The following are some of today's most notable large cap movers of interest ($10 bln - $200 bln market cap), ranked by % change (all stocks over 100K average daily volume).

Large Cap Gainers

• GSX (45.28 +5.99%): Continued volatility following last week's upside Q4 earnings press and amid ongoing coronavirus outbreak anxiety. Among recent items, co was mentioned this weekend in a Bloomberg report profiling the business impact of the coronavirus and associated school quarantines on various companies serving the Chinese education space, highlighting co's capabilities as an online provider. The stock today reaches new all-time highs.
• REGN (424.34 +5.26%): Gains to its highest levels since last March on above 3x average volume. Stat News today connected strength in the stock to safety concerns raised recently by the American Society of Retina Specialists in connection with Novartis' (NVS) Beovu, a competing product in the eye care space, which was last week approved by the European Commission as a treatment for wet AMD and which was previously approved for wet AMD by the FDA.
• GILD (72.82 +4.47%): Co's remdesivir was recently named by a World Health Organization officer as the only drug that seems to be showing real efficacy in treating the coronavirus.

Large Cap Losers

• RYAAY (79.06 -12.79%): Stoops to three-month lows as widespread concerns regarding coronavirus spread and disruption weigh on airlines and on the travel industry generally. The emergence of new cases of the virus in Italy raised outbreak concerns in Europe, causing industry companies that are heavily exposed to Europe to lag notably; fellow European airline company EasyJet also plunged in trading on the LSE to open the week. (Related: AAL, DAL...)
• GLPG (245.33 -10.47%): Downgraded to Underperform from Netural at BofA/Merrill, citing valuation and risk/reward, as the firm sees risk to the downside on the label/launch for filgotinib given the product's profile and competitive dynamics.
• NCLH (42.72 -9.05%): Downgraded to Hold at Argus, citing risk of coronavirus impact. Cruise lines generally underperform amid coronavirus concerns as the market continues to weigh the outbreak's disruption to global traffic patterns and leisure habits. At 52-week lows. (Related: CCL, RCL...)

Defensive Posturing Pressures Yields to Multi-Year Lows

• U.S. Treasuries began the week on a firmly higher note, pressuring yields to fresh lows for the year. The start of the new week was underscored by continued caution resulting from uncertainty associated with the spread of the coronavirus. The number of new cases in China continued slowing, but cases in South Korea approached 850 while the number of cases in Italy exceeded 200. The rising number of infections outside of China was behind today's defensive posturing due to continued uncertainty about how well supply chains will hold up through efforts to limit the spread of the disease. Treasuries hit session highs around 11:15 ET, pressuring the 10-yr yield to within a basis point of its record low from mid-2016 while the 30-yr yield hit a new record low of its own. Treasuries inched down from their highs in the afternoon, settling just below their best levels of the day. Gold touched its highest level in more than seven years before backtracking while the U.S. Dollar Index ended the day little changed at 99.31 after surrendering its overnight gain.
• Yield Check:
  • 2-yr: -9 bps to 1.26%
  • 3-yr: -9 bps to 1.22%
  • 5-yr: -10 bps to 1.22%
  • 10-yr: -9 bps to 1.38%
  • 30-yr: -8 bps to 1.84%

• News:
  • The number of reported coronavirus cases in China approached 77,500 with deaths nearing 2,600.
  • The IMF lowered its outlook for 2020 GDP growth in China to 5.6% from 6.0%.
  • A People's Bank of China vice governor hinted at another cut to the reserve requirement ratio.
  • Bank of Italy Governor Ignazio Visco said that two quarters of data are needed to understand the impact of the coronavirus, adding that the lack of a rebound over those two quarters should prompt fiscal stimulus.
  • Moody's affirmed France's Aa2 rating but lowered the outlook to Stable from Positive.
  • Germany's February ifo Business Climate Index ticked up to 96.1 from 96.0 (expected 95.3). February Current Assessment decreased to 98.9 from 99.2 (expected 98.6) while Business Expectations improved to 93.4 from 92.9 (expected 92.2).
• Commodities:
  • WTI crude: -3.6% to $51.40/ozt
  • Gold: +1.7% to $1676.70/ozt
  • Copper: -1.2% to $2.577/lb
• Currencies:
  • EUR/USD: UNCH at 1.0847
  • GBP/USD: -0.3% to 1.02915
  • USD/CNH: UNCH at 7.0393
  • USD/JPY: -0.7% to 110.75
• The Day Ahead:
  • 9:00 ET: December S&P Case-Shiller Home Price Index (Briefing.com consensus 3.2%; prior 2.6%) and February FHFA Housing Price Index (prior 0.2%)
  • 10:00 ET: February Consumer Confidence (Briefing.com consensus 132.0; prior 131.6)
• Treasury Auctions:
  • 13:00 ET: $40 bln 2-yr Treasury note auction results

There is notable weakness throughout the market today, as most stocks are trading lower on growth concerns attributed to the spread of the coronavirus outside of China. The exchanges, however, are a notable pocket of relative strength when compared to the S&P 500, which is down 2.8%.

• MarketAxess holdings (MKTX 343.35, +3.45, +1.0%): Bonds are in demand today, which is constructive for this provider of an electronic trading platform for fixed-income market participants
• CME Group (CME 210.00, +1.17, +0.6%): Regarded as a beneficiary of increased use of options and futures to insulate portfolios from further downside, and/or to position them for eventual rebound
• CBOE Group (CBOE 122.48, -0.13, -0.1%): Another beneficiary of increased use of options and futures to insulate portfolios from further downside, and/or to position them for eventual rebound
• Nasdaq, Inc. (NDAQ 115.09, -0.09, -0.1%): Most Nasdaq-listed stocks aren't doing well today, but they are being heavily traded which bodes well for company's trading and clearing operations
• Intercontinental Exchange (ICE 94.00, -0.75, -0.8%): Increased trading activity viewed as favorable for trading and clearing business

The following are some of today's most notable mid cap movers of interest ($2 bln - $10 bln market cap), ranked by % change (all stocks over 100K average daily volume).

Mid Cap Gainers

• UTHR (115.69 +8.16%): Announced that the INCREASE study of its Tyvaso Inhalation Solution in patients suffering from WHO Group 3 pulmonary hypertension associated with interstitial lung disease has met its primary efficacy endpoint of demonstrating improvement in six-minute walk distance; Tyvaso increased six-minute walk distance by 21 meters vs placebo after 16 weeks of treatment. Significant improvements were also observed in each of the study's secondary endpoints. Co plans to submit results to the FDA by mid-year in support of an efficacy supplement that is expected to result in revised labeling. Additionally, co and DEKA Research & Development Corp. announced receipt of an additional 510(k) clearance by the FDA related to the Unity Subcutaneous Delivery System for Remodulin Injection. This enables co to launch the system using drug reservoirs that have been prefilled by specialty pharmacies. The stock reaches its highest levels since last April.
• DAO (25.22 +5.79%): Sees volatility ahead of its Q4 earnings report, which will be issued following the close this Wednesday, February 26. Co's current advance sees it outpacing most other Chinese names; also providing an exception to general underperformance this afternoon is fellow online-oriented education industry company GSX Techedu (GSX).
• EQM (23.47 +3.9%): Gold and silver stocks see modest relative strength in contrast to a widespread retreat in the broader market. (Related: GFI, AU, VIRT...)

Mid Cap Losers

• KOS (4.1 -17.51%): Reported Q4 results; co topped consensus for EPS and revs (total revs +48.7% to $460.22 mln). Sales for the quarter amounted to 7.5 mln barrels of oil equivalent; total net production averaged approx. 65,200 barrels of oil equivalent per day. Co expects to spend approx. $325-375 mln in 2020, excluding activity in Mauritania and Senegal; in Mauritania and Senegal, total 2020 capital expenditure for co's approx. 30% working interest is expected to amount to $250 mln, which will be funded with proceeds from an ongoing farm-down process. Co expects total net production of circa 62-70 Mboed in 2020 from its operations in Ghana, the Gulf of Mexico, and Equatorial Guinea. Announced upcoming retirement of CFO Thomas P. Chambers, effective in May; Mr. Chambers, who has served in the role since November 2014, will be succeeded by current deputy CFO Neal D. Shah. At 52-week lows.
• DORM (65.5 -14.59%): Missed consensus for Q4 EPS and revs (fell 8% yr/yr to $239.6 mln). The net sales decline was driven primarily by an increase in customer return provisions primarily from new business wins, including a recently launched premium chassis program with a large national retail customer. Adj. gross margin declined to 32.8% vs 37.8% in the prior year quarter, due to increased customer return provisions and a charge related to historical underpayment of custom duties, as well as redundant overhead costs tied to the ramp up of production at co's new Portland, TN distribution facility. Guided FY20 EPS and revs below consensus; co's guidance excludes potential coronavirus-related supply chain disruptions. Co expects its results to improve throughout the year due to efficiencies at its new TN facility, expected new contract wins, and continued new product introductions. Drops to its lowest levels in more than a year.
• CRI (96.13 -13.19%): Reported below-consensus Q4 EPS on in-line revs (+1.3% yr/yr to $1.1 bln). Comparable retail sales rose over +2% during the November and December holiday period. Continued investments in the business and higher inventory-related costs weighed on profitability. Guided Q1 and FY20 below consensus. Co is closely monitoring the impact of the coronavirus threat; co plans to source approx. 15% of its products from China in 2020, and co's suppliers throughout Asia source a significant amount of fabric from China; as the impact of production delays has not yet been determined with certainty, co's guidance does not include any adjustments for potential coronavirus effects. At four-month lows.

• This Afternoon: AWR APY APLE ARLO AXGN BWXT CDEV CSOD PLOW EPR EVER FBM GH HALO HLIO HLX HTZ HPQ INTU ITRI KAMN KEYS KTOS MEDP MMSI NSA OII OKE PANW APTS PROS RCII RTRX SAIL SHAK TNDM THC TREX XHR
• Tomorrow Morning: AMT AMWD AVNS BMO BNS BCC CBRL DNR DEA NPO ETM FI FRPT FCN HD INSM ICPT IRDM LNTH TREE LGIH LL M MNK MANU PRFT PGTI PRIM RLGY RHP SRC STWD TRI BLD TA TZOO TUP USCR SLCA UNVR VCEL WBT WWW

• Apr Crude Oil futures fell $2.09 (-3.92%) to $51.29/barrel
• Apr Natural Gas $0.08 lower (-3.96%) at $1.841/MMBtu
• Apr RBOB Gasoline settled $0.05 lower (-3.04%) at $1.7076/gallon
• Apr Heating oil futures settled $0.08 lower (-4.54%) at $1.6052/gallon

Top 5:

• Verizon (VZ 58.28, +0.08, +0.2%): Domestic orientation, and attractive dividend yield (4.23%), affording stock a measure of relative strength in market worried about global growth slowdown
• Travelers (TRV 134.03, -1.13, -0.8%): Showing relative strength, along with some other P&C insurance companies, which have good earnings dependability and fairly recession-resistant businesses
• McDonald's (MCD 213.50, -2.37, -1.1%): A favored blue chip stock; won't be immune altogether from coronavirus impact, but solid balance sheet and good liquidity have raised stock's appeal in down market
• Merck (MRK 81.38, -0.96, -1.2%): Drug stocks showing some relative strength as market participants recognize their importance in efforts to find a coronavirus vaccine and treatment for affected patients
• Walmart (WMT 116.52, -2.06, -1.7%): Won't be immune from effects of coronavirus, but demand at Walmart seen as holding up relatively well in more challenging sales climate given its size and value orientation

Bottom 5:

• UnitedHealth Group (UNH 278.24, -23.19, -7.7%): Impressive showing by Senator Bernie Sanders in Nevada caucus, and his standing as the frontrunner in Democratic presidential race, has pressured the managed care stocks given his negative stance on private insurers
• American Express (AXP 127.83, -7.15, -5.3%): Worries about reduced travel and spending activity by consumers and business alike because of coronavirus are undercutting the stock
• Dow, Inc. (DOW 45.83, -2.47, -5.1%): Chemical company falling victim to global growth concerns that have hit deep cyclical stocks
• Walgreens Boots Alliance (WBA 49.12, -2.33, -4.5%): Company's European exposure is an added weight as investors worry about escalation in cases in Italy and potential for increased spread throughout the continent
• Walt Disney (DIS 133.27, -5.70, -4.1%): Under pressure along with other stocks that benefit from tourism/vacation activity

• Apr gold settled today's session up $26.80 (1.63%) at $1675.7/oz
• Mar silver settled today's session $0.34 higher (1.83%) at $18.87/oz
• Mar copper settled $0.03 lower (1.21%) at $2.573/lb

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:

• IAG Mar 4 calls (volume: 3760, open int: 570, implied vol: ~68%, prev day implied vol: 44%). Co is expected to report earnings early May.
• GT Weekly Feb28 11 calls (volume: 2570, open int: 80, implied vol: ~60%, prev day implied vol: 41%). Co is scheduled to present at a Wolfe Research conference on February 26. Co is expected to report earnings late April.
• NVS Mar 95 calls (volume: 4280, open int: 10, implied vol: ~26%, prev day implied vol: 18%). Co announces FDA and EMA filing acceptance of ofatumumab, a novel B-cell therapy for patients with relapsing forms of multiple sclerosis. Co is expected to report earnings late April.
  

Bearish Put Activity:

• KBW Regional Bank ETF (KRE) Mar 54 puts (volume: 22.3K, open int: 0, implied vol: ~26%, prev day implied vol: 24%).
  

Sentiment: The CBOE Put/Call ratio is currently: 1.15, VIX: (24.72, +7.64, +44.3%).
March 20 is options expiration -- the last day to trade March 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 OPTNX comments.

The Dow Jones Transportation Average (-4.6%) is among the biggest weak spots today, as it falls below its 200-day moving average to a level not seen since the end of October.

The selling has been widespread as all 20 components of the DJTA trade with losses of 2.0% or more while six components are down more than 5.0%. Airlines are especially weak amid worries that the spread of the coronavirus will lead people to change their travel plans. Freight carriers, meanwhile, could have fewer goods to transport if supply chain issues prevent companies from producing goods at full volume.

Notable movers:

• American Airlines (AAL 25.02, -2.80, -10.1%): weakest performer, falling to its lowest level since early October.
• Avis Budget (CAR 43.81, -4.14, -8.6%): deepening its pullback from a level not seen since November 2015.
• Delta Air Lines (DAL 53.38, -4.49, -7.8%): falling below its 200-day moving average (57.36) to a level not seen since mid-October.
• JetBlue Airways (JBLU 19.12, -1.49, -7.2%): falling below its 50-day moving average (19.56).
• FedEx (FDX 153.04, -10.21, -6.3%): falling back below its 200-day (158.37) and 50-day (155.12) moving averages.
• Southwest Air (LUV 53.47, -3.06, -5.4%): falling below its 50-day (55.41) and 200-day (53.71) moving averages.
• JB Hunt Transport (JBHT 104.01, -5.69, -5.2%): falling below its 200-day moving average (106.50) to a six-month low.
• Expeditors International (EXPD 72.01, -3.40, -4.5%): falling below its 200-day moving average (74.12) to its lowest level since October.

• Healthcare: GILD (27.45 mln +2.8%), ACB (19.04 mln -6.89%)
• Materials: VALE (30.11 mln -7.49%), AUY (24.21 mln +1.93%)
• Industrials: GE (42.78 mln -3.43%)
• Consumer Discretionary: F (67.47 mln -3.59%), NIO (42.67 mln -6.69%)
• Information Technology: AMD (54.91 mln -7.85%), MSFT (41.87 mln -3.79%), AAPL (34.46 mln -4.17%), NOK (25.16 mln -3.61%), MU (19.7 mln -3.99%)
• Financials: QQQ (48.03 mln -3.81%), SQQQ (41.66 mln +11.44%), BAC (41.33 mln -5.15%), TQQQ (20.23 mln -11.48%)
• Energy: CHK (45.96 mln -4.01%), ET (18.97 mln -4.45%)
• Consumer Staples: ABEV (30.64 mln -2.45%)

• Materials: EGO (3.66x +9.92%), IAG (2.99x +17.73%)
• Industrials: RYAAY (2.19x -12.18%)
• Consumer Discretionary: CTB (4.45x +4.23%), CRI (3.58x -14.59%)
• Information Technology: AVX (6.08x +0.07%), CMCM (2.99x +2.68%)
• Financials: PUK (4.38x -2.58%), VMBS (4.31x -0.01%), TDIV (2.72x -3.45%), NCV (2.66x -4.21%), ADX (2.57x -3.04%), DSU (2.4x -2.19%), ETJ (2.36x -3.75%), GAB (2.28x -2.57%), ETY (2.21x -2.49%), CLM (2.2x -2.95%), FFC (2.17x -3.38%)
• Energy: EQNR (2.34x -5.19%)
• Consumer Staples: BTI (2.41x -4.41%)

• Healthcare: SENS (1.63 +13.15%), UTHR (113.86 +6.45%), TVTY (12.67 +5.58%), NVAX (8.13 +5.29%), ESPR (64.28 +4.09%)
• Materials: IAG (3.69 +17.73%), NGD (0.94 +10.69%), EGO (10.92 +9.92%), MAG (12.21 +6.92%), HMY (4.38 +6.1%), AU (23.38 +5.65%), GFI (7.88 +5.63%), GOLD (22.39 +4.44%), PVG (8.15 +4.35%)
• Consumer Discretionary: CTB (27.96 +4.23%), SAH (29.24 +4.06%)
• Financials: SQQQ (19.38 +11.44%), VIRT (19.09 +4.35%)
• Energy: CEIX (6.26 +6.46%)

• Healthcare: EPZM (20.89 -16.06%), PBYI (12.01 -11.73%), CLVS (9.74 -11.45%)
• Materials: GPK (14.22 -11.6%)
• Industrials: BLDP (11.29 -14.08%), RYAAY (79.61 -12.18%)
• Consumer Discretionary: CRI (94.58 -14.59%), FTCH (10.59 -13.76%), GES (18.59 -12.89%), FOSL (5.25 -12.66%), DORM (67.01 -12.62%), HOME (6.25 -12.59%)
• Financials: TQQQ (95.73 -11.48%)
• Energy: KOS (4.11 -17.3%), NBR (1.97 -14.35%), UNT (0.41 -12.55%), CPE (2.51 -11.93%), TUSK (1.45 -11.89%), XOG (0.82 -11.2%)

The stock market is selling off more than 3% following a surge in coronavirus cases reported outside China, specifically in South Korea, Italy, and Iran. The Nasdaq Composite has dropped 3.6%, just a bit more than the S&P 500 (-3.2%), Dow Jones Industrial Average (-3.4%), and Russell 2000 (-3.2%). 

The sudden surge in cases prompted South Korea to raise its virus alert level to its highest level and Italy to quarantine dozens of towns and shut down many public spaces. South Korea's Kospi fell 3.9%, while Italy's MIB dropped 5.4%. The good news is that the number of new cases in China is reportedly slowing down.

Investors have shown no interest in buying this "dip," though, given the adverse implications for global growth and the uncertainty that remains. No S&P 500 sector is trading higher, while the energy (-4.3%) and information technology (-3.8%) sectors accumulate the bulk of losses. The utilities sector is down the least with a 0.6% decline. 

As expected, technology and travel stocks like Apple (AAPL 300.70, -12.51, -4.0%) and American Airlines (AAL 25.13, -2.69, -9.7%) are getting hit the hardest, while flight-to-safety trades continue to boost gold futures ($1674.70, +25.90, +1.6%) and U.S. Treasuries.

The benchmark 10-yr yield has dropped 11 basis points to 1.36% and is nearing its all-time low from July 2016. The CBOE Volatility Index has surged 45.7% to 24.89 in a protection trade against further weakness in equities. The increased volatility has benefited shares of CME Group (CME 211.00, +2.17, +1.0%). 

Newmont Goldcorp (NEM 41.17, +1.73, +3.5%) is also bucking the broader trend, as shares benefit from the increase in gold prices and CIBC upgrading the stock to Sector Outperform from Neutral. 

Note, investors did not receive any economic data, and today's losses have erased the yearly gains in the Dow, S&P 500, and Russell 2000. The Nasdaq is still up 2.8% this year. 

Third Point LLC manages ~5% of the outstanding common shares of Prudential plc; the firm sent a letter to the Board of Directors of PUK:

• Prudential plc's two separately managed franchises, Prudential Corporation Asia ("PruAsia") and Jackson National Life ("Jackson"), have distinct strengths but share no discernable benefit from being operated under the same corporate umbrella.
• Despite the strengths of these unique businesses in Asia and the US, Prudential plc trades for less than 10x consensus 2020 earnings, and has returned <0% on a cumulative basis over the past 5 years -- underperforming the stock of its only true Asian peer, AIA, by ~80%. We see three primary reasons for this disappointing performance: Current portfolio deters natural holders from owning PruAsia; Management has prioritized dividend growth over reinvestment; Corporate structure inconsistent with "Asia-Led" strategy.
• In order to address these issues and close the yawning gap between the current share price and intrinsic value, we urge the Board to immediately consider the following actions:
  • Create two standalone focused companies.
  • Bespoke capital allocation policies. Once the companies have been separated, pivot from dividend growth to long-term value creation as the central priority. In Asia, focus on reinvestment of cash at high ROEs, and consider options to increase the stake in the 50%-owned China JV. At Jackson, manage capital to build a strong balance sheet, which will enhance strategic optionality and increase valuation certainty.
  • Eliminate central costs.
  • Recruit best-in-class management teams and boards.
• If PruAsia and Jackson were separated, resulting in a greater focus on reinvesting capital in each unit and streamlining central costs at the group level, our analysis indicates that the interests represented by Prudential plc shares can double within three years.

The following are some of today's most notable small cap movers of interest ($300 mln - $2 bln market cap), ranked by % change (all stocks over 100K average daily volume).

Small Cap Gainers

• NGM (19.49 +20.35%): Reported positive preliminary top-line results from Cohort 4 its Phase 2 study of 1 mg aldafermin in adults with biopsy-confirmed NASH with stage 2 or 3 liver fibrosis. Per results, treatment with aldafermin resulted in clinically meaningful improvements at 24 weeks vs placebo in fibrosis and in resolution of NASH, leading to a fibrosis improvement of at least 1 stage with no worsening of NASH in 38% of patients vs 18% of placebo patients; 24% of aldafermin patients achieved the endpoint of NASH resolution with no worsening of liver fibrosis vs 9% of placebo patients. Aldafermin patients also demonstrated statistically significant improvements in steatosis, lobular inflammation, and hepatocellular ballooning. Aldafermin was generally well tolerated; no reported serious adverse event was deemed related to treatment. Spiked to all-time highs.
• SENS (1.62 +12.49%): In recent items, Soros Fund Management disclosed a 5.09% passive stake in co after the close on Friday. Co today announced that it presented data that demonstrated real-world use of the Eversense CGM System across adult age ranges; Key International Consensus CGM targets were met in many adult patients. The stock has seen notable volatility since mid-February, breaking out to its highest levels since July on above-average volumes. It currently trades higher by circa +98% month-to-date.
• VHC (5.53 +11.04%): Headlines from various sources, which were subsequently confirmed by co, today indicated that the US Supreme Court refused to hear a petition from Apple (AAPL) that sought to review a Federal Circuit judgment in order to avoid paying certain damages to co in connection with a long-running patent infringement case concerning co's security technology. The US Court of Appeals for the Federal Circuit had issued an order denying Apple's petition for panel and en banc rehearing of the patent judgment against Apple earlier this month. The underlying judgment in the case awarded co a total of $439.8 mln in damages, fees, and interest. At three-month highs. 

Small Cap Losers

• CYH (6.23 -13.23%): Lags alongside various hospital stocks and other health sector peers; weakness in the industry has been connected to Bernie Sanders' win in the Nevada caucuses over the weekend. The stock pulls back after advancing to two-month highs last week following co's upside Q4 results. (Related: HCA, THC...)
• FCEL (2.19 -13.1%): Pulls back alongside various alternative energy peers, including Ballard Power (BLDP). Among recent press, on Friday, co disclosed that it has notified POSCO Energy -- which co previously relied upon to develop and grow the South Korean and Asian markets for co's fuel cell business, in connection with certain license agreements that remain in effect -- that it is in material breach of its obligations under its license agreements with co on account of its "actions in connection with the spin-off of the fuel cell business to [Korea Fuel Cell]," its "suspension of performance through its cessation of all sales activities since late 2015 and its abandonment of its fuel cell business in Asia," and its disclosure of certain "material nonpublic information" and other media statements that have "caused reputational damage to the fuel cell business" and to co. Per co, POSCO Energy has 60 days to "fully cure its breaches to [co's] satisfaction"; failure to accomplish such curing will result in the termination of the license agreements.
• VAL (3.68 -12.38%): Continued weakness following Q4 earnings; the stock has dropped by circa 36% during the most recent two sessions. Energy sector lags. (Related: CPE, CDEV, SM, LPI...)

Last week, Fed Vice Chair Clarida said in a CNBC interview that he didn't think most market participants actually expect a rate cut even though the fed funds futures market seemingly suggests as much.

Well, in light of the increased concerns about the spread of the coronavirus outside of China, and the potential impact on global growth because of it, the fed funds futures market is raising its expectations for the Fed to cut rates by 25 basis points -- and to cut them relatively soon.

According to the CME FedWatch Tool, there is a 54.5% probability of a rate cut at the April meeting, versus 39.7% on Friday, and a 77.2% chance of a rate cut at the June meeting, versus 60.3% on Friday. Furthermore, the fed funds futures market is pricing in a growing probability of a second rate cut before the end of the year. That is still not the prevailing expectation, yet the trend is noteworthy.

Currently, the probability of a second 25 basis points cut at the December meeting sits at 45.2% versus 29.7% on Friday.

• VirnetX announced today that the US Supreme Court denied Apple's petition for a writ of certiorari seeking review of the judgment of the US Court of Appeals for the Federal Circuit in case 2018-1197. The underlying judgment in the case awarded VirnetX a total of $439.8 mln in damages, fees, and interest.
• "We are extremely pleased with the Supreme Court's decision not to hear Apple's writ of certiorari," said Kendall Larsen, VirnetX CEO and President. "It has taken us 10 long years, 4 successful jury trials, 2 successful Appellate Court rulings and a favorable Supreme Court decision to get here. [...] We trust Apple will honor the decisions rendered by our courts and their esteemed judges and honor an agreement to abide by the court's decision. [...] We believe that our technology provides an important security feature in some Apple products especially the iPhone. The jury award we received and confirmed by Federal judges, is less than a quarter of one percent of the cost of an iPhone. We believe this amount is more than fair considering the importance of Internet security."

• Home Depot (HD) will report Q4 earnings tomorrow before the open. There is a conference call scheduled for 9:00 a.m. ET.
• Q4 Capital IQ consensus calls for EPS of $2.18 (vs $2.25 last year) on revenue of $25.78 bln (-2.7% yr/yr).
• The company's FY2020 guidance stands at EPS of $10.03 on revs of +1.8% yr/yr to ~$110.2 bln. HD also sees comp sales for the comparable 52-week period to increase ~3.5%.
• The company hasn't missed EPS estimates in over four years with positive qtr/qtr sales growth stretching all the way back past 2015.
• This morning, shares of HD peeled off their all-time highs from Friday but the selling has softened somewhat, now down just 1.3% today vs lows of 3.1%.
• HD has an ~$264 bln valuation and trades at 23.5x FY20 EPS vs LOW at 19.3x.
• LOW is scheduled to report Q4 results on Wednesday morning (2/26).

Shake Shack (SHAK) will report fourth quarter results after markets close this afternoon. Management is scheduled to host a conference call to review those results at 5:00 p.m. ET.

• S&P Capital IQ consensus calls for Q4 EPS to fall to $(0.01) from EPS of $0.06 in the prior year quarter on revenue growth of +23.2% yr/yr to $153.05 mln.
• Shake Shack is expected to share guidance for FY20 in its Q4 report. S&P Capital IQ consensus currently forecasts FY20 EPS of $0.60 and revenues of $736.94 mln. The company has estimated that it will open between 40-42 new domestic company-operated Shacks and between 20-25 net new licensed Shacks locations in FY20.
• In its Q3 report in November, the company issued updated guidance for the full year, lifting its total revenue guidance to $592-597 mln while trimming its outlook for Same-Shack sales growth (to approx. +1.5% from prior expectations for approx. +2%) and for Shack-level operating profit margin (to 22.0-22.5% from approx. 23.0%). The mixed guidance and implied sequential deceleration in Same-Shack pressured the stock, which dropped nearly 21% following the report.
• During its Q3 earnings call, the company cautioned that there remained "more inherent risk" for Q4 performance than was typical in connection with uncertainty around the short- to mid-term financial impact of its delivery transition; the company has been integrating a delivery partnership with Grubhub (GRUB). Higher operating costs in connection with new Shack openings and inflation in beef costs were also expected to impact Q4.

SHAK has a valuation of $2.49 bln and trades at roughly 123x forward earnings estimates. The stock has yet to fully close the gap back up to levels held prior to the release of Q3 results. It currently trades lower by circa 12% vs its November 4 close.

Following the ruling by the US District Court for the Southern District of New York on February 18, dismissing plaintiffs' putative consumer class action, SmileDirectClub, issues the following statement:

• "We are pleased that the federal court in New York dismissed the plaintiffs' consumer class action. Customer satisfaction is a top priority for our Company and the network of affiliated dentists and orthodontists who use our platform to treat customers, and we work tirelessly together to address the very small percentage of issues that can arise during treatment. These situations, however, are rare and not proper for class action suits. This court decision verifies that these kinds of claims have no place in court," said Susan Greenspon-Rammelt, SmileDirectClub Chief Legal Officer, EVP of Business Affairs and Corporate Secretary.

This was the last consumer class action lawsuit pending against the company and marks the second time in two months that a consumer class action complaint against SmileDirectClub has been dismissed in its entirety.

The energy sector (-3.9%) had a weak showing in 2019 and things have not gotten much better so far in 2020. The growth-sensitive group is the weakest performer today, widening its Q1 loss to 14.5%.

Today's slide to a fresh low for the year comes as risk tolerance worsens due to the continued spread of the coronavirus outside of China. Expectations for slowing growth have sent crude oil lower by $2.40, or 4.5%, to $50.98/bbl. This puts the price of oil not far above its February low ($49.31).

Notable movers:

• Devon Energy (DVN 19.47, -1.51, -7.2%): weakest performer, falling to its lowest level in almost four years.
• Noble Energy (NBL 16.78, -1.17, -6.5%): falling to its lowest level since late 2008.
• Marathon Oil (MRO 9.50, -0.61, -6.0%): falling to its lowest level in nearly four years.
• Diamondback Energy (FANG 71.78, -4.62, -6.1%): set a fresh four-year low.
• EOG Resources (EOG 70.05, -4.18, -5.6%): trading at its lowest level since December.
• Exxon Mobil (XOM 57.11, -2.02, -3.4%): falling to its lowest level since mid-2010. Cowen lowered its price target for the stock to $58 from $65.
• Cabot Oil & Gas (COG 15.12, +0.23, +1.3%): lone advancer in the sector.

There is widespread selling pressure today rooted in concerns about the spread of the coronavirus outside of China. Those concerns have centered around an escalation of reported cases in South Korea, Iran, and Italy, and reported efforts to contain the spread via travel restrictions and lockdown efforts which, in Italy's case, have involved the closure of schools and museums, and the cancellation of Series A futbol (soccer) matches.

Ironically, these concerns are escalating at a time when the pace of new cases in China -- and specifically in the epicenter, which is the Hubei province -- have slowed and more businesses in China are reportedly picking up production.

The latter point notwithstanding, the prevailing thought this morning is that the spread of the virus outside of China, and efforts to contain it, will weigh further on economic, and earnings growth, prospects. That view has been the tinder for igniting broad-based selling interest in a market many had already thought was overextended, overcrowded, overvalued, and due for a meaningful pullback.

Indeed, there has been a risk-off trade today and a re-think of stretched valuations that is evident in the fact that every sector is trading lower. Strikingly, there isn't any rotation within the stock market today; rather, there is a general shift out of stocks. Losses in the 11 sectors range from 0.7% (utilities) to 3.7% (energy).

The weakness in equities, and the underlying growth concerns, has precipitated a flight-to-safety trade that has benefited bonds (10-yr -10 bps at 1.37%), gold ($1674.00, +25.20, +1.5%), and the dollar. There has also been a rush to hedge against further downside, evidenced by the 30.0% increase in the CBOE Volatility Index (22.23, +5.25).

As an aside, the 2.5% decline in the S&P 500 looks relatively good against other foreign markets, namely European bourses, where losses are pushing 4.0%.

The S&P 500 is down 2.5%; the Dow Jones Industrial Average is down 2.6%; the Russell 2000 is down 2.7%; and the Nasdaq Composite is down 2.9%.

Taking an early look at the options market, we found the following names that may be worth watching throughout the day for further indication of investor expectations given their options volume and implied volatility movement.

Stocks seeing volatility buying (bullish call buying/bearish put buying):

Calls:

• CAT Weekly Feb28 138 calls are seeing interest with 1220 contracts trading vs. open int of 400, pushing implied vol up around 9 points to ~35%. Barron's was out positive on the stock over the weekend. Co is expected to report earnings late April.
  

Puts:

• KBW Regional Bank ETF (KRE) Weekly Feb28 54.5 puts are seeing interest with 2160 contracts trading vs. open int of 150, pushing implied vol up around 4 points to ~27%.
  

Stocks seeing volatility selling:

• CTB, DORM implied vol is lower following earnings/guidance

Sentiment: The CBOE Put/Call ratio is currently: 1.15, VIX: (22.41, +5.33, +31.2%).
March 20 is options expiration -- the last day to trade March 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 OPTNX comments.

The PHLX Semiconductor Index (-4.2%) trades near its January low as defensive bets continue building amid uncertainty related to the spread of the coronavirus. The case count in South Korea has continued climbing, leading to worries that supply chains of semiconductor companies will be strained further. The PHLX Semiconductor Index is now down 2.0% since the end of 2019.

27 components of the PHLX Semiconductor Index are down 3.0% or more with AMD (AMD 49.31, -3.97, -7.4%) at the forefront of the selling. AMD's significant underperformance should not be a shock, since the stock was the best S&P 500 performer in 2019 and it is the top S&P 500 performer over the past five years.

Notable movers:

• AMD (AMD 49.31, -3.97, -7.4%): weakest performer in the group, falling to its 50-day moving average (48.78) for the first time since October.
• NVIDIA (NVDA 299.83, -16.97, -5.4%): deepening its pullback from a record high set on Thursday.
• Applied Materials (AMAT 60.82, -3.45, -5.4%): falling below its 50-day moving average (62.10).
• Semtech (SMTC 44.66, -2.50, -5.3%): falling to its lowest level since September.
• Marvell Technology (MRVL 23.25, -1.19, -4.8%): trading at its lowest level since October.
• Silicon Labs (SLAB 97.03, -3.27, -3.4%): falling to its lowest level since June.
• Micron (MU 54.63, -2.36, -4.2%): falling below its 50-day moving average (55.98).
• Qorvo (QRVO 96.00, -2.19, -2.2%): best performer in the group.

The stock market starts the session in sell-off mode following a surge in coronavirus cases outside China over the weekend. The S&P 500 is down 2.7%, the Dow Jones Industrial Average is down 2.9%, and the Nasdaq Composite is down 3.4%. 

Looking at the S&P 500 sectors shows broad-based losses, with information technology (-4.0%), energy (-3.6%), and consumer discretionary (-2.9%) leading the retreat. The utilities sector (-0.3%) is down the least with a modest 0.3% decline. 

U.S. Treasuries continue to rally, sending yields sharply lower across the curve. The 2-yr yield is down nine basis points to 1.26%, and the 10-yr yield is down ten basis points to 1.37%. The U.S. Dollar Index is up 0.2% to 99.44. WTI crude is down 4.5% to $50.96/bbl. 

• Boise Cascade (BCC) announced today the permanent curtailment of its I-joist production facility in Roxboro, North Carolina. The shutdown will affect approximately 29 employees. The company anticipates discontinuing production by the end of Q1 2020, though inventory shipment may continue into Q3 before all operations cease.
• ExpressJet Airlines, a carrier for United Express, a United Airlines (UAL) brand, announced today it will add 36 Embraer ERJ145 aircraft (ERJ) to its United Express fleet, which will make ExpressJet the world's largest operator of the 50-seat Embraer ERJ145 aircraft. The parties are working towards a long-term extension of the ExpressJet Capacity Purchase Agreement.
• Dave & Buster's Entertainment (PLAY) has appointed Brandon Coleman III as SVP and Chief Marketing Officer, effective February 26. Mr. Coleman will succeed Sean Gleason, who has served in the role since 2009 and who will continue with the company in an advisory capacity through April 30. Most recently, Mr. Coleman served as President of Del Frisco's Grille.
• Steelcase (SCS) has sold all of the issued and outstanding capital stock of PolyVision Corporation to an affiliate of Industrial Opportunity Partners. PolyVision is a US and Belgium-based manufacturer of ceramic coated steel used in whiteboards, chalkboards, and architectural cladding. Steelcase and its affiliates will continue to market certain PolyVision branded products to provide customers with a full suite of collaboration solutions. Terms were not disclosed.
• Enochian Biosciences (ENOB) announced that the FDA has scheduled an Initial Targeted Engagement for Regulatory Advice on CBER Products (INTERACT) meeting for early June. The meeting is focused on Enochian's ENOB-HV-01, a novel approach to autologous stem cell transplantation with the potential to increase engraftment of genetically modified cells that are resistant to HIV infection, as a potential cure for HIV.
• Intel (INTC) today made a sweeping set of hardware and software announcements, including the launch of the new Intel Atom P5900, a 10nm system-on-a-chip for wireless base stations, which is a critical early deployment target for 5G networks. Other offerings announced today include new 2nd Gen Intel Xeon Scalable processors; Diamond Mesa, Intel's first next-generation structured ASIC for 5G network acceleration; and the Intel Ethernet 700 series adapter.

U.S. stocks are set to drop at the open, as the S&P 500 futures trade 89 points, or 2.7%, below fair value amid the widening outbreak of the coronavirus outside China. The benchmark index is also on pace to open below its 50-day moving average (3274) for the first time since October. 

The sell-offs in South Korea's Kospi (-3.9%) and Italy's MIB (-5.1%) have reflected these virus fears after new cases surged in both countries over the weekend. U.S. companies aren't immune from the worsening outbreak overseas, as a slowdown in economic activity in China and beyond is apt to hurt earnings prospects of multinationals. 

In the U.S. Treasury market, the benchmark 10-yr yield is down ten basis points to 1.37% -- nearing its all-time low from July 2016. 

• Hete, 65, is expected to remain a member of ATSG's Board of Directors and to be elected Chairman of the Board upon his retirement. Randy Rademacher, currently Chairman of the Board, is to become the Board's independent Lead Director.
• Corrado, 60, who was elected president of ATSG effective September 16, 2019, will be nominated for election to ATSG's Board of Directors.

• The acquisition of these assets builds upon Perrigo's July 2019 acquisition of Ranir, the world's largest private label oral self-care company. Notably, the deal includes leading children's oral care value brand, Firefly, in addition to the REACH and Dr. Fresh brands. The acquisition, which is subject to bankruptcy court approval in connection with High Ridge Brands' chapter 11 cases, as well as other customary closing conditions, demonstrates Perrigo's commitment to transform to a consumer-focused self-care company and build shareholder value. The transaction is expected to close in the first quarter of 2020.
• The acquired assets are expected to contribute more than $100 mln in net sales and be accretive to Perrigo's adjusted diluted earnings per share in first full-year post closing.

The S&P 500 futures trade 89 points, or 2.7%, below fair value.

Equity indices in the Asia-Pacific began the week on a lower note as continued fears about the impact of the coronavirus weighed on risk tolerance. The number of reported coronavirus cases in China approached 77,500 with deaths nearing 2,600. The number of cases in South Korea grew to almost 850 over the weekend, prompting some airlines to suspend service to Daegu, the city with most coronavirus cases. A People's Bank of China vice governor hinted at another cut to the reserve requirement ratio. Japan's Nikkei was closed for Emperor's Birthday.

• In economic data:
  • Singapore's January CPI 0.8% yr/yr (expected 0.9%; last 0.8%)
  • New Zealand's Q4 Retail Sales 0.7% qtr/qtr (last 1.6%)

---Equity Markets---

• Japan's Nikkei: CLOSED
• Hong Kong's Hang Seng: -1.8%
• China's Shanghai Composite: -0.3%
• India's Sensex: -2.0%
• South Korea's Kospi: -3.9%
• Australia's ASX All Ordinaries: -2.3%

Major European indices trade sharply lower amid concerns about the growing potential for the spread of the coronavirus through Europe after Italy's case count climbed above 200. Bank of Italy Governor Ignazio Visco said that two quarters of data are needed to understand the impact of the coronavirus, adding that the lack of a rebound over those two quarters should prompt fiscal stimulus. Moody's affirmed France's Aa2 rating but lowered the outlook to Stable from Positive.

• In economic data:
  • Germany's February ifo Business Climate Index 96.1 (expected 95.3; last 96.0). February Current Assessment 98.9 (expected 98.6; last 99.2) and Business Expectations 93.4 (expected 92.2; last 92.9)

---Equity Markets---

• STOXX Europe 600: -3.6%
• Germany's DAX: -3.9%
• U.K.'s FTSE 100: -3.4%
• France's CAC 40: -3.8%
• Italy's FTSE MIB: -5.1%
• Spain's IBEX 35: -3.7%

• Donaldson has received a binding offer from Nelson Global Products to purchase its Exhaust and Emissions ("E&E") business. Due to the receipt of this offer, Donaldson will engage in a consultation with its employee representative committees in Europe. Following completion of the consultation process, Donaldson will have the right to enter into a purchase agreement with Nelson, pursuant to a put option agreement.
• Donaldson's E&E business contributed approx. $120 mln of revenue to the Engine Products segment in fiscal 2019. The transaction would include Donaldson's dedicated E&E sales and engineering functions, production facilities, and lab capabilities. Pending the consultation process noted above, the parties' entry into the purchase agreement, and satisfaction of closing conditions and necessary approvals, the transaction is expected to close in Donaldson's third quarter of fiscal 2020.

• Magenta Therapeutics (MGTA) completed dosing in its Phase 1 trial of stem cell mobilization therapy clinical candidate, MGTA-145, as well as updated clinical data from the trial at the Transplant and Cellular Therapy Annual Meeting. Magenta is developing MGTA-145 as the new first-line standard of care for stem cell mobilization in a broad range of diseases, including autoimmune diseases, blood cancers and genetic diseases.
• Verint Systems (VRNT) and Adobe (ADBE) ahve expanded their partnership to support more personalized customer journeys by combining experience data from the Verint Experience Cloud along with data from the Adobe Experience Platform. Verint customers can magnify their Adobe digital analytics outcomes with Verint's predictive model to increase customer satisfaction across every channel and improve business outcomes.
• Magenta Therapeutics (MGTA) announced data from its newest clinical development candidate for conditioning, MGTA-117, at the Transplant and Cellular Therapy Annual Meeting. The company also announced additional results with a tool CD117-ADC molecule, which were recognized by TCT with an award for Best Oral Abstract. MGTA-117 ADC clinical candidate for conditioning showed broad tolerability and wide pre-clinical safety margins. MGTA-117 demonstrated robust anti-tumor activity in xenograft models from patients with refractory leukemia. Magenta plans to move MGTA-117 into the clinic with initial clinical data in 2021. Landmark data with tool CD117-ADC demonstrate first successful gene therapy transplant without chemotherapy in non-human primates was awarded Best Oral Abstract by TCT.
• Avis Budget (CAR) entered into a new cooperation agreement with SRS Investment Management, LLC, the company's largest shareholder. The terms of the new approximately two-year cooperation agreement include the appointment of Jagdeep Pahwa, a current Board member and President of SRS, as Vice Chairman of the Board. The company's slate for election at the 2020 Annual Meeting of Shareholders will include the addition of Karthik Sarma, Managing Partner of SRS, and current Board members Bernardo Hees, Mr. Pahwa, Carl Sparks, Glenn Lurie, Brian Choi, and Lynn Krominga.

The S&P 500 futures continue to trade 83 points, or 2.5%, below fair value. 

Given the coronavirus-induced losses, travel names are among this morning's laggards. Shares of Carnival (CCL 39.34, -2.35, -5.6%), American Airlines (AAL 26.40, -1.42, -5.1%), and Delta Air Lines (DAL 55.00, -2.87, -5.0%) are down at least 5.0%. 

Apple (AAPL 301.70, -11.35, -3.6%), Amazon (AMZN 2030.32, -65.65, -3.1%), Alphabet (GOOG 1439.50, -45.61, -3.1%), and Microsoft (MSFT 171.68, -6.91, -3.9%) exhibit losses greater than 3.0%. 

• Rocket Pharmaceuticals (RCKT) announces the recent publication of a peer-reviewed manuscript: the first comprehensive review of somatic mosaicism in Fanconi Anemia in the journal Annals of Hematology. The review, entitled, "Mosaicism in Fanconi Anemia: Concise review and evaluation of published cases with focus on clinical course of blood count normalization," summarizes the existing literature regarding mosaicism in FA, a phenomenon previously described as "natural gene therapy." The review provides the FA community with an additional resource to better understand the phenomenon and further supports Rocket's approach of treating patients with RP-L102, the company's gene therapy candidate for FA, without a pre-treatment conditioning regimen.
• Anavex Life Sciences (AVXL) announced the publication in the peer-reviewed Journal of Neuroimmunology, titled "Sigma-1 Receptor Agonists as Potential Protective Therapies in Multiple Sclerosis" featuring preclinical data of ANAVEX2-73 (blarcamesine) relevant to multiple sclerosis. The study also described that ANAVEX2-73 (blarcamesine) provides optimal protection of oligodendroglia against glutamate toxicity in vitro.
• Paratek Pharmaceuticals (PRTK) entered into a license grant with Almirall for SEYSARA (sarecycline) for the greater China region, which includes the Peoples Republic of China, Hong Kong, and Macau. Paratek will earn high single-digit royalties on net sales in the greater China region. Almirall plans to develop sarecycline for acne in China, with a potential submission to the China National Medical Products Administration in 2023. Almirall also has rights to SEYSARA for acne in the US. As part of this agreement, Paratek and Almirall also finalized a license granting Paratek exclusive rights to develop, manufacture, and commercialize sarecycline outside of the US. Paratek will share with Almirall any potential revenues of SEYSARA (sarecycline) outside of the US and the greater China region.
• Proteostasis Therapeutics (PTI) and CF Europe, the federation of 48 national CF Associations in Europe, announced the completion of enrollment of 502 patients with CF for HIT-CF, a European-based initiative that is paving the path to personalized medicine through the CHOICES clinical trial. CHOICES will test PTI drug combinations in an ex vivo study and then in a clinical trial to assess the predictability of the organoid assay for clinical benefit.
• Resolution Bioscience announced an agreement with LabCorp (LH) to make the Resolution ctDx Lung assay available to clinicians and patients. The fast, accurate, and non-invasive test is designed to detect actionable mutations in non-small cell lung cancer genes recommended by professional guidelines. The assay will be performed in Resolution's CLIA laboratory as a laboratory developed test and is expected to be available exclusively from LabCorp in the first half of 2020.
• CytomX Therapeutics (CTMX) announced that its partner, Bristol-Myers Squibb (BMY) initiated a randomized Phase 2 cohort expansion in its ongoing first-in-human Phase 1/2a trial of the anti-CTLA-4 Probody BMS-986249 alone and in combination with Opdivo (nivolumab). BMS-986249 is a peptide masked version of the anti-CTLA-4 antibody Yervoy (ipilimumab). The randomized cohort expansion is designed to further evaluate the safety and efficacy of BMS-986249 in combination with Opdivo in patients with metastatic melanoma. The advancement of BMS-986249 into this part of the planned study triggers a milestone payment of $10 mln from Bristol-Myers Squibb to CytomX.
• InMode (INMD) received Health Canada certification for Evoke, a breakthrough aesthetic solution for treating wrinkles and rhytids. 

• There was a clinically meaningful response rates of 38% of patients treated with aldafermin having liver fibrosis improvement of > or =1 stage and 24% of patients achieving resolution of NASH at 24 weeks.
• 22% of aldafermin-treated patients versus 0% placebo achieved composite endpoint of both fibrosis improvement and resolution of NASH, a statistically significant result.
• Data support aldafermin's differentiation in the NASH development landscape as a potential potent monotherapy that rapidly improves and sustains liver health with a favorable tolerability profile.
• Aldafermin (formerly NGM282), NGM's lead wholly-owned drug candidate, is an engineered variant of the human hormone FGF19 being developed as a once-daily treatment for patients with NASH. Cohort 4 was powered to demonstrate the effect of aldafermin treatment versus placebo on the primary endpoint of change in absolute liver fat content, which achieved statistical significance. In addition, the study assessed secondary and exploratory endpoints of liver histology and biomarkers of disease activity, many of which also achieved statistical significance.
• The company will host conference call and webcast today at 8:30 a.m. ET.

Gapping up
In reaction to strong earnings/guidance:

• EXK +6.4%, CTB +1.8%, XENT +0.7%, KOS +0.6%

Select metals/mining stocks trading higher:

• HMY +11.6%, GFI +8%, AUY +6.4%, AU +5.7%, GOLD +5.4%, IAG +4.5%, PAAS +4.5%, AG +4.4%, GDX +3.8%, GLD +2.3%, SLV +1.5% 

Other news:

• CFRX +11.6% (granted Breakthrough Therapy designation by FDA to exebacase for the treatment of MRSA bloodstream infections including right-sided endocarditis including anti-staphylococcal antibiotics in adult patients)
• SENS +7.6% (Soros Fund Management discloses 5.09% passive stake)
• UTHR +6.6% (Tyvaso meets primary and all secondary endpoints)

Analyst comments:

• NEM +5.7% (upgraded to Sector Outperform from Neutral at CIBC)
• PBA +0.5% (upgraded to Overweight from Equal Weight at Wells Fargo)

Briefing note - With US futures down 2.5-3% in pre-market, most stocks are trading lower. The following represents a snap shot of sectors and names with identified catalysts

Gapping down
In reaction to disappointing earnings/guidance:

• CRI -9.7%, DORM -4.9%, BRK.B -3.7%, SPNS -2.2%, EPZM -1.9%, AWI -1.4%, STAR -0.7%

Select sectors showing weakness:

• SMH -4%, XLK -3.5%, XLE -3%, QQQ -2.8%, XLF -2.8%, IWM -2.7%, DIA -2.7%, XLY -2.7%, SPY -2.5%, XLI -1.9%

Select travel related names showing early weakness:

• CCL -6%, AAL -5.1%, DAL -5%, RCL -4.5%, UAL -2.9%

Other news:

• CEL -7.6% (Chairman Ami Erel resigns, effective March 1; no updates on replacement at this time)
• CRON -5.6% (announces that it will delay its 2019 fourth quarter and full-year earnings release and conference cal)
• JCAP -4.4% (Jernigan Capital lowers quarterly dividend to $0.23/sh from $0.35/sh)
• TECK -3.8% (announced it is withdrawing the Frontier Project from the regulatory review process)
• TCOM -3.7% (reschedules Q4 release to March 18 after the close due to the evolving situation brought on by the novel coronavirus outbreak in China)
• BB -3.2% (files for 4,182,189 share common stock offering by selling shareholders)
• EBAY -1.5% (issues on statement regarding the previously announced strategic review of its Classifieds Group)

Analyst comments:

• GLPG -8% (downgraded to Underperform from Neutral at BofA/Merrill)
• W -6.4% (downgraded to Underweight from Equal-Weight at Morgan Stanley)
• ACB -6% (downgraded to Market Perform from Outperform at Cowen)
• TLRY -6% (downgraded to Market Perform from Outperform at Cowen)
• COMM -4.5% (downgraded to Hold from Buy at Deutsche Bank)
• A -4.4% (downgraded to Hold from Buy at Needham)
• NCLH -4.2% (downgraded to Hold from Buy at Argus)
• FSLR -3.9% (downgraded to Underperform from Buy at BofA/Merrill)

Briefing note - With US futures down 2.5-3% in pre-market, most stocks are trading lower. The following represents a snapshot of sectors and names with identified catalysts

Gapping down
In reaction to disappointing earnings/guidance:

• CRI -9.7%, DORM -4.9%, BRK.B -3.7%, SPNS -2.2%, EPZM -1.9%, AWI -1.4%, STAR -0.7%

Select sectors showing weakness:

• SMH -4%, XLK -3.5%, XLE -3%, QQQ -2.8%, XLF -2.8%, IWM -2.7%, DIA -2.7%, XLY -2.7%, SPY -2.5%, XLI -1.9%

Select travel related names showing early weakness:

• CCL -6%, AAL -5.1%, DAL -5%, RCL -4.5%, UAL -2.9%

Other news:

• CEL -7.6% (Chairman Ami Erel resigns, effective March 1; no updates on replacement at this time)
• CRON -5.6% (announces that it will delay its 2019 fourth quarter and full-year earnings release and conference cal)
• JCAP -4.4% (Jernigan Capital lowers quarterly dividend to $0.23/sh from $0.35/sh)
• TECK -3.8% (announced it is withdrawing the Frontier Project from the regulatory review process)
• TCOM -3.7% (reschedules Q4 release to March 18 after the close due to the evolving situation brought on by the novel coronavirus outbreak in China)
• BB -3.2% (files for 4,182,189 share common stock offering by selling shareholders)
• EBAY -1.5% (issues on statement regarding the previously announced strategic review of its Classifieds Group)

Analyst comments:

• GLPG -8% (downgraded to Underperform from Neutral at BofA/Merrill)
• W -6.4% (downgraded to Underweight from Equal-Weight at Morgan Stanley)
• ACB -6% (downgraded to Market Perform from Outperform at Cowen)
• TLRY -6% (downgraded to Market Perform from Outperform at Cowen)
• COMM -4.5% (downgraded to Hold from Buy at Deutsche Bank)
• A -4.4% (downgraded to Hold from Buy at Needham)
• NCLH -4.2% (downgraded to Hold from Buy at Argus)
• FSLR -3.9% (downgraded to Underperform from Buy at BofA/Merrill)

• Reports Q4 (Dec) earnings of $1.78 per share, excluding non-recurring items, $0.07 better than the S&P Capital IQ Consensus of $1.71; revenues rose 4.7% year/year to $227.5 mln vs the $233.15 mln S&P Capital IQ Consensus.
• IHOP's comparable same-restaurant sales increased 1.1% for the fourth quarter of 2019, achieving the eighth consecutive quarter of sales growth.
• Applebee's comparable same-restaurant sales decreased 2.5% for the fourth quarter of 2019.
• Co issues downside guidance for FY20, sees EPS of $7.08-7.28 vs. $7.52 S&P Capital IQ Consensus.
• Guidance: Applebee's domestic system-wide comparable same-restaurant sales performance is expected to range between 0% and positive 2.0%. IHOP's domestic system-wide comparable same-restaurant sales performance is expected to range between 0% and positive 2.0%. Domestic development activity by Applebee's franchisees is expected to result in net closures between 0 and 10 restaurants. Domestic development activity by IHOP franchisees and area licensees are expected to result in net new openings between 40 and 50 restaurants.

Gapping up
In reaction to strong earnings/guidance:

• EXK +6.4%, CTB +1.8%, XENT +0.7%, KOS +0.6%

Select metals/mining stocks trading higher:

• HMY +11.6%, GFI +8%, AUY +6.4%, AU +5.7%, GOLD +5.4%, IAG +4.5%, PAAS +4.5%, AG +4.4%, GDX +3.8%, GLD +2.3%, SLV +1.5%

Other news:

• CFRX +11.6% (granted Breakthrough Therapy designation by FDA to exebacase for the treatment of MRSA bloodstream infections including right-sided endocarditis including anti-staphylococcal antibiotics in adult patients)
• SENS +7.6% (Soros Fund Management discloses 5.09% passive stake)
• UTHR +6.6% (Tyvaso meets primary and all secondary endpoints)

Analyst comments:

• NEM +5.7% (upgraded to Sector Outperform from Neutral at CIBC)
• PBA +0.5% (upgraded to Overweight from Equal Weight at Wells Fargo)

Surge Extended

• U.S. Treasuries are on track to build on last week's rally after Treasury futures marched higher in overnight trade. The advance in Treasury futures was part of an intensifying risk-off tone that pressured Asian equity markets while boosting gold amid continued worries about the coronavirus. The number of reported cases in China approached 77,500 with deaths nearing 2,600 while the number of cases in South Korea grew to almost 850 over the weekend, prompting some airlines to suspend service to Daegu, the city with most coronavirus cases. The European session has been underscored by similar fears after Italy's case count climbed above 200. The U.S. Dollar Index is up 0.3% at 99.57 while gold has spiked to its highest level since early 2013, approaching $1,700/ozt.
• Yield Check:
  • 2-yr: -7 bps to 1.28%
  • 3-yr: -8 bps to 1.23%
  • 5-yr: -9 bps to 1.23%
  • 10-yr: -9 bps to 1.38%
  • 30-yr: -6 bps to 1.84%

• News:
  • The IMF lowered its outlook for 2020 GDP growth in China to 5.6% from 6.0%.
  • A People's Bank of China vice governor hinted at another cut to the reserve requirement ratio.
  • Singapore's January CPI rose 0.8% yr/yr (expected 0.9%; last 0.8%). New Zealand's Q4 Retail Sales increased 0.7% qtr/qtr (last 1.6%).
  • Bank of Italy Governor Ignazio Visco said that two quarters of data are needed to understand the impact of the coronavirus, adding that the lack of a rebound over those two quarters should prompt fiscal stimulus.
  • Moody's affirmed France's Aa2 rating but lowered the outlook to Stable from Positive.
  • Germany's February ifo Business Climate Index ticked up to 96.1 from 96.0 (expected 95.3). February Current Assessment decreased to 98.9 from 99.2 (expected 98.6) while Business Expectations improved to 93.4 from 92.9 (expected 92.2).
• Commodities:
  • WTI Crude: -4.0% to $51.25/bbl
  • Gold: +2.1% to $1683.40/ozt
  • Copper: -1.6% to $2.566/lb
• Currencies:
  • EUR/USD: -0.2% to 1.0821
  • GBP/USD: -0.4% to 1.2903
  • USD/CNH: +0.1% to 7.0375
  • USD/JPY: -0.2% to 111.33
• No Data on Today's Schedule

The S&P 500 futures have dropped 85 points and are trading 2.5% below fair value, as increased outbreaks of the coronavirus reported outside of China exacerbate growth and valuation concerns. 

South Korea, Italy, and Iran are among the countries with a reported surge in new coronavirus cases, prompting increased government action to protect citizens. South Korea's Kospi fell 3.9% on Monday, and Italy's MIB is currently down 4.4%. Cases are reportedly slowing down in China, though, which may explain why the Shanghai Composite only declined 0.3%.

While China's President Xi described the virus as the country's "fastest-spreading" health crisis, he also said the impact is "short term and overall controllable," according to a Politico report. U.S. Treasury Secretary Mnuchin for his part said he doesn't expect the coronavirus to have a material impact on the Phase One trade deal at this time. 

Nevertheless, other parts of the market are rallying in flight-to-safety trades, specifically gold futures ($1693.90/ozt, +34.60, +2.1%) and U.S. Treasuries. The continued strength in the bond market has the 2-yr yield down seven basis points to 1.28% and the 10-yr yield down eight basis points to 1.39%.

The U.S. Dollar Index is up 0.3% to 99.58. WTI crude is down 4.0%, or $2.13, to $51.24/bbl. The CBOE Volatility Index is up 32.0% to 22.54, as investors assume some protection against further weakness in equities. 

In U.S. Corporate news:

• Intuit (INTU 287.00, -10.57): -3.6% as the company nears a deal to purchase Credit Karma for $7 billion, according to The Wall Street Journal. 
• Newmont Goldcorp (NEM 52.32, +2.88): +5.8% amid the continued strength in gold prices. 
• Advanced Micro Devices (AMD 49.52, -3.76): -7.0% amid coronavirus fears. The stock is continuing last Friday's sell-off when it fell 7.0%. 

Reviewing overnight developments:

• Equity indices in the Asia-Pacific began the week on a lower note as continued fears about the impact of the coronavirus weighed on risk tolerance. Japan's Nikkei: CLOSED, Hong Kong's Hang Seng: -1.8%, China's Shanghai Composite: -0.3%, India's Sensex: -2.0%, South Korea's Kospi: -3.9%, Australia's ASX All Ordinaries: -2.3%.
  • In economic data:
    • Singapore's January CPI 0.8% yr/yr (expected 0.9%; last 0.8%)
    • New Zealand's Q4 Retail Sales 0.7% qtr/qtr (last 1.6%)
  • In news:
    • The number of reported coronavirus cases in China approached 77,500 with deaths nearing 2,600.
    • The number of cases in South Korea grew to almost 850 over the weekend, prompting some airlines to suspend service to Daegu, the city with most coronavirus cases.
    • A People's Bank of China vice governor hinted at another cut to the reserve requirement ratio.
    • Japan's Nikkei was closed for Emperor's Birthday.

• Major European indices trade sharply lower amid concerns about the growing potential for the spread of the coronavirus through Europe after Italy's case count climbed above 200. STOXX Europe 600: -3.2%, Germany's DAX: -3.4%, U.K.'s FTSE 100: -2.9%, France's CAC 40: -3.3%, Italy's FTSE MIB: -4.4%, Spain's IBEX 35: -3.2%.
  • In economic data:
    • Germany's February ifo Business Climate Index 96.1 (expected 95.3; last 96.0). February Current Assessment 98.9 (expected 98.6; last 99.2) and Business Expectations 93.4 (expected 92.2; last 92.9)
  • In news:
    • Bank of Italy Governor Ignazio Visco said that two quarters of data are needed to understand the impact of the coronavirus, adding that the lack of a rebound over those two quarters should prompt fiscal stimulus.
    • Moody's affirmed France's Aa2 rating but lowered the outlook to Stable from Positive.

Major European indices trade sharply lower amid concerns about the growing potential for the spread of the coronavirus through Europe after Italy's case count climbed above 200. Bank of Italy Governor Ignazio Visco said that two quarters of data are needed to understand the impact of the coronavirus, adding that the lack of a rebound over those two quarters should prompt fiscal stimulus. Moody's affirmed France's Aa2 rating but lowered the outlook to Stable from Positive.

• In economic data:
  • Germany's February ifo Business Climate Index 96.1 (expected 95.3; last 96.0). February Current Assessment 98.9 (expected 98.6; last 99.2) and Business Expectations 93.4 (expected 92.2; last 92.9)

---Equity Markets---

• STOXX Europe 600: -3.2%
• Germany's DAX: -3.4%
• U.K.'s FTSE 100: -2.9%
• France's CAC 40: -3.3%
• Italy's FTSE MIB: -4.4%
• Spain's IBEX 35: -3.2%

---FX---

• EUR/USD: -0.2% to 1.0822
• GBP/USD: -0.5% to 1.2889
• USD/CHF: +0.2% to 0.9802

• Reports Q4 (Dec) earnings of $0.21 per share, excluding non-recurring items, $0.01 better than the S&P Capital IQ Consensus of $0.20; revenues rose 18.1% year/year to $86.7 mln vs the $85.14 mln S&P Capital IQ Consensus.
• Co issues upside guidance for FY20, sees FY20 revs of $377-383 mln vs. $366.53 mln S&P Capital IQ Consensus.
• Co said: "The Sapiens global team delivered one of our most successful years to date with 34 new logos for 2019." continued Mr. Al-Dor. Mr. Al-Dor concluded: "We are building a unified global platform of innovative digital insurance solutions and advancing our competitive position as a one-stop-shop for insurance software with enhanced products and services. The pipeline for 2020 is very robust and we see further opportunities to increase operating efficiencies and improve margins. We are introducing 2020 guidance for revenue in a range of $377 million to $383 million, and operating margin in a range of 16.0% to 16.5%."

• Gapping up:
  • SENS +11.1%, HMY +10.9%, GFI +7.8%, AUY +6.9%, IAG +5.8%, AU +5.7%, PAAS +4.6%, GOLD +4.3%, NEM +3.6%, EXK +3.4%, GDX +3.3%, AG +3.2%, GLD +2.2%, SLV +1.4%
• Gapping down:
  • KOS -11.3%, JCAP -5.3%, CCL -5.2%, CRI -4.3%, RCL -4.1%, AAL -4%, DAL -3.8%, TCOM -3.8%, XLK -3%, BRK.B -2.8%, XLE -2.6%, XLF -2.5%, XLY -2.5%, QQQ -2.4%, DIA -2.4%, IWM -2.3%, SPY -2.2%, XLI -1.9%, EPZM -1.9%, BB -1.5%, UAL -1.4%

• Reports Q4 (Dec) earnings of $0.52 per share, excluding non-recurring items, $0.18 worse than the S&P Capital IQ Consensus of $0.70; revenues fell 8.0% year/year to $239.57 mln vs the $265.89 mln S&P Capital IQ Consensus.
• Co issues downside guidance for FY20, sees EPS of $3.35-3.55, excluding non-recurring items, vs. $3.84 S&P Capital IQ Consensus; sees FY20 revs of +5-8% (implying $1.04-1.07 bln) vs. $1.07 bln S&P Capital IQ Consensus.
  • "In the first quarter of 2020, we expect to face difficult comparisons to the prior year period results, but we expect our financial results to improve throughout the year as we benefit from efficiencies at our new Portland, TN facility, new contract wins that we expect to launch in the second half of 2020 and the continued introduction of new products."

• Reports Q4 (Dec) earnings of $1.02 per share, $0.35 better than the S&P Capital IQ Consensus of $0.67; revenues fell 2.6% year/year to $750.2 mln vs the $740.18 mln S&P Capital IQ Consensus.
• Outlook
  • Full year 2020 expectations include:
    • A modest global unit volume increase compared to 2019, including in the U.S.
      Operating profit margin that improves during the year, with the second half better than the first half, and the full year exceeding 2019.
    • An effective tax rate, excluding significant discrete items, of approximately 25%.
    • Capital expenditures that will range between $260 and $280 million. This includes investments in Serbia and Mexico.
  • Management anticipates first half 2020 operating profit margin to be impacted by typical seasonality and certain unique items which are included in the full year outlook:
    • Approximately $10 million of restructuring charges related to the transition at the company's Mexico manufacturing facility, which will occur primarily in the first quarter of 2020.
    • Higher manufacturing costs in Latin America, Europe and Asia related to both market conditions and the company's footprint actions.
    • Higher SG&A expenses, including the impact of the timing of advertising spend.

• Reports Q4 (Dec) loss of $0.25 per share, $0.10 better than the S&P Capital IQ Consensus of ($0.35); revenues fell 3.4% year/year to $31.7 mln vs the $31.6 mln single analyst estimate.
• Gross margin in the range of 70-75%, with quarterly margins expected to decline in the first half of the year before improving. 2020 operating expenses will be in the range of $141 to $145 million reflecting continued commercial, R&D and operations investments.
• Co issues in-line guidance for FY20, sees FY20 revs of $115-119 mln vs. $117.17 mln S&P Capital IQ Consensus.

Equity indices in the Asia-Pacific began the week on a lower note as continued fears about the impact of the coronavirus weighed on risk tolerance. The number of reported coronavirus cases in China approached 77,500 with deaths nearing 2,600. The number of cases in South Korea grew to almost 850 over the weekend, prompting some airlines to suspend service to Daegu, the city with most coronavirus cases. A People's Bank of China vice governor hinted at another cut to the reserve requirement ratio. Japan's Nikkei was closed for Emperor's Birthday.

• In economic data:
  • Singapore's January CPI 0.8% yr/yr (expected 0.9%; last 0.8%)
  • New Zealand's Q4 Retail Sales 0.7% qtr/qtr (last 1.6%)

---Equity Markets---

• Japan's Nikkei: CLOSED
• Hong Kong's Hang Seng: -1.8%
• China's Shanghai Composite: -0.3%
• India's Sensex: -2.0%
• South Korea's Kospi: -3.9%
• Australia's ASX All Ordinaries: -2.3%

---FX---

• USD/JPY: -0.2% to 111.33
• USD/CNH: +0.1% to 7.0389
• USD/INR: +0.1% to 71.97

Mr. Buffett said:

• Long-term outlook for business hasn't changed due to coronavirus.
• He is buyers on balance when stocks are down.
• He would tell people to buy stocks if you get enough for your money.
• A "good number" of businesses that he owned were impacted by the coronavirus in the short term.
• He believes "something else" other than coronavirus will be "front and center" six months from now.
• US economy is strong, although softer.
• It is "unlikely" that he will buy one of the airlines outright (JETS, AAL, UAL, JBLU, LUV).
• He thinks banks can make money even with low rates (WFC).
• Low rates are good for stocks, but bad for insurance companies.

• CLEANCOR Energy Solutions, an indirect wholly-owned subsidiary of SEACOR Holdings (CKH) and a leading supplier of alternative fuels to over-the-road truck fleets, announced today that a subsidiary completed an acquisition of a liquefied natural gas and compressed natural gas fueling station located at 670 Garnet Avenue in Palm Springs, California.
• SkyWest (SKYW) announced an agreement with United Airlines (UAL) to operate 25 E175 aircraft under a multi-year contract. These aircraft are scheduled to be placed into service ratably over a 12-month period beginning in the second quarter of 2020 through the first quarter of 2021. The aircraft are financed by United and are to be sourced from another United Express operator.
• Transcat (TRNS) announced it has acquired substantially all of the assets of TTE Laboratories including the URL, www.pipettes.com, effective February 21, 2020.
  

• Reports Q4 EPS of ($0.59) vs ($0.51) Capital IQ consensus; revs of $4.3 mln vs $3.1 mln consensus
• Financial Guidance
  • Based on its current operating plans, Epizyme expects its current cash runway to extend into at least 2022. Additionally, the company expects its GAAP operating expenses for 2020 to be between $300 and $330 million inclusive of the milestones due to Eisai for the FDA approval of TAVERIK for epithelioid sarcoma and for follicular lymphoma, if approved.

• Co has been appointed Executive Vice President and CFO.
• As previously announced on January 22, 2020, Paul joined the company on January 27, 2020 and assumed the CFO role following the release of the 2019 results on February 18, 2020.
• Andr van Niekerk will remain with Golden Star to assist with the transition.

• Co entered into an agreement to sell its natural gas retail business, CenterPoint Energy Services, Inc. (CES) to Energy Capital Partners, LLC, (ECP), a private equity and credit investor specializing in energy infrastructure projects, for total consideration of approximately $400 million, including estimated working capital at close, subject to the satisfaction of customary terms and conditions. As part of the transaction, CES will enter into a structured long-term.
• Preferred Supply agreement where Shell Energy North America will provide gas supply and collateral support, as well as receive equity warrants. Net proceeds of the sale will be used to repay a portion of outstanding CenterPoint Energy debt.

• Reports Q4 (Dec) earnings of $2.81 per share, excluding non-recurring items, $0.08 worse than the S&P Capital IQ Consensus of $2.89; revenues rose 1.3% year/year to $1.1 bln vs the $1.1 bln S&P Capital IQ Consensus.
• Co issues downside guidance for Q1, sees EPS of $0.60, excluding non-recurring items, vs. $0.95 S&P Capital IQ Consensus; sees Q1 revs of comparable to Q1 of 2019 or $741.1 mln vs. $766.81 mln S&P Capital IQ Consensus.
• Co issues downside guidance for FY20, sees EPS of +4-6% to $6.72-6.84, excluding non-recurring items, vs. $7.05 S&P Capital IQ Consensus; sees FY20 revs of +2-3% to $3.59-3.62 bln vs. $3.63 bln S&P Capital IQ Consensus.
• The Company is closely monitoring the outbreak of a respiratory illness caused by a novel coronavirus that was first detected in Wuhan, China. The virus has affected several industries within China, including textile production and manufacturing. The Company plans to source approximately 15% of its products from China in 2020. Additionally, the Company's suppliers throughout Asia source a significant amount of fabric from China. Travel restrictions delayed the return of factory workers following the recent conclusion of the Chinese New Year holiday. The Company's suppliers have not yet determined, with certainty, the impact of production delays. Accordingly, the financial impact of any delayed receipts from China is not known at this time. The Company's guidance for fiscal year 2020 and the first quarter of fiscal 2020 does not include any adjustments for potential effects of the coronavirus situation.

• AT&T (T) announced that AT&T Mobility has reached a tentative agreement with Communications Workers of America District 6 in Mobility Southwest (or Mobility Purple) contract negotiations. The four-year agreement, which will be submitted to the union's membership for a ratification vote in coming days, covers over 7,300 AT&T Mobility employees in CWA District 6 -- the Southwest Region, which includes Arkansas, Kansas, Missouri, Oklahoma, and Texas.
• United Therapeutics (UTHR) and DEKA Research & Development Corp announced receipt of an additional 510(k) clearance by the FDA related to the Unity Subcutaneous Delivery System for Remodulin (treprostinil) Injection, also referred to as the Remunity pump, enabling United Therapeutics to launch the system using drug reservoirs that have been prefilled by specialty pharmacies.
• Tutor Perini (TPC) announced that its subsidiary, Black Construction Corp., in a joint venture with MACE International, has been awarded by the U.S. Naval Facilities Engineering Command, Far East District, three new task orders for projects in Diego Garcia collectively valued at approx. $28 mln.
• Radware (RDWR) has joined the Microsoft Intelligent Security Association, an ecosystem of independent software vendors that have integrated their solutions to better defend against a world of increasing threats.

• Canyon Capital Advisors LLC, the investment advisor to funds and accounts that beneficially own, in the aggregate, over 9 million shares, or almost 7.0% of the outstanding common stock of Berry Global, sent a letter to Berry's Board of Directors and senior management team asking the company to immediately take the following steps:
  1. Publicly announce that it has hired an investment bank or other financial advisor to develop a clear plan of action toward accelerated deleveraging
  2. Commit to achieving an investment grade rating (and cease M&A activity other than deleveraging transactions)
  3. Get in front of environmental, social, and governance trends and correct market misperceptions about sustainability.

• The consideration has been structured to realize both immediate value for these non-core assets through a cash component of $20 million and further value from a significant $45 million share position in a newly created, growth-oriented company with a driven and experienced management team. As a founding shareholder, Yamana stands to benefit from participation in the new company, a pure-play precious metals royalty company that has significant potential upside through mineral resource expansions and mine life extensions.
• Upon closing of the Acquisitions, Guerrero intends to change its corporate name to Nomad Royalty Company Ltd. ("Nomad"). Orion and Yamana are expected to hold approximately 77% and 13% of the outstanding shares of Nomad, respectively, on a pro forma basis, after taking into consideration the conversion into shares of the subscription receipts to be issued in the Private Placement, and excluding any shares that may be issued under the Deferred Cash Payment, if issued.

• Reports Q4 (Dec) loss of $0.09 per share, excluding non-recurring items, $0.01 better than the S&P Capital IQ Consensus of ($0.10); revenues rose 48.7% year/year to $460.2 mln vs the $420.28 mln S&P Capital IQ Consensus.
• U.S. Gulf of Mexico production averaged approximately 26,000 boepd net (82% oil) during the fourth quarter. Record fourth quarter production was driven by strong performance at Odd Job and initial production from new wells from the Odd Job, Gladden, and Nearly Headless Nick fields. During the fourth quarter, Kosmos recorded approximately $75 million of exploration expense related to the Resolution-1 and Oldfield-1 unsuccessful wells.
• Co announces that Thomas Chambers, who has served as senior vice president and chief financial officer since November 2014, has informed the company that he will retire in May 2020. Mr. Chambers will be succeeded by Neal D. Shah, currently senior vice president and deputy chief financial officer. Mr. Shah has been with Kosmos since 2010, serving in a series of roles of increasing responsibility in finance, investor relations and, most recently, in international operations as head of the Equatorial Guinea business unit. Prior to Kosmos, Mr. Shah was an investment banker at Morgan Stanley assisting oil and gas companies.
  

• The FDA has approved Trulicity (dulaglutide) for the reduction of major adverse cardiovascular events in adults with type 2 diabetes who have established cardiovascular (CV) disease or multiple cardiovascular risk factors. This decision makes Eli Lilly and Company's Trulicity the first and only type 2 diabetes medicine approved to reduce the risk of MACE for both primary and secondary prevention populations.
• The new indication reflects the differentiated patient population of REWIND, the Trulicity cardiovascular outcomes trial. While all participants had CV risk factors, the study consisted primarily of people without established CV disease. REWIND showed a significant risk reduction in MACE, a composite endpoint of nonfatal myocardial infarction (heart attack), nonfatal stroke or CV death. Results demonstrated consistent MACE risk reduction with Trulicity across major demographic and disease subgroups. Trulicity's safety profile was consistent with the GLP-1 receptor agonist (RA) class. The most common adverse events leading to the discontinuation of Trulicity were gastrointestinal events.
  

• eBay has been exploring potential value-creating alternatives for Classifieds and continues to be in active discussions with multiple parties regarding a potential transaction. As previously noted, eBay expects to provide an update regarding this process by the middle of the year. eBay remains committed to maximizing the value of Classifieds for eBay shareholders.
• The strategic review of Classifieds is part of eBay's broader portfolio review, which resulted in the successful sale of StubHub for $4.05 billion in cash.
• "eBay's Board and management are committed to driving significant returns to shareholders by maximizing the value of Classifieds and positioning our Marketplace business for long-term success," said Scott Schenkel, interim CEO of eBay Inc. "The Classifieds review process, together with the StubHub sale and our initiatives to increase volume, revenues, margins, and cash flow while continuing to invest in long-term profitable growth, demonstrate this commitment. We are acting with urgency while focusing on the ultimate objective of maximizing the value of Classifieds."
  

• Reports Q4 (Dec) earnings of $1.04 per share, excluding non-recurring items, $0.18 better than the S&P Capital IQ Consensus of $0.86; revenues rose 3.3% year/year to $246.9 mln vs the $255.35 mln S&P Capital IQ Consensus.
• Co issues downside guidance for FY20, sees FY20 revs of +6-8% to $1.1-1.12 bln vs. $1.11 bln S&P Capital IQ Consensus.
• "I'm pleased that we were once again able to deliver results consistent with our value creation model," said Brian MacNeal, CFO of AWI. "As we look ahead to 2020, we expect a continuation of the market conditions we saw in 2019. We again expect to grow sales in the high-single digit range, expand adjusted EBITDA margins and generate sector leading adjusted free cash flow of more than 25% of sales."
• The company also entered into an agreement on February 20, 2020 to transfer approximately $1 billion of outstanding retiree pension benefit obligations and administration related to approximately 10,000 retirees and beneficiaries under its Retirement Income Plan ("RIP") to Athene Annuity and Life Company and Athene Annuity & Life Assurance Company of New York.

• Preliminary analysis indicates that the INCREASE clinical study of Tyvaso (treprostinil) Inhalation Solution in patients suffering from World Health Organization Group 3 pulmonary hypertension associated with interstitial lung disease (PH-ILD) has met its primary efficacy endpoint of demonstrating improvement in six-minute walk distance.
• Tyvaso increased six-minute walk distance by 21 meters versus placebo (p=0.0043, Hodges-Lehmann estimate) after 16 weeks of treatment. Benefits of Tyvaso were observed across several key subgroups, including etiology of PH-ILD, disease severity, age, gender, baseline hemodynamics, and dose.
• Significant improvements were also observed in each of the study's secondary endpoints including reduction in the cardiac biomarker NT-proBNP, time to first clinical worsening event, change in peak 6MWD at Week 12, and change in trough 6MWD at week 15. Treatment with Tyvaso of up to 12 breaths per session, four times daily, in the INCREASE study was well tolerated and the safety profile was consistent with previous Tyvaso studies in PAH and known prostacyclin-related adverse events (see the discussion of adverse events below under "About Tyvaso").

• Clover entered into a research collaboration with GSK for its protein-based coronavirus vaccine candidate (COVID-19 S-Trimer). GSK will provide Clover with its pandemic adjuvant system for further evaluation of S-Trimer in preclinical studies.
• Having one of the largest in-house, commercial-scale cGMP biomanufacturing capabilities in China, Clover could potentially rapidly scale-up and produce large-quantities of a new coronavirus vaccine.
  

• Co announced that both the FDA and European Medicines Agency (EMA) have accepted the company's Supplemental Biologics License Application (sBLA) and Marketing Authorization Application (MAA), respectively, for ofatumumab (OMB157) for the treatment of relapsing forms of multiple sclerosis (RMS) in adults. Ofatumumab is a novel B-cell therapy that delivers sustained efficacy with a favorable safety profile.
• If approved, ofatumumab has the potential to become a first-choice treatment for a broad RMS population and the first B-cell therapy that is easy to start and manage in a monthly subcutaneous injection that can be self-administered at home using an autoinjector pen.
  

• The global equity markets are getting hit hard this morning after increased outbreaks of the coronavirus were reported outside of China. Recent reports indicate an uptick in outbreaks in Italy, Iran, and South Korea. The EU and US markets are reeling in response. S&P Futures gap opened lower and have tumbled down to the 3250 area. This is just off the session low of 3242.50. The overnight was set on the open at 3312.00.
• In Asia, Japan was spared from the sell-off with markets closed for public holiday. China was opened but only saw a decline of 0.3%. Reports suggest that the spread of the virus is slowing in China which is likely why the Shanghai avoided a similar response as the rest of the world markets. 
• In Europe, the major bourses are all down about 3.5%. Italy made headlines over the weekend after it put 50,000 people on lockdown across several towns. This has spooked the markets with broad-based weakness. Gold miners have seen some relative strength with gold futures acting as a safe-haven this morning, up well over 2%.

Market Updates

• S&P Futures vs Fair Value: -88.0
• 10 yr Note: 1.402%
• USD/JPY: 111.33 -0.19
• EUR/USD: 1.0817  -0.0030
• Europe: FTSE -3.5%  DAX -3.5%  CAC -3.6%
• Asia: Hang Seng -1.8% Shanghai -0.3% Nikkei CLOSED
• Gold (1684.60 +35.80) Silver (18.76 +0.22) Crude (51.54 -1.84)

• Healthcare: RCUS (17.32 +57.03%), CYH (7.18 +52.12%), SENS (1.44 +32.11%), ABEO (4.05 +27.76%)
• Materials: EGO (9.93 +48.88%), HMY (4.13 +31.95%)
• Industrials: ENPH (59.09 +43.81%)
• Consumer Discretionary: STMP (174.47 +96.63%), DPZ (371.96 +27.56%), ASNA (5.59 +27.05%), CVNA (110.09 +24.23%)
• Information Technology: TIVO (8.82 +28.76%), SEDG (142.07 +27.75%), SSTI (36.9 +24.79%), SPWR (10.2 +22.3%)
• Financials: LM (50.35 +23.65%)
• Consumer Staples: NBEV (2.68 +22.94%)
  

• Healthcare: TVTY (12 -46.52%), MD (19.99 -25.41%), IMGN (5.41 -20.44%), TXMD (2.06 -16.94%)
• Materials: TECK (10.92 -18.87%), KOP (28.69 -16.94%)
• Industrials: FLR (14.74 -24.56%), KNL (21.31 -17.05%)
• Consumer Discretionary: GRPN (1.65 -41.7%), AAN (43.33 -25.55%), SGMS (23.75 -17.59%), SIX (32.63 -16.78%)
• Information Technology: APPN (48.65 -18.67%), VECO (14.99 -17.09%), CMCM (2.99 -15.3%),
• Energy: GEL (14.61 -20.9%), CEIX (5.88 -16.48%)
• Consumer Staples: FDP (28.66 -16.88%)

• Co provides an update on the previously announced acquisition by merger of the company by NexPoint Hospitality. The closing has been extended to March 16, 2020, a previously announced potential extension date, from February 28, 2020, subject to the satisfaction or waiver of certain remaining closing conditions.

• Co and Gas Investment announce that BPGIC and Sahara Energy have mutually agreed to discontinue their joint development project that would have resulted in Sahara's installation of a modular refinery at BPGIC's terminal. After conducting several technical studies over the past few months, BPGIC and Sahara decided to discontinue their joint development project due to their differing perspectives and visions for the refinery.

• Co confirms that the FDA approved NEXLETOL, which is indicated as an adjunct to diet and maximally tolerated statin therapy for the treatment of adults with heterozygous familial hypercholesterolemia (HeFH) or established atherosclerotic cardiovascular disease (ASCVD) who require additional lowering of LDL-C.
• It's the first oral, once-daily, non-statin LDL-cholesterol lowering medicine approved in the US in nearly 20 years for indicated patients. 
• NEXLETOL will be commercially available in the U.S. March 30, 2020.
• Conference Call set for Monday at 8am ET.

U.S. stocks sold off to end the week, while investors continued to buy less risky assets, amid pestering concerns about the coronavirus and valuation. The Nasdaq Composite led the retreat with a 1.8% decline, followed by the S&P 500 (-1.1%), Russell 2000 (-1.0%), and Dow Jones Industrial Average (-0.8%).

Reported cases of the coronavirus continued to climb in China, but that wasn't new information for the market -- or investors who were buying yesterday's dip. Arguably, the bigger story was the continued flight-to-safety in gold ($1648.90/ozt, +28.90, +1.8%) and U.S. Treasuries (30-yr yield set a new all-time low at 1.89%). 

The defensive positioning was attributed not only to the coronavirus fostering growth concerns, but also to the record run in U.S. stocks despite the coronavirus. The latter bolstered calls that the market had gotten overextended and was due for a pullback. The Markit flash services PMI for February, which fell into contraction territory, didn't help sentiment, either. 

The top-weighted S&P 500 information technology sector (-2.3%) was today's outright laggard amid broad-based selling. The gains in the real estate (+0.4%) and consumer staples (+0.3%) sectors reflected the market's defensive posture and helped limit the broader decline. 

Apple (AAPL 313.05, -7.25, -2.3%), Amazon (AMZN 2095.97, -57.13, -2.7%), Alphabet (GOOG 1485.11, -33.04, -2.2%), and Microsoft (MSFT 178.59, -5.83, -3.2%) -- four widely-held, and crowded, stocks largely responsible for the market's record run -- dropped more than 2% on Friday.

Deere (DE 177.43, +11.60, +7.0%) was among the few bright spots in the market after the company reported solid quarterly results.

U.S. Treasuries, as previously stated, continued to post gains. The 2-yr yield declined four basis points to 1.35%, and the 10-yr yield declined five basis points to 1.47%. The U.S. Dollar Index fell 0.5% to 99.32. WTI crude declined 0.7%, or $0.40, to $53.34/bbl. 

Reviewing Friday's economic data, which featured the Existing Home Sales report for January:

• Existing home sales decreased 1.3% m/m in January to a seasonally adjusted annual rate of 5.46 million units (Briefing.com consensus 5.42 million) from a downwardly revised 5.53 million (from 5.54 million) in December. Total sales were up 9.6% year-over-year.
  • The key takeaway from the report is that the housing inventory for January was at its lowest level since 1999, demonstrating that there are serious inventory constraints in the existing home sales market, which is driving up prices and underscoring the importance of mortgage rates staying low for affordability purposes.

Investors will not receive any notable economic data on Monday.

• Nasdaq Composite +6.7% YTD
• S&P 500 +3.3% YTD
• Dow Jones Industrial Average +1.6% YTD
• Russell 2000 +0.6% YTD

Wells Fargo has entered into agreements with the US Department of Justice (DOJ) and Securities and Exchange Commission (SEC) to resolve these agencies' investigations into the company's historical Community Bank sales practices and related disclosures. As part of this resolution, Wells Fargo has agreed to make payments totaling $3 bln. As the settlement agreements with the DOJ recognize, Wells Fargo cooperated fully with the government's investigations. Wells Fargo had fully accrued for the amount of this settlement as of December 31, 2019. Today's resolution includes:

• An agreement with the DOJ that resolves the criminal investigation into sales practice activities in the Community Bank from 2002 to 2016. As part of the agreement, no charges will be filed against Wells Fargo provided Wells Fargo abides by all the terms of the agreement.
• A separate settlement agreement that resolves DOJ's civil investigation.
• A separate administrative order that resolves the SEC's civil investigation. Wells Fargo has agreed to the establishment of a $500 mln Fair Fund for the benefit of investors who were harmed by the conduct covered in the agreement. The Fair Fund is part of the $3 bln settlement.