Hammerstone’s Early Look

By admin | 03/18/2020

Wednesday, March 18, 2020

Stocks futures are sharply lower, once again hitting lower trading limits as futures hit lows around 5%, tumbling alongside weakness in European and Asian markets as well as markets continue to weigh the impact of fiscal and monetary stimulus provided by global central banks and governments in an effort to deal with the impact of the coronavirus to their economies. Oil prices extend their losses, dropping to an almost 17-year low while industrial metals slide on waning demand. Stocks got a small boost yesterday after central bank efforts as the Fed opened an emergency lending facility for primary dealers to support short-term commercial debt market, while Treasury Secretary Mnuchin said the government is considering a fiscal stimulus package that includes directly sending checks to Americans in the next two weeks, and tax deferments of as much as $10M for corporations and up to $1M for individuals in payments to the IRS. U.S. Treasury yields jumped in reaction to the news, with the 10-year rate soaring 27 bps to break back to 1% and the two-year yield adding 8 bps to 0.45% (yields are still slightly higher this morning as well). In Asian markets overnight, The Nikkei Index fell -284 points to 16,726, the Shanghai Index dropped -50 points to 2,728 and the Hang Seng Index plunged -971 points (4.18%) to 22,291. In Europe, the German DAX is down about -400 points to 8.540, while the FTSE 100 is down around -250 points, holding just above the 5,000 level. Several leisure, transportation, health care, energy and mining companies have been drawing billions of dollars from existing lines or negotiating new ones, raising fears of liquidity issues for major banking institutions. Overall coronavirus cases climbed to 191,521 worldwide, deaths topped 7,800 in the latest figures

Market Closing Prices Yesterday

• The S&P 500 Index jumped 143.06 points, or 6.00%, to 2,529.19
• The Dow Jones Industrial Average rose 1,048.86 points, or 5.20%, to 21,237.38
• The Nasdaq Composite spiked 430.19 points, or 6.23%, to 7,334.78
• The Russell 2000 Index advanced 69.09 points, or 6.66% to 1,106.51

Economic Calendar for Today

• 7:00 AM EST       MBA Mortgage Applications Data
• 8:30 AM EST       Housing Starts MoM for Feb…est. 1.5M (down 4.3%)
• 8:30 AM EST       Building Permits MoM for Feb…est. 1.5M (down 3.2%)
• 10:30 AM EST     Weekly DOE Inventory Data
• 2:00 PM EST        FOMC interest rate decision (with another cut expected)

Earnings Calendar:

• Earnings Before the Open: CTRA, GES, IAA
• Earnings After the Close: ACMR, FIVE, GES, MLHR, ONEM, QUAB, TLRD, WSM

Sector News Breakdown

Consumer

• Spirit Airlines (SAVE) said it is removing about 20% of flying from April schedule, including government-mandated cancellations and previously announced pulldown

Energy

• The American Petroleum Institute (API) said that U.S. crude supplies edged lower by 421,000 barrels for the latest week, showed gasoline stockpiles down -7.8M barrels, while distillate inventories declined by -3.6M barrels.
• WPX Energy (WPX) revises capital expenditure for the FY to $1.28B-$1.4B, cutting by $400M while maintains current oil production of roughly 150,000 bbl/d for the balance of the year and expects to generate at least $150 million of free cash flow in 2020
• Earthstone Energy (ESTE) reduces FY20 adjusted capital budget to $50M-$60M (from $160M-$170M) citing the recent drop in oil prices, and said it plans to run one rig into the Q2 and operated completion activity will be limited to three wells currently in progress

Financials

• Sabre Corp. (SABR) suspends stock buyback plan and suspend dividend payments to better manage its cash position in light of current market conditions caused by the novel coronavirus
• KeyBanc (KEY) the latest bank to halt share repurchases to preserve cash
• Arbor Realty (ABR) announces $100M share repurchase program

Healthcare

• AbbVie (ABBV) and Allergan plc (AGN) announced that they have entered into a consent decree agreement with staff of the U.S. Federal Trade Commission regarding AbbVie’s pending acquisition of Allergan. Under the terms, the companies have agreed to divest brazikumab, an investigational IL-23 inhibitor in development for autoimmune diseases
• Addus HomeCare (ADUS) sees Q4 adjusted EPS 73c on revs $192.4M vs. est. 66c/$182.91M; announced that it will delay the filing of its Annual Report on Form 10-K for the FY19 and also reported certain preliminary unaudited financial and operational data for the Q4 and FY19
• Arrowhead Pharmaceuticals (ARWR) said it’s pausing new patient screening for at least four weeks in study of ARO-AAT for the treatment of alpha-1 liver disease
• Cronos Group Inc. (CRON) said that it would have to re-state three quarters of financial statements for 2019 because the company has been conducting an internal review of its bulk resin purchases and wholesale revenues. Said it was eliminating several wholesale transactions that would reduce its revenue by C$2.1M for the March, 2019 quarter and C$5.1M for Sept
• McKesson (MCK) raises FY20 adj. EPS view to $14.67-$14.87 from $14.60-$14.80 to reflect the completion of the company’s exit of its investment in Change Healthcare, as announced on March 10, 2020
• Qiagen (QGEN) announced plans to dramatically ramp up global production capacity of RNA extraction kits that are used as part of workflows around the world to detect nucleic acid from SARS-CoV-2, the novel coronavirus that causes COVID-19
• Sage Therapeutics Inc. (SAGE) unveiled plans to conduct three additional trials of its depression drug just months after a failed study sent shares spiraling. SAGE will start the three late-stage trials in a range of depression types this year, with plans to publish data sometime next year

Industrials & Materials

• Fed-Ex (FDX) Q3 adj EPS $1.41 on revs $17.5B vs. est. $1.27 and $15.82B; fiscal 2020 outlook suspended due to covid-19 uncertainty; says remain well positioned to assist our customers as they work to manage their supply chains and inventories; said operating results declined due to weaker global economic conditions including impact of coronavirus
• Emerson Electric (EMR) board announces stock buyback of 60M shares

Technology, Media & Telecom

• MongoDB (MDB) Q4 adjusted EPS loss (25c)/$123.5M vs. est. loss (28c)/$110.57M; sees Q1 adjusted EPS loss (25c)-(22c) on revs $119M-$121M vs. est. loss (24c)/$116.09M; sees FY21 adjusted EPS loss ($1.40)-($1.23) on revs $510M-$530M vs. est. loss (79c)/$530.22M
• Smartsheet (SMAR) Q4 adj EPS loss (13c) on revs $78.5M vs. est. loss (16c) and $77,7M; sees Q1 EPS loss (19c-21c) on revs $82M-$82M vs. est. loss (15c) and $81.6M; sees year revs $373M-$378M vs. est. $372.5M
• Fox Corp. (FOXA) said it will buy Tubi, an ad-supported free streaming service, for $440 million. Fox is selling its 5% stake in Roku Inc. to finance the transaction. Tubi features more than 20,000 titles and 56,000 hours of film and episodic television programming

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