Early Look

Friday, January 7, 2022

Futures	Up/Down	%	Last
Dow	32.00	0.09%	36,155
S&P 500	10.25	0.21%	4,697
Nasdaq	53.50	0.34%	15,812

 

 

U.S. futures are edging higher after Europe and Asia was mostly mixed to little changed ahead of the all-important monthly job figures in the U.S. The nonfarm payroll report at 8:30 AM could be market moving with an est. for +400K jobs added in December (vs. Nov 210K), private payrolls +365k jobs (vs. Nov 235K), manufacturing +35K (vs. Nov 31K), unemployment to dip to 4.1% (from 4.2% prior) and average hourly earnings to rise +0.4% MoM (rose 0.2% in Nov). Recall the ADP private payroll report on Wednesday came in double of what expectations were, further raising expectations the Fed will remain on track for faster rate hikes and to conclude asset tapering by March. Oil prices are set for a third weekly advance as market tightens on outages as WTI crude reclaims the $80 per barrel mark. In Asian markets, The Nikkei Index slipped 9 points to 28,578, the Shanghai Index dipped -6 points to 3,579, and the Hang Seng Index jumped 420 points or 1.82% to settle at 23,493. In Europe, the German DAX is down about 20 points to 16,030, while the FTSE 100 is little changed at 7,450. Crypto assets extend their decline to start January, with Bitcoin down 2% around 442,250, while Ethereum tumbles around 6% to $3,225. Stocks ended lower on Thursday after swinging between gains and losses as investors reassessed valuations following the Federal Reserve’s latest signal that it will move aggressively if prices remain elevated. FOMC members Daly and Bullard both commented on stubbornly high inflation. Treasuries continue to selloff with the 10-year rate near 1.73%. The dollar was marginally higher.

Events Calendar for Today

·     8:30 AM ET                 Nonfarm Payrolls for December…est. 400K

·     8:30 AM ET                 Private Payrolls for December…est. 365K

·     8:30 AM ET                 Manufacturing Payrolls for December…est. 35K

·     8:30 AM ET                 Unemployment Rate for December…est. 4.1%

·     8:30 AM ET                 Average Hourly Earnings for Dec…est. 0.4%

·     1:00 PM EST               Baker Hughes Weekly rig count data

·     3:00 PM ET                 Consumer Credit for November…est. $19.5B

 

Earnings Calendar:

·     Earnings Before the Open: AYI, GBX, RDW

 

Other Key Events:

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

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

 

Market Closing Prices Yesterday

·     The S&P 500 Index slipped -4.53 points, or 0.10%, to 4,696.05

·     The Dow Jones Industrial Average fell -170.64 points, or 0.47%, to 36,236.47

·     The Nasdaq Composite slumped -19.31 points, or 0.13%, to 15,080.87

·     The Russell 2000 Index advanced 12.37 points, or 0.56% to 2,206.37

 

 

Macro	Up/Down	Last
Nymex	0.56	80.02
Brent	0.65	82.64
Gold	1.60	1,790.80
EUR/USD	0.0009	1.13
JPY/USD	0.00	115.82
10-Year Note	-0.006	1.727%

 

 

World News

·     Fed’s Daly sees rate hikes ahead, but says ‘measured’ approach needed ‘; U.S. labor market very strong, high inflation acting as a repressive tax, raising rates aggressively to offset high inflation won’t solve supply chain problems, but will bridal the economy in a way that will mean less job creation down the road

·     Fed’s Bullard pencils in three rate hikes, suggests that the Fed should start in March to be in a better position to control inflation. Fed should go ahead with balance-sheet runoff shortly after lifting off the policy rate.

 

Sector News Breakdown

Consumer

·     GameStop Corp. (GME) shares rise 19% on a report the company is launching a division to develop a marketplace for nonfungible tokens and establish cryptocurrency partnerships, according to the WSJ. The retailer has hired more than 20 people to run the unit, which is building an online hub for buying, selling, and trading NFTs of virtual videogame goods such as avatar outfits and weapons https://on.wsj.com/3HLK0er

·     PriceSmart (PSMT) Q1 EPS $0.99 vs. est. $0.93; Q1 revs $975.4M vs. est. $967.86M; comparable net merchandise sales for the 46 warehouse clubs that have been open for greater than 13 1/2 calendar months increased 9.4% for the 13-week period ended November 28, 2021 compared to the comparable period of the prior year

·     CarParts.com (PRTS) guides Q4 revenue rose 23% to $138M vs. est. $126.43M; was up 15% versus the fourth quarter of 2020 and up 23% excluding an extra week in 2020; sees year revs about $582M vs. est. $573.8M

·     Kura Sushi (KRUS) Q1 EPS loss (-$0.13) vs. est. loss (-$0.15); Q1 revs $29.8M vs. est. $29.96M; said Q1 comp restaurant sales increased 154% as compared to the first quarter of 2021 and increased 19.9% as compared to the Q1’20; sees FY sales $130M-$140M vs. est. $134.7M

·     Latham Group (SWIM) 12M share Secondary priced at $19.50

·     WD-40 (WDFC) Q1 EPS $1.34 vs. est. $1.25; Q1 revs rose 8% to $134.7M vs. est. $129.23M; reaffirms FY22 EPS view $5.24-$5.38 vs. est. $5.30; raises top end of year rev outlook to $522M-$547M from $522M-$542M (est. $524.75M)

·     Starbucks (SBUX) downgraded to sector perform from outperform at RBC Capital, saying risk-reward is more balanced and sees less upside in shares in the near-term given current valuation and its margin outlook; trims PT to $122 from $124

·     WWE (WWE) announced that it has signed a multi-year exclusive licensing agreement with International Game Technology Plc (IGT) to develop and distribute WWE-branded omnichannel lottery games and turnkey promotional programs featuring company logos, Superstars, events, and programs

 

Energy, Industrials and Materials

·     Royal Dutch Shell PLC (RDS.A) said it will distribute the remaining $5.5 billion of proceeds from the sale of its Permian Basin assets in the U.S. through share buybacks; said this is in addition to the ordinary distributions of 20%-30% of cash flow from operations; that production from its integrated gas division was hurt by unplanned maintenance in the fourth quarter of 2021.

·     Albemarle Corporation (ALB) announced a price increase for Catalysts global business unit customers. These price increases are effective immediately, or as contracts allow.

·     Acuity Brands (AYI) Q1 EPS $2.46 vs. est. $2.41; Q1 revs $926.1M vs. est. $880.7M; guides Q1 adj EPS $2.85 vs. est. $2.41; delivered sales growth of 17%, expanded our operating profit margin by 160 basis points and increased diluted EPS by 57%

·     Greenbrier (GBX) Q1 adj EPS $0.32 vs. est. $0.21; $1 revs $550.7M vs. est. $532.55M; new railcar orders for 6,300 units valued at $685M and deliveries of 4,100 units, resulted in a 1.5x book-to-bill, the fourth consecutive quarter with a book-to-bill exceeding 1.0x.

 

Healthcare

·     Moderna (MRNA) CEO said Thursday that people are likely to need a second booster dose in the fall, with front-line workers and those 50 and older a particular priority as antibody levels wane.

·     Johnson & Johnson (JNJ) announced new results from the largest study to date on the durability of COVID-19 vaccines in the United States (U.S.), showing that a single shot of the Johnson & Johnson COVID-19 vaccine resulted in long-lasting protection for up to six months against COVID-19 breakthrough infections, hospitalizations, and intensive care unit (ICU) admissions

·     Glaukos Corporation (GKOS) announced that it has received 510(k) clearance from the U.S. Food and Drug Administration (FDA) for the iPRIME™ Viscodelivery System, a sterile, single-use, minimally invasive device for the delivery of viscoelastic fluid during ophthalmic surgery

·     Neurocrine Biosciences (NBIX) provides preliminary Q4 and full-year 2021 net product sales results and future program milestones: Ingrezza (valbenazine) preliminary q4 net product sales of approximately $301Mn and 56,400 total prescriptions

·     Quidel Corp. (QDEL) guides Q4 revs $633M-$637M vs. est. $465.7M; guides year revs $1.695B-$1.699B vs. est. $1.53B

 

Technology, Media & Telecom

·     Samsung Elec (SSNLF) reported Q4 operating profit of about 13.8 trillion South Korean won, equivalent to about $11.4 billion, for the quarter ended Dec. 31. That compares with about 9.05 trillion won for the year-earlier quarter; estimated Q4 operating profit was below market expectations but said the drop reflected a one-time bonus paid to employees.

·     T-Mobile (TMUS) Adds 1.2M Postpaid Accounts in 2021 and adds 5.5M Postpaid Customers in 2021; Prelim Q4 postpaid net customer additions +1.8M vs. est. 1.57M; prelim postpaid phone net adds +844K, prelim prepaid net customer change +49K vs. est. 94,973

·     Duck Creek Technologies (DCT) Q1 EPS $0.04 vs. est. $0.01; Q1 revs $73.42M vs. est. $69.01M; posted SaaS ARR growth and profitability that was well ahead of expectations; guides Q2 revs $71.5M-$73.5M vs. est. $71.9M and year revs $298M-$304M vs. est. $297.8M

·     The New York Times Co. (NYT) confirmed it will acquire sports subscription site The Athletic, for $550 million.

·     Marin Software (MRIN) rises 20%; after the marketing software firm announced an integration with Amazon Ads’ demand-side platform

·     Discovery (DISCA) upgraded to Buy from Neutral at Bank America and raise tgt to $45 from $34