Early Look

Tuesday, January 19, 2021

Futures	Up/Down	%	Last
Dow	198.00	0.64%	30,918
S&P 500	28.25	0.76%	3,791
Nasdaq	125.50	0.98%	12,928

 

 

Another strong start to the week with U.S. futures looking sharply higher, looking to shake off the pullback on Friday on yet more bullish stimulus headlines. President-elect Joe Biden’s pick for Treasury Secretary and former Fed Chairperson Janet Yellen, is set to testify today before the Senate Finance Committee, which is considering her nomination. Expectations are for the calling for “big” action on the COVID-19 pandemic after Biden unveiled a $1.9T economic stimulus plan last week. Also overnight, Biden re­jected an ef­fort by President Trump on Mon­day to lift bans on most travel into the U.S. from Eu­rope, the U.K. and Brazil that were im­posed as part of the Trump administration’s ini­tial re­sponse to the coro­n­avirus pan­demic, the WSJ reported. In Asian markets, The Nikkei Index jumped 391 points to 28,633. the Shanghai Index slipped -29 points to 3,566 and the Hang Seng Index surged 779 points to 29,642. In Europe, the German DAX is up over 40 points to 13,890, while the FTSE 100 gains 20 points to 6,740. Overall, there are no big headlines to account for the jump in futures this morning other than more buying on speculation of a big relief package to further juice the economy. Some key catalysts this week outside of the Presidential inauguration on Wednesday include a busy week of tech and bank earnings, data reports on appliance shipments, boating sales and containerboard pricing. New York Governor Andrew Cuomo is expected to include language next week as part of his state budget proposal directing the New York State Gaming Commission to solicit bids from mobile sports wagering operators. On Wednesday, crude oil WTI futures contracts expire just as new COVID-19 cases in China are being attributed to a turn lower in oil prices.

Market Closing Prices Yesterday

·     The S&P 500 Index slumped -27.29 points, or 0.72%, to 3,768.25

·     The Dow Jones Industrial Average fell -177.24 points, or 0.57%, to 30,814.26

·     The Nasdaq Composite dropped -114.10 points, or 0.87%, to 12,998.50

·     The Russell 2000 Index declined -32.15 points, or 1.49% to 2,123.20

 

Events Calendar for Today

·     7:45 AM ET         ICSC Weekly Retail Sales

·     8:55 AM ET         Johnson/Redbook Weekly Sales

·     4:00 PM EST       Net Long-term TIC Flows for November

 

Earnings Calendar:

·     Earnings Before the Open: BAC, CMA, GS, HAL, MBWM, ONB, PETS, SCHW, STT

·     Earnings After the Close: AVO, FNB, FULT, IBKR, JBHT, NFLX, PNFP, SMBK, UCBI, ZION

 

 

Macro	Up/Down	Last
Nymex	0.33	52.69
Brent	0.79	55.54
Gold	3.90	1,845.20
EUR/USD	0.0053	1.213
JPY/USD	0.30	103.99
10-Year Note	+0.021	1.118%

 

 

World News

·     China’s economic recovery (GDP) beat analyst expectations in the fourth quarter, expanding 6.5% from a year earlier, s faster than the 6.1% forecast by economists, and followed 4.9% growth in the third quarter – GDP grew 2.3% in 2020

·     China’s industrial output rose at a faster-than-expected rate of 7.3% in December from a year ago, expanding for the ninth straight month (est. had expected annual industrial output growth to have eased to 6.9% in December from 7.0% in November.

·     China’s retail sales edged up 4.6% last month from a year earlier, missing analysts’ forecast for 5.5% growth, in contrast to 5.0% growth in November.

 

Sector News Breakdown

Consumer

·     YETI Holdings (YETI) will replace Trimble (TRMB) in the S&P MidCap 400 as Trimble (TRMB) is replacing Concho Resources (CXO) in the S&P 500 at the open on January 21st – Hilltop Holdings (HTH) will replace YETI Holdings (YETI) in the S&P SmallCap 600

·     GameStop (GME) mentioned cautiously in Barron’s saying its business continues to get worse after the videogame retailer said that its holiday sales were down 3.1%, despite shares surging over 100% on the week (says rally seemed to be news Monday that Chewy co-founder Ryan Cohen would be joining GameStop’s board of directors, along with two former Chewy executives)

·     Delta Air Lines (DAL) disclosed that it entered into a payroll support program extension agreement with the U.S. Treasury Department and expects to receive $2.9B in relief payments – consisting of ~$2B in grants and $830M in an unsecured 10-year loan

·     The National Rifle Association (NRA) filed for bankruptcy protection and plans to restructure as a Texas-based nonprofit amid a legal battle with New York’s attorney general

 

Energy

·     U.S. President-elect Joe Biden is planning to cancel the permit for the $9 billion Keystone XL pipeline project as one of his first acts in office, and perhaps as soon as his first day, according to Reuters this weekend. The Keystone XL pipeline is operated by TC Energy Corp. (TRP). President Donald Trump had made building the pipeline a central promise of his presidential campaign

·     ReneSola (SOL) files $250M mixed securities shelf

·     Total (TOT) agree to acquire a 20% stake in India’s Adani Green Energy, the world’s largest solar developer, for $2.5B; Total also will take a 2.35 GW portfolio of operating solar assets owned by Adani Green

 

Financials

·     Bank America (BAC) authorizes $2.9B share repurchase plan and declares quarterly cash dividend of 18c per share

·     Western Union Co. (WU) rises 8%; announced a new agreement with Walmart Inc. (WMT) in which money transfer services will be enabled at Walmart stores nationwide

·     Comerica (CMA) Q4 EPS $1.49 vs. est. $1.19; Q4 net interest income rose $11M to $469M;see decline in NII with lower average loan balances

·     CME Group (CME) reports international average daily volume grew 8% YoY to 5.2M contracts in 2020, reflecting all trading done outside North America was driven largely by 85% growth in Equity Index and 28% in Agricultural products.

·     Mercantile Bank (MBWM) Q4 EPS 87c vs. est. 55c; Q4 revenue $46.3M vs. est. $40.34M; Q4 CET1 capital ratio 12.68%

 

Healthcare

·     Biohaven Pharma (BHVN) provides update on phase 2/3 trial and Alzheimer’s disease program; completed focused analysis of topline co-primary, key secondary data from its phase 2/3 clinical trial of Alzheimer’s trial; said Troriluzole did not statistically differentiate from placebo at 48 weeks on study’s prespecified co-primary endpoints and also did not differentiate from placebo on key secondary measure

·     Halozyme Therapeutics (HALO) said Janssen Biotech, Inc. (JNJ) has received U.S. FDA approval of DARZALEX FASPRO in combination with bortezomib, cyclophosphamide and dexamethasone for the treatment of adult patients with newly diagnosed light chain amyloidosis

·     Quest Diagnostics (DGX) entered into an agreement with the CDC to provide genomic sequencing to identify new mutations in, and patterns of transmission of SARS-CoV-2, the virus that causes COVID-19

·     New York Governor Andrew Cuomo asked Pfizer Inc (PFE) CEO if the state could buy COVID-19 vaccine doses directly from the U.S. drug maker. Pfizer, however, told Reuters that such a proposal would first require approval by the U.S. Department of Health and Human Services.

·     Gritstone Oncology (GRTS) rises 34%; said advancing development of a second-generation vaccine against SARS-CoV-2, with potential for both prolonged protection and potency against Spike mutants.

·     ProPhase Labs (PRPH) 3M share Secondary priced at $12.50

·     TCR2 Therapeutics (TCRR) files to sell $125M in common stock

 

Industrials & Materials

·     3M (MMM) shares mentioned positively in Barron’s saying investors looking to make a bet on an industrial bounce back could do worse than buy 3M, noting the stock has dropped 7.9% over the past 12 months, but the stock could be set for a move higher into earnings

·     Tronox Holdings (TROX) terminated its agreement with Eramet S.A. To acquire the tizir titanium and iron business; says sees Q4 revs $783M above the $696M estimate and adjusted EBITDA to exceed previously issued guidance; increasing annualized dividend to $0.32 per share

·     J.B. Hunt (JBHT) upgraded to Outperform from Neutral at Credit Suisse with a price target of $175, up from $131 saying it has one of the fastest earnings growth profiles in transports, which the analyst thinks will persist beyond 2021

·     Werner (WERN) upgraded to Neutral from Underperform at Credit Suisse with a price target of $44, up from $43 as sees more balanced upside vs. downside risk with the recent underperformance of the TL stocks.

 

Technology, Media & Telecom

·     Lumentum Holdings Inc. (LITE) is in advanced talks to buy laser maker Coherent Inc. (COHR), according to people familiar with the matter, the WSJ reported in a deal that would combine two companies; a cash-and-stock deal could come together as soon as this week, assuming the talks don’t fall apart (COHR market value $3.7 billion as of Friday’s close) https://on.wsj.com/38RIYPf 

·     E.W. Scripps (SSP) rose late Friday after the company reported that Berkshire (BRK/A) holds 24.9% passive stake in the company; 23.1M shares disclosed in form SC 13G are held in the form of a warrant exercisable by the Berkshire Hathaway within 60 days

·     Logitech (LOGI) Q3 EPS $2.45 vs. est. $1.02; Q3 revs $1.67B above consensus $1.23B; raises FY21 sales growth outlook to 57%-60% from 35%-40%

·     Citrix (CTXS) to acquire Wrike for $2.25 billion in cash to accelerates Citrix’s business model transformation strategy and enhances overall future growth expectations; Q4 adjusted EPS $1.46 beats the $1.33 estimate and Q4 revenue $810M beats consensus $781.34M

·     Facebook (FB) said it will ban advertisements for weapon accessories and protective equipment in the United States with immediate effect until at least two days after U.S. President-elect Joe Biden’s inauguration on Jan. 20

·     The Trump administration notified Huawei suppliers, including chipmaker Intel (INTC), that it is revoking certain licenses to sell to the Chinese company and intends to reject dozens of other applications to supply the telecommunications firm – Reuters

·     Signal said on Saturday it had restored its services a day after the application faced technical difficulties as it dealt with a flood of new users after rival messaging app WhatsApp announced a controversial change in privacy terms.