Morning Preview: October 05, 2020

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Early Look

Monday, October 5, 2020





DJ Industrials




S&P 500










Stock futures in the U.S. are edging higher following conflicting reports this weekend over the timeline of Trump’s treatment and his condition. On Sunday, Trump’s doctors said his condition was improving as Trump left Walter Reed briefly to drive by supporters and says he’s “learned a lot about COVID“, but it’s unclear when he will return to the White House. Negotiations are expected to continue on fiscal stimulus, so another day of contradictory soundbites looks likely. In Asian markets, The Nikkei Index gained 282 points to 23,312, the Shanghai Index dipped -6 points to 3,218 and the Hang Seng Index jumped over 300 points to 23,767. In Europe, the German DAX is up around 80 points to 12,765, while the FTSE 100 gains about 40 points to 5,945. The S&P 500 index dropped over 1% on Friday but still managed to snap its’ four-week losing streak while the Nasdaq Composite declined over 2% led by mega caps and biotech names but also gained for the week despite no new stimulus relief measures being passed in Washington as both sides said there are significant differences and no concrete agreement. While the S&P closed up for week, it’s a concern that late selling pushed the index back below its 50-day simple moving average at 3,355. Politico reported that House Speaker Nancy Pelosi as well as Treasury Secretary Steven Mnuchin consulted Federal Reserve Chair Jerome Powell about their stimulus plan talks. It’s unclear what, if any, role the Fed will play.

Market Closing Prices Yesterday

·     The S&P 500 Index plunged -32.36 points, or 0.8196%, to 3,348.44

·     The Dow Jones Industrial Average fell -134.09 points, or 0.48%, to 27,682.81

·     The Nasdaq Composite dropped -251.49 points, or 2.22%, to 11,705.02

·     The Russell 2000 Index advanced 8.09 points, or 0.53% to 1,539.30


Economic Calendar for Today

·     9:45 AM EST      Markit Composite PMI, Sept-F

·     9:45 AM EST      Markit Services PMI, Sept-F

·     10:00 AM EST    ISM Non-Manufacturing PMI for Sept

·     10:45 AM EST    Fed’s Evans speaks at luncheon at NABE Meeting Chicago

·     3:15 PM EST       Fed’s Bostic speaks at Regulating Financial Technology


Earnings Calendar:

·     Earnings Before the Open: None

·     Earnings After the Close: None


Other Key Events:

·     Chardan Genetics Medicines Virtual Conference, 10/5-10/7

·     Deutsche Bank Virtual Leveraged Finance Conference, 10/5-10/7






WTI Crude















10-Year Note





World News

·     U.S. Senate Majority Leader Mitch McConnell canceled votes planned in the chamber over the next two weeks, after three recent cases of Covid-19 among Republican senators put the Senate’s functioning at risk but left the schedule unchanged for hearings on Supreme Court nominee Amy Coney Barrett.

·     U.K. Prime Minister Boris Johnson and European Commission President Ursula von der Leyen issued a statement urging their negotiators to “work intensively” to forge a trade deal, as Johnson also declared in an interview that he was willing to leave the trading bloc without one

·     New York City’s mayor said de Blasio said Sunday that he has asked the state for permission to close schools and reinstate restrictions on nonessential businesses in several neighborhoods because of a resurgence of the coronavirus. Shutdowns would happen starting Wednesday in nine ZIP Codes in the city, Mayor Bill de Blasio said.


Sector News Breakdown


·     Camping World (CWH) mentioned positively in Barron’s saying it may be a so-called clean play on dealers of recreational vehicles, noting shares have slumped 26% since its high in early August, but the company’s management is still upbeat about its outlook.

·     Cineworld, the world’s second-biggest cinema operator, said it was considering temporarily closing all its screens in the United States and Britain after studios pulled major releases such as the latest James Bond film – Reuters



·     Six pipeline funds offer cheap way to play energy rebound according to Barron’ saying Kayne Anderson Energy Infrastructure (KYN), the largest fund in the sector with $690M in net assets, is down 71% YTD and now trades at ~$4, while other major MLP funds include Tortoise (TYG), ClearBridge MLP & Midstream (CEM) and First Trust MLP & Energy Income (NFEI). Enterprise Products Partners (EPD), whose units are down 44% YTD is another one

·     Eversource (ES) upgraded to Neutral from Underperform at Bank America

·     Kosmos Energy (KOS) rises as it strengthens liquidity position with closing of $200 mln Gulf of Mexico facility; restructured previously announced Gulf of Mexico prepayment facility into a five-year $200 mln term-loan facility

·     Oneok (OKE) upgraded to Overweight from Equal Weight at Wells Fargo

·     Targa Resources (TRGP) has authorized the repurchase of up to $500M outstanding common stock, effective immediately; expects FY2020 Adjusted EBITDA to be at or around the high end of its previously provided outlook of $1.5B to $1.625B

·     Patterson-UTI Energy (PTEN) announced an average of 60 drilling rigs operating for the month of September vs. 59 in August.



·     Regeneron (REGN) shares rise 5% after President Trump receives its experimental polyclonal antibody cocktail for COVID-19

·     Bristol-Myers (BMY) will buy MyoKardia (MYOK) for $225 a share in cash, or $13.1B, The Wall Street J reports as MyoKardia’s lead pipeline drug, code-named mavacamten, treats a chronic heart condition that can cause irregular heart rhythms in some patients and even death 

·     Jaguar Health Inc. (JAGX) files to offer up to $7 mln shares of common stock

·     ImmunoGen Inc. (IMGN) said the FDA has granted Breakthrough Therapy designation for IMGN632 for the treatment of patients with relapsed or refractory blastic plasmacytoid dendritic cell neoplasm.

·     Bristol Myers Squibb (BMY) says it won FDA approval for the drug combination of Opdivo and Yervoy for use in treatment of adults with malignant pleural mesothelioma.


Industrials & Materials

·     Caterpillar (CAT) agreed to acquire the Oil & Gas Division of the Weir Group PLC, a Scotland-based global engineering business for $405M

·     Electric vehicles like Tesla need lithium, and miners such as Albemarle (ALB), SQM (SQM) and Livent (LTHM) should be considered among the potential winners of an anticipated boom in the EV market, according to Barron’s

·     Cummins (CMI), Paccar (PCAR) and Navistar (NAV) leveraged to data as preliminary North America Class 8 net orders in September were up 145% from a year ago to 31,100 units, according to new data from ACT Research. Class 8 orders rose 60% from the level seen in August.

·     K+S (KPLUY) is in advanced talks to sell its Morton Salt unit to Kissner Group for ~$3B, and a deal could be announced as soon as this week, Bloomberg reported over the weekend. K+S is selling assets after its earlier bet on a Canadian potash project backfired, weighing on earnings and sent its credit rating into junk territory.

·     Terex (TEX) mentioned positively in Barron’s calling shares are cheap as the small-cap industrial company has a strong balance sheet and potentially higher profits, making it a good choice for investors betting on a cyclical recovery in the global economy.

·     XPO Logistics (XPO) has revived a sale of its European supply chain business, after the process had paused during the pandemic according to Bloomberg late Friday. The company has reached out to potential private equity and strategic buyers about the unit, which could fetch $4B-$4.5B


Technology, Media & Telecom

·     Gilat Satellite Networks (GILT) agrees to terminate merger agreement with communications solutions provider Comtech Telecom (CMTL) saying since the COVID-19 pandemic made timing of combination particularly challenging, GILT and CMTL concluded settlement is best path forward for both cos and their respective stakeholders; Comtech to pay Gilat Satellite $70M after agreeing to terminate merger agreement

·     AT&T (T) downgraded to Underweight from Sector Weight at KeyBanc saying key first look data suggests deterioration in DirectTV subscription and average rev per user (ARPU) in August and declining wireless postpaid ARPU indicating limited rev improvement in Q3

·     Alpha and Omega Semiconductor (AOSL) now expects Q1 revenue in the range of $148M to $152M vs. prior: $134M-$138M and a consensus of $136.03M

·     Chinese chipmaker Semiconductor Manufacturing International Corporation has undertaken “preliminary exchanges” with the U.S. Bureau of Industry and Security regarding export restrictions, the company said on Sunday in a filing – Reuters

·     Video game sector mentioned positively in Barron’s noting the pandemic is a significant moment for the industry with the delay in sports, film releases and other major events saying Activision Blizzard (ATVI), Electronic Arts (EA) and Take-Two Interactive Software (TTWO), whose shares are each up at least 24% this year, are set to post further gains. Activision Blizzard (ATVI) shares deserve more of a premium because the company is developing major games like Overwatch 2 and Diablo IV, according to Jefferies video-game analyst

·     A10 Networks (ATEN) late Friday raised its revenue guidance for Q3 to come in at $55.5M-$56.5M, above the prior range of $53M-$56M, and vs. est. $55.7M.

·     Facebook (FB) said says no way on splitting Instagram and WhatsApp in response to a U.S. government effort to split the two as the company’s lawyers say such a move would be a “complete non-starter” in a 14-page document released ahead of a report from the House Antitrust Subcommittee expected this month


Market commentary provided by Catena Media Financials US, LLC, a firm separate from and not affiliated with Regal Securities. Regal Securities has not participated in the creation of the content, and does not explicitly or implicitly endorse the content.

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