Morning Preview: August 21, 2019

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Early Look

Wednesday, August 21, 2019





DJ Industrials




S&P 500










U.S. stock futures are bouncing after yesterday’s pullback (as the Dow snapped its 3-day win streak), following gains in Europe with markets focusing on the Italian political situation as well as turmoil in the global economy. Markets continue to move on every trade related headline as President Donald Trump acknowledged Tuesday his aggressive China trade policies may mean economic pain for Americans but insisted, they’re needed for more important long-term benefits. He insisted he’s not fearing a recession but is nonetheless considering new tax cuts to promote growth. In addition to some key retailer earnings (TGT, LOW), markets also await Fed minutes today, Fed Chairman Powell’s comments at the Jackson Hole Symposium later in the week (along with other Fed members and foreign central bank leaders) and developments on the trade front. Meanwhile, President Donald Trump renewed his criticism of the Federal Reserve. “If the Fed would do its job, we’d have a tremendous spurt of growth,” he said in remarks. The president also said Tuesday that he was looking at tax cuts, including cutting payroll taxes. In Asian markets, The Nikkei Index fell -58 points to 20,618, the Shanghai Index was little changed at 2,880 and the Hang Seng Index rose 38 points to 26,270. In Europe, major averages are higher led by gains in Italy as the country waits for President Sergio Mattarella to decide whether to hold fresh elections after the resignation of Prime Minister Giuseppe Conte on Tuesday. The German DAX is up 116 points (1%) to 11,765, while the FTSE 100 is up over 70 points (1% as well) to 7,200 and Italy’s FTSE MIB rises over 1.6%. Oil prices are higher, gold lower and the dollar is mixed.

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -23.14 points, or 0.79%, to 2,900.51

·     The Dow Jones Industrial Average fell -173.35 points, or 0.66%, to 25,962.44

·     The Nasdaq Composite sunk -54.25 points, or 0.68%, to 7,948.56

·     The Russell 2000 Index declined -10.84 points, or 0.72% to 1,498.01


Events Calendar for Today

·     7:00 AM EST      MBA Mortgage Applications Data

·     10:00 AM EST    Existing Home Sales MoM for July

·     10:30 AM EST    Weekly DOE Inventory Data

·     2:00 PM EST       FOMC Meeting Minutes from the July 30-31st meeting


Earnings Calendar:

·     Earnings Before the Open: ADI, LOW, TGT, XPEL

·     Earnings After the Close: JWN, KEYS, LB, PSTG, SMRT, SNPS, SPLK


Other Key Events:

·     FOMC Meeting Minutes from July meeting






WTI Crude















10-Year Note





World News

·     Top negotiators from Japan and the U.S. will meet this week to try and narrow the gaps in ongoing trade talks, but hopes that there will be substantial progress on the key issues agriculture and automobiles seem to be fading.

·     Minneapolis Fed President Neel Kashkari, in an op-ed in the Financial Times, said that the central bank should not only cut interest rates in September but also use forward guidance. “At a minimum, we should commit to not raising rates again until core inflation returns to our 2% target on a sustained basis,


Sector News Breakdown


·     Target Corp. (TGT) shares rise 7%; Q2 adjusted EPS $1.82/$18.4B vs. est. $1.62/$18.34B; Q2 comp store sales rose 3.4% vs. est. 2.9%, while Q2 comparable traffic up 2.4%; sees Q3 EPS $1.04-$1.24 vs. est. $1.16 and guides Q3 comp sales to up 3.4%; raises FY19 adj EPS view to $5.90-$6.20 from $5.75-$6.05 (above est. $5.93 and sees comps up 3.4% in second half of FY19

·     Lowe’s (LOW) shares rise 6%; Q2 adjusted EPS $2.15/$21B vs. est. $2.00/$20.94B; Q2 comp sales rose 2.3%; backs FY19 adjusted. EPS view of $5.45-$5.65 (est. $5.57) backs FY19 revenue growth guidance of approximately 2% and also reaffirms its FY19 comp sales guidance of about 3%

·     Urban Outfitters (URBN) Q2 EPS 61c/$962.33M vs. est. 58c/$980.61M; Q2 comparable retail segment net sales decreased 3%, driven by negative retail store sales, partially offset by growth in the digital channel. By brand, comparable retail segment net sales increased 6% at Free People and decreased 3% at the Anthropologie Group and 5% at Urban Outfitters

·     La-Z-Boy (LZB) Q1 adjusted EPS 42c/$413.6M vs. est. 34c/$415.95M; Q1 adjusted operating margin 6.3% vs. 6.1% a year ago; Q1 comp sales for company-owned Retail segment up 3.5%

·     Toll Brothers (TOL) Q3 EPS $1.00/$1.77B vs. est. 82c/$1.7B; Q3 home sales revenues were $1.76 billion, down 8%; home building deliveries were 1,994, down 11%; said Q2 net signed contract value was $1.87 billion, down 8%; contract units were 2,241, down 3%

·     Jack Henry & Associates (JKHY) Q4 EPS 79c/$393.5M vs. est. 77c/$390.17M

·     Pandora shares jumped 13%, extending gains after the jeweler announced a restructuring plan and reported a 10% drop in comparable-store sales in the second quarter.

·     Walmart (WMT) is suing Tesla’s (TSLA) energy business, formerly known as SolarCity, for breach of contract, alleging the business failed to live up to industry standards in the installation of solar panels on top of hundreds of stores, resulting in multiple fires across the U.S. – Bloomberg


Energy, Industrials & Materials

·     The American Petroleum Institute (API) reported that U.S. crude supplies fell by -3.5M barrels for the week ended Aug. 16, showed a stockpile decline of -403,000 barrels in gasoline, while distillate supplies rose by 1.8 million barrels

·     Nordson (NDSN) Q3 GAAP EPS $1.62/$560M vs. est. $1.81/$587.74M; Q3 EPS include approximately $1.4M of one-time charges associated with restructuring and the step-up in value of acquired inventory; Q3 sales included a decrease of 2% organic volume and a decrease of 2% related to the unfavorable effects of currency translation as compared to the prior year’s Q3; expects flat to modest organic sales growth in FY19

·     Ring Energy (REI) mid-quarter Q3 operations update showed in the first 47 days ended August 16, 2019, the company drilled six new 1-mile horizontal San Andres wells on its Northwest Shelf property. Of the six wells drilled, two were waiting on completion and four were drilled



·     German bank Commerzbank is considering to close up to 200 of their overall 1,000 branches, business magazine Handelsblatt reports, citing sources. The bank is reviewing its strategy and mulling reducing the number of branches to 800 to 900 in order to cut costs

·     Royal Bank of Canada (RY) reports Q3 adjusted cash EPS C$2.26 vs. est. C$2.30; raises quarterly dividend to C$1.05 from C$1.02 per share



·     AstraZeneca (AZN) announced final overall survival results from the Phase III NEPTUNE trial, a randomized, open-label, multi-center, global trial of Imfinzi in combination with Tremelimumab, an anti-CTLA4 antibody, vs. standard-of-care platinum-based chemotherapy in previously-untreated Stage IV non-small cell lung cancer patients.

·     Cardinal Health (CAH) files automatic mixed securities shelf

·     Jazz Pharmaceuticals (JAZZ) downgraded to Neutral from Overweight at Piper Jaffray


Technology, Media & Telecom

·     Cree (CREE) Q4 adjusted EPS 11c/$251.2M vs. est. 10c/$248.95M; sees Q1 adjusted EPS loss (7c)-(3c) on revs $237M-$243M below estimate 15c profit and $259.23M

·     ScanSource (SCSC) Q4 non-GAAP EPS 71c/$960.8M vs. est. 43c/$980.87M; sees Q1 non-GAAP EPS 70c-75c on revs $970M-$1.03B vs. est. 35c/$940.77M; sees Q1 non-GAAP net sales excluding the Planned Divestitures to range from $830M-$890M

·     Pinduoduo (PDD) Q2 EPS loss (12c)/$1.06B vs. est. loss (19c)/$878.68M


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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