Morning Preview: January 29, 2019

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Early Look

Tuesday, January 29, 2019

Futures

Up/Down

%

Last

DJ Industrials

-34.00

0.14%

24,439

S&P 500

-2.50

0.09%

2,639

Nasdaq

-10.50

0.16%

6,691

 

 

Stock futures are pointing to a slightly lower open, adding on to yesterday’s losses as investors prepare for the busy week of quarterly earnings upcoming. Apple (AAPL) which lowered its sales view last week for the quarter, officially reports earnings tonight after the close, as markets await the 113 S&P components that report this week. After falling to 2-week lows yesterday, oil futures rebounded after the U.S. Treasury sanctioned Venezuela’s oil firm, which is also known as PdVSA, raising the risk of disruptions to oil supply. In Asian markets, The Nikkei Index rose 15 points to 20,664, the Shanghai Index dipped -2 points to 2,594 and the Hang Seng Index slipped -45 points to 27,531. In Europe, the German DAX is flat at 11,200, while the FTSE 100 is up around 90 points at 6,835. Asian markets rebounded after falling overnight as trade tensions remain high following the US filing charges against Huawei and its executive Meng Wanzhou with wire fraud, breaking Iran sanctions and IP theft. Bonuses were allegedly paid to staff who stole technology from rivals like T-Mobile, the indictments said. The move comes before President Trump will meet with China’s chief trade negotiator, Liu He this week.

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -20.91 points, or 0.78%, to 2,643.85

·     The Dow Jones Industrial Average fell -208.98 points, or 0.84%, to 24,528.22

·     The Nasdaq Composite sunk -79.18 points, or 1.11%, to 7,085.68

·     The Russell 2000 Index declined -9.32 points, or 0.63% to 1,473.54

 

Events Calendar for Today

·     7:45 AM EST      ICSC Weekly Retail Sales

·     8:55 AM EST      Johnson/Redbook Weekly Sales

·     9:00 AM EST      S&P CoreLogic’s CaseShiller for November…est. 0.4%

·     10:00 AM EST    Consumer Confidence for January…est. 124.0

·     4:30 PM EST       API Weekly Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: AGN, AOS, BIIB, CIT, DHR, DOV, EAT, EXP, GLW, GPK, HCA, HOG, HRS, LLL, LMT, MMM, NUE, PCAR, PFE, PHM, PII, RGS, ROK, VZ, XRX

·     Earnings After the Close: AAPL, ALGN, AMD, AMGN, BXP, CHRW, COHR, EBAY, EGHT, HA, IEX, ILMN, IPHI, JNPR, KLAC, MKSI, MRCY, MSTR, MXIM, NATI, PFG, PKG, RHI, SLGN, SYK, TSS, WNC, WRB

 

 

Macro

Up/Down

Last

WTI Crude

0.46

52.45

Brent

0.61

60.54

Gold

3.40

1,312.70

EUR/USD

0.0006

1.1434

JPY/USD

0.10

109.45

10-Year Note

-0.007

2.737%

 

 

Sector News Breakdown

Consumer

·     Ethan Allen (ETH) Q2 EPS 46c/$197.2M vs. est. 46c/$201.5M; 2Q adjusted operating margin 8.3%, 2Q Comparable Design Center written orders -4.2% and 2Q total written orders for retail -3.4%

·     Eagle Materials (EXP) Q3 EPS $1.24/$333.3M vs. est. $1.32/$354.03M

·     MGM Growth (MGP) 17M share Spot Secondary priced at $29.25

·     PulteGroup (PHM) Q4 adjusted EPS $1.11/$2.9B vs. est. $1.10/$2.9B; reports FY18 backlog of 8,722 Homes Valued at $3.8B

·     Polaris Industries (PII) Q4 adjusted EPS $1.83/$1.63B vs. est. $1.82/$1.64B; sees FY19 adjusted EPS $6.00-$6.25 vs. est. $6.95 and sees FY19 adjusted sales growth in the range of 11%-13%

·     Inter Parfums (IPAR) Q4 prelim net sales $177.2M vs. est. $167M; raises 2018 earnings view; sees year EPS $1.68-$1.70 from prior $1.61 while reaffirms 2019 EPS, rev views

·     Whirlpool (WHR) shares fell -5%; Q4 adjusted EPS $4.75/$5.7B vs. est. $4.25/$5.76B; sees year EPS $14.00-$15.00 vs. est. $15.98

·     J&J Snack Foods (JJSF) Q1 EPS 93c/$271.6M vs. est. 88c/$271.8M; said “although we had only a modest sales increase this quarter, our operating income improved largely due to improved operations at several of our production facilities”

·     Sysco Corp. (SYY) said it has agreed to buy Waugh Foods Inc. for an undisclosed amount. East Peoria, Ill.-based Waugh, a food distributor, has about $40 million a year in sales,

 

Energy

·     PG&E Corp. (PCG) filed for Chapter 11 bankruptcy protection and reorganization. PG&E is facing at least $30 billion in liabilities from devastating wildfires caused by its equipment in recent years. PG&E also filed a motion asking the court to approve $5.5 billion in debtor-in-possession (DIP) financing with major banks

·     Abraxas (AXAS) said that, as part of efforts to crystalize the value of its Bakken assets for shareholders, it has engaged Petrie Partners LLC to assist the company with identifying and assessing options for the Bakken holdings; cuts FY19 capital budget to $95M from $108M

 

Financials

·     CIT Group (CIT) Q4 EPS ex-items $1.21/$421M vs. est. $1.14/$483.77M; reports Q4 CET1 capital ratio 12% and Q4 net charge-offs 0.32%

·     Dynex Capital (DX) 7M share Spot Secondary priced at implied $5.90

·     Heartland Financial (HTLF) Q4 EPS 93c vs. est. $1.01; 4Q net interest margin 4.28% and 4Q return on average assets 1.12%

·     NBT Bancorp (NBTB) Q4 EPS 65c (in-line), 4Q non-interest income $25.9 million and 4Q allowance for loan losses $72.5 million

·     Reinsurance Group (RGA) Q4 operating EPS $3.46 vs. est. $3.46; 4Q adjusted book value per share $124.39; still targets adjusted operating EPS growth of 5%-8%

·     Washington Trust (WASH) Q4 EPS 98c (in-line) and reports Q4 book value per share $25.90; reports Q4 CET1 ratio 11.20%

·     WesBanco (WSBC) Q4 EPS 82c vs. est. 75c and reports tangible book value per share $19.63 at end of FY18

 

Healthcare

·     Tivity (TVTY) prelim Q4 revs $152M-$154M vs. est. $154.8M, with income from continuing operations of $27.5M-$29.5M; 4q prelim adj. EBITDA, which excludes project costs incurred in connection with potential and pending acquisitions, $36M-$38M

·     Aetna, a CVS Health (CVS) business, announced the launch of Attain, a unique health experience designed by Aetna in collaboration with Apple (AAPL). Through the use of an Apple Watch, the Attain app will provide Aetna members personalized goals, track their daily activity levels

 

Industrials & Materials

·     3M reports (MMM) Q4 adjusted EPS $2.31/$7.9B vs. est. $2.28/$7.87B; cuts FY19 EPS view to $10.45-$10.90 from $10.60-$11.05 and updated its organic local-currency sales growth expectations to reflect the current external environment and to include the pending acquisition of the technology business of M*Modal which was previously excluded from guidance

·     L3 Technologies (LLL) Q4 EPS $3.10/$2.8B vs. est. $2.70/$2.69B; sees FY19 revenue $10.75B vs. est. $10.76B and sees FY19 free cash flow $1.045B

·     AK Steel (AKS) Q4 EPS 11c/$1.68B vs. est. 11c/$1.70B; said made good progress in 2018, generating our highest net income and adjusted EBITDA in a decade and further strengthening our balance sheet

·     Celanese (CE) Q4 EPS $2.38/$1.69B vs. est. $2.40/$1.72B

·     Crane Corp. (CR) Q1 EPS $1.64/$840M vs. est. $1.54/$863M; boosts quarterly dividend to 39c from 35c; sees year EPS $6.25-$6.45 vs. est. $6.46

·     Graco (GGG) Q4 EPS 43c/$406.4M vs. est. 43c/$404.8M; sees mid-single-digits increase in 2019 revenue on an organic, constant currency basis; Q4 gross margin down 2pts

·     Woodward (WWD) Q1 EPS 96c/$652.8M vs. est. 75c/$577.9M; 1Q Aerospace net sales $392.9 million and 1Q industrial net sales $259.9 million; backs previously stated outlook for FY19

 

Technology, Media & Telecom

·     The US filed charges against Chinese telecommunications equipment maker Huawei accusing it of corporate theft and violating sanctions against Iran

·     Sanmina (SANM) shares rose 20% as Q1 EPS 83c/$2.19B vs. est. 71c/$1.9B; sees Q2 adjusted EPS 70c-80c on revs $1.9B-$2B well above 66c/$1.83B est.; announced that CFO, David Anderson, plans to retire from his role to spend more time with his family (watch shares of FLEX, BHE, FN, JBL, PLXS)

·     Integrated Device (IDTI) Q3 EPS 50c/$240.6M vs. est. 47c/$235.6M;

·     Rambus Inc. (RMBS) reported Q4 adjusted EPS 9c/$68.6M but under old accounting rules revenue would have been $102M vs. est. 25c/$101.9M; Rambus has taken to reporting earnings under both new accounting rules, ASC 606, and old rules, ASC 605

·     Snap Inc. (SNAP) said late Monday that it had appointed Lara Sweet as interim chief financial officer

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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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