Early Look

Monday, November 30, 2020

Futures	Up/Down	%	Last
DJ Industrials	-215.00	0.73%	29,655
S&P 500	-19.50	0.53%	3,617
Nasdaq	-6.50	0.06%	12,250

 

 

U.S. stocks are pointing to a lower open, just a few days after the S&P 500 reached a new record high after positive vaccine related news headlines, an apparent transition to Joe Biden in the White House and ongoing economic recovery hopes boosted stocks broadly last week. The Dow Jones Industrial Average, Dow Transports, and SmallCap Russell 2000 index all achieved record highs at some point last week and are on track for some of their best monthly returns with the Dow up 12.8% for November heading into the final trading day, the S&P 500 up 11.3%, the Nasdaq Comp up 11.8% and the Russell 2000 up a whopping 20.5%. Gains have been led by cyclical, value related sectors as S&P energy is on track for its best month ever with ~34% gain, as crude trades to its best levels since March, along with strong gains for financials, consumer discretionary and industrials. As for last week, the Dow gained 2.21% and the Nasdaq unofficially rose 2.96%, while gold futures settled sharply lower, registering the biggest weekly slide since late September (down -4.5%), as the metals prices have been buffeted by upbeat news on coronavirus vaccines that have driven investors to equities and away from the perceived haven of bullion. In Asian markets, The Nikkei Index fell -211 points to 26,433, the Shanghai Index dropped -16 points to 3,391 and the Hang Seng Index declined -553 points to 26,341. In Europe, the German DAX is up around 50 points to 13,385, while the FTSE 100 is up about 10 points to 6,380. Bitcoin prices resumes its upward surge, up over 9% to around $18,600, while gold dips to lows below $1,770 an ounce (-0.8%). Some factors weighing on futures overnight were profit taking, geopolitical concerns with Iran, Brexit negotiations and a delay in a vaccine trial.

Market Closing Prices Yesterday

·     The S&P 500 Index gained 8.70 points, or 0.24%, to 3,638.35

·     The Dow Jones Industrial Average rose 37.90 points, or 0.13%, to 29,910.37

·     The Nasdaq Composite surged 111.44 points, or 0.92%, to 12,205.85

·     The Russell 2000 Index advanced 10.25 points, or 0.56% to 1,855.27

 

Economic Calendar for Today

·     9:45 AM EST      Chicago PMI for November…est. 59.0

·     10:00 AM EST    Pending Home Sales MoM for October…est. 1.0%

·     10:30 AM EST    Dallas Fed Manufacturing for November…prior 19.8

 

Earnings Calendar:

·     Earnings Before the Open: ADNT

·     Earnings After the Close: EMKR, ZM

 

Other Key Events:

·     Caixin Manufacturing PMI for November

·     Cowen Cannabis Conference (virtual), 11/30-12/2

·     Credit Suisse 24th Annual Technology Conference (virtual), 11/30-12/3

·     HC Wainwright Mining Conference (virtual), 11/30-12/1

·     Piper 32nd Annual Healthcare Conference (virtual), 11/30-12/3

 

 

Macro	Up/Down	Last
WTI Crude	-0.70	44.83
Brent	-0.82	47.36
Gold	-18.10	1,769.70
EUR/USD	0.0023	1.1986
JPY/USD	-0.13	103.96
10-Year Note	+0.003	0.844%

 

 

World News

·     Britain and the European Union cautioned each other on Monday that time was running out for a Brexit trade deal as negotiators sparred over state aid, enforcement and fishing in a bid to avoid a tumultuous exit in just a month’s time. The UK finally leaves the EU on Dec. 31

·     New York City’s public schools will begin to reopen for in-person learning on Dec. 7, starting with elementary schools for students whose parents agree to a weekly testing regimen for the novel coronavirus, Mayor Bill de Blasio announced on Sunday.

·     A senior Iranian official said on Monday an opposition group was suspected alongside Israel in the killing of a prominent Iranian nuclear scientist, an attack that has raised the prospect of a new standoff between Tehran and its longtime enemy – Reuters

 

Sector News Breakdown

Consumer

·     Airbnb (ABNB) and DoorDash (DASH), both set to start roadshows this week, are planning for IPO valuations that exceed previous estimates, the Wall Street Journal reports. Airbnb is planning a range of ~$30B-$33B, on a fully diluted share count basis, while DoorDash plans to target ~$25B-$28B on a fully diluted basis https://bit.ly/2JjqJbz

·     Ford Motor (F) mentioned positively in Barron’s saying shares could double noting the automaker’s top-selling F-150 line always underpins a bullish story on Ford, but the publication also notes that sales of the heftier F-250, F-350, and F-450 models helped Ford post EPS of $0.65 in Q3 to top consensus marks

·     Regis (RGS) positive mention in Barron’s saying the owner and franchiser of barbershops and salons in the U.S., U.K., and Canada, will benefit from pent-up demand next year. With a market cap of $300 million, it is the only publicly traded firm in the highly fragment market, where many small salons won’t survive.

·     Shopify (SHOP) announced Saturday that sales for Black Friday were up 75% YoY, hitting $2.4 billion from its independent and direct-to-consumer brands. Shopify said, “in just a single day, merchants around the world produced more than 80% of the sales of the entire holiday shopping weekend last year.”

·     Barron’s positive on Azek (AZEK) saying the maker of recyclable decking and railings recently declined following favorable vaccine news, but the outdoor-living market was growing nicely even before the pandemic and shares could reach $70 by 2025

·     Autohome (ATHM) Q3 EPS 1.04 on revs $341.05M vs. est. $1.01 and $344.42M; said during the quarter, made significant progress in enriching our end-to-end SaaS platform through unfolding new dealer data products; sees Q4 revs $264.5M-$365.9M vs. est. $379.9M

 

Energy, Industrials and Materials

·     OPEC and allies led by Russia have yet to find a consensus on oil output policy for 2021, after an initial round of talks on Sunday and ahead of crucial meetings on Monday and Tuesday, four OPEC+ sources told Reuters. OPEC+ is now considering rolling over existing cuts of 7.7 million barrels per day, or around 8% of global demand, into the first months of 2021, sources said

·     Daqo New Energy (DQ) announced that it signed a long-term high-purity polysilicon supply agreement with Trina Solar

·     KBR (KBR) won a $300M recompete for scientific, engineering and technical services for the U.S. Geological Survey’s (USGS) Earth Resources Observation and Science Center

 

Financials

·     S&P Global (SPGI) and IHS Markit (INFO) have entered into a merger agreement to combine in an all-stock transaction which values IHS Markit at $44B, including $4.8B of net debt. Under the terms of the agreement, each common share of IHS Markit will be exchanged for a fixed ratio of 0.2838 shares of S&P Global common stock. Current S&P Global shareholders will own ~67.75% of the combined company https://bit.ly/3qf7hgz

·     Perella Weinberg Partners is nearing a deal to go public through a blank-check company sponsored by financial entrepreneur Betsy Cohen, Bloomberg reports, citing a person familiar with the matter. The SPAC set up by Cohen, FinTech Acquisition Corporation IV (FTIV) is in talks to merge with boutique investment bank Perella Weinberg https://bit.ly/37ii6WF

·     HSBC (HSBC) is weighing up a complete exit from retail banking in the U.S. after narrowing the options for how to improve performance at its struggling North America business

·     Morgan Stanley Upgrades Large Cap Bank Industry to attractive as vaccine materially cuts downside risks and boosts stock upside – Upside to our price targets ranges from 16% to 64%, with median price target up 44%. The EPS we are using to value the stocks is increasing by 9% to 110%. Consumer Finance Top Picks: SYF, ADS, ALLY, COF, AXP and Large Cap Bank Top Picks: RF, WFC, C, and STT

 

Healthcare

·     Novavax (NVAX) said it has pushed back the start of a U.S.-based, late-stage trial for its experimental COVID-19 vaccine and now expects it to begin in the coming weeks instead of November. It is the second time that Novavax has rescheduled the Phase 3 trial after first flagging an October start, hampered by issues in scaling up its manufacturing.

·     Moderna (MRNA) will supply a total of 7M mRNA-1273 doses to the U.K., beginning in March under its new supply agreement with the United Kingdom’s government; said it’s continuing to scale up its global manufacturing to be able to deliver ~500M doses per year and possibly up to 1B doses per year beginning in 2021.

·     Cigna Corp (CI) expects to reaffirm commitment to target of achieving 2021 consolidated adj income from operations on per share basis of $20.00 to $21.00 and still sees 2020 revs about $158B

·     HOOKIPA Pharma (HOOK) announced interim efficacy results, as well as additional safety and immunogenicity data, for its prophylactic Cytomegalovirus vaccine candidate HB-101. HB-101, a non-replicating arenavirus vaccine, is being investigated in a double-blind Phase 2 clinical trial

·     Regeneron (REGN) and Sanofi (SNY) announced that the European Commission extended the marketing authorization for Dupixent in the European Union to include children six to 11 years of age with severe atopic dermatitis who are candidates for systemic therapy

 

Technology, Media & Telecom

·     Apple’s (AAPL) new MacBook’s, viewed favorably by critics, should delight investors according to Barron’s this weekend

·     Arrow Electronics (ARW) is in talks with the U.S. government about the designation of an Asian subsidiary that could lead to export restrictions, according to Bloomberg