Early Look

Tuesday, September 15, 2020

Futures	Up/Down	%	Last
DJ Industrials	161.00	0.58%	28,032
S&P 500	20.50	0.62%	3,393
Nasdaq	90.50	0.81%	11,357

 

 

Stocks in the U.S. are pointing to a higher open, looking to build on yesterday’s strong gains as markets await the two-day FOMC meeting kicking off today, and is expected to maintain a dovish stance after earlier saying it will shift to a more relaxed approach on inflation. In Asian markets, The Nikkei Index fell -104 points to 23,454, the Shanghai Index rose 16 points to 3,295 following upbeat data and the Hang Seng Index rose 92 points to 24,732. In Europe, the German DAX is up about 25 points to 13,220, while the FTSE 100 is up around 50 points to 6,080. Looking ahead, Apple (AAPL) will host a virtual event today starting at 10 AM PDT that could involve a variety of product announces but might not include the 5G iPhone lineup, which could have a separate launch event in October, while software company Adobe and transport giant FedEx are expected to report after the close. Stocks are also getting a boost following better-than-expected China economic data overnight.

 

It was a winning day on Wall Street Monday led by small caps as the Russell 2000 posted its best daily win since July (rising 2.5%) though broader stocks climbed with each of the major averages posting a gain of more than 1%, buoyed by a flurry of merger deals and signs of progress for a COVID-19 vaccine. Gains were again across various sectors with financials and REITs, consumer and travel showing the best advances along with technology, semiconductors specifically after analyst upgrades (of MU, CRUS) and a deal in the space as NVDA bought chip designer Arm from Japan’s SoftBank Group. Adding to the positive tone, U.S. Treasury Secretary Steven Mnuchin on Monday said there still could be a deal with Congress for more federal coronavirus aid, though markets remain skeptical. Advancing stocks on the NYSE were more than 5x as much as declining stocks.

Market Closing Prices Yesterday

·     The S&P 500 Index jumped 42.57 points, or 1.27%, to 3,383.54

·     The Dow Jones Industrial Average rose 327.69 points, or 1.18%, to 27,993.33

·     The Nasdaq Composite spiked 203.11 points, or 1.87%, to 11,056.65

·     The Russell 2000 Index advanced 39.70 points, or 2.65% to 1,536.97

 

Economic Calendar for Today

·     7:45 AM EST      ICSC Weekly Retail Sales

·     8:55 AM EST      Johnson/Redbook Weekly Sales

·     4:30 PM EST       API Weekly Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: CBRL, FRAN

·     Earnings After the Close: ADBE, FDX

 

Other Key Events:

·     Credit Suisse Annual Basic Materials Conference,9/15-9/17

·     Goldman Sachs Communacopia Virtual Conference, 9/15-9/17

·     Jefferies Virtual Software Conference, 9/14-9/15

·     Morgan Stanley 18th Annual Global Healthcare Virtual Conference, 9/14-9/18

·     RBC Capital Global Industrials Conference, 9/14-9/15

·     Roth Capital Solar & Storage Symposium, 9/14-9/17

·     ShopTalk 2020 (rescheduled from March 2020), 9/14-9/17

 

 

Macro	Up/Down	Last
WTI Crude	0.60	37.86
Brent	0.53	40.14
Gold	8.90	1,965.75
EUR/USD	0.0024	1.189
JPY/USD	-0.06	105.67
10-Year Note	+0.013	0.682%

 

 

World News

·     China retail sales returned to growth for the first time in 2020, rising 0.5% in August from a year earlier, according to data released Tuesday by the National Bureau of Statistics. The result was better than the 1.1% drop in July and a 0.1% increase expected

·     China Industrial production rose 5.6%, up from July’s 4.8% increase, the statistics bureau said. The economists polled expected 5.2% growth.

·     German economic expectations have risen again in September after going up strongly in August, the ZEW economic research institute said as the measure of economic expectations went up to 77.4 in September from 71.5 in August, above economists’ forecast of 70.0 points

 

Sector News Breakdown

Consumer

·     Nikola (NKLA) shares slipped -6% after Bloomberg reported that the SEC is examining the company to determine the merits of Hindenburg’s allegations of deceit; Hindenburg’s Sept. 10 report referred to Nikola as an “intricate fraud”; also after the close, the company disclosed that Chairman Trevor Milton bought about 41,000 shares.

·     Lennar (LEN) Q3EPS $2.12 on revenue $5.87B topping the $1.58 estimate and $5.53B; Q3 deliveries of 13,842 homes vs. its guidance of 13,200-13,400; Q3 new orders of 15,564 homes, up 16%; new order dollar value of $6.3% increased 20% Y/Y; backlog at Aug. 31 was homes 19,697, up 4% Y/Y; backlog dollar volume of $7.9B, up 4% Y/Y.

·     Fiat Chrysler (FCAU) says it will now pay €2.9B in dividends to its shareholders ahead of the closing of the merger with PSA Group, down from the previously agreed €5.5B

·     Camping World Holdings (CWH) outlined the following initiatives and 2021 outlook highlights: The company believes it can grow adjusted EBITDA in the mid-single digits over the next 5 years, with a goal of generating more than $500 million in Adjusted EBITDA in 2021, up from a projected range of $460 to $490 million in 2020. Annually, the Company is targeting a minimum Adjusted EBITDA margin of 7.5% and SG&A expenses as a percentage of gross profit of approximately 68%

·     Marriott Vacations Worldwide (VAC) discloses a workforce reduction plan that is expected to affect ~3,300 jobs by mid-November or later, as part of its response to the effects of the COVID-19 pandemic on business operations.

 

Energy

·     The IEA cut its 2020 oil demand forecast, following the lowered forecast of OPEC yesterday by saying “we expect the recovery in oil demand to decelerate markedly in the second half of 2020, with most of the easy gains already achieved.” Worldwide oil demand growth is now seen at 91.7M barrels per day, marking a contraction of 8.4M bpd Y/Y and more than the 8.1M bpd contraction predicted in the agency’s August report

·     NextEra Energy (NEE) is increasing its FY21 financial expectations ranges by $0.20 and now expects adjusted earnings per share to be in the range of $9.60 to $10.15. For 2022 and 2023, NextEra Energy expects to grow 6% to 8%, off the expected increased 2021 adjusted earnings per share; approves 4-for-1 split

·     Lonestar Resources US (LONE) signs a Restructuring Support Agreement with its largest stakeholders to eliminate ~$390M in debt obligations and preferred equity interests.

 

Financials

·     Capital One (COF) reports August net charge-offs 3.74% vs. 3.82% last month and reports August 30-plus day performing delinquencies 2.23% vs. 2.44% last month

·     Western Union (WU) upgraded to Buy from Neutral at Bank America with an unchanged $26 price target.

·     ExlService Holdings (EXLS) guides 3Q revs at least $239Mm vs. est. $227.8Mm, sees 3Q adj EPS at least $1.00 vs. est. $0.64; sees FY revs $945-$955Mm vs. est. $933.7Mm; guides FY adj EPS $3.35-3.45 vs. est. $2.70

 

Healthcare

·     GenMark (GNMK) received European CE Mark for its ePlex Respiratory Pathogen Panel 2 (RP2) test that provides results in less than two hours for more than 20 viruses and bacteria.

·     Marinus Pharmaceuticals (MRNS) announced positive top-line results from its registrational Phase 3 clinical trial evaluating the use of oral ganaxolone in children and young adults with CDKL5 deficiency disorder, a rare, genetic epilepsy with refractory seizures

·     Outset Medical (OM) 8.95M share IPO priced at $27.00

 

Industrials & Materials

·     3M reports (MMM) total sales for August increased 2% year-on-year to $2.7B. Organic local-currency sales declined 2% while acquisitions, net of divestitures, and foreign currency translation increased sales year-on-year by 3% and 1% respectively.

·     Fed-Ex (FDX) shipping rates to increase for FedEx express, FedEx ground and FedEx freight services; express shipping rates will increase by an average of 4.9% for U.S. domestic, U.S. export and U.S. import services; ground and home delivery shipping rates will increase by an average of 4.9% (FDX reports earnings tonight after the close)

·     Forterra (FRTA) announces offering of 10M shares of common stock for holders

·     Gates Industries (GTES) said it sees 3q core rev decline of 5%-7% year-over-year vs previously guidance of 10%-15% decline

·     KBR (KBR) secured an eight-year contract to perform day-to-day base operations for the U.S. Air Forces in Europe and Air Forces Africa (USAFE-AFAFRICA) as the new IDIQ contract has a $974M maximum ceiling value.

·     Scotts Miracle-Gro (SMG) raises FY20 adj. EPS view to $7.25 from $6.65-$6.85 (est. $6.75) while raises FY20 revenue view to over 30% from 26%-28% as momentum of business continues to exceed our expectations in both the U.S. Consumer and Hawthorne segments

·     U.S. Steel (X) increased the base price on new orders for hot-rolled coil, cold-rolled coil and hot-dipped galvanized steel products by a minimum of $60/short ton as the market rebounds from deep lows in August, Argus reports

·     Valvoline (VVV) enters into a definitive agreement with Kent Lubrication Centers to acquire its 14 quick-lube locations which will be rebranded as company-owned Valvoline Instant Oil Change

 

Technology, Media & Telecom

·     Interactive Corp (IAC) with monthly metrics saying total ANGI HomeServices revenue up 12% in August and total Vimeo revenue up 43% and ending subscribers up 19% in August; said total revenue from search was down 25% in August

·     Monolithic Power (MPWR) raises Q3 revenue view to $257M-$259M from $200M-$210M (est. $205.15M) and lowers Q3 non-GAAP gross margin view to 55.4%-55.6% from 55.5%-56.1% – said business during Q3 increased beyond our expectations for two key reasons. First, a majority of the increase was because we were able to fulfill our customers’ demand that had been delinquent due to past capacity constraints. Second, several China-based customers requested previously scheduled shipment dates be pulled into the third quarter of 2020, which we believe is related to recent trade policy changes

·     Alphabet Inc.’s Google (GOOGL) faces a $3.2 billion lawsuit on behalf of more than five million British children under 13 and their parents over claims that YouTube routinely breaks privacy laws by tracking children online

·     Aspen Group (ASPU) Q1 adj eps 0c on revs $15.2m vs. est. loss (5c) and $14.2m; reports acceleration of revenue growth to 46% for Q1

·     PPD (PPD) raises Q3 revenue view to $1.157B-$1.188B from $1.065B-$1.085B (est. $1.12B) and also ups Q3 adjusted EBITDA view to $223M-$227M from $211M-$215M to reflects better than expected financial performance in both the Clinical Development Services and Laboratory Services segments; files for offering of up to 38.0 mln shares of common stock

·     Kornit Digital (KRNT) files to sell 2.93M shares of common stock for holders