Morning Preview: June 28, 2019

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Early Look

Friday, June 28, 2019

Futures

Up/Down

%

Last

DJ Industrials

80.00

0.30%

26,626

S&P 500

6.50

0.22%

2,937

Nasdaq

5.50

0.07%

7,696

 

 

U.S. futures are moving higher ahead of the highly anticipated meeting between President Trump and Chinese leader Xi Jinping tomorrow, while Trump also denied promising to withhold new tariffs. Markets have pushed higher all week on hopes of a trade deal, but leaving this weekend’s meeting in Osaka Japan without some sort of positive talk could spell weak stock markets on Monday. Trump met India’s Narendra Modi and Japan’s Abe, promising trade announcements with both while also asked Vladimir Putin (in jest) not to interfere in the next election, according to reports. Asian markets fell overnight but ended with their fourth week of gains while European markets gain. The Nikkei Index fell -62 points to 21,275, the Shanghai Index slid -17 points to 2,978 and the Hang Seng Index dropped -78 points to 28,542. In Europe, the German DAX is up over 50 points to 12,325, while the FTSE 100 is up about 20 points to 7,425. The big news overnight was day two of the Democratic debates and that all 18 large cap banks in the U.S. passed the Fed’s annual stress tests, with many of them issuing new buybacks and dividend increases (JPM, GS, C, MS, etc.) Heading into the final day of the month and quarter, gold is headed for its biggest monthly gain since 2016, while oil is still poised for the best month since January. In stock news, shares of Dow component NKE missed earnings estimates for the first time in over 25 quarters last night, while AAPL lost one of its key designers Jony Ive who designed the iPhone and iPod. U.S. stocks rose Thursday, with the S&P 500 snapping a four-day losing streak, as investors hope for progress on the trade between the U.S. and China.

 

Market Closing Prices Yesterday

·     The S&P 500 Index gained 11.14 points, or 0.38%, to 2,924.92

·     The Dow Jones Industrial Average fell -10.24 points, or 0.04%, to 26,526.58

·     The Nasdaq Composite climbed 57.79 points, or 0.73%, to 7,967.76

·     The Russell 2000 Index spiked 28.78 points, or 1.90% to 1,546.55

 

Events Calendar for Today

·     8:30 AM EST      Personal Income for May…est. 0.3%

·     8:30 AM EST      Personal Spending for May…est. 0.5%

·     8:30 AM EST      PCE Deflator MoM for May…est. 0.2%

·     8:30 AM EST      PCE Deflator YoY for May…est. 1.5%

·     8:30 AM EST      PCE Core Deflator MoM for May…est. 0.2%

·     8:30 AM EST      PCE Core Deflator YoY for May…est. 1.5%

·     9:45 AM EST      Chicago PMI for June…est. 53.5

·     10:00 AM EST    University of Michigan Sentiment, June-F…est. 97.9

·     1:00 PM EST       Baker Hughes Weekly Rig Count

 

Earnings Calendar:

·     Earnings Before the Open: STZ

 

 

Macro

Up/Down

Last

WTI Crude

0.03

59.46

Brent

0.10

66.65

Gold

4.10

1,413.90

EUR/USD

0.0014

1.1383

JPY/USD

-0.14

107.65

10-Year Note

+0.004

2.017%

 

 

Sector News Breakdown

Consumer

·     Nike (NKE) Q4 EPS 62c/$10.2B vs. est. 66c/$10.16B; Q4 gross margins 45.5% (vs. est. 45.6%); 4Q North America revs up 7.5% YoY to $4.17B while EMEA revs $2.46 billion, down -0.4% YoY, Greater China revs $1.70B, +16% YoY and 4Q Asia Pacific & Latin America revs $1.38B, -4% YoY

·     Procter & Gamble (PG) upgraded to buy from neutral at Goldman Sachs and raise tgt to $125noting market share and organic sales growth turned around this past year

·     Franklin Covey (FC) Q3 EPS loss (14c)/$56M vs. est. loss (20c)/$52.95M; reaffirms its previously announced Adjusted EBITDA guidance for fiscal 2019, which is expected to be in the range of $18M-$22M

·     RealReal (REAL) 15M share IPO priced at $20.00

·     Merlin Entertainments PLC agreed to be acquired in a $7.5 billion deal. The world’s second largest theme-park operator behind Walt Disney, which also runs Legoland Parks recommended the offer from Lego’s founding family, private-equity firm Blackstone, and Canadian pension fund CPPIB. https://on.mktw.net/2X9gFaK

 

Energy, Materials and Industrials

·     Volkswagen AG’s truck-and-bus unit Traton SE edged down on their first day of trading Friday, after listing at the low end of their proposed price range. Traton set its offer price at 27 euros ($30.69) a share, at the bottom end of the initial book building range of EUR27 to EUR33.

·     JinkoSolar (JKS) Q1 EPS 12c/$867.5M vs. est. 10c/$861.59M; Q1 shipments 3,037 MW up 51% YoY

·     Yamana Gold (AUY) raises FY19 Jacobina gold production view to 152,000 ounces from prior view of 145,000 ounces while sees FY20 Jacobina gold production 160,000 ounces

 

Financials

·     The Fed’s Comprehensive Capital Analysis and Review (CCAR) signed off on the buyback and dividend plans of 18 of the largest banking giants. The Fed said Capital One (COF) and JPMorgan Chase (JPM) would have had minimum capital ratios lower than required under the plans they submitted to the Fed and after the stress test. In addition, the Fed said Credit Suisse (CS) will have to address weaknesses in its capital adequacy process by the end of October.

·     Several banks announce buybacks and dividend boosts following Fed stress test round two:

·     JPMorgan (JPM) to buy back up to $29.4B in stock and boost dividend to 90c

·     Bank America (BAC) to buy back up to $30.9B in shares and raise dividend by 20% to 18c

·     BNY Mellon (BK) to raise quarterly dividend 11%, repurchase of up to $3.94B of stock

·     Capita One (COF) plans to buy back up to $2.2B of shares and expects to maintain its dividend

·     Citigroup (C) to buy back up to $17.1B of stock and raise dividend to 51c

·     Citizens Financial (CFG) authorized the Company to repurchase up to $1.275B of common stock

·     Goldman Sachs (GS) to buy back up to $7B in shares and boosts dividend to $1.25 from 85c

·     Morgan Stanley (MS) to boost stock buyback up to $6B and raise dividend to 35c from 30c

·     PNC Bank (PNC) to raise dividend to $1.15 and buyback up to $4.3B in stock

·     Regions Financial (RF) announces $1.37B share buyback and consider boosting dividend

·     State Street (STT) announces planned dividend increase, $2B share repurchase plan

·     US Bank (USB) to recommend dividend boost to 42c and approves $3B stock buyback

·     Wells Fargo (WFC) expects to boost dividend to 51c from 45c and buyback up to $23.1B of stock

·     BGC Partners, Inc. (BGCP) updated its outlook for the quarter ending June 30, 2019 saying revenues and pre-tax adjusted earnings for the second quarter are now expected to be above the mid-point of the range of its previously stated guidance

 

Healthcare

·     Verrica Pharmaceuticals’ (VRCA) said the first patient has been enrolled in a Phase 2 clinical trial, CARE, evaluating its topical VP-102 for the treatment of external genital warts/topline data should be available in H2 2020.

·     Chiasma (CHMA) provided an update on the clinical development of its octreotide capsules product candidate, conditionally trade-named Mycapssa, which is currently being evaluated in two ongoing, international Phase 3 clinical trials for the maintenance treatment of adults with acromegaly, the CHIASMA OPTIMAL and MPOWERED trials

·     Hutchison China MediTech (HCM) 8.5M share Spot Secondary priced at $24.00

·     Karuna Therapeutics (KRTX) 5.578M share IPO priced at $16.00

 

Technology, Media & Telecom

·     Apple Inc. (AAPL) announced last night that designer Jony Ive was leaving the company. “Jony is a singular figure in the design world and his role in Apple’s revival cannot be overstated, from 1998’s groundbreaking iMac to the iPhone and the unprecedented ambition of Apple Park, where recently he has been putting so much of his energy and care,” said Apple CEO Tim Cook

·     CalAmp (CAMP) Q1 EPS 12c/$89.1M vs. est. 9c/$86.9M; sees Q2 ESP 8c-14c vs. est. 14c and sees Q2 revs $89.5M-$94.5M vs. est. $91.2M; Software and Subscriptions Services revenue for the first quarter increased 38% year-over-year to $25.5M

·     Progress Software (PRGS) Q2 adjusted EPS 65c/$100M vs. est. 57c/$98.2M; raises year EPS $2.52-$2.57, from $2.46-$2.52 (est. $2.51) and still sees FY adjusted revenue $422M-$428M vs. est. $418.3M; sees Q3 EPS adjusted EPS 68c-70c on revs $101M-$104M vs. est. 66c/$110.86M

·     Smart Global (SGH) Q3 EPS 34c/$235.7M vs. est. 37c/$265M; guides Q4 EPS 55c-65c on revs $270M-$280M vs. est. 68c/$298.1M; Q3 Ebitda $19.2M below est. $22M and sees Q4 adjusted gross margins 19%-21%

·     ServiceSource (SREV) has extended its relationship with Alcatel-Lucent Enterprise, with a new agreement that extends through 2020

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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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