Early Look

Monday, November 9, 2020

Futures	Up/Down	%	Last
DJ Industrials	400.00	1.42%	28,604
S&P 500	51.50	1.47%	3,552
Nasdaq	216.50	1.79%	12,291

 

 

U.S. futures are markedly higher, building on last week’s gains as global investors bet on gridlock as Democrat Joe Biden edges closer to victory in the Presidential race, though President Trump continues to fight back with lawsuits against certain states on voting concerns. Every sector looking to outperform, paced by advances within tech and healthcare as the lacks of ‘Blue Wave’ eases regulatory clampdown concerns and as a split Senate outcome seen likely to shield healthcare from sweeping reforms. Pot stocks and solar stocks seen among biggest sector beneficiaries under a Biden administration while materials stocks mixed as divided government dampens prospects for large infrastructure spending package (MLM, VMC, USCR fell last week). With the fiscal response uncertain, it also means the Fed will have to do more to bolster the world’s largest economy, which has weakened the dollar in recent days.

 

Stocks posted their best week in 7-months on Friday as the S&P 500 ended the week up 7.3% and the Nasdaq jumped 9% despite Presidential election turmoil and uncertainty, an FOMC meeting (no changes made) while a strong jobs report added comfort to a week of better earnings. The CBOE Volatility index (VIX) fell 13.16 points for the week, its biggest weekly drop since week ended April 3^rd (same stretch). Several media news outlets project that Joe Biden has won the U.S. presidency after factoring in the latest batch of votes this morning. Specifically, they project Pennsylvania’s electoral votes go to Biden, putting him over 270. Pennsylvania is the subject of GOP challenges to mail-in ballots (estimated at 3K to 4K). Arizona, Georgia, North Carolina and Nevada have yet to be called for either candidate as of last night. Legal challenges and recounts in some other states are still possible. Not getting better on the Covid-19 front as the U.S. recently reported more than 126,000 new infections for two days in a row. Globally, the number of infections crossed the 50M mark on Sunday.

 

In Asian markets, The Nikkei Index rose 515 points (2.12%) to 24,839, the Shanghai Index jumped 61 points to 3,373 and the Hang Seng Index gains 1.18% or 303 points to settle at 26,016. In Europe, the German DAX jumps 225 points (1.83%) to 12,700, while the FTSE 100 is higher by 75 points to 5,990. European shares advance as Democrat Joe Biden’s win in the U.S. election raised hopes of better trade ties between Washington and Europe.

Market Closing Prices Yesterday

·     The S&P 500 Index slipped -1.01 points, or 0.03%, to 3,509.44

·     The Dow Jones Industrial Average fell -66.78 points, or 0.24%, to 28,323.40

·     The Nasdaq Composite gained 4.30 points, or 0.04%, to 11,895.23

·     The Russell 2000 Index declined -15.89 points, or 0.96% to 1,644.16

 

Economic Calendar for Today

·     No major economic data released

 

Earnings Calendar:

·     Earnings Before the Open: ACTG, ALE, ALLK, BCOR, BHVN, BKI, BTU, CARS, CCO, CVGI, EBIX, ELY, FPI, GOGO, HL, ICPT, III, IVR, KOS, MCD, MIC, MRSN, NBEV, NEOS, PLUG, PRTY, RDNT, RUBY, SCU, SYNL, TGNA, TH, TXMD, URGN, WHF, WKHS, WVE, XERS,

·     Earnings After the Close: AGM, AL, AMBC, APEI, APPF, APTS, ARNA, ASUR, ATRA, AVD, BYND, CARA, CBT, CCXI, CLAR, CPRX, CSTL, DIOD, FLGT, FPAY, FSK, GPMT, GSKY, HBB, HIL, IDEX, IIN, INFI, ITCI, KIN, MBII, MWA, MYGN, NBIC, NCLH, OSH, OXY, PDLI, PEIX, PROS, RAMP, REAL, REI, RLGT, RNG, RPAY, SCOR, SCSC, SENS, SNCR, SND, SPG, SPNE, SSTI, STAY, SWAV, TCO, TLND, UNIT, VERI, WATT, WIFI, XPER, ZAGG, ZGNX, ZI, ZIXI

 

Other Key Events:

·     Credit Suisse 29th Annual Healthcare Conference, 11/9-11/2 (virtual)

·     Edison Electric (EEI) Financial Conference, 11/9-11/10 (virtual)

·     Society of Immunotherapy Conference, 11/9-11/14 (virtual)

·     UBS European Virtual Conference, 11/9-11/13

·     China October PPI, CPI data

 

 

Macro	Up/Down	Last
WTI Crude	1.27	38.41
Brent	1.29	40.74
Gold	5.50	1,957.20
EUR/USD	-0.0000	1.1874
JPY/USD	0.33	103.68
10-Year Note	-0.008	0.81%

 

 

World News

·     Vote counting goes on in many states, with some too close to declare a winner, even though Democrat Joe Biden clinched enough electoral votes to currently be named as president-elect, according to the Associated Press. Many of the remaining votes to be counted are late-arriving mail-in ballots in states that have extended deadlines past Election Day, as well as overseas military ballots and provisional ballots (as of late Sunday)

·     Three states have no declared winner: Georgia, where Mr. Biden leads by around 10,000; North Carolina, where President Trump leads by around 75,000 votes and which will announce results later this week; and Alaska, where Mr. Trump has a commanding lead but a large percentage of mail-in ballots have yet to be counted.

·     Turkish lira rises against the dollar (6%) as finance minister, central bank chief exit over the weekend. Berat Albayrak, Turkey president’s son-in-law, steps down as finance minister due to health reasons

 

Sector News Breakdown

Consumer

·     Party City Holdco Inc. (PRTY) shares up 22%; with big revenue beat and provided a upbeat fourth-quarter outlook; Q3 EPS 10c on sales $533.7M vs. est. loss (32c) and $489.2M; Q3 same-store sales grew 8.3%, helped by strength in balloon, birthday and entertainment categories, to beat expectations of a 2.3% decline; guides Q4 EPS 31c-37c on revs $675M-$695M vs. est. 29c and $660M

·     NewAge (NBEV) Q3 EPS loss (14c) on revs $62.7M vs. est. loss (6c) and $70.69M

·     California voters passed Proposition 22 on Tuesday, which exempts ride-sharing and food-delivery companies from a state law that would have required them to classify their drivers as employees, rather than contractors, Barron’s noted. The Uber (UBER) and Lyft (LYFT) position their Prop 22 victory as a landmark win for drivers. But the proposition lost by a 60/40 margin in San Francisco, where the companies are based, and it also was defeated in Santa Clara and San Mateo counties, which make up Silicon Valley

·     Marriott Vacations Worldwide (VAC), a timeshare company, is well positioned to benefit from the resiliency of leisure travelers and has an attractive socioeconomic customer base, Barron’ wrote. The business has seen a “material turn” in the third quarter, according to its CEO. While trading at a premium to peers, the stock is still down year-to-date

 

Energy

·     American Electric (AEP) files automatic mixed securities shelf

·     Renewable energy and electric-vehicle stocks rise in premarket trading after Democrat-candidate Joe Biden wins the U.S. election – SPWR, FSLR, CSIQ, JKS, SEDG, ENPH among gainers

·     EdisonFuture, a wholly owned subsidiary of SPI Energy (SPI), has signed a joint strategic cooperation framework agreement with Liuzhou Liancheng Industrial and Guangxi Dazhou Automobile Sales to strengthen EV supply chain and sales infrastructure.

·     Foran Energy Group said it signed a framework agreement with U.S. producer Cheniere Energy (LNG) to purchase 26 cargoes between 2021 and 2025.

·     Vermilion Energy (VET) Q3 FFO 73c vs. $1.39 last year and Q3 revenue $282.02M vs. $381.94M last year

 

Financials

·     Apollo Global Management (APO) looks cheap despite the cloud over CEO Leon Black’s ties with Jeffrey Epstein, Barron’s said. The private- equity manager has an expanding asset base, earnings growth and favorable investment trends. It can thrive without Black, some analysts say.

·     Berkshire Hathaway (BRK/A): Warren Buffett’s company spent the third quarter buying back about $9 billion of its own stock, more than it had repurchased in any full year in its history

 

Healthcare

·     Biogen Inc. (BIIB) failed to gain support from a panel of U.S. FDA advisers late Friday as outside experts voted 8 to 1, with 2 undecided, that data from a single clinical trial with positive results was insufficient to show its Alzheimer therapy drug aducanumab works. They also voted 10 to 0, with 1 undecided, that the positive study shouldn’t be considered primary proof the drug works in light of conflicting evidence from a different trial. Shares of Eisai shares in reaction

·     Aptevo Therapeutics (APVO) shares jumped in extended trading Friday after Tang Capital Partners reported a 54% stake in new 13D regulatory filing.

·     Canopy Growth (CGC) posted a loss before interest, taxation, depreciation and amortization of C$85.7 million ($65.86 million) for the three months ended Sept. 30, compared with a loss of C$150.4 million a year earlier.; said it has identified C$150 million to C$200 million of savings across its business

 

Industrials & Materials

·     Volkswagen AG’s truck unit Traton SE has agreed to pay about $3.7 billion for the outstanding shares of U.S. truck maker Navistar International Corp (NAV) in a deal announced on Saturday. Finalization of the deal comes after Traton said on Oct. 16 it had agreed to raise its bid for Navistar to $44.50 per share, up from $43 https://bit.ly/3eMsbyA

·     Lockheed Martin (LMT) was awarded an Other Transaction Authority agreement with a ceiling of ~$339.32M for the Mid-Range Capability.

·     Lithium stocks Albemarle (ALB) upgraded to buy from neutral and tgt raised to $132 from $99 at Citigroup and Livent (LTHM) upgraded t buy from neutral as well

 

Technology, Media & Telecom

·     Activist investor Elliott Management has taken a stake in F5 Networks (FFIV) and spoken to the software company’s management in recent weeks about ways to boost its lagging stock https://on.wsj.com/2U5UMW

·     Strategists still prefer big tech stocks, including Facebook (FB), Apple (AAPL), Amazon.com (AMZN) and Alphabet (GOOG) because they’re less likely to face a big tax increase or legislation to limit their power under a split Congress according to Barron’s

·     Nokia (NOK) signs a three-year contract with A1 for LTE and 5G campus networks in Austria to provide services for all existing and new private LTE and 5G enterprise campus network deployments

·     Clear Channel Outdoor (CCO) Q3 revenue $447.51M vs. est. $413.87M; reports Q3 adjusted EBITDA $30.85M vs. $142.59M last year

·     Apple (AAPL) suspends iPhone supplier Pegatron for labor violations as they violated Apple’s Supplier Code of Conduct in its administration of a student work study program

·     Acer (ASIYF) reports Oct. revenues at NT$25.52B, up 43.2% Y/Y and down 13.5% M/M; YTD, consolidated revenues were NT$220B (+15.5% Y/Y).

·     United Microelectronics (UMC) reports October sales of NT$15.28, +4.77% Y/Y; YTD sales reached NT$146.81B, an increase of 21.39% Y/Y.