Hammerstone’s Early Look

By admin | 09/11/2019


Wednesday, September 11, 2019

Futures Up/Down % Last
DJ Industrials 38.00 0.14% 26,932
S&P 500 1.50 0.05% 2,980
Nasdaq 0.50 0.01% 7,815

Stock futures are up slightly, catching a bid after reports that China plans to exempt 16 products from the first round of extra tariffs on U.S. imports, according to Chinese media reports, which will take effect September 17, citing the Customs Tariff Commission of the State Council. While U.S. futures are only up a little on the reports, markets overseas are outperforming as the Nikkei Index rose 205 points to 21,597, the Shanghai Index fell -12 points to close at 3,008 and the Hang Seng Index jumped 475 points (1.78%) to settle at 27,159. In Europe, the German DAX is higher by nearly 100-points to 12,365, while the FTSE 100is up over 60 points to 7,330. Note U.S. and Beijing negotiators are due to meet in Washington in October for a fresh round of trade talks. Also, in Europe, shares of the London Stock Exchange jumped after the Hong Kong Exchanges & Clearing launched a surprise £29.6 billion, or 8,361 pence a share bid. Markets also await central bank news as the European Central Bank meets on Thursday with expectations of a package of easing measures to be announced. Note U.S. markets were volatile again yesterday, but it was the obliteration of momentum and year-to-date winning stocks that really stood out for a second day while beaten up small cap stocks, metals, financials and energy names that underperformed paced the market gains. One can point to this as: JPM’s head quant, Marko Kolanovic wrote yesterday that the divergence observed last Friday with the record performance gap between small and large companies, was an “all-time extreme”, as JPM’s momentum indicator – a weighted average of 1, 3, 6 and 12M price momentum – of small cap stocks reached its maximal negative reading, while the same indicator for the S&P 500 reached its maximal positive reading. This divergence, as Kolanovic describes it, “has only occurred on two days in history” and most recently was recorded on one day in February 1999 during the tech bubble – Zerohedge.com reported

Market Closing Prices Yesterday

  • The S&P 500 Index inched higher 0.96 points, or 0.03%, to 2,979.39
  • The Dow Jones Industrial Average rose 73.92 points, or 0.28%, to 26,909.43
  • The Nasdaq Composite slipped -3.28 points, or 0.04%, to 8,084.16
  • The Russell 2000 Index advanced 18.76 points, or 1.23% to 1,542.99

Events Calendar for Today

  • 7:00 AM EST       MBA Mortgage Applications Data
  • 8:30 AM EST       Producer Price Index (PPI) MoM for August…est. 0.0%
  • 8:30 AM EST       PPI Ex: Food & Energy (core) MoM for August…est. 0.2%
  • 8:30 AM EST       PPI Final Demand YoY for August…est. 1.7%
  • 8:30 AM EST       PPI (core) Ex: Food & Energy YoY for August…est. 2.2%
  • 10:00 AM EST     Wholesale Inventories MoM for July…est. 0.2%
  • 10:30 AM EST     Weekly DOE Inventory Data

Earnings Calendar:

  • Earnings Before the Open: GFN, LOVE
  • Earnings After the Close: OXM, STRM, TLRD

Other Key Events:

  • 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
  • Deutsche Bank Technology Conference, 9/10-9/11, in Las Vegas
  • Morgan Stanley 17th Annual Healthcare Conference, 9/9-9/11, in New York
  • Morgan Stanley 7th Annual Laguna Conference, 9/11-9/13, in California
Macro Up/Down Last
WTI Crude 0.58 57.98
Brent 0.48 62.86
Gold 1.10 1,500.30
EUR/USD -0.0029 1.1014
JPY/USD 0.21 107.75
10-Year Note -0.019 1.712%

World News

  • Investor Intelligence Poll showed equity newsletter writers considered bullish further rebounds from a nearly three-month low two weeks ago, rising to 50.0% up big from 44.9% last week and 43.9% the prior week; bearish sentiment dipped to 17.9% from two weeks at 18.7% and those expecting a correction slips to 6-week low of 32.1% from 36.4% last week and 37.4% prior
  • Scottish court rules Boris Johnson’s suspension of Parliament is unlawful, but does not order it to be reversed

Sector News Breakdown

Consumer

  • Dave & Buster’s (PLAY) shares fell -9%; Q2 EPS 90c/$344.6M vs. est. 84c/$344.29M; Q2 comp sales fell -1.8% vs. est. -0.7% and reports number of stores increased 11.1% to 130 from 117; lowers FY comps to -2% to -3.5%, from prior view -1.5% to +0.5% and lowers FY net income to $91M-$100M from $103M-$113M prior; said it has expanded share repurchase authorization by $200M to $800M
  • GameStop (GME) shares fell -12%; Q2 adjusted EPS loss (32c) vs. est. loss (19c); Q2 comp sales fell -11.6% vs. est. -9.4%; guides year EPS $1.15-$1.30 below the $1.57 est.; sees year capex $90M-$95M and sees FY19 comparable store sales declining in the low-teens
  • RH (RH) rises 4%; Q2 adjusted EPS $3.20/$706.5M above est. $2.70/$697.77M; raises FY adj revs to $2.68B-$2.694B from $2.65B-$2.67B (est. $2.67B), sees FY adj operating margin 13.6-13.8% (had seen 12.9%-13.4%), while raises year EPS to $10.53-$10.76 from  $9.08-$9.52 (est. $9.44); says doesn’t expect current China tariffs to impair ability to achieve stated financial goals
  • Peloton Interactive Inc. (PTON) said it plans to charge $26 to $29 for shares in its initial public offering, which would raise up to $1.16 billion at a valuation of up to $8 billion
  • Philip Morris (PM) raises quarterly dividend to $1.17 per share from $1.14 per share

Energy, Industrials & Materials

  • OPEC lowered its forecast of world oil demand in 2019 to growth of 1.02 million barrels a day in its monthly report, citing weaker-than-expected data in the first half from various global demand centers and slower economic growth projections for the remainder of the year. It also lowered its 2020 world oil demand view, seeing growth of 1.08 million barrels a day
  • The American Petroleum Institute (API) reported that U.S. crude supplies fell by 7.2 million barrels for the week, also showed a stockpile decline of 4.5 million barrels in gasoline, while distillate supplies rose by 618,000 barrels
  • General Electric Co. (GE) said it plans to sell millions of shares in spinoff Baker Hughes (BHGE) and will no longer control the majority of shares in the company. Baker Hughes that GE and other affiliates plan to sell 105 million shares in an underwritten secondary offering, and sell $250 million in stock back to Baker Hughes.
  • Cenovus Energy (CVE) files up to $5B mixed securities shelf
  • Alcoa (AA) upgraded to Outperform from Neutral at Credit Suisse
  • Copper prices fell after a sharp fall in Chinese auto sales underlined fears of weaker demand from the world’s largest consumer of metals. Concerns over China’s economic outlook outweighed any optimism from a decision by Beijing to exempt some U.S. goods from additional tariffs — potentially easing tensions in a damaging trade dispute -Reuters

Financials

  • The London Stock Exchange has received a surprise £29.6bn takeover offer from Hong Kong Exchanges and Clearing — a bid that threatens the UK group’s £20bn-plus acquisition of US data provider Refinitiv. https://bit.ly/2kDTlQk
  • Franklin Resources, Inc. (BEN) reported preliminary month-end assets under management of $690.6B at August 31, 2019, compared to $709.5B at July 31, 2019 attributing the decline to net market declines and moderate net outflows
  • Farmer Bros. (FARM) Q4 EPS loss (52c)/$142.05M vs. est. loss (19c)/$144.29M; Q4 adjusted Ebitda $3.9M vs. est. $5.2M; announces appointment of Deverl Maserang as president, CEO and member of the company’s board of directors effective Sept. 13 who succeeds Chris Mottern, who has been interim CEO since May 2019
  • Charles Schwab (SCHW) plans to cut about 600 jobs, about 3% of its staff, Wall Street Journal reports, citing an attendee at a recent town hall with some employees

Healthcare

  • Lexicon Pharmaceuticals (LXRX) and Sanofi (SNY) terminated their alliance for the development and commercialization of Zynquista and settled their disputes/Lexicon will regain rights to Zynquista and assume responsibility for the worldwide development and commercialization of Zynquista in both type 1 and type 2 diabetes with SNY paying Lexicon $260M
  • T2 Biosystems (TTOO) said that healthcare services provider Premier has awarded it a Breakthrough Technology contract that extends discounted pricing for its T2Bacteria and T2Candida Panels to its network of 4,000 U.S. hospitals and health systems. The contract went into effect on September 1
  • Celyad (CYAD) files to sell 2M ordinary shares in a global offering
  • Tilray (TLRY) files a mixed securities shelf

Technology, Media & Telecom

  • Zscaler (ZS) shares fell -15%; Q4 EPS 7c/$86.1M vs. est. 1c/$82.79M; said Q4 calculated billings grew 32% YoY to $125.8M and deferred revenue grows 53% YoY to $251.2M; sees FY20 EPS 12c-15c on revs $395M-$405M vs. est. 19c/$402.93M and guides FY20 calculated billings of $490M-$500M
  • Aspen Technology (AZPN) said its financial reports for the quarters ended Sept. 30, 2018, Dec. 31, 2018 and March 31, 2019, should not be relied upon as the company has identified some errors in accounting.
  • Lantronix (LTRX) Q4 EPS 3c/$10.15M vs. est. 3c/$11.8M; sees Q1 EPS (3c)-0c and revs of $12M-$13M; sees FY20 Non-GAAP EPS up at least 30% and sees FY20 revenue up at least 15%
  • Federal Trade Commission (FTC) investigators have been interviewing small businesses that sell products on Amazon.com Inc. (AMZN) according to Bloomberg News, citing several attorneys and at least one economist.
  • Cloudflare (NET) sets IPO at 35M shares with price range $12-$14, above prior price range of $10-$12

Want a free trial to The Hammerstone Report 4x Daily ? Sign-up for a trial today at https://www.hammerstonemarkets.com/

Please be sure to check out The Hammerstone Pro Feed; News and Analysis for the Informed Trader at https://www.hammerstonemarkets.com/pro-trader/#get-started

***DISCLAIMER/LIMITATION OF LIABILITY: Hammerstone Inc. (the “Report”) provides information and data and does NOT provide any individual investment advice or money management assistance and does NOT attempt to influence the sale or purchase of securities.  The Report is intended for informational purposes only and does not claim to be actionable for investment decisions.  The information contained in the Report has been obtained from sources deemed to be reliable but is not represented to be complete, and it should not be relied upon as such.  The Report does not purport to be a complete analysis of any security, issuer, or industry and is not an offer or a solicitation of an offer to buy or sell any securities.  The Report is prepared for general information purposes only and does not consider the specific investment objectives, financial situation, and particular needs of any individual subscriber, person, or entity. This e-mail and any attachment(s) are believed to be free from virus. However it is the responsibility of the recipient to ensure that they are virus free. We do not accept any liability for any loss or damage arising in any way from the receipt, opening or use of this e-mail and any attachment(s). Nothing on the Hammerstone Platform is a recommendation that you purchase, sell or hold any security or other investment, or that you pursue any investment style or strategy.