Sunday, December 13, 2020

Brexit endgame unnerves some investors 

Weekly Market Update: Brexit endgame unnerves some investors


This week investors continued to grapple with a worrying elevation in US Covid-19 infections, juxtaposed to the hope provided by the growing expectation that US vaccinations could begin as early as next week. Pfizer saw its Covid-19 vaccine get the nod from a key FDA advisory panel paving the way for EUA authorization in the next few days. Corporate news was very robust, with key earnings reports and analyst days providing managements the opportunity to offer color on markets and their forecasts heading into the new year. The US IPO market remained red hot, boosting animal spirits, though some market veterans viewed it as a potential signpost of topping in equity valuations. The long-awaited Doordash and Airbnb deals saw surging demand amid a host of SPAC offerings and merger related announcements.

As the week progressed both Brexit optimism and US fiscal stimulus hopes waned. PM Johnson and EU’s Von der Leyen were unable to bridge differences ahead of an EU summit. In Washington, party leaders blamed each other for lack of compromise, while largely ignoring the latest offer coming from a White House that was clearly more focused on contesting the election. US weekly jobless claims rose to the highest level since September. The Euro rose after the ECB met and tweaked non-conventional stimulus measures while leaving rates unchanged, but the adjustments had been widely foreshadowed. By Friday, disappointing news on the vaccine front, the fact a hard Brexit appeared imminent, and continued surge in COVID cases sent Treasury yields lower while capping stock markets. For the week, the S&P lost 1%, the DJIA was fell 0.6%, and the Nasdaq shed 0.7%.

In corporate news this week, Toll Brothers reported beats on its top and bottom line but Q1 delivery guidance disappointed. Oracle beat consensus, while noting cloud license revenue growth declined, though upbeat guidance lifted shares. Software security maker FireEye disclosed a cyber breach by suspected nation-state hackers who used techniques that the company had itself not witnessed in the past. AirBNB doubled its initial share price on its first day of trading, while DoorDash stock finished its first session up a mere 80%. The FTC and 48 state attorneys general filed suit alleging Facebook has used its monopoly power to crush competition from smaller rivals. Sanofi and GSK postponed their COVID-19 vaccine program to improve immune response in the elderly, with its availability now pushed to Q4’21. Snap and Twitter announced a partnership to bring native integration of tweets to Snapchat, and Twitter said it will test a similar integration with Instagram stories. Disney shares jumped after updating investors on its streaming subscriber numbers and extensive future content plans.

SUN 12/6
000660.KR Notes it has developed 176-layer NAND flash chip, expects the chip to improve prior generation chips' bit productivity by 35%

MON 12/7
(UK) EU chief negotiator Barnier in briefing to EU envoys reportedly said no UK trade deal yet; reiterates stance that 3 key issues remain - financial press
(UK) Govt could offer to pull clauses in internal market bill & taxation bill which break international law Joint committee discussions said to be progressing well BUT it will still reinstate clauses today - govt expected to offer to remove them in coming days if solution reached - UK Times Political reporter Tweet
TOL Reports Q4 $1.55 v $1.23e, Rev $2.55B v $2.08Be

TUES 12/8
*(EU) EURO ZONE Q3 FINAL GDP Q/Q: 12.5% V 12.6%E; Y/Y: -4.3% V -4.4%E
FEYE Discloses cyber breach by suspected nation-state hackers who used "techniques not witnessed by us or our partners in the past" - filing

WEDS 12/9
DASH IPO opens for trade at $182
PFE Statement on EMA hacker attack: no Pfizer or BioNtech systems were breached; some of our Covid vaccine documents were unlawfully accessed in the attack
FB FTC and state AGs file suit alleging Facebook has used its monopoly power to crush competition from smaller rivals
C CFO: we are in a much better place than we expected in Oct - investor conf comments
(EU) EU Commission chief's Von der Leyen: confirms position with UK remains far apart; we will come to decision by end of weekend, teams should immediately reconvene
(UK) PM Johnson: Acknowledges [Brexit] situation is difficult; Will not leave any route to fair deal is left untested
(CN) S&P Dow Jones Indices’ issues Consultation on the Executive Order Prohibiting U.S. Transactions in Certain Chinese Companies Results: China Based companies will be deemed ineligible for S&P and Dow Jones equity indices

THURS 12/10
2330.TW Reports Nov (NT$) Rev 124.9B v 107.9B y/y, +4.7% m/m
(EU) EU Commission proposes contingency measures for no-deal Brexit - press
(EU) EU Commission chief's Von der Leyen: negotiations are still ongoing on Brexit
HUN Raises Q4 adj EBITDA +20-25% y/y, (higher than prior forecast)
*(EU) ECB LEAVES MAIN REFINANCING RATE UNCHANGED AT 0.00%; AS EXPECTED; PEPP program increased by €500B extended by at least 9 months; TLTRO III extended by 1 year
*(EU) ECB INCREASES ITS PANDEMIC BOND BUYING PROGRAM (PEPP) BY €500B TO €1.85T; with program extended by 9 months until at least Mar 2022
ADBE Reports Q4 $2.81 adj v $2.65e, Rev $3.42B v $3.36Be; Announces $15B share buyback (6.5% of market cap)
*(US) NOV CPI M/M: 0.2% V 0.1%E; CPI (EX-FOOD/ENERGY) M/M: 0.2% V 0.1%E; CPI NSA: 260.229 V 260.087E
PFE Doran Dink, Deputy Director-Clinical, Division of Vaccines and Related Products Applications: “Expect a high bar to be met with efficacy data from at least one well-designed Phase 3 trial demonstrating protection against SARS-CoV-2 infection or disease before approval of Emergency Use Authorization (EUA)”; Would need additional 6 months analysis of positive data before a BLA approval will be considered - Vaccines and Related Biological Products Advisory Committee Meeting
(UK) BOE statement: Banks can resume paying dividends and bonuses; Any distributions should be prudent, reflecting the still elevated levels of economic activity
CHA FCC adopts order instituting proceeding on China Telecom to revoke authorization to operate in US.
(US) Sen Maj Leader McConnell reportedly has said bipartisan COVID deal talks will not be able to win over Senate GOP members - Politico
(EU) EU leaders agree on compromise involving EU budget and rule of law with Poland and Hungary unblocking recovery package; approve $2.2T stimulus backed by joint debt
(UK) PM Johnson: Cabinet has agreed the EU deal on table is not right for the UK; more likely now there will no deal than a deal
TWTR Snap and Twitter partner to bring native integration of tweets to Snapchat; Twitter will test similar integration with Instagram stories - TechCrunch
(EU) Reportedly new EU rules will define tech companies with millions of European users as online 'gatekeepers'
PFE Plan to file BNT162b2 Covid-19 Vaccine BLA by April 2021
ORCL Reports Q2 $1.06 v $1.00e, Rev $9.80B v $9.79Be; Claims more datacenters than AWS
COST Reports Q1 $2.62 v $2.04e, Rev $43.2B v $43.2Be
AVGO Reports Q4 $6.35 v $6.26e, Rev $6.47B v $6.42Be; Raises Quarterly dividend 10.8% to $3.60 from $3.25 (indicated yield 3.51%)
PFE FDA advisory committee votes in favor that Pfizer-BioNTech COVID vaccine outweighs its risks for use in individuals 16 and older (17 yes, 4 no, 1 abstain)
CDC reports daily new COVID cases at 231.4K v 217.0K d/d (new record)
AAPL Exec tells staff Apple has begun development of in-house cellular modem that would replace Qualcomm modem chips - press, citing sources
DIS Disney+ streaming service has 86.8M subscribers as of Dec 2nd - investor day comments

FRI 12/11
SAN.FR Sanofi and GSK announce a delay in their adjuvanted recombinant protein-based COVID-19 vaccine program to improve immune response in the elderly; potential vaccine availability now expected in Q4 2021 (prior mid-2021)
*(DE) GERMANY NOV FINAL CPI M/M: -0.8% V -0.8% PRELIM; Y/Y: -0.3% V -0.3% PRELIM
(EU) EU Commission chief Von der Leyen said to have told EU leaders that a no-deal Brexit outcome is most likely option for now - press
(ES) Spain 10-year govt bond yield turns negative for the 1st time ever
AZN.UK Announces developing immunization programmes against COVID-19 with Russian Gamaleya Research Institute through potential vaccine combination
(UK) PM Johnson: Looks 'very, very likely' will have no Brexit deal; yet to see big change from EU
*(US) NOV PPI FINAL DEMAND M/M: 0.1% V 0.1%E; Y/Y: 0.8% V 0.7%E
(US) Weekly Baker Hughes Rig Count: 338 v 323 w/w (+4.6% w/w) (biggest jump since Jan)