Early Look

Friday, July 10, 2020

Stock futures are edging lower following a mixed session on Thursday, tracking Asian markets to the downside while European markets nudge higher. Notable is strength in Treasury prices and subsequent declines in yields, as the 10-year falls to 0.57% its lowest level in three months following the weakness in markets (outside of technology) while oil prices also dip. U.S. stocks closed mostly lower Thursday, but off the low of the day, as investors sought safety in technology and tech-related investments amid rising cases of coronavirus in more U.S. states, with several seeing record high cases and a tick up in related deaths. Markets also dipped following a 7-2 Supreme Court decision ruling that a New York prosecutor could have access to President Donald Trump’s tax returns. The Dow fell over 360 points, led by component Walgreens (WBA) after disappointing quarterly results and guidance. The Nasdaq Composite Index resumed its advance, marking its second record in a row and its 26th of 2020, led by large cap tech. In Asian markets fell for the first time in a few days, pulling back after a massive surge as the Nikkei Index fell -238 points to 22,290, the Shanghai Index dropped -67 points (or nearly 2%) to 3,383 and the Hang Seng Index dropped -482 points to 25,727. In Europe, the German DAX is up about 20 points to 12,500, while the FTSE 100 is up about 20 points to 6,070. The China CSI 300 index halted an 8-session winning streak, with a loss of 1.8%. The index has climbed 14% this month, driven in part by articles in government-backed newspapers cheering on the market.

Market Closing Prices Yesterday

·     The S&P 500 Index slipped -17.89 points, or 0.56%, to 3,152.05

·     The Dow Jones Industrial Average fell -361.19 points, or 1.39%, to 25,706.09

·     The Nasdaq Composite advanced 55.25 points, or 0.53%, to 10,547.75

·     The Russell 2000 Index declined -28.48 points, or 2.00% to 1,398.91

Economic Calendar for Today

·     8:30 AM EST      Producer Price Index (PPI) Final Demand MoM for June…est. 0.4%

·     8:30 AM EST      PPI Ex: Food & Energy MoM for June…est. 0.1%

·     8:30 AM EST      Producer Price Index (PPI) Final Demand YoY for June…est. (-0.2%)

·     8:30 AM EST      PPI Ex: Food & Energy YoY for June…est. 0.4%

·     1:00 PM EST       Baker Hughes Weekly Rig Count

Sector News Breakdown

Consumer

·     Ford (F) may need to shut some U.S. car plants as early as next week if they fail to receive engines produced in Mexico’s Chihuahua state, U.S. ambassador to Mexico Christopher Landau said

·     Foot Locker (FL) and Calares (CAL) both upgraded at Susquehanna

·     WD-40 (WDFC) 3Q EPS $1.06 vs. est. $1.08 on net sales $98.2M (down 14% YoY) vs. est $108.1M; gross margin 54% vs. est. 53.7%

·     PriceSmart (PSMT) Q3 EPS 41c on revs $799.9M vs. est. 27c/$693.45M; said net merch comps fell -3.6%

Energy

·     The IEA said while global oil demand in the first half of 2020 plunged by 10.75M barrels a day, down roughly 11% Y/Y, the agency forecast oil demand would be down by 5.1M bpd in the second half. This means global oil demand this year will average 92.1M barrels per day, down by 7.9M bpd versus 2019, a slightly smaller decline than forecast in the last report.

·     The Trump administration is asking a federal judge to reject a settlement between the Sierra Club and DTE Energy (DTE) over alleged clean air violations, arguing the deal improperly goes beyond what the U.S. government has approved – WSJ

Financials

·     Cohen & Steers (CNS) reports preliminary AUM $66.3B as of June 30, an increase of $2.5B from assets under management at May 31

·     Franklin Covey (FC) reports Q3 EPS loss (79c) on sales $37.5M (vs. $56M YoY) missing estimates of 28c and $49.6M; says covid-19 pandemic restrictions challenged Q3 onsite training and coaching delivery

·     GAIN Capital (GCAP) said OTC Trading Volume was up 24% sequentially and up 61.4% y/y; OTC Average Daily Volume was up 18.8% sequentially and up 46.4% y/y; 12 Month Trailing Active OTC Accounts were up 4.5% sequentially and were up 26.3% y/y

·     NASDAQ INC (NDAQ) said June U.S. equity options volume of 230 mln contracts vs 132 mln contracts last year

·     Spirit Realty (SRC) said June and 2q rent collections reached approximately 75% as of July 8

·     Wells Fargo (WFC) and Comerica (CMA) upgraded to Outperform from Neutral at Baird

·     KeyCorp (KEY) downgraded to Underperform from Neutral at Bank America

Healthcare

·     Centogene (CNTG) 3.5M share Secondary priced at $14.00

·     Nkarta (NKTX) 14M share IPO priced at $18.00

·     Poseida Therapeutics (PSTX) 14M share IPO priced at $16.00

·     FDA has approved AbbVie (ABBV) unit Allergan’s supplemental marketing application for BOTOX (onabotulinumtoxinA) for the treatment of spasticity (muscle stiffness) in pediatric patients 2 years of age and older

·     ANI Pharmaceuticals (ANIP) files $350M mixed securities shelf

·     Ziopharm Oncology (ZIOP) initiates phase 1 trial evaluating rapid personalized mfg car-t technology in patients with relapsed cd19+

Industrials & Materials

·     Greenbrier (GBX) Q3 adj. EPS $1.05 on revenue $762.6M vs., est. 14c/$616.06M; based on current backlog, are left with minimal open production capacity for remainder of both fiscal and calendar year

·     Matson (MATX) said it sees Q2 operating income for Ocean Transportation to be $40.5M-$42.5M vs. $19.7M YoY; and sees Q2 EPS 70c-75c vs. est. 12c saying China service strength, including additional vessel charters, primarily drove increase in operating income

Technology, Media & Telecom

·     ChipMOS Technologies (IMOS) reports Q2 revenue of $184.4M (+10.7% Y/Y) vs. consensus of $182.92M; June revenue was $60.6M (-0.3% M/M)

·     Taiwan Semiconductor (TSM) reports June revenue of NT$120.8M, up 40.8% Y/Y and 28.8% M/M; 1H20 net sales of NT$621.3M (+35.2% Y/Y).

·     TikTok (owned by ByteDance) has officially been pulled from Apple’s App Store and the Google Play Store in Hong Kong, exiting the territory due to China’s national security law.

·     Fastly (FSLY) downgraded to Underperform from Buy at Bank America while raising the tgt to $90 from $50