Early Look

Tuesday, October 20, 2020

Futures	Up/Down	%	Last
DJ Industrials	187.00	0.67%	28,287
S&P 500	26.50	0.77%	3,449
Nasdaq	91.50	0.79%	11,742

 

 

Stock futures are looking higher, partially recovering after yesterday’s sharp downturn with futures pointing to strong gains ahead of a busy day of earnings, positive vaccine comments (from MRNA CEO) and as talks are expected to continue between House speaker Pelosi and Treasury Secretary Mnuchin on stimulus aid. Stocks tumbled on Monday as the Nasdaq Composite declined for a 5th straight day, its longest losing streak since Aug 2019, the Dow toppled over 400 points for its worst day in about a month and the S&P 500 posted its biggest % decline since late September as hopes of a stimulus-relief bill that markets have clung to over the last few weeks dimmed as the window for a pre-election deal narrows. Bonds also fell, pushing the 10-year Treasury yield up almost 2 basis points to 0.77% while all 11 S&P 500 sectors ended the day in the red, with energy (-2.1%), information technology (-1.9%) and communication services (-1.9%) sliding the most. The White House has recently increased its stimulus offer to almost $1.9 trillion (now up from the $1 trillion initially), noting that Trump is willing to raise direct payments to households and small-business aid to help keep restaurants, hotels and other businesses afloat – but the Democrats have failed to budge from their higher $2.2 trillion figure. In Asian markets, The Nikkei Index fell -104 points to 23,567, the Shanghai Index rose 15 points to 3,328 and the Hang Seng Index gained 27 points to 24,569. In Europe, the German DAX is down around -70 points to 12,785, while the FTSE 100 is up a few points to 5,890.

Market Closing Prices Yesterday

·     The S&P 500 Index plunged -56.89 points, or 1.63%, to 3,426.92

·     The Dow Jones Industrial Average fell -410.89 points, or 1.44%, to 28,195.42

·     The Nasdaq Composite dropped -192.67 points, or 1.65%, to 11,478.88

·     The Russell 2000 Index declined -20.18 points, or 1.24% to 1,613.63

 

Economic Calendar for Today

·     7:45 AM EST      ICSC Weekly Retail Sales

·     8:30 AM EST      Housing Starts MoM for September

·     8:30 AM EST      Building Permits MoM for September

·     8:55 AM EST      Johnson/Redbook Weekly Sales

·     4:30 PM EST       API Weekly Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: ACI, CBSH, CIT, CMA, CTG, DOV, GATX, GPK, IQV, IRDM, LMT, MAN, NVR, PEBO, PG, PLD, PM, RF, SNV, SYF, TRV

·     Earnings After the Close: AGR, CALX, CSL, FMBI, FULT, HOPE, IBKR, IRBT, NAVI, NFLX, PNFP, STXB, TER, THC, TXN, UCBI, USNA, WDFC, WRB

 

Other Key Events:

·     Fed’s Williams opening remarks at culture event

·     Fed’s Evans speaks to Detroit Economic Club

 

 

Macro	Up/Down	Last
WTI Crude	-0.02	40.81
Brent	-0.07	42.55
Gold	3.65	1,907.75
EUR/USD	0.0046	1.1815
JPY/USD	0.13	105.56
10-Year Note	+0.007	0.78%

 

 

Sector News Breakdown

Consumer

·     General Motors (GM) said it plans to make a “major U.S. manufacturing investment announcement” tomorrow, which reportedly will include plans to begin building the Cadillac Lyriq electric SUV at its Spring Hill, Tenn. plant.

·     Activist investor Starboard Value boosted its stake in ACI Worldwide Inc (ACIW) to 9%, according to a regulatory filing Monday that helped push the payment systems company’s stock up

·     Whirlpool (WHR) raised its quarterly dividend to $1.25 from prior dividend of $1.20.

 

Energy

·     Pioneer Natural Resources (PXD) is said to be in talks to acquire Parsley Energy (PE) in an all-stock deal that may be finalized by the end of the month, The Wall Street Journal reported, citing people familiar with the matter https://on.wsj.com/3dKRwZ1 

·     Piedmont Lithium (PLL) files to sell 1.5M American Depositary Shares

·     Consolidated Edison (ED) downgraded to Sell from Neutral at Goldman Sachs

 

Financials

·     Goldman Sachs (GS) has reached a long-awaited pact with the U.S. Justice Department to pay more than $2B for its role in Malaysia’s 1MDB scandal, and the deal may be announced within days, Bloomberg reported. In all, Goldman may pay roughly $5B once accords with Malaysia, the Justice Department and other agencies are tallied together.

·     Commerce Bancshares (CBSH) Q3 EPS $1.11 vs. est. 70c; Q3 Net loan charge-offs $7.6M, compared to $8.4M in the prior quarter and Q3 net interest income $215.96M vs. $203.5M prior

·     Regions Financial (RF) Q3 EPS 52c on revs $1.64B vs. est. 33c and $1.49B; reports Q3 net interest margin 3.13% vs. 3.44% a year ago; NII $988Mm vs. est. $960Mm

·     Synovus (SNV) Q3 adj EPS 89c on revs $492.4M vs. est. 52c and $469.67M; qtrly net interest income of $377.0 mln was stable with Q2

·     BancorpSouth (BXS) Q3 adj EPS 69c vs. est. 53c; 3Q provision for credit losses $15M and net interest margin 3.31% vs. 3.88% YoY

·     Equity Lifestyle Properties (ELS) Q3 FFO of $0.50 misses by $0.03 as revs of $285M were up +5.1% YoY; closed on a financing transaction with Fannie Mae generating gross proceeds of $386.9M

·     ServisFirst (SFBS) Q3 EPS 80c vs. est. 71c; Q3 tangible book value per share $17.35, Q3 CET1 capital ratio 11.24% and Q3 net charge-offs .54%

·     Triumph Bancorp (TBK) Q3 adj EPS 91c vs. est. 49c; earned net interest income for qtr. ended sept 30, 2020 of $74.4 mln compared to $64.3 mln last qtr.

·     Zions Bancorp. (ZION) Q3 EPS $1.01 vs. est. 88c; 3Q net interest margin 3.06% vs. 3.48% YoY, provision for credit losses $55M vs. $10M YoY and 3Q non-interest income $157M, +7.5% YoY

·     Sam’s club and Synchrony (SYF) extend strategic credit card program collaboration with multi-year agreement- agreement builds upon 25-year credit card program collaboration

 

Healthcare

·     Accolade Inc. (ACCD) files for offering 4.5 mln shares of common stock

·     Bellus Health (BLU) 15.555M share Spot Secondary priced at $2.25

·     Cytocom Inc, a biopharma co in the area of immune-modulation, to acquire Cleveland Biolabs (CBLI) in all-stock deal, the firms said on Monday as Cytocom shareholders will have a majority position in the newly combined entity

·     Jazz Pharmaceuticals (JAZZ) said it will host a virtual investor event on Monday, October 26, at 4:30 pm ET to discuss the commercial launch of Xywav oral solution, approved in the U.S. in July for cataplexy in patients at least seven years old with narcolepsy

·     Phreesia (PHR) announces offering of 5M shares of common stock

·     Moderna (MRNA) CEO said the U.S. could authorize emergency use of its experimental COVID-19 vaccine in December, if the company gets positive interim results in November from a large clinical trial.

 

Industrials & Materials

·     Crown Holdings (CCK) 3Q adj EPS $1.96 vs. est. $1.58; global food can volume +9%; guides 4Q adj EPS $1.22-1.27 vs. est. $1.15, sees FY adj EPS $5.65-570 vs. est. $5.19; intends to initiate a regular qtrly dividend of at least $0.20/share beginning 1Q21

·     Hexcel (HXL) Q3 adj EPS loss (29c) on sales $287M vs. est. loss (7c) and $360.1M; said Boeing 737 Max says continue to be at a very low level; dividend and share buybacks remains temporarily suspended; 3Q Industrial sales fell -36% YoY to $49.3M and Commercial Aerospace Sales down -67% YoY to $128.8M

·     PPG (PPG) Q3 Non-GAAP EPS of $1.93 beats by $0.01 while GAAP EPS of $1.86 misses by $0.05; Q3 revenue of $3.68B (-3.9% Y/Y) vs. est. $3.66B; sees 4q sales down a low-to-mid-single digit percentage and EPS $1.50-$1.57 vs. est. $1.45

·     Steel Dynamics (STLD) Q3 EPS 47c on revs $2.33B vs. est. 47c/$2.21B

·     Dover (DOV) Q3 adj EPS $1.60 on revs $1.75B vs. est. $1.32 and $1.64B; raises FY20 adj. EPS view to $5.40-$5.45 from $5.00-$5.25 (est. $5.24) after saying they are operating with a healthy order backlog and have levers in our possession for continued solid conversion margin performance

·     BHP (BHP) reports a 7.2% rise in quarterly iron ore production, supported by stable demand from China, while keeping its full-year iron ore forecast unchanged; said it produced 74M metric tons of Western Australia Iron Ore in the quarter ended Sept. 30, up from 69M mt a year earlier and slightly above analyst expectations, while copper equiv. output gained 2% Y/Y,

·     Vale (VALE) reports a strong increase in Q3 iron ore production, due in part to restarts at mines that previously faced regulatory and coronavirus-related concerns; said it produced 88.7M metric tons of iron ore in the quarter, up 31% from Q2 and 2.3% better than the year-ago period, while production of iron ore pellets gained 21% Q/Q but fell 23.1% Y/Y to 8.6M mt.

 

Technology, Media & Telecom

·     IBM Corp. (IBM) Q3 EPS $2.58 on revs $17.56B (down 2.6%) vs. est. $2.58 and $17.54B; Revenue from the cloud business, previously headed by IBM’s new boss Arvind Krishna, rose 19% to $5.5 billion in Q3; 3Q global business services revenue $3.97B and global technology services revenue $6.46B; qtrly Gaap gross profit margin 48%, up 180 basis points and operating (non-Gaap) gross profit margin 49%, up 160 basis points

·     Intel Corp (INTC) has agreed to sell its NAND memory chip business to SK Hynix Inc for $9 billion in an all-cash deal that would propel the South Korean chipmaker to second in the global rankings, confirming reports first reported by the WSJ on Monday https://on.mktw.net/3jfjn4O

·     Microsoft Corp. (MSFT) is teaming up with Elon Musk’s SpaceX as it takes on Amazon.com Inc. (AMZN) in cloud-computing for space customers, the Wall Street Journal reported. Microsoft will offer services using low-orbit spacecraft being developed by SpaceX and traditional satellite fleets circling the earth at higher altitudes https://on.mktw.net/34j0dXH

·     Cadence Design (CDNS) 3Q EPS $0.58 vs. est. $0.61 on revs $667Mm vs. est. $641.5Mm; guides 4Q revs $720-740Mm vs. est. $703.7Mm, sees FY revs $2.64-2.66B from prior $2.50-$2.56 and vs. est. $2.6B

·     Emcore (EMKR) reports prelim Q4 rev of $33.5M, above its prior forecast of $29M-$31M and est. $30M as sees robust order book for cable TV products extending through the March 2021 quarter

·     Logitech (LOGI) raises FY21 sales growth target to 35%-40% from 10%-13% as the new sales growth guidance implies $4.02B-$4.17B vs. est. $3.35B and also raises its FY21 non-GAAP operating income view to $700M-$725M from $410M-$425M

·     Huawei, ZTE banned from upcoming Swedish 5G networks after Swedish regulators have laid out some guidelines ahead of their 5G spectrum auctions scheduled for next month.