Hammerstone’s Early Report
February 10, 2020|
Monday, February 10, 2020
Stock futures are little changed after stocks surged last week, posting their best returns in months as the Dow Jones Industrial Average advanced 846.48 points, or 3%, to 29,102.51 last week, while the S&P 500 index rose 3.2%, to 3327.71. The Nasdaq Composite gained 4%, to 9520.51, its biggest weekly gain since November 2018. Markets have chosen to focus on strong economic data, well received earnings results and a dovish Fed, which has overshadowed the fears of the potential impact of the vicious coronavirus that has spread globally and affected many companies. As of late this weekend, China reported 97 new coronavirus deaths on mainland on Sunday, toll rises to 908- Across mainland China, there were 3,062 new confirmed infections on Sunday, bringing the total number so far to 40,171, as per Reuters. In Asian markets, The Nikkei Index fell -142 points to 23,685, the Shanghai Index gained 14 points to 2,890 and the Hang Seng Index dropped -162 points to 27,241. In Europe, the German DAX is off by -30 points to 13,480, while the FTSE 100 is down about -20 points to 7,450. Benchmarks in Asia were mostly lower following a report from researcher TrendForce that expects a virus outbreak in China to take global smartphone production down by 12%, its lowest level in five years, in Q1 and expects Huawei, Apple and other companies to bear the brunt.
Market Closing Prices Yesterday
- The S&P 500 Index dropped -18.07 points, or 0.54%, to 3,327.71
- The Dow Jones Industrial Average fell -277.26 points, or 0.94%, to 29,102.51
- The Nasdaq Composite dropped -51.64 points, or 0.54%, to 9,520.51
- The Russell 2000 Index declined -20.68 points, or 1.23% to 1,656.78
Events Calendar for Today
- No major economic data to be released
- Earnings Before the Open: AGN, AVYA, CAN, DO, ELY, EPC, GBDC, GFN, IVC, L, MCY, MPAA
- Earnings After the Close: AEMD, AMKR, APPS, BHF, CHGG, CMP, DVA, ELVT, FLDM, GPP, GPRE, IIIV, IIVI, JCOM, KMPR, LMNX, MESA, MIME, MOH, OMF, RNG, RPD, STE, VOYA, WTS, XPO
Other Key Events:
- Annual WORLD Symposium 2020, 2/10-2/13, in Orlando, FL
- Biotech Innovation Organization, 2/10-2/11, in New York
- China’s consumer inflation hit its highest level in more than eight years in January due to impact from the coronavirus outbreak and the Lunar New Year, official data showed. The consumer price index climbed 5.4% in January from a year earlier, the highest reading since October 2011, when the index grew 5.5%, the National Bureau of Statistics said Monday.
- China food prices in January grew6% from a year earlier, accelerating from a 17.4% increase in December. Pork prices surged 116% on year in January, extending from a 97% increase in December. Pork prices alone boosted headline CPI by 2.76 percentage points in January.
- China reports 97 new coronavirus deaths on mainland on Sunday, toll rises to 908- Across mainland China, there were 3,062 new confirmed infections on Sunday, bringing the total number so far to 40,171 – Reuters
- France has confirmed five additional cases of the new virus spreading from China, including one child. The announcement Saturday by Health Minister Agnes Buzyn brings the total number of people confirmed with the virus in France to 11
Sector News Breakdown
- L Brands (LB) is close to a deal to sell Victoria’s Secret to private equity company Sycamore Partners, CNBC reported Sunday night, though a price was not reported, but said the deal could be announced this week. The Wall Street Journal reported in January that L Brands was considering selling the Victoria’s Secret brand https://on.mktw.net/2Uzc13s
- Edgewell Personal Care (EPC) Q1 adj. EPS 55c/$454M vs. est. 29c/$445.94M; announced that following the FTC filing of a lawsuit seeking to block the proposed transaction, Edgewell terminated its merger agreement with Harry’s, Inc.; cuts FY20 adj. EPS view to $2.95-$3.15 from $3.10-$3.30 (est. $2.95) and cuts FY20 revenue decline view down 4%-5% from down 1%-2%
- Restaurant Brands (QSR) Q4 adjusted EPS 75c vs. est. 73c; Burger King comp sales +2.8% vs. est. 3.4% and Tom Horton’s comps (-4.3%) vs. est. (-2.6%)
- Volvo Car AB (VOLAF) and Geely Automobile Holdings (GELYF) are considering combining their businesses in the same global group, according to a Bloomberg report. The automaker believes a combination would accelerate financial and technological synergies between the two companies.
- NIO Inc. (NIO) provided its January 2020 delivery results. NIO delivered 1,598 vehicles in January, 11.5% lower than the same month last year. This decrease was primarily due to the reduction in business days in January due to the comparatively earlier Chinese New Year holiday in 2020.
- General Motors (GM) should be the auto maker with a $150B-plus market value Barron’s said noting investors give General Motors little credit for the huge amount of cash it generates, adding that GM is more tech-forward than one might realize as it is heavily invested in autonomous-driving technology via its Cruise division, just like Tesla (TSLA)
- Kraft Heinz (KHC) now trades at about 11.5 times estimated 2020 earnings, versus about 20 times estimated earnings for its peers, Barron’s noted. If it can split the difference, and trade at a ratio of 17 times earnings in 2021, the stock could hit $43, up more than 40% from a recent $29.
- America’s Car-Mart Inc. (CRMT) will replace com Inc. (CRCM) in the S&P SmallCap 600. IAC/InterActiveCorp (IAC) is acquiring Care.com in a transaction expected to be completed soon pending final conditions
Energy, Industrials and Materials
- Energy stocks mentioned positively in Barron’s saying shares may have hit bottom and that investors may want to consider getting in, with some ways to play the energy sector include BP (BP), Chevron (CVX), ConocoPhillips (COP), Exxon Mobil (XOM) and Royal Dutch Shell (RDS.B)
- PG&E Corp. (PCG) said it aims to shrink the breadth and duration of intentional blackouts during California’s wildfire season as part of a $2.6 billion plan aimed at improving safety.
- Diamond Offshore (DO) Q4 adj. EPS loss (45c)/$276.38M vs. est. loss (65c)/$249.26M; during 2019, the company secured $620M of backlog, including over $50M secured in Q4 related to a 12-month extension for the Ocean Patriot in the North Sea
- Generac Holdings Inc. (GNRC) will replace Alexander & Baldwin Inc. (ALEX) in the S&P MidCap 400, and Alexander & Baldwin will replace Diplomat Pharmacy (DPLO) in the S&P SmallCap 600. S&P 500 constituent UnitedHealth Group Inc. (UNH) is acquiring Diplomat Pharmacy in a transaction expected to be completed soon
- FirstCash (FCFS) mentioned positively in Barron’s saying the pawnshop owner generated $1.86B in revenue last year, and that investors are not thinking about risk-off trades, which has contributed to a selloff in FirstCash stock
- Pzena Investment (PZN) reports preliminary AUM $39B at January 31; compared to $41.2B as of December 31, 2019 and $36.6B as of January 31, 2019
- Zions Bancorp (ZION) downgraded to Sector Perform from Outperform at RBC Capital
- Eli Lilly & Co. (LLY) and Roche Holdings AG’s (RHHBY) Genentech unit said a phase 2/3 study of their investigational therapies for Alzheimer’s disease missed its primary endpoint in people with a rare, early-onset, inherited form of the disease. The study, sponsored by Washington University School of Medicine in St. Louis, didn’t show a significant slowing of the rate of cognitive decline in people treated with Lilly’s solanezumab and Roche’s gantenerumab compared with placebo
- Inovio receives (INO) announced the FDA has accepted its Investigational New Drug, or IND, application to evaluate its DNA medicine INO-3107 in a Phase 1/2 trial for treatment of Recurrent Respiratory Papillomatosis or RRP
- Anthem (ANTM) stock cratered after the health insurer’s fourth-quarter report, but the top executive bought up millions of dollars of shares, Barron’s noted. Anthem stock tumbled after the company said its medical-loss ratio, or MLR, rose in the quarter to 89%, nearly a percent higher than the consensus estimate
- Kodiak (KOD) said its KSI-301 Phase 1B study reported encouraging safety profile, with zero cases of intraocular inflammation after 420 doses in 130 patients
Technology, Media & Telecom
- Apple Inc. (AAPL) shares slipped as a report from researcher TrendForce expects a virus outbreak in China to take global smartphone production down by 12%, its lowest level in five years, in Q1 and expects Huawei, Apple and other companies to bear the brunt. Other research reports estimate China’s smartphone sales to plunge by as much as 50% in Q1, as retail shops remain closed for an extended period and production is yet to fully resume
- TSMC (TSM) announced its net revenues for January 2020: On a consolidated basis, revenues for January 2020 were approximately NT$103.68B, an increase of 0.4B from December 2019 and an increase of 32.8% from January 2019.
- WWE Inc. (WWE) downgraded at Wells Fargo to Underweight from Overweight with a price target of $36, down from $80
Want a free trial to The Hammerstone Report 4x Daily ? Sign-up for a trial today at https://www.hammerstonemarkets.com/
Please be sure to check out The Hammerstone Pro Feed; News and Analysis for the Informed Trader at https://www.hammerstonemarkets.com/pro-trader/#get-started
***DISCLAIMER/LIMITATION OF LIABILITY: Catena Media Financials US, Inc, (D.B.A. Hammerstone Markets) (the “Report”) provides information and data and does NOT provide any individual investment advice or money management assistance and does NOT attempt to influence the sale or purchase of securities. The Report is intended for informational purposes only and does not claim to be actionable for investment decisions. The information contained in the Report has been obtained from sources deemed to be reliable but is not represented to be complete, and it should not be relied upon as such. The Report does not purport to be a complete analysis of any security, issuer, or industry and is not an offer or a solicitation of an offer to buy or sell any securities. The Report is prepared for general information purposes only and does not consider the specific investment objectives, financial situation, and particular needs of any individual subscriber, person, or entity. This e-mail and any attachment(s) are believed to be free from virus. However it is the responsibility of the recipient to ensure that they are virus free. We do not accept any liability for any loss or damage arising in any way from the receipt, opening or use of this e-mail and any attachment(s). Nothing on the Hammerstone Platform is a recommendation that you purchase, sell or hold any security or other investment, or that you pursue any investment style or strategy.