DAILY MORNING CHAI REPORT

 The S&P 500 futures trade 37 points, or 1.0%, above fair value to begin the week, aided by a positive vaccine update from Moderna (MRNA 102.70, +13.31, +15.2%). The tech-heavy Nasdaq 100 futures trade 0.2% below fair value despite an initial knee-jerk spike.

Specifically, Moderna said early data indicated its COVID-19 vaccine was 94.5% effective after the second dose and has a longer shelf life at refrigerated temperatures than the vaccine from Pfizer (PFE 38.00, -0.62, -1.6%) and BioNTech (BNTX 96.00, -10.00, -9.4%). MRNA shares are up 15%.

Value, cyclical, and small-cap stocks have also taken the news in stride after leading the S&P 500 and Russell 2000 to record closes last Friday, while many of the stay-at-home stocks have slipped lower. In addition, longer-dated Treasury yields have edged higher on the hope that a vaccine will improve economic growth prospects in 2021.

The 2-yr yield is up one basis point to 0.18%, and the 10-yr yield is up three basis points to 0.92%. The U.S. Dollar Index is little changed at 92.68. WTI crude futures are up 3.8%, or $1.51, to $41.64/bbl.

Today's economic data will be limited to the Empire State Manufacturing Survey for November (Briefing.com consensus 14.0) at 8:30 a.m. ET.

In U.S. Corporate news:

  • Moderna (MRNA 102.70, +13.31): +15.2% after announcing its COVID-19 vaccine is 94.5% effective.
  • Palo Alto Networks (PANW 266.00, +7.30): +2.8% after beating top and bottom-line estimates and issuing upside guidance for fiscal Q2 and FY21.
  • Tyson Foods (TSN 64.63, +2.28): +3.7% after beating top and bottom-line estimates.
  • Zoom Video (ZM 380.00, -23.58): -5.8% as part of the early rotation out of the mega-cap/growth/mega-cap stocks due to the virus news.

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region began the week on a mostly higher note while markets in India were closed for Diwali. Japan's Nikkei: +2.1%, Hong Kong's Hang Seng: +0.9%, China's Shanghai Composite: +1.1%, India's Sensex: CLOSED, South Korea's Kospi: +2.0%, Australia's ASX All Ordinaries: +1.2%.
    • In economic data:
      • China's October Retail Sales 4.3% yr/yr (expected 4.9%; last 3.3%), October Industrial Production 6.9% yr/yr (expected 6.5%; last 6.9%), October Fixed Asset Investment 1.8% yr/yr (expected 1.6%; last 0.8%), and October Unemployment Rate 5.3%, as expected (last 5.4%)
      • Japan's Q3 GDP 5.0% qtr/qtr (expected 4.4%; last -8.2%); 21.4% yr/yr (expected 18.9%; last -28.8%). Q3 GDP Capital Expenditure -3.4% qtr/qtr (expected -3.0%; last -4.5%), Q3 GDP External Demand 2.9% qtr/qtr (expected 2.6%; last -3.3%), and Q3 Private Consumption 4.7% qtr/qtr (expected 5.1%; last -3.1%). September Industrial Production 3.9% m/m (expected 4.0%; last 4.0%) and Capacity Utilization 6.4% m/m (expected 1.3%; last 2.9%)
      • South Korea's October trade surplus $5.83 bln (last $5.98 bln). October imports -5.6% yr/yr (last -5.8%) and exports -3.8% yr/yr (last -3.6%)
      • India's October WPI Inflation 1.48% yr/yr (last 1.32%)
    • In news:
      • Trading in Australian equities was suspended after 30 minutes due to technical issues.
      • Taiwan Semiconductor Manufacturing Company is reportedly expanding its production capacity to keep up with strong demand.
      • Japan's Economy Minister said that economic support from past stimulus measures will be smaller in fiscal 2021.
  • Major European indices trade higher across the board. STOXX Europe 600: +1.4%, Germany's DAX: +1.3%, U.K.'s FTSE 100: +1.8%, France's CAC 40: +2.4%, Italy's FTSE MIB: +2.3%, Spain's IBEX 35: +3.8%.
    • In economic data:
      • Italy's October CPI 0.2% m/m, as expected (last 0.2%); -0.3% yr/yr, as expected (last -0.3%)
    • In news:
      • The Italian government is reportedly looking to acquire a 50% stake in EU's largest steel mill by capacity.
      • British Prime Minister, Boris Johnson, is self-isolating after meeting another bureaucrat who had tested positive for the coronavirus. Mr. Johnson was hospitalized for SARS-CoV-2 in April.
      • Germany's Economy Minister said that his country should prepare for 4-5 months of severe restrictions and not expect current restrictions to be relaxed quickly.
      • Fitch affirmed France's AA rating with a Negative outlook.

U.S equity futures:

  • S&P 500 Futures +37 @ 3619
  • DJIA Futures +468 @ 29878
  • Nasdaq Futures -9 @ 11924

Overseas:

  • Europe: DAX +1.3%, FTSE +1.8%, CAC +2.4%
  • Asia: Nikkei +2.1%, Hang Seng +0.9%, Shanghai +1.1%

Commodities:

  • Crude Oil +1.74 @ 41.87
  • Nat Gas -0.139 @ 2.856
  • Gold -12.10 @ 1874.10
  • Silver -0.270 @ 24.505
  • Copper +0.0672 @ 3.2452


U.S. Summary:

  • Earnings/Guidance (Full Earnings Calendar):
    • Aecom Tech (ACM) beats by $0.03, beats on revs; guides FY21 EPS above consensus
    • Azul S.A. (AZUL) beats by $0.13, misses on revs
    • Casper Sleep (CSPR) misses by $0.05, misses on revs; guides Q4 revs below consensus
    • Frequency Therapeutics (FREQ) beats by $0.16; beats on revs
    • Inhibrx (INBX) reports Q3 results; announces amended loan agreement with Oxford
    • JD.com (JD) beats by RMB0.71, beats on revs
    • Legend Biotech (LEGN) beats by $0.06; misses on revs
    • Palo Alto Networks (PANW) beats by $0.29, beats on revs; guides Q2 EPS above consensus, revs above consensus; guides FY21 EPS above consensus, revs above consensus
    • Tyson Foods (TSN) beats by $0.62, beats on revs; guides FY21 revs in-line
    • Vodafone (VOD) reports in-line results; misses on revs; reaffirms FY21 outlook
  • General News:
    • US COVID-19 data continues to move an unfavorable direction
    • Incoming White House Chief of Staff Ron Klein says stimulus agreement should not wait until Joe Biden takes office and he spoke to Democratic leadership about that, according to NBC News
    • Michigan and Washington ordered new coronavirus restrictions such as closure of indoor dining and restrictions on gatherings, according to the Wall Street Journal
    • President-elect Joe Biden's coronavirus advisers do not support a national lockdown, but they do support targeted mitigation, according to Bloomberg
    • President Trump is planning a more aggressive approach to China before he leaves office which will include plan to sanction trade with more Chinese companies, according to Axios
    • House Democrats will hold initial leadership elections this week amid party divisions and slimmer incoming majority, according to Bloomberg
    • President Trump made remarks on COVID-19 vaccines last Friday afternoon
    • China and 14 other countries agree to trade agreement, according to Reuters
    • EU could ban tech services if they do not comply with regulations, according to Reuters
    • Investors are hopeful OPEC+ will hold production levels current, according to CNBC
    • Adverum Biotech (ADVM) reports positive interim data from cohorts 1-4 from OPTIC Phase 1 trial of ADVM-022; Maintained efficacy and greatly reduced anti-VEGF treatment burden
    • Aecom Tech (ACM) increased the authorization in its existing stock repurchase program from $305 million to $1 billion
    • Agilent (A) receives expanded FDA approval for PD-L1 IHC 22C3 pharmDx
    • Alpha and Omega Semi (AOSL) announces that COO and co-founder Dr. Yueh-se Ho will retire; Stephen Chang promoted to President
    • Apellis Pharmaceuticals (APLS) announces FDA acceptance and priority review of the new drug application for pegcetacoplan for the treatment of PNH
    • Arbutus Biopharma (ABUS) announces additional robust HBsAg decline data with AB-729 in chronic Hepatitis B subjects
    • AT&T (T) mulling sale of CNN, according to Fox News
    • Atara Biotherapeutics (ATRA) presents new open-label extension data, including 15-month safety and efficacy data from highest dose cohorts, in the Phase1a study of ATA188
    • Bausch Health (BHC) announces investigational in vitro data indicating complete inactivation of SARS-CoV-2 with LUMIFY and BESIVANCE eye drops preserved with benzalkonium chloride
    • BeyondSpring (BYSI) announces positive topline results from its PROTECTIVE-2 Phase 3 registrational trial of plinabulin in combination with pegfilgrastim for prevention of chemotherapy-induced neutropenia
    • Cracker Barrel (CBRL): Biglari reiterates its support of its nominee for election to the Cracker Barrel board of directors (the "Board") at the Company's upcoming annual meeting of shareholders, scheduled for November 19, 2020
    • Cytokinetics (CYTK) announces preclinical data for CK-3773274 and CK-3772271 presented at the AHA scientific sessions 2020
    • Dicerna Pharmaceuticals (DRNA) announces positive updated data from Phase 1 trial of RG6346 for treatment of chronic Hepatitis B Virus (HBV) infection
    • Dicerna Pharmaceuticals (DRNA) announces FDA acceptance of Lilly's (LLY) investigational new drug application for first GalXC RNAi candidate under companies' global research collaboration and licensing agreement
    • Discover Financial Services (DFS) reports October card metrics
    • Dynavax (DVAX) and Biological E. Limited initiated a Phase I/II clinical trial of its COVID-19 subunit vaccine candidate in India following approval from the Drugs Controller General of India
    • General Motors (GM) to recall over 50000 electric vehicles amid potential battery fire risk, according to Bloomberg
    • Gilead Sciences (GILD) and Novo Nordisk (NVO) present new data from proof-of-concept trial in NASH; trial met its primary endpoint
    • Gossamer Bio (GOSS) appointed Faheem Hasnain as Chief Executive Officer and President, effective immediately
    • Granite Constr (GVA) names James A. Radich as Chief Operating Officer effective December 1, 2020
    • Inovio Pharma (INO) received clearance from the U.S. Food & Drug Administration (FDA) to proceed with the Phase 2 segment of its planned Phase 2/3 clinical trial for INO-4800, its COVID-19 vaccine candidate
    • Kirkland Lake Gold (KL) filed an early warning report in connection with the disposition of 1,095,900 common shares of Novo Resources Corp
    • Kodiak Sciences (KOD) completes enrollment of DAZZLE Phase 2b/3 pivotal study of KSI-301 in patients with wet age-related macular degeneration
    • Johnson & Johnson (JNJ) and U.S. Department of Health & Human Services expand agreement to support next phase of COVID-19 vaccine candidate research and development
    • Johnson and Johnson (JNJ) to begin UK coronavirus vaccine trial, according to Financial Times
    • Lordstown Motors (RIDE) releases business updates; remains on track to begin production of the lordstown endurance in September 2021
    • MeiraGTx (MGTX) Announces Investigational Gene Therapy Continues to Demonstrate Statistically Significant Improvement in Vision in Patients with X-Linked Retinitis Pigmentosa One Year After Treatment
    • Merck (MRK) announces that the FDA has approved KEYTRUDA for triple-negative breast cancer
    • Merck (MRK) advances phase 3 trial to evaluate investigational Islatravir as once-monthly oral prep for women at high risk for acquiring HIV-1
    • Moderna (MRNA) COVID-19 vaccine candidate meets its primary efficacy endpoint in the first interim analysis of the Phase 3 COVE study; vaccine efficacy of 94.5%
    • Moderna (MRNA) announces longer shelf life for its COVID-19 vaccine candidate at refrigerated temperatures
    • MyoKardia (MYOK) presents cardiac imaging data from 30-week EXPLORER-HCM study of Mavacamten
    • Myriad Genetics (MYGN) announced the expansion of Myriad myChoice tumor testing in several European markets and China
    • New Senior Investment (SNR) provides update on October occupancy
    • NICE (NICE) announced that it has partnered with Symphony, a Sykes company, to expand deployment of robotic process automation, and in particular attended automation, globally
    • ObsEva (OBSV) reports topline results of the PROLONG proof-of-concept trial of Ebopiprant
    • Qualcomm (QCOM) gets permission to sell 4G mobile phone chips to Huawei Technologies, according to Reuters
    • RAPT Therapeutics (RAPT) reports positive initial clinical data from its ongoing Phase 1/2 trial for FLX475 in multiple cancer indications; will host call at 8:30 a.m. Eastern Time
    • Sanofi (SNY) receives Complete Response Letter for sutimlimab
    • Silvercorp Metals (SVM) reports the discovery of new gold zones and high grade intercepts from its 2020 exploration program at the LMW mine, Ying Mining District, Henan Province, China
    • SilverCrest Metals (SILV) announces new high-grade discovery at Las Chispas and record intercept
    • Tesla (TSLA) CEO Elon Musk says most likely he has a 'moderate' case of coronavirus
    • Voxeljet AG (VJET) receives follow-up order for three additional units of its new high-speed 3D printer
    • XOMA (XOMA) earns $2 million milestone from Takeda (TAK) as mezagitamab advances into phase 2 development
  • M&A:
    • Foundation Building Materials (FBM) to be acquired for $19.25 per share in cash
    • KKR (KKR) and and Rakuten to acquire stakes in Seiyu from Walmart (WMT)
    • PAE (PAE) announced that its subsidiary has entered into a definitive agreement to acquire Metis Solutions Corporation for approximately $92 million in cash; reaffirms FY20 guidance issued on November 5
    • PNC (PNC) agrees to purchase BBVA USA Bancshares for $11.6 bln
    • Resideo (REZI) files mixed securities shelf offering
    • Taubman Centers (TCO) and Simon Property Group (SPG) modify merger price to $43.00 per share in cash
    • Uber (UBER) is in talks to sell ATG self-driving unit, according to TechCrunch
  • Syndicate:
    • Constellium (CSTM) files for share common stock offering, no amount given
    • Guardant Health (GH) proposes $1 bln principal amount of convertible senior notes due 2027
    • Immunic (IMUX) files for $250 mln mixed securities shelf offering
  • IPOs:
    • Expected to Price:
      • Aspire Real Estate Investors (NYSE: ASPI): The REIT developing and managing a portfolio of affordable and workforce multifamily housing in Opportunity Zones is expected to price its 15.0 M share IPO at $20.
      • Maravai Life Sciences (Nasdaq: MRVI): The life sciences company providing critical products to enable the development of drug therapies, diagnostics and novel vaccines is expected to price its 50.0 M share IPO between $24-$27.
      • NeoGames (Nasdaq: NGMS): The global B2G and B2B technology and service provider to state lotteries and other lottery operators is expected to price its 4.8 M share IPO between $14-$16.
      • Sotera Health Company (Nasdaq: SHC): The global provider of mission-critical sterilization and lab testing and advisory services is expected to price its 46.6 M share IPO between $20-$23.
      • Yasten Holding (NYSE: YSG): The leader in the China beauty market with three color cosmetics and skincare brands is expected to price its 58.8 M ADS IPO between $8.5-$10.50.


Gapping Up/Down

  • Gapping up:
    • FBM +25.3%, VJET +22.5%, BBVA +16.6%, OBSV +16.4%, ABUS +10.2%, TCO +8%, DVAX +5.8%, PLTR +5.7%, AOSL +5.2%, SPG +3.8%, UBER +2.5%, VOD +2.3%, QDEL +2.2%, PNC +1.8%, JNJ +1.6%, ATRA +1.6%, CTVA +1.4%, INBX +1%
  • Gapping down
    • CSPR -16.6%, REZI -3%, VXX -2.2%, JD -1.9%, ZM -1.5%, LOGI -1.5%


Analyst Research (see Upgrades/Downgrades calendarfor full list):

  • Upgrades:
    • ACADIA Pharmaceuticals (ACAD) upgraded to Strong Buy from Outperform at Raymond James; tgt $65
    • BigCommerce (BIGC) upgraded to Buy from Hold at Truist; tgt $95
    • Bloomin' Brands (BLMN) upgraded to Outperform from Market Perform at BMO Capital Markets; tgt raised to $22
    • Bristol-Myers (BMY) upgraded to Buy from Hold at Societe Generale; tgt $76
    • Bruker (BRKR) upgraded to Peer Perform from Underperform at Wolfe Research
    • Chuy's (CHUY) upgraded to Outperform from Market Perform at BMO Capital Markets; tgt raised to $30
    • Entergy (ETR) upgraded to Outperform from Peer Perform at Wolfe Research
    • F5 Networks (FFIV) upgraded to Overweight from Neutral at JP Morgan; tgt raised to $192
    • Hewlett Packard Enterprise (HPE) upgraded to Outperform from Mkt Perform at Raymond James; tgt $14
    • Int'l Paper (IP) upgraded to Buy from Neutral at Citigroup
    • Li Auto (LI) upgraded to Buy from Neutral at Citigroup; tgt raised to $45.60
  • Downgrades:
    • American Electric (AEP) downgraded to Peer Perform from Outperform at Wolfe Research
    • Aurora Cannabis (ACB) downgraded to Underperform from Hold at Jefferies; tgt lowered to $3.75
    • BancorpSouth (BXS) downgraded to Neutral from Buy at DA Davidson
    • Kodiak Sciences (KOD) downgraded to Equal-Weight from Overweight at Morgan Stanley; tgt raised to $125
    • OGE Energy (OGE) downgraded to Neutral from Buy at Mizuho; tgt lowered to $34
    • SAGE Therapeutics (SAGE) downgraded to Equal-Weight from Overweight at Morgan Stanley; tgt lowered to $85
    • South State (SSB) downgraded to Neutral from Buy at DA Davidson; tgt raised to $76
    • SVB Financial Group (SIVB) downgraded to Perform from Outperform at Oppenheimer
  • Others:
    • BigCommerce (BIGC) initiated with a Buy at Stifel; tgt $80
    • Chinook Therapeutics (KDNY) initiated with a Buy at H.C. Wainwright; tgt $28
    • Chuy's (CHUY) initiated with a Buy at Needham; tgt $75
    • Datto Holding (MSP) initiated with a Equal Weight at Barclays; tgt $35
    • Datto Holding (MSP) initiated with a Outperform at BMO Capital Markets; tgt $38
    • Datto Holding (MSP) initiated with a Neutral at Credit Suisse; tgt $35
    • Datto Holding (MSP) initiated with a Hold at Jefferies; tgt $35
    • Datto Holding (MSP) initiated with a Neutral at Mizuho; tgt $35
    • Datto Holding (MSP) initiated with a Equal-Weight at Morgan Stanley; tgt $35
    • Datto Holding (MSP) initiated with a Outperform at RBC Capital Mkts; tgt $39
    • Electronic Arts (EA) initiated with a In-line at Evercore ISI; tgt $135
    • Guild Holdings (GHLD) initiated with a Buy at Compass Point; tgt $20
    • Guild Holdings (GHLD) initiated with a Mkt Outperform at JMP Securities; tgt $19
    • Guild Holdings (GHLD) initiated with a Overweight at Wells Fargo; tgt $20
    • McAfee (MCFE) initiated with a Buy at Goldman; tgt $26
    • McAfee (MCFE) initiated with a Buy at Mizuho; tgt $25
    • McAfee (MCFE) initiated with a Overweight at Piper Sandler; tgt $22
    • McAfee (MCFE) initiated with a Sector Perform at RBC Capital Mkts; tgt $19

Upcoming Events:

  • Econ Data:
    • 08:30 ET: Empire State Manufacturing for November (Briefing.com Consensus 14.0; Prior 10.5)
  • Earnings:
    • Monday (Nov 16)
      • Morning: ACM AZUL CSPR JD PANW TSN
      • Afternoon: API BIDU GAN GDS IQ YY MSGE SDC
    • Tuesday (Nov 17)
      • Morning: ARMK AQUA HD KSS SE WMT
      • Afternoon: LZB NIO VREX
    • Wednesday (Nov 18)
      • Morning: AVYA BV KC LOW SR TGT TJX
      • Afternoon: BILI CPA CPRT CUB JACK KEYS KLIC LB NUAN NVDA PAGS SCVL SQM SONO UGI ZTO
    • Thursday (Nov 19)
      • Morning: ATKR BERY BJ BRC CSIQ M MMS NTES
      • Afternoon: BECN BEST CAL ESE HP INTU POST ROST WSM WWD WDAY
    • Friday (Nov 20)
      • Morning: BKE FL GSX HHR HIBB


    Asia & Europe detail:

    Asia: Nikkei +2.1%, Hang Seng +0.9%, Shanghai +1.1%

    Equity indices in the Asia-Pacific region began the week on a mostly higher note while markets in India were closed for Diwali while trading in Australian equities was suspended after 30 minutes due to technical issues. Taiwan Semiconductor Manufacturing Company is reportedly expanding its production capacity to keep up with strong demand. Japan's Economy Minister said that economic support from past stimulus measures will be smaller in fiscal 2021.

    • In economic data:
      • China's October Retail Sales 4.3% yr/yr (expected 4.9%; last 3.3%), October Industrial Production 6.9% yr/yr (expected 6.5%; last 6.9%), October Fixed Asset Investment 1.8% yr/yr (expected 1.6%; last 0.8%), and October Unemployment Rate 5.3%, as expected (last 5.4%)
      • Japan's Q3 GDP 5.0% qtr/qtr (expected 4.4%; last -8.2%); 21.4% yr/yr (expected 18.9%; last -28.8%). Q3 GDP Capital Expenditure -3.4% qtr/qtr (expected -3.0%; last -4.5%), Q3 GDP External Demand 2.9% qtr/qtr (expected 2.6%; last -3.3%), and Q3 Private Consumption 4.7% qtr/qtr (expected 5.1%; last -3.1%). September Industrial Production 3.9% m/m (expected 4.0%; last 4.0%) and Capacity Utilization 6.4% m/m (expected 1.3%; last 2.9%)
      • South Korea's October trade surplus $5.83 bln (last $5.98 bln). October imports -5.6% yr/yr (last -5.8%) and exports -3.8% yr/yr (last -3.6%)
      • India's October WPI Inflation 1.48% yr/yr (last 1.32%)

    ---Equity Markets---

    • Japan's Nikkei: +2.1%
    • Hong Kong's Hang Seng: +0.9%
    • China's Shanghai Composite: +1.1%
    • India's Sensex: CLOSED
    • South Korea's Kospi: +2.0%
    • Australia's ASX All Ordinaries: +1.2%

    ---FX---

    • USD/JPY: +0.4% to 104.99
    • USD/CNH: -0.3% to 6.5717
    • USD/INR: -0.1% to 74.49

    Europe: DAX +1.3%, FTSE +1.8%, CAC +2.4%

    Major European indices trade higher across the board. The Italian government is reportedly looking to acquire a 50% stake in EU's largest steel mill by capacity. British Prime Minister, Boris Johnson, is self-isolating after meeting another bureaucrat who had tested positive for the coronavirus. Mr. Johnson was hospitalized for SARS-CoV-2 in April. Germany's Economy Minister said that his country should prepare for 4-5 months of severe restrictions and not expect current restrictions to be relaxed quickly. Fitch affirmed France's AA rating with a Negative outlook.

    • In economic data:
      • Italy's October CPI 0.2% m/m, as expected (last 0.2%); -0.3% yr/yr, as expected (last -0.3%)

    ---Equity Markets---

    • STOXX Europe 600: +1.4%
    • Germany's DAX: +1.3%
    • U.K.'s FTSE 100: +1.8%
    • France's CAC 40: +2.4%
    • Italy's FTSE MIB: +2.3%
    • Spain's IBEX 35: +3.8%

    ---FX---

    • EUR/USD: +0.1% to 1.1842
    • GBP/USD: -0.1% to 1.3191
    • USD/CHF: +0.2% to 0.9139

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