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US Morning Prep for 8th of August 2019

Markets higher in a much calmer morning

U.S. equity futures, along with global stocks, have ticked higher in a much calmer morning, as upbeat Chinese data and European economic indicators help tame some of this week’s volatility. The S&P 500 futures trade three points, or 0.1%, above fair value. 

Asian equities rose after Chinese exports unexpectedly increased 3.3% in July yr/yr, while imports declined less than expected. China’s Shanghai Composite advanced 0.9%. Elsewhere, the European Central Bank’s economic indicators continued to point to employment and steady consumption growth despite the rising risk to global growth. The Europe Stoxx 600 is up 0.8%. 

On Wall Street, earnings reports have been mixed since yesterday’s close. Lyft (LYFT 64.64, +4.25) has climbed 7.1% in pre-market action after beating top and bottom-line estimates and issuing upside revenue guidance. Booking Holdings (BKNG 1916.00, +94.44, +5.4%) has also pleased investors with its results, while Monster Beverage (MNST 56.80, -3.59, -5.9%) came up short of expectations. 

On the data front, investors will receive the weekly Initial Claims (Briefing.com consensus 213,000) and Continuing Claims report at 8:30 a.m. ET and Wholesale Inventories for June (Briefing.com consensus 0.2%) at 10:00 a.m. ET. 

U.S. Treasuries have cooled off, pushing yields higher across the curve. The 2-yr yield is up two basis points to 1.60%, and the 10-yr yield is up three basis points to 1.71%. The U.S. Dollar Index is flat at 97.64. WTI crude has rebounded 1.9% to $52.04/bbl after falling more than 8% over the prior three days. 

In U.S. Corporate news:

  • Lyft (LYFT 64.64, +4.25): +7.1% after beating top and bottom-line estimates, guiding Q3 revenue above consensus, and raising its FY19 revenue guidance above consensus. 
  • Booking Holdings (BKNG 1916.00, +94.44): +5.4% after beating top and bottom-line estimates. 
  • Monster Beverage (MNST 56.80, -3.59): -5.9% after missing top and bottom-line estimates.
  • Symantec (SYMC 23.07, +2.66): +13.0% following a Wall Street Journal report indicating that the company is nearing a deal to sell its enterprise business to Broadcom (AVGO 268.51, -1.54, -0.6%) for about $10 billion. 
  • Advanced Micro Devices (AMD 30.74, +1.55): +5.3% following a Reuters report indicating that it added Google and Twitter as customers. 

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region ended Thursday on a higher note. Japan’s Nikkei +0.4%, Hong Kong’s Hang Seng +0.5%, China’s Shanghai Composite +0.9%, India’s Sensex +1.7%, South Korea’s Kospi +0.6%, Australia’s ASX All Ordinaries +0.8%.
    • In economic data:
      • China’s July trade surplus $45.06 bln (expected $40.00 bln; last $50.98 bln). July Imports -5.6% yr/yr (expected -8.3%; last -7.3%) and Exports +3.3% yr/yr (expected -2.0%; last -1.3%)
      • Japan’s June adjusted Current Account surplus JPY1.94 trln (expected JPY1.76 trln; last JPY1.31 trln). July Bank Lending +2.3% yr/yr (expected 2.4%; last 2.3%). July Economy Watchers Current Index 41.2 (last 44.0)
      • Singapore’s June Retail Sales -2.2% m/m (expected 0.4%; last -2.2%); -8.9% yr/yr (expected 0.2%; last -2.0%)
    • In news:
      • China reported a wider than expected trade surplus for July, but the report showed that imports decreased for the seventh month out of the past eight. 
      • The People’s Bank of China fixed the yuan at a level that was a touch weaker than 7.00 per dollar, but the Chinese currency has ticked higher in the offshore market.
      • South China Morning Post observed that China’s household debt is so high that stimulus measures to boost consumption are likely to fail. China’s household debt to GDP ratio hit 51.9% in Q4.
      • Nikkei reported that the Japanese government will approve exports of some chip materials to South Korea for the first time since increasing restrictions on exports in July.
  • Major European indices trade in the green. STOXX Europe 600 +0.9%, Germany’s DAX +0.9%, U.K.’s FTSE 100 +0.1%, France’s CAC 40 +1.2%, Italy’s FTSE MIB +0.8%, Spain’s IBEX 35 +0.8%.
    • In economic data:
      • Spain’s June Industrial Production +1.8% yr/yr (expected 0.8%; last 1.4%)
    • In news:
      • Italy’s Deputy Prime Minister, Matteo Salvini, has reportedly threatened to dissolve the current government if there is no shake-up of the cabinet by Monday.
      • The European Central Bank’s latest Economic Bulletin commented on the rising risk of a broad-based deterioration in global growth expectations due to weak services output in Q2.
      • However, the bulletin noted that economic indicators continue pointing to employment growth and steady consumption growth.

U.S. equity futures:

  • S&P 500 Futures +10.62
  • DJIA Futures +85
  • Nasdaq Futures +42.55

Overseas: 

  • Europe: DAX +0.9%, FTSE +0.1%, CAC +1.2%
  • Asia: Nikkei +0.4%, Hang Seng +0.5%, Shanghai +0.9%

Commodities: 

  • Crude Oil +0.95 @ 52.05
  • Nat Gas +0.028 @ 2.111
  • Gold -10.20 @ 1509.70
  • Silver -0.166 @ 17.030
  • Copper +0.016 @ 2.587

U.S. Summary:

  • Earnings/Guidance:
    • Adidas AG (ADDYY) reports Q2 results; revs increased 5% yr/yr
    • Albemarle (ALB) beats by $0.11, reports revs in-line; guides FY19 EPS above consensus, reaffirms FY19 revs guidance
    • AMC Entertainment (AMC) misses by $0.01, beats on revs
    • Amdocs (DOX) beats by $0.08, reports revs in-line; narrows FY19 guidance
    • AMERCO (UHAL) misses by $0.85, beats on revs
    • American Intl (AIG) beats by $0.27
    • ANGI Homeservices (ANGI) misses by $0.01, misses on revs; lowers adj EBITDA / op income guidance
    • Aspen Tech (AZPN) beats by $0.50, beats on revs; guides FY20 above consensus
    • Assured Guaranty (AGO) beats by $0.62, beats on revs
    • Booking Holdings (BKNG) beats by $0.89, beats on revs; guides Q3 EPS in-line
    • Brookfield Asset Mgmt (BAM) beats by $0.29, beats on revs
    • Cable ONE (CABO) misses by $1.72, reports revs in-line
    • Cabot Micro (CCMP) beats by $0.02, beats on revs; guides Q4 revs below consensus; lowers lowers FY19 EBITDA guidance
    • Cannae Holdings (CNNE) beats by $0.29, beats on revs
    • Cardinal Health (CAH) beats by $0.17, beats on revs; guides FY20 EPS in-line
    • Carvana (CVNA) beats by $0.03, beats on revs; raises FY19 revs outlook
    • CenturyLink (CTL) beats by $0.03, reports revs in-line
    • Cogent Communications (CCOI) misses by $0.06, reports revs in-line; dividend increased
    • Commscope (COMM)beats by $0.09, reports revs in-line; guides Q3 EPS below consensus, revs below consensus
    • Copa Holdings (CPA) beats by $0.17, beats on revsDarling Ingredients (DAR) reports Q2 (Jun) results, misses on revs
    • Flowers Foods (FLO) reports EPS in-line, revs in-line; guides FY19 EPS in-line, revs in-line
    • Fossil (FOSL) misses by $0.10, reports revs in-line
    • Fox (FOXA) beats by $0.03, beats on revs
    • Genpact (G) beats by $0.03, beats on revs; guides FY19 EPS above consensus, revs above consensus
    • Green Dot (GDOT) beats by $0.27, beats on revs; guides Q3 EPS and revs below consensus; guides FY19 EPS and revs below consensus
    • IAMGOLD (IAG) misses by $0.02, misses on revs; lowers 2019 gold production and CapEx guidance
    • ICU Medical (ICUI) misses by $0.07, misses on revs; guides FY19 EPS below consensus
    • Infinera (INFN) beats by $0.04, misses on revs; guides Q3 EPS below consensus, revs in-line
    • InterActiveCorp (IAC) reports Q2 (Jun) results, revs in-line; co says any decision to spin-off MTCH or ANGI should come in next few months
    • Jack In The Box (JACK) beats by $0.07, reports revs in-line
    • Kontoor Brands (KTB) beats by $0.29, beats on revs; guides FY19 revs in-line
    • LHC Group (LHCG) beats by $0.05, misses on revs; reaffirms FY19 guidance
    • Liberty Global (LBTYA) reports Q2 results and reaffirming all 2019 targets; announces intended tender offers for Class A and Class C shares of up to an aggregate of $2.5 bln
    • Lyft (LYFT) beats by $0.32, beats on revs; guides Q3 revs above consensus; raises FY19 revs guidance above consensus
    • Marathon Oil (MRO) beats by $0.09, beats on revs
    • MercadoLibre (MELI) misses by $0.01, beats on revs
    • Monster Beverage (MNST) misses by $0.03, misses on revs
    • Murphy Oil (MUR) beats by $0.03, beats on revs
    • Natera (NTRA) beats by $0.09, beats on revs; guides FY19 revs in-line
    • Netease (NTES) beats by $1.43, reports revs in-line
    • New Age Beverages (NBEV) misses by $0.14, beats on revs
    • NICE (NICE) beats by $0.03, reports revs in-line; guides Q3 EPS in-line, revs in-line; raises FY19 EPS in-line, revs in-line
    • Norwegian Cruise Line (NCLH) beats by $0.03, beats on revs; guides Q3 EPS below consensus; guides FY19 EPS below consensus
    • Nuance Communications (NUAN) tops earnings estimates; raises FY19 EPS / op margin guidance, maintains revenue guidance
    • NuStar (NS) Energy misses by $0.04, misses on revs
    • Pan Am Silver (PAAS) reports EPS in-line; updates guidance
    • Pegasystems (PEGA) misses by $0.21, beats on revs
    • Perrigo (PRGO) beats by $0.06, beats on revs; reaffirms FY19 EPS guidance
    • Q2 Holdings (QTWO) beats by $0.03, beats on revs; guides Q3 revs in-line; guides FY19 revs above consensus
    • Rayonier (RYN) beats by $0.02, misses on revs; guides FY19 EPS below consensus
    • Rent-A-Center (RCII) beats by $0.03, beats on revs; raises FY19 guidance
    • Roku (ROKU) beats by $0.12, beats on revs; guides Q3 revs above consensus; guides FY19 revs above consensus
    • Skyworks (SWKS) beats by $0.01, reports revs in-line; guides Q4 EPS below consensus, revs below consensus; increases dividend
    • Sonos (SONO) beats by $0.03, beats on revs; guides Q4 revs below consensus
    • Stamps.com (STMP) beats by $0.29, beats on revs; raises low end of prior guidance for FY19 EPS and revs
    • Switch (SWCH) misses by $0.04, beats on revs; guides FY19 revs in-line
    • Tradeweb Markets (TW) beats by $0.02, reports revs in-line
    • TripAdvisor (TRIP) misses by $0.06, misses on revs
    • Upland Software (UPLD) reports Q2 (Jun) results, beats on revs; guides Q3 revs in-line; guides FY19 revs in-line
    • Upwork (UPWK) beats by $0.02, beats on revs; guides Q3 revs in-line; guides FY19 revs in-line
    • Viacom (VIAB) beats by $0.13, reports revs in-line
    • Wright Medical Group (WMGI) beats by $0.01, misses on revs; guides FY19 EPS below consensus, revs below consensus
    • Zillow (ZG) beats by $0.04, beats on revs; guides Q3 revs above consensus 
  • General News:
    • Apple (AAPL) sued for alleged unauthorized recordings by Siri devices
    • New Media Investment (NEWM) is trying to gain support for USA Today (GCI) M&A deal, according to NY Post Report
  • M&A:
    • Bayer AG (BAYRY) to acquire remaining stake in BlueRock Therapeutics for $240 mln upfront
    • Roper (ROP) to acquire iPipeline in all-cash transaction valued at $1.625 bln
  • Syndicate:
    • Alteryx (AYX) prices offering of $350.0 mln of 0.50% Convertible Senior Notes due 2024 and $350.0 mln of 1.00% Convertible Senior Notes due 2026 
    • B&G Foods (BGS) files mixed securities shelf offering for an undisclosed amount 
    • Continental Resources (CLR) files mixed securities shelf offering
    • Dorian LPG (LPG) files for $500 mln mixed securities shelf offering
    • Dynavax (DVAX) intends to offer an aggregate of up to $60.0 million of shares of its common stock
    • Everspin Technologies (MRAM) discloses entry into $25 mln open market sale agreement
    • Ironwood Pharma (IRWD) prices $350 mln convertible senior notes 
    • Juniper Networks (JNPR) files mixed securities shelf offering
    • Kinsale Capital (KNSL) prices offering of 645,000 shares of common stock at $93.00 per share
    • National Vision (EYE) announces secondary offering of 9,149,908 shares of common stock by selling stockholder and concurrent share repurchase
    • Portola (PTLA) files mixed securities shelf offering for an undisclosed amount
    • PTC Therapeutics (PTC) discloses entry into $125 mln at the market offering sales agreement
    • Quanterix (QTRX) commences public offering of $75 mln of shares of its common stock
    • Safehold (SAFE) prices offering of 3 mln shares of common stock for $84 mln
    • Stemline Therapeutics (STML) announces 5,000,000 shares of its common stock in an underwritten public offering
    • Wabtec (WAB) announced the pricing of 20,485,156 share offering at a public offering price of $72.50 by General Electric (GE) as the sole selling stockholder 

  • IPOs:
    • Expected this week:
      • InMode (NYSE: INMD): Global provider of innovative, energy-based, minimally-invasive surgical aesthetic and medical treatment solutions prices 5 mln share IPO at $14.00 per share, at the low end of the $14-16 expected range
      • 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 up: AVDR +29%, CVNA +17.9%, DBVT +17.3%, APYX +15.9%, TLND +15.5%, ROKU +14.4%, FSCT +13.9%, NTRA +13.5%, SYMC +12.3%, STMP +10.9%, INFN +10.1%, CPA +9.4%, JACK +9%, DAR +8.9%, NUAN+8.6%, DISH +7%, ORA +6.7%, G +6.6%, ALB +6.5%, DERM +5.8%, AVLR +5.6%, LYFT +5.4%, PETQ +5.3%, UPLD +5.1%, PRGO +4.6%, AAOI +4.5%, BKNG +4.3%, MRO +3.7%, HIMX +3.7%, AIG +3.6%, RGNX+3.6%, TELL +3.6%, ENS +3.4%, TWLO +3.3%, CLDR +3.3%, SONO +3%, ELF +3%, NTES +2.9%, UPWK +2.8%, FSM +2.8%, ET +2.6%, RDUS +2.2%, VERI +2.1%, TTGT +1.9%, MDLZ +1.6%, NICE +1.5%, OPK+1%, ZVO +1%, GOGO +1% 
  • Gapping down: GDOT -35.5%, TRXC -29.6%, ICUI -29.1%, ANGI -23.7%, WMGI -21.8%, RYAM -20.6%, AGS -19.1%, DVAX -16.1%, DVAX -16.1%, ZG -14.7%, CLVS -10.8%, CWH -10.7%, RUN -9.7%, FLO -9.2%, IAG -9.2%,DDD -9.1%, MGTX -8.1%, CAAS -8%, BREW -7.8%, GKOS -7%, GKOS -7%, COMM -7%, MNST -5.7%, CTL -5.7%, SWKS -5.5%, TPIC -4.9%, SRPT -4.8%, STML -4%, FOSL -4%, TRIP -3.7%, QHC -3.4%, BL-3.2%, IMMU -2.8%, ARNA -2.6%, IIPR -2.4%, CDXC -2.1%, GFI -2.1%, LBTYA -1.9%, UHAL -1.7%, WAB -1.5%, SWCH -1.5%, VRS -1.5%, RGLD -1% 

Analyst Research (see Upgrades/Downgrades calendar for full list):

  • Upgrades:
    • Dollar General (DG) upgraded to Buy from Neutral at Goldman; tgt raised to $152
    • Walt Disney (DIS) upgraded to Outperform from Neutral at Credit Suisse
    • F5 Networks (FFIV) upgraded to Equal-Weight from Underweight at Morgan Stanley; tgt $130
    • G1 Therapeutics (GTHX) upgraded to Overweight from Neutral at JP Morgan
    • Lyft (LYFT) upgraded to Outperform from Neutral at Wedbush ; tgt raised to $75
    • Lyft (LYFT) upgraded to Neutral from Underweight at Atlantic Equities
    • Mondelez Int’l (MDLZ) upgraded to Overweight at Morgan Stanley
  • Downgrades:
    • Granite Constr (GVA) downgraded to Neutral from Buy at Goldman; tgt lowered to $31
    • ICU Medical (ICUI) downgraded to Outperform from Strong Buy at Raymond James
    • Intl Flavors (IFF) downgraded to Hold from Buy at Berenberg; tgt lowered to $133
    • Inogen (INGN) downgraded to Hold from Buy at Stifel
    • Rexahn Pharmaceuticals (REXN) downgraded to Market Perform from Strong Buy at IFS Securities
    • Williams Cos (WMB) downgraded to Hold from Buy at Argus
    • Wright Medical Group (WMGI) downgraded to Sector Perform from Outperform at RBC Capital Mkts
  • Others:
    •  Avalara (AVLR) initiated with Outperform at William Blair
    • Arista Networks (ANET), Ciena (CIEN), F5 Networks (FFIV), Corning (GLW), Keysight (KEYS), Motorola Solutions (MSI), Pure Storage (PSTG) initiated with Outperform ratings at Barclays
    • Apple (AAPL), Casa Systems (CASA), Cisco Systems (CSCO), Dell (DELL), Hewlett Packard Enterprise (HPE), HP (HPQ), Juniper Networks (JNPR), NetApp (NTAP), Samsung (SSNLF), Western Digital (WDC) initiated with Equal Weight ratings at Barclays
    • Seagate Tech (STX), Ubiquiti Networks (UBNT) initiated with Underweight at Barclays

Upcoming Events:

  • Econ Data:
    • 8:30 ET: Initial Claims for week ended August 3 (Briefing.com consensus 213,000; Prior 215,000) and Continuing Claims for week ended July 27 (Prior 1.699 mln)
    • 10:00 ET: Wholesale Inventories for June (Briefing.com consensus 0.2%; Prior 0.4%)
    • 10:30 ET: EIA Natural Gas Inventories for week ended August 3 (Prior +65 bcf)
  • Earnings:
    • 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
    • Full Earnings Calendar

Asia & Europe detail:

Asia: Nikkei +0.4%, Hang Seng +0.5%, Shanghai +0.9%

Equity indices in the Asia-Pacific region ended Thursday on a higher note. China reported a wider than expected trade surplus for July, but the report showed that imports decreased for the seventh month out of the past eight. The People’s Bank of China fixed the yuan at a level that was a touch weaker than 7.00 per dollar, but the Chinese currency has ticked higher in the offshore market. South China Morning Post observed that China’s household debt is so high that stimulus measures to boost consumption are likely to fail. China’s household debt to GDP ratio hit 51.9% in Q4. Nikkei reported that the Japanese government will approve exports of some chip materials to South Korea for the first time since increasing restrictions on exports in July.

  • In economic data:
    • China’s July trade surplus $45.06 bln (expected $40.00 bln; last $50.98 bln). July Imports -5.6% yr/yr (expected -8.3%; last -7.3%) and Exports +3.3% yr/yr (expected -2.0%; last -1.3%)
    • Japan’s June adjusted Current Account surplus JPY1.94 trln (expected JPY1.76 trln; last JPY1.31 trln). July Bank Lending +2.3% yr/yr (expected 2.4%; last 2.3%). July Economy Watchers Current Index 41.2 (last 44.0)
    • Singapore’s June Retail Sales -2.2% m/m (expected 0.4%; last -2.2%); -8.9% yr/yr (expected 0.2%; last -2.0%) 

—Equity Markets—

  • Japan’s Nikkei: +0.4%
  • Hong Kong’s Hang Seng: +0.5%
  • China’s Shanghai Composite: +0.9%
  • India’s Sensex: +1.7%
  • South Korea’s Kospi: +0.6%
  • Australia’s ASX All Ordinaries: +0.8%

—FX—

  • USD/JPY: -0.1% to 106.11
  • USD/CNH: -0.2% to 7.0672
  • USD/INR: -0.9% to 70.60

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

Major European indices trade in the green. Italy’s Deputy Prime Minister, Matteo Salvini, has reportedly threatened to dissolve the current government if there is no shake-up of the cabinet by Monday. The European Central Bank’s latest Economic Bulletin commented on the rising risk of a broad-based deterioration in global growth expectations due to weak services output in Q2. However, the bulletin noted that economic indicators continue pointing to employment growth and steady consumption growth.

  • In economic data:
    • Spain’s June Industrial Production +1.8% yr/yr (expected 0.8%; last 1.4%).

—Equity Markets—

  • STOXX Europe 600: +0.9%
  • Germany’s DAX: +0.9%
  • U.K.’s FTSE 100: +0.1%
  • France’s CAC 40: +1.2%
  • Italy’s FTSE MIB: +0.8%
  • Spain’s IBEX 35: +0.8%

—FX—

  • EUR/USD: UNCH at 1.1205
  • GBP/USD: +0.2% to 1.2164
  • USD/CHF: +0.1% to 0.9758
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