Morning Preview: March 28, 2019

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Early Look

Thursday, March 28, 2019

Futures

Up/Down

%

Last

DJ Industrials

-7.00

0.03%

25,653

S&P 500

-0.50

0.03%

2,809

Nasdaq

-1.50

0.02%

7,332

 

 

U.S. futures have slipped into negative territory, erasing earlier gains as Treasury yields resume their downward slide. Attention will likely turn from the decline in Treasury yields back to trade between China and the U.S. after U.S. officials offered encouraging words about ongoing negotiations with China according to Reuters, saying that progress had been made in all areas under discussion, though hurdles remain. U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steve Mnuchin arrive in Beijing for a new round of talks set to begin Thursday, which will be followed by talks in Washington next week. Reuters reported that China has offered to do more than ever before to curb forced technology transfers, though no timetable to reach a final deal was laid out. There are also five Fed speakers on the calendar today (Quarles, Clarida, Bowman, Bostic, Bullard) after the Fed’s George last night defended last year’s hikes but said was appropriate to keep rates steady now.

 

In Asian markets, The Nikkei Index fell -344 points to 21,033, the Shanghai Index dropped -27 points to move back under the 3,000 level (2,994), the Hang Seng Index rose 46 points to finish at 28,775. In Europe, the German DAX is up around 60 points at 11,480, while the FTSE 100 is higher by more than 50 points at 7,250. Yields on 10-year Treasuries recovered after hitting a fresh 15-month low, while those for Japanese benchmark bonds fell to the lowest in more than two years. Economic data also important today as U.S. GDP growth is expected to be revised down to an annualized 2.3% for the fourth-quarter from 2.6% according to consensus estimates. Meanwhile, U.S. initial jobless claims probably stayed essentially flat at 220,000 according to estimates.

 

U.S. stocks declined on Wednesday, erasing an early-morning rally as all major indexes ended the day in the red. The rally in bonds gained momentum globally and the 10-year Treasury yield fell to its lowest level since December 2017 (touching lows of 2.34% before settling around 2.38%). Newfound dovishness from central banks around the world (ECB, Fed, New Zealand yesterday) and weaker-than-expected data have hurt market sentiment, creating a rush into defensive, safe haven assets as bonds and gold have rallied and utilities touched all-time highs this week.

 

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -13.09 points, or 0.46%, to 2,805.37

·     The Dow Jones Industrial Average fell -32.14 points, or 0.13%, to 25,625.59

·     The Nasdaq Composite sunk -48.15 points, or 0.63%, to 7,643.38

·     The Russell 2000 Index declined -5.93 points, or 0.39% to 1,522.23

 

Events Calendar for Today

·     7:15 AM EST      Fed’s Quarles speaks at ECB Conference in Frankfurt

·     8:30 AM EST      GDP Annualized QoQ for Q4-T…est. 2.3%

·     8:30 AM EST      Personal Consumption for Q4-T…est. 2.6%

·     8:30 AM EST      GDP Price Index for Q4-T…est. 1.8%

·     8:30 AM EST      Core PCE QoQ for Q4-T…est. 1.7%

·     8:30 AM EST      Weekly Jobless Claims…est. 220K

·     8:30 AM EST      Continuing Claims…est. 1.778M

·     9:30 AM EST      Fed’s Clarida speaks at Bank of France conference in Paris

·     9:45 AM EST      Bloomberg Consumer Comfort Index…prior 61.5

·     10:00 AM EST    Pending Home Sales MoM for February…est. (-0.5%)

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

·     11:00 AM EST    Kansas City Fed Manufacturing Activity for March…est. 0

·     5:20 PM EST       Fed’s Bullard speaks in Wisconsin

 

Earnings Calendar:

·     Earnings Before the Open: MOV, OXM, PRGS,

·     Earnings After the Close: SAIC, SGH, SPWH

 

Other Key Events:

·     Academy of Managed Care & Specialty Pharma, 3/25-3/29 in San Diego, CA

·     Adobe Summit – The Digital Experience Conference, 3/25-3/28, in Las Vegas

·     Sidoti Spring 2019 Investor Conference, in New York

 

 

Macro

Up/Down

Last

WTI Crude

-0.35

59.06

Brent

-0.42

67.41

Gold

-4.40

1,312.50

EUR/USD

0.0006

1.1250

JPY/USD

-0.20

110.31

10-Year Note

-0.008

2.372%

 

 

World News

·     Kansas City Fed President Esther George (an FOMC voting member) said “the current outlook for inflation appears to be benign, and I consider the recent behavior of inflation to be broadly consistent with our price stability mandate,” in a speech to The Money Marketeers of New York University last night

·     House Judiciary Committee Chairman Jerrold Nadler, D-N.Y., said Attorney General William Barr agreed Wednesday to testify before Congress soon but didn’t say when he would share the special counsel’s report with lawmakers

 

Sector News Breakdown

Consumer

·     Five Below (FIVE) Q4 EPS $1.59/$602.7M vs. est. $1.58/$602M. Q4 EPS included an approximate 1c benefit due to a tax benefit from share-based accounting; sees Q1 comparable sales increase of 3%-4% after Q4 comp sales rose 4.4% vs. est. 4.3%; sees FY EPS $3.00-$3.07 vs. est. $3.13 and Q1 EPS 32c-35c on sales $361M_$366M vs. est. 39c/$358M; plans to open 145-150 stores, ending fiscal 2019 with 895-900 stores

·     Lululemon (LULU) shares rose 11%; Q4 EPS $1.85/$1.2B vs. est. $1.74/$1.15B; 4Q total comparable sales including direct-to-consumer in constant currency +17%, estimate +16.6%; sees Q1 EPS 68c-70c on revs $740M-$750M vs. est. 68c/$743.7M; sees Q1 comp sales growth in the low-double digits on a constant dollar basis; sees FY19 EPS $4.48-$4.55 on revs $3.7B-$3.74B vs. est. $4.40/$3.72B; sees FY19 comp sales growth in the low-double digits on a constant dollar basis; authorizes $500M shares buyback;

·     PVH Corp. (PVH) Q4 adjusted EPS $1.84/$2.48B vs. est. $1.76/$2.41B; authorizes $750M stock buyback; sees Q1 EPS $2.40-$2.45 vs. est. $2.45 and sees year EPS $10.30-$10.40 vs. est. $10.32; 4Q N.A. Calvin Klein comparable sales -1%, 4Q international Calvin Klein comparable sales +6%, 4Q N.A. Tommy Hilfiger comparable sales +5% and 4Q int’l Tommy Hilfiger comp sales +16%

·     YogaWorks (YOGA) Q4 EBITDA loss ($2.1M) versus ($1.1M) in Q417 and reports of revenue $14M; sees Q1 revenue $15.25M-$15.75M vs. est. $15.12M

·     Lyft (LYFT) boosts IPO price range to $70-$72 per share from $62-$68 per share (the IPO is expected to price this evening)

·     Peugeot S.A. said that it is buying a controlling interest in Longstar, a regional automotive parts wholesaler in China, aiming to increase its market coverage in the country.

 

Energy, Industrials & Materials

·     Bayer AG (BAYRY) – A federal jury awarded $80 million in damages to a California man who blamed Roundup weed killer for his cancer, in a case that his attorneys say could help determine the fate of hundreds of similar lawsuits (Roundup is owned by Monsanto which Bayer acquired)

·     H.B. Fuller (FUL) Q1 adjusted EPS 34c/$673M vs. est. 35c/$701.3M; backs FY19 adjusted EPS view $3.15-$3.45 (est. $3.29) and backs FY19 adjusted EBITDA in the range of $465M-$485M

·     Nucor Corp. (NUE) announced it will build a $1.35 billion manufacturing mill in a rural Kentucky county, creating several hundred jobs while expanding its presence in the bluegrass state

·     Sempra Energy (SRE), which has been selling assets following pressure form billionaire investor Paul Singer’s Elliott Management Corp., plans to hold on to its natural gas export terminals and build out the business – Bloomberg

 

Financials

·     Deutsche Bank (DB) is mulling new cost cuts following a weak first three months of the year, Reuters reports

·     JPMorgan (JPM) is cutting hundreds of workers in its asset and wealth-management division, Bloomberg reports

 

Healthcare

·     Precision BioSciences (DTIL) 7.9M share IPO priced at $16.00

·     Blueprint Medicines (BPMC) files to sell $300M in common stock; announced plans to expedite development of avapritinib, BLU-667 and BLU-782 based on recent clinical progress and interactions with regulatory authorities

 

Technology, Media & Telecom

·     On Semiconductor (ON) to acquire Quantenna (QTNA) for $24.50 per share in an all cash transaction in deal valued of approximately $1.07B and enterprise value of approximately $936M, after accounting for Quantenna’s net cash https://on.mktw.net/2V5yXox

·     Nielsen (NLSN) shares fell -11% after hours last night after the New York Post reported Private equity giant Blackstone Group is dropping out of the Nielsen Holdings sales process — putting the future of the auction in doubt https://nyp.st/2Wu3I6u 

·     SYNNEX (SNX) Q1 adjusted EPS $2.84/$5.25B vs. est. $2.74/$5.29B; sees Q2 adjusted EPS $2.62-$2.78 on revs $5.4B-$5.7B vs. est. $2.69/$5.5B

·     Verint (VRNT) Q4 EPS $1.08/$336.7M vs. est. $1.01/$332.54M; raises guidance for FY20; expects 8% year-over-year growth in 1Q non-GAAP revenue and 14% year-over-year growth in ADJ EPS; sees year rev Increasing by $25 million to $1.37 billion with a range of +/- 2%

·     British officials accused Huawei Technologies Co. of repeatedly failing to address security flaws in its products and said the company hasn’t demonstrated a commitment to fixing them. The report findings subject the Chinese telecom-equipment giant to fresh international scrutiny

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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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