Morning Preview: July 12, 2019

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Early Look

Friday, July 12, 2019





DJ Industrials




S&P 500










Stock futures are looking at a higher open, on track to extend record gains for the Dow Industrial Average and S&P 500 index as markets remain upbeat on indications that an expected Fed rate cut will be delivered at the end of the month after dovish testimony to Congress and the Senate Banking Committee the last two days by Fed Chairman Powell. In Asian markets, The Nikkei Index rose 42 points to 21,685, the Shanghai Index gained 12 points to settle at 2,930 and the Hang Seng Index gained 39 points to 28,471. In Europe, the German DAX is little changed at 12,330, while the FTSE 100 is up around 20 points to 7,530. Asian markets rallied despite data showing imports and exports declined more sharply than a year ago in China, while the European market rally continues but German stocks hit by Daimler profit warning. The Dow rallied 200 points on Thursday to close above 27,000 for the first time ever as Fed Chair Jerome Powell cemented his view that rates have room to go lower in the coming months, while the S&P also closed at an all-time best. The Nasdaq Composite and Russell 2000 both ended down on the day. Healthcare stocks boosted markets yesterday, while interest rate sensitive stocks sank as Treasury yields extended their gains to about 5-days. Inflation data coming up today in the form of Producer Prices (PPI) which follows a bounce in inflation in CPI yesterday. Oil prices steady ahead of Tropical Storm Barry as wind and rain were starting to hit parts of Louisiana early Friday as New Orleans and coastal communities braced what’s expected to be the first hurricane of the season.

Market Closing Prices Yesterday

·     The S&P 500 Index gained 6.84 points, or 0.23%, to 2,999.91

·     The Dow Jones Industrial Average rose 227.88 points, or 0.85%, to 27,088.08

·     The Nasdaq Composite dipped -6.49 points, or 0.08%, to 8,196.04

·     The Russell 2000 Index declined -7.13 points, or 0.46% to 1,557.92


Events Calendar for Today

·     8:30 AM EST      Producer Price Index (PPI) MoM for June…est. 0%

·     8:30 AM EST      PPI Ex: Food & Energy MoM for June…est. 0.2%

·     8:30 AM EST      PPI Final Demand YoY for June…est. 1.6%

·     8:30 AM EST      PPI Ex: Food & Energy YoY for June…est. 2.1%

·     1:00 PM EST       Baker Hughes Weekly Rig Count





WTI Crude















10-Year Note





World News

·     China trade figures showed exports fell 1.3% in June from a year ago and imports shrank a more-than-expected 7.3%, leaving the trade surplus of $50.98 billion, while economists forecast that exports would slip by 1.4% while imports would shrink by 4.6%.


Sector News Breakdown


·     Daimler AG (DDAIF) warns that Q2 Group EBIT will be significantly below market expectations and sees FY19 Group EBIT significantly below’ prior year level – last month, Daimler cut that metric to “level” compared with 2018.

·     Volkswagen (VWAGY) plans to invest in Ford’s (F) driverless car partner Argo AI at a valuation of roughly $7B as the two car makers expand an alliance established earlier this year – Bloomberg reported (recall yesterday Volkswagen said it was holding a press and investor conference on Ford cooperation on July 12th)

·     Alaska Air (ALK) reported a 1.7% increase in traffic on a combined basis for all operations, on a 1.9% increase in capacity compared to June 2018. Load factor decreased 0.1 points to 88.2%.

·     Allegiant Travel (ALGT) reports revenue passenger miles rose 12.9% to 1.37B in June; capacity grew 13.3% to 1.62B available seat miles and the load factor slipped 30 bps to 84.9% for the month

·     Spirit (SAVE) said it expects Q2 top line revenue growth of nearly 19% on a total revenue per ASM (TRASM) improvement of 5.0% year over year driven by increases in both yield and load factor. Total cost per available seat mile excluding fuel (CASM ex-fuel) for Q2 is expected to be in line with the Company’s initial guidance of up approximately 4.6% YoY


Energy, Industrials & Materials

·     Morgan Stanley says it’s even more bearish on the future of battery raw material lithium, saying it expects prices to fall by 30 per cent over the next six year (watch shares of ALB, FMC, SQM), the Financial Times reported

·     In Paper & Forest Products, Bank of America downgraded shares of Berry Global (BERY) to Neutral from Buy and cut both Boise Cascade (BCC) and Sonoco (SON) downgraded to Underperform from Neutral

·     Coeur Mining, Inc. (CDE) said Q2 production of 86,584 ounces of gold, 3.1 million ounces of silver, 5.3 million pounds of zinc and 5.0 million pounds of lead. Metal sales for the quarter were 86,385 ounces of gold, 3.0 million ounces of silver, 5.3 million pounds of zinc and 5.2 million pounds of lead

·     PNM Resources (PNM) cut 2019 EPS guidance to $2.05-$2.11 from $2.10-$2.20 and sees Q2 EPS 36c-38c, below prior guidance 57c-59c and the 62c estimate



·     AllianceBernstein (AB) said preliminary assets under management increased to $581B during June 2019 from $560B at the end of May. The 3.8% increase was due to market appreciation, as well as total firm wide net inflows.

·     Brookfield Infrastructure (BIP) 11.765M share Spot Secondary priced at $42.50



·     Illumina (ILMN) shares fell -16%; as guides Q2 revs light at $835M vs. est. $876M saying results were impacted by approximately $30M lower revenue than expected associated with population genomics initiatives; lowers growth revenue outlook to about 6% from prior view of 13%-14% growth; said preliminary analysis suggests Q2 challenges are transitory and do not reflect a macro change to fundamentals of our business; continues to expect 2019 NovaSeq system shipments to be flat to slightly up compared to 2018

·     CannTrust Holdings Inc. (CTCT) said that it has ceased sale and shipment of all cannabis products, days after the company said Health Canada inspections revealed the existence of several illegal grow rooms at an Ontario facility. Health Canada seized more than five metric tons of CannTrust’s inventory.

·     Hookipa Pharma (HOOK) shares spike after the recent IPO (April) said the FDA gave the go-ahead for its first clinical trial in immuno-oncology: a Phase 1/2 study of HB-201 in HPV-positive cancers

·     Amgen (AMGN), Novartis (NVS) and Banner Alzheimer’s Institute announced the collective decision to discontinue investigation of the BACE1 inhibitor CNP520 in two pivotal Phase 2/3 studies in the Alzheimer’s Prevention Initiative Generation Program

·     Invitae (NVTA) said it will acquire Jungla for approximately $50M upon closing, $35M in NVTA stock and $15M cash

·     MannKind Corporation (MNKD), said that it has completed construction of a new high-potency manufacturing suite in its Danbury Connecticut facility


Technology, Media & Telecom

·     Infosys (INFY) raising year revenue guidance from 7.5%-9.5% to 8.5%-10%; says maintained FY 20 operating margin guidance range of 21%-23%

·     EMCORE (EMKR) cuts Q3 revenue view to $17.0M-$17.5M from $20M-$22M (and below consensus $21.4M); said chip product sales, GPON in particular, experienced significant decline in Q3, largely due to additional negative effects of trade dispute with China

·     Worldwide PC demand grew more than expected in Q2, led in part by a phasing out of support for Microsoft Corp.’s (MSFT) Windows 7 operating system, according to IDC. Sales of PCs rose 4.7% to 64.9 million units from the year ago quarter as supply shortages eased. According to IDC, market share was 25.1% for Lenovo Group Ltd., 23.7% for HP Inc. (HPQ), 17.9% for Dell (DELL), 6.6% for Acer Group, and 6.3% for Apple Inc. (AAPL)


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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