Early Look

Thursday, October 8, 2020

Futures	Up/Down	%	Last
DJ Industrials	150.00	0.53%	28,329
S&P 500	16.50	0.49%	3,423
Nasdaq	68.50	0.60%	11,538

 

 

Stocks futures are looking higher, helped by a combination of news as President Trump in a video on Twitter said REGN and LLY‘s COVID-19 medications were “incredible the way it worked,” adding he will make it free for Americans to use. Also helping, stimulus hopes yet again as House Speaker Pelosi spoke with Treasury Secretary Mnuchin by phone Wednesday night about a potential standalone bill for $25 bln in aid to airlines. Pelosi and Mnuchin plan to talk again today amid what is considered broad bipartisan support for a standalone relief package. In Asian markets, The Nikkei Index gained 224 points to 23,647, the Shanghai Index remained closed and the Hang Seng Index slipped -49 points to 24,193. In Europe, the German DAX is higher by 90 points to move back above the 13,000 level, while the FTSE 100 gains 30 points to 5,980. The debate between VP Mike Pence and Democratic vice-presidential nominee Kamala Harris on Wednesday night was more traditional than the presidential debate.

 

On Wednesday, the Dow Jones Industrial Average posted its biggest one-day gain since July as all 30 components finished the day higher, while the Dow Transports touched record highs, rising over 300 points topping the 11,700 level with broad based strength in airlines, package delivery, car rental and rails. Overall, the market rallied from beginning to end, recovering all of Tuesday’s losses with gains across the board. News late Tuesday that President Trump would approve piecemeal stimulus measures including airline aid a day after he told his team to stop negotiating with House Speaker Pelosi as she was not in acting in good faith helped renew faith that some sort of a deal is in the nearing. Another infusion for the airlines looks most likely, with the administration and Democrats amenable to some kind of relief. Fed minutes from the recent policy meeting indicated that the FOMC was pricing in further stimulus measures this year, without which the economic recovery was expected to be weaker. Treasury prices fell as the 10-year Treasury yield rose 5 basis points to 0.79%.

Market Closing Prices Yesterday

·     The S&P 500 Index jumped 58.50 points, or 1.74%, to 3,419.45

·     The Dow Jones Industrial Average rose 530.70 points, or 1.91%, to 28,303.46

·     The Nasdaq Composite gained 210.00 points, or 1.88%, to 11,364.60

·     The Russell 2000 Index advanced 33.75 points, or 2.14% to 1,611.04

 

Economic Calendar for Today

·     8:30 AM EST      Weekly Jobless Claims…est. 820K

·     8:30 AM EST      Continuing Claims…est. 11.4M

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

 

Earnings Calendar:

·     Earnings Before the Open: AYI, DPZ, HELE

·     Earnings After the Close: None

 

Other Key Events:

·     China Caixin Services PMI for September

·     China FX Reserves

 

 

Macro	Up/Down	Last
WTI Crude	0.49	40.44
Brent	0.61	42.60
Gold	5.10	1,892.50
EUR/USD	0.0001	1.1764
JPY/USD	0.01	105.99
10-Year Note	-0.016	0.77%

 

 

World News

·     German exports in August rose 2.4% m/m, after a 4.7% rise in July; Imports increased by 5.8% after a rise of 1.1% in the previous month. The trade surplus narrowed to €15.7B ($18.5B).

 

Sector News Breakdown

Consumer

·     Costco wholesale (COST) sept. total comp sales +15.5%, vs. est. +12.1% and U.S. comp sales ex-gas, FX +16.7%, vs est. +14.2%; said net sales of $16.84 bln for retail month of September, five weeks ended October 5, 2020, up 16.9 percent from $14.41 bln last year; September sales were positively impacted by two holiday shifts

·     American Airlines (AAL), Delta Air Lines (DAL) United Airlines (UAL) are among airlines moving higher after House Speaker Pelosi spoke with Treasury Secretary Mnuchin by phone Wednesday night about a potential standalone bill for $25 bln in aid to airlines

·     Kroger Co. (KR) said it will launch two ghost kitchens at stores in Indianapolis and Columbus, Ohio through a partnership with ClusterTruck, a company that launched its first kitchen in 2016.

·     Resources Connection (RGP) Q1 EPS $0.14 vs. est. $0.07 on revs $147.3Mm vs. est. $150.4Mm

 

Energy

·     Cabot Oil & Gas Corp. (COG) expects production for Q3 of 2020 to be approximately 2,406 mmcfe per day; natural gas price realizations, including impact of derivatives, are expected to be $1.57 per thousand cubic feet in Q3 of 2020; has provided a Q4 2020 production guidance of 2,300 to 2,350 mmcfe per day

·     Pioneer Natural Resources (PXD) announced the realignment of certain members of Pioneer’s Management Committee effective January 1, 2021. Richard Dealy, currently CFO, has been named President and Chief Operating Officer

 

Financials

·     Citigroup (C) downgraded to Neutral from Overweight with an unchanged price target of $57.50 at JPMorgan after the Federal Reserve and Office of the Comptroller of the Currency announced consent orders against the company and its lead U.S. bank

·     Pzena Investment Management (PZN) reports September AUM of $33.3B, down 5.4% YoY

·     Saratoga Investment (SAR) Q2 adj. EPS 49c vs. est. 26c; quarterly metrics include LTM return on equity of 14.3%, adjusted NII per share of $0.49 per share and adjusted NII yield of 7.6%

 

Healthcare

·     Regeneron (REGN) and Eli Lilly (LLY) advanced after the close after President Trump in a video on Twitter said REGN and LLY’s COVID-19 medications were “incredible the way it worked,” adding he will make it free for Americans to use. Trump received REGN’s experimental antibody COVID-19 cocktail therapy this weekend and wants the treatment to be given emergency approval

·     Aziyo Biologics (AZYO) 2.94M share IPO price $17.00

·     NanoString (NSTG) 5M share Secondary priced at $40.00

·     SpringsWorks Therapeutics (SWTX) 4.9M share Secondary priced at $51.00

·     CareDx (CDNA) said it sees Q3 revenue $53M (up 57% YoY) above consensus $44.68M; said testing revenue for the quarter is expected to be approximately $45.2M, compared with $28.2M in the same period in 2019

·     Alphatec (ATEC) reports Q3 preliminary revenue of $40.7M-$41.1M vs. consensus of $30.98M; said U.S. revenue of $39.7M-$40M, rose 31-43% YoY

 

Industrials & Materials

·     Lithium producers Albemarle (ALB), Livent (LTHM), SQM (SQM) and Piedmont Lithium (PLL) shares may be active after data and analytics company Global Data said lithium demand is expected to more than double by 2024, as the production of electric vehicle batteries is set for substantial growth, as demand is forecast to rise at a 25.5% compound annual growth rate to 117,400 tons in 2024 from 47,300 tons in 2020

·     Yamana Gold (AUY) announces strong third quarter preliminary operating results and increases 2020 production guidance to 915K GEO from 890K GEO; raises annual dividend by a further 50% and sets new dividend floor of $100 per gold equivalent ounce

·     The Association of American Railroads (AAR) reports September U.S. rail traffic down 1% Y/Y to 2,543,429 carloads and intermodal units, comprising of carloads down 9.7% and containers and trailers volume up 7.1% during the month (shares of CSX, KSU, NSC, UNP leverages to data)

 

Technology, Media & Telecom

·     IBM Corp. (IBM) shares rise 3%; to accelerate hybrid cloud growth strategy and executes spin-off of market-leading managed infrastructure services; also says expects 3Q adj EPS $2.58 vs. est. $2.58 on revs $17.6B vs. est. $17.5B

·     nCino (NCNO) 6.7M share Secondary priced at $72.00

·     Exfo (EXFO) Q4 EPS loss (7c) on revs $70.6M vs. est. 6c/$65.33M; CEO said was pleased to see EXFO close its Q4 on a positive note with strong revenues and cash flows from operations

·     Guidewire (GWRE) announces $200M stock repurchase program

·     IAC/InterActiveCorp (IAC) said September total ANGI HomeServices revenue up 9% and Sept ending Vimeo subscribers up 20%

·     Radware (RDWR) is launching multi-dimensional DDoS detection and protection to meet the unique and complex demands of the online gaming industry.

·     TSMC (TSM) reports September revenue of NT$127.59B (+3.8% M/M, +24.9% Y/Y); YTD sales were up 29.9% y/y to NT$977.72B.

·     ChipMOS Technologies (IMOS) reports Q3 revenue of $196.4M (+5.3% Y/Y) vs. consensus of $198.69M; September revenue was $65.5M (-0.3% M/M)