Morning Preview: December 28, 2020
Early Look
Monday, December 28, 2020
Futures |
Up/Down |
% |
Last |
DJ Industrials |
179.00 |
0.59% |
30,288 |
S&P 500 |
27.0 |
0.73% |
3,722 |
Nasdaq |
87.50 |
0.69% |
12,791 |
U.S. futures are pointing higher yet again, getting a bounce after President Donald Trump signed last week’s $900B COVID-19 relief bill into law just a few days after he criticized the bill’s $600 direct payments to Americans (as too low) and suggesting he may veto the legislation. Trump said “I am signing this bill to restore unemployment benefits, stop evictions, provide rental assistance, add money for PPP, return our airline workers back to work, add substantially more money for vaccine distribution, and much more.” The package includes $1.4T in spending to fund government agencies; if Trump had not signed the bill, then a partial government shutdown would have begun on Tuesday. He still vowed to push for $2,000 stimulus checks to American citizens. Markets also cheered a last-minute trade deal clinched between Britain and the European Union. Bitcoin prices surge another 9.5% to $26,725 as the flight to crypto continues while bonds remain weak. In Asian markets, The Nikkei Index rose 197 points to 26,854, the Shanghai Index was little changed at 3,397 and the Hang Seng Index slipped -71 points to 26,314. In Europe, the German DAX is up over 200 points to around 13,800, while the FTSE 100 was closed. Stocks have been on a tear since late March, extending gains after the November Presidential election, with the Nasdaq Composite on track for a gain of over 42% YTD, the S&P 500 14% YTD (and up 66% from the March lows), the Russell 200 looking up 20% YTD and the Dow with a modest 5% YTD heading into the final trading week of the year. With stocks on track for strong gains in 2020, an alarming signal reared its head this weekend as investors borrowed a record $722.1 billion against their investment portfolios through November, according to the Financial Industry Regulatory Authority, topping the previous high of $668.9 billion from May 2018. The milestone is an ominous one for the stock market — margin debt records tend to precede bouts of volatility, as seen in 2000 and 2008.
Market Closing Prices Yesterday
· The S&P 500 Index gained 13.05 points, or 0.35%, to 3,703.06
· The Dow Jones Industrial Average rose 70.04 points, or 0.23%, to 30,199.87
· The Nasdaq Composite climbed 33.62 points, or 0.26%, to 12,804.73
· The Russell 2000 Index declined -3.15 points, or 0.16% to 2003.95
· 10:30 AM EST Dallas Fed Manufacturing for December
Macro |
Up/Down |
Last |
WTI Crude |
0.37 |
48.60 |
Brent |
0.37 |
51.66 |
Gold |
-9.05 |
1,874.40 |
EUR/USD |
0.0011 |
1.2204 |
JPY/USD |
0.21 |
103.64 |
10-Year Note |
+0.028 |
0.955% |
World News
· China’s finance ministry said it will extend tariff exemptions for imports of 6 products from the United States including white oil and food-grade petroleum wax, for another year, according to Reuters. The extension, effective on Dec. 26, will last through Dec. 25, 2021 – Reuters
Sector News Breakdown
Consumer
· Holiday retail sales excluding automotive and gasoline increased 3.0% this expanded holiday season, according to tracking from Mastercard SpendingPulse. Online sales were up 49.0% for an extended holiday period tracking that ran from October 11 to December 24, E-commerce accounted for 19.7% of overall retail sales, up from 13.4% last year with Amazon (AMZN), Wayfair (W) and Etsy (ETSY) made big market share grabs this year in retail.
· Pool Corp. (POOL) positive mention in Barron’s noting shares got a Covid-19 boost, but with lockdowns continuing and pools in need of maintenance, that’s an opportunity for investors to buy into an industry leader with a remarkably stable growth outlook
· BMW is planning to step up its production of electric vehicles, Chief Executive Oliver Zipse told German daily Augsburger Allgemeine. “We are significantly increasing the number of electric vehicles. Between 2021 and 2023, we will build a quarter of a million more electric cars than originally planned”, Zipse told the newspaper
· Barron’s notes some travel and leisure stocks are up 20% or more in recent weeks, though many remain down on the year, with a big impetus coming in early November when promising news about the efficacy of COVID-19 vaccines began to emerge. Barron’s sees Wyndham Hotels (WH), Norwegian Cruise Line (NCLH), Caesars (CZR), Marriott Vacations (VAC), Extended Stay (STAY) and Wynn Resorts (WYNN) as stocks with good potential value
Healthcare
· Myovant (MYOV) and Pfizer (PFE) to jointly develop and commercialize ORGOVYX(TM) (relugolix) and relugolix combination tablet and share profits and expenses in the U.S. and Canada. Myovant to receive an upfront payment of $650 million in addition to potential regulatory and sales milestones for a total payment of up to $4.2 billion
· Politico reported that the U.K. is poised to approve the coronavirus vaccine developed by the University of Oxford and AstraZeneca (AZN) within days. The Oxford/AstraZeneca vaccine could be rolled out across Britain from Jan. 4, the Sunday Telegraph reported
· CytoDyn (CYDY) has announced that the FDA has issued guidance to add an open-label extension to its Phase 3 trial (CD12) for Vyrologix™ (leronlimab-PRO 140) in severe-to-critically ill COVID-19 patients, including specific criteria for the continuation of eINDs for patients meeting the inclusion/exclusion criteria of CD12
· Sundial Growers (SNDL) signed a license agreement with Simply Solventless Concentrates for the processing and manufacturing of a suite of solventless cannabis concentrates products by Sundial in its Rocky View facility using SSC’s intellectual property
Industrials & Materials
· United (UAL) and Delta (DAL) 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, is effective today, while United’s requirement begins Dec. 28.
· An Air Canada Boeing Co (BA) 737-8 Max en route between Arizona and Montreal with three crew members on board suffered an engine issue that forced the crew to divert the aircraft to Tucson, Arizona, the Canadian airline company said in an emailed statement on Friday.
· Delta (DAL) and Southwest (LUV) are among airline stocks that could cruise higher, according to Barron’s says. Notes airline stocks have climbed sharply as vaccine approvals have lifted hopes for travel, and they are no longer bargains
Technology, Media & Telecom
· Alibaba (BABA) extends Friday’s decline after Chinese regulators have ordered affiliate Ant Group to shift its focus back to its main payments business after launching a probe into Alibaba for suspected monopolistic behavior. BABA also increased its stock repurchase program late Sunday to $10B (from $6B), but shares still remain weak
· Dish Network (DISH) announced it reached a new, multi-year carriage agreement with Nexstar Media (NXST). Local stations and WGN America have been immediately restored on DISH TV. In addition, WGN America will be available on SLING TV in early 2021 as part of an Extra add-on package
· Yelp (YELP) with a positive mention in Barron’s saying the stock might merit only a one-star review for 2020, as the widespread shutdown of indoor dining has weighed heavily on the online recommendation service, yet changes in its business model, combined with hopes for a reopening of the economy as COVID-19 vaccines arrive, give reason to reason to rethink
· Nano Dimension Ltd. (NNDM) said it has entered into definitive agreements with investors to sell 33.3 million American Depositary Shares at $7.50 an ADS in a registered direct offering.
· Weibo (WB) Q3 EPS 66c vs. est. 64c and reports Q3 revenue $465.74M vs. est. $455.26M; said Q3 monthly active users (MAUs) were 511M in September, a net addition of approximately 14M users on YoY basis; average daily active users (DAUs) were 224M in September, a net addition of approximately 8M users on YoY basis; sees Q4 revenue up 1%-3% vs. est. $489.39M
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Market commentary provided by Catena Media Financials US, LLC, a firm separate from and not affiliated with Regal Securities. Regal Securities has not participated in the creation of the content, and does not explicitly or implicitly endorse the content.