Early Look

Monday, December 6, 2021

Futures	Up/Down	%	Last
Dow	204.00	0.59%	34,770
S&P 500	11.25	0.25%	4,548
Nasdaq	-56.50	0.36%	15,661

 

 

U.S. stock futures are mixed, as the S&P and Dow are looking at higher opens, while the Nasdaq extends Friday (and last week declines) as growth stocks falter. Stocks dropped on Friday after a disappointing November jobs report, as the market wrapped up a roller-coaster week driven by Covid omicron variant concerns and inflation fears as the Dow fell 0.17%, the S&P 500 fell 0.85% and the Nasdaq plunged 1.92%. For the week, the S&P fell 1.22%, the Dow lost 0.92%, the Nasdaq shed 2.62% and the Russell 2000 index was the worst laggard, down -4.2% as Smallcaps were punished. It was a wild rise for crypto currencies this weekend as on Friday, Bitcoin sat above $57,000 before the risk aversion hammering stocks spilled over into crypto world — dragging the digital coin down by as much as 20% on the day to below $43,000. On Sunday, the currency bounced by over 2% to trade around 49,000 but last down around $47,500. Ether, the second-largest cryptocurrency, was down more than 13% this weekend below $4,000. In Asian markets, The Nikkei Index fell -102 points to 27,927, the Shanghai Index slipped -0.5% to 3,589 and the Hang Seng Index dropped -1.76% or over 400 points to 23.349. In Europe, the German DAX gains +0.25% to 15,205, while the FTSE 100 rises roughly 60 points or 0.85% to 7,180. China Evergrande Group plunged to an all-time low Monday after the indebted property developer faces $342.5 million in payments to creditors as its chairman was summoned by authorities in Beijing.

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -38.67 points, or 0.84%, to 4,538.43

·     The Dow Jones Industrial Average fell -59.71 points, or 0.17%, to 34,580.08

·     The Nasdaq Composite plunged -295.85 points, or 1.92%, to 15,085.47

·     The Russell 2000 Index declined -47.02 points, or 2.13% to 2,159.31

 

Events Calendar for Today

·     No major U.S. economic data

 

Earnings Calendar:

·     Earnings Before the Open: SAIC

·     Earnings After the Close: COUP, GTLB, HQY, MDB, SUMO

 

Other Key Events:

·     Annual Meeting of American Epilepsy Society (AES), in Chicago, 12/3-12/7

·     JMP Securities Hematology & Oncology Summit (virtual), 12/6-12/7

·     UBS Global Technology, Media & Telecom Conference (virtual), 12/6-12/8

·     Morgan Stanley 2021 East Coast Biotech Bus Trip (virtual), 12/6-12/10

·     Raymond James Technology Investors Conference (virtual), 12/6-12/8

·     China Imports, Exports, Trade Balance for November

 

 

Macro	Up/Down	Last
Nymex	1.87	68.13
Brent	1.83	71.71
Gold	-1.30	1,782.00
EUR/USD	-0.0016	1.1297
JPY/USD	0.41	113.21
10-Year Note	+0.048	1.389%

 

 

World News

·     Goldman Sachs lowers 2022 GDP to 3.8% from 4.2% previously over Omicron fears.

·     China’s securities regulator says that stories that China will ban companies with a VIE (Variable Interest Entity) structure from U.S. listing is a case of total misunderstanding and is misreading – Nikkei reports

·     Germany Oct Factory Orders: -6.9% vs -0.5% consensus; Germany Nov Construction PMI: 47.9 vs 47.7 previous

·     Dr. Anthony Fauci, the nation’s top infectious disease expert, said Sunday that data from South Africa, where the new variant was first discovered, indicates that Omicron may induce milder symptoms than previously forecast, although its rapid spread continues to worry virologists around the world.

 

Sector News Breakdown

Consumer

·     Kohl’s (KSS): Activist investor Engine Capital is said to be pushing department store chain Kohl’s Corp. (KSS) to sell itself or to separate its e-commerce business. Engine Capital believes there are private equity firms that would pay at least $75 per share for the company, according to a WSJ report, which cited a copy of letter Engine sent to Kohl’s board today. https://on.wsj.com/3lxvrCv

·     Lucid Group (LCID) shares slide over 13% after the EV maker said it had received a subpoena from the U.S. SEC, requesting documents related to an investigation on its blank-check deal with Churchill Capital Corp.

·     S&P SmallCap 600 constituents Macy’s Inc. (M), Vicor Corp. (VICR) and Power Integrations Inc. (POWI) will move to the S&P MidCap 400, replacing S&P MidCap 400 constituents Tootsie Roll Industries Inc. (TR), Telephone and Data Systems Inc. (TDS), and Nektar Therapeutics (NKTR), all of which will move to the S&P SmallCap 600

·     Large home builders like D.R. Horton (DHI), Lennar (LEN), PulteGroup (PHM) and Toll Brothers (TOL) are poised to gain from the recent housing trends and are leading the industry transition from “land developers” to “home manufacturers” — a shift that has increased returns while lowering risk, Barron said this weekend citing Bill Smead, a manager of the Smead Value fund.

 

Energy

·     SolarEdge Technologies Inc. (SEDG) will be moving to the S&P 500 Index effective prior to the open of trading on Monday, December 20, 2021

·     Crude oil prices fell for a sixth consecutive week on Friday, marking the longest stretch of weekly declines since November 2018, amid worries over the COVID-19 omicron variant and increased production by OPEC+ in January. U.S. WTI crude for January delivery fell -0.4% Friday to $66.26/bbl, while February Brent settled +0.3% to $69.88/bbl; for the week, WTI lost 2.8% and Brent fell 2.4%

·     ReneSola (SOL) has authorized the repurchase of up to $50M

 

Financials

·     S&P MidCap 400 constituents Signature Bank (SBNY), SolarEdge Technologies Inc. (SEDG) and FactSet Research Systems Inc. (FDS) will move to the S&P 500, replacing S&P 500 constituents Leggett & Platt Inc. (LEG), Hanesbrands Inc. (HBI) and The Western Union Co. (WU), all of which will move to the S&P MidCap 400. All moves will be effective prior to the open of trading on Monday, December 20, 2021 to coincide with the quarterly rebalance

·     UMH Properties (UMH) positively mentioned in Barron’s noting it is a real estate investment trust that owns 127 manufactured-home communities in 10 states, primarily in the Northeast and Southeast. It makes money from selling and renting manufactured homes-essentially, factory-built houses-with units selling for roughly twice the local annual income in areas where houses can cost more than seven times a year’s pay

·     China’s Evergrande Group shares slide to a 11yr low after the company said there was no guarantee it would have enough funds to meet debt repayments. Investors waiting to see if Evergrande makes good on a coupon payment of $82.5 mln due on Monday. The firm also grappling with creditors demanding payment of $260 million obligations

·     Hackers withdrew about $150 million of cryptocurrencies from BitMart wallets, according to the unverified Twitter account of the exchange’s chief executive officer. “We have identified a large-scale security breach related to one of our ETH hot wallets and one of our BSC hot wallets,” Sheldon Xia was quoted as tweeting – Bloomberg

·     Citi (C) downgraded to Equal Weight from Overweight with an $82 price target; Goldman Sachs (GS) upgraded to Equal Weight from Underweight with a $479 price target and BNY Mellon (BK) downgraded to Underweight from Equal Weight at Morgan Stanley all at Morgan Stanley

 

Healthcare

·     Amgen (AMGN) raises quarterly dividend 10% to $1.94 per share

·     Bristol (BMY) positively mentioned in Barron’s noting a healthcare crisis should have been good for biopharma stocks…but instead, it’s been anything but. Article notes few pharma companies have been hit as hard as Bristol-Myers, with the stock dropping 11% so far this year amid concerns that it will lose exclusivity on drugs like multiple-myeloma treatment Revlimid in 2022, and cancer treatment Opdivo and blood-clot preventer Eliquis later this decade

·     Merck (MRK) said the FDA approved KEYTRUDA, Merck’s anti-PD-1 therapy, for the adjuvant treatment of adult and pediatric patients with stage IIB or IIC melanoma following complete resection. Additionally, the FDA expanded the indication for KEYTRUDA as adjuvant treatment for stage III melanoma following complete resection to include pediatric patient

·     Molecular Partners (MOLN) announces results from the Phase 2a study of ensovibep for COVID-19 patients as well as additional data from Phase 1 study in healthy volunteers at the European Scientific Working Group on Influenza Conference.

 

Industrials & Materials

·     Lockheed Martin Corp (LMT) edges higher following a report saying the Finnish Defense Forces propose the U.S. defense company’s F-35 fighter jet as the state’s newest combat aircraft; Finnish media outlet Iltalehti reported the F-35 is one of the five aircraft proposed to Finland

·     PotlatchDeltic (PCH) board declares $4 special dividend and increases regular distribution 7.3%

·     Deere (DE) a positive mention in Barron’s saying the stock could benefit from sustained inflation. The recent selloff in industrial stocks has left some names looking particularly cheap with Deere trading at 14.7x its next 12 months expected free cash flow per share, below its five-year average of 20.7x, despite the fact it is expected to grow FCF in the high teens the next two years

·     Saint-Gobain will acquire GCP Applied Technologies (GCP) for $32.00 per share, in cash, in a transaction valued at approximately $2.3B https://bit.ly/3DrUXPM

 

Technology, Media & Telecom

·     Nintendo (NTODY) is an overlooked metaverse play according to Barron’s this weekend, saying it is time to buy stock. Says investors have spent much of the year looking for companies making big promises about the “metaverse”-the idea of virtual worlds that enable social interaction and commerce, which has powered stocks like Roblox (RBLX) and Nvidia (NVDA) but says new games could create renewed momentum for the Switch, helping Nintendo

·     Twitter’s (TWTR) CEO swap from Jack Dorsey to Parag Agrawal led to a 10% fall in the company’s stock, opening up a buying opportunity that investors haven’t seen in years according to Barron’s. Agrawal hasn’t been in the chief executive position for a week and has already made restructuring decisions that left two executives out

·     Alibaba Group (BABA) announced that Toby Xu, Deputy Chief Financial Officer, will succeed Maggie Wu as the company’s Chief Financial Officer, effective April 1, 2022

·     SoftBank Group Corp. (SFTBY) extended a six-day slump with another drop of as much as 6.5% in Tokyo Monday extending losses after the U.S. Federal Trade Commission sued to block SoftBank’s sale of Arm Ltd. to Nvidia Corp. (NVDA) last week

·     Trump-related SPAC Digital World Acquisition Corp. (DWAC) confirmed $1B PIPE deal for Trump’s social media company Trump Media & Technology Corp. “$1 billion sends an important message to Big Tech that censorship and political discrimination must end,” former President Donald Trump said in a statement. https://bit.ly/3rJjPQR

·     United Microelectronics (UMC) November net sales grew 33.52% Y/Y to NT$19.66B, compared to NT$19.16B in October; YTD sales were up 19.31% Y/Y to NT$192.73B