Morning Preview: August 26, 2019

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Early Look

Monday, August 26, 2019





DJ Industrials




S&P 500










U.S. stock futures with a sharp overnight spike, coming after China called and asked to restart trade talks, according to President Trump after Beijing’s top trade negotiator publicly urged calm following the back-and-forth tariff increases by both nations, erasing losses after Asian markets plunged as tensions get hotter between the U.S. and Beijing. Asian markets fell after President Donald Trump said late Friday that he plans to hike tariff rates on certain Chinese goods in response to Beijing’s latest retaliation in the trade war between the two countries. Trump said he will raise China tariffs on $300B in goods to 15% from 10%, and will raise China tariffs on $250M in goods to 30% from 25%. The move followed a 4-part tweet early Friday where President Trump called for American companies to immediately start looking for an alternative to China including bringing your companies home and making your products in the USA. Aides to President Donald Trump said Sunday he has no plans to invoke emergency powers and force companies to relocate operations from China, two days after his Friday tweet that they were “hereby ordered” to look for alternative locations. Reuters also reported that China said it strongly opposes Washington’s decision to levy additional tariffs on $550B worth of Chinese goods and warned the U.S. of consequences if it does not end its “wrong actions.”


The reaction to the escalating trade dispute was the U.S. dollar falling below the 105 level against the Japanese yen, moving to a fresh 2019 low, gold prices hitting a new 6-year high and the U.S. 10-year yield dropping as much as 9 bps to 1.44% soon after Asia open, the lowest level since August 2016 while Japan’s 10-year bond yield slides to a fresh three-year low. In Asian markets, The Nikkei Index plunged -449 points (2.1%) to 20,261, the Shanghai Index fell -33 points to 2,863 and the Hang Seng Index dropping -499 points (1.91%) to 26,580. In Europe, the German DAX is up around 30 points to 11,650, while the FTSE 100 was closed.

Market Closing Prices Yesterday

·     The S&P 500 Index plunged -75.84 points, or 2.59%, to 2,847.11

·     The Dow Jones Industrial Average fell -623.30 points, or 2.37%, to 25,628.90

·     The Nasdaq Composite plummeted -239.62 points, or 3.00%, to 7,751.77

·     The Russell 2000 Index declined -46.51 points, or 3.09% to 1,459.49


Events Calendar for Today

·     8:30 AM EST      Chicago Fed Nat Activity Index for July…est. 0.05

·     8:30 AM EST      Durable Goods Orders, July-P…est. 1.0%

·     8:30 AM EST      Durable Goods Orders Ex: Transportation…est. 0.0%

·     10:30 AM EST    Dallas Fed Manufacturing Activity for Aug…est. (-4.5)


Earnings Calendar:

·     Earnings Before the Open: None

·     Earnings After the Close: CAL, FLXS, OSIS


Other Key Events:

·     Jefferies Semi, Hardware & Comm Summit, 8/26-8/27, in Chicago, Il

·     Piper Jaffray Southwest Regional Bank Forum, 8/26-8/28, in Dallas, TX

·     William Blair 12th Annual West Coast MedTech Field Trip, 8/26-8/30, in San Diego, CA






WTI Crude















10-Year Note





World News

·     Hong Kong police drew their guns and fired a warning shot Sunday night after protesters attacked officers with sticks and rods, and brought out water cannon trucks for the first time, an escalation in the summer-long protests

·     China’s central bank adjusted interest-rate mechanisms Sunday for the second time this month, this time focused on mortgage loans, just one week after the People’s Bank of China unveiled a new benchmark interest-rate system meant to more closely align with market signals

·     The U.S. and Japan agreed in principle to core elements of a trade deal that President Donald Trump and Prime Minister Shinzo Abe said they hoped to sign in New York next month – Reuters


Sector News Breakdown


·     Nestle (NSRGY) mentioned positively in Barron’s noting the company is having a great year as it upgrades its cupboard to reflect changing tastes, and streamlines operations to launch and deliver products faster, putting it on track to realize 7% to 8% annualized profit growth over each of the next four years

·     Ulta Beauty (ULTA) mentioned favorably in Barron’s saying it has been one of retail’s few bright lights; says the retailer has long been bucking the industry’s downbeat trends with robust traffic and sales, inking savvy partnerships with social-media stars and attracting consumers to stores with an array of products even as many malls remain empty


Energy, Industrials and Metals

·     PDC Energy (PDCE) and SRC Energy (SRCI) announced they have entered into a definitive merger agreement under which PDC will acquire SRC in an all-stock transaction valued at approximately $1.7B, including SRC’s net debt of approximately $685M as of June 30

·     Iran wants to export a minimum of 700,000 barrels per day of its oil and ideally up to 1.5 million bpd if the West wants to negotiate with Tehran to save a 2015 nuclear deal, two Iranian officials and one diplomat told Reuters on Sunday

·     SolarEdge Technologies (SEDG) announced the death of Guy Sella, co-chairman and founder over the weekend; recall on 8/21, the company had announced Sella was taking a leave of absence amid declining health conditions

·     3M (MMM) mentioned cautiously in Barron’s saying shares are down by more than 16% so far in 2019, far worse than the Dow Jones Industrial Average’s 14.4% gain, while says bargain-seeking investors shouldn’t rush back into the stock, with new potential environmental liabilities threatening to erode the premium valuation multiple 3M still enjoys



·     Amgen (AMGN) entered into an agreement with Celgene Corporation (CELG) in connection with its previously announced merger with Bristol-Myers Squibb Company (BMY) to acquire worldwide rights to Otezla®, the only oral, non-biologic treatment for psoriasis and psoriatic arthritis, and certain related assets and liabilities, for $13.4 billion in cash

·     Bristol Myers (BMY) accelerates its share buyback plan to $7B

·     Intellia Therapeutics (NTLA) files $300M mixed securities shelf


Technology, Media & Telecom

·     Roku (ROKU) mentioned in Barron’s noting the streaming war continues to heat up, with Apple (AAPL) reportedly committing more than $6B to original content for its coming Apple TV+ service, and says the best way to play streaming is turning out to be upstart Roku (ROKU)

·     Target (TGT) announced a collaboration with The Walt Disney Co. (DIS) saying it will open 25 Disney-branded stores start on Oct. 4, with 40 additional locations opening by October 2020

·     Daily Mail and General Trust has agreed to sell its energy information business Genscape to Verisk (VRSK) for $364M


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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