Mid-Morning Look

Monday, December 28, 2020

U.S. stock averages open at new record highs for the S&P 500 index, Dow Industrials, Russell 2000, and Nasdaq Composite as the Santa Claus rally continues into year end. Markets are getting a boost after President Donald Trump over the weekend reversed course and signed a package of legislation that included $900 billion in relief to consumers and small businesses and $1.4 trillion to fund the government. Trump last week threatened to not sign the bill, calling for an increase in checks to households from $600 to $2,000, but gave in to help fund the government. Talks for bigger checks will continue into the New Year, though the Republican controlled Senate has balked at it thus far. News this week is expected to be relatively quiet into the New Years’ Day holiday Friday, but there’s lots of market volatility early in what has been a remarkable run off the March pandemic related lows- with gains accelerating over the last 2-months following the Presidential election. Brexit and U.S. stimulus relief boost sentiment as the Germany’s DAX hits record high, up as much as 1.7%. Among the recovery plays jumping on expectation of relief funds are airlines, cruise lines, theme parks, retailers, and theaters, also boosted by better-than-expected revs for the release of “Wonder Woman 1984”. Bitcoin mania grabbing market’s attention as prices traded above the $28,000 level this weekend, rising over 10% currently around $27,000, while the dollar remains weak after falling about 7% this year. The 10-yr yield rises 2.5bps to 0.955% – note this week, the U.S. Treasury auctions a record $176 billion in shorter maturities this week, starting with Monday’s $58 billion in two-year notes and $59 billion in five-year debt. Trading volumes are likely to remain thin this week, with many investors and traders taking time off in the year-end holiday period. Markets in the U.S. will be shut Friday in observance of New Year’s Day.

Sector Movers Today

·     Biotech movers: APRE drops after saying its therapy, eprenetapopt in combination with chemotherapy drug, azacitidine, to treat a type of blood cancer did not meet main goal in a late-stage trial; NVAX has begun a large late-stage study of its experimental COVID-19 vaccine in the United States, the drug developer said on Monday, after delaying the trial twice due to issues in scaling up the manufacturing process. It will enroll up to 30,000 volunteers across about 115 sites in the United States and Mexico gene editing stocks (CRSP, EDIT, NTLA) extend gains after outperformance last week

·     Transports; airlines higher (DAL, UAL, AAL, JBLU) after U.S. President Donald Trump signs into the $900B relief bill passed by Congress last week – comes to around $2.3 trillion in total spending to fund government agencies (if Trump had not signed the bill, then a partial government shutdown would have begun on Tuesday; DAL and UAL said Friday they will require all passengers on flights from the U.K. to the U.S. to present a negative COVID-19 test taken within 72 hours of departure. Delta’s policy, which expands its earlier decision to require the screenings on U.K. flights to New York’s JFK International Airport. The U.S. Transportation Security Administration said it screened 1.28 million passengers on Sunday at U.S. airports, the highest number since mid-March, but is still about 50% lower than the same date last year.

Stock GAINERS

·     AHT +19%; after receiving $200M financing commitment from funds managed by Oaktree Capital Management and can be increased by $150M to an aggregate amount of $350M

·     CCL +5%; as recovery plays seeing the biggest gains this morning (airlines, cruise, theme parks)

·     IDEX +18%; said its Mobile Energy Global unit and contractor Qingdao Chengyang Medici have signed an agreement with Meihao Chuxing, a joint venture between China’s BYD and Didi, to purchase an initial 2,000 units of its model BYD D1 electric vehicle

·     MARA +21%; enters into a contract with Bitmain to purchase 70,000 Antminer S-19 ASIC miners. The Bitcoin self-mining company said under the terms of the agreement, it should receive an initial batch of 7,000 S-19 miners in July 2021, and the final shipment in December 2021.

·     MYOV +21%; and PFE to jointly develop and commercialize ORGOVYX (relugolix) and relugolix combination tablet in the U.S. and Canada as Myovant to receive an upfront payment of $650M in addition to potential regulatory and sales milestones for a total payment of up to $4.2B

·     OSMT +11%; shares rise ahead of expected arbaclofen PDUFA tomorrow

Stock LAGGARDS

·     APRE -71%; after saying its therapy, eprenetapopt in combination with chemotherapy drug, azacitidine, to treat a type of blood cancer did not meet main goal in a late-stage trial

·     BYND -4%; as food related names underperform broader market strength

·     ETSY -6%; among top decliners in the S&P on profit taking after 300% advance YTD

·     FUBO -12%; after sliding over 15% both last Wednesday and Thursday ahead of 12/30 expiry lock-up (66M shares will be free to trade on 12/30/20) while was also downgraded by BMO on 12/23 and Lightshed initiated with a Sell rating and $8 one-year price target on 12/24

·     NNDM -5%; after entered into definitive agreements with investors to sell 33.3 million American Depositary Shares at a discount of $7.50 an ADS in a registered direct offering