Morning Preview: August 01, 2019

Auto PostDaily Market Report

Early Look

Thursday, August 1, 2019

Futures

Up/Down

%

Last

DJ Industrials

60.00

0.22%

26,915

S&P 500

5.50

0.18%

2,987

Nasdaq

22.50

0.29%

7,889

 

 

After yesterday’s sharp late day FOMC related sell-off, stock futures are pointing to a modest bounce after all three major indexes fell more than 1% yesterday following the Fed’s 0.25% rate cut. Asian markets were broadly negative, while European stocks mostly made small gains. Investors also had news of an inconclusive end to the latest round of U.S.-China trade talks to digest. China did agree to buy more U.S. agricultural products, and the White House said talks are expected to continue in Washington in September, but nothing more out of the meetings. PMIs across many Asian economies generally painted a weaker picture for the region outside of China, where the official and Caixin/Markit PMIs showed some signs of improvement (but still in contraction territory). In Asian markets, The Nikkei Index rose 19 points to 21,540, the Shanghai Index dropped -23 points to 2,908 and the Hang Seng Index fell -212 points to 27,565. In Europe, the German DAX is up over 50 points to 12,250, while the FTSE 100is up around 20 points back above 7,600. The US dollar rallied on Thursday following cautious signals from the Federal Reserve overnight, sending the pound to a 30-month low against the greenback. Stocks posted their biggest decline in weeks on Wednesday after the Fed’s decision to cut rates by just 25 bps left investors wanting more, as Fed Chairman Powell said the move was more of a preemptive strike against struggling global economy rather than the start of a fresh round of quantitative easing. Stocks held gains after the announced cut but found itself plunging as Powell spoke at his press conference, unsettling investors as he inferred it could be just the one cut. Stocks turned lower, while the dollar rallied to a two-year high and Treasury yields whipped up and down (the 2-year yield spiked as high as 1.96% after his comments from lows of 1.80% before settling lower).

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -32.80 points, or 1.09%, to 2,980.38

·     The Dow Jones Industrial Average fell -333.75 points, or 1.23%, to 26,864.27

·     The Nasdaq Composite plunged -98.19 points, or 1.19%, to 8,175.42

·     The Russell 2000 Index declined -10.99 points, or 0.69% to 1,574.60

 

Events Calendar for Today

·     8:30 AM EST      Weekly Jobless Claims…est. 214K

·     8:30 AM EST      Continuing Claims…est. 1.678M

·     9:45 AM EST      Markit US Manufacturing PMI, July-F…est. 50.0

·     10:00 AM EST    ISM Manufacturing PMI for July…est. 52.0

·     10:00 AM EST    Construction Spending MoM for June…est. 0.3%

·     10:30 AM EST    Weekly EIA Natural Gas Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: ABC, ABMD, BLL, BR, CI, CIR, CLVS, CLX, DNKN, GM, GNRC, HBI, HFC, HII, IDCC, IRM, K, KEM, LXRX, MAC, MPC, MSCI, OSK, PBF, PBH, PENN, PH, PWR, SFM, SNDR, SUM, THS, UFS, VZ, W, WCC, WEX, WING, WRK, XEL, XYL

·     Earnings After the Close: AIV, ANET, ASPN, BL, BLDR, BRKS, BZH, CBLK, CC, CDNA, CENX, CHRS, CPS, CRC, CWST, DLB, DVA, ETSY, FLR, FND, FSLR, GDDY, GHDX, GLUU, GMED, GPRO, HASI, HIG, HLF, IPHI, LM, MSI, MTSI, MTZ, OLED, PINS, POST, QRVO, RDFN, REG, RP, SQ, SRCL, SVMK, TNDM, WTI, WU, X

 

Other Key Events:

·     Monthly auto sales data for July

 

 

Macro

Up/Down

Last

WTI Crude

-0.77

57.83

Brent

-0.65

64.40

Gold

-18.50

1,407.60

EUR/USD

-0.0038

1.1038

JPY/USD

0.17

108.95

10-Year Note

+0.022

2.036%

 

 

World News

·     Caixin China July Manufacturing PMI 49.9 from 49.4 in June and down from year ago 50.8 (the second consecutive month of contraction), while output rises to 50.1 vs 49 in June and new orders rise vs prior month

·     The US will extend waivers allowing Russia, China and European countries to continue working with Tehran on civil nuclear projects, national security adviser John Bolton said

·     Brazil’s central bank slashed its benchmark interest rate to 6%, the first cut in over a year amid a gloomy outlook

 

Sector News Breakdown

Consumer

·     Beyond Meat (BYND) 3.25M share secondary priced at $160.00 per share

·     Cheesecake Factory (CAKE) Q2 EPS 82c/$602.6M vs. est. 81c/$615.15M; Q2 comp sales increased 1.0%; narrows FY19 adj. EPS view to $2.58-$2.68 from $2.58-$2.70 and narrows FY19 comp sales to 1%-1.5% from 1%-2%

·     Kura Sushi (KRUS) 2.9M share IPO priced at $14.00

·     Pilgrim’s Pride (PPC) Q2 adjusted EPS 69c/$2.84B vs. est. 60c/$2.88B; 2Q adjusted Ebitda $349.3M, +24% YoY

·     Boot Barn (BOOT) Q1 EPS 32c/$185.8M vs. est. 22c/$179.9M; Q1 comp sales soared 9.4%, driven by a double-digit retail store comp increase; said gross profit rate increased due to a 150 bps increase in merchandise margin rate and 20 bps of leverage in buying and occupancy costs; sees year comp sales growth of 6% vs. +4.7% consensus and EPS of $1.57-$1.65 up from $1.42-$1.50

·     Fitbit (FIT) Q2 EPS loss (14c)/$313.6M vs. est. loss (18c)/$312.0M; sees Q3 EPS loss (11c) to (9c) on revs $335M-$355M vs. est. 2c/$399.4M; guides FY19 EPS to loss of (38c) to (31c) on revs $1.43B-$1.48B vs. est. loss (15c)/$1.56B

 

Energy

·     Antero Midstream (AM) Q2 adjusted EPS 15c/$255.63M vs. est. 22c/$275.64M

·     Basic Energy Services (BAS) Q2 EPS loss (1.02)/$189.8M vs. est. loss (87c)/$205.2M; cut its capital expenditure forecast for the full year to $58M from $69M; Q2 adjusted Ebitda $16.5M

·     SunPower (SPWR) shares rose 20%; Q2 adjusted EPS loss (22c)/$481.9M vs. est. loss (12c)/$451.64M; guides Q3 revs $450M-$490M vs. est. $512.8M while raises 2019 sales to $1.9B-$2.1B from $1.9B-$2B; sees Q3 gross margins 14%-17% vs. est. 12.7%

·     Concho Resources (CXO) Q2 adjusted EPS 69c/$1.13B vs. est. 75c/$1.14B; Q2 production about 30 million barrels of oil equivalent (MMBoe), or an average of 329 thousand Boe per day (Mboepd); average daily oil production for second-quarter 2019 totaled 206 thousand barrels per day (Mboepd)

·     HollyFrontier (HFC) Q2 adjusted EPS $2.18/$4.78B vs. est. $1.64/$4.2B

·     Marathon Petroleum (MPC) Q2 adjusted EPS $1.73/$33.69B vs. est. $1.32/$33.38B

·     Royal Dutch Shell (RDSA) reported a 26 per cent slide in second-quarter earnings, which came well below expectations

·     Laredo Petroleum (LPI) Q2 EPS 24c vs. est. 21c; is increasing its anticipated full-year 2019 total production growth guidance to 14% (up from 11% prior) and oil production guidance to flat (had seen -2%) as compared to full-year 2018; reiterates capex for 2019 at $465M

·     Matador Resources (MTDR) Q2 EPS 30c vs. est. 21c; boosted its adjusted Ebitda forecast for the full year to $540M-$560M from $520M-$550M and sees FY oil production 13.3M-13.5M barrels, from 12.9M-13.3M; 2Q avg production 61,290 boe/d

·     Whiting Petroleum (WLL) Q2 adjusted EPS loss (28c)/$426.26M vs. est. 27c/$463.96M; production totaled 11.6 million barrels of oil equivalent (MMBOE), an average of 127,090 barrels of oil equivalent per day (BOE/d); crude oil and natural gas liquids (NGLs) comprised 65% and 17%, respectively, of total production; cuts workforce by 33%

·     RPC Inc. (RES) will replace Control4 Corp. in the S&P SmallCap 600 Index effective prior to the open of trading on August 6

·     Occidental Petroleum (OXY) Q2 EPS 84c vs. est. 93c; total average daily production volumes exceeded guidance at 741,000 barrels of oil equivalent (BOE) for Q2, compared to 719,000 BOE QoQ; also formed a new joint venture to accelerate development plans in the Permian Basin, the center of the US shale boom, ahead of the expected completion of its $55B takeover of Anadarko (APC)

 

Financials

·     Lincoln Financial (LNC) Q2 adjusted EPS $2.36/$4.47B vs. est. $2.37/$4.46B; said posted adjusted operating EPS and an adjusted operating ROE of 13.6%; Q2 book value $91.92 vs. $69.85 YoY

·     MetLife (MET) Q2 adjusted EPS $1.38/$16.45B vs. est. $1.34/$16.4B; approves $2B stock buyback; Q2 ROSE on equity 11.6% vs. 6.5% YoY; 2Q net investment income $4.69 billion vs $4.47 billion YoY; 2Q book value per share $64.61 vs $50.28 YoY

·     Prudential (PRU) Q2 adjusted EPS $3.14 vs. est. $3.23; Q2 per-share figure includes 9-cent charge from Prudential’s annual reviews and update of other assumptions and refinements vs. 29 cents in the year-ago quarter; adjusted book value of $97.15 per share at June 30, 2019 vs. $92.60 a year earlier.

·     Annaly Capital Management (NLY) Q2 core EPS of 25c missed the 26c estimate; book value per share of $9.33 at June 30, 2019 slips from $9.67 at March 31, 2019; Q2 net interest margin of 0.87% falls from 1.25% in Q1; Q2 net interest spread (excluding PAA) was 1.07% vs. 1.03% in Q1 and 1.18% in Q2 2018.

 

Healthcare

·     Cigna (CI) Q2 adjusted EPS $4.30/$34.4B vs. est. $3.74/$33.19B; raises FY19 adj. EPS view to $16.60-$16.90 from $16.25-$16.65 and also up its FY19 revenue view to $136B-$137B from $132.5B-$134.5B

·     DexCom (DXCM) Q2 adjusted EPS 8c/$336.4M vs. est. 1c/$307.04M; raises FY19 revenue view to $1.325B-$1.375B from $1.25B-$1.3B (est. $1.29B)

·     McKesson (MCK) Q1 adjusted EPS $3.31/$55.7B vs. est. $3.01/$54.03B; raises FY20 EPS view to $14.00-$14.60 from $13.85-$14.45 (est. $14.13); says following the completion of the Change Healthcare, Inc. IPO, McKesson owns approximately 58.5% of Change Healthcare, reduced from 70%

·     Vertex (VRTX) Q2 EPS $1.26/$940M vs. est. $1.07/$885.58M; 2Q Orkambi revenue $316 million, +1.6% YoY

 

Industrials & Materials

·     CF Industries (CF) Q2 EPS $1.28/$1.5B vs. est. 84c/$1.39B; delivered first half adjusted EBITDA 23% higher than in 2018 on similar product volumes

·     DuPont (DD) Q2 EPS 97c/$5.47B vs. est. 84c/$5.63B; sees FY19 EPS $3.75-$3.85 vs. est. $3.77

·     Rio Tinto (RIO) declared a $1B special dividend after reporting its best half-year profits in five years

·     Gardner Denver (GDI) Q2 EPS 43c/$629M vs. est. 39c/$634.44M; cuts FY19 adj. EBITDA view to $610M-$630M from $680M-$710M

·     Kinross Gold (KGC) Q2 EPS 6c/$837.8M vs. est. 3c/$816.71M

·     Owens-Illinois (OI) Q2 EPS 69c/$1.8B vs. est. 77c/$1.76B; cut its adjusted free cash flow forecast for the full year to at least $260M from $400M and guides year EPS $2.40-$2.55, (down from $3.00) and below estimate $2.88

 

Technology, Media & Telecom

·     Alteryx (AYX) Q2 EPS 1c/$82.0M vs. est. loss (6c)/$76.57M; sees FY19 EPS 44c-50c on revs $370M-$375M vs. est. 44c/$362.7M

·     Dynatrace (DT) 35.6M share IPO priced at $16.00

·     Cognizant (CTSH) Q2 adjusted EPS 94c/$4.14B vs. est. 92c/$4.14B; sees Q3 revenue growth 3.8%-4.8% YoY vs. est. $4.21B and sees FY19 adjusted EPS $3.92-$3.98 vs. est. $3.90; sees FY19 revenue growth 3.95-4.9% in constant currency

·     Five9 Inc. (FIVN) shares rose 10%; Q2 EPS 20c/$77.4M vs. est. 12c/$72.4M; raises year guidance to 70c-73c from 61c-66c (est. 64c) and raises FY19 revenue view to $312.5M-$314.5M from $304M-$307M (est. $306.2M)

·     Lam Research (LRCX) Q4 EPS $3.62/$2.36B vs. est. $3.42/$2.36B; guides 1Q adj EPS $2.80-3.20 vs est. $3.20

·     Pluralsight (PS) shares fell over -30%; Q2 EPS loss (6c)/$75.9M vs. est. loss (14c)/$73.88M; sees Q3 EPS loss (15c)-(13c) on revs $79.5M-$80M vs. est. loss (11c)/$82.34M; sees FY19 EPS loss (42c)-(38c)/$312M-$318M vs. est. loss (40c)/$315.92M

·     Qualcomm (QCOM) shares fell -3%; Q3 adjusted EPS 80c/$4.9B vs. est. 75c/$5.08B; Q3 MSM chip shipments 156M, down 22% YoY; guides Q4 adjusted EPS 65c-75 on revs $4.3B-$5.1B well below est. $1.08/$5.63B; sees Q4 MSM chip shipments 140M-160M, down 31%-40% YoY; says Huawei taking mkt share in China

·     Qualys (QLYS) Q2 adjusted EPS 55c/$78.9M vs. est. 47c/$78.56M; raises FY19 adjusted EPS view to $2.03-$2.07 from $1.89-$1.94 (est. $1.93) and says expects year revenues $321M-$322.5M vs. est. $321.95M

·     Twilio (TWLO) Q2 EPS 3c/$275M vs. est. 2c/$263.8M; sees FY EPS 17c-18c on revs $1.11B-$1.12B up from prior 11c-13c and revs $1.07B-$1.08B

·     Western Digital (WDC) Q4 adjusted EPS 17c/$3.6B vs. est. 17c/$3.66B; sees Q1 adjusted EPS 15c-35c on revs $3.8B-$4B vs. est. 35c/$3.92B; Client Devices, $1.61B (last year: $2.47B); Client Solutions, $755M (last year: $1.03B); Data Center, $1.27B (last year: $1.6B); HDD units totaled 27.7M vs. the 29.43M and data center beat with 6.2M compared to the 5.73M estimate

·     Zynga (ZNGA) Q2 EPS loss (6c)/$306.5M vs. est. 5c/$364.5M; said Q2 mobile user pay revenue of $224M, up 56% YoY, Mobile user pay bookings of $294M, up 83% YoY and Average Mobile DAUs up 1%; Average mobile MAUs down 10%; Average mobile daily bookings per average DAU up 70% at 18.8c; raising full-year revenue guidance to $1.24B from $1.2B (up 37% Y/Y) and boosting bookings guidance to $1.5B from $1.45B (up 55%)

_________________________________________________________________

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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