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13/01/23 Briefing


The S&P 500 futures are down 31 points and are trading 0.8% below fair value. The Nasdaq 100 futures are down 109 points and are trading 0.9% below fair value. The Dow Jones Industrial Average futures are down 243 points and are trading 0.7% below fair value.

Things are more negative in the equity futures market today as participants digest the first slate of Q4 earnings reports. The stock market has had a good run leading up this point so there might be some profit taking activity behind this morning's weakness. The S&P 500 closed yesterday just shy of key technical resistance at its 200-day moving average. 

China reported a decline in imports (-7.5% yr/yr) and exports (-9.9% yr/yr) in December, but the numbers came in better than feared. 

The Bank of Korea raised its policy rate by 25 bps to 3.50%, as expected.

Germany's 2022 GDP was up 1.9% versus the expected 1.8%.

The 2-yr Treasury note yield is up two basis points to 4.16% and the 10-yr note yield is up four basis points to 3.48%.

In corporate news:

  • Bank of America (BAC 33.80, -0.67, -1.9%): beats by $0.08, beats on revs

  • JPMorgan Chase (JPM 135.49, -4.00, -2.9%): beats by $0.47, reports revs in-line;  provides FY23 guidance metrics in slide presentation

  • Virgin Galactic (SPCE 5.4500, +0.83, +18.0%): updates leadership structure; commercial spaceline operations on track for 2Q23 as previously announced

  • Tesla (TSLA 116.96, -6.60, -5.3%): lowers some US priced vehicles by 20% so more buyers qualify for a $7,500 tax credit, according to WSJ

  • UnitedHealth (UNH 484.92, -10.75, -2.2%): beats by $0.17, reports revs in-line; reaffirms FY23 EPS guidance, revs guidance

  • Delta Air Lines (DAL 37.87, -1.73, -4.4%): beats by $0.14, beats on revs; guides Q1 EPS below consensus, revs above two analyst estimate; guides FY23 EPS in-line, revs above consensus

  • Salesforce (CRM 147.48, -2.12, -1.4%): downgraded to Neutral from Overweight at Atlantic Equities

  • Lockheed Martin (LMT 446.50, -15.24, -3.3%): downgraded to Sell from Neutral at Goldman Sachs

  • Boeing (BA 212.46, -1.86, -0.9%): 737 Max from China Southern Airlines (ZNH) took off from Guangzhou, according to WSJ

Reviewing today's economic data:

  • Equity indices in the Asia-Pacific region ended the week on a mostly higher note. Japan's Nikkei: -1.3% (+0.6% for the week), Hong Kong's Hang Seng: +1.0% (+3.6% for the week), China's Shanghai Composite: +1.0% (+1.2% for the week), India's Sensex: +0.5% (+0.6% for the week), South Korea's Kospi: +0.9% (+4.2% for the week), Australia's ASX All Ordinaries: +0.7% (+3.2% for the week).

  • In economic data:

  • China's December trade surplus $78.00 bln (expected surplus of $76.20 bln; last surplus of $69.84 bln). December Imports -7.5% yr/yr (expected -9.8%; last -10.6%) and Exports -9.9% yr/yr (expected -10.0%; last -8.7%)

  • South Korea's December Import Price Index 9.1% yr/yr (last 14.0%) and Export Price Index 3.1% yr/yr (last 8.3%)

  • Australia's November Home Loans -2.0% m/m (expected -3.0%; last -5.6%) and Investment Lending for Housing -3.6% m/m (last -2.3%)

  • In news:

  • China's Premier Li said that growth and consumer prices will be stabilized and that incentives to boost the domestic economy will be maintained.

  • The Bank of Japan conducted two unscheduled bond buying operations to counteract rising yields.

  • The Bank of Korea raised its policy rate by 25 bps to 3.50%, as expected.

  • The central bank expects that growth will be shy of what had been forecast in November.

  • Major European indices trade on a mostly higher note. STOXX Europe 600: +0.4% (+1.7% week-to-date), Germany's DAX: UNCH (+3.1% week-to-date), U.K.'s FTSE 100: +0.3% (+1.6% week-to-date), France's CAC 40: +0.1% (+1.9% week-to-date), Italy's FTSE MIB: -0.2% (+2.1% week-to-date), Spain's IBEX 35: +0.3% (+1.7% week-to-date).

  • In economic data:

  • Eurozone's November Industrial Production 1.0% m/m (expected 0.5%; last -1.9%); 2.0% yr/yr (expected 0.5%; last 3.4%). November trade deficit EUR11.70 bln (expected deficit EUR21.10 bln; last deficit of EUR27.00 bln)

  • Germany's 2022 GDP 1.9% (expected 1.8%; last 2.6%)

  • U.K.'s November GDP 0.1% m/m (expected -0.3%; last 0.5%); 0.2% yr/yr (expected 0.3%; last 1.5%). November Industrial Production -0.2% m/m (expected -0.3%; last -0.1%); -5.1% yr/yr (expected -3.0%; last -4.7%). November Manufacturing Production -0.5% m/m (expected -0.2%; last 0.7%); -5.9% yr/yr (expected -4.8%; last -5.7%). November Construction Output 0.0% m/m (expected -0.3%; last 0.4%); 4.0% yr/yr (expected 5.4%; last 5.9%). November trade deficit GBP15.62 bln (expected deficit GBP14.90 bln; last deficit GBP12.26 bln)

  • France's December CPI -0.1% m/m, as expected (last 0.3%); 5.9% yr/yr, as expected (last 6.2%)

  • Italy's November Industrial Production -0.3% m/m (expected 0.3%; last -1.1%); -3.7% yr/yr (last -1.6%)

  • Spain's December CPI 0.2% m/m (expected 0.3%; last -0.1%); 5.7% yr/yr (expected 5.8%; last 6.8%)

 

U.S. equity futures:

  • S&P 500 Futures: -33 @ 3,950

  • DJIA Futures: -223 @ 33,967

  • Nasdaq 100 Futures: -104 @ 11,356

Overseas:

  • Europe: DAX UNCH, FTSE +0.3%, CAC +0.1%

  • Asia: Nikkei -1.3%, Hang Seng +1.0%, Shanghai Composite +1.0%

Commodities:

  • Crude Oil +0.27 @ 78.66

  • Nat Gas -0.112 @ 3.583

  • Gold +0.25 @ 1899.05

  • Silver -0.304 @ 23.70

  • Copper -0.0513 @ 4.1452

 

Earnings/Guidance:

  • Alamos (AGI) reports Q4 production; provides three-year production and operating guidance

  • Bank of America (BAC) beats by $0.08, beats on revs

  • BlackRock (BLK) beats by $0.85, beats on revs

  • BNY Mellon (BK) beats by $0.06, misses on revs

  • Caledonia Mining (CMCL) reports FY22 Blanket Mine production above guidance

  • Delta Air Lines (DAL) beats by $0.14, beats on revs; guides Q1 EPS below consensus, revs above two analyst estimate; guides FY23 EPS in-line, revs above consensus

  • First Republic Bank (FRC) beats by $0.08, misses on revs

  • Hanesbrands (HBI) CFO Michael Dastugue to step down; guides Q4 revs above prior guidance

  • JPMorgan Chase (JPM) beats by $0.47, reports revs in-line

  • Lending Club (LC) guides Q4 revenue inline; also announces that its streamlining operations, including a 14% reduction in workforce

  • Shaw Comms (SJR) misses by CAD 0.05, reports revs in-line

  • UnitedHealth (UNH) beats by $0.17, reports revs in-line; reaffirms FY23 EPS guidance, revs guidance

  • Wash. Federal (WAFD) beats by $0.07, reports revs in-line

  • Wells Fargo (WFC) misses by $0.47, misses on revs

  • Wendy's (WEN) sees Q4 revs above consensus; approves $500 mln buyback; raises dividend

News:

  • Western tanks are now headed to Ukraine, according to the New York Times

  • Alibaba (BABA): China expected to take "golden shares" in Alibaba and Tencent (TCEHY), according to Financial Times

  • Alphabet's (GOOG) Verily unit to cut workforce by 15%

  • Apple (AAPL) CEO Tim Cook will take a 40% pay cut in 2023, according to Bloomberg

  • AstraZeneca (AZN) receives positive opinion from CHMP for Tezspire self-administration in the EU in a new pre-filled pen

  • Atomera (ATOM) to collaborate with Arizona State University to fast-track advancement of semiconductor materials

  • Bed Bath & Beyond (BBBY) is talking with potential lenders that would finance the company during bankruptcy proceedings, according to Bloomberg

  • Boeing (BA) 737 Max from China Southern Airlines (ZNH) took off from Guangzhou, according to the Wall Street Journal

  • Brookdale Senior Living (BKD) CAO Dawn Kussow will become CFO replacing Steven Swain; expects FY22 revenue to exceed expectations

  • Carlyle Group (CG) considering two Wall Street bankers for CEO role, according to Financial Times

  • Conagra (CAG) doesn't expect large price increases in the near term, according to the Wall Street Journal

  • ConocoPhillips (COP) in talks to sell Venezuelan oil in the U.S. to recover close to $10 bln it is owed, according to the Wall Street Journal

  • Duke Energy (DUK) reaches agreement with all parties in South Carolina for its rate review request filed in September 2022

  • Fluor (FLR) joint venture selected for roadway project in the Netherlands; will book its share of the $436 mln contract in 1Q23

  • Goldman Sachs (GS) made certain changes to its business segments commencing with the fourth quarter of 2022

  • HUYA (HUYA) amends license agreement regarding broadcasting rights for League of Legends Matches

  • MediciNova (MNOV) completes enrollment in the Phase 2 Clinical Trial evaluating MN-166

  • Roche Hldg (RHHBY): US releases supplies of flu drug Tamiflu from a national stockpile, according to Bloomberg

  • SatixFy Communications (SATX) appoints Ido Gur as CEO replacing David Ripstein, effective January 15

  • Silence Therapeutics (SLN) Provides SLN360 and SLN124 Clinical Program Updates

  • Tesla (TSLA) lowers some US priced vehicles by 20% so more buyers qualify for a $7,500 tax credit, according to the Wall Street Journal

  • TravelCenters of America (TA) signs 30 new franchise agreements in 2022, reaching its annual target

  • Virgin Galactic (SPCE) updates leadership structure; commercial spaceline operations on track for 2Q23 as previously announced

  • Wendy's (WEN) shareholder Trian Fund (Nelson Peltz) strongly supports the Company's newly announced capital allocation strategy

  • World Wrestling (WWE) engages outside advisors to support review of strategic alternatives

  • Zegna Group (ZGN) confirms that jury found that at no time did Thom Browne infringe on any of adidas's (ADDYY) trademarks

M&A:

  • InterActiveCorp (IAC) mulling sale of Daily Beast, according to the New York Times

  • Leo Holdings (LHC) discloses it entered into merger agreement with World View Enterprises Inc

  • Maverix Metals (MMX): Triple Flag (TFPM) provides update on combination with Maverix

  • Purple Innovation (PRPL) rejects unsolicited acquisition proposal from Coliseum Capital Management

Syndicate:

  • Ares Capital (ARCC) prices offering of 10.5 mln shares of common stock (price undisclosed)

  • Expro Group (XPRO) prices offering of 8 mln shares of common stock at $16.50 per share

  • Scilex Holding (SCLX) files for 28,128,422 share common stock offering by selling shareholder

  • VICI Properties (VICI) prices offering of 26.35 mln shares of common stock at $33.00 per share

IPOs:

  • Priced to Trade:

  • Skyward Specialty Insurance Group (Nasdaq: SKWD): The specialty insurance company delivering commercial property and casualty products and solutions priced its 9.0 M share IPO at $15, the midpoint of the $14-$16 expected price range.

Gapping Up/Down

  • Gapping up:

  • SPCE +16.5%, HBI +7.2%, BBBY +5.2%, MNOV+3.6%, ATOM +3.2%, CMCL +2.9%, ZYME +2.7%, WAFD +2.6%, LHC +2.2%, HUYA +1.7%, BLK +1.3%, AZN +1%, PRPL +0.8%, COP +0.8%

  • Gapping down:

  • SCLX -11.7%, ARCC -3.6%, VICI -3.3%, XPRO -2.7%, DAL -2.7%, LC -2.3%, COIN -2.2%, TA -2%, DUK -1%

 


Analyst Research (see Upgrades/Downgradescalendarfor full list):

  • Upgrades

  • Carrier Global (CARR) upgraded to Buy from Neutral at Mizuho; tgt raised to $53

  • Caterpillar (CAT) upgraded to Buy from Neutral at BofA Securities; tgt raised to $295

  • Community Healthcare Trust (CHCT) upgraded to Buy from Neutral at Janney; tgt $44

  • Copa Holdings (CPA) upgraded to Overweight from Neutral at JP Morgan; tgt raised to $132

  • Farmland Partners (FPI) upgraded to Buy from Neutral at Janney

  • Downgrades:

  • AutoNation (AN) downgraded to Equal Weight from Overweight at Wells Fargo; tgt $126

  • Casella Waste (CWST) downgraded to Underperform from Neutral at BofA Securities; tgt lowered to $81

  • Corebridge Financial (CRBG) downgraded to Neutral from Outperform at Credit Suisse; tgt lowered to $23

  • Costamare (CMRE) downgraded to Hold from Buy at Stifel; tgt lowered to $11

  • Dream Finders Homes (DFH) downgraded to Underperform from Sector Perform at RBC Capital Mkts; tgt $8

  • Fortinet (FTNT) downgraded to Neutral from Buy at BTIG Research

  • Fortune Brands Innovations (FBIN) downgraded to Sector Perform from Outperform at RBC Capital; tgt raised to $63

  • Gladstone Commercial (GOOD) downgraded to Neutral from Buy at Janney; tgt $17.50

  • Jacobs Engineering (J) downgraded to Neutral from Buy at BofA Securities; tgt $137

  • KB Home (KBH) downgraded to Sector Perform from Outperform at RBC Capital Mkts; tgt $34

  • Lennar (LEN) downgraded to Underperform from Sector Perform at RBC Capital Mkts; tgt lowered to $76

  • Lithia Motors (LAD) downgraded to Equal Weight from Overweight at Wells Fargo; tgt raised to $233

  • Masonite International (DOOR) downgraded to Sector Perform from Outperform at RBC Capital Mkts; tgt lowered to $89

  • Others:

  • Aon (AON) initiated with an Outperform at Credit Suisse; tgt $363

  • Canadian Natrl Res (CNQ) resumed with a Buy at Stifel

Upcoming Events:

  • Econ Data:

  • 08:30 ET: Import Prices for Dec (Briefing.comConsensus NA; Prior -0.6%)

  • 08:30 ET: Import Prices ex-Oil for Dec (Briefing.comConsensus NA; Prior -0.4%)

  • 08:30 ET: Export Prices for Dec (Briefing.comConsensus NA; Prior -0.3%)

  • 08:30 ET: Export Prices ex-ag for Dec (Briefing.comConsensus NA; Prior -0.6%)

  • 10:00 ET: Univ. of Michigan Consumer Sentiment - Prelim for Jan (Briefing.comConsensus 60.5; Prior 59.7)

  • 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 -1.3%, Hang Seng +1.0%, Shanghai Composite +1.0%

Equity indices in the Asia-Pacific region ended the week on a mostly higher note. China's Premier Li said that growth and consumer prices will be stabilized and that incentives to boost the domestic economy will be maintained. The Bank of Japan conducted two unscheduled bond buying operations to counteract rising yields. The Bank of Korea raised its policy rate by 25 bps to 3.50%, as expected. The central bank expects that growth will be shy of what had been forecast in November.

  • In economic data:

  • China's December trade surplus $78.00 bln (expected surplus of $76.20 bln; last surplus of $69.84 bln). December Imports -7.5% yr/yr (expected -9.8%; last -10.6%) and Exports -9.9% yr/yr (expected -10.0%; last -8.7%)

  • South Korea's December Import Price Index 9.1% yr/yr (last 14.0%) and Export Price Index 3.1% yr/yr (last 8.3%)

  • Australia's November Home Loans -2.0% m/m (expected -3.0%; last -5.6%) and Investment Lending for Housing -3.6% m/m (last -2.3%)

---Equity Markets---

  • Japan's Nikkei: -1.3% (+0.6% for the week)

  • Hong Kong's Hang Seng: +1.0% (+3.6% for the week)

  • China's Shanghai Composite: +1.0% (+1.2% for the week)

  • India's Sensex: +0.5% (+0.6% for the week)

  • South Korea's Kospi: +0.9% (+4.2% for the week)

  • Australia's ASX All Ordinaries: +0.7% (+3.2% for the week)

---FX---

  • USD/JPY: -0.5% to 128.65

  • USD/CNH: +0.1% to 6.7341

  • USD/INR: +0.3% to 81.38

 

Europe: DAX UNCH, FTSE +0.3%, CAC +0.1%

Major European indices trade on a mostly higher note. The British economy expanded slightly in November despite expectations for a contraction. Bank of England policymaker Mann said that more needs to be done on rates and there is no risk of overtightening yet. British Chancellor of the Exchequer Hunt said that the plan to cut inflation by half in 2023 should remain in place. European Central Bank policymaker Kazaks said that rates should be raised into restrictive territory and that he does not expect rate cuts to take place before the end of the year.

  • In economic data:

  • Eurozone's November Industrial Production 1.0% m/m (expected 0.5%; last -1.9%); 2.0% yr/yr (expected 0.5%; last 3.4%). November trade deficit EUR11.70 bln (expected deficit EUR21.10 bln; last deficit of EUR27.00 bln)

  • Germany's 2022 GDP 1.9% (expected 1.8%; last 2.6%)

  • U.K.'s November GDP 0.1% m/m (expected -0.3%; last 0.5%); 0.2% yr/yr (expected 0.3%; last 1.5%). November Industrial Production -0.2% m/m (expected -0.3%; last -0.1%); -5.1% yr/yr (expected -3.0%; last -4.7%). November Manufacturing Production -0.5% m/m (expected -0.2%; last 0.7%); -5.9% yr/yr (expected -4.8%; last -5.7%). November Construction Output 0.0% m/m (expected -0.3%; last 0.4%); 4.0% yr/yr (expected 5.4%; last 5.9%). November trade deficit GBP15.62 bln (expected deficit GBP14.90 bln; last deficit GBP12.26 bln)

  • France's December CPI -0.1% m/m, as expected (last 0.3%); 5.9% yr/yr, as expected (last 6.2%)

  • Italy's November Industrial Production -0.3% m/m (expected 0.3%; last -1.1%); -3.7% yr/yr (last -1.6%) 

  • Spain's December CPI 0.2% m/m (expected 0.3%; last -0.1%); 5.7% yr/yr (expected 5.8%; last 6.8%)

---Equity Markets---

  • STOXX Europe 600: +0.4% (+1.7% week-to-date)

  • Germany's DAX: UNCH (+3.1% week-to-date)

  • U.K.'s FTSE 100: +0.3% (+1.6% week-to-date)

  • France's CAC 40: +0.1% (+1.9% week-to-date)

  • Italy's FTSE MIB: -0.2% (+2.1% week-to-date)

  • Spain's IBEX 35: +0.3% (+1.7% week-to-date)

---FX---

  • EUR/USD: -0.4% to 1.0807

  • GBP/USD: -0.3% to 1.2177

  • USD/CHF: +0.3% to 0.9298

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