Morning Preview: October 19, 2020

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Early Look

Monday, October 19, 2020





DJ Industrials




S&P 500










U.S. stock futures are looking higher after gains last week amid increasing chances of fiscal stimulus and as investors await a flurry of earnings releases, with around 80 S&P 500 companies expected to report third-quarter results including HAL and IBM today. Chinese growth data showed that economy continues to recover from the COVID-19 pandemic is also helping boost sentiment. Markets are factoring in new hopes for a stimulus deal, which House Speaker Nancy Pelosi says she is optimistic about, as well as a slight dip in U.S. coronavirus cases over the weekend. Pelosi set a deadline for the White House to strike a deal with Democrats that could pass before Election Day. Speaker Pelosi’s office said late Saturday that “decisions must be made by the White House” within 48 hours. Pelosi added that the deadline only relates to if we want to get it deal done before the election. Last week the Dow edged higher 0.1%, the S&P 500 rose 0.2%, and the Nasdaq gained 0.8%. On the vaccine front, the U.S. recorded over 70,000 daily cases on Saturday for the first time since July, while Pfizer said earlier it could be ready to apply for emergency-use authorization of its COVID-19 vaccine by late November. In Asian markets, The Nikkei Index rose 260 points to 23,671, the Shanghai Index fell -23 points to 3,312 and the Hang Seng Index gained 155 points to 24,542. In Europe, the German DAX is flat at above 12,900, while the FTSE 100 is down a few points to hold just above the 5,900 level.

Market Closing Prices Yesterday

·     The S&P 500 Index edged higher 0.47 points, or 0.01%, to 3,483.81

·     The Dow Jones Industrial Average rose 112.11 points, or 0.39%, to 28,606.31

·     The Nasdaq Composite dropped -42.31 points, or 0.36%, to 11,671.56

·     The Russell 2000 Index declined -5.07 points, or 0.31% to 1,633.81


Economic Calendar for Today

·     10:00 AM EST    NAHB Housing Market Index for October


Earnings Calendar:

·     Earnings Before the Open: GNTY, HAL, HNI, LII, ONB, SFNC

·     Earnings After the Close: ADC, BXS, CCK, FNB, IBM, PFBC, PPG, STLD, TBK, WASH, ZION


Other Key Events:

·     Fed’s Bostic speaks on economic diversity

·     Fed’s Harker discusses Covid recovery






WTI Crude















10-Year Note





World News

·     Japan’s exports fell 4.9% in September from a year earlier, compared with August’s 14.8% decline and the 1.3% drop expected by economists surveyed and marked the 22nd straight month of decline; exports to China rose 14% in September

·     China passed a new law restricting sensitive exports to protect national security. The law, which will apply to all companies in China, was passed Saturday by the National People’s Congress Standing Committee and will take effect on Dec. 1st

·     China Q3 GDP rises by 4.9% missing the expectation of 5.2%, while YTD GDP rose 0.7% from -1.6% in 1H20. On a quarter-on-quarter basis, GDP rose 2.7% in July-September, the bureau said, compared with expectations for a 3.2% rise and an 11.5% rise in the previous quarter.


Sector News Breakdown


·     eBay (EBAY) mentioned positively in Barron’s this weekend noting shares have been overlooked during the current online retail boom but the company, under pressure from activist investors, is going back to the basics. Revenue and its active buyer base rose in June quarter.

·     Barron’s said investors should handle electric vehicle companies going public through SPAC deals with care, noting some of them, such as Fisker, Canoo and Lordstown, have aggressive targets for billions of dollars in revenue in 2024, despite almost no sales last year. The companies plan to merge with Spartan Energy Acquisitions (SPAQ), Hennessy Capital Acquisition (HCAC) and DiamondPeak Holdings (DPHC), respectively.

·     Danone SA (DANOY) said Q3 sales fell and restored guidance for the full year, while laying out a reorganization of its structure; said Q3 sales for the period came to 5.82 billion euros ($6.82 billion) compared with EUR6.42 billion for the previous-year period

·     New York state moved to reopen ski resorts and movie theaters, Bloomberg reported. Governor Andrew Cuomo said this weekend that cinemas, except for those in New York City and counties with high infection rates, can reopen at 25% capacity next Friday, with up to 50 people per screen. Ski resorts can open at 50% indoor capacity, beginning Nov. 6, and outdoor capacity on mountains will be cut by 25% during peak days (watch shares of AMC, CNK, MTN)


Energy, Industrials & Materials

·     Agnico Eagle (AEM) downgraded to Equal Weight from Overweight at Barclays

·     Kansas City Southern (KSU) upgraded to Outperform from Market Perform at BMO Capital

·     TechnipFMC (FTI) has been awarded a engineering, procurement, construction and installation contract by Equinor (EQNR)

·     American Airlines (AAL) is preparing to operate a daily 737 MAX flight between Miami and New York from Dec. 29 to Jan. 4, with flights available for booking from Oct. 24



·     American Equity Investment Life (AEL) agrees to a strategic partnership with Brookfield Asset Management (BAM), which will reinsure as much as $10B of American Equity’s fixed index annuity liabilities and make a 19.9% equity investment in the company at $37 per share. AEL rejects Athene (ATH) and MassMutual’s takeover proposal made public earlier this month, saying it undervalues the company and is not in shareholders best interest

·     AllianceBernstein (AB) downgraded to Market Perform from Outperform, Artisan Partners (APAM) downgraded to Market Perform from Outperform and Franklin Resources (BEN) upgraded to Outperform from Market Perform all at Keefe Bruyette

·     Visa (V), Mastercard (MA), and PayPal (PYPL) mentioned in Barron’s by money managers surveyed by the publication said these companies will benefit from a transition to a cashless society



·     AbbVie’s (ABBV) VENCLEXTA in combination with azacitidine, or decitabine, or low-dose cytarabine for the treatment of newly diagnosed acute myeloid leukemia (AML) in adults who are age 75 years or older received FDA approval

·     Bristol-Myers (BMY) upgraded to Buy from Neutral at Guggenheim

·     OraSure Technologies Inc. (OSUR) said it received emergency use authorization from the U.S. FDA for a saliva collection and stabilization device in Covid-19 testing.

·     Fluidigm (FLDM) COVID-19 test offered in federal program after the HHS said the federal surge testing effort for COVID-19 will offer the company’s saliva test which uses samples of saliva collected by spitting into a sterile container.

·     MultiPlan (MPLN) said its CFO was diagnosed with Covid-19 and continues to work remotely while receiving treatment; said it anticipates revenue for the three months ended Sept. 30 to be between $220 million and $225 million, down about 9.5% from $245.8 million in the same period last year. Its second-quarter revenue was $206.9 million (though said guidance above forecast)

·     Sorrento Therapeutics (SRNE) entered a binding term sheet setting out the terms of an acquisition of Acea, and the companies agreed to negotiate exclusively for 90 days

·     Dr. Reddy’s Laboratories (RDY) and The Russian Direct Investment Fund said they have received approval from the Drug Control General of India (DCGI) to initiate an adaptive phase 2/3 human clinical trial for Sputnik V vaccine in India.


Technology, Media & Telecom

·     Apple’s (AAPL) launch event brought no surprises according to Barron’s saying 5G won’t matter that much, but iPhones should still sell well. Apple isn’t going to include the usual earbuds and power bricks in the box, allegedly to be greener, but really to reduce the cost of goods sold. One of the few surprises on launch day was the aggressive upgrade push from carriers AT&T (T), Verizon (VZ), and later, T-Mobile US. (TMUS).

·     Alibaba (BABA) has invested ~$3.6B in Sun Art Retail, raising its aggregate direct and indirect stake to ~72%.

·     Altice USA (ATUS) presented a revised offer to acquire Cogeco (CGECF) and Cogeco Communications (CGEAF), now up to C$11.1B (about $8.4B), topping its previous C$10.3B offer

·     Twitter (TWTR) is changing its Hacked Materials Policy, walking back a set of rules at the heart of its enforcement action this week against a controversial article that included potentially damaging allegations against U.S. presidential candidate Joe Biden.

·     SMART Global Holdings (SGH) entered into a agreement with Cree (CREE) to purchase the Cree LED Products business unit for up to $300M, including fixed upfront and deferred payments and contingent consideration.

·     Nokia (NOK) has been selected by NASA as a partner to advance “Tipping Point” technologies for the Moon, deploying the first LTE/4G communications system in space and helping pave the way towards sustainable human presence on the lunar surface


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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