Morning Preview: March 20, 2019

Auto PostDaily Market Report

Early Look

Wednesday, March 20, 2019

Futures

Up/Down

%

Last

DJ Industrials

-1.00

0.00%

25,905

S&P 500

0.00

0.00%

2,836

Nasdaq

2.50

0.03%

7,379

 

 

U.S. stock futures are flat to mixed ahead of today’s FOMC rate decision (no rate move expected) and after package delivery giant (and a good barometer for the economy) Fed-Ex shares slide over 6% after Q3 results fell short of estimates and lowered its full year profit outlook saying weaker global trade growth trends contributed to the revenue shortfall. In Asian markets, The Nikkei Index rose 42 points to settle at 21,608, the Shanghai Index…the Hang Seng Index fell -145 points to settle at 29,320. In Europe, the German DAX is down over 130 points to 11,650, while the FTSE 100 is little changed at 7,320. Back to the Fed, Chairman Powell is likely to stress his patient message and covey the notion that although it’s impossible to know for sure whether or when the Fed will raise rates again, it will not be soon according to some. Powell will also likely use his press conference Wednesday to accentuate the positive about the outlook while avoiding the negative, though noting the economy has slowed since. Stocks finished mixed on Tuesday, as a rally sputtered late day following headlines that U.S. and Chinese negotiators remain at odds on certain parts of their current trade talks and that Trump administration officials are concerned that China is pushing back against U.S. demands. The headlines took some steam out of the market rally ahead of today’s FOMC meeting, where rates are expected to stand pat, but may see a change in “dot plots” regarding the futures stance on rates. Prior to the late day slide, the benchmark S&P 500 Index topped 2,850 for the first time since October.

Market Closing Prices Yesterday

·     The S&P 500 Index dipped -0.37 points, or 0.01%, to 2,832.57

·     The Dow Jones Industrial Average fell -26.72 points, or 0.10%, to 25,887.38

·     The Nasdaq Composite gained 9.47 points, or 0.12%, to 7,723.95

·     The Russell 2000 Index declined -8.95 points, or 0.57% to 1,554.99

 

Events Calendar for Today

·     7:00 AM EST      MBA Mortgage Applications Data

·     10:30 AM EST    Weekly DOE Inventory Data

·     2:00 PM EST       FOMC Rate Decision – no rate change expected

 

Earnings Calendar:

·     Earnings Before the Open: GES, GIS, MTBC

·     Earnings After the Close: MLHR, MU, QADB, RAVN, WOR, WSM

 

Other Key Events:

·     FOMC Rate Decision at 2:00 PM

·     Drug, Chemical, & Associated Tech (DCAT) week, 3/18-3/21, in New York

·     Game Developers Conference (GDC) runs 3/18-3/22, in San Francisco

·     Oppenheimer 29th Annual Healthcare Conference, 3/19-3/21, in New York

·     William Blair 9th Annual Cancer Immunotherapy Conference in New York

 

 

Macro

Up/Down

Last

WTI Crude

-0.35

58.68

Brent

-0.15

67.46

Gold

-3.70

1,302.80

EUR/USD

0.00

1.1352

JPY/USD

0.16

111.55

10-Year Note

-0.017

2.596%

 

 

Sector News Breakdown

Consumer

·     Kroger (KR) announces an agreement to sell its Turkey Hill business to an affiliate of Peak Rock Capital; Kroger expects the deal to close during FQ1. The company plans to pay down debt with the proceeds

·     Steelcase (SCS) Q4 EPS 29c/$912.4M vs. est. $870M; sees Q1 EPS 16c-20c on revs $830M-$855M vs. est. 20c/$818.5M

·     SeaWorld Entertainment (SEAS) announces that COO John Reilly is leaving the company on March 31

·     Monster Beverage (MNST) downgraded to neutral and removed from Goldman Sachs conviction list

·     Invitation Homes (INVH) 43M share Spot Secondary priced at $23.30

·     Nomad Foods (NOMD) 17.39M share Secondary priced at $20.00

 

Energy

·     The American Petroleum Institute (API) reported late U.S. crude supplies fell by -2.1M barrels for the week ended March 15, showed that gasoline stockpiles were down -2.8M barrels, while distillate inventories declined by -1.6M barrels

·     Westport (WPRT) Q4 EPS loss (8c)/$60.5M vs. est. loss (4c)/$62.15M; sees FY19 consolidated revenue $265M-$295M vs. est. $294.17M

·     Five of the ten most destructive fires in California since 2015 have been tied to PG&E’s (PCG) electrical network and regulators have found in many cases that the company violated state law or could have put more effort into making the equipment safer – NY Times reports

·     FirstEnergy (FE) upgraded to Overweight from Equal Weight at Barclays with $46 tgt saying technical overhangs and associated bankruptcy risk “is now de minimis and the discount to peers isn’t justified

 

Financials

·     Investor Intelligence poll equity newsletter writers classified as bulls rise for 10 of last 11 weeks to 53.9% vs 52.4% last week; now at highest since October 10 while bearish sentiment drops to 20.6% from 21.4%; those expecting a correction drop for a 7th week to a five-month low of 25.5% vs 26.2%

·     The UK market regulator has fined UBS (UBS) $27.6M for failing to report tens of millions of transactions properly, warning that such errors increase the risk of market abuse not being spotted.

·     UP Fintech (TIGR) 13M share IPO priced at $8.00

·     BlackRock Inc. (BLK) plans to cut the price that its largest clients will pay for investing it its biggest equity index fund, according to the Wall Street Journal.

 

Healthcare

·     Dermira (DERM) 9.8M share Secondary priced at $13.25 per share

·     NanoString (NSTG) 4.5M share Secondary priced at $23.00

·     ResTORbio (TORC) 7.2M share Secondary priced at $6.95

·     Merck KGaA and Pfizer Inc. (PFE) announced the discontinuation of the ongoing Phase III JAVELIN Ovarian PARP 100 study evaluating the efficacy and safety of avelumab in combination with chemotherapy

·     Affibody and Alexion Pharmaceuticals (ALXN) announce partnership to co-develop ABY-039 for rare Immunoglobulin G (IgG)-mediated autoimmune diseases

·     Ceridian (CDAY) 13M share Secondary priced at $50.50

 

Industrials & Materials

·     FedEx (FDX) Q3 adjusted EPS $3.03/$17B vs. est. $3.11/$17.67B; Q3 adjusted operating margin 5.8% vs 5.8% last year; cuts FY19 EPS view to $15.10-$15.90 from $15.50-$16.50 (est. $15.97); sees FY19 Capital Spending of $5.6B. Fiscal 2019 pre-tax cash costs related to business realignment activities, including the voluntary buyout program for eligible U.S.-based employees, are expected to total $450M-$575M

·     AAR Corp. (AIR) Q3 adjusted EPS 79c/$530M vs. est. 70c/$537.47M; sees FY19 adjusted EPS $2.50-$2.57 on revs $2.01B-$2.03B vs. est. $2.57/$2.05B; sees FY19 adjusted EBITDA in the range of $165M-$170M

·     Bayer (BAYRY) has lost the first phase of a trial over allegations that its Roundup herbicide causes cancer and now proceeds to a second phase to determine the liability and damages in the case of a man who sprayed the product on his property for decades

·     Franco-Nevada (FNV) Q4 EPS 24c/$148.2M in revs vs. est. 26c/$161.3M; 4Q gold production 104,877 equivalent oz; 4Q adjusted Ebitda $118.7M vs. estimate $124.8M

·     Aeris Resources Ltd. (AIS.AU) has made a US$575 million offer for Glencore PLC’s (GLNCY) underground mine in eastern Australia

 

Technology, Media & Telecom

·     Google (GOOGL) plans to ask all Android smartphone users in Europe whether they want to switch to competing search engines or web browsers, one of two new concessions the search giant is offering to stave off complaints, and potential fines, from EU antitrust regulators.

·     Smartsheet (SMAR) Q4 EPS loss (7c)/$52.2M vs. est. loss (14c)/$49.75M; sees Q1 EPS loss (19c)-(18c) on revs $54M-$55M vs. est. loss (14c)/$52.05M; sees FY20 EPS loss (59c)-(55c) on revs $253M-$257M vs. est. loss (52c)/$243.77M

·     Tencent Music (TME) Q4 revenue 5.40B yuan vs. Bloomberg est. 5.29B yuan

·     Viacom (VIAB) is warning DirecTV (T) customers that they could lose access to channels such as Nickelodeon and MTV unless the companies reach a new programming agreement; the current contract between the parties expires Friday

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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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