Early Look

Tuesday, September 28, 2021

Futures	Up/Down	%	Last
Dow	-120.00	0.37%	34,614
S&P 500	-36.25	0.81%	4,397
Nasdaq	-232.50	1.53%	14,962

 

 

U.S. stock futures are sharply lower, extending losses in tech as Treasury yields keep climbing (10-year hit 1.55% overnight), hitting growth stocks while the debt ceiling showdown in Washington D.C. intensifies with markets awaiting news on the House vote Thursday on the $1T bipartisan infrastructure bill, as Democrats work to build a consensus on the $3.5T reconciliation bill. If the two sides can’t agree on the bill that Democrats recently attached to the federal debt ceiling limit, the country could see a partial gov’t shutdown by Friday. Politico reported that Democrats are hinting they could be willing to drop the debt ceiling from their government funding package this week in order to avoid a government shutdown. The 10-year Treasury yield is up more than 4 basis points to 1.53% after topping 1.55% earlier while the 5-year is setting new records for the year and is up 2 bps to 1.02%. There will be an auction of $62B in 7-year notes this afternoon. The move higher is coming as concerns about inflation rise, especially in commodities as oil is up again, with WTI futures above $76 per barrel and Brent futures topping $80. In Asian markets, The Nikkei Index fell -56 points to 30,183, the Shanghai Index gained 19 points to 3,602 and the Hang Seng Index climbed 291 points to 24,500. In Europe, the German DAX is down -180 points (1.15%) to drops below 15,400, while the FTSE 100 slides -30 points to 7.025.

 

The Dow Jones Industrial Average advanced on Monday with the S&P 500 and Nasdaq falling amid rising Treasury yields (up a 5^th straight day) raising concerns for growth stocks while global oil price reached its highest level since October 2018. Brent crude gains 2.1% to $78.81, sending the energy sector soaring and WTI crude topped $75 per barrel, also best levels in about 3-years. Durable goods orders posted their biggest increase since May, rising 1.8% for August and handily beating economists. Notably, small-capitalization stocks advanced sharply on the session, aided by a gain in energy shares which themselves were helped by a rally in crude-oil prices. U.S. natural gas futures soared 11% to a seven-year high as record global gas prices kept demand for U.S. liquefied natural gas (LNG) exports strong. On its second to last day as the front-month, gas futures for October delivery rose 56.6 cents, or 11.0%, to settle at $5.706 per million British thermal units (highest close since February 2014).

Market Closing Prices Yesterday

·     The S&P 500 Index slipped -12.37 points, or 0.28%, to 4,443.11

·     The Dow Jones Industrial Average rose 71.37 points, or 0.21%, to 34,869.37

·     The Nasdaq Composite dropped -77.73 points, or 0.52%, to 14,969.97

·     The Russell 2000 Index advanced 32.93 points, or 1.46% to 2,281.00

 

Events Calendar for Today

·     7:45 AM ET         ICSC Weekly Retail Sales

·     8:30 AM ET         Advance Goods Trade Balance for Aug

·     8:30 AM ET         Wholesale Inventories for Aug

·     8:55 AM ET         Johnson/Redbook Weekly Sales

·     9:00 AM ET         Monthly Home Price MoM for July

·     9:00 AM ET         S&P CaseShiller 20 City MoM for July

·     10:00 AM ET      Consumer Confidence for Sept

·     10:00 AM ET      Richmond Fed Index for Sept

·     1:00 PM ET         U.S. to sell $62 bln 7-year notes

·     4:30 PM ET         API Weekly Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: FDS, SNX, THO, UNFI

·     Earnings After the Close: CALM, MU, NTWK, PCYG, PEYE

 

Other Key Events:

·     BMO Capital Washington DC Property Tour, 9/27-9/28

·     Cantor Global Healthcare Conference (virtual), 9/27-9/30

·     Oppenheimer ESG Summit: Navigating the ESG & Climate Transition, 9/28

·     Wolfe Utilities & Midstream Conference 2021, 9/28-9/31

 

 

Macro	Up/Down	Last
Nymex	0.87	76.32
Brent	0.66	80.19
Gold	-12.00	1,738.00
EUR/USD	-0.0016	1.1679
JPY/USD	0.37	111.37
10-Year Note	+0.036	1.52%

 

 

World News

·     Senate GOP (as expected) blocks bill that would fund government and suspend debt limit, as time runs short to avoid shutdown and default. Lawmakers have to pass an appropriations bill by Thursday to avoid a shutdown, and need to suspend or increase the debt limit sometime in the coming weeks to prevent a default

·     Goldman’s revised China GDP forecast to 0% Q/Q in Q3, down from 1.3% and cuts China 2021 GDP growth forecast to 7.8% vs. 8.2%

 

Sector News Breakdown

Consumer

·     Endeavor Group Holdings, Inc. (EDR) shares rise 10% as has entered into an agreement to acquire OpenBet, a leading content, platform and service provider to the sports betting industry, from Scientific Games Corporation (SGMS) for $1.2 billion paid through a combination of cash ($1 billion) and Endeavor’s Class A common stock ($200 million).

·     Ford (F) unveiled plans to team with South Korean battery maker SK Innovation to spend $11.4B to build an electric F-150 assembly plant and three battery plants in the U.S., in a substantial acceleration of its push into electric vehicles. Ford will build two massive battery factories in Glendale, Ky., and a third in Stanton, Tenn., alongside a new truck factory set to begin producing electric F-series pickups by 2025

·     Manchester United plc (MANU) files for potential mixed shelf; size not disclosed

 

Energy, Industrials and Materials

·     Sempra Energy (SRE) updating its 2021 financial guidance. As full-year 2021 GAAP earnings-per-common-share (EPS) guidance range is updated from $7.41 to $8.01 to $3.83 to $4.43, while the company is also guiding to the upper end of the range for its full-year 2021 adjusted EPS guidance of $7.75 to $8.35

·     Activist hedge fund Starboard Value LP has a more-than-8% stake in Huntsman Corp. (HUN) and plans to agitate for change at the chemical’s producer, according to people familiar with the matter, the WSJ reported after the close last night. Huntsman has a market value of roughly $6.3 billion, making Starboard’s stake worth around $500 million or more

·     Agnico Eagle Mines Limited (AEM) and Kirkland Lake Gold Ltd. (KL) have entered into an agreement to combine in a merger of equals, with the combined company to continue under the name “Agnico Eagle Mines Limited”. Kirkland Lake Gold shareholders will receive 0.7935 of an Agnico Eagle common share for each Kirkland Lake Gold common share held

 

Financials

·     Concentrix Corporation (CNXC) Q3 EPS $2.49 vs. est. $2.24; Q3 revs $1.397B vs. est. $1.38B; sees Q4 revs $1.44B-$1.48B; board has authorized co to purchase up to $500 mln of co’s outstanding shares from time to time; raises double-digit revenue growth expectations for the full year

·     Montrose Environmental Group Inc. (MEG) said it intends to offer for sale 1.8 mln shares of its common stock in an underwritten public offering

·     IHS Markit (INFO) Q3 adj EPS $0.85 vs. est.$0.83; Q3 revs $1.18B vs. est. $1.17B; raises FY21 adjusted EPS view to $3.18-$3.20 from $3.15-$3.17 (est. $3.17) and lowers FY21 revenue view to $4.61B-$4.63B from $4.635B-$4.675B

 

Healthcare

·     Merck (MRK) is in advanced discussions to acquire Acceleron Pharma (XLRN), with the deal potentially being announced this week if talks do not break down, the WSJ reported. https://on.wsj.com/3F7QtzV . Recall shares of XLRN rose yesterday after Bloomberg had reported is in advanced discussions to be acquired by a large pharmaceutical company for about $180 a share in cash https://bloom.bg/3ANfEVx

·     Aurora Cannabis Inc. (ACB) Q4 revenue C$54.8M vs. est. C$56.3M and vs. C$68.4M last year; Q4 adjusted EBITDA (C$19.3M) vs. (C$33.3M) last year; business transformation plan on track; reiterates annual cost savings of $60M-$80M; qtrly medical cannabis net revenue was $35.0M, a 9% increase from prior year period; qtrly adjusted Ebitda loss, excluding restructuring costs, narrows to $13.9M

·     Pfizer (PFE) phase 1 randomized study of MRNA-based next generation flu vaccine program will take place in united states

·     Ziopharm Oncology (ZIOP) announces strategic reduction in workforce and extension in cash runway

·     AstraZeneca PLC (AZN) said that Saphnelo has been approved in Japan for the treatment of adult patients with systemic lupus erythematosus, or SLE, who show an insufficient response to standard treatment.

·     Biogen (BIIB) and Eisai (ESALY) initiated a rolling submission to the U.S. FDA of a Biologics License Application for lecanemab, the company’s investigational anti-amyloid beta protofibril antibody, for the treatment of early Alzheimer’s disease

·     Sanofi (SNY) announces positive interim results from a Phase 1/2 study of its mRNA-based COVID-19 vaccine candidate.

 

Technology, Media & Telecom

·     Charter Communications (CHTR) subsidiaries Charter Communications Operating, LLC and Charter Communications Operating Capital Corp. have priced $4B of notes in three tranches.

·     Microchip (MCHP) downgraded to Equal Weight from Overweight at Wells Fargo

·     Sirius XM (SIRI) upgraded to Equal Weight from Underweight at Barclays

·     The U.S. Equal Employment Opportunity Commission, or EEOC, is suing Activision Blizzard (ATVI) over claims that it fostered a toxic work environment defined by sexual misconduct and discrimination