Mid-Morning Look: August 06, 2019

Auto PostDaily Market Report

Mid-Morning Look

Tuesday, August 06, 2019

Index

Up/Down

%

Last

 

DJ Industrials

128.22

0.50%

25,845

S&P 500

20.27

0.71%

2,865

Nasdaq

79.25

1.03%

7,805

Russell 2000

3.94

0.27%

1,491

 

 

U.S. equities are looking to rebound after posting the worst daily return of 2019 on Monday, with sentiment improving (for the moment) as the Chinese yuan stabilized after China’s central bank signals it wouldn’t let the yuan fall much further. On Monday the yuan depreciated beyond 7 to the dollar for the first time since 2008 in what was seen as retaliation against the U.S. and President Trump after he announced a 10% tariff staring on September 1st for $300B in Chinese goods. The news yesterday caused waves in global stocks, as major U.S. averages finished the day lower by around 3% (and brought the S&P 500 and Nasdaq Comp to 6-day losing streaks. Last night, the US Treasury labeled China a currency manipulator, causing additional selling pressure overnight but markets have since rebounded. The trade headlines have completely overshadowed the recent Fed rate cut by 25 bps, in-line payroll data last Friday and non-stop earnings releases over the last 2-weeks. RBC Capital noted so far in 2Q19 reporting season, 73% of the S&P 500 results that have come in have beaten consensus EPS expectations (down from 83% three weeks ago and 79% in last week’s update) while 58% have beaten consensus on sales (in line with last week’s update, but down from 75% three weeks ago and 63% two weeks ago). EPS beats are now coming in a touch below 1Q19 levels and are tracking just above their long-term average. The sales beat rate is still coming in above 1Q19 levels, but below its LT average.

 

Treasuries, Currencies and Commodities

·     In currency markets, the dollar edges higher as tries to snap its 3-day losing streak that has seen it fall from two-year highs reached last week; the dollar recovers vs. safe haven currencies (Franc, Yen) as stocks rebounded, as recovered from overnight low of 105.52 vs. the Yen, levels last seen in early January; no major economic data today as trade concerns have steered currencies

·     Commodity prices are little changed after extreme volatility the last few days with oil prices slightly higher and gold holding around 6-year highs. Treasury markets pare recent gains as Treasury yields bounce off multi-year lows (the 10-year touched overnight low of 1.6705% before rebounding to 1.75% and the 2-yr off lows of 1.52% before bouncing to 1.60%).

 

 

Macro

Up/Down

Last

 

WTI Crude

0.33

55.02

Brent

0.35

60.16

Gold

1.10

1,477.50

EUR/USD

-0.002

1.1184

JPY/USD

0.50

106.45

10-Year Note

0.059

1.76%

 

 

Sector Movers Today

·     Transports; Dow Transports bounce after falling -3.2% yesterday (was 4th straight down day) with nearly all names moving higher; CAR shares fell as the rental company adjusted EBITDA for Q2 trails analyst expectations slightly ($175M vs. $178M est.) with mixed guidance for the year of $9.20B-$9.50B in revs vs. $9.23B consensus and EPS of $3.35-$4.20 vs. $4.09 consensus; the Baltic Dry Index of commodity shipping costs fell 2.25% to 1,734 points to mark the 11th straight day of posting a drop (BDI is coming off its high point of the year in July and is still up 39% for the year) – shares of DSX, DRYS, SALT, SBLK, SHIP, GNK among those leveraged to data; EXPD shares outperformed in the Transport Index after its Q2 EPS/revenue beat

·     Semiconductors; KLAC reported EPS upside to both results and guide as sol-id exposure to foundry/ logic helps offset a weak memory market (tgt raised to $150 at BofA and UBS); CREE and ON announced the execution of a multi-year agreement where Cree will produce and supply its Wolfspeed® silicon carbide wafers to ON Semiconductor, in deal valued at more than $85M; AMD CEO Lisa Su denied early day market chatter that she was eyeing a role at IBM; LASR 2Q revs beat, at mid-point of guide, but 3Q outlook significantly weaker

·     Casino & Leisure movers; SEAS 2Q EPS topped the highest analyst estimate of 64c vs. est. 54c and higher Ebitda $149.7M (up 27% YoY); in gaming, CZR reported Q2 results with adj. EBITDAR of $631M, +2% above consensus/Q2 Las Vegas EBITDAR of $389M was +6% ahead; in lodging MAR guides full-year fee revenue to $3.82B-$3.85B from $3.85B-$3.93B prior and also trimmed its RevPAR guidance

·     Software movers; in video games, TTWO posted a big Q1 beat prompting analysts to raise their tgt prices as bookings and implied adjusted profit well above estimates and guidance, citing increased spending in its marquee titles and record sales for its NBA 2K game franchise; EVBG shares fell as 2Q19 results broadly topped expectations, although investors focus on the 2Q19 billings figure that came in 15% below consensus (+2% y/y); GWRE announced co-founder and CEO will transition to role of Chairman/reiterated guidance.

·     Oil E&P sector; LONE shares jump as Q2 revenue above expectations top views with a narrower-than-expected EPS loss and boosted production guidance for 2019 to 14,800-15,000 BOE/d from 13,700-14,700 BOE/d/production rose 22% during quarter; WPX raised its FY19 total/oil production guidance midpoints by 5%/4% while maintaining capex guidance/$400MM stock repurchase plan announced/3Q19 oil production guidance that is 9% above consensus and +12% qoq at the midpoint; CDEV Q2 production above expectations (76.12 Mboe/d vs 71.3 mboe/d est) and ups FY production guidance to 68-75 Mboe/d vs 61.5-70.5 Mboe/d previously and consensus estimate 70.8 Mboe/d/FY capex midpoint in line with estimates; HPR in-line quarter and guidance; CLR FY19 oil production guidance increase of 1% and gas increase of 4% while keeping capex locked-in place at $2.6B while Q2 EBITDA below estimates ($845M vs $874M est); XEC posts double-digit EPS miss (by 46c) as Q2 EBITDA below expectations ($330M vs $373M est.) driven by weaker than expected realized gas prices which were partially offset by stronger than expected liquids production/FY19 oil production got bumped higher

 

Stock GAINERS

·     ADNT +17%; Q2 adjusted EBITDA of $205M topped the $191M estimate and reported 3Q net sales of $4.2B slightly better

·     EVER +41%; on smaller Q2 EPS loss (8c) vs. est. (15c) on better revs $55.7M and raises FY19 revenue view to $215M-$219M from $197M-$203M – upgraded at Raymond James

·     KLAC +7%; reported EPS upside to both results and guide as solid exposure to foundry/ logic helps offset a weak memory market

·     NPTN +14%; top and bottom line beat in its Q2 earnings as revenue grew 0.7% Y/Y and 3% from last quarter and guided next quarter higher to $87M-$93M (above est. $59.6M)

·     PODD +18%; reported exceptionally strong Q2 results and raised guidance for the full year to $700M-$715M, above consensus $684.56M as sales grew 43% and topped consensus

·     SHAK +7%; 52-week highs after posted better-than-expected Q2 results and raised FY revenue forecast prompting at least six analysts to raise their tgt prices

·     TDG +14%; among top gainers in the S&P early after Q3 EPS handily topped views and raises FY19 adjusted EPS view to $17.93-$18.25 from $16.47-$17.15 on higher revs

·     TTWO +9%; posted a big Q1 beat prompting analysts to raise their tgt prices as bookings and implied adjusted profit well above estimates and guidance

·     WPX +5%; raised its FY19 total/oil production guidance midpoints by 5%/4% while maintaining capex guidance/$400MM stock repurchase plan announced

·     ZTS +7%; trades to record highs after beat and raise quarter

 

Stock LAGGARDS

·     CRCM -21%; Q2 results that beat EPS estimates but missed on revenue but had downside Q3 revenue of $52-52.5M (below est. $56.27M)

·     DF -30%; after Q2 EPS loss of (36c) worse than the (13c) loss estimate while sales of $1.84B missed the $1.88B est/saw volume pressure due to an accelerated decline in the conventional white milk category and higher dairy commodity inflation in Q2

·     ENR -8%; dropping after Q3 EPS of 37c missed the 46c estimate and revs missed while guided year sales $2.48B-$2.50B vs. est. $2.52B

·     EVBG -8%; 2Q19 results broadly topped expectations, although investors focus on the 2Q19 billings figure that came in 15% below consensus (+2% y/y).

·     GSKY -22%; said it would explore strategic alternatives as it reported adjusted Ebitda for the second quarter that missed the average analyst estimate

·     IFF -9%; company lowered 2019 EPS to $4.85-$5.05 on revenue of $5.15B-$5.25B, down from its previous guidance of $4.90-$5.10 and sales of $5.2B-$5.3B

·     MOS -9%; lowered its year EPS forecast to a range of $1.10-$1.50 from prior outlook of $1.50-$2.00, citing lower-than-expected sales volumes in the first half of 2019

_________________________________________________________________

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

Register