Sunday. In addition to trade, Asian markets hot a boost after the People’s Bank of China (PBoc) tweaked the way it sets the currency’s official value each day, a move seen as an effort to curb both outflows from the stock market. In Asian markets higher as the Nikkei Index jumped 197 points to 22,799, the Shanghai Index gained 51 points (1.89%) to close at 2,780 and the Hang Seng Index surged nearly 600 points (2.17%) to settle at 28,271, a 2-week closing high. In Europe, the German DAX is up around 50 points at 12,450, while the FTSE 100 is up around15 points at 7,575. Last Friday, the S&P 500 index finished at a record, snapping a 145-day stretch without notching an all-time high. Meanwhile, the Nasdaq Comp booked a 0.9% advance, posting its first record since July 25 as the stock market advanced as comments from Fed Chairman Powell struck a balanced tone on the outlook for monetary policy and underlined the strength of the U.S. economy. For the week, the S&P rose 0.9%, while the Dow gained 0.5% and the Nasdaq jumped 1.7%.

Market Closing Prices Yesterday

· The S&P 500 Index jumped 17.71 points, or 0.62%, to 2,874.69

· The Dow Jones Industrial Average rose 133.37 points, or 0.52%, to 25,790.35

· The Nasdaq Composite spiked 67.52 points, or 0.86%, to 7,945.98

· The Russell 2000 Index advanced 8.62 points, or 0.50% to 1,725.67

Events Calendar for Today

· 8:30 AM EST Chicago Fed Nat Activity Index for July…est. 0.45

· 10:30 AM EST Dallas Fed Manufacturing Activity for Aug…est. 30.0

Earnings Calendar:

· Earnings Before the Open: AMWD

· Earnings After the Close: HEI, PAHC

World News

· German business sentiment surged in August as companies raised their business outlook, the Ifo Institute said Monday. The Ifo business-climate index jumped to 103.8 in August from 101.7 in July, topping the WSJ estimate of 101.9.

· China’s large industrial firms reported slower profit growth in July, as industrial profit rose 16.2% from a year earlier in July, compared with a 20% on-year growth in June

· Cindy McCain may be named by Arizona Gov. Doug Ducey to fill the U.S. Senate seat vacated by her husband, John McCain, after his death this weekend from brain cancer; the 64-year-old already had been representing the senator at public events

· Japanese Prime Minister Shinzo Abe announced on Sunday his candidacy for a ruling Liberal Democratic Party (LDP) leadership election

Sector News Breakdown


· Tesla (TSLA) – Elon Musk said in a posting on Tesla’s website that he believes the “better path is for Tesla to remain public.” In the posting, Musk says he met with the Tesla board yesterday and they indicated they agreed with him. Among the reasons given were that shareholders Musk spoke with were opposed to the go-private plan.

· L Brands (LB), parent of Victoria’s Secret, mentioned cautiously in Barron’s saying shares continues to weaken, despite a second quarter which topped analyst forecasts as the company slashed its full-year guidance for the second time this year; says investors should not be tempted by L Brands’ “fat yield”

· American Woodmark (AMWD) Q1EPS $2.04/$429M vs. est. $1.92/$428M

· Chipotle Mexican Grill (CMG) downgraded to Underperform from Neutral at Wedbush

· American Eagle (AEO) downgraded to Neutral from Outperform at Wedbush

Energy, Industrials and Materials

· Vivint Solar (VSLR) files $200M mixed securities shelf

· State oil company PDVSA and Shell Venezuela have signed a contract for technical services and supply of materials for natural gas exploitation in the northern Venezuelan state of Monagas

· Amerco (UHAL) announces special cash dividend of 50c per share

· Eclipse Resources (ECR) and Blue Ridge Mountain Resources (BRMR) announced that they have entered into a definitive merger agreement under which Eclipse Resources and Blue Ridge will combine in an all-stock transaction. In the Transaction, Blue Ridge stockholders will receive consideration consisting of 4.4259 shares of Eclipse Resources common stock for each share of Blue Ridge common stock


· CIT Group (CIT) downgraded to equal-weight from overweight at Stephens

· Prologis (PLD) files automatic mixed securities shelf


· Pfizer’s (PFE) tafamidis lowered all-cause mortality by 30% and decreased the rate of cardiovascular-related hospitalizations by 32% for patients with transthyretin amyloid cardiomyopathy in a Phase 3 study comparing the drug to placebo over a 30-month period. (watch shares of ALNY, IONS, AKCA on the news)

· Wright Medical Group N.V. (WMGI) has entered into a definitive agreement to acquire Cartiva, Inc., a private orthopedic medical device company for $435M; raises FY18 revenue view to $812M-$822M from $808M-$820M (est.) citing strong performance of the business in the third quarter to date

· Zimmer Biomet (ZBH) received a Warning Letter from the FDA related to observed non-conformities with current good manufacturing practice requirements of the Quality System regulation at its North Campus manufacturing facility

· Bayer (BAYRY) and J&J’s (JNJ) Xarelto (rivaroxaban) didn’t prevent blood clots and death from clotting when given to high-risk patients for more than six weeks after they were released from the hospital, the companies said

· GlaxoSmithKline (GSK) mentioned positively in Barron’s saying shares are on the mend after years of poor performance as investors feel better about the company’s prospects of replacing one blockbuster asthma drug with another

· Medtronic (MDT) raises quarterly dividend 9% to 50c per share

Technology, Media & Telecom

· According to Barron’s, Videogame makers Electronic Arts (EA) and Activision Blizzard (ATVI) could present challenges for companies like Microsoft (MSFT), Sony (SNE) and Nvidia (NVDA) as cloud-based videogaming becomes more popular. Once pricey hardware is no longer necessary and top-tier games can run on two-year-old smartphones, even casual gamers will become candidates for the latest releases.

· Days after “Fortnite” said it would launch an Android app but circumvent Alphabet Inc.’s (GOOGL) app store, Google found a major security flaw in the Android version of the game and publicly exposed both the flaw and a request to keep it quiet.


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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