Mid-Morning Look: July 16, 2019

Auto PostDaily Market Report

Mid-Morning Look

Tuesday, July 16, 2019






DJ Industrials




S&P 500








Russell 2000






U.S. equities are mixed, dipping from intraday record highs for major averages as attention turned to financials and banks following quarterly results from Dow components JPM and GS along with large cap bank WFC and several regional banks. Top and bottom line results came in better for the big banks, but lower trading revenue and softer NIM and NII figures (and outlooks) have weighed on sentiment, especially heading into what is expected to be a lower interest rate environment from the Fed, with expectations of a cut in two weeks after four rate hikes in 2018. Transports helping push markets higher led by gains in truckers and rails after better results from JBHT and CP. Economic data was mixed as U.S. retail sales grew more than expected last month, topping expectations, while monthly import and export prices fell more than expected. The U.S. dollar is pushing higher, especially vs. the British Pound (best levels since June 2017) on more Brexit concerns, while also rising vs. the euro. Treasury yields also edging higher, with the 10-year up 3 bps to 2.12% after the better economic data. Oil prices are modestly higher into weekly inventory data tonight and tomorrow (note data has been bullish for oil over the last few weeks). Outside of a few earnings results this morning and economic data, all is generally quiet on the macro front on trade and rates (FOMC meeting end of July).


Economic Data

·     Import Prices MoM for June fell more than expected at (-0.9%) vs. est. (-0.6%) while export Prices MoM for June fell a greater (-0.7%) vs. est. (-0.2%).

·     Retail Sales MoM for June rose a greater 0.4%, topping the 0.2% economist estimate as retail Sales Ex: Auto & Gas for June jumped 0.7% vs. est. 0.1%; strong retail sales data across the board

·     Industrial production was unchanged in June MoM vs. est. 0.1% and after rising 0.4% in May (was unrevised in May), while capacity utilization fell to 77.9% from 78.1% in May (which was also the est.). Factory production rose 0.4% in June after rising 0.2% in May

·     U.S. business inventories rose 0.3% in May with sales up 0.2%. Inventories had increased 0.5% in April, while sales had declined -0.2%

·     U.S. July NAHB housing market index rebounded 1 point to 65 after falling 2 points to 64 in June. The index was as high as 74 in December 2017







WTI Crude















10-Year Note





Sector Movers Today

·     Bank movers; earnings out for large caps JPM, WFC and GS, with lower net interest income and margins weighing on sentiment; JPM reported beat on earnings, but shares slipped after cutting its year net interest income view to about $57.5B, down from prior view of at least $58B – (follows Citigroup Inc.’s net interest margin miss yesterday) while overall JPM profit beat as higher interest income and a modest increase in loans more than made up for lower trading. WFC Q2 EPS and revenue topped consensus ($1.17/$21.6B vs. est. $1.15/$20.9B) while net interest income missed the lowest analyst estimate as $12.1B, down -3.6% YoY vs. est. $12.33B and said total average loans $947.5 billion, -0.3% QoQ; GS Q2 revs were $9.46B, 2% lower YoY but topped estimates of $8.8B while EPS beat/GS said Q2 revenues in fixed income, currency and commodities client execution were $1.47B, 13% lower YoY

·     Regional banks; KEY shares fell after saying it discovered “fraudulent activity” associated with transactions conducted by a business customer of its subsidiary – KeyBank National Association – in Q3 of 2019/the company estimates impact of up to $90M, net of tax; PBCT to acquire UBNK in a 100% stock transaction valued at approximately $759M as PBCT sees the transaction adding 7c per share to earnings https://on.mktw.net/32sX8kx ; in earnings, WTFC shares slip as Q2 miss driven by higher credit costs; SNV Q2 EPS beat by a penny as NIM 3.69% vs est 3.71%, charge-offs $11.8M vs est $16.3M; FHN Q2 EPS beat by 6c and NIM 3.34% vs est 3.31%; FRC falls as Q2 eps 1.24 vs. est. 1.27; charge offs $1.2M and NIM misses at 2.85% vs. 2.93% est.; CBSH Q2 EPS 96c vs. est. 94c; and provision for loan losses $11.8M, +18% YoY

·     Metals & Materials; iron ore prices jumped to 5-year highs overnight in China amid tight global supply and record steel output in China (follows recent dam disaster at VALE in Brazil and bad weather curtailing shipments); FCX was upgraded to equal-weight at Barclay’s; RIO said the estimated cost of its giant Oyu Tolgoi copper and gold mine in Mongolia could blow out by $1.9B and the project may be delayed by as much as two and a half years

·     Materials; SON was downgraded to underperform at BMO Capital as the stock is trading on the higher-end of its historical valuation while also expresses concern about cyclical easing; BERY was resumed at Overweight at JPMorgan after period of restriction and added to focus list saying it should post solid earnings and FCF growth over the next couple of years; paper & packaging stocks (SEE, IP ) rebound after recent weakness as analysts have taken down estimates and ratings due to worsening fundamentals in containerboard, pulp and uncoated freesheet



·     APRN +6%; after saying it will begin including BYND recipes on Blue its signature two-serving plan starting in August

·     CP +2%; Q2 EPS and revs topped views while operating ratio was a second-quarter record 58.4%, a 580 bps improvement YoY/said saw revenue growth across every line of business

·     JBHT +7%; missed both EPS and revenue estimates but analyst applauded the better-than-expected Q2 performance in DCS unit (several analysts raised tgts)

·     IP +3%; amid a rebound in paper & packaging stocks (SEE, PKG) after recent weakness in the group as analysts have taken down estimates and ratings due to worsening fundamentals in containerboard, pulp and uncoated freesheet

·     SCHW +3%; Q2 EPS of 66c beat estimates while net interest revenue rose 14% Y/Y to $1.6B, and net interest margin rose 10 bps from a year ago to 2.40%, reflecting the Fed’s 2018 rate hikes



·     ARW -2%; after guiding Q2 adjusted EPS $1.50-$1.62 on revs $7.30B, below est. $1.96/$7.61B in revs and said to wind-down PC and Mobility Asset disposition business

·     DPZ -6%; after posting sales growth in the U.S. that missed analysts’ estimates, as Q2 revs were $811M vs. est. $837M and comp sales growth rose 3% in Q2, trailing the 4.6% estimate

·     FDS -4%; downgraded to underweight at Morgan Stanley on potential for earnings deceleration to lead to valuation contraction

·     GOOGL -1%; after President Donald Trump said his administration will take a look at accusations that Google has worked with the Chinese government (follows Peter Thiel treason accusations made yesterday)

·     KEY -1%; after saying it discovered “fraudulent activity” associated with transactions conducted by a business customer of its subsidiary – KeyBank National Association – in Q3 of 2019

·     LEA -1%; pares losses after lower guidance; lowers year net sales view, core operating eps and adjusted ebitda views – watch other auto parts names on lower guidance

·     QTT -5%; after saying it will temporarily suspend content updates and certain commercial activities on Midu Novels/the suspension starts today and ends on October 15

·     TSLA -1%; dropped the standard-range variants of its Model X and Model S from its product lineup and adjusted prices across its range


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.

Live Trading

Open an Account

Paper Trading