Today’s Big Picture
Asian markets closed in positive territory today with the exception of Japan’s Nikkei 225 which declined 0.47%. China’s Shanghai Composite rose 0.98% and Korea’s KOSPI Composite advanced 0.93% while Taiwan’s TAIEX and Hong Kong’s Hang Seng rose 0.46% and 1.08%, respectively. Major European markets are experiencing a slight selloff in midday trading while U.S. futures are pointing to a sluggish open.
With equities clawing back the omicron inspired sell-off, stocks are taking a breather as they wait for greater clarity on omicron’s threat to the economy and vaccine effectiveness. At the same time, the stock market is waiting for the next round of inflation data to be released in the coming days as investors gauge the likelihood of the Federal Reserve accelerating the already-announced bond tapering program. In Washington, the Senate will vote today on a procedural bill that will allow the debt ceiling to be passed with 51 votes. Once signed by President Biden, both the House and the Senate will have to vote again on actually raising the debt ceiling. Hopefully, all of this occurs ahead of the December 15 data that is being estimated by Treasury Secretary Janet Yellen as the potential date for the U.S. to run out of cash.
Data Download
Coronavirus
According to a preliminary study by Pfizer (PFE) and BioNTech (BNTX), a booster shot of their covid vaccine increases antibody protection 25x versus the initial two shots, a level of protection that is comparable to the protection afforded by just the two initial shots against the original strain of the virus.
A study published by Kyoto University in Japan found the omicron variant is 4.2 times more transmissible in its early stage than the delta variant.
Steps announced by British Prime Minister Boris Johnson to contain the spread of the omicron variant are estimated by Bloomberg Economics to cost the economy as much as $2.6 billion per month.
According to data from the CDC, 71.48% of U.S. population has received one dose of a multi dose vaccine and 60.42% of US population has been fully vaccinated.
Lyft (LYFT) announced employees can work remotely for all of 2022 while Alphabet (GOOG) has announced year-end bonuses for employees to help offset some of the stress of the past year. The company has pushed back its return to office timeline into 2022. Also included in the incentive is an additional “wellness” day.
International Economy
Yesterday the Bank of Canada announced it would make no change to interest rate policy and projected the output gap for Canada’s economy would close “in the middle quarters of 2022.” The central bank dropped any reference to inflation as temporary from its formal statement. Some had thought a January rate hike might be on the table, but given what was in this month’s formal statement, that now looks unlikely.
China’s inflation rate rose less than expected to 2.3% YoY in November following October’s 1.5% pace, below expectations for an acceleration to 2.5% YoY. The Producer Price Index for November rose more than expected to 12.9% YoY following October’s 13.5% increase, above expectations for a decline to a 12.4% YoY increase.
Domestic Economy
Yesterday’s Job Openings and Labor Turnover Survey found that job openings in October rose again to 11.03 million, up from September’s 10.63 million, but still slightly below the record high 11.1 million from July. When looking at the level of job openings relative to U6 (a measure of all officially unemployed, plus all those marginally attached to the labor force, plus employed part-time for economic reasons - basically all those looking for full-time employment at least to some degree) the number of job openings has hit a new record high of 1.33 jobs per person looking. When we saw the record high of job openings in July, this metric stood at 1.21 jobs per personal looking. Voluntary quits declined to 4.15 million, down from last month’s record high 4.36 million, which represented 2.7% of the civilian labor force level, to 2.58% of the civilian labor force level, also the third highest reading on record.
Later today we will get the usual weekly jobless claims reports and wholesale inventories for October.
Markets
Domestic equities enjoyed their third day of gains yesterday, although more modest, as the Nasdaq Composite rose 0.6%, the S&P 500 added 0.3% and the Dow closed 0.1% higher. The biggest gainer for the day was the Russell 2000, which added 0.8%. The only S&P 500 sectors to close lower today were Utilities, Consumer Staples, and Financials while Communication Services and Healthcare were the two strongest sectors. U.S. Treasury yields rose higher at the longer end of the curve.
Stocks to Watch
Before equity trading kicks off in U.S. markets, Ciena (CIEN) and Hormel Foods (HRL) are expected to report their latest quarterly results.
China’s Evergrande Group (EGRNF) has officially been labeled a defaulter as Fitch Ratings cut the developer to restricted default over its failure to meet two coupon payments after a grace period expired on Monday. According to reports, the downgrade could trigger cross defaults on Evergrande’s $19.2 billion of dollar debt.
After reporting quarterly losses grew to $1.39 per share compared to $0.29 in the year ago quarter, shares of GameStop (GME) came under pressure in after-market trading last night. Weighing on the company’s results was the move to grow its inventory to ward off the impact of supply chain challenges so as to be ready for the holiday shopping season.
Italy fined Amazon (AMZN) EUR 1.128 billion as the Autorità Garante della Concorrenza e del Mercato, or AGCM, said Amazon had harmed competing operators in the e-commerce logistics service.
Shares of Philip Morris International (PM), British American Tobacco (BTI), and similar tobacco companies could be volatile today following New Zealand’s announcement of plans to prevent young people from ever being able to buy cigarettes. The initiative would make the entire country smoke-free by 2025, ensuring that anyone born after 2008 will not be able to purchase cigarettes or tobacco products in their lifetime.
MeaTech 3D (MITC) has created the world's largest lab-grown steak, featuring real bovine cells that mature into muscle and fat. The 3.67 oz steak was made using 3D printing, where stem cells taken from cow tissue were incorporated into "bio-inks" that were then layered and matured in an incubator. MeaTech hopes to start marketing its products in 2022, with a pilot that will sell cultured fat as an ingredient for other products.
Digital Turbine (APPS) and Bango, a platform for data-driven commerce, announced a strategic partnership to offer app developers more secure payment options for their end-users.
Farfetch (FTCH) announced it will acquire resale platform LUXCLUSIF, a B2B service provider with a turnkey solution enabling the acquisition, authentication, and sale of second hand luxury goods to and from auctions, retailers, e-commerce platforms, and stores worldwide.
Avast (AVTTY) will acquire Evernym, a software company that develops decentralized, self-sovereign identity applications in order to form more trusting interactions.
IPOs
Cloud infrastructure company HashgiCorp (HCP) priced its IPO at $80, well above the targeted $68-$72 range. HCP shares will trade on Nasdaq.
Digital banking platform Nu Holdings (NU) priced its IPO at $9, the upper end of the targeted $8-$9 range.
Near-term the IPO calendar is pretty thin and readers looking to dig more into it should visit Nasdaq’s Latest & Upcoming IPOs page.
After Today’s Market Close
Broadcom (AVGO), Chewy (CHWY), Costco Wholesale (COST), lululemon athletica (LULU), and Oracle (ORCL) are among the companies slated to report their quarterly results. Those looking for more on which companies are reporting when, head on over to Nasdaq’s Earnings Calendar.
On the Horizon
- December 10: Inflation, Michigan Consumer Sentiment, Federal Monthly Budget
- December 14: November PPI
- December 15: Retail Sales, NY Empire State Manufacturing, Import/Export Prices, NAHB Housing Market, Business Inventories, Federal Reserve Interest Rate decision
- December 16: Housing Starts, Building Permits, Philly Fed Manufacturing, jobless claims, Industrial Production, Markit Manufacturing PMI (Flash)
Thought for the Day
“When you pick a partner, you pick a story. And sometimes you find yourself recruited for a play you didn’t audition for.” ~Esther Perel
Disclosures
- Avast (AVTTY) is a constituent of the Foxberry Tematica Research Cybersecurity & Data Privacy Index
- lululemon athletica (LULU) is a constituent of the Tematica BITA Cleaner Living Index
- lululemon athletica (LULU) is a constituent of the Tematica BITA Cleaner Living Sustainability Screened Index
- Broadcom (AVGO) is a constituent of the Tematica BITA Digital Infrastructure & Connectivity Index
- Costco Wholesale (COST) is a constituent of the Tematica Research Thematic Dividend All-Stars Index
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
Chris Versace
Christopher (Chris) Versace is the Chief Investment Officer and thematic strategist at Tematica Research. The proprietary thematic investing framework that he’s developed over the last decade leverages changing economic, demographic, psychographic and technology landscapes to identify pronounced, multi-year structural changes. This framework sits at the heart of Tematica’s investment themes and indices and builds on his more than 25 years analyzing industries, companies and their business models as well as financial statements. Versace is the co-author of “Cocktail Investing: Distilling Everyday Noise into Clear Investing Signals” and hosts the Thematic Signals podcast. He is also an Assistant Professor at NJCU School of Business, where he developed the NJCU New Jersey 50 Index.
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Lenore Elle Hawkins
Lenore Elle Hawkins has, for over a decade, served as a founding partner of Calit Advisors, a boutique advisory firm specializing in mergers and acquisitions, private capital raise, and corporate finance with offices in Italy, Ireland, and California. She has previously served as the Chief Macro Strategist for Tematica Research, which primarily develops indices for Exchange Traded Products, co-authored the book Cocktail Investing, and is a regular guest on a variety of national and international investing-oriented television programs. She holds a degree in Mathematics and Economics from Claremont McKenna College, an MBA in Finance from the Anderson School at UCLA and is a member of the Mont Pelerin Society.
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Mark Abssy
Mark Abssy is Head of Indexing at Tematica Research focused on index and Exchange Traded Product development. He has product development and management experience with Indexes, ETFs, ETNs, Mutual Funds and listed derivatives. In his 25 year career he has held product development and management positions at NYSE|ICE, ISE ETF Ventures, Morgan Stanley, Fidelity Investments and Loomis Sayles. He received a BSBA from Northeastern University with a focus in Finance and International Business.
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