Early Look

Thursday, June 27, 2019

Futures	Up/Down	%	Last
DJ Industrials	-57.00	0.21%	26,493
S&P 500	4.50	0.16%	2,922
Nasdaq	18.50	0.24%	7,668

 

 

Stocks futures are mixed, as the Dow Industrial futures slide being led by weakness in Boeing (BA), with shares down over 5% after tests on its currently grounded 737 Max have revealed a new safety risk and U.S. regulators are ordering the company to make additional design changes. At the same time, trade tensions remain heading into the G20 meeting this weekend between President Trump and Chinese leader Xi as the WSJ reported terms for a trade truce with President Donald Trump will include an insistence that the U.S. lift its ban on the sales of technology to Huawei. Also of note today, the financial sector as the Fed releases part two of its annual bank stress tests, the crucial CCAR numbers (for dividends and buybacks). In geopolitical news, Iran is set to breach the 2015 nuclear deal for the first time today. Night one of the Democratic debates took place last night (part two tonight), with many taking aim at the Healthcare industry. In Asian markets, The Nikkei Index jumped 251 points to settle at 21,338, the Shanghai Index rose 20 points to 2,996 and the Hang Seng Index gained 399 points to close at 28,621. In Europe, the German DAX is down roughly -15 points to 12,230, while the FTSE 100 is down about -30 points to 7,385.

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -3.60 points, or 0.12%, to 2,913.78

·     The Dow Jones Industrial Average fell -11.40 points, or 0.04%, to 26,536.82

·     The Nasdaq Composite gained 25.25 points, or 0.32%, to 7,909.97

·     The Russell 2000 Index declined -3.26 points, or 0.21% to 1,517.78

 

Events Calendar for Today

·     8:30 AM EST      Weekly Jobless Claims

·     8:30 AM EST      Continuing Claims

·     8:30 AM EST      Gross Domestic Product (GDP Annualized for Q1-T

·     8:30 AM EST      Personal Consumption

·     8:30 AM EST      GDP Price Index for Q1-T

·     8:30 AM EST      Core PCE QoQ, Q1-T

·     10:00 AM EST    Pending Home Sales MoM for May

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

·     11:00 AM EST    Kansas City Fed Manufacturing for June

 

Earnings Calendar:

·     Earnings Before the Open: APOG, CAG, GMS, PDCO, SKIS, WBA

·     Earnings After the Close: CAMP, FC, NKE

 

Other Key Events:

·     Fed stress tests round two (CCAR)

·     JMP Securities one-day Real Estate 1×1 forum in Boston

·     Global Annual Meeting of Drug Information Association, 6/24-6/27, in San Diego

 

 

Macro	Up/Down	Last
WTI Crude	-0.69	58.69
Brent	-0.72	65.77
Gold	-3.75	1,405.30
EUR/USD	0.0001	1.137
JPY/USD	0.07	107.86
10-Year Note	-0.012	2.038%

 

 

World News

·     European factory confidence plummeted to its lowest level since September 2013 during June, while consumers experienced a less marked decline in optimism. The Commission’s Economic Sentiment Indicator fell to 103.3 from 105.2 in May, hitting its lowest level since August 2016.

·     The price of bitcoin plunged more than $1,700 in 15 minutes Wednesday afternoon after the website of cryptocurrency exchange Coinbase apparently crashed. After topping a 17-month high above $13,700 earlier Tuesday, bitcoin sank below the $12,000 level, and was last trading around $12,400. A notice on Coinbase’s website read “An error has occurred…but was resolved 5:40 PM. The digital currency is up 60% this month, and more than 230% year to date.

 

Sector News Breakdown

Consumer

·     KB Home (KBH) Q1 EPS 51c/$1.02B vs. est. 38c/$936.35M; said Q2 homes delivered increased 2% to 2,768 and average selling price decreased 8% to $367,700, mainly due to a shift in the geographic mix of homes delivered and a changing mix of communities within the Company’s West Coast region

·     Herman Miller (MLHR) Q4 adjusted EPS 88c/$671M vs. est. 77c/$657.23M; sees Q1 EPS 77c-81c on revs $650M-$670M vs. est. 76c/$651.55M; 4Q gross margin 37% vs. 36.9% YoY and raises dividend to 21c from 19.75c

·     Rite Aid (RAD) shares fell -9%; Q1 adjusted EPS loss (14c)/$5.37B vs. est. loss (7c)/$5.38B; said Q1 same store sales from Retail Pharmacy rose 1.4% over the prior year, consisting of a 2.3% increase in pharmacy sales and a 0.3% decrease in front-end sales; said front-end same store sales, excluding cigarettes and tobacco products, increased 0.3%; backs FY20 revenue view $21.5B-$21.9B (est. $21.6B)

·     Pier 1 Imports (PIR) shares fell -11%; Q1 EPS loss ($19.97) on revs $314.3M vs. est. $330.3M; Q1 comp sales fell (-13.5%) vs. (-8.2%) YoY; Q1 gross margins 25.1% vs. 32.3% YoY

·     Hennes & Mauritz AB shares jumped after the fashion retailer said its summer collections are proving popular, with June sales growing strongly; posted a 1.5% drop in fiscal second quarter net profit to 4.57 billion Swedish kronor ($492.6 million)

·     Apogee (APOG) Q1 EPS 58c/$355.4M vs. est. 55c/$324.7M; reaffirms its guidance for the year for EPS and revenue

·     McCormick (MKC) Q2 EPS $1.12/$1.3B vs. est. $1.08/$1.31B

·     BJ’s Wholesale (BJ) files to sell 9.98M shares of common stock for holders

 

Energy, Industrials and Materials

·     Carl Icahn is seeking to replace four directors at Occidental Petroleum Corp., (OXY) saying the company’s board mismanaged its $38 billion deal to buy Anadarko Petroleum Corp. (APC)

·     Boeing (BA) said Wednesday that the FAA “identified an additional requirement” for software changes that the aircraft manufacturer has been working on for eight months, since shortly after the first crash.

·     HB Fuller (FUL) shares fell -5%; Q2 adjusted EPS 88c/$760M vs. est. 89c/$778.12M; cuts FY19 adjusted EPS view to $3.10-$3.30 from $3.15 -$3.45 (below est. $3.29) saying full year organic sales growth is expected to be 1 to 2%; said foreign currency exchange is expected to have a full year negative impact on reported revenues of 3 to 4%, and the divestiture of the surfactants business is forecasted to impact sales by approximately 0.5%

·     Worthington Industries (WOR) Q4 EPS 66c vs. 50c YoY and Q4 net sales $938.8M vs. est. $865M

 

Financials

·     The Fed releases part two of its annual bank stress tests, the crucial CCAR numbers (for dividends and buybacks

·     Washington REIT (WRE) lowers 2019 core FFO view to $1.68-$1.72 from $1-74-$1.78 saying the sale of eight retail assets reduces previously forecasted 2019 NOI by approximately $16M

·     OFG Bancorp’s (OFG) subsidiary, Oriental Bank, to acquire Scotiabank’s Puerto Rico operation for $550 million in cash and Scotiabank’s US Virgin Island branch operation for a $10 million deposit premium (deal announced after the close yesterday)

·     The Peck Company (PECK) announced an initial agreement to construct a portfolio of solar PV arrays generating 7 megawatts for one of its customers

 

Healthcare

·     Aclaris Therapeutics (ACRS) shares fell -30%; announced results from a Phase 2 clinical trial of ATI-502. an investigational topical Janus Kinase, or JAK, 1/3 inhibitor, in patients with alopecia areata, or AA. ATI-502 did not achieve statistical superiority at the primary or secondary endpoints due to high rates of disease resolution in vehicle-treated patients

·     Esperion (ESPR) and an investor group led by Oberland Capital are in a $200 million capped revenue-based funding agreement on revenues of bempedoic acid and the bempedoic acid/ezetimibe combo tablet. Agreement includes $125 million up front, $25 million upon FDA approval and $50 million at Esperion’s option after launch

·     Magellan Health (MGLN) is in exclusive discussions over a possible sale to Centerbridge Partners, the Wall Street Journal reported late yesterday https://on.wsj.com/2J3U45G

·     Patterson Co (PDCO) Q4 EPS 30c/$1.44B vs. est. 39c/$1.43B

·     Verrica Pharmaceuticals (VRCA) announced positive topline results from its COVE-1 Phase 2 open label clinical study of VP-102 for the treatment of verruca vulgaris, or common warts. In both cohorts, VP-102 achieved positive results on both the primary endpoint of complete clearance of all treatable warts at Day 84 and the secondary endpoint of the percentage reduction of warts.

·     Watch health insurers: Health insurance was a source of contention in the first Democratic debate Wednesday night, with Sen. Elizabeth Warren saying she sees no role for private insurers as she fully supported Sanders’ Medicare-for-All legislation

·     Adaptive Biotechnologies (ADPT) 15M share IPO priced at $20.00

·     BridgeBio (BBIO) 20.5M share IPO priced at $17.00

·     Change Healthcare (CHNG) 42.9M share IPO priced at $13.00

·     Gamida Cell (GMDA) 7M share Secondary priced at $5.00

·     Motus GI Holdings (MOTS) 6.667M share Spot Secondary priced at $3.00

 

Technology, Media & Telecom

·     Interxion (INXN) 4M share Secondary priced at $72.75

·     The WSJ reported that the White House will hold a social media summit on July 11, aiming to have a “robust conversation” about online platforms such as Google (GOOGL) and Facebook (FB)