Mid-Morning Look: January 29, 2021

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Mid-Morning Look

Friday, January 29, 2021






DJ Industrials




S&P 500








Russell 2000






Global stock markets trade lower on the final day of trading for the month, pulling back after strong returns for January as the Nasdaq is up about 3% MTD, the Russell 2000 +6% MTD, though the S&P 500 is flat and the Dow down slightly (however, major averages already well off overnight and morning lows as investors again “buy the dip”). There are so many moving parts today for investors to focus on including: 1) Vaccine news plentiful as NVAX with positive data while JNJ single-shot data today disappoints investors; 2) short squeeze story continues to get louder –the investing community platforms of Reddit and WallStreetBets, targeting stocks that have high short interest, have currently changed the market investing structure with many of those names recovering part of yesterday’ steep losses (but still up massively this year); 3) earnings overwhelm with results in tech lifting names (WDC, SWKS big gains on results); 4) Bitcoin prices surge as much as 14% above $38K after Tesla Inc CEO Elon Musk tagged the cryptocurrency in his Twitter biography; 5) Economic data showed better personal income and spending with higher inflation readings. The week also had an FOMC meeting, an earnings barrage and the short story all grabbing headlines. Oil and gold up along with Treasury yields.


Economic Data

·     December Personal Income rose +0.6% MoM vs. +0.1% consensus and -1.3% prior (revised from -1.1%), while Consumer spending fell -0.2% MoM vs. -0.5% consensus and -0.4% prior. The PCE Price Index rose +0.4%, slightly above the +0.3% consensus and 0.0% prior, while Core PCE Price Index rose +0.3% vs. +0.1% consensus and 0.0% prior. The Q4 Employment Cost Index: +0.7% Q/Q vs. +0.5% consensus and +0.5% prior.

·     Chicago PMI reported at 63.8 for January vs. est. 58.5

·     University of Michigan Consumers Sentiment final Jan 79.0 vs. est. 79.2 and prelim Jan 79.2 and final dec 80.7; expectations index final Jan 74.0 vs prelim Jan 73.8 and final Dec 74.6 and the current conditions index final Jan 86.7 vs prelim Jan 87.7 and final Dec 90.0

·     Pending home sales for Dec fell -0.3% vs. est. -0.1% to 125.5 according the National Association of Realtors; Dec pending home sales +21.4 pct from Dec 2019







WTI Crude















10-Year Note





Sector Movers Today

·     Consumer Finance; SLM was upgraded to Outperform with a $20 target at RBC and its price target was also bumped to $18 from $15 at Barclays, $20 from $17 at Credit Suisse, and $17 from $14 at BTIG following their earnings; Visa (V) announced a $8B share repurchase program and posted Q1 EPS $1.42 on revs $5.7B (down 6% YoY) vs. est. $1.28 and $5.52B, payments volume up 5% and transactions processed 39.2B, while they did not provide outlook for FY21; Home Point Capital (HMPT) 7.25M share IPO priced at $13.00; SYF reported Q4 EPS $1.24 (est. 91c) on revs $3.659B (est. $3.55B), net interest margin 14.6% (est. 14.1%, 15.0% YoY), and authorized a $1.6B stock buyback plan; Raymond James initiated LPRO at Strong Buy with a $55 target

·     Insurance; AJG Q4 adj EPS 88c vs. est. 78c on revs $1.67B vs. est. $1.45B, and they have not seen any meaningful decline in cash receipts from clients to date and have over $1.6B of available liquidity; PFG reported Q4 EPS $1.48 vs. est. $1.42, record AUM of $806.6b, and generated net cash flow of $1.2B, its 49th consecutive quarter of positive net cash flow; Credit Suisse double-downgraded LNC to Underperform from Outperform on valuation and the potential for adverse mortality, lowering their target price to $45 from $56, and they also downgraded RGA to Underperform as yearly renewable term mispricing from 1998-2004 continues to affect earnings

·     Consumer Staples; MDLZ posted 3.2% organic sales growth for the quarter and 3.7% for the full year: Revenues came in 1.9% above consensus estimates. However, the gross margin of 39.2% was -72bp below consensus and down by -80bp YoY; CL with 1c EPS beat on better sales of $4.32B as organic sales growth +8.5% vs consensus +5.4% – NA +8.5% vs consensus +3.0%; CHD slight beat on top and bottom line for Q4 with organic sales growth +10.8% vs est. +8.1% though margins slightly below consensus

·     Auto sector; TSLA tgt raised to $1,010 from $777 at Argus on belief that Tesla is the undisputed leader in the electric vehicle (EV) space with its Model S, Model 3, Model X, Model Y, and upcoming Cybertruck offerings; NIO tgt raised to $80 from $33 at Morgan Stanley on confidence the electric vehicle upstart is a strong place to gain more market share and firm initiated XPEV with an overweight and $70 tgt; ABG increases share repurchase program to $100M; Ford (F) downgraded to Underweight from Equal Weight at Morgan Stanley based on assessment of the regulatory, technological and economic factors driving de-carbonization

·     Retailers; one of the busiest sectors over last two weeks given the large amount of high short interest in brick-and-mortar and names that have little online presence during to pandemic shutdowns (shares of GME, EXPR, BBW, FOSL, M among the sharpest movers recently); CPRI upgraded to Outperform from Neutral, price target $58 at Baird, and firm downgraded SFIX to neutral from Outperform with $85 tgt



·     BIIB7%; as the U.S. FDA extended review period for aducanumab, its experimental Alzheimer’s disease treatment by three months and set an action date of June 7, 2021

·     BLCM +34%; after the FDA lifted the clinical hold on patient enrollment and dosing in its Phase 1/2 dose-escalation clinical trial evaluating BPX-601 and rimiducid in patients with previously treated metastatic pancreatic or prostate cancer

·     GME +65%; another squeeze for short interest names after yesterday’s sharp declines – AMC, BBBY, EXPR, NOK, FUBO, BB, KOSS among early movers higher

·     NVAX +37%; after saying its vaccine, NVX-CoV2373, was 89.3% effective in preventing COVID-19 in a trial conducted in the UK; reported 60% efficacy among HIV-negative individuals against the variant found in South Africa – JPM said the recent COVID-19 vaccine data has strengthened the co’s experimental vaccine’s position as the “best-in-class”

·     SWKS +13%; reported a DecQ almost 50% ahead of consensus top line, with Rev/EPS/GM at $1.51B/ $3.36/51.1% vs. est. ~$1.06B/$2.06/50.1%, and guided to a much stronger MarQ

·     WDC +11%; surges after co posts Q2 revenue above estimates on robust retail demand with EPS of $0.69 topping the $0.54 estimate – Evercore raises to Outperform



·     AAL -2%; after filed $1.1B ATM (“at-the-market”) sale, selling ~68.6 mln shares at avg price of $12.87, for gross raise of ~$882 mln under its prior $1 bln ATM filed in Oct

·     CCL -4%; as JNJ disappointing one-shot vaccine dose data takes toll on reopen trade

·     CHTR -5%; shares fell as Q4 revs in-line at $12.6B, but said added 197,000 total customer relationships in q4, compared to 268,000 during q4 of 2019

·     EHTH -33%; after guiding Q4 prelim revs $291M-$293M vs. est. 4369.8M saying 4q Medicare enrollments negatively impacted

·     JNJ -3%; shares dropped after the company’s single-dose vaccine was 72% effective in preventing COVID-19 in the United States, but a lower rate of 66% was observed globally

·     LNC -4%; Credit Suisse double-downgraded LNC to Underperform from Outperform on valuation and the potential for adverse mortality



·     Drive Shack (DS) 20.833M share Secondary priced at $2.40

·     Duck Creek Technologies (DCT) 9M share Secondary priced at $46.00

·     Dynex Capital (DX) 2.75M share Spot Secondary priced at $17.85

·     Evelo Biosciences (EVLO) 4.5M share Spot Secondary priced at $15.00

·     Home Point Capital (HMPT) 7.25M share IPO priced at $13.00

·     Neuronetics (STIM) 4.84M share Spot Secondary priced at $15.50


Market commentary provided by Hammerstone Markets, Inc, 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.

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