Early Look

Friday, July 17, 2020

U.S. futures are looking higher including a more than 1% gain for the Nasdaq Comp futures, coming despite a disappointing quarterly result and lower subscriber guidance from Netflix (NFLX) overnight, as shares fall over 7%. U.S. stocks ended lower on Thursday as upbeat retail sales data failed to quell concerns about rising numbers of COVID-19 cases, though markets pared some losses late day. On the economic calendar in the U.S., investors get housing starts data for June and Sentiment data later in the morning. Data this week has been generally positive, helping reassure the measures taken by the Fed and government have indeed been helping. In Asian markets, The Nikkei Index fell -93 points to 22,696, the Shanghai Index inched higher 4-points to settle at 3,214 and the Hang Seng Index rose 118 points to 25,089. In Europe, the German DAX is higher by about 50-points to 12,925, while the FTSE 100 is up about 25 points to 6,275. Leaders across the European Union are gathering for the first time since the start of lockdowns on reports they will try to reach a deal over differences on a €750B recovery fund needed to lift the bloc out of recession.

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -10.99 points, or 0.34%, to 3,215.57

·     The Dow Jones Industrial Average fell -135.39 points, or 0.50%, to 26,734.71

·     The Nasdaq Composite dropped -76.66 points, or 0.73%, to 10,473.83

·     The Russell 2000 Index declined -10.71 points, or 0.72% to 1,467.56

Economic Calendar for Today

·     8:30 AM EST      Housing Starts MoM for June…est. 22.1% to 1.189M

·     8:30 AM EST      Building Permits for June MoM for June…est. 6.3% to 1.293M

·     10:00 AM EST    University of Michigan Sentiment, July-P…est. 79.0

·     1:00 PM EST       Baker Hughes Weekly Rig Count

Earnings Calendar:

·     Earnings Before the Open: ALLY, BLK, CFG, FHN, KSU, RF, STT, SXT

World News

·     U.S. Treasury issues monthly report on international capital flows: U.S. total cross-border investment outflows were at $4.5B in May and U.S. net long-term portfolio securities inflows at $127Bb in May; Japan holds $1.26T, a decrease of $5.8B from last month while China holds $1.08T of U.S. Treasuries, an increase of $10.9B from last month; Foreign net selling of Treasuries at $27.7B and foreign net buying of equities at $79.7B

Sector News Breakdown

Consumer

·     Fiesta Restaurant (FRGI) reported Pollo Tropical Q2 comparable sales were -31.6% vs. -1.30% YoY, 2Q Taco Cabana comp sales -19.2% vs. -3% YoY; at current sales trends believes will continue to improve liquidity, says significant sequential improvement in comps extended through first two weeks of July

·     Norwegian Cruise (NCLH) 16.7M secondary priced at $15.00 per share

·     Autoliv (ALV) Q2 adj. EPS loss ($1.40) larger than the (85c) loss estimate on revs $1.05B vs. est. $1.06B; not providing guidance due to COVID-19

·     Daimler AG (DDAIF) warned that it expects to report a Q2 loss following coronavirus-related shutdowns, and that it will need to continue its cost cutting program for the rest of the year; said it expects to report a loss before interest and taxes of 1.68 billion euros ($1.91 billion).

Energy, Industrials & Materials

·     British Airways said they are proposing to retire their entire Boeing (BA) 747 fleet with immediate effect. “It is unlikely our magnificent ‘Queen of the Skies’ will ever operate commercial services for British Airways again due to the downturn in travel caused by the COVID-19 global pandemic.”

·     JB Hunt (JBHT) Q1 EPS $1.14 on revs $2.15B vs. est. 83c and $2.03B; 2Q Intermodal revenue fell -7.4% YoY to $1.07B, Dedicated Contract Services revenue down -22% YoY to $533.2M and Integrated Capacity Solutions revenue down -9% YoY to $304.3M; Q2 operating income down 9% at $175.2M

·     Marten Transport (MRTN) Q2 EPS 33c vs. est. 23c and revs $212.4M was above the $205.5M estimate; announces 50% dividend increase to 4c

·     PPG Industries (PPG) Q2 adj EPS 99c on revs $3.0B (down 25% YoY) vs. est. 71c and $2.78B; says Q3 aggregate sales volumes are anticipated to be down 8% to 15%; says ended qtr with strong liquidity position (cash and s-t investments about $2.3B), expects overall economic activity to continue to recover

·     Rio Tinto (RIO) said in its 2Q operations review it forecast for unit costs this year of $14-$15/ton at its operations in Australia’s Pilbara region included “unplanned one-off Covid-19 costs of US$0.50 per ton.” These virus-related costs, mostly incurred in 1H, include controls such as cleaning, screening, additional flights, and roster changes.

·     California investigators conclude that PG&E’s (PCG) power lines ignited last year’s Kinkade wildfire, which forced the evacuation of tens of thousands of residents and destroyed hundreds of structures in Sonoma County wine country.

Financials

·     Blackrock (BLK) Q2 adj EPS$78.5 vs. est. $6.96 and had Q2 inflows $100.2B vs. est. $105.7B; assets under mgmt. were up 6.9% to $7.32 trillion

·     First Horizon (FHN) Q2 adjusted EPS 20c on revs $511.6M vs. est. 14c/$487.82M

·     Regions Financial (RF) reported a Q2 EPS loss of 23c, missing estimates by about 30c while revenues of $1.54B came in slightly above consensus

·     BancFirst (BANF) Q2 EPS 63c vs. est. 48c; NIM 3.54% vs. 3.89% YoY

·     Lending Tree (TREE) said Q2 revenue is now anticipated in the range of $182-$186M, above the prior $160M-$175M view; variable marketing margin is now anticipated to be $79M-$83M vs. prior range of $65M-$75M and adjusted EBITDA is now anticipated to be $28M-$32M from prior $12M-$18M view

Healthcare

·     ALX Oncology (ALXO) 8.5M share IPO priced at $19.00

·     Berkeley Lights (BLI) 8.1M share IPO priced at $22.00

·     Pandion Therapeutics (PAND) 7.5M share IPO priced at $18.00

·     Cytokinetics (CYTK) 7.292M share Secondary priced at $24.00

·     Renalytix AI (RNLX) 5.5M share IPO priced at $13.50

·     Evolent Health (EVH) said that Molina Healthcare (MOH) and Passport Health Plan have entered into a definitive agreement for Molina to acquire certain assets of Passport, including Passport’s brand, operational and clinical infrastructure, and certain provider and vendor agreements

·     Puma Biotechnology (PBYI) announces that licensee Specialized Therapeutics Asia has received a regulatory nod in Malaysia for Nerlynx

Technology, Media & Telecom

·     Netflix (NFLX) shares fell -9% on mixed Q2 and weaker Q3 sub outlook; reports Q2 EPS $1.59 missed the $1.81 estimate while revs of $61.5B beat the 6.08B estimate; average streaming paid memberships in q2 rose 25% year over year while streaming ARPU increased 0.4% YoY; added a net 10.1M global streaming subscribers; sees 3q streaming paid net change +2.50M, below est. +5.12M and guides Q3 revs $6.327B vs. est. $6.4B; said has sufficient liquidity to fund operations for over 12 months, says 2020 plans for launching original shows and films continues to be largely intact; NFLX warns on sharp H2 slowdown

·     CarGurus (CARG) will use RumbleOn’s (RMBL) technology and transportation and distribution services in testing a new inventory acquisition product for dealers; the product helps dealers source vehicles on the CarGurus platform (RMBL shares jump over 40% after hours)