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US Morning Briefing for the 7th of August 2019

Global indices stabilize as investors weigh central bank easings

The S&P 500 futures are trading four points, or 0.1%, below fair value after yesterday’s rebound trade, while investors assess more central bank easing and the continued decline in U.S. Treasury yields. 

Three more central banks around the world cut their interest rates overnight as forecasts on the economic outlook diminish. The Reserve Bank of New Zealand and the Reserve Bank of India cut their interest rates more than expected, and the Bank of Thailand unexpectedly cut its rates.

Economic growth concerns continue be reflected in the flattening of the U.S. Treasury yield curve as longer-dated tenors see increased demand. The 2-yr yield is down four basis points to 1.61%, and the 10-yr yield is down eight basis points to 2.66% — its lowest level since Oct. 2016. The U.S. Dollar Index is unchanged at 97.61. WTI crude is down 0.7% to $53.24/bbl.

In earnings news, Walt Disney (DIS 136.59, -5.28, -3.7%) missed top and bottom-line expectations, sending shares down nearly 4% in pre-market action. On a related note, the company announced that its streaming bundle, which will include ESPN+, Disney+, and Hulu, will cost $12.99/month.

On the data front, investors will receive the Consumer Credit report for June (Briefing.com consensus $16.5 billion) at 3:00 p.m. ET. The weekly MBA Mortgage Applications Index increased 5.3% following a 1.4% decline in the prior week.

In U.S. Corporate news:

  • Walt Disney (DIS 136.59, -5.28): -3.7% after missing top and bottom-line estimates. Disney also announced that its streaming bundle, which will include ESPN+, Disney+, and Hulu, will cost $12.99/month. 
  • CVS Health (CVS 56.85, +2.76): +5.1% after beating top and bottom-line estimates and raising its FY19 EPS guidance above consensus.
  • Match Group (MTCH 86.40, +12.49): +16.9% after beating revenue and Tinder subscription estimates and providing upbeat guidance. 

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region ended Wednesday on a mixed note. Japan’s Nikkei -0.3%, Hong Kong’s Hang Seng +0.1%, China’s Shanghai Composite -0.3%, India’s Sensex -0.8%, South Korea’s Kospi -0.4%, Australia’s ASX All Ordinaries +0.6%.
    • In economic data:
      • China’s July FX Reserves $3.104 trln (expected $3.110 trln; last $3.119 trln)
      • Japan’s July FX Reserves $1.317 trln (last $1.322 trln)
      • Hong Kong’s July FX Reserves $448.50 bln (last $445.70 bln)
      • Singapore’s July FX Reserves $272.70 bln (last $273.90 bln)
      • Australia’s June Home Loans -0.9% m/m (expected 0.6%; last 0.0%)
    • In news:
      • The People’s Bank of China fixed the yuan modestly lower at 6.9996 per dollar, but the currency ticked past the 7.00 level regardless, though it remains below yesterday’s overnight low.
      • Samsung denied that it is seeking alternative sources for all chip materials made in Japan.
      • The Reserve Bank of New Zealand lowered its official cash rate by 50 bps to 1.00% while expectations called for a 25-bps cut.
      • Governor, Adrian Orr, said that the rate cut does not rule out future action on rates, adding that negative rates may have to be considered.
      • The Reserve Bank of India lowered its repurchase rate by 35 bps to 5.40% and cut its reverse repo rate by 35 bps to 5.15%. The cuts were 10 bps larger than expected.
      • The Bank of Thailand unexpectedly cut its repurchase rate by 25 bps to 1.50%.
  • Major European indices trade on a firmly higher note. STOXX Europe 600 +0.9%, Germany’s DAX +1.3%, U.K.’s FTSE 100 +0.8%, France’s CAC 40 +1.3%, Italy’s FTSE MIB +0.6%, Spain’s IBEX 35 +1.2%.
    • In economic data:
      • Germany’s June Industrial Production -1.5% m/m (expected -0.5%; last 0.1%)
      • U.K.’s July Halifax House Price Index -0.2% m/m (expected 0.3%; last -0.4%); +4.1% yr/yr (expected 4.4%; last 5.7%)
      • France’s June trade deficit EUR5.20 bln (expected deficit of EUR4.00 bln; last deficit of EUR3.30 bln). June Current Account deficit EUR800 mln (expected EUR560 mln; last EUR300 mln).
    • In news:
      • The advance in regional markets has masked another disappointing Industrial Production report from Germany.
      • Italy’s Deputy Prime Minister, Matteo Salvini, cautioned that Italy’s deficit-to-GDP ratio will not be below 2.0% in 2020.
      • British Foreign Secretary, Dominic Raab, said he is looking forward to working toward a free trade agreement with the U.S.

U.S. equity futures:

  • S&P 500 Futures +3.62 @ 2879.62
  • DJIA Futures +11 @ 25935
  • Nasdaq Futures +14.88 @ 7530.38

Overseas: 

  • Europe: DAX +1.24%, FTSE +0.80%, CAC +1.34%
  • Asia: Nikkei -0.33%, Hang Seng +0.08%, Shanghai -0.32%

Commodities: 

  • Crude Oil -0.43 @ 53.20
  • Nat Gas +0.025 @ 2.136
  • Gold +21.25 @ 1505.45
  • Silver +0.493 @ 16.938
  • Copper +0.002 @ 2.56

U.S. Summary:

  • Earnings/Guidance:
    • ADT (ADT -5%) misses by $0.18, beats on revs; raises FY19 revs guidance, still in-line with consensus
    • Beacon Roofing Supply (BECN -10%) misses by $0.33, misses on revs; cuts outlook
    • Capri Holdings (CPRI) beats by $0.05, misses on revs; guides Q2 EPS in-line, revs below consensus; reaffirms FY20 EPS guidance, guides FY20 revs below consensus
    • CVS Health (CVS +4.5%) beats by $0.20, beats on revs; guides Q3 EPS in-line; raises FY19 EPS above consensus
    • CyberArk (CYBR +5%) beats by $0.12, beats on revs; guides Q3 EPS, revs above consensus; raises FY19 guidance
    • Frontier Communications (FTR -17%) reports Q2 (Jun) results, revs in-line; reduces FY19 adj EBITDA guidance
    • Guardant Health (GH +25%) beats by $0.22, beats on revs; raises FY19 revs guidance
    • Hertz Global (HTZ +6%) beats by $0.24, beats on revs
    • HubSpot (HUBS +8%) beats by $0.12, beats on revs; guides Q3 EPS in-line, revs in-line; guides FY19 EPS above consensus, revs above consensus
    • Lending Club (LC +11%) beats by $0.09, reports revs in-line; guides Q3 EPS above consensus, revs in-line; reaffirms FY19 revs guidance; improves profit outlook
    • Lumber Liquidators (LL -9%) misses by $0.03, misses on revs; cuts FY19 outlook
    • Match Group (MTCH +19%) reports EPS in-line, beats on revs and Tinder subs; guides Q3 revs above consensus; raises FY19 EBITDA, revenue, Tinder sub forecast
    • New Relic (NEWR -22%) beats by $0.11, reports revs in-line; issues mixed Q2 guidance; guides FY20 EPS in-line, reaffirms FY20 revs guidance
    • Nu Skin (NUS) reports EPS in-line, revs in-line; guides Q3 EPS in-line, revs below consensus; guides FY19 EPS in-line, revs in-line
    • Papa John’s (PZZA +2%) misses by $0.02, beats on revs; reaffirms FY19 EPS guidance
    • Planet Fitness (PLNT -2%) beats by $0.04, beats on revs; guides FY19 EPS in-line, revs above consensus
    • Potbelly (PBPB -13%) misses by $0.08, reports revs in-line, guides for flat to low-single digit decrease in company-operated comparable store sales for FY19
    • SailPoint (SAIL +9%) beats by $0.04, beats on revs; guides Q3 EPS below consensus, revs in-line; guides FY19 EPS below consensus, revs in-line
    • SolarEdge Technologies (SEDG +19%) beats by $0.11, beats on revs; guides Q3 revs above consensus
    • ShotSpotter (SSTI -17%) beats by $0.03, misses on revs; guides FY19 revs below consensus
    • Teva Pharma (TEVA) beats by $0.02, beats on revs; reaffirms FY19 guidance
    • Walt Disney (DIS -3.5%) misses by $0.39, misses on revs
    • WW (WW +26%) beats by $0.13, misses on revs; guides FY19 EPS above consensus, revs in-line
    • Wynn Resorts (WYNN -1%) beats by $0.05, beats on revs
    • ZAGG (ZAGG -18%) reports EPS in-line, beats on revs; lowers FY19 guidance; to consider strategic alternatives to maximize shareholder value; announces restructuring
  • General News:
    • QEP Resources (QEP) enters into cooperation agreement with 4.9% shareholder Elliott Management
    • Subway unveils new culinary innovation partnership with Beyond Meat (BYND) to test exclusive plant-based protein options
    • Tesla (TSLA) said mulling a China price increase in September, according to Reuters
    • Teva Pharma (TEVA) CFO Michael McClellan steps down
  • M&A:
    • 3M (MMM) to sell advanced ballistic-protection business for $91 mln
    • Cambrex (CBM) to be acquired by affiliate of the Permira funds in a transaction valued at approximately $2.4 billion, or $60/share in cash
    • Marcus & Millichap (MMI) to buy substantially all of the assets of Form Real Estate Advisors; terms not disclosed
    • NIKE (NKE) acquires Celect; terms not disclosed
    • PDC Energy (PDCE) said in talks to merge with SRC Energy (SRCI), according to Bloomberg
    • Synopsys (SNPS) to acquire QTronic GmbH
  • Syndicate:
    • Allakos (ALLK) prices upsized offering of 4,545,454 shares at a public offering price of $77.00 per share
    • Alteryx (AYX) proposes private offering of $350 mln of Convertible Senior Notes due 2024 and $350.0 million aggregate principal amount of Convertible Senior Notes due 2026
    • Ceridian HCM (CDAY) announces secondary public offering of 8.0 mln shares of common stock by selling stockholders
    • Eldorado Gold (EGO) files $750 mln preliminary short form base shelf prospectus
    • Gates Industrial (GTES) files for $1 bln mixed securities shelf offering and 243,985,383 ordinary share offering by holders
    • Ironwood Pharma (IRWD) proposes offering of $330 mln of convertible senior notes
    • Kinsale Capital (KNSL) files mixed securities shelf offering; intends to offer 530,000 shares of common stock in an underwritten public offering under an effective shelf registration statement
    • Mesa Laboratories (MLAB) files mixed securities shelf offering; announces concurrent public offerings of 375,000 shares of common stock and $150 mln aggregate principal amount of its convertible senior notes due 2025
    • Neuronetics (STIM) files $125 mln mixed securities shelf offering and for 3.5 mln share common stock offering by selling stockholders
    • Rosetta Stone (RST) files $200 mln mixed securities shelf offering
    • Safehold (SAFE) commences public offering of 3.0 mln shares of common stock and concurrent private placement
    • Silk Road Medical (SILK) commences proposed underwritten public offering of 3,500,000 shares of its common stock
    • Snap (SNAP) prices upsized offering of $1.1 bln principal amount of 0.75% convertible senior notes due 2026 in a private placement
    • Wabtec (WAB) announces launch secondary offering of 20,485,156 shares by General Electric Company (GE) as the sole selling stockholder
    • WAVE Life Sciences (WVE) files 7.072 mln ordinary share offering by selling stockholders
  • IPOs:
    • Expected this week:
      • InMode (NYSE: INMD): Global provider of innovative, energy-based, minimally-invasive surgical aesthetic and medical treatment solutions [Planning to offer 5 mln shares between $14.00-16.00]
      • 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]

Gapping Up/Down

  • Gapping upGH +23.4%, WW +22.8%, NVTA +19.3%, SEDG +19%, MR +18.3%, MTCH +17.3%, GWPH +11.8%,FLXN +10.5%, PE +10.3%, SAIL +8.7%, LC +8.6%, IAC +8.1%, TXMD +8%, HUBS +7.9%, HTZ +5.8%, CPE+5.5%, HCR +5.3%, WK +5.1%, BOLD +4.6%, TEVA +3.7%, MCHP +3.5%, TAN +3.2%, ALLK +3.1%, AMN +3%,GSKY +2.6%, NVS +2.4%, SLV +2.4%, IONS +2.3%, TROX +2.2%, GDX +2.1%, FLT +2.1%, CSIQ +2%, SPWR+1.9%, ARLO +1.9%, RUN +1.8%, FSLR +1.7%, BTG +1.7%, PZZA +1.5%, ENPH +1.3%, AMD +1.2%, AMZN +1%, BABA +1%
  • Gapping downDPW -23.9%, ZAGG -18%, NEWR -17.6%, FTR -17.1%, SSTI -16.8%, KAR -13.5%, PBPB -12.9%,OAS -12.5%, PEN -11.5%, BECN -9.7%, SUPN -9%, VOYA -5.6%, ADT -5.4%, ENLC -4.9%, IRWD -4.1%, AYX-3.5%, DIS -3.4%, BYND -3.2%, MBI -2.1%, PLNT -2%, RRR -1.9%, WAB -1.4%, SILK -1.1%, MAXR -1.1% 

Analyst Research:

  • Upgrades:
    • Arconic (ARNC) upgraded to Overweight from Equal Weight at Barclays; tgt raised to $31
    • Boston Beer Co (SAM) upgraded to Outperform from Neutral at Macquarie; tgt $460
    • Dunkin (DNKN) upgraded to Buy from Hold at Argus; tgt $92
    • Tactile Systems (TCMD) upgraded to Buy from Neutral at BTIG Research; tgt $62
  • Downgrades:
    • Allergan (AGN) downgraded to Neutral from Buy at Guggenheim
    • Casey’s General (CASY) downgraded to Hold from Buy at Gabelli & Co
    • ShotSpotter (SSTI) downgraded to Mkt Perform from Outperform at William Blair
    • WEC Energy Group (WEC) downgraded to Underperform at Credit Suisse
  • Others:
    •  Neurocrine Biosci (NBIX) initiated with an Outperform at RBC Capital Mkts; tgt $118

Upcoming Events:

  • Econ Data:
    • 10:30 ET EIA Crude Oil Inventories for 08/03 (Prior -8.5M)
    • 15:00 ET Consumer Credit for Jun (Briefing.com consensus $16.5 bln, Prior $17.1 bln)
  • Earnings:
    • Wednesday (August 7)
      • After-Hours: AAOI, AGO, AGS, AIG, ALB, ANGI, AOSL, APYX, ARNA, ASRT, ATO, AVLR, AZPN, BKNG, BREW, CABO, CAI, CCMP, CDE, CECO, CLI, COLL, CPA, CPRX, CSGS, CTL, CVNA, CWH, DAR, DOX, DVAX, EB, ECPG, ENS, ENV, EVRG, FG, FLO, FNV, FOSL, FOXA, FRGI, FSCT, FSM, FTDR, FTK, G, GBDC, GDOT, GKOS, GLPI, GTE, HHC, IAC, IAG, ICUI, IIPR, IMMU, INFN, IVR, JACK, KIDS, KRO, LHCG, LYFT, MATX, MELI, MFC, MNST, MRAM, MRO, NTES, NTRA, NUAN, NVEE, OPK, ORA, PAAS, PDCE, PEGA, PETQ, PRA, PRI, PRSC, PTLA, QHC, QRTEA, QTWO, RCII, RDUS, RGLD, RGNX, RLJ, ROKU, RUN, RYAM, RYN, SENS, SFLY, SGMO, SJI, SONO, SRPT, STMP, SUN, SWCH, SWKS, SWM, TCX, TLND, TPIC, TRIP, TTGT, TVTY, TWNK, UHAL, UPLD, UPWK, VERI, WMGI, ZG, ZVO
    • Thursday (August 8)
      • Pre-Market: ACIW, AMC, AMRC, AZUL, BAM, BPMP, CAH, CBB, CCOI, CDLX, CEVA, CNNE, COMM, COT, CRON, CSWI, CVIA, DESP, EBIX, ECOM, EGRX, EPAM, ESPR, FOCS, FOLD, FVRR, GOGO, GTS, GTT, HIMX, HMHC, IBP, KDP, KOP, KTB, LAUR, LITE, LKSD, LNG, MGA, MMS, MUR, NBEV, NCLH, NGL, NHI, NICE, NOMD, NS, OGE, PCRX, PNW, PQG, PRGO, PRTY, PTE, RDNT, REZI, RLGY, SATS, SNH, SUP, TAST, THR, TTI, TW, USPH, VIAB, VIRT, VSTO
      • After-Hours: AAXN, AIMT, AIRG, AL, ALRM, ALTR, AMBC, APPN, AQN, ASYS, ATVI, AVT, CBS, CHUY, CISN, CNDT, COLD, CUTR, CYRX, DBX, DXC, ELY, EPAY, EQH, ESE, FGEN, FLNT, FNKO, FSLY, FTCH, HBM, IIIV, JAG, LGF.A, MAIN, MDRX, MESA, MTW, NKTR, NNBR, NNI, NVGS, NVRO, NWSA, OSTK, PBYI, PCTY, PRAA, PUMP, QDEL, QNST, RBA, ROAD, RVLV, SEMG, SIEN, SPPI, SSRM, SYMC, SYNA, TPC, TRHC, TRUE, TSE, TTD, UBER, UNIT, VRAY, VRTU, VSAT, VSLR, WPM, WPRT, WTRH, XON, YELP
    • Friday (August 9)
      • Pre-Market: CLNY, DPLO, ERF, HPT, SSP, TRCO, USCR, YRCW
      • After-Hours: TDW

Asia & Europe detail:

Asia: Nikkei -0.3%, Hang Seng +0.1%, Shanghai -0.3%

Equity indices in the Asia-Pacific region ended Wednesday on a mixed note. The People’s Bank of China fixed the yuan modestly lower at 6.9996 per dollar, but the currency ticked past the 7.00 level regardless, though it remains below yesterday’s overnight low. Samsung denied that it is seeking alternative sources for all chip materials made in Japan. The Reserve Bank of New Zealand lowered its official cash rate by 50 bps to 1.00% while expectations called for a 25-bps cut. Governor, Adrian Orr, said that the rate cut does not rule out future action on rates, adding that negative rates may have to be considered. The Reserve Bank of India lowered its repurchase rate by 35 bps to 5.40% and cut its reverse repo rate by 35 bps to 5.15%. The cuts were 10 bps larger than expected. The Bank of Thailand unexpectedly cut its repurchase rate by 25 bps to 1.50%.

  • In economic data:
    • China’s July FX Reserves $3.104 trln (expected $3.110 trln; last $3.119 trln)
    • Japan’s July FX Reserves $1.317 trln (last $1.322 trln)
    • Hong Kong’s July FX Reserves $448.50 bln (last $445.70 bln)
    • Singapore’s July FX Reserves $272.70 bln (last $273.90 bln)
    • Australia’s June Home Loans -0.9% m/m (expected 0.6%; last 0.0%)

—Equity Markets—

  • Japan’s Nikkei: -0.3%
  • Hong Kong’s Hang Seng: +0.1%
  • China’s Shanghai Composite: -0.3%
  • India’s Sensex: -0.8%
  • South Korea’s Kospi: -0.4%
  • Australia’s ASX All Ordinaries: +0.6%

—FX—

  • USD/JPY: -0.2% to 106.27
  • USD/CNH: +0.4% to 7.0790
  • USD/INR: -0.1% to 70.81

Europe: DAX +1.3%, FTSE +0.8%, CAC +1.3%

Major European indices trade on a firmly higher note. The advance in regional markets has masked another disappointing Industrial Production report from Germany. Italy’s Deputy Prime Minister, Matteo Salvini, cautioned that Italy’s deficit-to-GDP ratio will not be below 2.0% in 2020. British Foreign Secretary, Dominic Raab, said he is looking forward to working toward a free trade agreement with the U.S.

  • In economic data:
    • Germany’s June Industrial Production -1.5% m/m (expected -0.5%; last 0.1%)
    • U.K.’s July Halifax House Price Index -0.2% m/m (expected 0.3%; last -0.4%); +4.1% yr/yr (expected 4.4%; last 5.7%)
    • France’s June trade deficit EUR5.20 bln (expected deficit of EUR4.00 bln; last deficit of EUR3.30 bln). June Current Account deficit EUR800 mln (expected EUR560 mln; last EUR300 mln).

—Equity Markets—

  • STOXX Europe 600: +0.9%
  • Germany’s DAX: +1.3%
  • U.K.’s FTSE 100: +0.8%
  • France’s CAC 40: +1.3%
  • Italy’s FTSE MIB: +0.6%
  • Spain’s IBEX 35: +1.2%

—FX—

  • EUR/USD: -0.1% to 1.1187
  • GBP/USD: -0.2% to 1.2139
  • USD/CHF: +0.3% to 0.9783
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