After Hours Summary: CUTR +15%, EGLE +11%, TWLO +10%, MTW +9%, LC +7% higher and THC -12%, PAGP -11%, CAR -8%, MAR -2.5% following earnings/guidance; FGEN +62% on positive topline data/earningsAfter Hours Gainers:
Companies trading higher in after hours in reaction to earnings/guidance: CUTR +15.4%, ITI +14.2%, APPS +12.7%, MDCA +12.3%, EGLE +11.2%, TWLO +10.4%, CTSO +9.5%, MTW +8.6%, LC +7.1%, QTNA +6.4%, APPF +6.4%, KURA +4.8% (ticking higher), BKD +4.2%, TWOU +3.1%, VRAY +3%, MXWL +1.9% (ticking higher), IPHI +1.6%, AGII +1.4% (light volume), CBS +0.7%
Companies trading higher in after hours in reaction to news: FGEN +62.4% (announces positive topline results of its Phase 2 study and two combination sub-studies of pamrevlumab in IPF with earnings), VG +6.7% (will replace CoreSite Realty in the S&P SmallCap 600), XXII +1.2% (continued momentum), BXMT +0.9% (commences public offering of $100.0 million aggregate principal amount of its 4.375% convertible senior notes due 2022),
After Hours Losers:
Companies trading lower in after hours in reaction to earnings/guidance: EVH -15.4% (also plans to offer $175 million of its Class A common stock), THC -11.6%, PAGP -11%, DEPO -10.6% (also discloses opioid-related request and subpoenas), RUN -9.2%, PAA -8.7%, CAR -8.4%, NVTA -6.1%, INWK -5.7% (ticking lower), CHRS -4.8%, KRNT -4% (light volume), ARNA -3.8%, ALB -3.7%, FRGI -3.6%, GWPH -3.4%, MNKD -2.6%, MAR -2.5%
Companies trading lower in after hours in reaction to news: BIOA -24.2% (commences public offering of common stock and warrants), ENDP -3.5% (reaches agreement to resolve virtually all known U.S. mesh product liability claims and that it is engaged in discussions to resolve the known remaining U.S. claims at reasonable values), HTZ -3.2% (following CAR results), BMRN -2.9% (to offer $450 million aggregate principal amount of senior subordinated convertible notes due 2024), RDUS -2.4% (commences $300 mln offering of Convertible Senior Notes due 2024), ESNT -2.4% (commenced a public offering in which it is offering 5,000,000 common shares), MYOK -1.1% (commences 3.5 mln common stock offering), MKC -1.1% (McCormick announces $500 mln common stock non-voting offering to fund part of its acquisition of Reckitt Benckiser's [RBGLY] Food Division)
Asia Mid-Session Market Update: China trade continues to slow in July; Japan and N. Korea hold short meeting
***Asia Summary***
- Asian markets opened mixed, with USD weakening during the session. China reported its July trade balance data, exports slowed for the 5th consecutive month. The yuan rose 0.25% against the USD, after trade data, to 6.7044. Notably steel product exports were down ~29% y/y at a 2013 low. AUD/USD rose after July business confidence and conditions rose. Fresh talks recirculated that the yuan trading band could be expanded later this year. Japan and Korea markets were little moved on the report that Japan and North Korea foreign ministers briefly met yesterday. No further details were given on the meeting.
***Key economic data***
- (CN) CHINA JULY TRADE BALANCE (CNY): 321.2B V 297.4BE; Exports Y/Y: 11.2% v +15.2%e, Imports Y/Y: 14.7% v 22.6%e
- (CN) CHINA JULY TRADE BALANCE: $46.7B V $45.0BE; Exports Y/Y: 7.2% v +11.0%e; Imports Y/Y: 11.0% v +18.0%e
- (JP) JAPAN JUN TOTAL CURRENT ACCOUNT: ¥934.6B V ¥860.5BE; ADJ TOTAL CURRENT ACCOUNT: ¥1.52T V ¥1.50TE; TRADE BALANCE BOP BASIS: ¥518.5B V ¥571.5BE
- (JP) JAPAN JUL BANK LENDING (INC TRUSTS) Y/Y: 3.3% V 3.3% PRIOR; BANK LENDING (EX-TRUSTS) Y/Y: 3.4% V 3.3%E
- (AU) Australia July NAB Business Confidence: 12 v 8 prior; Conditions: 15 v 14 prior
***Speakers and Press***
China
- (CN) Trump delays intellectual property investigation into China by at least 1-week after China backed UN sanctions against North Korea
Australia
-(AU) Australia Trade Min Ciobo: Stronger A$ is making exports less competitive
- (AU) Australia July Port Hedland Iron Ore Exports: 37.9Mt v 43.1M tons prior; Iron ore exports to China 32.0Mt v 36.6M tons prior
Korea
- (KR) North Korea Foreign Min Yong Ho: Will not give up its nuclear weapons under any circumstances
Japan
- (JP) Japan Chief Cabinet Sec Suga: Japan and North Korea Foreign Mins met briefly yesterday
- (JP) Former BOJ Deputy Gov Iwata: BOJ should proceed with current slowdown in JGB buying so annual pace of buying eventually falling to ¥40T from ¥80T
***Asian Equity Indices/Futures (00:00ET)***
- Nikkei -0.3%, Hang Seng +0.1%, Shanghai Composite -0.2%, ASX200 -0.7%, Kospi -0.1%
- Equity Futures: S&P500 -0.1%; Nasdaq100 -0.1%, Dax -0.2%, FTSE100 -0.2%
***FX ranges/Commodities/Fixed Income (00:00ET)***
- EUR 1.1824-1.1791; JPY 110.81-110.57; AUD 0.7939-0.7906; NZD 0.7369-0.7351
- Dec Gold +0.1% at 1,265/oz; Sept Crude Oil -0.3% at $49.23/brl; Sept Copper -0.3% at $2.90/lb
- (AU) Australia sells A$150M in 2030 bonds; avg yield 0.8959%; bid-to-cover 7.04x
- (CN) China PBOC OMO injects CNY140B in 7 and 14-day reverse repos v CNY250B prior; Drains net CN0Y v CNY60B prior
- USD/CNY *(CN) PBOC SETS YUAN REFERENCE RATE AT: 6.7184 V 6.7228 PRIOR
- JGB (JP) Japan MoF sells ¥647B v ¥800B indicated in 0.8% (0.8% prior) 30-yr bonds; Avg yield: 0.8760% v 0.8780% prior; Bid to cover: 3.90x v 3.62x prior (highest bid-to-cover since March 2016)
***Equities notable movers***
Hong Kong/China
- Geely, 175.HK Reports July Vehicle sales 91.1K units +88% y; +3.8%
Japan
- Suntory Beverage, 2587.JP Reports Q1 Net ¥20.5B v ¥17.9B y/y; Op ¥43.0B v ¥39.9B y/y; Rev ¥689.6B v ¥679.1B y/y; -4.5%
Korea
- Kia, 000270.KR Seoul Court to rule on base pay case on Aug 17th - South Korean press; -4.5%
Australia
- Mobile Embrace, MBE.AU Reports FY17 EBITDA A$5.3M v A$5-6M guided; Rev A$52.1M v A$52M guided: Names Neil Wiles new CEO; +18.7%
- Cudeco,CDU.AU Reports July Rocklands shipment of 8,620 WMT, valued at A$17.4M; +10%
- James Hardie, JHX.AU Reports Q1 Net $57.4M v $87.1M y/y; Rev $507.7M v $477.7M y/y; -5.3%
- CBA.AU Says CEO Narev retains 'full confidence of the board'; Narev short-term variable pay to be cut to zero; -1.2%
Other
- Shin Kong Financial, 2888.TW Reports July Net NT$6.84B v NT$2.07B m/m; +10%
- Post-earnings gainers: MDCA +13.4%, CUTR +12.6%, RPD +12.1%, IPHI +9.9%, TWLO +9.7%, MTW +9.3%, LC +8.1%, QTNA +5.8%, VRAY +4.8%,KURA +4.8%, BKD +4.2%
- Post-earnings losers: CAR -9.9%, ARNA -7.4%, DEPO -5.2%, THC -4.6%, FRGI -4.2%, CHRS -4%, PAGP -3.2%, GWPH -3.1%, NCMI -2.5%
Adidas Refutes Skechers’ Defense of Stan Smith Copying
A California judge refused to let Skechers off the hook for its alleged copying of Adidas’ trademarked designs.
Adidas has taken round one in a fight with Skechers over its stripes design and its Stan Smith sneakers.
A California federal judge late last week rejected an attempt by Skechers USA Inc. to escape allegations that it copied Adidas’ popular Stan Smith sneaker with its Onix shoe and infringed on Adidas’ long-trademarked three-stripe shoe detail with its Cross Court shoe.
Skechers’ Cross Court shoe (left) and Adidas’ Ultra Boost shoe.
Pointing to a number of other court rulings in similar trademark-infringement cases, District Judge Marco Hernandez found that the odds currently favor Adidas succeeding in its trademark suit, including its claims of brand dilution and trade dress infringement with regard to its Stan Smith shoe.
Although Skechers argued in its push for dismissal of Adidas’ infringement claims that it can’t show a likelihood of consumer confusion with its striped Cross Court shoe design, which it describes as an “E” shape, nor can it show it actually owns the purportedly “generic” trade dress of the Stan Smith shoe, Hernandez disagreed.
“Skechers conflates the Stan Smith trade dress with the Stan Smith line of products as a whole,” Hernandez said. “The former refers to the classic white leather shoe with a green mustache-shaped heel patch. The latter refers to a constellation of limited edition Stan Smith spinoffs that are extremely varied. Many of those limited editions do not have the elements described above and are not covered under the Stan Smith Trade Dress. That does not mean, however, that the trade dress elements themselves are too indefinite to be protectable.”
Adidas’ Stan Smith (left) and Skechers’ Onix shoe.
The judge also pointed out that Skechers has admitted that it set out to create a “Skecherized” version of the Stan Smith based on direct orders from chief executive officer Robert Greenberg, and that the company in the case thus far has argued only “that its copying was legal” and implied that it has “other reasons” than profit for copying the designs, according to the order.
“This factor alone is sufficient to deny Skechers’ motion for summary judgment that the trade dress is indistinct,” Hernandez said. “Furthermore, this factor weighs heavily in Adidas’ favor as Skechers has produced no evidence rebutting the clear evidence of its meticulous efforts to copy the Stan Smith shoe. Skechers provides no factual support for the position that its copying was legal or that it had other reasons for copying the Stan Smith other than to profit from Adidas’ trade dress precisely because it has acquired secondary meaning.”
Hernandez went on to note that Adidas has “a very strong case” supporting that the Stan Smith has acquired secondary meaning, meaning the design immediately signals to a consumer the source of a product.
Representatives of Adidas and Skechers could not be reached for comment.
As for Skechers’ claim that its Cross Court shoe is unlikely to be mistaken for an Adidas product with its striped design, nor is it likely to dilute the value of Adidas’ brand, Hernandez pushed back there as well, finding there to be at least a “genuine factual dispute” worthy of further proceedings and discovery.
The judge also agreed with Adidas that a 1995 settlement agreement with Skechers over another alleged infringement incident involving the three-stripe mark is still in effect, rejecting Skechers’ arguments to the contrary.
Adidas launched the suit in September 2015, accusing Skechers of willfully copying its three-stripe trademarks and making a near-exact replica of its Stan Smith shoe, of which Adidas has sold 40 million pairs worldwide since its release in 1972.
The German company has since made a strong case against Skechers and in February 2016 Hernandez ordered a halt to all sales of the allegedly infringing shoes at issue. Skechers appealed that ruling to the Ninth Circuit, but the effort was quickly dismissed.
Adidas is a fervent protector of its intellectual property and has file scores of such lawsuits, more recently against the likes of Forever 21, Juicy Couture and Asics.
Closing Market Summary: S&P 500, Dow Tick Up to New All-Time HighsEquities opened the week on a positive note as the S&P 500 (+0.2%) ticked up to a new record high for the first time since July 26. The Dow (+0.1%) also closed at a new record high, marking its ninth-consecutive record close, but the Nasdaq was the top performer, outpacing its peers with a gain of 0.5%. A small late-afternoon rally left the major averages at their best marks of the day.
The benchmark S&P 500 index drifted within a five-point range on Monday as a lack of notable headlines resulted in a lack of conviction for investors. More sectors finished in the green than the red--seven to four--but sector movement was modest for the most part with eight of the eleven groups settling within 0.2% of their unchanged marks.
Three groups--technology, consumer staples, and energy--showed notable movement with the technology (+0.6%) and consumer staples (+0.7%) groups finishing at the top of the leaderboard and the energy space (-0.9%) settling at the bottom.
Tyson Foods (TSN 66.90, +3.60) was the top-performing component in the consumer staples sector, jumping 5.7% after beating both top and bottom line estimates and issuing upbeat revenue guidance. As for the tech sector, which is the heaviest sector in terms of weight, chipmakers were among the strongest components, sending the PHLX Semiconductor Index higher by 1.7%.
Mega-cap technology names like Apple (AAPL 158.59, +2.20) and Facebook (FB 171.98, +2.36) also played a vital role in the tech sector's positive performance. The two companies added 1.4% apiece.
As for the energy sector, nearly all of its components finished in the red as crude oil held a sizable loss for much of Monday's session. The commodity hit its session low ($48.55/bbl, -2.1%) in the late morning, but was able to retrace nearly all of the decline by the close. WTI crude settled lower by 0.1% at a price of $49.37/bbl.
On a related note, OPEC and non-OPEC nations kicked off a two-day compliance meeting in Abu Dhabi on Monday, looking to strengthen their efforts to tighten the world's oil supply. The current OPEC-led supply cut agreement has been in effect since the beginning of the year, but increased production from the United States has largely mitigated the effort.
It's also worth pointing out that Dow component United Technologies (UTX 118.52, -2.97) dropped 2.4% following news that the company has made an approach to acquire Rockwell Collins (COL 127.07, +8.07). Conversely, COL shares jumped 6.8% following the news.
Treasuries settled Monday's session with modest gains, leaving the benchmark 10-yr yield one basis point lower at 2.26%. Meanwhile, the U.S. Dollar Index (93.30, -0.07%) finished lower by 0.1%.
Reviewing Monday's economic data, which was limited to the June Consumer Credit Report:
- The Consumer Credit report for June showed an increase of $12.4 billion while the consensus expected growth of $16.2 billion. The prior month's credit growth was revised to $18.3 billion from $18.4 billion.
On Tuesday, investors will once again receive just one piece of economic data--June JOLTS. The report will cross the wires at 10:00 ET.
- Nasdaq Composite +18.6% YTD
- Dow Jones Industrial Average +11.9% YTD
- S&P 500 +10.8% YTD
- Russell 2000 +4.2% YTD
Thermo Fisher to offer $1.5 billion of its common stock; all of the shares in the offering are to be sold by Thermo Fisher (177.35 +1.02)
Thermo Fisher intends to use all of the net proceeds of the offering to fund a portion of the consideration payable for its acquisition of Patheon N.V. (NYSE: PTHN), including the repayment of indebtedness of Patheon N.V. to be assumed by Thermo Fisher. As announced in a separate press release issued today, Thermo Fisher now expects to complete the transaction around the end of the third quarter of 2017
CBS beats by $0.07, beats on revs (64.52 +0.09)
- Reports Q2 (Jun) adj. earnings of $1.04 per share, $0.07 better than the Capital IQ Consensus of $0.97; revenues rose 9.4% year/year to $3.26 bln vs the $3.09 bln Capital IQ Consensus. with growth across all of the Company's significant revenue streams. Affiliate and subscription fee revenues were up 16%, driven by a 25% increase in retransmission revenues and fees from CBS Television Network affiliated stations, as well as growth from new initiatives, including the Company's digital subscription services. Advertising revenues were up 4%, led by the broadcast of the semifinals and finals of the NCAA Division I Men's Basketball Championship on the CBS Television Network. Content licensing and distribution revenues benefited from a higher volume of television licensing sales and grew 12%, despite a difficult comparison to the second quarter of 2016, which included the international sales of five Star Trek series.
- "First, we had a terrific upfront with gains in pricing and volume, including more and more deals that better reflect how people are watching our programming on a delayed basis. In addition, we took significant steps during the quarter to grow our affiliate fees from both traditional and 'skinny' bundles. Retransmission consent and reverse compensation increased 25% in the second quarter. And we are now seeing the benefit of our recent skinny bundle deals with Google's YouTube TV, Hulu, fuboTV, and just today we announced that we will be a part of DIRECTV NOW as well. At the same time, our in-house over-the-top subscription services, CBS All Access and Showtime OTT, continue to grow beyond our expectations and are on track to surpass a combined four million subscribers by the end of 2017. We are now gearing up to take the next strategic step with All Access by expanding it into the international marketplace, starting with Canada in the first half of 2018. Showtime also had a terrific quarter, led by the successful return of Twin Peaks, which boosted OTT subscriptions dramatically, and we continue to expand the Showtime brand overseas with new deals to license our entire portfolio in France, India, Taiwan, Hong Kong, and others. So, 2017 is turning out to be a great year for the CBS Corporation even without the Super Bowl and political spending that we had in the prior year. And as we look ahead, we are positioned to have an even better year in 2018.
Inter Parfums beats by $0.02, beats on revs; reaffirms FY17 EPS guidance, revs guidance (38.45 -0.25)
- Reports Q2 (Jun) earnings of $0.22 per share, $0.02 better than the Capital IQ Consensus of $0.20; revenues rose 10.2% year/year to $129.1 mln vs the $122.57 mln Capital IQ Consensus.
- Co reaffirms guidance for FY17, sees EPS of $1.25-1.27 vs. $1.27 Capital IQ Consensus Estimate; sees FY17 revs of $560-570 mln vs. $571.34 mln Capital IQ Consensus Estimat