Morning Brew: January 26, 2021 - Raymond James
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PORTFOLIO STRATEGY | PUBLISHED BY
RAYMOND JAMES & ASSOCIATES
Michael Gibbs, Director of Equity Portfolio & Technical Strategy | (901) JANUARY 26, 2021 | 8:58 AM EST
579-4346 | michael.gibbs@raymondjames.com
Joey Madere, CFA | (901) 529-5331 | joey.madere@raymondjames.com
Richard Sewell, CFA | (901) 524-4194 | richard.sewell@raymondjames.com
Mitch Clayton, CMT, Senior Technical Analyst | (901) 579-4812 | mitch.clayton@raymondjames.com
Morning Brew: January 26, 2021
The S&P 500 futures are trading four points, or 0.1%, above fair
value after the benchmark index and Nasdaq closed at record
highs yesterday. Earnings reports have been in focus while the
Fed prepares for its two-day policy meeting today.
In-line with the muted futures performance, Dow components
Johnson & Johnson (JNJ 168.70, +2.72, +1.6%), Verizon (VZ
57.99, -0.43, -0.7%), 3M (MMM 171.11, +0.72, +0.4%), and
American Express (AXP 118.00, -3.15, -2.6%) are indicated
mixed in pre-market action despite each beating earnings
expectations. JNJ and Verizon also issued upbeat FY21 EPS
guidance.
Separately, stocks with high short-interest positions like
GameStop (GME 92.00, +15.21, +19.8%) and BlackBerry (BB
19.84, +1.81, +10.0%) continue to rise, suggesting there remains
a speculative spirt in the market despite the lackluster indication
at the index level.
In Washington, President Biden remarked that he was willing
to negotiate on the proposed $1400 stimulus checks, which
have received some pushback among lawmakers for not being
targeted, and he believes that the U.S. can reach 1.5 million/
vaccinations per day rather than the current goal of 1.0 million
per day.
On the data front, investors will receive the S&P Case-Shiller
Home Price Index for November (Briefing.com consensus 9.0%)
and the FHFA Housing Price Index for January at 9:00 a.m. ET,
followed by the Conference Board's Consumer Confidence Index
for January (Briefing.com consensus 89.0) at 10:00 a.m. ET.
Longer-dated Treasuries have ticked lower following
yesterday's advance. The 2-yr yield is flat at 0.12%, and the 10-yr
yield is up one basis point to 1.05%. The U.S. Dollar Index is down
0.1% to 90.30. WTI crude futures are up 0.8% to $53.18/bbl.
U.S. equity futures:
● S&P 500 Futures +3 @ 3852 .
Sources: Briefing.com, FactSet, Raymond James Research,
● DJIA Futures +65 @ 30933
Raymond James Equity Portfolio & Technical Strategy
● Nasdaq 100 Futures -6 @ 13470
Overseas:
INTERNATIONAL HEADQUARTERS: THE RAYMOND JAMES FINANCIAL CENTER | 880 CARILLON PARKWAY | ST. PETERSBURG FLORIDA 33716PORTFOLIO STRATEGY
● Europe: DAX +2.0%, FTSE +0.9%, CAC +1.4%
● Asia: Nikkei -1.0%, Hang Seng -2.6%, Shanghai -1.5%
PAGE 2 OF 9PORTFOLIO STRATEGY
.
Source: FactSet and RJ Equity Portfolio & Technical Strategy
In U.S. Corporate news:
● Johnson & Johnson (JNJ 168.70, +2.72): +1.6% after beating top and bottom-line estimates and guiding FY21 EPS and revenue above
consensus.
● Verizon (VZ 57.99, -0.43): -0.7% despite beating EPS estimates and guiding FY21 EPS above consensus.
● 3M (MMM 171.11, +0.72): +0.4% after beating top and bottom-line estimates.
● American Express (AXP 118.00, -3.15): -2.6% despite beating EPS estimates.
● General Electric (GE 11.70, -0.71): -6.5% after missing earnings expectations and guiding FY21 EPS below consensus. GE also beat revenue
estimates.
Today’s U.S. Economic Data (Briefing.com))
● 08:00 ET: S&P Case-Shiller Home Price Index for November (Briefing.com Consensus 9.0%; Prior 7.9%)
● 09:00 ET: FHFA Housing Price Index for January (Briefing.com Consensus NA; Prior 1.5%)
● 10:00 ET: Consumer Confidence for January (Briefing.com Consensus 89.0; Prior 88.6)
OVERSEAS OVERNIGHT SUMMARY (BRIEFING.COM)
● Equity indices in the Asia-Pacific region ended Tuesday on a lower note while markets in Australia and India were closed for holidays. Japan's
Nikkei: -1.0% Hong Kong's Hang Seng: -2.6% China's Shanghai Composite: -1.5% India's Sensex: CLOSED South Korea's Kospi: -2.1% Australia's
ASX All Ordinaries: CLOSED.
PAGE 3 OF 9PORTFOLIO STRATEGY
○ In economic data:
– South Korea's Q4 GDP 1.1% qtr/qtr (expected 0.7%; last 2.1%); -1.4% yr/yr (expected -1.7%; last -1.1%)
– Japan's December Corporate Services Price Index -0.4% yr/yr (expected -1.3%; last -0.5%) and December BoJ Core CPI -0.1% yr/yr (last
-0.1%)
– Hong Kong's December trade deficit HKD45.70 bln (last deficit HKD25.60 bln). December Imports 14.1% m/m (last 5.1%) and Exports
11.7% m/m (last 5.6%)
– Singapore's December Industrial Production 2.4% m/m (expected -0.6%; last 7.5%); 14.3% yr/yr (expected 11.5%; last 18.7%)
○ In news:
– Nikkei reported that Toyota is on track to meet its global production target for FY20/21.
– MSCI cautioned that more Chinese companies could be removed from MSCI indices depending on further instructions from the U.S.
Treasury.
– China announced plans to build more than 500,000 5G base stations in 2021.
● Major European indices are rebounding from yesterday's losses. STOXX Europe 600: +1.1% Germany's DAX: +2.0% U.K.'s FTSE 100: +0.9%
France's CAC 40: +1.4% Italy's FTSE MIB: +1.2% Spain's IBEX 35: +1.2%.
○ In economic data:
– U.K.'s December Claimant Count Change 7,000 (expected 35,000; last 38,100) and November Unemployment Rate 5.0% (expected 5.1%;
last 4.9%). November Average Earnings Index + Bonus 3.6% yr/yr (expected 2.9%; last 2.8%). January CBI Distributive Trades Survey -50
(expected -28; last -3)
– Spain's December PPI -1.4% yr/yr (last -2.8%)
○ In news:
– Italy's Prime Minister Conte offered his resignation to the Italian president. Mr. Conte could be named prime minister again once the
president consults with individual parties, but Lega leader Matteo Salvini said that center-right parties oppose another government led
by Mr. Conte.
– There were more anti-lockdown protests and riots across the Netherlands yesterday.
– Rolls Royce lowered its forecast for widebody engine flying hours for the year.
STOCK HEADLINES (BRIEFING.COM)
Earnings/Guidance:
● 3M (MMM) beats by $0.21, beats on revs; guides FY21 EPS in-line, revs in-line
● AGNC Investment (AGNC) beats by $0.10
● American Express (AXP) beats by $0.46, reports revs in-line
● Archer-Daniels (ADM) beats by $0.12, beats on revs
● AstraZeneca (AZN) receives approval for Symbicort Turbuhaler in China
● Audiocodes (AUDC) beats on top and bottom lines
● Axonics Modulation (AXNX) guides Q4 revs slightly below consensus
● AZZ (AZZ) issues in-line FY 22 guidance
● BancorpSouth (BXS) beats by $0.07
● Boot Barn Holdings (BOOT) beats by $0.11, reports revs in-line
PAGE 4 OF 9PORTFOLIO STRATEGY
● Brown & Brown (BRO) beats by $0.03, beats on revs
● Crane (CR) misses by $0.10, misses on revs; guides FY21 EPS in-line, revs below consensus
● Daqo New Energy (DQ) provides FY20 guidance (no comparable ests)
● Dorian LPG (LPG) guides to Q3 (Dec) TCE revs of $86.725-88.725 mln
● D.R. Horton (DHI) beats by $0.42, beats on revs; raises FY21 revs and home closed guidance
● DuPont (DD) issues upside EPS and revenue guidance for Q4; commenced exchange offer
● Equity Lifestyle Properties (ELS) beats by $0.01, beats on revs; guides FY21 FFO in-line; increases dividend
● Essential Properties Realty Trust (EPRT) guides FY21 AFFO slightly below consensus
● Everest Re (RE) provides 2020 guidance, increases prior year loss reserves by $400 mln
● Genmab (GMAB) provides FY20 net product sales (no comparable ests)
● Graco (GGG) beats by $0.10, beats on revs
● H.B. Fuller (FUL) beats by $0.20, beats on revs
● Heartland Financial (HTLF) misses by $0.04, increases dividend by 10%
● Hexcel (HXL) beats by $0.02, misses on revs
● Inter Parfums (IPAR) guides Q4 revs above consensus, reaffirms FY21 guidance
● Intl Flavors (IFF) sees Q4 revs above consensus
● Invesco (IVZ) beats by $0.15, beats on revs
● J&J Snack Foods (JJSF) reports Q1 (Dec) results, beats on revs, misses on EPS
● Johnson & Johnson (JNJ) beats by $0.03, beats on revs; guides FY21 EPS above consensus, revs above consensus
● Lockheed Martin (LMT) misses by $0.03, reports revs in-line; guides FY21 EPS in-line, revs above consensus
● NextEra Energy (NEE) beats by $0.02, misses on revs; Co also reaffirms FY 21 EPS guidance
● NextEra Energy Partners (NEP) beats by $0.42, misses on revs
● Novartis AG (NVS) misses by $0.03, reports revs in-line; guides FY21 revs in-line
● Pacific Premier (PPBI) beats by $0.15
● Plug Power (PLUG) raises gross billings targets for 2021 and beyond
● Polaris Industries (PII) beats by $0.44, beats on revs; guides FY21 EPS above consensus, revs above consensus
● Raytheon Technologies (RTX) beats by $0.05, beats on revs; guides FY21 EPS in-line, revs below consensus
● Repro Med Systems (KRMD) guides FY20 revs below consensus
● Rockwell Automation (ROK) beats by $0.06, misses on revs; guides FY21 EPS above consensus, revs above consensus
● Steel Dynamics (STLD) beats by $0.13, beats on revs, expects to see continued steel price strength in 2021
● Synovus (SNV) beats by $0.26, net interest income up 2% qtr/qtr
● UBS AG (UBS) beats by $0.17
● Verizon (VZ) beats by $0.04, reports revs in-line; guides FY21 EPS above consensus
● Xerox (XRX) misses by $0.05, beats on revs; guides FY21 revs above consensus
● XP (XP) provides Assets Under Custody results and other key performance indictators for Q4
PAGE 5 OF 9PORTFOLIO STRATEGY
● Yamana Gold (AUY) provides 2021-2023 guidance and ten-year overview; reports 4Q20 gold equivalent once production of 255,361
General News:
● President Biden says he is open to negotiation on $1400 stimulus checks
● Majority Leader Chuck Schumer warns a comprehensive COVID deal may be four to six weeks away, according to Reuters
● Janet Yellen confirmed by Senate as Treasury Sec, according to multiple news reports
● Senator Joe Manchin (D-WV) and Senator Kyrsten Sinema (D-AZ) reiterated that they will not vote to remove the Senate filibuster, which
was enough for Senate Minority Leader Mitch McConnell (R-KY) to drop his demand that filibuster commitment be included in power sharing
agreement, according to the New�York�Times
● President Biden says it’s possible US can reach 1.5 mln/vaccines per day rather than 1.0 mln/day; believes anyone can get vaccine “this spring”
● Minnesota Department of Health confirms nation’s first known COVID-19 case associated with Brazil P.1 variant
● President Biden will begin process to ban oil and gas drilling on federal land, according to the New�York�Times
● Abbott Labs (ABT) receives CE Mark for Panbio COVID-19 Ag Rapid Test Device for asymptomatic testing and self-swabbing
● AbCellera Biologics (ABCL) announces bamlanivimab administered with etesevimab reduced risk of COVID-19 hospitalizations and death by
70%
● Accenture (ACN) and Salesforce (CRM) expand partnership to help companies embed sustainability into the core of their business
● Alliance Data (ADS) signs multi-year renewal agreement with brand partner Arhaus
● Apollo Global Management (APO) announces that CEO Leon Black will retire on or before July 31; Marc Rowan will succeed him as CEO; co
also names new directors
● Athenex (ATNX) reports CEO and Chairman Dr. Johnson Lau is now recuperating from COVID-19 at home
● Becton Dickinson (BDX) names Tom Polen CEO and president, will assume additional responsibility as chairman of the board of directors,
effective April 28, 2021
● Berkshire Hills Bancorp (BHLB) appoints Nitin J. Mhatre as CEO, effective January 29
● Bicycle Therapeutics (BCYC) announces publication of article highlighting preclinical data of tumor-targeted immune cell agonists
● BlackBerry (BB) partners with Baidu (BIDU) for next generation autonomous driving technology
● BP (BP) reduces oil exploration staff to focus more on renewable energy, according to Reuters
● Caesars Entertainment (CZR) announces strategic investment in SuperDraft
● Collective Growth Corporation (CGRO) partners with Macnica, Japan's largest distribution company
● Contango Oil & Gas (MCF) does not expect any negative impact from US suspension of authority for federal permitting
● Eli Lilly (LLY) reports new data showing treatment with Lilly's neutralizing antibodies bamlanivimab (LY-CoV555) and etesevimab (LY-CoV016)
together reduced risk of COVID-19 hospitalizations and death by 70%
● Google (GOOG): EU to look at Google's (GOOG) data gathering and advertising practices, according to Business�Insider
● Heat Biologics (HTBX) has engaged CRS Crossroads Strategies, a bipartisan government relations firm based in Washington DC, to assist in
advancing government collaborations related to COVID-19 and other vaccine programs
● ICF International (ICFI) selected by EPA for Energy Star Services contract worth as much as $94 mln
● I-MAB (IMAB) and MorphoSys dose first patient in U.S. Phase 1 study of TJ210/MOR210 in patients with advanced cancer; MorphoSys to receive
$1.5 mln milestone payment
● InterActiveCorp (IAC) unit Vimeo raises $300 mln in primary equity
PAGE 6 OF 9PORTFOLIO STRATEGY
● Longview Acquisition Corp (LGVW) and Butterfly Network name Dr. Todd M. Fruchterman, M.D., Ph.D. as CEO in advance of expected closing
of business combination
● M/A-COM Tech (MTSI) enters into a Cooperative R&D Agreement with the US Air Force Research Lab
● Merck (MRK): EC has approved KEYTRUDA as a monotherapy for the first-line treatment of adult patients with metastatic microsatellite
instability-high or mismatch repair deficient colorectal cancer
● Myovant Sciences (MYOV) and Pfizer (PFE) announce "positive" one-year data from Phase 3 SPIRIT extension study of once-daily relugolix
combination therapy in women with endometriosis
● Nanobiotix (NBTX) subsidiary Curadigm announces new gene therapy-focused collaboration with Sanofi (SNY)
● Novartis (NVS) CEO Vas Narasimhan renews commitment to his Sandoz generic unit, according to Reuters
● Overstock.com (OSTK) announces partnership with Pelion Venture Partners to oversee Medici Ventures' blockchain assets
● Parsons (PSN) JV awarded DSB large framework contract for the Copenhagen Future Rail Network
● Regeneron Pharma (REGN) reports "positive" initial results from ongoing Phase 3 trial of REGEN-COV antibody cocktail as passive COVID-19
vaccine
● Repro Med Systems (KRMD) announces CEO transition
● Rhythm Pharmaceuticals (RYTM) announces "positive" proof-of-concept data from Phase 2 Basket Study of setmelanotide
● Seritage Growth Properties (SRG) provides 2020 update
● Twitter (TWTR) announces settlement of pending shareholder derivative lawsuits
● Wyndham Destinations (WYND) to change name to "Travel + Leisure Co." and ticker to "TNL" on February 17
● XPO Logistics (XPO) has secured a new, multi-year contract with Corteva Agriscience (CTVA)
Today's Research - VIEW FULL REPORT
Sources: Briefing.com, FactSet, Raymond James Research, Raymond James Equity Portfolio & Technical Strategy (M21-3421942)
PAGE 7 OF 9PORTFOLIO STRATEGY
IMPORTANT INVESTOR DISCLOSURES
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subject to change. Any information should not be deemed a recommendation to buy, hold or sell any security. Certain information
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not include all available data necessary for making an investment decision. Prior to making an investment decision, please consult
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Index Definitions
The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market.
The Dow Jones Industrial Average (DJIA) is a price-weighted average of 30 significant stocks traded on the New York Stock
Exchange (NYSE) and the NASDAQ.
The NASDAQ Composite is a stock market index of the common stocks and similar securities listed on the NASDAQ stock market.
The MSCI World All Cap Index captures large, mid, small and micro-cap representation across 23 Developed Markets (DM)
countries. With 11,732 constituents, the index is comprehensive, covering approximately 99% of the free float-adjusted market
capitalization in each country.
The MSCI EAFE (Europe, Australasia, and Far East) is a free float-adjusted market capitalization index that is designed to measure
developed market equity performance, excluding the United States & Canada. The EAFE consists of the country indices of 21
developed nations.
The MSCI Emerging Markets Index is designed to measure equity market performance in 23 emerging market countries. The
index's three largest industries are materials, energy, and banks.
The Russell 2000 index is an index measuring the performance of approximately 2,000 smallest-cap American companies in the
Russell 3000 Index, which is made up of 3,000 of the largest U.S. stocks.
The NYSE Alerian MLP is the leading gauge of energy infrastructure Master Limited Partnerships (MLPs). The capped, float-adjusted,
capitalization-weighted index, whose constituents earn the majority of their cash flow from midstream activities involving energy
commodities, is disseminated real-time on a price-return basis (AMZ) and on a total-return basis (AMZX).
The Barclays Intermediate Government/Credit Bond index measures the performance of U.S. Dollar denominated U.S.
Treasuries, government-related and investment grade U.S. corporate securities that have a remaining maturity of greater than one
year and less than ten years.
The Euro Stoxx 50 Index is a market capitalization weighted stock index of 50 large, blue-chip European companies operating
within Eurozone nations. Components are selected from the Euro STOXX Index which includes large-, mid- and small-cap stocks
in the Eurozone.
The China CSI 300 is a capitalization-weighted stock market index designed to replicate the performance of top 300 stocks traded
PAGE 8 OF 9PORTFOLIO STRATEGY
in the Shanghai and Shenzhen stock exchanges. It had a sub-indexes CSI 100 Index and CSI 200 Index.
The S&P 500 Futures is a capitalization-weighted index of 500 stocks. The index is designed to measure performance of the broad
domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.
The DJIA Futures is a stock market index futures contract traded on the Chicago Mercantile Exchange`s Globex electronic trading
platform. Dow Futures is based off the Dow 30 stock index.
The Nasdaq 100 Futures is a modified capitalization-weighted index of the 100 largest and most active non-financial domestic and
international companies listed on the NASDAQ.
Europe: DAX (Deutscher Aktienindex (German stock index)) is a blue chip stock market index consisting of the 30 major German
companies trading on the Frankfurt Stock Exchange.
Asia: Nikkei is short for Japan's Nikkei 225 Stock Average, the leading and most-respected index of Japanese stocks. It is a price-
weighted index composed of Japan's top 225 blue-chip companies traded on the Tokyo Stock Exchange.
Keep in mind that individuals cannot invest directly in any index, and index performance does not include transaction costs or other
fees, which will affect actual investment performance. Individual investor's results will vary. Past performance does not guarantee
future results. Future investment performance cannot be guaranteed, investment yields will fluctuate with market conditions.
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