Morning Preview: April 22, 2019

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Early Look

Monday, April 22, 2019

Futures

Up/Down

%

Last

DJ Industrials

-55.00

0.21%

26,511

S&P 500

-7.00

0.24%

2,903

Nasdaq

-19.50

0.26%

7,692

 

 

Stock futures in the U.S. are set to start the week lower as the benchmark Standard & Poor’s 500 index ended a shortened trading week on Thursday higher, but snapped a winning streak of three weekly gains. Markets may be expressing caution with major averages right around all-time highs ahead of a very busy week of earnings and data (GDP report expected Friday). In the commodity sector, oil prices jumped over 2% after reports the U.S. will announce the end of waivers for countries to import Iranian oil, as part of a bid by the Trump administration to push Iran’s exports to zero. WTI crude prices topped the $65 per barrel level after finishing last week with a modest 0.2% gain around 5-month highs. In Asian markets, The Nikkei Index rose 17 points to settle at 22,217, the Shanghai Index dropped -55 points to settle at 3,215 though the Hang Seng Index was closed. In Europe, most major markets were closed, including the German DAX is closed, FTSE 100 index and Cac-40. Overall, after extreme volatility in December when markets plunged and have subsequently risen to near all-time record over the last 3 months, April has been relatively “calm” so far as the S&P 500 index has not risen or declined more than 1% on any given day while the CBOE Volatility index (VIX) has slipped.

Market Closing Prices Yesterday

·     The S&P 500 Index climbed 4.58 points, or 0.16%, to 2,905.03

·     The Dow Jones Industrial Average rose 110.00 points, or 0.42%, to 26,559.54

·     The Nasdaq Composite gained 1.98 points, or 0.02%, to 7,998.06

·     The Russell 2000 Index declined -1.85 points, or 0.12% to 1,565.75

 

Events Calendar for Today

·     8:30 AM EST      Chicago Fed Nat Activity Index for March

·     10:00 AM EST    Existing Home Sales MoM for March

 

Earnings Calendar:

·     Earnings Before the Open: AVX, BMS, GWW, HAL, KMB, LII, STLD, TCF

·     Earnings After the Close: BRO, CDNS, CE, HLX, RMBS, RRC, WHR, ZION

 

 

Macro

Up/Down

Last

WTI Crude

1.51

65.51

Brent

1.87

73.84

Gold

4.00

1,279.40

EUR/USD

0.0006

1.1251

JPY/USD

0.00

111.92

10-Year Note

+0.002

2.567%

 

 

World News

·     Sri Lankan authorities took 24 people into custody in connection with a series of Easter morning suicide bombing attacks on tourist hotels and churches that killed almost 300 people and injured hundreds of others. Arrests were made in several locations in and near the capital, where the bombings were focused. There were at least eight explosions on Sunday,

 

Sector News Breakdown

Consumer

·     Tesla (TSLA) said on Monday that it was investigating a video that appears to show one of its electric vehicles exploding in a parking lot in Shanghai. 

·     Francesca’s (FRAN) provides preliminary estimated results, or range of estimated results, for 4Q; sees preliminary 4Q adj loss 1c-3c per share; sees “modest deceleration” in comp sales for 1Q “attributable to the simplification of the promotional strategy and markdown cadence,” and as enhancements to merchandise presentation in boutiques; requires extension for 10-K filing

·     Boston Beer (SAM) mentioned positively in Barron’s saying investors shouldn’t rush to buy the stock as big stock swings around earnings and a hoppy valuation give reason for pause

 

Energy

·     Oil climbed to a new five-month high on Monday following a report that the US will stop giving sanctions waivers to countries that import Iranian crude or condensate

·     Occidental Petroleum (OXY) downgraded to Neutral from Buy at Mizuho

·     ExxonMobil (XOM) said it made a new oil discovery offshore Guyana at the Yellowtail-1 well, marking the 13th discovery on the Stabroek Block. The discovery adds to the previously announced estimated recoverable resource of approximately 5.5 billion oil-equivalent barrels on the Stabroek Block

·     Saudi Aramco will acquire Royal Dutch Shell’s (RDSA) 50% stake in their Saudi refining joint venture SASREF for $631 million, the two companies said on Sunday

·     The Trump administration won’t renew the waivers that let countries buy Iranian crude oil without facing U.S. sanctions, according to people familiar with the matter, a move that could roil energy markets and risks upsetting major importers such as India and China – Bloomberg

 

Financials

·     Santander Consumer USA Holdings (SC) was downgraded to neutral from overweight at Piper Jaffray (PT $24), which wrote that valuation and credit metrics “are no longer as compelling.”

·     Washington Trust (WASH) Q1 EPS $1.00 vs. est. 95c; 1Q net interest income $34.6M and Q1 net interest margin 2.93%

·     INDB Q1 operating EPS $1.30 vs. est. $1.30; 1Q tangible book value per share $29.64

·     People’s United (PBCT) Q1 operating EPS was 33c, in-line with estimates; 1Q net interest margin 3.20% vs. estimate 3.19%

·     United Insurance (UIHC) said it sees estimated catastrophe losses incurred in 1Q at $18M

 

Healthcare

·     Intuitive Surgical (ISRG) Q1 EPS $2.61/$974M vs. est. $2.70/$973.4M; said 1Q worldwide procedure growth +18% vs. Bloomberg est. +16.5% and Q1 surgical system placements 235 vs. Bloomberg estimate 219

·     UnitedHealth Group (UNH), Anthem (ANTM), Cigna (CI), Humana (HUM) and CVS Health (CVS) look appealing, Barron’s said, adding that “Medicare-for-All” looks like a long shot.

·     Watch health insurers as former Vice President Joe Biden is making preparations to enter the Democratic presidential campaign with a possible announcement as soon as next Wednesday, according to people familiar with his plans

·     Eli Lilly (LLY) announced a global licensing and research collaboration focused on the discovery, development and commercialization of potential new medicines in immunology and other select indications

 

Industrials & Materials

·     Boeing’s (BA) factory in North Charleston, S.C., has faced problems with production and oversight that create a safety threat, NY Times reported, citing a review of internal emails, corporate documents and federal records, as well as interviews with more than a dozen current and former employees

·     Bemis (BMS) Q1 adjusted EPS 67c/$1B vs. est. 65c/$1.01B; due to the pending merger with Amcor, Bemis Company is not providing 2019 guidance

 

Technology, Media & Telecom

·     Huawei Technologies Co. said Q1 revenue jumped 39% to 179.7 billion yuan ($26.81 billion), as the Chinese telecom giant made further inroads in the market for 5G wireless technology. Huawei also said it has signed 40 commercial contracts to supply carriers with 5G technology,

·     Samsung Electronics has delayed its media events to launch its new foldable phone in Hong Kong and Singapore, which were planned for this week, after defective samples of the Galaxy Fold were reported

·     IPG Photonics (IPGP) upgraded to Buy from Neutral at Bank America

·     Spotify (SPOT) mentioned cautiously in Barron’s saying although it is fast-growing, youth-focused, cloud-operated, subscription-based, passionate CEO, the article says concerns such as fierce competition from competitors such as Apple, Google, and Amazon; pushback from artists who complain about how little they get from the deal, and on valuation, isn’t worth the risk

·     Mark Mahaney of RBC Capital Markets thinks Spotify can be the next Netflix (NFLX), an underdog that outmaneuvers tech giants. Notes Spotify is investing in podcasting, a business whose U.S. revenues are expected to more than double to about $659 million from 2017 to 2020

·     Intel (INTC) mentioned positively in Barron’s saying it could be the big winner after Apple (AAPL) and Qualcomm (QCOM) reached a six-year patent licensing deal and agreed for Qualcomm to supply chipsets to Apple. Intel’s decision to exit the 5G smartphone-modem business removes a distraction from its money-making core x86 chip division.

·     Exponent (EXPO) Q1 EPS 42c/$93.4M vs. est. 36c/$94.7M; 1Q Ebitda $23.9M

·     Intelsat S.A. (I) said that the anomaly previously disclosed on April 10, 2019 has resulted in the total loss of the Intelsat 29e spacecraft. A failure review board has been convened with the satellite’s manufacturer, Boeing, to complete a comprehensive analysis of the cause of the anomaly.

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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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