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01/11/21 Briefing

The S&P 500 futures trade 27 points, or 0.6%, above fair value in fresh record territory, as the market benefits from first-of-the-month inflows, positive momentum, infrastructure optimism, and encouraging tariff updates.

Starting with the macro headlines, House progressives reportedly said they will support both the $1.2 trillion bipartisan infrastructure bill and the $1.75 trillion reconciliation bill, Treasury Secretary Yellen told Reuters that some China tariffs could be removed "in a reciprocal way" to ease inflation, and the U.S. and EU agreed to ease tariffs on steel and aluminum.

Potential market-moving developments this week include the ISM Manufacturing Index for October (Briefing.com consensus 60.5%), which will be released today at 10:00 a.m. ET, the FOMC Rate Decision on Wednesday, and Employment Situation Report for October on Friday.

The final IHS Markit Manufacturing PMI for October will precede the ISM report at 9:45 a.m. ET while the Construction Spending report for September (Briefing.com consensus 0.5%) will be released concurrently with the ISM report.

U.S. Treasury yields are moving higher across the curve. The 2-yr yield is up two basis points to 0.51%, and the 10-yr yield is up three basis points to 1.59%. The U.S. Dollar Index is little changed at 94.09. WTI crude futures are up 0.4% to $83.93/bbl.

In U.S. Corporate news:

  • Coca-Cola (KO 56.41, +0.04): +0.1% after The Wall Street Journal reported that the company is buying full control of BodyArmor for $5.6 billion.

  • Harley-Davidson (HOG 39.60, +3.11): +8.5% after saying that the 2021 annual impact from EU tariffs will be $61 million, versus the previously disclosed $64 million, with no incremental impact from tariffs in 2022. The update follows a U.S.-EU agreement on Oct. 30.

  • CrowdStrike (CRWD 275.50, -6.30): -2.2% after the stock was downgraded to Neutral from Buy at BTIG Research.

  • Tesla (TSLA 1154.70, +40.70): +3.7% in a continuation of its recent parabolic move.

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region began the week on a mostly higher note. Japan's Nikkei: +2.6% Hong Kong's Hang Seng: -0.9% China's Shanghai Composite: -0.1% India's Sensex: +1.4% South Korea's Kospi: +0.3% Australia's ASX All Ordinaries: +0.7%.

  • In economic data:

  • China's October Manufacturing PMI 49.2 (expected 49.7; last 49.6) and Non-Manufacturing PMI 52.4 (last 53.2). October Caixin Manufacturing PMI 50.6 (expected 50.0; last 50.0)

  • Japan's October Manufacturing PMI 53.2 (last 51.5)

  • South Korea's October trade surplus $1.69 bln (last surplus of $4.21 bln). October Imports 37.8% (expected 40.1%; last 31.0%) and Exports 24.0% yr/yr (expected 27.0%; last 16.7%). October Nikkei Manufacturing PMI 50.2 (last 52.4)

  • India's October Nikkei Markit Manufacturing PMI 55.9 (expected 54.0; last 53.7) Australia's October AIG Manufacturing Index 50.4 (last 51.2) and October Manufacturing PMI 58.2 (last 56.8). October Home Loans -2.7% m/m (expected -2.0%; last -6.6%) and October ANZ Job Advertisements 6.2% m/m (last -2.8%)

  • Hong Kong's Q3 GDP 0.1% qtr/qtr (last -0.9%); 5.4% yr/yr (last 7.6%)


  • In news:

  • Japan's LDP won outright majority in yesterday's parliamentary election, though the party lost 15 seats. Prime Minister Kishida said that an extra budget will be passed immediately with a full framework expected by the middle of this month.

  • Australia reopened to conditional international travel after 20 months.

  • The Reserve Bank of Australia is likely to scrap its 3-yr yield target at tomorrow's policy meeting.



  • Major European indices trade on a firmly higher note. STOXX Europe 600: +0.5% Germany's DAX: +0.7% U.K.'s FTSE 100: +0.4% France's CAC 40: +0.9% Italy's FTSE MIB: +1.0% Spain's IBEX 35: +1.3%.

  • In economic data:

  • Germany's September Retail Sales -2.5% m/m (expected 0.6%; last 1.2%); -0.9% yr/yr (expected 1.8%; last 0.9%)

  • U.K.'s October Manufacturing PMI 57.8 (expected 57.7; last 57.1)

  • Swiss October procure.ch PMI 65.4 (expected 65.5; last 68.1)


  • In news:

  • French President Macron issued an ultimatum to the U.K., demanding licenses for small French fishing boats.

  • The U.K.'s foreign secretary threatened legal action if France doesn't drop its demands.

  • Fitch affirmed Germany's AAA rating with a Stable outlook.

  • Barclays CEO Staley announced his resignation. Ryanair reported a quarterly profit but warned that it will need to cut prices to maintain demand.



U.S. equity futures:

  • S&P 500 Futures: +18 @ 4,623

  • DJIA Futures: +155 @ 35,974

  • Nasdaq 100 Futures: +58 @ 15,909

Overseas:

  • Europe: DAX +0.4%, FTSE +0.7%, CAC +0.9%

  • Asia: Nikkei +2.6%, Hang Seng -0.9%, Shanghai Composite -0.1%

Commodities:

  • Crude Oil +0.35 @ 83.92

  • Nat Gas -0.010 @ 5.427

  • Gold +2.80 @ 1786.70

  • Silver -0.014 @ 23.935

  • Copper -0.01 @ 4.36

U.S. Summary:

  • Earnings/Guidance (Full Earnings Calendar):

  • Affiliated Managers (AMG) beats by $0.09, misses on revs

  • Akoustis Technologies (AKTS) misses by $0.05, misses on revs; guides Q2 revs in-line

  • CNA Financial (CNA) beats by $0.19

  • Essential Utilities (WTRG) reports Q3 (Sep) results; issues in-line guidance

  • Harley-Davidson (HOG) updates impacts from EU tariffs following agreement between US and EU; 2021 annual impact from tariffs to be $61 million versus the previously disclosed $64 million; reaffirms FY21 motorcycles guidance

  • JELD-WEN (JELD) beats by $0.09, reports revs in-line; reaffirms FY21 revs guidance

  • Timken (TKR) beats by $0.02, beats on revs

  • XL Fleet (XL) appoints Eric Tech as CEO; sees Q3 revs below expectations


  • General News:

  • G-20 leaders agree to global minimum tax agreement; this must be ratified through every country's legislature

  • World leaders meet at COP26 climate conference

  • House Progressives say they will support both the $1.2 trillion bipartisan infrastructure bill and the $1.75 trillion infrastructure bill. Moderate Senators have still not endorsed the framework. House vote will likely take place sometime after Tuesday. (Note: If the bipartisan infrastructure bill passes, it will go to President Biden. If the reconciliation bill passes, it will go to Senate where it could be amended, in which case it will need to go back to the House). --CNN

  • Democratic lawmakers are warning that a loss by Terry McAuliffe (D) in Virginia Governor election on Tuesday (polls remain very close based on averages) could prompt Democrats to pull back from President Biden's agenda. This race is seen as a bellwether for midterms. --NY Times

  • Treasury Secretary Janet Yellen says President Biden will make Fed Chair decision soon. She believes Jerome Powell and "other candidates" will reassure markets if they are selected. --Reuters

  • Treasury Secretary Janet Yellen says some China tariffs could be removed "in a reciprocal way" to ease inflation (FXI). --Reuters

  • Treasury Secretary Janet Yellen is open to raising debt ceiling through budget reconciliation process, which will not require Republican votes. --Washington Post

  • US will not apply section 232 duties and will allow duty-free importation steel and aluminum from the EU at a historical-based volume and the EU will suspend related tariffs on U.S. products

  • Japan Liberal Democrats win election

  • Macau Gaming Inspection and Coordination Bureau earlier reported October gross revs -40% yr/yr to HKD 4.365 bln versus -72.5% in October of 2020

  • 2% of parents are still unlikely to get their younger children vaccinated -- NY Times

  • 3M (MMM) discloses Flemish environmental agency issued a new safety measure that prohibits all emissions of all forms of PFAS from that facility

  • Amazon.com (AMZN): Unions in Germany want strikes at seven Amazon locations. -- Reuters

  • AMC Entertainment (AMC) confirmed October Theatre Admissions Revenue for AMC both in the United States and internationally the highest it has been in any month since Covid forced the closure of theatres early in 2020.

  • American Airlines (AAL) cancelled 1600 flights amid staffing problems. --WSJ

  • ArcBest (ARCB) announces new $100 million accelerated share repurchase program

  • Baidu (BIDU) appoints Rong Luo as CFO

  • Barclays PLC (BCS) CEO Jes Staley steps down

  • BioNTech (BNTX) and Pfizer (PFE) receive FDA Emergency Use Authorization for COVID-19 vaccine in children ages 5 through 11 years

  • Deere (DE): UAW announced that the elected national bargaining team at John Deere has reached a tentative agreement and will remain on strike throughout the ratification process

  • Digital World Acquisition Corp. (DWAC): Former President Trump's SPAC may have sidestepped securities laws -- NY Times

  • GameStop (GME) announces that COO Jenna Owens will depart, effective October 25 -- 8K filing

  • Li Auto (LI) reports October deliveries increased 107.2% yr/yr

  • Moderna (MRNA) provides update on timing of EUA for COVID-19 vaccine for adolescents; FDA requires more time to complete assessment

  • NIO (NIO) reports October deliveries decreased 27.5% yr/yr; significantly impacted by restructuring and upgrades of manufacturing lines

  • Novavax (NVAX) and Serum Institute of India receive Emergency Use Authorization for COVID-19 vaccine in Indonesia

  • SWK Holdings (SWKH) completes Strategic Review Committee evaluation of strategic alternatives; to institute dividend policy, evaluate alternatives for non-core assets

  • Walt Disney (DIS): Disneyland in Shanghai was closed due to COVID-19 outbreak. --CNN

  • XPeng (XPEV) reports October deliveries increased 233% yr/yr


  • M&A:

  • Coca-Cola (KO) aiming to purchase full control of BodyArmor for $5.6 bln. -- WSJ

  • General Electric (GE) completes combination of GECAS with AerCap (AER)

  • Golden Star Resources (GSS): Chifeng Jilong Gold to acquire Golden Star in an all-cash offer valued at US$470 mln; expected to close in January 2022

  • McKesson (MCK) to sell UK businesses to AURELIUS; financial terms not disclosed

  • Rockwell Automation (ROK) announces that it has acquired AVATA; financial terms not disclosed


  • Syndicate:

  • Allegro Microsystems (ALGM) announces secondary offering of 7 mln shares of its common stock by OEP SKNA, an affiliate of One Equity Partners; also files mixed securities shelf offering

  • Casella Waste (CWST) files mixed securities shelf offering

  • Financial Inst. (FISI) files for $100 mln mixed securities shelf offering

  • Joby Aviation (JOBY) files for 98,357,200 share common stock offering by selling shareholders

  • Mawson Infrastructure Group () files for 8,228,8MIGI19 share common stock offering by selling shareholders

  • Rekor Systems (REKR) files for 2,186,931 share common stock offering by selling shareholders

  • Trident Acquisitions Corp. (TDAC) closes combination with Lottery.com; to trade under symbol "LTRY" starting November 1

  • Wrap Technologies (WRAP) files for $150 mln mixed securities shelf offering


  • IPOs:

  • Expected to Price:

  • Expensify (Nasdaq: EXFY) launches 2.61 mln share IPO, expected to price between $23-$25

  • Kidpik Corp. (Nasdaq: PIK) launches 1.66 mln share IPO, expected to price between $8-$10

  • LianBio (Nasdaq: LIAN) prices 20.3 mln ADS IPO at $16.00 per ADS, at the midpoint of the $15-17 expected range

  • Lulu's Fashion Lounge (Nasdaq: LVLU) launches 5.75 mln share IPO, expected to price between $16-$19

  • Third Coast Bancshares (Nasdaq: TCBX) launches 3.0 mln share IPO, expected to price between $24-$26



Gapping Up/Down

  • Gapping up:

  • ANIP +14.5%, NVAX +9.7%, MIGI +7.9%, XPEV +2.8%, TEVA +2.5%, LMPX +2.3%, JOBY +2.1%, BNTX +1.3%, NUE +1.2%, FB +1.1%, SCM +1%, MX +0.7%, PFE +0.7%


  • Gapping down:

  • BTBT -14.4%, JELD -5%, NIO -4%, OIS -4%, MARK -3.8%, WRAP -2.5%, REKR -2.2%, LI -2.2%, MRNA -2.2%, BCS -1.7%


Analyst Research (see Upgrades/Downgrades calendar for full list):

  • Upgrades

  • Activision Blizzard (ATVI) upgraded to Mkt Perform from Underperform at Bernstein

  • Alnylam Pharma (ALNY) upgraded to Outperform from Perform at Oppenheimer; tgt $200

  • Discovery (DISCA) upgraded to Mkt Perform from Underperform at Bernstein

  • Intel (INTC) upgraded to Market Perform from Under Perform at Northland Capital; tgt $49

  • NatWest Group plc (NWG) upgraded to Hold from Sell at Investec

  • Newell Brands (NWL) upgraded to Overweight from Neutral at JP Morgan; tgt $27


  • Downgrades:

  • Advanced Micro (AMD) downgraded to Market Perform from Outperform at Northland Capital; tgt $120

  • AGCO Corp (AGCO) downgraded to Neutral from Buy at BofA Securities; tgt lowered to $135

  • Aon (AON) downgraded to Equal Weight from Overweight at Wells Fargo; tgt raised to $326

  • Bank of America (BAC) downgraded to Underperform from Neutral at Robert W. Baird; tgt $42

  • CrowdStrike (CRWD) downgraded to Neutral from Buy at BTIG Research

  • Eastman Chemical (EMN) downgraded to Neutral from Overweight at JP Morgan; tgt lowered to $110

  • Futu Holdings (FUTU) downgraded to Neutral from Buy at BOCOM; tgt $53.30

  • Int'l Paper (IP) downgraded to Hold from Buy at Jefferies; tgt lowered to $55

  • Lockheed Martin (LMT) downgraded to Neutral from Buy at BofA Securities; tgt lowered to $375

  • Mercer Intl (MERC) downgraded to Underperform from Sector Perform at RBC Capital Mkts; tgt lowered to $8


  • Others:

  • CION Investment (CION) initiated with an Equal Weight at Wells Fargo; tgt $12.50

  • Cohu (COHU) resumed with a Buy at Rosenblatt; tgt $45

  • Decarbonization Plus Acquisition Corporation II (DCRN) initiated with a Buy at Seaport Research Partners; tgt $17

  • ESS Inc. (GWH) initiated with an Outperform at Cowen; tgt $23.50

  • Monster Beverage (MNST) initiated with a Neutral at Redburn


Upcoming Events:

  • Econ Data:

  • 09:45 ET: October IHS Markit Manufacturing - Final (Prior 60.7)

  • 10:00 ET: October ISM Manufacturing Index (Briefing.com consensus 60.5%; Prior 61.1%)

  • 10:00 ET: September Construction Spending (Briefing.com consensus 0.5%; Prior 0.0%)


  • Earnings:

  • Monday (Nov. 1)

  • Morning: AMG AKTS CNA BEN JELD OIS ON PCG TKR

  • Afternoon: ADUS ADTN ANET CAR BCC BRX BRKR BWXT CHGG CRUS CLX CACC FANG PLOW EVER FN HLIT HOLX NSP KMT KFRC LEG MCK MOS NBIX NTR NXPI OGS OTTR PSA RMBS O RRX RHP SBAC SPG SNCY SKT RIG UNVR VRNS VNOM VNO WMB ZI


  • Tuesday (Nov. 2)

  • Morning: AME APO ARCB ARNC AVNS TECH BLMN BP CTLT CIGI COP CRSR CMI DD DEA ETN EPD ETRN ESPR EL EXLS EXTR RACE IT GNRC GPN HEES HLNE HSC HSIC IAA IEP IDXX INCY INGR IART IPGP KKR LCII LEA LDOS LGIH LPX MMP MPC MLM MTRN MIME MPLX MYGN NNN NRZ NXST OMCL PFE PINC PEG RCM RL ROK SABR SAGE SEE SRCL TNC TMX TRI BLD UAA WAT WEC WLK XHR XYL ZBRA

  • Afternoon: EGHT ATVI AKAM AYX AMCR DOX AMED AFG AWK AMGN AIZ BTG BKH BFAM CZR CDLX CDK COUR DCP DCPH DENN DVN DHT APPS DEI EIX ES EXAS EXEL FNF FMC FRG FRSH HALO PEAK HURN ICFI ICHR IOSP INSP JRVR KAI KAR LSCC LSI LPSN RAMP LYFT MGNX MANT MTCH MRCY MDLZ NSA NMIH OKE OSPN PACB PAYC PKI PAA PUMP PRO PRU RDN RRR RGNX TSLX SKY SEDG SRC SPT STE SMCI TMUS TX RARE UIS UNM VECO VRSK VRTX VOYA WTI HCC WU XPO ZG


  • Wednesday (Nov. 3)

  • Morning: AGIO AMRN AMRX ASTE ATH AAWW AVA BDC BWA EAT BR BIP CWH CPRI CDW FUN CVE CRL CIM CLH CTRA CRTO CVS DISCA EMR ETR EVRG EVOP EXC EXPI FDP GCP HFC HZNP HUM ICPT IONS JLL LAMR LANC LIVN LL MAC MAR NFE NYT NI NCLH DNOW ODP OMI PCRX PSN PBI PLTK PRG RDWR RRD SPNS SMG SBGI SITE SPR SHOO SUN SYNH TT TUP UTHR VIRT VSH WING

  • Afternoon: TXG ONEM ADPT ATGE ALB ALL AEE ANSS APA ACA ATRC ACLS BNFT BLKB BKNG WHD CDAY CF CHNG CAKE CLR CORT CTVA CCRN CW DIOD DXC ELF EA ECPG ET NVST EPR EQIX EQH ETSY FSLY FSR FLT FOXA FNV GFL GDDY HR HMN HST TWNK HUBS HBM H IAG ICLR ICUI INFN IR INSG ITT KW KL KTOS LCI LHCG LNC LUMN MGNI MTW MFC MRO MATX MAXR MDU MLNK MET MTG MGM NUS OPRT OSUR ORA OCDX ORCC PLMR PK PDCE PEN PETQ PING PXD PLYA PTC QTWO QGEN QRVO QCOM QLYS QNST RPD RYN RCII RVLV ROKU RGLD RPT SRPT SITM SKLZ SJI SWN SFM SPXC STAA RGR SUM SLF SPWR SUPN TTWO TNDM TTGT TRMB TRUE TRUP UPLD VVV VAPO VMEO WTS WK YELL ZD


  • Thursday (Nov. 4)

  • Morning: ACIW GOLF AHCO WMS AES APD ALE ABC APTV ARW BLL BALY GOLD BCE BDX BLI BCOR BBIO BLDR CARS CNP LNG CQP CHH CI CTXS CWEN CNHI CCOI CFX COMM CYBR DLX XRAY DOCN DIN DUK DNB EPAM FIS FOCS GEL GEO GIL GOGO GTN GPRE HBI HL HSKA HIMX HWM HII NSIT IBP NTLA IDCC IRM IRWD ITRI K KOP LNTH LXP LITE MTSI MBUU MRNA MUR NEO NTCT NKLA NOMD NVMI NRG NS OGE OPCH PH PENN PLNT PPL PBH PWR QRTEA REGN REYN SO STOR SSYS STRA TGP TNK TGNA SHYF USPH UNIT VIAC VSTO VG VNT VMC WD W WCC ZBH ZTS

  • Afternoon: AAON ACMR AL ATSG ABNB ALRM ALKT Y LNT MDRX ALTR ATUS AMH AIG COLD AMN ANGI AINV APPN ARNA AVLR AXNX BGS BIGC BILL BL BE BHF CABO CMBM CVNA CC CHUY CLNE NET CDXS CGNX COLL ED CNDT CVET CYRX CUBE CWK DDOG DK DRH DBX LOCO EBS ENDP EOG EXPE FATE FRT FSLR FND FTNT FOXF FNKO GKOS GBT GMED GPRO GDOT GDYN GH HTA ILMN INGN PODD IAC IOVA IRTC FROG LLNW LGF.A LYV LTHM MNDT MTZ MED MELI MTD MCHP MTX MITK MNST MSI MP NTRA NFG NKTR NPTN NWSA LASR NLOK NVAX OXY OHI ONTO OTEX OEC OUT PCTY PTON PBA PFSI PRDO PINS PCOR PGNY PBYI KWR QDEL RDFN REG RGA REZI RBA RLJ RKT ROG SEM SLQT SHAK SWKS SQ RUN SHO SWCH SYNA TRHC TDC UBER OLED USM VLDR VIAV VRAY VIR WELL WPM WSC WWE WW YMAB YELP ZGNX


  • Friday (Nov. 5)

  • Morning: AMCX AXL BEP CGC CNK DSEY D ELAN ERJ ENB ESNT FLR GT GRPN HMC TILE JCI KIM MGA MMI MFA MODV MOG.A NWN DOC PNW SSP SRE TRP TEN ECOL VTR

  • Afternoon: TSE



Asia & Europe detail:

Asia: Nikkei +2.6%, Hang Seng -0.9%, Shanghai Composite -0.1%

Equity indices in the Asia-Pacific region began the week on a mostly higher note. Japan's LDP won outright majority in yesterday's parliamentary election, though the party lost 15 seats. Prime Minister Kishida said that an extra budget will be passed immediately with a full framework expected by the middle of this month. Australia reopened to conditional international travel after 20 months. The Reserve Bank of Australia is likely to scrap its 3-yr yield target at tomorrow's policy meeting.

  • In economic data:

  • China's October Manufacturing PMI 49.2 (expected 49.7; last 49.6) and Non-Manufacturing PMI 52.4 (last 53.2). October Caixin Manufacturing PMI 50.6 (expected 50.0; last 50.0)

  • Japan's October Manufacturing PMI 53.2 (last 51.5)

  • South Korea's October trade surplus $1.69 bln (last surplus of $4.21 bln). October Imports 37.8% (expected 40.1%; last 31.0%) and Exports 24.0% yr/yr (expected 27.0%; last 16.7%). October Nikkei Manufacturing PMI 50.2 (last 52.4)

  • India's October Nikkei Markit Manufacturing PMI 55.9 (expected 54.0; last 53.7)

  • Australia's October AIG Manufacturing Index 50.4 (last 51.2) and October Manufacturing PMI 58.2 (last 56.8). October Home Loans -2.7% m/m (expected -2.0%; last -6.6%) and October ANZ Job Advertisements 6.2% m/m (last -2.8%)

  • Hong Kong's Q3 GDP 0.1% qtr/qtr (last -0.9%); 5.4% yr/yr (last 7.6%)


---Equity Markets---

  • Japan's Nikkei: +2.6%

  • Hong Kong's Hang Seng: -0.9%

  • China's Shanghai Composite: -0.1%

  • India's Sensex: +1.4%

  • South Korea's Kospi: +0.3%

  • Australia's ASX All Ordinaries: +0.7%

---FX---

  • USD/JPY: +0.2% to 114.24

  • USD/CNH: -0.1% to 6.3938

  • USD/INR: UNCH at 74.91

Europe: DAX +0.7%, FTSE +0.4%, CAC +0.9%

Major European indices trade on a firmly higher note. French President Macron issued an ultimatum to the U.K., demanding licenses for small French fishing boats. The U.K.'s foreign secretary threatened legal action if France doesn't drop its demands. Fitch affirmed Germany's AAA rating with a Stable outlook. Barclays CEO Staley announced his resignation. Ryanair reported a quarterly profit but warned that it will need to cut prices to maintain demand.

  • In economic data:

  • Germany's September Retail Sales -2.5% m/m (expected 0.6%; last 1.2%); -0.9% yr/yr (expected 1.8%; last 0.9%)

  • U.K.'s October Manufacturing PMI 57.8 (expected 57.7; last 57.1)

  • Swiss October procure.ch PMI 65.4 (expected 65.5; last 68.1)


---Equity Markets---

  • STOXX Europe 600: +0.5%

  • Germany's DAX: +0.7%

  • U.K.'s FTSE 100: +0.4%

  • France's CAC 40: +0.9%

  • Italy's FTSE MIB: +1.0%

  • Spain's IBEX 35: +1.3%

---FX---

  • EUR/USD: UNCH at 1.1567

  • GBP/USD: -0.2% to 1.3647

  • USD/CHF: -0.1% to 0.9146


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