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Economic Prints, Q4 Reports Up for Lilly, CAT; J&J Posts Phase-3 Data

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Mark Vickery
·4 min read
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Friday, January 29, 2021

With the GameStop GME short-squeeze saga continuing, market indexes work to regain their equilibrium. The Dow, Nasdaq and S&P 500 are all lower in today’s pre-market trading, though if fortunes shift, we could be looking at an up week of trading overall — despite the big 2%+ drop as investors tried to reckon with risks associated with Robinhood traders going after hedge-fund short-sellers.

Personal Income for December outperformed expectations this morning, posting +0.6% from a +0.1% estimate, though on a downwardly revised -1.3% report from November. We note that the year 2020 in Personal Income prints reflected more along the lines of labor force employment than workers earning higher incomes; back in April, when Personal Income grew 12.4%, it was the biggest one-month drop in labor ever.

Over the past six months, we have averaged -0.367% in income growth. Thus, growing by 0.6% we see as a positive development, even though it may again be the result of more layoffs as pandemic conditions force companies to shed low-end workers.

Consumer Spending, also for December, sank lower than expected: -0.2% from a -0.4% estimate. However, this was more than made up in the previous month’s revision, from -0.4% originally reported in November to -0.7% now. There are many reads on a monthly basis tracking the appetite of the American consumer; this one in particular is demonstrating that purchasing confidence is not where many thought it would have been by this point.

Johnson & Johnson JNJ has released data on its phase-3 Covid-19 vaccine trial against moderate-to-severe strains of the coronavirus. We see 72% efficacy in the U.S. trial and 66% in testing overall (including South Africa), but with 85% efficacy in preventing severe disease and protecting against hospitalizations and fatalities from Covid-19 as of Day 28 in the study. These are obviously not as successful as figures released from Pfizer PFE/BioNTech BNTX and Moderna MRNA vaccines, though the previous studies did not include efficacy versus tougher strains of the coronavirus.

Eli Lilly LLY saw a boost to its Q4 numbers on its Covid-19 antibody drug, bamlanivimab, to be used for the prevention of contracting Covid-19. Earnings of $2.75 per share swept past the $2.35 Zacks consensus, on $7.44 billion in sales which topped expectations of $7.23 billion. This marks 22% top-line growth year over year. Shares are up an additional 3.5% on the Q4 release, and Lilly has already gained 27% year to date. For more on LLY’s earnings, click here.

Heavy equipment manufacturer Caterpillar CAT stomped estimates on its bottom line this morning in its Q4 report, posting a 45% positive surprise to $2.12 per share (though down 22% from the year-ago quarter) on $11.24 billion in quarterly revenues, ahead of the $11.18 billion expected but -15% from the year-ago quarter. Caterpillar saw reduced numbers across all segments, but still performed better than expected. Shares are up 2% following the release, pushing the stock into positive territory year to date. For more on CAT’s earnings, click here.

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