Early Look

Wednesday, April 15, 2020

Stock futures are sharply lower, giving back some of yesterday’s gains in about of profit taking. With Tuesday’s 3% gain for the S&P 500 it marked the 38th session gain of at least 1% this year on Tuesday, surpassing last year’s total, while it also marked the 23rd move of at least 3% in either direction for the index, matching such moves in all of 2009, according to Dow Jones Market Data. Tech was the standout leader yesterday, led behind 4% gains for NFLX, GOOGL and 5% for AAPL and AMZN (which hit an all-time high). Fear has subsided for the time being as the CBOE Volatility Index (VIX) was at 37 Tuesday afternoon, far from its peak above 80 last month, but still above its historic average at 20. Still, as markets have jumped over 20% from their March lows, more than 16 million Americans have lost their jobs over the past three weeks, while the coronavirus has sickened two million people and claimed the lives of more than 120,000 world-wide.

Market Closing Prices Yesterday

·     The S&P 500 Index jumped 84.43 points, or 3.06%, to 2,846.06

·     The Dow Jones Industrial Average rose 558.99 points, or 2.39%, to 23,949.76

·     The Nasdaq Composite spiked 323.32 points, or 3.95%, to 8,515.74

·     The Russell 2000 Index advanced 25.29 points, or 2.09% to 1,237.33

Economic Calendar for Today

·     7:00 AM EST      MBA Mortgage Applications Data

·     8:30 AM EST      Retail Sales MoM for March…est. (-8%)

·     8:30 AM EST      Retail Sales Ex-Autos for March…est. (-5%)

·     8:30 AM EST      Empire Manufacturing for April…est. -35.0

·     9:15 AM EST      Industrial Production MoM for March…est. (-4%)

·     9:15 AM EST      Capacity Utilization for March…est. 74.0%

·     10:00 AM EST    Business Inventories for Feb…est. (-0.4%)

·     10:00 AM EST    NAHB Housing Market Index for April…est. 55 (prior 72)

·     10:30 AM EST    Weekly DOE Inventory Data

·     2:00 PM EST       Fed Beige Book released

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

Earnings Calendar:

·     Earnings Before the Open: BAC, C, GS, IMBI, PNC, UNH, USB

·     Earnings After the Close: BBBY, LAKE, MIND

Sector News Breakdown

Consumer

·     JetBlue (JBLU) said it will receive $685M in grants and $251M in direct loans from the government through the CARES Act. The money received will be split into two different portions, one which needs to be paid back and one that does not. The portion that we do not have to pay back covers about 56% of what our payroll costs were during the same six months last year.

·     Southwest Airlines (LUV) confirmed that it reached an agreement in principle with the Department of Treasury on payroll relief. The expected disbursements under the program total more than $3.2B, consisting of more than $2.3B in direct payroll support and a nearly $1B unsecured term loan

·     Red Robin Gourmet (RRGB) said is temporarily closing 35 Company-operated restaurants, the majority of which are mall-based locations, as of local closing times today; temporarily reducing pay by approximately 20% for all non-furloughed restaurant support center and restaurant supervisory Team Members, effective as of April 20, 2020; eliminating approximately 50 restaurant support center G&A positions

·     Scientific Games Corporation (SGMS) said it has a strong liquidity position and has already cut more than $100 million in quarterly costs. The company has drawn approximately $480 million under its Revolving Credit Facilities to give it maximum flexibility during these difficult times.

Energy, Industrials, Materials

·     The American Petroleum Institute (API) showed a build of 13.4M barrels of oil for the week ended April 10, its third consecutive increase while gasoline inventories rose 2.23M barrels, distillate inventories a build of 5.64M barrels, and Cushing a build of 5.36M barrels.

·     Covanta (CVA) said it is cutting its annualized dividend to 32c from $1.00 and withdraws 2020 guidance, citing the economic uncertainty created by COVID-19; says the dividend cut will save $90M per year

·     JB Hunt (JBHT) Q1 EPS 98c on revs $2.28B vs. est. $1.01 and $2.2B; 1Q effective tax rate 26.5% vs. 22.7% YoY; said Q1 Intermodal revs rose 5.7% YoY to $1.15B

Financials

·     LendingTree (TREE) guides Q1 revs $280M-$285M, down from prior $296M-$306M while suspends FY 2020 guidance

·     Re/Max Holdings (RMAX) said it sees financial and operating performance declining during Q2 and for the foreseeable as new housing activity becomes “increasingly compromised” due to the COVID-19 pandemic

Healthcare

·     Fluidigm (FLDM) preliminary Q1 revenue $27.6M vs. est. $29.32M and says cash and cash equivalents, short-term investments, and restricted cash as of March 31 totaled approximately $49.6M, vs. $60.7M at the end of 2019

·     Illumina (ILMN) guides Q1 revs to about $858M vs. est. $830.3M; withdraws 2020 guidance; said strong sequencing consumable revenue more than offset the impact of COVID-19 including disrupted system sales in the closing weeks of the quarter; warns Q2 to be significantly impacted by COVID-19

·     NuVasive (NUVA) guides Q1 revs $259M-$261M vs. est. $280.2M; said has a strong cash position, including more than $500 million in cash on hand at the end of the first quarter

·     Teladoc (TDOC) guides Q1 revs $180M-$181M, above est. $173.1M; now routinely providing in excess of 20,000 virtual medical visits /day in US, up over 100% as compared to first week of March; said total visit volume is expected to exceed 1.8M visits in Q1 of 2020

Technology, Media & Telecom

·     ANGI HomeServices (ANGI) withdrew full-year guidance amid the COVID-19 pandemic and said it sees Q1 revenues of $340M-$345M (vs. consensus for $352.3M), an operating loss of $15M to $20M, and EBITDA of $30M-$35M