{"id":12789,"date":"2020-06-04T09:41:24","date_gmt":"2020-06-04T14:41:24","guid":{"rendered":"https:\/\/www.eoption.com\/2020\/06\/04\/mid-morning-look-june-04-2020\/"},"modified":"2020-06-04T09:41:24","modified_gmt":"2020-06-04T14:41:24","slug":"mid-morning-look-june-04-2020","status":"publish","type":"post","link":"https:\/\/www.eoption.com\/mid-morning-look-june-04-2020\/","title":{"rendered":"Mid-Morning Look: June 04, 2020"},"content":{"rendered":"
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Mid-Morning Look<\/o:p><\/span><\/b><\/p>\n

Thursday, June 04, 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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66.70<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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0.25%<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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26,336<\/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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4.52<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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0.14%<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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3,127<\/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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32.14<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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0.33%<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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9,715<\/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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0.45<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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0.03%<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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1,452<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n<\/tr>\n

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U.S. equities are bouncing off initial weakness following mixed economic data that saw nearly 2 million Americans file applications for unemployment benefits last week, reflecting a slowing in job losses (but still disheartening), while the European Central Bank (ECB<\/span>) almost doubled the asset-buying program it has dedicated to fighting the coronavirus’ economic consequences, adding EUR600 billion ($675 billion) to the EUR750 billion it announced in March and said the program would continue until the end of June, 2021 (prior expected to end in December). The ECB decision came just one day after the German government added a significant layer of fiscal stimulus to the massive plan it had launched in March. Transportation stocks are mixed though airline stocks are taking off after American (AAL<\/span>) said it is increasing flights for the summer season as it sees higher demand for air travel after many of its planes have been idle due to the coronavirus pandemic. Dow component Boeing (BA<\/span>) extends gains to move to 2-month highs helping pace gains for the index. The Nasdaq Composite moves to the 9,700 level, moving to within less than 2% of its February all-time highs while the S&P 500 and Dow look to make it a fifth straight day of gains ahead of the big jobs number tomorrow morning. <\/o:p><\/p>\n

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

·     <\/span><\/span><\/span>In currency markets,<\/b> the U.S. dollar erases earlier gains, sliding after mixed economic data, with the dollar index on track for a 5th<\/sup> day of declines, as the euro rises to its best levels in about 7 weeks nearing the 1.13 level (52-week high 1.145). Weekly jobless claims were higher than consensus, the trade deficit wider than expected, and revised productivity a bit better than forecasts. The dollar also slips against the yen and Pound. Commodity prices are mixed<\/b> as gold prices bounce off yesterday’s sharp decline, helped as the dollar slides again, while oil prices pullback from 3-month highs. Treasury market’s<\/b> recent sell-off continues as the yield on the 10-year breaks above recent 2 month trading range; last up over 6 bps to 0.81% to best levels of morning and the highest since late April; the 2-yr yield up 1 bps to 0.2%<\/o:p><\/p>\n

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

·     <\/span><\/span><\/span>U.S. weekly jobless claims fell<\/b> to 1.877Mm in latest week vs. est. 1.833M and below the 2.126M level last week; the 4-week moving average fell to 2.284M from 2.608M; continued claims rose to 21.487M in latest week from 20.838M prior week; insured unemployment rate rose to 14.8% from 14.3% in prior week<\/o:p><\/p>\n

·     <\/span><\/span><\/span>The trade deficit for April widened<\/b> to (-$49.4B) vs. est. (-$49.0B) and vs. March deficit revised to (-$42.3B) from (-$44.4B); April goods deficit $71.84 bln, services surplus $22.4B; April exports (-20.5%) vs. March (-10.2%)<\/o:p><\/p>\n

·     <\/span><\/span><\/span>U.S. Q1 Nonfarm Productivity fell<\/b> (-0.9%), better than the estimated decline of (-2.7%), as preliminary 1Q productivity was down (-2.5%); unit labor costs rose 5.1% in 1Q vs. up 4.8% preliminary while output fell 6.5% in 1Q (down -6.2% preliminary); said compensation per hour rose 4.2% in 1Q; up 2.2% preliminary<\/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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-0.55<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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36.74<\/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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-0.32<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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39.47<\/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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4.20<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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1,709.00<\/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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0.006<\/o:p><\/span><\/p>\n<\/td>\n

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1.1293<\/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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-0.12<\/o:p><\/span><\/p>\n<\/td>\n

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108.78<\/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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0.064<\/o:p><\/span><\/p>\n<\/td>\n

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0.81%<\/o:p><\/span><\/p>\n<\/td>\n<\/tr>\n

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

·     <\/span><\/span><\/span>Software movers; ESTC <\/span><\/b>reported a strong 4QFY20 ahead of expectations, reflecting better execution and broad product traction, but FY21 guidance was below consensus taking into account expected (not yet witnessed) macro headwinds; CLDR<\/span><\/b> shares tumble after downbeat guidance as sees year revs $825M-$845M, below the $858M estimate; SMAR<\/span><\/b> tumbles as after Q1 results above expectations, supported by strong large customer activity and a net retention rate of 132% but billings disappointed, sending shares lower; ZUO<\/span><\/b> rises on much better than feared 1Q and 2Q guide (Q1 was better and 2Q was in line) while withdrew FY guide; GWRE<\/span><\/b> reported strong 3Q results, beating estimates on top and bottom line due to an acceleration in cloud revenue growth and some longer-term license deals which closed during the quarter; ADSK<\/span><\/b> tgt raised by several analysts following its annual Investor Day virtually where mgmt highlighted subscription growth that has thus far shown directional resiliency to the pandemic; GLUU <\/span><\/b>15M share Secondary priced at $9.25; CCC <\/span><\/b>48M share Secondary priced at $22.50<\/o:p><\/p>\n

·     <\/span><\/span><\/span>Chemicals; VVV<\/span><\/b> was upgraded to buy at SunTrust as view it is uniquely positioned not only to benefit from a surge in road trips over the next several months, but also gain share as it leverages its drive-thru quick lube business model; KeyBanc raised estimates on DOW<\/span>, LYB<\/span><\/b> and WLK <\/span><\/b>saying fundamentals for crude oil and ethylene\/polyethylene improved and sees DOW and LYB’s stocks as inexpensive based on 2021 multiples; however, Citigroup noted they expect 2Q\/3Q to be difficult for NAM ethylene\/PE companies (DOW<\/span>, WLK<\/span>, LYB<\/span><\/b>); MEOH<\/span><\/b> secures additional financial flexibility under its credit facilities and upgraded to outperform at Scotia Bank<\/o:p><\/p>\n

·     <\/span><\/span><\/span>Casino & Leisure movers; RCL<\/span><\/b> discloses that it plans to sell $2B worth of senior notes and senior convertible notes in a private placement; PLNT <\/span><\/b>was downgraded to market perform at Raymond James noting since bottoming at $27.54 on March 18, the shares have rallied well beyond our target price and now approach $80 and believe optimism or recovery baked in; SEAS<\/span><\/b> upgraded to Buy from Neutral, and raising our target price to $24 from $9 at Citigroup noting the company’s strategic efforts to promote its season pass has helped grow in-park spend, particularly in 2018 and 2019; casino stocks seeing momentum (WYNN<\/span>, MGM<\/span>, LVS<\/span>, ERI<\/span>, PENN<\/span><\/b>) as several begin to resume operations; NIO<\/span><\/b> said it delivered 3,436 vehicles in May, +215.5% YoY; company to increase production capacity and expand sales network to support future growth<\/o:p><\/p>\n

·     <\/span><\/span><\/span>Retailers; CNBC reported this morning that TIF<\/span><\/b> is prepared to litigate if LVMH proposes a price cut for the deal\/LVMH has yet to propose any changes in deal terms; COST <\/span><\/b>reported stronger-than-expected May comps with an adjusted increase of 9.2% in the US and a 108.1% increase in e-commerce sales; FNKO<\/span><\/b> said it expects to reduce its global workforce by approximately 25% which will occur by the end of Q2 and the remainder by the end of Q3; SBH <\/span><\/b>upgraded to outperform at Oppenheimer as re-opening of salons in the US, strength of the company’s growing e-commerce offering, and the May sales performance have exceeded expectations; MIK<\/span><\/b> slips after posting a surprise quarterly loss as Q4 net sales fell 27% to $799.9M on store closures, below the $1.03B est. and comp sales dropped over 27% for the quarter vs. down -2.9% YoY; GPS<\/span><\/b> sued by SPG<\/span><\/b> for $66M in unpaid rent<\/o:p><\/p>\n

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

·     <\/span><\/span><\/span>AAL<\/span><\/b> +16%; said it is increasing flights for the summer season as it sees higher demand for air travel after many of its planes have been idle due to the coronavirus pandemic<\/o:p><\/p>\n

·     <\/span><\/span><\/span>AMTD<\/span><\/b> +4%; shares rise after SCHW<\/span><\/b> agreement to buy the rival online broker for $26B won U.S. antitrust approval as first reported by CNBC’s David Faber (deal announced last November calls for 1.0837 Schwab shares for each share of TD Ameritrade<\/o:p><\/p>\n

·     <\/span><\/span><\/span>ATSG<\/span><\/b> +5%; after AMZN<\/span><\/b> announced the lease of 12 Boeing (BA<\/span><\/b>) 767-300 converted cargo aircraft from the company as these aircraft will join Amazon’s existing fleet of 70 aircraft to bring its total network to over 80 aircraft<\/o:p><\/p>\n

·     <\/span><\/span><\/span>BA<\/span><\/b> +5%; upside momentum continues, rising to its best levels since late March<\/o:p><\/p>\n

·     <\/span><\/span><\/span>EBAY <\/span><\/b>+6%; reports stronger volume growth and raises revenue and Gaap and non-Gaap eps guidance for Q2\/said approximately 6 mln buyers added in April and May and classifieds revenues in qtr are performing at high end of previous expectations<\/o:p><\/p>\n

·     <\/span><\/span><\/span>JKS <\/span><\/b>+6%; as the U.S. International Trade Commission (ITC<\/span>) issues favorable final determination concluding JinkoSolar’s products do not infringe a Hanwha Q CELLS patent<\/o:p><\/p>\n

·     <\/span><\/span><\/span>LIVX<\/span><\/b> +13%; to launch pay-per-view live stream music events, virtual tours and digital ticketing to drive new revenue-share model for artists<\/o:p><\/p>\n

·     <\/span><\/span><\/span>PBPB<\/span><\/b> +19%; after saying same-store sales have improved in eight of the last nine weeks, progressing from a decline of 68% to a decline in the mid-20% range<\/o:p><\/p>\n

·     <\/span><\/span><\/span>UAL<\/span><\/b> +6%; as airlines extend gains, broadly higher on economic recovery optimism, along with more data showing travel demand picking up<\/o:p><\/p>\n

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

·     <\/span><\/span><\/span>CMTL <\/span><\/b>-11%; shares fell on mixed results as EPS topped views but sales of $135.1M missed the $146.5M estimate<\/o:p><\/p>\n

·     <\/span><\/span><\/span>DVN<\/span><\/b> -3% as energy stocks pare recent gains, with sector among top decliners in the S&P early<\/o:p><\/p>\n

·     <\/span><\/span><\/span>ESS<\/span><\/b> -2%; shares of REITs UDR<\/span>, ARE<\/span>, PSA<\/span>, MAA<\/span><\/b> all down over 2% in the S&P 500 index<\/o:p><\/p>\n

·     <\/span><\/span><\/span>MIK<\/span><\/b> -12% after posting a surprise quarterly loss as Q4 net sales fell 27% to $799.9M on store closures, below the $1.03B est. and comp sales dropped over 27% for the quarter vs. -2.9% YoY<\/o:p><\/p>\n

·     <\/span><\/span><\/span>SJM <\/span><\/b>-3%; reports sales jumped 10% in FQ4 driven by an 11 percentage point contribution from higher volume\/guides year EPS $7.90-$8.30 vs. $8.46 est<\/o:p><\/p>\n

·     <\/span><\/span><\/span>SMAR <\/span><\/b>-19%; as after Q1 results above expectations, supported by strong large customer activity and a net retention rate of 132% but billings disappointed, sending shares lower<\/o:p><\/p>\n

Syndicate:<\/o:p><\/p>\n

·     <\/span><\/span><\/span>Clarivate Analytics (CCC<\/span>) 48M share Secondary priced at $22.50<\/o:p><\/p>\n

·     <\/span><\/span><\/span>Glu Mobile (GLUU<\/span>) 15M share Secondary priced at $9.25<\/o:p><\/p>\n

·     <\/span><\/span><\/span>NMI Holdings (NMIH<\/span>) 13.8M share Spot Secondary priced at $14.50<\/o:p><\/p>\n

·     <\/span><\/span><\/span>Twist Bioscience (TWST<\/span>) $100M Spot Secondary priced at $33.00<\/o:p><\/p>\n

·     <\/span><\/span><\/span>ZoomInfo (ZI<\/span>) 44.5M share IPO priced at $21.00<\/p>\n<\/div>\n

<\/p>\n