Morning Preview: October 14, 2020

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Early Look

Wednesday, October 14, 2020





DJ Industrials




S&P 500










Stock futures are edging lower, wavering between gains and losses ahead of big bank earnings (BAC, GS) which followed better results from JPM and Citi yesterday (though shares fell), while Dow component UNH posted a beat and raise in the managed care sector. The S&P 500 index snapped a four-day winning streak on Tuesday while the Nasdaq Comp just missed out on making it five in a row, sliding in the final minutes to end slightly lower. The election, stimulus hopes, vaccine news on the virus and now earnings remain the key market drivers these days. Investors are monitoring progress on developing a coronavirus vaccine as drugmaker Eli Lilly said Tuesday that it was pausing a study of its Covid-19 treatment due to a potential safety concern while JNJ said it hopes to know within days whether it can resume testing its Covid-19 vaccine, which it paused after a study volunteer fell ill. In stimulus discussions Majority Leader McConnell is planning on a Senate vote on a stripped-down targeted stimulus package, which is actually going backwards as that’s been rejected by the Democrats. Amid that caution more reliable pandemic and work-from-home names (CMG, DPZ, ZM rose yesterday) are performing and recovery plays are not (CCL, RCL). In Asian markets, The Nikkei Index rose 25 points to 23,626, the Shanghai Index fell -18 points to 3,340 and the Hang Seng Index gained 17 points to 24,667. In Europe, the German DAX is down over -20 points to move back under the 13,000 level while the FTSE 100 dips a few points to 5,960.

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -22.29 points, or 0.63%, to 3,511.93

·     The Dow Jones Industrial Average fell -157.71 points, or 0.55%, to 28,679.81

·     The Nasdaq Composite dipped -12.36 points, or 0.10%, to 11,863.90

·     The Russell 2000 Index declined -12.21 points, or 0.74% to 1,636.85


Economic Calendar for Today

·     7:00 AM EST      MBA Mortgage Applications Data

·     8:30 AM EST      Producer Price Index MoM for September

·     8:30 AM EST      PPI Core Ex: Food & Energy MoM for September

·     8:30 AM EST      Producer Price Index YoY for September

·     8:30 AM EST      PPI Core Ex: Food & Energy YoY for September

·     4:30 PM EST       Weekly API Inventory Data (pushed out one day due to holiday)


Earnings Calendar:

·     Earnings Before the Open: ASML, BAC, GS, INFY, PGR, PNC, UNH, USB, WFC

·     Earnings After the Close: AA, ACCD, HCCI, SNBR, UAL


Other Key Events:

·     Amazon (AMZN) holds two-day Prime event Oct 13-14

·     Cowen Virtual Therapeutics Conference, 10/13-10/14

·     Fed’s Clarida speaks at annual IIF Meeting

·     Fed’s Kaplan, Quarles speaks at 3:00 PM on financial supervision

·     Fed’s Kaplan to hold virtual town hall at 6:00 PM EST






WTI Crude















10-Year Note





Sector News Breakdown


·     Alaska Air (ALK) said on its revenue fell less than expected in the last month of the third quarter on improving demand for air travel; forecast September revenue to fall between 70% and 75%, said the decline slowed to 66% from 72% in August; expected October revenue to be down about 65% (the guidance followed weaker Q3 EPS/revs from Delta yesterday)

·     Bed Bath & Beyond (BBBY) announced that it has entered into separate agreements to sell its Christmas Tree Shops retail banner, its institutional Linen Holdings business and a distribution center located in Florence, New Jersey and expects to generate a total of approximately $250M in aggregate from the monetization of these assets

·     Ford (F) pushes back launch of its plug-in hybrid Escape SUV after thousands of similar SUVs in Europe were recalled for problems involving fires while being recharged. The Escape plug-in hybrid, which was originally was scheduled to go into production this past spring, is now expected to launch in 2021

·     Kroger Co. (KR) has expanded its exclusive Simple Truth Plant Based collection by unveiling more than 50 new, fresh and flavorful plant-based foods at affordable prices

·     Pilgrim’s Pride (PPC) has agreed to a plea deal with the U.S. Justice Department to resolve price-fixing charges, and will pay a fine of $110.5M.

·     Royal Caribbean (RCL) 8.33M share Secondary priced at $60.00

·     Six Flags (SIX) said in a filing that it’s committed to reduce its full-time workforce by 10% as part of transformation productivity initiatives (effects about 240 employees).


Energy, Industrials and Materials

·     ConocoPhillips (COP) is in talks to buy Concho Resources (CXO), Bloomberg News reported, citing people familiar with the matter. The report said the deal may come in the next weeks, and would represent a big shale bet at a time when oil prices are depressed.

·     The IEA said global oil supply fell in September to levels 9% below the pre-pandemic average levels of 2019 and that oil in expensive offshore floating storage fell “sharply” below its level in May at the nadir of the global crude crisis.

·     Diamondback Energy (FANG) reiterates Q4 2020 production guidance of 170-175 MBO/d (280-290 MBOE/d), full year 2020 production guidance of 178-182 MBO/d (290-305 MBOE/d) and full year 2020 cash CAPEX of $1.8B-$1.9B; continues to believe it can maintain Q4 2020 oil production through full year 2021 with a capital budget 25%-35% less than 2020’s capital budget

·     Viper Energy (VNOM) Q3 2020 average production of 15,829 bo/d (26,409 boe/d); — Q3 2020 hedged realized prices of $27.65 per barrel of oil, $12.44 per barrel of natural gas liquids and $0.16 per Mcf of natural gas, resulting in a total equivalent price of $19.11 per boe; Q3 2020 unhedged realized prices of $36.80 per barrel of oil, $12.44 per barrel of natural gas liquids and $1.07 per Mcf of natural gas, resulting in a total equivalent price of $25.76 per boe

·     PG&E Corp. (PCG) warned that it might cut off power to about 54,000 customers in 24 California counties Wednesday due to weather forecasts showing the potential for strong, dry winds that could lead to increased wildfire risk.

·     Cummins (CMI) raises quarterly cash dividend 3% to $1.35 from $1.311 per share



·     Americold Realty Trust (COLD) 31.9M share Secondary priced at $38.00

·     Arch Capital (ACGL) estimates Q3 catastrophe losses of $190M-$210M

·     Axis Capital Holdings (AXS) announced a preliminary net loss estimate in the range of $225M-$255M pre-tax, or $190M-$220M after-tax, for third quarter catastrophes and other events.

·     RenaissanceRe (RNR) estimates losses from q3 2020 catastrophe events will have an estimated net negative impact of approximately $325 mln on its q3 2020; estimated net negative impact is primarily driven by losses from hurricanes Laura and Sally

·     The Hanover (THG) estimates catastrophe losses in the third quarter to be slightly above expectations; expects its Q3 catastrophe losses to be approximately $66M, before taxes, or $52M after taxes; overall catastrophe losses in quarter are estimated to be approximately 5.8% of net premiums earned



·     UnitedHealth (UNH) Q3 adj. EPS $3.51 on revs $65.12B vs. est. $3.09 and $63.76B; raises FY20 adj. EPS view to $16.50-$16.75 from $16.25-$16.55 (vs. est. $16.58); Q3 medical costs rose to $41.64 billion from $39.04 billion in the year-ago quarter and operating costs rose to $10.17 billion, up from $8.96 billion in last year’s third quarter

·     Alphatec (ATEC) 11.43M share Spot Secondary priced at $8.75

·     Allscripts (MDRX) to sell its CarePort Health business to WellSky, a global health and community care technology company for an agreed price of $1.35B

·     Codiak (CDAK) 5.5M share IPO priced at $15.00

·     Theratechnologies (THTX) rises after the USPTO issued U.S. Patent No. 10,799,562, directed to the treatment of Nonalcoholic Steatohepatitis (NASH) and/or Nonalcoholic Fatty Liver Disease (NAFLD) in patients using tesamorelin


Technology, Media & Telecom

·     AMC Entertainment Holdings Inc. (AMC) is considering a range of options that include a potential bankruptcy to ease its debt load as the pandemic keeps moviegoers from attending and studios from supplying films, Bloomberg reported overnight

·     ASML (ASML) reports Q3 EPS EUR2.54 vs. EUR1.79 QoQ and Q3 revenue EUR3.96B vs. EUR3.33B last quarter

·     VOXX (VOXX) reports Q2 EPS 30c vs. (24c) last year and Q2 revenue $128.0M vs. $90.2M last year


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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