Early Look

Wednesday, September 16, 2020

Futures	Up/Down	%	Last
DJ Industrials	113.00	0.40%	28.021
S&P 500	16.50	0.49%	3,411
Nasdaq	57.50	0.50%	11,507

 

 

Stock futures are looking higher, extending gains for a third day ahead of busy economic data (retail sales at 8:30) while all eyes are on the latest FOMC policy meeting, with results due around 2:00 PM EST. U.S. stocks finished mostly higher on Tuesday as the blue-chip Dow shed early gains to finish flattish, but the tech heavy Nasdaq Composite paced the gains rising 1.2% as tech continued to make up lost ground from last week’s selloff that saw the it enter correction territory by falling more than 10% from a record high. The Federal Reserve started its policy-setting meeting on Tuesday, which will be followed by a news conference and policy statement on Wednesday, while central-bank decisions from the Bank of England and the Bank of Japan are due on Thursday. The meeting of the policy-setting FOMC is the first since the central bank introduced its new policy framework of average-inflation targeting. In Asian markets, The Nikkei Index rose 20 points to 23,475, the Shanghai Index slipped -11 points to 3,283 and the Hang Seng Index dipped 7-points to 24,725. In Europe, the German DAX is flat at 13,215, while the FTSE 100 fell a few points to around the 6,100 level. In Washington, House Speaker Pelosi has signaled the chamber should postpone the planned October recess until lawmakers can strike a bipartisan agreement on a new coronavirus relief bill, though its unclear how Congress will be able to break the impasse. Oil prices are jumping as Hurricane Sally disrupted more than 25% of U.S. offshore oil and gas output and the API showed a big drop in U.S. crude stockpiles.

Market Closing Prices Yesterday

·     The S&P 500 Index gained 17.66 points, or 0.52%, to 3,401.20

·     The Dow Jones Industrial Average rose 2.27 points, or 0.01%, to 27,995.60

·     The Nasdaq Composite surged 133.67 points, or 1.21%, to 11,190.32

·     The Russell 2000 Index advanced 1.18 points, or 0.08% to 1,538.15

 

Economic Calendar for Today

·     7:00 AM EST      MBA Mortgage Applications Data

·     8:30 AM EST      Retail Sales MoM for August

·     8:30 AM EST      Retail Sales Ex: Autos for Aug…est. 0.9%

·     10:30 AM EST    Weekly DOE Inventory Data

·     4:00 PM EST       Net Long-term TIC flows for July

 

Earnings Calendar:

·     Earnings Before the Open: BRC

·     Earnings After the Close: MLHR, OSH

 

Other Key Events:

·     Credit Suisse Annual Basic Materials Conference,9/15-9/17

·     Goldman Sachs Communacopia Virtual Conference, 9/15-9/17

·     Morgan Stanley 18th Annual Global Healthcare Virtual Conference, 9/14-9/18

·     Roth Capital Solar & Storage Symposium, 9/14-9/17

·     ShopTalk 2020 (rescheduled from March 2020), 9/14-9/17

·     Wells Fargo Virtual Consumer Conference,9/16-9/17

 

 

Macro	Up/Down	Last
WTI Crude	0.87	39.15
Brent	0.82	41.35
Gold	11.60	1,965.75
EUR/USD	0.0025	1.1872
JPY/USD	-0.38	105.06
10-Year Note	-0.007	0.67%

 

 

World News

·     Japan’s exports fell 14.8% in August from a year earlier, as demand from most regions except for China remained weak amid the pandemic. The pace of decline was slower than July’s 19.2% decline and the 15.3% drop expected by economists surveyed by data provider FactSet. That marked the 21st straight month of decline.

·     Japan exports to China rose 5.1% in August on the back of growing demand for semiconductor-manufacturing machines, nonferrous metals and cars. Meanwhile, exports to the U.S. slumped 21.3% due to declines in shipments of motors and pharmaceuticals

·     The Organization for Economic Cooperation and Development (OECD) boosted its global economic outlook while warning policy makers not to tighten policy too quickly. The OECD said global gross domestic product will shrink by 4.5% this year, and rise 5% next year. That is a big improvement from what the OECD projected in June, which was for a 6% contraction this year, followed by 5.2% growth in 2021

 

Sector News Breakdown

Consumer

·     Del Taco Restaurants (TACO) reported Q3 prelim growth of 4.1% in system-wide comparable restaurant sales with positive trends at company-operated (+2%) and franchised restaurants (+6.5%); total revenue of $120.7M and company-operated restaurant sales of $109.5M (-1.4% Y/Y) led by fewer company-operated restaurants open during 2020 amid re-franchising activity

·     Host Hotels & Resorts Inc. (HST) expects to accrue approximately $22 to $24 mln of Q4 furlough related healthcare benefits in Q3; expects to incur $60 to $70 mln of severance expenses in second half of year

·     Kohls Corp. (KSS) reduced corporate positions by about 15%, expects position reductions to generate expense savings of about $65 mln on an annualized basis; expects pre-tax costs of about $23M for position reductions, majority of which will be recorded in Q3 of 2020

·     Southwest (LUV) Aug load factor 42% vs. prior outlook 40%-45% and cuts daily cash burn to $17M from $20M; revenue down 70%from year ago vs. down 70%-75% guidance

 

Energy

·     The American Petroleum Institute (API) showed a draw of 9.52M barrels of oil for the week ending Sept. 11, gasoline inventories showed a build of 3.76M barrels, distillate inventories show a draw of 1.12M barrels and Cushing inventories show a draw of 798K barrels.

·     Transocean (RIG) downgraded to neutral from positive at Susquehanna

 

Financials

·     LPL Financial Holdings (LPLA) reports total brokerage and advisory assets of $823B (+3.9% M/M) at the end of August; August total net new assets were an inflow of $3.1B, translating to a 4.7% annualized growth rate

·     Stepstone Group (STEP) 17.5M share IPO priced at $18.00

 

Healthcare

·     Axogen (AXGN) says it now expects total Q3 revs at least $30M vs. est. $23M

·     Aveo Oncology (AVEO) announced that final overall survival results from its Phase 3 TIVO-3 study were published in the journal European Urology. TIVO-3 is the company’s pivotal Phase 3 trial comparing tivozanib, AVEO’s next-generation vascular endothelial growth factor receptor tyrosine kinase inhibitor drug candidate, to sorafenib in third-and fourth-line renal cell carcinoma

·     The FDA grants emergency use authorization to Abbott’s (ABT) BinaxNOW COVID-19 Ag Card rapid test, its sixth for the coronavirus, that generates a result in 15 minutes without the need for equipment

·     The Russian Direct Investment Fund, or RDIF, Russia’s sovereign wealth fund, and Indian drug company Dr. Reddy’s Laboratories Ltd. (RDY) have agreed to cooperate on clinical trials and distribution of Russia’s COVID-19 vaccine named Sputnik V in India. In a joint statement, the partners said RDIF will supply Dr. Reddy’s with 100 million doses of the vaccine

·     Metracrine (MTCR) 6.54M share IPO priced at $13.00

 

Industrials & Materials

·     FedEx (FDX) Q1 adjusted EPS $4.87 vs. est. $2.69 and revenue rose 13% YoY to $19.3B vs. est. $17.55B; Q1 adjusted operating margin 8.5% vs. 6.10% YoY; not providing FY EPS forecast

·     Boeing (BA): The House Committee on Transportation and Infrastructure has released a 238-page filing, in the works for about 18 months, that paints a Boeing that prioritized profits over safety. Numerous designs, management and regulatory failures during the development phase of the 737 MAX had preceded the “preventable death” of 346 people in two crashes of the popular jetliner, as well as an FAA that was unable to ensure passenger safety.

·     Freeport McMoRan (FCX) does not want to be distracted by any buyout offers and is focused on expanding its Grasberg mine in Indonesia and boosting cash flow as it is nearing the end of a $15B project to expand the world’s largest copper mine its CFO said at a Morgan Stanley conference.

·     O-I Glass (OI) expects 3Q20 sales volume will be about flat to slightly up Y/Y; said actual sales volume up ~ 1% QTD through August; the current 3Q20 outlook slightly favorable to prior outlook of flat to modesty down

·     Rush Enterprises (RUSHA) announces three-for-two stock split

 

Technology, Media & Telecom

·     Snowflake (SNOW) 28M share IPO priced at $120.00, as the deal priced above the revised range of $100.00-$110.00

·     Shopify (SHOP) 1.1M share Secondary priced at $900.00

·     JFrog (FROG) 11.568M share IPO priced at $44.00

·     Kodak’s (KODK) shares rise 40%; law firm said securities transactions made by CEO Continenza around the time co learned it could receive a $765 mln government loan did not violate internal policies. However, an investigation found “gaps” in KODK’s insider trading processes and that the general Counsel was found to be overwhelmed and running on outdated policies

·     Adobe Systems (ADBE) Q3 adjusted EPS $2.57 vs. est. $2.41 and revs rise 14% YoY to $3.23B vs. est. $3.16B; Q3 subscription revs $3B rising +18% YoY and 3Q product revenue $109M, down -31% YoY; sees Q4 adjusted EPS around $2.64 (in-line) and revs around $3.35B, vs. consensus $3.36B; Q3 digital media annualized recurring revenue (ARR) increased $458M QoQ to $9.63B and sees about $540M of net new ARR for digital media segment in Q4

·     Microsoft (MSFT) raises quarterly dividend 10% to 56c from 51c per share

·     The Federal Trade Commission is readying a potential antitrust lawsuit against Facebook (FB) that it could file by the end of 2020, in a case that would challenge the social media giant’s dominant position in the space https://on.wsj.com/3km9eUV

·     AMC Networks (AMCX) said Charles Dolan is exiting as executive chairman, and that James Dolan has been elected non-executive chairman; also updated details of its modified Dutch auction tender offer – which it plans to use to buy up to $250M of its class A common stock at a price range of $22.50-$26.50/share

·     Clear Channel outdoor (CCO) said it expects restructuring to result in pre-tax annual cost saves in excess of $200Mm, continues to consider other cost reduction initiatives including in Americas division