Mid-Morning Look: July 23, 2020

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Mid-Morning Look

Thursday, July 23, 2020






DJ Industrials




S&P 500








Russell 2000






U.S. equities are taking a breather, as investors digest the heavy dose of quarterly earnings this morning (including Dow components MSFT, TRV, DOW) and eagerly await any details related to the GOP stimulus plan, which many hope will be reveled today. Weekly jobless claims disappoint after posting its first increase in claims since March, pushing Treasury prices higher and yields lower. Gold prices currently up again, nearing its all-time high $1,891.90 an ounce in August of 2011. Treasury yields have fallen following the disappointing weekly jobless claims data with the first rise, as the 10-year is down 2 bps to 0.57% as it aims for the 0.543% historic low from March 9 – the 2-year yield dipped to 0.145%, and has been unable to breech the 0.14% level. Earnings recap of top movers below. Major averages come into the day with a 4-day win streak, being threatened right now. China-U.S. tensions increased yesterday, but all quiet today for the most part in relation to China retaliation. Senate Republicans and the White House announced progress toward an agreement on a new package of funds (between $1 trillion Rep and the $2 trillion Dems want) to help businesses and households stricken by the COVID-19 pandemic.


Economic Data

·     Weekly Jobless claims rose to 1.416M in the latest week above the 1.307M level the prior week and also above the 1.3M consensus view; continued claims fell to 16.197M from 17.304M in prior week (est. 17.067M); the 4-week moving average fell to 1.360M from 1.376M in prior week and U.S. insured unemployment rate fell to 11.1% from 11.8% prior

·     U.S. leading index climbed 2.0% to 102.0 in June after surging 3.2% to 100.0 (was 99.8) in May. The index was at an all-time high of 112.0 in January (tying the level in July 2019), but dropped over the three months from February to 96.9 in April, the weakest since September 2014







WTI Crude















10-Year Note





Sector Movers Today

·     Autos; TSLA posted top- and bottom-line 2Q upside on better than expected ASPs and Automotive GM ex-regulatory credits and also indicated it had reached full ramp on Model Y capacity and is progressing well on additional capacity; auto retailers continue to show strong results with AN the latest with better earnings (LAD record highs yesterday on beat); in auto supplier preview at Guggenheim, said believe VC may modestly top consensus revenue estimates, while believe APTV, BWA, GNTX, LEA, VC, and VNE could have top line misses and see potential EPS beats from BWA, VC, and VNE on better cost controls; BTIG said used car sales softened moderately, down 5% last week vs. up 4% the week prior. Meanwhile, new car sales were down 26% last week, in-line with recent trend (CARG leveraged to data)

·     Transports; airlines all lower after weaker quarterly results (as expected) from AAL, ALK, LUV and SAVE amid their cautious outlook going forward; LUV Q2 cash burn was $22M a day, in-line w prior guidance and guides Q3 cash burn $23 citing softer September trends softening – said July revenue trends worse than prior- now expect topline to decline 70-75%; AAL posted month of June cash burn better than expected at $30M per day vs. most recent guide of $40M a day while Q2 revs finished -86%, a touch better than -90% guidance; ALK posted smaller loss while traffic fell -88.7% for Q2; SAVE Q3 guidance indicates waning demand, consistent with commentary from other airlines, after a surprisingly positive June with load factors increasing to 79%

·     Metals & Materials; gold miners; FCX posted Q2 EPS beat on revs of $3.05B (down -14% YoY and just below views) while cut its copper sales volume forecast for the full year; KALU shares dipped in aluminum space after earnings; PAAS upgraded to buy from neutral at Bank America saying its revenue basket is about 30%/55%/15% silver/gold/base metals and see earnings upgrades upside risk; steel space active as NUE reported Q2 EPS that topped the highest estimate though sales just missed estimates ($4.33B down -27% YoY) vs. est. $4.41B

·     Consumer Staples; HSY Q2 adjusted EPS came to $1.31, ahead of the $1.12 consensus but sales fell to $1.707B from $1.767B, below the $1.740B consensus; KHC downgraded to sell from neutral at Guggenheim saying while many food companies are seeing a demand tailwind as a result of the pandemic, Kraft’s portfolio continues to lose share in most segments; KMB Q2 EPS of $2.20 beat by 40c on sales $4.61B and sees FY net sales +1% to +2%

·     Restaurants; CMG reported Q2 comps declined (9.8%), slightly better than the Street, with comps down (24.4%) and (7.0%) in April and May, respectively, before improving to 2.0% in June – several analysts raise their tgt following results; BLMN was upgraded to neutral at Bank America ahead of Q2 results as Q2 total revenue of $2.59B beats the consensus by $60M; increased from $2.43B a year earlier while net new orders decreased 4% to 6,522 homes



·     AMAG +13%; enters deal with Norgine B.V. to commercialize its experimental drug, ciraparantag, which reverses the effects of blood-thinners, in Europe, Australia and New Zealand

·     CBAY +29%; rises as the FDA lifted its clinical hold on applications seeking to test CBAY’s liver disease drug, seladelpar, in humans

·     HZO +2%; boating stocks get a boost after HZO earnings including 37% comp store sales growth and revenue beat (MBUU, MCFT, BC active)

·     PHM +11%; after EPS beat ($1.15 vs. 84c est.) as Q2 results topped views and said expects improved conditions in H2 – improving economic data and plunging mortgage rates help sector

·     TSLA +1%; posted top- and bottom-line 2Q upside on better than expected ASPs and Automotive GM ex-regulatory credits and also indicated it had reached full ramp on Model Y capacity and is progressing well on additional capacity

·     TWTR +5%; saw record daily user growth for second straight quarter but its 2Q revenue came in below analyst estimates amid a global marketing pullback/said is exploring additional business lines including a possible subscriptions service

·     WHR +9%; Q2 EPS/sales beat and revises FY20 sales decline to 10%-15% from 13%-18% and sees FY20 organic net sales decline of 7%-12% vs. 10%-15% previously



·     ALGN -3%; after mixed results as EPS loss ($0.35) vs. est. ($0.05) on revs $352.3Mm vs. est. $332.88Mm and says cannot reasonably estimate future impact on operations and financial results at this time

·     BNTX -7%; after 5.5M share Secondary priced at $93.00

·     CTXS -7%; said its ongoing transition to a subscription model “can be seen in declines in the Product and License as well as the Support and Services reported revenue

·     DOW -3%; after slight miss on ($757M Ebitda vs. est. $800M and guided Q3 sales light at $8.75B mid-point vs. $9.2B view

·     LVS -5%; reported Q2 adjusted property EBITDA of -$514M, missing consensus of -$370M as much of LVS’s portfolio was closed for the quarter (Singapore/Las Vegas) or effectively closed

·     MSFT -1%; reported a mixed Q2, with strong revenue driven by consumer (Xbox, Surface, Windows) while business was weak/margins missed due to revenue mix but EPS was in line

·     RCL -3%; as cruise lines all under pressure this morning (CCL, NCLH)


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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