Mid-Morning Look: April 15, 2020

Auto PostDaily Market Report

Mid-Morning Look

Wednesday, April 15, 2020






DJ Industrials




S&P 500








Russell 2000






U.S. equities giving back a decent portion of its recent market gains, running out of steam after topping key technical levels over the last 24-hours as the Nasdaq Composite slides for the first time in five sessions after trading well above its 50-day and 200-day moving averages on Tuesday paced by gains in mega cap tech (AMZN, AAPL, NFLX, GOOGL). Energy stocks and financials, the two biggest laggards in yesterday’s market rally, are once again dragging down major averages as WTI crude dropped back below $20 per barrel (18-year lows), while banks were slammed on weak earnings from BAC, C, and GS this morning, as all posted more than 40% declines in profit from a year ago while also significantly boosting reserves for losses for potential bad loans due the pandemic impact. Economic data today was also abysmal (as expected) as manufacturing in NY State plunged to a record low reading of negative -78.2, worse than the -35.0 estimate while industrial production plunged as well, along with an 8% drop in retail sales and the biggest plunge in the NAHB Housing Market index in its history.


Treasuries, Currencies and Commodities

·     In currency markets, the U.S. dollar broadly higher, bouncing after yesterday’s decline with the dollar index (DXY) up around 1% as nears the 100 level once again. Treasury prices are surging as yields tumble to lowest level in weeks (10-year down 10 bps to 0.64%) following the steep declines in retail sales, Empire State numbers, Housing data and industrial production (which were all expected to be very weak– but still the headline shock enough to remind just how dire the situation is for the economy). Commodity prices tumble as gold pulls back from 8-year highs on the dollar recovery while oil plunges again to 18-year lows around $20 per barrel for WTI.


Economic Data

·     Empire Manufacturing plunges to -78.2, worse than the -35.0 estimate (last month was -21.5); segment breakdown showed: the new orders index -66.3 in April vs -9.3 in March, prices paid index 5.8 vs. 24.5 in March; the employment index fell to -55.3 from -1.5 MoM and the six-month business conditions index 7.0 in April vs. 1.2 in March

·     Industrial Production for March reported at down (-5.4%) vs. est. (-4.0%) while Capacity Utilization fell to 72.7% vs. est. 74.0%, and down from 77% prior month

·     U.S. Home Builders’ Confidence index in April plunges over 42 points to reading of 30, which compared to a reading of 72 last month, according to NAHB/Wells Fargo (index level lowest since June 2012); the present single family sales falls to 36 vs 79 last month, future single family sales falls to 36 vs 75 last month and prospective buyers traffic falls to 13 vs 56 last month







WTI Crude















10-Year Note





Sector Movers Today

·     Bank movers; Citigroup (C) reported total cost of credit for the Q1 of $7.03B vs. $1.98B YoY while reported a 46% plunge in quarterly profit (set aside nearly $5B to prepare for an expected flood of defaults on loans due to coronavirus pandemic) – earnings offset due to a surge in fees as trading desks rallied in February and March as equities and fixed-income trading rose 39% YoY; GS said Q1 quarterly profit fell 46% to $1.21B from $2.25B a year ago while revs of $8.74B was flat on a YoY basis/ trading revenue rose 28% to $5.16 billion while fixed-income trading had their best quarter in five years/revenue from mergers fell 11%; BAC with a 45% plunge in Q1 profit and set aside an additional $3.6B for potential bad loans due the pandemic impact, while total provision for credit losses rose to $4.76B, from $941M the previous quarter/ Net interest income (NII) fell 2% from a year ago to $12.13B, while noninterest income was flat at $10.64B; SCHW Q1 EPS met views on better revs while net interest revenue of $1.6B declined 6% Y/Y, due to pressure across the yield curve accelerating late in the quarter/said clients opened a record 609K new brokerage accounts — over 280K in March alone/ 1 total net new assets rose 42% YoY

·     Airlines active after Treasury Secretary, Steven Mnuchin announced that 10 airlines have signaled that they plan to accept grants to cover payroll and benefits while conversations continue with the other airlines. Airlines accepting these grants are subject to restrictions on involuntary furloughs, shareholder returns, executive compensation, and minimum service levels as discussed previously (ALK, ALGT, DAL, HA, JBLU, LUV, SKYW, UAL)

·     Medical equipment and devices; NUVA announced preliminary Q1 revenue and withdrew its full year financial guidance (Q1 revs range was $259M-$261M, representing a 5.0% – 5.7% YoY decline and said began to see a global decline in elective surgical procedures in mid-March; ABT said it launches third covid-19 test, a laboratory-based antibody blood test that will ship in the U.S. starting tomorrow/to distribute 4M tests in April, ramping to 20M in U.S. per month in June; FLDM saw prelim Q1 revenue $27.6M vs. est. $29.32M and says cash and cash equivalents about $49.6M, vs. $60.7M at the end of 2019; ILMN guides Q1 revs higher to about $858M vs. est. $830.3M while withdraws 2020 guidance on COVID-19 uncertainty

·     Consumer finance and lending; BAC credit card charge-off rate was 2.74% in March vs 2.52% in February; TREE guides Q1 revs $280M-$285M, down from prior $296M-$306M while suspends FY 2020 guidance (but shares were upgraded to a buy at SunTrust today); V and MA were both downgraded at Jefferies saying despite affinity for both co’s and their long-term outlook, they struggle to see upside over next 12 months amid several factors (headwinds from lower international travel, risk to current premium multiples and potential negative shock from April volume updates

·     Retailers; sector falls amid resumption of weakness after a week of buying/short covering drove the group higher last week/but industry still suffering from store closures (shares of PVH, LB falls); BOOT was downgraded to neutral at Susquehanna citing elevated inventory levels, mgmt decision to keep stores open and lack of transparency around store closures/withdrawal of guidance; PTON was initiated buy and $38 tgt at Roth Capital as they believe there are many factors that will improve customer acquisition and subscriber monetization in the coming years; AEO was downgraded to sell at Loop Capital; TGT upgraded to outperform and $125 tgt at BMO Capital as believe that Target’s market share trends in discretionary categories are poised to accelerate in a post-COVID-19 retail landscape



·     JBHT +2%; reported 1Q20 EPS of 98c but UBS notes if we exclude all three of the one-time charges in the quarter (BNSF 2019 adjustment, driver bonus, and exec retirement), the 1Q would have been $1.15/share which is well above the 97c estimate

·     NFLX +2%; extends gains to fresh 52-week highs ahead of earnings next week, amid expectations that subscriber numbers will soar given “stay at home” orders amid coronavirus

·     PG +1%; boosted its dividend and brings forward its Q3 earnings release to Friday

·     TDOC +4%; guides Q1 revs $180M-$181M, above est. $173.1M; now routinely providing in excess of 20,000 virtual medical visits /day in US, up over 100% as compared to first week of March

·     TSLA +4%; after Goldman Sachs initiated with a buy and $864 tgt as believe that the company has a significant product lead in EVs, which is a market where we expect long-term secular growth

·     UNH +3%; reported Q1 EPS of $3.72 beating by about 10c on in-line revs $64.4B while guidance for the year was above views ($16.25-$16.55 vs. est. $16.22)



·     APA -9%; as energy related stocks plunge following the drop in oil prices back below the $20 per barrel level – back at 18-year lows (NBL, HP, MPC fall)

·     BAC -6% (along with weakness in C, GS) after big profit declines for each (all fell over 45% YoY) and higher provision for credit losses (follows weakness in JPM, WFC yesterday)

·     CLF -9%; issued downside revenue guidance for Q1, seeing sales of $345M-$375M vs. $402M analyst consensus estimate, and suspending its dividend.

·     CVA -14%; after cutting its dividend from $1.00 to 32c and withdraws 2020 outlook in light of macroeconomic uncertainties, prompting a downgraded to sell at Stifel

·     PVH -12%; as resumption in weakness in retailers continues after a week of buying/short covering drove the group higher last week/but industry still suffering from store closures


Market commentary provided by Catena Media Financials US, LLC, a firm separate from and not affiliated with Regal Securities. Regal Securities has not participated in the creation of the content, and does not explicitly or implicitly endorse the content.

Live Trading

Open an Account

Paper Trading