Morning Preview: February 04, 2019

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Early Look

Monday, February 4, 2019

Futures

Up/Down

%

Last

DJ Industrials

-3.00

0.01%

24,993

S&P 500

-0.50

0.01%

2,704

Nasdaq

-0.50

0.01%

6,877

 

 

Stock futures are flat across the board, with Asian markets higher overnight and Europe mixed, as investors prepare for another very busy week of earnings, as well as The State of the Union address by President Trump tomorrow night and central bank meetings late week (the BoE). In Asian markets, The Nikkei Index gained 95 points to 20,883, the Shanghai Index was closed for holiday and the Hang Seng Index rose 59 points to 27,990. In Europe, the German DAX is down about -30 points to 11,150, while the FTSE 100 rose about 20 points to 7,040. Key earnings today including the last of the FAANG group, with Alphabet (GOOGL) reporting after the close tonight. Stocks finished mixed on Friday, but posted more than 1% gains for the week as major averages rallied behind better earnings from energy giants (and Dow components) Exxon and Chevron to close out its sixth consecutive week of gains. The strong January jobs report in spite of the U.S. partial government shutdown helped sentiment as well, easing concerns about a potential economic slowdown. Tech shares slipped on Friday after Amazon issued cautious Q1 revenue guidance amid and a boost in spending. Overall though, stocks gained on the week as the Dow gained 1.3%, the Nasdaq climbed 1.4% and the S&P advanced 1.6% following strong data and earnings, while the Fed eased rising rate fears but turning even more dovish towards rates at its meeting last Wednesday. This week is one of the busiest related to earnings season in sheer volume, while last week had the most S&P components reporting.

Market Closing Prices Yesterday

·     The S&P 500 Index gained 2.43 points, or 0.09%, to 2,706.53

·     The Dow Jones Industrial Average rose 64.22 points, or 0.26%, to 25,063.89

·     The Nasdaq Composite dropped -17.87 points, or 0.25%, to 7,263.87

·     The Russell 2000 Index advanced 2.64 points, or 0.18% to 1,502.05

 

Events Calendar for Today

·     10:00 AM EST    Factory Orders for November…est. 0.3%

·     10:00 AM EST    Factory Orders Ex; Trans for November…est. 

·     10:00 AM EST    Durable Goods Orders, Nov-F…est. 1.5%

·     10:00 AM EST    Durable Goods Orders Ex-Trans, Nov-F…est. 0.1%

·     7:30 PM EST       Fed’s Mester discusses Economic Outlook and Monetary Policy

 

Earnings Calendar:

·     Earnings Before the Open: ALXN, AMG, CLX, ON, SYY

·     Earnings After the Close: GILD, GOOGL, HIG, LM, OLN, STX, VSM

 

Macro

Up/Down

Last

WTI Crude

0.01

55.26

Brent

0.24

62.99

Gold

-6.90

1,315.20

EUR/USD

-0.0007

1.1449

JPY/USD

0.38

109.88

10-Year Note

+0.005

2.691%

 

 

World News

·     China’s Caixin/Markit services purchasing managers’ index (PMI) fell slightly to 53.6 in January from 53.9 in December, but well above the 50.0 mark separating growth from contraction, while overall new orders also ticked higher, to 52.6 from 52.3 in December.

·     The New England Patriots beat the LA Rams, 13-3, in the lowest-scoring Super Bowl ever

 

Sector News Breakdown

Consumer

·     Clorox (CLX) Q2 EPS $1.40/$1.47B vs. est. $1.30/$1.47B; still sees FY EPS from continuing operations $6.20-$6.40 vs. est. $6.32 and still sees FY sales +2% to +4%

·     General Motors Co. (GM) considering about 10 billion reais ($2.7 billion) of new investment in Brazil between 2020 and 2024, company says in statement

·     Investors should consider Stryker (SYK), Microsoft (MSFT), Aptiv (APTV), Spirit Airlines (SAVE), and Ball (BLL) according to a Barron’s cover story saying with corporate earnings growth expected to slow to a trickle this year, it may be better to look for what are sometimes called secular, or idiosyncratic, growers that benefit from powerful long-term trends

·     Nu Skin Enterprises (NUS) said it estimates that its revenue for the fiscal year was approximately $2.68 billion versus analysts’ estimate of $2.67 billion.

·     Kandi Technologies Group, Inc. (KNDI) CFO Mei Bing resigned for personal reasons and the board of directors approved his resignation

·     Ryanair (RYAAY) posted a net loss for the final three months of 2018 of EUR19.6 million ($22.4 million), down from a EUR105.6 million profit in the year-earlier period. Sales rose 9% to EUR1.53 billion on an 8% rise in passenger numbers; said Chairman David Bonderman will leave the post next year.

·     Johnson Outdoors (JOUT) Q1 EPS 35c/$104.4M vs. est. 39c/$116.79M

 

Energy,

·     Edison International (EIX) is facing a potential junk rating if California doesn’t change a policy that holds a utility accountable for liabilities from wildfires that its equipment ignites, CEO Pedro Pizarro said

·     Amazon.com (AMZN) should buy FedEx (FDX) because its stock is cheap according to Barron’s, but says it will never happen as there are issues that should scuttle this proposed deal, including valuation, the latter’s massive infrastructure and competition

·     ConocoPhillips (COP) upgraded to Buy from Neutral at Goldman Sachs as it raised its long-term cash flow forecasts

·     Rio Tinto (RIO) downgraded to Neutral from Overweight at JPMorgan

 

Financials

·     Intuit (INTU) upgraded to equal-weight from underweight at Morgan Stanley and tgt raised to $225 from $172 saying there are multiple catalysts ahead for the company’s Consumer Tax and Small Business segments

·     Brookfield Property (BPY) with a positive mention in Barron’s saying it is one of the world’s largest property owners with a high-octane strategy and lofty yield, and it comes at a depressed price. Its partnership units (BPY) look attractive, and with a market value of $18B, Brookfield Property is the flagship real estate vehicle for Brookfield Asset Management (BAM)

 

Healthcare

·     Alexion (ALXN) Q4 adjusted EPS $2.14/$1.13B vs. est. $1.82/$1.06B; sees FY19 adjusted EPS $9.10-$9.30 on revs $4.625B-$4.7B vs. est. $8.73/$4.75B

·     Starboard Value has taken a stake in Bristol-Myers (BMY), Bloomberg reported, citing sources. The size of the stake and any plans that the hedge fund might have for its investment have not yet been learned https://bloom.bg/2G9Ungq

·     Alkermes (ALKS) announced that it received a Complete Response Letter from the U.S. FDA regarding its New Drug Application for ALKS 5461 for the adjunctive treatment of major depressive disorder.

·     Evolus Health (EOLS) shares rose late Friday after the company won U.S. FDA approval for a new wrinkle treatment that some fear may bite into Allergan’s market-leading Botox.

·     Argenx (ARGX) and Halozyme Therapeutics (HALO) announced a global collaboration and license agreement that enables use by Argenx of Halozyme’s ENHANZE drug delivery technology to develop multiple subcutaneous product formulations for current or future Argenx product candidates

·     Regeneron Pharmaceuticals (REGN) and Sanofi (SNY) announced that the European Medicines Agency’s Committee for Medicinal Products for Human Use, or CHMP, has adopted a positive opinion for Praluent Injection

 

Technology, Media & Telecom

·     On Semiconductor (ON) Q4 EPS 53c/$1.50B vs. est. 48c/$1.50B; Q4 gross margin 37.9%; sees Q1 revenue $1.37B-$1.42B. vs. est. $1.45B and sees Q1 gross margins 36.4%-37.4%

·     Apple Inc (AAPL) said on Friday it has fixed a privacy flaw in its group video chat software (FaceTime) and that it plans to improve how it handles reports of software bugs

·     Corning (GLW) mentioned positively in Barron’s saying shares shot higher last week after the company reported fourth quarter sales and earnings that beat expectations and the company’s CEO forecast a robust 2019, but says it still has room to run

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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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