Early Look

Friday, September 11, 2020

The roller coaster ride for U.S. equities continue this morning, with major averages pointing to a strong open after falling apart late yesterday as major U.S. stock indexes fell more than 1% on Thursday (and recorded their 4^th loss in the last 5 days). Markets were dragged down again by technology-related shares that resumed their selloff after a sharp rebound on Wednesday as the Nasdaq led the decline falling nearly 2%. Despite futures pointing higher, major averages are on track for their first back-to-back weekly drop since May (for the S&P) as the S&P 500 was down more than 2% for the week, along with Dow, while the Nasdaq has fallen 3.5%. Energy stocks have also slumped this week with oil prices dipping back to levels not seen since June on demand concerns along with rising inventory. In Asian markets, The Nikkei Index rose 171 points to 23,406, the Shanghai Index gained 25 points to settle the week at 3,260 and the Hang Seng Index gained 189 points to 24,503. In Europe, the German DAX is down around -10 points to 13,195, while the FTSE 100 is up over 20 points to 6,025. European stocks trade mixed as investors searched for direction, eyeing a tense Brexit standoff and a warning from the European Central Bank over getting too complacent about a recovery in the eurozone. On the economic calendar today, the U.S. Labor Department is expected to report that consumer prices increased 0.3% in August, following a 0.6% rise in July.

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -59.77 points, or 1.76%, to 3,339.19

·     The Dow Jones Industrial Average fell -405.89 points, or 1.45%, to 27,534.58

·     The Nasdaq Composite slumped-221.97 points, or 1.99%, to 10,919.59

·     The Russell 2000 Index declined -18.73 points, or 1.23% to 1,507.75

Economic Calendar for Today

·     8:30 AM EST      Consumer Price Index (CPI) MoM for August…est. 0.2%

·     8:30 AM EST      CPI Ex: Food & Energy MoM for August…est.

·     8:30 AM EST      Consumer Price Index (CPI) YoY for August…est. 1.6%

·     8:30 AM EST      CPI Ex: Food & Energy YoY for August…est. 1.2%

·     1:00 PM EST       Baker Hughes Weekly Rig Count

·     2:00 PM EST       Monthly Budget Statement for August…est. (-$245.0B)

World News

·     German consumer prices in August fell 0.1% on month as measured by national standards, and declined 0.2% on EU-harmonized standards. The consumer price decrease was again driven by the VAT reduction

·     The U.K. economy expanded by 6.6% in July, for its third consecutive monthly increase, according to data released Friday. The U.K. Office for National Statistics said the country has recovered just over half of the lost output caused by the coronavirus

Sector News Breakdown

Consumer

·     Chewy Inc. (CHWY) Q2 EPS loss (8c) on sales $1.7B vs. est. loss (16c) and $1.69B; 2Q adjusted Ebitda $15.5M vs. est. loss $12.4M; sees Q3 sales $1.7B-$1.72B vs. est. $1.7B and year sales $6.775B-$6.825B vs. est. $6.85B; Q2 active customers 16.6M, up 37.9% YoY and Q2 gross margin expanded 190 bps to 25.5%

·     Crocs (CROX) sees Q3 revenue growth of 10% y/y to ~$344.1M vs. a consensus of $305.25M.

·     Peloton (PTON) Q4 EPS 27c on revenue $607.1M vs. est. 10c/$582.51M; ended Q4 with $1.8B in cash, cash equivalents, and marketable securities; Q4 and FY20 ending Connected Fitness Subscriptions grew 113% to over 1.09M and paid Digital subscriptions grew 210% to over 316,800; sees Q1 revenue $720M-$730M vs. est. $505.21M; sees 1.32M-1.33M ending Connected Fitness Subscriptions for Q1, growth of 135% at the midpoint; sees FY21 revenue $3.5B-$3.65B above $2.72B and sees 2.05M-2.1M ending Connected Fitness Subscriptions, growth of 90% at the midpoint

·     Dave & Buster’s (PLAY) Q2 EPS loss ($1.24) on revenue $50.83M vs. est. loss ($1.39) and $80.93M; Q2 comp store sales decreased (87%); said believe they have lowered near-term enterprise EBITDA breakeven sales index benchmark to approximately 50%-55% of prior year sales, compared with the 60% sales index we initially estimated in June; not issuing guidance

·     Vroom (VRM) 10.8M share Secondary priced at $54.50

·     Zumiez (ZUMZ) Q2 EPS $1.01 on sales $250.4M vs. est. 20c and $225.7M; 2Q gross margin 36.3% vs. 33.8% YoY; Q2 comp store sales rose 37.3%; says not providing an outlook for year

Energy, Industrials, and Materials

·     Brigham Minerals (MNRL) 4.366M share Spot Secondary priced at $8.20

·     FreightCar America (RAIL) announced additional steps in its manufacturing and operational realignment as it plans to acquire its partner’s 50% interest in the joint venture in Castanos, Mexico and consolidate all of its production there by January

·     MSC Industrial (MSM) Q4 revenue $747.7M vs. est. $755.34M; total net sales for the fiscal month of August were down -9.7% YoY to $240.3M

Financials

·     AllianceBernstein L.P. (AB) announced that preliminary assets under management increased to $643 billion during August 2020 from $623 billion at the end of July. The 3.2% increase was due to market appreciation and firmwide net inflows

·     Artisan Partners Asset Management Inc. (APAM) today reported that its assets under management as of August 31, 2020 totaled $136.5 billion. Separate accounts for $73.3 billion of total firm AUM, while Artisan Funds and Artisan Global Funds accounted for $63.2 billion.

·     Franklin Resources, Inc. (BEN) reported preliminary month-end assets under management of $1,441.3 billion at August 31, 2020, compared to $1,428.2 billion at July 31, 2020.

·     i3 Verticals (IIIV) 3.25M share Secondary priced at $23.50

·     Invesco Ltd. (IVZ) reported preliminary month-end assets under management (AUM) of $1,245.8 billion, an increase of 4.2% versus previous month-end. The firm achieved total net inflows of $6.9 billion this month. Overall net long-term inflows were $2.4 billion. AUM was positively impacted by favorable market returns, which increased AUM by $40 billion. FX increased AUM by $3.5 billion

·     Virtus Investment Partners, Inc. (VRTS) reported preliminary long-term and total assets under management (AUM) as of August 31, 2020 of $116.8 billion and $118.2 billion (including $1.4 billion of liquidity assets), respectively

Healthcare

·     AstraZeneca’s (AZN) CEO Pascal Soriot has said that the company is still aiming for the Oxford COVID-19 vaccine to be ready by this year-end. Pascal Soriot said during an online conference that it is unclear how long the trial will be paused in response to a recent adverse event, but a 2020 approval is still on the cards.

·     Galapagos (GLPG) announced positive top line results in the Phase 2a NOVESA trial with investigational ziritaxestat (GLPG1690) in patients with diffuse cutaneous systemic sclerosis (dcSSc), a severe autoimmune disease. The trial enrolled 33 patients.

·     Intra-Cellular (ITCI) 11.667M share Secondary priced at $30.00

·     Trillium Therapeutics (TRIL) 10M share Secondary priced at $13.00

·     Bicycle Therapeutics (BCYC) announced the first patient has been dosed in the Phase I dose escalation portion of a company-sponsored Phase I/II trial of BT8009, a Bicycle Toxin Conjugate targeting Nectin-4

·     Quotient (QTNT) 17.65M share Secondary priced at $4.25

Technology, Media & Telecom

·     Oracle (ORCL) Q1 adj EPS 93c on revs $9.37B vs. est. 86c and $9.19B; 1q adjusted operating margin 45% vs. 42% YoY; said Q1 adjusted cloud services and license support revenue $6.95B; qtrly cloud license and on-premise license revenues were up 9% in USD and 8% in constant currency to $886M; Q1 hardware revenues $814M vs. $815M YoY

·     Disney’s (DIS) $200M live-action remake Mulan is heading for a weak premiere in China today