Early Look

Friday, April 3, 2020

Futures	Up/Down	%	Last
DJ Industrials	-227.00	1.07%	21,046
S&P 500	-26.50	1.03%	2,490
Nasdaq	-81.00	1.07%	7,546

 

 

Stock futures are pointing to lower open, giving back a portion of yesterday’s gains as investors brace for the monthly jobs report which is expected to show a decline in jobs for the first time in several years. The nonfarm payroll report, released at 8:30 AM EST, is forecasted to show a net decline of -100K jobs and private payrolls to fall by -123K jobs while the unemployment rate may rise to 3.8% from 3.5%. The data comes a day after weekly jobless claims for Americans filing first time unemployment soared to a staggering 6.64M individuals, above the prior week 3.3M as the forced store closures and travel instituted by our government to help prevent the further spread of the coronavirus takes its toll. As of yesterday, the COVID-19 infections have topped 1 million globally, while the U.S. has reported roughly 245K cases and nearly 6,000 deaths according to data from John Hopkins University. In Asian markets, The Nikkei Index was little changed at 17,820, the Shanghai Index lost -16 points to settle at 2,763 and the Hang Seng Index dipped -43 points to 23,236. In Europe, the German DAX is down around -40 points to 9,525, while the FTSE 100 is down around -60 points to hold just above the 5,400 level. Europe showed dreadful PMI manufacturing readings as the IHS Markit eurozone services purchasing managers index in March slumped to a reading of 26.4 from 52.6 in February. Oil prices are adding to yesterday gains as Brent rises over 8% and WTI crude 4% after surging nearly 25% yesterday on reports by President Trump that talks with Saudi Arabia indicated they are close to announcing a big production cut to help stabilize reeling prices that touched 20-year lows this week. Today also marks the first day that the Small Business Administration launches its payment protection program for small businesses.

Economic Calendar for Today

·     8:30 AM EST      Change on Nonfarm Payrolls for March…est. -100K

·     8:30 AM EST      Change in Private Payrolls for March…est. -123K

·     8:30 AM EST      Unemployment Rate for March…est. 3.8%

·     8:30 AM EST      Average Hourly Earnings for March…est. 0.2%

·     8:30 AM EST      Average Weekly Hours for March…est. 34.2 hours

·     9:45 AM EST      Markit US Service PMI, Mar-F…est. 38.5

·     9:45 AM EST      Markit US Composite PMI, Mar-F

·     10:00 AM EST    ISM Non-Manufacturing index for March…est. 43.0

·     1:00 PM EST       Baker Hughes Weekly Rig Count

 

Market Closing Prices Yesterday

·     The S&P 500 Index jumped 56.40 points, or 2.28%, to 2,526.90

·     The Dow Jones Industrial Average rose 469.93 points, or 2.24%, to 21,413.44

·     The Nasdaq Composite gained 126.73 points, or 1.72%, to 7,487.31

·     The Russell 2000 Index advanced 13.81 points, or 1.29% to 1,085.81

 

 

Macro	Up/Down	Last
WTI Crude	1.15	26.47
Brent	2.84	32.78
Gold	-6.20	1,631.50
EUR/USD	-0.005	1.0808
JPY/USD	0.58	108.49
10-Year Note	-0.003	0.593%

 

 

World News

·     The COVID-19 coronavirus has now infected 1 million people across the world, a milestone reached just four months after it first surfaced in the Chinese city of Wuhan as more than 51,000 have died and 208,000 recovered

·     The White House is expected to announce a new policy, based on guidance from the Centers for Disease Control and Prevention, that would urge Americans to wear cloth masks in an effort to prevent coronavirus spread, according to a federal official familiar with the policy. – STAT News reports

·     The IHS Markit eurozone services purchasing managers index in March slumped to a reading of 26.4 from 52.6 in February, the worst-ever reading in the history of the series, and the final reading was worse than the flash reading of 28.4.

·     Italy services PMI fell to 17.4 in March, plunging from 52.1 in February

 

Sector News Breakdown

Consumer

·     Tesla Inc. (TSLA) reported Q1 deliveries 88,400, -21% QoQ vs. est. 78,052 as 1Q production dipped -2.1% QoQ to 102,672 vehicles and said Model Y production significantly ahead of schedule; 1Q model S/X Production 15,390, Deliveries 12,200 and 1Q model 3/Y Production 87,282, Deliveries 76,200

·     American Airlines Group Inc. (AAL) will suspend 60% of its international capacity for the “peak” summer travel season compared with a year ago, in response to “record low customer demand” resulting from the COVID-19 pandemic. The suspensions include an 80% reduction in Pacific capacity, a 65% cut in Atlantic capacity and a 48% reduction in Latin America capacity

·     Cheesecake Factory (CAKE) says it expects Q1 comparable restaurant sales to be down approximately (-13%); QTD comparable sales through February were up 3% before a March drop of approximately (-46%) after the virus impact led to store shutdowns

·     Chewy.com (CHWY) Q4 adj Ebitda loss $5.85M vs. est. loss $17.8M and revs $1.35B vs. est. $1.38B; and Q3 EPS loss (15c) vs. est. loss (10c)

·     Dave & Busters (PLAY) Q4 EPS 80c on sales $347.2M vs. est. $344.7M and Q4 comp sales fell -4.7%; Q4 Ebitda $72.9M vs. est. $69.2M; suspended quarterly dividend and share buyback

·     Monro (MNRO) said prelim Q4 comp sales fell -9.5% largely driven by a substantial decrease in traffic since mid-March as government authorities took actions to curb the COVID-19 outbreak; guides Q4 revs $286.1M vs. est. $308M

·     Leggett & Platt (LEG) withdraws its 2020 guidance, saying it expects the coronavirus to have a material effect on its business, but that it can’t currently quantify what that effect will likely be

·     Resource Connection (RECN) Q3 EPS 27c on revs $168.1M vs. est. 12c and $168M; 3Q adjusted Ebitda down -85% YoY to $2.02M vs. est. $7.6M; sees $4M-$5M charge from restructuring initiative

·     The FTC last night granted antitrust clearance for BorgWarner’s (BWA) purchase of Delphi Technologies (DLPH)

 

Energy

·     Cenovus Energy (CVE) said it would back further mandated Alberta production cuts to prevent crude storage from hitting full capacity; yesterday, CVE said it would cut its full-year capital spending by another C$150M (US$106M) and suspend its dividend

·     Extraction Oil & Gas (XOG) lowered its planned 2020 upstream capex budget by 42% to $250M-$300M and cut its 2020 cash G&A budget by 18% to $40M-$50M

·     Macquarie Infrastructure (MIC) withdrew its guidance and suspending its quarterly cash dividend which will result in retaining ~$260M through 2020; also drew $599M on its credit facility

·     Ovintiv (OVV) announces plans to further reduce Q2 capital spending by an additional $200M, bringing total capital reductions in the quarter to $500M.

 

Financials

·     The U.S. Small Business Administration (SBA) has increased to 1% the interest rate lenders may charge small businesses under a $350B U.S. relief program after lenders complained that the previous approved rate of 0.5% was lower than even their own cost of funds

·     MarketAxess Holdings’ (MKTX) said trading volume consists of $269.5B in credit volume and $647.1B in rates volume in March; total credit trading average daily trading volume of $12.2B; total trading volume of $269.5B, rose 51% from a year ago.

 

Healthcare

·     Iqvia (IQV) cuts Q1 EPS guidance to $1.46-$1.51 from $1.59-$1.65 (est. $1.59) and cuts Q1 revenue view to $2.71B-$2.74B from $2.79B-$2.84B (est. $2.81B)

·     Fate Therapeutics (FATE) shares rose after hours after the company signed a global collaboration and option agreement with Johnson & Johnson (JNJ) unit Janssen Biotech aimed at developing cell therapies for cancer

·     Cutera (CUTR) files for $75M mixed shelf

 

Industrials & Materials

·     Navistar (NAV) temporarily ceased production at its plant in Springfield, Ohio on March 23 due to disruptions in the supply chain resulting from the pandemic (said plans to resume on April 27)

·     TransDigm Inc., (TDG) priced its private offering of $1.1B of 8.00% Senior Secured Notes due 2025 at 100% of their principal amount

 

Technology, Media & Telecom

·     Cree Inc. (CREE) guides Q3 EPS loss (14c-16c) on revenue $216M vs. est. loss (13c) and $222.6M

·     National Instruments (NATI) preliminary Q1 adj. EPS 25c-26c on revs $309M vs. est. 28c and $315.1M; Q1 estimated organic order growth, defined as growth in the value of the company’s orders excluding the impact of acquisitions and divestitures noted above, was up 1% YoY; Q1 Americas region had positive year-over-year organic order growth of 8%

·     Until Thursday, a data-mining feature on videoconferencing app Zoom (ZM) allowed certain participants to surreptitiously gain access to LinkedIn (MSFT) profile data about other users without Zoom asking for their permission or even notifying them on the matter – NY Times

·     Super Micro Computer (SMCI) said it expects to report Q3 revenue of $755-785M, down from the previous guidance of $770-830M