Morning Preview: July 09, 2019

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Early Look

Tuesday, July 9, 2019

Futures

Up/Down

%

Last

DJ Industrials

-97.00

0.36%

26,696

S&P 500

-10.50

0.36%

2,967

Nasdaq

-38.50

0.50%

7,762

 

 

U.S. stock futures are pointing to a lower open, on track for a third day of declines ahead of closely watched semi-annual testimony on the economy and monetary policy from Fed Chairman Powell to the Senate and House (tomorrow and Thursday), as markets continue to assess trade and the chances of a Fed rate cut later this month. Futures dipping overnight after the U.S. Commerce Department determined that China and Mexico are unfairly subsidizing exports of fabricated structural steel and said it would impose duties on imports. In a preliminary ruling announced Monday, the department said it would apply duties ranging from 30.3% to 177.43% on Chinese imports of the product and an up to 74.01% duty on those from Mexico. Yesterday, U.S. markets opened lower and stayed down throughout as investors reassess the probability of the Fed cutting rates for the rest of the year. The Nasdaq fell 0.8%, the S&P 500 declined 0.5%, and the Dow slipped 0.4%. Six out of 11 of the S&P 500 industry sectors ended the session in the red, with materials and communication services sliding the most. In Asian markets, The Nikkei Index rose 30 points to 21,565, the Shanghai Index dipped -5 points to 2,928 and the Hang Seng Index slumped -215 points to 28,116. In Europe, the German DAX is down over -125 points to 12,415, while the FTSE 100 is down a few points to 7,540. Overall European markets slipped following a profit warning from chemicals giant BASF’s late yesterday blaming the trade war between the U.S. and China, and a slowdown in the automotive industry (the lowered outlook came midday trading yesterday in the U.S. which weighed heavily on chemical stocks).

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -14.46 points, or 0.48%, to 2,975.95

·     The Dow Jones Industrial Average fell -115.98 points, or 0.43%, to 26,806.14

·     The Nasdaq Composite slumped -63.41 points, or 0.78%, to 8,098.38

·     The Russell 2000 Index declined -14.24 points, or 0.90% to 1,561.39

 

Events Calendar for Today

·     6:00 AM EST      NFIB Small Business Optimism for June…est. 103.1

·     7:45 AM EST      ICSC Weekly Retail Sales

·     8:55 AM EST      Johnson/Redbook Weekly Sales

·     10:00 AM EST    JOLTs Job Openings for May…est. 7473

·     10:10 AM EST    Fed’s Bullard speaks in St. Louis

·     2:00 PM EST       Fed’s Bostic speaks in St. Louis

·     4:30 PM EST       API Weekly Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: LNN, PEP

·     Earnings After the Close: HELE, KSHB, LEVI, WDFC

 

Other Key Events:

·     SemiCon West 2019, 7/9-7/11, in San Francisco

 

 

Macro

Up/Down

Last

WTI Crude

0.46

58.12

Brent

0.61

64.72

Gold

-7.30

1,388.25

EUR/USD

-0.0006

1.1208

JPY/USD

0.08

108.80

10-Year Note

+0.013

2.061%

 

 

World News

·     In a preliminary ruling announced Monday, the department said it would apply duties ranging from 30.3% to 177.43% on Chinese imports of the product and an up to 74.01% duty on those from Mexico. Imports of fabricated structural steel from China and Mexico in 2018 were valued at estimated an $897.5 million and $622.4 million, respectively. A final determination on the finding is scheduled on or about Nov. 19.

·     Small Business Optimism for June fell to 103.3, slightly below the 103.1 estimate as 24% of employers think it is a good time to expand; net percentage of employers anticipating job creation falls to 19%; net percentage of firms expecting a better economy unchanged at 16%

·     China denounced a possible U.S. weapons sale to Taiwan as a violation of international law, after the State Department approved a weapons package including tanks, missiles and other armaments for island – Bloomberg

 

Sector News Breakdown

Consumer

·     PepsiCo (PEP) Q2 Core EPS $1.54/$16.45B vs. est. $1.50/$16.42B; 2Q organic revenue +4.5% vs. +2.60% YoY; backs FY19 Core EPS view of $5.50 (est. $5.53) and backs FY19 revenue growth guidance of 4%

·     Geely (GELYY) shares dropped in Asia after the carmaker said it expected a sharp drop in its net profit for the first half

·     Hawaiian Holdings (HA) reported traffic for June of +1.6%, with June load factor 89%, capacity +0.3%; said 2Q traffic up 3.7% and 2Q capacity up 2.7%

·     TreeHouse Foods (THS) announced that it has entered into a definitive agreement to sell the company’s Snacks Division to Atlas Holdings. Atlas has agreed to pay $90M for the Division, subject to certain post-closing adjustment

 

Energy, Industrials & Materials

·     Montage Resources (MR) said it sees 2Q production above 515 Mmcfe per day vs. prior view of 500 To 515 Mmcfe; sees FY capital expenditure $345M-$370M vs. prior view $375M-$400M; still sees FY production 520 to 540 mmcfe/d

·     ABB Ltd. (ABB) said that Italy’s Fimer SpA will acquire ABB’s solar-inverter business and its associated liabilities; said it will take an after-tax, non-operational charge of about $430 million in the second quarter from the deal.

·     Lindsay (LNN) Q3 EPS 50c/$121.1M vs. est. 79c/$137M

·     BrightView (BV) files $500M mixed securities shelf

·     3M Co. (MMM) downgraded to sector perform from outperform at RBC Capital Markets and cut tgt to $176 from $207

 

Financials

·     Piper Jaffray Cos. (PJC) is close to a deal to buy Sandler O’Neill + Partners for roughly $485 million, according to The Wall Street Journal. A deal announcement could come as early as Tuesday, the Journal reported https://bit.ly/2Ld7dg4

·     Assurant Inc. (AIZ) said its 2019 property catastrophe reinsurance program reduces its financial exposure by lowering its per-event retention to $80M from $120M in ’18; estimates 2019 reinsurance premiums at about $165M pretax, reflecting the lower catastrophe per-event retention and modest growth in exposure

·     Square (SQ) upgraded to Market Perform from Underperform at Raymond James

·     New Mountain Finance (NMFC) files to sell 6M shares of common stock

 

Healthcare

·     Innovation Shares LLC said that a cannabis-focused exchange traded fund will begin to trade on the NYSE today under the ticker symbol “THCX.” The Cannabis ETF will hold 35 stocks and includes some of the world’s largest Canadian marijuana companies by market capitalization such as CGC, ACB, TLRY and includes operators in the U.S. such as CWEB and IIPR

·     HealthEquity (HQY) files to sell $410M in common stock

·     Myriad Genetics (MYGN) downgraded to Market Perform from Outperform at Cowen

·     Sarepta (SRPT) price tgt raised to $220 from $165 at Morgan Stanley

 

Technology, Media & Telecom

·     WPP Plc (WPP) is planning to announce the sale of a majority stake in its Kantar market-research business to Bain Capital within days – Bloomberg reported

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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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