Early Look

Wednesday, November 18, 2020

Futures	Up/Down	%	Last
DJ Industrials	59.00	0.20%	29,779
S&P 500	6.50	0.18%	3,613
Nasdaq	28.00	0.23%	12,003

 

 

Stock futures rebound off overnight losses, helped for a third day in a row on vaccine news as the FDA has issued an emergency use authorization (EUA) to the single-use COVID-19 diagnostic test kit from Lucira Health, a California manufacturer. The Lucira COVID-19 All-In-One at home test kit provides rapid results. To date, the Agency has authorized nearly 300 tests for coronavirus. Markets also await more retail earnings as Lowe’s and Target report today, follows better results from Dow component Home Depot and Wal-Mart yesterday, though shares slumped. There was been absolutely no fear for global stock markets, with many main indexes trading at or near all-time highs as investors pile into equities on the hopes of a global economic recovery and as they await additional stimulus fiscal. In Asian markets, The Nikkei Index fell -286 points to 25,728, the Shanghai Index rose 7 points to 3,347 and the Hang Seng Index gained 129 points to 26,544. In Europe, the German DAX is higher by 35 points to 13,170, while the FTSE 100 is little changed at 6,367. Oil prices look higher, Treasury yields lower and the dollar mixed. U.S. stocks ended mostly lower on Tuesday, as the Russell 2000 SmallCap index was the only major to add to record highs as a decline in pharmacy retailers and drug distributors (on AMZN entrance into the industry) and weaker economic data led to modest profit taking. Recovery and stay-at-home sectors were mixed as cruise lines and retailers advanced along with a midday rebound in energy while airlines were mixed and casinos fell. There are a few Fed speakers today, as well as housing data, but markets key focus remains the hopes for a vaccine and the extended market rally.

 

Economic Calendar for Today

·     7:00 AM EST      MBA Mortgage Applications Data

·     8:30 AM EST      Housing Starts MoM for October…est. 1.46M

·     8:30 AM EST      Building Permits MoM for October…est. 1.56M

·     10:30 AM EST    Weekly DOE Inventory Data

·     12:15 PM EST    Fed’s Williams takes part in webinar discussion

·     1:20 PM EST       Fed’s Bullard discusses Economic Outlook

·     6:00 PM EST       Fed’s Kaplan moderates panel discussion

 

Earnings Calendar:

·     Earnings Before the Open: AVYA, LOW, SR, TGT, TJX

·     Earnings After the Close: CUB, JACK, KEYS, LB, NUAN, NVDA, SCVL, SONO, UGI, UTI

 

Other Key Events:

·     Citigroup Financial Technology Virtual Conference, 11/16-11/19

·     Cowen Annual Semi and Semi-cap Equipment Bus Tour, 11/17-11/20

·     American Association for Study of Liver Diseases virtual, 11/16-11/19

·     Jefferies West Coast Consumer Virtual Conference, 11/17-11/18

·     RBC Capital Global Tech, Media, Telecom Virtual Conference, 11/17-11/18

·     REITWorld 2020 Annual Virtual Conference, 11/17-11/19

·     Wolfe Virtual Healthcare Conference, 11/18-11/19

 

Market Closing Prices Yesterday

·     The S&P 500 Index slipped -17.38 points, or 0.48%, to 3,609.53

·     The Dow Jones Industrial Average fell -167.09 points, or 0.56%, to 29,783.35

·     The Nasdaq Composite dropped -24.79 points, or 0.21%, to 11,899.34

·     The Russell 2000 Index declined -6.58 points, or 0.37% to 1,791.91

 

 

Macro	Up/Down	Last
WTI Crude	0.37	41.80
Brent	0.42	44.17
Gold	-4.65	1,875.70
EUR/USD	0.0012	1.1875
JPY/USD	-0.32	103.87
10-Year Note	-0.008	0.86%

 

 

World News

·     President Donald Trump’s year-long effort to install Judy Shelton at the Federal Reserve fell short on Tuesday, as COVID quarantines and a lack of GOP support sank her nomination. The U.S. Senate failed to confirm the former Trump transition economic adviser in a 47-50 vote, derailing the president’s bid to reshape the central bank before his expected departure

·     U.S. Senate Majority Leader Mitch McConnell said that he is open to a $500B COVID-19 relief package, but noted that he has not had any private talks with House Democrats or Democratic President-elect Joe Biden

·     A U.S. travel group said that travel spending is expected to fall by more than $500 billion in 2020 and is not expected to recover to pre-coronavirus levels until 2024. The U.S. Travel Association projects spending in 2019 will be $617 billion, down from its July forecast of $622 billion, compared with $1.13 trillion in 2019 – Reuters

 

Sector News Breakdown

Consumer

·     Target Corp. (TGT) Q3 EPS $2.79 on revs $22.34B above est. $1.60 and $20.93B; Q3 comp store sales up 20.7%; in q3, same-day services growth for drive up increased more than 500% and same-day services growth for ship grew nearly 280%; sees resuming share repurchases in 2021

·     Lowe’s (LOW) Q3 adj. EPS $1.98 on revs $22.31B vs. est. $1.99 and $21.25B; Q3 comparable sales increased 30.1% and comp sales for the U.S. home improvement business increased 30.4% in Q3; sees Q4 adj. EPS $1.10-$1.20 vs. est. $1.16 and sees Q4 comparable sales also up 15%-20%

·     Tesla (TSLA) upgraded to overweight from equal-weight at Morgan Stanley and raises PT to $540 from $360 as adds software and connected vehicle services revenue to his earnings forecast and base case valuation, including Tesla Energy and Tesla Insurance

·     Norwegian Cruise Line (NCLH) 40M share Block Trade priced at $20.80

·     Copa Holdings (CPA) reports October traffic down 87.8%, capacity down 85.2%, load factor was 69.9% vs. 85% a year ago; said has now restarted regular operations and is gradually increasing its capacity

·     K12 (LRN) to acquire coding and information technology education provider Tech Elevator at ~$23.5M in all-cash deal.

·     La-Z-Boy (LZB) 2Q adj EPS $0.82 vs. est. $0.50 on revs $459.1Mm vs. est. $433.7Mm, quarterly written comps for entire galleries network +34%; sees consolidated sales +0-4% in 3Q vs. est. +7.6%, sees 4Q sales +40-45% vs. est. +13.2% (vs pandemic closures); also reinstates dividend of $0.14 per share

·     Nio Inc. (NIO) 3Q revs RMB 4.526B vs. est. 4.38B and EPS loss (12c) vs. est. (17c); says expects to deliver 16,500 to 17,000 vehicles in 4Q after Q3 deliveries 12,206; sees 4Q revenue 6.26 billion yuan to 6.44 billion yuan vs. estimate 5.42 billion yuan; gross margin increased from negative 12.1% last year to positive 12.9%

·     Polaris (PII) CEO Scott Wine to leave to assume CEO role at CNH Industrial (CNHI); reaffirms full year 2020 sales and earnings guidance; adjusted net income is expected to be in the range of $7.15 to $7.30 per diluted share for the full year 2020, a 13%-16% increase over 2019, on expected sales growth in the range of 2%-3% compared to 2019 adjusted sales of $6,783 million

·     European registrations of new cars declined by 7.8% to 953,615 units, as several European governments reimposed curtailments to battle resurgence of the coronavirus

 

Energy, Industrials and Materials

·     The American Petroleum Institute (API) showed a bigger than expected build of 4.17M barrels of oil for the week ending Nov. 14; gasoline inventories show a build of 256K barrels, distillate inventories show a draw of 5.02M barrels and Cushing inventories show a build of 1.64M barrels.

·     TechnipFMC (FTI) said it received a notice to proceed for a major Engineering, Procurement and Construction contract by Sempra Energy (SRE) and IENova at the Energía Costa Azul liquefied natural gas facility in Mexico; for TechnipFMC, a “major” contract exceeds $1B.

·     FirstEnergy (FE) said it received notice from the NYSE that it is not in compliance with the exchange’s continued listing requirements because of its failure to file its Form 10-Q for Q3. FirstEnergy now has six months to file the form and any subsequent delayed filings.

·     MSC Industrial Direct Co., Inc. (MSM) declares $3.50 per share special dividend.

·     Resideo (REZI) 17M share Secondary priced at $15.00

·     The U.S. House today unanimously approved legislation to reform the FAA’s aircraft certification process in the wake of the two fatal Boeing (BA) 737 MAX crashes.

 

Financials

·     Robinhood eyeing IPO as soon as first quarter of 2021 according to reports yesterday; at its most recent funding round in September, Robinhood raised $460M at an $11.7B valuation

 

Healthcare

·     The FDA has issued an emergency use authorization to the single-use COVID-19 diagnostic test kit from Lucira Health, a California manufacturer. The Lucira COVID-19 All-In-One at home test kit provides rapid results. To date, the Agency has authorized nearly 300 tests for coronavirus

·     Kodiak Sciences (KOD) 5.19M share Secondary priced at $108.00

·     Oncternal Therapeutics (ONCT) 7.258M share Spot Secondary priced at $3.10

·     Curaleaf (CURLF) reports Q3 EPS (1c) vs. (1c) a year ago, with total revenue $192.4M vs. $61.82M a year ago and Q3 managed revenue $193.22M vs. $73.19M a year ago

·     Roche (RHHBY) has completed early tests of its ability to produce large quantities of Regeneron Pharmaceuticals’ (REGN) COVID-19 antibody treatment and is on track to begin manufacturing the drug once it is authorized by regulators, Reuters reported

·     Sinovac Biotech’s (SVA) experimental COVID-19 vaccine CoronaVac triggered a quick immune response but the level of antibodies produced was lower than in people who had recovered from the disease, preliminary trial results showed on Wednesday.

·     Varex Imaging (VREX) 4Q adj EPS ($0.04) vs. est. ($0.10) on revs $170Mm vs. est. $162.1Mm; guides 1Q revs $160-180Mm vs. est. $173.7Mm; 1Q adj EPS ($0.15) – $0.10 vs. est. ($0.05)

 

Technology, Media & Telecom

·     Apple (AAPL) slashes App store fees for small developers; AAPL said starting in 2021 it will collect 15% rather than 30% of App Store sales from companies that generate no more than $1 million in revenue through the software platform, including in-app purchases. The fee will remain 30% for developers whose sales through the App Store, excluding commission payments, exceed $1Mm

·     Nokia (NOK), Elisa and Qualcomm (QCOM) announced that they have achieved the world’s fastest 5G speeds on a commercial network in Finland by delivering 8 Gbps for the first time serving two 5G mmWave devices connected simultaneously

·     AT&T (T) has announced exchange offers for 13 series of notes, to be traded for a combination of cash and new senior notes; for four series of notes, up to $3B worth, AT&T is offering cash and new 2057 senior notes

·     PaySign (PAYS) Q3 EPS loss (12c) vs. est. 2c and reports negative revenue of ($152,541) vs $9.008M last year; said the pandemic continues to have a meaningful impact on our business due to its adverse effect on our clients in the pharma and plasma industries