Morning Preview: March 07, 2019

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Early Look

Thursday, March 7, 2019

Futures

Up/Down

%

Last

DJ Industrials

-78.00

0.30%

25,623

S&P 500

-6.00

0.22%

2,771

Nasdaq

-15.50

0.21%

7,123

 

 

U.S. futures are pointing to a lower open, dragged down by weakness in Europe amid reports the ECB will cut forecasts for growth and inflation again today and probably by enough to justify another round of loans for banks, which ECB President Mario Draghi may reveal later today during his press conference following the ECB meeting details. Reuters also reports, citing EU sources that the EU is skeptical a Brexit deal can be reached before March 21-22 summit. Also not helping sentiment, Chinese telecoms equipment maker Huawei sued the U.S. government saying a law limiting its U.S. business was unconstitutional, ratcheting up its fight back against the government. Given the lack of upside catalysts for stocks, and several developing situations overseas, stocks look to set for a 4th day of declines. In Asian markets, The Nikkei Index fell -140 points to 21,456, the Shanghai Index gained 4 points to close at 3,106 and the Hang Seng Index lost -258 points to settle at 28,779. In Europe, the German DAX is down around 60 points at 11,520, while the FTSE 100 is down over 30 points at 7,160.

 

U.S. stocks dropped to a three-week low Wednesday following weaker than expected private payroll data (ADP) as well as a wider trade deficit (10-year high) ahead of the monthly nonfarm payroll report on Friday. The S&P 500 Index and Nasdaq Composite Index fell the most since February 7th, registering their third straight day of declines while the SmallCap Russell 2000 dropped over 2%. Stocks remained lower after the Federal Reserve’s Beige Book report saw most central bank districts report “slight-to-moderate” growth in late January and February. Markets have been on edge over the last week, awaiting new developments in trade talks between the China and U.S. with investors getting restless. Meanwhile in Europe, the ECB holds its monetary policy meeting later this morning (no rate changes expected) and press conference from ECB President Mario Draghi, while Brexit remains on the minds of many ahead of a March deadline.

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -18.20 points, or 0.65%, to 2,771.45

·     The Dow Jones Industrial Average fell -133.17 points, or 0.52%, to 25,673.46

·     The Nasdaq Composite slumped -70.44 points, or 0.93%, to 7,505.92

·     The Russell 2000 Index declined -31.46 points, or 2.01% to 1,536.82

 

Events Calendar for Today

·     7:30 AM EST      Challenger job cuts YoY for February

·     8:30 AM EST      Weekly Jobless Claims…est. 225K

·     8:30 AM EST      Continuing Claims…est. 1.774M

·     8:30 AM EST      Nonfarm Productivity, Q4-F…est. 1.5%

·     8:30 AM EST      Unit Labor Costs, Q4-F…est. 1.7%

·     9:45 AM EST      Bloomberg Consumer Comfort Index…prior 61.0

·     10:30 AM EST    Weekly EIA Natural Gas Inventory Data

·     3:00 PM EST       Consumer Credit for January…est. $17.0B

 

Earnings Calendar:

·     Earnings Before the Open: AGLE, BKS, BURL, CECE, FCEL, GNC, HOV, HRB, IGT, KR, OZM, SUP, TECD, TWI, UPL, USPH

·     Earnings After the Close: AOBC, CHUY, COST, KFY, LOCO, MRVL, OKTA, TTOO

 

Other Key Events:

·     OECD publishes its economic outlook

·     The European Central Bank (ECB) policy decision at 7:45 AM EST

·     ECB President Draghi press release, 8:30 AM EST

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

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

 

Macro

Up/Down

Last

WTI Crude

0.50

56.72

Brent

0.74

66.73

Gold

-0.30

1,287.30

EUR/USD

0.0008

1.1315

JPY/USD

-0.09

111.68

10-Year Note

-0.003

2.683%

 

 

Sector News Breakdown

Consumer

·     American Eagle (AEO) Q4 adjusted EPS 43c/$1.24B vs. est. 42c/$1.26B; sees Q1 EPS 19c-21c vs. est. 24c; 4Q comparable sales +6%, in-line with estimates while 4Q AE total brand comparable sales +3% and 4Q Aerie total brand comparable sales +23%

·     Craft Brew Alliance (BREW) Q4 adjusted EPS 5c/$46.29M vs. est. 1c/$46.54M; said Kona depletions increased by 11% in Q4, and total CBA depletions decreased 1% from the same period a year ago; Kona shipments increased by 8% in Q4, and total CBA shipments decreased 1% compared to the same period last year; sees FY19 CapEx $15M-$19M

·     Hugo Boss AG (BOSS.XE) said 2018 net profit rose, and it set higher targets for 2019; said 2018 net profit was 236 million euros ($266.8 million), up 2.2% from EUR231 million the year before. The result came below analyst expectations of EUR275.9 million net profit for the year

·     Tesla Inc. (TSLA) gave details about its updated Supercharger network, with new technology that will ultimately cut drivers’ recharging time by 50%. In a blog post, Tesla said V3 Supercharging can provide a Model 3 Long Range operating at peak efficiency 75 miles of charge in 5 minutes

·     Rosetta Stone (RST) Q4 EPS loss (19c)/$44.6M vs. est. loss (38c)/$43.89M

 

Energy

·     Flotek (FTK) Q4 adjusted EPS loss (10c)/$43.4M vs. est. loss (10c)/$62.4M

·     Canadian Natural (CNQ) reports Q4 EPS (C$0.64) vs. C$0.32 last year; company achieved record annual production of approximately 1,079,000 BOE/d, delivering 12% production growth and 14% production per share growth over 2017 levels

·     Northern Oil and Gas’ (NOG) total proved reserves at Dec. 31 increased 79% to 135.5 million barrels of oil equivalent (MMBoe) with an associated PV-10 value of $2.18 billion.

·     Ultra’s (UPL) 2019 annual production is expected to range between 240-250 Bcfe. In Q1, the average daily production rate is expected to range between 675-695 MMcfe/d. For 2019, the capital investment program is expected to be approximately $320M-$350M

 

Healthcare

·     Allergan’s (AGN) rapastinel fails to meet primary endpoint in three studies as an adjunctive treatment of Major Depressive Disorder. In three acute studies, the rapastinel treatment arms did not differentiate from placebo on the primary and key secondary endpoints. In all three acute studies rapastinel was well tolerated without any signal of psychotomimetic side effects

·     Health Insurance Innovations (HIIQ) Q4 EPS 98c/$131.9M vs. est. 77c/$83.12M; said “had a strong finish to 2018 and business trends have accelerated in the first two months of 2019 with expected total months sold, or expected duration units, increasing 24% year-over-year;” sees FY19 EPS $3.20 to $3.35 vs. est. $2.98 and expects annual revenue for 2019 to grow 22% to 25% year-over-year

·     Epizyme (EPZM) 10M share secondary priced at $11.50 per share

·     Horizon Pharma (HZNP) 12.245M share Secondary priced at $24.50

·     ShockWave Medical (SWAV) 5.7M share IPO priced at $17.00

 

Industrials & Materials

·     Buyout firm Apollo Global Management LLC has agreed to acquire Direct ChassisLink Inc, the largest chassis rental and leasing company in the United States, for about $2.5 billion, including debt, Reuters reported https://reut.rs/2CbkTSW

·     ABM Industries (ABM) Q1 EPS 31c/$1.61B vs. est. 26c/$1.62B; sees year EPS $1.90-$2.05 vs. est. $1.97; adopted Financial Accounting Standards Board’s new revenue recognition standards in Nov.

·     MYR Group (MYRG) Q4 EPS 64c/$446.3M vs. est. 52c/$398.51M; reports “record” backlog of $1.147B

·     REV Group (REVG) Q1 adjusted EPS loss (5c)/$518.7M vs. est. 2c/$510.8M; backs FY19 revenue view $2.4-$2.6B vs. est. $2.46B while backs FY19 adjusted EBITDA view $150M-$170M

 

Technology, Media & Telecom

·     Huawei has confirmed it is suing the US over its ban on government agencies buying equipment from the Chinese company

·     Tech Data (TECD) Q4 adjusted EPS $4.55/$10.46B vs. est. $4.03/$10.63B; sees Q1 adjusted EPS $1.80-$2.10 on revs $8.3B-$8.6B vs. est. $2.04/$8.69B

·     Pluralsight (PS) 13.56M share Secondary priced at $29.25

·     Samsung denied it may bid for NXP Semiconductor (NXPI) Bloomberg reported. NXPI shares had jumped overnight after Invest Chosun initially reported Samsung’s interest

·     Comtech (CMTL) Q4 EPS 40c/$164.1M vs. est. 16c/$159.96M; Q2 Adjusted EBITDA was $23.2M vs. $14.5M last year; backlog as of January 31, 2019 was $586.4M; bookings in Q2 were $123.3M, with a company-wide book-to-bill ratio of 0.75; lowers FY19 GAAP EPS view to 86c-98c from 95c-$1.08; raises FY19 revenue view to $645M-$660M from $625M-$640M

·     Descartes Systems (DSGX) Q4 EPS 10c/$71.0M vs. est. 11c/$71.22M; said at January 31, Descartes had $27.3M in cash. Cash decreased $7.8M in Q4 and $5.5M in FY19

·     Guidewire Software (GWRE) Q2 adjusted EPS 34c/$169.3M vs. est. 19c/$159.71M; sees Q3 adjusted EPS 5c-9c on revs $152.5M-$156.5M vs. est. 5c/$148.61M

·     TTEC Holdings (TTEC) Q4 adjusted EPS 63c/$419.1M vs est. 76c/$409.61M; sees FY19 revenue $1.614B-$1.63B vs. est. $1.56B

·     Yext (YEXT) Q4 adjusted EPS loss (3c)/$63.8M vs. est. loss (9c)/$62.77M; sees Q1 adjusted EPS loss (11c)-(9c) on revs $66M-$67M vs. est. loss (10c)/$67.04M; sees 2020 EPS loss (40c-44c) vs. est. loss (38c)

·     Facebook Inc (FB) Chief Executive Mark Zuckerberg said on Wednesday the company would encrypt conversations on more of its messaging services and make them compatible

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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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