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11/01/22 Briefing

Updated: Feb 15

The S&P 500 futures trade 22 points, or 0.5%, above fair value in a continuation of yesterday's comeback effort. Long-term interest rates are behaving themselves this morning in front of Fed Chair Powell's confirmation hearing at 10:00 a.m. ET.

In his prepared remarks, Mr. Powell said the Fed will use all its tools to prevent higher inflation from becoming entrenched. Investors will tune in for any specific questions on policy normalization. On a related note, Fed Vice Chair Clarida plans to resign from the Board of Governors on Jan. 14instead of Jan. 31.

Separately, there's been a lot of guidance since yesterday's close. CVS Health (CVS 106.39, +1.33, +1.3%) and Illumina (ILMN 378.00, +15.72, +4.3%) provided upside guidance while retailers Abercrombie & Fitch (ANF 34.15, +1.80, +5.6%) and Big Lots (BIG 42.90, -3.44, -7.4%) issued downside Q4 guidance, citing impacts from the Omicron variant.

In the Treasury market, the 2-yr yield is up three basis points to 0.93% while the 10-yr yield is down one basis point to 1.76%. The U.S. Dollar Index is down 0.1% to 95.93. WTI crude futures are up 1.5%, or $1.20, to $79.43/bbl.

Earlier this morning, the NFIB Small Business Optimism Index for December increased to 98.9 from 98.4 in November. Investors will not receive any other data today.

In U.S. Corporate news:

  • CVS Health (CVS 106.39, +1.33): +1.3% after raising its FY21 EPS guidance above consensus.

  • Illumina (ILMN )378.00, +15.72): +4.3% after guiding Q4 and FY22 revenue above consensus and announcing multiple new partnerships.

  • IBM (IBM 132.00, -3.03): -2.2% after the stock was downgraded to Sell from Neutral at UBS.

  • Abercrombie & Fitch (ANF 34.15, +1.80): +5.6% even though the company lowered its fiscal Q4 revenue guidance.

  • Big Lots (BIG 42.90, -3.44): -7.4% after guiding fiscal Q4 EPS below consensus.

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region ended Tuesday on a mostly lower note. Japan's Nikkei: -0.9% Hong Kong's Hang Seng: UNCH China's Shanghai Composite: -0.7% India's Sensex: +0.4% South Korea's Kospi: +0.4% Australia's ASX All Ordinaries: -0.7%.

  • In economic data:

  • Japan's November Leading Index 103.0 (last 101.5) and Coincident Indicator 3.8% m/m (last 1.1%)

  • Australia's November Retail Sales 7.3% m/m (expected 3.9%; last 4.9%). November trade surplus $9.423 bln (expected surplus of $10.60 bln; last surplus of $10.78 bln). November Imports 6% m/m (last -2%) and Exports 2% m/m (last -3%)


  • In news:

  • Japan's Prime Minister Kishida said that current border restrictions will be maintained through February.

  • A poll conducted by the Bank of Japan showed that nearly 80% of responding households expect prices to be higher one year from now.

  • South Korea's exports through the first ten days of January were up 24.4% yr/yr with chip exports increasing 23.3%.

  • North Korea conducted its second missile test in under a week.



  • Major European indices trade higher across the board. STOXX Europe 600: +1.0% Germany's DAX: +1.2% U.K.'s FTSE 100: +0.7% France's CAC 40: +1.3% Italy's FTSE MIB: +0.9% Spain's IBEX 35: +0.8%.

  • In economic data:

  • U.K.'s Q3 Labour Productivity -1.4% qtr/qtr (last 0.1%)

  • Italy's November Retail Sales -0.4% m/m (expected 0.6%; last 0.2%); 12.5% yr/yr (last 4.0%)

  • Spain's November Industrial Production 4.8% yr/yr (expected 0.6%; last -0.7%)


  • In news:

  • European Central Bank Chief Economist Lane repeated the view that inflation will slow later in 2022, slipping back below the 2.0% target at the end of the current forecast period. Nokia increased its margin guidance for the year.






U.S. equity futures:

  • S&P 500 Futures: +14 @ 4,685

  • DJIA Futures: +65 @ 36,134

  • Nasdaq 100 Futures: +69 @ 15,683

Overseas:

  • Europe: DAX +1.2%, FTSE +0.7%, CAC +1.3%

  • Asia: Nikkei -0.9%, Hang Seng UNCH, Shanghai Composite -0.7%

Commodities:

  • Crude Oil +1.23 @ 79.46

  • Nat Gas -0.008 @ 4.071

  • Gold +7.65 @ 1806.45

  • Silver +0.186 @ 22.648

  • Copper +0.0365 @ 4.3885

U.S. Summary:

  • Earnings/Guidance (Full Earnings Calendar):

  • Abercrombie & Fitch (ANF) lowers JanQ revenue guidance to +4-6% yr/yr due to additional unexpected inventory receipt delays and increased COVID-related impacts

  • Accolade (ACCD) reports Q3 (Nov) results, beats on revs; guides FebQ revs below consensus; expects FY23 revenue growth of +25% yr/yr

  • Albertsons (ACI) beats by $0.20, beats on revs; raises FY22 EPS above consensus

  • American Airlines (AAL) expects Q4 total revenue to be down ~17% versus the fourth quarter of 2019, which is better than the previous guidance of down ~20%

  • Big Lots (BIG) guides JanQ EPS below consensus, has seen a softening of traffic and sales trends since early January

  • Build-A-Bear Workshop (BBW) raises FY22 guidance

  • Charles River (CRL) sees FY22 EPS above consensus; announces a retirement and transition plan for its CFO

  • Chico's FAS (CHS) reports holiday net sales of +30%; sees Q4 EPS at high end of prior guidance; sees Q4 revs at low end of prior guidance

  • CVS Health (CVS) raises FY21 EPS guidance; reaffirms FY22 outlook

  • Danaher (DHR) raises outlook ahead of J.P. Morgan Healthcare Conference presentation

  • Duluth Trading Co (DLTH) issues in-line FY22 earnings and revenue guidance; provides sales metrics during the nine-week holiday period ending Jan 2

  • Endeavour Silver (EXK) report Q4 production was 1,443,564 silver oz and 9,446 gold oz, for silver equivalent production of 2.2 million oz AgEq

  • Illumina (ILMN) guides Q4 and FY22 revenue above consensus; also announces multiple new partnerships

  • Impinj (PI) raises Q4 revenue guidance above consensus estimate

  • Inari (NARI) guides Q4 revenue above consensus

  • Lands' End (LE) provides fiscal 2026 targets and long term drivers in slides

  • Natus Medical (NTUS) guides Q4 revs above single analyst estimate

  • Nokia (NOK) sees FY21 revs at mid-point of prior guidance; raises operating margin outlook

  • Original BARK Co. (BARK) guides DecQ revs above two analyst estimate; names Matt Meeker CEO, effective immediately

  • Ortho Clinical Diagnostics (OCDX) provides FY21 guidance

  • Osisko Gold Royalties (OR) provides preliminary deliveries update for Q4

  • Pacific Biosciences (PACB) sees Q4 revs below consensus

  • PerkinElmer (PKI) sees Q4 EPS above consensus; sees FY21 revs above consensus

  • SomaLogic (SLGC) sees FY21 revs above forecast

  • Sonendo (SONX) guides Q4 revenue slightly above consensus

  • Sotera Health (SHC) reaffirms FY21 revenue guidance

  • Takeda Pharma (TAK) issues upside FY22 revenue guidance; expects $4.5 bln in revs by FY25

  • Tenet Healthcare (THC) anticipates its Adjusted EBITDA, excluding any Q4 stimulus grant income related to the pandemic, will meet or exceed the current Wall Street consensus estimate

  • Veeco Instruments (VECO) in slide presentation says FY22 revenue growth is expected to be between 10-17%; making progress towards target of $800 mln in revenue and 20% operating income

  • XP (XP) reports Q4 metrics


  • General News:

  • Senate Banking Committee releases prepared remarks from Fed Chairman Jerome Powell ahead of confirmation hearing at 10:00 ET; Mr. Powell will say that Fed will use all tools prevent higher inflation from becoming entrenched

  • US hospitalizations from coronavirus reach record high, but that number includes people who test positive after being admitted to the hospital for a reason unrelated to the virus, according to the New York Times

  • Fed Vice Chair R. Clarida plans to resign from Board of Governors on Jan. 14, 2022; term was set to expire on Jan. 31

  • Tens of thousands protested across Germany over coronavirus restrictions and mandates, according to the New York Times

  • President Biden will endorse changes to filibuster rules to pass voting rights bill, but two moderate Senate Democrats are against this, which means it will not pass, according to the New York Times

  • CMS confirms it will require insurance companies and group health plans to cover the cost of at-home COVID-19 tests, increasing access to free tests

  • CDC mulling recommending (not requiring) that people wear N95 or KN95 masks if they can wear them consistently instead of cloth masks, according to the Washington Post

  • India to allow US pork imports, according to Reuters

  • Airbus (EADSY) is cautious regarding China due to Omicron, according to Bloomberg

  • Allegro Microsystems (ALGM) appoints Derek D'Antilo as CEO

  • Antares Pharma (ATRS) announces "positive" results from a Phase I study for ATRS-1902 for adrenal crisis

  • Apple (AAPL) has had serious talks about carrying MLB games next season, according to NY Post

  • Arcturus Therapeutics (ARCT) commenced the submission of regulatory documents to the Ministry of Health in Vietnam in December 2021 with respect to an Emergency Use Authorization application for ARCT-154

  • Azul S.A. (AZUL) reports December domestic passenger traffic (RPKs) increased 20.9% compared to December 2019 on a domestic capacity (ASKs) increase of 20.9%, resulting in a load factor of 82.3%

  • Babcock & Wilcox Enterprises (BW) awarded contracts totaling more than $18 mln to install equipment to improve the operating efficiency, performance, and increase availability for two power plants for a large U.S. utility

  • Bausch Health (BHC) provides strategic updates at JP Morgan Conference

  • BioAtla (BCAB) announces clinical collaboration with Bristol Myers Squibb

  • Black Diamond Therapeutics (BDTX) announces FDA allowance of IND Application for BDTX-1535, a masterkey inhibitor of EGFR for the treatment of gliobastoma and non-small cell lung cancer

  • Bluebirdbio (BLUE) provides updates on FDA reviews and assets for FY22ahead of JP Morgan Healthcare conference

  • Cellectis' (CLLS) licensed partner, Allogene Therapeutics (ALLO) announced that the FDA has lifted the hold on its clinical trials

  • CME Group (CME) reports international ADV increased 4% yr/yr

  • Cohen & Steers (CNS) reports preliminary assets under management of $106.6 bln as of December 31

  • Embraer SA's (ERJ) Eve UAM and Falko Regional Aircraft announce Letter of Intent which contemplates a potential order for 200 of Eve's electric vertical take-off and landing aircraft (eVTOL) and a commercial partnership to develop a global network of eVTOL operators in support of Urban Air Mobility missions

  • EPAM Systems (EPAM) unit EPAM Continuum appointed strategic digital partner for launch of INEOS Automotive's new Grenadier Vehicle

  • FREYR Battery (FREY) and Aleees to pursue LFP cathode manufacturing joint venture

  • Fusion Pharmaceuticals (FUSN) announces nomination of first targeted alpha therapy candidate in collaboration with AstraZeneca (AZN)

  • Gilead (GILD) believes FDA will decide within two weeks if remdesivir could be used outside hospital in shorter courses, according to Bloomberg

  • Gores Guggenheim (GGPI) merger partner Polestar meets global sales target of 29,000 cars in 2021 and continues to deliver on ambitious growth plans ahead of proposed listing

  • Immunome (IMNM) provides update on IND submission for IMM-BCP-01; receives clinical hold letter from the FDA

  • Intel (INTC) confirms appointment of David Zinsner as CFO, effective January 17

  • Intel (INTC): Senator Marco Rubio (R-FL) says "Intel should not get CHIPS funding from U.S. government after caving to Beijing"

  • KKR (KKR) announces appointment of Ryan Stork as a Partner and Chief Operating Officer

  • LumiraDx's (LMDX) C-reactive protein (CRP) Test has achieved CE Marking

  • Matador Resources (MTDR) announces planned retirement of CFO David E. Lancaster

  • Medtronic (MDT) receives regulatory approval in Japan for launch of Micra AV Transcatheter Pacing System

  • Merck (MRK) execs expect pill to be effective against Omicron, according to Reuters

  • Micron's (MU) Chief Financial Officer resigns to join Intel; company also reaffirms Q2 guidance

  • NASDAQ (NDAQ) reports December 2021 metrics -- U.S. equity options volume was 258 mln contracts vs 301 mln prior month and 277 mln one year ago

  • NeoGenomics (NEO) announces RaDaR assay receives CE mark and is submitted for US reimbursement via the MolDX program

  • Pacific Biosciences (PACB) partners with Google & Genomics England for sequencing tech

  • Pacific Biosciences (PACB) and Berry Genomics announce a collaboration to provide PacBio long read sequencing technology to the Chinese clinical market

  • Pfizer (PFE) awarded $440 mln Army contract modification

  • Quantum-Si (QSI) provides commercial update, sets list prices for its end-to-end protein sequencing platform

  • RingCentral (RNG) appoints Mo Katibeh, former Chief Product Officer and Chief Marketing Officer for AT&T Business, as Chief Operating Officer

  • Rivian Automotive (RIVN) produced more than 1,000 vehicles in 2021, which is inline with its reduced outlook, according to the Wall Street Journal

  • Rocket Pharmaceuticals (RCKT) Highlights Anticipated 2022 Milestones Across Lentiviral and AAV Gene Therapy Clinical Programs

  • Rogers Comms (RCI) appoints Tony Staffieri as CEO, effective immediately

  • Sana Biotechnology (SANA) announces non-exclusive license agreement for clinically validated BCMA CAR construct with IASO Biotherapeutics and Innovent Biologics

  • STAG Industrial (STAG) announces CEO transition plan and appoints Matts Pinard as Chief Financial Officer and Treasurer

  • Starbucks (SBUX): Union wins another representation at Starbucks store in Buffalo, NY, according to Reuters

  • Talon Metals (TSLA) enters into an agreement with Tesla for the supply and purchase of nickel concentrate

  • TELUS International (TIXT) to collaborate with Automation Anywhere to simplify the delivery and migration of automation solutions on Google (GOOG / GOOGL) Cloud

  • Uber (UBER) shuts down Apple Watch (AAPL) application, according to Verge

  • Velodyne Lidar (VLDR) announced a five-year sales agreement for its lidar sensors with QinetiQ

  • Vertex Pharma (VRTX) receives EC approval for KAFTRIO in combination with Ivacaftor to treat children with cystic fibrosis ages 6 to 11

  • Vir Biotechnology (VIR) and GlaxoSmithKline plc (GSK) announce that the US government will purchase an additional 600,000 doses of sotrovimab, enabling further nationwide access to sotrovimab for patients


  • M&A:

  • Aptiv (APTV) acquires Wind River for $4.3 bln

  • CI Financial Corp (CIXX) to acquire Northwood Family Office, Canada's leading multi-family office

  • Planet Fitness (PLNT) to acquire Sunshine Fitness Growth Holdings in a cash and stock deal valued at $800 mln; deal to be accretive to adj. net income in 2022

  • Stewart Info (STC) announced the acquisition of a majority interest in Great American Title Company; no financial terms disclosed

  • Take-Two (TTWO) deal to acquire Zynga includes $550 mln termination fee

  • Targa Resources (TRGP) to acquire its development company joint ventures for approximately $925 mln

  • TechnipFMC (FTI) announces sale of stake in Technip Energies N.V.


  • Syndicate:

  • First Financial (FFBC) files for 405,805 share common stock offering by selling shareholders

  • nCino (NCNO) files mixed securities shelf offering; also files for 43,973,042 share common stock offering by selling shareholders

  • NETSTREIT (NTST) prices offering 9 mln shares of common stock at $22.25 per share


  • IPOs:

  • Expected to Price:

  • Justworks (Nasdaq: JW): The cloud-based software platform that gives small and medium-sized businesses access to benefits, payroll, human resources and compliance support is expected to price its 7.0 M share IPO between $29-$32.

  • TPG, Inc. (Nasdaq: TPG): The leading global alternative asset manager is expected to price its 33.9 M share IPO between $28-$31.

  • Verdant Earth Technologies (Nasdaq: VDNT): The development stage green energy company is expected to price its 6.3 M share IPO between $7-$9.



Gapping Up/Down

  • Gapping up:

  • ZY +12.5%, ACCD +10.4%, QSI +8.2%, SONX +6.6%, NARI +6.2%, ANF +5.9%, FREY +5.3%, ILMN +4.3%, PI +3.8%, FUSN +3.6%, BARK +3.3%, BCAB +3%, MAIN +2.6%, EPAM +1.7%, OCDX +1.7%, NDAQ+1.6%, NOK +1.6%, STAG +1.4%, INTC +1.4%, EFC+1%, PFE +0.8%, MDT +0.8%, AAPL +0.7%, NVEI+0.7%, VRTX +0.7%, ABT +0.6%


  • Gapping down:

  • IMNM -13.7%, FTI -7.4%, BIG -5%, MTDR -4.3%, NCNO -3.6%, RIVN -2.9%, NTST -2.7%, NTUS -2.7%, DLTH -2.6%, OR -1.1%, TRGP -1%, TAK -1%, ALGM-0.9%, MU -0.9%


Analyst Research (see Upgrades/Downgradescalendarfor full list):

  • Upgrades

  • Advanced Micro (AMD) upgraded to Overweight from Sector Weight at KeyBanc Capital Markets; tgt $155

  • Allegheny Tech (ATI) upgraded to Outperform from Market Perform at Cowen; tgt raised to $23

  • American Airlines (AAL) upgraded to Equal-Weight from Underweight at Morgan Stanley; tgt lowered to $21

  • Certara (CERT) upgraded to Buy from Hold at Jefferies; tgt $31

  • Frontier Communications Parent (FYBR) upgraded to Conviction Buy from Buy at Goldman; tgt $48

  • Houghton Mifflin Harcourt (HMHC) upgraded to Outperform from Market Perform at BMO Capital Markets; tgt raised to $20

  • Intercept Pharma (ICPT) upgraded to Buy from Neutral at B. Riley Securities; tgt raised to $30

  • iRhythm (IRTC) upgraded to Outperform from Perform at Oppenheimer; tgt $150

  • Juniper Networks (JNPR) upgraded to Buy from Underperform at BofA Securities; tgt raised to $40


  • Downgrades:

  • Alcoa (AA) downgraded to Hold from Buy at Deutsche Bank; tgt raised to $65

  • American Tower (AMT) downgraded to Neutral from Buy at Goldman; tgt lowered to $281

  • Apria (APR) downgraded to Neutral from Buy at UBS; tgt $37.50

  • Bilibili (BILI) downgraded to Mkt Perform from Outperform at Bernstein; tgt $45

  • BNY Mellon (BK) downgraded to Mkt Perform from Outperform at Keefe Bruyette; tgt raised to $70

  • Cleveland-Cliffs (CLF) downgraded to Peer Perform from Outperform at Wolfe Research; tgt $23

  • Cogent Communications (CCOI) downgraded to Sell from Neutral at Goldman; tgt lowered to $57

  • IBM (IBM) downgraded to Sell from Neutral at UBS; tgt lowered to $124

  • Intel (INTC) downgraded to Sector Weight from Overweight at KeyBanc Capital Markets


  • Others:

  • Apollo Medical (AMEH) assumed with a Buy at Colliers Securities; tgt $93

  • AvePoint (AVPT) initiated with an Overweight at Cantor Fitzgerald; tgt $10

  • Bill.com(BILL) initiated with a Buy at Goldman; tgt $296

  • CoStar Group (CSGP) initiated with an Outperform at RBC Capital Mkts; tgt $85

  • Danaher (DHR) initiated with an Outperform at Bernstein; tgt $365

  • Domino's Pizza (DPZ) resumed with a Buy at BofA Securities; tgt $642

  • Embark Technology (EMBK) initiated with a Sector Weight at KeyBanc Capital Markets

  • Emerson (EMR) initiated with a Mkt Perform at Bernstein; tgt $100

  • Fifth Third (FITB) assumed with an Overweight at Morgan Stanley; tgt $56

  • First Republic Bank (FRC) assumed with an Equal-Weight at Morgan Stanley; tgt $225

  • General Electric (GE) initiated with an Outperform at Bernstein; tgt $120

  • Huntington Banc (HBAN) assumed with an Equal-Weight at Morgan Stanley; tgt $19

  • IDEX Corp (IEX) initiated with a Mkt Perform at Bernstein; tgt $230

  • IronNet (IRNT) initiated with a Neutral at Guggenheim

  • JD.com(JD) initiated with an Overweight at Atlantic Equities; tgt $100

  • Krispy Kreme, Inc. (DNUT) initiated with a Buy at BofA Securities; tgt $23


Upcoming Events:

  • Econ Data:

  • 06:00 ET: NFIB Small Business Optimism report for Dec (Briefing.comConsensus NA; Prior 98.4)


  • Earnings:

  • Monday (Jan 10)

  • Morning: AZZ CMC TLRY

  • Afternoon: ACCD


  • Tuesday (Jan 11)

  • Morning: ACI SNX


  • Wednesday (Jan 12)

  • Morning: JEF SJR

  • Afternoon: KBH


  • Thursday (Jan 13)

  • Morning: DAL TSM

  • Afternoon: WAFD


  • Friday (Jan 14)

  • Morning: BLK C FRC JPM WFC




Asia & Europe detail:

Asia: Nikkei -0.9%, Hang Seng UNCH, Shanghai Composite -0.7%

Equity indices in the Asia-Pacific region ended Tuesday on a mostly lower note. Japan's Prime Minister Kishida said that current border restrictions will be maintained through February. A poll conducted by the Bank of Japan showed that nearly 80% of responding households expect prices to be higher one year from now. South Korea's exports through the first ten days of January were up 24.4% yr/yr with chip exports increasing 23.3%. North Korea conducted its second missile test in under a week.

  • In economic data:

  • Japan's November Leading Index 103.0 (last 101.5) and Coincident Indicator 3.8% m/m (last 1.1%)

  • Australia's November Retail Sales 7.3% m/m (expected 3.9%; last 4.9%). November trade surplus $9.423 bln (expected surplus of $10.60 bln; last surplus of $10.78 bln). November Imports 6% m/m (last -2%) and Exports 2% m/m (last -3%)


---Equity Markets---

  • Japan's Nikkei: -0.9%

  • Hong Kong's Hang Seng: UNCH

  • China's Shanghai Composite: -0.7%

  • India's Sensex: +0.4%

  • South Korea's Kospi: +0.4%

  • Australia's ASX All Ordinaries: -0.7%

---FX---

  • USD/JPY: +0.2% to 115.39

  • USD/CNH: UNCH at 6.3796

  • USD/INR: -0.1% to 73.91

Europe: DAX +1.2%, FTSE +0.7%, CAC +1.3%

Major European indices trade higher across the board. European Central Bank Chief Economist Lane repeated the view that inflation will slow later in 2022, slipping back below the 2.0% target at the end of the current forecast period. Nokia increased its margin guidance for the year.

  • In economic data:

  • U.K.'s Q3 Labour Productivity -1.4% qtr/qtr (last 0.1%)

  • Italy's November Retail Sales -0.4% m/m (expected 0.6%; last 0.2%); 12.5% yr/yr (last 4.0%)

  • Spain's November Industrial Production 4.8% yr/yr (expected 0.6%; last -0.7%)


---Equity Markets---

  • STOXX Europe 600: +1.0%

  • Germany's DAX: +1.2%

  • U.K.'s FTSE 100: +0.7%

  • France's CAC 40: +1.3%

  • Italy's FTSE MIB: +0.9%

  • Spain's IBEX 35: +0.8%

---FX---

  • EUR/USD: +0.1% to 1.1339

  • GBP/USD: +0.1% to 1.3586

  • USD/CHF: -0.1% to 0.9264


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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