Mid-Morning Look: August 08, 2019

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Mid-Morning Look

Thursday, August 08, 2019

Index

Up/Down

%

Last

 

DJ Industrials

169.96

0.65%

26,177

S&P 500

28.10

0.97%

2,912

Nasdaq

95.27

1.21%

7,957

Russell 2000

16.19

1.08%

1,516

 

 

U.S. equities extending yesterday’s bounce, getting a lift from upbeat China trade data after posting a surprise increase in Chinese exports for July, helping ease global growth concerns for the moment. Stocks advanced further, while Treasury yields recovered further (10-year to 1.75% from lows of 1.6% yesterday) after a Reuters report that a senior German government official has said lawmakers are looking at ditching the so-called “black zero” ambition of a balanced budget in favor of fresh borrowing that could be used for a spending plan to tackle climate change. Not shortly after, headlines indicated Germany has not made a decision to give up its balanced budget (stocks dipped initially, only to rally to new highs a few moments later). Gold prices dipped from recent 6-year highs after closing above $1,500 for the first time since 2013, while oil prices edge higher. Its “risk-on” early with defensive assets such as gold, Treasuries, safe-haven currencies (yen) paring recent gains, while technology, industrials, consumer get a lift along with beaten shares of energy and financials.

 

Treasuries, Currencies and Commodities

·     In currency markets, the U.S. dollar looking to snap its 4-day losing streak, as it rebounds against safe haven currencies (yen and franc) given the spike in U.S. equites; while the buck is flat against the euro; sterling sinks to lowest level in two years against the euro

·     Commodity prices are mixed as gold pares recent gains, falling from 6-year highs as the dollar bounces along with stocks; oil prices looking to rebound off 7-month lows following its recent drop on slowing global growth concerns (better China export data overnight helped sentiment)

·     Treasury market’s slip and yields recover after massive volatility over the last week that saw the 10-year yield at 2.07% last Tuesday to lows of 1.60% yesterday morning (now 1.76%) and the 2-year at highs of 1.96% last Wednesday to lows of 1.50% yesterday (now at 1.625). Trade impact fears between China and the U.S., central banks around the globe lowering interest rates and rising expectations the Fed will aggressively cut at the September meeting have boosted bonds

 

Economic Data

·     Weekly jobless claims fell 8K to 209K, below the 215K estimate while the 4-wk avg rose to 212,250 from 212,000 prior week (previous 211,500); US continued claims fell to 1.684M in latest week vs. est. 1.690M from 1.699M prior week

·     Wholesale Inventories flat vs. est. 0.2% and wholesale sales fall (-0.3%) vs. est. up +0.2%

 

 

Macro

Up/Down

Last

 

WTI Crude

0.97

52.06

Brent

0.66

56.89

Gold

-13.20

1,506.40

EUR/USD

0.0004

1.1203

JPY/USD

-0.16

106.11

10-Year Note

0.031

1.765%

 

 

Sector Movers Today

·     Software; CRM said it acquired ClickSoftware Technologies Ltd., for an amount expected to be approximately $1.35B https://on.mktw.net/31ncZQl ; in another deal, SYMC shares jumped overnight after the WSJ reported AVGO was nearing a deal to buy Symantec’s enterprise-security unit, mostly made up of the former Blue Coat Systems Inc. which is valued around $10B https://on.mktw.net/2YOtGT3 ; TLND outperformed after Q2 revenue of $60.5M topped views and boosted its year EPS view (though cut its year revenue outlook); QTWO reported strong F2Q19 results (record revs) and subsequently raised FY19 revenue guidance

·     Internet; STMP shares a nice recovery after last quarter’s plunge, as Q2 results easily topped views and boosted the low end of its year profit outlook to $3.60-$4.85 from $3.35-$4.85 (est. $3.96); in online travel, two different outcomes as BKNG shares rise on Q2 EPS/revenue beat and said Q2 gross travel bookings were $25.0B up 5% YoY with better guidance (Q3 adjusted EPS $43.60-$44.60 vs. est. $43.97), while TRIP shares rebound from 4% decline overnight on its quarterly miss to trade higher; EB shares slipped as Q3 revs were guided below estimates ($74M-$78M vs. est. $77M); ZG shares tanked as net loss widened to $71.98M from a year-ago loss of $3.09M and said guidance for its Premier Agent business was changed based on the company moving to a deferred revenue model for that business

·     Media & Telecom movers; CTL Q2 revenue misses estimates citing an impact from contract rerates/CTL also reiterates full-year 2019 forecast for adj. EBITDA and free cash flow – also downgraded at JPM, but upgraded at Raymond James; CBS and T reach new content carriage agreement/terms not disclosed; AMC Q2 revenue, profit beat estimates, driven by record attendance in both U.S. (up 3.1%) and international markets (up 16.6%); GTT shares fall as Q2 adjusted Ebitda $112M vs. est. $125M and said hires advisor to explore some asset sales/posts larger EPS loss; SWCH reported solid C2Q results with stronger revenue growth of 9.2% yoy and OIBDA growth of 16% YoY; VIAB rises after topping consensus with Q3 earnings even as investors keep one eye on hopeful CBS deal/company showed a turnaround in domestic advertising after years of declines; DIS upgraded to outperform at Credit Suisse after shares fell Thursday post EPS

·     Retailers; ADDYY Q2 where EPS of €2.33 came in ahead of the €2.30 consensus estimate on sales of +4% CC (+5% reported), while gross margins were once again a highlight–up 120 bps Y/Y (beating estimates by 70 bps) said Piper; AGS shares fell, downgraded by two analysts after posting a disappointing Q2 report, with adjusted EBITDA falling slightly to $35.75M on top of sales and profit misses; ELF reported Q1 last night and results beat expectations across the board on sales/EBITDA/margins and raises year sales view to $246M-$256M from $235M-$245M and better EPS; VSI to be acquired by Liberty Tax for $6.50 per share in cash in deal valued at $208M; COST July comp sales of +5.6% vs Consensus +6.3%, with core at +5.1% vs Consensus +5.4%; FOSL shares rose after earning; FL was upgraded at Morgan Stanley

 

Stock GAINERS

·     AIG +4%; posted a nearly 18% increase in second-quarter net income as EPS of $1.43 topped the $1.16 estimate as General Insurance achieved its second consecutive quarter of underwriting profitability

·     AMD +12%; formally launched its 7nm 2nd generation EPYC server processor family (Rome)/follows the launch of 7nm Ryzen 3 desktop processors and 7nm Navi GPUs last month

·     AVDR +36%; as GKOS said it will acquire the company in an all-stock transaction, with Avedro shareholders will receive an exchange ratio equivalent of 0.365 shares of Glaukos share valuing AVDR at about $26.68 per share in $456.5M deal https://yhoo.it/2OJHDls

·     CVRS +75%; after agreed to be acquired by Siemens Healthineers AG subsidiary Siemens Medical Solutions for $4.28 per share in cash

·     DBVT +9%; after the company resubmitted its marketing application for its peanut allergy treatment with U.S. FDA (Viaskin Peanut) for the treatment in children ages 4-11 years

·     HUN +16%; announced a definitive agreement to sell a collection of upstream assets to Indorama Ventures for $2.0B in cash plus $76MM in net underfunded pension and OPEB liabilities

·     ROKU +19%; as its EPS loss was smaller than expected on better revs and reported active accounts of 30.5M, a net addition of 1.4M from last quarter

·     SYMC +10%; after the WSJ reported AVGO was nearing a deal to buy Symantec’s enterprise-security unit, mostly made up of the former Blue Coat Systems Inc. which is valued around $10B https://on.mktw.net/2YOtGT3

·     VSI +40%; to be acquired by Liberty Tax for $6.50 per share in cash in deal valued at $208M

 

Stock LAGGARDS

·     AGS -48%; downgraded by two analysts (DBAB, Bofa) after posting a disappointing Q2 report, with adjusted EBITDA falling slightly to $35.75M on top of sales and profit misses

·     CLVS -13%; after filing to offer $225M of convertible senior notes

·     CWH -15%; following weaker earnings results as EBITDA for the quarter and FY coming in well below estimates (EPS missed by 20c) prompting a downgrade at JPMorgan

·     DDD -13%; down seventh straight session after Q2 revenue falls short of estimates, impacted by ordering patterns of large enterprise customer, delay in shipping factory metals systems

·     GDOT -46%; Q2 earnings above expectations but lowered its guidance for the year (cuts FY19 operating revenues view to $1.06B-$1.08B versus its previous guidance of $1.114B-$1.134B)

·     GTT -38%; as Q2 adjusted Ebitda $112M vs. est. $125M and said hires advisor to explore some asset sales/posts larger EPS loss

·     ICUI -31%; on miss and lower outlook as Q2 revs, adjusted EBITDA and adjusted EPS were below expectations while cuts year EPS to $7.55-$8.15 from $9.00-$9.90

·     KHC -13%; as profit falls in 1H saying it took a $744M goodwill impairment charge in H1 related to certain reporting units including U.S. Refrigerated and expects to record a non-cash impairment loss of $474M in Q2 related to six brands

·     MNST -7%; missed across the board on 2Q results, delivered 2Q EPS of 53c (2c miss) as US sales growth of ~5-6% (missed 7.3% est.) and Int’l sales growth of +16.8% (missed 21.7% est.) on a -110 bps decline in gross margins

·     WMGI -21%; posted Q2 revenue below estimates and lowered 2019 forecast for sales citing unexpected weakness in U.S. lower extremities business

·     ZG -18%; after wider Q2 loss as it spent heavily to boost its home segments business; firm spent $240.7M its home segment business in the quarter to earn revenue of $248.9M

 

Syndicate

·     Dynavax (DVAX) 18.525M share Spot Secondary priced at $3.00

·     InMode (INMD) 5M share IPO priced at $14.00

·     Kinsale Capital Group (KNSL) 645K share Secondary priced at $93.00

·     MeiraGTx (MGTX) 3.2M share Spot Secondary priced at $23.50

·     National Vision (EYE) 9.15M share Spot Secondary priced at $31.00

·     Safehold (SAFE) 3M share Secondary priced at $28.00

·     Sol-Gel Technologies (SLGL) 1.25M share Secondary priced at $8.00

·     Wabtec (WAB) 20.49M share Secondary priced at $72.50

_________________________________________________________________

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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