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07/12/21 Briefing

Updated: Dec 15, 2021

The stock market is looking for a continuation of yesterday's advance as futures on the S&P 500 trade 62 points above fair value while Nasdaq futures trade nearly 300 points above fair value.

The early strength in futures comes after a steady overnight rally that produced highs during the past hour. European equities also trade on a firmly higher note after Asian markets registered gains overnight, helped by news of another reserve requirement ratio cut from the People's Bank of China.

Crude oil has also continued its rebound, rising $2.120 or 3.2%, to $71.70/bbl.

Treasuries, meanwhile, are slightly lower with the 10-yr yield up one basis point at 1.44%.

The market will receive a handful of economic reports today with October Trade Balance (Briefing.comconsensus -$66.80 bln; prior -$80.90 bln), revised Q3 Productivity (Briefing.comconsensus -4.9%; prior -5.0%), and revised Q3 Unit Labor Costs (Briefing.comconsensus 8.2%; prior 8.3%) set to be released at 8:30 ET, followed by October Consumer Credit (prior $29.90 bln) at 15:00 ET.

President Biden is expected to speak with Russian President Putin at 10:00 ETabout the U.S. intelligence community's concern about potential escalation of the conflict in East Ukraine.

In US. corporate news:

  • ACADIA Pharmaceutical (ACAD 22.73, +3.33): +17.2% after announcing positive results from a Phase III drug trial.

  • Bright Health Group (BHG 4.35, +0.57): +15.1% after reaffirming its revenue guidance for FY21 and issuing above-consensus FY22 revenue guidance.

  • Intel (INTC 55.19, +4.20): +8.2% after The Wall Street Journal reported that the company plans a public listing of its Mobileye unit next year.

  • Merck (MRK 72.19, -1.23): -1.7% after pausing enrollment for one of its clinical studies.

Reviewing overnight developments:

  • Asian markets ended higher. Japan's Nikkei +2.1%, Hong Kong's Hang Seng +2.7%, and China's Shanghai Composite +0.2%

  • In economic data:

  • China's November Trade Surplus $71.7B (expected $82.8B; last $84.5B); November Exports +22.0% (expected +19.0%; last +27.1%) and Imports +31.7% (expected +19.8%; last +20.6%)

  • Japan's October Household Spending +3.4% m/m (expected +3.6%; last +5.0%) and -0.6% yr/yr (expected -0.6%; last -0.6%); October Leading Index +1.9% m/m (last -0.4%)

  • Australia's November AIG Services Index 49.6 (last 47.6); Q3 House Price Index +5.0% qtr/qtr (expected +5.0%; last +6.7%)


  • In news:

  • The People's Bank of China will cut the required reserve ratio for banks by 50 bps on December 15

  • The Reserve Bank of Australia left its cash rate target unchanged at 0.10%, as expected, saying it doesn't think Omicron will derail the economy and that it will review its QE plan in February



  • Major European indices trade in the green. Germany's DAX +2.0%, France's CAC +2.3%, and the U.K.'s FTSE +1.2%

  • In economic data:

  • Eurozone's final Q3 GDP +2.2% qtr/qtr (expected +2.2%; last +2.1%) and +3.9% yr/yr (expected +3.7%; last +14.2%); Q3 Employment Change +0.9% qtr/qtr (expected +0.9%; last +0.7%) and +2.1% yr/yr (expected +2.0%; last +1.8%); December ZEW Economic Sentiment 26.8 (last 25.9)

  • Germany's December ZEW Economic Sentiment 29.9 (expected 25.1; last 31.7); October Industrial Production +2.8% (expected +0.8%; last -0.5%)

  • UK's November Halifax House Price Index +1.0% m/m (expected +0.8%; last +1.0%) and +8.2% yr/yr (last +8.2%)

  • France's October Trade Balance -EUR7.5B (expected -EUR6.9B; last -EUR6.9B)

  • Spain's Consumer Confidence 84.6 (last 97.3)

  • Switzerland's November Unemployment Rate 2.5% (expected 2.6%; last 2.7%)


  • In news:

  • The European Central Bank warned that banks' asset quality could deteriorate, and downside risks to the economy could be seen, with a progressive withdrawal of stimulus



U.S. equity futures:

  • S&P 500 Futures: +60 @ 4,652

  • DJIA Futures: +361 @ 35,588

  • Nasdaq 100 Futures: +284 @ 16,130

Overseas:

  • Europe: DAX +2.1%, FTSE +1.2%, CAC +2.3%

  • Asia: Nikkei +2.1%, Hang Seng +2.7%, Shanghai Composite +0.2%

Commodities:

  • Crude Oil +2.18 @ 71.67

  • Nat Gas +0.043 @ 3.700

  • Gold +4.45 @ 1783.95

  • Silver +0.194 @ 22.457

  • Copper +0.0320 @ 4.3695

U.S. Summary:

  • Earnings/Guidance (Full Earnings Calendar):

  • ABB Ltd (ABB) provides long term targets at Capital Markets day

  • AT&T (T) sees 2022 postpaid phone ARPU remaining stable with 2021 levels

  • AutoZone (AZO) beats by $4.61, beats on revs; Q1 comps +13.6%

  • Bright Health Group (BHG) reaffirms FY21 revenue guidance; sees FY22 revs above consensus

  • Broadridge Financial (BR) reaffirms FY22 revenue guidance in slide presentation

  • Conn's (CONN) reports EPS in-line, beats on revs; Q3 comps +20.6%

  • Core & Main (CNM) beats by $0.09, beats on revs; provides FY21 adjusted EBTIDA guidance

  • Coupa Software (COUP) beats by $0.29, beats on revs; guides JanQ EPS above consensus, revs above consensus

  • Designer Brands (DBI) beats by $0.30, misses on revs; guides Q4 EPS above consensus; Q3 comps +40.8%

  • Enbridge (ENB) reaffirms FY21 EBITDA guidance of $13.9 billion to $14.3 billion; sees FY22 adjusted EBITDA Of $15.0 to $15.6 billion

  • GitLab (GTLB) reports Q3 results, revenue increased 58% yr/yr

  • HealthEquity (HQY) reports EPS in-line, misses on revs; guides FY22 EPS below consensus, revs below consensus

  • Kinder Morgan (KMI) gives FY22 forecast; expects $1.09 of net income attributable to KMI/share, share repurchases of up to $750 mln

  • MiMedx Group (MDXG) raises FY21 guidance

  • MongoDB (MDB) beats by $0.27, beats on revs; guides JanQ EPS above consensus, revs above consensus

  • Stellantis (STLA) targets ~20 billion in incremental annual revenues by 2030 driven by software-enabled vehicles

  • Sumo Logic (SUMO) beats by $0.02, beats on revs; guides JanQ EPS below consensus, revs in-line

  • Synovus (SNV) sees FY21 loans at high end of prior 2-4% guidance range

  • Timken (TKR) sees FY21 guidance

  • VEON (VEON) announced a new medium-term financial ambition, including a 10-14% CAGR local currency revenue and EBITDA growth over the next three years


  • General News:

  • Initial data from South Africa shows that Omicron causes less severe disease compared to other variants despite high transmissibility, but more data is needed to confirm all this, according to the New York Times

  • Senate Republicans reject idea to attach debt ceiling increase to national defense authorization act, but both sides are still discussing alternatives to raise debt ceiling ahead of December 15deadline, according to Politico

  • President Biden will warn Russian President Putin that if Russia invade Ukraine, US and allies could cut Russia off from the international financial system, according to the New York Times

  • ACADIA Pharmaceuticals (ACAD) announces "positive" top-line results from Phase 3 Lavender trial

  • Aecom Tech (ACM) to develop first phase of innovative Humber Zero carbon capture project - will be working with VPI and Phillips 66 (PSX)

  • American Airlines (AAL) announces leadership succession plan - Robert Isom to become CEO on March 31, 2022; Doug Parker to continue as chairman

  • Apple's (AAPL) treatment of Roblox (RBLX) is under scrutiny amid antitrust investigation, according to The Information

  • Babylon (BBLN) and Palantir Technologies (PLTR) outline the substantial progress they have made in a new partnership designed to deliver a revolution in the use of data to improve clinical delivery and care for Babylon's members in the US healthcare marketplace

  • Black Hills Corp (BKH) provides regulatory update prior to investor meetings

  • British American Tobacco (BTI) says new categories will contribute to profit growth for the first time as their losses start to reduce, a key step on its pathway to profitability by 2025

  • CareTrust REIT (CTRE) follow-up: CareTrust weighing potential strategic options, including a prospective sale, according to Bloomberg

  • Clene (CLNN): Clene Nanomedicine's RESCUE-ALS Phase 2 results selected for late-breaking presentation at 32nd International Symposium on ALS/MND

  • Digital World Acquisition Corp (DWAC): Congressman Devin G. Nunes selected as CEO of Trump Media & Technology Group, effective January 2022

  • Eastman Chemical (EMN) announces $500 million accelerated share repurchase

  • Energous (WATT) received its first regulatory approval in Asia for RF-based power transfer at any distance

  • GlaxoSmithKline (GSK) & Medicago announce positive Phase 3 efficacy and safety results for adjuvanted plant-based COVID-19 vaccine candidate

  • Grupo Aeroportuario Del Sureste (ASR) reports November traffic of 4.9 mln passengers, up 7.2% vs November 2019

  • Hillenbrand (HI) authorizes new share repurchase program of up to $300 mln

  • IDEAYA Biosciences (IDYA) provided a clinical data update for the Phase 1/2 trial evaluating darovasertib and crizotinib synthetic lethal combination in metastatic uveal melanoma (MUM) patients

  • Intel (INTC) plans public listing of shares of its self-driving car business, Mobileye, according to the Wall Street Journal

  • Johnson & Johnson's (JNJ) Janssen announces respiratory syncytial virus adult vaccine candidate maintains high efficacy regardless of lower respiratory tract disease severity

  • LHC Group (LHCG) approves share repurchase program for up to $250 mln of common stock

  • Marriott Vacations' (VAC) Interval International announces new affiliation agreement with Disney Vacation Club

  • Mastercard (MA) announced a series of changes in the leadership of its international operations

  • MeiraGTx (MGTX) announces positive preliminary data from the AQUAx phase 1 clinical trial of AAV-hAQP1 for the treatment of grade 2/3 radiation-induced xerostomia

  • Merck (MRK) pauses enrollment for IMPOWER 22 and IMPOWER 24 Phase 3 clinical studies evaluating islatravir for pre-exposure prophylaxis in people at high risk of HIV-1 infection

  • Microsoft (MSFT): EU aiming to take a more extensive look at Microsoft deal for Nuance Communications (NUAN), according to Reuters

  • Newpark Resources (NR) announces non-binding memorandum of understanding for JV in Saudi Arabia

  • Pentair (PNR) announces 5% rate increase to its quarterly cash dividend

  • Plymouth Industrial REIT (PLYM) announces succession plan for CFO position; Anthony Saladino, current Chief Accounting Officer, named successor

  • Prometheus Biosciences (RXDX) reports "positive" topline results from its Phase 1 trial of PRA023 in healthy volunteers

  • Raymond James (RJF) President John Carson to retire effective December 31, 2021; Paul Allison, Chairman and CEO of company's Canadian subsidiary Raymond James Ltd, to step down, effective December 31, 2021; will transition to RJL Exec. Chairman

  • Samsung Electronics (SSNLF) announces new leadership; Jong-Hee Han to lead the newly merged SET Division, Kyehyun Kyung to head the Device Solutions Division

  • Silicon Motion (SIMO) announces new $200 mln share repurchase program; reiterates Q4 guidance

  • Spire Global (SPIR) awarded a contract under the European Space Agency's Navigation Innovation and Support Programme (NAVISP) Element 2 Program funded by UK Space Agency

  • Sumo Logic (SUMO) appoints Stewart Grierson as CFO, effective December 13

  • Taysha Gene Therapies (TSHA) presents late-breaking abstract and poster for TSHA-105 for the treatment of epilepsy caused by SLCA13A5 deficiency

  • Tesla (TSLA) granted US patent for "QOS manager for system on a chip communications"

  • Univar Solutions (UNVR) announces new distribution agreement with Tata Chemicals

  • Vir Biotechnology (VIR) preclinical studies demonstrate sotrovimab retains activity against the full combination of mutations in the spike protein of the omicron SARS-CoV-2 Variant

  • Yamana Gold (AUY) receives permit to increase throughput at Jacobina mine


  • M&A:

  • Ameresco (AMRC) acquired Plug Smart, an Ohio-based energy services company that specializes in the development and implementation of budget neutral capital improvement projects

  • CGI Group (GIB) subsidiary agrees to acquire Melbourne-based Unico; terms not disclosed

  • Commercial Metals (CMC) entered into a definitive agreement to acquire TAC Acquisition Corp for $550 mln

  • FirstCash (FCFS) announced that it has amended its previously announced definitive agreement to acquire American First Finance; total consideration payable to the seller at closing remains unchanged

  • Gaming and Leisure Properties (GLPI) enters into agreements to acquire property assets of Live! Casino & Hotel Maryland, Live! Casino & Hotel Philadelphia, and Live! Casino Pittsburgh; announces public offering of 7.7 mln common shares

  • GoHealth (GOCO) appoints Vance Johnston as CFO, effective December 7, 2021

  • Hill-Rom (HRC): EU Commission clears acquisition of Hill-Rom by Baxter (BAX)

  • Mimecast (MIME) to become a private company through transaction with Permira valued at ~$5.8 bln or $80/share

  • Oaktree Acquisition Corp. II (OACB) and Alvotech announce merger agreement to create a leading publicly-traded global biopharmaceutical company


  • Syndicate:

  • Blue Owl Capital (OWL) announces that NBSH Blue Investments II, LLC intends to offer 26.7 mln shares of common stock in a public offering

  • Bright Health Group (BHG) announces $750 mln capital raise

  • Patrick Industries (PATK) announces proposed offering of $225 mln convertible senior notes due 2028

  • Silvergate Capital (SI) pricing of an underwritten public offering of 3,310,344 shares of Class A common stock at a price to the public of $145.00/share


  • IPOs:

  • Expected to Price:

  • Chicago Atlantic Real Estate Finance (Nasdaq: REFI): The commercial real estate finance company dedicated to making loans to operators and property owners in cannabis industry is expected to price its 6.3 M share IPO between $16-$18.

  • HashiCorp (Nasdaq: HCP): The cloud computing company providing a standardized approach to automating the critical processes involved in delivering applications in the cloud is expected to price its 15.3 M between $68-$72.

  • Nu Holdings (NYSE: NU): The digital banking platform is expected to price its 289.2 M share IPO between $8-$9.



Gapping Up/Down

  • Gapping up:

  • ACAD +15.5%, BHG +12.4%, KULR +12%, VIR+11.3%, SPIR +10.1%, TSHA +10%, INTC +9.2%, SCYX +8.3%, DWAC +5.6%, TSLA +3.8%, BB +3%,


  • Gapping down:

  • SI -4.9%, GLPI -3.6%, OWL -2.1%, MRK -1.3%,


Analyst Research (see Upgrades/Downgradescalendarfor full list):

  • Upgrades

  • Bumble Inc. (BMBL) upgraded to Overweight from Neutral at JP Morgan; tgt $55

  • CarMax (KMX) upgraded to Overweight from Neutral at JP Morgan; tgt raised to $160

  • Cerence (CRNC) upgraded to Outperform from Mkt Perform at Raymond James; tgt $100

  • Commscope (COMM) upgraded to Buy from Hold at Jefferies; tgt raised to $15

  • CVR Energy (CVI) upgraded to Neutral from Underperform at Credit Suisse

  • Digital Turbine (APPS) upgraded to Outperform from Neutral at Macquarie; tgt $80

  • Global Blood Therapeutics (GBT) upgraded to Outperform from Mkt Perform at William Blair

  • ironSource (IS) upgraded to Outperform from Neutral at Macquarie; tgt $14

  • Jack In The Box (JACK) upgraded to Buy from Hold at Deutsche Bank; tgt lowered to $108

  • Juniper Networks (JNPR) upgraded to Buy from Hold at Jefferies; tgt raised to $42

  • Murphy Oil (MUR) upgraded to Overweight from Neutral at JP Morgan; tgt raised to $37


  • Downgrades:

  • Air Products (APD) downgraded to In-line from Outperform at Evercore ISI

  • AstraZeneca (AZN) downgraded to Hold from Buy at Jefferies

  • CNX Resources (CNX) downgraded to Neutral from Overweight at JP Morgan; tgt $18

  • Helmerich & Payne (HP) downgraded to Underweight from Equal-Weight at Morgan Stanley; tgt lowered to $27

  • Jackson Financial (JXN) downgraded to Equal-Weight from Overweight at Morgan Stanley; tgt $38

  • Linde plc (LIN) downgraded to In-line from Outperform at Evercore ISI

  • Magnolia Oil & Gas (MGY) downgraded to Neutral from Overweight at JP Morgan; tgt $24

  • Merck (MRK) downgraded to Neutral from Buy at Guggenheim


  • Others:

  • Algoma Steel Group (ASTL) initiated with an Outperform at BMO Capital Markets

  • Arvinas (ARVN) initiated with an Outperform at Cowen

  • Camden Property (CPT) initiated with a Buy at Stifel; tgt $192

  • Canopy Growth (CGC) initiated with an Underweight at Wells Fargo; tgt $8

  • Chart Industries (GTLS) initiated with a Buy at The Benchmark Company; tgt $206

  • CI&T Inc (CINT) initiated with an Outperform at Itau BBA; tgt $22

  • CNH Industrial (CNHI) initiated with an Outperform at Bernstein (yesterday)

  • Columbus McKinnon (CMCO) initiated with an Overweight at JP Morgan; tgt $64

  • CRISPR Therapeutics (CRSP) initiated with a Market Perform at Cowen

  • Embark Technology (EMBK) initiated with a Buy at Citigroup; tgt $11

  • Equity Residential (EQR) initiated with a Hold at Stifel; tgt $93

  • Essex Property (ESS) initiated with a Buy at Stifel; tgt $390

  • Fate Therapeutics (FATE) initiated with an Outperform at Cowen

  • Fluence (FLNC) initiated with an Outperform at Robert W. Baird; tgt $44

  • F45 Training Holdings (FXLV) initiated with a Buy at Jefferies; tgt $23

  • GrowGeneration (GRWG) initiated with an Equal Weight at Wells Fargo; tgt $18

  • Hydrofarm Holdings (HYFM) initiated with an Equal Weight at Wells Fargo; tgt $33

  • Iovance Biotherapeutics (IOVA) resumed with an Outperform at Cowen

  • Janus International Group (JBI) initiated with a Neutral at UBS; tgt $14

  • Journey Medical (DERM) initiated with a Buy at B. Riley Securities; tgt $14

  • Moderna (MRNA) initiated with a Market Perform at Cowen


Upcoming Events:

  • Econ Data:

  • 08:30 ET: Trade Balance for Oct (Briefing.comConsensus -$66.8B; Prior -$80.9B)

  • 08:30 ET: Productivity-Rev. for Oct (Briefing.comConsensus -4.9%; Prior -5.0%)

  • 08:30 ET: Unit Labor Costs - Rev for Q3 (Briefing.comConsensus 8.2%; Prior 8.3%)

  • 15:00 ET: Consumer Credit for Oct (Briefing.comConsensus NA; Prior $29.9B)


  • Earnings:

  • Monday (Dec 6)

  • Morning: SAIC

  • Afternoon: COUP HQY MDB SUMO


  • Tuesday (Dec 7)

  • Morning: AZO CONN DBI

  • Afternoon: AVAV CASY CHPT BASE PLAY PD S SFIX TOL


  • Wednesday (Dec 8)

  • Morning: BF.B CPB KFY LOVE PLAB THO UNFI VRA

  • Afternoon: GME GEF OXM PHR RH SPWH CURV PATH


  • Thursday (Dec 9)

  • Morning: CIEN HRL

  • Afternoon: AOUT AVGO CHWY COST LESL LULU MESA ORCL MTN


  • Friday (Dec 10)

  • Morning: ASO




Asia & Europe detail:

Asia: Nikkei +2.1%, Hang Seng +2.7%, Shanghai Composite +0.2%

Equity indices in the Asia-Pacific region had a strong showing on Tuesday, drafting off the late-Monday decision by the PBOC to cut the required reserve ratio for banks by 50 bps, and the optimism about the Omicron variant that drove big gains in the U.S. market on Monday. Notably, China's Shanghai Composite was the weakest performer of the major indices despite better than expected trade data for November. There was a deceleration in exports, however, and imports were said to have been boosted by large coal purchases, so the positive surprises weren't as cheery as the headline numbers suggested. The RBA left its cash rate target unchanged at 0.10%, as expected, saying it doesn't think Omicron will derail the economy and that it will review its QE plan in February.

  • In economic data:

  • China's November Trade Surplus $71.7B (expected $82.8B; last $84.5B); November Exports +22.0% (expected +19.0%; last +27.1%) and Imports +31.7% (expected +19.8%; last +20.6%)

  • Japan's October Household Spending +3.4% m/m (expected +3.6%; last +5.0%) and -0.6% yr/yr (expected -0.6%; last -0.6%); October Leading Index +1.9% m/m (last -0.4%)

  • Australia's November AIG Services Index 49.6 (last 47.6); Q3 House Price Index +5.0% qtr/qtr (expected +5.0%; last +6.7%)



---Equity Markets---


  • Japan's Nikkei: +2.1%

  • Hong Kong's Hang Seng: +2.7%

  • China's Shanghai Composite: +0.2%

  • India's Sensex: +1.6%

  • South Korea's Kospi: +0.6%

  • Australia's ASX All Ordinaries: +1.0%


---FX---


  • USD/JPY: +0.1% to 113.54

  • USD/CNH: flat at 6.3710

  • USD/INR: +0.1% to 75.434

Europe: DAX +2.1%, FTSE +1.2%, CAC +2.3%

Major European indices are in rally mode, following form with other global markets as investors express hope that the Omicron variant won't be as bad as feared from a health and economic standpoint. That perspective overshadowed an ECB observation that banks' asset quality could deteriorate, and downside risks to the economy could be seen, with a progressive withdrawal of stimulus. The eurozone's final Q3 GDP report was revised slightly higher. Germany's industrial production in October was stronger than expected and economic sentiment in December was also better than expected, although lower than the prior month. Lots of attention today on the 10:00 a.m. ETvideo summit between President Biden and President Putin, with the former expected to warn the latter against invading Ukraine. EUR/USD -0.3% to 1.1253.

  • In economic data:

  • Eurozone's final Q3 GDP +2.2% qtr/qtr (expected +2.2%; last +2.1%) and +3.9% yr/yr (expected +3.7%; last +14.2%); Q3 Employment Change +0.9% qtr/qtr (expected +0.9%; last +0.7%) and +2.1% yr/yr (expected +2.0%; last +1.8%); December ZEW Economic Sentiment 26.8 (last 25.9)

  • Germany's December ZEW Economic Sentiment 29.9 (expected 25.1; last 31.7); October Industrial Production +2.8% (expected +0.8%; last -0.5%)

  • UK's November Halifax House Price Index +1.0% m/m (expected +0.8%; last +1.0%) and +8.2% yr/yr (last +8.2%)

  • France's October Trade Balance -EUR7.5B (expected -EUR6.9B; last -EUR6.9B)

  • Spain's Consumer Confidence 84.6 (last 97.3)

  • Switzerland's November Unemployment Rate 2.5% (expected 2.6%; last 2.7%)


---Equity Markets---

  • STOXX Europe 600: +1.9%

  • Germany's DAX: +2.1%

  • U.K.'s FTSE 100: +1.2%

  • France's CAC 40: +2.3%

  • Italy's FTSE MIB: +1.8%

  • Spain's IBEX 35: +0.9%

---FX---

  • EUR/USD: -0.3% to 1.1253

  • GBP/USD: -0.1% to 1.3248

  • USD/CHF: -0.1% to 0.9247

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The S&P 500 futures are up 3 points and are trading % above fair value. The Nasdaq 100 futures are up 9 points and are trading roughly in-line with fair value. The Dow Jones Industrial Average futures