Morning Preview: March 21, 2019

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Early Look

Thursday, March 21, 2019

Futures

Up/Down

%

Last

DJ Industrials

-28.00

0.11%

25,701

S&P 500

-1.50

0.04%

2,826

Nasdaq

8.50

0.11%

7,417

 

 

Stocks in the U.S. are pointing to a mixed open, with Dow futures indicated lower after sliding yesterday, while the tech heavy Nasdaq is on track to open higher, led by shares of chipmakers after Micron (up 3%) rallies despite a significantly lower outlook for the upcoming quarter. In Asian markets, The Nikkei Index was closed, the Shanghai Index rose 10 points to move just above the 3,100 level and the Hang Seng Index fell -249 points to 29,071. In Europe, the German DAX adds to yesterday losses, down another 40 points at 11,560, while the FTSE 100 is up around 20 points above the 7,300 level as Brexit uncertainty continued to plague the U.K. Next up for the UK, The Bank of England is expected to leave rates unchanged at its Monetary Policy Committee meeting this morning. In the U.S. later this morning, initial jobless claims, the Philadelphia Fed’s business outlook index and February’s leading index are all expected out.

 

It was a volatile session on Wednesday as stocks started lower on more tough tariff talk from President Trump on China, only to rally late afternoon following an overly dovish Fed statement that indicated there would be no more rate hikes this year (down from its prior view of two this year) and only one next year citing slowing growth and tame inflation. However, the rally couldn’t hold as stocks faded late session with the Dow dropping over -140 points. Technology shares gained, paced by FAANG stocks as Internet large caps lead the way. U.S. crude oil climbed above $60 per barrel for the first time in about four months, after government data showed domestic stockpiles of crude oil and refined fuels plunged last week. Treasuries surged, driving 10-year yields to the lowest level since January 2018, as Federal Reserve officials wiped out interest-rate hikes from their median projection (10-year Treasury yield slid as low as 2.53%, falling 9 basis points).

 

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -8.34 points, or 0.29%, to 2,824.23

·     The Dow Jones Industrial Average fell -141.71 points, or 0.55%, to 25,745.67

·     The Nasdaq Composite gained 5.02 points, or 0.07%, to 7,728.97

·     The Russell 2000 Index declined -11.83 points, or 0.76% to 1,543.16

 

Events Calendar for Today

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

·     8:30 AM EST      Continuing Claims…est. 1.77M

·     8:30 AM EST      Philly Fed Survey for March…est. 4.8

·     9:45 AM EST      Bloomberg Consumer Comfort Index…prior 60.8

·     10:00 AM EST    Leading Index for February…est. 0.1%

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

 

Earnings Calendar:

·     Earnings Before the Open: APTX, ATU, CATO, CCL, CMC, CTAS, CVIA, DRI, GIII, LE

·     Earnings After the Close: CAG, CAL, NKE, SCHL, ZUO

 

 

Macro

Up/Down

Last

WTI Crude

-0.35

59.88

Brent

-0.30

68.20

Gold

16.20

1,317.90

EUR/USD

-0.0018

1.1395

JPY/USD

-0.22

110.48

10-Year Note

-0.022

2.512%

 

 

World News

·     U.K. Prime Minister Theresa May addressed the nation saying she would seek a short extension to the March 29 deadline and laying the blame at the feet of British MPs

·     U.K. Retail Sales rose 0.4% in February, well above the expectations that they would sink 0.04%, suggesting consumers are not pulling back quite as hard amid Brexit as many had feared

·     New Zealand Prime Minister Jacinda Ardern announced an immediate ban Thursday on semi-automatic and automatic weapons like the ones used in the attacks on two mosques in Christchurch

 

Sector News Breakdown

Consumer

·     Guess (GES) shares fell -14%; Q4 EPS 70c/$837.1M vs. est. 75c/$831.515M; sees FY20 GAAP EPS $1.09-$1.21 vs. est. $1.38 and sees FY20 revenue up 4.0%-5.0%, implies $2.71B-$2.74B (est. $2.72B); 4Q Americas comparable sales +6% vs. est. +2.2%; sees 1Q revenue +2.5% to +3.5%

·     Williams-Sonoma (WSM) shares rose 5%; Q4 adjusted EPS $2.10/$1.84B vs. est. $1.96/$1.79B; 4Q comparable sales +2.4% vs. estimate +2.8%, with Q4 Pottery Barn comparable sales -0.4% vs. Bloomberg estimate +0.8% and 4Q Williams-Sonoma comparable sales +0.1% vs. estimate +1.1%; sees FY19 comparable brand revenue growth 2%-5%; sees FY19 EPS $4.50-$4.70 on revs $5.67B-$5.84B vs. est. $4.33/$5.63B; increases stock repurchase program by $500M

·     Frontdoor (FTDR) 16.73M share Secondary priced at $30.00

·     Levi Strauss (LEVI) 36.667M share IPO priced at $17.00

·     AutoZone Inc. (AZO) authorized an additional $1 billion in the company’s stock buyback program

·     Chegg (CHGG) to offer $500M of convertible senior notes due 2025

·     Herman Miller (MLHR) Q3 adjusted EPS 64c/$619M vs. est. 60c/$622.35M; sees Q4 adjusted EPS 76c-80c on revs $645M-$665M vs. est. 72c/$654.85M; 3Q gross margin 35.7% vs. Bloomberg estimate 36.1% and Q3 adjusted Ebitda $68.2M vs. est. $65.2M

·     J. Crew Group Q4 comparable company sales +9% following a decrease of 3% in 4Q; said J. Crew comparable sales +6%; Madewell comparable sales +22%; gross margin decreased to 22.4% from 36.7% in 4Q; net loss $74.4M which reflects impact of excess inventory write-downs

 

Energy, Industrials & Materials

·     Boeing (BA) shares slipped overnight after the Seattle Times reported that the FBI has joined the criminal investigation being conducted by the U.S. Department of Transportation into the certification of the 737 MAX following two recent fatal crashes involving the Boeing jet

·     Covia (CVIA) Q4 EPS loss (37c)/$441M vs. est. loss (30c)/$464.85M; sees FY19 CapEx $80M-$100M, down from prior view of $90M-$110M

·     Vale (VALE) halted operations at the Algeria iron mine in the Mariana complex, which may remove up to 10 million tons a year from the market. The mine will re-enter production when analysis guarantees stability under stress conditions

·     Raytheon (RTN) raises annual dividend 8.6% to $3.77 from $3.47 per share

·     Worthington Industries (WOR) Q3 EPS 46c/$874.4M vs. est. 56c/$927.3M; CEO said “we continued to feel the impact of higher input costs and volatility in steel prices, but we also made good progress toward recovering margin as the quarter progressed;” Gross margin decreased $37.0 million from the prior year quarter to $90.0 million

·     Canadian Solar (CSIQ) Q4 non-GAAP EPS $1.61/$901.0M vs. est. $1.01/$814.02M; Q4 total solar module shipments were 1,951 MW, compared to 1,590 MW in Q3 and the revised fourth quarter guidance of 1.9 GW to 1.95 GW; sees Q1 revenue $450M-$480M vs. est. $875.41M as reflects the impact of an expected lower module ASP and lower revenue from solar project sales; sees FY10 revenue $3.5B-$3.8B vs. est. $2.48

 

Financials

·     MGIC Investment (MTG) announces $200M share buyback

·     Raymond James (RJF) February client assets under administration rose 7% y/y, 3% m/m to $785.3B; financial assets under administration rose 4% y/y, 2% m/m to $136.7B

·     Wex (WEX) Q4 adjusted EPS $2.11/$381.2M vs. est. $2.10/$373.8M (and vs. $331.6M last year); sees Q1 adjusted EPS $1.64-$1.70 on revs $375M-$380M, vs. est. $1.96/$381.62M; sees FY19 adjusted EPS $8.80-$9.20 on FY19 revenue $1.68B-$1.72B vs. est. $8.96/$1.63B

·     AXA Equitable (EQH) 40M share Secondary priced at $20.50

 

Healthcare

·     U.S. cannabis retailer Curaleaf Holdings Inc. (CURLF) disclosed that CVS Health Corp. (CVS) will carry its line of CBD products with a derivative of marijuana

 

Technology, Media & Telecom

·     Micron (MU) Q2 EPS $1.71/$5.84B vs. est. $1.67/$5.82B; sees Q3 EPS 85c +/- 10c on revs $4.8B +/- $200M below consensus of $1.23/$5.33B; sees Q3 gross margin 37%-40%; sees Q3 operating expenses $785M +/- $25M; will cut output and trim investment in manufacturing after reporting its first sales drop in more than two years in the second quarter

·     Uniti Group (UNIT) Q4 EPS 4c/$270.8M vs. est. 5c/$266.88M; cuts quarterly dividend to 5c from 60c; sees FY19 revenue $1,080B-$1,089 below consensus $1.13B saying 2019 outlook assumes the Windstream lease continues in full force and effect, and that Windstream continues to make all lease payments on time

·     Tencent’s (TCEHY) quarterly profit missed estimates while revenue beat after the company spent heavily on cloud and mobile payments to offset a gaming slowdown; Weixin and WeChat had 1.1 billion monthly active users, which were up 11% year-on-year.

·     Apple (AAPL) has made a notable deal with The Wall Street Journal (NWSA) to join its Apple News subscription service, 9to5Mac reports

_________________________________________________________________

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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