Mid-Morning Look: August 12, 2020

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Mid-Morning Look

Wednesday, August 12, 2020






DJ Industrials




S&P 500








Russell 2000






U.S. equities open higher with the S&P 500 edging closer back to an all-time high after yesterday’s late day market swoon snapped the S&P and Dow 7-day win streaks, as a fall in U.S. crude stockpiles drove up oil prices, although investors remained on edge over a new coronavirus relief bill. The tech heavy Nasdaq Composite a strong start to the day, erasing much of the recent selling pressure as investors taking advantage of 3-day pullback – no specific news today driving the broader group. The stalemate between Republicans and Democrats risks dragging on for weeks and could continue into September, when lawmakers will have to forge a consensus on how to keep the government running when the new fiscal year begins on Oct. 1st, Bloomberg reported. The White House now says Trump’s executive actions only guarantee extra $300 per week, not $400 as per the Washington Post. Still, momentum back to the upside early on same stories (vaccine hopes, improving COVID-19 cases, better economic data, Fed continues to help markets and stimulus plan expectations – offsetting the China trade tensions). The slowdown in economic activity is likely to continue as states put more restrictions in place to control the virus, and the momentum to return to full employment could fade as consumers remain cautious, Boston Federal Reserve President Eric Rosengren said Wednesday. Oil prices edge higher on bullish inventory, Treasury yields also edge higher and gold prices whippy after posting its biggest one day decline in over 7-years yesterday.


Economic Data

·     Consumer Price Index (CPI) for July MoM rose 0.6% vs. est. 0.2% and core prices (ex food & energy also rose 0.6% vs. est. 0.2%; on a YoY basis, CPI headline rose 1% vs. est. 0.7% and core CPI rose 1.6% vs. est. 1.1%; real earnings all private workers -0.6%% vs. June -2.1%







WTI Crude















10-Year Note





Sector Movers Today

·     Auto sector; TSLA shares jump after announced a 5 for 1 stocks split; Guggenheim said they are more positive on the auto dealer group as see room for further potential earnings upside revisions and multiple expansion driven by: 1) a robust used car demand backdrop; 2) sustainability of recent pricing and margin tailwinds; 3) strong operating leverage as sales rebound with significant permanent cost reductions being realized; and 4) potential for longer-term omni-channel-driven share gains and margin benefits – upgraded AN to buy with $69 tgt and upped price tgts on LAD to $275 from $233 and KMX to $114 from $106 despite their premium valuations versus the group/history; RACE tgt raised to $265 from $180 at Morgan Stanley as think Ferrari is entering a higher phase of growth and a tech transition that takes investor thinking beyond the limits of luxury goods comps

·     Asset managers out with monthly Assets under management (AUM) data: LAZ preliminary AUM approximately $222.5B as of July 31 as it included market appreciation of $4.5B, net outflows of $1.4B and foreign exchange appreciation of $4.7B; WDR reports preliminary AUM $67.8B as of July 31 as compared to $65B on June 30; TROW reports preliminary AUM $1.28T at July 31; AB monthly AUM data increased to $623 billion during July 2020 from $600 billion at the end of June as the 3.8% increase was due to market appreciation and firm wide net inflows; APAM July AUM data totaled $127.8 billion; BEN reported preliminary month-end assets under management of $1,428.2 billion at July 31, 2020, compared to $622.8 billion at June 30, 2020 (increase of about $797B due to acquisition of Legg Mason); IVZ preliminary month-end assets under management (AUM) of $1,195.3 billion, an increase of 4.4% versus previous month-end

·     Software movers; OMCL has agreed to acquire Pharmaceutical Strategies Group’s (PSG) 340B Link business for $225M in cash; SYNC Q2 continued to see headwinds in Portal/Advertising while Zimbra Enterprise and Cloud ID software businesses saw double digit growth; UPLD 3.5M share Secondary priced at $34.00; COUP was downgraded at Evercore/ISI following +97% upside move essentially telling clients the stock is ahead of itself here

·     Retailers; TGT was added to analyst focus list at JPMorgan as a growth idea saying the bull case evidence mounts on Target with share gains across the box and apparel looking dramatically different from the dept store/mall competition; AEO was upgraded to overweight at JPMorgan as see the story at a positive multi-year inflection point with Aerie’s double digit top/bottom-line profile reaching scale at $1B revenues and AE brand store closures representing a positive catalyst; SMRT files for bankruptcy protection, considering potential sale of its ecommerce business and related intellectual property; says evaluating all strategic alternatives



·     AEO +9%; upgraded to overweight at JPMorgan as see the story at a positive multi-year inflection point with Aerie’s double digit top/bottom-line profile reaching scale at $1B revenues

·     CVET +5%; posted better-than-expected quarterly profit and revenue, helped by higher sales in its prescription management business while saying it saw a recovery in market demand in May/June

·     GRUB +6%; after Just Eat Takeaway.com’s H1 revenue was up 44% Y/Y to €1.03B with the pandemic driving double-digit growth in its main markets (Just Eat agreed to buy GRUB in June)

·     MRNA +2%; announced a supply agreement with the U.S. government for an initial 100M dose of its COVID-19 vaccine as the award covers up to $1.525B for the initial doses and contains an option for the government to buy up to an additional 400M dose

·     MTZ +5%; was upgraded to Buy from Neutral at UBS and raise tgt to $56 from $40 saying their detailed segment research and modelling support our view that the market underestimates the resiliency of EBITDA over the next 1-2 years

·     SWAV +4%; reported Q2 results which beat Street numbers, including sales of $10.3M vs. $8.3M, respectively as business recovered at a nice pace from the April trough

·     TSLA +6%; announced a 5 for 1 stocks split



·     HLF -1%; Icahn Enterprises L.P. (IEP) said it sold approximately 14.7M shares pursuant to HLF’s Nutrition’s self-tender offer, though remains the Company’s largest shareholder

·     JMIA -25%; reports a Q2 GMV decline partially attributed to a business mix shift as quarterly revs narrowly beat and marketplace revenue rose 38% Y/Y to €23.6M

·     LMND -4%; as guidance falls shy of consensus in inaugural report following last month’s IPO with Q3 revs seen $14M-$15M vs. est. $15.2M and year $86M-$88M vs. est. $89M

·     LNDC -9% after weaker FY21 revenue guidance of $530M-$550M vs. est. $590M after slightly better Q4 results

·     RRGB -9%; shares slip as sales have continued to gradually recover, RRGB is still lagging peers, with QTD SSS down ~35%, says hurt by higher beef costs and said is configuring its restaurants to accommodate for higher capacity partly by adding patio space

·     WYNN -2%; as pandemic related sectors such as cruise lines, gaming pare recent gains


·     Omeros (OMER) 6.9M share Secondary priced at $14.50

·     Overstock.com (OSTK) 2.1M share Spot Secondary priced at $84.50

·     Pacific Biosciences (PACB) 19.43M share Spot Secondary priced at $4.47

·     Personalis (PSNL) 6.579M share Spot Secondary priced at $19.00

·     Plug Power (PLUG) 30.675M share Spot Secondary priced at $10.25

·     Shutterstock (SSTK) 2.58M share Secondary priced at $48.50

·     Trevena (TRVN) 21.7M share Spot Secondary priced at $2.30

·     Upland Software (UPLD) 3.5M share Secondary priced at $34.00


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.

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