Morning Preview: August 22, 2019

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Early Look

Thursday, August 22, 2019

Futures

Up/Down

%

Last

DJ Industrials

-36.00

0.14%

26,190

S&P 500

-4.50

0.15%

2,924

Nasdaq

-21.50

0.27%

7,729

 

 

Stock futures are pointing to a modestly lower open, paring some of yesterday’s gains after equities managed to rise on Wednesday, getting a late day boost after minutes of the Fed’s July meeting showed policy makers believed that “it was important to maintain optionality in setting policy.” The FOMC voted 8-2 to lower interest rates by 25 bps to 2%-2.25%, marking its first such rate reduction in more than a decade. Most Fed members who supported the rate cut agreed with Fed Chairman Jerome Powell’s assessment that it was a mid-cycle adjustment and thus not the start of an aggressive monetary easing campaign. Prior to the Fed minutes, stocks had rallied amid strength in retailers as Target (TGT) and Lowe’s (LOW) both reported quarterly results that topped consensus expectations. In a negative yesterday, President Donald Trump backtracked on comments he had made about fiscal stimulus, saying he no longer thought cutting payroll taxes was a good idea. In Asian markets overnight, The Nikkei Index inched higher by 9 points to 20,628, the Shanghai Index rose 3 points to 2,883 and the Hang Seng Index fell -221 points to 26,048. In Europe, the German DAX is down slightly trading under 11,800, while the FTSE 100 is down around -30 points to 7,170. Markets will closely watch the headlines out of the Fed’s Symposium today and tomorrow, with several Fed speakers and foreign central bank heads speaking, highlighted by Fed Chairman Powell tomorrow.

Market Closing Prices Yesterday

·     The S&P 500 Index gained 23.92 points, or 0.82%, to 2,924.43

·     The Dow Jones Industrial Average rose 240.29 points, or 0.93%, to 26,202.73

·     The Nasdaq Composite jumped 71.65 points, or 0.90%, to 8,020.21

·     The Russell 2000 Index advanced 11.84 points, or 0.79% to 1,509.85

 

Events Calendar for Today

·     8:30 AM EST      Weekly Jobless Claims

·     8:30 AM EST      Continuing Claims

·     9:45 AM EST      Markit US Manufacturing PMI, Aug-P

·     9:45 AM EST      Markit US Services PMI, Aug-P

·     9:45 AM EST      Markit US Composite PMI, Aug-P

·     10:00 AM EST    Leading Index for July

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

·     11:00 AM EST    Kansas City Fed Manufacturing Activity

 

Earnings Calendar:

·     Earnings Before the Open: BJ, CTRN, DKS, HRL, LYTS, SSI, TTC, TUES

·     Earnings After the Close: ATGE, CRM, HPQ, INTU, ROST, VMW

 

Other Key Events:

·     Annual Federal Reserve Policy Symposium in Jackson Hole, WY

 

 

Macro

Up/Down

Last

WTI Crude

0.38

56.06

Brent

0.40

60.70

Gold

-9.90

1,505.80

EUR/USD

-0.0011

1.1074

JPY/USD

-0.25

106.37

10-Year Note

-0.006

1.582%

 

 

World News

·     The federal budget deficit is expected to balloon to more than $1 trillion in the next fiscal year under the first projections taking into account the big budget deal that President Donald Trump and Congress reached this summer, the Congressional Budget Office reported

·     German Chancellor Angela Merkel raised the possibility that a negotiated departure for Britain from the European Union might still be possible indicating that a solution for the contentious Irish border issue might yet be reached before the Brexit date of Oct. 31.

 

Sector News Breakdown

Consumer

·     Nordstrom (JWN) Q2 EPS 90c/$3.78B vs. est. 75c/$3.93B; company said they delivered strong bottom-line results, demonstrating our inventory and expense discipline; narrows FY19 EPS view to $3.25-$3.50 from $3.25-$3.65 (est. $3.27) and sees FY19 net sales growth roughly (2%) compared to the prior view of sales growth view (2%)-0%.

·     L Brands (LB) Q2 adjusted EPS 24c/$2.90B vs. est. 20c/$2.95B; sees Q3 EPS (5c) to 5c below consensus 8c while backs its year EPS view of $2.30-$2.60; raises FY19 free cash flow view to ~$750M from ~$700M and backs FY19 SSS view of up low single digits

·     BJ Wholesale (BJ) Q2 adjusted EPS 39c/$3.35B vs. est. 37c/$3.39B; Q2 comp sales ex: gas 1.6% vs. est. 1.9%; still sees FY EPS $1.42-$1.50 vs. est. $1.49 and year sales $12.9B-$13.2B vs. est. $13.4B

·     Hormel Foods (HRL) Q3 EPS 37c/$2.29B vs. est. 36c/$2.3B; still sees FY EPS $1.71-$1.85 vs. est. $1.73 and sees FY sales $9.5B-$10B vs. est. $9.52B

·     The Simply Good Foods Company (SMPL) and Quest Nutrition announced that the companies have entered into a definitive agreement under which Simply Good Foods will acquire Quest for $1.0B in cash, or approximately $870M net of tax benefits, on a cash-free and debt-free basis

·     Energizer (ENR) upgraded to Buy from Neutral at UBS

·     Audi is poised to join an alliance with rivals Daimler (DDAIF) and BMW to develop advanced driving assistance systems, according to German weekly Wirtschaftswoche.

 

Energy, Industrials & Materials

·     U.S. oil futures settled lower Wednesday after the government reported a weekly decrease in domestic crude supplies, the first in three weeks, but smaller than the market expected. Concerns over energy demand also continued to pressure prices.

·     Fluor (FLR) upgraded to Buy from Hold at Canaccord

·     Noble Energy (NBL) upgraded to Outperform from Perform at Oppenheimer

·     TechnipFMC (FTI) has been awarded a “significant” integrated Engineering, Procurement, Construction and Installation, or iEPCI, contract by Shell (RDS/A) for the PowerNap project, located in the Gulf of Mexico

 

Financials

·     LPL Financial (LPLA) said total brokerage and advisory assets served at the end of July were approximately $713B, a $7B increase, or 1.0%, compared to the end of June 2019

·     Canadian Imperial Bank of Commerce (CM.TO) quarterly profit topped estimates, as gains in domestic retail and U.S. commercial banking overshadowed a weak capital markets business; net income at CIBC’s retail banking unit rose 3% to C$657 million ($494.47 million) from a year earlier

·     MasterCard (MA) says there was data breach for its German loyalty program

 

Healthcare

·     PerkinElmer (PKI) announced that after 12 years as CEO, Robert F. Friel, has decided to retire as chairman and CEO and member of the board of directors as of the end of the company’s FY19

·     BeiGene (BGNE) announced that the FDA has accepted the company’s new drug application, or NDA, for zanubrutinib for the treatment of patients with mantle cell lymphoma, or MCL, who have received at least one prior therapy

·     Health insurers (CI, MOH, ANTM, UNH) are expanding their Affordable Care Act plan offerings for next year, with the business now generating profits, despite the overall individual-insurance market that has shrunk, the WSJ reported

·     Avinger (AVGR) 3.81M share Spot Secondary priced at $1.18

 

Technology, Media & Telecom

·     Splunk (SPLK) Q2 adjusted EPS 30c/$516.6M vs. est. 12c/$488.35M; sees Q3 revenue ~$600M above consensus $580.52M and sees Q3 operating margin ~16%; raises FY20 revenue view to $2.30B from $2.25B (vs. est. $2.26B) and backs FY20 operating margin view around 14%

·     Pure Storage (PSTG) Q2 non-GAAP EPS 1c/$396.3M vs. est. loss (4c)/$392.52M; sees Q3 revenue $434M-$446M below consensus $466.33M; lowers FY20 revenue view to $1.65B-$1.72B from $1.7B-$1.77B (est. $1.73B) and sees FY20 non-GAAP gross margin in the range of 67.0% to 69.0%

·     Synopsys (SNPS) Q3 adjusted EPS $1.18/$853M vs. est. $1.10/$831.02M; sees Q4 adjusted EPS $1.10-$1.15 on revs $830M-$860M vs. est. $1.01/$838.45M; raises FY19 adjusted EPS view to $4.52-$4.57 from $4.24-$4.40 and ups FY19 revenue view to $3.34B-$3.37B from $3.3B-$3.35B

·     Keysight Technologies (KEYS) Q3 adjusted EPS $1.25/$1.09B vs. est. $1.02/$1.05B; sees Q4 EPS $1.14-$1.22 on revs $1.08B-$1.10B vs. est. $1.06/$1.07B

·     58.com (WUBA) Q2 adjusted earnings per ADS $1.61/$601.4M vs. est. 79c/$579.74M

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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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