Early Look

Friday, December 17, 2021

U.S stock futures slide further, now having erased all the gains posted after this week’s Fed policy decision, as investors retrace following a surge in the Covid variant as infection rates rise and amid ongoing inflation and the rising path of interest rates. With new infections sweeping through the sports world, cancelling games, and putting players on the sidelines, reopen related sectors are seeing weakness led by travel and leisure. In transports, Fed-Ex (FDX) rises following a strong quarterly result last night. Trading volatility may pick up ahead of quadruple witching hour, where futures and options on both single stocks and indices expire heading into the close of the quarter. U.S. stocks slid on Thursday as weakness among large tech stocks and consumer discretionary dragged down major market averages, while the same sectors look poised to start the day lower again. In Asian markets, The Nikkei Index tumbled over 500 points or 1.79% to 28,545, the Shanghai Index falls -1.16% to 3,632, and the Hang Seng Index dropped -1.2% to 23,192. In Europe, the German DAX is lower by -0.7% or over 100 points to 15,525, while the FTSE 100 rises +0.25% to 7,275. Oil prices are looking lower, along with another decline in Bitcoin prices.

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -41.18 points, or 0.87%, to 4,668.67

·     The Dow Jones Industrial Average fell -29.79 points, or 0.08%, to 35,897.64

·     The Nasdaq Composite plunged -385.15 points, or 2.47%, to 15,180.43

·     The Russell 2000 Index declined -42.75 points, or 1.95% to 2,152.46

Events Calendar for Today

·     1:00 PM EST       Baker Hughes Weekly rig count data

Earnings Calendar:

·     Earnings Before the Open: DRI, WGO

World News

·     The Bank of Japan (BoJ) left interest rates unchanged, as widely expected. Corporate debt purchases are set to be tapered to pre-pandemic levels and the emergency funding scheme scaled back once the March 2022 deadline is reached. Loan assistance for smaller businesses was extended another six months, while support for larger firms will be gradually scaled back from April

·     German Dec IFO Business Climate missed: 94.7 vs 95.3 consensus; German Dec IFO Current Conditions missed: 96.9 vs 97.5 consensus; German Dec IFO Expectations missed: 92.6 vs 93.5 consensus

·     UK Nov Retail Sales beat rising 1.4% m/m vs 0.8% cons; 4.7% y/y vs 4.2% consensus; UK Nov Retail Sales Ex Fuel beat: 1.1% m/m vs 0.8% cons; 2.7% y/y vs 2.4% consensus

Sector News Breakdown

Consumer

·     General Motors (GM) slips 3% after saying Dan Ammann, the CEO of its majority-owned Cruise self-driving car subsidiary, is leaving co, effective immediately; GM did not give a reason for the departure; said Kyle Vogt, Cruise president and chief technical officer, will serve as interim CEO

·     Rivian (RIVN) cash and cash equivalents at sept. 30 $5.2B; Q3 EPS loss (-$12.21); delivered first consumer vehicles, R1t pickup truck and R1s sport utility vehicle in September and December, respectively; says expect to start production in Georgia facility in 2024, expect Georgia facility to have capacity to produce up to 400,000 vehicles annually

·     Steelcase (SCS) Q3 EPS $0.08 vs. est. $0.09; Q3 rev $738.2M vs. est. $767.6M; sees Q4 revs up 8%-13% or $740M-$765M vs. est. $770.8M; Q3 orders grew 40% in Q3 compared to the prior year

·     Scholastic (SCHL) reports Q2 EPS $1.91 vs. $1.02 a year ago; Q2 revenue $524.2M vs. $406.2M a year ago.

·     Quanex Building Products (NX) announced a new $75M share repurchase program.

Energy, Industrials and Materials

·     Fed-Ex (FDX) shares rose 7%; announces new $5 bln share repurchase program authorized, including $1.5 bln accelerated share repurchase program; 2Q adj EPS $4.83 vs est. $4.27 on revs $23.5B vs est. $22.47B, says in qtr faced challenging labor market which resulted in network inefficiencies; continue to forecast improved earnings and margins for FY; sees FY 2022 EPS of $20.50-$21.50 vs. est. $19.64

·     United States Steel Corp. (X) issues Q4 2021 adjusted EBITDA is expected to be approximately $1.65B vs est. $2.13B; said are bullish for next year; Q4 guidance indicates another quarter of strong performance yet reflects a temporary slowdown in order entry activity

·     Dover (DOV) completed the acquisition of Acme Cryogenics, Inc. for $295 million in cash, and that it has entered into a definitive agreement to acquire Engineered Controls International, LLC for $631 million in cash

·     Exxon Mobil (XOM) is slated to bid for new blocks in Brazil’s deep-water oil fields, Reuters reported saying any offer would mark the company’s first major investment since it decided to resume spending following a $22.4B annual loss in 2020

·     EOG Resources (EOG) files automatic mixed securities shelf

Financials

·     Chinese regulators are planning to ban online brokerages such as Futu Holdings Ltd (FUTU) and UP Fintech Holding Ltd (TIGR) from offering offshore trading services to mainland clients due to concern about data security and capital outflows, according to reports from Reuters.

·     Shift4 (FOUR) announces stock repurchase program, up to $100 million

·     HSBC (HSBC) has been fined 64 million pounds ($85 million) by British regulators for failings in its anti-money laundering processes spanning eight years.

Healthcare

·     The European Union’s drug regulator on Friday rejected Biogen Inc’s (BIIB) Alzheimer’s drug, Aduhelm, dealing a blow to the U.S. drugmaker after a panel voted against the treatment last month.

·     BioMarin (BMRN) and Skyline Therapeutics announce strategic collaboration to develop novel gene therapies for cardiovascular diseases

·     Taysha Gene Therapies Inc (TSHA) preliminary clinical safety and ppt1 enzyme activity data expected in first half of 2022

·     CDC advisory panel unanimously advised yesterday that people take an mRNA-based vaccine as opposed to the one developed by Johnson & Johnson (JNJ). There’s been evidence the J&J vaccine can trigger a dangerous clotting condition called thrombosis with thrombocytopenia syndrome

Technology, Media & Telecom

·     Oracle (ORCL) is in discussions to acquire Cerner (CERN) in a deal that could be worth around $30B, the Wall Street Journal reported saying a deal could be finalized soon, assuming talks don’t fall apart https://on.wsj.com/3s7yLbA

·     Expensify, Inc. (EXFY) 3Q EPS ($0.18) on revs $37.4Mm; sees 4Q revs $38.2-39.2Mm vs est. $38.5Mm, sees 4Q avg monthly paid members $673-691k