Morning Preview: May 30, 2019

Auto PostDaily Market Report

Early Look

Thursday, May 30, 2019

Futures

Up/Down

%

Last

DJ Industrials

59.00

0.23%

25,168

S&P 500

9.50

0.34%

2,789

Nasdaq

24.50

0.34%

7,240

 

 

U.S. stock-index futures are tracking higher, looking to rebound along with the bounce in European equities as markets look to steady ahead of key economic data today. The yield on the benchmark 10-year Treasury held near the lowest level since 2017 (now up around 2.26% after falling to 2.21% yesterday), while the dollar edges higher. Busy morning of important economic data in the U.S. as first quarter gross domestic product (GDP) is expected at 8:30 AM EST with the consensus prediction for no change from the previous quarter’s figure, 3.2%, while weekly jobless claims data is also set to be released. In macro news overnight, Reuters reported on a request for federal funding by the U.S. Defense Department to bolster production of rare earths minerals, which China is the dominant player in and has threatened to withhold in the latest escalation of trade with Beijing. As for yesterday, stocks fell to a 12-week low as trade tensions between the U.S. and China persisted and Treasuries resumed a rally that raised recession fears. In Asian markets overnight, The Nikkei Index fell -60 points to 20,942, the Shanghai Index dipped -8 points to settle at 2,905 and the Hang Seng Index dropped -120 points to 27,114. In Europe, the German DAX is up about 70 points to trade back above 11,900, while the FTSE 100 is up around 30 points to 7,220.

Events Calendar for Today

·     8:30 AM EST      Gross Domestic Product (GDP) Annualized QoQ, Apr-P…est. 3.0%

·     8:30 AM EST      Personal Consumption for Q1-S…est. 1.2%

·     8:30 AM EST      GDP Price Index for Q1-S…est. 0.9%

·     8:30 AM EST      Core PCE QoQ for Q1-S…est. 1.3%

·     8:30 AM EST      Advance Goods Trade Balance for April…est. (-$72.7B)

·     8:30 AM EST      Weekly Jobless Claims…est. 215K

·     8:30 AM EST      Continuing Claims…est. 1.667M

·     9:45 AM EST      Bloomberg Consumer Comfort Index…prior 60.3

·     10:00 AM EST    Pending Home Sales MoM for April…est. +0.5%

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

·     11:00 AM EST    Weekly DOE Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: BURL, DBI, DG, DLTR, GHM, MOV, SAFM, SPWH, TECD, TITN

·     Earnings After the Close: COO, COST, DELL, GPS, MRVL, NTNX, OKTA, RRGB, SAFM, ULTA, VMW, YEXT, ZS

 

Other Key Events:

·     Bernstein 35th Annual Strategic Decisions Conference, 5/29-5/31, in NY

·     Cowen 47th Annual Technology, Media & Telecom Conference, 5/29-5/30, in NY

·     Jefferies 4th Annual IT & Internet & Service Summit, 5/29-5/30, in New York

·     KeyBanc Industrial & Materials Conference, 5/28-5/30, in Boston

·     Fed’s Clarida speaks to the Economic Club of New York 12:00 PM EST

·     RBC Capital Consumer & Retail Conference, 5/29-5/20, in Boston

 

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -19.37 points, or 0.69%, to 2,783.02

·     The Dow Jones Industrial Average fell -221.36 points, or 0.87%, to 25,126.41

·     The Nasdaq Composite slumped -60.04 points, or 0.79%, to 7,547.31

·     The Russell 2000 Index declined -14.07 points, or 0.94% to 1,489.95

 

 

Macro

Up/Down

Last

WTI Crude

0.18

58.99

Brent

-0.68

68.77

Gold

-3.25

1,276.50

EUR/USD

0.0006

1.1137

JPY/USD

0.12

109.71

10-Year Note

+0.01

2.262%

 

 

World News

·     In Italy, Deputy Prime Minister Matteo Salvini demanded that the European Central Bank intervene and back government debt (as Italian bonds rise)

 

Sector News Breakdown

Consumer

·     PVH (PVH) shares fell -11%; Q1 adjusted EPS $2.46/$2.4B vs. est. $2.44/$2.37B; said EPS exceeded the high end of our guidance range; lowered year EPS view to $10.20-$10.30 from $10.30-$10.40 (est. $10.43) and sees year revs to rise approximately 3% – down from prior view of 4% (increase approximately 5% on a constant currency basis) YoY; guided Q2 EPS $1.85-$1.90 on flat revs vs. est. $2.43/$2.41B; 1Q N.A. Calvin Klein comp sales -5% vs. +5% y/y and 1Q N.A. Tommy Hilfiger comparable sales -4% vs. +9% y/y

·     Tilly’s (TLYS) shares fell -6%; Q1 EPS 2c/$130.3M vs. est. 2c/$128.73M; Q1 comp sales rose 2.4% vs. up 0.1% YoY (includes e-commerce); sees Q2 EPS 17c-23c on revs $154M-$159M below est. 28c/$159.7M; Q1 E-commerce net sales increased 29.6% and represented approximately 15.1% of total net sales this year vs. a decrease of 7.2% and a 12.2% share of total net sales last year

 

Energy, Industrials & Materials

·     The American Petroleum Institute (API) reported U.S. crude supplies fell by -5.3M barrels for the week ended May 24, showed a stockpile increase of 2.7M barrels in gasoline, while distillate supplies fell by -2.1M barrels

·     Enphase Energy (ENPH) files to sell $120M of convertible senior notes due 2024

·     Canadian Solar (CSIQ) Q1 EPS loss (29c)/$484.7M vs. est. loss (49c)/$469.6M; Q1 total solar module shipments were 1,575 MW, compared to 1,951 MW in 4Q18 and 1Q19 guidance of 1.3 GW to 1.4 GW; sees 2Q revenue $970M-$1.01B vs. est. $864.6M and sees 2Q gross margin 13% to 15%

·     Delek Group Ltd., the Israeli energy company agreed to buy North Sea oil and gas fields from Chevron Corp. (CVX) for about $2 billion

·     Steel stocks U.S. Steel (X) and Nucor (NUE) downgraded to Sell from Hold at Deutsche Bank to reflect a more negative stance on steel and downgraded Steel Dynamics (STLD) to Hold from Buy

·     Waste Management (WM) reaffirms its 2019 financial outlook as still sees 2019 to 2021 revenue growth in collection and disposal business 4% to 6% and sees adjusted operating Ebitda growth between 5% and 7% in same period

 

Financials

·     Bank America (BAC) said it expects Q2 trading revenue down 7.5% from Q1 and investment banking revenue to be flattish QoQ, speaking at Bernstein Strategic conference

·     Citigroup (C) was upgraded to buy from neutral at Citigroup

·     MFA Financial (MFA) files to sell $200M of convertible senior notes due 2024

 

Healthcare

·     Amicus (FOLD) offers to sell $150M in common stock

·     Myovant Sciences (MYOV) announces $100M offering of common stock

·     Achieve Life Sci (ACHV) announces patent granted in the U.S. for novel formulation of Cytisinicline

·     Epizyme (EPZM) submitted a new drug application to FDA for accelerated approval of tazemetostat for the treatment of patients with metastatic or locally advanced epithelioid sarcoma

 

Technology, Media & Telecom

·     Palo Alto Networks (PANW) shares fell -4%; Q3 adjusted EPS $1.31/$726.6M vs. est. $1.25/$704.05M; 3Q deferred revenue grows 27% y/y to $2.6B; sees Q4 adjusted EPS $1.41-$1.42 on revs $795M-$805M vs. est. $1.55/$793.81M

·     Keysight Technologies (KEYS) shares rose 7%; Q2 EPS $1.22/$1.09B vs. est. 99c/$1.07B; sees Q3 EPS 97c-$1.05 on revs $1.02B-$1.06B vs. est. 97c/$1.06B; reports $500M share repurchase program

·     Semtech (SMTC) Q1 EPS 34c/$131.35M vs. est. 33c/$130.54M; sees Q2 EPS 32c-40c on revs $128M-$142M below est. 40c/$139.2M; sees Q2 gross margins 61.9%-62.5% after Q1 GM’s was 61.9%; bookings grew 18% sequentially resulting in a Book to Bill greater than 1

·     Tech Data (TECD) Q1 non-GAAP EPS $2.04/$8.41B vs. est. $1.97/$8.46B; sees Q2 EPS $2.15-$2.45 on revs $8.6B-$8.9B vs. est. $2.29/$8.99B

·     Comcast (CMCSA) is dropping AT&T’s (T) Cinemax network from its pay-TV bundles and replacing it with a new on-demand movie channel, Hitz, featuring more than 200 films

·     Twilio (TWLO) files to sell $750M of Class A common stock

·     Veeva (VEEV) shares rose 7%; Q1 EPS 50c/$244.75M vs. est. 44c/$238.68M; sees Q2 EPS 48c-49c on revs $259M-$260M vs. est. 46c/$249.84M; sees FY20 EPS $2.01-$2.03 on revs $1.045B$1.05B vs. est. $1.92/$1.04B; Q1 subscription services revenues increasing 27%

·     Verint (VRNT) Q1 adjusted EPS 73c/$315M vs. est. 61c/$316.96M; raises FY20 EPS view to $3.65 from $3.60 (est. $3.61) and ups FY20 revenue view to $1.375B from $1.37B, plus/minus 2% (est. $1.37B)

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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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