Morning Preview: September 14, 2018

Terrie AmengualDaily Market Report

Early Look

Friday, September 14, 2018


Stock futures are pointing to a higher open, adding to strong weekly gains as better economic data, and hopes that the U.S. will iron out trading issues with China have pushed markets higher. Reports the tail end of the week that Secretary Steven Mnuchin invited top Beijing officials for further trade talks, marking a potential softening of testy negotiations between the world’s largest economies has helped lessen trade fears this week. Also, Hurricane Florence was downgraded to a category 1 storm but is still expected to bring surges and several feet of rainfall, was within a few miles of the North Carolina coastline early Friday, with forecasters warning that a slight weakening of wind speed did not mean the storm will not cause major damage. Reports indicate that over 300K people have already lost power in North Carolina due to the storm. Strong week overseas for Europe and Asia, as the Nikkei Index rose 273 points to settle at 23,094, the Shanghai Index lost -4 points to close at 2,681 and the Hang Seng Index gained 271 points to close at 27,286. In Europe, the German DAX is up around 40 points, trading just under 12,100, while the FTSE 100 is up about 20 points at 7,300.


Stocks advanced again on Thursday as the Dow Industrials closed above 26K for the first time in September on Thursday, while the S&P 500 extended its winning streak to 4-days; the Nasdaq outperformed rising 0.75% on semi strength (SOX was up 1.2%), and Small Caps underperformed as the Russell 2000 fell slightly on the day. The European Central Bank and the Bank of England met yesterday for their policy-setting gatherings but didn’t make any notable changes. In economic news, the consumer-price index rose by 0.2% in August, its fifth straight increase, but was below estimates.


Market Closing Prices Yesterday

· The S&P 500 Index gained 15.26 points, or 0.53%, to 2,904.18

· The Dow Jones Industrial Average rose 147.07 points, or 0.57%, to 26,145.99

· The Nasdaq Composite spiked 59.48 points, or 0.75%, to 8,013.71

· The Russell 2000 Index declined -1.38 points, or 0.08% to 1,714.32


Events Calendar for Today

· 8:30 AM EST Advance Retail Sales MoM for Aug…est. 0.4%

· 8:30 AM EST Import Prices MoM for Aug…est. (-0.2%)

· 9:15 AM EST Industrial Production for Aug…est. 0.3%

· 9:15 AM EST Capacity Utilization for Aug…est. 78.2%

· 10:00 AM EST University of Michigan Sentiment for Sept-P…est. 96.6

· 10:00 AM EST Business Inventories for July…est. 0.6%

· 10:00 AM EST Fed’s Rosengren speaks at Brookings conference

· 1:00 PM EST Baker Hughes Weekly Rig Count


World News

· Russian Central Bank raises key interest rate by 25 bps to 7.50%

· China fixed-asset investment outside rural households rose 5.3% in the January-August period from a year earlier, the National Bureau of Statistics said, marking the most sluggish since 1992

· The Bank of France reduced its growth forecast to 1.6% from 1.8%, saying it expects slower economic expansion than its prior projections for this year and next; the bank says it also expects growth of 1.6% growth compared with its projection of 1.7% in June.


Sector News Breakdown

Consumer

· Costco (COST) downgraded to Market Perform from Outperform at Wells Fargo

· Dunkin’ Brands (DNKN) downgraded from Outperform to Sector Perform at RBC Capital as believe current valuation of 22x 2020E EPS and a 5.5% FCF yield is closer to fair value

· VF Corp (VFC) upgraded to outperform and $106 at Cowen

· PGT, Inc. (PGTI) 7M share Secondary priced at $23.00

· Sears Holdings Corp. (SHLD) Q2 EPS loss ($4.68) on sales $3.2B compared to a loss of ($2.33) and sales of $4.3B a year ago; due in part to store closures; Q2 comparable-store sales fell (-3.9%), reflecting Kmart same-store sales down (-3.7%) and Sears comparable-store sales declining (-4%)

Energy, Industrials and Materials

· Arch Coal’s (ARCH) Mountain Coal unit received imminent danger order at West Elk mine in Gunnison County, Colorado; order states mechanic was observed riding on top of ram-car with guarding in open position while in operation

· Genesee & Wyoming (GWR) reported traffic volumes for August 2018. G&W’s total traffic in August 2018 was 296,442 carloads, an increase of 18,970 carloads, or 6.8%, compared with August 2017. G&W’s same railroad traffic in August 2018 increased 29,674 carloads, or 11.1%, compared with G&W’s traffic in August 2017

· NN, Inc. (NNBR) 12.5M share Secondary priced at $16.00

· Radiant Logistics (RLGT) Q4 EPS 11c/$233.8M vs. est. 8c/$220.16M; Q4 adjusted Ebitda $9.9M vs. Bloomberg est. $7.14M

Financials

· Wells Fargo (WFC), in a presentation for the Barclays Financial Services Conference, says third quarter C&I and CRE loans are expected to be down from the second quarter, reflecting continued competitive pressure on credit structure and pricing – Bloomberg

· Americold Realty Trust (COLD) 37.3M share Secondary priced at $24.50

· Genworth (GNW) and China Oceanwide announced they are submitting supplemental information to the regulators who are reviewing their proposed transaction

· Waddell & Reed Financial, Inc. (WDR) reported preliminary assets under management of $80.2 billion for the month ended August 31, 2018, compared to $79.2 billion on July 31, 2018; said August outflows $663M

· Manning & Napier (MN) reported preliminary AUM as of August 31 of $23.1B compared with $23.0B at July 31 and $22.8B at June 30

· FVCBankcorp (FVCB) 1.75M share IPO priced at $20.00

· AllianceBernstein (AB) announced that preliminary assets under management increased to $551B during August 2018 from $546B at the end of July. The 0.9% increase was due to market appreciation, as well as positive net flows in each distribution channel

· Investec PLC (INVP.LN) said that it plans to spin off and separately list the Investec Asset Management business, which is expected to be completed in the next 12 months.

Healthcare

· Cannabis-related stocks (TLRY, CGC, CRON, WEED and MJ) dropped in after-hours trading Thursday following a report that the U.S. may bar Canadians who invest in the companies from entering the U.S. Politico reported Thursday afternoon that an official with the U.S. Customs and Border Protection agency said that Canadians who smoke marijuana, work in the industry or invest in the companies could be permanently banned from the U.S.

· AstraZeneca PLC (AZN) said the FDA approved its drug Lumoxiti for patients with hairy cell leukemia who had received other treatment previously.

· Foamix (FOMX) 11.67M share Secondary priced at $6.00

· Principia Biopharma (PRNB) 6.25M share IPO priced at $17.00

Technology, Media & Telecom

· Adobe (ADBE) Q3 EPS $1.73/$2.29B vs. est. $1.69/$2.25B; Q3 subscription revenue $2.02B vs. $1.57B last year; Q3 Digital Media segment revenue was $1.61B, with Creative revenue growing to $1.36B and Document Cloud achieving record revenue of $249M, which represents 21% YoY growth; sees Q4 EPS about $1.42 vs. est. $1.47 and non-GAAP EPS about $1.87 vs. est. $1.86

· DocuSign (DOCU) 8.06M share Secondary priced at $55.00

· Corning (GLW) upgraded to Buy from Neutral at Citi

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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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