Early Look

Wednesday, December 16, 2020

Futures	Up/Down	%	Last
DJ Industrials	84.00	0.28%	30,198
S&P 500	11.50	0.31%	3,698
Nasdaq	30.50	0.24%	12,626

 

 

U.S. stocks are again looking higher, rising ahead of the FOMC meeting later today (which is expected to show more dovish comments), and on track to add to the big gains on Tuesday as market momentum remains clearly to the upside. The timeline for Americans to receive the Covid-19 vaccine has moved up as Dr. Moncef Slaoui, head of Operation Warp Speed, who had said just two weeks ago that the U.S. could immunize one-third of its population within three months, has now said it looks like most of America could get a vaccine by that date as believes there will be enough supply. Out of Washington, U.S. congressional leaders reported substantial progress on Tuesday night after two meetings of top Democrats and Republicans to end a months-long standoff on coronavirus relief and finalize a funding bill to avert a government shutdown. “We are getting closer and closer,” Republican Senate Majority Leader Mitch McConnell said “I am optimistic that we are going to be able to complete an understanding sometime soon.” They left without announcing a deal. But McCarthy said: “I think we’re moving in the right direction. I think there’s a possibility of getting it done. So we’re finalizing out to see if it’s possible. Let us keep working.” In Asian markets, The Nikkei Index rose 69 points to 26,757, the Shanghai Index was little changed at 3,366 and the Hang Seng Index jumped 253 points to 26,460. In Europe, the German DAX is up over 200 points to 13,580, while the FTSE 100 rises 75 points to 6,590. It was another day of stock market gains on Tuesday as the Dow, S&P 500 close at their highest level in three weeks on pandemic fiscal relief hopes, while the SmallCap Russell 2000 touched a fresh record high and the Nasdaq Comp gains were paced by gains in Apple (AAPL) after a report that it plans to boost manufacturing by nearly 30% in the first half of 2021 (also sending iPhone suppliers higher). Oil prices are holding gains, gold rises and the U.S. dollar remains at 2-year lows. In stocks news, cannabis stocks are jumping early after a Bloomberg report of a potential tie-up in the sector.

 

Market Closing Prices Yesterday

·     The S&P 500 Index jumped 47.13 points, or 1.29%, to 3,694.62

·     The Dow Jones Industrial Average rose 337.76 points, or 1.13%, to 30,199.31

·     The Nasdaq Composite spiked 155.02 points, or 1.25%, to 12,595.06

·     The Russell 2000 Index advanced 45.91 points, or 2.40% to 1,959.76

 

Economic Calendar for Today

·     7:00 AM EST      MBA Mortgage Applications Data

·     8:30 AM EST      Advance Retail Sales MoM for November…est. (-0.3%)

·     8:30 AM EST      Retail Sales MoM for November…est. 0.1%

·     9:45 AM EST      Markit Manufacturing PMI, PMI-flash…est. 55.7

·     9:45 AM EST      Markit Services PMI-flash…est. 55.9

·     10:00 AM EST    NAHB Housing Market Index for December…est. 88

·     10:30 AM EST    Weekly DOE Inventory Data

·     2:00 PM EST       FOMC Meeting results

 

Earnings Calendar:

·     Earnings Before the Open: TTC

·     Earnings After the Close: ABM, AEY, BLBD, LEN, MLHR

 

Other Key Events:

·     FOMC Meeting 2:00 PM EST

·     JMP Securities Hematology Summit, 12/15-12/16

 

 

Macro	Up/Down	Last
WTI Crude	0.10	47.72
Brent	0.08	50.84
Gold	11.75	1,865.40
EUR/USD	0.0046	1.2197
JPY/USD	-0.34	103.33
10-Year Note	+0.00	0.921%

 

 

World News

·     China and Japan, the two largest non-U.S. holders of Treasuries, reduced their holdings in October, data from the U.S. Treasury department showed on Tuesday. China’s holdings of Treasuries fell to $1.054 trillion, the lowest since January 2017, cutting its load of U.S. government debt for five straight months. Japan, the world’s largest holder of Treasuries at $1.269 trillion, also pared back its holdings for a third straight month.

·     Japan’s exports fell -4.2% in November from a year earlier, Ministry of Finance data showed which compared with a 0.5% rise expected and followed a 0.2% fall in October.

·     IHS Markit’s European flash composite PMI, seen as a good guide to economic health, soared to 49.8 in December from November’s 45.3, just shy of the 50 mark separating growth from contraction. A Reuters poll had predicted a much shallower rise to 45.8.

 

Sector News Breakdown

Consumer

·     AutoZone (AZO) authorizes additional $1.5B stock repurchase

·     American Outdoors (AOUT) 2Q adj EPS $0.77 vs. est. $0.25, net sales $79.1Mm vs. est. $61Mm; guides FY adj EPS $1.49-1.67 vs. est. $0.91; raises FY21 revenue view to $235M-$245M from $195M-$205M (est. $209.98M)

·     Ollie’s Bargain Outlet (OLLI) announces $100M increase to share repurchase plan, as increase in its share buyback program now up to $159.6M

·     DAVIDsTEA (DTEA) announces 145.5% increase in e-commerce and wholesale sales to $22.1 million for Q3, Gross profit of $10.8 million, adjusted EBITDA of $3.3 million and cash of $21.9 million at quarter-end

·     ContextLogic (WISH) has priced its IPO at $24 to raise $1.1B, giving an initial valuation of $17B; WISH had planned to sell 46M shares in the range of $22-$24 per share

·     Copa Holdings (CPA) reports revenue passenger miles declined 74.6% to 431.5M in November; capacity dropped 72.3% to 551.1M available seat miles; load factor decreased 730 bps to 78.3%

 

Energy, Industrials and Materials

·     Goldman Sachs with several changes in the energy sector: upgraded Exxon (XOM) to buy from neutral and raise tgt to $52 from $42, upgrade Cimarex Energy (XEC) to buy from neutral with $48 tgt (from $46), Devon (DVN) added to conviction buy list with $20 tgt and remove EOG Resources (EOG) from the CL; downgraded Par Pacific (PARR) to neutral from buy with $14 tgt

·     The American Petroleum Institute (API) showed an unexpected build of 1.97M barrels of oil for the week ending Dec. 11, gasoline inventories show a build of 828K barrels, distillate inventories show a build of 4.76M barrels and Cushing inventories show a draw of 165K barrels.

·     Nordson (NDSN) Q4 adj EPS $1.59 vs. est. $1.53 on sales $559M vs. est. $556.7M; sees Q1 sales up about 2%-3%

·     Rio Tinto (RIO) and Nippon Steel (NPSCY) sign an MoU to jointly explore, develop and demonstrate technologies to transition to a low-carbon emission steel value chain.

 

Financials

·     LPL Financial Holdings (LPLA) reported $873B (+8.1% M/M) in total advisory and brokerage assets served for November as total organic net new assets for November were an inflow of $4.9B, translating to a 7.3% annualized growth rate; includes total organic net new advisory assets of $4.2B, translating to a 12.4% annualized growth rate.

·     Cboe Global Markets (CBOE) announced it has signed an exclusive licensing agreement with CoinRoutes to disseminate its market data and create potential derived data and analytics products using its RealPrice data

·     United Insurance (UIHC) announced estimated current year catastrophe losses incurred from October 1, 2020 to November 30, 2020 between $85M and $100M before income taxes, net of expected reinsurance recoveries

 

Healthcare

·     Aphria Inc (APHA) and Tilray Inc. (TLRY) advanced after the close after BNN Bloomberg reports that both firms are in advanced merger talks, citing sources familiar with the matter. CNBC says the deal is set to be announced as soon as Wednesday. Note APHA had held unsuccessful merger talks with Aurora Cannabis (ACB) earlier in July https://bit.ly/3gOXGsM

·     vTv Therapeutics (VTVT) announced that the “Phase 2 Elevage study of azeliragon in people with mild Alzheimer’s disease and type 2 diabetes did not meet its primary objective of demonstrating an improvement in cognition as assessed by the 14-item Alzheimer’s Disease Assessment Scale

·     Penumbra, Inc. (PEN) announced that it is voluntarily recalling all configurations of the Penumbra JET® 7 Reperfusion Catheter with Xtra Flex technology (JET 7 Xtra Flex). Penumbra is recalling JET 7 Xtra Flex because the catheter may become susceptible to distal tip damage during use.

·     BioNTech SE (BNTX) rises after Shanghai Fosun Pharmaceutical Group Co Ltd says it will buy 100 mln doses of BNTX-Pfizer Inc’s PFE.N COVID-19 vaccine for use in mainland China next year

·     Gilead Sciences (GILD) and Galapagos NV (GLPG) announced that the companies have agreed to amend their existing arrangement for the commercialization and development of Jyseleca, or filgotinib

·     Celyad Oncology (CYAD) successfully doses first patient in expansion cohort of the CYAD-101 phase 1 alloSHRINK trial for mCRC

·     Sio Gene Therapies (SIOX) announces positive six-month follow-up data from low-dose cohort of phase 1/2 trial of axo-aav-gm1 for gm1 gangliosidosis

·     Cryoport (CYRX) files automatic mixed securities shelf

·     Greenwich LifeSciences (GLSI) files to sell 470,085 shares of common stock

·     Seelos Therapeutics (SEEL) files $200M mixed securities shelf

·     Arvinas (ARVN) 5.71M share Secondary priced at $70.00

·     BioAtla (BCAB) 10.5M share IPO priced at $18.00

·     Castle Biosciences (CSTL) 4M share Secondary priced at $58.00

·     Ocular Therapeutix (OCUL) 3.725M share Secondary priced at $21.50

 

Technology, Media & Telecom

·     Amazon (AMZN) urged a U.S. judge to set aside the U.S. Department of Defense’s $10B JEDI cloud computing contract award, saying the Pentagon wrongfully awarded the lucrative deal to Microsoft (MSFT) even after it proposed a cheaper and technically superior bid.

·     Dish Networks (DISH) plans to offer $2B of convertible notes

·     Etsy (ETSY) downgraded to Hold from Buy at Stifel

·     Everspin Technologies (MRAM) announced that Kevin Conley has notified the company of his decision to resign as President and CEO

·     Twitter (TWTR) upgraded to Overweight from Neutral at JPMorgan with $65 tgt

·     Upstart (UPST) 12.016M share IPO priced at $20.00