Mid-Morning Look: October 13, 2020

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Mid-Morning Look

Tuesday, October 13, 2020






DJ Industrials




S&P 500








Russell 2000






U.S. stocks open higher only to drift lower as vaccine concerns mount after JNJ paused its vaccine study following unexplained illness in participant while the EU raises restrictions as coronavirus cases rise. Earnings this morning from big banks JPM and Citi top consensus views, but shares slip, while energy stocks rebound along with oil prices. Presidential election remains less than three weeks away and polls continue to show Biden leading comfortably at this point, while markets surging of late on chance of Democratic White House, Congress and potential Senate, which would be much easier to pass large stimulus measures. U.S.-China tensions in focus after Beijing emphasized its opposition to reports White House is proceeding with three separate arms sales to Taiwan. Stay-at-home economy related names active as DIS accelerates direct-to-consumer, ETH and WSM with positive guidance, buyback news, PC sales were the strongest in 10 years as people work from home. Airlines fall on weaker DAL results while cruise lines drop as RCL raises capital and suspends more cruises for year. In tech, Apple is set to unveil a 5G-enabled iPhone, and Amazon, kicked off its annual Prime Day event. Gold prices tumble over $30 an ounce back below $1,900 as the dollar recovers.


Economic Data

·     Consumer Price Index (CPI) for September rose 0.2%, in-line with estimates while core prices MoM were also reported at an in-line 0.2%; CPI YoY rose 1.4% (in-line) and core prices rose 1.7% vs. est. 1.8%; CPI energy +0.8%, gasoline +0.1%, and new vehicles +0.3%







WTI Crude















10-Year Note





Sector Movers Today

·     Bank movers; JPM reports a 4% rise in Q3 profit, helped by a surge in trading activity & IBD revs alongside lower provisions and slightly lower expenses – net income rose to $9.44B, or $2.92 per share (est. $2.23) in Q3, compared with $9.1B, or $2.68 per share, a year earlier while Q3 provision for credit losses down -60% YoY to $611M; Citigroup (C) posted a Q3 EPS and revenue beat helped by strength in the institutional clients business and as credit costs have stabilized as IC revenue rose 5% to $10.35B, as equity markets revenue grew 15% to $875 million and fixed income markets revenue increased 18% to $3.79 billion

·     Industrial & Machinery; FAST reported Q3 EPS 38c on sales $1.41B, in-line with expectations, and the company still sees FY capex in the $155M-180M range; AZZ reported Q2 adj EPS 49c on net sales $203.4M, which missed the $219M est. and fell from Q2 2019 $236.2M; JPMorgan upgraded AGCO to Overweight from Neutral and downgraded PCAR to Underweight ahead of earnings in machinery; Morgan Stanley initiated WM and RSG at Equal-Weight and WCN at OW; UBS upgraded GTES to Buy with 25% upside and downgraded AOS to Neutral on limited upside and a flattening improvement in demand

·     Hardware & Component news; CMBM increases revenues and net income above high-end of previous outlook as sees Q3 revs about $73M; UIS said Q3 revenue is expected to grow by $47M-$53M, up 10.7% to 12.1% compared to Q2; NTAP upgraded to Equal-weight at Morgan Stanley saying with corporate IT demand re-accelerating and coverage trading near a record discount to the S&P 500, they upgraded IT Hardware industry view to Attractive and raise tgts across sector (AAPL, DELL and STX Piper updating estimates for FFIV, FSLY and NTNX given our recent channel survey, calls with the management teams, and other industry inputs

·     Lodging; MAR, PK, HLT and HST all upgraded at BMO Capital, taking a more positive stance saying while the env’t remains challenging, particularly in non-leisure/group market segments, we believe the sector is on the path to recovery, albeit one that will play out over several years. We are once again reducing estimates, but we believe negative estimate revisions are nearing an end and an inflection in demand is likely in 2H21 and into 2022

·     Auto sector; TSLA cuts the Model S starting price by 3% in China, trimming the U.S. price of Model S Long Range Plus by 4% to $71,990; China’s vehicle sales rose 12.8% Y/Y to 2.57M vehicles, up from August’s 11.6% growth, according to the China Association of Automobile Manufacturers; LEA upgraded from Underperform to In-Line w/ $145 pt at Evercore/ISI; Ford (F) named a new short-term catalyst call buy at Deutsche Bank, pt $9; WKHS was downgraded to hold from buy at Roth Capital saying the USPS is pushing the highly-anticipated NGDV decision to the end of the year (original timing of the decision was expected to be today)



·     BLK +3%; quarterly profit rose 22% to $1.36 billion, or $8.87 share, up from $1.1 billion, or $7.15 a share, a year earlier while revenue rose 18% to $4.37 billion (both company’s profit and revenue beat analyst estimates)

·     DIS +4%; is shaking up its operations to refocus on the thriving Disney+ business, redoubling its push to become a global streaming giant like NFLX as its putting its TV networks, film studio and direct-to-consumer divisions inside one big group called Media and Entertainment

·     EOG +3%; as energy stocks rebound along with the price of oil

·     ETH +13%; rises as guides Q1 sales $151.1M above the est. $137.8M and said retail segment written orders continued to accelerate with growth of 10.8% over the prior year

·     KLIC +1%; the latest chipmaker to raise guidance citing stronger demand from the general semiconductor and advanced LED end markets.

·     MU +2%; upgraded to buy from hold with $60 tgt at Deutsche Bank saying latest industry checks suggest that DRAM demand has picked up in both mobile and server markets



·     GOSS -30%; after saying its experimental treatment, GB001, did not meet main goal of asthma control in mid-stage trial; GB001 did not meet main and secondary goals of a trial in patients with chronic rhinosinusitis

·     JNJ -1%; COVID-19 vaccine has been temporarily stopped due to an unexplained illness in a trial participant, according to a report by health care news provider STAT – separately, posted better-than-expected quarterly earnings and sales for Q3

·     LOOP -31%; shares dropped after a short report from Hindenburg research claiming Loop Industries “is smoke and mirrors with no viable technology”

·     RCL -10%; after having commenced an underwritten public offering of $500M of shares of common stock and $500 mln 3-year convertible debt deal, while suspends all winter sailings throughout Australia and New Zealand, South Africa, South America

·     VYGR -5%; said Investigational New Drug submission for VY-HTT01 for the treatment of Huntington’s disease has been placed on clinical hold pending the resolution of certain chemistry, manufacturing and controls matters

·     WKHS -9%; was downgraded to hold from buy at Roth Capital saying the USPS is pushing the highly anticipated NGDV decision to the end of the year (original timing of the decision was expected to be today).


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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