Early Look

Tuesday, December 14, 2021

Futures	Up/Down	%	Last
Dow	-11.00	0.03%	35,532
S&P 500	-12.25	0.26%	4,647
Nasdaq	-110.50	0.69%	15,971

 

 

S&P futures slide -0.25% to 4,655, extending the late day slide that saw markets finish at their lows as investors brace for the two-day FOMC meeting that starts today, as well as another inflation reading later with the November PPI at 8:30 AM. Economists expect the PPI to have risen 0.5% last month, climbing to an annual rate of 9.2%, while the core PPI, excluding food and energy, is seen coming in at 7.2%. For tomorrow’s meeting, the Fed is likely to announce tapering of bond purchases earlier than previously expected, while the ECB could provide more detail on how it will unwind its Pandemic Emergency Purchase Program, due to end in March when they meet later this week. U.S. stocks finished at session lows Monday as investors moved from risk to the safe-haven equities and to Treasury bonds, pushing yields sharply lower. In oil news, Saudi Arabia’s energy minister warned traders against shorting oil, saying OPEC+ could react quickly to any fall in prices. Global oil markets have returned to surplus and face a bigger oversupply early next year, according to IEA. Markets are also dealing with a surge in Covid cases, which impacted reopen and travel stocks, with number expected to rise heading into the holiday with more people traveling and seeing family. In Asian markets, The Nikkei Index slides over -200 points to 28,432, the Shanghai Index drops -0.5% to 3,661, and the Hang Seng Index falls over 300 points, or 1.33% to settle at 23,635. In Europe, the German DAX is down slightly at 15,610, while the FTSE 100 rises +0.35% to 7,258.

Events Calendar for Today

·     6:00 AM ET          NFIB Small Business Optimism for November

·     7:45 AM ET          ICSC Weekly Retail Sales

·     8:30 AM ET          Producer Price Index (PPI) MoM for November…est. 0.5%

·     8:30 AM ET          Producer Price Index (PPI) YoY for November…est. 9.2%

·     8:30 AM ET          PPI Core Ex: Food & Energy MoM for November…est. 0.4%

·     8:30 AM ET          PPI Core Ex: Food & Energy YoY for November…est. 7.2%

·     8:55 AM ET          Johnson/Redbook Weekly Sales

·     4:30 PM ET          API Weekly Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: none

·     Earnings After the Close: ASPU, CLSK, LVLU, OPTT, RICK, SEAC, SKIL

 

Other Key Events:

·     American Society of Hematology (ASH) Annual Meeting, 12/11-12/14, in Atlanta, GA

·     Cowen 7th Annual Software Bus Tour (virtual), 12/14-12/15

·     KeyBanc Virtual Bus Tour: Modern FinTech & Software Establishment 12/14

·     Mizuho San Francisco Multi-Asset Property Tour, 12/14-12/16, in San Francisco, CA

·     Stephens Auto Parts Investor Field Trip, 12/13-12/14, in Atlanta, GA

·     Truist Texas Bank Summit, 12/13-12/14, in Dallas, TX

·     Wolfe Global Consumer Growth Conference (virtual), 12/14-12/15

·     China Industrial Output and Retail Sales for November

 

Market Closing Prices Yesterday

·     he S&P 500 Index slumped -43.05 points, or 0.91%, to 4,668.97

·     The Dow Jones Industrial Average fell -320.04 points, or 0.89%, to 35,650.95

·     The Nasdaq Composite dropped -217.32 points, or 1.39%, to 15,413.28

·     The Russell 2000 Index declined -31.31 points, or 1.42% to 2,180.50

 

 

Macro	Up/Down	Last
Nymex	-0.12	71.16
Brent	-0.13	74.26
Gold	-1.65	1,785.00
EUR/USD	0.0034	1.1318
JPY/USD	-0.01	113.53
10-Year Note	+0.01	1.434%

 

 

World News

·     NFIB Small Business Optimism Index: 98.4 vs. 98.3 consensus, 98.2 in October.

·     Eurozone October Industrial Production missed: 1.1% m/m vs 1.2% consensus, 3.3% y/y vs 3.2% consensus

 

Sector News Breakdown

Consumer

·     Gambling.com Group Limited (GAMB) entered into a definitive agreement to acquire Roto Sports, operator of RotoWire.com, with the aggregate purchase price is $27.5 million

·     Purple Innovation (PRPL) sees FY21 revenue, adjusted EBITDA at low end of prior view as updated its outlook for the calendar year 2021; Robert T. DeMartini succeeds Joseph B. Megibow, who is stepping down as CEO and member of the board

·     Fresh Vine (VINE) 2.2M share IPO priced at $10.00

·     Beyond Meat (BYND) upgraded to neutral from underweight at Piper saying a U.S. nationwide launch in McDonald’s appears to be coming late in the first quarter of 2022, earlier than they anticipated.

·     Rentokil Initial (RTOKY) said it has agreed to acquire pest control company Terminix Global Holdings (TMX) in a cash-and-stock deal valued at $55 per share or an aggregate of $6.7 billion. Under the deal, Rentokil will issue about 643.3 million shares to Terminix shareholders and about $1.3 billion in cash

 

Energy, Industrials and Materials

·     3M Corp. (MMM) is near a deal to combine its food-safety business with Neogen Corp. (NEOG), a food testing and animal healthcare specialist, according to the WSJ. The deal will value the combined company at $9.3 billion including debt and come as soon as Tuesday, and will be structured as a Reverse Morris Trust, https://on.wsj.com/30oe4fY

·     Alcoa Corp. (AA) will move to the S&P MidCap 400, replacing Hill-Rom Holdings Inc. (HRC), effective at the start of trading on Dec. 20. S&P 500 constituent Baxter International Inc. (BAX) is acquiring Hill-Rom in a deal completed Monday.

·     EQT Corp. (EQT) announces $1 billion share repurchase program, reinstatement of regular dividend, and updated long-term leverage target; expects to generate approximately $1.9 bln of free cash flow in 2022; expects to generate an average of approximately $1.6 bln of free cash flow per year from 2023 through 2026

·     Caterpillar Inc. (CAT) files mixed securities shelf

·     The IEA revised down 2021/2022 oil demand f/c by ~100k bpd; new C-19 cases are expected to be slow but not derail a recovery in oil demand; if OPEC+ continue unwinding cuts, the oil surplus could be 1.7m bpd in Q1 2022 & 2m bpd in Q2

 

Healthcare

·     Merck (MRK) announced that the FDA has placed clinical holds on the investigational new drug applications (INDs) for the oral and implant formulations of islatravir (MK-8591) for HIV-1 pre-exposure prophylaxis (PrEP); the injectable formulation of islatravir for HIV-1 treatment and prophylaxis; and the oral doravirine/islatravir (DOR/ISL) HIV-1 once-daily treatment.

·     Bellus Health (BLU) announces launch of $175M common share offering (followed a 47% gain Monday after announced positive topline results from its Phase 2b SOOTHE Trial of BLU-5937 for the treatment of refractory chronic Cough)

·     Mesoblast (MESO) slides after being notified by Novartis (NVS) that it has chosen to terminate the agreement with Mesoblast prior to closing; the company develops remestemcel-L in partnership with Novartis.

·     Seelos Therapeutics Inc (SEEL) files prospectus relates to resale by selling stockholder of up to 3.2M shares of common stock

·     A study conducted in South Africa among recipients of the Johnson & Johnson (JNJ) COVID-19 vaccine has found that no one has died from the recently detected Omicron variant, Reuters reported citing one of the co-lead investigators of the study.

 

Technology, Media & Telecom

·     IAC (IAC) reports November Angi Inc. (ANGI) total revenue up 17% from last year; Dotdash revenue up 13%, and its Search business revenue up 40% from last year; Vimeo (VMEO) November revenue up 26%, total subscribers up 11% and ARPU up 12%

·     Unity (U) & AppLovin (APP) upgraded to OW, and initiate IronSource (IS) at OW at Morgan Stanley saying consumer time/money spent on mobile apps are up 5x in recent years. We believe emerging mobile ad networks are set to benefit from this growth, as their advertising solutions are well-suited to gain share in an increasingly mobile, privacy focused world.

·     The U.K. competition regulator said Tuesday that its interim report has found that a duopoly of Apple Inc. (AAPL) and Alphabet Inc.’s Google (GOOGL) limits competition and choice, and that the firms are “exercising a vice-like grip” over mobile devices.