Early Look

Tuesday, August 11, 2020

Futures	Up/Down	%	Last
DJ Industrials	280.00	1.01%	27,959
S&P 500	24.50	0.72%	3,376
Nasdaq	58.50	0.53%	11,130

 

 

Stock futures are soaring as the S&P 500 index nears a new all-time record high, with small cap and value related stocks playing catch up to growth stocks in what was a worldwide stock rally overnight. The Dow Jones Industrials Average and S&P 500 index each extended their winning streak to 7-consecutive days on Monday, while the Nasdaq Composite slid for a 2^nd day in a row after trading to record highs last Thursday in another bout of profit taking. Asian markets jump overnight, as the Nikkei Index jumped 420 points to 22,750, the Shanghai Index fell -38 points to 3,340 and the Hang Seng Index gained 513 points to 24,890. In Europe, the German DAX is higher by 345-points to move above the 13,000 level, while the FTSE 100 is up 140 points to move near the 6,200 level. U.S. stocks get a boost on reports President Trump, in addition to several weekend executive actions that included a payroll tax holiday, is “very seriously” considering a capital gains tax cut, which would “create a lot more jobs.” Trump said in a press conference overnight “there is no reason the economy can’t grow at a 20% pace in the third quarter,”…”that would be a record and interestingly, it’ll be a number that’s going to be announced before November 3.” The optimism and commentary is lifting global sentiment and overshadowing the recent increased tensions between Beijing and Washington, Positive vaccine news also helping as Russian President Putin said “as far as I know, a vaccine against a new coronavirus infection has been registered this morning, for the first time in the world.”

Market Closing Prices Yesterday

·     The S&P 500 Index gained 9.19 points, or 0.27%, to 3,360.47

·     The Dow Jones Industrial Average rose 357.96 points, or 1.30%, to 27,791.44

·     The Nasdaq Composite dropped -42.63 points, or 0.39%, to 10,968.36

·     The Russell 2000 Index advanced 15.49 points, or 0.99% to 1,584.67

 

Economic Calendar for Today

·     6:00 AM EST      NFIB Small Business Optimism for July

·     7:45 AM EST      ICSC Weekly Retail Sales

·     8:30 AM EST      Producer Price Index (PPI) MoM for July

·     8:30 AM EST      PPI Ex: Food & Energy MoM for July

·     8:30 AM EST      Producer Price Index (PPI) YoY for July

·     8:30 AM EST      PPI Ex: Food & Energy YoY for July

·     8:55 AM EST      Johnson/Redbook Weekly Sales

·     12:00 PM EST    Fed’s Daly speaks in California

·     4:30 PM EST       API Weekly Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: BR, LITE, MAC, RMD, SYY, TRWH

·     Earnings After the Close: AEMD, HCAT, IDEX, LNDC, LRN, RRGB, SWAV, SYNC, TTOO, VEC, VIAV

 

Other Key Events:

·     BTIG Virtual Biotech Conference, 8/11-8/12

·     Cowen 2020 Virtual Communications Infrastructure Summit, 8/11-8/12

·     Oppenheimer Annual Technology Virtual Conference, 8/11-8/12

·     Susquehanna Virtual Energy, Industrials and Airlines Conference 8/11

·     UBS Financial Services Virtual Conference, 8/11-8/12

·     Wedbush Healthcare Virtual Conference, 8/11-8/12

 

 

Macro	Up/Down	Last
WTI Crude	0.68	42.62
Brent	0.54	45.53
Gold	-44.00	1,995.70
EUR/USD	0.0055	1.1793
JPY/USD	0.13	106.09
10-Year Note	+0.023	0.598%

 

 

World News

·     President Trump is “very seriously” considering a capital gains tax cut, which would “create a lot more jobs.” While the president can’t unilaterally slash the 20% long-term capital gains rate without Congress, some advisers say he could issue an executive order that would slash tax bills for investors when they sell assets. The move, known as indexing capital gains to inflation, would likely face legal challenges, and comes as Trump also explores “an income tax cut for middle-income families.”

·     The NFIB Small Business Optimism Index: 98.8 vs. 100.0 consensus and below the 100.6 in June.

 

Sector News Breakdown

Consumer

·     A judge ruled Monday that Uber Technologies Inc. (UBER) and Lyft Inc. (LYFT) must classify their drivers as employees due to a new California law, a decision that threatens the business models of the ride-hailing giants and could upend the gig economy, which relies heavily on contractors.

·     Bed Bath & Beyond Inc. (BBBY) said it has lifted suspension of planned debt reductions, which had been implemented because of conditions caused by the pandemic; also announced it has started cash tender offers to purchase up to $300M of certain outstanding senior notes.

·     Extended Stay America (STAY) 2Q adj EPS ($0.04) vs. est. ($0.05) revs $230.8Mm vs. est. $228.9Mm, qtrly comparable system-wide occupancy 69.6%; qtrly system-wide RevPAR -28.7%

·     Floor & Decor (FND) files a secondary offering of 5.686M shares

·     Grocery Outlet (GO) Q2 adj. EPS 42c on revs $803.43M vs. est. 23c/$781.02M; reports Q2 comparable store sales increased 16.7%

·     Hertz (HTZ) Q2 EPS loss (-$3.51) vs. est. loss (-$2.33); Q2 revs $832M vs. est. $942M; says global revenue declined 67% in 2Q; liquidity at end of 2q was $1.4B

·     IFF (IFF) Q2 adj EPS $1.36 on revs $1.2B vs. est. $1.31/$1.22B; says FY20 financial results cannot be reasonably estimated

·     Mesa Air (MESA) 3Q EPS $0.10 vs. est. ($0.26) on op revs $73.1Mm vs. est. $80.2Mm

·     Nautilus (NLS) Q2 EPS loss (17c) on revs $114.2M vs. est. loss (9c)/$68.74M; said Q2 Direct Segment sales increased 142% and Retail Segment sales increased 68% from last year

·     Wayfair (W) announces $1.2B convertible senior notes offering due 2025

·      

 

Energy, Industrials & Materials

·     Occidental (OXY) Q2 adj EPS loss ($1.76) vs. est. loss ($1.68); 2Q Realized domestic gas price per Mcf 90c, -24% QoQ; 2Q realized oil price per barrel $23.17, -51% QoQ; qtrly oil and gas pre-tax loss on cont operations was $7.7 billion, compared to income of $236 million for the first quarter of 2020; qtrly average worldwide realized crude oil prices decreased by 51 percent from prior quarter to $23.17 per barrel

·     Nutrien (NTR) Q2 diluted EPS $1.34 on revs $8.42B vs. $8.69B a year ago; cuts FY20 adjusted EPS view to $1.50-$1.90 from $1.50-$2.10 and also cuts FY20 adjusted EBITDA view to $3.5B-$3.8B from $3.5B-$3.9B – top end of guidance range lowered due to lower ammonia and UAN prices

 

Financials

·     Robinhood joined the rest of brokerage industry by publishing monthly trading data, saying it saw 4.3M daily average revenue trades (DARTs) in June, outperforming all of the publicly traded, incumbent brokerage firms. TD Ameritrade (AMTD) was the next highest monthly total at 3.84M DARTs, Interactive Brokers (IBKR) saw 1.8M DARTs, followed by Charles Schwab (SCHW) and E-Trade (ETFC) at 1.8M and 1.1M, respectively – Seeking Alpha

·     Cohen & Steers, Inc. (CNS) reported preliminary assets under management of $70.1 billion as of July 31, 2020, an increase of $3.8 billion from assets under management at June 30, 2020. Net inflows of $1.3 billion and market appreciation of $2.7 billion were partially offset by distributions of $209 million.

·     Simon Property (SPG) 2Q FFO $2.12 vs. est. $2.13, says lost nearly 10,500 shopping days in US portfolio in 2Q, have generally been encouraged by shopper response, particularly in certain locations, after reopening; as of Aug. 7, 91% of US retail property tenants were open and operating

 

Healthcare

·     Ligand Pharmaceuticals (LGND) has agreed to acquire Pfenex (PFNX) at $12 per share, equivalent to $438M in equity value; additionally, Ligand will pay $2 per share or $78M as a Contingent Value Right in the event a predefined regulatory milestone is achieved by December 31, 2021

·     Equillium, Inc. (EQ), a clinical-stage biotechnology company announced positive interim data from the first two cohorts of the Phase 1b open label, dose escalation portion of the EQUATE study of itolizumab in acute graft-versus-host disease (aGVHD).

·     Fennec Pharmaceuticals (FENC) shares fall -34% as announced that it received a Complete Response Letter from the FDA regarding its marketing application seeking approval of Pedmark

·     Halozyme (HALO) Q2 EPS 19c on revs $55.2M vs. est. 25c/$66.68M; backs FY20 GAAP EPS view 60c-75c (est. 77c) and also backs FY20 revenue view $230M-$245M (est. $234.8M)

·     HTG Molecular Diagnostics (HTGM) has signed a Commercialization and Distribution Agreement with Qiagen Manchester, a wholly owned subsidiary of Qiagen N.V. (QGEN).

·     ICU Medical (ICUI) 2Q adj EPS $1.65 vs. est. $1.24 on revs $303.4Mm vs. est. $276.7Mm, says entered long-term US distribution agreement with Grifols for certain core IV solution products

·     Novavax (NVAX) Q2 EPS loss (30c) on revs $35.5M vs. est. loss (51c) and $49.5M; 2Q cash and cash equivalents $424.4M vs. $72.0M YoY; expanded our senior leadership team to advance our efforts to bring NVX-CoV2373 to market as rapidly as possible and grow our infrastructure to support commercial stage operations

·     Omeros (OMER) files to sell $125M in common stock, $200M in convertible senior notes

·     PTC Therapeutics (PTCT) files automatic mixed securities shelf

·     Tilray (TLRY) Q2 EPS loss (65c) on revs $50.4M vs. est. $55M; 2Q adjusted Ebitda loss $12.3 million, -31% YoY

·     Sorrento Therapeutics (SRNE) is adding to its recent breakout having jumped 159% since Wednesday, July 24, when it announced that it planned to acquire COVID-19 therapy developer SmartPharm Therapeutics.

 

Media & Telecom

·     IAC Corp. (IAC) reports Q2 EPS loss ($1.13) vs. 16c a year ago and revs $726.4M vs. $688.7M a year ago; said operating loss reflects $52.4M of stock-based compensation modification charges related to the Match Group (MTCH) separation

·     Qurate retail (QRTEA) 2Q adj EPS $0.54 vs. est. $0.49 on revs $3.11B vs. est. $3.2B

·     Tencent Music (TME) Q2 revenue 6.93B vs. est. 6.87B yuan; 2Q mobile monthly active users for online music 651 million, -0.9% QoQ and 2Q mobile monthly active users for social entertainment 236 million, -7.8% QoQ

 

Technology

·     Acacia Communications (ACIA) Q2 EPS 65c on revs $135.2M vs. est. 50c and $129.3M

·     Cornerstone OnDemand (CSOD) Q2 adjusted EPS 40c on revs $184.4M vs. est. 22c/$178.51M; sees Q3 revenue $187M-$189M below consensus $204.83M while sees Q3 subscription revenue $181M-$183M; sees FY revs $715M-$720M vs. est. $745M

·     j2 Global (JCOM) Q2 adjusted EPS $1.71 on revs $331.0M vs. est. 41.45/$316.05M

·     Qualys (QLYS) 2Q adj EPS $0.74 vs. est. $0.64; guides 3Q adj EPS $0.65-0.67 vs. est. $0.61, sees 3Q revs $91.6-92.2Mm vs. est. $90.4Mm; sees FY20 adj EPS $2.60-2.65 vs. est. $2.49, sees FY20 revs $359-360.5Mm vs. est. $357.39Mm

·     Schrodinger (SDGR) announces public offering of 4.5 mln common shares, including 500,000 shares offered by a selling stockholder

·     Sprout Social Inc. (SPT) to sell up to 1.5 mln of class a shares and selling stockholders proposing to sell up to 4.5 mln class a shares

·     Shutterstock (SSTK) files to sell $250M in common stock

·     ZoomInfo (ZI) Q2 adjusted EPS 7c on revs $110.9M vs. est. 5c/$105.57M; sees Q3 adjusted EPS 8c-9c on revs $116M-$118M vs. est. 8c/$112.65M; sees FY20 adjusted EPS 29c-30c on revs $451M-$455M vs. est. 28c/$441.01M