Morning Preview: September 03, 2019

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Early Look

Tuesday, September 3, 2019





DJ Industrials




S&P 500










U.S. stocks slide to start the week, giving back some of last week’s market advances after a new set of tariffs on Chinese imports too effect on Sunday, as now roughly more than two-thirds of the consumer goods the United States imports from China now face higher taxes. Also weighing on sentiment are reports that U.S. and Chinese officials are struggling to agree on a schedule to continue trade talks, according to Bloomberg while Reuters reported that U.S. President Donald Trump said a September meeting scheduled between U.S. and Chinese officials remains on schedule, adding that U.S. officials are currently having discussions with their Chinese counterparts on trade. Also, Huawei has accused the U.S. of “using every tool at its disposal” to disrupt its business, including launching cyberattacks on its networks and instructing law enforcement to “menace” its employees, the WSJ reported. In Asian markets, The Nikkei Index rose 4 points to 20,625, the Shanghai Index rose 6 points to 2,930 and the Hang Seng Index slipped -98 points to 25,527. In Europe, the German DAX is down about -50 points to 11,900, while the FTSE 100 is down about -15 points to 7,265. The British pound tumbled below $1.20 vs. the dollar for the first time since 2017 on weaker economic data and Brexit concerns. Treasury prices advance as do gold prices, while the dollar remains mixed.


U.S. stocks were mixed on Friday’s ahead of a new set of tariffs on Chinese imports that is set to took effect on Sunday including China’s levy of 5% on U.S. crude while the U.S. began collecting 15% tariffs on more than $125 billion in Chinese imports, including several tech items and China started to impose additional tariffs on some of the U.S. goods on a $75-billion target list. At month’s end on Friday, the S&P 500 posted a 1.8% loss in August, its first monthly decline since May despite rising 2.8% for the week. Also on the month, the Dow Jones Industrial Average fell -1.7% and the NASDAQ shed -2.65%. May, while both rose 3% and 2.67% respectively last week).

Market Closing Prices Yesterday

·     The S&P 500 Index gained 1.88 points, or 0.06%, to 2,926.46

·     The Dow Jones Industrial Average rose 41.08 points, or 0.16%, to 26,403.28

·     The Nasdaq Composite dipped -10.51 points, or 0.13%, to 7,962.88

·     The Russell 2000 Index declined -1.88 points, or 0.13% to 1,494.84


Events Calendar for Today

·     7:45 AM EST      ICSC Weekly Retail Sales

·     8:55 AM EST      Johnson/Redbook Weekly Sales

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

·     10:00 AM EST    ISM Manufacturing for August

·     10:00 AM EST    Construction Spending MoM for July

·     4:30 PM EST       API Weekly Inventory Data


Earnings Calendar:

·     Earnings Before the Open: CONN

·     Earnings After the Close: COUP, CSTL, EGAN, HQY


Other Key Events:

·     Barclay’s CEO Energy-Power Conference, 9/3-9/5, in New York

·     Barclay’s Global Consumer Staples Conference, 9/3-9/5, in Boston, MA

·     Deutsche Bank 9th annual Aircraft, Finance and Leasing Conference, 9/3-9.4, in New York

·     European Society of Cardiology (ESC) Congress Paris 2019, 8/31-9/4, in Paris France

·     Fed’s Rosengren speaks in Massachusetts at 5:00 PM EST






WTI Crude















10-Year Note





World News

·     The pound tumbled below $1.20 vs. the dollar following dismal British manufacturing data and as the battle within the governing Conservative party over the shape of the UK’s exit from the EU was ratcheted up. The pound continued its downward spiral on no-deal Brexit fears

·     UK manufacturing activity contracted in August for the fourth consecutive month and at the fastest pace since 2012 amid rising Brexit uncertainties and mounting fears of an economic recession; the IHS Markit/CIPS U.K. Manufacturing Purchasing Managers’ Index (PMI) dropped to 47.4 from 48 in July and business optimism fell to a record low.

·     The Caixin China manufacturing purchasing managers’ index (PMI) rose to 50.4 in August (5-month highs) compared with 49.9 in July, Caixin Media Co. and research firm Markit said on Monday. The sub index for total new orders inched down in August though staying in expansionary territory.

·     A no-deal Brexit is a very distinct possibility but not a preferred option for the European Union, the European Commission said on Tuesday. The Commission believes Britain’s withdrawal from the EU on the basis of the deal agreed between Britain’s former prime minister Theresa May and Brussels would be the best solution, its spokeswoman said. The British parliament has rejected that deal three times – Reuters


Sector News Breakdown


·     Conn’s (CONN) Q2 adjusted EPS 62c/$401.06M vs. est. 51c/$379.02M; sees Q3 total retail sales up 4%-8%; sees Q3 retail gross margin 40.0%-40.5% of total net retail sales

·     Boston Beer (SAM) downgraded to Underperform from Hold at Jefferies

·     Hilton (HLT) downgraded to Neutral from Outperform at Macquarie

·     Barron’s noted discount retail stores were the big winners (DG, DLTR, BIG, FIVE) during earnings as low prices has elevated them and big box stores, but has left other retailers in a riskier position. Noted shares of Best Buy (BBY) fell after reporting better-than-expected earnings, Tiffany (TIF) stock shares were pressured after noting pro-democracy protests in Hong Kong had disrupted business there, while Ulta Beauty (ULTA) tumbled after missing earnings forecasts


Energy, Industrials & Materials

·     CNH Industrial (CNHI) to separate by early 2021 “On-Highway” and “Off-Highway” assets into 2 businesses, the company says; also to take $250M strategic stake in Nikola

·     Nine Energy Service (NINE) announced that it has sold its Production Solutions segment to Brigade Energy Services for approximately $17M in cash



·     Alliance Data (ADS) upgraded to Buy from Neutral at UBS

·     LendingTree (TREE) upgraded to Buy from Neutral at UBS and raised tgt to $395 from $355

·     Virtu Financial (VIRT) reinstated with an Overweight from Neutral at JPMorgan



·     AstraZeneca (AZN) traded to all-time highs after saying Farxig, its type-2 diabetes drug, reduced the chances of cardiovascular death or worsening heart failure by 26% in a recent trial. Its cardiovascular drug Brilinta also reduced the risk of death and heart attack by 10%.

·     Translate Bio (TBIO) and Moderna (MRNA) both mentioned in Barron’s this weekend noting lots of diseases are caused by a single missing protein and if one could get the trick to work on one of those diseases, it could work for many of them, a thrilling idea that has many looking to make a drug of a messenger ribonucleic acid, or mRNA which include both companies

·     Syndax (SNDX) files $300M mixed securities shelf

·     TG Therapeutics (TGTX) files automatic mixed securities shelf

·     Trovagene (TROV) files to sell 1.63M shares of common stock for holders

·     Cidara Therapeutics Inc. (CDTX) shares spike over 60% after announced a partnership with Mundipharma with a total potential value of $568 million to Cidara. Under terms of the agreement, which follows the completion of its phase 2 trial of Rezafungin for the treatment of fungal infections, Cidara will receive a $30 million upfront payment and Mundipharma will make a $9 million equity investment in Cidara

·     Yesterday, Alnylam’s (ALNY) partner, The Medicines Company (MDCO), presented results from its ORION-11 study during a late-breaking science session at the European Society of Cardiology’s annual meeting. ORION-11 is one of three phase III clinical trials (along with ORION-9, and ORION-10) evaluating inclisiran as a treatment for hypercholesterolemia.

·     Endo International (ENDP) said that one of its operating companies, Par Pharmaceutical, has begun shipping an authorized generic version of Merck & Co.’s Noxafil (posaconazole) delayed-release tablets, 100 mg

·     Vertex (VRTX) upgraded to Conviction Buy from Buy at Goldman Sachs


Technology, Media & Telecom

·     eBay Inc. (EBAY) is considering selling its classified ads business and StubHub to avoid a clash with activist investors, The Sunday Times reported. It said eBay hired Goldman Sachs to draw up options for selling or spinning off the units, the report said. Elliott Management and Starboard Value have called for eBay to sell the units.

·     Cloudflare sets IPO at 35M shares, with a price range of $10-$12 per share as seeks to raise up to $420 million from its IPO, according to a regulatory filing


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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