Early Look

Tuesday, September 7, 2021

Futures	Up/Down	%	Last
Dow	7.00	0.02%	35,359
S&P 500	-2.25	0.05%	4,532
Nasdaq	-23.50	0.15%	15,628

 

 

U.S. stocks return from the 3-day Labor Day holiday weekend looking flat, heading into what is typically the worst month of the year for stocks amid looming uncertainty over the pace of the global recovery and the path of the Federal Reserve’s stimulus withdraw following Friday’s jobs report. Asian equities climb for eighth straight day as Nikkei briefly tops 30,000 for the first time since April and as China trade beats forecasts. The Nikkei Index gains 256 points (or 0.86%) to 29,916, the Shanghai Index jumped 54 points to 3,676, and the Hang Seng Index rises 190 points to 26,353. In Europe, the German DAX is down about -40 points to 15,890, while the FTSE 100 is down around -30 points to 7,155. Last week’s softer-than-expected employment report, which showed 235,000 new jobs were created last month, suggests a more muted pace of recovery over the final months of the year as the impact of government stimulus fades and Delta variant coronavirus infections continue to surge. Oil prices are edging lower while Treasury yields rise roughly 4 bps to above 1.36% for the 10-year. Global stocks got a modest boost from record China trade data, including a much stronger-than-expected 25.6% year-on-year increase in exports over the month of August.

Market Closing Prices Yesterday

·     The S&P 500 Index slipped -1.52 points, or 0.03%, to 4,535.43

·     The Dow Jones Industrial Average fell -74.71 points, or 0.21%, to 35,369.09

·     The Nasdaq Composite climbed 32.32 points, or 0.21%, to 15,363.52

·     The Russell 2000 Index declined -11.97 points, or 0.52% to 2,292.05

 

Events Calendar for Today

·     7:45 AM ET         ICSC Weekly Retail Sales

·     8:55 AM ET         Johnson/Redbook Weekly Sales

 

Earnings Calendar:

·     Earnings Before the Open: None

·     Earnings After the Close: CASY, COUP, MLNK, PATH, RXST, SMAR

 

 

Macro	Up/Down	Last
Nymex	-0.74	68.55
Brent	-0.19	72.03
Gold	-13.30	1,810.00
EUR/USD	-0.0005	1.1865
JPY/USD	0.11	109.97
10-Year Note	+0.043	1.365%

 

 

World News

·     German July Industrial Orders beat up +3.4% MoM vs. est. -1.0%; German Aug Markit Construction PMI lower at 44.6 vs 47.1 previous

·     UK Aug Construction PMI missed at 55.2 vs 56.9 consensus

·     Germany Sep ZEW Expectations 31.1 vs 30.8 consensus; Current Situation 31.9 vs 34.0 consensus

·     Eurozone Q2 GDP higher QoQ at 2.2% v 2.0% consensus; y/y 14.3% 13.6% consensus; Eurozone Q2 Employment: q/q 0.7% vs 0.5% consensus; y/y 1.8% in line

·     Bitcoin prices held firmly over the $50,000 mark Tuesday after El Salvador became the first country in the world to declare the cryptocurrency as legal tender. El Salvador, a central American national that relies heavily on remittances from the United States to support its annual economic growth, purchased 400 bitcoin on Monday, taking prices to a multi-month high of $52,680 each on the Bitcoin exchange. Bitcoin prices have since pulled back, down -1.8% below $51K; Bitcoin cash ($BCH) down over 6% at $745; Ethereum $ETH down 5% at $3,750

 

Sector News Breakdown

Consumer

·     TAL Education Group (TAL), New Oriental Education & Tech (EDU) and Gaotu Techedu (GOTU): China said local governments should set the fees for after-school tutoring institutions that offer compulsory education subjects, another step in the country’s efforts to overhaul the private education sector, Bloomberg reported; price increases from the standard level will be capped at 10%.

·     Genius Sports Limited (GENI) signs a new multi-year agreement with Caesars Entertainment (CZR).

·     Limbach Holding (LMB) files $100M mixed securities shelf

·     LGI Homes (LGIH) closed 776 homes in August, up from 669 homes closed in August 2020, up 16% YoY

·     Reports that China’s Beijing city government is advising state-owned companies to invest in ride-hailing giant Didi Global Inc (DIDI) are untrue, the city government told Reuters in a faxed statement. Citing unidentified sources, Bloomberg News on Friday reported that China’s capital city is considering taking Didi under state control and has proposed that government-run companies invest in Didi.

 

Energy, Industrials and Materials

·     Kansas City Southern (KSU) said it will take a new look at Canadian Pacific Railway Ltd.’s (CP) $27 billion acquisition offer and hold talks with the company after a recent regulatory ruling jeopardized a rival bid that the U.S. railroad had already accepted.

·     Boeing (BA) deliveries of its 787 Dreamliner will likely remain halted until at least late October as the industry regulator rejected the company’s recent inspection proposal, the Wall Street Journal reported.

·     Talos Energy Inc. (TALO) said Friday it’s contesting a decision by the Mexican government to give operatorship of a joint offshore development to state oil concern Petróleos Mexicanos. The Mexican government in July designated Pemex the operator of the development which includes Talos’s 2017 Zama discovery and an adjacent field assigned to Pemex, giving the state company management control of the project.

·     China’s crude imports rose to a five-month high after private refiners were allocated new import quotas and as cargoes delayed due to typhoon were delivered. Hurricane Ida’s initial impact on Gulf of Mexico oil supply has been greater than any other storm in history – Bloomberg

·     Amazon (AMZN) and Mitsubishi to set up 450 solar power plants in Japan- Nikkei

·     U.S. authorities are investigating whether payments by U.S. weapons maker Raytheon Technologies Corp (RTX) to a consultant for the Qatar Armed Forces may have been bribes intended for a member of the country’s ruling royal family, the Wall Street Journal reported

 

Financials

·     S&P MidCap 400 constituents Ceridian HCM Holding Inc. (CDAY), and Brown & Brown Inc. (BRO) will move to the S&P 500, replacing Unum Group (UNM) and NOV Inc. (NOV) both of which will move to the S&P MidCap 400.

·     Columbia Property Trust Inc. (CXP) shares +15%; announced an agreement to be acquired by funds managed by Pacific Investment Management Co. LLC (PIMCO) in a deal valued at $3.9 billion. Under terms of the deal, PIMCO will pay $19.30 for each Columbia Property share outstanding, a 16.7% premium to Friday’s closing price of $16.54. https://on.mktw.net/2WVSi1A 

·     State Street Corporation (STT) and Brown Brothers Harriman & co. today announced that they have entered into a definitive agreement for state street to acquire BBH’s investor services business, including its custody, accounting, fund administration, global markets and technology services, for $3.5 billion in cash.

 

Healthcare

·     Barron’s highlights five biotech’s that are ready for a comeback: Acceleron Pharma (ALRN), Invitae (NVTA), Sarepta Therapeutics (SRPT), Compass Pathways (CMPS), and AlloVir (ALVR). The SPDR Biotech ETF (XBI) is down 4.7% year-to-date, which compares to a 20.8% return in the same period for the S&P 500.

·     Johnson & Johnson (JNJ) downgraded to Equal-Weight from Overweight by Morgan Stanley with $187 tgt

·     Novavax (NVAX) rises after Takeda Pharmaceutical Co says Japanese government will purchase 150 mln doses of the COVID-19 vaccine it will produce using NVAX formula; Novavax is licensing and transferring manufacturing technologies to enable Takeda to manufacture vaccine

·     RenovoRx (RNXT) rises 50%; receives a new 510(k) clearance from the FDA for its proprietary RenovoCath Delivery System

·     Aehr Test Systems (AEHR) files $75M mixed securities shelf

·     Tandem Diabetes Care Inc. (TNDM) will replace Healthcare Services Group Inc. (HCSG) in the S&P MidCap 400, and Healthcare Services Group will replace MicroStrategy Inc. (MSTR) in the S&P SmallCap 600. UNIQURE N.V. (QURE) will replace United Insurance Holdings Corp. (UIHC) in the S&P SmallCap 600

 

Technology Media & Telecom

·     Qualcomm Inc (QCOM) said it will supply a key computing chip for the digital dashboard in a new Renault SA electric vehicle – Reuters

·     Match Group Inc. (MTCH) will replace Perrigo Company plc (PRGO) in the S&P 500, Perrigo Company will replace WW International Inc. (WW) in the S&P MidCap 400, and WW International will replace Team Inc (TISI) in the S&P SmallCap 600. Team has a market capitalization that is no longer representative of the small-cap market space.

·     Global semiconductor sales were up 29% on the year in July to $45.4B, a 2.1% increase on the prior month, according to new data from the Semiconductor Industry Association (SIA)

·     Veon (VEON) has a deal to sell its Russian mobile network towers to Service-Telecom for 70.65 billion rubles (about $970 million). Service-Telecom is an existing partner that provides Veon and its VimpelCom Russian unit with passive infrastructure.

·     United Microelectronics (UMC) August net sales grew 26.6% Y/Y to NT$18.79B; Jan-August sales up 15.5% Y/Y to NT$135.16B

·     Hon Hai Precision (HNHAF) reports August revenue of NT$400B, down 4.3% M/M and 4.9% Y/Y; Year-to-date revenue totaled NT$ 3,518.53B, up by 22% from the previous year.

·     Disney (DIS) ‘Shang-Chi’ made an estimated $71.4 million in U.S. and Canadian theaters, dominating the weekend box office with an all-time record for a film opening over Labor Day

·     Spotify (SPOT) upgraded to Overweight on favorable dynamics at KeyBanc