Morning Preview: August 27, 2019

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Early Look

Tuesday, August 27, 2019

Futures

Up/Down

%

Last

DJ Industrials

12.00

0.05%

25,955

S&P 500

2.00

0.07%

2,885

Nasdaq

11.00

0.14%

7,601

 

 

Stock futures are flat across the board, having rebounded from Friday’s sharp selloff yesterday, helped by President Trump as he provided markets with a much more optimistic tone on a potential trade deal with China, saying Beijing asked to “get back to the table” for talks. But outside of a few comments from Trump, following up after announcing increased tariffs on additional China goods last Friday, markets were relatively quiet amid a lack of market moving corporate news. However major averages remain on track for monthly declines of roughly 3% with only a few trading sessions to go for the remainder of the month. Market gains were broad-based on Monday, as communication services and technology sectors outperformed. Treasury prices finished lower, erasing an overnight rally that saw the 10-year yield hit a 3-year low of 1.44% while WTI crude oil settled lower by -1% on speculation that a possible U.S.-Iran meeting could lead to oversupply. In Asian markets overnight, The Nikkei Index gained 195 points to 20,456, the Shanghai Index jumped 38 points to 2,902 and the Hang Seng Index dipped -16 points to 25,664. In Europe, the German DAX is up 35 points to trade just under 11,700, while the FTSE 100 is down about -20 points to 7,075. In Italy, Five Star canceled its morning meeting with the Democratic Party according to media reports, after overnight talks went nowhere and the selection of a new PM caused tension. Speaking at the conclusion of the G-7 summit in France, Trump said he was ready to resume trade negotiations with China, following what he said were two “very good calls” from Beijing. Oil advanced after sliding 4.8% in the previous four sessions, while gold prices inch back to 6-year highs. There are a couple of economic data points today as well as handful of earnings, but expect another low volume summer trading day.

Market Closing Prices Yesterday

·     The S&P 500 Index gained 31.27 points, or 1.10%, to 2,878.38

·     The Dow Jones Industrial Average rose 269.93 points, or 1.05%, to 25,898.83

·     The Nasdaq Composite surged 101.97 points, or 1.32%, to 7,853.74

·     The Russell 2000 Index advanced 16.52 points, or 1.13% to 1,476.00

 

Events Calendar for Today

·     7:45 AM EST      ICSC Weekly Retail Sales

·     8:55 AM EST      Johnson/Redbook Weekly Sales

·     9:00 AM EST      House Price Purchase Index for Q2…est. 0.2%

·     9:00 AM EST      FHFA House Price Index MoM for June…est. 0.2%

·     9:00 AM EST      S&P CoreLogic CaseShiller Index for June

·     10:00 AM EST    Richmond Fed Index for August…est. (-0.2%)

·     10:00 AM EST    Consumer Confidence for August…est. 129.0

·     4:30 PM EST       API Weekly Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: AMWD, BNED, CTLT, EV, JILL, LANC, PLAN, RGS, SJM

·     Earnings After the Close: ADSK, HEI, HPE, LCI, OOMA, PAHC, VEEV

 

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

·     Seaport Global Annual Energy & Industrials Conference, 8/27-8/28, in Chicago

·     Simmons European Energy Conference, 8/27-8/29, in Scotland

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

 

 

Macro

Up/Down

Last

WTI Crude

0.67

54.31

Brent

0.61

59.36

Gold

3.40

1,540.60

EUR/USD

0.0000

1.1102

JPY/USD

-0.32

105.80

10-Year Note

-0.028

1.5064%

 

 

Sector News Breakdown

Consumer

·     Farfetch Limited (FTCH) said it wasn’t buying Barneys New York, following a New York Post story that said it was in advanced talks to do so. “The story is incorrect — Farfetch is not acquiring Barneys New York,” the report said https://on.mktw.net/2MFgIp7 

·     American Woodwork (AMWD) Q1 adjusted EPS $2.13/$427.4M vs. est. $1.96/$432.3M; authorizes stock buyback of up to $50M; said growth in builder channel was offset by declines in home center, independent dealers, distributors channels during q1 2020

·     Genesco (GCO) upgraded to Positive from Neutral at Susquehanna

·     Regis (RGS) Q4 adjusted EPS 62c/$248.19M vs. est. 17c/$248.95M

·     Caleres (CAL) shares rose 11%; Q2 adj EPS 62c/$752.5M vs. rest. 58c/$752M; said Q2 comp sales rose 1.5% at Famous Footwear vs. 2.6% YoY; Q2 gross margin 40.7% vs. 41.5% last year

·     Knoll, Inc. (KNL) to buy ecommerce furniture brand Fully for $35.0 million plus contingent future payments dependent on the performance of the business over the next four years.

 

Energy, Industrials & Materials

·     Parsley Energy (PE) declares initial quarterly dividend of 3c

·     Arconic Inc. (ARNC) agreed to sell its aluminum rolling mill in Itapissuma, Brazil to Companhia Brasileira de Aluminio for about $50 million in cash; expects to record a third-quarter, pretax restructuring charge

·     Heartland Express (HTLD) announced that it has acquired 100% of the equity of dry van truckload carrier Millis Transfer and related entities, for aggregate value of approximately $150M

·     Standex (SXI) Q4 adjusted EPS $1.16/$209.2M vs. est. $1.13/$208.3M; says as we enter fiscal 2020, we expect a sequential decline in the first quarter due to continued challenges in some of our markets followed by improved year-over-year performance in our fiscal second quarter

·     Exelon (EXC) upgraded to overweight from equal-weight and raise tgt to $60 from $56 at Morgan Stanley

 

Financials

·     Bank of Nova Scotia (BNS) Q3 adjusted EPS C$1.88 vs. C$1.76 a year ago, Q3 return on equity of 14.3%, compared to 14.5% a year ago, continued to maintain strong capital ratios and reported a Common Equity Tier 1 capital ratio of 11.2%, or 11.7% on a pro-forma basis

·     Bank of Montreal (BMO) Q3 EPS C$2.38 vs. C$2.36 last year, revenue $6.67B vs. C$5.79B last year, Q3 CET1 capital ratio 11.4%

 

Healthcare

·     An Oklahoma judge ruled against Johnson & Johnson (JNJ) and its subsidiaries in a landmark opioid case. The judge fined the drugmaker $572 million to help abate the state’s opioid problem in the coming years. In response, Johnson & Johnson and its Janssen Pharmaceutical Companies announced they would appeal the civil judgment

·     Nuvectra Corporation (NVTR) says it’s exploring all options, including a sale or merger of the company, to enhance shareholder value

 

Technology, Media & Telecom

·     Bilibili (BILI) reports Q2 adjusted EPS RMB (78c) vs. RMB (7c) last year and Q2 revenue 1.54B yuan vs. est. 1.49B yuan; Q2 Average monthly active users reached 110.4M, mobile MAUs reached 96.2M, representing increases of 30% and 35% from the same period in 2018, respectively

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Content is provided by Hammerstone Inc., which has no affiliation with Regal Securities, Inc. (“Regal”) This commentary is provided for information purposes only, and is not a recommendation, offer or solicitation by Regal to buy or sell securities or to adopt any investment strategy. Regal has not participated in the creation of the Hammerstone content and does not directly or indirectly endorse the content. Any reliance on this material is at the sole discretion of the reader.

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