Early Look

Monday, December 13, 2021

Futures	Up/Down	%	Last
Dow	51.00	0.14%	35,926
S&P 500	11.25	0.24%	4,714
Nasdaq	62.50	0.38%	16,394

 

 

Another day, another record for the S&P 500 after closing at a new all-time best late Friday ahead of several important central bank decisions, including a key Federal Reserve decision on taper Wednesday, while closely tracking the quickening increase of Omicron infections around Europe. The Fed is widely expected to accelerate the tapering of its monthly bond purchases when it concludes a two-day policy meeting. Other central bank meetings this week include the Bank of England, the Bank of Japan, and the European Central Bank all with policy statements this week. President Biden is scheduled to meet with Senator Manchin as early as today, in what hill insiders say will be a make-or-break moment for enacting the build back better act before Christmas, citing reports In Asian markets, The Nikkei Index gained 200 points to 28,640, the Shanghai Index rose 0.4% to 3,681, and the Hang Seng Index fell -41 points to 23,954. In Europe, the German DAX is up over 1% at 15,785, while the FTSE 100 is little changed at 7,290.

 

What a week it was for U.S. equities, as the S&P 500 surged 3.8% to end at all-time closing high of 4,712.02 (intraday record high stands at 4,743.58 on Nov 22nd). For the week, S&P rises +3.8%, Dow +4%, Nasdaq +3.6% and the Russell 2000 up 2.37%. Large cap heavyweights have been doing most of the heavy lifting, with case in point Apple (AAPL), rising 11% last week alone as its market cap increased by roughly $300 Billion (which is larger than about 480 of the companies in the S&P 500) as the company is a few points away from hitting $3 trillion in market cap. Wild to note that as of last Friday, U.S. stocks close at all-time highs (S&P), while Home prices and wages all-time highs, inflation (CPI YoY) highest since 1982 while the Fed/Government continues to hold interest rates down at 0% and borrow/spend trillions more with more spending plans in works. The CBOE volatility index (VIX) closes lower by 2.89 points at 18.69, its lowest close since Nov. 24th (and off last week highs of 35.32). This week’s focus remains the FOMC, where persistent inflation due to ongoing supply-chain challenges suggests the U.S. Federal Reserve could very well start tightening its accommodative monetary policy sooner than many might have hoped. A Reuters poll of economists sees the central bank hiking key interest rates from near zero to 0.25-0.50% in Q3 of next year, followed by another in Q4.

 

Market Closing Prices Yesterday

·     The S&P 500 Index gained 44.57 points, or 0.95%, to 4,712.02

·     The Dow Jones Industrial Average rose 216.29 points, or 0.60%, to 35,970.99

·     The Nasdaq Composite jumped 113.20 points, or 0.73%, to 15,630.60

·     The Russell 2000 Index declined -8.40 points, or 0.38% to 2,211.81

 

Events Calendar for Today

·     No major economic data

 

Earnings Calendar:

·     Earnings Before the Open: none

·     Earnings After the Close: BLZE, CMTG, JILL, PHX, REPX, ZDGE

 

Other Key Events:

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

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

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

 

 

Macro	Up/Down	Last
Nymex	-0.22	71.448
Brent	-0.40	74.76
Gold	4.10	1,788.90
EUR/USD	-0.0035	1.1276
JPY/USD	0.27	113.65
10-Year Note	-0.012	1.477%

 

 

World News

·     El-Erian says transitory inflation call likely Fed’s worst ever ‘; “It results in a high probability of a policy mistake,” he said. “So the Fed must quickly, starting this week, regain control of the inflation narrative and regain its own credibility. Otherwise, it will become a driver of higher inflation expectations that feed off themselves.” – Bloomberg

·     Japanese Oct Machinery Orders beat: 3.8% m/m vs 2.1% cons; 2.9% y/y vs 4.0% consensus; Japanese Q4 Large Manufacturing Index missed: 18 vs 19 consensus

·     Norway will further tighten its coronavirus restrictions this week to limit the spread of the virus, Prime Minister told news agency NTB on Monday.

·     Insiders dump stocks to their own companies at record pace: Corporate insiders sold $63.5 bln of their shares through November, a 50% jump versus all of 2020 – Zerohedge reported

 

Sector News Breakdown

Consumer

·     Dollar Tree (DLTR) said Sunday it offered to explore a settlement with Mantle Ridge and hand a board seat to a former chief executive of a rival retailer, saying the activist investment firm’s decision to seek control of its board is “unwarrantedly aggressive.” Dollar Tree is reacting publicly to Mantle Ridge’s decision late on Friday to nominate 11 directors and replace the entire board as well as push the company to hire Richard Dreiling, a former CEO of Dollar General Corp

·     LVMH (LVMUY) mentioned positively in Barron’s saying the company is expected to generate revenue of more than $69.5 billion in 2021, up 38% from last year’s depressed results and 15% from 2019’s pre-pandemic level. The company’s shares have also shot up, along with those of smaller luxury rivals, adding that COVID changed luxury buying habits, but possibly for the better.

·     Starbucks (SBUX) said it had shut two outlets in China and was investigating after a state-backed newspaper reported that they used expired ingredients to make drinks, violating food safety rule

 

Energy, Industrials and Materials

·     SPX FLOW (FLOW) to be acquired by Lone Star for $86.50 per share in cash, in a deal valued at about $3.8B, as transaction values includes assumption of debt (FLOW closed at $85.63 on Friday) https://on.mktw.net/3dNXw41

·     Hawaiian Holdings Inc. (HA) boosted its Q4 revenue and earnings outlook, saying that demand for travel on Hawaiian Airlines has been better than expected; now sees quarterly revenue to be 29% to 32% lower than its pre-pandemic level (had previously guided a 32%-37% two-year decline; now sees Q4 Ebitda loss of $25M-$65M, improved from prior loss view $50M-$100M

·     Taylor Maritime Investments (TMILF) agrees to acquire a 22.6% stake in Grindrod Shipping (GRIN) for a cash consideration of $77.9 million via a private; the purchase price of $18.0 per share represents a premium of ~17.9% to Friday’s Grindrod’s closing price

·     Odyssey Marine Exploration Inc (OMEX) files for mixed shelf of up to $100 mln

·     New Fortress Energy (NFE) signs a 15-year gas supply agreement, GSA, with a subsidiary of Norsk Hydro (NHYDY) for the supply of natural gas to the Alunorte Alumina Refinery in Para, Brazil.

·     OPEC Dec Monthly Oil Report will be released at 12:20 GMT

 

Financials

·     Opendoor’s (OPEN) mentioned favorably in Barron’s saying shares could get a lift if more and more people choose the ease and certainty of a digital home sale. The article notes Zillow’s (ZG) exit from the iBuying business last month was a wrecking ball for the other companies in this new industry, which make online, all-cash purchases of homes by the thousands.

·     RRD Donnelley (RRD) board unanimously determines that Chatham’s unsolicited proposal to acquire the company for $10.85 per share in cash constitutes a “superior proposal”

 

Healthcare

·     Pfizer Inc. (PFE) plans to acquire Arena Pharmaceuticals Inc. (ARNA) in a deal valuing Arena at $6.7 billion, the companies said; PFE will pay $100 a share in an all-cash transaction, as shares rise 92% in pre-market trading Monday morning. https://on.mktw.net/3GDAn0O

·     bluebird bio, Inc. (BLUE) announced updated results from its Phase 1/2 HGB-206 study of lovotibeglogene autotemcel (formerly LentiGlobin(R) for SCD, bb1111) gene therapy for sickle cell disease, including further analyses from its pivotal cohort, HGB-206 Group C, following enhancements to the manufacturing protocols and treatment process.

·     Eli Lilly & Co. (LLY) and Foghorn Therapeutics Inc. (FHTX) said they will collaborate to develop new cancer medicines using Foghorn’s proprietary Gene Traffic Control platform; LLY said it will make an upfront payment of $300 million in cash to Foghorn and invest $80 at $20 a share, a nearly 67% premium to Friday’s closing price of $11.99.

·     Editas Medicine, Inc. (EDIT) reported in vitro and in vivo preclinical data on the enhanced tumor killing capacity of two modified induced pluripotent stem cell (iPSC)-derived natural killer (or iNK) cell therapies using Editas Medicine’s proprietary AsCas12a gene editing. The Company reported these findings in a presentation today at the 63^rd Annual Meeting and Exposition of the American Society of Hematology (ASH), being held in Atlanta and virtually.

·     Kite, a Gilead Company (GILD) announced updated two-year results from ZUMA-5, a global, multicenter, single-arm, open-label Phase 2 study evaluating Yescarta in adult patients with relapsed or refractory indolent non-Hodgkin lymphoma (NHL) after at least two prior lines of therapy. Among all treated patient’s overall response rate was 92% with a 75% complete response. In Follicular Lymphoma, 57% of patients were in durable response at 31 months median follow-up

·     Novartis (NVS) announced new 48-week data from the Phase III ASCEMBL trial of Scemblix(R) (asciminib) demonstrating that the results observed in the primary analysis (24 weeks) vs. Bosulif (bosutinib) were maintained in longer-term follow up for patients with Philadelphia chromosome-positive chronic myeloid leukemia in chronic phase (Ph+ CML-CP) previously treated with two or more tyrosine kinase inhibitors (TKIs)(1-4)

·     Roche (RHHBY) presents pivotal data at ASH 2021 for novel cancer immunotherapy mosunetuzumab. Results to be presented for the first-time show mosunetuzumab induces high and durable complete response rates in people with follicular lymphoma who have received two or more prior therapies1

·     Sangamo Therapeutics (SGMO) announces updated preliminary sar445136 phase 1/2 proof-of-concept data showing tolerability and sustained effects in sickle cell disease; no adverse events related to investigational SAR445136 were reported; all four treated patients experienced increases in total hemoglobin, fetal hemoglobin, and percent F cells; none required blood transfusions post engraftment

·     TherapeuticsMD (TXMD) shares slide after the FDA said it couldn’t approve revisions to some manufacturing testing limits for the Annovera birth-control ring requested by the company through a supplemental new drug application

 

Technology, Media & Telecom

·     Microsoft (MSFT) files debt securities shelf

·     Clear Channel Outdoor (CCO) announced that its board of directors has authorized a review of strategic alternatives for its European business, including a possible sale; company reaffirms Q4 Americas revenue view

·     Satellite radio broadcaster SiriusXM (SIRI) has tapped a top architect of the Disney+ (DIS) streaming service to help it broaden its appeal to audiences outside the car – WSJ

·     Sportradar (SRAD) a positive mention in Barron’s noting it is the world’s leading provider of sports data and play-by-play tallies for the betting industry betting on sports betting data. Barron’s notes more than 30 states have legalized sports betting, with nearly half of them allow online wagering, as Barron’s notes the co revenue has been growing at a 30% annual clip, as the company serves a global sports betting market that could reach $70 billion by 2030