Today’s Big Picture

All eyes will be on tonight’s presidential debate as investors prepare themselves for what is likely to be a feisty exchange. Equities closed mixed in Asia with Hong Kong’s Hang Seng falling 0.9% while China’s Shanghai Composite gained 0.2% and its Shenzhen Component rose 1.1%. South Korea’s Kospi also gained on the day, closing up 0.9%, Japan’s Nikkei squeezed out a slight gain of 0.1%, but Australia’s S&P/ASX 200 closed flat.

By midday trading the majority of the European indices were in the red for the day and U.S. equity futures point to little change at the open from yesterday’s close.

Much like yesterday, there are few corporate earnings reports while the U.S.-facing economic data today will have little influence on GDP expectations for the soon-to-be-over September quarter. Hopes for some forward progress on a fiscal stimulus deal appear to be once again dashed as Treasury Secretary Steven Mnuchin and Senate Republicans said the proposed $2.2 trillion stimulus bill announced by House Democrats yesterday is too much to spend. 

We suspect this will add to the barbs to be had at tonight’s first 2020 presidential debate, the outcome of which is likely to influence expectations for both the coming election and post-election policies. Get your popcorn and beverage of choice ready – plenty of fireworks are all but guaranteed. We here at Tematica are partial to Aviation Gin HomeschoolingEdition. Ah 2020, the gift that keeps on giving.

Data Download

International Economy

South Korea’s recovery is slowing. Industrial Production fell -0.7% MoM in August after a 1.9% gain in July to sit 3.0% below where it was a year prior versus expectations for a decline to just -2.8% YoY. Manufacturing production is down 3.1% YoY and Construction Output is down 9.4% YoY. Retail sales rose 3.0% MoM and are now up 0.3% YoY.

Inflation remains elusive in Japan with Tokyo CPI rising just 0.2% YoY in September and core falling -0.2% YoY.

Consumer Confidence in France remained flat a 95 versus expectations for a decline to 94.

Retail Sales in Spain rose 1.8% MoM in August and are now down just 2.4% YoY, an improvement from July’s -3.9%YoY. Inflation remains elusive here as well with the Inflation Rate -0.4% YoY in September and the Harmonized Inflation Rate -0.6% YoY.

It is the same story of weak Inflation in Italy with the Producer Price Index (PPI) up just 0.1% MoM in August, slowing from the 0.2% increase in July, and down 3.0% YoY.

Overall in the Euro Area sentiment is improving, but remains pretty “meh,” rising to its highest post-pandemic level, but with the smallest increase in five months. Economic Sentiment rose to 91.1 in September from 87.5 in August, besting expectations for an increase to 89. Consumer Confidence rose to -13.9 from -14.7. Industrial Sentiment rose to -11.1 from -12.8. Services Sentiment rose to -11.1 from -17.2.

Domestic Economy

Yesterday the Dallas Fed’s Manufacturing Activity Index came in stronger than expected. Combining those results with the other four that have already reported, the composite ISM for the five is in the 91st percentile of all readings, and every current and outlook reading improved sequentially.

Later today the Conference Board releases its Consumer Confidence Index report for September which is expected to see an increase for the headline index to 90 from 84.8 in August but still below the post-pandemic high of 91.7 in July. This morning will bring the Goods Trade Balance for August, Wholesale Inventories in August, the S&P/Case-Shiller Home Price report, and the usual weekly Redbook retail sales report.

Markets

Yesterday was the third consecutive day of gains for the major equity indices. The Nasdaq 100 and Nasdaq Composite both gained 1.9%, the S&P 500 1.6%, and the NYSE Composite 1.5%. Yesterday’s Merger Monday helped the struggling small-cap indices, with the S&P 600 gaining 2.8% and the Russell 2000 2.4%. Recent cloud IPO Snowflake (SNOW) gained 9.4% to close near its all-time closing high.

Stocks to Watch

Papa John’s (PZZA) reported September system-wide international restaurant comps of 23.3% and system-wide North American restaurants Sept comps were 18.4%. Of the company’s approximately 2,100 international franchised stores, approximately 90 are temporarily closed, primarily in Latin America and Europe, in accordance with government policies. In North America, almost all traditional restaurants remain open and fully operational.

Big Lots (BIG) issued upside guidance for its October quarter with EPS of $0.50-$0.70 vs. the $0.21 consensus with comparable sales for the quarter up in the mid-teens.

McCormick & Co. (MKC) reported better than expected top and bottom-line results for its August quarter but served up mixed guidance. The spice, seasoning, and extract company expects FY2020 revenue to rise at the upper end of 4%-5% vs. +3.44% consensus and adjusted EPS to be in the range of $5.64-$5.72 vs. consensus of $5.76. The company’s board approved a 2-for-1 stock split effective November 20.

Shares of Abbott Laboratories (ABT) moved higher in aftermarket trading following a late-day news conference at which President Trump said the federal government would start distributing rapid COVID-19 tests that it ordered from Abbott. Per Trump, the U.S. will start distributing 6.5 million rapid tests this week, with a plan to get 100 million tests it ordered out to the states by year-end,

Yesterday Uber (UBER) got an early Christmas present when a judge in the UK ruled that the company could get back its license to operating in London, sending shares up 3.0%. Good news, but Uber never actually stopped operating in London as it was allowed to continue its operations with appealing the revocation. Uber shares are up 19.6% year-to-date versus Lyft (LYFT) shares that are down 34.8%. This morning Bloomberg reports Uber is considering a purchase of Daimler AG (DAI:GR) and BMW AG’s (BMW:GR) ride-hailing joint venture Free Now, a deal that could boost its market share in Europe and Latin America.

Cybersecurity company McAfee (MCFE) filed for an IPO and is expected to list on the Nasdaq under the symbol “MCFE.” In 2019 the company generated revenue of $2.64 billion with a $236 million net loss and adjusted EBITDA for $799 million. Among its enterprise customer list, the company had 86% of the Fortune 100, 78% of the Fortune 500, and over 61% of the Global 2000.

Molina Healthcare (MOH) announced it will acquire Affinity Health Plan for approximately $380 million, which represents less than 30% of premium revenues for the twelve months ended July 31, 2020.

Healthcare and workforce services company Providence Service (PRSC) will move into the Home Care Segment with its $575 million acquisition of Simplura Health Group. Simplura provides over 20 million hours of non-medical personal care annually to primarily Medicaid patient populations.

ACI Worldwide (ACIW) and Mastercard (MA) announced that they will partner to provide a wide range of real-time payment solutions globally. 

Polaris (PII) signed a 10-year partnership with Zero Motorcycles that will lead to the electrification of its snowmobiles, ATVs, and side-by-sides. The agreement is a part of rEV’d up, Polaris’ long-term strategy to position the company as the leader in powersports electrification. Through rEV’d up, Polaris aims to offer customers an electric vehicle option within each of its core product segments by 2025, with the first vehicle from the Zero-Polaris partnership debuting by the end of 2021.

Oil and gas company Total (TOT) will acquire “Blue Point London” from the Bolloré Group, the largest electric vehicle charging network citywide, which includes more than 1,600 on-street charge points. The acquisition is in line with Total’s goal of operating more than 150,000 electric vehicle charge points by 2025.

Walmart (WMT) is reportedly in talks with Tata Group for a potential $20-25 billion investment in the Indian company’s upcoming super-app business that would offer products and services including food delivery and bill payment.

Internet service provider j2 Global (JCOM) will acquire RetailMeNot for approximately $420 million from Vericast

Walt Disney (DIS) has sold TrueX, an ad company it absorbed as part of its $71.3 billion acquisition of 21st Century Fox assets, to Gimbal, a company that provides location-based technology and ad services. Financial terms of the deal weren’t announced.

After today’s market close, Micron (MU) and Progress Software (PRGS) will report their quarterly results. Investors looking to get the nitty-gritty on those reports and the others to be had this week should visit Nasdaq’s earnings calendar page

On the Horizon

    • September 30: Caixin China General Manufacturing PMI (September), ADP Employment, GDP, Personal Consumption, MNI Home Sales, Pending Home Sales
    • October 1: Personal Spending, PCE, Initial Jobless Claims, Bloomberg Comfort, Markit Manufacturing PMI, ISM Manufacturing, Construction Spending
    • October 2: Nonfarm Payrolls, Unemployment Rate, Average Hourly Earnings, University of Michigan Sentiment, Factory Orders, Durable Goods, Capital Goods

Thought for the Day

“Things won are done, joy’s soul lies in the doing.” William Shakespeare, a bloke who could seriously turn a phrase.

Disclosures

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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