Mid-Morning Look: January 04, 2021

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Mid-Morning Look

Monday, January 04, 2021






DJ Industrials




S&P 500








Russell 2000






U.S. stocks initially rise on the first trading day of 2021, as the S&P 500 and Dow Jones Industrial Average added to Friday’s record highs as hopes for continued government stimulus and the rollout of coronavirus vaccines lift sentiment. Stocks however have since reversed lower after the open as investors remain cautious ahead of the Senate runoff in Georgia tomorrow which could shake up markets, while also booking some profits after a stellar 2020. Sentiment remains very bullish after a banner year for global stocks, led by gains in technology (Nasdaq rose 43% in 2020) and Smallcaps (Russell up 18% in 2020) despite the economic hit from the coronavirus. Electric vehicle stocks open mostly higher after delivery monthly updates from several (TSLA, NIO, XPEV, LI). Gold prices jump as the dollar slips, with gold miners and industrial metals (FCX) rising. Seeing weakness in early in the “recovery” trade as cruise lines, gaming, hotels, and travel names seeing the biggest declines in the S&P 500. Markets brace for an important week of politics and economic data (jobs data on Friday).


Economic Data

·     Markit said U.S. manufacturing activity picked up at its fastest pace in more than six years in December, extending a recovery in the factory sector. IHS Markit said its manufacturing PMI climbed to 57.1 in December from 56.7 in November. The index also improved from its preliminary – or “flash” – reading in mid-December of 56.5

·     Construction Spending for November rose +0.9% vs. est. 1% and Nov private construction spending +1.2%, public spending -0.2%







WTI Crude















10-Year Note





Sector Movers Today

·     Auto sector; monthly delivery updates announced in the electric vehicle space, giving a boost to several names initially after a strong 2020; TSLA reported 499,550 deliveries for 2020, slightly missing the 500K target as delivered 180,570 electric vehicles in Q4 and produced 179,757 vehicles total; in Q4, Tesla delivered 18,920 and produced 16,670 Model S/X vehicles, and delivered 161,650 and produced 163,660 Model 3/Y vehicles; LI delivered 6,126 Li ONEs in December 2020, representing an increase of 31.9% MoM and up 529.6% YoY; NIO delivered 7,007 vehicles in December 2020, rising 121.0% YoY – NIO delivered 17,353 vehicles in Q4, representing an increase of 111.0% YoY and topping the high end of guidance; XPEV said it reached a record monthly delivery of 5,700 Smart EVs in December 2020, consisting of a record high 3,691 P7s, the company’s sports smart sedan, and 2,009 G3s, its smart compact SUV; FSR shares active after Canadian auto supplier MGA to develop an advanced driver assistance system with the company, expected to launch in late 2022; WKHS said it received a purchase order for 6,320 C-Series all-electric delivery vehicles from Pride Group Enterprises

·     Insurance: Wells downgraded PGR to UW after outperforming the sector in 2020 and remain EW on ALL, saying they are cautious on personal lines insurers as miles driven rebounds with a vaccine rollout and consequently have a more favorable view on commercial and reinsurance sectors; Wells raised their pt on AIG to $42 from $40 but downgraded the stock to EW to reflect higher group multiples and following the stock’s Q4 performance (+38% vs. S&P +12%); JPMorgan remains upbeat on P&C stocks but the sector’s Q4 performance provides less enticing valuations. They upgraded HIG to OW after underperforming last year and on expected stabilization of workers comp prices, acceleration of buybacks, and reduced BI uncertainty, and names it as a top pick along with AON. They also downgraded CB to Neutral following on risk-reward valuation after Q4 outperformance, though they consider it best-positioned to take advantage of hardening prices and prefer it to other insures they rate at Neutral; GNW shares plunged after the December 31, 2020 end date for its merger with China Oceanwide Holdings passed without an extension

·     Bank movers; Wells Fargo says banks enter 2021 with capital adequacy and lending standards that have improved since the GFC, though they will have to deal with low rates and a dismal loan growth outlook. SBNY is their top pick and they doubled their pt to $200 from $100 as the bank’s growth is matched by few banks, each of which trades at a greater valuation which should drive upside as the narrative shifts to growth from credit. Wells also downgraded PNFP, WBS, and FIBK to EW, upgraded BOKF and PACW to OW and SIVB to EW, and they raised their target on LPLA to $122 from $110 and reiterated its OW rating; Barclays upgraded ALLY, MS, and GS to OW and downgraded C (Citi), ZION, and SIVB to Equal-Weight

·     Media & Telecom movers; AT was upgraded to outperform with $32 tgt at Raymond James saying while 4Q is likely to be an unimpressive quarter, between a whopper of a C-Band bill and pressures from the iPhone launch and marketing, they believe the situation improves for AT&T over the next 12 months, offering a solid total return story; shares of CHA, CHL and CHU were down initially after delisting announcement over the weekend; DISCA Launches discovery+ In The U.S. and announces new distribution and platform agreements discovery+ to be available on several platforms; VOD said it has signed a long-term, multi-platform agreement with Discovery Communications (DISCA) to allow customers in 12 of its European markets to continue to access Discovery content – partnership covers Vodafone’s TV and mobile customers in the UK; Quibi is in advanced talks to sell its content catalog to ROKU, the WSJ reports according to people familiar with the matter, as the short-form streaming service winds down its operations following an unsuccessful run https://on.wsj.com/358gBKr



·     BPY +16%; BAM offered to acquire the remaining shares of BPY that it does not already own for $16.50/share (a 14% premium to last close) to take it private in a $5.9B deal https://bit.ly/357WTyh

·     FCX +5%; adds to strong gains in 2020 (rose around 100%), opening higher as metals jump early

·     FLIR +22%; be acquired by TDY in an $8B cash and stock deal, with holders to receive $28 in cash and 0.0718 shares of TDY’s common stock which implies a purchase price of $56.14, a premium of 28.1% from Thursday’s close https://on.mktw.net/388OBrX

·     MGLN +12%; after announced it will be acquired by CNC for $95.00 per share in cash for a total enterprise value of $2.2B https://on.mktw.net/3ohFZ84;

·     MRNA +3%; after increased the base-case 2021 global production estimate for its COVID-19 vaccine to 600M doses, from 500M and issued update

·     NEM +4%; rise along with other gold miners AEM, GOLD with gold jumping over 2% or $40 to $1,938 an ounce as the dollar plunges further

·     TSLA +4%; said it delivered a record 499,550 cars last year, just shy of its half a million target.



·     AI -9%; after several analysts initiate coverage, with JPMorgan the most cautious with an underperform and $84 tgt noting shares are currently trading at 427% of the initial IPO filing range midpoint.

·     BA -3%; was downgraded to Underperform at Bernstein and cut tgt to $199 from $221 saying had seen Boeing as fairly valued since the stock rose after announcements on high efficacy vaccines for Covid-19

·     CALA -40%; after saying topline results from the CANTATA clinical study of its glutaminase inhibitor, telaglenastat, in patients with advanced or metastatic renal cell carcinoma did not meet primary endpoint while announces 35% workforce reduction

·     GNW -27%; after the company and China Oceanwide Holdings Group Co. Ltd provided an update on their merger agreement. “Given uncertainty around the completion and timing of the remaining steps required to close the transaction, Genworth and Oceanwide have not extended the current December 31, 2020 “end date” under the merger agreement”

·     HLF ; announced it would buy back $600M of shares from Icahn Enterprises for $48.05 per share and all five director designees previously nominated by Icahn Enterprises resigned from the company’s board on 3-January

·     NCLH -6%; down along with other cruise lines and among the top S&P 500 decliners as recovery trades names hit the hardest – lodging, travel, leisure

·     SWK -3%; downgraded to Underperform from Neutral at bank America on what they see as an unfavorable setup for 2021, noting a tougher 1-2 year comp


Market commentary provided by Catena Media Financials US, LLC, 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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