Hammerstone’s Early Look

By admin | 09/16/2019


Monday, September 16, 2019

Futures Up/Down % Last
DJ Industrials -105.00 0.39% 27,108
S&P 500 -11.50 0.39% 2,996
Nasdaq -47.50 0.60% 7,860

Global stocks are under pressure to start the week in reaction to news of an attack this weekend that took half of Saudi Arabia’s oil output offline, sending oil producers much higher (RDS/A, XOM, CVX, COP) while will likely pressure transportation stocks such as airlines (UAL, AAL, LUV). Crude oil prices are spiking more than 8% following weekend attacks against key Saudi Arabian oil facilities the initially sent Brent oil futures up nearly 20% before paring gains. Saturday’s attack on Saudi oil fields knocked out about half that country’s oil production while Saudi officials said they expect to regain about one-third of that output capacity by Monday. President Donald Trump said in a series of tweets that he has authorized the release of U.S. strategic oil reserves “if needed” to “keep the markets well-supplied.” Tensions in the region rose as the U.S. blamed Iran for the attacks Sunday, while Iranian officials denied the charges. In Asian markets, The Nikkei Index was closed, the Shanghai Index was little changed at 3,030 and the Hang Seng Index fell -228 points to 27,124. In Europe, the German DAX is down about -75 points to move under 12,400, while the FTSE 100 is down about -10 points to 7,350. The news grabs headlines to start a week that is squarely focused on the 2-day FOMC meeting ending Wednesday that is expected to result another possible rate cut and perhaps other easing measures to offset the recent easing measures announced by other central banks (ECB last week).

Events Calendar for Today

  • 8:30 AM EST       Empire Manufacturing for Sept…est. 4.0
Macro Up/Down Last
WTI Crude 4.40 59.25
Brent 5.03 65.25
Gold 12.50 1,512.00
EUR/USD -0.0023 1.105
JPY/USD -0.33 107.76
10-Year Note -0.061 1.834%

Sector News Breakdown

Consumer

  • Somewhere around 49,000 workers at General Motors (GM) plants in the U.S. plan are expected to go on strike just before midnight Sunday, but talks between the United Auto Workers and the automaker will resume. About 200 plant-level union leaders voted unanimously in favor of a walkout during a meeting Sunday morning
  • New York Governor Cuomo is pushing to enact a statewide ban on the sale of flavored e-cigarettes amid growing health concerns connected to vaping, especially among young people. In announcing the action, Cuomo sharply criticized the flavors that are for sale, like bubble gum and cotton candy. (watch shares of MO)
  • H&M shares fell after reported a 12% rise in third-quarter sales and said it had well-receiver summer collections and increased market share.
  • Tapestry (TPR), the holding company that owns Coach, Kate Spade, and Stuart Weitzman – stands out as a flop, with shares down 25% in 2019, Barron’s reported but said the stock’s recent weakness, however, opens an opportunity

Energy

  • Oil prices rise as Yemen’s Houthi rebels launched drone attacks on the world’s largest oil processing facility in Saudi Arabia and a major oil field Saturday, sparking huge fires and halting about half of the supplies from the world’s largest exporter of oil.
  • State energy producer Saudi Aramco lost about 5.7 million barrels per day of output after 10 unmanned aerial vehicles on Saturday struck the world’s biggest crude-processing facility in Abqaiq and the kingdom’s second-biggest oil field in Khurais, the company said
  • PG&E (PCG) upgraded to Neutral from Sell at Citigroup and raised its tgt to $12 from $4  after the company settled all subrogation claims for the 2017/2018 fires for $11B
  • Noble Corp (NE) announced that Adam Peakes, Senior Vice President and CFO resigned effective September 9, 2019
  • Viper Energy (VNOM), a subsidiary of Diamondback Energy (FANG) announced it has entered into a definitive purchase and sale agreement to acquire certain mineral and royalty interests from Santa Elena Minerals for approximately 5.2M common units representing limited partner interests in Viper, subject to certain adjustments

Financials

  • Capital One (COF) reports August net charge-offs 4.18% vs. 4.25% last month and said August delinquencies 3.50% vs. 3.49% last month
  • JPMorgan (JPM) reports August net charge-offs 2.45% vs. 2.21% last month and August delinquencies 1.14% vs. 1.15% last month
  • Synchrony Financial (SYF) reported charge-offs for August of 3.90% and monthly delinquencies of 2.58%
  • JPMorgan (JPM) was downgraded to Neutral from Buy at Buckingham with $122 tgt
  • Deutsche Bank (DB) has signed up to the JPMorgan Chase-led (JPM) Interbank Information Network, the financial services industry’s biggest blockchain project – Financial Times

Healthcare

  • Aimmune (AIMT) won FDA Panel approval late Friday, as advisers to the FDA said there is adequate data showing that its Palforzia drug for peanut allergy works in children; 7 panelists voted in favor while 2 voted against the efficacy; the panel also voted 8-1 in favor of safety approval; the FDA is expected to decide by late January whether to approve the therapy
  • Purdue Pharma, the company that made billions selling the prescription painkiller OxyContin, filed for bankruptcy days after reaching a tentative settlement with many of the state and local governments suing it over the toll of opioids. The filing was anticipated before and after the tentative deal, which could be worth up to $12 billion over time, was struck.

Industrials & Materials

  • Boeing Co.’s (BA) full board of directors is expected to hear a report this week detailing structural corporate changes that can be made to improve the safety of its planes following two fatal crashes of its 737 Max planes, the New York Times reported Sunday. The recommended changes from a small committee of board members include a new corporate reporting structure, creating a new safety group and building simpler cockpits
  • Amerco (UHAL) mentioned positively in Barron’s calling it one of the better-kept secrets in the stock market as it has virtually no analyst coverage, communicates little with investors, and is run like a private business by controlling Shoen family; says shares look appealing
  • Wabtec (WAB) and Greenbrier (GBX) both upgraded to overweight from sector weight at KeyBanc saying that the rail companies had a positive set-up given recent share-price declines.

Technology, Media & Telecom

  • Barron’s noted following Apple’s (AAPL) product event, investors seemed to only care about Apple TV+’s unexpectedly low price, with stocks of streaming rivals like Netflix (NFLX) and Disney (DIS) quickly falling on potential unforeseen risks to competition. Barron’s said while the $4.99 a month price for Apple TV+ looks appealing, it may not be so attractive once consumers consider the number of shows the service will offer
  • Facebook (FB) will be asked questions by global regulators Monday on its planned Libra coin project amid concerns from EU governments over the threat the digital currency poses to financial stability

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