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10/01/23 Briefing


The S&P 500 futures are down 18 points and are trading 0.5% below fair value. The Nasdaq 100 futures are down 72 points and are trading 0.6% below fair value. The Dow Jones Industrial Average futures are down 153 points and are trading 0.4% below fair value.

There's a negative disposition in the equity futures market following yesterday's disappointing finish as enthusiasm seen after Friday'sjobs report and ISM Non-Manufacturing Index unwinds. Market participants may be more cautious ahead of Fed Chair Powell's speech today at 9:00 a.m. ET, although it's unclear if he will make any remarks about the Fed's rate hike path since the speech is titled "Central Bank Independence."

Tokyo's year/year CPI rate (+4.0%) accelerated to its fastest pace in 42 years in the December reading.

Treasury yields are on the rise this morning. The 2-yr note yield is up five basis points to 4.25% and the 10-yr note yield id up five basis points to 3.57%. The U.S. Dollar Index is inching higher, up 0.4% to 103.42.

Energy complex futures trade in mixed fashion. WTI crude oil futures are up 0.5% to $74.98/

bbl and natural gas futures are down 3.3% to $3.44/mmbtu. 

The NFIB Small Business Optimism survey fell to 89.9 in December from 91.9 in November. Market participants will receive November Wholesale Inventories (prior +0.5%) at 10:00 a.m. ET

In corporate news:

  • Coinbase Global (COIN 37.52, -0.75, -2.0%): discloses that FY22 Adjusted EBITDA is expected to be within the negative $500 mln loss guardrail that the company provided in the shareholder letter; also announces further restructuring plan; will eliminate 950 jobs; Oppenheimer maintains Outperform rating 

  • Sotera Health (SHC 13.60, +4.96, +57.4%): Announces Settlement of Ethylene Oxide Litigation in Illinois; reaffirms FY22 guidance at J.P. Morgan Healthcare Conference

  • Oak Street Health (OSH 30.50, +7.93, +35.1%): CVS (CVS) mulling acquisition of Oak Street Health (OSH), according to Bloomberg; guides FY22 revs above consensus; FY23 revs in-line

  • Boeing (BA 202.37, -6.20, -3.0%): downgraded to Equal Weight from Overweight at Morgan Stanley

  • AT&T (T 19.21, +0.17, +0.9%): upgraded to Overweight from Equal Weight at Wells Fargo

  • Royal Caribbean (RCL 57.45, +0.16, +0.3%): upgraded to Equal Weight from Underweight at Morgan Stanley

  • Microsoft (MSFT 225.99, -1.13, -0.5%): in discussions to invest $10 bln in Open AI, according to Bloomberg

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region ended Tuesday on a mixed note. Japan's Nikkei: +0.8%, Hong Kong's Hang Seng: -0.3%, China's Shanghai Composite: -0.2%, India's Sensex: -1.0%, South Korea's Kospi: +0.1%, Australia's ASX All Ordinaries: -0.3%.

  • In economic data:

  • China's December New Loans CNY1.40 trln (expected CNY1.10 trln; last CNY1.21 trln) and December Total Social Financing CNY1.31 trln (expected CNY1.60 trln; last CNY1.99 trln)

  • Japan's November Household Spending -0.9% m/m (expected -0.5%; last 1.1%); -1.2% yr/yr (expected 0.5%; last 1.2%). December Tokyo Core CPI 4.0% yr/yr (last 3.7%) and Tokyo Core CPI 4.0% yr/yr (expected 3.8%; last 3.6%)

  • South Korea's November Current Account deficit $620 mln (last deficit of $880 mln)

  • In news:

  • Tokyo's yr/yr CPI rate accelerated to its fastest pace in 42 years in the December reading.

  • China Securities Daily noted that analysts forecast stable inflation around 2.0% in 2023, but also see a risk of a rise past 5.0%.

  • Chinese officials are expected to cut the value added tax for small businesses this year.

  • China will reportedly halt the issuance of visas to Koreans until South Korea reverses entry restrictions on Chinese citizens.

  • Taiwan Semiconductor Manufacturing Company reported that sales in 2022 hit a record of TWD2.26 trln, up 42.6% yr/yr.

  • Major European indices trade in the red. STOXX Europe 600: -0.7%, Germany's DAX: -0.4%, U.K.'s FTSE 100: -0.2%, France's CAC 40: -0.7%, Italy's FTSE MIB: -0.1%, Spain's IBEX 35: UNCH.

  • In economic data:

  • France's November Industrial Production 2.0% m/m (expected 0.8%; last -2.5%)

  • In news:

  • Bank of England Chief Economist Pill said that inflation in the U.K. could remain at a high level even if energy prices recede.

  • The British government is preparing to reduce energy subsidies to businesses by about 85%.

  • EU Economic Commissioner Gentiloni said that EU inflation appears to have peaked and that a deep recession has likely been avoided. On a related note, Goldman Sachs no longer expects that a recession will take place in the eurozone.

 

U.S. equity futures:

  • S&P 500 Futures: -3 @ 3,892

  • DJIA Futures: -113 @ 33,518

  • Nasdaq 100 Futures: +66 @ 10,636

Overseas:

  • Europe: DAX -0.4%, FTSE -0.2%, CAC -0.7%

  • Asia: Nikkei +0.8%, Hang Seng -0.3%, Shanghai Composite -0.2%

Commodities:

  • Crude Oil +0.37 @ 75.00

  • Nat Gas -0.128 @ 3.782

  • Gold -1.65 @ 1876.15

  • Silver -0.266 @ 23.605

  • Copper -0.0193 @ 4.0072

 

Earnings/Guidance:

  • Accolade (ACCD) reports Q3 results, beats on revs; guides FebQ revs below consensus; guides FY24 revs in-line

  • Amarin (AMRN) sees Q4 revs above consensus

  • Amneal Pharmaceuticals (AMRX) reaffirms FY22 guidance

  • ASE Technology (ASX) reports Dec revs declined 10.8% yr/yr to NT$53.2 bln; Q4 revs below consensus

  • AZZ (AZZ) beats by $0.09, beats on revs; guides FY23 EPS above consensus, reaffirms FY23 revs guidance

  • Bed Bath & Beyond (BBBY) misses by $0.84, misses on revs

  • Berkeley Lights (BLI) guides FY22 revs below consensus due to a delay in several Beacon platform placements and lower revs from partnerships and services contracts

  • CECO Environ. (CECO) sees Q4 orders of at least $145 mln

  • ChipMOS TECHNOLOGIES (IMOS) reports Dec revs declined 31.4% yr/yr to NT$1.55 bln; Q4 revs above consensus

  • Coinbase Global (COIN) discloses that FY22 Adjusted EBITDA is expected to be within the negative $500 mln loss guardrail that the company provided in the shareholder letter; also announces further restructuring plan; will eliminate 950 jobs

  • Crocs (CROX) sees FY22 revs above consensus

  • Danaher (DHR) guides Q4 revenue above consensus

  • DHT (DHT) provides business update; estimates Q4 time charter equivalent earnings for its fleet at $56,900 per day

  • E2open (ETWO) misses by $0.01, misses on revs; guides FY23 revs below consensus

  • Endeavour Silver (EXK) surpasses upper range of production guidance by delivering 9.0 million silver equivalent ounces in 2022

  • Fair Isaac (FICO) CFO Michael McLaughlin to step down; co reaffirms prior FY23 guidance

  • GE HealthCare (GEHC) sees Q4 revs above consensus; provides outlook for FY23

  • Jefferies (JEF) beats by $0.05, beats on revs

  • Oak Street Health (OSH) guides FY22 revs above consensus; FY23 revs in-line

  • OrthoPediatrics (KIDS) guides Q4 revs and FY23 revs below consensus

  • Palantir Technologies (PLTR) announced a strategic partnership with Cloudflare (NET)

  • Paragon 28 (FNA) sees Q4 revs above consensus

  • PerkinElmer (PKI) expects to meet or exceed prior guidance for Q4

  • PriceSmart (PSMT) beats by $0.16 (single estimate), misses on revs (single estimate)

  • Sight Sciences (SGHT) issues guidance for Q4, sees revenue up 40% yr/yr

  • Sotera Health (SHC) reaffirms guidance for FY22

  • Taiwan Semiconductor Manufacturing (TSM) reports Dec revs increased 23.9% yr/yr to NT$192.6 bln; Q4 revs below consensus

  • Urban Outfitters (URBN) reports record holiday sales; total net sales increased 2.3% yr/yr for two months ended December 31, 2022

  • Wabash Natl (WNC) announced a multi-year supply agreement with J.B. Hunt Transport (JBHT)

  • WD-40 (WDFC) beats by $0.04 (single estimate), misses on revs (single estimate); reaffirms FY23 EPS guidance, revs guidance

  • Wolverine (WWW) guides Q4 EPS below consensus, but revenue above consensus; moving quickly on previously-announced sale of Keds and Wolverine Leathers business, both are now in very active processes with potential buyers

News:

  • House passes rules package 220-213 for the chamber with several commitments that conservative members demanded

  • House passes bill 221-210 that will rescind additional IRS funding passed under the Inflation Reduction Act last year; this bill will be dead on arrival in the Senate

  • Fed Chairman Jerome Powell will give speech titled "Central Bank Independence" today at 9:00 ET

  • China stops issuing some visas for South Korea and Japan in retaliation for coronavirus restrictions against Chinese travelers, according to Bloomberg

  • President Biden's lawyers found a small number of classified documents at his former DC office. DOJ officials will look into the situation, according to the New York Times

  • Federal Judge blocks New Jersey's gun law that prohibits firearms in public places, according to the Wall Street Journal

  • Russia working on measures to lower discounts on its oil, according to, Reuters

  • TikTok is offering lower advertising rates than competitors, according to Financial Times

  • Federal officials to probe soda pricing, according to Politico

  • Department of Education issues "proposed regulations would transform income-driven repayment by cutting undergraduate loan payments in half and preventing unpaid interest accumulation"

  • Agilent (A) authorizes $2 bln share repurchase program; beginning March 1

  • Alcoa (AA) announces restructuring of Executive Leadership Team

  • Apple (AAPL) plans to drop Broadcom (AVGO) and Qualcomm (QCOM) chips for its own chips by the end of 2024 or early 2025, according to Bloomberg

  • ARKO Corp. (ARKO) announces that Chief Financial Officer Don Bassell has informed the Company of his intent to retire by the end of 2023

  • BioNTech (BNTX) has entered into an agreement under which BioNTech will acquire InstaDeep

  • Builders FirstSource (BLDR) names Dave Rush as CEO effective immediately

  • Can-Fite BioPharma (CANF) submits market registration plan to European Medicines Agency for piclidenoson in the treatment of psoriasis; FDA submission to follow

  • Churchill Downs (CHDN) subsidiary Presque Isle Downs & Casino enters into multi-year agreement with a subsidiary of bet365 for online sports betting and iGaming market access in PA, subject to regulatory approvals

  • Franco-Nevada (FNV) provides additional update on Cobre Panama

  • Kymera Therapeutics (KYMR) shares key 2023 goals to support its evolution into a fully integrated degrader medicines company

  • MediciNova (MNOV) receives a notice of allowance for a new patent covering MN-001 and MN-002 for the treatment of hypertriglyceridemia, hypercholesterolemia, and hyperlipoproteinemia in Brazil

  • Mercedes-Benz Group AG (MBGYY) finishes 2022 with strong Top-End and Battery Electric Vehicle deliveries

  • MeridianLink (MLNK) COO Alan Arnold to resign

  • MYR Group (MYRG) announces CFO succession plan; Betty Johnson to retire, effective February 24, 2023

  • New Found Gold Corp. (NFGC) Intercepts 16.1 g/t Au Over 5.30m at Lotto North; Intercepts Gold Mineralization on West Side of Appleton Fault At 'Zone 36'

  • ONEOK (OKE) reaches agreement with insurers to settle all claims for physical damage and business interruption related to the Medford incident

  • Pfizer (PFE) could soon produce Paxlovid in China, according to Financial Times

  • Planet Fitness (PLNT) announces year-end metrics: members increased 1.8 mln to approx. 17 mln; opened 158 new stores bringing the total to 2,410

  • Prenetics Group's (PRE) ACT Genomics received FDA clearance for ACTOnco comprehensive genomic profiling test for solid tumors

  • REGENXBIO (RGNX) announces promotion of Curran Simpson from Chief Technology and Operations Officer to Chief Operating Officer

  • Rocket Pharmaceuticals (RCKT) Expands Cardiac Gene Therapy Portfolio with Addition of RP-A601 for PKP2-ACM and Announces Positive Updated Phase 1 Data for RP-A501 in Danon Disease

  • Salesforce (CRM): U.S. online sales rose top $1.14 trillion during 2022 Holiday Season

  • Sotera Health (SHC) Announces Settlement of Ethylene Oxide Litigation in Illinois

  • Southwest Air (LUV) announces promotions across several departments; expects changes to strengthen operational execution

  • Sutro Biopharma (STRO) to Provide Data Update on STRO-002 and Plans for Registrational Path Forward in Advanced Ovarian Cancer

  • Syneos Health (SYNH) announces that Jason Meggs will transition from role as CFO to pursue other career opportunities

  • Tredegar (TG) Chairman John D. Gottwald retired on January 6; Gregory A. Pratt selected to succeed Mr. Gottwald as Chairman

  • Udemy (UDMY) CEO and Chairman Gregg Coccari to retire, Udemy Business President Greg Brown promoted to CEO; effective February 28, 2023

  • Valmont (VMI) secures $85 mln order for irrigation products and technology solutions in Africa

M&A:

  • CVS (CVS) mulling acquisition of Oak Street Health (OSH), according to Bloomberg

  • Frontline (FRO) terminates its combination agreement with Euronav (EURN)

  • GE HealthCare (GEHC) enters into agreement to acquire IMACTIS, terms of deal not disclosed

  • Microsoft (MSFT) in discussions to invest $10 bln in Open AI, according to Bloomberg

  • Umpqua Holdings (UMPQ) & Columbia Banking System (COLB) announce FDIC approval and expected closing timeline for combination

  • Vale (VALE) received bids for stake in its base metals unit, according to Financial Times

Syndicate:

  • H World Group Limited (HTHT) announces proposed public offering of american depositary shares

  • Lifecore Biomedical (LFCR) issued and sold 38,750 shares of convertible preferred stock in private placement for total gross proceeds of $38.75 mln

IPOs:

  • Expect to Price:

  • Skyward Specialty Insurance Group (Nasdaq: SKWD): The specialty insurance company delivering commercial property and casualty products and solutions is expected to price its 8.5 M share IPO between $14-$16.

Gapping Up/Down

  • Gapping up:

  • SHC +52.5%, PRE +44.1%, OSH +32%, FRO +24.7%, ACCD +5%, RGNX +4.7%, SOVO +4.4%, TRIN +4.2%, AZZ +4.2%, UDMY +3%, NKTX +2.8%, WWW +2.8%, TXRH +2.6%, PSMT +2.3%, RCKT +1.9%, DHT +1.8%, OKE +1.5%, CHDN +1.2%, DHR +1%, A +0.9%, TSM+0.9%, MNOV +0.8%, ASRT +0.7%

  • Gapping down:

  • KIDS -5.1%, BLI -4.9%, ETWO -3.6%, SGHT -2.5%, LFCR -2.4%, AMRX -2.3%, JEF -2%, FICO -1.8%, AVGO -1.2%, LUV -1.1%, SYNH -0.8%, WDFC -0.7%, GEHC -0.6%

 


Analyst Research (see Upgrades/Downgradescalendarfor full list):

  • Upgrades

  • A.O. Smith (AOS) downgraded to Sell from Neutral at UBS; tgt lowered to $58

  • Agilent (A) upgraded to Overweight from Equal Weight at Wells Fargo; tgt $170

  • Altus Power (AMPS) upgraded to Overweight from Equal-Weight at Morgan Stanley; tgt $12

  • American Tower (AMT) upgraded to Buy from Neutral at Goldman; tgt raised to $245

  • Aon (AON) upgraded to In-line from Underperform at Evercore ISI; tgt $330

  • Camden Property (CPT) upgraded to Buy from Neutral at Mizuho; tgt raised to $125

  • HF Sinclair (DINO) upgraded to Buy from Neutral at Mizuho; tgt raised to $68

  • Downgrades:

  • Ally Financial (ALLY) downgraded to Hold from Buy at Jefferies; tgt lowered to $25

  • APA Corp. (APA) downgraded to Underperform from Buy at Mizuho; tgt lowered to $48

  • Ashmore Group (AJMPF) downgraded to Equal Weight from Overweight at Barclays

  • Comstock (CRK) downgraded to Neutral from Buy at Mizuho; tgt lowered to $17

  • Delek US Holdings (DK) downgraded to Underperform from Neutral at Mizuho; tgt raised to $30

  • Others:

  • Antero Resources (AR) assumed with a Buy at Mizuho; tgt raised to $51

  • California Resources Corp (CRC) initiated with a Buy at Mizuho; tgt $60

  • Callon Petroleum (CPE) initiated with a Buy at Mizuho; tgt $59

  • Chesapeake Energy (CHK) initiated with a Buy at Mizuho; tgt $155

  • Chevron (CVX) downgraded to Neutral from Buy at Mizuho; tgt raised to $200

  • Chord Energy (CHRD) initiated with a Buy at Mizuho; tgt $196

  • Civitas Resources (CIVI) initiated with a Neutral at Mizuho; tgt $71

  • CNX Resources (CNX) initiated with an Underperform at Mizuho; tgt $19

  • ConocoPhillips (COP) assumed with a Buy at Mizuho; tgt raised to $151

  • Coterra Energy (CTRA) assumed with a Buy at Mizuho; tgt lowered to $41

  • Crescent Energy Company (CRGY) initiated with a Buy at Mizuho; tgt $19

Upcoming Events:

  • Econ Data:

  • 06:00 ET: NFIB Small Business Optimism for Dec (Briefing.comConsensus NA; Prior 91.9)

  • 10:00 ET: Wholesale Inventories for Nov (Briefing.comConsensus NA; Prior 0.5%)

  • Earnings:

  • Monday (Jan 9)

  • Morning:  AYI CMC TLRY

  • Afternoon: ACCD AZZ JEF PSMT WDFC

  • Tuesday (Jan 10)

  • Morning: ACI BBBY SNX

  • Wednesday (Jan 11)

  • Afternoon:  KBH

  • Friday (Jan 13) 

  • Morning:  BAC BLK BK C DAL FRC JPM UNH WFC

Asia & Europe detail:

Asia: Nikkei +0.8%, Hang Seng -0.3%, Shanghai Composite -0.2%

Equity indices in the Asia-Pacific region ended Tuesday on a mixed note. Tokyo's yr/yr CPI rate accelerated to its fastest pace in 42 years in the December reading. China Securities Daily noted that analysts forecast stable inflation around 2.0% in 2023, but also see a risk of a rise past 5.0%. Chinese officials are expected to cut the value added tax for small businesses this year. China will reportedly halt the issuance of visas to Koreans until South Korea reverses entry restrictions on Chinese citizens. Taiwan Semiconductor Manufacturing Company reported that sales in 2022 hit a record of TWD2.26 trln, up 42.6% yr/yr.

  • In economic data:

  • China's December New Loans CNY1.40 trln (expected CNY1.10 trln; last CNY1.21 trln) and December Total Social Financing CNY1.31 trln (expected CNY1.60 trln; last CNY1.99 trln)

  • Japan's November Household Spending -0.9% m/m (expected -0.5%; last 1.1%); -1.2% yr/yr (expected 0.5%; last 1.2%). December Tokyo Core CPI 4.0% yr/yr (last 3.7%) and Tokyo Core CPI 4.0% yr/yr (expected 3.8%; last 3.6%)

  • South Korea's November Current Account deficit $620 mln (last deficit of $880 mln)

---Equity Markets---

  • Japan's Nikkei: +0.8%

  • Hong Kong's Hang Seng: -0.3%

  • China's Shanghai Composite: -0.2%

  • India's Sensex: -1.0%

  • South Korea's Kospi: +0.1%

  • Australia's ASX All Ordinaries: -0.3%

---FX---

  • USD/JPY: +0.2% to 132.10

  • USD/CNH: +0.2% to 6.7889

  • USD/INR: -0.5% to 81.70

 

Europe: DAX -0.4%, FTSE -0.2%, CAC -0.7%

Major European indices trade in the red. Bank of England Chief Economist Pill said that inflation in the U.K. could remain at a high level even if energy prices recede. The British government is preparing to reduce energy subsidies to businesses by about 85%. EU Economic Commissioner Gentiloni said that EU inflation appears to have peaked and that a deep recession has likely been avoided. On a related note, Goldman Sachs no longer expects that a recession will take place in the eurozone.

  • In economic data:

  • France's November Industrial Production 2.0% m/m (expected 0.8%; last -2.5%)

---Equity Markets---

  • STOXX Europe 600: -0.7%

  • Germany's DAX: -0.4%

  • U.K.'s FTSE 100: -0.2%

  • France's CAC 40: -0.7%

  • Italy's FTSE MIB: -0.1%

  • Spain's IBEX 35: UNCH

---FX---

  • EUR/USD: UNCH at 1.0726

  • GBP/USD: -0.3% to 1.2139

  • USD/CHF: +0.2% to 0.9228


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