Morning Preview: April 29, 2019

Scott GreenDaily Market Report

Early Look

Friday, April 26, 2019

Futures

Up/Down

%

Last

DJ Industrials

3.00

0.01%

26,520

S&P 500

-1.50

0.03%

2,940

Nasdaq

-2.50

0.03%

7,838

Stock futures in the U.S. are little changed ahead of another very busy week of corporate earnings as well as a busy week for global economic data, highlighted by Friday’s monthly U.S. jobs report and Tuesday’s China PMI data and EuroZone GDP report. Other major data due includes the U.S. report on personal income and spending today, while the U.S. and China will resume trade talks this week in Beijing amid hopes a deal is imminent. Federal Reserve officials also conclude a meeting on Wednesday with expectations they won’t change their monetary policy. Oil prices fell on Monday, extending Friday’s 3% decline for WTI and Brent after President Donald Trump demanded that OPEC raise output to soften the impact of U.S. sanctions against Iran. U.S. stocks gained Friday on better-than-expected earnings results from companies including Amazon and Ford, pushing the S&P 500 and Nasdaq Composite to record highs while Q1 GDP growth accelerated by more than expected on a big boost from inventories and trade. In Asian markets, The Nikkei Index was closed, the Shanghai Index fell -23 points to 3,062 and the Hang Seng Index gained 287 points to end at 29,892. In Europe, the German DAX is down around -30 points to 12,280, while the FTSE 100 is down about -20 points to 7,410.

Market Closing Prices Yesterday

·     The S&P 500 Index gained 13.71 points, or 0.47%, to 2,939.88

·     The Dow Jones Industrial Average rose 81.25 points, or 0.31%, to 26,543.33

·     The Nasdaq Composite gained 27.72 points, or 0.34%, to 8,146.40

·     The Russell 2000 Index advanced 16.20 points, or 1.03% to 1,591.82

Events Calendar for Today

  • 8:30 AM EST       Personal Income for March
  • 8:30 AM EST       Personal Spending for March
  • 8:30 AM EST       PCE Deflator MoM for March
  • 8:30 AM EST       PCE Core Deflator MoM for March
  • 8:30 AM EST       PCE Core Deflator YoY for March
  • 10:30 AM EST     Dallas Fed Manufacturing Activity for April

Earnings Calendar:

  • Earnings Before the Open: AWI, CTB, L, MDR, MDSO, ON, OPB, SPOT
  • Earnings After the Close: AKS, BRKS, CGNX, CR, GHL, GOOGL, JBT, MGM, MKSI, MOH, MUSA, NBIX, NXPI, OMF, PI, RIG, RGA, Samsung, SANM, SBAC, THC, TNET, VNO, WDC, YUMC           

Sector News Breakdown

Consumer

  • Costco (COST) announced a $4B share buyback plan and boosted its quarterly dividend to 65c from 57c
  • Colgate-Palmolive (CL) upgraded to Neutral from Underweight at JPMorgan
  • American Airlines (AAL) upgraded to Buy from Hold at Deutsche Bank
  • Target (TGT) upgraded to overweight from equal-weight at Barclay’s
  • Veoneer (VNE) Q1 EPS loss ($1.57)/$494M vs. est. loss ($1.19)/$525.33M; said vehicle segment saw a sharper production decline than the general market; said they currently see these trends continuing through 2019, primarily due to weak markets in China and Europe
  • Tesla (TSLA) mentioned in Barron’s noting investing in shares can be a wild ride, with the stock buffeted by disappointing car deliveries, steeper first-quarter losses than Wall Street expected, and the departures of top executives…but for investors, there is a way to bet on Tesla’s cars and clientele, rather than on the company or Musk, namely bonds backed by customers’ car leases, also known as automobile asset-backed securities
  • Unilever (UL) mentioned cautiously in Barron’s saying some analysts say Unilever could underinvest in some of its brands in the pursuit of more profit, as Kraft Heinz has acknowledged

Energy

  • Pioneer Natural Resources (PXD) is in advanced talks to sell its Eagle Ford acreage in South Texas to Ensign Natural Resources, Reuters reports, citing sources familiar with the matter; says the transaction could still fall apart while Ensign expected to initially pay less than $1B
  • Diamond Offshore (DO) Q1 adjusted EPS loss (53c)/$233.54M vs. est. loss (59c)/$234.18M
  • An armed group tried to attack Libya’s El Sharara oilfield, the country’s biggest, but there was no impact on production, a field engineer said on Monday. Reuters
  • A Saudi oilfield services company backed by country’s sovereign wealth fund agreed to pay $415 million for Schlumberger’s (SLB) Middle Eastern drilling-rig business.

Financials

  • Berkshire Hathaway (BRK/A) mentioned in Barron’s, with a to-do list which would include buy back more stock, pay a dividend, showcase the next generation of leaders, offer better financial disclosure, provide annual letter from equity managers Todd Combs and Ted Weschler, and hold an annual Investor Day.
  • Visa Inc. (V) and MasterCard Inc. (MA) finalized a settlement with EU antitrust regulators that requires them to reduce card fees for non-European visitors shopping in the region
  • CNA Financial (CNA) reports Q1 core EPS $1.17 vs. est. $1.09 and reports Q1 book value per share $42.19

Healthcare

  • Lexicon Pharmaceuticals (LXRX) after European Commission approval of Zynquista (Sotagliflozin) as an adjunct to insulin to improve blood sugar control in adults with type 1 diabetes and a body mass index of at least 27 kg/m2, considered overweight. About a month ago, the FDA issued a CRL to co-developer Sanofi (SNY) in response to its U.S. marketing application
  • Regeneron Pharmaceuticals (REGN) and Sanofi (SNY) said the FDA approved Praluent (alirocumab) to reduce the risk of heart attack, stroke and unstable angina requiring hospitalization in adults with established cardiovascular disease

Industrials & Materials

  • Boeing (BA) did not tell Southwest Airlines (LUV), the largest MAX customer, when the airline began flying 737 MAX jets in 2017 that a standard safety feature, found on earlier models and designed to warn pilots about malfunctioning sensors, had been deactivated – WSJ
  • Gardener Denver (GDI) is closing in on a deal to combine with a division of Ingersoll-Rand (IR) to form the world’s second-largest manufacturer of industrial pumps and compressors with a market cap of roughly $11.6B https://on.wsj.com/2PJeGmR
  • Xylem (XYL) mentioned positively in Barron’s as RBC Capital analyst suggests companies engaged in water reuse and desalination, suggesting Xylem, a water technology provider up 25% this year; also notes shares of A.O. Smith (AOS) has climbed 32% this year
  • Bayer (BAYRY) CEO Werner Baumann lost a confidence vote as shareholders questioned how he handled the $63B Monsanto transaction and the wave of lawsuits that followed

Technology, Media & Telecom

  • ON Semiconductor (ON) Q1 adjusted EPS 43c/$1.39B vs. est. 39c/$1.39B; sees Q2 revenue $1.36B-$1.41B below consensus $1.44B; sees Q1 gross margin 36.5%-37.5%
  • Spotify (SPOT) Q1 EPS EUR (0.79) vs. EUR ($1.01) a year ago and reports Q1 revenue EUR 1.51B vs. EUR 1.14B a year ago; Q1 MAUs up 26% Y/Y to 217M and Premium Subscribers grew to 100M, up 32% Y/Y; sees Q2 revenue EUR 1.51B-EUR 1.71B, up 18%-35% Y/Y; sees Q2 total MAUs: 222M-228M, up 23-27% Y/Y and total Premium Subscribers: 107M-110M, up 29-34% Y/Y
  • Disney (DIS) “Avengers: Endgame” took a record $1.2 billion globally this weekend which includes an estimated international debut of $859 million and domestic debut of $350 million
  • Unimicron Technology drops by as much as the 10% daily limit, after Economic Daily News reported China’s Shennan Circuits may benefit from Apple’s plans to diversify suppliers to lower costs – Bloomberg

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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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