Morning Preview: August 23, 2019

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Early Look

Friday, August 23, 2019

Futures

Up/Down

%

Last

DJ Industrials

42.00

0.16%

26,267

S&P 500

5.50

0.20%

2,928

Nasdaq

21.50

0.27%

7,732

 

 

Stock futures are edging higher into an important day of Fed speakers, highlighted by Fed Chairman Powell later this morning in Jackson Hole (10:00 AM EST), as investors look to any comments and clues regarding the pace of future interest rate cuts. Outside of the Fed, its relatively quiet on the news front with limited economic data and earnings results. In trade, the China Global Times reported that Beijing to soon unveil a retaliatory tariffs plan, which pared morning market gains. In Asian markets, The Nikkei Index rose 82 points to 20,710, the Shanghai Index rose 13 points to 2,897, the Hang Seng Index rose 130 points to 26,179. In Europe, the German DAX is up about 45 points to trade just under 11,800, while the FTSE 100 is higher by 50 points to 7,185. U.S. stocks finished mixed yesterday, buoyed by stronger than expected retail earnings (DKS, BJ, JWN) while Federal Reserve officials Harker and George cast doubt on further interest-rate cuts, while Fed President Kaplan was more open-minded. Kansas City Fed President Esther George said the U.S. doesn’t need lower interest rates, making similar comments from Harker later in the morning at the central bank symposium taking place in Jackson Hole Wyoming. Fer chairman Jerome Powell is due to speak later this morning and could provide more guidance on policy.

Market Closing Prices Yesterday

·     The S&P 500 Index dipped -1.48 points, or 0.05%, to 2,922.95

·     The Dow Jones Industrial Average rose 49.51 points, or 0.19%, to 26,252.24

·     The Nasdaq Composite dropped -28.82 points, or 0.36%, to 7,991.39

·     The Russell 2000 Index declined -3.85 points, or 0.25% to 1,506.00

 

Events Calendar for Today

·     10:00 AM EST    New Home Sales MoM for July…est. up 0.5% to 649K

·     1:00 PM EST       Baker Hughes Weekly Rig Count

 

Earnings Calendar:

·     Earnings Before the Open: BKE, FL, HIBB, RRGB

 

Other Key Events:

·     Annual Federal Reserve Policy Symposium in Jackson Hole, WY

 

 

Macro

Up/Down

Last

WTI Crude

-0.04

55.30

Brent

-0.07

59.85

Gold

-2.60

1,505.90

EUR/USD

-0.0025

1.1055

JPY/USD

0.20

106.64

10-Year Note

+0.03

1.643%

 

 

World News

·     The Trump administration is still planning for a round of in-person talks between U.S. and Chinese officials in September after a constructive exchange this week between deputy-level negotiators, White House economic adviser Larry Kudlow said on Thursday.

·     Moody’s Investors Service revised downward its GDP growth outlook for 16 Asian economies due to sharp slowdown in “externally-oriented” economies, as well as domestic factors holding back Japan, India and the Philippines

·     China “will not sit idly by” if the U.S. proceeds with a sale of advanced F-16V fighter jets to Taiwan, a Chinese general said, while warning of other potential countermeasures in addition to punishing foreign firms involved in the deal – Marketwatch.com

 

Sector News Breakdown

Consumer

·     Gap (GPS) Q2 adjusted EPS 63c/$4.01B vs. est. 53c/$4.02B; Q2 comparable sales were down (-4%) vs. est. (-3%) and compared with a 2% YoY; Q2 comp sales breakdown: Old Navy Global (-5%) vs. up 5% YoY, Gap Global comps (-7%) vs. (-5%) YoY, Banana Republic Global comps (-3%) vs. up 2% YoY; backs FY19 adjusted EPS view $2.05-$2.15 vs. est. $2.06 and backs FY19 comp sales view of down low single digits

·     Foot Locker (FL) Q2 adjusted EPS 66c vs. est. 67c; Q2 comp sales rises 0.8%, missing the 3.3% estimate; company said results came in at the low end of expectations

·     Ross Stores (ROST) Q2 EPS $1.14/$3.98B vs. est. $1.11/$3.96B; said Ladies business continued to trail the chain, trends in this important area showed some improvement during the period; Q2 operating margin of 13.7% was better than expected; sees Q3 EPS 92c-96c vs. est. $1.00 while narrows FY19 EPS view to $4.41-$4.50 from $4.38-$4.52 (est. $4.51); Q2 comp sales were up 3% vs. est. 2.1%

·     Hasbro, Inc. (HAS) and Entertainment One Ltd. (ETO.LN) entered into a definitive agreement under which Hasbro will acquire eOne in an all-cash transaction valued at approximately £3.3 billion or US$4.0B; eOne shareholders will receive £5.60 in cash for each common share of eOne

·     Adtalem Global Education (ATGE) Q4 adjusted EPS 97c/$330.3M vs. est. 96c/$328.63M; said completed the divestitures of DeVry University and Carrington College, streamlined our three verticals to support our enterprise growth strategy and expanded the financial services customer base; sees FY20 EPS ex-items up 7%-9% and FY20 revenue growth 5%-7%

·     Macy’s (M) downgraded to Neutral from Buy at Guggenheim while the firm added Nike (NKE) to its best ideas list

·     Altria Group (MO) upgraded to Equal Weight from Underweight at Morgan Stanley

·     Hibbett Sports (HIBB) Q2 adjusted EPS loss (13c)/$252.4M vs. est. loss (18c)/$255.86M; Q2 comp sales up 0.3%; sees year EPS $2.15-$2.25 up from prior view of $2.00-$2.15 and sees year comp sales up 1%-2% vs. prior view 0.5%-2%

 

Energy, Industrials & Materials

·     The U.S. Federal Aviation Administration said on Thursday it would invite Boeing (BA) 737 MAX pilots from across the world to participate in simulator tests as part of the process to recertify the aircraft for flight following two fatal crashes.

·     China’s coal demand will start to fall in 2025 once consumption at utilities and other industrial sectors reaches its peak, a state-owned think tank said in a new report – Reuters

 

Financials

·     Intuit (INTU) Q4 EPS loss (9c)/$994M vs. est. loss (14c)/$961.89M; sees Q1 EPS 23c-25c on revs $1.105B-$1.125B below est. 34c/$1.12B; sees FY20 EPS $7.50-$7.60 on revs $7.44B-$7.54B vs. est. $7.54/$7.44B; sees FY20 revenue growth for Small Business & Self Employed at 12%-14%, Consumer Group growth of 9%-10%, Strategic Partner Group growth at 1%-2%

 

Healthcare

·     Health Catalyst (HCAT) Q2 EPS loss (21c) on revs $36.8M; Q3 revs guidance $36.8M-$38.8M and non-GAAP EBITDA: ($11.2M-9.2M) vs. est. $37.6M; guides year revs $149.8M-151.8M

·     Immersion Corporation (IMMR) announced that it has signed a license agreement with Awinic Technology Limited (Awinic) to make Immersion haptic patent and technology licenses available to mobile phone and wearable OEMs through Awinic

 

Technology, Media & Telecom

·     Salesforce (CRM) Q2 adjusted EPS 66c/$4B vs. est. 47c/$3.95B; sees Q3 adjusted EPS 65c-66c on revs $4.44B-$4.45B above est. 61c/$4.25B (though note includes DATA acquisition); raises FY20 adjusted EPS view to $2.82-$2.84 from $2.68-$2.70 (est. $2.65) and ups FY20 revenue view to $16.75B-$16.90B from $16.45B-$16.65B (est. $16.66B); 2Q subscription and support revenue $3.75 billion, +22% YoY

·     HP Inc. (HPQ) Q3 EPS 58c/$14.6B vs. est. 55c/$14.61B; said continued to deliver strong free cash flow and non-GAAP EPS growth, while raising our non-GAAP EPS outlook; sees FY19 EPS $2.18-$2.22 (up from prior view $2.14-$2.21) vs. consensus $2.18; Enrique Lores will become President and CEO of HP Inc. effective Nov. 1, 2019 as current CEO Weisler to step down due to a family health matter and will be returning home to Australia

·     VMWare (VMW) Q2 adjusted EPS $1.60/$2.44B vs. est. $1.55/$2.42B; 2Q billings growth +17% vs. +13% YoY, free cash flow $611M, -16% YoY, 2Q license revs $1.01 billion, +12% YoY and Q2 Services revenue $1.43 billion, +12% YoY; to acquire Carbon Black (CBLK) for $26 per share in enterprise value $2.1B https://on.mktw.net/2ZgiHSM

·     Huawei Technologies Co. said it expects U.S. export restrictions to reduce annual revenue at its consumer devices business by about $10 billion, as the company is banned from buying American components

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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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