Early Look

Monday, August 17, 2020

U.S. stock futures are trading higher to start the week, with the S&P 500 making another attempt at reaching its record all-time February 2020 highs after failing on three attempts last week. A slow summer week is expected with light volumes as earnings season is now behind us (few important names though with WMT, HD, LOW, TGT and NVDA on the calendar) while investors wait for news on the stimulus situation and a resumption of trade talks between the U.S. and China after meetings were cancelled this weekend. In Washington, Speaker Nancy Pelosi said Sunday she is calling the House back into session over the crisis at the U.S. Postal Service, setting up a political showdown amid growing concerns that the Trump White House is trying to undermine the agency ahead of the election. Pelosi is cutting short lawmakers’ summer recess with a vote expected the Saturday after the Democratic National Convention on legislation that would prohibit changes at the agency as tensions mount. In Asian markets, The Nikkei Index fell -192 points to 23,096, the Shanghai Index jumped 78 points to 3,438 and the Hang Seng Index rose 164 points to 25,347. In Europe, the German DAX is up slightly to 12,910, while the FTSE 100 is up a few points to trade at the 6,100 level. Goldman Sachs became the latest firm to increase its price target for the S&P 500 boosting its year-end target by 20%, from 3000 to 3600. Gold prices get a boost after Warren Buffett’s Berkshire Hathaway acquired nearly 21 million shares of Barrick Gold (GOLD) worth $563 million, while selling shares/stakes of several banks including Wells Fargo (WFC) and JPMorgan (JPM) according to 13-F filings released Friday afternoon.

Market Closing Prices Yesterday

·     The S&P 500 Index slipped -0.58 points, or 0.02%, to 3,372.85

·     The Dow Jones Industrial Average rose 34.30 points, or 0.12%, to 27,931.02

·     The Nasdaq Composite dropped -23.20 points, or 0.21%, to 11,019.30

·     The Russell 2000 Index declined -1.91 points, or 0.12% to 1,577.88

Economic Calendar for Today

·     8:30 AM EST      Empire Manufacturing for August…est. 15.0

·     10:00 AM EST    NAHB Housing Market Index for August…est. 74

·     4:00 PM EST       Net long-term TIC flows for June

Earnings Calendar:

·     Earnings Before the Open: CIDM, ECC, EIC

·     Earnings After the Close: CRMT

Other Key Events:

·     EnerCom Virtual Oil & Gas Conference, 8/17-8/19

·     Needham Virtual MedTech 1 on 1’s

World News

·     President Donald Trump on Friday gave the Chinese company ByteDance 90 days to divest itself of any assets used to support the popular TikTok app in the United States. Trump’s executive order said there is “credible evidence that leads me to believe that ByteDance … might take action that threatens to impair the national security of the United States.”

·     The U.S. Postal Service is warning states coast to coast that it cannot guarantee all ballots cast by mail for the November election will arrive in time to be counted, even if mailed by state deadlines. Voters and lawmakers in several states are also complaining that some curbside mail collection boxes are being removed

Sector News Breakdown

Consumer

·     Target (TGT) and Walmart (WMT), two early beneficiaries of the pandemic, report earnings this coming week, Barron’s noted while saying the past three months have been mediocre but now Walmart and Target get to show that they have benefited from consumption strength, and the article is betting Target does a better job of it.

·     Barron’s noted the pet economy is booming and the pandemic doesn’t seem to have hurt business, with only 15% of pet owners saying that current economic conditions have made them spend less, while 21% reported spending more. Zoetis (ZTS) stock, which makes animal medicine, has multiplied six times in price since the company was spun out from Pfizer (PFE) in 2013

Energy

·     PG&E (PCG) says it expects to initiate rolling power outages for the second straight night, as the California Independent System Operator again issued an emergency order for utilities to cut down on power to prevent a heat wave from overwhelming the system

·     ConocoPhillips’ (COP) plan for drilling in the National Petroleum Reserve in Alaska along the state’s North Slope oil fields was approved on Friday by the U.S. Bureau of Land Management

·     Hess (HES) is laying off ~10% of its workforce and streamlining operations; Hess, which had 1,770 employees as of year-end 2019, dismissed 165 full-time workers this week

·     MDU Resources (MDU) files automatic mixed shelf

Healthcare

·     Sanofi SA (SNY) entered into a definitive agreement for the acquisition of Principia Biopharma Inc. (PRNB) for a total enterprise value of roughly $3.36 billion, paying $100 per share in cash https://on.mktw.net/2CxuYNd

·     Novavax (NVAX) shares rise 5%; said it’s beginning a Phase 2b clinical trial in South Africa to evaluate the efficacy of NVX-CoV2373, its COVID-19 vaccine candidate; the Bill & Melinda Gates Foundation providing $15 million grant toward trial

·     Applied DNA Sciences (APDN) rises after filing a nonprovisional patent application with the USPTO entitled “Methods and Systems of PCR-Based Recombinant Adeno-Associated Virus (AAV) Manufacture.”

·     CytoDyn (CYDY) announces that it has submitted its report to the FDA on the recently completed Phase 2 clinical trial evaluating leronlimab in COVID-19 patients with mild-to-moderate symptoms together with its request for emergency use authorization.

·     DaVita (DVA) announces a $1B stock buyback offering

·     G1 Therapeutics’ (GTHX) said the FDA accepted for accelerated review its marketing application for trilaciclib for small cell lung cancer patients being treated with chemo. The agency’s action date is February 15, 2021

·     United Therapeutics’ (UTHR) said the FDA accepted for review its supplemental marketing application seeking approval to use Tyvaso (treprostinil) Inhalation Solution to treat pulmonary hypertension associated with interstitial lung disease

Industrials & Materials

·     CH Robinson Worldwide (CHRW) downgraded to neutral from outperform after its recent rally while upgraded Union Pacific (UNP) to outperform with a $220 tgt

·     Lockheed Martin (LMT) is awarded a $62B 10-year contract from the U.S. Air Force to produce F-16 fighter jets for sale to foreign countries, the Pentagon announces

Technology, Media & Telecom

·     Apple’s (AAPL) and Tesla’s (TSLA) stock splits could lead to others. Amazon (AMZN), Chipotle (CMG), Alphabet (GOOGL), and Booking (BKNG), whose stocks are highly priced, are split candidates, Barron’s said

·     Dialog Semiconductor (DLGNF) expands collaboration with Renesas (RNECF) as preferred power solution provider for automotive platforms.

·     Tencent Music (TME) announced a strategic partnership with Thailand’s largest international record and publishing company, GMM Grammy