Morning Preview: January 22, 2020

Darwin SarazaDaily Market Report

Early Look

Wednesday, January 22, 2020

Futures

Up/Down

%

Last

DJ Industrials

90.00

0.31%

29,269

S&P 500

13.00

0.39%

3,332

Nasdaq

59.50

0.65%

9,229

 

 

U.S. stocks are recovering after yesterday’s pullback surrounding China’s coronavirus, which has killed at least nine people and infected hundreds, and as the U.S. reported its first case on Tuesday in Washington State (as per the CDC). Market jitters could return if the World Health Organization labels the virus a global health emergency after its meeting on Wednesday. President Donald Trump said the U.S. has the outbreak of the coronavirus under control and has been briefed by the CDC. Speaking to CNBC from Davos, Trump said he wasn’t worried it would turn into a pandemic and said the only person infected had flown in from China. He also took another opportunity to take a shot at the FOMC saying interest rates should still go lower because the dollar is strong. Dow futures are getting a boost as tech rallies on earnings from Netflix and IBM. In Asian markets, The Nikkei Index rose 166 points to 24,031, the Shanghai Index rose 8 points to 3,060 and the Hang Seng Index gained 355 points to 28,341. In Europe, the German DAX is little changed at 13,550, while the FTSE 100 is up a few points to 7,620. The German Dax moved into fresh record territory as equities across Europe bounced after lingering concerns over the spread of China’s coronavirus weighed on stocks yesterday. Earnings season getting into full swing with results from JNJ, TXN, TER among those reporting today.

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -8.83 points, or 0.27%, to 3,320.79

·     The Dow Jones Industrial Average fell -152.06 points, or 0.52%, to 29,196.04

·     The Nasdaq Composite slipped -18.14 points, or 0.19%, to 9,370.81

·     The Russell 2000 Index declined -19.32 points, or 1.13% to 1,685.90

 

Events Calendar for Today

·     7:00 AM EST      MBA Mortgage Applications Data

·     8:30 AM EST      Chicago Fed Nat Activity Index for December…est. 0.13

·     9:00 AM EST      FHFA House Price Index MoM for November…est. 0.3%

·     10:00 AM EST    Existing Home Sales MoM for December…est. 5.43M

·     4:30 PM EST       API Weekly Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: ABT, ALLY, APH, BKR, BOKF, CBSH, CBU, FITB, JNJ, NTRS, PLD

·     Earnings After the Close: BPFH, CATY, CTXS, CUBI, FUL, HOPE, INBK, KMI, NVEC, PFBC, PLXS, PTC, QCRH, RJF, RLI, SLM, SLG, STLD, STL, TCBI, TER, TXN, UMPQ

 

Other Key Events:

·     Jefferies Winter Restaurant, Foodservice and Gaming Conference, 1/20-1/22, in Colorado

·     New York Boat Show, 1/22-1/26 in New York

·     TD Securities 2020 Mining Conference, 1/22-1/23, in Toronto, Canada

 

 

Macro

Up/Down

Last

WTI Crude

-0.37

58.01

Brent

-0.38

64.21

Gold

-0.20

1,557.70

EUR/USD

-0.0000

1.1082

JPY/USD

0.08

109.95

10-Year Note

-0.007

1.767%

 

 

Sector News Breakdown

Consumer

·     Estee Lauder (EL) downgraded to Neutral from Buy at Citigroup

·     Daimler (DDAIF) has warned that its 2019 profits, already forecast to be the lowest in a decade, will be hit by up to €1.5bn in Diesel-related litigation costs

·     German prosecutors are investigating Mitsubishi Motors, under investigation for possibly selling diesel vehicles in the country that had been programmed to cheat on emissions tests – NY Times

 

Energy

·     EOG Resources (EOG) said it expects Q4 loss of $62.3M on derivative contracts

·     One Gas (OGS) narrows FY19 EPS view to $3.49-$3.53 from $3.39-$3.57 (est. $3.49); sees FY19 preliminary estimate is that the net income impact of colder weather on sales volumes, net of weather normalization mechanisms, was an increase of $4.9M; sees EPS up 5%-7% in average between FY19 and FY24

 

Financials

·     TD Ameritrade (AMTD) Q1 adjusted EPS 74c/$1.38B vs. est. 77c/$1.3B; said trading was very strong in the first quarter averaging 1M trades per day – for the first time in history – which helped offset a portion of the revenue impact from zero commissions; said trading is up roughly 40% January to-date, averaging 1.4M trades per day”; Q1 net new client assets $29B, up 9% YoY

·     Capital One (COF) Q4 adjusted EPS $2.49/$7.43B vs. est. $2.37/$7.35B; 4Q card delinquencies 3.51% vs. 3.62% YoY and credit-card charge-offs 4.31% vs. 4.61% YoY; 4Q provision for credit losses rose 11% YoY to $1.82B; 4Q NIM 6.95% vs. 6.96% YoY and NII up 4.2% YoY to $6.07B

·     Commerce Bancshares (CBSH) Q4 EPS 93c/$346.12M vs. est. 87c/$336.94M; Q4 loan loss provision $15.2M vs. $12.26M a year ago, Q4 net charge-offs $3.0M vs. $1.47M a year ago and said book value per common share was $26.70 at quarter end vs. $26.27 at previous quarter end

·     CIT Group (CIT) to replace Tanger Factory in S&P 400 at open on 1/27

·     Ellington Financial (EFC) 4.6M share Spot Secondary priced at $18.29

·     Tanger Factory (SKT) to replace McDermott (MDR) in the S&P 600 at open on 1/27

·     United Community Banks (UCBI) Q4 EPS 61c/$143.3M vs. est. 58c/$144.96M; reports Q4 net interest margin 3.93% vs. 3.97% last year

·     Franklin Financial Network (FSB) Q4 core EPS 68c/$32.9M vs. est. 69c/$28.37M; reports Q4 net interest margin 3.12% vs. 2.69% last year

·     Fulton Financial (FULT) Q4 EPS of 33c missed the 35c est.; 4Q net interest margin 3.22% vs. 3.44% YoY and 4Q net interest income $159.3M misses the $163M est.

·     Interactive Brokers (IBKR) Q4 EPS 58c/$500M vs. est. 61c/$504.55M; reports Q4 total DARTs down 16% at 797K; Q4 customer equity grew 36% from the year-ago quarter to $174.1B and customer debits increased 15% to $31.0B. Q4 customer accounts increased 15% from the year-ago quarter to 690K; Q4 commissions revenue of $168M fell 18% YoY

·     Navient Corp. (NAVI) 4Q core EPS 69c vs. est. 58c; 4Q FFELP net income fell -7.5% YoY to $136M; 4Q consumer lending net income up 35% YoY to $89M

·     Zions Bancorp (ZION) Q4 EPS 97c/$711M misses the consensus $1.07/$705.5M; Q4 net interest margin 3.46% vs. 3.48% in Q3

 

Healthcare

·     Johnson & Johnson (JNJ) Q4 EPS $1.88/$20.75B vs. est. $1.87/$20.87B; Q2 consumer sales up 0.9% to $3.57B, pharma sales up 3.5% to $10.55B, medical device sales down -0.5% to $6.63B; sees 2020 sales $85.4B-$86.2B vs. est. $875.52B

·     Adaptive Biotechnologies (ADPT) said sees FY19 revs is expected to be in the range of $84-$85 million, reflecting growth of approximately 52% at the midpoint of the range over full year 2018; files to sell 8.0M shares of common stock for holders

·     Blueprint Medicines (BPMC) files to sell $325M in common stock

·     Novavax (NVAX) files to offer up to $100M in shares

·     Zymeworks (ZYME) filed to offer $200M in shares

·     NanoViricides (NNVC) 2.5M share Secondary priced at $3.00

·     Supernus (SUPN) announced that the U.S. FDA has found the New Drug Application for SPN-812 for the treatment of children and adolescents with attention deficit hyperactivity disorder acceptable for review

 

Industrials & Materials

·     Eaton (ETN) announced it has entered into an agreement to sell its Hydraulics business to Danfoss A/S, a Danish industrial company, for $3.3 billion in cash; this represents a 13.2 multiple of 2019 EBITDA

·     United Airlines (UAL) Q4 adjusted EPS $2.67/$10.89B vs. est. $2.67/$10.88B; Q4 PRASM up 0.8%, Q4 CASM down 1.3%, CASM-ex up 2.7% and load factor 82.5%; still sees year EPS $11.00-$13.00 vs. est. $12.70; sees Q1 EPS 75c-$1.25 vs. est. 75c

 

Technology, Media & Telecom

·     Netflix (NFLX) Q4 EPS $1.30 vs est. $0.53, streaming paid net change +8.76Mm vs. est. +7.65Mm, Q4 revs $5.47B vs est. $5.45B; guides 1Q EPS $1.66 vs est. $1.16, sees 1Q revs $5.73B vs est. $5.74B, sees 1Q streaming paid net adds 7.0Mm vs. 9.6M YoY; Operating income during the quarter rose to $459M vs. $216M last year; operating margin was 8.4% of sales

·     IBM Corp (IBM) Q4 operating EPS $4.71 vs. est. $4.69 on revs $12.8B vs. est. $21.6B; guides 2020 op EPS at least $13.35 vs. est. $13.29; sees FY20 adjusted EPS of ‘at least’ $13.35 vs. consensus $13.29; Q4 cloud & cognitive software revenue $7.2B, up 8.7%, Q4 Global Business Services revenue $4.2B, down 0.6%, Q4 Global Technology Services revenue $6.9B, down 4.8% and Q4 Systems revenue $3B, up 16%

·     ASML Holding NV (ASML) said that it was launching a three-year share-buyback program of up to 6 billion euros ($6.66 billion), and that profit rose for the fourth quarter of 2019

·     VMware, Inc. (VMW) announced its intent to acquire Nyansa, Inc., a fast-growing innovator of AI-based network analytics

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Market commentary provided by Hammerstone Markets, a division The Hammerstone Group, a firm separate from and not affiliated with Regal Securities L.P. Regal Securities L.P. has not participated in the creation of the content, and does not explicitly or implicitly endorse the content.

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