Thursday, August 2, 2018

08/02/2018 - *Overnight Markets and News*

*Overnight Markets and News*

Sep E-mini S&Ps (ESU18 -0.52%) this morning are down -0.60% at a 2-week low and European stocks are down -1.24% at a 1-week low as trade tensions were ratcheted up between the U.S. and China.  Global stocks sold-off after China's Ministry of Commerce said, "China has made full preparation for the U.S. threats to escalate the trade war and will have to retaliate to defend national pride and the people's interests."  The Chinese response is for the consideration by the U.S. to increase the proposed tariff on $200 billion in Chinese imports to 25% from 10%.  Trade war concerns are also hurting economic growth prospects and weighing on commodity prices with Sep WTI crude oil (CLU18 -0.83%) down -0.93% at a 2-week low and Sep COMEX copper (HGU18 -0.91%) down -1.06% at a 1-1/2 week low.  In Europe, losses in automakers led the overall market lower after the U.S. reported Wednesday that Jul auto sales increased at the slowest pace in 11-months.  The Turkish lira sank to a record low of 5.0924 against the dollar after the U.S. imposed sanctions on two government ministers over the detention of a U.S. pastor.  Asian stocks settled lower: Japan -1.03%, Hong Kong -2.21%, China -2.00%, Taiwan -1.52%, Australia -0.56%, Singapore -1.28%, South Korea -1.72%, India -0.95%.  Increased risks of a trade war between the U.S. and China sent the Shanghai Composite down to a 3-1/2 week low and pushed the yuan to a 14-month low against the dollar.

*The dollar index (DXY00 +0.31%) is up +0.26%.  EUR/USD (^EURUSD -0.38%) is down -0.36%.  USD/JPY (^USDJPY -0.20%) is down -0.24%.

*Sep 10-year T-note prices (ZNU18 +0-050) are up +5 ticks.

*The BOE voted 9-0 to raise its benchmark interest rate to 0.75% from 0.50% and BOE policy makers agreed that more rate hikes will be needed.

*Eurozone Jun PPI rose +0.4% m/m and +3.6% y/y, stronger than expectations of +0.3% m/m and +3.5% y/y with the +3.6% y/y gain the largest year-on-year increase in 14-months.

*UK Jul Markit/CIPS construction PMI unexpectedly rose +2.7 to a 14-month high of 55.8, stronger than expectations of -0.3 to 52.8.



*U.S. Stock Preview*

Key U.S. news today includes: (1) weekly initial unemployment claims (expected +3,000 to 220,000, previous +9,000 to 217,000) and continuing claims (expected +5,000 to 1.750 million, previous -8,000 to 1.745 million), (2) USDA weekly Export Sales, (3) Jun factory orders (expected +0.7%, May +0.4% and +0.7% ex transportation).

Notable S&P 500 earnings reports today include: Yum Brands (consensus $0.74), AIG (1.21), Symantec (0.33), Take-Two Interactive (0.04), Fluor (0.71), Motorola Solutions (1.37), CBS (1.11), Kellogg (1.05), ICE (0.89), Duke Energy (1.02), MGM (0.28), Royal Caribbean Cruises (1.97), Church & Dwight (0.47), MSCI (1.28), Clorox (1.58), Aetna (3.04), Regeneron (4.70).

U.S. IPO's scheduled to price today: Arlo Technologies (ARLO).

Equity conferences during the remainder of this week: none.


*Overnight U.S. Stock Movers*

Boeing (BA -0.99%) was downgraded to 'Hold' from 'Buy' at Nord/LB.

Tesla (TSLA +0.91%) rose more than 5% in after-hours trading after it reported Q2 negative-free cash flow of $739.5 million, narrower than expectations of $900.5 million.

Wynn Resorts Ltd (WYNN -4.07%) slid more than 7% in after-hours trading after it reported Q2 net revenue of $1.61 billion, weaker than consensus of $1.67 billion.

Fortinet (FTNT +2.69%) climbed 9% in after-hours trading after it reported Q2 revenue of $441.3 million, better than consensus of $425.4 million, and then forecast full-year revenue of $177 billion to $1.79 billion, above consensus of $1.73 billion.

Red Robin Gourmet Burgers (RRGB -3.07%) slumped 17% in after-hours trading after it reported Q2 adjusted EPS of 46 cents, well below consensus of 66 cents, and then forecast full-year EPS  of $1.80 to $2.20, weaker than consensus of $2.54.

Herbalife Nutrition Ltd (HLF -1.07%) rose more than 4% in after-hours trading after it reported Q2 adjusted EPS of 80 cents, higher than consensus of 68 cents.

Square (SQ +3.42%) lost almost 2% in after-hours trading after it forecast Q3 adjusted Ebitda of $62 million to $65 million, weaker than consensus of $71.3 million.

DexCom (DXCM +0.33%) surged 20% in after-hours trading after it reported Q2 revenue of $242.5 million, well above consensus of $205.9 million.

Hub Group (HUBG +1.19%) rallied almost 7% in after-hours trading after it reported Q2 revenue of $1.18 billion, better than consensus of $1.10 billion.

TripAdvisor (TRIP -0.59%) dropped 11% in after-hours trading after it reported Q2 revenue of $433 million, below consensus of $435 million.

MetLife (MET -0.26%) gained 1% in after-hours trading after it reported Q2 adjusted EPS of $1.30, better than consensus of $1.17.

Exact Sciences (EXAS +1.15%) sank over 20% in after-hours trading after it reported Q2 revenue of $102.9 million, below consensus of $104.8 million and said it expects 2018 sales of $420 million to $430 million, weaker than consensus of $435.8 million.

Cross Country Healthcare (CCRN +1.11%) fell more than 4% in after-hours trading after it reported Q2 revenue of $204.6 million, below consensus of $209.2 million and then forecast Q3 revenue of $195 million to $205 million, weaker than consensus of $220.6 million.

Fitbit (FIT -0.17%) rose 3% in after-hours trading after it reported Q2 revenue of $299.3 million, above consensus of $285.4 million, and then forecast full-year revenue of $1.50 billion, better than consensus of $1.47 billion.


*Market Comments*

*Sep S&P 500 E-minis (ESU18 -0.52%) this morning are down -16.75 points (-0.60%) at a 2-week low.  Wednesday's closes: S&P 500 -0.10%, Dow Jones -0.32%, Nasdaq 100 +0.57%.  The S&P 500 on Wednesday closed lower on an escalation of U.S./China trade tensions on reports the U.S. is considering raising tariffs on $200 billion of Chinese goods to 25% from 10%.  Stocks were also undercut by the -2.1 point drop in the Jul ISM manufacturing index to 58.1, weaker than expectations of -0.8 to 59.4.  Stocks were supported by signs of strength in the U.S. labor market after the Jul ADP employment change increased 219,000, stronger than expectations of 186,000 and the biggest increase in 5 months.  There was also strength in technology stocks led by a nearly 6% gain in Apple to a record high after it forecast stronger-than-expected Q4 revenue.

*Sep 10-year T-notes (ZNU18 +0-050) this morning are up +5 ticks.  Wednesday's closes: TYU8 -8.00, FVU8 -3.75.  Sep 10-year T-notes fell to a 2-1/4 month nearest-futures low and closed lower on supply pressures after the Treasury announced it will sell $78 billion of T-notes and T-bonds this quarter, up from $73 billion last quarter.  T-note prices were also undercut by the larger-than-expected increase in Jul ADP employment and by increased inflation expectations after the 10-year T-note breakeven rate jumped to a 3-week high.

*The dollar index (DXY00 +0.31%) this morning is up +0.249 (+0.26%).  EUR/USD (^EURUSD -0.38%) is down -0.0042 (-0.36%).  USD/JPY (^USDJPY -0.20%) is down -0.27 (-0.24%).  Wednesday's closes: Dollar Index +0.131 (+0.14%), EUR/USD -0.0031 (-0.27%), USD/JPY -0.13 (-0.12%).  The dollar index on Wednesday closed higher on the jump in the 10-year T-note yield to a 2-1/4 month high, which improved the dollar's interest rate differentials.  The dollar was also boosted by the larger-than-expected increase in the U.S. Jul ADP employment change (+219,000 vs. expectations of 186,000), which is hawkish for Fed policy.

*Metals this morning are weake with Dec gold (GCZ18 -0.25%) -3.2 (-0.26%), Sep silver (SIU18 +0.12%) -0.002 (-0.01%) and Sep copper (HGU18 -0.91%) -0.029 (-1.06%) at a 1-1/2 week low.  Wednesday's closes: Dec gold -6.0 (-0.49%), Sep silver -0.107 (-0.69%), Sep copper -0.0840 (-2.97%).  Metals on Wednesday closed lower with Sep copper at a 1-week low.  Metals prices were undercut by a stronger dollar and by an escalation of trade risks that may crimp global economic growth and demand for industrial metals on reports the U.S. is considering raising tariffs on $200 billon of Chinese goods to 25% from 10%.  Copper prices were undercut by reduced copper demand after LME copper canceled warrants fell -3,450 MT to 26,900 MT, a 2-1/4 year low.

*Sep WTI crude oil (CLU18 -0.83%) this morning is down -63 cents (-0.93%) at a 2-week low.  Sep gasoline (RBU18 -0.50%) is down -1.32 cents (-0.65%) at a 1-1/2 week low.  Wednesday's closes: Sep crude -1.10 (-1.60%), Sep gasoline -3.54 (-1.70%).  Sep crude and gasoline on Wednesday closed lower with Sep crude at a 1-1/2 week low and Sep gasoline at a 1-week low.  Crude oil prices were undercut by a stronger dollar and by the unexpected +3.8 million bbl increase in EIA crude inventories, more than expectations for a -3.0 million bbl draw.  Crude oil prices were boosted by the -1.34 million bbl decline in crude supplies at Cushing to a 3-3/4 year low and by the -2.5 million bbl decline in EIA gasoline inventories to a 7-month low (vs expectations of -2.0 million bbl).




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