Morning Preview: May 16, 2019

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Early Look

Thursday, May 16, 2019

Futures

Up/Down

%

Last

DJ Industrials

83.00

0.32%

25,757

S&P 500

9.50

0.32%

2,864

Nasdaq

22.50

0.30%

7,551

 

 

U.S. stocks futures are pointing to a higher open, with Asia and Europe mixed with markets looking to extend gain into a third straight session despite another move by President Trump against the Chinese in the ongoing trade dispute. Markets are “shaking off” news that President Trump signed an executive order declaring a national emergency and imposing restrictions on the use of equipment from countries considered “foreign adversaries”. This has widely been taken as a move to target Huawei. Note earlier this month, an official report by the U.K. government suggested that Huawei’s equipment could be used in a limited fashion in the country’s 5G network. In the U.K., Prime Minister Theresa May is under renewed pressure to set a date for her departure, as attempts to reach a cross party Brexit agreement angered Conservative MPs. In corporate news, Dow component CSCO advanced overnight on better earnings results while retail giant WMT reports later this morning.

 

U.S. equities closed higher Wednesday on signs that the Trump administration is working towards easing tensions with trade partners, including the European Union and Japan. Treasuries ended off their best levels of the day but still finished higher as the 10-year Treasury yield dipped to 2.37% vs. 2.41% Tuesday. Meanwhile, the CBOE Volatility index (VIX) declined -9% to 16.44 as U.S. stocks posted their best 2-day return in over six weeks. In Asian markets overnight, The Nikkei Index fell -125 points to 21,062, the Shanghai Index rose 17 points to 2,955 and the Hang Seng Index gained a modest 6 points to 28,275. In Europe, the German DAX is up 40 points to 12,149, while the FTSE 100 is little changed holding around the 7,300 level.

Market Closing Prices Yesterday

·     The S&P 500 Index climbed 16.55 points, or 0.58%, to 2,850.96

·     The Dow Jones Industrial Average rose 115.97 points, or 0.45%, to 25,648.02

·     The Nasdaq Composite gained 87.65 points, or 1.13%, to 7,822.15

·     The Russell 2000 Index advanced 5.21 points, or 0.34% to 1,548.27

 

Events Calendar for Today

·     8:30 AM EST      Weekly Jobless Claims…est. 220K

·     8:30 AM EST      Continuing Claims…est. 1.675M

·     8:30 AM EST      Housing Starts MoM for April…est. 1.209M

·     8:30 AM EST      Building Permits MoM for April…est. 1.29M

·     8:30 AM EST      Philly Fed Business Outlook for May…est. 9.0

·     9:45 AM EST      Bloomberg Consumer Comfort Index…prior 59.8

·     10:30 AM EST    Weekly EIA Natural Gas Inventory Data

·     12:05 PM EST    Fed’s Kashkari discusses Monetary Policy and the Economy

 

Earnings Calendar:

·     Earnings Before the Open: ENS, EXP, HLIX, WMT

·     Earnings After the Close: AGYS, AINV, NVDA, PINS, PLMR

 

Other Key Events:

·     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

0.48

62.50

Brent

0.35

72.12

Gold

-1.80

1,294.75

EUR/USD

0.0009

1.1210

JPY/USD

0.05

109.65

10-Year Note

-0.001

2.375%

 

 

World News

·     U.S. total cross-border investment outflows at $8.1B in March and U.S. net long-term portfolio securities outflows at $28.4B in March. China holds $1.12T of U.S. Treasuries, a decrease of $10.4B from last month while Japan holds $1.08T, an increase of $5.7B from last month

 

Sector News Breakdown

Consumer

·     Dillard’s (DDS) Q1 EPS $2.99/$1.47B vs. est. $2.89/$1.50B; Q1 inventory up 3% and Q1 comp sales flat, gross margin from retail operations down 141bps; sees FY19 capex $140M vs. $137M last year

·     Burberry Group PLC reported comp-store sales rose only 2%, and pretax profit rose 6.8% below analysts’ expectations. The company appointed a new creative director last year in an effort to shift its strategy amid weak sales growth in the all-important Chinese market.

·     Flowers Foods (FLO) Q1 EPS 32c/$1.26B vs. est. 30c/$1.23B; backs year EPS view of 94c-$1.02 on revs $4.03B-$4.1B (est. 97c/$4.06B)

·     Jack in the Box (JACK) Q2 adjusted EPS 99c/$215.73M vs. est. 93c/$217.75M; Q2 system same-store sales increased 0.2% and company same-store sales increased 0.6% driven by average check growth of 2.8%, partially offset by a 2.2% decrease in transactions; narrows FY19 system SSS view to 0%-1% from 0%-2% and backs FY19 adjusted EBITDA view $260M-$270M

·     Limbach Holding (LMB) Q1 EPS 28c on revs $134.0M and reports Q1 adjusted EBITDA $5.6M vs. ($0.9M) last year

·     Farfetch (FTCH) Q1 adjusted EPS loss (18c)/$174.06M vs. est. loss (16c)/$171.05M; sees Q2 platform GMV growth 40%-42% and Adjusted EBITDA Margin is expected to be approximately (19%)-(21%); Q1 adjusted Ebitda loss $30.2M; sees year Platform GMV to grow about 41%

 

Energy, Industrials & Materials

·     California’s deadliest and most destructive fire, which ravaged northern portions of the state in November 2018, was caused by electrical transmission lines owned and operated by utility PG&E (PCG)

·     FTS International (FTSI) announces $100M stock buyback

·     Curtiss-Wright (CW) raises dividend 13%, announces new $200M share repurchase plan

·     Eagle Materials (EXP) Q4 adjusted EPS 87c/$284.7M vs. est. 80c/$276M; 4Q Gypsum Wallboard and Paperboard revenue $154.4M vs. $136.4M YoY

·     Colfax (CFX) announced that it has signed a definitive agreement to sell its Air and Gas Handling business to KPS Capital Partners for enterprise value of $1.8B, including $1.66B in cash consideration and $0.14B in assumed liabilities and minority interest

·     AZZ (AZZ) has delayed its conference call to review the financial results for the fourth quarter and fiscal year to May 20 at 11am ET

·     Premier Oil raised its production guidance for this year to 75k-80k boe/d from prior view of output of ~75k

·     ZTO Express (ZTO) Q1 adjusted EPS 13c/$681.6M vs. est. 17c; Q1 parcel volume grew 41.6% to 2.3B, market share expanded to 18.6%; sees 2019 net income up 14.3%-23.8% YoY; expects parcel volume for 2019 to be in range of 11.51B-11.93B, representing a 35%-40% increase YoY

 

Financials

·     Extra Space Storage (EXR) files automatic mixed securities shelf

 

Healthcare

·     Agios (AGIO) shares rose 18%; said the randomized Phase 3 ClarIDHy Trial of Tibsovo (ivosidenib) achieved its primary endpoint in previously treated IDH1 mutant cholangiocarcinoma patients; supplemental new drug application on track for submission by end of 2019

·     Iovance Bio (IOVA) +25%; after updated cervical and skin cancer results last night showed data from one arm of the “InnovaTIL-01” study with the drug lifileucel showed a 38% overall response rate in skin cancer, including two patients whose cancer went into remission

·     Second Sight Medical Products (EYES) will accelerate the development and commercialization of its Orion Visual Cortical Prosthesis System; sees adding more than 25 new positions this year, including top research and development talent as we pursue technological improvements of Orion

·     Seattle Genetics (SGEN) announced data from six of its proprietary programs will be presented at the upcoming ASCO 2019 Annual Meeting taking place May 31 to June 4, 2019 in Chicago

 

Technology, Media & Telecom

·     Cisco (CSCO) Q3 adjusted EPS 78c/$12.96B vs. est. 77c/$12.89B; sees Q4 adjusted EPS 80c-82c on rev growth 4.5%-6.5% (or $13.21B-$13.46B) vs. est. 81c/$13.29B; revenue overall grew 6%, as products grew 7% and services grew 3%; total gross margin was 64.6% on a non-GAAP basis (up from 64.5%), with product gross margin up to 62% from 61%, and service gross margin up to 66.3% from 65.8%

·     Virtusa (VRTU) Q4 EPS 59c/$327.6M vs. est. 62c/$330.91M; sees Q1 EPS 37c-43c on revs $313M-$321M below est. 61c/$334.45M; in-line FY20 outlook has $1.36-1.40B in revenue vs. $1.4B estimate and $2.58-2.82 EPS (est. $2.80)

·     NetEase (NTES) Q1 adjusted EPS $3.48/$2.74B vs. est.$2.28/$2.68B

·     Nice (NICE) Q1 EPS $1.18/$377.03M vs. est. $1.11/$374.9M; raises FY19 EPS view to $5.11-$5.31 from $5.08-$5.28 (est. $5.18) and backs FY19 revenue view $1.56B-$1.58B (est. $1.57B)

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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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