Morning Briefing - Reported progress on relief bill lifting equity futures

U.S. equity index futures are pointing to another higher start on Wall Street, with the S&P 500 futures trading 21 points, or 0.6%, above fair value amid positive stimulus, vaccine, and earnings news. After reports yesterday indicated that negotiations surrounding the next coronavirus relief bill were deadlocked, Treasury Secretary Mnuchin later said that the goal was to reach an agreement by the end of this week as both sides have reportedly started to make concessions. On the corporate side, Walt Disney (DIS 125.18, +7.90, +6.7%) topped earnings estimates and added 60.5 million Disney+ subscribers while Novavax (NVAX 193.85, +36.68, +23.3%) stepped up with promising data from its Phase 1/2 trial of its COVID-19 vaccine candidate. In economic data, investors will receive the ADP Employment Change Report for July (Briefing.com consensus 1.600 million) at 8:15 a.m. ET and the Trade Balance report for June (Briefing.com consensus -$49.3 billion) at 8:30 a.m. ET. The weekly MBA Mortgage Applications Index declined 5.1% following a 0.8% decline in the prior week. U.S. Treasuries have edged lower on the longer-end of the curve. The 2-yr yield is flat at 0.11%, while the 10-yr yield is up two basis points to 0.53%. The U.S. Dollar Index is down 0.5% to 92.90. WTI crude futures are up 4.3%, or $1.78, to $43.44/bbl. In U.S. Corporate news: Walt Disney (DIS 125.18, +7.90): +6.7% after beating earnings estimates, adding 60.5 million Disney+ subscribers, and announcing "Mulan" will now debut in theaters on August 21 and on Disney+ on Sept. 4 for $30. Novavax (NVAX 193.85, +36.68): +23.3% after providing positive data from its Phase 1/2 trial of its COVID-19 vaccine candidate. CVS Health (CVS 67.34, +2.36): +3.6% after beating top and bottom-line estimates and raising its FY20 EPS above consensus. Beyond Meat (BYND 132.44, -9.81): -6.9% despite reporting in-line EPS results and beating revenue estimates. The company experienced a significant slowdown in its foodservice business due to COVID-19. The precious metals rally gathered pace overnight as spot gold rose as much as 0.6% to a record $2,031.14 per ounce, while spot silver advanced as much as 1.3% to $26.3473/oz. The printers are running... Investors are counting on even more spending in the U.S. to combat the pandemic's fallout as White House negotiators work "around the clock" to reach a stimulus deal by the end of the week, while markets also latched on to comments from San Francisco Fed President Mary Daly that the U.S. economy will need more support than initially thought. Search for a new reserve currency? Goldman Sachs says gold may climb to $2,300/oz. and RBC Capital puts the odds of a rally to $3,000/oz. at 40%. ly continues U.S. stock index futures are looking to extend gains as traders await progress from Washington on a new coronavirus aid package. "I think the expectation for the market is that we are going to get that stimulus," Ally Invest's Lindsay Bell told CNBC. Better-than-expected earnings from Disney (NYSE:DIS) are also helping sentiment (see below), while closely-watched Moderna (NASDAQ:MRNA) will report before the opening bell. On the trade front, reports suggest that U.S. trade representative Robert Lighthizer and Chinese Vice Premier Liu will meet in mid-August to discuss the Phase One trade deal between the U.S. and China. 100 million streaming subscribers While Disney (DIS) continued to feel the impact of the COVID-19 pandemic on sectors like its parks business, where revenue tanked 85% from a year earlier, CEO Bob Chapek announced a new streaming service that will launch in fiscal 2021 under the Star brand acquired from Fox (NASDAQ:FOX). In total, Disney now has 100M paid subscribers across its streaming services, which include Disney+, Hulu and ESPN+. Disney+ reached 60.5M paid subscribers, hitting a goal of 60M-90M subscriptions by 2024, four years early. Go deeper: Disney call: Cinemas slip on 'Mulan' news. Wild ride for Novavax At one point in after-hours trading on Tuesday, Novavax (NASDAQ:NVAX) was down 32% after STAT News reported that eight participants in a Phase 1 clinical trial evaluating COVID-19 vaccine candidate NVX-CoV2373 had to be hospitalized. That data was later found to be erroneous and shares are now up 17% premarket (the stock has rallied 3,800% YTD). Novavax's two-injection regimen when administered with its immune-boosting technology generated antibody responses that were four times higher than those seen in people who had recovered from the disease. Beirut blast Lebanon is eyeing a state of emergency following a massive explosion that rocked Beirut with the force of a 3.5 magnitude earthquake on Tuesday and caused widespread damage across the capital. At least 100 people were killed and more than 4,000 wounded, while local officials linked the blast to some 2,750 tons of confiscated ammonium nitrate that were being stored at a port warehouse for the past six years. It's been a rough ride for the country's economy. Lebanon's GDP fell 6.9% in 2019, while the Lebanese pound has lost over 60% of its value in just the past month, and 80% of its value since October. Opioid epidemic The U.S. Department of Justice is demanding OxyContin maker Purdue Pharma pay as much as $18.1B in penalties as part of its bankruptcy reorganization plan, WSJ reports. On the civil side, the DOJ is seeking $2.8B - which could be tripled under the law - for tax dollars spent battling the U.S. opioid epidemic, as well as kickbacks to doctors and pharmacies and transferring cash to hide money from creditors. On the criminal side, federal prosecutors want Purdue to pay a $6.2B fine and the forfeiture of potentially $3.5B more over marketing and distribution that violated criminal statutes including anti-kickback laws, misbranding under the Food, Drug and Cosmetic Act and conspiracy. Tale of two companies Sir Richard Branson plans to fly on a Virgin Galactic (NYSE:SPCE) spaceship next year after the company settled on an early 2021 date for its first passenger flight. That assumes both demonstration flights go as planned in the fall and yield the "expected results." Meanwhile, Virgin Atlantic is seeking Chapter 15 bankruptcy protection in the Southern District of New York as it tries to nail down a £1.2B rescue plan. Under the proposal, Virgin Group will retain its 51% controlling stake in the airline, while partner Delta (NYSE:DAL) will continue to hold the remaining 49%. Meet the teenager allegedly behind the Twitter hack Graham Ivan Clark, 17, of Tampa, Fla., convinced a Twitter (NYSE:TWTR) employee that he was a co-worker, according to prosecutors, and seized control of a phone number via SIM-swapping. He also set up several fake phishing pages, including one that resembled the company’s Okta login portal, a destination used for securely logging into company systems. Once inside, Clark, who entered a not-guilty plea in court Monday, allegedly gained the ability to bypass Twitter's security protections, setting the stage for an hourslong hack on July 15 that held hostage the main communications tool of some of the most powerful people on the planet. More misconduct One of the most prominent trade secret cases in recent years has come to a close as Anthony Levandowski was sentenced to 18 months in prison (his incarceration will be delayed until after the COVID-19 pandemic). Levandowski had been a key engineer at Google's (GOOG, GOOGL) Waymo before starting his own self-driving truck company called Otto. The latter was eventually bought by Uber Technologies (NYSE:UBER), where he became the head of its self-driving unit, but Levandowski eventually pleaded guilty to taking thousands of files from his former employer when he left in 2016. What else is happening... Fed is expected to commit to push inflation higher. Kodak (NYSE:KODK) reportedly under SEC investigation over drug deal disclosure. Ford (NYSE:F) elevates COO Jim Farley to CEO position. Booking Holdings (NASDAQ:BKNG) to lay off 25% of employees in pandemic measure. Another delay for Walmart's (NYSE:WMT) same-day delivery service. EU launches probe into Google's (GOOG, GOOGL) Fitbit (NYSE:FIT) acquisition. Tuesday's Key Earnings Activision Blizzard (NASDAQ:ATVI) -1.4% AH despite strong Q2, upbeat guidance. Beyond Meat (NASDAQ:BYND) -9.9% AH weighed down by heavy costs. Nikola (NASDAQ:NKLA) -13.4% AH reporting wider loss, light on details. Square (NYSE:SQ) +9.6% AH posting a 64% jump in revenue. Twilio (NYSE:TWLO) -4.1% AH despite beating expectations. Walt Disney (DIS) +6.1% AH reporting 100M paid streaming subscribers. Today's Markets In Asia, Japan -0.3%. Hong Kong +0.6%. China +0.2%. India -0.1%. In Europe, at midday, London +1%. Paris +0.8%. Frankfurt +0.8%. Futures at 6:20, Dow +0.7%. S&P +0.5%. Nasdaq +0.4%. Crude +2.5% to $42.72. Gold +1.7% to $2056.20. Bitcoin +1.4% to $11384. Ten-year Treasury Yield +2 bps to 0.53% Today's Economic Calendar 7:00 MBA Mortgage Applications 8:15 ADP Jobs Report 8:15 International Trade 9:45 PMI Services Index 10:00 ISM Non-Manufacturing Index 10:30 EIA Petroleum Inventories 5:00 PM Fed's Mester: Economic Outlook UPGARADES AND DOWN GRADES Walt Disney (DIS) was upgraded to Outperform at Credit Suisse and to Buy at Guggenheim following earnings. Cowen upgraded Emerson (EMR) to Outperform from Market Perform; they highlighted EMR's many investment merits: "knowable" demand headwinds, a well-defined restructuring (R/S) plan under proactive management, and a high dividend buttressed by strong liquidity. Over the next year, comps will be easy, and CEO Dave Farr will transition out, likely to a successor who will become obvious via performance through this downturn. They expect the stock to grind up to their $70 PT. JP Morgan upgraded Valvoline (VVV) to Overweight from Neutral; firm believes that after a longer period of slower expansion, the company is reaching an inflection point in its growth rate. BofA Securities downgraded Apple (AAPL) to Neutral from Buy with a new $470 tgt (up from prior $420) om 28x C21E EPS of $17.07. With shares already trading at the highest premium to SPX in 10 years and consumer staples multiples, firm is concerned about the following risks to C21 ests (1) Product gross margin (GM) pressure from higher BOM costs for the 5G iPhones, (2) Unit volume risk in case of higher ASP to compensate for GM pressure, (3) Tough compares in 2021 from an unsustainable trajectory (30% growth) of high margin App Store growth, (4) Pressure on services GM from content amortization costs, (5) Lower impact from share buybacks, and (6) potential risk of a higher tax rate in the event of a democratic win in the US elections in Nov. Credit Suisse downgraded Tyson Foods (TSN) to Neutral from Outperform with a new $68 tgt (from prior $75) on expectations for another weak year ahead for the company's Chicken & Prepared Foods divisions due to oversupplied conditions in the Chicken industry and weak demand in the foodservice channel. Credit Suisse also downgraded Sanderson Farms (SAFM) to Neutral; firm's thesis for the past several months had been that capacity rationalization in the chicken industry would tighten supplies and lead to stronger pricing power for chicken producers in the fall negotiating season. However, commodity chicken values are falling because growth in the Retail channel has not been sufficient to offset the declines in foodservice and export sales haven't been strong enough to boost dark meat values. Jefferies started coverage of Brinker (EAT) with a Buy, $34 tgt; firm thinks balance sheet/liquidity are improving and investors under-appreciate upside opportunity to EBITDA into C21/F22 from Chili's improved execution, off-premise business & meaningful share-gain opportunity as capacity landscape shifts.