Mid-Morning Look: November 30, 2020

Mid-Morning Look

Monday, November 30, 2020

Index

Up/Down

%

Last

 

DJ Industrials

-339.86

1.14%

29,570

S&P 500

-26.23

0.72%

3,612

Nasdaq

-78.89

0.65%

12,126

Russell 2000

-21.68

1.17%

1,833

 

 

U.S. stocks open lower, pulling back from near record highs for major averages but still on track to post some of the best monthly gains in several years after positive vaccine related news headlines and a clearer picture in Washington helped propel stocks higher. Major averages came into the day with massive November gains with the Dow up 12.8% heading into the final trading day, the S&P 500 up 11.3%, the Nasdaq Comp up 11.8% and the Russell 2000 up a whopping 20.5%. Stocks losing some steam early despite more upbeat vaccine news (see MRNA below) after weaker economic data as the Chicago PMI was reported at 58.2, slightly below the 59.0 estimate (and below prior month of 61.1), and Pending Home Sales showing a surprise decline. Moderna said it would ask U.S. and European regulators for approval of its vaccine (but was widely expected) after saying on Nov. 16 that it had achieved 94.5% effectiveness of its vaccine, which sent the S&P 500 up 1.1% that day. Bitcoin prices touch all-time highs, surging more than 15% as nears the $20,000 level with more investors making bets on the crypto currency. Commodity prices dipping as gold adds to last week 4% declines (rotation into Bitcoin) and oil prices pullback after strong November gains.

 

Economic Data

·     Chicago PMI for November weaker, reported at 58.2, slightly below the 59.0 estimate (and below prior month of 61.1). The data follows the -1.3-point slide to 61.1 in October as the index continues to pare gains after its 11.2-point bounce to 62.4 in September which was the highest reading since December 2018

·     U.S. Oct Pending Home Sales index -1.1 pct (vs. consensus +1.0 pct) to 128.9 and Oct Pending Home Sales still up +20.2% from Oct 2019

 

 

Macro

Up/Down

Last

 

WTI Crude

-0.39

45.14

Brent

-0.50

47.68

Gold

-9.30

1,778.80

EUR/USD

0.0034

1.1995

JPY/USD

0.07

104.14

10-Year Note

0.008

0.849%

 

 

Sector Movers Today

·     Auto sector; NKLA big swing higher too lower as signs MOU with GM for global supply agreement but was smaller in scale than some investors hoped and doesn’t include any equity investment (the MOU does not include the previously contemplated development of the Nikola Badger); Ford (F) mentioned positively in Barron’s saying shares could double noting the automaker’s top-selling F-150 line always underpins a bullish story on Ford, but notes that sales of the heftier F-250, F-350, and F-450 models helped Ford post EPS of $0.65 in Q3 to top consensus marks; electric vehicle stocks (AYRO, BLNK, FSR, NIO, SBE) seeing some profit taking early

·     Bank movers; Morgan Stanley upgrades large cap bank industry to attractive with upside ranging from 16-64% as vaccine materially cuts downside risks and boosts stock upside, and names RF, WFC, C (Citi), STT as their top picks in the space, while upgrading BK to EW from UW, downgrading GS to UW from Equal-Weight, and issuing a double downgrades on JPM and BAC to UW from OW; Stephens upgraded USB to OW from EW as the bank’s YTD underperformance (down 25% vs BKX -18%) provides an attractive entry point for large-cap bank investors, and downgraded PNC to EW from OW after the stock’s performance following their acquisition of BBVA and overall bank valuations on recent vaccine news; RBC upgraded WFC to Sector Perform with a $31 target ahead of an expected announcement of cost savings and divesture plans, reversing their downgrade in January on regulatory concerns which still remain

·     Leisure and Gaming; Airbnb (ABNB) and DoorDash (DASH), both set to start roadshows this week, are planning for IPO valuations that exceed previous estimates, the Wall Street Journal reports. Airbnb is planning a range of ~$30B-$33B, on a fully diluted share count basis, while DoorDash plans to target ~$25B-$28B on a fully diluted basis https://bit.ly/2JjqJbz – DASH later said sees IPO pricing $75-$85; in gaming, CZR (to 85 from 70), MCRI (to 65 from 60) and MGM (to 32 from 22) tgts raised to reflect broader group re-rate since vaccine news at Truist

·     MLP sector; Wells Fargo bullish as upgraded ENB, TRGP, DCP, NS, WES, RTLR, NBLX to overweight, TRP, KMI, MMP, PPL and BKEP to equal weight and downgrade CAPL, SUN to underweight – turned bullish on midstream headed into 2021 due to vaccine driven crude rally, bullish set up for both gas and NGL prices, rotation into value over growth and long-term opportunities around renewables

·     Software movers; WORK shares rose after CNBC’s David Faber said this morning CRM deal for WORK roughly half cash and half stock in high premium deal https://bit.ly/3mpDaAR ; ZI files to sell 12.5M shares of common stock; PFPT upgraded to buy at Truist and raise ests as conversations with industry sources indicate strength in its emerging products as well as increased traction in its product bundling initiatives and Federal business; Unity Software (U) downgraded at Oppenheimer advising to take profits as still have confidence in the beat/raise story, but the stock has run up too soon, too fast for our risk appetite; ZM shares rise ahead of earnings expected after the close tonight

 

Stock GAINERS

·     INFO +6%; as SPGI and INFO entered into a merger agreement to combine in an all-stock transaction which values IHS Markit at $44B, including $4.8B of net debt. https://bit.ly/3qf7hgz

·     MRNA +13%; surges to new record highs after saying says it will file for U.S. and European emergency authorization of its COVID-19 vaccine after full results from a late-stage study showed the vaccine was 94.1% effective

·     MSTR +19%; shares extend last week gains (recall last week Citron positive on shares of MSTR – had tweeted last Tuesday 11/24 saying it is how they play Bitcoin) https://citronresearch.com/

·     PFE +3% and BNTX +9%; as the Financial Times reported the U.K. is set to become the first country in the world to roll out a COVID-19 vaccine, with the country’s medical regulator likely to give approval “within days” (had submitted its request on Nov. 20 and the FDA has scheduled a panel of outside advisers to review the Pfizer/BioNTech vaccine on Dec. 10)

·     RGS +7%; feature Barron’s article, saying that haircuts, coloring, and highlights can’t be sold online or in a box, and a brief, socially distanced look at family, friends, and colleagues reveals plenty of pent-up demand

·     SHOP +4%; announced Saturday that sales for Black Friday were up 75% YoY, hitting $2.4 billion from its independent and direct-to-consumer brands

·     ZM +2%; adds to last week gains ahead of earnings after the close tonight

 

Stock LAGGARDS

·     AAL -5%; downgraded to underperform at Raymond James, while overall winners from last week (cruise lines, airlines, energy and REITs) seeing some profit taking

·     CEO -13%; shares fall following reports the Trump administration is set to add China’s top chipmaker SMIC and CNOOC to a blacklist of alleged Chinese military companies, Reuters reports

·     NKLA -16%; big swing from higher too lower as signs MOU with GM for global supply agreement but was smaller in scale than some investors hoped and doesn’t include any equity investment (the MOU does not include the previously contemplated development of the Nikola Badger)

·     NVAX ; said it has pushed back the start of a U.S.-based, late-stage trial for its experimental COVID-19 vaccine and now expects it to begin in the coming weeks instead of November

·     SAGE -6%; as analysts continue to weigh in after BIIB collaboration deal announced Friday where some analysts feel it takes some upside off the table for SAGE

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Market commentary provided by Catena Media Financials US, LLC, a firm separate from and not affiliated with Regal Securities. Regal Securities has not participated in the creation of the content, and does not explicitly or implicitly endorse the content.