Early Look

Monday, January 3, 2022

U.S. stock markets are kicking off the New Year strong, rebounding following modest losses the final few days of 2022, as investors look to put money to work after solid overall returns for 2021. For the month of December, the S&P rose 4.36%, the Dow added 5.38%, the Nasdaq gained 0.69%; for the quarter, the S&P rose 10.65%, the Dow added 7.37%, and the Nasdaq gained 8.28%. Finally, for the year, the S&P rose 26.89% (posting 70 record highs along the way), the Dow added 18.73%, and the Nasdaq gained 21.39% as each closed higher for the third straight year. For the first time in its history, all the sectors in the S&P 500 also posted double-digit gains in 2021, led by energy as WTI crude posted a 55% gain for 2021, its best annual return since 2009. Gold prices slipped from 6-week highs above $1,827 an ounce as higher bond yields and rallying equities weighed on the metal’s safe-haven appeal. In Asian markets, The Nikkei Index remained closed at 28,791, the Shanghai Index was also closed at 3,639, and the Hang Seng Index dropped -0.53% to 23,274. In Europe, the German DAX is up over 150 points or nearly 1% to move back above the 16,000 level, while the FTSE 100 was closed.

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -12.55 points, or 0.26%, to 4,766.18

·     The Dow Jones Industrial Average fell -59.78 points, or 0.16%, to 36,338.30

·     The Nasdaq Composite slumped -96.59 points, or 0.61%, to 15,644.97

·     The Russell 2000 Index declined -3.48 points, or 0.15% to 2,245.31

Events Calendar for Today

·     9:45 AM ET        Markit Manufacturing PMI, Dec-F

·     10:00 AM ET      Construction Spending MoM for November…est. +0.6%

Other Key Events:

·     China Caixin Manufacturing PMI, Dec-F

World News

·     Eurozone Dec Manufacturing PMI (final) in-line: 58.0; German Dec PMI (final) missed: 57.4 vs 57.9 consensus; French Dec PMI (final) beat: 55.6 vs 54.9 consensus; and Italian Dec PMI beat: 62.0 vs 61.5 consensus

·     Turkey’s annual inflation soared to its highest in 19 years, as consumer prices rose 36.08%, outstripping a median forecast of 30.6%, with staples such as transportation and food and drink – which took increasing shares of Turkish households’ incomes during 2021 – rising even faster

Sector News Breakdown

Consumer

·     Tesla (TSLA) shares surge 7%; said it achieved production of more than 305,000 vehicles and deliveries of over 308,000 vehicles in Q4 vs. 263,422 consensus; in 2021, the company delivered over 936,000 vehicles vs. 499,550 vehicles in 2020.

·     NIO (NIO) said it delivered 10,489 vehicles in December 2021, 25,034 vehicles in the fourth quarter of 2021, and 91,429 vehicles in 2021 in total. As of December 31, 2021, cumulative deliveries of the ES8, ES6 and EC6 reached 167,070 vehicles

·     XPeng (XPEV) announced it delivered 16,000 Smart EVs in December 2021. Total deliveries for the fourth quarter 2021 reached 41,751 units, a 222% increase year-over-year, including 21,342 P7 deliveries.

·     Li Auto (LI) delivered 14,087 Li ONEs in December 2021, representing a 130.0% YoY increase; took its fourth quarter deliveries to 35,221, up 40.2% QoQ and 143.5% YoY; total deliveries in 2021 increased 177.4% YoY to 90,491

·     Armstrong Flooring Inc (AFI) shares jump after the co announced late Friday it has retained Houlihan Lokey Capital Inc to assist with process for sale of the co and with the consideration of other strategic alternatives

·     Macau’s gaming bureau reported December gross revenue from games of fortune in the region was up 1.8% year-over-year to 7.962B patacas

·     ODP Corporation (ODP) announced that it has sold its CompuCom Systems subsidiary to an affiliate of Variant Equity in a transaction valued up to $305M; boosts share buyback by $200M

Financials

·     Marsh McLennan (MMC) downgraded to Underperform from Neutral at Bank America

·     Medical Properties Trust (MPW) files mixed securities shelf

·     The London Interbank Offered Rate, or Libor, which has underpinned the pricing derivatives and loans – ranging from mortgages and student loans to business funding and credit cards – is ending a role it had held for about four decades. The Secured Overnight Financing Rate (SOFR) will be the main replacement for Libor in the U.S. The SOFR benchmark, which is based on the rates U.S. financial institutions pay each other for overnight loans, is said to be more accurate and secure

Healthcare

·     Walgreens Boots (WBA) is said to have received a takeover offer from private equity firm Bain Capital for its Boots drugstore chain in the U.K. Bain Capital offered to buy the U.K. chain two months ago, according to a Times of London report. Boots owns about 25% of its stores and the chain may be valued at GBP6B pounds ($8.1B) to GBP7B pounds in a sale.

·     Belgium has agreed to buy 10,000 courses each of the COVID-19 antiviral oral treatments developed by Pfizer (PFE) and Merck & CO (MRK), a spokesman for the health ministry told Reuters in an emailed statement.

·     Ovid Therapeutics (OVID) said it has entered into an exclusive license agreement with AstraZeneca (AZN) for a library of early-stage small molecules targeting the KCC2 transporter, including lead candidate, OV350.

Technology, Media & Telecom

·     AT&T (T) and Verizon (VZ) have been asked by Transportation Secretary Pete Buttigieg to delay a 5G wireless service scheduled to start this week by two weeks. He said “failure to reach a solution by January 5 will force the U.S. aviation sector to take steps to protect the safety of the traveling public, particularly during periods of low visibility or inclement weather,”

·     AT&T (T) and Verizon Communications (VZ) refused a request by U.S. Transportation Secretary Pete Buttigieg to delay the start of the 5G C-Band launch this week. The wireless companies instead offered to adopt the same C-Band radio exclusion zones that are already in use in France for a period of six months expiring on July 5