Morning Preview: September 09, 2019

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Early Look

Monday, September 9, 2019

Futures

Up/Down

%

Last

DJ Industrials

55.00

0.21%

26,863

S&P 500

7.50

0.25%

2,988

Nasdaq

18.50

0.24%

7,876

 

 

U.S. stock futures are pointing to a higher open, looking to add to last week’s strong gains as more trade hopes with China continue to push markets to the upside. Reports that China trade negotiators last week offered to buy a small amount of U.S. farm goods, but that offer could hinge on U.S. concessions, (according to Politico), are helping sentiment early. Crude prices edged higher on Monday in the first day of trading after Saudi Arabia’s decision to remove and replace its energy minister. In Asian markets, The Nikkei Index rose 118 points to 21,318, the Shanghai Index gained 25 points to move back above the 3,000 level for the first time since early July, while the Hang Seng Index slipped -9 points to 26,681. In Europe, the German DAX is up 45 points to 12,235, while the FTSE 100 is down about -20 points to 7,260. The British pound rallied following a press gathering with UK PM Johnson and Irish Prime Minister Leo Varadkar, where the U.K. prime minister said a deal on the Irish border question can be secured in time to enable a smooth Brexit. It is an overall quiet start to the week with few market moving headlines or stories thus far.

Market Closing Prices Yesterday

·     The S&P 500 Index inched higher 2.71 points, or 0.09%, to 2,978.71

·     The Dow Jones Industrial Average rose 69.31 points, or 0.26%, to 26,797.46

·     The Nasdaq Composite slipped -13.75 points, or 0.17%, to 8,103.07

·     The Russell 2000 Index declined -5.58 points, or 0.37% to 1,505.17

 

Events Calendar for Today

·     3:00 PM EST       Consumer Credit for July…est. $16.0B

 

Earnings Calendar:

·     Earnings Before the Open: None

·     Earnings After the Close: ASPU, LAKE, LMNR

 

Other Key Events:

·     2019 World Conference on Lung Cancer, 9/7-9/10 in Barcelona, Spain

·     Barclay’s Global Financial Services Conference, 9/9-9/11, in New York

·     Credit Suisse 32nd Annual Basic Materials Conference, 9/9-9/11, in New York

·     HC Wainwright Healthcare Conference, 9/9-9/10, in New York

·     Morgan Stanley 17th Annual Healthcare Conference, 9/9-9/11, in New York

 

 

Macro

Up/Down

Last

WTI Crude

0.28

56.80

Brent

0.23

61.77

Gold

2.20

1,517.70

EUR/USD

0.0005

1.1034

JPY/USD

0.11

107.03

10-Year Note

+0.034

1.594%

 

 

World News

·     China’s exports unexpectedly contracted in August with sales to the U.S. shrinking by 16% from a year earlier, as the trade war between the two nations escalates. Exports decreased 1% in dollar terms from a year earlier (vs. est. up 2.2%), while imports declined 5.6% (vs. est. -6.4%), leaving a trade surplus of $34.84 billion, the customs administration said

·     German exports unexpectedly rose in July, as exports adjusted for seasonal and calendar effects rose 0.7% on the month to 115.2 billion euros ($126.98 billion) in July

·     Samples taken by the U.N. nuclear watchdog at what Israel’s prime minister called a “secret atomic warehouse” in Tehran showed traces of uranium that Iran has yet to explain, two diplomats who follow the agency’s inspections work closely say- Reuters

·     Japan’s economy grew an annualized 1.3% in April-June, less than the initial estimate of a 1.8% expansion, revised data from the Cabinet Office showed Monday.

·     One of the strongest typhoons to hit the Japanese capital in recent years made landfall just east of Tokyo on Monday, bringing record-breaking winds, stinging rain and sending some rivers close to the top of their banks.

 

S&P MidCap 400 and S&P SmallCap 600 Index Changes affective Monday 9/23:

·     S&P SmallCap 600 constituents Selective Insurance Group Inc. (SIGI), Repligen Corp. (RGEN), and FirstCash Inc. (FCFS) will move to the S&P MidCap 400. S&P MidCap 400 constituents Signet Jewelers Ltd (SIG), Range Resources Corp. (RRC), Tupperware Brands Corp. (TUP), The Michaels Companies Inc. (MIK), QEP Resources Inc. (QEP), Valaris plc (VAL) and McDermott International Inc. (MDR) will move to the S&P SmallCap 600.

·     Etsy Inc. (ETSY), Pilgrim’s Pride Corp. (PPC), KAR Auction Services Inc. (KAR), Antero Midstream Corp. (AM), Owens Corning Inc. (OC), and Penumbra Inc. (PEN) will join the S&P MidCap 400.

·     Warrior Met Coal Inc. (HCC), Cadence Bancorporation (CADE) and GCP Applied Technologies Inc. (GCP) will join the S&P SmallCap 600.

·     Cars.com (CARS) and Mallinckrodt plc (MNK) will be removed from the S&P MidCap 400 as they are no longer representative of the mid-cap market space. Kirkland’s Inc. (KIRK), Nautilus Group Inc. (NLS), LSC Communications Inc. (LKSD), Ascena Retail Group Inc. (ASNA), Superior Industries International (SUP), Superior Energy Services Inc. (SPN) and Kopin Corp. (KOPN) will be removed from the S&P SmallCap 600 as they are no longer representative of the small-cap market space

 

Sector News Breakdown

Consumer

·     Spirit Airlines Inc. (SAVE) said it sees Q3 total revenue per available seat miles (TRASM) to be down 2.5% to 3.5% YoY due to Hurricane Dorian, worse than its prior view of down 1.0% to 2.0% before the hurricane; said it canceled 768 flights due to Hurricane Dorian

·     Air France-KLM warned over bookings saying “close-in bookings in the peak travel period are weaker than foreseen in view of softening macro-economic environment.”

·     Lululemon (LULU) mentioned in Barron’s after it reported blowout financial results that sent its stock 8% higher the next day, as the athleisure trend becomes a lasting consumer shift, not a fad, and more gains for comfortable fabrics should be expected

·     Royal Caribbean Cruises (RCL) boosted its quarter dividend to 78c per share from 70c

·     Dean Foods (DF) concludes its review of strategic alternatives including possible sale of the company, says standalone operating plan under recently appointed CEO Eric Beringause is the best way to generate long-term shareholder value.

·     Famous Dave’s (DAVE) board approved a holding company reorganization whereby it will become a wholly owned subsidiary of a new public holding company, BBQ Holdings (BBQ)

·     Nissan Motor (NSANY) CEO Hiroto Saikawa has decided to step down days after admitting he received improperly inflated compensation, according to Nikkei Asian Review

·     Tesla (TSLA) CEO Elon Musk said on Twitter that, “For the remainder of September, Tesla is permanently waiving the $1,500 solar removal fee requirement

 

Energy

·     The city of San Francisco has offered to buy PG&E Corp’s (PCG) power lines and other electrical system infrastructure serving the city for $2.5 billion, according to the utility, which sought Chapter 11 bankruptcy protection in January

·     Pioneer Power (PPSI) announced that its board has declared a one-time special cash dividend of $1.37 per share

·     Baker Hughes (BHGE) said that the Baker Hughes international rig count for August 2019 was 1,138, down 24 from the 1,162 counted in July 2019, and up 130 from the 1,008 counted in August 2018

 

Healthcare

·     Amgen (AMGN) shares may be active after the highest dose of Amgen’s AMG 510 shrank tumors in seven of 13 patients (54%) based on their first imaging scans post-treatment, while the disease was stable in the remaining six, according to results the World Conference on Lung Cancer

·     ACADIA Pharmaceuticals Inc. (ACAD) announced that its Phase 3 HARMONY study, a double-blind, placebo-controlled relapse prevention trial evaluating pimavanserin for the treatment of dementia-related psychosis, met its primary endpoint, demonstrating a highly statistically significant longer time to relapse of psychosis with pimavanserin compared to placebo in a planned interim efficacy analysis

·     Chiasma (CHMA) files $200M mixed securities shelf

 

Industrials & Materials

·     Alcoa (AA) said it will be restructuring, with a plan to eliminate its business unit structure and consolidate sales, procurement and other commercial capabilities at an enterprise level.

·     Barron’s said when it comes to the Boeing (BA) 737 MAX, investors have focused mainly on when the troubled jet will return to service, according to “Europe Introduces a New Boeing 737 MAX Risk” article. That process may not be as simple as Boeing Co (BA) investors hope.

·     Rayonier Advanced Materials (RYAM) said late Friday it has suspended its quarterly cash dividend in order to prioritize its cash flow to repay indebtedness and fund capital investments and working capital needs

·     Science Applications International (SAIC) was awarded a U.S. Defense Logistics Agency contract valued at up to $950 million

 

Technology, Media & Telecom

·     Sohu.com (SOHU) announced that it has submitted to the board of its majority-owned subsidiary Changyou.com (CYOU) a preliminary non-binding proposal to acquire all of the outstanding Class A ordinary shares of Changyou, including Class A ordinary shares represented by American Depositary Shares, that are not already owned by Sohu for a purchase price of $5.00 per Class A ordinary share, or $10.00 per ADS, in cash

·     United Microelectronics (UMC) reports revenue grew 0.02% to NT$13.18B in August; YTD revenue slipped 8.04%% to NT$95.53B

·     AT&T (T), McKesson (MCK) and D.R. Horton (DHI) are three stocks for “inpatient investors,” Barron’s said, due to free-cash flow, enticing valuation and potential for millennial home buying, respectively

·     DBV Technologies (DBVT) files to sell $300M of ordinary shares

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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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