Early Look

Monday, June 21, 2021

U.S. stock futures are looking sharply higher, tracking gains in Europe while Asian markets decline with global stock markets mixed. Stocks ended lower last week after the Federal Reserve said Wednesday it expects to raise interest rates by late 2023, sooner than previously projected. Prompting the policy shift was a much stronger economic rebound and hotter inflation than the Fed anticipated just a few months ago. Markets then again dropped on Friday after St. Louis Fed President James Bullard said during a TV interview on CNBC that inflation risks may warrant the Federal Reserve beginning raising interest rates next year, backing an even-earlier liftoff than penciled in by many of his colleagues. Shares of banks, energy firms and other companies that tend to be sensitive to the economy’s fluctuations have fallen sharply since the Fed’s meeting on Wednesday. Material stocks plunged with Nucor (NUE) falling ~13% in tough week for steel stocks, while Freeport-McMoRan (FCX) fell 14%, and gold miner Newmont Corp (NEM) dropped 11%. The S&P 500 Banks index plunges 8% as the yield curve flattens and energy stocks fall over 5% as crude retreats from multi-year highs as U.S. dollar firms after Fed signal on rates. Treasury yields plunged further overnight as the benchmark 10-year U.S. yield fell to its lowest since Feb. 24 at 1.354%, before recovering back to 1.433% now. Bitcoin prices dropping nearly 8% to $32,700, while Ethereum falls about 10% to $1,975 in a general rout of crypto assets to start the week; Bitcoin cash (BCH) down over 11% under $500 – crypto assets fall as Reuters reports further crackdown in China as authorities in the southwest province of Sichuan on Friday ordered cryptocurrency mining projects to close. In Asian markets, The Nikkei Index plunged -953 points to 28,010, the Shanghai Index was up a few points at 3,529 and the Hang Seng Index dropped -312 points to 28,489. In Europe, the German DAX is higher by 115 points to 15,560, while the FTSE 100 is up about 15 points to 7,030.

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -55.41 points, or 1.31%, to 4,166.45

·     The Dow Jones Industrial Average fell -533.32 points, or 1.58%, to 33,290.08

·     The Nasdaq Composite slumped -131.02 points, or 0.93%, to 14,030.38

·     The Russell 2000 Index plunged -49.71 points, or 2.17% to 2,237.75

Events Calendar for Today

·     8:30 AM EST      National Activity Index for May

Earnings Calendar:

·     Earnings Before the Open: PLUG

·     Earnings After the Close: none

Other Key Events:

·     Goldman Sachs 17th Business Services, Transport & Leisure Conference (virtual), 6/21-6/23

·     Raymond James Human Health Innovation Conference (virtual), 6/21-6/23

·     Roth London Conference (virtual), 6/21-6/23

World News

·     Bitcoin prices dropping nearly 8% to $32,700, while Ethereum falls about 10% to $1,975 in a general rout of crypto assets to start the week; Bitcoin cash (BCH) down over 11% under $500 – crypto assets fall as Reuters reports further crackdown in China as authorities in the southwest province of Sichuan on Friday ordered cryptocurrency mining projects to close.

·     Negotiators for Iran and six world powers on Sunday adjourned talks on reviving their 2015 nuclear deal and return to respective capitals for consultations as remaining differences still need to be overcome, officials said – Reuters

Sector News Breakdown

Consumer

·     Six Flags Entertainment (SIX) could keep climbing as it offers outdoor entertainment that’s close to home, according to Barron’s. Some 1.3 million people visited its parks in the first quarter, versus Wall Street’s estimate of just 600,000, boding well for the summer season when all of its North America parks will be open. Still, labor shortages could be a headwind.

·     Porsche AG (POAHY) will develop and produce battery cells for electric sportscars in a new joint venture with German lithium-ion specialist Custom Cells GmbH; is investing a high double-digit million-euro sum and will control a 83.75% stake in the Cellforce venture

·     Amazon (AMZN) Prime Day has kicked off, with the online retail giant promising more than 2 million deals over the two-day event.

Energy, Industrials and Materials

·     CNH Industrial (CNHI) agreed to acquire Raven Industries (RAVN) for $58.00 per share, in a transaction valued at $2.1B https://bit.ly/3iXZByo

·     Chevron (CVX) said it was returning offshore workers who had been evacuated ahead of Tropical Storm Claudette from its Gulf of Mexico production platforms

·     Boeing’s (BA) 737-10, the largest airplane in the 737 MAX family, completed a successful first flight on June 18. The airplane took off from Renton Field in Renton, Washington, at 10:07 a.m. and landed at 12:38 p.m. at Boeing Field in Seattle

·     FedEx (FDX) mentioned positively in Barron’s saying it can charge higher fees when demand strengthens, thanks to the duopoly it shares with UPS (UPS), and that should add up to a strong earnings report this coming week. A big beat and strong guidance will probably be needed to move the stock higher

Healthcare

·     Tarsus Pharmaceuticals Inc. (TARS) said a pivotal Phase 2b/3 study of its investigational therapeutic TP-03 met all of its primary and secondary endpoints in patients with Demodex blepharitis, an ocular disease caused by an infestation of Demodex mites.

·     Theravance Biopharma Inc. (TBPH) said its Phase 2 trial of its treatment for acute lung injury and impaired oxygenation didn’t meet its primary endpoint when compared with a placebo

Technology, Media & Telecom

·     Oracle (ORCL) mentioned positively in Barron’s saying the company is in the middle of a major business overhaul, reinventing itself for the cloud, and thought the stock has been among the year’s best performing tech shares, but the rally may not be over

·     Pershing Square Tontine Holdings (PSTH), a special purpose acquisition company, announced that it had entered into a definitive agreement with Vivendi (VIVHY) to acquire 10% of the outstanding Ordinary Shares of Universal Music Group for approximately $4 billion