Early Look

Wednesday, October 21, 2020

Futures	Up/Down	%	Last
DJ Industrials	9.00	0.03%	28,191
S&P 500	44.50	0.14%	3,437
Nasdaq	28.50	0.24%	11,689

 

 

U.S. futures are pointing to a mixed open, pulling back off overnight highs as we are now about two-weeks from the U.S. Presidential election. Major averages rallied Tuesday on growing optimism that talks among U.S. lawmakers are progressing with respect to a U.S. stimulus package…but once again talks failed to produce a deal. White House representatives and House Speaker Nancy Pelosi both said enough progress was made on Tuesday to justify further talks on Wednesday, with an aim of getting a package voted on before the Nov. 3 election (so much for her 48-hour self-imposed deadline for talks). Despite the no deal, futures are holding up well ahead of another busy day of quarterly earnings (TSLA results expected tonight). Overnight shares of Netflix (NFLX) fell over 5% after earnings missed and subscriber numbers fell short of expectations, while social media co SNAP rallied 20% after its better than expected results. With yesterday’s gains, the Nasdaq was able to end its five-day losing streak, its longest since August 2019, though many stocks pared gains sharply throughout the day. The U.S. 10-Year Treasury yield topped 0.80%, is registering its highest close in more than 4 months. In Asian markets, The Nikkei Index rose 72 points to 23,639, the Shanghai Index dipped -3 points to 3,325 and the Hang Seng Index rose 184 points to 24,754. In Europe, the German DAX is down over 90 points to 12,640, while the FTSE 100 is lower by -60 points to 5,825. Rising coronavirus cases in both the U.S. and UK continued to weigh on investors. In Spain, officials are reportedly considering a nationwide curfew.

Market Closing Prices Yesterday

·     The S&P 500 Index gained 16.20 points, or 0.47%, to 3,443.12

·     The Dow Jones Industrial Average rose 113.37 points, or 0.40%, to 28,308.79

·     The Nasdaq Composite climbed 37.61 points, or 0.33%, to 11,516.49

·     The Russell 2000 Index advanced 4.08 points, or 0.25% to 1,617.71

 

Economic Calendar for Today

·     7:00 AM EST      MBA Mortgage Applications Data

·     10:30 AM EST    Weekly DOE Inventory Data

·     2:00 PM EST       Fed’s Beige Book released

 

Earnings Calendar:

·     Earnings Before the Open: ABT, AN, APH, AVY, BIIB, CADE, EVR, FBC, FCFS, IPG, KEY, KNX, LAD, NDAQ, NTRS, SLGN, TDY, TMO, TZOO, UNF, VZ, WGO,

·     Earnings After the Close: ALGN, BANR, BCOV, BDN, CCI, CMG, CSX, DFS, EFX, EW, GGG, GSBC, GTY, HLX, INBK, KALU, KMI, LSTR, MMLP, MTH, NTGR, NVEC, RLI, RUSHA, SEIC, SLG, SLM, STL, TCBI, TRN, TSLA, UMPQ, VMI, WSBC, WTFC, XLNX

 

Other Key Events:

·     Fed’s Mester discusses Monetary Policy at virtual event

·     Fed’s Singh discusses Fed Corporate Credit

 

 

Macro	Up/Down	Last
WTI Crude	-0.58	41.12
Brent	-0.52	42.64
Gold	11.30	1,918.25
EUR/USD	0.0003	1.1852
JPY/USD	-0.63	104.87
10-Year Note	+0.02	0.81%

 

 

World News

·     Annual inflation in the U.K. accelerated in September as consumer prices rose 0.5% on year in September compared with a 0.2% rise in August, the Office for National Statistics said

 

Sector News Breakdown

Consumer

·     iRobot (IRBT) Q3 EPS $2.58 on revs $413.1M vs. est. $1.00/$312.44M; says expects to exceed original 2020 targets; sees year EPS $4.52-$4.62 on revs $1.365B-$1.375B

·     Container Group (TCS) 2Q adj EPS $0.43 vs. est. $0.03 on revs $248.2Mm vs. est. $216.5Mm

·     Nestle (NSRGY) reported sales at 61.91 billion Swiss francs ($68.24 billion) in the period, down from CHF68.37 billion in the previous year; organic sales growth was 3.5%; raised its full-year guidance, saying it now expects organic sales growth at around 3% vs. prior view 2%-3%

·     Usana (USNA) raises FY20 EPS view to $5.15-$5.45 from $4.70-$5.25 and raises FY20 revenue view to $1.09B-$1.115B from $1.05B-$1.10B; 3Q EPS $1.44 vs. est. $1.27 on revs $298.5Mm vs. est. $278.8Mm; qtrly active customers +16.5% to 650K

·     WD-40 (WDFC) Q4 EPS $1.42 on revs $111.6M vs. est. $1.13 and $98.8M; Gross margin was 56.3% in the fourth quarter compared to 54.6% in the prior year fiscal quarter

 

Energy

·     Pioneer Natural Resources Co. (PXD) has agreed to buy Parsley Energy Inc. (PE) for $4.5 billion, in an all-stock deal would solidify Pioneer’s place as one of the largest producers in the Permian Basin of Texas and New Mexico, the top American oil field (confirms reports the day prior)

·     Bonanza Creek (BCEI) said Q3 2020 estimated average sales volumes of 26.2 thousand barrels of oil equivalent per day (MBoe/d), up 6% over second quarter volumes; average third quarter 2020 oil sales volumes of 14.0 thousand barrels per day, sequentially flat with Q2

·     The American Petroleum Institute (API) shows a build of 584K barrels of oil for the week ending Oct. 16; gasoline inventories show a draw of 1.62M barrels, distillate inventories show a draw of 5.98M barrels and Cushing inventories show a build of 1.17M barrels.

 

Financials

·     KeyBanc (KEY) Q3 EPS of 41c beat by 4c on revs of $1.69B, slightly above views; said provision for credit losses of $160M vs. $231.4M consensus

·     Navient (NAVI) Q3 core EPS 99c on revs $244M vs. est. 78c and $281.74M; New Jersey Attorney General Gurbir Grewal sued Navient on Tuesday, alleging the student loan servicing giant deployed “deceptive, misleading” tactics to boost its profits.

·     Rexford Industrial (REXR) raises FY20 core FFO view to $1.29 to $1.31 from $1.26-$1.29 and ups year-end Stabilized Same Property Portfolio occupancy view to within a range of 97.5%-98.0% from 95.0%-96.0%; Stabilized Same Property Portfolio NOI growth for the year within a range of 3.0%-3.5% from 1.3%-1.8%

·     W.R. Berkley (WRB) Q3 EPS 65c on revs $2.04B vs. est. 71c/$2.04B; 3Q net premiums written $1.88 billion, +7.4% YoY, 3Q net premiums earned $1.75 billion, +4.3% YoY and 3Q combined ratio reported 93.7% vs. 93.6% YoY

·     Michael Bloomberg, the former New York mayor and founder of Bloomberg LP, has been in talks to take Bloomberg LP public through a blank-check company controlled by Bill Ackman, according to the New York Post https://bit.ly/2HlJkCr

 

Healthcare

·     Tenet Health (THC) 3Q adjusted EPS from continuing operations 64c vs. est. 33c; 3Q net operating revs $4.56B vs. est. $4.4B and adj Ebitda down -13% YoY to $551M; qtrly hospital segment net patient service revenue per adjusted admission up 17% on a same-hospital basis YoY; through oct 19, 2020, co had received about $1.5 bln of Medicare advance payments from CMS

·     Xeris Pharmaceuticals’ (XERS) said the FDA designated its XP-0863 (diazepam non-aqueous injection) for fast track review for the treatment of acute repetitive seizures.

·     Thermo Fisher (TMO) Q3 adj EPS $5.63 on revs $8.52B vs. est. $4.31/$7.65B; quarterly organic revs rose 34% and said generated $2.0 Covid related revs

 

Industrials & Materials

·     Carlisle (CSL) 3Q EPS $1.87 vs. est. $1.67 on revs $1.127B vs. est. $1.12B; reports organic revenue declined 14.3% in Q3, acquired revenues contributed 1.9% and changes in foreign exchange rates had a positive 0.4% impact.

·     Canadian National (CNI) 3Q adjusted EPS C$1.38 vs. est. C$1.45; 3Q revenue C$3.41 billion vs. est. C$3.50 billion; 3Q operating ratio 59.9% vs. 57.9% y/y, estimate 58.7% and 3Q carloads -6% vs. 0% y/y, vs. estimate -6.63%

·     Century Aluminum (CENX) says it notified employees at its Mount Holly aluminum plant in South Carolina that it could shut down by the end of 2020, affecting 295 jobs

·     Mosaic (MOS) downgraded to Neutral from Buy at Citigroup

 

Technology, Media & Telecom

·     Netflix (NFLX) shares fall 5% on EPS miss, weaker sub growth; Q3 EPS $1.74 vs. est. $2.13; Q3 revs $6.44B was up 23% YoY vs. est. $6.38B; 3Q operating income $1.31 billion, -3.2% QoQ; sees 4q streaming paid net change +6.00m, below est. +6.54m (and down from 8.8M YoY) after Q3 streaming paid net change +2.20m, vs. est. +3.32m (and down from 6.8M YoY); said net cash generated by operating activities in Q3 was +$1.3 billion vs. -$502 million in the prior year period; forecast Q4 operating margin of 13.5% vs. 8.4% last year

·     Snap Inc. (SNAP) rises 16%; Q3 adj EPS 1c on revs $678.7M vs. est. loss (5c) and $5559M; Not providing 4Q guidance given uncertainties related to the pandemic and rapidly shifting macro conditions; Q3 daily active users 249 million, +19% YoY, vs. estimate 244.6 million; and sees 4Q DAUs of about 257m, or +18% YoY; says believes rev growth of 47%-50% for Q4 is attainable and expects YoY expense growth likely to be higher

·     Teradyne (TER) Q3 beats featuring 41% Y/Y revenue growth to $819M, 53% EPS growth to $1.18, and a recovery for the Industrial Automation segment; total Test revenue was up 46% Y/Y with $592M in Semiconductor Test sales, $118M in System Test, and $41M in Wireless Test; sees Q4 revenue of $680-740M (vs. est. $522.18M) with $0.90-1.60 EPS (vs. est. $0.45).

·     Texas Instruments (TXN) 3Q EPS $1.45 vs. est. $1.28 on revs $3.82B vs. est. $3.45B; guides 4Q EPS $1.20-1.40 vs. est. $1.20, sees 4Q revs $3.41-3.69B vs. est. $3.34B

·     Duck Creek Technologies (DCT) Q4 EPS 2c on revs $58.3M above est. loss (2c)/$53.52M; said had 54% growth in subscription revenue; sees Q1 EPS (1c)-0c on revs $55M-$56M vs. est. loss (3c)/$54.34M; sees FY21 revenue $244M-$249M vs. est. $241.89M

·     Mavenir PLC (MVNR), has set terms for its initial public offering, as the Texas-based mobile networking company looks to raise up to $327.3 million. The company is offering 13.64 million shares in the IPO, which is expected to price between $20 and $24 a share