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03/01/22 Briefing

The S&P 500 futures trade 35 points, or 0.7%, above fair value to begin 2022, as the market benefits from new inflows on the first trading session of the month and year. After a record 2021, investors remain keen on deploying new money to work.

Like last week, there isn't a specific news item to account for the upside bias with media headlines continuing to focus on the Omicron variant, the Fed's potential impact on the market this year, and the prospects of the Build Back Better Act.

Supportive factors include Tesla (TSLA 1132.50, +75.72, +7.2%) reporting a record number of Q4 deliveries (308,600), Europe reporting expansionary December Manufacturing PMIs, and seasonality. On the latter, there are two sessions remaining in the Santa Claus rally period.

In U.S. data, investors will receive the preliminary IHS Markit Manufacturing PMI for December at 9:45 a.m. ETand Construction Spending for November (Briefing.comconsensus 0.6%) at 10:00 a.m. ET.

U.S. Treasury yields have edged higher amid the positive bias in the futures market. The 2-yr yield is up three basis points to 0.76%, and the 10-yr yield is up two basis points to 1.53%. The U.S. Dollar Index is down 0.2% to 95.80. WTI crude futures are up 0.4% to $75.51/bbl.

In U.S. Corporate news:

  • Tesla (TSLA 1132.50, +75.72): +7.2% after reporting a record number of Q4 deliveries (308,600), representing a 71% yr/yr increase.

  • McDonald's (MCD 271.00, +2.93): +1.1% after the stock was upgraded to Overweight from Neutral at Piper Sandler.

  • PayPal (PYPL 192.10, +3.52): +1.9% after the stock was upgraded to Outperform from Market Perform at BMO Capital Markets.

  • U.S. Global Jets ETF (JETS 39.30, +0.22): +0.6% despite reports indicating that thousands of more flights were canceled over the weekend due to bad weather and staffing issues related to the Omicron variant.

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region began 2022 on a mixed note while markets in Australia, China, Japan, and New Zealand were closed for New Year's Day. Japan's Nikkei: CLOSED Hong Kong's Hang Seng: -0.5% China's Shanghai Composite: CLOSED India's Sensex: +1.6% South Korea's Kospi: +0.4% Australia's ASX All Ordinaries: CLOSED.

  • In economic data:

  • South Korea's December Nikkei Manufacturing PMI 51.9 (last 50.9). December trade deficit $590 mln (last surplus of $3.06 bln). December Imports 37.4% yr/yr (expected 35.8%; last 43.6%) and Exports 18.3% yr/yr (expected 22.0%; last 32.0%)

  • India's December Nikkei Markit Manufacturing PMI 55.5 (last 57.6)

  • Singapore's Q4 GDP 10.7% qtr/qtr (expected 2.0%; last 5.2%); 5.9% yr/yr (expected 5.4%; last 7.1%)

  • Hong Kong's November Retail Sales 7.1% yr/yr (last 12.0%)


  • In news:

  • A Kyodo poll showed that nearly 85% of major Japanese companies expect economic growth in the new year.

  • Korean press reported that Samsung may invest more than KRW35 trln in its semiconductor business this year after spending KRW32.90 trln last year.

  • Property developers in China reportedly face nearly $200 bln in total debt payments this month.



  • Major European indices trade on a solidly higher note while the U.K.'s FTSE is closed for New Year's Day. STOXX Europe 600: +0.5% Germany's DAX: +1.0% U.K.'s FTSE 100: CLOSED France's CAC 40: +1.2% Italy's FTSE MIB: +1.1% Spain's IBEX 35: +0.7%.

  • In economic data:

  • Eurozone's December Manufacturing PMI 58.0, as expected (last 58.4)

  • Germany's December Manufacturing PMI 57.4 (expected 57.9; last 57.4)

  • France's December Manufacturing PMI 55.6 (expected 54.9; last 55.9)

  • Italy's December Manufacturing PMI 62.0 (expected 61.5; last 62.8)

  • Spain's December Manufacturing PMI 56.2, as expected (last 57.1)

  • Swiss December procure.chPMI 62.7 (expected 61.0; last 62.5)


  • In news:

  • Germany's Finance Minister pledged at least EUR30 bln in tax relief for individuals and corporations starting in 2023.

  • Reports from the U.K. suggest that Prime Minister Johnson is being pressured to act in response to rising energy prices.

  • Final December Manufacturing PMI readings for major regional economies remained in expansionary territory.




U.S. equity futures:

  • S&P 500 Futures: +27 @ 4,764

  • DJIA Futures: +171 @ 36,509

  • Nasdaq 100 Futures: +113@ 16,433

Overseas:

  • Europe: DAX +1.0%, FTSE CLOSED, CAC +1.2%

  • Asia: Nikkei CLOSED, Hang Seng -0.5%, Shanghai Composite CLOSED

Commodities:

  • Crude Oil +0.29 @ 75.50

  • Nat Gas -0.042 @ 3.688

  • Gold -7.00 @ 1822.00

  • Silver -0.145 @ 23.207

  • Copper -0.0105 @ 4.4570

U.S. Summary:

  • Earnings/Guidance (Full Earnings Calendar):

  • Li Auto (LI) announced that the Company delivered 14,087 Li ONEs in December 2021, representing a 130.0% increase yr/yr

  • NIO (NIO) provides December and Q4 delivery update

  • Tesla (TSLA) reports Q4 deliveries +71% yr/yr to 308,000 vehicles

  • XPeng (XPEV) reports 16,000 vehicles delivered in December 2021, a 181% increase yr/yr


  • General News:

  • Senate Majority Leader Chuck Schumer (D-NY) wants to bring Build Back Better Act for a vote early this year, but it currently does not have votes to pass. Democrats also want to change filibuster rules to pass voting bills, but there is resistance to this from some Democrats, according to the Wall Street Journal

  • Democrats want to push smaller Build Back Better Act. Senator Joe Manchin (D-WV) wants programs funded for 10 years in Build Back Better Act, but funding only the child tax credit would leave little room for other programs. He also demands to reverse more of the 2017 tax cuts, which Senator Kyrsten Sinema (D-AZ) is against, according to Bloomberg

  • Dr. Anthony Fauci says testing negative to end isolation period guidance is under consideration. He said US should start focusing on hospitalizations rather than daily cases. He is concerned that even though Omicron is milder, the large number of cases might still put pressures on hospitals, according to ABC News

  • White House issues "action plan for a fairer, more competitive, and more resilient meat and poultry supply chain"

  • UK Health Secretary Sajid Javid in interview says restrictions should be a "last resort" and wants to avoid lockdown in 2022, according to UK Daily Mail

  • OPEC+ is expected to proceed with production increase in February, according to Reuters

  • Thousands flights were cancelled over the weekend amid weather and staffing issues related to Omicron, according to the New York Times

  • NYC Mayor Eric Adams says he might mandate that city workers get coronavirus booster shots, according to the New York Times

  • Israel will begin offering fourth coronavirus vaccine to people over 60, according to Bloomberg

  • Macau Gaming Inspection and Coordination Bureau earlier reported December gross revs +1.8 yr/yr to HKD 7.962 bln versus +0.1% in November of 2021

  • Applied Therapeutics (APLT) provides regulatory update on galactosemia program

  • AT&T (T) and Verizon (VZ) refuse to delay 5G despite requests, according to Bloomberg

  • Azure Power (AZRE) fully commissions its 600 MWs SECI project, the largest owned and operated single site solar project in India

  • Bionomics Limited (BNOX) initiated its Phase 2 clinical trial (the PREVAIL Study) to evaluate BNC210 for the acute treatment of Social Anxiety Disorder with topline results expected by the end of 2022

  • Bitfarms (BITF) reports December production totals 363 bitcoin

  • Escalade (ESCA) to purchase the assets of the Brunswick Billiards business from Life Fitness, LLC, a portfolio company of KPS Capital Partners, LP

  • FDIC Chair Jelena McWilliams unexpectedly resigns, according to Politico

  • General Motors (GM) and Volkswagan (VWAGY) aiming to build up EV battery supply chains, according to the Wall Street Journal

  • Gilat Satellite (GILT) announced that one of the world's largest Mobile Network Operators (MNOs) will deploy 4G cellular backhaul over satellite technology from Gilat

  • Goldman Sachs (GS) will ask employees to work from home until at least January 18, according to Bloomberg

  • HollyFrontier (HFC) now expects crude oil throughput to average approximately 420,000 barrels per day for the fourth quarter of 2021

  • Humanigen (HGEN): Lenzilumab Treatment Response in Hospitalized COVID-19 Patients Correlates with C-Reactive Protein Levels

  • Huntsman (HUN) appoints two new independent directors and announces governance changes as part of ongoing board refreshment

  • LXP Industrial Trust (LXP) recapitalized portfolio consisting primarily of manufacturing assets through a sale to a new joint venture with an affiliate of Davidson Kempner

  • Newmark Group (NMRK) announces agreement with leading commercial real estate services group in Poland

  • NRx Pharmaceuticals (NRXP) filed a provisional composition of matter patent application with the US Patent and Trademark Office entitled "Stable, Buffer-free Compositions of Vasoactive Intestinal Peptide (VIP)"

  • Ovid Therapeutics (OVID) expands epilepsy franchise with novel KCC2 activators

  • Personalis (PSNL) entered into $100 MLN At-the-Market Sales Agreement

  • Pieris Pharmaceuticals (PIRS) announced the successful completion of the sponsor safety review of part 1a of the multi-center, placebo-controlled phase 2a study of dry powder inhaler-formulated PRS-060/AZD1402

  • Primoris Services (PRIM) announces solar award worth more than $370 mln

  • Sabra Health Care REIT (SBRA) appointed Executive VP Finance and Chief Accounting Officer Michael Costa to succeed Harold Andrews as the EVP -Chief Financial Officer (Principal Financial Officer) and Secretary, in each case effective January 1, 2022

  • TAL Education (TAL) announced the appointment of Dr. Alex Zhuangzhuang Peng, Chief Financial Officer of the Company, to also serve as the President of the Company, effective on January 1, 2022


  • M&A:

  • Altra Industrial Motion (AIMC) announced that it has acquired Nook Industries; price undisclosed

  • Apollo Global Management (APO) completes merger with Athene (ATH) and finalizes key governance enhancements

  • AZZ (AZZ) to acquire all the assets of Steel Creek Galvanizing Company; expects the acquisition will be accretive to earnings within the first year of operation

  • Garmin (GRMN) has acquired Vesper Marine; financial terms not disclosed

  • ODP Corp (ODP) sells CompuCom Systems for $305 mln; also authorizes $200 mln increase to share buyback authorization


  • Syndicate:

  • Xeris Biopharma (XERS) enters into agreement for $30 mln private placement


  • IPOs:

  • Expected to Price:

  • No IPOs expected to price.



Gapping Up/Down

  • Gapping up:

  • TSLA +7.2%, ESCA +3%, LI +3%, XPEV +2.8%, HGEN+2.4%, NIO +2.1%, MLCO +1.5%


Analyst Research (see Upgrades/Downgradescalendarfor full list):

  • Upgrades

  • Alnylam Pharma (ALNY) upgraded to Overweight from Neutral at Piper Sandler; tgt raised to $208

  • AvalonBay (AVB) upgraded to Buy from Hold at Deutsche Bank; tgt $285

  • Boston Properties (BXP) upgraded to Buy from Hold at Deutsche Bank; tgt $131

  • C.H. Robinson (CHRW) upgraded to Overweight from Sector Weight at KeyBanc Capital Markets; tgt $135

  • Cooper (COO) upgraded to Buy from Neutral at Guggenheim

  • II-VI (IIVI) upgraded to Outperform from Mkt Perform at Raymond James; tgt $77

  • McDonald's (MCD) upgraded to Overweight from Neutral at Piper Sandler; tgt raised to $282

  • NovoCure (NVCR) upgraded to In-line from Underperform at Evercore ISI; tgt $82

  • PayPal (PYPL) upgraded to Outperform from Market Perform at BMO Capital Markets; tgt lowered to $224

  • PNC (PNC) upgraded to Overweight from Equal Weight at Barclays; tgt raised to $250

  • Regency Centers (REG) upgraded to Buy from Hold at Deutsche Bank; tgt $92

  • Regeneron Pharma (REGN) upgraded to Outperform from Mkt Perform at Bernstein; tgt $660

  • Regions Fincl (RF) upgraded to Equal Weight from Underweight at Barclays; tgt $26

  • Rocket Companies (RKT) upgraded to Neutral from Underperform at Wedbush; tgt $14

  • Sea Limited (SE) upgraded to Buy from Neutral at BofA Securities; tgt lowered to $287

  • SL Green Realty (SLG) upgraded to Buy from Hold at Deutsche Bank; tgt $82

  • Vivid Seats (SEAT) upgraded to Buy from Neutral at Citigroup; tgt $14

  • Wells Fargo (WFC) upgraded to Overweight from Equal Weight at Barclays; tgt raised to $62

  • Wolfspeed (WOLF) upgraded to Overweight from Neutral at Piper Sandler; tgt raised to $160


  • Downgrades:

  • Altice USA (ATUS) downgraded to Peer Perform from Outperform at Wolfe Research; tgt lowered to $17

  • American Campus Communities (ACC) downgraded to Hold from Buy at Deutsche Bank; tgt $60

  • Charter Comm (CHTR) downgraded to Underperform from Peer Perform at Wolfe Research; tgt lowered to $621

  • Cheesecake Factory (CAKE) downgraded to Neutral from Overweight at Piper Sandler; tgt lowered to $44

  • Exelon (EXC) downgraded to Neutral from Buy at Mizuho; tgt raised to $57

  • Genmab (GMAB) downgraded to Neutral from Buy at Guggenheim

  • Huntington Banc (HBAN) downgraded to Underweight from Equal Weight at Barclays; tgt $17

  • Kimco Realty (KIM) downgraded to Hold from Buy at Deutsche Bank; tgt $26

  • Kingsoft Cloud (KC) downgraded to Neutral from Buy at Goldman; tgt lowered to $18

  • Marsh McLennan (MMC) downgraded to Underperform from Neutral at BofA Securities; tgt $168

  • Medical Properties Trust (MPW) downgraded to Hold from Buy at Deutsche Bank; tgt $25

  • Restaurant Brands Int'l (QSR) downgraded to Neutral from Overweight at Piper Sandler; tgt lowered to $60

  • Ross Stores (ROST) downgraded to Equal Weight from Overweight at Wells Fargo; tgt lowered to $120

  • U.S. Bancorp (USB) downgraded to Equal Weight from Overweight at Barclays; tgt $68


  • Others:

  • AdTheorent (ADTH) initiated with a Mkt Outperform at JMP Securities; tgt $10

  • Americold Realty Trust (COLD) initiated with a Peer Perform at Wolfe Research; tgt $37

  • Chicago Atlantic Real Estate Finance (REFI) initiated with a Mkt Outperform at JMP Securities; tgt $26

  • Chicago Atlantic Real Estate Finance (REFI) initiated with an Outperform at Oppenheimer; tgt $17

  • Chicago Atlantic Real Estate Finance (REFI) initiated with a Buy at Compass Point; tgt $22

  • Cyxtera Technologies (CYXT) initiated with a Neutral at UBS; tgt $14

  • Dr. Reddy's (RDY) resumed with a Neutral at BofA Securities

  • Fastly (FSLY) initiated with an Equal-Weight at Morgan Stanley; tgt $43

  • Gray Television (GTN) resumed with an Overweight at Wells Fargo; tgt $26

  • HashiCorp (HCP) initiated with a Buy at Stifel; tgt $100

  • HashiCorp (HCP) initiated with an Outperform at Wolfe Research; tgt $105

  • HashiCorp (HCP) initiated with an Equal-Weight at Morgan Stanley; tgt $90

  • HashiCorp (HCP) initiated with a Buy at BofA Securities; tgt $102

  • HashiCorp (HCP) initiated with a Sector Weight at KeyBanc Capital Markets

  • HashiCorp (HCP) initiated with a Mkt Outperform at JMP Securities; tgt $110

  • HashiCorp (HCP) initiated with a Neutral at JP Morgan; tgt $100

  • HashiCorp (HCP) initiated with an Outperform at Cowen; tgt $105

  • HashiCorp (HCP) initiated with an Outperform at William Blair

  • HashiCorp (HCP) initiated with a Neutral at Goldman; tgt $90

  • InterActiveCorp (IAC) resumed with an Overweight at JP Morgan; tgt lowered to $175

  • Nu Holdings (NU) initiated with an Outperform at Wolfe Research; tgt $13

  • Nu Holdings (NU) initiated with a Positive at Susquehanna; tgt $14

  • Nu Holdings (NU) initiated with an Overweight at Morgan Stanley; tgt $16

  • Nu Holdings (NU) initiated with an Overweight at KeyBanc Capital Markets; tgt $12

  • Nu Holdings (NU) initiated with a Hold at HSBC Securities; tgt $10

  • Nu Holdings (NU) initiated with a Buy at UBS; tgt $12.50

  • Nu Holdings (NU) initiated with a Buy at Goldman; tgt $15

  • Pacira BioSciences (PCRX) resumed with an Overweight at JP Morgan; tgt raised to $83

  • Pear Therapeutics (PEAR) initiated with a Buy at BTIG Research; tgt $12

  • Privia Health (PRVA) initiated with a Buy at Jefferies; tgt $33

  • Vacasa (VCSA) initiated with a Buy at Needham; tgt $13

  • Vacasa (VCSA) initiated with a Neutral at BTIG Research


Upcoming Events:

  • Econ Data:

  • 09:45 ET: IHS Markit Manufacturing PMI - Prelim for Dec (Briefing.comConsensus NA; Prior 57.8)

  • 10:00 ET: Construction Spending for Nov (Briefing.comConsensus 0.6%; Prior 0.2%)


  • Earnings:

  • Tuesday (Jan 4)

  • Afternoon: MLKN SGH


  • Wednesday (Jan 5)

  • Morning: RPM SMPL

  • Afternoon: RGP


  • Thursday (Jan 6)

  • Morning: ANGO BBBY CAG STZ HELE LW LNN SCHN WBA

  • Afternoon: DCT PSMT WDFC


  • Friday (Jan 7)

  • Morning: AYI GBX




Asia & Europe detail:

Asia: Nikkei CLOSED, Hang Seng -0.5%, Shanghai Composite CLOSED

Equity indices in the Asia-Pacific region began 2022 on a mixed note while markets in Australia, China, Japan, and New Zealand were closed for New Year's Day. A Kyodo poll showed that nearly 85% of major Japanese companies expect economic growth in the new year. Korean press reported that Samsung may invest more than KRW35 trln in its semiconductor business this year after spending KRW32.90 trln last year. Property developers in China reportedly face nearly $200 bln in total debt payments this month.

  • In economic data:

  • South Korea's December Nikkei Manufacturing PMI 51.9 (last 50.9). December trade deficit $590 mln (last surplus of $3.06 bln). December Imports 37.4% yr/yr (expected 35.8%; last 43.6%) and Exports 18.3% yr/yr (expected 22.0%; last 32.0%)

  • India's December Nikkei Markit Manufacturing PMI 55.5 (last 57.6)

  • Singapore's Q4 GDP 10.7% qtr/qtr (expected 2.0%; last 5.2%); 5.9% yr/yr (expected 5.4%; last 7.1%)

  • Hong Kong's November Retail Sales 7.1% yr/yr (last 12.0%)


---Equity Markets---

  • Japan's Nikkei: CLOSED

  • Hong Kong's Hang Seng: -0.5%

  • China's Shanghai Composite: CLOSED

  • India's Sensex: +1.6%

  • South Korea's Kospi: +0.4%

  • Australia's ASX All Ordinaries: CLOSED

---FX---

  • USD/JPY: UNCH at 115.06

  • USD/CNH: UNCH at 6.3631

  • USD/INR: -0.2% to 74.32

Europe: DAX +1.0%, FTSE CLOSED, CAC +1.2%

Major European indices trade on a solidly higher note while the U.K.'s FTSE is closed for New Year's Day. Germany's Finance Minister pledged at least EUR30 bln in tax relief for individuals and corporations starting in 2023. Reports from the U.K. suggest that Prime Minister Johnson is being pressured to act in response to rising energy prices. Final December Manufacturing PMI readings for major regional economies remained in expansionary territory.

  • In economic data:

  • Eurozone's December Manufacturing PMI 58.0, as expected (last 58.4)

  • Germany's December Manufacturing PMI 57.4 (expected 57.9; last 57.4)

  • France's December Manufacturing PMI 55.6 (expected 54.9; last 55.9)

  • Italy's December Manufacturing PMI 62.0 (expected 61.5; last 62.8)

  • Spain's December Manufacturing PMI 56.2, as expected (last 57.1)

  • Swiss December procure.chPMI 62.7 (expected 61.0; last 62.5)


---Equity Markets---

  • STOXX Europe 600: +0.5%

  • Germany's DAX: +1.0%

  • U.K.'s FTSE 100: CLOSED

  • France's CAC 40: +1.2%

  • Italy's FTSE MIB: +1.1%

  • Spain's IBEX 35: +0.7%

---FX---

  • EUR/USD: -0.1% to 1.1352

  • GBP/USD: -0.1% to 1.3508

  • USD/CHF: +0.1% to 0.9128


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