Morning Preview: July 08, 2019

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Early Look

Monday, July 8, 2019

Futures

Up/Down

%

Last

DJ Industrials

-74.00

0.28%

26,811

S&P 500

-7.50

0.24%

2,983

Nasdaq

-35.50

0.46%

7,815

 

 

Stocks futures are pointing to a lower open, tracking Asian markets lower overnight as the Nikkei Index fell -212 points to 21,534, the Shanghai Index plunged -77 points (2.58%) to settle at 2,933 and the Hang Seng Index dropped -443 points to 28,331. In Europe, the German DAX is down a few points at 12,560, while the FTSE 100 is down about 10 points to 7,540. In macro news, Iran remains open to diplomacy to save its 2015 nuclear deal with world powers but has “no hope” in the international community, the country’s Foreign Ministry spokesman said Monday. But U.S. averages have been driving by economic data as well as hopes of interest rate cuts at the Fed meeting at month’s end, while look for dovish signals during commentary this week at the semi-annual testimony by Fed Chairman Powell on monetary policy and the economy on Capitol Hill. U.S. stocks stumbled and Treasury yields jumped Friday after a better-than-expected June jobs report clouded expectations of an imminent interest-rate cut by the Federal Reserve. The S&P 500 index gained 1.7%, to 2990.41, this past week, while the Dow Jones Industrial Average rose 322.16 points, or 1.21%, to 26,922.12, and the Nasdaq Composite climbed 1.9%, to 8161.79. All three narrowly missed finishing the week at record highs.

 

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -5.41 points, or 0.18%, to 2,990.41

·     The Dow Jones Industrial Average fell -43.88 points, or 0.16%, to 26,922.12

·     The Nasdaq Composite dipped -8.44 points, or 0.10%, to 8,161.79

·     The Russell 2000 Index advanced 3.50 points, or 0.22% to 1,575.62

 

Events Calendar for Today

·     3:00 PM EST       Consumer Credit for May…est. $17.0B

 

 

Macro

Up/Down

Last

WTI Crude

0.00

57.51

Brent

0.13

64.36

Gold

5.80

1,405.05

EUR/USD

-0.0001

1.1224

JPY/USD

0.03

108.50

10-Year Note

-0.014

2.023%

 

 

World News

·     Iran said it will boost its uranium enrichment in a few hours above a cap set by a landmark 2015 nuclear deal, a move that could eventually culminate in the return of all international sanctions on Tehran – Reuters

·     The Turkish lira slumped after President Recep Tayyip Erdogan’s shock decision to replace the country’s central bank governor fueled concern the regulator will lower borrowing costs by more than expected. Erdogan used his executive powers to dismiss Murat Cetinkaya over the weekend

·     German industrial production saw a slight pick-up in May, rising 0.3% on the month, which was just short of economists’ estimates for a 0.4% gain

·     Buildings shook in Los Angeles after an earthquake with a preliminary magnitude of 7.1 hit Southern California, as tremors continued in the region for a second day. The quake struck 17 kilometers (10.5 miles) north-northeast of Ridgecrest, California at about 8:19 p.m. local time

·     The U.S. won its fourth Women’s World Cup on Sunday in Lyon, France, with a 2-0 defeat of the Netherlands. The U.S.’s World Cup win was its second consecutive.

 

Sector News Breakdown

Consumer

·     M.D.C. Holdings (MDC) reports preliminary Q2 net new home orders up 32% to 2,273; Q2 ending active subdivisions increased 14% to 187 from 164; Q2 average sales price of approximately $484,000 and Q2 new home deliveries of 1,514 compared with 1,512 a year ago

·     SoftBank Group Corp. received approval on Friday from U.S. authorities for its planned $2.25 billion investment in self-driving vehicle company Cruise, controlled by General Motors Co. (GM), Reuters reported

·     Delta Air Lines (DAL), the most profitable of the big three U.S. airlines, should end the year with free cash flow in the high end of the $3 billion to $4 billion range Barron’s said

·     Barron’s said retailer GameStop (GME), J.C. Penney (JCP), Blue Apron (APRN) and maybe Tailored Brands (TLRD) are cheap for a reason and could follow in Radio Shack’s undoing. Video game-seller GameStop hit about $5 from over $40 in 2015. J.C. Penney has recently traded around a dollar, and Blue Apron, which sells meal-delivery kits, is trading around $7 versus $150 in its June 2017 initial public offering

 

Energy, Industrials & Materials

·     Encana Corp. (ECA) said its Newfield Exploration Mid-Continent Inc. subsidiary is selling its natural gas assets in Oklahoma’s Arkoma Basin to an undisclosed buyer for $165 million. The energy company said the deal is expected to close in the third quarter of 2019. Encana said the move will help it realize value from non-core assets, and proceeds from the sale will be directed to its balance sheet.

·     AZZ Inc. (AZZ) Q1 EPS 81c/$289.1M vs. est. 67c/$274M; sees FY EPS $2.25-$2.75 vs. est. $2.47

·     Lonestar Resources (LONE) announced estimated production rates for the three months ended June 30. Lonestar previously issued production guidance for the three months ended June 30 in a range of 12,400 to 12,800 Boe/d, which represents a 12% increase over first quarter 2019 levels at its midpoint. At its midpoint, this guidance consisted of 7,355 Bbl/d of crude oil, 2,530 Bbl/d of NGL’s and 16,290 Mcf/d of natural gas

 

Financials

·     Deutsche Bank (DB) said it will exit global equities trading, cut 18,000 jobs and transfer €75bn of risk-weighted assets into a so-called bad bank as part of a major overhaul of the German lender’s business. The bank has also entered into preliminary talks over the sale of its electronic trading and prime finance divisions with French rival BNP Paribas.

·     Banc of America (BAC) earnings per share should rise 8% to 10% a year through 2021, Barron’s said citing analysts noting BMO Capital Markets recently upgraded its rating to Outperform from Market Perform when the stock was trading at a 15% discount to historic levels

·     State Street (STT) and BNY Mellon (BK) both downgraded to Underweight from Overweight at Morgan Stanley

·     Barron’s reported regional banks/financials Huntington Bancshares (HBAN), Regions Financial (RF), Citizens Financial (CFG), Fifth Third Bancorp (FITB) and Discover Financial (DFS) are expected to have sufficient capital to boost their dividends

 

Healthcare

·     Catalyst Biosciences (CBIO) shares rise 18%; says its experimental treatment met the main goal of a mid-stage study in patients with hemophilia; says the treatment, MarzAA, was effective in reducing bleeding episodes in patients; the study also met all secondary goals of safety, tolerability and lack of anti-drug antibody or inhibitor formation, co says

 

Technology, Media & Telecom

·     Broadcom (AVGO) has secured financing and identified cost savings for the acquisition of Symantec (SYMC) in an all-cash deal that could value the cybersecurity company at more than $22B including debt – Bloomberg https://bloom.bg/2NDEXpf

·     Google (GOOG) is in talks to help create a fourth U.S. wireless carrier, even as Sprint (S) and T-Mobile (TMUS) struggle to get their controversial merger cleared with federal and state authorities, The New York Post reports https://nyp.st/2XzkaHV 

·     F5 Networks (FFIV) downgraded to sell from neutral at Goldman Sachs and cut its tgt to $120 from $165 citing a weaker short-term spending environment and increasing competitive threat

·     Sony (SNE) and Disney-owned (DIS) Marvel Studios’ “Spider-Man: Far from Home” scored a six-day launch of $185.1M domestically, including $93.6M over the weekend

·     Office space manager WeWork Cos is looking to raise $3 billion to $4 billion in debt before it goes public, a person familiar with the matter said on Sunday. The money raised via the debt offering, which will be separate from funds WeWork would receive in an IPO, could grow as big as $10 billion over the next few years https://reut.rs/2G2OY9c

·     Shopify (SHOP) stock isn’t cheap said Barron’s, but its valuation could grow like Amazon’s did over the past 10 years, as some analysts are looking past the next few years for the cloud-based commerce platform

·     Amazon.com Inc (AMZN) founder Jeff Bezos’ divorce from his wife of 25 years, MacKenzie Bezos, was finalized by a Seattle-area judge on Friday, paving the way for her to receive $38.3 billion worth of Amazon stock, Bloomberg reported.

·     Gray Television (GTN) mentioned positively in Barron’s saying it is among the companies best positioned to capitalize on the powerful wave of political advertising spending over the next 16 months

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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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