Morning Preview: August 19, 2019

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Early Look

Monday, August 19, 2019

Futures

Up/Down

Last

DJ Industrials

246.00

26,153

S&P 500

27.50

2,918

Nasdaq

79.50

7,691

 

 

U.S. stock futures are pointing to a higher open, following both European and Asian to the upside and extending the strong gains from Friday amid positive comments from President Donald Trump and other officials on trade talks, along with a move by China over the weekend to lower borrowing costs for companies and also reports that Germany may also be considering stimulus measures. U.S. President Donald Trump played down recession this weekend, while his top economic adviser Larry Kudlow predicted a strong second-half performance for the U.S. economy and told Fox News Sunday that the administration was “looking at” a 10% tax cut for middle-income earners. In China, investors cheered a move by the People’s Bank of China to reform interest rates, with the goal of lowering real interest rates for companies. Stocks are looking to rebound globally after recent weakness as the Dow has fallen for three consecutive weeks and lost 400 points or 1.53% last week. The S&P 500 index ended the week down 1.03% for a third week of falls. More news on trade with China over the weekend as Reuters reported President Donald Trump said on Sunday that he did not want the U.S. to do business with China’s Huawei even as the administration weighs whether to extend a grace period for the company, according to Reuters. That followed the earlier report that the U.S. Commerce Department is expected to extend a reprieve given to Huawei Technologies that permits the Chinese firm to buy supplies from U.S. companies so that it can service existing customers, two sources familiar with the situation said. In Asian markets, The Nikkei Index was up while the Shanghai Index and Hang Seng Index were both up over 2%, while the German DAX is up about 115 points to 11,680 and the FTSE 100 is up about 65 points to 7,185. European markets are looking to snap their recent losing streak, led higher by gains in Germany after a report that Germany could spend $55 billion on stimulus should its economy slow

 

Market Closing Prices Yesterday

·     The S&P 500 Index gained 41.08 points, or 1.44%, to 2,888.68

·     The Dow Jones Industrial Average rose 306.61 points, or 1.20%, to 25,886.01

·     The Nasdaq Composite surged 129.37 points, or 1.67%, to 7,895.99

·     The Russell 2000 Index advanced 31.99 points, or 2.19% to 1,493.64

 

Events Calendar for Today

·     No Major Economic Data Released Today

 

 

Macro

Up/Down

Last

WTI Crude

0.45

55.32

Gold

-13.30

1,510.30

EUR/USD

0.0008

1.1098

10-Year Note

0.08

1.619%

 

 

World News

·     The German government could come up with $55 billion (50 billion euros) in stimulus should the country’s economy fall on hard times, German Finance Minister Olaf Scholz said in Berlin on Sunday, according to Bloomberg News. This comes after German gross domestic product shrank 0.1% in the second quarter of the year last week https://on.mktw.net/2ZhU0cs

·     Japan’s exports dropped for an eighth straight month in July, falling -1.6% last month from a year earlier, and was shallower than the 2.3 % forecast in a FactSet poll of economists. The country logged a 249.6B yen ($2.35B) trade deficit in July compared with a Y589.6B trade surplus MoM

·     Inflation in the eurozone was the weakest in more than two years in July, as Eurostat said euro-area inflation in July slowed to 1% over the last 12 months, down from 1.3% in June and an initial estimate of 1.1%. That was the lower than the 1.1% expected

 

Sector News Breakdown

Consumer

·     American Eagle’s (AEO) mentioned positively in Barron’s saying its outlook is more enticing than most investors realize, despite a trade war that could still hurt the retailer; says AEO has been gaining market share, and hiding in American Eagle is one of the nation’s fastest growing retailers

·     The U.S. Centers for Disease Control and Prevention is investigating a “cluster” of lung illnesses that it believes may be linked to e-cigarette use after such cases were reported in 14 states (watch shares of PM, MO)

·     Decker’s Brands (DECK) upgraded to Buy from Hold at Pivotal Research

·     Empire Resorts (NYNY) announced a definitive agreement under which affiliates of Kien Huat Realty and Genting Malaysia Berhad will acquire all of the outstanding equity of the company not currently owned by Kien Huat or its affiliates for $9.74 in cash per share of common stock and with each share of the company’s Series B preferred stock receiving the same consideration on an as-converted to common stock basis https://yhoo.it/2zbmYfH

 

Energy, Industrials & Materials

·     Tesla Inc. (TSLA) CEO Elon Musk announced a new offering that the company will allow residents of six states to rent solar-power systems starting at $50 a month, or $65 a month in California, for a small set-up. Musk says consumers can cancel anytime, although Tesla’s website says there’s a $1,500 charge to remove panels and restore the roof to its previous condition

·     Oil companies mentioned positively in Barron’s saying even if there is a global growth slowdown, near-term oil demand is not likely to fall much, if at all, noting you can now get dividend yields above 6% on Royal Dutch Shell (RDS.B) and BP (BP), while Exxon Mobil (XOM) is trading at the same levels as ten-years ago and Chevron (CVX) is regarded as best positioned of the majors

·     Precision Drilling (PDS) lowers FY19 CapEx view to C$144M from C$169M and said it intends to make an application to implement a normal course issuer bid through the facilities of the Toronto Stock Exchange and the New York Stock Exchange for a portion of its common shares.

·     PolyOne (POL) announced it has entered into a definitive agreement to sell its performance products and solutions, or PP&S, business to SK Capital Partners for $775M in cash. PolyOne expects to record a pre-tax gain of approximately $600M at the time the sale is completed (company raises year rev outlook following news)

·     Air Products (APD) downgraded to Neutral from Positive at Susquehanna

·     Westlake Chemical (WLK) raises quarterly dividend by 5% to 26.25c per share

·     Volkswagen and the SEC were ordered by a federal judge on Friday to seek a settlement over allegations the automaker defrauded U.S. investors, rather than continue a costly legal fight – WSJ

 

Financials

·     MasterCard (MA), which has partnered with Facebook (FB) on its Libra cryptocurrency, is also assembling its own cryptocurrency team – NY Post https://bit.ly/2TLeZ2f

·     East West Bancorp (EWBC) downgraded to Market Perform from Outperform at BMO Capital

 

Healthcare

·     Myriad Genetics (MYGN) mentioned in Barron’s noting shares plunged last week after reporting a surprise loss for the quarter, as revenue slid but notes more alarming was the GeneSight test that Myriad is counting on to restore sales growth seems to be in trouble with the FDA

·     Novartis (NVS) plans to answer U.S. Senate Finance Committee Chairman Chuck Grassley, who demanded details about data manipulation related to its gene therapy Zolgensma, Reuters reported

 

Technology, Media & Telecom

·     Apple Inc. (AAPL) CEO Cook warned President Donald Trump at dinner Friday that tariffs could hurt his company, Trump said Sunday. Speaking to reporters Trump said Cook argued that U.S. tariffs on Chinese goods would give its rival, South Korea’s Samsung Electronics an advantage, since it would not be subject to the same restrictions as Apple. “I thought he made a very compelling argument, so I’m thinking about it,” Trump told reporters.

·     The U.S. Commerce Department is expected to extend a reprieve given to Huawei Technologies that permits the Chinese firm to buy supplies from U.S. companies so that it can service existing customers, two sources familiar with the situation said. – Reuters reported

·     Sina (SINA) Q2 EPS 76c/$533.1Mvs. est. 47c/$510.18M

·     Weibo (WB) Q2 EPS 68c/$431.8M vs. est. $429.25M; monthly active users (MAUs) 486M in June, up about 55M YoY and mobile MAU’s represented approximately 94% of MAUs; average daily active users (DAUs) were 211M in June, up about 21M YoY; sees Q3 revenue up 6%-9% YoY

·     Softbank is planning to lend up to $20B to its employees, including CEO Masayoshi Son, to buy stakes in its second Vision Fund – WSJ reported

·     Helios and Matheson (HMNY) delays Q2 10-Q filing due to time and resource constraints on the accounting staff resulting from finalizing the Helios and Matheson Analytics’ annual report on form 10-K for FY18 and quarterly 10-Q

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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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