{"id":12620,"date":"2020-05-05T10:05:47","date_gmt":"2020-05-05T15:05:47","guid":{"rendered":"https:\/\/www.eoption.com\/2020\/05\/05\/mid-morning-look-may-05-2020\/"},"modified":"2020-05-05T10:05:47","modified_gmt":"2020-05-05T15:05:47","slug":"mid-morning-look-may-05-2020","status":"publish","type":"post","link":"https:\/\/www.eoption.com\/mid-morning-look-may-05-2020\/","title":{"rendered":"Mid-Morning Look: May 05, 2020"},"content":{"rendered":"
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Mid-Morning Look<\/o:p><\/span><\/b><\/p>\n

Tuesday, May 05, 2020<\/span><\/b><\/o:p><\/span><\/b><\/p>\n\n\n\n\n\n\n\n\n
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Index<\/o:p><\/span><\/p>\n<\/td>\n

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Up\/Down<\/o:p><\/span><\/p>\n<\/td>\n

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%<\/o:p><\/span><\/p>\n<\/td>\n

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Last<\/o:p><\/span><\/p>\n<\/td>\n

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DJ Industrials<\/span><\/b><\/o:p><\/span><\/p>\n<\/td>\n

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304.70<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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1.28%<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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24,054<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n<\/tr>\n

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S&P 500<\/span><\/b><\/o:p><\/span><\/p>\n<\/td>\n

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38.59<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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1.36%<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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2,881<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n<\/tr>\n

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Nasdaq<\/span><\/b><\/o:p><\/span><\/p>\n<\/td>\n

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135.25<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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1.54%<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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8,843<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n<\/tr>\n

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Russell 2000<\/span><\/b><\/o:p><\/span><\/p>\n<\/td>\n

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28.81<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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2.28%<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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1,292<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n<\/tr>\n

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U.S. equities with a strong start to the trading day, building on yesterday’s late day market momentum as investors appear increasingly optimistic about the slow re-opening of the U.S. economy (more than half the states have begun their reopening plans), looking past another round of dismal economic data. Technology stocks again pacing gains, though all 11 S<\/span>&P sectors start higher, also paced by energy as crude oil rallies on news that more Permian drillers are cutting production (oil prices on track for a 5th<\/sup> straight day of gains, with WTI<\/span> crude jumping more than 17% on growing demand expectations). California Governor Newsom said late yesterday that some of the state’s retailers would be allowed to offer curb-side pickup starting Friday, and New York Gov. Cuomo said the daily number of hospitalizations and new deaths are declining. Also, the U.S. reportedly is considering an extension of some China tariff exclusions despite recent tensions between the two countries and criticism of Secretary of State Pompeo in Chinese media. Economic data disappoints again (not a surprise) as U.S. business activity fell to new record lows in April as data firm IHS<\/span> Markit said last week its flash U.S. Composite Output Index, which tracks the manufacturing and services sectors, tumbled to a reading of 27.0 last month. That was the lowest since the series began in late 2009. Meanwhile, the ISM Non-Manufacturing for April fell to 41.8 from prior month reading of 52.5, but slightly above estimates of 38 as the index fell to the lowest level since 2009. The data points a sobering reminder of the impact from the coronavirus mandate business closures, which is expected yet again to show the difficulty in the jobs market later this week. The U.S. trade deficit widened in March, with exports plunging by a record and imports falling the most in 11 years.<\/o:p><\/p>\n

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Treasuries, Currencies and Commodities<\/o:p><\/p>\n

·     <\/span><\/span><\/span>In currency markets, the dollar is mixed, falling vs. most currencies on another round of weak economic data, but rises against the euro which declined after Germany’s highest court said on Tuesday that the European Central Bank exceeded its powers by launching a massive quantitative easing effort in 2015, and ordered the German government “to take active steps” against the program in its current form. Commodity prices are mixed as gold prices slip given more “risk-on” trades with stocks and oil rising\/Brent Crude oil hits $30 a barrel for first time since April 15 and WTI crude up more than 17% nearing 424 per barrel as rising demand hopes lift prices with many US states slowly reopening their economics. Treasury market’s stall as yields climb.<\/o:p><\/p>\n

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Economic Data<\/o:p><\/p>\n

·     <\/span><\/span><\/span>ISM Non-Manufacturing for April fell<\/b> to 41.8 from prior month reading of 52.5, but slightly above estimates of 38 as the index fell to the lowest level since 2009; business activity fell to 26.0 vs 48.0 prior month (the lowest on record while new orders fell to a record low 32.9 vs 52.9 and the employment index fell to 30.0 vs 47.0<\/o:p><\/p>\n

·     <\/span><\/span><\/span>U.S. trade deficit widened in March<\/b>, with exports plunging by a record and imports falling the most in 11 years as the pandemic stymied trade. The overall gap in goods and services trade increased to $44.4 billion from a revised $39.8 billion in February (vs. est. $44.2B). Imports fell 6.2% in March to $232.16b from $247.56b in February and exports fell 9.6% in March to $187.75b from $207.75b in February.<\/o:p><\/p>\n

·     <\/span><\/span><\/span>US IHS Markit April final services PMI<\/b> at 26.7 (vs flash 27.0) while services sector final PMI for April at 26.7 vs flash reading 27.0 and final march 39.8; said composite PMI shows private-sector business activity shrank at sharpest pace in survey history going back to October 2009; final US composite new orders index for April at 26.4 vs flash reading 27.2 and final March 40.9<\/o:p><\/p>\n

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Macro<\/o:p><\/span><\/p>\n<\/td>\n

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Up\/Down<\/o:p><\/span><\/p>\n<\/td>\n

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Last<\/o:p><\/span><\/p>\n<\/td>\n

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WTI Crude<\/span><\/b><\/o:p><\/span><\/p>\n<\/td>\n

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3.54<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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23.93<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n<\/tr>\n

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Brent<\/span><\/b><\/o:p><\/span><\/p>\n<\/td>\n

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3.08<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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30.28<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n<\/tr>\n

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Gold<\/span><\/b><\/o:p><\/span><\/p>\n<\/td>\n

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-9.80<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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1,703.50<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n<\/tr>\n

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EUR\/USD<\/o:p><\/span><\/b><\/p>\n<\/td>\n

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-0.0049<\/o:p><\/span><\/p>\n<\/td>\n

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1.0858<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n<\/tr>\n

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JPY\/USD<\/o:p><\/span><\/b><\/p>\n<\/td>\n

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-0.07<\/o:p><\/span><\/p>\n<\/td>\n

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106.65<\/o:p><\/span><\/p>\n<\/td>\n<\/tr>\n

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10-Year Note<\/o:p><\/span><\/b><\/p>\n<\/td>\n

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0.028<\/o:p><\/span><\/p>\n<\/td>\n

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0.661%<\/o:p><\/span><\/p>\n<\/td>\n<\/tr>\n

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Sector Movers Today<\/o:p><\/p>\n

·     <\/span><\/span><\/span>Auto movers; HTZ<\/span><\/b> shares plunged 25% overnight after the WSJ reported the company has hired an additional adviser to help prepare for a bankruptcy filing\/this morning the co enters into forbearances and limited waivers with certain lenders and holders of its asset-backed vehicle debt; HOG<\/span><\/b> upgraded to buy from hold at Argus with $30 tgt reflecting our positive view of the company’s new strategic plan; FCAU<\/span><\/b> Q1 deliveries down 21% to 818,000 units and sees more significant impact on Q2 results vs Q1; GPI <\/span><\/b>shares jump following better earnings<\/o:p><\/p>\n

·     <\/span><\/span><\/span>Materials and Chemicals; DD<\/span><\/b> Q1 EPS beat by 9c while sales slipped 4% to $5.2B as the company doubles its annual cost-savings target, slashes capital expenditure by about $500M to weather the coronavirus crisis; MOS <\/span><\/b>shares rise after top and bottom line beat; in paper space, WRK<\/span><\/b> shares tumble on mixed Q2 results while says it will reduce its planned FY20-FY21 capital investments and cutting its quarterly dividend to 20c from 80c in order to preserve cash amid the pandemic; other movers on earnings include LPX<\/span>, GLT<\/span><\/b> and SEE<\/span><\/b>; RPM<\/span><\/b> sees Q4 sales for its consumer group being flat to slightly up<\/o:p><\/p>\n

·     <\/span><\/span><\/span>Software movers; CRM<\/span><\/b> and WDAY<\/span><\/b> were both initiated with sell ratings at Rosenblatt saying for CRM, believe the company’s 20%+ annual organic revenue growth target and FY24 revenue target of $35B are at risk; APPF<\/span><\/b> was downgraded to underperform at Davidson as view the current valuation as incompatible with withdrawn 2020 guidance; SPLK<\/span><\/b> announces new strategic partnership with GOOGL<\/span><\/b> that will soon make Splunk Cloud tightly integrated with cloud offering<\/o:p><\/p>\n

·     <\/span><\/span><\/span>E&P sector; FANG<\/span><\/b> reported ~7% miss on EBITDA estimates mainly due to pricing, which was ~4% lower than the Street (NGL<\/span> and gas missed meaningfully) but production of ~321 Mboe\/d (3\/5% higher than consensus); CDEV<\/span><\/b> Q1 net loss widened to $548M from $8.1M the year prior, hurt by a non-cash impairment charge and expects to cut up to 40% of production during May in response to weak realized prices; suspends all near-term drilling and completion activity; PE<\/span><\/b> reported modest beats on EBITDA\/EPS relative to the Street driven by oil pricing 2% higher than consensus\/oil production of 126.6 Mbo\/d was 1% higher than consensus<\/o:p><\/p>\n

·     <\/span><\/span><\/span>Restaurants; BLMN<\/span><\/b> Q1 comp sales were down 10.4% in the U.S., including a 13.9% drop for Bonefish and 13.2% decline for Fleming’s while guided Q1 EPS 14c below estimates of 19c and suspended action with its strategic review; SBUX<\/span><\/b> said it sees more than 85% of company-operated U.S. stores reopened by May 9th<\/sup>; SHAK<\/span><\/b> mixed earnings as comp sales have improved sharply over the last 5 weeks, to -45% the week ending 4\/29, from -73% the week ending 3\/25 as cost cuts have supported restaurant margins; TXRH<\/span><\/b> busy after earnings as weekly sales improvement through April was also very encouraging, with comps down 37%\/45% in the weeks ended 4\/21 and 4\/28, respectively; TACO <\/span><\/b>also a mover post earnings<\/o:p><\/p>\n

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Stock GAINERS<\/o:p><\/span><\/p>\n

·     <\/span><\/span><\/span>AKBA <\/span><\/b>+35%; shares jump after announces positive top-line results from global phase 3 program of vadadustat for treatment of anemia due to chronic kidney disease in adult patients on dialysis<\/o:p><\/p>\n

·     <\/span><\/span><\/span>CHGG<\/span><\/b> +32%; posts better-than-expected Q1 adjusted profit as co benefited from increased levels of growth since the COVID-19 outbreak and guides Q2 revs $135M-$137M above the $123.8M est<\/o:p><\/p>\n

·     <\/span><\/span><\/span>EVER <\/span><\/b>+25%; as its accelerating quote request growth (+80% y\/y) driving ~56% total y\/y revenue growth, ahead of the upper end of guidance.<\/o:p><\/p>\n

·     <\/span><\/span><\/span>IPGP <\/span><\/b>+16%; shares surge, leading semis after 15c EPS beat on higher revs and boosts share buyback plan<\/o:p><\/p>\n

·     <\/span><\/span><\/span>PTLA<\/span><\/b> +130%; shares rise after agreeing to be bought by ALXN<\/span><\/b> for $18 per share in cash https:\/\/bit.ly\/2xAyNic<\/a> <\/o:p><\/p>\n

·     <\/span><\/span><\/span>SWKS<\/span><\/b> +7%; posts Q2 rev and profit above Wall Street expectations and says suspension of Mexicali, Mexico ops due to COVID-19 not expected to have a significant impact on overall business\/guides Q3 profit and rev below Street<\/o:p><\/p>\n

·     <\/span><\/span><\/span>TGTX <\/span><\/b>+24%; UNITY-CLL trial met the primary endpoint of improved progression-free survival (PFS<\/span>) benefit seen across both previously untreated and relapsed\/refractory patient populations<\/o:p><\/p>\n

·     <\/span><\/span><\/span>W<\/span><\/b> +25%; posted modestly better Q1 EPS loss and sales while said quarter-to-date revenue is up 90% as momentum has stayed strong into Q2\/results are tracking toward a positive adjusted EBITDA margin<\/o:p><\/p>\n

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Stock LAGGARDS<\/o:p><\/span><\/p>\n

·     <\/span><\/span><\/span>BLMN <\/span><\/b>-10%; Q1 comp sales were down 10.4% in the U.S., including a 13.9% drop for Bonefish and 13.2% decline for Fleming’s while guided Q1 EPS 14c below estimates of 19c and suspended action with its strategic review<\/o:p><\/p>\n

·     <\/span><\/span><\/span>FN<\/span><\/b> ; reports Q3 revenue of $411.2M missing the estimates of $414.1M, while also forecasts Q4 revenue and adjusted profit below estimates<\/o:p><\/p>\n

·     <\/span><\/span><\/span>HTZ<\/span><\/b> -18%; shares plunge after the WSJ reported the company has hired an additional adviser to help prepare for a bankruptcy filing\/ this morning the co enters into forbearances and limited waivers with certain lenders and holders of its asset-backed vehicle debt<\/o:p><\/p>\n

·     <\/span><\/span><\/span>ITRI<\/span><\/b> -14%; after Q1 missed estimates and guided Q1 well below consensus as gross margin of 28.7% (-180 bps Y\/Y), due to product mix and manufacturing inefficiencies<\/o:p><\/p>\n

·     <\/span><\/span><\/span>NCLH<\/span><\/b> -23%; shares fall after filing to sell shares and uses “going concern” language ahead of debt deal (launches $350 mln stock offering and concurrent $650 mln 4-yr exchangeable notes offering and $600 mln 4-yr straight debt deal)<\/o:p><\/p>\n

·     <\/span><\/span><\/span>UNM <\/span><\/b>-7%; shares dropped after its quarterly miss as Q1 adjusted EPS $1.35\/$2.87B vs. est. $1.38\/$3.05B and suspends buyback<\/o:p><\/p>\n

·     <\/span><\/span><\/span>WRK<\/span><\/b> -13%; mixed Q2 results while says it will reduce its planned FY20-FY21 capital investments and cutting its quarterly dividend to 20c from 80c in order to preserve cash amid the pandemic.<\/p>\n<\/div>\n

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