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Writer's pictureSimon Charles Hooper

03/12/21 Briefing

The stock market is on track for a slightly higher open as futures on the S&P 500 trade seven points above fair value, but the market is likely to see some early volatility in response to the 8:30 ETrelease of the Employment Situation report for November.

Overnight action saw a mostly positive showing from markets in Asia while European indices trade higher, but with slimmer gains.

In Washington, Congress voted in favor of another short-term funding bill, averting the risk of a government shutdown until mid-February.

Crude oil is higher by $1.91, or 2.9%, at $68.41/bbl, as it builds on yesterday's rebound.

The 8:30 ETrelease of November Nonfarm Payrolls (Briefing.comconsensus 525,000; prior 531,000), Nonfarm Private Payrolls (Briefing.comconsensus 500,000; prior 604,000), Unemployment Rate (Briefing.comconsensus 4.5%; prior 4.6%), Average Hourly Earnings (Briefing.comconsensus 0.4%; prior 0.4%), and Average Workweek (Briefing.comconsensus 34.7; prior 34.7) will be followed by October Factory Orders (Briefing.comconsensus 0.4%; prior 0.2%) and November ISM Non-Manufacturing Index (Briefing.comconsensus 65.0%; prior 61.9%) at 10:00 ET.

Treasuries hold modest gains with the 10-yr yield down two basis points at 1.43%.

In U.S. corporate news:

  • DocuSign (DOCU 160.24, -73.58): -31.5% after below-consensus Q4 revenue guidance overshadowed a Q3 beat.

  • Marvell Technology (MRVL 86.38, +15.35): +21.6% after beating Q3 expectations and issuing above-consensus EPS and revenue guidance for Q4.

  • Ollie's Bargain Outlet (OLLI 49.49, -13.37): -21.3% after missing Q3 expectations, issuing below-consensus guidance for FY22, and increasing its buyback.

  • Ulta Beauty (ULTA 405.00, +21.36): +5.6% after beating Q3 expectations and raising its guidance for FY22.

  • Zillow (ZG 58.55, +4.78): +8.9% after increasing the Q4 revenue outlook for its Homes segment.

Reviewing overnight developments:

  • Asian markets ended mixed. Japan's Nikkei +1.0%, China's Shanghai Composite +0.9%, and Hong Kong's Hang Seng -0.1%

    • In economic data:

      • China's November Caixin Services PMI 52.1 (expected 52.6; last 53.8)

      • Japan's November Services PMI 53.0 (last 50.7)

      • Australia's November Services PMI 55.7 (expected 55.0; last 51.8); November AIG Construction Index 57.0 (last 57.6) Hong Kong's November Manufacturing PMI 52.6 (last 50.8)

      • India's November Nikkei Services PMI 58.1 (expected 57.8; last 58.4)


  • In news:

    • The US and EU delivered a joint statement, stating concerns they have about China's actions in the Taiwan Strait and South China Sea.

    • Chinese company Didi will be delisting from the NYSE and the SEC is reportedly getting ready to drive a delisting of Chinese companies in the U.S. that won't disclose their ownership structure or sufficient evidence they have audited.



  • Major European indices trade higher. Germany's DAX +0.3%, France's CAC +0.1%, and the U.K.'s FTSE +0.4%.

    • In economic data:

      • Eurozone's November Services PMI 55.9 (expected 56.6; last 54.6); November Markit Composite PMI 55.4 (expected 55.8; last 54.2); October Retail Sales +0.2% m/m (expected +0.2%; last -0.4%) and +1.4% yr/yr (expected +1.2%; last +2.6%)

      • UK's November Services PMI 58.5 (expected 58.6; last 59.1); November Composite PMI 57.6 (expected 57.7; last 57.8)

      • Germany's November Services PMI 52.7 (expected 53.4; last 52.4); November Composite PMI 52.2 (expected 52.8; last 52.0)

      • France's November Services PMI 57.4 (expected 58.2; last 56.6); November Markit Composite PMI 56.1 (expected 56.3; last 54.7); October Industrial Production +0.9% m/m (expected +0.5%; last -1.5%)

      • Italy's November Services PMI 55.9 (expected 54.8; last 52.4); November Composite PMI 57.6 (last 54.2)

      • Spain's November Services PMI 59.8 (expected 58.8; last 56.6)


  • In news:

    • Germany's incoming Chancellor Scholz is said to be eyeing Joachim Nagel to replace Jens Weidmann as head of the Bundesbank after he departs at the end of the year

    • ECB President Lagarde thinks it is unlikely that the ECB will raise rates in 2022 and other officials continue to espouse the view that inflation pressures will be transitory



U.S. equity futures:

  • S&P 500 Futures: +6 @ 4,583

  • DJIA Futures: +32 @ 34,671

  • Nasdaq 100 Futures: +33 @ 16,023

Overseas:

  • Europe: DAX +0.3%, FTSE +0.4%, CAC +0.1%

  • Asia: Nikkei +1.0%, Hang Seng -0.1%, Shanghai Composite +0.9%

Commodities:

  • Crude Oil +1.90 @ 68.40

  • Nat Gas +0.153 @ 4.209

  • Gold +11.35 @ 1774.05

  • Silver +0.084 @ 22.400

  • Copper -0.0052 @ 4.2938

U.S. Summary:

  • Earnings/Guidance (Full Earnings Calendar):

    • Asana (ASAN) beats by $0.04, beats on revs; guides Q4 EPS in-line, revs above consensus; guides FY22 EPS above consensus, revs above consensus

    • Bank of Montreal (BMO) beats by CAD 0.11, misses on revs; increases dividend 25% to $1.33/share

    • Big Lots (BIG) beats by $0.02, reports revs in-line; guides Q4 EPS below consensus

    • Cooper (COO) misses by $0.10, beats on revs; guides FY22 EPS, revs below consensus

    • DocuSign (DOCU) beats by $0.12, beats on revs; guides JanQ revs below consensus

    • Dole plc (DOLE) misses by $0.59, misses on revs

    • Domo (DOMO) beats by $0.02, beats on revs; guides Q4 EPS mostly above consensus, revs below consensus; guides FY22 EPS above consensus, revs in-line

    • Enfusion (ENFN) reports Q3 earnings; revs jumped 46.8% yr/yr to $29 mln, ARR grew 49.3% yr/yr to $119.8 mln

    • Genesco (GCO) beats by $1.07, beats on revs; guides FY22 EPS above consensus, revs above consensus; Q3 comps +25%

    • Guidewire Software (GWRE) beats by $0.04, reports revs in-line; guides Q2 revs above consensus; reaffirms FY22 revs guidance

    • Hibbett (HIBB) beats by $0.07, beats on revs; guides Q4 EPS above consensus

    • JOANN Inc. (JOAN) beats by $0.11, misses on revs

    • Ollie's Bargain Outlet (OLLI) misses by $0.13, misses on revs, same-store sales declined -15.5%; guides FY22 EPS below consensus, revs below consensus; increases share repurchase program

    • Ooma (OOMA) beats by $0.04, beats on revs; guides Q4 EPS in-line, revs above consensus

    • Marvell (MRVL) beats by $0.05, beats on revs; guides Q4 EPS above consensus, revs above consensus

    • Sandstorm Gold (SAND) provides asset update; updates short-term guidance to approx. 63,000 gold equivalent ounces per year

    • Smartsheet (SMAR) beats by $0.08, beats on revs; guides Q4 EPS in-line, revs above consensus

    • Smith & Wesson Brands (SWBI) misses by $0.16, misses on revs

    • Synaptics (SYNA) completes acquisition of DSP Group; updates Q2 guidance to include DSPs expected contribution

    • Tilly's (TLYS) beats by $0.33, beats on revs; guides JanQ EPS above consensus, revs above consensus

    • Ulta Beauty (ULTA) beats by $1.46, beats on revs, comparable sales up 25.8%; raises FY22 EPS and revenue guidance above consensus

    • Verint Systems (VRNT) beats by $0.16, beats on revs; guides FY22 EPS in-line, revs in-line; guides FY23 EPS in-line, revs in-line

    • Yext (YEXT) beats by $0.03, beats on revs; guides Q4 EPS below consensus, revs above consensus; guides FY22 EPS mostly above consensus, revs above consensus

    • Zumiez (ZUMZ) beats by $0.16, reports revs in-line; is not providing guidance due to further closures in Europe from the pandemic


  • General News:

    • South Africa coronavirus cases almost tripled in three days, but hospitalizations are not yet increasing at the same pace as new cases, according to the Washington Post

    • House & Senate pass continuing resolution to fund government through February 18

    • There were five Omicron cases discovered in NYC and one in Hawaii. All cases have mild symptoms right now with some people fully vaccinated. NY officials say omicron was spreading throughout the community, according to CNBC

    • FDA preparing rapid 1-2 week review of variant specific drugs or vaccines if they are needed, according to the Wall Street Journal

    • Senator Joe Manchin (D-WV) has doubts Build Back Better Act will pass this year because he still has a number of concerns about the bill, according to CNN

    • Cleveland Fed President Loretta Mester (2022 voter) in interview says Omicron variant "could exacerbate the upward price pressures we've seen from the supply-chain problems", according to Financial Times

    • Fed members are showing a consensus for faster tapering amid inflation concerns, according to Reuters

    • Berkshire Hataway's (BRK.B) Charlie Munger believes markets are "even crazier" than the dotcom era, according to Bloomberg

    • Amicus Therapeutics (FOLD): European Medicines Agency validates amicus therapeutics marketing authorization applications for AT-GAA for the treatment of pompe diseaseAmicus Therapeutics: European Medicines Agency validates amicus therapeutics marketing authorization applications for AT-GAA for the treatment of pompe disease

    • AstraZeneca (AZN) to report data from DESTINY-Breast03 will reaffirm the efficacy of Enhertu in treating HER2-positive metastatic breast cancer at SABCS

    • AXIS Capital (AXS) authorizes $100 mln common stock repurchase program and increases quarterly dividend by 2.4% to $0.43

    • Bayer (BAYRY) Phase III trial with Nubeqa in combination with docetaxel and androgen deprivation therapy met primary endpoint

    • BeiGene (BGNE) announces inclusion in the China National Reimbursement Drug List (NRDL) of Tislelizumab in three new indications, BRUKINSA (Zanubrutinib) in one new indication, and the first listing for Pamiparib

    • BeiGene (BGNE) and EUSA Pharma receive approval of SYLVANT from China's NMPA

    • Brilliant Earth Group (BRLT) announces the early lock-up release date; with the conditions satisfied, the early release will occur on December 7, 2021

    • Bristol-Myers (BMY) receives Priority Review sBLA from FDA for Reblozyl

    • Citigroup (C) aiming to apply for China securities license, according to the Wall Street Journal

    • CNA Financial (CNA) names Scott Lindquist as CFO, effective January 10, 2022

    • COMPASS Pathways (CMPS) announces that it has appointed Michael Falvey as Chief Financial Officer, replacing Piers Morgan when he leaves the company, as previously announced, at the end of the year

    • Didi Global (DIDI) authorized the necessary procedures and file the relevant application for the delisting of the Company's ADSs from the NYSE

    • Dril-Quip (DRQ) names Kyle McClure as CFO, effective January 1, 2022

    • Ecolab (ECL) increases quarterly dividend to $0.51 from $0.48/share

    • Eli Lilly (LLY) and Innovent announce successful expansion of Sintilimab in China National Reimbursement Drug List to include three additional first-line indications

    • Federal Realty (FRT) announces holding company reorganization

    • Google (GOOG) will not return to office on January 10, according to CNBC

    • Harley-Davidson (HOG) entered into a letter agreement with CEO Jochen Zeitz, regarding the terms of Zeitz's employment with the Company as he continues his service as CEO

    • Himax Tech (HIMX) Chairman intends to use personal funds to purchase up to ~$10 mln ADSs in the open market

    • HUTCHMED (HCM) announces agreement with NHSA for continued inclusion of ELUNATE and addition of SULANDA in the National Reimbursement Drug List in China

    • Independence Realty Trust (IRT) declares prorated dividend in connection with pending merger with Steadfast Apartment REIT

    • Kazia Therapeutics (KZIA) announces positive final data from phase II clinical study of paxalisib in newly diagnosed glioblastoma

    • Lyft (LYFT) appoints Elaine Paul as CFO, effective January 3

    • National Beverage (FIZZ) declares special cash dividend of $3.00/share

    • Nucor (NUE) raises quarterly dividend by 23%to $0.50 per share; authorizes new $4 bln share repurchase program

    • Owens Corning (OC) increases quarterly cash dividend to $0.35/share from $0.26/share

    • Patterson-UTI (PTEN) reported November average rigs operating in the US of 106 drilling rigs (average of 104 drilling rigs operating over the Oct/Nov period)

    • POSCO (PKX) is reviewing various strategic options including corporate governance reform to strengthen future growth and enhance corporate value

    • Protagonist Therapeutics (PTGX) announces selection of PN-235 for Phase 2 clinical development program in multiple indications

    • Raymond James (RJF) approves $1 bln share repurchase authorization; raises quarterly cash dividend to $0.34/share from $0.26/share

    • Redwire Corporation (RDW) received notice of non-compliance for delayed 10-Q filing

    • Realty Income (O) provides business update; acquired properties with aggregate purchase price of $1.1 bln from October 1 through December 1, 2021

    • Riot Blockchain (RIOT) produced 466 Bitcoin in November, up 298% yr/yr

    • Roche Hldg (RHHBY) rapidly develops additional testing options to differentiate mutations in the Omicron SARS-CoV-2 variant

    • Sientra (SIEN) enters into distribution agreements with Kai Aesthetics and Paragon Meditech Company

    • Sinclair Broadcast's (SBGI) subsidiary Diamond Sports Group enters into multi-year renewal of its digital and outer market distribution rights agreement with the National Hockey League

    • Tesla (TSLA) is having problems with solar supplies, according to Electrek

    • Toyota (TM) to introduce EV in China in 2022, according to Reuters

    • Trane (TT) to increase its dividend by 14%, from $0.59 to $0.67 per share quarterly

    • Tutor Perini (TPC) receives two project awards valued at $218.8 mln

    • Veritone (VERI) announces contract for aiWARE with the Environmental Protection Agency

    • Werner Enterprises (WERN) announces new data integration with Decisiv

    • White Mountains (WTM) announces Liam Caffrey as new CFO effective March 1, 2022

    • Xenia Hotels (XHR) provides update; as of November 30, 2021, the Company had over $1 billion of liquidity, consisting of approximately $500 million of cash and cash equivalents, and full availability on its revolving credit facility

    • Xenon Pharmaceuticals (XENE) Presents Additional Positive Data from Phase 2b 'X-TOLE' Clinical Trial at the Annual Meeting of the American Epilepsy Society

    • Zai Lab (ZLAB) announces inclusion of ZEJULA in China's National Reimbursement Drug List for first-line ovarian cancer

    • Zillow (Z) announces significant progress in wind-down of Zillow Offers inventory; updates Homes segment outlook; authorizes $750 mln share repurchase program


  • M&A:

    • 890 5th AvenuePartners (ENFA) announces shareholder approval of combination with BuzzFeed; closing expected to occur on or about December 3

    • Aspen Tech (AZPN) announces HSR and Austrian antitrust approval for proposed transaction with Emerson (EMR)

    • Churchill Downs (CHDN) said to be weighing potential sale of betting business TwinSpires, according to Bloomberg

    • PPD (PPD): UK CMA has cleared the anticipated acquisition by Thermo Fisher Scientific (TMO) of PPD

    • Sportsman's Warehouse (SPWH) discloses termination of merger agreement with Great Outdoors Group


  • Syndicate:

    • AppLovin (APP) launches secondary offering of 6.5 mln shares of Class A common stock by selling stockholders

    • Esperion Therapeutics (ESPR) announces public offering of common stock; amount not indicated


  • IPOs:

    • Expected to Price:

      • No IPOs expected to price.



Gapping Up/Down

  • Gapping up:

    • MRVL +19%, SMAR +15.4%, ENFA +12%, ZG +8.8%, TLYS +8.1%, ULTA +6.3%, SYNA +4.9%, HIBB +4.4%, SBGI +4.2%, ZUMZ +4%, DIDI +2.9%, BGNE +1.8%, JOAN +1.7%, RIOT +1.6%, NUE +1.6%, FIZZ +1.5%, HCM +1.5%, ENBL +1.4%, KZIA +1.4%, VERI +1.1%, NDAQ +1%, YEXT +1%, RJF +0.9%, DOLE +0.6%


  • Gapping down:

    • DOCU -31.6%, ESPR -30.9%, OLLI -21.3%, SWBI-18.1%, ASAN -14.8%, BIG -12.9%, DOMO -8.9%, SPWH -8.3%, APP -8.1%, FRT -4.9%, PTGX -3.6%, VRNT -2.9%, SAND -1.9%, LYFT -1.6%


Analyst Research (see Upgrades/Downgradescalendarfor full list):

  • Upgrades

    • Appian (APPN) upgraded to Equal-Weight from Underweight at Morgan Stanley; tgt lowered to $87


  • Downgrades:

    • TopBuild (BLD) downgraded to Neutral from Buy at BTIG Research


  • Others:

    • Aflac (AFL) initiated with a Sell at Goldman; tgt $52

    • Agios Pharma (AGIO) initiated with a Buy at BofA Securities; tgt $54

    • Alignment Healthcare (ALH) initiated with an Overweight at JP Morgan; tgt $20

    • Alphatec (ATEC) initiated with a Neutral at Goldman; tgt $12.50

    • Ares Capital (ARCC) initiated with a Buy at Janney; tgt $22

    • Blackstone Secured Lending Fund (BXSL) initiated with a Neutral at Janney; tgt $30

    • Brighthouse Financial (BHF) initiated with a Neutral at Goldman; tgt $57

    • CAE (CAE) initiated with an Equal-Weight at Morgan Stanley

    • Cidara Therapeutics (CDTX) assumed with a Buy at H.C. Wainwright; tgt $6

    • Clean Harbors (CLH) resumed with a Sell at Goldman; tgt $95


Upcoming Events:

  • Econ Data:

    • 08:30 ET: Nonfarm Payrolls for Nov (Briefing.comConsensus 525K; Prior 531K)

    • 08:30 ET: Nonfarm Private Payrolls for Nov (Briefing.comConsensus 500K; Prior 604K)

    • 08:30 ET: Unemployment Rate for Nov (Briefing.comConsensus 4.5%; Prior 4.6%)

    • 08:30 ET: Avg. Hourly Earnings for Nov (Briefing.comConsensus 0.4%; Prior 0.4%)

    • 08:30 ET: Average Workweek for Nov (Briefing.comConsensus 34.7; Prior 34.7)

    • 09:45 ET: IHS Markit Services PMI - Final for Nov (Briefing.comConsensus NA; Prior 57.0)

    • 10:00 ET: Factory Orders for Oct (Briefing.comConsensus 0.4%; Prior 0.2%)

    • 10:00 ET: ISM Non-Manufacturing Index for Nov (Briefing.comConsensus 65.0%; Prior 61.9%)


  • Earnings:

    • Monday (Nov 29)

      • Morning: FRO LI

      • Afternoon: GBDC


  • Tuesday (Nov 30)

    • Morning: BNS BZUN MOMO JKS

    • Afternoon: AMBA BOX HPE NTAP CRM ZS


  • Wednesday (Dec 1)

    • Morning: DCI GIII PDCO RY

    • Afternoon: AI CRWD DSGX ESTC FIVE NCNO OKTA PVH SMTC SNOW SPLK SNPS VEEV ZUO


  • Thursday (Dec 2)

    • Morning: CM DG GMS KR SCWX SIG TD

    • Afternoon: ASAN COO DOCU DOMO GWRE JOAN MRVL OLLI OOMA SMAR SWBI ULTA VRNT ZUMZ


  • Friday (Dec 3)

    • Morning: BMO BIG DOLE GCO HIBB




Asia & Europe detail:

Asia: Nikkei +1.0%, Hang Seng -0.1%, Shanghai Composite +0.9%

Equity indices in the Asia-Pacific region had a mixed showing to end the week. Lots of understandable attention on the Omicron variant. South Korea is reportedly capping gatherings in the greater Seoul area to six people. Services PMI readings for many countries in the region were generally better than expected. The notable exception was China's Caixin Services PMI, which was a bit weaker than expected at 52.1. In geopolitical news, the US and EU delivered a joint statement, stating concerns they have about China's actions in the Taiwan Strait and South China Sea. Chinese company Didi will be delisting from the NYSE and the SEC is reportedly getting ready to drive a delisting of Chinese companies in the U.S. that won't disclose their ownership structure or sufficient evidence they have audited.

  • In economic data:

    • China's November Caixin Services PMI 52.1 (expected 52.6; last 53.8)

    • Japan's November Services PMI 53.0 (last 50.7)

    • Australia's November Services PMI 55.7 (expected 55.0; last 51.8); November AIG Construction Index 57.0 (last 57.6)

    • Hong Kong's November Manufacturing PMI 52.6 (last 50.8)

    • India's November Nikkei Services PMI 58.1 (expected 57.8; last 58.4)


---Equity Markets---

  • Japan's Nikkei: +1.0% (-2.5% for the week)

  • Hong Kong's Hang Seng: -0.1% (-1.3% for the week)

  • China's Shanghai Composite: +0.9% (+1.2% for the week)

  • India's Sensex: -1.3% (+1.0% for the week)

  • South Korea's Kospi: +0.8% (+1.1% for the week)

  • Australia's ASX All Ordinaries: +0.1% (-0.7% for the week)

---FX---

  • USD/JPY: +0.2% to 113.35

  • USD/CNH: flat at 6.3699

  • USD/INR: +0.2% to 75.128

Europe: DAX +0.3%, FTSE +0.4%, CAC +0.1%

Major European indices are sporting modest gains, drafting off Wall Street's positive showing on Thursday, but at the same time showing some reserve ahead of the response in the U.S. to the November Employment Situation report and as concerns about the Omicron variant fester. Germany and France have now reported Omicron cases, and Germany has announced a nationwide lockdown for unvaccinated individuals. Incoming Chancellor Scholz is said to be eyeing Joachim Nagel to replace Weidmann as head of the Bundesbank after he departs at the end of the year. ECB President Lagarde thinks it is unlikely that the ECB will raise rates in 2022 and other officials continue to espouse the view that inflation pressures will be transitory. November Services PMI data across the region was mixed, but still indicative of expanding activity.

  • In economic data:

    • Eurozone's November Services PMI 55.9 (expected 56.6; last 54.6); November Markit Composite PMI 55.4 (expected 55.8; last 54.2); October Retail Sales +0.2% m/m (expected +0.2%; last -0.4%) and +1.4% yr/yr (expected +1.2%; last +2.6%)

    • UK's November Services PMI 58.5 (expected 58.6; last 59.1); November Composite PMI 57.6 (expected 57.7; last 57.8)

    • Germany's November Services PMI 52.7 (expected 53.4; last 52.4); November Composite PMI 52.2 (expected 52.8; last 52.0)

    • France's November Services PMI 57.4 (expected 58.2; last 56.6); November Markit Composite PMI 56.1 (expected 56.3; last 54.7); October Industrial Production +0.9% m/m (expected +0.5%; last -1.5%)

    • Italy's November Services PMI 55.9 (expected 54.8; last 52.4); November Composite PMI 57.6 (last 54.2)

    • Spain's November Services PMI 59.8 (expected 58.8; last 56.6)


---Equity Markets---

  • STOXX Europe 600: +0.2%

  • Germany's DAX: +0.3%

  • U.K.'s FTSE 100: +0.4%

  • France's CAC 40: +0.1%

  • Italy's FTSE MIB: +0.3%

  • Spain's IBEX 35: +0.2%

---FX---

  • EUR/USD: +0.1% to 1.1306

  • GBP/USD: -0.3% to 1.3260

  • USD/CHF: -0.1% to 0.9193


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