Early Look

Thursday, January 6, 2022

Futures	Up/Down	%	Last
Dow	55.00	0.15%	36,346
S&P 500	-4.25	0.09%	4,688
Nasdaq	-82.50	0.52%	15,684

 

 

Global markets move lower overnight after hawkish commentary on interest rates sent U.S. stocks tumbling on Wednesday, paced by hefty declines in technology and growth stocks as the U.S. 10-year Treasury yield topped the 1.7%, its highest level since April 2021. Yields have extended gains this morning, with the 10-yr above 1.73%, sending Nasdaq futures lower while the S&P is looking at a flat open. Bitcoin prices tumbled as low as $42,400 overnight before rebounding, Ethereum dropped below $3,400. Its amazing how quickly sentiment changed by a few comments from the Fed, as it was just only 2 days ago everyone was celebrating AAPL‘s 3 trillion milestone! The S&P 500 dropped over 1.7% yesterday as nine of 11 sectors were lower as Materials held up well. The Russell 2000 suffers biggest one-day percentage drop since Nov 26, down -3.3%, while the CBOE Volatility Index (VIX) closes at 19.73, the highest since December 21. The FOMC minutes showed the policymakers leaning to rate changes rather than balance sheet moves to normalize policy. ADP said before the bell that the latest private payrolls gain came in at 807K, more than double expectations for 400K, with the survey time coming between COVID variants. In Asian markets, The Nikkei Index tumbled 840 points or 2.88% to 28,487, the Shanghai Index slid 9 points to 3,586, and the Hang Seng Index rose 165 points to 23,072. In Europe, the German DAX is down nearly 1%, or 155 points to 16,115, while the FTSE 100 slides over -0.4% to 7,485.

Events Calendar for Today

·     8:30 AM ET                 Weekly Jobless Claims…est. 197K

·     8:30 AM EST               Continuing Claims…est. 1.688M

·     8:30 AM ET                 International Trade Balance for November…est. (-$77.1B)

·     10:00 AM ET               Durable Goods Orders MoM, for November

·     10:00 AM ET               Factory Orders MoM for November…est. 1.5%

·     10:00 AM ET               ISM Non-Manufacturing PMI for December…est. 66.9

·     10:30 AM ET               Weekly EIA Natural Gas Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: ANGO, BBY, CAG, HELE, LNN, LW, SCHN, STZ, WBA

·     Earnings After the Close: AEHR, DCT, EDUC, FC, PSMT, SLP, WDFC

 

Other Key Events:

·     Consumer Electronics Show (CES), 1/5-1/8 in Las Vegas, NV

·     Citigroup AppsEconomy Conference (virtual), 1/4-1/7

·     Goldman Sachs Global Energy & Clean Technology Conference, 1/5-1/6, in Florida

·     Goldman Sachs 14^th Annual Healthcare CEOs Conference (virtual), 1/6

 

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -92.87 points, or 1.94%, to 4,700.67

·     The Dow Jones Industrial Average fell -392.35 points, or 1.07%, to 36,407.30

·     The Nasdaq Composite plunged -522.54 points, or 3.34%, to 15,100.17

·     The Russell 2000 Index declined -74.88 points, or 3.30% to 2,194.00

 

 

Macro	Up/Down	Last
Nymex	1.08	78.93
Brent	1.34	82.14
Gold	-27.40	1,797.70
EUR/USD	-0.0005	1.1309
JPY/USD	-0.26	115.85
10-Year Note	+0.029	1.732%

 

 

World News

·     Caixin China December Services PMI 53.1 vs. est. 51.7 and previous 52.1; Caixin China PMI Composite Dec 53.0 vs. previous 51.2

 

Sector News Breakdown

Consumer

·     Costco (COST) net sales of $22.24B for retail month of Dec, five weeks ended Jan 2, 2022, an increase of 16.2% from $19.14B last year; Dec. total comparable sales +14.5%, vs. estimate +15.3% and Dec. U.S. comparable sales excluding fuel, currencies +11.5%, vs. est. +11.7%

·     Helen of Troy (HELE) Q3 EPS $3.72 vs. est. $3.11; Q3 revs $624.9M vs. est. $566.5M; raises FY22 adj EPS view to $11.73-$11.93from $11.26-$11.56 (est. $11.21); boosts FY22 revenue view to $2.095B-$2.115B from $2.024B-$2.067B

·     The Buckle, Inc. (BKE) December comparable store net sales, for stores open at least one year, for 5-week period ended January 1, 2022 increased 17.7%; net sales for 5-week fiscal month ended January 1, increased 17.3% to $198.7M

·     The RealReal (REAL) said December gross merchandise value (GMV) was approximately $153M, an increase of 40% and 49% compared to the same periods in 2020 and 2019, respectively. December average order value (AOV) was approximately $518, an increase of 10% and 4% compared to the same periods in 2020 and 2019, respectively

·     LGI Home (LGIH) announced it closed 1,004 homes in December, a total of 2,526 home closings in the fourth quarter and a record 10,442 home closings for the full year 2021.

 

Energy, Industrials and Materials

·     Core & Main (CNM) 20M share Secondary priced at $26.00

·     ExxonMobil (XOM) upgraded to Hold from Sell at Truist

·     Landec (LNDC) Q2 EPS loss ($1.30) vs. est. loss (-$0.07); Q2 revs rose 8.8% to $129.49M vs. est. $130.91; sees year revs $179M-$185M vs. est. $186.4M; sees FY22 cont ops adj. EBITDA $20.5M-$23M as updates forecast on inflationary & supply chain headwind

·     Patterson-UTI Energy (PTEN) reports an average of 110 drilling rigs operating for the month of December, 2021 in the US; for the three months ended December 31, 2021, the company had an average of 106 drilling rigs operating in the US.

·     Uranium stocks (CJ, DNN, URA, UUUU) look to surge a third day as protests related to a fuel price hike in the OPEC+ nation of Kazakhstan turned violent overnight, leading the Government to resign; as well as Russia sending troops into Kazakhstan

 

Financials

·     Goldman Sachs (GS) downgraded to Neutral at Bank America as see limited potential for upside surprises in a moderating capital markets backdrop. In our view, the secular re-rating in the stock on the back of revenue diversification (away from capital markets) is likely to be a multi-year event.

·     AFC Gamma (AFCG) 3M share Secondary priced at $20.50

·     Capital One (COF) downgraded to Buy from Conviction Buy at Goldman Sachs

·     Western Union (WU) downgraded to Underperform from Buy at Bank America

·     MarketAxess (MKTX) reports monthly trading volume of $538.1B in Dec., consisting of $183.6B in credit volume and $354.5B in rates volume; Dec. Trading volume $538.1b, +14% y/y

 

Healthcare

·     Berkeley Lights (BLI) reports FY21 preliminary revenue $84M-$84.5M, below consensus $90.85M; announced that Eric D. Hobbs, Ph.D. will transition from his role as Chief Executive Officer (CEO) and member of the board of directors to president of the Antibody Therapeutics business line

·     Roivant Sciences (ROIV) announced that it has entered into a licensing agreement with Eisai (ESALY) for exclusive global rights to the investigational agent RVT-2001, which will provide the lead program for a new subsidiary Vant

·     Eli Lilly (LLY) has acquired exclusive rights to Entos Pharmaceuticals’ Fusogenix nucleic acid delivery technology to research, develop and commercialize nucleic acid products targeting the central and peripheral nervous system

·     Humana (HUM) and Cigna (CI) upgraded to Overweight from Equal Weight at Wells Fargo

·     Gilead (GILD) downgraded to equal weight from overweight at Morgan Stanley

 

Technology, Media & Telecom

·     AT&T’s (T) WarnerMedia unit and ViacomCBS (VIAC) are considering the potential sale of the CW Network, which they own jointly, The WSJ reported; Nexstar Media (NXST) is among the suitors, adding that the most prevalent scenario is Nexstar’s taking a controlling stake in the CW https://on.wsj.com/3eTSweH

·     Turtle Beach (HEAR) said its preliminary full year 2021 revenue was about $365M, the low end of its guidance of $365M-4380M; prelim FY 2021 Adjusted EBITDA at lower end of guidance range of $36M-$44M

·     United Microelectronics (UMC) net sales for December 2021 grew 32.65% Y/Y to NT$20.28B; annual sales for period January – December 2021 rose 20.47% to NT$213.01B

·     Akami (AKAM) downgraded to Neutral from Overweight at Piper