Early Look

Tuesday, April 21, 2020

Futures	Up/Down	%	Last
DJ Industrials	-363.00	1.55%	23,125
S&P 500	-30.50	1.09%	2,776
Nasdaq	-56.50	0.65%	8,635

 

 

Stock futures are lower in the U.S., tracking weakness yesterday and both Asian and European markets overnight as investors try and wrap their head around the action in oil markets Monday, when expiring May contract futures (expires today as June now becomes the most active contract) plunged over 300% to negative -$37 per barrel (meaning sellers were paying buyers $37 to just take the physical oil off their hands with no demand and no place to store it). The U.S. oil benchmark for May was back in positive territory Monday night after the wild and historic plunge but is back down about -$7 per barrel. U.S. futures also lower ahead of a busy wave of corporate earnings results this week, with IBM shares slipping after results last night. In Asian markets, The Nikkei Index dropped-388 points to 19,280, the Shanghai Index declined -25 points to settle at 2,827 and the Hang Seng Index fell -536 points (2.2%) to 23,793. In Europe, the German DAX is lower by -250 points to 10,425, while the FTSE 100 is down about -90 points to 5,720. After three straight advances, the Stoxx Europe 600 lost 1.5%. In Asia, unconfirmed reports indicate that North Korea Kim Jong Un is in fragile condition after heart surgery. Kim has not made a public appearance since presiding over a political bureau meeting of the ruling Workers’ Party on April 11. In political news, President Donald Trump said he planned to sign an executive order to temporarily suspend immigration, citing fears about lost American jobs due to the pandemic.

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -51.40 points, or 1.79%, to 2,823.16

·     The Dow Jones Industrial Average fell -592.05 points, or 2.44%, to 23,650.44

·     The Nasdaq Composite slumped -89.41 points, or 1.03%, to 8,560.73

·     The Russell 2000 Index declined -15.75 points, or 1.28% to 1,213.35

 

Economic Calendar for Today

·     7:45 AM EST      ICSC Weekly Retail Sales

·     8:55 AM EST      Johnson/Redbook Weekly Sales

·     10:00 AM EST    Existing Home Sales MoM for March

·     4:30 PM EST       API Weekly Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: CIT, CMA, DOV, EMR, FHN, FITB, GPK, HCA, KO, LMT, MAN, NTRS, PCAR, PEBO, PLD, PM, POL, SNA, SYF, TRV, WBS

·     Earnings After the Close: CMG, CSL, FULT, IBKR, MANH, MIND, NAVI, NFLX, PZM RLI, SNAP, TER, TXN, UCBI, USNA, WRB

 

 

Macro	Up/Down	Last
WTI Crude	31.33	-6.30
Brent	-4.46	21.11
Gold	-26.60	1,684.80
EUR/USD	-0.003	1.0832
JPY/USD	-0.19	107.43
10-Year Note	-0.034	0.57%

 

 

World News

·     Eurozone economic expectations rose sharply in April after experiencing a big drop in March due to the coronavirus pandemic, the ZEW research institute said. The measure of economic expectations swung into positive territory, rising to 25.2 points in April from minus 49.5 points in March, the institute said

 

Sector News Breakdown

Consumer

·     Coca-Cola (KO) Q1 EPS 51c/$8.57B vs. est. 44c/$8.285; said Q1 organic revenue “even” vs. est. -2.2%; 1Q unit case volume fell -1% vs. +2% YoY and sparkling beverage unit case volume -2%; says full year financial results cannot be estimated

·     Starbucks (SBUX) will debut Beyond Meat (BYND) products on its menu in China on Wednesday, marking Beyond Meat’s entry into the Chinese market

·     JM Smucker (SJM) sees 2020 net sales to be down 1% compared to previous guidance of down 3%; says FY2020, sees adj eps to exceed high end of previous guidance range of $8.10 to $8.30; sees 2020 capital expenditures below prior estimate of $300M-$320M; continues to maintain adequate financial liquidity to manage its business; FCF at ending April 30 to exceed the previous guidance of $850 million

·     Gap (GPS) is in talks to issue new bonds backed by assets including real estate as one financing option to get the retailer through the COVID-19 outbreak, Bloomberg reported after the close

·     Darden Restaurants (DRI) sold 7.83M shares at$58.50 per share; said 4q through April 19 same-restaurant sales fell (-44.7%)

·     Grocery Outlet (GO) filed to sell 10M shares of stock; 1Q prelim net sales $760.3M, adj EBITDA $55-56M

·     The U.S. Treasury Department has disbursed $2.9B in aid to U.S. passenger airlines, as part of $25B in funds earmarked for payroll costs. Major airlines must repay 30% of the funds in low-interest loans and grant Treasury warrants equal to 10% of the loan amount (AAL, DAL, UAL)

 

Energy, Industrials & Materials

·     Oil and gas stocks tumble premarket as U.S. oil futures trade in negative territory (May contract once again). U.S. oil futures sink nearly $40 the previous session in their first ever dive below zero, as concern grew the sector will run out of storage for a glut caused by the coronavirus lockdown. U.S. WTI crude trades at -$7.45 per barrel while Brent crude LCo1 down ~19% at $20.78 per barrel

·     Cleveland-Cliffs (CLF) announces additional offering of $555.2M of 9.875% senior secured notes due 2025 at 99% of their principal amount in an offering

·     Crown Holdings (CCK) Q1 EPS $1.13 on revs $2.76B vs. est. 92c and vs. prior year $1.05

·     Dover Corp. (DOV) Q1 adj EPS $1.39/$1.66B vs. est. $1.66B; suspends 2020 guidance

·     Hexcel (HXL) Q1 adjusted EPS 64c on revs $541M vs. est. 70c and $556.45M; said Q1 results were negatively impacted primarily by the continued grounding of the Boeing 737 MAX and effects of the COVID-19 pandemic; withdraws all previously provided 2020, mid-term guidance as suspends dividend and stock buyback programs

·     Steel Dynamics (STLD) Q1EPS 88c on sales of $2.6B, topping analysts’ expectation of 79c and $2.56B; said it is still too early to determine the full scope of the negative impact COVID-19 will cause to global economies and the related impact to domestic steel demand

·     Tanker stocks remain strong amid plunge in oil prices as traders remain concerned over storage capacity filling up as lockdowns create supply glut; shares of Tsakos Energy Navigation (TNP), Teekay (TK), Nordic American Tanker (NAT) and Scorpio Tankers (STNG) among gainers. Traders are storing an estimated record 160 million barrels of oil on ships as they seek to tackle a glut of stocks, Reuters reported citing shipping sources

 

Financials

·     American Campus (ACC) Q1 FFO 70c on revs $249.4M with same-store NOI 1.2% vs. est. 68c/$232M

·     CIT (CIT) reported provision for credit losses for the Q1 of $514M vs. $33M YoY; 1Q adjusted loss per share from continuing operations $2.43 which includes provision for credit losses

·     Credit Acceptance Corp. (CACC) delayed its 10Q filing

·     Zions (ZION) Q1 EPS 4c vs. est. 74c and last year $1.04; said has a strong capital and reserve position, a robust liquidity profile and a loan portfolio that has been substantially “de-risked” in recent years

·     RBB Bancorp (RBB) Q1 EPS 33c vs. est. 41c; reports Q1 provision for loan losses $1.945M

·     TriState Capital (TSC) Q1 EPS 38c on revs $48.2M vs. est. 27c/$45.68M; Q1 net interest margin 1.84% vs. 2.10% YoY

 

Healthcare

·     Henry Schein, Inc. (HSIC) announced that it has closed on a new credit facility totaling $700M

·     Novan (NOVN) announced that it has engaged H.C. Wainwright to assist the company in exploring and evaluating a range of strategic and financial alternatives, intended to maximize shareholder value

 

Technology, Media & Telecom

·     Cadence Design Systems (CDNS) Q1 adj EPS 60c/$618M vs. est. 54c/$613.4M; guides Q2 revs $580M-$600M vs. est. $622.9M with EPS 50c-54c vs. est. 59c and year $2.54B-$2.585B vs. est. $2.55B

·     IBM Corp. (IBM) Q1 revenue falls 3.4% YoY to $17.57B vs. est. $17.69B and withdraws full-year forecast; Q1 operating EPS $1.84 vs. est. $1.81 (down from $2.25 YoY); 1Q adjusted gross margin 46.2%; rev breakdown: Q1 cloud and cognitive software revs up 3.9% YoY to $5.24B, global business services revenue $4.14B (flat YoY), global technology services revs down -6% YoY to $6.47B and total cloud revenue $5.4 billion, up 19%

·     SAP (SAP) announced co-CEO Jennifer Morgan will be leaving the software giant this month, leaving Christian Klein in control. SAP said a significant percentage of new business was postponed in March, as Q1 adjusted operating profit edged 1% higher; adjusted measure of revenue rose 7%, with cloud revenue jumping 27%

·     Entegris (ENTG) Q1 EPS 55c/$412.3M vs. est. 52c/$417.41M; said despite major supply-chain shutdowns across many industries, our manufacturing operations were only modestly impacted by Covid-19, as a direct result of the extraordinary efforts of our Entegris teams and extended supply chain partners around the world; sees Q2 sales $410M-$430M vs. est. $403.5M