Week end brief.

 

 Economic reports in the week ahead include the Empire State Manufacturing Survey, a housing starts update and PMI prints. Initial jobless claims will also be watched to see if the number stays below 1M for a second consecutive week. The retail sector takes over the earnings calendar, with Walmart (NYSE:WMT), Target (NYSE:TGT), Home Depot (NYSE:HD) and Lowe's (NYSE:LOW) all expected to show strong Q2 sales growth. Meanwhile, traders in the energy sector will be monitoring a committee of OPEC+ that oversees the implementation of output curbs and the weekly API oil inventory report. Once again, gold (XAUUSD:CUR) will be watched closely after its first down week in over two months. Credit Suisse sees a record run for the precious metal to $2,500 an ounce, while in a humorous spin, the Winklevoss twins are convinced that Bitcoin (BTC-USD) is a better investment due to the prospect of Elon Musk mining gold-laden asteroids. There might be a pair trade in there somewhere.

_______---------------------

Notable Research alls For Friday, August 14

  • BofA Securities and Morgan Stanley upgraded Tesla (TSLA) to Hold-equivalent recommendations. BofA highlighted the company's compelling brand and improving execution as impetus for their upgrade, though admittedly they remain skeptical that TSLA will be the dominant EV automaker in the long-run. Morgan Stanley moves value from their battery business into their base case scenario.
  • Jefferies upgraded Marriott (MAR) and Hilton (HLT) to Buy noting the interactions between hotel owners and travelers are changing, most likely for the better. Firm is confident that efficiencies to the operating model should drive better returns for the companies and related owners as demand rebounds through 2021 and into 2022.
  • Oppenheimer upgraded Tencent Music (TME) to Outperform as they hold that investors may be overlooking the core music business.

  • The Benchmark Company downgraded Vroom (VRM) to Hold from Buy in light of Wednesday night's lower than expected unit pricing data as well as underwhelming unit and pricing guidance for the second half.
  • UBS started coverage on CrowdStrike (CRWD) with a Buy, $120 tgt as they feel the portfolio is well positioned, and foresee more upside ahead.


  • DA Davidson launched coverage on select retail names with 8 Buys and 5 Neutrals; specifically, they initiated coverage on the Retailing / Broadlines & Hardlines space with a positive view as retail survivors that have made it through the latest retail apocalypse are now well positioned in the new normal. Their Buy rated names include those that should take share as consumers "stay, play, earn and learn" from home (AZO, BBY, BJ, DKS, GO, LOW, TGT, WMT). They have NEUTRAL ratings on names that are either less well positioned, at least in the near term, or have run too far too fast and thus warrant a better entry point (AAP, COST, HD, ORLY, TSCO).


Closing Stock Market Summary

The S&P 500 finished flat on Friday and traded near its flat line all session. The Dow Jones Industrial Average increased 0.1%, while the Nasdaq Composite (-0.2%) and Russell 2000 (-0.1%) closed marginally lower. 

Within the S&P 500, no sector gained or lost more than 1.0%, but the cyclical groups did see modest gains following a batch of mostly positive economic data. The energy (+0.9%), industrials (+0.4%), financials (+0.3%), and materials (+0.2%) sectors outperformed, while the utilities sector declined 0.9%. 

Highlighting key economic reports, retail sales increased 1.2% in July (Briefing.com consensus 1.8%) and nonfarm labor productivity jumped 7.3% (Briefing.com consensus 3.5%) in the second quarter. 

In the latest coronavirus relief news, President Trump said he was ready to send $105 billion to states for pandemic resources and "additional money" to states to pay government workers. Note, Democrats are looking for $915 billion in funding for state and local governments. 

Separately, Reuters reported that Saturday's trade talks between U.S. and China have been delayed due to a scheduling conflict, but both sides are still expected to recommit to a deal. China reportedly increased purchases of U.S. oil shipments. 

On the corporate front, McKesson (MCK 158.67, +6.48, +4.3%) partnered with the U.S. government for COVID-19 vaccine distribution, Applied Materials (AMAT 67.62, +2.55, +3.9%) provided positive quarterly results and upbeat guidance, and Tesla (TSLA 1650.71, +29.71, +1.8%) was upgraded to the equivalent of a Hold rating at BofA Securities and Morgan Stanley. 

Most U.S. Treasuries finished slightly higher. The 2-yr yield declined three basis points to 0.13%, and the 10-yr yield declined one basis point to 0.71%. The U.S. Dollar Index declined 0.3% to 93.10. WTI crude futures declined 0.5%, or $0.21, to $42.05/bbl. 

Reviewing Friday's big batch of economic data:

  • Retail sales increased 1.2% in July (Briefing.com consensus 1.8%) after increasing a revised 8.4% (from 7.3%) in June. Excluding autos, retail sales rose 1.9% (Briefing.com consensus 1.4%) after increasing a revised 8.3% (from 7.3%) in June.
    • The key takeaway from the report is that while sales were shy of expectations in July, the upward revision to figures from June makes the report less disappointing on the whole.
  • Nonfarm business sector labor productivity jumped 7.3% in the second quarter (Briefing.com consensus 3.5%) after a revised 0.3% decrease (from -0.9%) in the first quarter. Unit labor costs increased 12.2% in the second quarter (Briefing.com consensus 5.5%) after increasing a revised 9.8% (from 5.1%) in the first quarter.
    • The key takeaway from the report is that while productivity improved significantly in Q2, the overall level of activity was sharply lower due to coronavirus-related shutdowns and restrictions. If sustained, the jump in labor costs could lead to some cost-push inflation.
  • Total industrial production increased 3.0% in July (Briefing.com consensus 2.9%) following a revised 5.7% increase (from 5.4%) in June. The capacity utilization rate improved to 70.6% (Briefing.com consensus 70.0%) from a revised rate of 68.5% (from 68.6%) in June.
    • The key takeaway from the report is that while total industrial production remains well below levels from a year ago, the production of motor vehicles and parts has largely recovered.
  • The preliminary University of Michigan Index of Consumer Sentiment for August ticked up to 72.8 (Briefing.com consensus 70.5) from the final reading of 72.5 for July.
    • The key takeaway from the report is that there was little overall change from the preceding period. The University of Michigan provided a table showing consumer expectations by political affiliation, which showed a stark difference in expectations among those who identify as Republican (97.4) and Democrat (45.0). Expectations of respondents identifying as Independent were essentially in the middle (66.7).
  • Business inventories decreased 1.1% in June (Briefing.com consensus -1.3%) following an unrevised 2.3% decline in May.

Looking ahead, investors will receive the Empire State Manufacturing Survey for August, the NAHB Housing Market Index for August, and Net Long-Term TIC Flows on Monday.






_____________________________________________________________________________

T


Unusual Options Activity

The following options are exhibiting notable trading, potentially indicating changing sentiment toward the underlying stocks, and/or potentially representing positioning for increased volatility.

Bullish Call Activity:

  • GOCO Aug 17.5 calls are seeing interest with the underlying stock up 5% (volume: 2000, open int: 60, implied vol: ~112%, prev day implied vol: 81%).
  • LUV Aug 34.5 calls (volume: 2820, open int: 660, implied vol: ~63%, prev day implied vol: 49%). Co is confirmed to report earnings October 22 before the open.
  • KTOS Aug 20 calls are seeing interest with the underlying stock up 4% (volume: 10.3K, open int: 90, implied vol: ~60%, prev day implied vol: 55%). Co is expected to report earnings early November.

Bearish Put Activity:

  • AEO Aug 11 puts (volume: 1810, open int: 7840, implied vol: ~79%, prev day implied vol: 74%). We noted activity in the Aug 12 calls earlier this week (see 8/11 13:14). Co is expected to report earnings nearly September.
  • ELAN Jan21 27 puts are seeing interest with the underlying stock up 6% (volume: 10.2K, open int: 0, implied vol: ~44%, prev day implied vol: 40%). Activist speculation circulated earlier today. Co is expected to report earnings early November.

Sentiment: The CBOE Put/Call ratio is currently: 0.68, VIX: (22.05, -0.08, -0.4%).
August 21 is options expiration -- the last day to trade August equity options.
*Please use the Talk to Us link at the top of the page to provide feedback on this comment as well as the


Earnings spotlight: 

JD.com (NASDAQ:JD) on August 17; Walmart (WMT), Home Depot (HD), Kohl's (NYSE:KSS), Advance Auto Parts (NYSE:AAP) and Toll Brothers (NYSE:TOL) on August 18; Lowe's (LOW), Target (TGT), TJX Companies (NYSE:TJX), Nvidia (NASDAQ:NVDA) and L Brands (NYSE:LB) on August 19; Alibaba (NYSE:BABA), BJ's Wholesale (NYSE:BJ), Estee Lauder (NYSE:EL), and Ross Stores (NASDAQ:ROST) on August 20 and Buckle (NYSE:BKE), Foot Locker (NYSE:FL) and Deeere (NYSE:DE) on August 21.

IPO watch: Expected IPO pricings for next week include Harmony Biosciences (HRMY) and INHIBRX (INBX) on August 19. Also on the IPO calendar, the IPO lockup period expires for Windtree Therapeutics (OTCQB:WINT) on August 18. Quiet period expirations arrive on Jamf (NASDAQ:JAMF), Skillful Craftsman Education (NASDAQ:EDTK) and Montrose Environmental (NYSE:MEG) on August 17 - as well as Nurix Therapeutics (NASDAQ:NRIX), Inozyme Pharma (NASDAQ:INZY) and Annexon (NASDAQ:ANNX) on August 18. Go deeper: Catch up on all the latest IPO news.

 

M&A tidbits: The tender offer on the Madison Dearborn Partners buyout of Benefytt Technologies (NASDAQ:BFYT) is on August 19. M&A talk is swirling around Cineworld (OTCPK:CNNWF) and potential Zynga (NASDAQ:ZNGA) target Glu Mobile (NASDAQ:GLUU).

Projected dividend changes (quarterly): Intuit (NASDAQ:INTU) to $0.61 from $0.53, Community Bank Systems (NYSE:CBU) to $0.42 from $0.41.

Kandi event: Kandi Technologies (NASDAQ:KNDI) is hosting a live virtual event on August 18 to officially kick off sales of the Kandi K27 and K23 models being sold in the U.S. Customers can reserve the EV models with a fully-refundable $100 deposit, with delivery expected in Q4. Kandi says its mission is to make electric cars accessible to all through what it calls Auto EVolution. The company has teased a surprise emcee for the event that will feature an exclusive look at the sleek design and advanced technology features of K27 and K23 models. Kandi says it will also unveil additional information to consumers, dealers and other stakeholders. Shares of Kandi are up 200% over the last 90 days, despite the company recently reporting a 20% drop in Q2 revenue.

Business updates: Corteva (NYSE:CTVA) is hosting an investor update on August 17 with the company's CEO and CFO. On Semiconductor (NASDAQ:ON) has a strategic business update call set for August 18. FormFactor's (NASDAQ:FORM) Analyst Day event is scheduled for August 18 and AMERCO (NASDAQ:UHAL) has a virtual analyst and investor meeting set for August 20. 

Sales updates: Progressive Corporation (NYSE:PGR) will issue a July sales report on August 19. Raymond James (NYSE:RJF) will post an operating data update on August 19 that will include assets under management, loan growth and net interest margin data.

Healthcare watch: FDA action dates arrive in the week ahead for Galapagos NV (NASDAQ:GLPG) and licensee Gilead Sciences' (NASDAQ:GILD) filgotinib for rheumatoid arthritis and BioMarin Pharmaceutical's (NASDAQ:BMRN) gene therapy Roctavian for Hemophilia A is August 21. Companies releasing abstracts with data on August 20 for the European Association for the Study of the Liver meeting later in the month include NGM Biopharmaceuticals (NASDAQ:NGM), Assembly Biosciences (NASDAQ:ASMB), Gilead Sciences (GILD), Enanta Pharmaceuticals (NASDAQ:ENTA), Vir Biotechnology (NASDAQ:VIR), Alnylam Pharmaceuticals (NASDAQ:ALNY), Viking Therapeutics (NASDAQ:VKTX), Novartis (NYSE:NVS), AstraZeneca (NYSE:AZN) and Adaptimmune Therapeutics (NASDAQ:ADAP), Eiger BioPharmaceuticals (NASDAQ:EIGR), Viking Therapeutics (VKTX) and Mirum Pharmaceuticals (NASDAQ:MIRM). 

Conferences rundown: The Raymond James SMID Cap Growth Conference running from August 18-19 includes presentations from EverQuote (NASDAQ:EVER), RealReal (NASDAQ:REAL), Shift4 Payments (NYSE:FOUR), Envestnet (NYSE:ENV), nLIGHT (NASDAQ:LASR) and Limelight Networks (NASDAQ:LLNW). The Needham Medtech Virtual Conference includes presentations by LeMaitre Vascular (NASDAQ:LMAT), AtriCure (NASDAQ:ATRC), InMode (NASDAQ:INMD), CryoLife (NYSE:CRY), Invacare (NYSE:IVC), GenMark Diagnostics (NASDAQ:GNMK) and Merit Medical Systems (NASDAQ:MMSI). In the energy industry, the virtual version of the Enercom Oil & Gas Conference will include presentations by Cornstock Resources (NYSE:CRK), GeoPark (OTC:GRPK), SM Energy (NYSE:SM), Goodrich Petroleum (NYSEMKT:GDP), Earthstone Energy (NYSE:ESTE), Sundance Energy (NASDAQ:SNDE), Penn Virginia (PVA), Ring Energy (NYSEMKT:REI), Cimarex Energy (NYSE:XEC) and DCP Midstream (NYSE:DCP). Finally, the JMP Securities Cannabis Technology Forum features sessions with execs from Akerna Corp. (NASDAQ:KERN), Driven Deliveries, Inc. (OTCQB:DRVD) and Helix Technologies (OTCQB:HLIX). Go deeper: 

Movies: AMC Entertainment (NYSE:AMC), Cinemark (NYSE:CNK), Regal Entertainment (NYSE:RGC) and Marcus (NYSE:MCS) will open some theaters next week as the industry goes for a proof-of-life test during the pandemic. The chains are planning on instituting safety measures like enhanced cleaning, fresh-air replacement and staggered showtimes with limited capacity. The box office tallies won't be as important as building some confidence with moviegoers in front of bigger releases like Christopher Nolan's Tenet during Labor Day weekend. Companies likes National CineMedia (NASDAQ:NCMI) and IMAX (NYSE:IMAX) will also be hoping for a steady return of theater business.

Product watch: On Semiconductor (ON) is introducing its Voice User Interface solution for local and cloud during a webinar. The company says the solution can provide advanced voice triggering, voice recognition and processing functions, with ultra-low power consumption.

 

Data updates: Packaging shipment and pricing data is due in for containerboards and boxboards. Sonoco Products (NYSE:SON), Greif (NYSE:GEF), International Paper (NYSE:IP), and WestRock Company (NYSE:WRK) are some names that could move off the pricing report. Appliance shipments data is due in from the Association of Home Appliance Manufacturers. Shares of Whirlpool rose last month when the shipments data turned positive.

Barron's mentions: High-profile stock splits by Apple and Tesla has Barron's wondering what S&P 500 Index companies might be the next to split their shares. Of note, S&P companies with share prices over $1,000 include Amazon (NASDAQ:AMZN), Alphabet (NASDAQ:GOOGL), AutoZone (NYSE:AZO), Chipotle (NYSE:CMG), Booking Holdings (NASDAQ:BKNG) and NVR (NYSE:NVR) all have shares prices over $1,000. Whether or not it defies logic, holders of shares that split generally make money in the short term, notes the publication. Remember the trade war? Cybersecurity specialists Fortinet (NASDAQ:





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