>>> US Close Dow -2,90% S&P -2,¥8% Nasdaq -3,47% Russell -3,




The stock market had its worst day of 2019 with each of the major U.S. indices losing around 3% on Monday. Trade and growth concerns rattled capital markets after China devalued the yuan to its weakest level against the dollar since 2008. Broad-based selling left the S&P 500 down 3.0% for the day. 

The Dow Jones Industrial Average fell 2.9%, the Nasdaq Composite fell 3.5%, and the Russell 2000 fell 3.0%. 

Monday's session already began noticeably lower after China allowed the yen to weaken beyond 7 per U.S. dollar in response to President Trump's tariff threat. Global equities declined sharply, and the selling carried over into U.S. equities, which steadily declined throughout the session. 

President Trump expressed his discontent on the "currency manipulation," while the People's Bank of China Governor, Yi Gang, said the central bank will not engage in competitive devaluation. China also said its companies agreed to suspend new agricultural purchases from the U.S. 

It was clearly risk-off on Wall Street with all 11 S&P 500 sectors finishing with steep losses. Eight sectors finished with losses between 2.3% (health care) and 4.1% (information technology). The tech sector was pressured by shares of Apple (AAPL 193.34, -10.68, -5.2%) and semiconductor companies, many of which derive a large portion of their revenue from China. The Philadelphia Semiconductor Index dropped 4.4%.

The implied likelihood for a 50-basis points rate cut at the September FOMC meeting climbed to 23.5% versus 1.5% on Friday. Expectations for the Fed to step up its easing efforts amid increased risks to the economic outlook expounded the flight-to-safety in U.S. Treasuries. On a related note, all of Germany's sovereign debt yielded negative rates for the first time on Monday. 

The 2-yr yield dropped 13 basis points to 1.58%, and the 10-yr yield dropped 12 basis points to 1.74%. The U.S. Dollar Index fell 0.5% to 97.58. WTI crude lost 2.0% to $54.64/bbl. 

Separately, gold futures settled 1.2% higher at $1467.20/oz, further helped by weakness in the dollar and declining U.S. Treasury yields. Shares of Newmont Goldcorp (NEM 37.42, +0.51) advanced 1.4%.

Reviewing Monday's lone economic report, the ISM Non-Manufacturing Index for July:

  • The ISM Non-Manufacturing Index decreased to 53.7% in July (consensus 55.4) from 55.1% in June. The dividing line between expansion and contraction is 50.0%.
    • The key takeaway from the report is that it shows a continuation of a decelerating trend that has been in place since late 2018. The Non-Manufacturing Index is at its lowest level in almost three years.

Looking ahead, investors will receive the JOLTS - Job Openings report for June on Tuesday.

  • Nasdaq Composite +16.4% YTD
  • S&P 500 +13.5% YTD
  • Russell 2000 +10.3% YTD
  • Dow Jones Industrial Average +10.3% YTD

WSJ : Renault-Nissan’s Long Road to a Better Alliance Talks to rebalance their c

Renault-Nissan’s Long Road to a Better Alliance
Talks to rebalance their cross-shareholdings are encouraging, but need to overcome big obstacles

Renault and Nissan NSANY -0.54% seem to be moving toward a desperately needed reboot of their global alliance, but there are major roadblocks ahead.

The two are in talks that could lead to Renault’s cutting its stake in Nissan, according to The Wall Street Journal. Renault’s outsize influence in the alliance—it owns 43% of its Japanese partner with voting rights, while Nissan owns only 15% of its French partner, and has no voting rights—has always grated on Nissan, especially given that the Japanese company sells more cars.

Renault has been reluctant to cut its stake, but now has a reason to go ahead: A more harmonious relationship with Nissan would allow it to restart deal talks with Fiat Chrysler. The Italian-American car maker withdrew its merger proposal in June after the French government, which owns 15% of Renault, worried that Nissan wasn’t completely on board. Yet the bosses of both Fiat Chrysler and Renault reiterated the logic of a deal alongside their most recent quarterly results, while stressing that they weren’t in talks.

Apart from smoothing the relationship, cutting the stake would free up capital for Renault, potentially helping to negotiate more favorable terms with Fiat Chrysler. Renault’s shares jumped at the open Monday before giving up their gains on a weak day for stocks. Nissan’s fell 4.3%: Investors may be worrying that Renault will be able to place its shares only at a discount.

The big obstacle remains the French government: President Macron suggested in June that the shareholdings weren’t up for negotiation.

Nissan’s stock price, at its lowest since 2012, is one problem. In late July the company reported a 99% drop in operating profit for the April-June quarter and said it would cut 12,500 jobs, or 9% of its global workforce, mainly due to problems in the U.S. that have nothing to do with Renault. Ideally the French company would wait for a recovery before trimming its stake.

Another problem may be unrealistic expectations at Nissan, which is pushing for Renault to reduce its holding to just 5% to 10%, according to The Wall Street Journal. But Renault may need to stay above 20% to avoid an embarrassing write-down of its entire Nissan stake, which is kept on its books at €20.6 billion ($23 billion)—more than double its market value.

If Renault and Nissan do eventually negotiate a settlement, including a better balance of shareholdings, it could draw a line under the disastrous performance of both stocks since the arrest of their former Chairman Carlos Ghosn last November. Given the complications, though, investors are wise to keep their expectations in check.

>>> US Gapping down

Gapping down
In reaction to disappointing earnings/guidance:

  • CARS -11.3%, DO -8.2%, ON -6.9%, AMRX -6.2%, SOHU -4.7%, CYOU -4.1%, SOGO -4.1%, HSBC -2.2%, BRK.B -1.7%, DKL -1.3%

M&A news:

  • ACCO -3.5% (acquires Industria Grafica Foroni for approximately $57 mln)

Select China related names showing weakness:

  • MT -4.4%, LVS -4.2%, JD -4.1%, MOMO -4.1%, WUBA -4%, YY -3.6%, BABA -3.5%, HTHT -3.4%, WYNN -3.4%, WB -3.4%, EDU -3.2%, BHP -3.2%, SINA -3.1%, BIDU -2.8%, NTES -2.2%, RIO -2%

Select fan favorite stocks trading lower:

  • NVDA -3.9%, AMD -3.8%, STM -3.2%, MU -3.1%, AMAT -2.6%, AAPL -2.6%, AMZN -2.4%, STX -2.4%, TSLA -2.2%, FB -2%, MSFT -2%, NFLX -1.9%, GOOG -1.9%

Select oil/gas related names showing early weakness:

  • BP -2.9%, RDS.A -1.6%, XOM -1.3%, SLB -1.2%, XLE -1.1%, TOT -0.9%

Other news:

  • GLYC -49.1% (Pfizer and GlycoMimetics (GLYC) reports Top-Line Phase 3 results for Rivipansel; study did not meet its primary or key secondary endpoints)

Analyst comments:

  • WMB -3.2% (downgraded to Mkt Perform from Outperform at Bernstein)
  • MERC -2.2% (downgraded to Sector Perform from Outperform at RBC Capital Mkts)
  • PRU -2.2% (downgraded to Neutral from Buy at Citigroup)
  • DLTR -1.9% (downgraded to Hold from Buy at Deutsche Bank)
  • TTMI -1.8% (downgraded to Neutral from Overweight at JP Morgan)
  • BLL -1.2% (downgraded to Market Perform from Outperform at Wells Fargo)

>>> US Gapping up

Gapping up
In reaction to strong earnings/guidance:

  • SPNS +4.7%, DK +2.8%, UUUU +1.2%, TSN +1.1%

Select financial related names showing strength:

  • FOXA +1% (acquires Credible Labs)

Select metals/mining stocks trading higher:

  • HMY +5.3%, AG +4.7%, FSM +4.3%, SBGL +4.2%, GFI +4%, PAAS +3.7%, DRD +3.6%, HL +3.2%, IAG +2.9%, GOLD +2.8%, AUY +2.5%, GDX +2.3%, NEM +2.3%, AU +1.5%, SLV +1.3%

Other news:

  • ALLK +70.9% (positive results from Phase 2 randomized, double-blind, placebo-controlled trial of AK002 in patients with eosinophilic gastritis and/or eosinophilic gastroenteritis)
  • PRVB +8.9% (granted FDA Breakthrough Therapy Designation to teplizumab for the prevention or delay of clinical type 1 diabetes in individuals at-risk of developing the disease; also files $200 mln mixed securities shelf offering)
  • ITCI +7.2% (discloses agreement reached with FDA on submission of additional non-clinical information for NDA review of lumateperone for the treatment of schizophrenia; PDUFA goal date extended three months to December 27)
  • ABMD +2.7% (comments on final Medicare payment levels for inpatient hospital discharges for fiscal year 2020)
  • APYX +1.2% (received FDA 510(k) clearance to market and sell its next-generation J-Plasma Precise Handpiece)

Analyst comments:

  • ATEC +1.7% (initiated with an Overweight at Piper Jaffray)

>>> US Early premarket gappers

Early premarket gappers

Gapping up:

  • SPNS +4.7%, AG +4.6%, PAAS +4.2%, SBGL +4.2%, HMY +4.1%, GFI +3.7%, ABMD +3.4%, FSM +3.3%, HL +3.2%, DRD +3%, GOLD +2.8%, GDX +2.3%, AUY +2.2%, NEM +1.6%, SLV +1.6%, LIN +1.2%, AU +1.2%, UUUU +1.2%, IAG +1.1%, SOGO +1%, CYOU +0.7%, AMRX +0.6%

Gapping down:

  • GLYC -51.5%, ON -6.4%, JD -4.5%, TTM -4.3%, MT -4.3%, LVS -4.2%, MOMO -4.1%, AMD -3.7%, STM -3.7%, BABA -3.7%, WB -3.7%, NVDA -3.5%, BHP -3.5%, MU -3.5%, JCI -3.4%, HTHT -3.4%, WYNN -3.4%, DO -3.4%, EDU -3.1%, BIDU -3.1%, HPQ -3%, YY -3%, SOHU -3%, AAPL -2.9%, AMAT -2.8%, NTES -2.7%, SINA -2.6%, TSLA -2.6%, BP -2.6%, V -2.5%, SHOP -2.4%, FB -2.4%, AMZN -2.3%, NFLX -2.3%, STX -2.3%, EA -2%, GOOG -2%, WUBA -2%, MSFT -2%, RDS.A -1.7%, RIO -1.3%, DKL -1.3%, XLE -1.2%, SLB -1.1%, RBS -1%, TOT -1%, XOM -0.9%

>>> Kosmos Energy misses by $0.01, beats on revs; sees 2019 production at low en

Kosmos Energy misses by $0.01, beats on revs; sees 2019 production at low end of guidance (5.64)
  • Reports Q2 (Jun) earnings of $0.05 per share, excluding non-recurring items, $0.01 worse than the S&P Capital IQ Consensus of $0.06; revenues rose 83.8% year/year to $395.93 mln vs the $391.29 mln S&P Capital IQ Consensus.
  • "Kosmos has continued to make good progress in the second quarter with record quarterly production and strong free cash flow," said Andrew G. Inglis, chairman and chief executive officer. "At current oil prices we are forecasting to exceed the 2019 free cash flow we set out at our capital markets day. Kosmos has an active second half of the year with multiple catalysts across the portfolio including five exploration wells in Mauritania, Equatorial Guinea and the Gulf of Mexico, and the planned sell down of our position in Mauritania and Senegal which remains on track."
  • Total net production was a record in the second quarter of 2019 averaging approximately 71,100 barrels of oil equivalent per day (boepd).
  • As a result of the completion issue at TEN, Kosmos now expects production for 2019 to be at the low end of the guidance range. All other 2019 guidance remains unchanged