Morning Preview: September 28, 2018

Terrie AmengualDaily Market Report

Early Look

Friday, September 28, 2018

U.S. futures are pointing to a lower open, tracking European markets lower as stocks look to close out September with volatility. The euro declined and Italian bonds plunged the most in almost four months after Italy’s deficit issue. The government set next year’s budget deficit target at 2.4% of GDP, wider than investors expected, which has pushed bonds lower and yields to highest levels since 2014. Oil prices are little changed after rising yesterday. Shares of Tesla (TSLA) dropped 11% overnight after the SEC sued its CEO Elon Musk over the August tweet about taking Tesla private and will request a judge bar Musk from serving as an officer or director of a public company. In Washington news, the Senate Judiciary Committee plans to vote on Brett Kavanaugh today as markets await to see if his denial of allegations of sexual misconduct yesterday may have convinced Republicans they can overlook Christine Blasey Ford’s testimony. Stocks ended modestly higher Thursday, gaining ground a day after equities weakened in the wake of the Federal Reserve’s widely expected decision to lift interest rates and kept largely to its forecast for future increases. The Nasdaq Composite led the way higher, rising 0.6% to close near 8,041.97, led by shares of tech giant Apple (AAPL).

In Asian markets, The Nikkei Index gained 323 points to settle at 24,120, the Shanghai Index rose 29 points to settle at 2,821 and the Hang Seng Index rose 72 points to 27,788. In Europe, the German DAX is down about -100 points at 12,330, while the FTSE 100 is down about -20 points to 7,525. The euro fell on Friday to its lowest in nearly two weeks while Italy’s bond yields hit their highest in three after the government agreed to set a higher than expected budget deficit target that could put Rome on a collision course with Brussels. The Italian MIB Index extended losses, falling around 4%.

Market Closing Prices Yesterday

· The S&P 500 Index climbed 8.03 points, or 0.28%, to 2,914.00

· The Dow Jones Industrial Average rose 54.65 points, or 0.21%, to 26,439.93

· The Nasdaq Composite spiked 51.60 points, or 0.65%, to 8,041.97

· The Russell 2000 Index slipped -1.08 points, or 0.06% to 1,690.53

Events Calendar for Today

· 8:30 AM EST Personal Income for Aug…est. 0.4%

· 8:30 AM EST Personal Spending for Aug…est. 0.3%

· 8:30 AM EST PCE Core MoM for Aug…est. 0.1%

· 8:30 AM EST PCE Core YoY for Aug…est. 2.2%

· 8:30 AM EST PCE Deflator MoM for Aug…est. 0.1%

· 9:45 AM EST Chicago PMI for September…est. 62.0

· 10:00 AM EST University of Michigan Confidence, Sept-F…est. 100.5

· 1:00 PM EST Baker Hughes Weekly Rig Count

Earnings Calendar:

· Earnings Before the Open: BB, MTN

World News

· Core inflation in the eurozone area slipped back to 0.9% this month, countering consensus expectations for a slight pick-up. The headline measure accelerated to 2.1%. The euro extended declines.

· Inflation in Tokyo accelerated for a fourth straight month in September as tourism underpinned demand. Core consumer prices rose 1% on year, up from 0.9% in August. The national jobless rate fell to 2.4% last month

· The euro extended its losses against the dollar following the release of weaker than expected EuroZone core inflation data and the weakness in Italian stocks on concerns over its budget

· China’s manufacturing sector likely resumed its slowdown in September after taking a pause in August. The official manufacturing Purchasing Managers’ Index (PMI) is expected to have slipped to 51.2 in September from 51.3 in August according to Reuters

Sector News Breakdown


· Tesla (TSLA) shares fell -11% overnight after Bloomberg reported that the SEC sued its CEO Elon Musk of misleading investors when he tweeted that he was “virtually certain” he could take the company private if he wanted to

· Lowe’s (LOW) upgraded to buy at SunTrust with $138 tgt


· E&P sector assumed coverage at Piper: as sees the long-term investment case for the group being more attractive than it’s been for “quite some time.” Sees 3Q results being a potential opportunity with weak 4Q18/2019 guidance getting the “bad news” out, and offering a chance to buy the attractive 2H19+ outlook; prefers FANG and MRO

· Devon Energy (DVN) upgraded to overweight from neutral at Piper as sees less near-term risk to negative revisions in the Permian, while potential addition asset sales and buybacks are a tailwind

· Hess (HES) downgraded to neutral from overweight at Piper saying tailwinds have pushed valuation limits and Apache (APA) downgraded to neutral from overweight citing range-bound natural gas prices and limited running room to APA’s current valuation

· Transocean (RIG) announced that the ultra-deepwater drillship Petrobras 10000 was awarded a 790-day contract extension offshore Brazil with Petrobras

· Scana (SCG) upgraded to Neutral from Sell at UBS


· Global Payments (GPN) agreed to acquire SICOM Systems. from LLR Partners in a cash transaction valued at about $415M; said will finance the acquisition with its existing credit facility and cash on hand

· Several Italian banks were halted for volatility this morning given the broad sell-off in Italian markets and bonds which pushed yields higher


· Aldeyra (ALDX) 5.25M share secondary priced at $13.75 per share

· Nightstar (NITE) 4M ADR priced at $18.00 per share

· Gritstone (GRTS) 6.071M share IPO priced at $15.00

· Eli Lilly and Company [LLY) said the FDA has approved its drug Emgality for the preventive treatment of migraine in adults

· Crispr Therapeutics’ (CRSP) first-in-human trial of its gene-editing technology is going well so far, although no one has been dosed yet, CEO Samarth Kulkarni said in an interview at the Jefferies Gene Therapy Summit in New York, Bloomberg reported

· Spero (SPRO) reports Progress in SPR994 Phase 1 Final Results; plans to initiate a pivotal Phase 3 clinical trial of SPR994 for the treatment of complicated urinary tract infections around year-end 2018.

· Canada-based marijuana firm CannaRoyalty Corp. (CNNRF) said that it has acquired 180 Smoke for C$25 million of stock. CannaRoyalty said that it would pay an additional C$12.5 million to 180 smoke shareholders if the company reaches certain goals such as obtaining a processing license in Canada and opening vape stores

· Adamis Pharmaceuticals (ADMP) says the FDA approved Adamis’ lower dose version (0.15mg) of Symjepi for the emergency treatment of allergic reactions (Type I) including anaphylaxis. Adamis recently announced a distribution and commercialization agreement with Sandoz, a division of Novartis Group, to market both doses of Symjepi in the U.S. market

Industrials & Materials

· Boeing Co (BA) was selected to build the U.S. Air Force’s next training jet in a contract worth up to $9.2 billion over the life of the program, the Air Force said on Thursday.

· Freeport-McMoRan (FCX) said the Rio Tinto interests will be merged into PT-FI in exchange for 40% share ownership in PT-FI under the terms of the agreement, concurrent with Inalum’s purchase

Technology, Media & Telecom

· Applied Optoelectronics (AAOI) shares plunge -18% as cuts Q3 revenue view to $55M-$58M from $82M-$92M (below est. $88.48M) saying during Q3 they identified an issue with a small percentage of 25G lasers within a specific customer environment (this was the basis for the recent downgrade to sell by Loop Capital) – watch shares of LITE, FNSR, CIEN, IIVI in sympathy

· CooTek (CTK) 4.35M share IPO priced at $12.00

· Lions Gate’s (LGF/A) partnership Amazon (AMZN) could be a precursor to an outright takeover, Bloomberg reports. That’s the hope of investor John Kornitzer, the fourth-largest holder of Class A shares in the company

· Chinese electronics giant TCL Corp. is weighing a bid for ASM International NV’s (AMSI) remaining stake in its listed Asian affiliate, as the Dutch semiconductor-equipment maker faces pressure from activist investors, people familiar with the matter said.

· Progress Software (PRGS) Q3 EPS 60c/$95.7M vs. est. 58c/$96.98M; sees Q4 adjusted EPS 71c-74c on revs $107M-$110M, below est. 78c/$116.67M; narrows FY18 EPS view to $2.45-$2.48 from $2.45-$2.50 (est. $2.50) and cuts FY18 revenue view to $393M-$396M from $399M-$404M

· CalAmp (CAMP) Q2 EPS 31c/$96M vs. est. 28c/$95.36M; sees Q3 adjusted EPS 29c-35c on revs $94M-$99M vs. est. 32c/$98.53M

· Synchronoss Technologies (SNCR) announced that on Sept 26, 2018, it received notice that the Nasdaq Listing Qualifications Staff has approved the listing of its common stock on Nasdaq.

· Federal prosecutors in Manhattan have started investigation into media-buying practices in the advertising industry and have begun issuing subpoenas, Wall Street Journal reports, citing unidentified people familiar with matter. Ad companies being probed include Vivendi-owned Havas


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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