Early Look

Thursday, March 12, 2020

Futures	Up/Down	%	Last
DJ Industrials	-1231.00	5.25%	22,210
S&P 500	-131.50	4.80%	2,598
Nasdaq	-392.00	4.90%	7,600

 

 

Stocks futures are cratering, with overnight circuit breakers kicking in for the second time in a week (limit-down again) after President Trump announced a 30-day travel ban between Europe and the U.S. starting Friday due to the coronavirus outbreak, causing another sharp decline in oil prices down over 6%, with more weakness in travel and leisure related stocks as uncertainty grows about when things can return back to normal. In sports news, the NBA suspended its season until further notice after a player tested positive for the virus last night, another blow to ticket vendors, hotels and retailers/restaurants. Stocks dropped yesterday after the WHO declared the coronavirus a pandemic while market looks for fiscal stimulus that could help ease tensions temporarily, but is not likely to get people to rush out and spend as the economic impact from the virus appears more significant by the day. Coming into today, the S&P500 and Nasdaq have closed lower for four of the past five trading days. The S&P500 index is down 15.15% year-to-date and at its lowest level since February 11 last year, while Nasdaq is down 11.37% for the year. At last count as of last night a total of 124,578 cases, 4,584 deaths, U.S. case count is now 1,110, with 30 deaths in California, Florida, New Jersey, South Dakota, and Washington state, according to the most recent data.

 

President Donald Trump spoke live from the Oval Office at 9:00 PM Eastern last night, detailing plans on how the government is addressing the spreading coronavirus outbreak, including economic stimulus plans and said all travel between the U.S. and Europe will be suspended for 30 days, beginning Friday. The news followed another steep selloff on Wall Street on Wednesday that snapped a more-than-decade-long bull market for the Dow Jones Industrial Average, falling over 20% from its all-time peak. The S&P 500 will fall into a bear market if it closes below 2,708.92 — a little over 32 points — while the Nasdaq will do so if it closes under 7,853.74, about 98 points lower than Wednesday’s close. In Asian markets, The Nikkei Index drop -856 points (4.4%) to 18,559, the Shanghai Index dropped -45 points to 2,923 and the Hang Seng Index plunge -922 points to 24,309. In Europe, the German DAX is lower by -600 points to 9,830 (5.7%), while the FTSE 100 is down over -300 points to 5,540 (5.7%).

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -140.85 points, or 4.89%, to 2,741.38

·     The Dow Jones Industrial Average fell -1,464.94 points, or 5.86%, to 23,553.22

·     The Nasdaq Composite plunged -392.20 points, or 4.70%, to 7,952.05

·     The Russell 2000 Index declined -86.60 points, or 6.41% to 1,264.30

 

Economic Calendar for Today

·     8:30 AM EST      Weekly Jobless Claims

·     8:30 AM EST      Continuing Claims

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

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

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

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

·     10:30 AM EST    Weekly EIA Natural Gas Inventory Data

·     12:00 PM EST    Change in Household net worth for Q4

 

Earnings Calendar:

·     Earnings Before the Open: ACTG, AGEN, DG, ESTE, GCO, HZN, LXRX, PRRY, PTE, RUBY, SELB

·     Earnings After the Close: ADBE, ADMA, AVGO, BLCM, CAL, DOCU, DOMO, FLXN, GPS, ORCL, TLYS, ULTA, UNIT, VRAY, WORK, XONE, ZUMZ, ZUO

 

Other Key Events:

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

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

 

 

Macro	Up/Down	Last
WTI Crude	-1.81	31.17
Brent	-2.06	33.73
Gold	-3.80	1,638.50
EUR/USD	-0.0038	1.1232
JPY/USD	-0.73	103.81
10-Year Note	-0.177	0.692%

 

 

World News

·     President Donald Trump spoke live from the Oval Office at 9:00 PM Eastern last night, detailing plans on how the government is addressing the spreading coronavirus outbreak, including economic stimulus plans and said all travel between the U.S. and Europe will be suspended for 30 days, beginning Friday.

·     In another casualty to the coronavirus, the National Basketball Association (NBA) has suspended its season “until further notice” after a Utah Jazz player tested positive Wednesday for the coronavirus, a move that came only hours after the majority of the league’s owners were leaning toward playing games without fans in arenas.

·     Coronavirus count: At last count as of last night a total of 124,578 cases, 4,584 deaths, U.S. case count is now 1,110, with 30 deaths in California, Florida, New Jersey, South Dakota, and Washington state, according to the most recent data. Spain now has 2,182 cases and 49 deaths; Germany, 1,908 cases and three deaths. Italy, which is under a countrywide quarantine, has 12,462 cases and 827 deaths, and France has 1,784 cases and 33 deaths

 

Sector News Breakdown

Consumer

·     Del Taco (TACO) Q4 adjusted EPS 18c/$157.1M vs. est. 17c/$157.32M; reports Q4 system-wide comp sales up 0.4% below est. 1.3%; sees fy2020 system-wide comparable restaurant sales growth of low single digits; sees year EPS 35c-40c on revs $503M-$513M vs. est. 47c and $504.8M

·     Limoneira (LMNR) Q1 EPS loss (30c) vs. est. loss (20c) and reports Q1 revenue $41.7M vs. est. $43.05M; Q1 Adjusted EBITDA was ($5.1M) vs. ($0.6M) last year; reiterates guidance for FY20

 

Energy, Industrials & Materials

·     Oneok (OKE) cut its 2020 capital expenditure forecast to range of $1.6B-$2.4B down from $2.25B-$2.73B, but says it expects 2020 results to be within its prior guidance ranges

·     Kronos (KRO) Q4 EPS 8c/$372.7M vs. est. 13c/$378.0M; said 4Q TiO2 Product pricing change -3% vs. -2% YoY and posted lower net income in the 2019 periods primarily due to lower income from operations resulting from the effects of lower average selling prices and higher raw materials and other production costs partially offset by higher sales volumes

·     Park-Ohio Holdings (PKOH) 4Q adjusted EPS 65c vs. est. $1.00; 4Q net sales $379.5M below the estimate $401.7M; to buy back up to 1 million shares

 

Financials

·     Farmland Partners (FPI) Q4 AFFO/share 28c vs. estimate 27c on revs $21.9M vs. est. $20.4M

 

Healthcare

·     Novavax (NVAX) Q4 EPS loss ($1.13) vs. est. loss ($1.07); 4Q revenue $8.82M vs. est. $2.89M; 4Q cash and cash equivalents $78.8 million, +12% YoY; says NanoFlu phase 3 top-line data expected end of month; says covid-19 vaccine phase I expected in May or June

·     PDL BioPharma (PDLI) shares fell -30%; Q4 EPS loss (48c) while 4Q cash and cash equivalents fell -51% YoY to $193.5M; announces plan to dissolve the company by year-end 2020 – targeting to file a certificate of dissolution under Delaware law by year-end 2020

 

Technology, Media & Telecom

·     Lantronix (LTRX) said it now expects net revenue of $15M-$17M, down from prior view for Q3 revenue of $18M plus/minus 10% citing the near-term disruption to our business as a result of COVID-19

·     Semtech (SMTC) Q4 adj EPS 40c on sales $138M vs. est. 36c and $134.5M; guides Q1 EPS 30c-36c on sales $125M-$135M vs. est. 32c and $132.4M; sees Q1 gross margins 61%-62%

·     Zagg (ZAGG) Q4 operating EPS 94c vs. est. $1.01 and revenue $189.9M well below consensus $207.29M; sees FY20 diluted EPS approximately 50c, below est. $1.00 while sees FY20 net sales flat compared to FY19 and sees FY20 gross profit margin as a percentage of net sales in the mid 30’s range – board suspended its review of strategic alternatives, which was first publicly announced on august 6, 2019 saying was unable to finalize a definitive offer at a price that was not significantly below current trading levels

·     Blizzard (ATVI) said that it has canceled all Overwatch League events in March and April amid coronavirus fears. “The health and safety of employees, fans, players, teams, and partners is paramount to Activision Blizzard Esports,” the company said