Mid-Morning Look: July 16, 2020

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Mid-Morning Look

Thursday, July 16, 2020






DJ Industrials




S&P 500








Russell 2000






U.S. equities are pulling back after yesterday’s strong advance, with major averages seeing a small unwind of yesterday winners as airlines, cruise lines, restaurants and energy among the biggest decliners in the S&P, along with a third day of weakness for technology stocks as profit taking continues following record highs earlier this week for the Nasdaq Composite. The S&P 500 is retreating from a five-week high as concerns about the economic toll from another round of shutdowns across the United States offset data showing upbeat domestic retail sales in June. June retail sales jumped 7.5% last month topping the Street forecast of 5%, but weak mixed data overnight in China, along with increased tensions between the country and U.S. (sanctions being issued), is raising fear early. A recent surge in domestic COVID-19 cases has forced states such as California to shut down again, is also a concern. Asia was lower overnight with China coming under outsized pressure as the Shanghai Composite fell 4.5% on better GDP data, but weaker retail sales figures. The ECB, as expected, left its policy settings on hold after it increased the size of its emergency program by €600B in June and extended it to run until at least June 2021. Financials active again following earnings from Morgan Stanley and Bank America.


Economic Data

·     Weekly Jobless claims fell to 1.3M first time claims from 1.31M prior, btu was above the 1.25M estimate while continuing claims fell to 17.338M from 18.062M prior and vs. estimate 17.6M; insured unemployment rate fell to 11.9% from 12.2% prior; the 4-week moving average fell to 1,375,000 from 1,435,000

·     Retail sales MoM for June rose a greater-than-expected 7.5%, topping the 5% estimate while retail sales ex-auto and gas rose 6.7% also topping the 5% estimate; June gasoline sales rose +15.3% vs. May +11.9%

·     Philly Fed outlook for June fell to 24.1 from 27.5 last month, but came in above the 20.0 estimate as the Fed prices-received at 11.5 vs 11.0 and employment index at 20.1 vs -4.3

·     Business Inventories for May fell -2.3% MoM, in-line with estimates; May inventory/sales ratio 1.51 months’ worth vs. April 1.67 months; May business sales +8.4% vs. April -14.4%

·     The 30-year fixed mortgage rate for week ended today fell to 2.98% from 3.03%, lowest rate in survey records going back to 1971, Freddie Mac said while the 15-year rate avg 2.48%, down from 2.51% a week earlier







WTI Crude















10-Year Note





Sector Movers Today

·     Internet; TWTR shares dropped after a number of major accounts on the social networking site were apparently hacked including the official Twitter accounts of Bill Gates, Jeff Bezos, Michael Bloomberg, Joe Biden and Elon Musk seeking bitcoin donations (raising security concerns); BABA tgt raised to $275 from $230 at Baird saying China reported a significant step up in Q2 e-commerce spending following a challenging Q1; GOOGL tgt raised to $1,805 at SunTrust and $1,550 at Stifel ahead of earnings in 2-weeks as they expect strong print; NFLX kicks off earnings for the Internet space tonight after the close

·     Bank movers; BAC posted Q2 EPS beat on slightly higher revs just above $22B while qtrly provision for credit losses increased to $5.1 billion, driven by $4.0 billion reserve build – trading strong as FICC revs increased 50% to $3.2 billion and equities rev increased 7% to $1.2 billion; net interest income $10.85 bln vs $12.19 bln reported last year; MS Q2 EPS $2.04 vs. est. $1.14 with net revenues of $13.4 bln and eps of $1.96; qtrly institutional securities net revenue $$7,977 bln vs about $5.11 bln reported last yr; qtrly equity sales and trading net revenues of $2.62 bln vs $2.13 bln; qtrly fixed income sales and trading net revenues of $3.03 bln vs $1.13; SCHW Q2 net revenue of $2.45B was below the consensus of $2.48B and $2.62B in Q1 and $2.68B in the year-ago quarter while Q2 trading revenue of $193M compared to $188M in Q1 and $207M YoY

·     Hardware & Component news; DELL was upgraded to overweight at Morgan Stanley and raise tgt to $69 with increasing likelihood of a VMW spin after the company said it is exploring a potential spin-off of its 81% stake in VMW; CSCO was downgraded to Neutral from Overweight with $50 tgt at JPMorgan led by expectation for limited investor enthusiasm for the shares in the absence of visibility into a return to revenue growth amidst continuing headwinds to Enterprise spending; GLW was upgraded to overweight at JPMorgan and raise tgt to $36 led by increasing visibility into improving demand in the different end-markets Corning is levered to — TV panels, automotive, as well as smartphones; Wedbush upgraded Indian IT stocks INFY and CTSH to outperform on improving visibility & growth re-acceleration prospects and raising tgts as believe, the market over-estimated COVID-19’s related challenges on FY21’s revenue growth, margin trends as well as the pace of recovery for the next 3-4 quarters



·     AA +5%; posted a much smaller-than-expected Q2 loss (2c vs. est. loss 46c) despite the toll from the COVID-19 pandemic while revs of $2.15B just topped estimates while maintains 2020 shipment outlook for bauxite, alumina and aluminum unchanged

·     DELL +16%; said it is exploring a potential spin-off of its 81% stake in VMW; says exploration is in an early stage and any spin-off would not occur before September 2021

·     DKNG +3%; debuted its standalone casino and sports betting mobile app in association with Hollywood Casino at Charlestown Races in West Virginia

·     HIG +4%; pre-announces strong underlying results for Q2 as guided Q2 core EPS $1.22, topping the 93c estimate

·     JNJ reported a beat on the top and bottom line for the quarter on strong medical device sales while raised its year outlook for profit and sales above consensus

·     LCI +11%; signs interim agreement with Neolpharma Pharmaceutical Group unit Cediprof for the exclusive supply and distribution of the latter’s Levothyroxine Sodium Tablets USP

·     QGEN +2%; as TMO agreed to raise its bid for QGEN by about 10% (to 43M euros from 39M euros), bringing the value of the deal to about $11.2 billion (up from prior offer of about $10.1B)

·     SPCE +9%; after saying Michael Colglazier will replace George Whitesides, who will become Chief Space Officer, effective Jul 20 (Colglazier was formerly head of Disney Parks International)



·     AAL -6%; as airlines giving back some of yesterday strong gains in a reversal of yesterday vaccine induced rally for travel and leisure names

·     CCL -7%, NCLH -10%; cruise lines slide after CCL and NCLH announce plans for new bond offerings – CCL said plans to raise about $1.26B in bond offering, raising even more debt while NCLH plans on offering about $925 mln of bonds and says it has also commenced a $250 mln equity offering

·     FANG -3%; reversal of yesterday winners as energy stocks slip as oil prices fall from 4-month lows

·     TCDA 33%; after disclosing it had received a notification from the US FDA that it had received deficiencies that preclude discussion of labeling and post marketing requirements/commitments at this time

·     TWTR -3%; after a number of major accounts on the social networking site were apparently hacked including the official Twitter accounts of Bill Gates, Jeff Bezos, Michael Bloomberg, Joe Biden and Elon Musk seeking bitcoin donations


·     Aptose Biosciences (APTO) 10.5M share Spot Secondary priced at $5.25

·     Atreca (BCEL) 7.8M share Spot Secondary priced at $16.00

·     Adaptive Biotechnologies (ADPT) 8M share Secondary priced at $40.00

·     Profound Medical (PROF) 2.76M share Secondary priced at $14.50

·     Relay Therapeutics (RLAY) 20M share IPO priced at $20.00

·     HeadHunter (HHR) 5M share Secondary priced at $20.25

·     Trean Insurance (TIG) 10.714M share IPO priced at $15.00

·     Postal Realty Trust (PSTL) 3.5M share Secondary priced at $13.00


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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