Morning Preview: July 16, 2019

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Early Look

Tuesday, July 16, 2019

Futures

Up/Down

%

Last

DJ Industrials

-1.00

0.01%

27,340

S&P 500

1.50

0.03%

3,018

Nasdaq

3.50

0.05%

7,990

 

 

U.S. stock futures are flat across the board, as the U.S. dollar advanced against most top tier peers ahead of key U.S. retail sales and factory data later this morning, as major stock averages continue to hold at recently achieved all-time highs into the start of earnings season. In Asian markets, The Nikkei Index fell -150 points to 21,535, the Shanghai Index dipped -4 points to 2,937 and the Hang Seng Index rose 64 points to 28,619. In Europe, the German DAX is little changed at 12,380, while the FTSE 100 is up a few points to 7,540. Stock markets have done well in recent weeks despite ongoing trade disputes between the U.S. and China amid 25% U.S. tariffs on some goods coming from China and the potential threat of more if talks between the countries continue to fail. Lower interest rate hopes have been the key driver of stocks over the last week, but earnings will have to impress for the rally to likely continue. This week, markets get a heavy dose of bank earnings (JPM, WFC later this morning), along with industrials and large cape tech names (NFLX, IBM, MSFT). This morning, Dow component and healthcare giant JNJ reported a top and bottom-line quarterly beat and raised its yearly sales view.

Events Calendar for Today

·     7:45 AM EST      ICSC Weekly Retail Sales

·     8:30 AM EST      Import Prices MoM for June…est. (-0.6%)

·     8:30 AM EST      Export Prices MoM for June…est. est. (-0.2%)

·     8:30 AM EST      Retail Sales MoM for June…est. 0.1%

·     8:30 AM EST      Retail Sales Ex: Auto & Gas for June…est. 0.1%

·     8:55 AM EST      Johnson/Redbook Weekly Sales

·     9:15 AM EST      Industrial Production MoM for June…est. 0.1%

·     9:15 AM EST      Capacity Utilization for June…est. 78.1%

·     10:00 AM EST    NAHB Housing Market Index for July…est. 64

·     10:00 AM EST    Business Inventories for May…est. 0.3%

·     3:30 PM EST       Fed’s Evans speaks in Chicago

·     4:00 PM EST       Net-Long term TIC Flows for May…prior $46.9B

·     4:30 PM EST       API Weekly Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: CBSH, FHN, FRC, JNJ, JPM, MBWM, PLD, SNV, WFC

·     Earnings After the Close: CSX, CTAS, FNF, FULT, HOPE, IBKR, SGEN, UAL, UBNK

 

Market Closing Prices Yesterday

·     The S&P 500 Index inched higher 0.53 points, or 0.02%, to 8,258.19

·     The Dow Jones Industrial Average rose 27.13 points, or 0.10%, to 27,359.16

·     The Nasdaq Composite gained 14.04 points, or 0.17%, to 8,258.19

·     The Russell 2000 Index declined -8.18 points, or 0.52% to 1,561.82

 

 

Macro

Up/Down

Last

WTI Crude

0.13

59.71

Brent

0.12

66.60

Gold

2.90

1,416.40

EUR/USD

-0.0027

1.1231

JPY/USD

0.02

107.93

10-Year Note

0.005

2.093%

 

 

World News

·     German Jul ZEW Economic Sentiment missed views at -24.5 vs -22.3 consensus while current conditions were -1.1 vs 5 consensus; on investor sentiment said Iran conflict seems to be intensifying; ongoing trade dispute between the US & China is a burden not only for Chinese economic development; lasting containment of factors causing uncertainty in export-oriented sectors of German economy isn’t currently in sight

·     Chinese retail sales grew 9.8% in June that surpassed consensus estimates of 8.5% and May’s 8.6% growth, helped by strong auto demand

 

Sector News Breakdown

Consumer

·     Tesla (TSLA) has dropped the cheapest variants of its Model X and Model S from its product lineup and adjusted prices across its range, Reuters reported. The company is also raising the starting prices of the Model X to $84,990 and of the Model S to $79,990. Tesla also lowered the starting price of its mass-market Model 3 to $38,990

·     Ryanair (RYAAY) said it is planning to cut back service at some airports and abandon others entirely because regulators may not return the grounded Boeing (BA) 737 MAX to service until as late as December

·     Burberry Group (BRBY.LN) reported a 4% rise in comparable-store sales in the June-ending quarter; said that was led by a high single-digit percentage gain in the Asia Pacific region, driven by mainland China. Burberry maintained its outlook for a “broadly stable” top line and operating margin at constant exchange rates

 

Energy

·     PG&E (PCG) is working to fix nearly 10,000 problems it discovered throughout its electrical system, the company said

·     Parker Drilling Company (PKD) said that Gary Rich has decided to retire from his roles as President, Chief Executive Officer, and Director of Parker Drilling later this year

 

Financials

·     First Horizon (FHN) Q2 EPS 42c/$461.4M vs. est. 37c/$440.7M; Q2 net interest margin 3.34% and net interest income -2.4% YoY to $303.6M

·     Commerce Bancshares (CBSH) Q2 EPS 96c vs. est. 94c; 2Q efficiency ratio 55.9% vs. 54.1% YoY and Q2 provision for loan losses $11.8M, +18% YoY

·     Synovus (SNV) Q2 EPS $1.00/$487.9M vs. est. 99c/$481.5M; Q2 net interest margin 3.69% and net charge-offs $11.8M

·     Prologis (PLD) Q2 FFO 77c/$790.4M vs. est. 76c/$724.99M

·     PayPal (PYPL) launched Xoom-its international money transfer service-in 32 markets across Europe. Xoom customers can send up to EURO$10,000 in a single transaction

·     People’s United Financial, (PBCT) to acquire United Financial Bancorp, Inc. (UBNK) in a 100% stock transaction valued at approximately $759 million; PBCT sees the transaction adding 7c per share to earnings based on fully phased-in cost savings https://on.mktw.net/32sX8kx

·     Prologis Inc. (PLD) has agreed to buy real-estate investment trust and warehouse owner Industrial Property Trust in a deal valued at $3.99B including debt, the company said

·     ServisFirst (SFBS) Q2 EPS 66c vs. est. 65c; Q2 tangible book value per share $14.29, Q2 CET1 capital ratio 10.18% and Q2 net interest margin 3.44%; average total deposits for Q2 were $7.18 billion, an increase of $203.0 million, or 12% annualized

·     Essential Properties Realty Trust (EPRT) files to sell 17.25M shares of common stock

·     Unum (UNM) raises dividend to 28.5c from 26c

 

Healthcare

·     Johnson & Johnson (JNJ) Q2 EPS $2.58/$20.56B vs. est. $2.46/$20.29B; raises year sales view to $80.8-$81.6B from prior view of $80.4B-$81.2B; guides year EPS $8.53-$8.63 vs. est. $8.60

·     Arbutus Biopharma (ABUS) reported preliminary results from a Phase 1a/1b clinical trial in healthy subjects and two cohorts of chronic hepatitis B subjects who received AB-506 monotherapy

·     Faro Tech (FARO) cuts 2Q sales by incremental $5.8M sales adjustment

·     Abbott Laboratories (ABT) said it plans to ramp up manufacturing capacity for its lower-cost continuous glucose monitor, the FreeStyle Libre, by three to five times in the next few years, aiming to reach millions more patients worldwide, Reuters reported

·     Medical Properties Trust (MPW) 45M share Spot Secondary priced at $17.29

·     Medical Properties Trust (MPW) files to sell 45M shares of common stock to raise capital to partly fund acquisitions of 14 acute care hospitals and two behavioral health facilities from Prospect Medical Holdings and one acute care hospital from Halsen Healthcare

·     Repligen (RGEN) announced a $100M public offering of common stock and $250M public offering of convertible senior notes due 2024; also guides Q2 EPS 30c-33c vs. est. 22c

 

Industrials & Materials

·     J.B. Hunt (JBHT) Q2 EPS $1.23/$2.26B vs. est. $1.35/$2.26B; current quarter total operating revenue, excluding fuel surcharges, increased 6.5% vs. the comparable quarter 2018; revenue growth was driven primarily by a 19% increase in revenue producing trucks and an 8% increase in truck productivity in Dedicated Contract Services (DCS), but partially offset by an 8% decline in volume in Intermodal (JBI)

·     Rio Tinto PLC (RIO) said it will take longer and cost more than expected to finish building one of the world’s biggest copper mines in Mongolia’s remote southern Gobi Desert. Rio said Tuesday it is assessing mine design options given stability risks associated with its approved design, which could delay production by 16-30 months to between May 2022 and June 2023. Reports Q2 Pilbara iron ore shipments 85.4M tons, down 3%, Q2 mined copper 137.1KT, down 13% and cuts FY19 Pilbara ore shipments view to 320M-330M tons from prior view 333M-343M

·     Freeport McMoRan (FCX) upgraded to Equal Weight at Barclays

·     Bayer (BAYRY) Roundup verdict was reduced by $55M by judge, the WSJ reported, as a federal judge cut the award to $25M from previously awarded $80M in a case linking his non-Hodgkin lymphoma to years-long Roundup

·     Sonoco (SON) downgraded to Underperform from Market Perform at BMO Capital

 

Technology, Media & Telecom

·     Arrow Electronics (ARW) shares fell -4%; sees Q2 adjusted EPS $1.50-$1.62 on revs $7.30B, below est. $1.96/$7.61B in revs; to wind-down PC and Mobility Asset disposition business as initiates $130M expense reduction program

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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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