Morning Preview: May 15, 2019

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Early Look

Wednesday, May 15, 2019

Futures

Up/Down

%

Last

DJ Industrials

-77.00

0.30%

25,493

S&P 500

-8.50

0.28%

2,831

Nasdaq

-18.50

0.25%

7,402

 

 

Stock futures are pointing to a weaker open, giving back some of yesterday’s rebound amid weaker China data overnight, a lower forecast for oil demand growth from the IEA and of course uncertainty regarding global trade after the U.S. and China issued tariffs on products for one another over the last week. Equities closed higher on Tuesday after President Donald Trump tried to reassure markets that a trade deal with China will be reached, but that follows lots of criticisms of China the last 2-days. Asian markets, The Nikkei Index gained 121 points to 21,188, the Shanghai Index jumped 55 points to 2,938 and the Hang Seng Index rose 146 points to 28,628. In Europe, the German DAX is down about -50 points to 11,940, while the FTSE 100 is little changed at 7,240. Regarding Brexit, Prime Minister Theresa May has told the opposition leader Jeremy Corbyn that she will bring her withdrawal bill (three times) back before the House of Commons on June 3. In a meeting with Corbyn on Tuesday, the PM said she wanted to see the bill approved by ministers before the House’s summer recess in late July.

Market Closing Prices Yesterday

·     The S&P 500 Index gained 22.54 points, or 0.80%, to 2,834.41

·     The Dow Jones Industrial Average rose 207.06 points, or 0.82%, to 25,532.05

·     The Nasdaq Composite spiked 87.47 points, or 1.14%, to 7,734.49

·     The Russell 2000 Index advanced 20.06 points, or 1.32% to 1,543.06

 

Events Calendar for Today

·     7:00 AM EST      MBA Mortgage Applications Data

·     8:30 AM EST      Retail Sales MoM for April…est. 0.2%

·     8:30 AM EST      Retail Sales Ex: Autos MoM for April…est. 0.7%

·     8:30 AM EST      Empire Manufacturing for May…est. 8.0

·     9:15 AM EST      Industrial Production MoM for April…est. 0.0%

·     9:15 AM EST      Capacity Utilization for April…est. 78.7%

·     10:00 AM EST    NAHB Housing Market Index for May…est. 64

·     10:00 AM EST    Business Inventories for March…est. 0.0%

·     10:30 AM EST    Weekly DOE Inventory Data

·     12:00 PM EST    Fed’s Barkin speaks to Economists in New York

·     4:00 PM EST       Net Long Term TIC Flows for March…prior $51.9B

 

Earnings Calendar:

·     Earnings Before the Open: CHRA, M, RUBY

·     Earnings After the Close: ACHV, CSCO, FLO, JACK, LMB

 

Other Key Events:

·     China Industrial Production and Retail Sales for April

·     JPMorgan 47th Annual Technology, Media & Communications Conference, 5/14-5/16, in Boston

·     JPMorgan Global Consumer & Retail Conference, 5/14-5/16, in London

·     MLP & Energy Infrastructure 2019 conference, 5/14-5/16, in Las Vegas

 

 

Macro

Up/Down

Last

WTI Crude

-0.82

60.96

Brent

-0.64

70.60

Gold

1.35

1,298.25

EUR/USD

-0.0005

1.1199

JPY/USD

-0.29

109.32

10-Year Note

-0.038

2.375%

 

 

World News

·     Chinese retail sales grew at the slowest pace in nearly 16 years in April while industrial output and fixed asset investment came in short of estimates. China’s economy limped into April as factory output rose 5.4% year on year, missing the 6.5% estimate, and retail sales flopped.

·     The IEA slashed its forecast for oil demand growth, citing an economic lull in Asia and disappointing consumption from China, Japan and Brazil. The IEA slashed estimates for global oil demand in the first quarter by 400,000 barrels a day, and for the year as a whole by a more modest 200,000 a day. As a result, the growth rate for 2019 was lowered by 90,000 barrels a day to a still “healthy” 1.3 million a day.

·     Investor Intelligence equity newsletter writer’s classified as bullish falls to 51.4% the lowest since February 13 and down from 55.5% last week. Those expecting a correction jumps by the most since mid-December, rising to 31.1%, the highest since the end of January, from 26.7% last week while bearish sentiment slips to 17.5% from 17.8%

·     The US is evacuating all but emergency staff from its embassy and consulate in Iraq, as tensions rise between the US and Iraq’s neighbor Iran in the volatile Gulf region

 

Sector News Breakdown

Consumer

·     Container Store (TCS) shares rose 14%; Q4 adjusted EPS 33c/$253.2M vs. est. 30c/$244.4M; Q4 comp sales up 8.5% (vs. 0.9% YoY), with Custom Closets up 7.4% and sees FY comparable sales +2% to +3%; sees FY19 EPS 41c-51c on revs $915M-$925M vs. est. 45c/$909.47M; says results include positive impact from the “Marie Kondo effect” that is driving interest in the company’s core category of custom closets, storage and organization

·     Amazon.com. Inc. (AMZN) broke ground on construction of a $1.5 billion air hub outside Cincinnati on Tuesday as part of a plan to deliver packages to consumers faster

·     Copa Holdings (CPA) reported load factor for April of 84.1%; April capacity -3.5% and April traffic -0.9%

·     Walmart Inc. (WMT) confirmed it is considering an initial public offering for its Asda subsidiary in the UK, according to Bloomberg News but that preparations could “take years.”

·     YogaWorks (YOGA) Q1 revenue $15.7M and reports Q1 adjusted net loss of ($2.7M).

 

Energy, Industrials & Materials

·     The American Petroleum Institute (API) reports that crude inventories rose 8.63M barrels last week, gasoline inventories rose 567,000 barrels, and distillates rose 2.17M barrels

·     JinkoSolar (JKS) files to sell 3.75M American Depositary Shares

·     Nordic American Tankers (NAT) Q1 EPS 4c/$53.6M vs. est. loss (1c)/$46.8M; 1Q operating cash flow $18.1M and 1Q adjusted net operating earnings $34.3M vs $4.39M YoY

·     Advanced Energy (AEIS) announced that it has entered into a definitive agreement to acquire the Embedded Power business of Artesyn Embedded Technologies from Platinum Equity. The total consideration for this transaction will be approximately $400M

·     Sunworks (SUNW) Q1 net loss per share (17c) vs. net loss of (7c) YoY and estimate for a loss of (3c); total revenue for the quarter was $9.3M compared to $13.4M last year

·     Werner (WERN) approves 5M shares repurchase program and declares $3.75 special cash dividend

 

Financials

·     Discover Financial (DFS) April Charge-offs 3.46% vs. 3.20% YoY; April delinquencies +2.38% vs. +2.30% YoY; April total card loans $66.4B, in-line YoY

·     Capital One (COF) reports April net charge-offs 5.15% vs. 4.90% last month and April delinquencies 3.42% vs. 4.04% last month

·     JPMorgan (JPM) reports April net credit losses 2.51% vs. 2.55% last month and April 30-plus day delinquencies 1.18% vs. 1.23% last month

·     CoreLogic (CLGX) sees 2Q non-cash impairment charge $45M-$50M for intangible and software assets relating to its appraisal management company, or AMC; sees 2Q cash charges $10M-$12M, mainly related to personnel reductions; doesn’t expect charges to affect its achievement of previously issued guidance for 2Q and full year

·     Mizuho Financial Group, Japan’s second largest bank, said it expects its profits to fall below analyst forecasts for its current financial year

·     Virtu Financial (VIRT) announces offering of 7M shares of Class A common stock

·     Western Asset Mortgage (WMC) files to sell 5M shares of common stock

 

Healthcare

·     Agilent (A) shares fell -8%; Q2 adjusted EPS 71c/$1.24B vs. est. 72c/$1.27B; cut its revenue forecast for the full year to $5.085B-$5.125B from $5.15B-$5.19B (below est. $5.19B) while backs FY19 EPS view $3.03-$3.07 vs. est. $3.07; guided Q3 revs $1.225B-$1.245B vs. est. $1.27B

·     Celgene (CELG) said the FDA designated its drug as orphan treatment for multiple myeloma; awarded designation to the treatment, which has generic name Cereblon Enzyme 3 (E3) Ubiquitin Ligase Modulating Agent

·     Aurora Cannabis Inc. (ACB) Q3 sales and losses both grew faster than expected as Q3 losses were C$160.1M, or (16c) vs. versus losses of C$20M, or (4c) in the year-ago period; Q3 gross revenue to C$75.2M, up from C$16.1M in the year-ago period.

·     Tilray (TLRY) Q1 EPS loss (27c)/$23M vs. est. loss (27c)/$21.16M; Q1 total kilogram equivalents sold increased over two-fold to 3,012 kilograms from 1,299 kilograms in the prior year period; Q1 adjusted EBITDA ($14.6M) vs. ($3.2M)

·     Chiasma Inc. (CHMA) signed a commercial supply agreement with Lonza for its oral somatostatin analog candidate, conditionally trade named Mycapssa

·     ImmunoGen (IMGN) said the FDA has recommended it conduct a new Phase 3 trial to evaluate the safety and efficacy of mirvetuximab soravtansine in patients with high folate receptor alpha (FRα)-positive, platinum-resistant ovarian cancer as part of a Type C meeting held this week

 

Technology, Media & Telecom

·     AT&T (T) reaffirmed year forecast at conferences as still sees free cash flow in $26 billion range, still sees low single-digit adjusted EPS growth and still sees adjusted net debt-to-EBITDA ratio in the 2.5x range by the end of 2019

·     8×8 (EGHT) Q4 adjusted EPS loss (9c)/$93.8M vs. est. loss (8c)/$93M; sees Q1 revenue $95.3M-$96.3M vs. est. $97.36M and sees Q1 adjusted pre-tax loss of roughly $17M; guides FY20 revenue roughly $418M vs. est. $416.6M; sees FY20 adjusted pre-tax loss roughly $50M

·     Amdocs (DOX) Q2 EPS $1.06/$1.02B vs. est. $1.03/$1.02B; sees Q3 EPS $1.08-$1.14 on revs $1.005B-$1.045B vs. est. $1.09/$1.02B; sees FY19 EPS growth of roughly 4.5%-8.5% year-over-year and sees FY19 revenue growth of 3.0%-5.0% year-over-year on a constant currency basis

·     New Relic (NEWR) Q4 adjusted EPS 13c/$132.1M vs. est. 6c/$128.1M; sees Q1 adjusted EPS 7c-8c on revs $138M-$140M vs. est. 18c/$138.54M; sees FY20 adjusted EPS 54c-62c on revs $600M-$607M vs. est. 86c/$601.48M

·     Xilinx (XLNX) said it expects $3.5B in year revenue, slightly above estimates of $3.49B

_________________________________________________________________

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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