Early Look

Monday, November 2, 2020

Futures	Up/Down	%	Last
DJ Industrials	479.00	1.81%	26,873
S&P 500	50.50	1.55%	3,315
Nasdaq	136.50	1.24%	11,183

 

 

Stock futures are surging, recovering after last week’s sharp declines ahead of a big week for averages, though oil prices extend losses amid additional lockdowns in Europe in an effort to control the rising Covid-19 cases. U.S. markets head into the Presidential election tomorrow with much uncertainty, following the worst weekly returns for major averages since the pandemic began in March as the Dow fell -6.5%, the S&P 500 dropped -5.6% and the Nasdaq Composite was down -5.5% as rising coronavirus cases (2^nd wave fears), large cap tech earnings related disappointments and fear of no declared winner Tuesday weigh on sentiment. The CBOE Volatility index (VIX) is pulling back after hitting four-month highs last week. In Asian markets, The Nikkei Index rose 318 points to 23,295, the Shanghai Index was little changed at 3,225 and the Hang Seng Index gained 352 points to 24,460. In Europe, the German DAX is higher by 225 points to 11,780, while the FTSE 100 gains 60 points to 5,635. Oil prices slumped more than 4% to the lowest levels since May (below $34 per barrel for WTI) on worries a slew of coronavirus lockdowns across Europe will weaken fuel demand, while markets brace for turbulence during the U.S. Presidential election week. England is going into a second lockdown for one-month and the government will extend the furlough scheme to help protect jobs. UK prime minister Boris Johnson said non-essential shops and hospitality will have to close, and travel will be under new restrictions, from Thursday and until 2 December. Schools and colleges will be allowed to stay open.

 

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -40.15 points, or 1.21%, to 3,296.96

·     The Dow Jones Industrial Average sunk -157.51 points, or 0.59%, to 26,501.60

·     The Nasdaq Composite plunged -274.00 points, or 2.45%, to 10,911.59

·     The Russell 2000 Index declined -23.10 points, or 1.48% to 1,538.48

 

Economic Calendar for Today

·     9:45 AM EST      Markit PMI Manufacturing, for Oct-F…prior 53.3

·     10:00 AM EST    Construction Spending MoM for September…est. 0.9%

·     10:00 AM EST    ISM Manufacturing PMI for October…est. 55.8

 

Earnings Calendar:

·     Earnings Before the Open: AMCX, BWXT, CCLP, CDW, CLX, CNA, CWH, EL, FE, HSIC, HZNP, ITRI, JLL, L, LCII, LDOS, LITE, LL, MPLX, NI, NNN, NSP, ON, PARR, RGS, SUP, TEN, USFD, WING, WM, XTNT

·     Earnings After the Close: ADTN, AIZ, AMC, ANET, BKH, BRKR, CDK, CNO, CPE, CRUS, DOOR, ESPR, EVER, EVRI, FANG, FMC, FRPT, G, GHL, HMN, HURN, IP, IR, JAKK, JCOM, KPTI, LEG, MATX, MDLZ, NPTN, O, OMI, PAA, PINC, PUMP, PYPL, RIG, RMBS, SBAC, STE, SWKS, TREX, VNOM, WMB, WPX, YRCW

 

Other Key Events:

·     China Caixin Manufacturing for Oct

·     Gabelli Annual Auto Aftermarket Symposium, 11/2-11/3 (virtual)

 

 

Macro	Up/Down	Last
WTI Crude	-0.97	34.82
Brent	-0.84	37.10
Gold	9.35	1,988.20
EUR/USD	0.0006	1.1653
JPY/USD	0.07	104.73
10-Year Note	-0.011	0.86%

 

 

World News

·     NY Governor Andrew Cuomo is now requiring people coming to New York to test negative, with the exception of residents from the states of New Jersey, Connecticut and Pennsylvania. Travelers will be required to get tested for COVID-19 three days before arriving in the Empire State. They will then need to quarantine for three days once they arrive, and get tested again on the fourth day. Should the test come back negative, they could exit quarantine. If a person chooses not to get tested, they must quarantine for 14 days

 

Sector News Breakdown

Consumer

·     Inspire Brands Inc. will pay $106.50 per share for Dunkin’ Brands Group Inc. (DNKN) in a $8.8B deal, the companies said, confirming prior reports last week. The deal is the 2nd acquisition of a N.A. restaurant chain in at least a decade at $11.3B including debt, behind the $13.3B deal for Tim Hortons by Restaurant Brands International Inc. in 2014 https://on.wsj.com/3mI3OVy

·     Clorox (CLX) Q1 EPS $3.22 on sales $1.92B vs. est. $2.32 and revs $1.75B; sees FY21 EPS $7.70-$7.95 vs. est. $7.69 and sees year sales growth between 5%-9%

·     Geo Group (CEO) files automatic mixed securities shelf

·     Ingredion (INGR) Q3 adj. EPS $1.77 on revs $1.50B vs. est. $1.45 and $1.47B; announced that it has signed an agreement with James Cameron and Suzy Amis Cameron to acquire the remaining portion of ownership in Verdient Foods that the company did not already own

·     Lumber Liquidators (LL) Q3 adjusted EPS 67c on revs $295.8M vs. est. 23c and $275.72M; Q3 comparable store sales rose 10.9%; said it is not providing yearly guidance

·     Under Armour (UAA) upgraded to Buy from Hold at Stifel

·     Nio (NIO) provides its October 2020 delivery results saying it delivered 5,055 vehicles, +100.1% YoY, deliveries consisted of 2,695 ES6s, 1,477 ES8s and 883 EC6s and said YTD deliveries reached 31,430 units, an increase of 111.4% over the prior year.

 

Energy

·     Oil prices fall as much as 6% overnight Libya and Iraq are also boosting their production, causing a rise in overall supply from OPEC+, despite having reduced quotas across its other members.

·     ConocoPhillips (COP) upgraded to Buy from Neutral at Bank America

·     PBF Energy (PBF) upgraded to Neutral from Sell at Goldman Sachs

·     Par Pacific EPS (PARR) Q3 Non-GAAP EPS of -$1.06 beats by $0.11; GAAP EPS of -$0.27 beats by $0.95 and revenue of $689.98M (-50.7% Y/Y) beats by $97.2M

·     Douglas Dynamics (PLOW) reports Q3 adjusted EPS 42c on revs $133.8M vs. est. 34c/$116.73M; said Q3 saw sequential improvements with customers and suppliers slowly ramping up their operations and learning to operate with pandemic related restrictions

·     Marathon Petroleum (MPC) Q3 Non-GAAP EPS of -$1.00 beats by $0.74; GAAP EPS of -$1.57 beats by $0.17; Q3 revenue of $17.55B (-36.6% Y/Y) misses by $530M.

 

Financials

·     Piper Sandler upgrades insurance broker Arthur J Gallagher (AJG) to overweight from neutral and downgraded Marsh & McLennan (MMC), Aon (AON) and Willis Towers Watson (WLTW) to neutral from overweight saying AJG’s organic growth is “solidly positive”, while that of larger brokers mostly flat. Says with little change to strategy and management over the past decade, AJG seen as a relatively stable place to work for producers

·     Mall owner CBL & Associates Properties (CBL) has filed for Chapter 11, as the pandemic kept consumers at home and forced many retailers to quit paying rent. Some of the company’s biggest renters, including J.C. Penney and Ascena Retail have already filed for bankruptcy

 

Healthcare

·     DBV Technologies (DBVT) soars over 100% following the validation of its marketing authorization application for Viaskin Peanut by the European Medicines Agency

·     Walgreens Boots Alliance (WBA) and McKesson (MCK) complete their previous agreement to create a joint venture (JV) combining respective pharmaceutical wholesale businesses in Germany, Alliance Healthcare Deutschland and GEHE Pharma Handel.

·     Novartis (NVS) announces that HER-MES, the first Phase IV, randomized, double-dummy, study of Aimovig (erenumab) against topiramate, an anticonvulsant, in patients with episodic and chronic migraine met its primary and secondary endpoints.

·     Orchard Therapeutics (ORTX) shares fell late Friday after the company said it was notified that a patient treated with Strimvelis under a compassionate use program in 2016 has been diagnosed with lymphoid T-cell leukemia

·     Managed-care stocks such as Anthem (ANTM) mentioned positively in Barron’s saying the company adds to its Medicare and Medicaid membership rolls and expands into areas such as behavioral health and pharmacy benefits. Barron’s notes health insurance stocks have outperformed the broader market and health-care sector in the months after presidential elections

 

Industrials & Materials

·     Boise Cascade (BCC) reportQ3 EPS $2.61 on sales $1.59B vs. est. $1.62b; and Q3 adjusted Ebitda $178.6M vs. $64.1M YoY

·     Industrial stocks Parker-Hannifin (PH), Littlefuse (LFUS) and TE Connectivity (TEL) could benefit if the U.S. makes an economic comeback like China’s, Barron’s reports. Parker-Hannifin and Littlefuse are both high-quality companies with short-cycle products. TE Connectivity could get a boost from a global auto recovery

 

Technology, Media & Telecom

·     Apple (AAPL) ordered to pay VirnetX (VHC) $503M in security-patent trial, Bloomberg said

·     Ambarella (AMBA) unveils the CV28M CVflow® processor for artificial intelligence (AI) providing flexibility required to enable a new class of smart devices for a variety of applications including smart home security, retail monitoring, consumer robotics, and occupancy monitoring.

·     Nielsen (NLSN) agreed to sell the Global Connect business to Advent International for $2.7 billion, subject to working capital, cash, debt-like items and other customary adjustments and NLSN also receives warrants in the new business.

·     On Semiconductor (ON) Q3 EPS 27c on revenue $1.32B vs. est. 20c and $1.27B; sees Q3 revs $1.3B-$1.4B vs. est. $1.31B

·     Twitter (TWTR) announced it was reinstating the New York Post’s account after it changed the policy that had kept the newspaper frozen out of the platform for more than two weeks

·     Zynga (ZNGA) has been overshadowed by larger video-game makers, Barron’s says. The company, initially seen as an offshoot of Facebook, has turned around by building fewer games and focusing on reaching a broader user base