Early Look

Wednesday, November 24, 2021

Futures	Up/Down	%	Last
Dow	-99.00	0.28%	35,667
S&P 500	-8.25	0.18%	4,680
Nasdaq	-26.50	0.16%	16,285

 

 

U.S. futures are looking lower heading into the Thanksgiving Day holiday tomorrow (market closed Thursday and early 1:00 PM ET close on Friday), ahead of a jammed packed day of economic data (with none over the next 2-days), and as increased European lockdown fears rise. A surge in Treasury yields the last two days put a dent into high growth technology stocks, pushing the Nasdaq sharply lower for two consecutive sessions amid bets that the Federal Reserve will accelerate its effort to fight inflation with faster bond purchase tapering, while financials and energy have advanced. Retailers overnight paint a dire picture for the upcoming holiday season as shares of Nordstrom (JWN) and Gap Stores (GPS) plunge on disappointing earnings results. Reports from Germany suggest Europe’s biggest economy could return to a full lockdown in the coming days amid a surge in COVID infections and a disappointing take-up in the country’s vaccine drive. A late day rally Tuesday lifted stocks well off their lowest levels of the day, but stocks are still on track for weekly losses. In Asian markets, The Nikkei Index fell -471 points (1.58%) to settle at 29,302, the Shanghai Index edged higher a few points to 3,592, and the Hang Seng Index gained 33 points to 24,685. In Europe, the German DAX is down about -0.5% to 15,862 after economic data, while the FTSE 100 is up a few points to 7,275.

Market Closing Prices Yesterday

·     The S&P 500 Index gained 7.76 points, or 0.17%, to 4,690.70

·     The Dow Jones Industrial Average rose 194.55 points, or 0.55%, to 35,813.80

·     The Nasdaq Composite slipped -79.62 points, or 0.50%, to 15,775.14

·     The Russell 2000 Index declined -3.49 points, or 0.15% to 2,327.86

 

Events Calendar for Today

·     7:00 AM ET         MBA Mortgage Applications Data

·     8:30 AM ET         Gross Domestic Product (GDP) Q3 2^nd estimate…est. +2.2%

·     8:30 AM ET         GDP Consumer Spending for Q3…est. 0%

·     8:30 AM ET         GDP Price Deflator for Q3…est. +5.7%

·     8:30 AM ET         GDP Core Prices Q3-P…est.

·     8:30 AM ET         Weekly Jobless Claims…est. 260K

·     8:30 AM ET         Continuing Claims…est. 2.033M

·     8:30 AM ET         Advance Goods Trade Balance for October

·     8:30 AM ET         Durable Goods Orders MoM for October

·     8:30 AM ET         Durable Goods Ex: Transports for Oct…est. +0.2%

·     10:00 AM ET      Personal Income MoM for October…est. +0.2%

·     10:00 AM ET      Personal Spending MoM for October

·     10:00 AM ET      PCE Price Index MoM for Oct

·     10:00 AM ET      PCE Prices Index YoY for Oct

·     10:00 AM ET      Core PCE Price Index MoM for October…est. +0.4%

·     10:00 AM ET      Core PCE Price Index YoY for October…est. +4.1%

·     10:00 AM ET      University of Michigan Confidence, Nov-F…est. 66.9

·     10:00 AM ET      New Home Sales MoM for October…est. 800K

·     10:30 AM ET      Weekly DOE Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: DE

·     Earnings After the Close: none

 

 

Macro	Up/Down	Last
Nymex	-0.13	78.37
Brent	-0.33	81.98
Gold	5.30	1,789.10
EUR/USD	-0.003	1.1216
JPY/USD	-0.14	114.98
10-Year Note	+0.02	1.644%

 

 

World News

·     German November IFO Business Climate 96.5 vs 96.6 consensus; Expectations 94.2 vs 95.0 consensus – latest fall in index is cause for concern; supply chain putting firms under pressure with no sign of relief; latest COVID wave worsening situation; see majority of firm implementing price increases; sentiment for service sector has notable deteriorated

 

Sector News Breakdown

Consumer

·     Gap Stores (GPS) shares fall -13%; Q3 adj EPS $0.27 vs. est. $0.50; Q3 sales fell (-15) to $3.9B below est. $4.4B; qtrly online sales grew 48% vs q3 2019 and represented 38% of the total business; revises year EPS outlook to $1.25-$1.40 below est. $2.20; now expects FY rev growth to be about 20% vs fiscal year 2020; qtrly comparable sales were up 5% vs 2019; said qtrly Old Navy net sales were up 8% vs 2019; qtrly gap net sales declined 10% vs 2019; qtrly Banana Republic net sales declined 18% vs 2019; qtrly Athleta net sales were up 48% vs 2019

·     Guess Inc. (GES) shares rise 8%; 3Q adj EPS $0.62 vs est. $0.46 on revs $643Mm vs est. $611.3Mm; sees FY op margin 11%; not providing detailed guide for 4Q or FY; doubles qtrly cash dividend to $0.225/share

·     Nordstrom (JWN) shares tumble -21%; 3Q EPS $0.39 vs est. $0.56 on revs $3.64B vs est. $3.39B, qtrly digital sales -12% YoY; says continued to see strength in pandemic related categories (esp home and active); sees elevated inventory levels through end of year; guides FY revs including retail sales and credit card revs to be more than +35% vs 2020 (est. +35.9%)

·     Tesla (TSLA) founder and CEO Elon Musk unveiled another batch of share sales, offloading just over $1 billion in the clean-energy carmaker. Musk recently said he planned to sell some of his shares to raise cash for a pending tax liability

 

Energy, Industrials and Materials

·     The American Petroleum Institute (API) showed a build of 2.31M barrels of oil for the week ending November 19; gasoline inventories show a build of 576K barrels, distillate inventories show a draw of 1.51M barrels and Cushing inventories show a build of 915K barrels.

·     Chevron (CVX) upgraded to Outperform at RBC Capital saying the oil giant is in a position to benefit from a strong commodity cycle over the coming years, given its business plans suggest much more stability in its portfolio than peers

·     Standard Lithium (SLI) announces $100 million direct investment from Koch strategic platforms; Standard Lithium ltd to issue 13.5 million common shares at a price of CDN$9.43 (us$7.42) per common share

·     A global shortage of nitrogen fertilizer is driving prices to record levels, prompting North America’s farmers to delay purchases and raising the risk of a spring scramble to apply the crop nutrient before planting season. Farmers apply nitrogen to boost yields of corn, canola and wheat, and higher fertilizer costs could translate into higher meat and bread prices – Reuters (watch shares of CF leveraged to nitrogen prices)

 

Financials

·     Raymond James (RJF) reports October clients’ assets under administration up 33%; record client assets under administration of $1.23T increased 33% over October 2020 and 4% over September. Record financial assets under management of $199.3B increased 32% over October 2020 and 4% over September

·     Ideanomics Inc. (IDEX) qtr EPS act ($0.11) vs qtr EPS est. ($0.01) on revs $27.0Mm vs qtr revs est. $32.5Mm

 

Healthcare

·     AmerisourceBergen Corp (ABC) files for mixed shelf, size not disclosed

·     Gilead (GILD) and Merck (MRK) announce temporary pause in enrollment for phase 2 study evaluating an oral weekly combination regimen of investigational islatravir and investigational lenacapavir

·     GoHealth (GOCO) disclosed that its CEO Clinton Jones and Chief Strategy Officer Brandon Cruz each bought 530K shares of common stock on November 22nd in transactions sizes of $1.94M.

·     Puma Biotechnology (PBYI) announced that the U.S. regulators have extended the term of a patent related to the company’s breast cancer therapy NERLYNX by five years.

·     Takeda Pharmaceutical’s (TAK) received FDA approval for Livtencity (maribavir) for post-transplant cytomegalovirus infection; approval is for CMV infections that do not respond to other antivirals.

 

Technology, Media & Telecom

·     Autodesk (ADSK) shares slide -12%; 3Q adj EPS $1.33 vs est. $1.26 on revs $1.126B vs est. $1.119B, total billings $1.168B +16%; qtrly subscription plan revs $1.071B +21%; guides FY revs $4.36-4.375B vs est. $4.37B, sees FY billings $4.74-4.8B, sees FY adj EPS $4.98-5.04 vs est. $4.99

·     Anaplan inc. (PLAN) 3Q adj EPS ($0.05) vs est. ($0.11) on revs $155.3Mm vs est. $146.3Mm; guides 4Q revs $154-155Mm vs est. $152.9Mm, adj op margin neg 10-11%; sees FY revs $583.5-584.5Mm vs est. $573.5Mm, sees FY adj op margin neg 7.5-8.5%

·     Dell Inc. (DELL) Q3 EPS $2.37 vs. est. $2.18; Q3 revs rose 21% YoY to $28.4B vs. est. $26.82B; client solutions group revenue for Q3 was up 35% to $16.5B (est. $15.3B); ended qtr with remaining performance obligations of $47B, up 26% and cash and investments of $24.2B; Q3 infrastructure solutions group revenue $8.43B, mostly in-line with views

·     HP Inc. (HPQ) shares rise 6%; Q4 EPS $0.94 vs. est. $0/88; Q4 revs rose 9.3% to $16.7B vs. est. $15.4B; sees FY GAAP EPS $3.86-$4.06 vs. est. $4.05; sees FY22 free ash flow of at least $4.5B; Q4 Personal Systems net revenue was $11.8 billion, up 13% YoY (up 10% in constant currency) with a 6.5% operating margin; consumer PCs net revenue decreased 3% and Commercial PCs net revenue increased 25%; total units were down 9% with Notebooks units down 12% and Desktops units up 2%.

·     Nutanix (NTNX) Q1 adj EPS loss (-$0.22) vs. est. loss (-$0.34); Q1 revenue $378.5M vs. est. $367M; said continued to execute towards our targets of free cash flow break-even in the 2H and 25%-plus ACV billings CAGR through fiscal 2025; guides Q2 revs $400M-4410M vs. est. $399.9M and sees year revs about $1.615B-$1.63B vs. est. $1.6B

·     Pure Storage (PSTG) shares rise 10%; 3Q adj EPS $0.22 vs est. $0.12 on revs $562.7Mm vs est. $530.8Mm; guides FY revs $2.1B vs est. $2.043B

·     VMWare (VMW) Q3 EPS $1.72 vs. est. $1.54; Q3 revs rose 11% YoY to $3.19B vs. est. $3.12B; Q3 combination of subscription and SaaS and license revenue was $1.53 billion, an increase of 16% YoY; subscription and SaaS revenue for Q3 was $820 million, an increase of 21% YoY and subscription and SaaS ARR for Q3 was $3.31 billion, an increase of 25% Yoy; raises FY22 EPS view to $7.19 from $6.90 and raises FY22 revenue view to $12.83B from $12.8B