Hammerstone’s Early Look

By admin | 05/18/2020

Monday, May 18, 2020

Stock futures are higher, tracking big gains in Europe as stocks continue to benefit from news of global economies reopening around the globe as the pace of total cases of the COVID-19 in the United States continues to slow. U.S. stock-index futures helped overnight as Federal Reserve Chairman Jerome Powell said on CBS 6-minutes that Americans need to prepare for a tough road ahead in the aftermath of the COVID-19 pandemic but said he wouldn’t bet against the domestic economy’s ability to persevere through the most significant public-health crisis in more than a century. “In the long-run and even in the medium-run, you wouldn’t want to bet against the American economy,” Powell said, speaking during an interview with CBS’ “60 Minutes” program. Commodity prices are surging with gold topping $1,570 an ounce while oil prices jump over 7%, lifting shares of energy stocks early. In Asian markets, The Nikkei Index rose 96 points to 20,133, the Shanghai Index rose 6 points to 2,875 and the Hang Seng Index gained 137 points to 23,934. In Europe, the German DAX is up 280 points to 107,50, while the FTSE 100 is up around 120 points to 5,920. Japan’s economy, shrank by an annualized 3.4% in the three months ended March 31 after a 7.3% contraction in the previous quarter. U.S. stocks closed out last week lower, with the Dow down 2.7%, the S&P 500 losing 2.3% and the Nasdaq 1.2% lower. Marking their worst weekly skid since the period ended March 20.

Market Closing Prices Yesterday

• The S&P 500 Index gained 11.20 points, or 0.39%, to 2,863.70
• The Dow Jones Industrial Average rose 60.08 points, or 0.25%, to 23,685.42
• The Nasdaq Composite jumped 70.84 points, or 0.79%, to 9,014.56
• The Russell 2000 Index advanced 19.44 points, or 1.57% to 1,256.99

Economic Calendar for Today

• 10:00 AM EST     NAHB Housing Market Index for May

World News

• Fed Chair Powell in his CBS 60 Minutes interview said this is a time of great suffering which has come on quickly & with force; it’ll take a while to get back loss of GDP but in the L/T the economy will recover, a recovery could carry thru into end of next year; the economy will recover steadily thru H2 assuming we don’t get 2nd wave of virus; a full recovery will need a vaccine; expects unemployment to peak around 20-25%; reiterates thinks negative rates are probably not an appropriate or a useful policy for the US
• S. expected to revise terms of PPP loans as changes are likely to include giving businesses more flexibility to spend the money (under the original terms, 75% of the funds were required to be spent on employee salaries for the loans to be forgiven). The government is also expected to extend the time to spend the loan money beyond the two months it originally set.
• A controversial idea being floated in Washington would allocate as much as $25B to companies that make essential goods to move production home, Trump administration officials told Reuters.
• The global case tally for the coronavirus that causes COVID-19 climbed to 4.73 million on Monday, according to data by Johns Hopkins University. The death toll rose to 315,482. More than 1.7 million people have recovered. The U.S. has the highest case toll at 1.49 million and the highest death toll at 89,564. Russia has 290,678 cases and 2,722 deaths. The U.K. has 244,995 cases and 34,716 deaths, the highest death toll in Europe and second highest in the world after the U.S. Brazil has moved past Spain and Italy by case number

Sector News Breakdown

Consumer

• While merger discussions between Uber (UBER) and GrubHub (GRUB) continued over the weekend, price remained a sticking point, WSJ reports. Uber’s latest offer of 1.9 of its shares for each GrubHub share was deemed too low by CEO Matt Maloney, and while Uber suggested it could go up to 1.925, it was still well below the price GrubHub is seeking. – WSJ https://on.wsj.com/2ThsVlz
• Tesla (TSLA) tells employees it received approval to reopen California plant as Alameda County’s interim health officer has approved Fremont work plan and safety measures
• After the lockdowns, Wayfair (W) stock might drop, Barron’s says. As consumers rushed to outfit their home offices, shares of the online site for buying chairs and rugs shot up from $22, to $197, before settling back to a recent $175
• C. Penney (JCP) files for Chapter 11 Bankruptcy, secures $900M in DIP financing. J. C. Penney announced that it has entered into a restructuring support agreement with lenders holding approximately 70% of JCPenney’s first lien debt to reduce the company’s outstanding indebtedness and strengthen its financial position

Energy, Industrials and Materials

• Chinese oil demand is all but back to levels last seen before Beijing imposed a national lockdown to fight the coronavirus outbreak – Bloomberg
• Williams Cos. (WMB) says it will not refile applications for its proposed $1B natural gas pipeline after regulators in New York and New Jersey again denied key water permits for the project.
• Thyssenkrupp (TKAMY) is talking with international peers about consolidating its steel business, Reuters reported

Financials

• Discover Financial (DFS) April credit card delinquency rate declines to 2.56% vs. 2.62% in March; three-month average is 2.61%; net charge-off rate of 3.98% increases from 3.67% in March; three-month average is 3.83%
• Boston Private Financial (BPFH) files $200M mixed securities shelf

Healthcare

• AstraZeneca (AZN) said it aims to make as many as 30M doses of its COVID-19 vaccine available in Britain by September.
• Deciphera (DCPH) announced the U.S. FDA has approved QINLOCK for the treatment of adult patients with advanced gastrointestinal stromal tumor who have received prior treatment with 3 or more kinase inhibitors, including imatinib

Technology, Media & Telecom

• Apple (AAPL) to reopen more than 25 of its branded stores in the United States this week, taking its open store tally to nearly 100 stores worldwide, reported Reuters
• The Justice Department and a group of state attorneys general may file antitrust lawsuits against Alphabet Inc.’s (GOOGL) Google as soon as this summer, according to a Wall Street Journal report late Friday afternoon. The states’ probes are centered on the Alphabet Inc. subsidiary’s online advertising business
• Plantronics (PLT) affirmed its April 15 guidance while saying it now expects to release its Q4 results on May 27; that’s a delay from a planned release of May 21.
• SoftBank Group Corp. said late Sunday, that longtime board member Jack Ma has resigned, and the company announced up to $4.7 billion in share buybacks
• com (SOHU) Q1 EPS loss (47c)/$436M vs. est. loss (72c)/$427.85M; sees Q2 EPS (13c)-13c on revs $410M-$445M vs. est. loss 913c)/$436M
• Sea Limited (SE) Q1 EPS loss (52c)/$913.92M vs. est. loss (32c)/$915.42M; 1Q E-commerce adj. rev. as percentage GMV 5.1% vs. 6.30% q/q
• The NPD Group said overall total industry consumer spending on video gaming in the U.S. reached a record $10.86 billion in the first quarter of 2020, an increase of 9 percent compared to the same time period last year. Sales of video game content reached $9.58 billion in the first quarter, up 11 percent when compared to a year ago (ATVI, TTWO, EA)
• Disney (DIS) will partially reopen its Disney Springs entertainment and shopping complex at Walt Disney World Resort in Florida on May 20

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