Early Look

Tuesday, March 24, 2020

Futures	Up/Down	%	Last
DJ Industrials	915.00	5.03%	19,427
S&P 500	113.00	5.09%	2,333
Nasdaq	375.00	5.37%	7,359

 

 

U.S. futures reach limit up with global stock markets surging around the world as stimulus talks are ongoing despite a failed effort to pass a bill yesterday in Washington, while European markets bounce amid tentative signs that the coronavirus spread is slowing in Italy, one of the worst-hit countries. Both new cases and deaths dropped for two days in Italy. “It means it took Italy 43 days from first case to peak case and 12 days after implementing the strictest travel restrictions. 43 days was exactly the same amount of time as it took South Korea to reach its apex. And if such is the case, the U.S. would be 14 days behind Italy. In Asian markets, The Nikkei Index surged 1,204 points (7.13%) to move back above the 18,000 level, the Shanghai Index rose 62 points (2.3%) to close at 2,722 and the Hang Seng Index jumped 967 points (4.4%) to settle at 22,663. In Europe, the German DAX is higher by 550 points (6.5%) trading above the 9,300 level, while the FTSE 100 is higher by over 200 points to reclaim the 5,200 level. Stocks in the U.S. also received positive news yesterday after the Fed said it would buy an unlimited number of Treasuries and mortgage-backed securities, starting with $125 billion every business day this week. Commodity prices are also rising with both oil and gold prices significantly higher.

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -67.52 points, or 2.93%, to 2,237.40

·     The Dow Jones Industrial Average fell -582.05 points, or 3.04%, to 18,591.93

·     The Nasdaq Composite dipped -18.84 points, or 0.27%, to 6,860.67

·     The Russell 2000 Index declined -11.49 points, or 1.13% to 1,002.40

 

Economic Calendar for Today

·     7:45 AM EST      ICSC Weekly Retail Sales

·     8:55 AM EST      Johnson/Redbook Weekly Sales

·     9:45 AM EST      Markit US Manufacturing PMI, March-P…est. 43.5

·     9:45 AM EST      Markit US Services PMI, Mar-P…est. 42.0

·     10:00 AM EST    New Home Sales MoM for Feb…est. (-1.8%) to 750K

·     10:00 AM EST    Richmond Fed Index for March…est. (-15)

·     4:30 PM EST       API Weekly Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: FRAN

·     Earnings After the Close: AIR, GO, HOME, NKE, PUMP, SCS, SNX

 

 

Macro	Up/Down	Last
WTI Crude	1.44	24.80
Brent	1.17	28.20
Gold	67.30	1,639.60
EUR/USD	0.0128	1.0854
JPY/USD	-0.67	110.56
10-Year Note	0.039	0.825%

 

 

World News

·     President Donald Trump said he called Federal Reserve Chairman Jerome Powell and told him he’d done a “good job” as the central bank has taken a number of steps to cushion the blow to the economy from the spread of the coronavirus. The Fed has slashed its benchmark interest rate to zero and announced it would purchase an unlimited number of Treasuries and securities tied to residential and commercial real estate t

·     U.K. Prime Minister Boris Johnson on Monday imposed a virtual lockdown, advising citizens to only leave homes for essential shopping, healthcare and daily exercise.

·     The flash U.K. composite purchasing managers index fell in March to a survey low of 37.1 from 53 in February, according to the latest data from IHS Markit/CIPS. Any reading below 50 indicates deteriorating conditions. The services index plunged to a record low 35.7 from 53.2

 

Sector News Breakdown

Consumer

·     iRobot (IRBT) guides Q1 revenue $175M-$185M below estimate $210.3M and withdraws year guidance while asks employees to work from home where possible

·     Thor Industries (THO) said it will temporarily suspend North American production as the coronavirus sparks new regulations across the U.S. that place limits on its workforce

·     Nordstrom (JWN) suspends quarterly cash dividend (latest retailer to do so to preserve cash) and said is drawing down $800M on revolving line of credit

·     Marriott International’s (MAR) senior unsecured debt rating was downgraded by Moody’s Investors Service to Baa3 from Baa2

·     SeaWorld (SEAS) said it won’t meet its adj. Ebitda target of $475M-$500M by 2020 citing the uncertainty of the impact from COVID-19 and the temporary closure of its parks

·     AB InBev (BUD) said given the uncertainty, volatility and fast-moving developments of the pandemic in the markets in which AB InBev operates, the company is withdrawing that 2020 outlook in its entirety because of the impact of COVID-19

 

Energy, Industrials & Materials

·     Chevron (CVX) cut its 2020 cap-ex spending plan by $4B or 20% and suspends share buyback plan

·     EnLink Midstream (ENLC) announced an update regarding its financial strategy, including a reduction in its quarterly common unit distribution by 50%

·     Precision Drilling (PDS) cut its capital expenditure forecast for the full year; the guidance missed the lowest analyst estimate as sees FY capital expenditure C$48M, down from prior C$95M view

·     Wabco (WBC) and ZF anticipate that Chinese State Administration for Market Regulation’s approval will be received without significant delay; sees deal close in the second quarter of 2020

·     Laredo Petroleum (LPI) reduced its 2020 capital budget 36% to $290M from $450M and said Feb. 26 guidance can no longer be relied upon; expects ~$90m in free cash flow, excluding non-budgeted acquisitions, for 2020

·     Ball Corp. (BLL) and Crown Holdings (CCK) both upgraded to Buy from Neutral at Goldman Sachs

 

Financials

·     New York Mortgage Trust (NYMT) said it doesn’t expect to fund future margin calls; received margin calls from repurchase agreement financing counterparties over the past week after the turmoil in the financial markets resulting from the global coronavirus pandemic.

·     Raymond James (RJF) reported financial assets under management for Feb. of $144.5 billion, +5.7% YoY and said overall assets under administration $854.8 billion, +8.9% YoY

·     IHS Markit (INFO) Q1 adjusted EPS 66c on revs $1.081B vs. est. 64c/$1.08B; targets double-digit earnings growth this year

 

Healthcare

·     Novavax Inc. (NVAX) shares rise 30% after saying its NanoFlu treatment for seasonal flu achieved all primary endpoints in a phase 3 trial for adults 65 an older. NanoFlu was well tolerated and had a safety profile comparable to Fluzone Quadrivalent

·     Gilead Sciences (GILD) said its remdesivir granted orphan designation by the FDA as treatment of COVID-19

·     Milestone Pharmaceuticals (MIST) announces topline results from first-of-its-kind phase 3 NODE-301 trial of Etripamil for at-home acute PSVT Treatment missed primary endpoint of mean time to conversion of SVT to SR over a five-hour period following dosing (p=0.12); study demonstrated a positive safety profile showing Etripamil was well tolerated in the at-home setting

 

Technology, Media & Telecom

·     Twitter (TWTR) said while the near-term financial impact of this pandemic is rapidly evolving and difficult to measure, based on current visibility, the company expects Q1 revenue to be down slightly on a year-over-year basis; also expects to incur a GAAP operating loss, as reduced expenses resulting from COVID-19 disruption are unlikely to fully offset the revenue impact of the pandemic in Q1

·     Nvidia (NVDA) upgraded to buy from hold at Needham saying investors should favor companies with superior balance sheets and robust free cash flow in an uncertain economic time

·     Applied Materials (AMAT) withdraws Q2 outlook; says remains committed to proposed acquisition of Kokusai Electric

·     Booking Holdings (BKNG) said to implement hiring freeze, says will dramatically reduce global marketing spend, brand CEOs to forego salaries