Mid-Morning Look: April 24, 2019

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Mid-Morning Look

Wednesday, April 24, 2019






DJ Industrials




S&P 500








Russell 2000






U.S. equities are pulling back from record closing highs in the S&P 500 index yesterday as investors digest the latest batch of corporate earnings that came in mixed this morning. The Nasdaq Comp traded as high as 8,131.33, just below its all-time intraday high of 8,133.29 last August. Earnings results have been strong thus far, with 120 having reported and almost 80% of companies reporting are beating Wall Street profit estimates according to a few newswires, but some are pulling back on profit taking or cautious forward looking outlooks. Treasuries rise globally as yields decline and the dollar extended its rally to a six-week high, weighing on commodity prices. Regarding trade, US trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin will lead a U.S. delegation to China next week to resume trade negotiations according to reports overnight. The earnings barrage continues again tonight with high profile reports from: MSFT, FB, TSLA, XLNX, LRCX, PYPL among many others.


Treasuries, Currencies and Commodities

·     In currency markets, the euro slipped to 3-week lows vs. the dollar below 1.12, as the greenback extends its recent gains, with the dollar index at fresh 52-week highs today; the Canadian dollar falls vs. the buck as Canada’s central bank keeps its key interest rate unchanged at 1.75% and now sees H1 growth in Canada slower than it expected in January.

·     Commodity prices are little changed with oi just off 6-month closing highs yesterday and gold bouncing off 2019 lows as the commodity space watching the recent spike up in the US dollar. In oil, Saudi Arabia sees no need to take immediate action in the crude market, though it will respond to the requirements of buyers affected by the end of U.S. waivers on imports from Iran, Energy Minister Khalid Al-Falih said.

·     Treasury market’s rally as the yield on the 10-year falls below 2.52%, back below January lows after having failed at 2.61% a week ago; no major economic data in the US to move Treasury markets which are higher as stocks pull back from near record highs







WTI Crude















10-Year Note





Sector Movers Today

·     Medical equipment and devices; BSX shares fell after missing 1Q revenue and adj. EPS estimates and lowering the high-end of its 2019 organic sales growth guidance; SYK reported 1Q revenue in line with consensus, but organic growth was 7.3%, at the upper end of SYK’s full-year guidance; EW TAVR growth was roughly in-line with the Street; ARAY reported an inline F3Q, with sales just slightly below consensus and gross orders ~$1.5M above expectations; ZBH was upgraded to strong buy at Needham as expect ZBH’s revenue growth to accelerate during 2019 as it shifts back to offense after addressing its supply issues; TFX was downgraded at Needham saying organic revenue growth comps get progressively more difficult in each quarter in 2019; TMO posted Q1 beat and raised guidance for the year (comes after weaker WAT guidance yesterday)

·     Aerospace & Defense; group posted solid gains on Tuesday after LMT beat and raise with more of the same today as Dow component BA reported results (EPS miss and in-line revs) while suspended its full-year guidance previously issued; NOC reported Q1 EPS beat but revs missed and boosted year EPS to $18.90-$19.30 from $18.50-$19.00 and backed year revs; GD posted Q1 top and bottom line beat and backlog up 11.4% to $69.2B

·     Transports; in rails, NSC better Q1 results as railway revenue was up 5% to a Q1 record of $2.8B and income from railway operations jumped 16% to $966M; CP however posted EPS below consensus views despite revenues that were in line with expectations citing extensive challenges from weather and C$50M of increased casualty expense; TK eliminates quarterly common stock dividend and said it intends to offer $300M senior secured notes due 2024 in a private placement; in trucking, KNX reported mix Q1 as EPS beat by 3c while revs of $1.2B missed the $1.3B estimate and cuts the top end of its Q1 forecast; Other rail names like UNP and CSX soared last week on the back of strong results

·     E&P sector; OXY offered to purchase APC in a deal valued at $38B, or $76, more than 15% higher than CVX’s agreement to buy the shale driller. CVX had previously bid $33B or $65 per share https://on.mktw.net/2VjtEFh ; RDSA is close to an agreement to buy BPs stake in the Shearwater oil and gas field in the U.K. North Sea for ~$250M, Reuters reports; CVE missed Q1 earnings expectations and cutting its FY 2019 oil sands production guidance by 7% to reflect the anticipated impact of Alberta’s mandated cuts across the full year.

·     Hospitals (THC, HCA, UHS); Baird said the proposed Medicare payment update for hospitals in FY2020 looks modestly better than their expectations. CMS plans to increase payments for hospital inpatient services by 3.5% and the impact table suggests payments for urban hospitals (proxy for HCA, THC, UHS) will also increase by 3.5% – compares to expectation of +2.5-3.0% and represents the highest payment update for hospitals in a decade



·     APC +10%; as OXY offered to purchase the company in a deal valued at $38B, or $76, more than 15% higher than CVX’s agreement to buy the shale driller. CVX had previously bid $33B or $65 per share https://on.mktw.net/2VjtEFh

·     BURL +3%; narrowed its Q1 forecasts and announced a leadership change-up, but company cut the upper end of its first-quarter adjusted EPS view

·     DPZ +6%; reported Q1 earnings that easily topped forecasts despite falling short on revenue and U.S. same-store sales

·     EBAY +5%; reported upside to both revenues and EPS, as take rate benefited from ramping promoted listings (just under 110% growth in 1Q), but GMV declined 1%

·     NSC +4%; better Q1 results as railway revenue was up 5% to a Q1 record of $2.8B and income from railway operations jumped 16% to $966M

·     SAP +10%; raised its annual profit forecast on growth in the cloud business, while activist Elliott Management revealed a 1.2% stake and endorsed the company’s change of direction.

·     SLAB +13%; after Q1 EPS/revs beat and guided Q2 EPS 70c-80c, well above the 63c estimate



·     AMTD -3%; as Q2 EPS beat analysts’ estimates but it was due to lower marketing spending and the capital return program as positives that would offset light revenue

·     APH -3%; lowered its 2019 sales outlook to $8.2 billion, or 2% below consensus, citing a weaker mobile device market

·     CAT -3%; reversed pre-market gains after mixed Q1 results as posted strong Q1 results and also boosted its full-year outlook, while reported lighter Q1 margins and CEO said the company would “lose a little bit of market share for this year” in China

·     IRBT -19%; posts an EPS beat but a revenue miss ($237M vs. est. $251M) while ups year EPS but reaffirms year sales

·     LPL -11%; after posting a wider than expected operating loss and warned of a weak 2019 on stalled smartphones and OLED R&D costs

·     MTSI 2%; guides Q2 EPS loss to (18c), worse than the prior guidance of up 4c-12c and revs about $121M below the $138M estimate citing inventory factors

·     RES -10%; missed on 1Q EPS, revenue, and Ebitda, while also announced it was cutting its dividend (SPN shares also weak after results in pressure pumping sector)

·     RHI -9%; after lower-than-expected Q1 results, but the top line increases 5.2% Y/Y to ~$1.5B on a reported basis and 8.5% on an adjusted basis

·     SNAP -6%; reversed overnight gains/posted smaller EPS loss than expected and accelerated 39% revenue growth while noting that its outlook for Q2 suggests a similar rate of growth

·     T -3%; reported a Q1 revenue miss as its premium TV and streaming service lost subscribers while the US telecoms group said it was on track to meet its deleveraging goals


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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