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US Market Briefing for the 9th of August 2019

Volatility persists with futures under early pressure

U.S. equity futures have backpedaled from yesterday’s rally, leaving the S&P 500 futures down 15 points, or 0.5%, below fair value.

There is no confirmed catalyst for the negative disposition, but there remains doubt among some investors about the global economy. In China, data showed producer prices unexpectedly decline 0.3% yr/yr in July, signaling deflation; while the UK’s GDP for the second quarter unexpectedly declined 0.2% qtr/qtr.

On Wall Street, economic data will be limited to the Producer Price Index for July (Briefing.com consensus 0.2%) at 8:30 a.m. ET. The core reading, which excludes food and energy, is projected to have increased 0.2%.

In earnings news, Uber (UBER 39.53, -3.44, -8.0%) shares have dropped 8.0% in pre-market action after the company missed top and bottom-line expectations, which included a $5.2 billion quarterly loss. Expectations were high heading into the report with shares rising over 8% yesterday. 

U.S. Treasuries have edged higher, pushing yields lower across the curve. The 2-yr yield is down one basis point to 1.60% and the 10-yr yield is down two basis points to 2.70%. The U.S. Dollar Index is down 0.1% to 97.57. WTI crude is up 1.2% to $53.18/bbl.

In U.S. Corporate news:

  • Uber (UBER 39.53, -3.44): -8.0% after missing top and bottom-line estimates.
  • Activision Blizzard (ATVI 48.50, -0.83): -1.7% after issuing downside Q3 guidance, but it did guide FY19 EPS above consensus and beat top and bottom-line estimates.
  • DXC Technology (DXC 41.50, -10.15): -19.7% after cutting its FY20 outlook. 
  • Symantec (SYMC 23.60, +0.68): +3.0% after beating top and bottom-line estimates and confirming it will sell its enterprise business to Broadcom (AVGO 270.35, -0.63, -0.2%) for $10.7 billion in cash. 

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region ended the week on a mixed note, with markets in China and Hong Kong showing relative weakness. Japan’s Nikkei +0.4%, Hong Kong’s Hang Seng -0.7%, China’s Shanghai Composite -0.7%, India’s Sensex +0.7%, South Korea’s Kospi +0.9%, Australia’s ASX All Ordinaries +0.3%.
    • In economic data:
      • China’s July PPI -0.3% yr/yr (expected 0.0%; last 0.0%). July CPI +0.4% m/m (expected 0.2%; last -0.1%); +2.8% yr/yr (expected 2.7%; last 2.7%)
      • Japan’s flash Q2 GDP +0.4% qtr/qtr (expected 0.1%; last 0.6%); +1.8% yr/yr (expected 0.4%; last 2.2%). Q2 GDP Capital Expenditure +1.5% qtr/qtr (expected 0.7%; last 0.3%) and External Demand -0.3% qtr/qtr (expected -0.5%; last 0.4%)
      • New Zealand’s June External Migration & Visitors +0.6% m/m (expected 3.0%; last -1.2%)
    • In news:
      • Bloomberg reported last evening that the Trump administration is delaying the issuance of license that would allow U.S. companies to continue doing business with Huawei.
      • Reserve Bank of Australia Governor, Philip Lowe, said that while it is unlikely for Australia’s cash rate to reach the lower bound, policymakers should be thinking about policy options at that level.
  • Major European indices trade in negative territory. STOXX Europe 600 -0.6%, Germany’s DAX -1.2%, U.K.’s FTSE 100 -0.1%, France’s CAC 40 -0.9%, Italy’s FTSE MIB -2.2%, Spain’s IBEX 35 -1.1%.
    • In economic data:
      • Germany’s June trade surplus EUR18.10 bln (expected EUR18.50 bln; last EUR18.10 bln). June Imports +0.5% m/m (expected 0.3%; last -0.3%) and June Exports -0.1% m/m, as expected (last 1.3%)
      • U.K.’s June GDP 0.0% m/m (expected 0.1%; last 0.2%). Q2 GDP -0.2% qtr/qtr (expected 0.0%; last 0.5%); +1.2% yr/yr (expected 1.4%; last 1.8%). June Industrial Production -0.1% m/m (expected -0.2%; last 1.2%); -0.6% yr/yr (expected -0.2%; last 0.5%). June Manufacturing Production -0.2% m/m (expected -0.1%; last 1.4%); -1.4% yr/yr (expected -1.1%; last -0.2%). June trade deficit GBP7.01 bln (expected GBP11.80 bln; last GBP10.70 bln). June Construction Output -0.7% m/m (expected -0.3%; last 0.3%); -0.2% yr/yr (expected 0.2%; last 1.3%). Q2 Business Investment -0.5% qtr/qtr (expected -0.3%; last 0.4%); -1.6% yr/yr (expected -1.8%; last -1.5%)
      • France’s June Industrial Production -2.3% m/m (expected 2.1%; last 2.0%) and Q2 Nonfarm Payrolls +0.3%, as expected (last 0.4%)
      • Italy’s June trade surplus EUR5.73 bln (expected surplus of EUR4.23 bln; last surplus of EUR5.39 bln). July CPI 0.0% m/m (expected 0.1%; last 0.1%); +0.4% yr/yr (expected 0.5%; last 0.5%)
      • Swiss July Unemployment Rate 2.3%, as expected (last 2.3%)
    • In news:
      • Italy’s MIB (-2.2%) is leading the retreat after Italy’s Deputy Prime Minister, Matteo Salvini, made it official that his party will bring forward a no-confidence motion, which he hopes will lead to a general election.
      • Prime Minister, Giuseppe Conte, indicated that he will recall the parliament from its summer recess.
      • Germany’s Association of Chambers of Trade and Industry expects that exports will show no growth in 2019, down from the previous forecast for a 1.2% increase.

U.S. equity futures:

  • S&P 500 Futures -17.12 @ 2922.88
  • DJIA Futures -136.50 @ 26228.50
  • Nasdaq Futures -60.63 @ 7675.12

Overseas: 

  • Europe: DAX -1.25%, FTSE -0.10%, CAC -0.97%
  • Asia: Nikkei +0.44%, Hang Seng -0.69%, Shanghai -0.71%

Commodities: 

  • Crude Oil +0.62 @ 53.16
  • Nat Gas -0.037 @ 2.091
  • Gold +3.45 @ 1512.95
  • Silver +0.056 @ 16.992
  • Copper -0.006 @ 2.601

U.S. Summary:

  • Earnings/Guidance:
    • Activision Blizzard (ATVI -2%) beats by $0.21, beats on revs; guides Q3 EPS below consensus, revs below consensus; guides FY19 EPS above consensus, reaffirms FY19 revs guidance
    • Alarm.com (ALRM +14%) beats by $0.08, beats on revs; guides FY19 EPS in-line, revs above consensus
    • Avnet (AVT -9%) misses by $0.06, beats on revs; guides SepQ EPS below consensus, revs in-line; co seeing margin pressure
    • Axon (AAXN -8%) misses by $0.02, misses on revs; guides Q3 revs in-line; reaffirms FY19 revs guidance
    • Callaway Golf (ELY +11%) beats by $0.11, beats on revs; guides Q3 EPS below consensus, revs in-line; guides FY19 EPS in-line, revs in-line
    • Diplomat Pharmacy (DPLO) misses by $1.94, beats on revs; reaffirms FY19 revs guidance, cuts Adj-EBITDA, GAAP EPS guidance; to review strategic alternatives
    • Dropbox (DBX -5%) beats by $0.02, reports revs in-line; guides Q3 revs above consensus; increases FY19 rev guidance
    • DXC Technology (DXC -21%) beats by $0.03, reports revs in-line; cuts FY20 outlook
    • Farfetch (FTCH -37%) beats by $0.02, beats on revs; tempers FY19 platform GMV guidance; to acquire New Guards Group for $675 mln
    • Fastly (FSLY -22%) misses by $0.03, beats on revs; guides Q3 EPS in-line, revs in-line; guides FY19 EPS in-line, revs in-line
    • Puma Biotech. (PBYI +23%) beats by $0.32, reports revs in-line
    • Revolve Group (RVLV -11%) misses by $0.02, beats on revs; guides FY19 revs in-line
    • Sientra (SIEN +11%) misses by $0.52, beats on revs; reaffirms FY19 revs guidance
    • Symantec (SYMC +3%)  beats by $0.10, beats on revs; guides Q2 EPS in-line, revs in-line; to sell enterprise security assets, which include the Symantec name, to Broadcom (AVGO) for $10.7 bln in cash; to reduce net global headcount by approximately 7%
    • The Trade Desk (TTD -4%)  beats by $0.27, beats on revs; guides Q3 revs in-line; raises FY19 revenue and adjusted EBITDA guidance
    • TrueCar (TRUE -21%) misses by $0.02, misses on revs; guides Q3 revs in-line; guides FY19 revs below consensus
    • Tutor Perini (TPC -10%) misses by $0.28, misses on revs; lowers FY19 EPS guidance to adjust for impairment charge
    • Uber (UBER -8%) misses by $1.53, misses on revs
    • ViewRay (VRAY -47%) misses by $0.10, beats on revs; guides FY19 revs below consensus; CFO resigns
    • Yelp (YELP +6%) reports Q2 results, reports revs in-line, EBITDA upside; guides Q3 revs in-line, reaffirms FY19 revenue guidance; CFO to step down next month
  • General News:
    • Amarin (AMRN) -20% after receiving notice of FDA AdCom for Vascepa sNDA; anticipates that PDUFA date will be extended
    • Bayer (BAYRY) makes $8 bln settlement proposal for weed killer lawsuits, according to Bloomberg
    • Beyond Meat (BYND) has ended plans to enter Japan, according to Reuters
    • Capri Holdings (CPRI) files to delay 10-Q — needs to further review its recent adoption of the Financial Accounting Standards Board’s Accounting Standards Update
    • Trump administration will hold off on licenses that would have allowed US companies to sell to Huawei in response to China’s decision to suspend agricultural imports, according to Bloomberg
  • M&A:
    • Canopy Growth (CGC) to acquire the global cannabinoid-based medical researcher Beckley Canopy Therapeutics; terms not disclosed
    • Diodes (DIOD) to acquire Lite-On Semiconductor Corporation for approximately $428 million
    • Eidos Therapeutics (EIDX): BridgeBio Pharma (BBIO) affirms 66.7% active stake, delivers letter setting forth non-binding proposal to acquire all remaining shares for a fixed exchange ratio of 1.30 shares of the Reporting Person for each share of the Issuer
    • Groupon (GRPN) acquires Presence AI; terms not disclosed
    • ManTech (MANT) acquires H2M Group; terms not disclosed
    • Symantec (SYMC) to sell enterprise security business to Broadcom (AVGO) for $10.7 bln in cash
  • Syndicate:
    • Adverum Biotech (ADVM) files mixed securities shelf offering for an undisclosed amount
    • BlackLine (BL) prices offering of $435 mln aggregate principal amount of 0.125% convertible senior notes due 2024
    • Brooks Automation (BRKS) files mixed securities shelf offering for an undisclosed amount
    • Clovis Oncology (CLVS) prices $250 mln of 4.50% convertible senior notes due 2024
    • i3 Verticals (IIIV) files $250 mln mixed securities shelf offering and for a 13.15 mln share Class A common stock offering by selling shareholders
    • Magenta Therapeutics (MGTA) files $350 mln mixed securities shelf offering
    • PennyMac Mortgage (PMT) prices underwritten public offering of 8 mln common shares of beneficial interest for total estimated gross proceeds of approximately $174 mln
    • Quanterix (QTRX) prices public offering of 2,376,238 shares of its common stock at $25.25/share
    • Replimune (REPL) files for $250 mln mixed securities shelf offering; discloses entry into $75 mln common stock sales agreement
    • Restaurant Brands Int’l (QSR) files mixed securities shelf offering for an undisclosed amount; files prospectus supplement for 20 mln common share offering by selling shareholder
    • Silk Road Medical (SILK) prices upsized secondary public offering of 4.2 mln shares of common stock by certain selling stockholders at $39.50 per share
    • Stemline Therapeutics (STML) prices underwritten public offering of 5 mln shares of its common stock at a price of $15.25 per share
    • Synlogic (SYBX) files 8.89 mln share common stock offering by a selling stockholder
  • IPOs:
    • Expected This Week/Day-To-Day:
      • WiMi Hologram Cloud (Nasdaq: WIMI): Provider of augmented reality-based holographic services and products [Planning to offer 4 mln shares between $7.50-9.50]
    • Expected Next Week
      • 9F (NYSE: JFU): Leading digital financial account platform integrating and personalizing financial services in China [Planning to offer 8.9 mln ADS between $7.50-9.50]
      • CrossFirst Bankshares (Nasdaq: CFB): Kansas corporation and registered bank holding company with total assets of $4.5 bln [Planning to offer 7.11 mln shares between $15.00-17.00]

Gapping Up/Down

  • Gapping upPBYI +22.7%, EIDX +15.4%, ALRM +13.9%, LXRX +11.7%, SIEN +11.4%,WPRT +7.7%, FNKO +7.6%, ELY +5.8%, UNIT +5.6%, YELP +5%, OMER +4.2%, VSAT+3.7%, PCTY +3.1%, MTW +3%, USCR +2.8%, APPN +2.7%, TERP +2.4%, EPAY+2.3%, CHUY +2%, LGF.A +1.9%, COLD +1.9%, JAG +1.8%, ASYS +1.7%, FGEN+1.6%, RBA +1.4%, CLVS +1.2%, SYMC +1.2%, GRPN +1.1%, BGNE +1.1%, IIIV +1%
  • Gapping downVRAY -46.6%, FTCH -37%, NKTR -32.4%, PUMP -31.3%, FSLY-23.6%, WTRH -21.5%, AMRN -20%, DXC -19.1%, MESA -18.1%, QNST -16%, VSLR-14.5%, RVLV -12.8%, HEAR -12.7%, XON -11.4%, MAT -9.5%, TPC -9.5%, PYX-9.4%, AVT -9.1%, KALA -8.9%, UBER -8.9%, CNDT -8.7%, AAXN -8.6%, TSE-7.1%, AXDX -6.7%, OSTK -6.1%, ALTR -5.2%, DBX -5%, TTD -5%, PMT -4.5%, WPM-3.2%, QSR -2.3%, AL -2.2%, MAIN -1.9%, BHVN -1.8%, ATVI -1.5%, AIMT -1.5%,FLNT -1.4%, VRTU -1.4%, SYNA -1.3%, WDC -0.9%

Analyst Research:

  • Upgrades:
    • Bed Bath & Beyond (BBBY) upgraded to In-line from Underperform at Evercore ISI
    • Corteva (CTVA) upgraded to Outperform from Sector Perform at RBC Capital Mkts; tgt raised to $38
    • Green Dot (GDOT) upgraded to Buy from Neutral at Guggenheim
  • Downgrades:
    • Chemours (CC) downgraded to Sector Perform from Outperform at RBC Capital Mkts; tgt lowered to $16
    • E*TRADE (ETFC) downgraded to Hold from Buy at Deutsche Bank; tgt lowered to $45
  • Others:
    • Allogene (ALLO) initiated with a Buy at BTIG Research; tgt $37
    • Lovesac (LOVE) initiated with an Outperform at Oppenheimer

Upcoming Events:

  • Econ Data:
    • 08:30 ET PPI for Jul (Briefing.com consensus 0.2%, Prior 0.1%)
    • 08:30 ET Core PPI for Jul (Briefing.com consensus 0.2%, Prior 0.3%)
  • Earnings:
    • Monday (August 12)
      • Pre-Market: GOLD, SYY, TSG
      • After-Hours: BE, TME, VFF
    • Tuesday (August 13)
      • Pre-Market: AAP, AVYA, BEST, CVET, EAT, ELAN, GDS, IIVI, JD, PSN, RUBY
      • After-Hours: ADPT, BILI, CDK, GO, HUYA, MYGN, PSNL, TLRY, YY
    • Wednesday (August 14)
      • Pre-Market: AIT, CAE, ERJ, GOOS, LK, PFGC
      • After-Hours: A, CACI, CGC, CSCO, HOLI, NTAP, PRSP, SPTN, VIPS
    • Thursday (August 15)
      • Pre-Market: BABA, BGG, CSIQ, JCP, TPR, WMT
      • After-Hours: AMAT, CRMT, GLOB, NVDA, PAGS, VIAV, ZTO
    • Friday (August 16)
      • Pre-Market: DE, QD
      • After-Hours: None of note

Asia & Europe detail:

Asia: Nikkei +0.4%, Hang Seng -0.7%, Shanghai -0.7%

Equity indices in the Asia-Pacific region ended the week on a mixed note, with markets in China and Hong Kong showing relative weakness. Bloomberg reported last evening that the Trump administration is delaying the issuance of licenses that would allow U.S. companies to continue doing business with Huawei. Reserve Bank of Australia Governor, Philip Lowe, said that while it is unlikely for Australia’s cash rate to reach the lower bound, policymakers should be thinking about policy options at that level.

  • In economic data:
    • China’s July PPI -0.3% yr/yr (expected 0.0%; last 0.0%). July CPI +0.4% m/m (expected 0.2%; last -0.1%); +2.8% yr/yr (expected 2.7%; last 2.7%)
    • Japan’s flash Q2 GDP +0.4% qtr/qtr (expected 0.1%; last 0.6%); +1.8% yr/yr (expected 0.4%; last 2.2%). Q2 GDP Capital Expenditure +1.5% qtr/qtr (expected 0.7%; last 0.3%) and External Demand -0.3% qtr/qtr (expected -0.5%; last 0.4%)
    • New Zealand’s June External Migration & Visitors +0.6% m/m (expected 3.0%; last -1.2%)

—Equity Markets—

  • Japan’s Nikkei: +0.4% (-1.9% for the week)
  • Hong Kong’s Hang Seng: -0.7% (-3.6% for the week)
  • China’s Shanghai Composite: -0.7% (-3.3% for the week)
  • India’s Sensex: +0.7% (-0.8% for the week)
  • South Korea’s Kospi: +0.9% (-3.0% for the week)
  • Australia’s ASX All Ordinaries: +0.3% (-2.7% for the week)

—FX—

  • USD/JPY: UNCH at 105.84
  • USD/CNH: UNCH at 7.0836
  • USD/INR: +0.4% to 70.71

Europe: DAX -1.2%, FTSE -0.1%, CAC -0.9%

Major European indices trade in negative territory, with Italy’s MIB (-2.2%) leading the retreat after Italy’s Deputy Prime Minister, Matteo Salvini, made it official that his party will bring forward a no-confidence motion, which he hopes will lead to a general election. Prime Minister, Giuseppe Conte, indicated that he will recall the parliament from its summer recess. Germany’s Association of Chambers of Trade and Industry expects that exports will show no growth in 2019, down from the previous forecast for a 1.2% increase.

  • In economic data:
    • Germany’s June trade surplus EUR18.10 bln (expected EUR18.50 bln; last EUR18.10 bln). June Imports +0.5% m/m (expected 0.3%; last -0.3%) and June Exports -0.1% m/m, as expected (last 1.3%)
    • U.K.’s June GDP 0.0% m/m (expected 0.1%; last 0.2%). Q2 GDP -0.2% qtr/qtr (expected 0.0%; last 0.5%); +1.2% yr/yr (expected 1.4%; last 1.8%). June Industrial Production -0.1% m/m (expected -0.2%; last 1.2%); -0.6% yr/yr (expected -0.2%; last 0.5%). June Manufacturing Production -0.2% m/m (expected -0.1%; last 1.4%); -1.4% yr/yr (expected -1.1%; last -0.2%). June trade deficit GBP7.01 bln (expected GBP11.80 bln; last GBP10.70 bln). June Construction Output -0.7% m/m (expected -0.3%; last 0.3%); -0.2% yr/yr (expected 0.2%; last 1.3%). Q2 Business Investment -0.5% qtr/qtr (expected -0.3%; last 0.4%); -1.6% yr/yr (expected -1.8%; last -1.5%)
    • France’s June Industrial Production -2.3% m/m (expected 2.1%; last 2.0%) and Q2 Nonfarm Payrolls +0.3%, as expected (last 0.4%)
    • Italy’s June trade surplus EUR5.73 bln (expected surplus of EUR4.23 bln; last surplus of EUR5.39 bln). July CPI 0.0% m/m (expected 0.1%; last 0.1%); +0.4% yr/yr (expected 0.5%; last 0.5%)
    • Swiss July Unemployment Rate 2.3%, as expected (last 2.3%)

—Equity Markets—

  • STOXX Europe 600: -0.6% (-1.5% week-to-date)
  • Germany’s DAX: -1.2% (-1.4% week-to-date)
  • U.K.’s FTSE 100: -0.1% (-1.7% week-to-date)
  • France’s CAC 40: -0.9% (-0.4% week-to-date)
  • Italy’s FTSE MIB: -2.2% (-3.2% week-to-date)
  • Spain’s IBEX 35: -1.1% (-1.4% week-to-date)

—FX—

  • EUR/USD: +0.1% to 1.1202
  • GBP/USD: -0.6% to 1.2069
  • USD/CHF: UNCH at 0.9733
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