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14/03/22 Briefing


The S&P 500 futures trade 22 points, or 0.5%, above fair value to start the week as oil prices continue to cool off from last week's highs. WTI crude futures are currently down 4.9%, or $5.31, to $103.95/bbl.

The lower oil prices have been driven by news that Russia and Ukraine are holding another round of ceasefire talks today, that China re-imposed Covid lockdowns and travel restrictions in certain cities, and that India might buy discounted oil from Russia.

Regarding Russia-Ukraine, Ukraine President Zelensky said he's seen a positive shift in talks with Russia (echoing Mr. Putin's perspective) on Saturday, only for Russia to continue its deadly offensive the following day and ask China for military equipment.

White House National Security Advisor Jake Sullivan said on the "Face the Nation" show, aired on CBS News, that Russia appears to be planning a chemical or biological weapon attack in Ukraine. Mr. Sullivan reiterated the president's stance that Moscow will face a "severe price" if that happens.

The idea of a ceasefire agreement, though, has taken precedence in Europe while the lockdown news took a toll on Chinese stocks on Monday. The Europe Stoxx 600 is currently up 1.2%. China's Shanghai Composite fell 2.6%. Hong Kong's Hang Seng fell 5.0%.

Treasury yields are on the rise, as hopes for geopolitical progress overshadows any China-related growth concerns. The 2-yr yield is up seven basis points to 1.82%, and the 10-yr yield is up eight basis points to 2.08%. The U.S. Dollar Index is down 0.1% to 98.99.

In U.S. Corporate news:

  • Pfizer (PFE 50.79, +0.52): +1.0% amid the Covid lockdowns in China and word from CEO Bourla that a fourth coronavirus vaccine will be necessary, according to CBS News.

  • Turquoise Hill Resources (TRQ 26.21, +6.08): +30.4% after acknowledging a privatization proposal received from Rio Tinto (RIO 70.83, -1.89, -2.6%) for $2.7 billion.

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region were mixed on Monday, although markets in China were particularly weak. Japan's Nikkei: +0.6% Hong Kong's Hang Seng: -5.0% China's Shanghai Composite: -2.6% India's Sensex: +1.7% South Korea's Kospi: -0.6% Australia's ASX All Ordinaries: +1.1%.

  • In economic data:

  • Singapore's Q4 Unemployment Rate 2.3% (last 2.4%)


  • In news:

  • The Hang Seng plunged 5.0% with many stocks facing de-listing possibility in U.S. getting hit hard.

  • Hong Kong, along with mainland China, also had to battle with COVID concerns. China has put Shenzhen in a lockdown mode, suspending all non-essential business until March 20.That is impacting Apple supplier, Foxconn, while COVID remediation issues in general are weighing on the casino operators and many tech stocks. Worries about a slowdown in China continue to fuel expectations that policy stimulus will be provided.

  • U.S. and Chinese delegates meeting in Rome to discuss Russia-Ukraine situation amid reports Russia is asking China to provide military equipment.

  • New Zealand announced that it will cut its fuel excise tax by NZ$0.25/liter for three months.



  • Major European indices are trading with a positive bias to begin the week, jumping on reports that both Russia and Ukraine have pointed to signs of progress in their talks. STOXX Europe 600: +1.2% Germany's DAX: +2.7% U.K.'s FTSE 100: +0.2% France's CAC 40: +1.7% Italy's FTSE MIB: +2.1% Spain's IBEX 35: +1.3%.

  • In economic data:

  • Germany's February Wholesale Price Index +1.7% m/m (0.9% expected; last 2.3%) and 16.6% yr/yr (last 16.2%)

  • France's January Trade Balance EUR8.0 bln (EUR -9.8 bln expected; last EUR -11.4 bln)

  • Spain's January Retail Sales 4.0% yr/yr (last -2.4%)


  • In news:

  • This news of progress comes amid separate reports noting that Russia has stepped up its military attacks on Ukrainian cities, has asked China for help in providing military equipment, is recruiting mercenaries form other countries, and has said convoys delivering military equipment to Ukraine are legitimate targets.

  • Still, the idea that a ceasefire agreement could be reached, along with a notable drop in oil prices (Brent -4.1% to $108.04/bbl), has been a boon for sentiment that is lifting stock prices.

  • These developments closer to home have overshadowed news that China is dealing with a COVID outbreak and has put Shenzhen in a lockdown mode until March 20.

  • Lots of chatter that the UK may soon announce plans to help consumers deal with rising costs.



U.S. equity futures:

  • S&P 500 Futures: +11 @ 4,216

  • DJIA Futures: +202 @ 33,146

  • Nasdaq 100 Futures: -49 @ 13,253

Overseas:

  • Europe: DAX +2.7%, FTSE +0.2%, CAC +1.7%

  • Asia: Nikkei +0.6%, Hang Seng -6.0%, Shanghai Composite -2.6%

Commodities:

  • Crude Oil -5.42 @ 103.91

  • Nat Gas -0.102 @ 4.623

  • Gold -18.45 @ 1966.55

  • Silver -0.645 @ 25.515

  • Copper -0.1145 @ 4.5110

U.S. Summary:

  • Earnings/Guidance (Full Earnings Calendar):

  • Ballard Power (BLDP) reports Q4 (Dec) results, beats on revs

  • KBR (KBR) updates 2025 long-term financial targets, underscoring expected value creation from HomeSafe alliance joint venture


  • General News:

  • National Security Advisor Jake Sullivan says he is seeing a "tell" that Russia is planning a chemical or biological weapon attack in Ukraine and will blame it on someone else. He says Russia will pay a "severe price" if that happens, according to CBS News

  • Russian airstrikes killed over 30 people at a base in Ukraine that was 10 miles from border with Poland, a NATO member, according to the Wall Street Journal

  • Russia asked China for military support for Ukraine war and economic support to offset sanctions. US does not know how China responded, according to the New York Times

  • Ukraine President Zelensky is seeing "some positive shifts" in dialogue with Russia, according to Times of Israel

  • National Security Advisor Jake Sullivan will meet with Chinese Communist Party Politburo Member and Director of the Office of the Foreign Affairs Commission Yang Jiechi Monday

  • Russia and China will meet for another round of peace talks today, according to the New York Times

  • Treasury targets Russian individuals and entities supporting DPRK weapons of mass destruction and ballistic missile programs

  • White House directs the drawdown of up to an aggregate value of $200 million in defense articles and services to provide assistance to Ukraine

  • Treasury sanctions Kremlin elites, leaders, oligarchs, and family for enabling Putin's war against Ukraine

  • Russia threatened to seize assets of companies leaving Russia, according to the Wall Street Journal

  • US does not plan to use Russian sanctions as negotiation for Iran nuclear deal, according to the Wall Street Journal

  • India might buy discounted Russian oil, according to Reuters

  • EU considering export ban of luxury cars to Russia, according to Bloomberg

  • Lockdowns and travel restrictions were ordered in certain cities in China as coronavirus cases surge in the country, according to the New York Times

  • Dr. Scott Gottlieb CNBC interview: China's population is very vulnerable to the virus because they lack natural immunity and the vaccines they have are not very effective; He does not think US will have another major surge of infections. but US might see a small uptick

  • Senator Joe Manchin (D-WV) wants President Biden to use defense production act to finish pipeline. He also wants White House to reverse regulations on oil and gas production, according to Bloomberg

  • Democrats have largely stopped talking about social and climate spending in the defunct Build Back Better Act and are pivoting toward executive orders ahead of the midterm elections, according to the New York Times

  • Macau puts more quarantine restrictions on arriving travelers, according to GGR Asia

  • AstraZeneca (AZN) and Merck's (MRK) Lynparza (olaparib) has been approved in the US for the adjuvant treatment of patients with germline BRCA-mutated (gBRCAm) HER2-negative high-risk early breast cancer

  • AstraZeneca (AZN) receives complete response letter for its sBLA for Fasenra

  • Berkshire (BRK.B) wants shareholders to reject proposal to replace Chairman Warren Buffett, according to Reuters

  • Biogen (BIIB) announces new data and updates from its SPINRAZA and spinal muscular atrophy research program aimed at improving clinical outcomes for people impacted by the disease, including the ASCEND, RESPOND and NURTURE studies

  • BridgeBio Pharma (BBIO) announces positive phase 2 data for limb-girdle muscular dystrophy type 2

  • Bristol-Myers (BMY) and Nektar (NKTR) announce update on phase 3 PIVOT IO-001 trial evaluating bempegaldesleukin in combination with opdivo (nivolumab) in previously untreated unresectable or metastatic melanoma

  • Chico's FAS (CHS) appoints Kevin Mansell as the next Chair of the Board, effective immediately

  • Clene Nanomedicine (CLNN) Presents Updated Clinical Data from Phase 2 RESCUE-ALS and REPAIR trials and Preclinical ALS data at 2022 MDA Clinical & Scientific Conference

  • Comcast (CMCSA): NBCUniversal's Peacock is finalizing a deal to stream major league baseball games, according to the Wall Street Journal

  • Deutsche Bank (DB) says "we are in the process of winding down our remaining business in Russia while we help our non-Russian multinational clients in reducing their operations. There won't be any new business in Russia"

  • DocGo (DCGO) names Lee Bienstock as COO

  • Ecolab (ECL) announced its intent to repurchase $500 million of its shares in 2022

  • Flora Growth (FLGC) has signed a distribution agreement with Israel-based, DNO Group, to distribute the Mind Naturals brand in the Hong Kong region

  • Ford (F) to sell some cars with missing chips, according to Auto News

  • Ford Motor (F) takes steps toward all-electric future in Europe; 7 new connected EVs support plans to sell 600k+ EVs annually by 2026

  • Foxconn (FCXNY) halts production at a Apple (AAPL) iPhone plant in China due to COVID-19 outbreak and restrictions, according to Bloomberg

  • IDEAYA Biosciences (IDYA) and Pfizer (PFE) expand clinical trial collaboration and supply agreements for evaluation of darovasertib and crizotinib combination in metastatic uveal melanoma and additional cMET-driven tumors

  • Innovative Industrial Properties (IIPR) increases quarterly dividend to $1.75/share from $1.50/share

  • International Paper (IP) to explore strategic options for 50% ownership interest in Ilim Group

  • JP Morgan (JPM) is leading talks with other banks regarding nickel market, according to the Wall Street Journal

  • Li Auto (LI) receives inclusion of its shares in the Shenzhen-Hong Kong Stock Connect Program

  • Lottery.com(LTRY) appoints Ryan Dickinson as President and CFO

  • MoneyGram (MGI) to Suspend Services in Russia

  • Myriad Genetics (MYGN) receives FDA approval of BRACAnalysis CDx as a companion diagnostic for Lynparza in early breast cancer

  • Novartis (NVS) reports new data reinforcing the benefit of Zolgensma

  • Oasis Petroleum (OAS) declares its first variable dividend of $3.00/share

  • Pfizer (PFE): Some parts of the world will not have access to Pfizer coronavirus treatment pill for a year, according to Bloomberg

  • Pfizer (PFE) CEO Albert Bourla says fourth coronavirus vaccine will be necessary, according to CBS News

  • Sanofi (SNY) provides update on Phase 2 study evaluating amcenestrant in ER+/HER2- advanced or metastatic breast cancer; AMEERA-3 trial did not meet primary endpoint of improving progression-free survival

  • Ship Finance Intl (SFL) has agreed to charter out six 14,000 TEU container vessels to Hapag-Lloyd AG for a fixed period of five years

  • TDCX (TDCX) has authorized a $30 mln share repurchase program

  • Tencent (TCEHY) might have a record fine for money laundering, according to the Wall Street Journal

  • TreeHouse Foods (THS) provides update on strategic review process; reaffirms FY22 guidance

  • Uber (UBER) adds fuel surcharge; consumers will pay a surcharge of either $0.45 or $0.55 on each Uber trip and either $0.35 or $0.45 on each Uber Eats order

  • Velodyne Lidar (VLDR) announces change to Board of Directors and provides update on stock ownership

  • W&T Offshore (WTI) promotes William Williford to COO


  • M&A:

  • Ginkgo Bioworks (DNA) to acquire Swiss-based strain development and optimization company FGen AG; terms not disclosed

  • JD.com(JD), unit JD Logistics, announces the proposed acquisition of Deppon Logistics

  • KKR (KKR): Telecom Italia Board assessed KKR indicative expression of interest, defined next steps

  • Luna Innovations (LUNA) divested Luna Labs for $21 mln

  • RLI Corp (RLI) agreed to sell its minority interest in Maui Jim; net after-tax purchase price proceeds from the Sale will be approximately $500 mln

  • Rogers (ROG) is in discussions to sell wireless assets to gain approval for Shaw (SJR) M&A deal, according to Bloomberg

  • Turquoise Hill Resources (TRQ): Rio Tinto (RIO) makes all-cash proposal to acquire full ownership of Turquoise Hill


  • Syndicate:

  • Applied Molecular Transport (AMTI) files for $150 mln mixed securities shelf offering

  • Nikola Corporation (NKLA) files for 17,025,590 share common stock offering by selling shareholder


  • IPOs:

  • Expected to Price:

  • No IPOs expected to price.



Gapping Up/Down

  • Gapping up:

  • TRQ +28.4%, MYGN +5%, KBR +3.7%, VLDR +2.4%, WFC +2.2%, BAC +2.2%, TTE +1.8%, AZN +1.6%, C+1.6%, NVS +1.5%, DIA +1.1%, SCPL +1%, IWM+0.9%, SPY +0.8%, UBER +0.7%, QQQ +0.5%


  • Gapping down:

  • XPEV -7.2%, BIDU -6.5%, JD -5%, BABA -4.9%, LI-4.3%, USO -3.8%, ASHR -3.1%, SNY -3.1%, OIH-2.5%, NKLA -2.4%, SLB -2.3%, HAL -2.3%, OAS-2%, XOM -1.9%, XLE -1.8%, PSX -1.7%, BP -1.6%, NIO -1.5%, TTCF -1.4%, SHEL -1.2%


Analyst Research (see Upgrades/Downgradescalendarfor full list):

  • Upgrades

  • BRP Group (BRP) upgraded to Buy from Neutral at BofA Securities; tgt $31

  • Carlsberg A/S (CABGY) upgraded to Hold from Sell at Berenberg

  • Centennial Resource Development (CDEV) upgraded to Equal Weight from Underweight at Wells Fargo; tgt $12

  • Deutsche Bank (DB) upgraded to Hold from Sell at Berenberg

  • Enova International (ENVA) upgraded to Buy from Neutral at Janney; tgt $49

  • Fortive (FTV) upgraded to Overweight from Equal Weight at Barclays; tgt $75

  • Helios Technologies (HLIO) upgraded to Overweight from Sector Weight at KeyBanc Capital Markets; tgt $90

  • Helmerich & Payne (HP) upgraded to Buy from Neutral at Seaport Research Partners; tgt $50

  • LTC Properties (LTC) upgraded to Sector Perform from Underperform at RBC Capital Mkts; tgt raised to $37

  • Nokia (NOK) upgraded to Outperform from Mkt Perform at Raymond James; tgt $6.50

  • Olin (OLN) upgraded to Overweight from Sector Weight at KeyBanc Capital Markets; tgt $64

  • Tenaris (TS) upgraded to Peer Perform from Underperform at Wolfe Research; tgt raised to $43

  • TFI International (TFII) upgraded to Outperform from Peer Perform at Wolfe Research; tgt $115

  • Unilever PLC (UL) upgraded to Mkt Perform from Underperform at Bernstein


  • Downgrades:

  • American Electric (AEP) downgraded to Neutral from Buy at Seaport Research Partners

  • Banco Bilbao Vizcaya Argentaria (BBVA) downgraded to Neutral from Overweight at JP Morgan

  • BCE Inc (BCE) downgraded to Neutral from Buy at BofA Securities

  • Campbell Soup (CPB) downgraded to Hold from Buy at R5 Capital

  • Chevron (CVX) downgraded to Equal-Weight from Overweight at Morgan Stanley; tgt $166

  • Futu Holdings (FUTU) downgraded to Underperform from Outperform at CLSA; tgt lowered to $27

  • Interpublic (IPG) downgraded to Equal Weight from Overweight at Barclays; tgt lowered to $42

  • IPG Photonics (IPGP) downgraded to Underperform from Mkt Perform at Raymond James

  • Northern Oil & Gas (NOG) downgraded to Equal Weight from Overweight at Wells Fargo; tgt $34

  • Occidental Petro (OXY) downgraded to Equal-Weight from Overweight at Morgan Stanley; tgt $52

  • Omnicom (OMC) downgraded to Equal Weight from Overweight at Barclays; tgt lowered to $90

  • OncoCyte (OCX) downgraded to Sector Weight from Overweight at KeyBanc Capital Markets

  • Southwestern Energy (SWN) downgraded to Underweight from Equal Weight at Wells Fargo; tgt raised to $10

  • The Vita Coco Company (COCO) downgraded to Neutral from Buy at BofA Securities; tgt lowered to $10

  • Tyson Foods (TSN) downgraded to Market Perform from Outperform at BMO Capital Markets; tgt lowered to $99

  • USA Compression Partners (USAC) downgraded to Underweight from Neutral at JP Morgan; tgt $17


  • Others:

  • Accenture (ACN) added to Tactical Outperform list at Evercore ISI

  • Constellation Energy (CEG) initiated with a Buy at Goldman; tgt $62

  • Energy Vault (NRGV) initiated with a Sell at Goldman; tgt $9

  • Oportun Financial (OPRT) initiated with a Buy at Loop Capital; tgt $24

  • Peloton (PTON) initiated with an Equal-Weight at Morgan Stanley; tgt $32

  • Republic Bancorp (RBCAA) initiated with an Overweight at Piper Sandler

  • Tyler Tech (TYL) initiated with an Equal Weight at Barclays; tgt $445


Upcoming Events:

  • Econ Data:

  • No economic data of note.


  • Earnings:

  • Monday (Mar 14)

  • Afternoon: CVGW COUP DLO MTN WPRT


  • Tuesday (Mar 15)

  • Morning: DOLE IHS

  • Afternoon: CAL GOCO S SMAR


  • Wednesday (Mar 16)

  • Morning: DOYU JBL

  • Afternoon: BRLT GES LEN PD SMTC WSM ZTO


  • Thursday (Mar 17)

  • Morning: ACN CSIQ CMC DBI DG GIII SCWX SIG WRBY

  • Afternoon: FDX GME JOAN STNE CURV


  • Friday (Mar 18)

  • Morning: ONON




Asia & Europe detail:

Asia: Nikkei +0.6%, Hang Seng -6.0%, Shanghai Composite -2.6%

Equity indices in the Asia-Pacific region were mixed on Monday, although markets in China were particularly weak. The Hang Seng plunged 5.0% with many stocks facing de-listing possibility in U.S. getting hit hard. Hong Kong, along with mainland China, also had to battle with COVID concerns. China has put Shenzhen in a lockdown mode, suspending all non-essential business until March 20.That is impacting Apple supplier, Foxconn, while COVID remediation issues in general are weighing on the casino operators and many tech stocks. Worries about a slowdown in China continue to fuel expectations that policy stimulus will be provided. U.S. and Chinese delegates meeting in Rome to discuss Russia-Ukraine situation amid reports Russia is asking China to provide military equipment. Separately, New Zealand announced that it will cut its fuel excise tax by NZ$0.25/liter for three months.

  • In economic data:

  • Singapore's Q4 Unemployment Rate 2.3% (last 2.4%)


---Equity Markets---

  • Japan's Nikkei: +0.6%

  • Hong Kong's Hang Seng: -5.0%

  • China's Shanghai Composite: -2.6%

  • India's Sensex: +1.7%

  • South Korea's Kospi: -0.6%

  • Australia's ASX All Ordinaries: +1.1%

---FX---

  • USD/JPY: +0.6% to 117.99

  • USD/CNH: +0.4% to 6.3815

  • USD/INR: -0.3% to 76.513

Europe: DAX +2.7%, FTSE +0.2%, CAC +1.7%

Major European indices are trading with a positive bias to begin the week, jumping on reports that both Russia and Ukraine have pointed to signs of progress in their talks. This news comes amid separate reports noting that Russia has stepped up its military attacks on Ukrainian cities, has asked China for help in providing military equipment, is recruiting mercenaries form other countries, and has said convoys delivering military equipment to Ukraine are legitimate targets. Still, the idea that a ceasefire agreement could be reached, along with a notable drop in oil prices (Brent -4.1% to $108.04/bbl), has been a boon for sentiment that is lifting stock prices. These developments closer to home have overshadowed news that China is dealing with a COVID outbreak and has put Shenzhen in a lockdown mode until March 20.Lots of chatter that the UK may soon announce plans to help consumers deal with rising costs.

  • In economic data:

  • Germany's February Wholesale Price Index +1.7% m/m (0.9% expected; last 2.3%) and 16.6% yr/yr (last 16.2%)

  • France's January Trade Balance EUR8.0 bln (EUR -9.8 bln expected; last EUR -11.4 bln)

  • Spain's January Retail Sales 4.0% yr/yr (last -2.4%)


---Equity Markets---

  • STOXX Europe 600: +1.2%

  • Germany's DAX: +2.7%

  • U.K.'s FTSE 100: +0.2%

  • France's CAC 40: +1.7%

  • Italy's FTSE MIB: +2.1%

  • Spain's IBEX 35: +1.3%

---FX---

  • EUR/USD: +0.5% to 1.0962

  • GBP/USD: unch at 1.3037

  • USD/CHF: +0.1% to 0.9352

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