Early Look

Wednesday, October 7, 2020

Futures	Up/Down	%	Last
DJ Industrials	143.00	0.52%	27,843
S&P 500	14.50	0.43%	3,367
Nasdaq	43.50	0.38%	11,317

 

 

Stocks futures are bouncing after yesterday’s late day slide as President Trump said in a tweet last night that he’s willing to pass several independent coronavirus relief measures, including a new round of stimulus checks, just hours after pushing for a pause in negotiations on a new aid package. “If I am sent a Stand-Alone Bill for Stimulus Checks ($1,200), they will go out to our great people IMMEDIATELY. I am ready to sign right now. Are you listening Nancy?” Trump tweeted. He followed up with “The House & Senate should IMMEDIATELY Approve 25 Billion Dollars for Airline Payroll Support, & 135 Billion Dollars for Paycheck Protection Program for Small Business. Both of these will be fully paid for with unused funds from the Cares Act. Have this money. I will sign now!” The comments come less than 12-hours after President Donald Trump pulled the rug out from under the stimulus-hope crowd, just as the broader market was hitting the highs of the day on Tuesday after accusing House Speaker Pelosi of not negotiating in good faith on coronavirus relief and called on his administration to stop negotiating on relief until after election. The S&P closed down 1.4%, the Nasdaq fell 1.6% and the Dow was off 1.3%. On the day defensive utilities and REITs were the best performers in the S&P 500 index while communication services, consumer discretionary and consumer staples fell the most. In other catalysts today, the Federal Reserve has speakers today along with the minutes of the Federal Reserve’s latest policy meeting ahead. The U.S. election stays in focus for later with a debate between Vice President Mike Pence and Democratic challenger Kamala Harris. In Asian markets, The Nikkei Index fell -10 points to 23,422, the Shanghai Index remained closed and the Hang Seng Index gained 262 points to 24,242. In Europe, the German DAX is down around -35 points to 12,870, while the FTSE 100 is little changed. Big tech also in focus as the House antitrust subcommittee has released its report on Big Tech after a 16-month investigation, concluding that four tech giants – Alphabet (GOOGL), Amazon.com (AMZN), Apple (AAPL), and Facebook (FB) – enjoy “monopoly power.”

Market Closing Prices Yesterday

·     The S&P 500 Index slumped -47.68 points, or 1.40%, to 3,360.95

·     The Dow Jones Industrial Average fell -375.84 points, or 1.34%, to 27,772.76

·     The Nasdaq Composite dropped -177.88 points, or 1.57%, to 11,154.60

·     The Russell 2000 Index declined -4.67 points, or 0.30% to 1,577.29

 

Economic Calendar for Today

·     7:00 AM EST      MBA Mortgage Applications Data

·     10:30 AM EST    Weekly DOE Inventory Data

·     1:00 PM EST       Fed’s Rosengren, Bostic, Kashkari host event on Economy

·     2:00 PM EST       FOMC Meeting Minutes for Sept 16th

·     3:00 PM EST       Consumer Credit for August

·     4:30 PM EST       Fed’s Evans discusses the U.S. Economy and Monetary Policy

 

Earnings Calendar:

·     Earnings Before the Open: LW, RPM

·     Earnings After the Close: RGP, SAR

 

Other Key Events:

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

·     Goldman Sachs Private Real Estate Conference

·     2020 North American Spine Society Virtual Meeting, 10/6-10/9

 

 

Macro	Up/Down	Last
WTI Crude	-0.95	39.72
Brent	-0.78	41.87
Gold	10.30	1,888.50
EUR/USD	0.0021	1.1755
JPY/USD	0.46	106.09
10-Year Note	+0.034	0.77%

 

 

World News

·     The current spike of the COVID-19 pandemic in Europe could delay the eurozone’s economic recovery, due to the impact of the containment measures being taken by governments across the region, European Central Bank President Christine Lagarde said

·     China’s foreign-exchange reserves dropped in September after five straight months of increases, falling by $22.1 billion to $3.143 trillion at the end of September, according to data released by the People’s Bank of China

·     German industrial production declined in August after three straight months of growth, as total industrial output–comprising production in manufacturing, energy and construction–fell 0.2% in August from July in calendar-adjusted terms. Economists had forecast a 1.5% increase

 

Sector News Breakdown

Consumer

·     DraftKings (DKNG) 32M share secondary priced at $52.00

·     Levi Strauss (LEVI) Q3 revs $1.1B vs. est. $822.3M and below last year $1.45M; Q3 cash and cash equivalents $1.35B; Q3 Americas revs up 94% QoQ to $550.0M and Europe revenue $390.0M vs. $129M QoQ; E-commerce sales were up 52% Y/Y to help offset the store weakness.

·     Royal Caribbean (RCL) extends the list of suspended sailings to include those departing on or before November 30, excluding sailings from Hong Kong.

·     Celebrity Cruises will be suspending their full 2020/21 winter program in Australia and Asia Azamara will be suspending their 2020/21 winter sailings throughout Australia & New Zealand, South Africa and South America.

·     Carnival’s (CCL) ultra-luxury Seabourn brand announces that it will cancel upcoming 2020 and 2021 voyages for three cruise ships in its fleet into Spring 2021

·     Havertys (HVT) reports Q3 sales of $217.5M, up 3.9% y/y vs. consensus of $230.03M. Sales for the 9M totaled $506.9M, compared with $588.5M year-ago; on a comparable store basis, sales for the quarter increased 4.0%.

 

Energy, Industrials and Materials

·     The American Petroleum Institute (API) shows a build of 951K barrels of oil for the week ending Oct. 2; gasoline inventories showed a draw of 876K barrels, distillate inventories show a draw of 1.03M barrels and Cushing inventories show a build of 749K barrels.

·     The Federal Aviation Administration (FAA) issued a draft report on revised training procedures for the Boeing (BA) 737 MAX, a key milestone to the plane’s eventual ungrounding. The FAA said the draft Flight Standardization Board report would be open for public comment through Nov. 2. It adds new training requirements to deal with a key safety system tied to two fatal crashes

·     Landec (LNDC) Q1 EPS loss (11c) in-line with ests and revs $135.6M vs. est. $127.9M; reiterates full year guidance

·     WestRock Company (WRK) said it plans to reduce its solid bleached sulphate mill system production capacity by 200K tons by shutting down one paper machine at a mill in Texas. This shutdown of the paper machine at the Evadale mill is expected to occur by the end of 2020 and reduce headcount at the mill by 60 employees

 

Healthcare

·     Catalyst Pharmaceuticals, Inc. (CPRX) said the United States Patent and Trademark Office (USPTO) has issued a new U.S. patent to Catalyst Pharmaceuticals for Firdapse(R) (amifampridine)

·     Eton pharmaceuticals (ETON) submits new drug application to the FDA for topiramate oral solution (et-101); product candidate, formerly known as et-101, was submitted for three indications; expects all three of neurology product candidates to be approved and launched in 2021

·     Exact Sciences (EXAS) and Pfizer (PFE) announced an extension and amendment of their agreement to promote Cologuard, the first and only FDA-approved non-invasive stool DNA screening test for colorectal cancer

·     Guardant Health (GH) files to sell 7M shares of common stock for holders

·     Hologic, Inc. (HOLX) announced that its Aptima(R) SARS-CoV-2 assay, which initially received Emergency Use Authorization (EUA) from the U.S. FDA in May, is now authorized for testing of individuals without symptoms or other reasons to suspect COVID-19 infection

·     Integra LifeSciences (IART) said it expects Q3 revenue to be in range of $368-$370M indicating a Y/Y decline of ~2.7% on a reported basis and ~1.8% on an organic basis but above estimates f $340.4M; Q3 sales improvement was broad-based across the company’s major franchises

·     Masimo (MASI) sees FY20 revenue $1.12B-$1.13B vs. est. $1.07B, which reflects reported growth of approximately 20.0% to 20.5% over the full-year of 2019; sees Q2 revenue $274M-$278M vs. est. $243.66M

·     NanoString (NSTG) sees Q3 product/service revenue $30.1M vs. est. $27.19M; Q3 Instrument revenue was $12.9M, up 60% from last year, and Consumables revenue was $13.7M, down 11% from last year; files to sell $150M of common stock

·     SpringsWorks Therapeutics (SWTX) files to sell $150M of common stock

 

Media & Telecom:

·     Sirius XM (SIRI) rises after reports last night that Howard Stern is nearing a new deal with the satellite radio broadcaster in a deal that would pay about $120M a year – his previous deals paid about $80M and $100M per year.

·     AT&T (T) is moving forward with plans for an auction of DirecTV, the New York Post says, but for significantly less than what it paid five years ago. A handful of suitors has been invited to a second round of bidding, though the opening figures came in around 3.5 times EBITDA of about $4.5B – implying valuation of about $15.75B (AT&T paid $49B and assumed $18B in debt for DirecTV in 2015). https://bit.ly/3jP1FGc

 

Technology:

·     The House antitrust subcommittee has released its report on Big Tech after a 16-month investigation, concluding that four tech giants – Alphabet (GOOGL), Amazon.com (AMZN), Apple (AAPL), and Facebook (FB) – enjoy “monopoly power,” and that antitrust laws need changes that might result in business separations. The near-450-page report has several recommendations, including imposing structural separations, and prohibiting dominant platforms from entering adjacent business lines

·     U.S. house antitrust panel’s report says Amazon (AMZN) has monopoly over third-party sellers and has engaged in extensive anti-competitive conduct in its treatment of such sellers; says Amazon’s dual role as a marketplace operator and also a seller on the marketplace creates an “inherent conflict of interest”

·     U.S. house antitrust panel report says Facebook (FB) has monopoly power in social networking and it has maintained dominance by identifying rivals and then copying, acquiring or killing them; says Facebook now considers competition within its own products to be more considerable than competition from outside firms; says acquired WhatsApp, Instagram and Onavo to entrench its dominance