Morning Preview: August 28, 2018

Scott GreenDaily Market Report

Early Look

Tuesday, August 28, 2018

Stock futures are higher, tracking European markets to the upside and looking to add to the record closing highs yesterday for the S&P 500, Nasdaq Composite and Russell 2000 as momentum remains clearly to the upside. U.S. stocks posted all-time bests on Monday as all main industries advanced except for real estate and utilities after the U.S. and Mexico moved closer to a deal on trade. The S&P 500 index broke out of a 7-month trading range Friday after Fed Chairman Jerome Powell signaled that the central bank sees little need aggressively tighten policy, while the Nasdaq Composite closed above the 8,000 level for the first time yesterday. Optimism around the U.S.-Mexico deal is helping shift the news agenda in markets in the wake of Trump’s legal woes last week, while the Federal Reserve’s outlook has also boosted sentiment. Next up, markets look for a trade deal with Canada later this week, as well as the EU and China hopefully in the no so distant future. In Asian markets, The Nikkei Index gained 13 points to settle at 22,813, the Shanghai Index slipped -2 point to end at 2,777 and the Hang Seng Index gained 80 points to close at 28,351. In Europe, the German DAX is up a few points topping 12,550, while the FTSE 100 is up around 25 points above 7,600. U.K. equities rose as the pound steadied as Prime Minister Theresa May said a no-deal break with Europe wouldn’t be the end of the world.

Market Closing Prices Yesterday

· The S&P 500 Index jumped 22.05 points, or 0.77%, to 2,896.74

· The Dow Jones Industrial Average rose 259.29 points, or 1.01%, to 26,049.64

· The Nasdaq Composite spiked 71.92 points, or 0.91%, to 8,017.90

· The Russell 2000 Index advanced 2.73 points, or 0.16% to 1,728.41

Events Calendar for Today

· 7:45 AM EST ICSC Weekly Retail Sales

· 8:30 AM EST Advance Goods Trade Balance for July…est. (-$69.0B)

· 8:55 AM EST Johnson/Redbook Weekly Sales

· 9:00 AM EST S&P CoreLogic’s CS 20-city index for June…est. 0.2%

· 10:00 AM EST Richmond Fed Manufacturing Index for Aug…est. 17

· 10:00 AM EST Consumer Confidence for Aug…est. 126.6

· 4:30 PM EST API Weekly Inventory Data

Earnings Calendar:

· Earnings Before the Open: BBY, BJ, BMO, BNS, CTLT, DSW, HAIN, SXI, TIF

· Earnings After the Close: BOX, FOCS, HPE, HRB, LCI, NCS, OOMA, PSEC, SCSC, SCVL

World News

· The European Central Bank said Tuesday that lending to non-financial corporations grew at an annual rate of 4.1%, the same rate as in June and the fastest pace since May 2009.

Sector News Breakdown


· Tiffany (TIF) Q2 EPS $1.17/$1.1B vs. est. $1.01/$1.04B; Q2 total comp sales ex FX 8%, topping the 5.6% estimate; sees FY EPS $4.65-$4.80 vs. est. $4.74

· In cosmetics space, Morgan Stanley upgraded Coty (COTY) and Estee Lauder (EL) to overweight from equal-weight and boosted its price targets

· Nestle (NSRGY) and Starbucks (SBUX) announced the closing of the deal granting Nestle the perpetual rights to market Starbucks Consumer Packaged Goods and Foodservice products globally, outside of the company’s coffee shops

· RYB Education (RYB) Q2 EPS 15c on revs $47.5M; raises FY18 revenue view to $160M-$170M from $154.9M-$166.1M

Energy, Materials and Industrials

· Heico (HEI) Q3 EPS 49c/$465.8M vs. est. 45c/$438.1M; sees FY net sales up 15%-16%; sees FY net income growth +35% to +37%

· Equinor is deciding if it should construct an offshore wind farm with floating turbines to power its Gullfaks and Snorre oilfields in the North Sea, according to Reuters; the project has estimated value of $591.54M

· FMC Corp (FMC) said its lithium business Livent aims to be a dominant supplier to next generation electric cars, as it gears up for a $500M initial public offering on the NYSE


· Aspen Insurance Holdings Ltd. (AHL) agreed to be bought by private equity firm Apollo Funds in an all-cash deal valued at $2.6 billion, as Apollo will acquire all outstanding shares of the global insurer and reinsurer for $42.75 per share in cash

· Bank of Cyprus Holdings PLC said it has agreed to sell a portfolio of non-performing loans to U.S. private-equity firm Apollo Global Management LLC (APO) for 1.40 billion euros ($1.63 billion).

· Bank of Nova Scotia (BNS) Q3 adjusted EPS C$1.76 vs. est. C$1.77; 3Q common equity Tier 1 ratio 11.4%


· Akcea Therapeutics Inc. (AKCA) and Ionis Pharmaceuticals Inc. (IONS) shares dropped overnight after the drug makers said they received a “complete response letter” from the FDA concerning their drug Waylivra, a medicine designed to treat a rare liver disorder; the companies said they would work with the FDA “to confirm the path forward.”

· Wright Medical (WMGI) 18.249M share Spot Secondary priced at $24.60

· Phibro Animal Health (PAHC) Q4 EPS 46c/$212M vs. est. 42c/$208.21M; Q4 adjusted EBITDA of $33M, an increase of $4M, or 12%; sees FY19 EPS $1.72-$1.77 on revs $850M-$875M vs. est. $1.85/$846.84M

· Tetraphase Pharmaceuticals, Inc. (TTPH), said the FDA has granted approval of XERAVA™ (eravacycline) for the treatment of complicated intra-abdominal infections (cIAI). In clinical trials, XERAVA was well-tolerated and achieved high clinical cure rates in patients with cIAI, demonstrating statistical non-inferiority to two widely used comparators

· Affimed (AFMD) announces collaboration with Genentech to develop novel NK cell engager-based immunotherapeutics for multiple cancer targets; Affimed will receive $96Mupfront and committed funding and is eligible for up to an additional $5.0B including milestone payments, and royalties on sales

· Ultragenyx Pharmaceutical (RARE) reported that the European Commission approved the marketing authorization application for Mepsevii for the treatment of non-neurological manifestations of Mucopolysaccharidosis VII.

· Illumina (ILMN) announced that its MiSeqDx Sequencing System received the approval certificate from the China National Drug Administration. This is Illumina’s first CNDA-cleared, next-generation sequencing system in China

Technology, Media & Telecom

· Semi equipment: Applied Materials (AMAT) and Lam Research (LRCX) both downgraded to neutral from buy at Bank America

· Xilinx (XLNX) upgraded to Outperform from Neutral at Baird

· Bilibili (BILI) 2Q revenue rose 76% y/y to US$155.1M, beating estimate of $146.3M, despite its app being removed on nationwide inspection and clean-up of online content from July

· Lattice Semiconductor (LSCC) named Jim Anderson president and CEO, effective Sept. 4; Anderson joins Lattice from Advanced Micro Devices, where was general manager and senior vice president of the computing and graphics business group

· Brooks Automation (BRKS) announced that it has entered into a definitive agreement to sell its semiconductor cryogenics business to Edwards Vacuum LLC (a member of the Atlas Copco Group) for $675M in cash

· Mitek Systems (MITK) said its CEO, Jim DeBello, will be transitioning out of his role effective Jan. 1, 2019; reaffirms full-year rev., profit margin views

· Electronic Arts (EA) cancelled the three remaining Madden Classic qualifier events while safety protocols are reviewed, the company’s CEO said in a blog post following the deadly shooting in Jacksonville. “While these qualifying events are operated independently by partners, we work with them to ensure competitive integrity and to gather feedback from players,” said Electronic Arts CEO Andrew Wilson


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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