Early Look

Friday, October 2, 2020

Futures	Up/Down	%	Last
DJ Industrials	-415.00	1.50%	27,274
S&P 500	-54.50	1.60%	3,313
Nasdaq	-241.50	2.08%	11,333

 

 

Global stock markets are lower as President Trump tweeted early Friday that he and first lady Melania Trump had tested positive for coronavirus. The news came hours after the White House announced that senior aide Hope Hicks tested positive for the virus after traveling with the president several times over the last week. In other news overnight, House Democrats approved a $2.2 trillion economic stimulus plan as talks drag on between House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin on a coronavirus aid deal, but passage in the Senate appears unlikely. In Asian markets, The Nikkei Index resumed trading, falling -155 points to 23,029, while both the Shanghai Index and Hang Seng Index were closed. In Europe, the German DAX is down -125 points to 12,600, while the FTSE 100 slides over -50 points to 5,825. The Dollar Index, which tracks the dollar against a basket of currencies, gained 0.1%. The Japanese yen, also seen as a haven asset, gained 0.4% against the dollar. Oil prices slide while gold and Treasury prices gains. The COVID news comes ahead of an important morning of economic data, with the monthly jobs report or September due at 8:30 AM EST, as 850K added jobs are expected for both nonfarm payrolls and private payrolls and 35K manufacturing jobs while the unemployment rate is expected to drop to 8.2%. New coronavirus cases in the U.S. topped 40,000 for the third day in a row. Total confirmed cases in the U.S. rose to nearly 7.28 million, while the death toll approached 208,000, according to data compiled by Johns Hopkins. Stocks were higher on Thursday as the Nasdaq Composite outperformed, rising over 1.4% alongside gains in Smallcaps as the Russell 2000 jumped over 1.5%, as markets continue to be led by hopes of additional stimulus relief measures and buying after stocks fell the prior month.

 

Market Closing Prices Yesterday

·     The S&P 500 Index climbed 17.80 points, or 0.53%, to 3,380.80

·     The Dow Jones Industrial Average rose 35.20 points, or 0.13%, to 27,816.90

·     The Nasdaq Composite surged 159.00 points, or 1.42%, to 11,326.51

·     The Russell 2000 Index advanced 23.51 points, or 1.56% to 1,531.20

 

Economic Calendar for Today

·     8:30 AM EST      Nonfarm Payrolls for September…est. 850K

·     8:30 AM EST      Private Payrolls for September…est. 850K

·     8:30 AM EST      Manufacturing Payrolls for September…est. 35K

·     8:30 AM EST      Unemployment rate for September…est. 8.2%

·     8:30 AM EST      Average Hourly Earnings for September…est. 0.2%

·     10:00 AM EST    Durable Goods Orders for August…est.

·     10:00 AM EST    Factory Orders for August…est. 1.0%

·     10:00 AM EST    University of Michigan Sentiment, Sept-F…est. 79.0

·     1:00 PM EST       Baker Hughes Weekly Rig Count

 

 

Macro	Up/Down	Last
WTI Crude	-1.66	37.06
Brent	-1.72	39.21
Gold	1.25	1,907.25
EUR/USD	-0.003	1.1718
JPY/USD	-0.34	105.19
10-Year Note	-0.017	0.66%

 

 

World News

·     President Trump tweeted that he and first lady Melania Trump had tested positive for coronavirus. The news came hours after the White House announced that senior aide Hope Hicks tested positive for the virus after traveling with the president several times over the last week

·     Democrats pushed through the House on Thursday night a $2.2 trillion economic stimulus plan, while House Speaker Nancy Pelosi continues to talk with Treasury Secretary Steven Mnuchin on a coronavirus aid deal. The bill will likely not be considered in the Senate, where Majority Leader Mitch McConnell has said it’s too expensive

·     Moody’s downgraded both New York city and state’s general-obligation bonds by one notch to Aa2, the firm’s third-highest rating, from Aa1.

 

Sector News Breakdown

Consumer

·     Uber Technologies Inc. (UBER) said Friday that an investor group led by Greenbriar Equity Group LP is investing $500 million in Uber Freight, the company’s logistics arm, in a Series A preferred stock financing that values the unit at $3.3 billion. Uber will continue to have majority control of Uber Freight, but Greenbriar will add two partners to the Uber Freight board

·     Academy Sports (ASO) 15.6M share IPO priced at $13.00

·     Pool (POOL) is headed to the S&P 500 Index, set to replace E-Trade Financial (ETFC)

·     Nu Skin Enterprises (NUS) guided Q3 revenue to $700-$703M, well ahead of its previous guidance of $605-$635M and said digital transactions accounted for ~90% of sales this quarter

·     Lennar (LEN) boosted its quarterly dividend to 25c from 12.5c

·     Li Auto (LI) has delivered 3,504 Li ONEs in September; company’s vehicle deliveries in Q3 2020 reached 8,660 units, +31.1% Q/Q; YTD deliveries reached 18,160 vehicles

·     Nio (NIO) said it delivered 4,708 vehicles in September 2020, representing a strong 133.2% Y/Y growth; the deliveries consisted of 3,210 ES6s, 1,482 ES8s and 16 EC6s; Nio delivered 12,206 vehicles in Q3, +154.3% Y/Y

 

Energy, Industrials and Materials

·     Boeing (BA) has been awarded a ~$298.37M firm-fixed-price contract for the Evolved Strategic Satellite Communications program.

·     BAE Systems’ (BAESY) has been awarded a $94.02M cost-plus-fixed-fee, cost-reimbursable, firm-fixed-price, IDIQ contract.

·     Marathon Oil Corp. (MRO) reinstated its dividend to 3c and took recent debt-reduction measures aiming for a “transparent framework for future capital allocation and uses of free cash flow intended to maximize long-term shareholder value

·     LyondellBasell (LYB) and Sasol (SSL) have entered into an agreement to form a 50/50 joint venture (JV) through which LyondellBasell will acquire 50% of Sasol’s 1.5 MM ton ethane cracker, 0.9 MM ton low and linear-low density polyethylene plants and associated infrastructure for a total consideration of $2B.

·     Renasant (RNST) is replacing Newpark Resources (NR) in the SmallCap 600

·     Simpson Manufacturing (SSD) is moving into the MidCap 400 to replace Delphi Technologies (DLPH), which is set to be acquired by BorgWarner

 

Financials

·     Assured Guaranty (AGO) is replacing Simpson Manufacturing (SSD) in the SmallCap 600 index as Simpson moves to the Midcap 400 index

·     Trian Fund Management LP has taken big stakes in investment firms Invesco Ltd. (IVZ) and Janus Henderson Group PLC (JHG), accumulating 9.9% stakes in both, with the two positions totaling roughly $900 million, according to reports https://on.mktw.net/33iREeP

 

Healthcare

·     Mesoblast Ltd. (MESO) shares dropped over 35% after the FDA issued a Complete Response Letter (CRL) for remestemcel-L for treatment of pediatric steroid-refractory acute graft versus host disease, recommending that Mesoblast conduct at least one additional study in adults and/or children to provide further evidence of effectiveness

·     Nano-X Imaging (NNOX) shares jumped after hours on news it plans to demonstrate its Nanox-ARC system in late November at RSNA 2020, the largest radiology conference in the world with over 50K attendees (at least before COVID-19); also plans to demonstrate its digital x-ray source, the principal enabler of its low-cost imaging device.

·     Dexcom (DXCM) downgraded to underweight from equal-weight at Wells Fargo and cut the tgt to $350 from $420 saying the recent approval of Abbott’s (ABT) Libre 3 in Europe will put downward pressure on DexCom’s pricing at a faster rate than the Street models

·     Arcutis Biotherapeutics (ARQT) 4M share Secondary priced at $25.00

·     Owens & Minor (OMI) 8.5M share Secondary priced at $20.50

·     Immunome (IMNM) 3.25M share IPO priced at $12.00

·     Oncorus (ONCR) 5.8M share IPO priced at $15.00

·     Neogen (NEOG) is replacing Pool (POOL) in the S&P MidCap 400 index and Capitol Federal Financial (CFFN) is replacing Neogen in the S&P SmallCap 600 Index

·     Delcath Systems (DCTH) appoints Gerard Michel as Chief Executive Officer, effective October 1, 2020

 

Technology, Media & Telecom

·     Activision Blizzard (ATVI) says it’s delaying the release of World of Warcraft: Shadowlands to later in the year. It was previously set for the end of October, but the company is taking “extra time” due to high expectations: The expansion is in public beta testing, and there will be a substantial pre-release patch to come on Oct. 13.

·     Google (GOOGL) said it will pay publishers more than $1 billion over the next three years to license news content for a new product called Google News Showcase.

·     Smart Global (SGH) Q4 adjusted EPS 82c vs. est. 79c and sales rose 6.7% YoY to $297.0M vs. est. 4299M; Q4 adjusted Ebitda $33.0M rose 31% YoY; sees 1q net sales $280M to $300M vs. est. $287.4m; sees 1q adj gross margin 18% to 19%, est. 21%

·     Twilio Inc. (TWLO) said at its investor day that it sees prelim Q3 revenue will be ahead of previously issued guidance of $401M-$406M 9est. $407.9M)