Swaggy's Top Stonks - Market Headache
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Swaggy's Top Stonks
Together with... Endeavour
January 13, 2021
Welcome newcomers to Swaggy's Top Stonks and thank you for subscribing.
The excitement of earnings SZN will soon be upon us. Swaggy will provide you with every update you need to know when it comes to beats and misses.
Today's edition will give you the complete rundown of what happened this week in the markets so far as we get closer to the excitement.
Today's Letter
U.S Equity Market
News Stories Moving the Market
Analyst Upgrades/Downgrades
Crypto Things & Trends
Meme Stocks
U.S Equity Market
The week so far…
Monday
S&P500 (SPX) -0.1%
Nasdaq (NDX) +0.1%
In the US, at the open yields were up and equities down around 3%, but a reversal through the day saw benchmark indices end the day flat
The Nasdaq rallied 3% intra-day to close +14bp, while both nominal and real US 10Y yields ended the day down fractionally.
Growth and Quality saw a strong rally through the session, with the Growth L/S pair ending +0.5% and Quality pair up 1%.
S&P started weaker rallying after 1.5 hours, from down 2%, to finish on the intraday highs. The index did not manage to close above the 50 dma(4,675).
Overall volumes tracked 16% above the 30 dmaas USD and Gold rallied.
Tech and healthcare were the best performing sectors with industrials and materials the worst. Cyclicals underperformed Defensives by 1.2%.
Fed President Barkin says labour market is "as tight as it could be at this point"; US 10y at 1.760% (-0.2bp)
Tuesday
US equities gained after 5 consecutive declines in the S&P 500.
S&P500 (SPX) -0.92%
Nasdaq (NDX) +1.5%
As US 10Y real yields pulled back by 8bps, Growth, Cyclicals and Tech bounced following recent declines. The rally was driven by a more dovish testimony from Powell and helped by recent oversold conditions in tech.
Tech, energy and materials were the best performing sectors with utilities and staples the worst.
Cyclicals outperformed Defensives by 2.1%, while both Value (-1.4%) and Quality (-1.6%) factors fell.
Unprofitable Tech added another 3.6% following yesterday’s 6% intraday rally.
Retail has been encouraged by the softening in rates moves. MS estimated that by the middle of the Tues US session, retail demand was the highest for that point of the day since March 2020
Wednesday
S&P500 (SPX) +0.28%
Nasdaq (NDX) +0.38%
Early strength in US equities faded a bit through the day with the SPX closing up 28bp, the Nasdaq up 38bp but the Russell 2000 fell -82bp to the lowest level relative to the S&P since October 2020.
10 of the 11 S&P 500 sectors did close in positive territory, but the lightly-weighted materials sector (+1.0%) was the only sector that rose at least 1.0%, following a hot CPI December report
Consumer discretionary and materials were the best performing sectors with healthcare and financials the worst
From a factor perspective, the Value L/S pair was up 2%, as was Momentum, yet Growth and Quality held up, rising ~20bps
Thursday (at time of writing)
US equities opened higher, as investors appear to be looking through the large inflation number yesterday
Growth and Value mostly in line; neither factor taking leadership
Tech is leading on big semiconductor rally. Industrials and financials also advancing.
Healthcare, consumer Staples and Energy the worst performers
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News Stories Moving the Market
Powell's confirmation hearing provides no additional color on Fed's policy pivot:
Fed Chair Powell testified before the Senate in his nomination hearing on Tuesday. Nothing at all incremental in his prepared testimony, with Powell noting economy expanding at fastest pace in years and labor market is strong.
Added economic strength has come despite the pandemic, though the two dynamics have led to persistent supply and demand imbalances and bottlenecks, and thus elevated inflation.
Highlighted concerns about fallout from high inflation and noted Fed will use its tools to support the strong economy and a strong labor market and to prevent higher inflation becoming entrenched.
Powell highlighted value of price stability in maintaining strong labor market, said he expects FOMC to raise rates this year, and added balance sheet may be allowed to shrink sometime later this year.
However, no real detail was offered on any of these topics. Governor Brainard to appear before same panel on Thursday.
Buy-the-dip calls heat up:
Oversold conditions seem to be getting the bulk of the credit when it comes to the recent bounce in equities.
More strategists have been out with buy-the-dip calls (Bloomberg).
While the velocity of the recent bond yield backup has been a widely discussed overhang on risk sentiment, some strategists have pointed out that stocks can continue to work in a higher rate environment.
At the same time, big universe of negative yielding debt and outsized positioning in bonds and cash still supportive of the TINA mantra for stocks.
Stickiness of the buy-the-dip theme evidenced by outsized retail inflows in recent days.
Also some skepticism about investors' willingness to meaningfully part with big tech given the group's outsized leverage to secular growth and disruption themes.
Elsewhere, extent of the Fed's recent policy pivot has dampened concerns the central bank is behind the curve.
Consumer Price Index (CPI) December Report published on Wed 12th Jan
Total CPI rose 0.5% m/m in December (Consensus 0.4%) and was up 7.0% yr/yr, which was the sharpest 12-month increase since June 1982.
Core CPI, which excludes food and energy, rose 0.6% m/m (Consensus 0.5%) and was up 5.5%yr/yr.
The 10-yr yield went from 1.74% to 1.71% in the wake of the report on Wednesday, signaling that inflation-rate expectations could be peaking with the Fed planning to tighten policy this year.
This immediate decline in long-term rates was cited as early boost for the stock market, particularly the growth stock
Apple reportedly in talks to broadcast MLB games - NY Post
The article states that Apple has held talks with MLB about carrying games next season.
Google seeking to change EU's Digital Markets Act - Financial Times
A Google executive tells the FT that top executives are "only waking up now" to the effects that the DMA may have on Google's business, and they are therefore blitzing politicians and officials with ads, emails, and social media posts in hopes of weakening the pending legislation.
MEPs and officials confirm to the FT that they have seen increased lobbying over the past few weeks
Rivian COO Rod Copes retired last month as the company ramped up production - Wall Street Journal
A company spokeswoman tells the WSJ thatCopes's retirement had been planned for months and his duties have been absorbed by the leadership team since his departure
The spokeswoman added that the company ended up producing more than 1,000 vehicles by the end of 2021
Apple's Metaverse Prospects Produce Real Optimism for Investors -WSJ
Sony dealing with PS5 shortages by making more PS4s -Bloomberg
Analyst Upgrades/Downgrades
Initiations
Barclays initiations:
KLAC equal weight, $170 target
LRCX overweight, $315 target
AMAT equal weight, $60 target
Piper Sandler initiations:
FVRR overweight $120
MTCH overweight $160
UPWK overweight $40
BMBL neutral $35
Other:
PEGA initiated at buy at Goldman Sachs, target $105
SNCR initiated at outperform at Northland Capital Markets, target $6.50
JD +10.3% initiated at overweight at Atlantic Equities, target $100, 44% upside
BILL +5.7% initiated at buy at Goldman Sachs, target $295
Upgrades
TTWO upgraded to outperform from market perform at BMO Capital Markets, target to $170 from $120
AMD upgraded to Overweight from Sector Weight at KeyBanc- target $155
ZNGA~ (Zynga): upgraded to neutral from underperform at Credit Suisse, target to $9.86 from $9. Also, downgraded to sector weight from overweight at KeyBanc
DASH upgraded to outperform from in line atEvercore ISI, target $256
SNOW upgraded to overweight from equal weight at Barclays, target to $367 from $393.
SHOP Shopify upgraded to outperform from market perform at William Blair.
Downgrades
IPGP downgraded to market perform at Raymond James
SHOP Shopify downgraded from Overweight to Neutral at Atlantic Equities
INTC Intel downgraded Overweight to Neutral atKeyBanc
IBM downgraded from Neutral to Sell at UBS
FISV downgraded to hold from buy at Jefferies, target $115.
PYPL downgraded to hold from buy at Jefferies, target $200
Crypto Things & Trends
Shiba Inu Surges 16% After Rumors of Robinhood Listing - Coindesk
Bitcoin Death Cross Is Staring Down Bulls After a Painful Retreat- Bloomberg
Dogecoin $DOGE has found a new light as the coin is up 15% in the last 48 hours. It's been gaining a lot of moment around social media and is currently the #1 spot in social momentum on the Swaggy Crypto section.
WallStreetBets - Most Mentioned Equities
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