Early Look

Wednesday, March 11, 2020

Futures	Up/Down	%	Last
DJ Industrials	-453.00	1.82%	24,396
S&P 500	-54.50	1.91%	2,811
Nasdaq	-149.50	1.79%	8,182

 

 

U.S. stock futures are rolling lower, giving back some of Tuesday’s gains as volatility continues after reports that U.S. coronavirus cases have also topped 1,000 nationwide, according to Johns Hopkins University data, and at least 28 people have died from the disease (broader context to financial markets is the coronavirus scare that, in Italy, surpassed 10,000 cases and essentially locked down the nation of 62 million people). In the UK overnight, the Bank of England cut its main interest rate by 50 bps to 0.25%, leading the FTSE 100 to gain nearly 1%. In Asian markets, The Nikkei Index fell -451 points to 19,416, the Shanghai Index dropped -28 points to 2,968 and the Hang Seng Index dropped -160 points to 25,231. In Europe, the German DAX is up over 180 point to 10,660, while the FTSE 100 is up 50 points back above the 6,000 level. U.S. stocks surged on Tuesday, restoring roughly half of the losses seen Monday when stocks saw the biggest one day fall since the 2008 financial crisis, with investors hopeful for additional stimulus measures from the government to help consumer sentiment. The gains were fueled amid President Trump’s push to persuade Congress to agree to a fiscal stimulus package that may include a payroll tax cut to mitigate the economic impact of the COVID-19 epidemic. However, lawmakers in both parties though expressed skepticism about a payroll-tax cut to bolster the economy. Still, the news was temporarily relief for stressed markets as the Dow Jones Industrial Average jumped closed at 1,167.14 points, or 4.9%, higher, at 25,105.14, while the S&P 500 gained 135.67 points or 4.9% to close at 2,882.23.

 

Economic Calendar for Today

·     7:00 AM EST      MBA Mortgage Applications Data

·     8:30 AM EST      Consumer Price Index (CPI) MoM for February…est. 0.0%

·     8:30 AM EST      CPI Ex: Food & Energy MoM for Feb…est. 0.2%

·     8:30 AM EST      Consumer Price Index (CPI) YoY for February…est. 2.2%

·     8:30 AM EST      CPI Ex: Food & Energy YoY for Feb…est. 2.3%

·     10:30 AM EST    Weekly DOE Inventory Data

·     2:00 PM EST       Monthly Budget Statement for February…est. (-$236.8B)

 

Earnings Calendar:

·     Earnings Before the Open: EXPR, IEA, INSE, LCUT, UNFI, VRA, XERS

·     Earnings After the Close: BREW, CALA, DVAX, IDN, LMNR, PACD, PDLI, RST, SIEN, SMTC, TACO, ZAGG

 

Other Key Events:

·     Barclay’s Global Healthcare Conference 2020, 3/10-3/12, in Miami, FL

·     Deutsche Bank 28th annual Media, Internet & Telecom Conference, 3/9-3/11 in Palm Beach, FL

·     JPMorgan Industrials Conference, 3/10-3/12, in New York

·     Optical Networking & Communication Conference, 3/8-3/12, in San Diego, FL

·     Piper West Coast Financial Services Conference, 3/11-3/12, in San Diego, CA

·     RBC Capital Financial Institutions Conference, 3/10-3/11, in New York

·     Susquehanna Technology Conference, 3/11-3/12, in New York

·     Wolfe Research FinTech Forum 2020, 3/9-3/11, in New York, NY

 

Market Closing Prices Yesterday

·     The S&P 500 Index surged 135.67 points, or 4.94%, to 2,882.23

·     The Dow Jones Industrial Average rose 1,167.14 points, or 4.89%, to 25,018.16

·     The Nasdaq Composite spiked 393.58 points, or 4.95%, to 8.344.25

·     The Russell 2000 Index advanced 37.46 points, or 2.85% to 1,350.90

 

 

Macro	Up/Down	Last
WTI Crude	-1.03	33.33
Brent	-1.19	36.03
Gold	2.30	1,662.60
EUR/USD	0.0041	1.1322
JPY/USD	-0.72	104.92
10-Year Note	-0.096	0.706%

 

 

World News

·     Former Vice President Joe Biden defeated Sen. Bernie Sanders in Michigan’s Democratic primary on Tuesday, networks projected. Michigan, which offers the night’s biggest delegate prize, was one of six states to vote Tuesday, when a total of 352 delegates were up for grabs. Biden also notched victories in Mississippi and Missouri (has 766 delegates to Sanders 618)

·     The Bank of England cut interest rates in its first emergency move since the financial crisis and announced measures to help keep credit flowing through the economy, warning that the coronavirus outbreak will damage growth. Governor Mark Carney and fellow policy makers voted unanimously to cut their main interest rate by 50 basis points to 0.25%, returning it to a record low. The BOE also introduced a new program to provide easy and cheap credit. They also reduced the amount of capital banks must hold in a further attempt to support lending.

·     The Trump administration is likely to extend the April 15 tax deadline as part of an effort to mitigate the effects of the novel coronavirus on U.S. households and businesses, according to an administration official and another person familiar with the matter – WSJ

 

Sector News Breakdown

Consumer

·     Nike (NKE) shares fell after rival Adidas (ADDYY) and Puma both flagged a sales hit on their China businesses due to the coronavirus outbreak; Adidas said it sees decline in Q1 sales for Greater China, says store traffic reducing in Japan and South Korea while Puma said it no longer expected its business would return to normal soon, despite encouraging signs coming out of China, and projects hit to sales and profit, withdraws 2020 forecast

·     PepsiCo Inc. (PEP) is getting close to a deal to buy Rockstar Energy Beverages for $3.85 billion, according to the Wall Street Journal which said the deal could be announced as soon as Wednesday, citing people familiar with the matter.

·     Xenia Hotels (XHR) announced that it is withdrawing its previously issued FY20 guidance due to increased uncertainty related to the financial impact of COVID-19 to the company

·     American Public Education (APEI) Q4 adj EPS 37c on revs $74.4M vs. est. 38c and $73.8M; sees Q1 revs down (-1%) to up 3% and EPS 13c018c vs. est. 28c

·     Korn/Ferry (KFY) Q3 adjusted EPS 75c on revs $528M vs. est. 73c and $500.28M

·     Turtle Beach (HEAR) shares rose 10%; 4Q revs $101.8Mm vs. est. $101.4Mm, adjusted EPS 83c vs. est. 71c; sees 2020 revs $224Mm vs. prior $236-242Mm; guides 2020 adj loss 12-45C, sees adj EBITDA $5-10Mm

 

Energy, Industrials & Materials

·     Exxon Mobil (XOM) files debt securities shelf

·     Matador Resources Co. (MTDR) said it was cutting the rigs it operates in half to three rigs by June 30, and its executives are taking pay cuts, in response to the recent sharp selloff in commodity prices; said it expects to release one rig by the end of March and two others by the end of Q2

·     Clean Energy Fuels (CLNE) Q4 adj EPS 21c on revs $119.6M vs. est. 15c and $108.6M; 4Q service revenue rose 31% YoY to $12.1M and product revenue up 24% YoY to $107.5M

·     Vivint Solar (VSLR) Q4 non-GAAP EPS loss ($1.02) vs. est. loss (17c) and reports Q4 revenue $77M vs. est. $88.15M; MW Installed of approximately 66 MWs for the quarter, up 22% over Q4 of FY18 Total cumulative MWs installed were approximately 1,294 MWs

·     Air Products (APD) upgraded to Overweight from Equal Weight at Wells Fargo

 

Financials

·     AllianceBernstein L.P. (AB) announced that preliminary assets under management decreased to $614 billion during February 2020 from $629 billion at the end of January. The 2.4% decline was due to market depreciation, partially offset by total firm wide net inflows into all three distribution channels

·     Invesco Ltd. (IVZ) reported preliminary month-end assets under management (AUM) of $1,159.4 billion, a decrease of 4.9% versus previous month-end. The decrease was driven by unfavorable market returns, net long-term outflows, foreign exchange and net outflows in money market AUM, partially offset by net inflows in non-management fee earning AUM and reinvested distributions

·     Artisan Partners Asset Management Inc. (APAM) reported that its assets under management as of February 29, 2020 totaled $111.7 billion; separate accounts accounted for $58.8 billion of total firm AUM, while Artisan Funds and Artisan Global Funds accounted for $52.9 billion

·     LPL Financial (LPLA) reported total brokerage and advisory assets for Feb. of -4%; said Feb. brokerage, advisory assets $737 billion

·     Information Services (III) Q4 adj. EPS 10c on revs $65.5M vs. est. 7c and $67.13M; said delivered significant profit improvement in the fourth quarter, capping a strong second half that saw the firm achieve its most profitable six months ever, with record adjusted EBITDA of $20 million

·     Endurance (EIGI) announces $40M share repurchase authorization

 

Healthcare

·     Johnson & Johnson’s (JNJ) Janssen Pharmaceutical said the FDA granted Breakthrough Therapy Designation for JNJ-61186372 (JNJ-6372) for the treatment of patients with metastatic non-small cell lung cancer.

·     Avid Bioservices (CDMO) Q3 EPS loss (6c) vs. est. loss (5c); 3Q gross margin 6% vs. 15% YoY; cuts FY 2020 rev guidance to $55M-$59M from $64M-$67M citing problem with equipment that affected manufacturing

·     Kala Pharmaceuticals (KALA) 16M share Spot Secondary priced at $7.89

 

Technology, Media & Telecom

·     Cloudera (CLDR) shares rose 15%; 4Q adj EPS $0.04 vs. est. loss (3c) on revs $211.7Mm vs. est. $201.7Mm; guides 1Q revs $202-207Mm vs. est. $206.4Mm, sees 1Q adj loss (1c) vs. est. loss (3c); guides 2021 FY adj EPS $0.25-0.29 vs. est. $0.00, sees 2021 FY revs $860-880Mm vs. est. $869.4Mm

·     DXC Technology (DXC) announced that it has entered into a definitive agreement to sell its U.S. State and Local Health and Human Services (State & Local HHS) business to Veritas Capital, the leading investor in government and healthcare technology businesses, for $5.0 billion in cash. The sale is the initial outcome of a process announced by DXC in November 2019 to explore strategic alternatives for three of its non-core assets