Morning Preview: June 19, 2019

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Early Look

Wednesday, June 19, 2019

Futures

Up/Down

%

Last

DJ Industrials

4.00

0.02%

26,508

S&P 500

-0.50

0.01%

2,926

Nasdaq

2.50

0.03%

7,675

 

 

FOMC day is here…as all eyes on the Federal Reserve at 2:00 PM EST, where they are expected to keep interest rates steady, but markets are looking for any signs or comments that could suggest a rate cut in July is a possibility (which is currently “baked-in” to market expectations). Asian markets jumped a day after positive trade commentary between the US and China where a meeting between the countries two leaders is set for next week at the G20 meeting, as The Nikkei Index gained 361 points to settle at 21,333, the Shanghai Index gained 27 points to 2,917 and the Hang Seng Index jumped over 700 points (2.56%) to finish at 28,202. In Europe, the German DAX is little changed at 12,330, while the FTSE 100 is down about -25 points to 7,415. U.S. stocks surged on Tuesday after U.S. President Donald Trump tweeted that he will meet with Chinese President Xi Jinping at the G-20 in Japan, boosting hopes for a near-term trade resolution with China, while energy stocks rose after WTI crude gained more than 4%. US futures are steady into the FOMC meeting, while oil, gold and the dollar are little changed.

 

Market Closing Prices Yesterday

·     The S&P 500 Index gained 28.08 points, or 0.97%, to 2,917.75

·     The Dow Jones Industrial Average rose 353.01 points, or 1.35%, to 26,465.54

·     The Nasdaq Composite spiked 108.86 points, or 1.39%, to 7,953.88

·     The Russell 2000 Index advanced 17.48 points, or 1.14% to 1,550.23

 

Events Calendar for Today

·     7:00 AM EST      MBA Mortgage Applications Data

·     10:30 AM EST    Weekly DOE Inventory Data

·     2:00 PM EST       FOMC Interest Rate Decision

·     2:30 PM EST       Fed Chairman Powell holds press conference after meeting

 

Earnings Calendar:

·     Earnings Before the Open: BKS, WGO

·     Earnings After the Close: AOBC, ORCL, SCS

 

Other Key Events:

·     FOMC Interest Rate Decision at 2:00 PM EST

·     Jefferies 2019 Global Consumer Conference, 6/17-6/19, in Nantucket, MA

·     JPMorgan Energy Conference, 6/18-6/19, in New York

·     Oppenheimer Annual Consumer Growth, E-Commerce Conference, 6/18-6/19, in Boston, MA

·     Roth Capital 5th Annual London Conference, 6/18-6/20, in London, UK

·     The 53rd International Paris Air Show takes place 6/17-6/23, at Paris-Le Bourget Airport

 

 

Macro

Up/Down

Last

WTI Crude

-0.02

53.88

Brent

-0.44

61.70

Gold

-3.50

1,343.12

EUR/USD

0.0009

1.1203

JPY/USD

-0.04

108.41

10-Year Note

+0.025

2.085%

 

 

World News

·     Investor Intelligence Poll shows equity newsletter writers classified as bulls rose to 50.5% this week vs 48.1% (the 1st time above 50% in a month), while bearish sentiment stays steady at 18.4% vs. 18.3% prior and those expecting a correction tumbled a second week to 31.1% from 33.6% (a 5-week low)

 

Sector News Breakdown

Consumer

·     La-Z-Boy (LZB) Q4 EPS 64c/$453.8M vs. est. 64c/$456.7M; delivered same-store sales for the company-owned Retail segment increased 5.7%; written same-store sales for the 353-store La-Z-Boy Furniture Galleries® network, including Canada, increased 1.8%; written same-store sales for the U.S. network of 318 stores increased 3.2%

·     Energizer (ENR) downgraded to underweight from neutral at JP Morgan saying although trends for ENR’s organic business appear solid, negative sell-through rates have worsened for the acquired Rayovac battery business

·     Southwest Air (LUV) sees Q2 CASM ex-fuel +11.5%-12.5% vs. 10.5%-12.5% prior and sees Q2 RASM up 6.5%-7.5% (had seen up 5.5%-7.5%); sees Q2 capacity down about 3.5% (had seen down 2%-3%)

·     Harley-Davidson Inc. (HOG) is partnering with a manufacturer in China to make its smallest bike in decades for that fast-growing market, extending a strategy to build more motorcycles outside the U.S. Harley wants to sell half its bikes abroad by 2027, up from 42% in 2018, as domestic Hog sales to a shrinking base of aging customers continue to decline – WSJ

·     Fred’s Stores (FRED) reported comparable sales for the first quarter of -8.5% vs. -3.90% YoY; Q1 sales $319M

·     Whitbread PLC said that tough U.K. trading led to a fall in first-quarter sales, in line with previous guidance.; said total sales fell 1.0% in the quarter to the end of May compared with the year-earlier period.

 

Energy

·     PG&E Corp. (PCG) has reached a $1 billion settlement with local government agencies that were harmed by blazes its equipment ignited. The deal between PG&E and 14 public entities includes a settlement for the town of Paradise, which was destroyed in November’s Camp Fire

·     The American Petroleum Institute (API) reported that U.S. crude supplies fell by -812,000 barrels for the week ended June 14, showed a stockpile climb of 1.5 million barrels in gasoline, while distillate supplies edged down by 50,000 barrels

·     Green Plains (GPRE) announced that its board of directors has decided to suspend its quarterly cash dividend in order to retain and redirect cash flow to the company’s Project 24 opex equalization plan and plans to offer $100 million of convertible senior notes due 2024

 

Financials

·     NCR Corp. (NCR) put itself up for sale in early May, attracting two bidders who have walked away in recent weeks without striking a deal, the NY Post reported. The two private equity firms who expressed interest in making an offer include Warburg Pincus and Apollo Global Management https://nyp.st/2IQHhTV

 

Healthcare

·     Stoke Therapeutics (STOK) 7.89M share IPO priced at $18.00

·     Biohaven Pharmaceutical (BHVN) 6.98M share Secondary priced at $43.00

·     Calithera Biosciences (CALA) 12.5M share Secondary priced at $4.00

·     Amphastar Pharmaceuticals (AMPH) says Momenta Pharmaceuticals Inc. (MNTA) and Sandoz Inc. to pay a combined $59.9 million by July 2 to the company under the terms of the settlement

·     Genocea (GNCA) announces offering of 10M shares of common stock

·     Ironwood Pharmaceuticals, Inc. (IRWD) and Allergan plc (AGN) announced positive topline data from a Phase IIIb clinical trial evaluating LINZESS (linaclotide) 290 mcg on multiple abdominal symptoms in adult patients with IBS-C/trial met its primary and secondary multi-component endpoint

 

Industrials & Materials

·     U.S. Steel (X) guides Q2 adjusted EPS to 40c below est. 52c and sees Q2 adjusted EBITDA approximately $250M, which excludes approximately $15M of estimated Q2 impacts from the December 24, 2018 fire at the Clairton coke making facility; said for both United Steel’s USSE and Tubular segments, it expects Q2 adjusted EBITDA to be lower than Q1

·     Genesee & Wyoming (GWR) reported traffic volumes for May 2019. G&W’s total traffic in May 2019 was 264,098 carloads, a decrease of 28,998 carloads, or 9.9%, compared with May 2018. G&W’s same railroad traffic in May 2019 decreased 16,250 carloads, or 5.8%, compared with G&W’s traffic in May 2018

 

Technology, Media & Telecom

·     Adobe Systems (ADBE) Q2 EPS $1.83/$2.74B vs. est. $1.78/$2.70B; Digital Media segment revenue was $1.89B, or 22% YoY growth; creative revenue grew to $1.59B and Document Cloud achieved revenue of $296M; Digital Media Annualized Recurring Revenue (“ARR”) grew to $7.47B exiting the QoQ-over-quarter increase of $406M; Creative ARR grew to $6.55B, and Document Cloud ARR grew to $921M; sees Q3 EPS ~$1.95 on revs ~$2.80B below est. $2.05/$2.83B

·     Jabil Circuits (JBL) Q3 core EPS 57c/$6.1B vs. est. 57c/$6.01B; sees Q4 core EPS 76c-96c vs. est. 86c and revs $6.3B-$6.9B vs. est. $6.42B; says outlook for revenue, core EPS and cash flow is solid as we see robust demand in 5G / wireless, cloud, industrial, healthcare and packaging

·     Macom (MTSI) cuts Q3 EPS view to loss of (45c)-(41c) from (8c)-(4c) vs. est. loss (6c) and cuts Q3 revenue view to $107M-$109M from $120M-$124M (est. $131.6M); cuts Q3 gross margin view to 39%-41% from 53%-55%

·     CBS Corp. (CBS) is preparing to make an offer for sister media company Viacom Inc. (VIAB) in the coming weeks, following a meeting of CBS directors last week in which a potential deal was discussed, according to people familiar with the situation. https://on.wsj.com/2ZGBxmP

·     YY Inc. (YY) announced the proposed offering of $425M in aggregate principal amount of convertible senior notes due 2025 and $425M in aggregate principal amount of convertible senior notes due 2026

·     Apple (AAPL) has asked its major suppliers to assess the cost implications of moving 15%-30% of their production capacity from China to Southeast Asia as it prepares for a restructuring of its supply chain, the Nikkei reported

_________________________________________________________________

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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