Morning Preview: September 05, 2019

Auto PostDaily Market Report

Early Look

Thursday, September 5, 2019

Futures

Up/Down

%

Last

DJ Industrials

255.00

0.97%

26,627

S&P 500

27.50

0.92%

2,965

Nasdaq

95.50

1.23%

7,818

 

 

U.S. futures are sharply higher, building on the strong gains yesterday after the U.S. and Beijing set trade talk dates, saying representatives from both countries will meet in early October aimed at ending a tariff war that threatens global economic growth. The agreement on a date came in a phone call conducted by the chief Chinese envoy, Vice Premier Liu He, with U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin, the Chinese Commerce Ministry said. Markets have been rattled of late on recent reports that officials were struggling to agree on a schedule for talks originally planned for this month. Tariffs went into effect this past weekend by both the U.S. and China on imported goods, while U.S. tariffs of 25% imposed previously on $250 billion of Chinese goods are due to rise to 30% on Oct. 1. In Asian markets, The Nikkei Index jumped 436 points (2.12%) to settle at 21,085, the Shanghai Index gained 28 points to 2,985 and the Hang Seng Index slipped -7 points to 26,515. In Europe, the German DAX is higher by 100 points to 12,125, while the FTSE 100 is down over 40 points to 7,270 as Prime Minister Boris Johnson called Wednesday for a national election on Oct. 15, saying it was the only way out of Britain’s Brexit impasse after lawmakers moved to block his plan to leave the European Union next month without a divorce deal…but Parliament delivered Johnson his third defeat in two days and turned down a motion triggering a vote. The news out of China has pushed Treasury yields higher and gold lower off 6-year best levels.

Events Calendar for Today

·     7:30 AM EST      Challenger Job Cuts YoY

·     8:15 AM EST      ADP Employment Change for August…est. 148K

·     8:30 AM EST      Nonfarm productivity, Q2-F…est. 2.2%

·     8:30 AM EST      Unit Labor Costs, Q2-F…est. 2.4%

·     8:30 AM EST      Weekly Jobless Claims…est. 215K

·     8:30 AM EST      Continuing Claims…est. 1.688M

·     9:45 AM EST      Markit US Services PMI, Aug-F…est. 50.9

·     9:45 AM EST      Markit UC Composite PMI, Aug-F

·     10:00 AM EST    Factory Orders for July…est. 1.0%

·     10:00 AM EST    ISM Non-Manufacturing Index for August

·     10:30 AM EST    Weekly EIA Natural Gas Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: CIEN, DCI, GIII, HOFT, HOV, JW/A, KIRK, LE LVGO, MDP, SCWX, SIG

·     Earnings After the Close: ABM, CDMO, CRWD, DOCU, DOMO, GWRE, KFY, MDLA, NX, PD, SAIC, VISI, ZM, ZUMZ

 

Other Key Events:

·     Baird 2019 Global Healthcare Conference, 9/4-9/5, in New York

·     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

·     Citigroup 14th Annual Biotech Conference, 9/4-9/5, in Boston, MA

·     Citigroup 2019 Global Technology Conference, 9/4-9/6, in New York

·     Cowen 12th Annual Global Transportation Conference, 9/4-9/5, in Boston, MA

·     Goldman Sachs 26th annual Global Retailing Conference, 9/4-9/5, in New York

·     KBW Inc. Insurance Conference, 9/4-9/5, in New York

·     Wells Fargo Healthcare Conference, 9/4-9/5 in Boston, MA

 

Market Closing Prices Yesterday

·     The S&P 500 Index gained 31.51 points, or 1.08%, to 2,937.78

·     The Dow Jones Industrial Average rose 237.45 points, or 0.91%, to 26,355.47

·     The Nasdaq Composite surged 102.72 points, or 1.30%, to 7,976.88

·     The Russell 2000 Index advanced 12.47 points, or 1.85% to 1,484.76

 

 

Macro

Up/Down

Last

WTI Crude

-0.14

56.12

Brent

0.06

60.76

Gold

-11.70

1,548.70

EUR/USD

0.0018

1.1053

JPY/USD

0.21

106.60

10-Year Note

+0.052

1.517%

 

 

World News

·     Hurricane Dorian which ravaged the Bahamas with more than a full day of devastating wind and rain, had weakened substantially — from a Category 5 storm to a Category 2 — but still had dangerously high winds and threatened to swamp low-lying regions from Georgia to southeastern Virginia as it moved northward.

·     German manufacturing orders slowed by more than expected in July, as they fell 2.7% in July on the month, in adjusted terms vs. an expected a decline of 1.5% on the month

·     Jo Johnson, the brother of Britain’s prime minister Boris Johnson, is quitting politics as minister and MP

 

Sector News Breakdown

Consumer

·     At Home Group (HOME) shares fell over -20% on lower guidance; Q2 adjusted EPS 18c/$342.3M vs. est. 15c/$342.91M; Q2 comp sales fell (-0.4%) vs. est. (-0.6%); narrows FY20 revenue view to $1.373B-$1.388B from $1.370B-$1.390B (est. $1.37B), while cuts FY20 comp sales view to down 1.5% to up 0.5% from down 1% to up 1%

·     Bed Bath & Beyond Inc. (BBBY) offered shareholders a “rapid refresh” of more than 160 of the company’s stores ahead of the holiday season and an “aggressive reduction” of up to $1 billion in inventory as the retailer struggles to improve its bottom line.

·     Copart (CPRT) Q4 adjusted EPS 60c/$542.6M vs. est. 58c/$517.89M;

·     REV Group (REVG) Q3 adjusted EPS 21c/$617.0M below est. 42c/$631.94M; Q3 adjusted EBITDA $33.5M vs. $47.6M last year; cuts FY19 adjusted EBITDA view to $100M-$110M from $150M-$170M while lowers FY19 revenue view to $2.35B-$2.45B from $2.4B-$2.6B (est. $2.47B)

·     Cedar Fair (FUN) announced that year-to-date preliminary net revenues through September 1 increased 8%, or $86M, to a record $1.12B compared with $1.03B for the same period in 2018

·     Spectrum Brands (SPB) said it sees FY19 loss $104M-to loss $70M, while reaffirms overall guidance

 

Energy, Industrials & Materials

·     AeroVironment Inc. (AVAV) Q1 adjusted EPS 74c/$86.9M vs. est. 36c/$85.2M; said 1Q backlog $165.2M; still sees FY EPS from continuing operations $1.35- $1.55 (est. $1.55) and also still sees FY revenue from continuing operations $350M-$370M vs. est. $356.3M

·     The American Petroleum Institute (API) reported that U.S. crude supplies rose by 401,000 barrels for the week ended Aug. 30, showed a stockpile decline of 877,000 barrels in gasoline, while distillate supplies fell by 1.2 million barrels.

·     Patterson-UTI (PTEN) reported that for August, the company had an average of 142 drilling rigs operating. For the two months ended August 31, the company had an average of 146 drilling rigs operating

·     Royal Dutch Shell (RDSA) downgraded to Market Perform from Outperform at Cowen

 

Financials

·     Prudential Financial Inc. (PRU) has agreed to pay $2.35 billion for an online startup Assurance IQ, The Wall Street Journal reported, citing the company. The report said Prudential hopes the firm can help it sell life insurance to middle-class clients https://on.mktw.net/2m01TS3

·     MarketAxess Holdings Inc. (MKTX) said total monthly trading volume for August 2019 of $172.8 billion, consisting of $85.2 billion in U.S. high-grade volume, $83.0 billion in other credit volume, and $4.6 billion in liquid products volume.

·     Cherry Hill Mortgage (CHMI) cuts quarterly dividend to 40c from 49c

·     National Retail Properties (NNN) files to sell 6M shares of common stock

 

Healthcare

·     Mallinckrodt (MNK) shares plunged over 40% overnight on reports they hired a consultant and law firm to help explore options to absorb potential costs from lawsuits tied to the sales of opioids; watch shares of specialty pharma names (TEVA, ENDP, MYL) along with shares of drug distributors (ABC, CAH, MCK) that may move in sympathy as well

·     Livongo Health (LVGO) Q2 EPS loss (46c)/$40.9M vs. est. loss (48c)/$39.74M; sees FY19 revenue $159M-$162M vs. est. $158.36M and guides FY19 adjusted EBITDA ($41M)-($39M)

·     Invitae Corporation (NVTA) said it intends to offer $200m aggregate principal amount of unsecured, semi-annual convertible senior notes due 2024 in a private offering

·     iRhythm (IRTC) files to sell $100M in common stock

·     uniQure (QURE) files to sell $200M of ordinary shares

·     Addus HomeCare (ADUS) 2M share Secondary priced at $79.50

 

Technology, Media & Telecom

·     Cloudera (CLDR) Q2 EPS loss (2c)/$196.7M vs. est. loss (10c)/$182.26M; sees FY20 non-GAAP EPS loss (28c)-(24c) on revs $765M-$775M vs. est. loss (31c)/ $752.59M

·     Dynatrace (DT) Q1 EPS loss (21c)/$122.6M vs. est. 3c/$121M; sees 2Q revs $123M-$124M and year revs $521M-$524M

·     MongoDB (MDB) Q2 adjusted EPS loss (26c)/$99.4M vs. est. loss (28c)/$91.7M; raises year rev outlook to $390M-$395M from prior $375M-$381M; sees Q3 EPS loss (29c)-(27c) on revs $98M-$100M vs. est. loss (28c)/$95.01M

·     Motorola Solutions (MSI) said it’s received a $1 billion investment from Silver Lake and will settle its $800 million aggregate principal investment one year ahead of its maturity

·     Palo Alto Networks (PANW) Q4 EPS $1.47/$805.8M vs. est. $1.42/$802.42M; Q4 deferred revenue up 27% YoY to $2.9B; entered into a definitive agreement to acquire Zingbox, an IoT security company, for a total purchase price of $75M; sees Q1 EPS $1.02-$1.04 on revs $760M-$770M vs. est. $1.33/$789.3M; sees Q1 total billings $875M-$890M, up 15%-17%

·     Qutoutiao (QTT) Q2 EPS loss (28c)/$201.9M vs. est. loss (26c)/$193.55M; said for Q2, combined average MAUs reached 119.3 million, representing an increase of 250.2% from 34.1M YoY and vs. 111.4M MoM

·     Slack Technologies (WORK) shares fell -13%; Q2 adjusted EPS loss (14c)/$145M vs. est. (19c)/$141.5M; raises year revs to $603M-$610M from prior view $590M-$600M and guides Q3 revs $154M-$156M vs. est. $154.2M; Q2 calculated billings $174.8M, up 52% YoY; Ended the quarter with over 100,000 Paid Customers, up 37% YoY, net dollar retention rate was 136% and the number of Paid Customers greater than $100,000 in annual recurring revenue was 720, up 75% YoY

·     Smartsheet (SMAR) Q2 EPS loss (8c)/$64.6M vs. est. loss (16c)/$63.52M; Q2 number of all customers with annualized contract values of $5,000 rose 55% YoY, customers with ACV of $50,000 or more grew to 635, an increase of 113% YoY; guides 3Q EPS loss (19c-18c) on revs $69-70Mm vs est. $68.9Mm and (14c), sees FY revs $265-268Mm vs prior $262-265Mm

·     Verint (VRNT) Q2 adjusted EPS 82c/$331.3M vs. est. 80c/$334.5M

·     Samsung announced early Thursday that the Galaxy Fold will go on sale in South Korea on Friday, and in select countries such as the U.S., the U.K., France and Germany “in the coming weeks.”

·     Ceridian (CDAY) 9M share Spot Secondary priced at $56.30

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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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