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12/02/22 Briefing


The S&P 500 futures trade 11 points, or 0.3%, above fair value while Treasury yields hold steady in front of the Consumer Price Index for March at 8:30 a.m. ET.

The Briefing.comconsensus is projecting another hot inflation report with a 1.2% m/m increase in total CPI that pushes the yr/yr rate to 8.4%. That should keep expectations elevated for the Fed to issue a 50-basis-point rate hike next month, as Fed officials have been suggesting could be the case.

Earlier, the NFIB Small Business Optimism Index for March decreased to 93.2 from 95.7 in February, and later, the Treasury Budget for March will be released at 2:00 p.m. ET.

The 2-yr yield is up one basis point to 2.51%, and the 10-yr yield is unchanged at 2.78%. The U.S. Dollar Index is up for the ninth straight session, topping the 100.00 level (100.14, +0.23, +0.2%), while WTI crude futures are rebounding 4.1%, or $3.89, to $98.17/bbl.

Separately, shares of Cisco (CSCO 51.63, -1.25, -2.4%) are down 2% in pre-market action after Citigroup downgraded the Dow component to Sell from Neutral. CarMax (KMX 99.50, -3.67, -3.6%) and Albertsons (ACI 33.50, -1.28, -3.7%) are down sharply following their earnings reports.

In U.S. Corporate news:

  • Cisco (CSCO 51.63, -1.25): -2.4% after the stock was downgraded to Sell from Neutral at Citigroup.

  • CarMax (KMX 99.50, -3.67): -3.6% after missing EPS estimates on above-consensus revenue.

  • Albertsons (ACI 33.50, -1.28): -3.7% despite beating top and bottom-line estimates.

  • American Airlines (AAL 16.95, -0.02): -0.1% despite raising its Q1 revenue guidance. The company now expects a revenue decline of 16% from Q1 of 2019 (prior guidance decline of 17%).

  • CrowdStrike (CRWD 224.80, +8.20): +3.8% after the stock was upgraded to Buy from Neutral at Goldman.

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region ended Tuesday on a mostly lower note. Japan's Nikkei: -1.8% Hong Kong's Hang Seng: +0.5% China's Shanghai Composite: +1.5% India's Sensex: -0.7% South Korea's Kospi: -1.0% Australia's ASX All Ordinaries: -0.5%.

  • In economic data:

  • Japan's March PPI 0.8% m/m (expected 0.9%; last 0.9%); 9.5% yr/yr (expected 9.3%; last 9.7%). March Bank Lending 0.5% m/m (last 0.3%)

  • Australia's March NAB Business Survey 18 (last 9)

  • New Zealand's Q1 NZIER Business Confidence -40% (last -28%). February External Migration & Visitors -1.2% (last -26.0%)


  • In news:

  • Japan's March PPI increased at its fastest pace since 1891 while the February reading was revised higher.

  • The U.S. reportedly ordered non-emergency staff to leave the Consulate in Shanghai.

  • A former Reserve Bank of Australia economist said that he does not expect Australia's cash rate to be increased soon.

  • Economists have a split view of the upcoming Bank of Korea policy meeting on Thursday with nearly half expecting the base rate to remain at 1.25%.



  • Major European indices trade on a mostly lower note. STOXX Europe 600: -0.5% Germany's DAX: -1.0% U.K.'s FTSE 100: -0.5% France's CAC 40: -0.6% Italy's FTSE MIB: -0.1% Spain's IBEX 35: +0.2%.

  • In economic data:

  • Eurozone's April ZEW Economic Sentiment -43.0 (expected -46.5; prior 38.7)

  • Germany's April ZEW Economic Sentiment -41.0 (expected -48.0; last -39.3) and ZEW Current Conditions -30.8 (expected -35.0; last -21.4). March CPI 2.5% m/m, as expected (last 0.9%); 7.3% yr/yr, as expected (last 5.1%). March WPI 6.9% m/m (last 1.7%); 22.6% yr/yr (last 16.6%)

  • U.K.'s February Average Earnings Index + Bonus 5.4% yr/yr, as expected (last 4.8%). February three-month employment change 10,000 (expected 50,000; last -12,000) and March Claimant Count -46,900 (expected -41,100; last -58,000). February Unemployment Rate 3.8%, as expected (last 3.9%)

  • France's February trade deficit EUR10.30 bln (last deficit of EUR8.00 bln). February Current Account deficit EUR1.10 bln (last deficit of EUR1.30 bln)


  • In news:

  • The European Central Bank's lending survey for Q1 showed a tightening of credit standards for consumers and businesses.

  • Credit standards for businesses are expected to continue tightening in Q2.

  • Germany's ZEW Economic Sentiment survey showed a decrease in inflation expectations.

  • Commerzbank and Deutsche Bank are among the laggards in Frankfurt after a big investor sold 5% stakes in both firms.



U.S. equity futures:

  • S&P 500 Futures: +6 @ 4,419

  • DJIA Futures: +24 @ 34,332

  • Nasdaq 100 Futures: +31 @ 14,021

Overseas:

  • Europe: DAX -1.0%, FTSE -0.5%, CAC -0.6%

  • Asia: Nikkei -1.8%, Hang Seng +0.5%, Shanghai Composite +1.5%

Commodities:

  • Crude Oil +4.07 @ 98.36

  • Nat Gas +0.172 @ 6.815

  • Gold +7.20 @ 1955.40

  • Silver +0.148 @ 25.135

  • Copper +0.0345 @ 4.6685

U.S. Summary:

  • Earnings/Guidance (Full Earnings Calendar):

  • Airspan Networks Holdings (MIMO) misses on top and bottom lines; sees Q1 revs below consensus

  • Albertsons (ACI) beats by $0.10, beats on revs; guides FY23 EPS in-line

  • American Airlines (AAL) raises Q1 revenue guidance

  • Caledonia Mining (CMCL) reports production update and record Q1 production at Blanket Mine; reaffirms FY22 production outlook

  • CarMax (KMX) misses by $0.32, beats on revs

  • GOL Linhas Aereas Inteligentes S.A. (GOL) sees Q1 earnings below consensus

  • New Gold (NGD) reports Q1 gold equivalent production of 87,696 ounces


  • General News:

  • Ukrainian President Volodymyr Zelensky says that Russia is planning "new stage of terror against Ukraine" which could include chemical weapons. Australia and Britain are working to confirm social media speculation that chemical weapons were already used in Mariupol, according to the New York Times

  • President Biden is considering Michael Barr for Fed Vice Chair of Supervision, according to Politico

  • White House announces that EPA will allow E15 gasoline-gasoline that uses a 15 percent ethanol blend-to be sold this summer

  • NYC Mayor Eric Adams is concerned that adoption of fully remote or hybrid work by several companies could severely hurt NYC's economy, which is dependent on office towers being filled, according to the New York Times

  • DBRS Morningstar confirms United States of America at AAA, stable

  • Retail marijuana sales could begin in New Jersey within 30 days, according to Bloomberg

  • Airlines want White House to end mask mandate on planes next week, according to Financial Times

  • Achilles Therapeutics (ACHL) announced clinical manufacturing expansion in the UK and US

  • Actinum Pharma (ATNM) and Immedica to commercialize Iomab-B (131I apamistamab) in Europe, the Middle East and North Africa

  • Aeglea BioTherapeutics (AGLE) Presents Additional Data from PEACE Phase 3 Study of Pegzilarginase for the Treatment of Arginase 1 Deficiency at SIMD; submits BLA to FDA for Pegzilarginase

  • Air Lease (AL) reports activity update for Q1 of 2022

  • Alamos Gold (AGI) Announces Groundbreaking for Phase III Expansion of Island Gold Mine in Ontario, Canada

  • Alibaba (BABA): Daily Journal cuts stake in Alibaba by 50%, according to Reuters

  • AllianceBernstein (AB) reports preliminary assets under management of $735 bln as of March 31

  • Apple (AAPL) iPhone producer Pegatron Corp. suspends Shanghai production amid COVID-19 lockdowns, according to Bloomberg

  • Arcos Dorados (ARCO) provides updates in Letter to Shareholders

  • Artisan Partners Asset Mgmt (APAM) reports preliminary assets under management of $159.6 bln as of March 31, 2022

  • AssetMark (AMK) issues highlights for March 2022

  • Cohen & Steers (CNS) reports preliminary assets under management of $102.1 bln as of March 31

  • Compass Minerals (CMP) reports above-average MarQ winter weather activity in its North American-served market, resulting in a 4.3% jump yr/yr in highway deicing salt products sold

  • CureVac (CVAC) and GSK Enter into pandemic preparedness contract with German Government

  • Ensign Group (ENSG) receives new $600 million credit facility

  • Etsy (ETSY): Some Etsy sellers are protesting higher fees, according to the Wall Street Journal

  • European Wax Center (EWCZ) declares special dividend of $3.30 per share

  • Ford (F) mulls manufacturing EVs in India, according to Digitimes

  • Franklin Resources (BEN) reports preliminary month-end assets under management of $1,477.5 bln as of March 31

  • General Motors (GM) and Glencore (GLNCY) enter multi-year cobalt supply agreement

  • Gilead Sciences (GILD) announces lift of partial clinical old on studies evaluating magrolimab in combination with azacitidine

  • Grid Dynamics (GDYN) expands in Europe, ceases operations in Russia

  • Harpoon Therapeutics (HARP) Presents Preclinical Data for TriTAC-XR Platform that Supports Potential for Improved Safety by Minimizing Cytokine Release Syndrome

  • Hecla Mining (HL) reports Q1 updates - silver production increased and zinc production is steady

  • Honda Motor (HMC) provides news briefing on EV prospects

  • Inozyme Pharma (INZY): First patient dosed in its Phase 1/2 clinical trial of INZ-701 in adult patients with ABCC6 Deficiency and the second cohort in the ongoing Phase 1/2 clinical trial in ENPP1 Deficiency has been fully enrolled

  • Invesco (IVZ) reports preliminary month-end assets under management for March of $1,555.9 bln

  • Jacobs Engineering (J) expects to record up to $80 mln in after-tax charges to net income in the second quarter of fiscal year 2022 in connection with the CH2M settlement payment

  • KBR (KBR) announces settlement agreement with Ichthys Power Plant Subcontractor

  • Lazard (LAZ) reports that its preliminary AUM as of March 31, 2022 totaled approximately $252.7 bln

  • Molecular Templates' (MTEM) Presentations at the American Association of Cancer Research (AACR) Annual Meeting 2022 Highlight Potential of ETB Approach

  • Myovant Sciences (MYOV) and Pfizer (PFE) provide update on sNDA for MYFEMBREE

  • Nokia (NOK) to exit the Russian market; no impact to financial outlook

  • Novartis (NVS) to eliminate thousands of jobs, according to Reuters

  • Partner Comms (PTNR) CEO Avi Zvi has notified the Board of Directors of his resignation from the Company

  • PPL Corp (PPL) provides update on Rhode Island Division of Public Utilities and Carriers

  • PureTech (PRTC) Announces Publication of Research from Collaborators Demonstrating PureTech's Glyph Platform Enhances Oral Absorption of Buprenorphine

  • Repare Therapeutics (RPTX) presents updated data from ongoing Phase 1/2 TRESR study

  • Rocket Lab USA (RKLB) breaks ground on neutron production complex in Virginia

  • SeaSpine (SPNE) announces full commercial launch of the Reef TA (TLIF Articulating) Interbody System

  • Sonoco Products (SON) names Rodger Fuller COO, effective immediately

  • Stantec (STN) awarded a five-year indefinite delivery/indefinite quantity multiple award task order contract with capacity of $18 mln by the U.S. Army Corps of Engineers

  • Takeda Pharma (TAK) announced that the Phase 3 SHP643-301 study (NCT04070326) evaluating the safety profile and pharmacokinetics (PK) of TAKHZYRO in patients 2 to <12 years of age is complete and has met its objectives

  • Tilray (TLRY) announces that the Company has signed a definitive agreement for a commercial and financial partnership with HEXO Corp. (HEXO)

  • US Foods (USFD): Sachem Head Capital Management LP continues to believe that significant change is needed in the USFD boardroom to fulfill its potential

  • Vimeo (VMEO) reports monthly metrics for March 2022; total revenue jumped 18% yr/yr

  • VistaGen (VTGN) and AffaMed Complete Key Regulatory Submissions for PALISADE Global Phase 3 Clinical Trial for PH94B

  • XL Fleet (XL) announces that Donald P. Klein has been appointed Chief Financial Officer of XL Fleet, effective April 11, 2022

  • Zentalis Pharmaceuticals (ZNTL) announces overview of clinical and preclinical data presented at AACR


  • M&A:

  • Gold Royalty (GROY) provides update on Elemental offer

  • Littelfuse (LFUS) announced it has acquired Embed, Ltd; terms not disclosed

  • SPX Corp (SPXC) acquires International Tower Lighting; financial details not disclosed


  • Syndicate:

  • Leafly (LFLY) files for 10,451,087 share common stock offering related to warrants; also files for 16,542,564 share common stock offering by selling shareholders

  • TeraWulf (WULF) announces public offering of common stock; size not indicated


  • IPOs:

  • Expected to Price:

  • Applied Blockchain (Nasdaq: APLD): The developer of next-generation data centers is expected to price its 3.2 mln share IPO between $16.50-$20.50.

  • Excelerate Energy (NYSE: EE): The provider of flexible liquefied natural gas solutions to emerging markets is expected to price its 16.0 mln share IPO between $21-$24.



Gapping Up/Down

  • Gapping up:

  • AGLE +32.1%, SPNE +5%, GDYN +5%, CVAC +2.3%, APAM +2.1%, GROY +1.2%, EWCZ +1.1%


  • Gapping down:

  • MYOV -9.2%, WULF -9.1%, ENSG -6.4%, VMEO-3.3%, GOL -1.4%, LFLY -0.9%, RKLB -0.8%, ZNTL-0.5%


Analyst Research (see Upgrades/Downgradescalendarfor full list):

  • Upgrades

  • Aptiv (APTV) upgraded to Equal Weight from Underweight at Wells Fargo; tgt raised to $112

  • Brighthouse Financial (BHF) upgraded to Equal Weight from Underweight at Wells Fargo; tgt raised to $54

  • Cardinal Health (CAH) upgraded to Overweight from Equal-Weight at Morgan Stanley; tgt $74

  • CrowdStrike (CRWD) upgraded to Buy from Neutral at Goldman; tgt raised to $285

  • Domino's Pizza (DPZ) upgraded to Buy from Neutral at Citigroup; tgt raised to $487


  • Downgrades:

  • AmerisourceBergen (ABC) downgraded to Equal-Weight from Overweight at Morgan Stanley; tgt $178

  • Bancolombia S.A. (CIB) downgraded to Neutral from Overweight at JP Morgan; tgt $46

  • Chegg (CHGG) downgraded to Sector Weight from Overweight at KeyBanc Capital Markets

  • Cisco (CSCO) downgraded to Sell from Neutral at Citigroup; tgt lowered to $45

  • Dana Inc (DAN) downgraded to Equal Weight from Overweight at Wells Fargo; tgt lowered to $17

  • Enjoy Technology (ENJY) downgraded to Market Perform from Outperform at Telsey Advisory Group; tgt lowered to $4

  • F5 Networks (FFIV) downgraded to Equal-Weight from Overweight at Morgan Stanley; tgt lowered to $250 and removed as Top Pick

  • Federated Hermes (FHI) downgraded to Sell from Neutral at Citigroup; tgt lowered to $28.50

  • Fiserv (FISV) downgraded to Market Perform from Outperform at Cowen; tgt lowered to $126

  • Hewlett Packard Enterprise (HPE) downgraded to Underweight from Equal-Weight at Morgan Stanley; tgt lowered to $15

  • Krispy Kreme, Inc. (DNUT) downgraded to Neutral from Buy at Citigroup; tgt lowered to $16


  • Others:

  • ADTRAN (ADTN) initiated with a Buy at Rosenblatt; tgt $25

  • BJ Restaurants (BJRI) initiated with a Neutral at Citigroup; tgt $29

  • Bloomin' Brands (BLMN) initiated with a Neutral at Citigroup; tgt $24

  • Calix Networks (CALX) initiated with a Buy at Rosenblatt; tgt $60

  • Cheesecake Factory (CAKE) initiated with a Buy at Citigroup; tgt $52

  • Cracker Barrel (CBRL) initiated with a Sell at Citigroup; tgt $97

  • Darden Restaurants (DRI) initiated with a Buy at Citigroup; tgt $162

  • Denny's (DENN) initiated with a Neutral at Citigroup; tgt $15

  • First Bancorp (FBP) assumed with an Outperform at Keefe Bruyette; tgt $17.50

  • First Watch Restaurant Group (FWRG) assumed with a Buy at Citigroup; tgt lowered to $17

  • HashiCorp (HCP) initiated with a Neutral at Piper Sandler; tgt $59

  • Helmerich & Payne (HP) initiated with a Buy at The Benchmark Company; tgt $53

  • Popular (BPOP) assumed with an Outperform at Keefe Bruyette; tgt $115


Upcoming Events:

  • Econ Data:

  • 08:30 ET: CPI for Mar (Briefing.comConsensus 1.2%; Prior 0.8%)

  • 08:30 ET: Core CPI for Mar (Briefing.comConsensus 0.5%; Prior 0.5%)

  • 14:00 ET: Treasury Budget for Mar (Briefing.comConsensus NA; Prior -$216.6B)


  • Earnings:

  • Tuesday (Apr 12)

  • Morning: ACI KMX


  • Wednesday (Apr 13)

  • Morning: BBBY BLK DAL FAST FRC JPM SJR

  • Afternoon: WAFD


  • Thursday (Apr 14)

  • Morning: ALLY C ERIC GS MS PNC PGR RAD STT TSM USB UNH WFC



Asia & Europe detail:

Asia: Nikkei -1.8%, Hang Seng +0.5%, Shanghai Composite +1.5%

Equity indices in the Asia-Pacific region ended Tuesday on a mostly lower note. Japan's March PPI increased at its fastest pace since 1891 while the February reading was revised higher. The U.S. reportedly ordered non-emergency staff to leave the Consulate in Shanghai. A former Reserve Bank of Australia economist said that he does not expect Australia's cash rate to be increased soon. Economists have a split view of the upcoming Bank of Korea policy meeting on Thursday with nearly half expecting the base rate to remain at 1.25%.

  • In economic data:

  • Japan's March PPI 0.8% m/m (expected 0.9%; last 0.9%); 9.5% yr/yr (expected 9.3%; last 9.7%). March Bank Lending 0.5% m/m (last 0.3%)

  • Australia's March NAB Business Survey 18 (last 9)

  • New Zealand's Q1 NZIER Business Confidence -40% (last -28%). February External Migration & Visitors -1.2% (last -26.0%)


---Equity Markets---

  • Japan's Nikkei: -1.8%

  • Hong Kong's Hang Seng: +0.5%

  • China's Shanghai Composite: +1.5%

  • India's Sensex: -0.7%

  • South Korea's Kospi: -1.0%

  • Australia's ASX All Ordinaries: -0.5%

---FX---

  • USD/JPY: +0.1% to 125.58

  • USD/CNH: -0.1% to 6.3760

  • USD/INR: +0.3% to 76.09

Europe: DAX -1.0%, FTSE -0.5%, CAC -0.6%

Major European indices trade on a mostly lower note. The European Central Bank's lending survey for Q1 showed a tightening of credit standards for consumers and businesses. Credit standards for businesses are expected to continue tightening in Q2. Germany's ZEW Economic Sentiment survey showed a decrease in inflation expectations. Commerzbank and Deutsche Bank are among the laggards in Frankfurt after a big investor sold 5% stakes in both firms.

  • In economic data:

  • Eurozone's April ZEW Economic Sentiment -43.0 (expected -46.5; prior 38.7)

  • Germany's April ZEW Economic Sentiment -41.0 (expected -48.0; last -39.3) and ZEW Current Conditions -30.8 (expected -35.0; last -21.4). March CPI 2.5% m/m, as expected (last 0.9%); 7.3% yr/yr, as expected (last 5.1%). March WPI 6.9% m/m (last 1.7%); 22.6% yr/yr (last 16.6%)

  • U.K.'s February Average Earnings Index + Bonus 5.4% yr/yr, as expected (last 4.8%). February three-month employment change 10,000 (expected 50,000; last -12,000) and March Claimant Count -46,900 (expected -41,100; last -58,000). February Unemployment Rate 3.8%, as expected (last 3.9%)

  • France's February trade deficit EUR10.30 bln (last deficit of EUR8.00 bln). February Current Account deficit EUR1.10 bln (last deficit of EUR1.30 bln)


---Equity Markets---

  • STOXX Europe 600: -0.5%

  • Germany's DAX: -1.0%

  • U.K.'s FTSE 100: -0.5%

  • France's CAC 40: -0.6%

  • Italy's FTSE MIB: -0.1%

  • Spain's IBEX 35: +0.2%

---FX---

  • EUR/USD: -0.2% to 1.0861

  • GBP/USD: -0.1% to 1.3015

  • USD/CHF: +0.2% to 0.9269

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