Early Look

Monday, March 29, 2021

Futures	Up/Down	%	Last
Dow	-122.00	0.37%	32,832
S&P 500	-13.25	0.34%	3,951
Nasdaq	-17.50	0.14%	12,949

 

 

U.S. stocks are looking lower after last Friday’s late day surge, with major U.S. averages closing at their best levels’ late day as the S&P 500 rose 1.57% for the week, the Dow added 1.36%, and the Nasdaq shed 0.58%. However, U.S. equities are slipping early following weakness in banks after shares of foreign banks Credit Suisse (CS) and Nomura Holdings fell sharply on Monday, as each warned of potentially large losses from a U.S. client. Neither bank identified the client, but the disclosures follow steep losses for shares of U.S. media companies ViacomCBS and Discovery, and Chinese entertainment group IQIYI on Friday among others, after some huge blocks were linked by the media this weekend to troubles for Archegos Capital Management (more below). In other top stories today, the huge container ship blocking Egypt’s Suez Canal for nearly a week has been partially refloated, the Suez Canal Authority said, raising hopes the busy waterway will soon be reopened for a big backlog of ships. Bitcoin prices up over 7% to around $58,000 after Visa (V) said it will allow the use of the cryptocurrency USD Coin to settle transactions on its payment network. Lastly in trade news, the U.S. isn’t ready to lift tariffs on Chinese imports in the near future, but might be open to trade negotiations with Beijing, The Wall Street Journal reported this weekend. In Asian markets, The Nikkei Index gained 207 points to 29,384, the Shanghai Index rose 16 points to 3,435 and the Hang Seng Index was little changed at 28,338. In Europe, the German DAX is up over 70 points to 14,820, while the FTSE 100 is flat.

 

The sharp sell-off in media names on Friday explained: A liquidation of holdings in Archegos Capital Management, which is run by Tiger cub Bill Hwang, led to a major sell off in ViacomCBS (VIAC) and Discovery Inc. (DISCA) shares Friday according to Bloomberg and IPO Edge (ViacomCBS fell 26%, while Discovery dropped 27%). The liquidation in Archegos, which reportedly focused on TMT companies, may have been precipitated by a margin call that the fund received from an investment bank that couldn’t be met. An email to clients seen by Bloomberg News said Goldman sold $6.6 billion worth of shares of Baidu Inc. (BIDU) Tencent Music (TME) and Vipshop Holdings Ltd (VIP)S, before the U.S. market opened on Friday. Following this, Goldman sold $3.9 billion worth of shares in ViacomCBS Inc, Discovery Inc, Farfetch Ltd (FTCH), iQIYI Inc (IQ) and GSX Techedu Inc. (GSX). The Financial Times reported that Morgan Stanley sold $4 billion worth of shares earlier in the day, followed by another $4 billion in the afternoon. https://yhoo.it/2PdRSQ8

 

Market Closing Prices Yesterday

·     The S&P 500 Index jumped 65.02 points, or 1.66%, to 3,974.54

·     The Dow Jones Industrial Average rose 453.38 points, or 1.39%, to 33,072.88

·     The Nasdaq Composite spiked 161.02 points, or 1.24%, to 13,138.72

·     The Russell 2000 Index advanced 38.36 points, or 1.76% to 2,221.48

 

Events Calendar for Today

·     10:30 AM EST    Dallas Fed Services for March

 

Earnings Calendar:

·     Earnings Before the Open: ACTG, CALM, GATO

·     Earnings After the Close: BFLY, DNMR, LFMD, MEDS, SEER, SRAX, VERO, VTSI

 

Other Key Events:

·     B Riley Sports Betting and iGaming 1-day conference

·     Jefferies China Internet Conference (virtual), 3/29-3/30

·     JPM NAPA Valley Biotech Forum (virtual), 3/29-3/31

·     Oppenheimer China Internet Bus Tour (virtual), 3/29-3/30

 

 

Macro	Up/Down	Last
Nymex	0.33	61.30
Brent	0.54	65.11
Gold	-5.80	1,726.75
EUR/USD	-0.0023	1.1771
JPY/USD	-0.06	109.58
10-Year Note	-0.003	1.657%

 

 

World News

·     The huge container ship blocking Egypt’s Suez Canal for nearly a week has been partially refloated, the Suez Canal Authority said, raising hopes the busy waterway will soon be reopened for a big backlog of ships. The 400-metre long Ever Given became jammed across a southern section of the canal in high winds early last week, halting traffic on the shortest shipping route between Europe and Asia

·     In China deal news: According to U.S. Trade Rep Katherine Tai, the U.S. isn’t ready to lift tariffs on Chinese imports in the near future, but might be open to trade negotiations with Beijing, The Wall Street Journal reported

·     British consumer lending fell in February at the fastest annual pace on record as consumer borrowing dropped 9.9% year-on-year in February, the biggest drop since the series began in 1998, the BoE said.

 

Sector News Breakdown

Consumer

·     Cal-Maine Foods (CALM) Q3 EPS 28c vs. est. 7c; Q3 revenue $359.1M vs. est. $369M

·     Lyft (LYFT), Uber (UBER); Connecticut lawmakers are shelving a bill that aimed to establish a novel system of collective bargaining rights for gig workers. The proposal had union support but provoked pushback from some in organized labor.

 

Energy

·     Oil edged higher after four sessions of wild swings in price, as efforts continued to dig out the giant container ship clogging the Suez Canal and little new emerged in the demand picture. Both benchmarks are roughly where they were before the Ever Given became the container ship got stuck in a narrow portion of the canal last week.

·     Sinopec (SNP) plans a 23.8% increase in capital spending to 167.2 billion yuan in 2021 following recovery of oil prices and energy demand as the COVID-19 epidemic subsided.

·     Peabody Energy (BTU) files $2B mixed securities shelf

·     Chevron (CVX) has emerged as a top contender to buy Royal Dutch Shell’s refinery in the U.S. Pacific Northwest, Reuters reported

·     Consolidated Edison (ED), Johnson & Johnson (JNJ), Coca-Cola (KO), IBM (IBM), SL Green Realty (SLG), AT&T (T) are among the ten companies Barron’s identified that could supplement revenue streams with dividend yields

 

Financials

·     Visa (V) said it will allow the use of the cryptocurrency USD Coin to settle transactions on its payment network – Visa has launched the pilot program with payment and crypto platform Crypto.com and plans to offer the option to more partners later this year, it said

·     H&R Block (HRB) positive mention in Barron’s saying Tax Day comes and Tax Day goes, but H&R Block might someday be a stock for all seasons, noting it is diversifying its business following years of underperformance. The plan could take longer than expected, though its 5.3% dividend yield means that investors are paid to wait for good things to happen

·     Broadridge Financial Solutions (BR) signs a deal to acquire Itiviti Holding AB in an all-cash transaction valued at €2.143B (about $2.5B) from Nordic Capital.

·     Franklin Resources (BEN) upgraded to Outperform from Market Perform at BMO Capital

·     Germany’s Allianz is said to be looking at the potential for making an offer for Hartford Financial Services (HIG) as a rival bid to Chubb’s (CB) bid, according to a Bloomberg report. Allianz is interested in Hartford, though it’s not sure if wants to get into a bidding war with Chubb. https://bit.ly/3fngdNX

 

Healthcare

·     Bristol Myers Squibb (BMY) and bluebird bio (BLUE) announced the FDA approval for idecabtagene vicleucel (ide-cel) for a certain category of adult patients with relapsed or refractory multiple myeloma. The FDA authorization has come a day ahead of the action date.

·     China Pharma Holdings (CPHI) has net current liabilities, accumulated deficit that raise substantial doubt about its ability to continue as going concern; bad debt expenses for 2020 was $115,186 compared to $3,153 in 2019

·     PTC Therapeutics (PTCT) upgraded to Sector Perform from Underperform with $47 price target at RBC Capital

·     Aslan Pharmaceuticals (ASLN) files to sell 25.57M ordinary shares for holders

·     Galmed (GLMD) files $300M mixed securities shelf

 

Industrials & Materials

·     Welbilt (WBT) shares mentioned positively in Barron’s saying shares could soar as restaurants recover; notes COVID-19 hammered the restaurant business-and its suppliers, like restaurant equipment maker Welbilt, hard…but with the economy recovering and eateries reopening, Welbilt stock looks like a buy

·     Lockheed Martin (LMT) won a $2.76 billion contract from the U.S. Army for rocket systems and other cybersecurity services, according to the Department of Defense

·     Ryder (R) files automatic mixed securities shelf

·     Carrier Global (CARR) upgraded to Overweight from Equal Weight at Morgan Stanley and firm also upgraded Johnson Controls (JCI) to Overweight from Equal Weight

 

Technology, Media & Telecom

·     News Corp (NWS) is near an agreement to buy the consumer arm of educational publisher Houghton Mifflin Harcourt (HMHC) for an unspecified sum, which could be announced as soon as tomorrow, WSJ reported

·     Tencent Music Entertainment’s (TME) board approved a share buyback to repurchase up to $1B of its Class A ordinary shares

·     ViacomCBS (VIAC) 45M share Block Trade priced at $47.00

·     ViacomCBS (VIAC) upgraded to Market Perform from Underperform at BMO Capital