Early Look

Monday, December 14, 2020

Futures	Up/Down	%	Last
DJ Industrials	249.00	0.83%	30,184
S&P 500	28.50	0.77%	3,681
Nasdaq	77.50	0.63%	12,445

 

 

U.S. futures are looking higher after the FDA on Friday issued an emergency authorization for a Covid-19 vaccine developed by Pfizer (PFE) and its German partner, BioNTech (BNTX) – as inoculations are expected to be rolled out as soon as today – while out of Washington, a bipartisan group of lawmakers is readying a two-part proposal with $908B in pandemic relief, though disagreements remain between the two parties over liability protections for businesses and funding for state and local governments. Also, today, increased M&A news boosting some sectors with a $39B deal in the Pharma space (AZN buying ALXN), a banking deal (HBAN, TCF tie-up), and a software company going private (PS) in a $3.5B deal. In Asian markets, The Nikkei Index gained 79 points to 26,732, the Shanghai Index rose 21 points to 3,369 while the Hang Seng Index fell -116 points to 26,389. In Europe, the German DAX jumps 170 points (1.3%) to 13,285, while the FTSE 100 rises over 30 points to 6,580. Oil prices rise with Brent back above $50 per barrel after tanker was hit by an explosion at the Saudi Arabian port of Jeddah. While markets wait for further stimulus measures. No major economic data today, and light earnings with focus midweek as the FOMC will hold its final meeting of 2020 on Tuesday and Wednesday.

Market Closing Prices Yesterday

·        The S&P 500 Index slipped -4.64 points, or 0.13%, to 3,663.46

·        The Dow Jones Industrial Average rose 47.07 points, or 0.16%, to 30,046.37

·        The Nasdaq Composite dropped -27.93 points, or 0.23%, to 12,377.87

·        The Russell 2000 Index declined -11.00 points, or 0.57% to 1,911.70

 

Economic Calendar for Today

·        No Major Economic Data

 

Earnings Calendar:

·        Earnings Before the Open: None

·        Earnings After the Close: CSBR, VNCE

 

Other Key Events:

·     Cowen Annual Networking Summit (virtual), 12/14-12/15

·     FBN Securities Silicon Valley Virtual Tour, 12/14-12/15

·     Oppenheimer Midwest Industrial Summit, 12/14-12/15

·     Truist Texas Bank Summit (virtual), 12/14-12/15

 

Macro	Up/Down	Last
WTI Crude	0.42	46.99
Brent	0.50	50.47
Gold	-14.50	1,825.35
EUR/USD	0.0041	1.2153
JPY/USD	-0.27	103.77
10-Year Note	+0.027	0.92%

 

 

World News

·        The Electoral College will formally vote today for Joe Biden as the next U.S. president – effectively ending President Trump’s bid to overturn the election – with the results sent to Congress to be officially counted on Jan. 6

·        The U.K. and European Union agreed “to go the extra mile” and keep negotiating over a new economic and security relationship, after previously saying they would decide by Sunday whether to call off the talks

·        Japanese business sentiment improved at the fastest pace in nearly two decades in October-December, a key central bank survey showed, as the headline index for big manufacturers’ sentiment improved to minus 10 in December from minus 27 in September, the Bank of Japan’s “tankan” survey showed on Monday, still a negative reading but marking the second straight quarter when companies were less pessimistic about business conditions.

 

Sector News Breakdown

Consumer

·        NIO Inc. (NIO) 60M share Secondary priced at $39.00

·        Tesla (TSLA) will join the S&P 500 next week, making it the most valuable company to ever be added to the widely followed index, and it will likely land as the eight-largest stock, according to Barron’s. Article notes this will have a huge impact on the massive amount of assets, both passive and active, tied to the benchmark index

·        Electric vehicles are the future of the auto industry, as Barron’s noted Xpeng’s (XPEV) ADRs have tripled, Li Auto (LI) is up 180% from its July 30 IPO and Nio’s (NIO) ADRs are up nearly 600%, adding that while It can be hard to part with a stock after such enormous gains, taking profits in the Chinese EV trio looks like the prudent thing to do as competition is heating up in the local market. Mature players such as BYD (1211 HK), GM (GM), Volkswagen (VOW GR), and BMW (BMW GY) are all planning new electric vehicles for the Chinese market in 2021

·        Tesla (TSLA) informed employees at its Fremont factory that high-end Model S and X production lines will close from December 24 to January 11

Energy

·        Exxon Mobil (XOM), facing activists, weak energy prices, and a broader push to address climate change, may not be able to avoid making a response, according to Barron’s; On Monday, recently-launched activist Engine No. 1, acting with the support of the California State Teachers’ Retirement System, said it will nominate four directors to Exxon’s board

·        An oil tanker docked at the Saudi port city of Jeddah was struck and suffered an explosion, the ship’s owner said, following a string of attacks on the kingdom’s oil infrastructure in recent months – WSJ

 

Financials

·        Huntington Bancshares Incorporated (HBAN) and TCF Financial Corp. (TCF) announced the signing of a definitive agreement under which the companies will combine in an all-stock merger with a total market value of approximately $22B to create a top 10 U.S. regional bank https://bit.ly/3oSBmBp

·        Mercury General (MCY) shares look appealing according to Barron’s with its share price at around $46 and a lofty dividend, saying the old-school insurer has little debt, virtually no analyst coverage, and is run like a private company

·        Elliott Management has built a significant stake in Public Storage (PSA) and privately nominated six directors to the self-storage REIT’s 13-person board, the Wall Street Journal reports, citing people familiar with the matter. https://bit.ly/2K3YttV

 

Healthcare

·        The FDA on Friday issued an emergency authorization for a Covid-19 vaccine developed by Pfizer (PFE) and its German partner, BioNTech (BNTX) – and inoculations are expected to be rolled out as soon as today

·        AstraZeneca PLC (AZN) said it agreed to buy Alexion Pharmaceuticals Inc. (ALXN) for $39 billion in cash and stock; Alexion shareholders will receive $60 in cash and 2.1243 AstraZeneca American Depositary Shares, or ADSs, with each ADS representing one-half of one ordinary share; AZN said the deal will support its long-term ambition to develop novel medicines in areas of immunology with high unmet medical needs https://reut.rs/345J17i

·        Johnson & Johnson (JNJ) has cut the target size of its pivotal Phase 3 clinical trial in the U.S. against COVID-19 from 60,000 to 40,000 trial participants, STAT News reported. Formerly the largest COVID-19 vaccine study, J&J’s ENSEMBLE trial will now be similar in size to the Phase 3 trial advanced by Pfizer Inc. (PFE) and bigger than that conducted by Moderna (MRNA).

·        Amarin (ARMN) rises as reports positive efficacy and safety results from a pilot study of VASCEPA, co.’s lead heart drug, in people with COVID-19

·        Moderna Inc (MRNA) rises as a panel of U.S. FDA advisers will discuss Moderna’s vaccine’s emergency use authorization this week; inoculations with PFE and BioNTech’s COVID-19 vaccine could begin as early as Monday after the U.S. FDA authorized emergency use of the vaccine on Friday – helping boost vaccine makers

·        Incyte (INCY) said the Phase 3 RUXCOVID study evaluating the safety and efficacy of ruxolitinib, a JAK1/JAK2 inhibitor, plus standard-of-care, or SoC, as a treatment for patients 12 years and older with COVID-19 associated cytokine storm did not meet its primary endpoint

·        Precision BioSciences Inc. (DTIL) said Abid Ansari, its chief financial officer (CFO), has resigned to pursue another opportunity.

 

Industrials & Materials

·        FedEx (FDX) and UPS (UPS) trucks are leaving Pfizer’s Kalamazoo, Mich. facility with the first shipments of the COVID vaccine. They will deliver the vaccine to nearly 150 state locations tomorrow, with another 450 sites set to receive the first doses on Tuesday and Wednesday.

·        Virgin Galactic’s (SPCE) latest spaceflight test was cut short after the engine of its SpaceShipTwo vehicle ‘Unity’ did not fully ignite as it attempted to launch above New Mexico on Saturday,” CEO Michael Colglazier said over Twitter. “Our flight today did not reach space as we had been planning.

·        Westlake Chemical (WLK) downgraded to Neutral from Buy at Goldman Sachs

 

Technology, Media & Telecom

·        Pluralsight (PS) to be acquired by Vista Equity Partners. Under the terms of the agreement, Vista, in partnership with its institutional co-investors including Partners Group, will acquire all outstanding shares of Pluralsight common stock for $20.26 per share in an all-cash transaction valued at approximately $3.5B https://bit.ly/2KkkQuP

·        Cognizant Tech (CTSH) approved an increase of $2B to the amount authorized under the Company’s existing stock repurchase program

·        Dada Group (DADA) announced a partnership with JD.com (JD) and Innisfree, a South Korean cosmetics brand owned by Amore Pacific

·     Electronic Arts Inc. (EA) announced that it has reached an agreement with the Board of Codemasters for the recommended acquisition of Codemasters, the UK-based game developer and publisher. In the transaction, Codemasters’ shareholders will be entitled to receive 604 pence (approximately US$7.98) in cash for each ordinary share of Codemasters with an implied enterprise value of US$1.2 billion