Early Look

Tuesday, March 10, 2020

Futures	Up/Down	%	Last
DJ Industrials	1,061.00	4.44%	24,938
S&P 500	123.50	4.50%	2,871
Nasdaq	363.50	4.57%	8,315

 

 

Stock futures are rebounding in a big way after President Donald Trump said in a White House news conference that he would seek payroll tax relief and other measures to help businesses amid the coronavirus outbreak. S&P futures hit their limit up band this morning, barring more gain as the news is helping boost market sentiment after posting one of its worst day’s in its history, as U.S. stocks plunged more than 7.5% for its’ biggest decline since the financial crisis following a full-blown oil price war between Saudi Arabia and Russia that rattled energy (oil prices fell 20%) and financial markets which were already teetering over the spreading coronavirus. The other big story was the plunge in Treasury yields plummeted, as the 10-year yield hit a record low of 0.31% and the 30-year 0.7%. The S&P 500 index is now at a nine-month low, led by a rout that began yesterday leading to a 15-minute trading halt with losses reaching 7% four minutes in. All but nine S&P 500 companies were lower Monday, with energy producers routed by 20%. If history is on its side, markets could see a bounce today after Bespoke Investment Group strategists found that in the 10 previous times since 1952 that the S&P 500 fell 5% or more on a Monday, the index has gained the following day, by an average 4.2%. In Asian markets, The Nikkei Index rose 168 points to 19,867, the Shanghai Index gained 53 points to close at 2,996 the Hang Seng Index rose 352 points to 25,392. In Europe, the German DAX is up 385 points (3.6%) to move back over 11,000, while the FTSE 100 is higher by over 200 points (nearly 4%) back to the 6,200 level. In coronavirus news, the whole of Italy, a country of more than 60 million people, is in lockdown. No one is allowed to leave the city where they reside without special permission; bars and restaurants will close at 6 p.m.; no sporting events or large gatherings will take place until April 3^rd.

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -225.81 points, or 7.60%, to 2,746.56

·     The Dow Jones Industrial Average fell -2,013.76 points, or 7.79%, to 23,851.02

·     The Nasdaq Composite slumped -624.94 points, or 7.29%, to 7,950.68

·     The Russell 2000 Index declined -135.78 points, or 9.37% to 1,313.44

 

Economic Calendar for Today

·     6:00 AM EST      NFIB Small Business Optimism for February

·     7:45 AM EST      ICSC Weekly Retail Sales

·     8:55 AM EST      Johnson/Redbook Weekly Sales

·     4:30 PM EST       API Weekly Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: AKBA, CATB, CVIA, KOPN, REYN, SPAR, WKHS

·     Earnings After the Close: APEI, BXC, CCXI, CDMO, CDXC, CLDR, CLNE, HEAR, III, KFY, PETQ, VSLR

 

Other Key Events:

·     Barclay’s Global Healthcare Conference 2020, 3/10-3/12, in Miami, FL

·     Deutsche Bank 28th annual Media, Internet & Telecom Conference, 3/9-3/11 in Palm Beach, FL

·     Healthcare Info & Mgmt. Systems Society, 3/9-3/13, in Orlando, FL

·     JPMorgan Industrials Conference, 3/10-3/12, in New York

·     Optical Networking & Communication Conference, 3/8-3/12, in San Diego, FL

·     RBC Capital Financial Institutions Conference, 3/10-3/11, in New York

·     Wolfe Research FinTech Forum 2020, 3/9-3/11, in New York, NY

 

 

Macro	Up/Down	Last
WTI Crude	3.00	34.13
Brent	3.04	37.40
Gold	-15.90	1,659.80
EUR/USD	-0.0097	1.1353
JPY/USD	2.40	104.76
10-Year Note	+0.192	0.733%

 

 

World News

·     U.S. President Donald Trump said he will ask the Senate for a payroll tax cut as well as relief for hourly wage earners amid the COVID-19 outbreak – CNBC

·     U.S. Feb. Small Business Optimism rises to 104.5 vs. est. 102.8; 26% of employers think it is a good time to expand; net percentage of employers anticipating job creation rises to 21%; net percentage of firms expecting a better economy rises to 22%

·     Starting Tuesday, the whole of Italy, a country of more than 60 million people, is in lockdown. No one is allowed to leave the city where they reside without special permission; bars and restaurants will close at 6 p.m.; no sporting events or large gatherings will take place until at least April 3

·     China producer-price index, a gauge of factory-gate prices, fell 0.4% in February from a year earlier, the National Bureau of Statistics said. The consumer-price index, meantime, climbed 5.2% in February from a year earlier, moderating from a 5.4% gain in the previous month. Food prices in February surged 21.9% from a year earlier, outpacing January’s 20.6% gain and hitting the highest level since April 2008.

 

Sector News Breakdown

Consumer

·     Stitch Fix (SFIX) shares fell as sees Q3 revenue $465M-$475M below consensus $506.21M; says coronavirus, macro themes led to lowered revenue outlook; said there are also macro themes that lead them to approach the back half of FY20 with more conservatism

·     Ascena Retail (ASNA) sees Q3 comparable sales of negative low single digits; sees Q3 revenue $1.05B-$1.08B and sees Q3 gross margin rate of 57.8%-58.3%, depreciation and amortization of approximately $60M, and adjusted operating loss of $10M-$30M

·     Casey’s (CASY) Q3 EPS 91c vs. est. 89c; 3Q revenue $2.25B vs. est. $2.29B; 3Q same store gallons -2% vs. -3.40% YoY, Q3 Same-store grocery sales +3.5% vs. +3.40% YoY and Q3 Same-store prepared food sales +2.8% vs. +1.50% YoY

·     Hawaiian Airlines (HA) reports February traffic up 6.4%, capacity up 13.3%; load factor was down 5.3 pts to 79.3%; withdraws its estimates for operating revenue in light of demand reductions associated with the global spread of COVID-19

·     NIO (NIO) delivered 707 vehicles in February 2020, consisted of 671 ES6s, the company’s 5-seater high-performance premium electric SUV, and 36 ES8s, the company’s 7-seater high-performance premium electric SUV and its 6-seater variant

·     Revlon (REV) preliminary Q4 adj. EPS 44c on revs $699.4M

·     Host Hotels & Resorts (HST) announced it is withdrawing its full-year 2020 guidance due to the ongoing financial impact of reduced travel demand as a result of the global coronavirus outbreak

·     Vail Resorts (MTN) Q2 EPS $5.04 vs. est. $5.45, withdraws guidance for FY20 while sees FY20 CapEx $155M-$160M

 

Energy, Industrials & Materials

·     Saudi Arabia said it will supply the market with 12.3m barrels of oil per day next month, up 25% from the previous month, in a severe escalation of its price war following a collapse of a production agreement between Opec and Russia

·     California Resources (CRC) said it’s reducing its capital investment due to the changes in the commodity market to a level that maintains the mechanical integrity of its facilities; was already on pace to invest less than $35 million of internally funded capital in the first quarter

·     Clarus reports Q4 adj. EPS 22c on revs $61.02M vs. est. 17c and $59.55M; said fourth quarter results, driven by continued brand momentum and sales performance from Black Diamond across all regions and product categories

·     Franco-Nevada (FNV) Q4 adjusted EPS 59c/$258.1M vs. est. 27c/$170.05M; expects attributable royalty and stream sales to total 550,000 to 580,000 GEOs from its mining assets and revenue of $80 to $95 million from its energy assets

 

Financials

·     Franklin Resources (BEN) reports preliminary AUM $656.5B as of February 29 as compared to $688B at January 31. Assets under management were driven lower by sharp market declines as net outflows continued to moderate

·     Cohen & Steers (CNS) reported preliminary assets under management of $69.3B as of February 29, 2020, a decrease of $4.0B from assets under management at January 31, 2020. Net inflows of $593M were offset by market depreciation of $4.4B and distributions of $194M

·     Pzena Investment (PZN) reported its preliminary assets under management as of February 29, 2020. AUM for month-end February 2020 was $34.8B versus $37.6B on February 28, 2019

·     For more than eight years Fifth Third Bank (FITB) ignored signs that employees were opening unauthorized accounts to meet aggressive sales goals, a federal regulator said in a lawsuit – NY Times reports

 

Healthcare

·     MediciNova (MNOV) announced that it plans to initiate development of MN-166 for severe pneumonia and acute respiratory distress syndrome

·     Santen Pharmaceutical and TRACON Pharmaceuticals (TCON) announced the discontinuation of the development of DE-122 for the treatment of wet age-related macular degeneration, or wAMD, following the review of recently obtained top-line data from the Phase 2a AVANTE clinical study.

 

Technology, Media & Telecom

·     Cypress Semiconductor (CY) shares rose 35% after receiving clearance from the Committee on Foreign Investment in the United States to be acquired by Germany’s Infineon Technologies (IFNNY). Cypress shares plunged last week on reports that CFIUS had recommended to Pres. Trump that he block the deal as a national security risk.

·     Booking Holdings (BKNG) announced that it is withdrawing its previously announced Q1 financial guidance as a result of the worsening impact of the COVID-19 outbreak on travel demand

·     TSMC (TSM) reports February revenue of about NT$93.39B (-9.9% M/M, +53.4% Y/Y); revenues for January through February 2020 totaled NT$197.08B (+41.8% Y/Y).