Morning Preview: March 08, 2019

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Early Look

Friday, March 8, 2019

Futures

Up/Down

%

Last

DJ Industrials

-97.00

0.38%

25,406

S&P 500

-10.50

0.37%

2,744

Nasdaq

-34.50

0.49%

7,021

 

 

U.S. stocks are pointing to a lower open, tracking weakness in Asia after gloomy export data out of China, on pace for a 5th straight day of losses ahead of the nonfarm payroll jobs report later this morning. Coming into today’s action, the Nasdaq Comp is looking at a 2.2% drop for the week, while the Dow industrials and S&P 500 are off around 2% each. In Asian markets, The Nikkei Index fell -430 points or 2% to settle at 21,025, the Shanghai Index plunged -136 points or 4.4% to finish near the lows, and the Hang Seng Index dropped -551 points (1.9%) to finish at 28,228. In Europe, the German DAX is down around -70 points at 11,450, while the FTSE 100 is down over -60 points back under the 7,100 level. The 4.4% decline in China marks its worst one-day percentage drop since October after reporting a 20% drop in February exports following a 9.1% gain in January.

 

Stocks struggled on Thursday, as the S&P, Dow and Nasdaq Comp each fell for a fourth straight session after the European Central Bank said it would push out the timeframe for interest rate hikes and offered a new round of cheap loans to help banks. At the same time, the ECB slashed their forecast for 2019 GDP growth in the EuroZone to 1.1% from a previous estimate of 1.7% and sees 2020 growth of 1.6% versus a previous forecast of 1.7%. Dow Transports fell a tenth straight day in a record-equaling losing streak while the S&P 500 and Dow fall for the seventh time in eight sessions. Treasury prices gained by the ECB stimulus move, sending the benchmark 10-year Treasury yield 6 bps lower to 2.64% and the two-year yield down 5 bps to 2.46%. Financials, consumer discretionary and tech led the declines while interest rate sensitive sectors such as utilities and homebuilders gained.

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -22.52 points, or 0.81%, to 2,748.93

·     The Dow Jones Industrial Average fell -200.23 points, or 0.78%, to 25,473.23

·     The Nasdaq Composite sunk -84.46 points, or 1.13%, to 7,421.46

·     The Russell 2000 Index declined -13.19 points, or 0.86% to 1,523.63

 

Events Calendar for Today

·     8:30 AM EST      Change in Nonfarm payrolls for February…est. 180K

·     8:30 AM EST      Change in Private Payrolls for February…est. 170K

·     8:30 AM EST      Change in Manufacturing Payrolls for February…est. 12K

·     8:30 AM EST      Unemployment Rate for February…est. 3.9%

·     8:30 AM EST      Average Hourly Earnings for February…est. 0.3%

·     8:30 AM EST      Housing Starts MoM for January…est. +10.9% to 1.195M

·     8:30 AM EST      Building Permits MoM for January…est. down -2.9% to 1.287M

·     1:00 PM EST       Baker Hughes Weekly Rig Count

 

Earnings Calendar:

·     Earnings Before the Open: DSKE, FGP, MTN, NAV

 

Macro

Up/Down

Last

WTI Crude

-0.94

55.72

Brent

-1.19

65.11

Gold

7.80

1,293.90

EUR/USD

0.0024

1.1217

JPY/USD

-0.41

111.17

10-Year Note

-0.002

2.637%

 

 

World News

·     China’s exports fell sharply last month, tumbling 20.7% from a year earlier in February, after jumping 9.1% in January, according to data. The country’s exports to the U.S. fell 26.2% last month, while imports from the U.S. dropped 28.6%, leading to a bilateral trade surplus of $14.72 billion, a two-year low.

·     German manufacturing orders plunged at the start of the year, but orders in December were revised sharply. Total orders for the key sector declined 2.6% month-to-month in January, missing economists’ forecasts of a 0.5% increase. But December data now show a 0.6% monthly rise in orders thanks to the late reporting of two large tickets in the aircraft industry.

 

Sector News Breakdown

Consumer

·     Costco (COST) Q2 EPS $2.01/$35.40B vs. est. $1.69/$35.67B; Q2 total company comparable sales up 5.4% vs. est. 5.7%; 2Q total company comparable sales excluding fuel, in constant currency +6.7% vs. estimate +6.5%; 2Q membership fees $768 million

·     Tesla Inc. (TSLA) has reached an agreement to secure loans from Chinese banks to build a vehicle and battery factory in the country, putting the carmaker a step closer to producing Model 3 sedans at its first overseas plant – Bloomberg said late Thursday

·     American Outdoor Brands (AOBC) Q3 EPS 16c/$162.0M vs. est. 12c/$160.9M; sees Q1 non-GAAP EPS 11c-15c on revs $162M-$172M vs. est. 20c/$170.51M; 3Q gross margin 33.4%, vs. Bloomberg estimate 32.9%

·     Camping World (CWH) Q4 revenue $982.4M vs. est. $971.4M; 4Q adjusted Ebitda $10.3M below est. $47.5M; corrected for errors that were immaterial to previously-reported consolidated financial statements; identified material weakness in internal controls that existed as of Dec. 31; specifically related to sufficiency of available technical resources

·     Chuy’s (CHUY) Q4 adjusted EPS 11c/$96.8M vs. est. 12c/$97.77M; on a calendar basis, comparable restaurant sales increased 0.9%; sees FY19 EPS 91c-95c, vs. consensus 95c; sees FY19 comparable restaurant sales growth 1.5%-2.5%

·     Korn/Ferry (KFY) Q3 adjusted EPS 81c/$486.2M vs. est. 81c/$480.52M; sees Q4 diluted EPS 85c-93c on revs $485M-$505M vs. est. 89c/$501.72M; approved increase to buyback to $250M

·     El Pollo Loco (LOCO) Q4 EPS 16c/$106.26M vs. est. 14c/$104.4M; system-wide comparable restaurant sales increased 4.4% (vs. est. 2.8%), including a 3.7% increase for company-operated restaurants, and a 5.1% increase for franchised restaurants; sees FY19 EPS 70c-75c vs. est. 80c; sees FY19 system-wide comparable restaurant sales growth of approximately 2%-4%

 

Energy, Industrials & Materials

·     Airbus (EADSY) has logged cancellations for 103 jetliners and garnered a grand total of four new sales (which were all for the A220 plane manufactured in Canada by Bombardier). The order drought comes after Airbus pulled the plug on its A380 after Emirates decided to cut back its orders of the iconic aircraft.

·     Navistar (NAV) Q1 EPS 11c/$2.4B vs. est. 16c/$2.19B; backs FY19 revenue view $10.75B-$11.25B, vs. consensus $10.72B and backs FY19 adjusted EBITDA view $850M-$900M

·     Trinity Industries (TRN) approves new $350M share repurchase program

 

Healthcare

·     Insys (INSY) Q4 EPS loss (37c) vs. est. loss (29c); Q4 adjusted Ebitda loss $28.7M vs. Bloomberg est. loss $21.1M

·     OncoMed (OMED) Q4 EPS loss (12c)/$10.2M vs. est. loss (22c)/$9M; 4Q cash and other $57.3M

·     NanoString (NSTG) Q4 EPS loss (68c)/$30M vs. est. loss (50c)/$29.4M; sees FY19 EPS ($2.45)-($2.30) on revs $118M-$123M vs. est. loss ($2.02)/$122.74M

·     T2 Biosystems (TTOO) sees Q1 revs $1.5M-$1.8M and FY19 revs $10.5M, both below estimates ($4.05M/$21.77M)

·     The FDA has accepted for Priority Review, the sBLA for Dupixent (dupilumab), developed by Sanofi Genzyme and Regeneron Pharmaceuticals (REGN), as an add-on maintenance treatment for adults with inadequately controlled severe chronic rhinosinusitis with nasal polyps

 

Technology, Media & Telecom

·     Marvell (MRVL) Q4 adjusted EPS 25c/$745M vs. est. 25c/$740.31M; sees Q1 adjusted EPS 12c-16c on revs $650M +/- 3% below est. 23c/$718.16M; sees 1Q adjusted gross margin 64% after Q4 margins 64.5%

·     Eventbrite (EB) Q4 EPS loss (17c)/$75.9M vs. est. loss (14c)/$73.22M; reports Q4 paid tickets up 17.6% to 26.7M; sees Q1 revenue $80M-$84M vs. est. $91.08M and sees Q1 adjusted EBITDA $4M-$8M

·     Okta (OKTA) Q4 adjusted EPS loss (4c)/$115.5M vs. est. loss (8c)/$107.95M; sees Q1 adjusted EPS (22c)-(21c) on revs $116M-$117M vs. est. loss (12c)/$111.73M; sees FY20 adjusted EPS (53c)-(48c) on revs $530M-$535M vs. est. loss (22c)/$518.35M

·     ON Semiconductor (ON) sees 2020 gross margin 40% and free cash flow $900 million, as the company’s 2020 model shows strong demand and industry discipline leading to better pricing environment; sees 2022 revenue $7.1 billion and gross margin of 43% – analyst day

·     Upland Software (UPLD) Q4 adjusted EPS 58c/$45.2M vs. est. 49c/$43.45M; sees Q1 revenue $47.9M-$48.9M vs. est. $46.43M and sees Q1 adjusted EBITDA $17.2M-$17.8M; sees FY19 revenue $194.8M-$198.8M vs. est. $190.34M

·     An Amazon (AMZN) led group of investors that includes the New York Yankees is ready to sign a deal to buy YES Network — one of New York’s most prominent cable sports channels — for roughly $3.5 billion, the NY Post reported

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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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