Morning Preview: May 13, 2019

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Early Look

Monday, May 13, 2019

Futures

Up/Down

%

Last

DJ Industrials

-300.00

1.16%

25,664

S&P 500

-35.50

1.23%

2,851

Nasdaq

-126.50

1.67%

7,483

 

 

After posting the worst weekly return of 2019, U.S. stocks are on track to open sharply lower to start the week, falling as the U.S. and China appear deadlock over trade negotiations with the Trump administration having demanded promises of concrete changes to Chinese law and Beijing saying over the weekend it would not swallow any “bitter fruit” that harmed its interests. Another round of harsh statements from President Trump to China over the weekend in another “tweet” blast is rocking U.S. futures early. White House economic adviser Larry Kudlow also said Sunday that the U.S. needs to see China agree to “very strong” enforcement provisions for an eventual deal and vowed the tariffs would remain in place while negotiations continue. In Asian markets, The Nikkei Index fell -153 points to settle at 21,191, the Shanghai Index fell -35 points to 2.903 and the Hang Seng Index was closed. In Europe, the German DAX is down about -80 points trading just under 12,000, while the FTSE 100 is little changed around the 7,200 level. Oil prices are jumping after reports Saudi Arabia has said two tankers came under attack near the United Arab Emirates on Sunday, shortly after the UAE said four of its vessels had been sabotaged. The rough start to the week begins as earnings season subsides, with Dow Industrials on track for a decline of over -300 points after disappointing results last week as the Dow fell 2.1% for its biggest weekly loss since March. The S&P saw a 2.2% weekly fall and the Nasdaq shed 3%, the biggest losses for both since the week ending Dec. 21. The move came after the U.S. said it was ready to impose 25% tariffs on another $300 billion worth of Chinese goods, nearly all that country’s imports.

Market Closing Prices Yesterday

·     The S&P 500 Index climbed 10.68 points, or 0.37%, to 2,881.40

·     The Dow Jones Industrial Average rose 114.01 points, or 0.44%, to 25,942.37

·     The Nasdaq Composite gained 6.35 points, or 0.08%, to 7,916.94

·     The Russell 2000 Index advanced 2.94 points, or 0.19% to 1,572.99

 

Events Calendar for Today

·     No Major U.S. Economic Data Released today

 

 

Macro

Up/Down

Last

WTI Crude

0.78

62.44

Brent

1.09

71.71

Gold

-2.15

1,283.90

EUR/USD

0.0002

1.1235

JPY/USD

-0.28

109.67

10-Year Note

-0.046

2.42%

 

 

World News

·     President Trump said in a tweet on Saturday: “I think that China felt they were being beaten so badly in the recent negotiation that they may as well wait around for the next election, 2020, to see if they could get lucky & have a Democrat win – in which case they would continue to rip-off the USA for $500 Billion a year…the only problem is that they know I am going to win (best economy & employment numbers in U.S. history, & much more), and the deal will become far worse for them if it has to be negotiated in my second term. Would be wise for them to act now, but love collecting BIG TARIFFS!”

 

Sector News Breakdown

Consumer

·     General Motors’ (GM) mentioned positively in Barron’s saying its Cruise division highlights the value of the company’s stock. Cruise got a new $1.15B investment from T. Rowe Price Group (TROW) and SoftBank (SFTBY), valuing the autonomous-driving unit at roughly $19B, and said investors should be more excited and believe in the Cruise valuation

·     Investors might want to shift from frothy stocks like Jack Daniel’s maker Brown-Forman (BF/B) and contract distiller MGP Ingredients (MGPI) to more diversified alcohol manufacturers such as Diageo (DEO), Barron’s said

 

Energy

·     Bristow (BRS) obtained $75 million in new financing from senior secured noteholders before Chapter 11 filing and an additional $75 million in debtor-in-possession financing

·     Saudi Arabia has said two tankers came under attack near the United Arab Emirates on Sunday, shortly after the UAE said four of its vessels had been sabotaged

·     Lonestar Resources (LONE) Q1 adjusted EPS loss (14c)/$40.74M vs. est. loss (4c)/$30.68M; reported a 46% increase in net oil and gas production to 11,372 BOE/d during Q1.

 

Healthcare

·     Catalyst Pharmaceuticals (CPRX) Q1 EPS loss (1c) on revenue $12.4M

·     Endo (ENDP) downgraded to Underweight from Neutral at JPMorgan

·     Teva Pharmaceuticals (TEVA) CFO reiterated that the company has done nothing wrong in the wake of a price-fixing lawsuit filed by 44 U.S. states, according to Reuters

·     Insys (INSY) said it has substantial doubt about the company’s ability to continue as a going concern within one year of the issuance date of the unaudited condensed consolidated financial statements. It may be necessary for the company to file a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code

 

Industrials & Materials

·     J.B. Hunt (JBHT) positively mentioned in Barron’s saying it has about a quarter of the $18B intermodal industry, but trends in the railroad industry and in e-commerce are seen as negatives for the company’s business. However, at a recent $95, J.B. Hunt’s stock looks cheap and says the stock could climb 50%-plus over the next couple of years

·     UPS (UPS) mentioned positively in Barron’s saying at $100, shares look appealing after being little changed over the past five years. UPS yields 3.8%, the highest dividend rate among major transportation companies and double that of the S&P 500 index. Said if the Street gets more comfortable with the company’s ability to hit its targets and increase free cash flow, the stock price could be appreciably higher

·     Bayer (BAYRY) said on Sunday it was hiring an external law firm to investigate French media complaints that Monsanto, the U.S. seed maker it took over last year, had compiled a file of influential personalities

·     Southwest (LUV) and American (AAL) pilot unions have received federal grand jury subpoenas for information related to Boeing’s (BA) 737 MAX aircraft, which is still grounded

·     U.S. defense companies Raytheon Co. (RTN) and Lockheed Martin Corp. (LMT) are competing against Britain’s Babcock International Group Plc for a contract to train U.K. Royal Navy recruits, the Financial Times reported

 

Technology, Media & Telecom

·     Facebook (FB) mentioned in Barron’s saying after announced its plans to enter the dating space last May, panicked investors sent market leader Match Group ‘s (MTCH) stock tumbling toward its worst drop ever, but a year later, they are not so worried. The main competitive risk to Match’s business appears to be fading, with Facebook yet to launch a dating product in the U.S.

·     Amazon (AMZN) considers using machines to automatically pack costumer orders at more warehouses

·     Shopify (SHOP) downgraded to neutral from buy at Guggenheim

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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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