Morning Preview: September 13, 2018

Terrie AmengualDaily Market Report

Early Look

Thursday, September 13, 2018

Stock futures in the U.S. are pointing to a higher open, as the S&P 500 index tries to make it a 4th straight session of gains and rising alongside European equities on trade optimism while Asian stocks halted a big losing streak with the Hang Seng jumping more than 2.5%. Emerging market focus turns back to Turkey where the slid after President Erdogan called for lower interest rates. Oil fell below $70 a barrel after spiking yesterday on bullish inventory data. Today’s early focus will be central banks as the European Central Bank (ECB) and Bank of England (BOE) both release details of their monetary policy meeting this morning, with a press conference from ECB President Draghi to follow around 8:30 AM EST. Another round of inflation data is also expected out in the form of Consumer Prices (CPI) after yesterday the wholesale cost of U.S. goods and services (PPI) fell in August for the first time in a year and a half as the recent upturn in inflation appeared to ease. Also, Hurricane Florence weakened to a Category 2, now classified as simply a hurricane rather than a major one but it’s forecast to deliver as much as 30 inches of rain raising major flood warnings. In Asian markets, The Nikkei Index surged 216 point or nearly 1% to settle at 22,821, the Shanghai Index gained 30 points to settle at 2,686 and the Hang Seng Index spiked 669 points or 2.54% to end at 27,014. In Europe, the German DAX is up around 50 points at 12,080, while the FTSE 100 is down around -25 points ahead of the BOE meeting.

U.S. stocks were mixed on Wednesday amid weakness in technology shares, specifically semiconductor weakness after several cautious analyst calls (Goldman Sachs and Stifel downgraded several names), while the Dow and S&P closed higher as gains in consumer-staples and energy helped lift markets. Meanwhile, shares of Apple Inc. declined 1.2% despite introducing new product updates to its iPhones and Apple Watches. Markets got a boost midday after reports the U.S. has reached out to China for follow-up talks after negotiations last month concluded without results.

Market Closing Prices Yesterday

· The S&P 500 Index inched higher 1.03 points, or 0.04%, to 2,888.92

· The Dow Jones Industrial Average rose 27.86 points, or 0.11%, to 25,998.92

· The Nasdaq Composite slipped -18.24 points, or 0.23%, to 7,954.23

· The Russell 2000 Index declined -2.71 points, or 0.16% to 1,715.70

Events Calendar for Today

· 8:30 AM EST Weekly Jobless Claims…est. 210K

· 8:30 AM EST Continuing Claims…est. 1.71M

· 8:30 AM EST Consumer Price Index (CPI) MoM for Aug…est. 0.3%

· 8:30 AM EST CPI Core MoM Ex Food & Energy for Aug…est. 0.2%

· 9:45 AM EST Bloomberg Consumer Comfort Index…prior 58.0

· 10:30 AM EST Weekly EIA Natural Gas Inventory Data

· 1:15 PM EST Fed’s Bostic gives speech on Economy and Monetary Policy

· 2:00 PM EST Monthly Budget Statement for Aug…est. (-$185.0B)

Earnings Calendar:

· Earnings Before the Open: BRC, KR, VNCE

· Earnings After the Close: ADBE, ORCL

Other Key Events:

· Barclay’s Global Financial Services Conference, 9/12-9/14, in New York

· CL King 16th Annual Best Ideas Conference (1-day), in New York

· CLSA Investors Forum, 9/11-9/14 in Hong Kong

· Credit Suisse 31st Annual Basic Materials Conference, 9/11-9/13 in New York

· Deutsche Bank Technology Conference, 9/12-9/13, in Las Vegas

· Morgan Stanley 16th Annual Global Healthcare Conference, 9/12-9/14, in New York

· Mobile World Congress Americas, 9/12-9/14

World News

· Confusion in Turkey as President Recep Tayyip Erdogan effectively banned Turkish entities from conducting business in dollars or euros, triggering a brief rally in the battered lira. Then he doubled down on demands for the central bank to cut interest rates, triggering a fresh selloff in the national currency – Bloomberg reports

· A member of the Russian activist group Pussy Riot, known for their acts of protest against Vladimir Putin’s government, has been hospitalized after a suspected poisoning – FT reports

Sector News Breakdown


· Hershey Co. (HSY) plans to buy the maker of Pirate’s Booty cheese puffs from B&G Foods Inc. (BGS) for $420M. Under an agreement, Hershey will acquire Pirate Brands from B&G using cash on hand and short-term debt

· Oxford Industries (OXM) Q2 EPS $1.83/$302.6M vs. est. $1.82/$306.12M; sees Q3 EPS10c-20c on revs $235M-$245M vs. est. 18c/$246.12M; sees FY18 EPS $4.45-$4.65 on revs $1.125B-$1.145 vs. est. $4.58/$1.13B

· Tailored Brands (TLRD) Q2 EPS $1.07/$823.4M vs. est. $1.07/$828.35M; reports Q2 retail segment comparable sales up 1.7%; sees FY EPS view $2.35-$2.50 vs. est. $2.50; raises year comparable sales for Men’s Wearhouse and Jos. A. Bank to be positive low-single-digits and sees year Moore’s comparable sales to be positive low-single-digits (up from flat-to-up slightly)

· Floor & Decor (FND) files to sell 10M shares of common stock

Energy, Industrials and Materials

· The IEA said in its monthly report that crude oil output in OPEC climbed in August by 420,000 barrels a day, to average 32.63 million barrels a day, making up for a decline in Iranian supply due to U.S. economic sanctions

· Alcoa (AA) said yesterday that uncertainty around sanctions are driving aluminum buyers to lock in contracts earlier than usual and expects its daily alumina output to slip as much as 3% in Q3 because of equipment issues and a strike in Western Australia.

· Matador Resources Company (MTDR) announced the successful acquisition of 8,400 gross (8,400 net) acres for approximately $387 million, or a weighted average cost of approximately $46,000 per net acre, in Lea and Eddy Counties, New Mexico in the Bureau of Land Management New Mexico Oil and Gas Lease Sale on September 5 and 6, 2018

· HollyFrontier (HFC) announces $1B share repurchase program


· Zions Bancorp (ZION) won its fight with the government to remove it from the list of systemically important financial institutions that are subject to heightened regulation. The Financial Stability Oversight Council announced it would grant Zions the waiver it requested.

· Fidelity Investments is preparing to double its number of free index funds, raising the stakes in its push to lure new clients from rivals like Vanguard Group (watch shares of AMTD, ETFC, SCHW)

· Invesco Ltd. (IVZ) reported preliminary month-end assets under management (AUM) of $988.0 billion, an increase of less than 0.1%. The increase was driven by favorable market returns and non-management fee earning AUM inflows; partially offset by net long-term outflows, foreign exchange, and a decrease in money market AUM

· Artisan Partners Asset Management Inc. (APAM) reported that its assets under management as of August 31, 2018 totaled $117.4 billion. Separate accounts1 accounted for $58.8 billion of total firm AUM, while Artisan Funds and Artisan Global Funds accounted for $58.6 billion.


· Progenics (PGNX) fell -22%; said the co-primary endpoint not met in late phase study; said Phase III trial evaluated the specificity of 1404 imaging to identify patients without clinically significant prostate cancer and sensitivity to identify patients with clinically significant disease

· MorphoSys and Galapagos (GLPG) report U.S. antitrust clearance for global license agreement for MOR106 with Novartis Pharma (NVS); MorphoSys confirms the increase of its financial guidance as already communicated on July 19

· Hologic (HOLX) said it sees 4Q Cynosure revenue about $15M less than prior view; cannot yet predict when its Cynosure division will resume selling TempSure Vitalia hand pieces and single-use probes

· AbbVie (ABBV) said three Phase 3 trials evaluating risankizumab showed significant improvements in health-related quality of life, mental health and work productivity measures in treatment of moderate to severe plaque psoriasis

· Galapagos NV (GLPG) 2.575M share Spot Secondary priced at $116.50

· Xenon Pharmaceuticals (XENE) 4.5M share Spot Secondary priced at $14.00

Technology, Media & Telecom

· Qualcomm (QCOM) initiates $16B accelerated share repurchase program

· Cision (CISN) 12M share Secondary priced at $16.00

· Impinj (PI) shares jumped 39%; Q2 adjusted EPS loss (19c)/$28.5M vs. es.t loss (28c)/$27.33M

· Pivotal Software (PVTL) Q2 adjusted EPS loss (6c)/$164.4M vs. est. loss (9c)/$158.22M; sees Q3 EPS loss (9c)-(8c) on revs $163M-$165M vs. est. loss (10c)/$162.72M; said Q2 subscription revenue growth of 51% and 30% total revenue growth were driven by customer expansions and new customer wins

· Houghton Mifflin (HMHC) to sell its Riverside clinical and standardized testing portfolio to PE firm Alpine Investors for $140M

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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