Morning Preview: September 5, 2018

Terrie AmengualDaily Market Report

Early Look

Wednesday, September 5, 2018

U.S. stock futures point to a lower open, tracking weakness in both Europe and Asia amid ongoing turmoil in emerging markets, as currencies continue to come under pressure. Asian stock markets posted broad declines Wednesday, after Wall Street finished weakly and European markets fell further after a pause on Monday. In Asian markets, The Nikkei Index dropped -116 points to end at 22,580, the Shanghai Index declined -46 points (1.68%) to settle at 2,704 and the Hang Seng Index plunged -729 points or 2.61% to settle at 27,243. In Europe, the German DAX is lower by about -100 points to 12,100, while the FTSE 100 is down over -30 points to around 7,420. In trade, the U.S. and Canada will resume efforts on Wednesday to resolve issues holding up a renegotiation of the North American Free Trade Agreement after the U.S. and Mexico agreed to terms of their portion of the deal last week. In social media, executives from Facebook, Twitter and Google testify today on social media, Russia meddling.

U.S. stocks slipped on Monday as Treasuries weakened and the dollar advanced as trade tensions persisted and emerging markets remained under pressure. Treasury yields rose Tuesday, extending last week’s climb, after a gauge of U.S. manufacturing activity outperformed. The 10-year Treasury note yield rose 4.6 bps to 2.899% after touching a 3-week high at 2.902%, while the 2-year note yield was up 2 bps to 2.649% and more than a 5 bps move for the 30-yr yield to 3.062%. The Institute for Supply Management reported its manufacturing index for August climbed to 61.3, a 14-year high, reinforcing views that the FOMC won’t let up on rising rates through the end of this year. Tech stocks overall declined, but shares of Apple and Amazon each traded to new all-time highs (AAPL a 9-day win streak while AMZN topped the $1 trillion mark in market value). Oil climbed as a storm threatened U.S. production on the Gulf Coast, but closed well off its highs (dropping back below $70 per barrel).

Market Closing Prices Yesterday

· The S&P 500 Index dropped -4.80 points, or 0.17%, to 2,896.72

· The Dow Jones Industrial Average fell -12.34 points, or 0.05%, to 25,952.48

· The Nasdaq Composite sunk -18.29 points, or 0.23%, to 8,091.25

· The Russell 2000 Index declined -7.38 points, or 0.42% to 1,733.38

Events Calendar for Today

· 7:00 AM EST MBA Mortgage Applications Data

· 8:30 AM EST Trade Balance for July

· 4:00 PM EST Fed’s Kashkari speaks at Townhall in Montana

· 4:30 PM EST API Weekly Inventory Data

Earnings Calendar:

· Earnings Before the Open: CBK, DLTH, HDS, SCWX, VRA

· Earnings After the Close: AVA, CLDR, CWK, DOCU, GWRE, MDB, OLLI, REVG, SEAC, VRNT, ZS

Other Key Events:

· Barclay’s CEO Energy Power Conference, 9/4-9/6 in New York

· Barclay’s Global Consumer Staples Conference, 9/4-9/6, in Boston

· Citigroup 13th Annual Biotech Conference, 9/5-9/6, in Boston

· Citigroup 25th Annual Technology Conference, 9/5-9/7, in New York

· Cowen 11th Annual Global Transportation Conference, 9/5-9/6, in Boston

· Goldman Sachs Global Retail Conference, 9/5-9/6, in New York

· KBW Insurance Conference, 9/5-9/6, in New York

· Piper Jaffray Tech Select Conference, 9/4-9/5, in CA

· RBC Capital Global Industrials Conference, 9/5-9/6, in Las Vegas

· RW Baird Global Healthcare Conference, 9/5-9/6, in New York

· UBS Global Chemicals, Paper & Packaging Conference, 9/5-9/6, in New York

· Wells Fargo 13th Annual Healthcare Conference, 9/5-9/6, in Boston

World News

· According to Investor Intelligence, newsletters classified as bulls by Investors Intelligence increase for a fifth week to 60.0% from 59.6% last week; remains at highest since late January; those bullish those looking for a correction slips for a 5th week to 21.9% from 22.1%, remains at lowest level since late January; bearish sentiment slip to 18.1% from 18.3%

· Growth in activity in China’s service sector slowed in August, as the Caixin China services purchasing managers’ index slipped to 51.5 in August from 52.8 in July, the lowest in ten months

· Australia’s economy grew solidly in the second quarter, supported by government infrastructure programs, and strong consumer spending, as the gross domestic product climbed by 0.9% from the first quarter and by 3.4% from a year earlier

· Federal Reserve Bank of St. Louis President James Bullard called for his colleagues to hold off on raising rates again, but appeared to acknowledge that a move higher this month is pretty much a done deal. Given where the economy is right now, “we’ve got a pretty good policy right now and we should stay where we are and see how the data come in,” said Bullard on Tuesday on Fox

Sector News Breakdown

Consumer

· UAL Corp (UAL) said it sees Q3 passenger unit revenue at the high end of 4%-6% range

· HD Supply (HDS) Q2 EPS 99c/$1.6B vs. est. 96c/$1.58B; sees FY18 EPS $3.22-$3.35 on revs $5.9B-$6B vs. est. $3.26/$5.93B

· Christopher & Banks (CBK) Q2 EPS loss (19c) on sales $87.4M and comp sales rose 0.8%

· Red Robin (RRGB) COO departs, will be replaced by CFO, company will look for new CFO

Energy, Materials and Industrials

· Bayer (BAYRY) lowered its year EPS view to between EUR5.70 and EUR5.90, compared with a restated 2017 figure of EUR6.64 a share to reflect the Monsanto acquisition and the divestment of several businesses; did raise 2018 sales to more than EUR39 billion, compared with a previous estimate of below EUR35 billion; Q2 Net profit was 799 million euros ($925.1 million) down from EUR1.22 billion a year earlier

· Advanced Energy Industries (AEIS) acquired LumaSense Technologies Holdings, a California-based provider of innovative temperature and gas sensing device for $85M

· BHP Billiton (BHP) has bought a 6% stake in Ecuador-focused explorer SolGold for $35M, giving it exposure to a potential new source of copper

Healthcare

· HealthEquity (HQY) Q2 EPS 34c/$71.1M vs. est. 28c/$69.82M; sees FY19 EPS $1.05 to $1.11 vs. est. $1.05 and year revs between $279M-$285M

· Histogenics Corporation (HSGX) shares plunge over 60% after saying its Phase 3 clinical trial of NeoCart did not meet the primary endpoint of a significant improvement in pain and function in a dual threshold responder analysis

· Bluebird Bio (BLUE) presented updated data from the Phase 2/3 Starbeam study of the Lenti-D gene therapy and initial data from the observational study of ALD-103 of allogeneic hematopoietic stem cell transplant

· TESARO, Inc. (TSRO) said it has initiated the second stage of the JASPER study that is designed to assess clinical benefit of ZEJULA® in combination with an anti-PD-1 antibody in first-line non-small cell lung cancer (NSCLC) patients.

· Dova Pharmaceuticals (DOVA) submitted a supplemental New Drug Application to the U.S. FDA for DOPTELET (avatrombopag), the Company’s second generation, orally administered thrombopoietin receptor agonist.

· Gilead Sciences (GILD) and Trianni announced that the companies have entered into a license agreement that grants Gilead the use of the Trianni transgenic human monoclonal antibody discovery platform to support the company’s drug discovery efforts

· Novus Therapeutics (NVUS) files to sell 6M shares of common stock

· Retrophin (RTRX) files automatic mixed securities shelf

· Theranos Inc., the blood-testing company accused of fraud, will soon cease to exist as the company will formally dissolve, according to a shareholder email. Theranos will seek to pay unsecured creditors its remaining cash in coming months, the letter said

Technology, Media & Telecom

· Workday (WDAY) Q2 EPS 31c/$671.7 vs. est. 26c/$663.09M; Q2 subscription revenue of $565.7M, up 30.2% YoY and reports subscription revenue backlog of $5.5B, up 26.0% YoY; raises FY19 subscription revenue to $2.34B-$2.35B or growth of 31%

· Smartsheet (SMAR) Q2 adjusted EPS loss (8c)/$42.4M vs. est. loss (13c)/$39.23M. “Q2 was a strong quarter with revenue growing 59% year-over-year and net dollar retention rate reaching a record 131%; raises FY19 adjusted EPS view to (56c)-(52c) from (59c)-(56c) and raises FY19 revenue view to $167M-$169M from $159M-$162

· Coupa Software (COUP) Q2 EPS 5c/$61.7M vs. est. loss (8c)/$56.6M; sees Q3 EPS loss (1c-4c) on revs $62M-$63M vs. est. loss (5c)/$58.6M; sees FY adjusted loss per share (6c to 11c) vs. est. loss (17c); also said it has acquired the technology assets of DCR Workforce, a leading provider of contingent workforce management and services procurement software

· Juniper Networks (JNPR) announced it has expanded its 18-year partnership with Ericsson (ERIC) to deliver a comprehensive end-to-end 5G solution leveraging each company’s complementary portfolios

 

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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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