Tuesday, August 7, 2018

08/07/2018 - **Overnight Markets and News**

**Overnight Markets and News**

*Sep E-mini S&Ps (ESU18 +0.23%) this morning are up +0.24% at a 6-1/4 month high and European stocks are up +0.73% as global trade tensions take a back seat to S&P 500 company quarterly earnings results.  Of the 420 S&P 500 companies that have already reported Q2 earnings results so far, about 82% have beaten estimates, higher than the 72% the beat estimates during the same quarter last year.  European stocks also found support on stronger-than-expected German Jun trade data.  Asian stocks settled mostly higher: Japan +0.69%, Hong Kong +1.54%, China +2.74%, Taiwan -0.37%, Australia -0.30%, Singapore +1.66%, South Korea +0.66%, India -0.07%.  Chinese stocks rallied sharply today as infrastructure and property companies surged on speculation the government will boost fiscal measures to spur domestic economic growth.   The China Business Journal reported that rail investment this year may be higher than originally planned and the China Daily cited an unidentified official at the National Development and Reform Commission who said the government would roll out more policies to boost investment. 

*The dollar index (DXY00 -0.28%) is down -0.29%.  EUR/USD (^EURUSD +0.34%) is up +0.35%.  USD/JPY (^USDJPY -0.22%) is down -0.20%. 

*Sep 10-year T-note prices (ZNU18 -0-030) are down -2.5 ticks.

*The German Jun trade balance was in surplus by +21.8 billion euros, wider than expectations of +20.9 billion euros.  Jun exports were unch m/m, stronger than expectations of -0.3% m/m.  Jun imports rose +1.2% m/m, stronger than expectations of +0.3% m/m.

*German Jun industrial production fell -0.9% m/m, weaker than expectations of -0.5% m/m.

*Japan Jun labor cash earnings rose +3.6% y/y, stronger than expectations of +1.7% y/y and the largest increase in 20-1/3 years.  Jun real cash earnings rose +2.8% y/y, stronger than expectations of +0.9% y/y and the biggest increase in 20-1/3 years.

*Japan Jun household spending fell -1.2% y/y, stronger than expectations of -1.4% y/y, although still declined for the fifth consecutive month.


**U.S. Stock Preview**

Key U.S. news today includes: (1) Jun JOLTS job openings (expected -13,000 to 6.625 million, May -202,000 to 6.638 million), (2) Treasury auctions $34 billion of 3-year T-notes, (3) Jun consumer credit (expected +$15.0 billion, May +$24.559 billion).

Notable S&P 500 earnings reports today include: Disney (consensus $1.94), AES (0.38), Emerson Electric (0.86), Discovery (0.86), Pioneer Natural Resources (1.51), Intl Flavors & Fragrances (1.60), Assurant (1.83).

U.S. IPO's scheduled to price today: none.

Equity conferences during the remainder of this week: UBS Financial Services Conference on Tue, Cowen Communications Infrastructure Summit on Tue, Oppenheimer Technology, Internet & Communications Conference on Tue-Wed, Jefferies Global Industrials Conference on Tue-Thu, J.P. Morgan Auto Conference on Wed-Thu, Canaccord Genuity Growth Conference on Wed-Thu, UBS Genomics Summit on Thu, DA Davidson Technology Conference on Thu, Wells Fargo Securities Technology Services Forum on Thu.


**Overnight U.S. Stock Movers**

*Williams Cos (WNB) was rated a new 'Buy' at Stifel with a price target of $35.

*Illumina (ILMN -0.10%) was upgraded to 'Equal-Weight' from 'Underweight' at Morgan Stanley.

*Weight Watchers International (WTW +0.69%) fell 3% in after-hours trading after it reported Q2 revenue of $409.7 million, weaker than consensus of $411.9 million.

*Twilio (TWLO +2.05%) jumped nearly 16% in after-hours trading after it reported Q2 revenue of $147.8 million, higher than consensus of $130.3 million, and then forecast full-year revenue of $585.5 million to $589.5 million, well above consensus of $543.1 million.

*RingCentral (RNG +2.33%) gained more than 2% in after-hours trading after it reported Q2 adjusted EPS of 19 cents, higher than consensus of 15 cents, and then forecast full-year adjusted EPS of 66 cents to 70 cents, stronger than consensus of 62 cents.

*Zillow Group (Z +1.01%) tumbled more than 15% in after-hours trading after it reported Q2 revenue of $325.2 million, below consensus of $325.5 million, and then forecast full-year revenue of $1.32 billion to $1.35 billion, well below consensus of $1.49 billion.

*Luminex (LMNX +0.35%) dropped more than 3% in after-hours trading after it reported Q2 revenue of $79.6 million, weaker than consensus of $79.7 million, and then forecast full-year revenue of $310 million to $316 million, the midpoint below consensus of $314.8 million.

*Tenet Healthcare (THC +0.36%) fell 3% in after-hours trading after it forecast full-year revenue of $17.9 billion to $18.3 billion, the midpoint below consensus of $18.15 billion.

*Five9 (FIVN +4.22%) rose 6% in after-hours trading after it reported Q2 adjusted EPS of 11 cents, well above consensus of 4 cents, and then forecast full-year adjusted EPS of  39 cents to 42 cents, higher than consensus of 28 cents.

*Turtle Beach (HEAR -6.12%) rallied more than 10% in after-hours trading after it reported Q2 revenue of $60.8 million, higher than consensus of $47.9 million, and then forecast 2018 revenue of $255 million, well above consensus of $205 million. 

*Etsy (ETSY +2.14%) climbed more than 8% in after-hours trading after it reported Q2 revenue of $132.4 million, better than consensus of $127.0 million.

*Manitowoc (MTW +2.43%) rallied nearly 6% in after-hours trading after it reported Q2 net sales of $495.3 million, above consensus of $455.1 million.

*Commercial Vehicle Group (CVGI +0.14%) jumped 10% in after-hours trading after it reported Q2 adjusted EPS of 43 cents, higher than consensus of 34 cents.

*Maxwell Technologies (MXWL -0.46%) slid almost 6% in after-hours trading after it reported Q2 revenue of $29.5 million, below consensus of $30.9 million and then forecast Q3 revenue of $32 million to $36 million, weaker than consensus of $36.1 million.


**Market Comments**

*Sep S&P 500 E-minis (ESU18 +0.23%) this morning are up +6.75 points (+0.24%) at a new 6-1/4 month high.  Monday's closes: S&P 500 +0.35%, Dow Jones +0.15%, Nasdaq 100 +0.59%.  The S&P 500 on Monday rallied to a 6-1/4 month high and closed higher on strength in energy stocks as crude oil prices rose +0.76% and on a rally in technology stocks.  Stocks were undercut by concern that an escalation of China/U.S. trade risks will slow global economic growth after U.S. National Security Adviser Bolton said the U.S. will take the trade war "far enough to get China to change" and China said it is prepared for a "protracted trade war" and doesn't fear sacrificing short-term economic interests.

*Sep 10-year T-notes (ZNU18 -0-030) this morning are down -2.5 ticks.  Monday's closes: TYU8 +4.00, FVU8 +1.25.  Sep 10-year T-notes on Monday rallied to a 2-week high and settled higher on carry-over support from a rally in German bunds to a 1-1/2 week high as ramped-up Brexit concerns boosted safe-haven demand for government debt after UK International Trade Secretary Fox said a "no-deal" Brexit is now more likely than not.  T-note prices were also boosted by US/China trade tensions after China said it is prepared for a "protracted trade war."

*The dollar index (DXY00 -0.28%) this morning is down -0.281 (-0.29%).  EUR/USD (^EURUSD +0.34%) is up +0.0040 (+0.35%).  USD/JPY (^USDJPY -0.22%) is down -0.22 (-0.20%).  Monday's closes: Dollar Index +0.214 (+0.22%), EUR/USD -0.0014 (-0.12%), USD/JPY +0.15 (+0.13%).  The dollar index climbed to a 2-week high and closed higher on weakness in EUR/USD which fell to a 1-1/4 month low after German Jun factory orders posted their sharpest decline in 17 months.  There was also weakness in GBP/USD which tumbled to an 11-month low on ramped-up Brexit concerns after UK International Trade Secretary Fox said a "no-deal" Brexit is now more likely than not.

*Metals this morning are higher with Dec gold (GCZ18 +0.38%) +5.4 (+0.44%), Sep silver (SIU18 +0.83%) +0.147 (+0.96%) and Sep copper (HGU18 +0.92%) +0.030 (+1/08%).  Monday's closes: Dec gold -5.5 (-0.45%), Sep silver -0.114 (-0.74%), Sep copper -0.0320 (-1.16%).  Metals on Monday closed lower on the rally in the dollar index to a 2-week high and on concern that global growth and demand for industrial metals will slow due to ratcheted up trade tensions between China and the U.S. after China said it is prepared for a "protracted trade war."   Copper was undercut by reduced copper demand after LME canceled copper warrants fell -725 MT to a 2-1/4 year low of 24,650 MT.

*Sep WTI crude oil (CLU18 +0.97%) this morning is up +60 cents (+0.87%).  Sep gasoline (RBU18 +1.45%) is up +2.66 cents (+1.29%).  Monday's closes: Sep crude oil +0.52 (+0.76%), Sep gasoline -0.04 (-0.02%).  Sep crude oil and gasoline on Monday settled mixed.  Crude oil prices were boosted by a reduction in Saudi crude output after Saudi Arabia July crude production fell to 10.3 million bpd from 10.489 million bpd in June.  There was also concern about global crude supplies after Total SA said that crude output from its North Sea oil fields were halted due to strikes by off-shore oil workers.  Crude oil prices were undercut by the rally in the dollar index to a 2-week high and by concern that an escalation of U.S./China trade tensions will curb global growth and energy demand after China said  it is prepared for a "protracted trade war."




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