***This will be the last “Early Look” report of the week.

***Early Look will resume on Monday August 24^th

 

 

 

 

 

 

 

Early Look

Wednesday, August 19, 2020

Futures	Up/Down	%	Last
DJ Industrials	58.00	0.21%	27,775
S&P 500	6.50	0.18%	3,393
Nasdaq	16.50	0.14%	11,425

 

 

Stock futures are trending higher as the S&P 500 and Nasdaq Composite look to add to their record setting days on Tuesday as better retail earnings, hopes of a stimulus deal, an accommodating FOMC and looming trade talks with China all provide upside momentum catalysts. Supportive of the move higher is action on the stimulus deal, with top Congressional Democrats yesterday signaling a willingness for further compromise, and the White House this morning optimistic about the chance to quickly pass a slimmed-down deal. After yesterday’s modest rally pushed the S&P 500 to record highs, the index completed the fastest-ever return to a record after a drop of at least 20%, surpassing February highs for the first time since the pandemic upended financial markets. The dollar fell to the lowest in more than two years, while Treasuries advanced. The S&P 500 eked out a gain, to cap a 52% rally from its March 23 low. The gains have been led by large cap tech with AAPL, AMZN, NFLX, FB, GOOGL, TSLA, NVDA all at or within record highs, as well as gains in transports and homebuilders which surged on strong data. On top of all that, daily coronavirus case counts, positive test rates and hospitalizations look to be improving — as evidence grows that the peak of the flareup may be behind us. In the retail sector, Target Corp. (TGT) absolutely crushed analyst expectations for Q2 on EPS, sales, Ebitda and comps, even better than the figures from WMT the day prior sending shares higher. In the pharma/biotech space, JNJ agrees to acquire Momenta (MNTA) in a $6.5B deal, paying $52.50 per share while GLPG and licensee GILD shares tumble after its marketing application for filgotinib for rheumatoid arthritis (RA) received a complete response letter from the FDA. In Asian markets, The Nikkei Index rose 59 points to settle at 23,110, the Shanghai Index dropped -42 points (1.24%) to 3,408 and the Hang Seng Index fell -188 points to 25,178. In Europe, the German DAX is higher by about 25 points to 12,900, while the FTSE 100 is little changed at 6,080.

Market Closing Prices Yesterday

·     The S&P 500 Index gained 7.79 points, or 0.23%, to 3,389.78

·     The Dow Jones Industrial Average fell -66.84 points, or 0.24%, to 27,778.07

·     The Nasdaq Composite jumped 81.12 points, or 0.73%, to 11,210.84

·     The Russell 2000 Index declined -15.70 points, or 0.99% to 1,569.77

 

Economic Calendar for Today

·     7:00 AM EST      MBA Mortgage Applications Data

·     10:30 AM EST    Weekly DOE Inventory Data

·     2:00 PM EST       FOMC Meeting Minutes from July 29th meeting

 

Earnings Calendar:

·     Earnings Before the Open: ADI, LOW, TGT, TJX

·     Earnings After the Close: LB, NDSN, NVDA, SNPS

 

Other Key Events:

·     Credit Suisse Virtual FinTech Conference 8/18-8/19

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

·     Raymond James Virtual SMID Cap Growth Conference, 8/18-8/19

 

 

Macro	Up/Down	Last
WTI Crude	-0.40	42.49
Brent	-0.47	44.99
Gold	-17.00	1,996.00
EUR/USD	0.0008	1.1939
JPY/USD	-0.14	105.27
10-Year Note	-0.019	0.65%

 

 

Sector News Breakdown

Consumer

·     Target Corp. (TGT) shares rise 4%; Q2 EPS $3.38 on sales $22.98B vs. est. $1.58 and 19.82B; Q2 Ebitda $2.92B vs. est. $1.77B; Q2 comp sales soar 24.3% vs. est. 8.6% as number blow away consensus across the board; said Q2 comp traffic was up 4.6%

·     Lowe’s (LOW) Q2 adj EPS $3.75 tops the $2.95 estimate; Q2 revenue $27.3B vs. est. $24.27B; Q2 comp sales soar 34.2% and US comp sales up 35.1%

·     Etsy Inc. (ETSY) said it intends to offer, subject to market conditions and other factors, $650 mln of convertible senior notes due 2027

·     Jack Henry (JKHY) Q4 EPS 80c on revenue $410.5M vs. est. 79c and $413M; 4Q operating margin 19% vs. 20% YoY; guides FY21 adj revs +5.5-6.5% vs. est. +5.8%, sees FY21 GAAP EPS $3.70-3.75 vs. est. $4.06

·     La-Z-Boy (LZB) Q1 adjusted EPS 18c vs. est. loss (13c) and revs $285.5M (down -31% YoY) misses the $295.7M estimate; Q1 operating income down -82% YoY to $4.33M; Written same-store sales for the entire La-Z-Boy Furniture Galleries network increased 14.8%; an initial decline in May of 13%, due to pandemic-related store closures, was more than offset by increases of 30% in June and 32% in July

 

Energy, Industrials & Materials

·     In a regulatory filing, U.S. Oil Fund said that on August 17, United States Commodity Fund LLC (USO), United States Oil Fund LP and John Love received a “Wells Notice” from the staff of the U.S. Securities and Exchange Commission. The Wells Notice relates to USO’s disclosures in late April and early May regarding constraints imposed on USO’s ability to invest in Oil Futures Contracts

·     Southwest Airlines Co (LUV) expects cash burn in the third quarter to slow to about $20 million per day as bookings improve modestly in August, following a weak July due to the coronavirus crisis, (had previously said it expected third-quarter cash burn rate to be about $23 million per day); sees 3q capacity down 30%-35% yoy, saw down 20% to 30%; prelim July operating rev down 70%-75% y/y and sees September capacity down about 40% y/y

·     A.P. Moller-Maersk (AMKAF): Q2 net profit of $427M from $141M in a year earlier; while underlying profit $359M vs. $134M in Q2 2019 vs. estimate $292.7M

·     GFL Environmental (GFL) upgraded to buy from neutral at Goldman Sachs as GFL continues to successfully execute its roll-up strategy through multiple acquisitions completed since its IPO, and its earnings have proven more recession-resilient than expected

·     KBR (KBR) has acquired Centauri, LLC, a leading independent provider of high-end space, directed energy and other advanced technology solutions, for ~$800M in cash, funded with ~$300M in cash on hand and $500M of debt.

·     Spark Energy (SPKE) authorizes share buyback of up to $20M of Class A common stock

 

Healthcare

·     Johnson & Johnson (JNJ) to acquire Momenta (MNTA) for about $6.5B in cash, paying $52.50 per share in cash; transaction will include full global rights to nipocalimab (M281), a clinically validated, potentially best-in-class anti-FcRn antibody. https://on.mktw.net/34fwqiW

·     The FDA on Monday approved Mylan NV’s (MYL) generic version of Biogen Inc’s (BIIB) blockbuster multiple sclerosis drug Tecfidera

·     Harmony Biosciences (HRMY) 5.35M share IPO priced at $24.00

·     Inhibrx (INBX) 7M share IPO priced at $17.00

·     Merck (MRK) announced that the pivotal Phase 3 KEYNOTE-590 trial evaluating KEYTRUDA, Merck’s anti-PD-1 therapy, in combination with chemotherapy, met its primary endpoints of overall survival and progression-free survival for the first-line treatment of patients with locally advanced or metastatic esophageal cancer

·     Agilent (A) Q3 adjusted EPS 78c on revs $1.26B vs. est. 66c and $1.21B;

·     Accelerate Diagnostics (AXDX) announces FDA emergency use authorization of privately held BioCheck’s SARS-CoV-2 IgM and IgG Combo Test and its fully automated MS-Fast instrument.

·     Albireo Pharma (ALBO) topline results from a Phase 2 clinical trial showed the 47-subject study met the primary endpoint demonstrating a statistically significant change from baseline in LDL-cholesterol (“bad” cholesterol) at week 16 compared to placebo but failed to achieve any of the secondary NASH endpoints thereby failing to show proof-of-concept

·     Galapagos (GLPG) and licensee Gilead Sciences (GILD) shares decline after saying the U.S. FDA issued a complete response letter for the New Drug Application for filgotinib, an investigational treatment for moderately to severely active rheumatoid arthritis.

·     Sorrento Therapeutics Inc. (SRNE) said it fired its chief financial officer

·     Supernus (SUPN) Q2 EPS 65c on revs $126.7M vs. est. 45c/$127.86M; reinstates, updates FY20 revenue view to $460M-$500M vs. est. $456.6M and sees FY20 gross margin 90%, R&D expense of about $85M, and selling/general expense of $240M-$250M

 

Technology, Media & Telecom

·     Cree (CREE) Q4 adjusted EPS loss (18c) on revs $205.7M vs. est. loss (19c)/$198.7M; sees Q1 adjusted EPS loss (20c)-(24c) on revs $203M-$217M vs. est. loss (13c) and $210.39M

·     Panasonic (PCRFY) will increase production capacity of batteries for Tesla (TSLA) next year in an investment expected to exceed $100M, The Nikkei reported

·     Sabre (SABR) announces registered public offerings of $250M of mandatory convertible preferred stock and $250M of common stock

·     Vipshop (VIPS) shares fall -12%; Q2 EPS 27c on revs $3.41B vs. est. 28c and $3.42B; Donghao Yang will step down from the company’s CFO position for personal reasons in November