Early Look

Wednesday, September 2, 2020

Stocks are on the march again as U.S. stocks track European markets higher on more stimulus measure hopes after reports Treasury Secretary Steven Mnuchin is now suggesting a higher number for the Trump administration’s proposed ceiling for a follow-on bill at $1.5T, while White House chief of staff Mark Meadows “conceded in an effort to get a deal done” to put more money on the table for cities and states. House Speaker Nancy Pelosi said last week Democrats wouldn’t be willing to accept anything less than a $2.2T package. Mnuchin also released a new estimate that the so-called Main Street Lending Program, which will make between $25B-$50B of loans to midsize businesses in coming months. Currency markets active after Philip Lane, chief economist at the European Central Bank said “the euro-dollar rate does matter.” “If there are forces moving the euro-dollar rate around, that feeds into our global and European forecasts and that in turn does feed into our monetary policy setting,” Lane said according to Bloomberg news. These comments are the first in a while talking about the recent appreciation of the euro against the dollar. The gains in U.S. futures are again broad based, with Nasdaq futures on track to open the day higher by another 1% with no end in sight (the Nasdaq has closed higher by more than 0.4% in 8 of the last 9 trading sessions with large cap tech driving gains such as AAPL, AMD, AMZN, FB, GOOGL, NVDA, and TSLA. In Asian markets, The Nikkei Index rose 109 points to 23,247, the Shanghai Index dipped -5 points to 3,404 and the Hang Seng Index fell -64 points to 25,120. In Europe, the German DAX is surging over 300 points to 13,275, while the FTSE 100 is up over 100 points to 5,960. The remainder of the week will be dominated by employment figures, with the ADP reporting on private sector hiring today and the non-farm payrolls for August, due on Friday morning. September started out with a bang as the S&P 500 and Nasdaq set new records with technology stocks again pacing the broader market gains on earnings and data. U.S. data continues to show resilience, with construction spending nearly flat in July, but with the prior month revised sharply higher. Meanwhile, the manufacturing sector continues to rebound, with the ISM Manufacturing Index hitting its highest levels since August 2018.

Market Closing Prices Yesterday

·     The S&P 500 Index gained 26.34 points, or 0.75%, to 3,526.65

·     The Dow Jones Industrial Average rose 215.61 points, or 0.76%, to 28,645.66

·     The Nasdaq Composite surged 164.21 points, or 1.39%, to 11,939.67

·     The Russell 2000 Index advanced 16.71 points, or 1.07% to 1,578.58

Economic Calendar for Today

·     7:00 AM EST      MBA Mortgage Applications Data

·     8:15 AM EST      ADP Employment Change for August

·     10:00 AM EST    Factory Orders for July

·     10:00 AM EST    Durable Goods Orders, July-F

·     10:30 AM EST    Weekly DOE Inventory Data

·     2:00 PM EST       Fed Beige Book Released

Earnings Calendar:

·     Earnings Before the Open: BF/B, GES, LE, M, VRA

·     Earnings After the Close: AMBA, CLDR, CPRT, CRWD, FIVE, GWRE, MDB, PD, PVH, RKT, SAIC, SMAR, SPWH, ZUO

Other Key Events:

·     BMO Capital Real Assets virtual conference, 9/2-9/3

·     Jefferies Semi, IT Hardware virtual conference, 9/1-9/2

World News

·     House prices in the U.K. surged to an all-time high in August, as Britain’s biggest building society said prices jumped by 2% in August, following a 1.8% rise in July, marking the highest monthly increase since February 2004 as annual house price growth jumped to 3.7% last month

·     The REIT sector is on watch after the Trump administration implemented a national moratorium on residential evictions through the end of the year based on the 1944 Public Health Service Act. The new ban covers tenants who certify that they have lost “substantial” income;

Sector News Breakdown

Consumer

·     At Home (HOME) Q2 EPS $1.39 vs. est. $1.31 on sales $515.2Mm vs. est. $515Mm, comps +42.3%; not providing 3Q or FY guidance

·     Caleres (CAL) 2Q adj EPS ($0.57) vs. est. ($1.02) on sales $501.4Mm vs. est. $450.1Mm, e-comm related sales more than +30%; sees 2H unpredictable

·     Peloton (PTON) price target raised to $105 from $58 at JPMorgan and keeps an Overweight rating on the shares ahead of the company’s fiscal Q4 results on September 10

·     Shoe Carnival (SCVL) 2Q EPS $0.71 vs. est. $0.62 on sales $300.8Mm vs. est. $310.5Mm, comps +12.6%, e-comm rose more than 100%; not providing guidance for FY, does expect net -9 stores for FY

Energy, Industrials & Materials

·     The American Petroleum Institute (API) shows a draw of 6.36M barrels of oil for the week ending Aug. 28, gasoline inventories show a draw of 5.76M barrels, distillate inventories show a draw of 1.42M barrels and Cushing inventories show a draw of 237K barrels.

·     RPM International (RPM) announces that its Rust-Oleum business has acquired Ali Industries, LLC, a leading manufacturer of sandpaper and other abrasives.

Financials

·     H&R Block (HRB) Q1 EPS 55c on revs $601.0M vs. est. 34c/$617M; Q1 operating expenses rose 30% YoY to $448.1M; intends to pay down its line of credit this month

·     Visa (V) total U.S. payments volume rose 7% Y/Y. Credit payment declined 8% Y/Y, while debit payment grew 24% Y/Y partially due to the expiration of the elevated unemployment benefits; processed transactions increased 3% Y/Y.

Healthcare

·     Mesoblast (MESO) announced that it has received ethics approval to include Australian hospitals in the Phase 3 randomized controlled trial of remestemcel-L in ventilator-dependent COVID-19 patients with acute respiratory distress syndrome (ARDS)

·     Smith & Nephew (SNN) announces the launch of its NOVOSTITCH PRO Meniscal Repair System in Europe after successfully receiving CE mark certification

Technology, Media & Telecom

·     AMC Entertainment (AMC) rises after its latest update for U.S. reopening plans for the upcoming Labor Day weekend; said 70% of U.S. AMC locations will have resumed operations by this weekend as the company welcomes guests at about 420 theaters nationwide

·     JAMF Holding Corp. (JAMF) 2Q EPS flat vs. est. $0.07 on revs $62.2Mm vs. est. $61.6Mm; guides 3Q revs $65-66Mm vs. est. $61.3Mm, sees 3Q ad op income $5-7Mm; guides FY revs $255-257Mm vs. est. $246.9Mm, sees FY adj op income $20-23Mm

·     Nvidia (NVDA) officially unveiled its GeForce RTX 30 Series GPUs based on the Ampere architecture. The GeForce RTX 3090, 3080 and 3070 GPUs also utilize the second-gen Nvidia RTX PC gaming platform for real-time ray tracing and AI gaming