Early Look

Monday, March 30, 2020

Futures	Up/Down	%	Last
DJ Industrials	-11.00	0.05%	21,426
S&P 500	5.50	0.23%	2,529
Nasdaq	26.50	0.35%	7,595

 

 

U.S. stock futures are mixed to little changed overnight for the first time in weeks, coming off a dreadful Friday performance of roughly down 4%, but also the best weekly performance overall in over a decade as stock markets weigh the impact of the coronavirus on economies. Over the weekend, President Trump yielded to advice from health professionals as he extended the social-distancing guidelines until April 30, later than his prior “hopes” of ending them by Easter. “Nothing would be worse than declaring victory before the victory is won,” Trump said. Earlier Sunday, Anthony Fauci, the director of the National Institute of Allergy and Infectious Diseases, said more than 100,000 Americans could die from coronavirus. There are now 724,945 cases of COVID-19 and at least 34,041 people have died, according to aggregated data from Johns Hopkins Whiting School of Engineering’s Centers for Systems Science and Engineering. About 152,314 people have recovered from the novel coronavirus that has sickened people in 176 countries. The U.S now has the greatest number of cases worldwide, with 143,055 cases and 2,513 deaths, China 82,156 cases and 3,308 deaths and Italy has 97,689 cases and 10,779 deaths. In Asian markets, The Nikkei Index fell -304 points to 19,084, the Shanghai Index dipped -25 points to 2,747 and the Hang Seng Index dropped -309 points to 23,175. In Europe, the German DAX is lower by about -20 points to hold just above the 9,600 level, while the FTSE 100 slipped -40 points to 5,470. European banks dropped on Monday to pace a broader market retreat after the chief regulator for the region recommended no dividend payments be made until the autumn. Stocks fell Friday, but for the week, stocks were lifted as U.S. lawmakers put together a $2 trillion stimulus package aimed at easing the blow of the pandemic to workers and businesses as the Dow still booked a 12.8% weekly advance, its strongest since 1938 despite falling 4% Friday, while the S&P 500 rose 10.3% for its biggest such jump since 2008 and the Nasdaq Composite’s 9.1% weekly rise was the biggest since March 2009.

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -88.60 points, or 3.37%, to 2,541.47

·     The Dow Jones Industrial Average fell -915.42 points, or 4.06%, to 21,636.78

·     The Nasdaq Composite plunged -295.16 points, or 3.79%, to 7,502.38

·     The Russell 2000 Index declined -48.33 points, or 4.09% to 1,131.99

 

Economic Calendar for Today

·     10:00 AM EST    Pending Home Sales MoM for Feb

·     10:30 AM EST    Dallas Fed Manufacturing for March

 

Earnings Calendar:

·     Earnings Before the Open: CALM

·     Earnings After the Close: None

 

 

Macro	Up/Down	Last
WTI Crude	-1.11	20.40
Brent	-1.99	22.94
Gold	-8.40	1,645.60
EUR/USD	-0.0082	1.1059
JPY/USD	0.08	108.02
10-Year Note	-0.025	0.649%

 

 

World News

·     U.S. deaths from coronavirus could reach 200,000 with millions of cases, Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases warned on Sunday as New York, New Orleans and other major cities pleaded for more medical supplies. The U.S. coronavirus death toll topped 2,300 on Sunday, after deaths on Saturday more than doubled from the level two days prior

·     The European Commission said its Economic Sentiment Indicator–a measure of sentiment among companies and households–fell to 94.5 from 103.4 in February, the largest drop since the series began in 1985. That left the measure at its lowest level since August 2013.

·     Fitch cuts UK credit rating to AA- from AA

 

Sector News Breakdown

Consumer

·     Casino regulators are delaying a review of the casino industry merger between Eldorado Resorts (ERI) and Caesars Entertainment (CZR) in a development that is seen raising the odds that the deal is ultimately scuttled as Vegas stays dark for the near future https://bit.ly/2UNn73c

·     La-Z-Boy (LZB) announced the temporary closure of its U.S. manufacturing facilities, effective immediately as it furloughs 6,800 employees, or ~70% of its global workforce; will cut salaries for senior management by 50% and salaried employees by 25%.

·     Gaming and Leisure Properties (GLPI) reached agreements to acquire real estate assets of the Tropicana Las Vegas hotel and casino and the land from Penn National Gaming (PENN) in exchange for an aggregate non-cash rent payment of $337.5M

·     New York Gov. Andrew Cuomo is reportedly considering a six-week ban on combustible cigarettes to reduce the state’s coronavirus death rate, according to reports. The ban could come as soon as tomorrow as part of the planned budget measure announcement – Seeking Alpha

·     Cal-Maine (CALM) Q4 EPS 28c on sales $345.6M vs. est. 18c and $338.3M

·     Jeld-Wen (JELD) said due to coronavirus restrictions, it temporarily suspended production at locations that cumulatively represent less than 10% of its 2019 consolidated net revenues.

 

Energy, Industrials & Materials

·     Crude-oil futures slumped over 4% in electronic trade, having briefly fallen below $20 a barrel. “From a technical point of view, the price is now dancing between the significant figure of $20 and the support at $20.50, which is the bottom reached in the last few weeks

·     Phillips 66 (PSX) upgraded to Outperform from Sector Perform at RBC Capital saying 2020 is shaping up to be the most dislocated petroleum market in decades, and Phillips 66’s extensive” logistics and marketing network has historically allowed them to take advantage of dislocations better than peer

·     Saudi air defenses shot down ballistic missiles late Saturday night fired at the country’s capital and a city along its southern border; officials blamed Iran-backed Houthi forces in Yemen

 

Financials

·     European banks dropped (CS, DB, UBS) to pace a broader market retreat after the chief regulator for the region recommended no dividend payments be made until the autumn

·     Jefferies Financial Group (JEF) announced that Jefferies Group CFO Peg Broadbent has died from coronavirus complications

·     Morgan Stanley (MS) won U.S. antitrust approval for its $13B acquisition of E*TRADE (ETFC), Bloomberg reported late Friday

·     Redwood Trust (RWT) delays the payment date for its previously declared 32c stock dividend for Q1 to June 12 from the original date of March 30

·     Taubman Centers (TCO) said this weekend that “Landlord’s obligation to pay its lenders, utility companies, insurance companies and the like, to ensure the safety and security of the building and maintain the appropriate level of operations, remains,

 

Healthcare

·     AstraZeneca PLC (AZN) said that trials for its diabetes drug Farxiga in patients with chronic kidney disease were stopped early based on its determination of overwhelming efficacy

·     Novartis (NVS) CEO Vas Narasimhan said in an interview with German magazine Sonntagszeitung, that pre-clinical studies in animals as well as the first data from clinical studies show that its hydroxychloroquine malaria drug kills the coronavirus.

·     Amgen (AMGN) upgraded to Outperform from Market Perform with a $255 price target at Raymond James saying the company already provided conservative guidance for 2020 during the Q4 earnings call, and disruption from the COVID-19 should not be outsized relative to peers

·     Axsome’s (AXSM) phase 3 trial in treatment resistant depression on AXS-05 did not reach statistical significance on the Week 6 primary endpoint on Montgomery-Åsberg Depression Rating Scale.

·     Boston Scientific (BSX) said medical authorities globally including the U.S. Surgeon General, the American College of Surgeons, and the U.K. National Health Service have advised the deferral of elective medical procedures because of COVID-19

·     Bruker (BRKR) Q4 adjusted EPS 53c on revs $599.9M vs. est. 59c and $597.68M; concludes internal investigation, no violations found; suspends FY20 guidance due to COVID-19 disruption

·     Cigna (CI) and Humana (HUM) said they will waive out-of-pocket costs for patients who need treatment for COVID-19 – Bloomberg

·     Edwards Lifesciences (EW) has temporarily suspended new enrollment in its active pivotal studies of transcatheter mitral and tricuspid therapies citing urgent COVID-19 responses around the globe; said enrollment will resume after consulting with each investigator and hospital after COVID-19 pressures subside

·     Medtronic (MDT) announced positive results from a 331-subject pivotal clinical trial, SPYRAL HTN-OFF MED, evaluating Breakthrough Device-tagged Symplicity Spyral Renal Denervation System in patients with uncontrolled high blood pressure who were not taking antihypertensive medications

·     Moderna (MRNA) pauses new enrollment for its Phase 1 rare disease clinical trials and the age de-escalation trial for its pediatric respiratory vaccine, citing the safety and health risks of the coronavirus pandemic.

 

Technology, Media & Telecom

·     ASML Holdings (ASML) lowers guidance; said it now expects Q1 revenue between 2.4B-2.5B euros ($2.67B-$2.78B) compared with previous guidance of EUR3.1 billion to EUR3.3 billion. Gross margin for the first quarter is anticipated to be between 45% and 46%, lower than its previous expectation of between 46% and 47%, ASML said.

·     Foxconn Technology Group’s Q4 net profit fell 23.7% before the coronavirus pandemic struck the world’s biggest contract electronics assembler and its largest customer, Apple Inc.; net profit for the fourth quarter, which ended in December, was 47.8 billion new Taiwan dollars ($1.6 billion),

·     Tegna (TGNA) said it received four unsolicited acquisition proposals in recent weeks and “engaged substantially” with two of them. Those two parties made proposals shortly before the recent market dislocation due to the Covid-19 pandemic and both told Tegna they’re ending talks. The other two parties have not signed confidentiality agreements to enable due diligence and have not delivered any information on financing sources.

·     Amazon (AMZN) is offering higher pay to recruit its own warehouse employees to pick and pack Whole Foods groceries amid rising demand and a worker shortage – Reuters