Morning Preview: March 06, 2019

Auto PostDaily Market Report

Early Look

Wednesday, March 6, 2019

Futures

Up/Down

%

Last

DJ Industrials

-40.00

0.15%

25,787

S&P 500

-4.00

0.14%

2,787

Nasdaq

-5.50

0.08%

7,160

 

 

U.S. stock futures are edging lower, looking to add to the late day swoon that erased market gains in the final minutes Tuesday, on edge about trade and issues in Europe. Markets are slipping on renewed Brexit fears following reports UK Prime Minister Theresa May doesn’t have enough votes to get her Brexit deal through Parliament next week (as the pound slips a 6th straight day). The OECD downgraded its global growth forecast for 2019 again and warned that a no deal Brexit could be a major shock for the world economy. The U.S. dollar looks to extend its rally to a sixth day and Treasuries edged higher as yields slip. In Asian markets, The Nikkei Index fell -129 points to settle at 21,596, the Shanghai Index jumped again, rising over 47 points (or 1.57%) to top the 3,100 level while the Hang Seng Index rose 76 points to 29,037. In Europe, the German DAX is down about -15 points to 11,600, while the FTSE 100 is up a few points around the 7,200 level. Weakness yesterday led by financials, healthcare and transports as the Dow Transport index fell for an 8th straight session, its longest losing streak in nine-years, but only down 2.5% during that stretch (though note the Dow transports, have risen 12.5% so far in 2019).

Market Closing Prices Yesterday

·     The S&P 500 Index slipped -3.16 points, or 0.11%, to 2,789.65

·     The Dow Jones Industrial Average fell -13.02 points, or 0.05%, to 25,806.63

·     The Nasdaq Composite dipped -1.21 points, or 0.02%, to 7,576.36

·     The Russell 2000 Index declined -7.15 points, or 0.45% to 1,568.28

 

Events Calendar for Today

·     7:00 AM EST      MBA Mortgage Applications Data

·     8:15 AM EST      ADP Employment Change in February…est. 190K

·     8:30 AM EST      Trade Balance for December…est. (-$57.9B)

·     10:30 AM EST    Weekly DOE Inventory Data

·     12:00 PM EST    Fed’s Williams speaks to the Economic Club of New York

·     12:00 PM EST    Fed’s Mester participates in moderated discussion

·     2:00 PM EST       Fed Beige Book released

 

Earnings Calendar:

·     Earnings Before the Open: ANF, BF/F, BJ, CHS, DCI, CLTR, FVE, HDSN, JILL, MCRB, MEET, MRNA, OPTN, THO, WHF

·     Earnings After the Close: ABM, AEO, ALSK, BREW, CDNA, FTK, GWRE, HIIQ, KIN, TTEC, YEXT

 

Other Key Events:

·     Bank of Canada (BoC) rate decision

·     Morgan Stanley Global Energy & Power Conference, 3/4-3/6, in New York

·     Raymond James 40th Annual Institutional Investors Conference, 3/3-3/6, in Orlando, FL

·     RSA Conference 2019, 3/4-3/8, in San Francisco

·     Sandler O’Neill 2019 West Financial Services Conference, 3/4-3/6, in San Diego, CA

·     Shoptalk 2019, 3/3-3/6, in Las Vegas, NV

·     UBS Global Consumer & Retail Conference, 3/6-3/7 in Boston MA

 

 

Macro

Up/Down

Last

WTI Crude

-0.41

56.15

Brent

-0.01

65.85

Gold

2.30

1,287.00

EUR/USD

-0.0005

1.1303

JPY/USD

-0.03

111.86

10-Year Note

-0.006

2.713%

 

 

World News

·     The British government is reported to be planning to slash trade tariffs on up to 90% of goods if the U.K. leaves the European trading bloc without a deal on March 29. Taxes on certain imports, such as car parts and some agriculture products, would be scrapped completely – Sky News

·     The Organization for Economic Co-operation and Development (OECD) downgraded its global growth forecast for 2019 again and warned that a no deal Brexit could be a major shock for the world economy. It warned that weakening international trade and the sharp slowdowns in China and the EuroZone will weigh on the economy in 2019. It predicted that global growth will decline to 3.3% down from its November forecast of 3.5%.

·     Australia’s economy slowed sharply in the second half of 2018, as Gross domestic product (GDP) grew by 0.2% in the fourth quarter from the previous three months and by 2.3% from a year earlier, the Australian Bureau of Statistics said

·     Investor Intelligence poll shows equity newsletter writers classified as bulls’ inch higher to 52.9% vs 52.4%; the nine-week streak of gains in bullishness is longest since Sept.-Nov. 1998; bearish sentiment rises to 20.6% from 10-week low 20.4% and those expecting a correction remain at lowest since early October, falling to 26.5% from 27.2%

·     Turkey’s central bank kept its benchmark interest rate on hold on Wednesday, sticking to a promise to stand firm on inflation even as the economy suffers a sharp slowdown in growth

·     Wall Street may face another squeeze on bonuses. Regulators including the Fed and SEC are considering dusting off Dodd-Frank rules to curb the levels of incentive pay that fueled the risk-taking that led to the 2008 meltdown, people familiar said – Bloomberg reports

 

Sector News Breakdown

Consumer

·     BJ’s Wholesale (BJ) Q4 adjusted EPS 44c/$3.42B vs. est. 36c/$3.39B; Q4 comp club sales excluding gasoline sales increased 2.9% for the quarter and 2.2% for the full year; sees FY19 EPS $1.42-$1.50 on revs $12.9B-$13.2B vs. est. $1.47/$13.37B

·     Ross Stores (ROST) Q4 EPS $1.20/$4.11B vs. est. $1.13/$4.05B; authorizes new $2.55B stock buyback; raises quarterly dividend 13% to 25.5c per share; sees FY19 EPS $4.30-$4.50 vs. est. $4.51 and year comp sales up 1%-2%; sees opening about 100 new stores in FY19

·     Urban Outfitters (URBN) Q4 EPS 80c/$1.13B vs. est. 79c/$1.14B; 4Q gross margin 33.3% and Q4 inventory $370.5 million; segment breakdown: 4Q Urban Outfitters comparable sales +4%, 4Q Free People comparable sales +4%, 4Q Anthropologie comparable sales +2% and overall 4Q comparable retail segment sales +3% in-line with estimates, estimate +3%

·     United Natural Foods (UNFI) Q2 EPS 44c/$6.15B vs. est. 24c/$6B; raises FY19 adj EPS view to $2.00-$2.40 from $1.69-$1.89 (est. $1.71) and repeats FY19 revenue view of $21.5B-$22.0B vs. est. $21.48B; lowers FY19 adjusted EBITDA view to $580M-$610M from $650M-$665M

·     Electric car maker Nio (NIO) shares fell -16% after saying it lost 3.5 billion renminbi ($511.5 million) in Q4 or (49c) with revenue 3.4 billion renminbi ($499.7M) – est. (32c)/$493M

·     PlayAGS (AGS) Q4 EPS loss (29c)/$72.1M vs. est. loss (1c)/$69.69M; sees 2019 Adjusted EBITDA $160.0M-$164.0M and capital expenditures $65.0M-$69.0M vs. $66.2M in 2018

·     Primo Water (PRMW) Q4 EPS 7c/$70.88M vs. est. 6c/$72.84M; sees Q1 revenue $67.8M-$70.8M (est. $75.27M) and sees FY19 revenue $315M-$325M (vs. est. $317.74M)

·     Quanex Building (NX) Q1 EPS loss (7c)/$196.8M vs. est. loss (12c)/$195.3M; reaffirms Full Year 2019 guidance

·     SkyWest Airlines (SKYW) reported 107,300 block hours in February, an increase of 6.1% from February 2018. SkyWest Airlines’ higher production was primarily due to the new E175 aircraft added to SkyWest Airline’s fleet since February 2018

 

Energy

·     The American Petroleum Institute (API) reported U.S. crude supplies rose by a much more than expected 7.3M barrels for the week ended March 1, showed that gasoline stockpiles fell by -391,000 barrels, while distillate inventories declined by -3.1M barrels

·     Par Pacific (PARR) Q4 adjusted EPS 44c/$879.1M vs. est. 33c/$853.7M;

·     Vivint Solar (VSLR) Q4 non-GAAP EPS loss (73c)/$63.5M vs. est. loss (31c)/$71.94M; sees 1q MW Installed: 43 – 45 MWs and sees 1q Cost per Watt: $3.45-$3.52

 

Healthcare

·     Ascendis Pharma (ASND) 4.167M share Secondary priced at $120.00

·     Invitae (NVTA) 9M share Secondary priced at $19.00

·     Iqvia (IQV) 5M share Spot Secondary priced at $141.00

·     Sarepta (SRPT) 2.6M share Spot Secondary priced at $144.00

·     Cooper Companies (COO) Q1 EPS $2.88/$628.1M vs. est. $2.50/$617.89M; reports Q1 operating margin 18% compared with 15% in last year’s Q1; sees FY adjusted EPS $11.85-$12.15 vs. est. $11.54 and sees FY revenue $2.63B-$2.68B vs. est. $2.64B

·     Exact Sciences (EXAS) files to sell $600M on convertible senior notes due 2027

·     Horizon Pharma (HZNP) said in a filing that it received a civil investigative demand from the U.S. Department of Justice over certain payments to pharmacy benefit managers that may be in violation of the Anti-Kickback Statute

·     Kura Oncology (KURA) Q4 EPS loss (42c), in-line with estimates and cash, cash equivalents and short-term investments totaled $179M as of December 31, compared with $93.1M as of December 31, 2017

·     Ligand Pharmaceuticals (LGND) and Royalty Pharma announce the sale of Ligand’s Promacta-related intellectual property rights licensed to Novartis, including the royalty stream on worldwide net sales of Promacta, to Royalty Pharma for $827 million in cash

·     Ziopharm (ZIOP) Q4 EPS $1.29; said that the increased income primarily from the forfeiture and return of all Series 1 preferred stock held by Intrexon Corporation and the relinquishment of Ziopharm’s obligations under the Ares Trading Agreement

 

Industrials & Materials

·     AeroVironment (AVAV) Q3 EPS 35c/$75.3M vs. est. 14c/$75.25M; raises FY19 EPS view to $1.60-$1.80 from $1.30-$1.50 (est. $1.48) and backs FY19 revenue view $300M-$310M (est. $308.59M)

·     LyondellBasell (LYB) upgraded to Buy from Neutral at Goldman Sachs

 

Technology, Media & Telecom

·     Ambarella (AMBA) Q4 EPS 14c/$51.1M vs. est. 4c/$50.92M; sees Q1 revenue $47M plus or minus 3% vs. est. $50.22M and sees 1Q adjusted gross margin 59% to 60%

·     Microchip Technology (MCHP) narrows 4Q adjusted EPS view to $1.30-$1.49 vs. prior view $1.26-$1.53 (est. $1.40) and sees 4Q net sales $1.279B-$1.375B vs. prior view $1.251B-$1.403B vs. est. $1.33B

·     Ooma (OOMA) Q4 EPS loss (3c)/$34.72M vs. est. loss (5c)/$33.21M; sees FY20 EPS loss (24c)-(14c) on revs $140M-$143M vs. est. loss (3c)/$140.37M

·     Qutoutiao (QTT) Q4 EPS loss (22c)/$193M vs. est. loss (14c)/$191.72M;

·     SailPoint (SAIL) Q4 adjusted EPS 19c/$80.6M vs. est. 9c/$71.12M; reports Q4 adjusted EBITDA $18.6M vs. $17.1M last year; sees FY19 EPS 25c-29c on revs $293M-$299M vs. est. 25c/$296.97M

·     Bandwidth (BAND) files to sell 2.25M shares of common stock

·     Chinese online retailers slash iPhone prices for second time this year as Apple (AAPL) wrestles with a prolonged sales slowdown in the world’s largest smartphone market – Reuters

·     Sea Limited (SE) 90M share Secondary priced at $22.50

_________________________________________________________________

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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