Morning Preview: August 30, 2019

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Early Look

Friday, August 30, 2019

Futures

Up/Down

%

Last

DJ Industrials

167.00

0.64%

26,546

S&P 500

18.50

0.62%

2,944

Nasdaq

50.50

0.65%

7,762

 

 

Stock futures in the U.S. are on track to finish the week with strong gains, buoyed by signs the U.S. and China are easing tensions around trade this week after China indicated yesterday it wouldn’t immediately retaliate against the latest American tariff increase. It was the first move by either side of not retaliating after rounds of tit-for-tat tariff increases earlier this month. Stocks have rebounded this week after spending much of August under pressure on worries over the global economic outlook, but are still on track to end the month lower, as the Dow and S&P 500 are down 1.9% for the month, while the Nasdaq is down 2.5% heading into the three-day Labor Day weekend. In Asian markets, The Nikkei Index jumped 243 points to 20,704, the Shanghai Index slipped -4 points to end the week at 2,886, and the Hang Seng Index rose 21 points to 25,724. In Europe, the German DAX is higher by 125 points to 11,960, while the FTSE 100 is up about 40 points to 7,225. European markets also extended gains on follow through trade war optimism between the U.S. and China. One of the bigger stories heading into the weekend is the first major storm of the year, with Hurricane Dorian expected to make U.S. landfall this weekend as a powerful Category 4 hurricane late Sunday or early Monday. Its latest trajectory suggests Dorian could hit somewhere between the Florida Keys and Georgia. Dorian thus far caused flooding and power outages, but no major damage in the Virgin Islands and off the coast of Puerto Rico. It has been a week of light volumes and big market swings given it being the final week of the summer.

Market Closing Prices Yesterday

·     The S&P 500 Index gained 36.64 points, or 1.27%, to 2,924.58

·     The Dow Jones Industrial Average rose 326.15 points, or 1.25%, to 26,362.25

·     The Nasdaq Composite surged 116.51 points, or 1.48%, to 7,973.39

·     The Russell 2000 Index advanced 24.01 points, or 1.63% to 1,496.72

 

Events Calendar for Today

·     8:30 AM EST      Personal Income for July…est. 0.3%

·     8:30 AM EST      Personal Spending for July…est. 0.5%

·     8:30 AM EST      PCE Deflator MoM for July…est. 0.2%

·     8:30 AM EST      PCE Deflator YoY for July…est. 1.4%

·     8:30 AM EST      PCE Core Deflator MoM for July…est. 0.2%

·     8:30 AM EST      PCE Core Deflator YoY for July…est. 1.6%

·     9:45 AM EST      Chicago PMI for August…est. 47.5

·     10:00 AM EST    University of Michigan Confidence for Aug-f…est. 92.3

·     1:00 PM EST       Baker Hughes Weekly Rig Count

 

Earnings Calendar:

·     Earnings Before the Open: BIG, CPB, JKS

 

 

Macro

Up/Down

Last

WTI Crude

-0.57

56.14

Brent

-0.11

60.97

Gold

-2.20

1,534.70

EUR/USD

-0.0014

1.1043

JPY/USD

-0.11

106.41

10-Year Note

+0.028

1.523%

 

 

Sector News Breakdown

Consumer

·     Ulta Beauty (ULTA) shares fall -19%; Q2 EPS $2.76/$1.67B below the consensus $2.80/$1.68B; said Q2 comp sales increased 6.2% vs. est. 4.6%, driven by 5.4% transaction growth and 0.8% growth in average ticket; cuts FY19 EPS view to $11.86-$12.06 from $12.83-$13.03 (est. $12.97) while lowers its FY19 comp sales growth view to 4%-6% from 6%-7%

·     American Outdoor Brands (AOBC) shares slid -12%; Q1 adjusted EPS 3c/$123.7M vs. est. 7c/$127.2M; sees Q2 non-GAAP EPS 3c-7c on revs $140M-$150M below the 20c/$162.57M estimate; also lowers year profit outlook to 70c-78c from 76c-84c (est. 83c)

·     Tesla (TSLA) has increased prices for some cars in China as the yuan trades at its weakest level in over decade, according to Reuters saying the starting price for the Model X SUV was hiked to Y809,900 from Y790,900 and long-range dual-motor variants of Model 3 vehicles are currently Y439,900, up from Y429,900

·     Big Lots (BIG) Q2 EPS 53c/$1.25B vs. est. 41c/$1.25B; Q2 comp sales rose 1.2% vs. est. 1.8%; Q2 gross margin 39.8% and inventory up 2.3% YoY; sees Q3 EPS loss (15c-25c) vs. est. loss (32c); sees Q3 comp sales flat and reaffirms year EPS

 

Energy, Industrials & Materials

·     JinkoSolar (JKS) Q2 adjusted EPS 71c/$1.01B vs. est. 26c/$931.74M; said Q2 module shipments during were 3,386 megawatts, a year-over-year increase of 21.2% and a sequential increase of 11.5%; sees Q3 shipments 3.2 GW-3.5 GW and backs FY19 shipments view 14GW-15GW

·     NGL Energy Partners (NGL) announces a $150 M share buyback

 

Healthcare

·     Cooper Companies (COO) Q3 adjusted EPS $3.23/$679.4M vs. est. $3.18/$687.6M; raises year rev outlook to $2.64B-$2.66B from $2.63B-$2.67B and also up year profit outlook to $12.27-$12.35 from $12.15-$12.35

·     Novartis (NVS) announced positive results for ofatumumab from the Phase III ASCLEPIOS I and II studies. In both head-to-head studies, ofatumumab demonstrated superiority over Aubagio in patients with relapsing forms of multiple sclerosis

·     Intra-Cellular (ITCI) files $350M mixed securities shelf

 

Technology, Media & Telecom

·     Workday (WDAY) Q2 adjusted EPS 44c/$887.7M vs. est. 35c/$872.4M; sees year revs $3.06B-$3.07B vs. est. $3.62B; Q2 subscription revs of $757.2 M, up 33.9% YoY; sees Q3 subscription revs $783-$785M – raising FY20 subscription rev outlook

·     Ambarella (AMBA) Q2 adjusted EPS 21c/$56.41M vs. est. 2c/$52.03M; sees Q3 revenue $63M-$67M above est. $55.38M and sees Q3 gross margins 56%-58%

·     Dell Technologies (DELL) Q2 adjusted EPS $2.15/$23.4B vs. est. $1.47/$23.27B; says on track to repay approximately $5B of gross debt in FY20; ended quarter with a cash and investments balance of $10B and said PC business produced record results, and saw record cash flow in qtr; raises FY20 adjusted EPS view to $6.95-$7.40 from $6.05-$6.70 (est. $6.42)

·     Marvell (MRVL) Q2 adjusted EPS 16c/$657M vs. est. 15c/$652.05M; sees Q3 adjusted EPS 15c-19c on revs $660M +/- 3% below current consensus of 21c and $697.58M; says Q3 non-GAAP gross margin is expected to be 63%-64%; 2Q Storage revenue $274.9M, -18% YoY and Q2 Networking revenue $329.6M, +16% YoY

·     NXP Semiconductors (NXPI) raises quarterly dividend 50% to 37.5c per share from 25c

·     Yankee Global Enterprises, with partners Sinclair Broadcast Group, announced the purchase of the YES Network from The Walt Disney Company (DIS), acquiring the 80% of the YES Network not already held by Yankee Global Enterprises at a total enterprise value of $3.47 billion.

·     Yext (YEXT) Q2 EPS loss (11c)/$72.4M vs. est. loss (12c)/$71.81M; sees Q3 EPS loss (19c)-(18c) on revs $75.5M-$76.5M below est. loss (13c)/$76.59M; sees FY20 EPS loss (43c)-(41c) on revs $299M-$301M vs. est. loss (41c)/$299.74M

·     MSG Networks (MSGN) authorizes $300M boost to stock buyback; to begin up to $250M modified Dutch auction

·     AT&T Inc. (T) said it’s reached tentative agreements with a union representing about 20,000 workers in nine states in the Southeast.

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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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