Early Look

Tuesday, April 14, 2020

Futures	Up/Down	%	Last
DJ Industrials	306.00	1.31%	23,615
S&P 500	30.50	1.10%	2,789
Nasdaq	120.50	1.44%	8,447

 

 

U.S. stock futures are pointing to a stronger open for major averages, looking to rebound after yesterday’s mixed market action amid growing optimism the world economy is slowly reopening with coronavirus spreading at a decreasing rate. The advance comes as the number of new coronavirus cases appears to have peaked in the U.S., the eurozone and the U.K. The daily increase in fatalities on a percentage basis world-wide is the lowest since March 7, while the increase in new cases is the lowest since March 10 according to one report. Markets are also bracing for the start of earnings season which is surely to show the impact from the coronavirus global market shutdown, while at the same time show uncertainty for future guidance (many companies have already withdrawn guidance). The Dow and S&P 500 fell on Monday after last week’s strong gains, as U.S. companies prepared to kick off a quarterly earnings season today, while shares of AMZN, NFLX and TSLA helped the Nasdaq post its first three-day streak of gains since Feb. 12. Financials were among the top decliners yesterday ahead of earnings this week, with JPM and WFC today. In Asian markets, The Nikkei Index jumped 595 points (3.13%) to 19,638, the Shanghai Index gained 44 points (1.59%) to settle at 2,827 and the Hang Seng Index gained 135 points to 24,435. In Europe, the German DAX is higher by over 100 points to 10,675, while the FTSE 100 is down about -30 points holding just above 5,800.

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -28.19 points, or 1.01%, to 2,761.63

·     The Dow Jones Industrial Average fell -328.60 points, or 1.39%, to 23,390.77

·     The Nasdaq Composite gained 38.85 points, or 0.48%, to 8,192.42

·     The Russell 2000 Index declined -34.68 points, or 2.78% to 1,202.04

 

Economic Calendar for Today

·     7:45 AM EST      ICSC Weekly Retail Sales

·     8:30 AM EST      Import Price MoM for March…est. (-3.2%)

·     8:30 AM EST      Export Prices MoM for March…est. (-5.1%)

·     8:55 AM EST      Johnson/Redbook Weekly Sales

·     4:30 PM EST       API Weekly Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: CBSH, FAST, FRC, HOFT, JNJ, JPM, WFC

·     Earnings After the Close: JBHT

 

 

Macro	Up/Down	Last
WTI Crude	-0.28	22.13
Brent	0.03	31.77
Gold	4.50	1,765.90
EUR/USD	0.0028	1.0942
JPY/USD	-0.30	107.47
10-Year Note	-0.027	0.744%

 

 

World News

·     China’s exports and imports in March continued to drop but at a slower rate as Chinese exports dropped 6.6% in March from a year earlier, after falling 17.2% over January and February. Chinese imports fell 0.9% from a year earlier, compared with a 4.0% decline in the first two months of the year, the customs data showed. China’s trade surplus reached $19.9B in March, compared with January-February’s $7.09 billion deficit and expectations for a $21 billion surplus.

·     The Federal Reserve launches a funding backstop for commercial paper markets today. In a program similar to one used during the 2008 financial crisis, the U.S. central bank becomes a lender of last resort for companies unable to borrow in the short-term market

 

Sector News Breakdown

Consumer

·     Five Below (FIVE) reduced compensation for its executive team and board and cut back on capital expenditure as a part of its response to the coronavirus business environment

·     Lithia Motors (LAD) said it expects Q1 net income to be in the range of $45.5M to $47M and EPS between $1.95 to $2.00; same store new vehicle sales expected to decrease between 10% to 11%, same store used vehicle retail sales to increase between 2% to 3%

·     Yeti (YETI) is selected to join the S&P SmallCap 600 Index

 

Energy

·     Exxon Mobil Corp. (XOM) borrowed another $9.5 billion in the U.S. corporate bond market on Monday, as the oil and gas giant sold a five-part package of bonds

·     Lonestar Resources (LONE) Q4 adjusted Ebitda fell -20% YoY to $32.6M vs. est. $32M; 4Q avg production 17,547 boe/d, +33% YoY

·     Chesapeake Energy (CHK) says its board approved a 1-for-200 reverse stock split following today’s special meeting of shareholders, effective at the market open on April 15.

 

Financials

·     JPMorgan (JPM) reports Q1 EPS 78c vs. $2.65 YoY; Q1 revs fell -2.6% YoY to $29.07B; Q1 provision for credit losses $8.29B vs. $1.5B YoY

·     AllianceBernstein L.P. (AB) said preliminary assets under management decreased to $542 billion during March 2020 from $614 billion at the end of February; the 11.7% decrease resulted predominantly from sharp market declines as well as net outflows from all three client channels – Retail, Institutions, and Private Wealth

·     Fidelity national (FIS) guides Q1 prelim EPS $1.26-$1.28 on revs $3.06B-$3.098B vs. prior $3.18B-$3.21B vs. est. $1.26; lowers Q1 organic rev growth to up 1%-2% from 5%-6% prior

 

Healthcare

·     Johnson & Johnson (JNJ) Q1 EPS $2.40 on sales $20.69B vs. est. $19.48B/$1.99 on higher Remicade sales of $990M and Stelara sales up 29% YoY to $1.82B; boosts quarterly dividend by 6.3%; guides FY20 EPS $7.50-$7.90 and sees 2020 adj operational sales down 3% to up 0.5% from prior view up 5%-6% due to the impact of COVID-19

·     AstraZeneca (AZN) said a phase III trial for its Tagrisso drug showed “overwhelming efficacy.” AstraZeneca said it is the first global trial for an EGFR inhibitor to show statistically significant and clinically meaningful benefit in adjuvant treatment of lung cancer and said plans for regulatory submission are already underway.

·     Inspire Medical Systems (INSP) suspended its full-year 2020 guidance due to uncertainties brought by the COVID-19 pandemic and said it expects Q1 revenue of $21.3M (est. $22.6M), up 31% YoY while says revenue was negatively impacted by the pandemic

·     Intersect ENT (XENT) expects Q1 sales of $19.5M – 19.8M, down 26% (midpoint) from $26.7M a year ago and down 26% from consensus of $26.5M; is withdrawing 2020 guidance and instituted cost-saving measures amid COVID-19

 

Industrials & Materials

·     Columbus McKinnon (CMCO) guides Q4 prelim revs $185M-$190M, down from $196M-$201M prior; is continuing its search for a CEO and is currently interviewing a short list of candidates

·     Navistar (NAV) reported a series of temporary cost cutting measures to preserve about $300m in cash over the balance of the fiscal year

·     Cleveland Cliffs (CLF) said it plans to temporarily idle production at two of its iron ore mining operations, Northshore Mining in Minnesota and Tilden Mine in Michigan.

·     PotlatchDeltic (PCH) said it plans to temporarily halt production at its St. Maries, ID, industrial plywood plant

 

Technology, Media & Telecom

·     Roku (ROKU) rises 11% after saying sees Q1 revenue $307M-$317M above est. $299.8M; estimates 39.8M Active Accounts as of March 31, 2020, a net increase of nearly 3M this year; sees Q1 Streaming Hours will be 13.2 billion, a 49% YoY increase; guides Q1 adjusted EBITDA loss ($23M) to ($18M)

·     News Corp. (NWSA) said it expects advertising and single-copy sales revenues in news and information services segment to be adversely affected; has seen increases in digital paid subscribers, including at the WSJ and NY Times; has seen digital audience gains at online versions of its news properties

·     IDC said global traditional PC market, comprised of desktops, notebooks, and workstations, declined 9.8% year over year in 1Q, reaching a total of 53.2 million shipments. Lenovo led 1Q with 12,830 traditional PC shipments, or 24.1% market share, following by HP with 11,701 shipments and 22.0% market share and Apple saw its Mac volumes decline by 20.7% YoY, hardest hit by factory shutdowns in China

·     Slack (WORK) CEO Stewart Butterfield calls out rival Microsoft (MSFT) Teams’ recently disclosed DAU figure. Butterfield: “If Microsoft is such a competitive threat to Slack as it says, we would not have grown in sales and $1 million customers. I mean, 44M is an impressive number, but that is out of 200 million Office 365 customers. That’s about a 20% adoption rate.” – Marketwatch.com

·     Brooks Automation (BRKS) sees Q2 EPS 24c-26c vs. est. 23c and sees Q2 revenue ~$220M vs. est. $213.37M; sees Q2 semiconductor revenue up 11% and life science revenue up 11% from last year