Early Look

Tuesday, February 16, 2021

U.S. markets are looking higher, adding to last week gains after closing out Friday at the highs as momentum continues to build to the upside. Markets are still awaiting President Biden’s $1.9T coronavirus relief bill, which would include $1,400 checks for many Americans, extra funding for unemployment benefits, child tax credit increases and more to help the economy further. The hopes along with strong earnings, economic data and Fed easy money policy has spurred markets to record highs. Fear has all but disappeared as the CBOE Volatility Index (VIX) has plunged to lowest levels in about a year (prior to the pandemic). The Bitcoin craze continues as prices traded around the $50,000 level this weekend. Another busy week of earnings and data should keep investors engaged. A new market story includes the deep freeze in Texas that has also resulted in rolling blackouts for at least 5M people and effected more than a million barrels a day of oil and 10B cubic feet of gas production that have gone offline (pushing WTI above $60 per barrel). Last week, the S&P 500 rose 1.24%, the Dow added 1.00%, the Nasdaq gained 1.73% and the Russell 2000 rose 2.42%. In sector movers, Dow Transports rose 3.02% on the week and the Philadelphia Semi index (SOX) jumped 7.87%. No fear in market as the CBOE Volatility Index (VIX) ends below 20 for first time since Feb. 21, 2020 – settles at 19.97. Japan’s Nikkei share average rose above the 30,000 level for the first time in more than 30 years on Monday, as it regained the ground lost during decades of economic stagnation. The break of 30,000 could open the way for test of all-time high of 38,957, touched at the end of 1989. In Asian markets, The Nikkei Index rose 383 points to 30,467, the Shanghai Index remained closed for its week holiday (last 3,655) and the Hang Seng Index rose 573 points to 30,746. In Europe, the German DAX is lower by about -20 points to 14,085, while the FTSE 100 is down-10 points to 6,745.

Market Closing Prices Yesterday

·     The S&P 500 Index jumped 18.45 points, or 0.47%, to 3,934.83

·     The Dow Jones Industrial Average rose 27.70 points, or 0.09%, to 31,458.40

·     The Nasdaq Composite spiked 69.70 points, or 0.50%, to 14,095.47

·     The Russell 2000 Index advanced 4.04 points, or 0.18% to 2,289.36

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 Flows for December

Earnings Calendar:

·     Earnings Before the Open: AAP, AN, BKI, BRKR, CEVA, CVS, EXPD, FELE, GEO, IPGP, JELD, LPX, MGP, NXRT, PLTR, SABR, TRU, USAC, USFD, VMC, ZTS

·     Earnings After the Close: A, ACC, ACCO, AIG, BYD, CAI, CAR, CLR, CMP, CRMT, CSOD, DENN, DIOD, DVN, ENLC, ES, EXAS, GNW, HE, IOSP, KAR, LSCC, LZB, OXY, QTS, RNG, TNET, VNO, WIRE

Other Key Events:

·     Barclay’s Industrials Select Virtual Conference, 2/16-2/17

World News

·     German economic expectations rose strongly in February, beating forecasts for a decline, the ZEW economic research institute said. The measure of economic expectations rose to 71.2 in February from 61.8 in January, topped forecast of 59.8 points

Sector News Breakdown

Consumer

·     Advance Auto Parts (AAP) Q4 adj EPS $1.87 vs. est. $1.96; q4 revs $2.4B vs. est. $2.36B; Q4 comp store sales rose 4.7%; sees FY21 revenue $10.1B-$10.3B vs. est. $10.19B; sees FY21 comp store sales growth of 1%-3%

·     Kroger’s (KR) Health division said it plans to offer the first smartphone-enabled, at-home Gauss COVID-19 Rapid Antigen Test Kit, expanding its existing portfolio of COVID-19 testing solutions.

·     Sturm, Ruger (RGR), Smith & Wesson Brands (SWBI) watch gun stocks: Joe Biden said yesterday “I am calling on Congress to enact commonsense gun law reforms, including requiring background checks on all gun sales, banning assault weapons and high-capacity magazines, and eliminating immunity for gun manufacturers who knowingly put weapons of war on our streets”.

·     Coty (COTY) mentioned positively in Barron’s noting the stock tumbled after earnings but it’s time to buy. ” The article noted the parent company of Cover Girl, Kylie, Max Factor and other well-known beauty brands, has had too much debt, too little growth and too many CEOs since the start of 2020. Yet, the stock now looks poised for a turnaround.

·     Ford (F) exited its stake in Velodyne Lidar (VLDR), according to a regulatory filing; Ford has held a passive stake of 7.6% of 13.07M shares at the end of Q3. Ford originally invested $75M in Velodyne in 2016.

Energy

·     Total’s (TOT) Port Arthur oil refinery reportedly is running crude units at minimum rates and has shut its coking unit, Exxon Mobil (XOM) is said to be shutting units at its 369K bbl/day Beaumont refinery and South of Houston near Galveston Bay, Marathon Petroleum (MPC) shut its refinery as the Arctic cold snap cross Texas has shut oil refineries in the state

·     Royal Dutch (RDSA) is looking significantly undervalued according to Barron’s citing Jon Rigby, an oil-stock analyst at Swiss bank UBS who sees Royal Dutch rallying over the next 12 months to 18.10 pounds sterling ($25), or 33% above its recent price

Financials

·     American Express (AXP) files automatic mixed securities shelf

·     Discover Financial Services (DFS) credit card charge-off rate 1.69% at Jan 2021 end vs 1.58% at Dec 2020 end and credit card delinquency rate 1.32% at Jan 2021 end vs 1.31% at Dec 2020 end

Healthcare

·     CVS Health (CVS) Q4 adj EPS $1.30 vs. est. $1.24; Q4 revenue $69.55B vs. est. $68.75B; sees 2021 cash flow from ops in range $120B-$125B; sees year EPS $7.39-$7.55 vs. est. $7.54; ; administered approximately 15 mln covid-19 tests nationwide to date at more than 4,800 cvs pharmacy locations; Q4 pharmacy comp sales rose 7.5% and front end sales fell -1.8%

·     Axonics Modulation Technologies (AXNX) receives PMA supplement approval from the FDA for its third-generation implantable neurostimulator (INS)

·     Equillium Inc (EQ) said late Friday that interim clinical data of its drug Itolizumab for the treatment of acute graft-versus-host disease has shown positive results

·     G1 Therapeutics Inc (GTHX) shares rose over 17% late Friday after saying the FDA approved its Cosela, a therapy that reduces the frequency of chemotherapy-induced bone marrow suppression in adults receiving chemotherapy

·     Hologic (HOLX) “Stock Is Cheap. Time to Buy,” according to Barron’s pointing out that the medical-diagnostics company is a COVID-19-beneficiary but also a business that will benefit as life returns to normal. Moreover, the stock has gained 55% during the past year, but its valuation has dropped as well.

·     Eyepoint Pharmaceuticals (EYPT) files prospectus related to offering of 3 mln shares of common stock by selling stockholder

Industrials & Materials

·     Generac Holdings (GNRC) and Quanta Services (PWR) may be active as Texas’ power grid experienced a systemwide failure Monday morning as demand surged due to the historic winter conditions across the state. Grid managers declared an emergency after the record-breaking energy use strained utilities beyond capacity.  

·     SPAC Peridot Acquisition Corp. (PDAC) is close to a deal to take Li-Cycle Corp., a recycler of lithium-ion batteries, public in a deal valued at about $1.7b, Reuters reported

·     Cubic (CUB) buyout could signal more deals for defense contractors according to Barron’s. Said that Cubic Corporation (CUB) has agreed to a $2.8 billion buyout, the latest in a string of mergers and acquisitions in the defense sector. Who could be next? Aerojet Rocketdyne Holdings Inc (AJRD), FLIR Systems, Inc. (FLIR)? https://bit.ly/2NuHjXv

Technology

·     Corning Incorporated (GLW) mentioned positively in Barron’s noting the co has been around since 1851 and now serves a diverse set of markets, from smartphones to auto manufacturing to vaccine vials. So says “Corning Is Filling Its Glass With New Ideas” and Barron’s believes this stock deserves more attention.