Early Look

Monday, April 13, 2020

Stock futures are pointing to a lower open, dragged down ahead of a busy week of bank earnings, while concerns remain about the impact of the coronavirus related economic shutdowns that has crippled businesses and individuals during this pandemic. Stocks ended higher on Friday in what was its biggest week of gains in over 30-years, helped after the Fed announced $2.3 trillion in loans on Thursday to aid the economy during the coronavirus pandemic, overshadowing a record 6.6M in jobless claims. Stocks lost ground following an OPEC+ deal on production cuts, which fell short of what markets were expecting (and confirmed this weekend at the rate of 9.7M barrels were day). For the holiday-shortened week, the S&P surged 12.1% for its biggest one-week gain since 1974, while the Dow rallied 12% and the Nasdaq jumped 10.6%. Financials were among the top sector leaders with J.P. Morgan up +9% leading the Dow higher ahead of earnings tomorrow morning. In Asian markets, The Nikkei Index fell -455 points to 19,043, the Shanghai Index slipped -13 points to 2,783 while the Hang Seng Index was closed. In Europe, most major averages were closed for holiday. In Italy, virus deaths rise by 431 to 19,899 on Sunday, the fewest in more than 3 weeks; Italy coronavirus cases rise by 4,092 to 156,363. Overall, the number of cases of COVID-19 around the world rose to 1.86 million on Monday, while the number of fatalities rose to 114,331, according to aggregated data from Johns Hopkins. At least 435,074 people around the world have recovered from the novel coronavirus that has sickened people in 185 countries, the data show. The U.S has the most cases at 557,590 and the most deaths at 22,109.

Market Closing Prices Yesterday

·     The S&P 500 Index gained 39.84 points, or 1.45%, to 2,789.82

·     The Dow Jones Industrial Average rose 285.80 points, or 1.22%, to 23,719.37

·     The Nasdaq Composite jumped 62.67 points, or 0.77%, to 8,153.58

·     The Russell 2000 Index surged 55.06 -7.60 points, or 4.62% to 1,246.73

Economic Calendar for Today

·     No Major Economic Data Released Today

World News

·     Dr. Anthony Fauci, America’s top infectious disease expert said Sunday that the economy in parts of the country could have a “rolling reentry” as early as next month. Dr. Anthony Fauci also said he “can’t guarantee” that it will be safe for Americans to vote in person on Election Day, Nov. 3rd

·     NY officials announced Sunday that the daily death toll for the state topped 700 in the state for the sixth straight day. Meantime, New York City Mayor Bill de Blasio and Gov. Andrew Cuomo remained at odds over the mayor’s plan to close city schools for the rest of the academic year. In all, 5,226 people were killed by the virus in the week that ended Saturday. That’s raised the total number of deaths in the state to 9,385

·     U.K. Prime Minister Johnson has been discharged from the London hospital where he was treated in intensive care for the coronavirus, as recorded deaths in Britain and Northern Ireland surpass 10K

Sector News Breakdown

Consumer

·     AMC Entertainment (AMC) is in talks to hire law firm Weil Gotshal & Manges to explore a potential Chapter 11 filing, The NY Post has learned https://on.mktw.net/3b8gAaw

·     Cooper Tire & Rubber Company (CTB) announced Friday that it plans to restart operations at its tire manufacturing plant in El Salto, Mexico beginning April 13

·     Fox Factory (FOXF) said it sees Q1 adjusted EPS at the low end of 55c-60c, vs. est. 57c and Q1 sales the low end of $182M-$190M (est. $182.3M

·     Hawaiian Holdings (HA) reported traffic for March of -40.9%, load factor 58.0% and March capacity -11.9%

·     Macy’s (M) has hired Lazard to explore options for improving its finances after the company lost most of its revenues as it shut down all its stores as a result of Covid-19, Reuters reported. Macy’s also has enlisted debt restructuring lawyers at Kirkland & Ellis, according to the report.

·     Smithfield Foods warned the U.S. is “perilously close to the edge in terms of our meat supply,” according to CEO Kenneth Sullivan, which announced the closing of his company’s Sioux Falls processing facility (facility alone accounts for 4-5% of U.S. pork production)

·     Carnival (CCL), Royal Caribbean (RCL) and Norwegian Cruise (NCLH): Cruise ships may be banned from sailing in US waters until July, according to an order issued by the CDC on Thursday. That ban could be lifted earlier if the CDC or the Department of Health and Human Services determine cruises or COVID-19 are no longer a major health risk.

Energy, Industrials and Materials

·     Oil prices are little changed after Sunday’s historic deal between OPEC and its other exporting allies (Russia) came after President Trump intervened to compensate what Mexico could not add to the proposed cuts. After several days of intense negotiations, members of OPEC+, agreed to cut overall crude-oil production by 9.7M barrels a day starting on May 1-June 30 of this year.

·     U.S. Steel (X) says it has idled blast furnace #8 at its Gary Works plant in Indiana for an indefinite period due to weak market demand

·     WD-40 (WDFC) Q2 EPS $1.04 vs. est. $1.21 as net sales were $100.0M down -1.3% YoY and withdraws guidance for the year

Financials

·     Artisan Partners Asset Management Inc. (APAM) reported that its assets under management as of March 31, 2020 totaled $95.2 billion. Separate accounts accounted for $50.8 billion of total firm AUM, while Artisan Funds and Artisan Global Funds accounted for $44.4 billion

·     GAIN Capital Holdings (GCAP) March retail OTC trading volume of $388.6B surged from $198.7B in February and soared 130% from $168.9B in March 2020. Retail OTC average daily volume of $17.7B increased 79% M/M and 121% Y/Y.

Healthcare

·     DexCom (DXCM) will be joining the NASDAQ-100 Index, NASDAQ-100 Equal Weighted Index and NASDAQ-100 Ex-Tech Sector Index beginning April 20. DexCom will be replacing American Airlines (AAL) in the index

·     DaVita (DVA) said its operations in Q1 were not impacted by COVID-19 until late March, so there was no significant effect on its financial performance for the quarter; also said it has not experienced any major issues in billing or cash collections

·     Eli Lilly (LLY) says it entered into an agreement with National Institute of Allergy and Infectious Diseases to study baricitinib as part of the institute’s Adaptive COVID-19 Treatment Trial.

·     KKR-owned Envision Healthcare has hired Houlihan Lokey as a financial advisor to explore ways to restructure its $7.5B debt pile, Reuters reports.

·     Athersys (ATHX) rises after announced that the FDA has signed off on a pivotal Phase 2/3 clinical trial, MACOVIA, evaluating MultiStem therapy in COVID-19 patients with moderate-to-severe acute respiratory distress syndrome

Technology, Media & Telecom

·     Walt Disney World (DIS) plans to stop paying wages to 43,000 workers in about a week while allowing them to keep their benefits for up to a year in what is the largest wave of furloughs since the theme park resort closed in mid-March because of the coronavirus spread.

·     Amazon (AMZN) said it will begin placing new grocery delivery customers on a wait list and reduce shopping hours at some Whole Foods stores to prioritize orders from existing customers buying food online

·     Micron Technology (MU) downgraded to neutral from buy at Goldman Sachs