Mid-Morning Look: February 10, 2020

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Mid-Morning Look

Monday, February 10, 2020






DJ Industrials




S&P 500








Russell 2000






U.S. equities are steadily higher, adding on to last week’s big gains despite rising death toll figures for the coronavirus (over 900 as nears the SARS outbreak figures from 2002-2003), as there were 3,062 new confirmed infections on Sunday, bringing the total number so far to 40,171, as per Reuters. It was a generally quiet morning for earnings, but picks up later this week, and no major economic data on the day as well, with Treasuries and the dollar little changed. There was one big M&A deal in the REIT space as mall owner SPG agreed to buy TCO in a $3B deal. Tech names again outperformed though markets were higher on lighter volume on the day as markets await details of President Trump new $4.8B trillion budget proposal. Energy stocks are lagging as oil prices once again dip on slowing demand fears.


Treasuries, Currencies and Commodities

·     In currency markets, the euro drops to 4-month lows vs. the US dollar while the Japanese yen is little changed. Commodity prices mixed with gold inching higher but oil prices again pressured on fears of slowing demand due to the coronavirus impact. Treasury markets are little changed with the 10-year yield down about 2 bps to 1.564% (follows a 6 bps gain last week – first gain in three weeks), with no major economic data to move markets today.







WTI Crude















10-Year Note





Sector Movers Today

·     Retailers; LB shares rose on reports it is close to a deal to sell Victoria’s Secret to private equity company Sycamore Partners, CNBC reported Sunday night, though a price was not reported, but said the deal could be announced this week https://on.mktw.net/2Uzc13s ; Cowen comments on TGT and WMT saying they like both but prefer TGT near-term as they’re more cautions on potential WMT’s digital profitability which may underwhelm

·     Insurance; Loew’s (L) shares led in the insurance sector after beating expectations for Q4, as res rose $3.88B, rising 18% YoY as results were helped mainly due to increased net investment income at CNA and the parent company; WLTW was downgraded at Credit Suisse saying while some of the issues depressing WLTW’s FCF may only be temporary, they have less confidence that WLTW will meaningfully increase its FCF conversion rate in the coming years; MCY shares rise as Q4 revenue topped estimates as net premiums written rose 5,4% YoY to $896.1M

·     REITs; a big day in the REIT sector as SPG said it would pay $52.50 a share in cash to acquire mall based REIT operator TCO in a deal valued at about $3.6B. The Taubman family will sell Simon about one-third of its ownership interest in Taubman and remain 20% owner in the operating subsidiary of its namesake real-estate firm https://on.mktw.net/31F92b8 (shares of MAC, SKT, WPG, PEI among other REITs moving in sympathy)

·     Autos; automakers look to restart production in China; TSLA resumed production at its Shanghai factory today; Volkswagen is opening a plant it operates with SAIC in Shanghai and most of the plants in the FAW joint venture; DDAIF and Ford (F) also restarting production at certain locations, while TM and HMC have extended their production shutdowns in China for the time being; FCAU flags multi-week disruptions at European factories due to parts shortages; NIO said it delivered 1,598 vehicles in January 2020, 11.5% lower than the same month last year; LYFT was upgraded to buy from neutral at Northcoast



·     ABBV +3%; following better earnings last week/rises for a 6th straight day to fresh 52-week highs

·     ADVM +34%; following new preliminary data from a Phase 1 dose-ranging study, OPTIC, evaluating gene therapy ADVM-022 in patients with wet age-related macular degeneration

·     AQST +8%; said the FDA accepted its new drug application for Libervant buccal film for the management of seizure clusters

·     CAR +2%; named Bernardo Hees will be the new board chairman, succeeded Leonard Coleman will continue as a board member and he is investing $15M in Avis’s stock

·     EPC +21%; after Q1 EPS and revenues topped consensus and announced that following the FTC filing of a lawsuit seeking to block the proposed transaction, Edgewell terminated its merger agreement with Harry’s, Inc.

·     FDX +2%; upgraded to buy at UBS and raised tgt to $187 from $161 as they believe that a combination of low expectations (both EPS and the stock) and a visible step toward improving the B2C cost structure of Express support a favorable outlook for the stock

·     HPQ +4%; after XRX raises its offer price for the company to $24 per share, which includes $18.40 in cash and 0.149 Xerox shares for each HP share/last November, Xerox offered $22/share, and HP declined, then Xerox then went hostile https://on.mktw.net/31GkDGZ

·     LB +2%; on reports it is close to a deal to sell Victoria’s Secret to private equity company Sycamore Partners, CNBC reported Sunday night, though a price was not reported, but said the deal could be announced this week https://on.mktw.net/2Uzc13s   

·     QSR +4%; after reports system-wide sales growth of 9.9% in Q4, driven higher by a 42% pop in Popeye’s sales as comparable sales soared 34.4% at Popeye’s vs. +14% consensus

·     TCO +52%; rises after SPG said it would pay $52.50 a share in cash to acquire the mall based REIT operator in a deal valued at about $3.6B. https://on.mktw.net/31F92b8

·     VTVT +58%; after the company said it saw positive results from part 2 of the Phase 2 Simplici-T1 trial assessing TTP399 as an oral adjunctive therapy to insulin in adults with type 1 diabetes.



·     ABUS -5%; after saying it will discontinue AB-452, its orally available hepatitis B specific RNA-destabilizer

·     BHVN -16%; shares plunge after its late-stage study testing experimental drug troriluzole as a treatment for Generalized Anxiety Disorder (GAD) misses main goal – the trial was testing 100 mg doses of the drug administered twice daily over eight weeks against placebo

·     DO -14%; after earnings results, but also warns sees 2021 cash flow negative if no change in the market/sees 1q drilling costs in range $185M-$195M

·     LLY -2%; and Roche Holdings AG’s Genentech unit said a phase 2/3 study of their investigational therapies for Alzheimer’s disease missed its primary endpoint

·     WWE ; was double downgraded from Overweight to Underweight at Wells Fargo saying there have been too many misfires at WWE for investors to take interest in the near future

·     XOM -2%; as shares back near 52-week lows reached last Tuesday ($59.89), as energy stocks broadly under pressure again


Market commentary provided by Catena Media Financials US, LLC, a firm separate from and not affiliated with Regal Securities. Regal Securities has not participated in the creation of the content, and does not explicitly or implicitly endorse the content.

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