Mid-Morning Look: December 01, 2021

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Mid-Morning Look

Wednesday, December 01, 2021






DJ Industrials




S&P 500








Russell 2000






The wild trading week continues, with the S&P posting its 4th straight day of a more than 1% move (after having not posted a closing more of more than 1% since October 14th prior), clawing back some of the previous session’s losses spurred by a hawkish Fed Chair Powell, who is again testifying on the economy, this time to the House panel (Senate was yesterday) along with Treasury Secretary Yellen. A sharp sell-off Tuesday, triggered by concerns over rising inflation fears (Powell comments) and the new Omicron coronavirus variant, are being offset by progress by Merck (MRK) which received approval of its COVID-19 pill (sinking shares of vaccine makers (NVAX, MRNA, BNTX). All 11 major S&P sectors advanced in early trading, with energy, materials, and financials leading the gains. Air travelers to the United States will face tougher COVID-19 testing rules to try to slow the spread of the Omicron variant and other countries tightened border controls as a European leader urged all concerned to “prepare for the worst”. Economic data mixed with strong private jobs growth (in-line with ests), on weaker construction spending and mixed manufacturing data. Several companies moving on mixed earnings and guidance as software names slip behind conservative CRM guidance. The Russell 2000 Smallcap index outperforms after recently falling more than 10% off highs, and falling below key technical levels.


Economic Data

·     Jobs data mostly in line after ADP reported private payrolls rose +534K, slightly above the +525K consensus and below the +571K prior (unrevised)

·     Markit November final manufacturing PMI at 58.3 (vs flash 59.1) and final October 58.4; final output index for November at 53.2 vs flash reading 53.9 and final October 52.1; final input prices index for November at 87.6 vs flash reading 87.8 and final October 86.9

·     Construction spending for October rose +0.2% vs. est. +0.4% to $1.598 trln, vs Sept -0.1%; Oct private construction spending -0.2%, public spending +1.8%

·     U.S. manufacturing activity picked up in November amid strong demand for goods, as the ISM said its index of national factory activity increased to a reading of 61.1 last month from 60.8 in October 9est was 61). Supplier deliveries slipped to a reading of 72.2 from 75.6 in October, prices paid by manufacturers fell to a still high 82.4 from a reading of 85.7 in October.







WTI Crude















10-Year Note





Sector Movers Today

·     Financial Services, Consumer Finance; MA announced an $8B share buyback and raised its quarterly dividend to 49c/share from 44c; COF upgraded to Neutral from Underperform at Baird with an unchanged price target of $145 noting card stocks have meaningfully lagged financials overall since the Q3 earnings season, and the risk/reward of Capital One is now more balanced in the low $140s; FICO authorized a new $500M share buyback authorization; COOP said expects pretax income at the higher end of guidance of $150M-175M.

·     Auto sector; strength in GM, F, TSLA early; in Chinese EV space, LI delivered 13,485 Li ONEs in November 2021, up 190.2% Y/Y and an increase of 76.3% M/M from October’s 7,649 deliveries; total deliveries for the eleven months ended November 30, 2021 reached 76,404, taking cumulative deliveries to 110,001; NIO delivered 10,878 vehicles in November, up 105.6% from a year earlier; delivered 80,940 vehicles year to date, a rise of 120.4% from the same period last year; XPEV says delivered 15,613 vehicles in Nov, up 270% from a year ago; says 82,155 total vehicles delivered YTD, up 285% YoY; says deliveries in Nov consisted of 7,839 P7 smart sports sedans; plans to begin deliveries of its new flagship smart SUV G9 in Q3 of 2022

·     Biotech movers; BYSI plunges after saying it receives Complete Response Letter (CRL) from the FDA for Plinabulin NDA; SAGE and BIIB announce positive one-year Zuranolone 50 mg data in the ongoing open-label SHORELINE study in patients with MDD; VBIV announces FDA approval of PreHevbrio for the prevention of hepatitis b in adults; BNOEF announces that the FDA has granted Fast Track designation to the BNC210 development program for the acute treatment of Social Anxiety Disorder and other anxiety-related disorders; KRYS 2.67M share Secondary priced at $75.00

·     Hardware, Components & Services; HPE Oct-Q revenue of $7.354B was in line with estimates, while EPS of $0.52 beat Street by ~4-cents due to below-line items as co noted demand was strong, with orders up 9% q/q and up 28% y/y, but HPE was unable to deliver upside due to component constraints, which hit all segments, particularly Intelligent Edge; EGHT entered into a definitive agreement to buy software company Fuze for about $130M in cash and $120M in stock; NTAP posts Q2 beat and raised FY22 Public Cloud Services (PCS) ARR guidance to $510-540M vs. $450-500M previously; BOX delivered a strong 3QFY22 with revenue, EPS, and billings exceeding consensus estimates. Highlights include continued suites momentum (~30% of rev. attributed to suites), large deal activity (97 $100K deals +56% YoY), and meaningful net retention rate improvement (109%, +3pts QoQ/+6pts YoY).



·     ABUS +38% after MRNA loses appeals of Board’s ruling on the co patents

·     AMBA +23%; on quarterly beat as raise as revenue was guided to $90M at the midpoint (down 2.4% q/q and up 44.8% y/y), above the Street and our estimate of $88.2M, while gross margin was guided to 63.5% at the midpoint (up 40bps q/q and 40bps y/y), above est. 61.3%

·     GIII +9%; boosted its FY22 sales view to about $2.77B, above prior view of $2.7B and net income to be $180M-$190M or $3.65-$3.75 per share above prior views $155M-$165M or $3.10-$3.20

·     LEN +5%; upgraded to Buy from Neutral at Goldman Sachs as look for company-specific catalysts, along with an underlying supportive macro backdrop, to drive peer relative outperformance, while firm downgraded DHI to Neutral

·     MRK +1%; as a group of FDA advisers narrowly voted yesterday (13-10) to recommend that Merck’s drug be authorized to treat Covid-19. The vote followed a day of tense debate over whether the pill’s benefits outweigh its risks.

·     RL +6%; broad strength in retail space today with PVH, GPS also among top S&P gainers

·     VRTX +4%; said it plans to advance its VX-147 drug candidate into pivotal development in Q1 after positive results from a Phase 2 proof-of-concept study in a severe genetic kidney disorder as it was well tolerated

·     ZS ; very strong quarter exceeding Street expectations as revenue and billings growth both accelerated against tougher comps amid momentum across its core products, ZIA and ZPA as well as emerging products, with the company calling out ZDX as seeing strong traction



·     BYSI -55%; plunges after saying it receives Complete Response Letter (CRL) from the FDA for Plinabulin NDA

·     CRM -7%; following a mixed F3Q as current RPO growth of 23% Y/Y (+19% organic CC) was slightly above ests (22%) while revenue and operating margins showed upside, but forecast Q4 profit below estimates as competition in the cloud space intensifies

·     HPE -1%; mixed quarter as supply chain issues the main drag but strong order trends and FCF are supportive of the long-term story according to Oppenheimer

·     MRNA -5%, along with weakness in NVAX, BNTX after U.S. FDA advisers narrowly voted (13-10) to recommend authorization of MRK’s oral pill for treatment of mild-to-moderate covid-19

·     SNOW -2%; weakness in software names ahead of earnings tonight – CRM softer guidance last night weighs on group (SNOW reports tonight)

·     UNP ; cuts full-year volume growth guidance to 4% – modifies fy21 guidance lowering volume growth to about 4%, productivity to about $250M and operating ratio improvement to around 150 basis points


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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