Morning Preview: September 06, 2019

Auto PostDaily Market Report

Early Look

Friday, September 6, 2019

Futures

Up/Down

%

Last

DJ Industrials

77.00

0.29%

26,778

S&P 500

8.00

0.27%

2,980

Nasdaq

12.75

0.16%

7,868

 

 

Stocks futures in the U.S. point to another strong open, looking to add to positive weekly gains, as attention turns from trade deals to economic data, as the monthly jobs report release is expected later this morning. Economists predict the U.S. added 160,000 jobs last month, marking a slight increase from July, the unemployment rate to hold steady at 3.7% and hourly wages to increase by 0.3%. The data point comes a few weeks ahead of the next FOMC central bank meeting where markets are hoping for additional easing to further stimulate the economy. In Asian markets, The Nikkei Index rose 113 points to 21,199, the Shanghai Index gained 13 points to settle just under 3,000 and the Hang Seng Index gained 175 points to 26,690. In Europe, the German DAX is up around 25 points to 12,150, while the FTSE 100 is down a few points to 7,260. On Thursday, U.S. stocks surged and Treasuries tumbled, with the yield on the 10-year peaking near 1.59% following several positive economic data points that bolstered confidence in the economy while China and the U.S. agreed to trade talks early next month. Safe-haven assets such as gold (fell over 2% for its biggest one-day decline) and Treasuries dropped sharply while the dollar slipped for a third straight day after touching 2-year highs earlier this week. Markets also turn their focus to Fed speakers which includes Fed Chair Jerome Powell Friday.

 

Market Closing Prices Yesterday

·     The S&P 500 Index gained 38.22 points, or 1.30%, to 2,976.00

·     The Dow Jones Industrial Average rose 372.68 points, or 1.41%, to 26,728.15

·     The Nasdaq Composite surged 139.95 points, or 1.75%, to 8,116.83

·     The Russell 2000 Index advanced 25.99 points, or 1.75% to 1,510.75

 

Events Calendar for Today

·     8:30 AM EST      Change in Nonfarm Payrolls for August…est. 160K

·     8:30 AM EST      Change in Private Payrolls for August…est. 150K

·     8:30 AM EST      Change in Manufacturing Payrolls for August…est. 5K

·     8:30 AM EST      Unemployment Rate for Aug…est. 3.7%

·     8:30 AM EST      Average Hourly Earnings for August…est. 0.3%

·     8:30 AM EST      Average Weekly Hours for August

·     1:00 PM EST       Baker Hughes Weekly Rig Count

 

Macro

Up/Down

Last

WTI Crude

-0.86

55.45

Brent

-0.91

60.04

Gold

-8.90

1,516.60

EUR/USD

-0.0007

1.1028

JPY/USD

0.07

107.01

10-Year Note

+0.023

1.582%

 

 

World News

·     The People’s Bank of China has cut its reserve requirement ratio by a half-point. The central bank said the move is effective Sept. 16.

·     The Russian central bank lowered its key interest rate to 7%, in-line with forecasts

·     German industrial production unexpectedly fell in July as total industrial output–comprising output in manufacturing, energy and construction–decreased 0.6% in July from the month before, in adjusted terms, Germany’s Federal Statistical Office said

·     Fitch Ratings downgraded Hong Kong’s Long-Term Foreign-Currency Issuer Default Rating to ‘AA’ from ‘AA+’ with a negative outlook to reflect months of persistent conflict and violence that are testing the perimeters and pliability of the “one country, two systems” framework that governs Hong Kong’s relationship with the mainland

·     Iran has ceased all its commitments under the 2015 nuclear deal on research and development, further pressing Europe to deliver promised economic benefits notably crude exports

 

Sector News Breakdown

Consumer

·     Lululemon (LULU) Q2 adjusted EPS 96c/$883.4M vs. est. 89c/$845.65M; Q2 Direct to consumer net revenue represented 24.6% of total net revenue compared to 23.1% YoY; Q2 comp sales ex fx up 17% vs. est. 12%; raises year EPS view to $4.63-$4.70 from prior $4.51-$4.58 (est. $4.64); sees Q3 EPS 90c-92c on revs $880M-$890M above est. 90c/$864.42M

·     Costco (COST) August total comparable sales +5.5%, topping the estimate +4.4%; August U.S. comparable sales excluding fuel, currencies +5.9%, also above the estimate +4.1%

·     Zumiez (ZUMZ) Q2 EPS 36c/$228.4M vs. est. 19c/$223.65M; Q2 comp sales rose 3.6% vs. est. 1.8%; sees Q3 EPS 55c-61c on revs $258M-$263M vs. est. 55c/$257.39M; raises FY 19 EPS view to $2.10-$2.20 from $1.84-$1.94 (est. $1.90) and says FY 19 comparable sales are now expected to increase between 2.0% and 4.0% compared to prior guidance of low single digits

·     Korn/Ferry (KFY) Q1 adjusted EPS 76c/$484.5M vs. est. 76c/$475.34M; sees Q2 EPS 76c-84c on revs $485M-$505M below the 91c/$500.21M estimate

·     Quanex (NX) Q3 adjusted EPS 41c/$238.5M vs. est. 36c/$244.25M; said they expect a strong finish to FY from a cash flow and earnings perspective, but consolidated revenue is trending below prior expectations/as such, now expect consolidated net sales for FY19 to be flat year-over-year

 

Energy, Industrials & Materials

·     ABM (ABM) Q3 adjusted EPS 60c/$1.65B vs. est. 58c/$1.65B

·     Steel Dynamics (STLD) downgraded to market perform at BMO Capital and cut tgt to $30 from $40 saying there is more downside risk versus upside potential to underlying spot prices into year end, and Steel Dynamics’ near-term company-specific catalysts are limited

·     MRC Global Inc. (MRC) said it’s cutting its 3q revenue outlook due to continued reductions in customer spending levels and lower demand in the midstream and upstream sectors as guides revs $930M-$950M vs. est. $1.01B

·     Advanced Drainage (WMS) 9M share Secondary priced at $29.75

 

Healthcare

·     Avid Bioservices (CDMO) Q1 EPS loss (8c)/$15.3M vs. est. loss (3c); reaffirms FY revenue guidance of $64M-$67M vs. est. $65.5M

·     Alexion Pharmaceuticals (ALXN) slipped following Amgen’s (AMGN) challenge of three patents covering top seller Soliris (eculizumab); the USPTO’s Patent Trial and Appeal Board (PTAB) will conduct an inter-partes review of new Soliris patents that, if upheld, will extend Soliris’ U.S. exclusivity to 2027.

·     iRhythm (IRTC) 1.37M share Secondary priced at $73.00

·     Turning Point Therapeutics (TPTX) 4.5M share Secondary priced at $45.00

·     uniQure (QURE) 4.89M share Secondary priced at $46.00

 

Technology, Media & Telecom

·     Alibaba (BABA) agreed to acquire an import e-commerce business from NetEase (NTES), Kaola, for about $2 billion, and invest $700 million into NetEase’s streaming music business, NetEase Cloud Music. Alibaba will continue to operate Kaola as an independent business https://on.mktw.net/2lzKZJU

·     CrowdStrike (CRWD) Q2 EPS loss (18c)/$108.1M vs. est. loss (23c)/$103.79M; said Q2 Annual Recurring Revenue, or ARR, increased 104% YoY and grew to $423.8M as of July 31, 2019, of which $59.2M was net new ARR added in the quarter; raises year revs to $445.4M-$451.8M from prior $430M-$436M and guides Q3 revs to $117.1M-$119.5M above the $110.8M est.

·     DocuSign (DOCU) Q2 EPS 1c/$235.61M vs. est. 4c/$220.93M; sees Q3 revenue $237M-$241M vs. est. $232.05M; raises FY revenue $947M-$951M from prior view $917M-$922M (est. $920.4M); 2Q billings rose 47% YoY to $252.4M and free cash flow $11.9M, -36% YoY

·     Domo (DOMO) Q2 EPS loss (96c)/$41.7M vs. est. loss (99c)/$41.68M; sees Q3 EPS ($1.00)-($1.04) on revs $41.5M-$42.5M below est. loss (90c)/$44.26M while also guides for a larger loss for the year than expected

·     Guidewire (GWRE) Q4 EPS 56c/$207.9M vs. est. 50c/$204.65M; sees Q1 EPS 1c-5c and revs $149M-$153M well below the 25c/$187.3M estimate and guides year below views as well; notes 65% of our new software sales in fiscal year 2019 from cloud products

·     PagerDuty (PD) Q2 EPS loss (7c)/$40.4M vs. est. loss (10c)/$39.12M; sees FY20 EPS loss (37c)-(36c) on revs $162M-$164M (up from prior $161M-$163M) vs. est. loss (37c)/$162.39M; PagerDuty had over 12,000 customers as of July 31, 2019. New and expansion customers include Marks and Spencer, Vanguard, WooliesX (Woolworths), Stripe, IHS Markit, Monzo, DoorDash, and Clover Health

·     Zoom Video (ZM) Q2 EPS 8c/$145.8M vs. est. 1c/$130.31M; sees Q3 EPS 3c on revs $155M-$156M vs. est. loss (1c)/$140.43M; said approximately 66,300 customers with more than 10 employees, up approximately 78% from the same quarter last year; 466 customers contributing more than $100,000 in trailing 12 months revenue, up approximately 104% from the same quarter last year

·     State attorneys general are formally launching separate antitrust probes into Facebook Inc. (FB) and Alphabet Inc.’s (GOOGL) Google unit starting next week, The Wall Street Journal reported, citing people familiar with the matter. The Google probe, led by Texas Attorney General Ken Paxton, will be announced Monday with a bipartisan group of about three dozen state attorneys general, the report said

_________________________________________________________________

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.

Live Trading

Open an Account

Paper Trading

Register