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14/12/22 Briefing

The S&P 500 futures are down 5 points and are trading roughly in line with fair value. The Nasdaq 100 futures are down 18 points and are trading 0.1% below fair value. The Dow Jones Industrial Average futures are down 40 points and are trading slightly below fair value.

Equity futures trade mixed and little changed from their flat lines as market participants await the FOMC decision at 2:00 p.m. ET, which will be accompanied by an updated Summary of Economic Projections. Fed Chair Powell will give a press conference shortly after at 2:30 p.m. ET. The market is expecting the FOMC to agree to a 50 basis point rate hike, bringing the target range for the fed funds rate to 4.25-4.50%.

Congress reached a framework on the omnibus spending package that will fund the government through September 30.The House will vote on a one week continuing resolution today to give the Senate more time to vote on the full ominous package, according to The Wall Street Journal.  

China will stop counting coronavirus cases without symptoms and accelerate vaccinations, according to FT.

The weekly MBA Mortgage Applications Index rose 3.2% following a 1.9% decline last week, with purchase applications up 4.0% and refinancing applications up 3.0%. Other data out today includes:

  • 8:30 a.m. ET: November Import Prices (prior -1.9%), Import Prices ex-oil (prior -0.2%), Export Prices (prior -0.1%), Export Prices ex-ag. (prior -0.3%)

  • 10:30 a.m. ET: Weekly EIA Crude Oil Inventories (prior -5.19M)

In corporate news:

  • Delta Air Lines (DAL 34.82, +1.44, +4.3%): raises Q4 EPS guidance; narrows Q4 revenue guidance; sees FY23 EPS and revs above consensus; sees FY24 EPS above consensus

  • Lennar (LEN 91.40, +0.81, +0.9%): upgraded to Overweight from Equal Weight at Barclays

  • Plug Power (PLUG 14.64, +0.53, +3.8%): USB initiated coverage with a Buy rating

  • Tesla (TSLA 159.49, -1.46, -0.9%): price target lowered to $235 from $305 at Goldman Sachs, according to CNBC; investors are concerned about CEO Elon Musk's focus on Twitter, according to WSJ 

  • Braze (BRZE 27.26, -1.64, -5.7%): beats by $0.07, beats on revs; guides JanQ EPS above consensus, revs above consensus

  • Best Buy (BBY 81.72, -2.35, -2.8%): downgraded to Underperform from Neutral at BofA Securities

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region ended the midweek session on a mostly higher note. Japan's Nikkei: +0.8%, Hong Kong's Hang Seng: +0.4%, China's Shanghai Composite: UNCH, India's Sensex: +0.2%, South Korea's Kospi: +1.1%, Australia's ASX All Ordinaries: +0.7%.

  • In economic data:

  • Japan's Q4 Tankan Large Manufacturers Index 7 (expected 6; last 8) and Q4 Tankan Large Non-Manufacturers Index 19 (expected 17; last 14). Q4 Tankan All Big Industry Capex 19.2% (expected 20.4%; last 21.5%). October Core Machinery Orders 5.4% m/m (expected 2.6%; last -4.6%); 0.4% yr/yr (expected 2.6%; last 2.9%). October Industrial Production -3.2% m/m (expected -2.6%; last -1.7%)

  • South Korea's November Unemployment Rate 2.9% (last 2.8%)

  • India's November WPI Inflation 5.85% yr/yr (expected 6.50%; last 8.39%)

  • New Zealand's Q3 Current Account -7.9% of GDP (expected -8.0% of GDP; last -7.7% of GDP)

  • In news:

  • U.S. officials are reportedly planning to cut off some Chinese tech companies from access to U.S. banks.

  • China Securities Journal speculated that special local government bond issuance in 2023 may exceed CNY4.40 trln.

  • Japanese officials have agreed to increase corporate, tobacco, and income taxes to fund higher defense spending.

  • New Zealand expects to fall into recession in 2023. Reserve Bank of New Zealand Governor Orr said that he expects spending to decrease and unemployment to increase next year.

  • Major European indices trade on a mostly lower note while Spain's IBEX (+0.1%) outperforms slightly. STOXX Europe 600: -0.5%, Germany's DAX: -0.5%, U.K.'s FTSE 100: -0.3%, France's CAC 40: -0.3%, Italy's FTSE MIB: -0.1%, Spain's IBEX 35: +0.1%.

  • In economic data:

  • Eurozone's October Industrial Production -2.0% m/m (expected -1.5%; last 0.8%); 3.4% yr/yr, as expected (last 5.1%)

  • U.K.'s November CPI 0.4% m/m (expected 0.6%; last 2.0%); 10.7% yr/yr (expected 10.9%; last 11.1%). November Core CPI 0.3% m/m (expected 0.5%; last 0.7%); 6.3% yr/yr (expected 6.5%; last 6.5%). November RPI 0.6% m/m (expected 0.5%; last 2.5%); 14.0% yr/yr (last 13.9%; last 14.2%)

  • Italy's Q3 Unemployment Rate 7.9% (last 8.1%)

  • Spain's November CPI -0.1% m/m, as expected (last 0.3%); 6.8% yr/yr (expected 6.3%; last 7.3%)

  • Swiss November CPI -0.5% m/m (last 0.0%); 3.8% yr/yr (last 4.9%)

  • In news:

  • The U.K.'s November CPI slowed a slowdown in the yr/yr rate to 10.7% from 11.1% that was reached in October. 

  • Spain's CPI slowed for the fourth consecutive month. Travel operator TUI beat revenue expectations for the fiscal year and announced that it will repay aid received during the pandemic.

  • Germany's ifo Institute raised the domestic growth forecast for 2022 to 1.8% from 1.6% while the outlook for next year was increased to -0.1% from -0.3%.

  • The European Central Bank and the Bank of England are expected to announce 50-bps rate hikes tomorrow after the Federal Reserve does the same today.

 

U.S. equity futures:

  • S&P 500 Futures: -6 @ 4,014

  • DJIA Futures: -23 @ 34,215

  • Nasdaq 100 Futures: -18 @ 11,782

Overseas:

  • Europe: DAX -0.5%, FTSE -0.3%, CAC -0.3%

  • Asia: Nikkei +0.8%, Hang Seng +0.4%, Shanghai Composite UNCH

Commodities:

  • Crude Oil +0.47 @ 75.86

  • Nat Gas -0.321 @ 6.614

  • Gold -8.85 @ 1816.65

  • Silver -0.112 @ 23.878

  • Copper +0.0050 @ 3.847

 

Earnings/Guidance:

  • ABM Industries (ABM) beats by $0.01, beats on revs; guides FY23 EPS below consensus due to ongoing labor-related pressures; approves additional $150 mln for share repurchases

  • Braze (BRZE) beats by $0.07, beats on revs; guides JanQ EPS above consensus, revs above consensus

  • Delta Air Lines (DAL) raises Q4 EPS guidance; narrows Q4 revenue guidance; sees FY23 EPS and revs above consensus; sees FY24 EPS above consensus

  • J.M. Smucker (SJM) reaffirms FY23 EPS and revenue guidance

  • Lennox Int'l (LII) sees FY23 EPS in-line with consensus; provides targets for 2026

  • Masimo (MASI) issues FY23 guidance during Investor Day; guides FY23 earnings and revs in-line with consensus

  • QuidelOrtho (QDEL) seeing during call guided for FY25 EPS of $6.00-$7.00 vs the $6.99 S&P Capital IQ Consensus Estimate

  • REV Group (REVG) beats by $0.02, beats on revs; guides FY23 revs in-line

  • Scorpio Tankers (STNG) provides Q4 update; receives new financing of up to $166.5 mln

  • Weber (WEBR) misses by $0.18, misses on revs

News:

  • Congress reaches framework on omnibus spending package that will fund government through September 30.House will vote on one week continuing resolution today to give Senate more time to vote on full ominous package, according to the Wall Street Journal

  • China will stop counting coronavirus cases without symptoms and accelerate vaccinations, according to Financial Times

  • IEA says world oil demand is set to contract by 110 kb/d y-o-y in 4Q22, reaching 100.8 mb/d, up by 130 kb/d compared with last month's report

  • EU Commission approves 1.8 billion German scheme to roll out high power charging infrastructure for electric vehicles

  • US will add 30 additional companies to China blacklist, according to Bloomberg

  • Binance deposits are returning, according to Reuters

  • Elon Musk's bank lenders for Twitter takeover will book losses, according to Reuters

  • AbbVie (ABBV) and Ipsen (IPSEY) terminate collaboration agreements with Exicure (XCUR)

  • Agilysys (AGYS) confirms ACV projections were inadvertently released

  • Amazon (AMZN) hit with $280 mln lawsuit over alleged breach of contract, according to the New York Post

  • Assurant (AIZ) to realign its organizational structure and talent and accelerate its real estate consolidation to support work-from-home arrangements; estimates approximately $55 mln in gross annualized run-rate savings

  • AST SpaceMobile (ASTS) provides interim operational update on its ongoing space-based cellular broadband satellite programs

  • Avidity (RNA) Announces Positive AOC 1001 Phase 1/2 MARINA Data Demonstrating First-Ever Successful Targeted Delivery of RNA to Muscle - Revolutionary Advancement for the Field of RNA Therapeutics

  • Carlyle (CG) is having trouble raising $22 bln it targeted, according to Financial Times

  • Cytokinetics (CYTK) receives outcome of FDA Advisory Committee Vote On Omecamtiv Mecarbil; committee voted 8-3 that benefits do not outweigh risks

  • Digital Realty Trust (DLR) appoints Andrew Power as CEO, effective immediately, after A. William Stein departed from his role as CEO

  • Eagle Bulk Shipping (EGLE) announces promotion of Costa Tsoutsoplides to CFO as Frank De Costanzo will step down, effective April 1, 2023

  • Icosavax (ICVX) Reports Positive Durability Data for VLP Vaccine Candidate IVX-121 Against RSV at Six-Month Timepoint

  • Kennedy Wilson (KW) announces that its real estate debt investment platform surpassed $3 billion in originations in just over two years, with a strong pipeline of new origination opportunities heading into 2023

  • Kymera Therapeutics (KYMR) announces positive results from Phase 1 clinical trial evaluating KT-474 in patients with HS and AD and Sanofi's (SNY) decision to advance KT-474 into phase 2 clinical trials

  • LivaNova (LIVN) took actions to remediate alleged FDA Warning Letter related violations; FDA considers Warning Letter closed

  • Methanex (MEOH) appoints Dean Richardson, currently VP, Corporate Finance, to CFO role, effective February 1, 2023

  • Mid-America Aptmt (MAA) increases quarterly dividend 12% to $1.40/share from $1.25/share

  • Nevro (NVRO) Announces Two Presentations from SENZA-PDN and SENZA-NSRBP Clinical Trials Have Been Accepted for Late-Breaking Abstract Sessions at NANS 2023 Annual Meeting

  • Newtek (NEWT) extended Stock Purchase Agreement with the National Bank of New York City and certain NBNYC shareholders to January 23, 2023from Jan 3, 2022

  • Pennant Group (PNTG) announces share repurchase program; size of repurchase authorization not disclosed

  • Petrobras (PBR) received interdiction notice for the shutdown of operations in 37 onshore oil and gas production facilities in Bahia

  • Pfizer (PFE) awarded $1.96 bln U.S. Army contract modification

  • Praxis Precision Medicines (PRAX) announces strategic collaboration with UCB for the discovery of small molecule therapeutics as potential treatments of KCNT1 related epilepsies

  • Quanta Services (PWR) increases quarterly dividend 14% to $0.08/share; annual yield of 0.2%

  • Realty Income (O) increases its monthly dividend to $0.2485/share; annual yield 4.6%

  • Royal Caribbean (RCL) announces strategic agreement with Meyer Turku Oy, Finnish Government

  • Sleep Number (SNBR): Serta Simmons preparing to file for bankruptcy, according to Bloomberg

  • Southside Banc (SBSI) increases stock repurchase plan authorization by an additional 1.0 mln shares, for total authorization for up to 2.0 mln shares

  • Spire Global (SPIR) will launch six satellites on the SpaceX Transporter-6 mission from Cape Canaveral Space Force Station no earlier than January 2023

  • Tesla (TSLA) investors are concerned about CEO Elon Musk's focus on Twitter., according to the Wall Street Journal

  • Toro (TTC) increases quarterly dividend by13% to $0.34/sh

  • WD-40 (WDFC) announces 6% increase in quarterly dividend to $0.83/share

M&A:

  • Fifth Wall Acquisition Corp. III (FWAC): Mobile Infrastructure Corp. enters business combination with FWAC

  • First Bank (FRBA) and Malvern Bancorp (MLVF) reach agreement on strategic combination

  • Flowers Foods (FLO) announces definitive agreement to acquire Papa Pita Bakery; terms of deal not disclosed

  • Harrow Health (HROW) enters into agreement to acquire exclusive U.S. rights to ILEVRO, NEVANAC, VIGAMOX, MAXIDEX, and TRIESENCE

  • Rice Acquisition Corp. II (RONI) and NET Power to combine to accelerate decarbonization of natural gas power generation

  • WillScot Mobile Mini (WSC) to divest its UK Storage segment to Algeco UK Holdings Limited for enterprise value of approximately 335 million

Syndicate:

  • Grindr (GRND) files for 37.36 mln share common stock offering; also files for 174,514,804 share common stock offering by selling shareholders, both filings relate to warrants

  • Harrow Health (HROW) priced offering of 2,376,426 shares of its common stock at $10.52/share for aggregate gross proceeds of $25 million

  • Prothena (PRTA) commences 3 mln share public offering

IPOs:

  • Expect to Price:

  • No IPOs expected.

Gapping Up/Down

  • Gapping up:

  • EGLE +3%, PNTG +2.1%, MAA +1.4%, SBSI +0.7%, BEN +0.5%, AMGN +0.5%

  • Gapping down:

  • GRND -6.3%, PRTA -5.8%, CYTK -5%, BRZE -4.9%, MASI -1.9%, ICVX -1.7%, DLR -1.6%, ABM -1.6%, ASTS -0.5%

 


Analyst Research (see Upgrades/Downgradescalendarfor full list):

  • Upgrades

  • ANSYS (ANSS) upgraded to Outperform from Neutral at Robert W. Baird; tgt raised to $295

  • Downgrades:

  • Adecoagro S.A. (AGRO) downgraded to Equal-Weight from Overweight at Morgan Stanley; tgt lowered to $10

  • Armstrong World Industries (AWI) downgraded to Hold from Buy at Jefferies; tgt lowered to $71

  • AutoZone (AZO) downgraded to Underperform from Neutral at BofA Securities

  • Best Buy (BBY) downgraded to Underperform from Neutral at BofA Securities; tgt lowered to $69

  • Others:

  • Aclaris Therapeutics (ACRS) initiated with a Buy at Stifel; tgt $29

  • Archer-Daniels (ADM) initiated with a Buy at UBS; tgt $115

  • Bloom Energy (BE) initiated with a Buy at UBS; tgt $35

  • Bunge (BG) initiated with a Buy at UBS; tgt $133

  • Clean Energy Fuels (CLNE) initiated with a Buy at UBS; tgt $12

  • FuelCell Energy (FCEL) initiated with a Neutral at UBS; tgt $3.85

  • Pliant Therapeutics (PLRX) initiated with a Buy at Stifel; tgt $33

  • Travere Therapeutics (TVTX) initiated with a Hold at Stifel; tgt $22

Upcoming Events:

  • Econ Data:

  • 07:00 ET: MBA Mortgage Applications Index for Dec 10 (Briefing.comConsensus NA; Prior -1.9%)

  • 08:30 ET: Import Prices for Nov (Briefing.comConsensus NA; Prior -0.2%)

  • 08:30 ET: Import Prices ex-oil for Nov (Briefing.comConsensus NA; Prior -0.1%)

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

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

  • 10:30 ET: EIA Crude Oil Inventories for Dec 10 (Briefing.comConsensus NA; Prior -5.19M)

  • 14:00 ET: FOMC Rate Decision (Briefing.comConsensus 4.25-4.50%; Prior 3.75-4.00%)

  • Earnings:

  • Monday (Dec 12)

  • Afternoon: COUP FLNC ORCL

  • Tuesday (Dec 13)

  • Morning: CNM PLAB

  • Afternoon:  ABM BRZE

  • Wednesday (Dec 14)

  • Morning:  REVG WEBR

  • Afternoon:  LEN NDSN TCOM

  • Thursday (Dec 15)

  • Morning: JBL

  • Friday (Dec 16) 

  • Morning:  ACN DRI WGO

Asia & Europe detail:

Asia: Nikkei +0.8%, Hang Seng +0.4%, Shanghai Composite UNCH

Equity indices in the Asia-Pacific region ended the midweek session on a mostly higher note. U.S. officials are reportedly planning to cut off some Chinese tech companies from access to U.S. banks. China Securities Journal speculated that special local government bond issuance in 2023 may exceed CNY4.40 trln. Japanese officials have agreed to increase corporate, tobacco, and income taxes to fund higher defense spending. New Zealand expects to fall into recession in 2023. Reserve Bank of New Zealand Governor Orr said that he expects spending to decrease and unemployment to increase next year.

  • In economic data:

  • Japan's Q4 Tankan Large Manufacturers Index 7 (expected 6; last 8) and Q4 Tankan Large Non-Manufacturers Index 19 (expected 17; last 14). Q4 Tankan All Bug Industry Capex 19.2% (expected 20.4%; last 21.5%). October Core Machinery Orders 5.4% m/m (expected 2.6%; last -4.6%); 0.4% yr/yr (expected 2.6%; last 2.9%). October Industrial Production -3.2% m/m (expected -2.6%; last -1.7%)

  • South Korea's November Unemployment Rate 2.9% (last 2.8%)

  • India's November WPI Inflation 5.85% yr/yr (expected 6.50%; last 8.39%)

  • New Zealand's Q3 Current Account -7.9% of GDP (expected -8.0% of GDP; last -7.7% of GDP)

---Equity Markets---

  • Japan's Nikkei: +0.8%

  • Hong Kong's Hang Seng: +0.4%

  • China's Shanghai Composite: UNCH

  • India's Sensex: +0.2%

  • South Korea's Kospi: +1.1%

  • Australia's ASX All Ordinaries: +0.7%

---FX---

  • USD/JPY: -0.5% to 134.92

  • USD/CNH: -0.1% to 6.9550

  • USD/INR: +0.2% to 82.54

Europe: DAX -0.5%, FTSE -0.3%, CAC -0.3%

Major European indices trade on a mostly lower note while Spain's IBEX (+0.1%) outperforms slightly. The U.K.'s November CPI slowed a slowdown in the yr/yr rate to 10.7% from 11.1% that was reached in October. Meanwhile, Spain's CPI slowed for the fourth consecutive month. Travel operator TUI beat revenue expectations for the fiscal year and announced that it will repay aid received during the pandemic. Germany's ifo Institute raised the domestic growth forecast for 2022 to 1.8% from 1.6% while the outlook for next year was increased to -0.1% from -0.3%. The European Central Bank and the Bank of England are expected to announce 50-bps rate hikes tomorrow after the Federal Reserve does the same today.

  • In economic data:

  • Eurozone's October Industrial Production -2.0% m/m (expected -1.5%; last 0.8%); 3.4% yr/yr, as expected (last 5.1%)

  • U.K.'s November CPI 0.4% m/m (expected 0.6%; last 2.0%); 10.7% yr/yr (expected 10.9%; last 11.1%). November Core CPI 0.3% m/m (expected 0.5%; last 0.7%); 6.3% yr/yr (expected 6.5%; last 6.5%). November RPI 0.6% m/m (expected 0.5%; last 2.5%); 14.0% yr/yr (last 13.9%; last 14.2%)

  • Italy's Q3 Unemployment Rate 7.9% (last 8.1%)

  • Spain's November CPI -0.1% m/m, as expected (last 0.3%); 6.8% yr/yr (expected 6.3%; last 7.3%)

  • Swiss November CPI -0.5% m/m (last 0.0%); 3.8% yr/yr (last 4.9%)

---Equity Markets---

  • STOXX Europe 600: -0.5%

  • Germany's DAX: -0.5%

  • U.K.'s FTSE 100: -0.3%

  • France's CAC 40: -0.3%

  • Italy's FTSE MIB: -0.1%

  • Spain's IBEX 35: +0.1%

---FX---

  • EUR/USD: +0.1% to 1.0648

  • GBP/USD: +0.2% to 1.2386

  • USD/CHF: -0.1% to 0.9281


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