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14/12/23 Briefing





The S&P 500 futures are up points and are trading 0.3% above fair value, the Nasdaq 100 futures are up 65 points and are trading 0.4% above fair value, and the Dow Jones Industrial Average futures are up 120 points and are trading 0.3% above fair value.

Yesterday's strong rally has carried over, leading to pre-open gains for equity futures this morning. Treasury yields continue to move lower, acting as support for stocks. The 10-yr note yield is below 4.00%, down nine basis points from yesterday at 3.93%. The 2-yr note yield is down 15 basis points to 4.31%. 

The Bank of England followed the Fed's lead and left its policy rate unchanged at 5.25% in a 6-3 vote, saying rates will likely need to stay elevated for some time. 

The Hong Kong Monetary Authority left its policy rate unchanged at 5.75%, as expected, and the Swiss National Bank left its policy rate unchanged at 1.75%, as expected, but the Norges Bank surprised with a 25 basis points hike in its policy rate to 4.50%.

The ECB will make its policy announcement at 8:15 a.m. ET.

In other news, the House voted to open a formal impeachment inquiry into President Biden with all Republicans voting in favor, according to The New York Times.

There is a slate of economic data today, including:

  • 08:30 ET: Initial jobless Claims (Briefing.com consensus 222K; Prior 220K) and Continuing Jobless Claims (Prior 1.861M); November Retail Sales (Briefing.com consensus -0.1%; Prior -0.1%) and Retail Sales, Ex-Auto (Briefing.com consensus 0.0%; Prior 0.1%); November Export Price Index (Prior -1.1%) and Export Prices, ex-agricultural (Prior -1.0%); November Import Price Index (Prior -0.8%) and Import Prices, ex-fuel (Prior -0.2%)

  • 10:00 ET: October Business Inventories (Briefing.com consensus 0.1%; Prior 0.4%)

  • 10:30 ET: EIA Natural Gas Inventories (Prior -117 bcf)

In corporate news:

  • Adobe (ADBE 601.41, -22.85, -3.7%): beats by $0.14, reports revs in-line; guides Q1 EPS above consensus, revs below consensus; guides FY24 EPS in-line, revs below consensus

  • Occidental Petro (OXY 58.37, +1.15, +2.0%): 10% owner Warren Buffett's Berkshire Hathaway bought another 10,482,162 shares worth approx. $589 mln (12/11-12/13 transaction dates)

  • American Eagle (AEO 21.00, +0.21, +1.0%): raises its quarterly dividend by 25% to $0.125/share; 2.4% annual yield

  • Nordson (NDSN 241.12, +0.40, +0.2%): beats by $0.06, beats on revs; guides Q1 EPS in-line, revs below consensus; guides FY24 EPS in-line, revs in-line

  • Mueller Water (MWA 13.95, -0.11, -0.8%): beats by $0.02, beats on revs; guides Q1 revs below consensus; guides FY24 revs below consensus

  • Toll Brothers (TOL 97.99, +1.53, +1.6%): approves new 20 mln share repurchase authorization replacing its current program

  • Robinhood Markets (HOOD 12.37, +0.38, +3.2%): reports monthly operating data for November 2023; crypto notional trading volumes up 74%

  • Moderna (MRNA 88.00, +9.41, +12.0%) and Merck (MRK 106.68, +0.34, +0.3%): announce mRNA-4157 in combination with Keytruda demonstrated continued improvement in recurrence-free survival and distant metastasis-free survival in patients with high-risk stage III/IV melanoma following complete resection versus Keytruda at three years

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region were mostly higher, riding the momentum of Wall Street's big rally in response to a dovish-sounding Fed and falling interest rates. Japan's Nikkei: -0.8%, Hong Kong's Hang Seng: +0.7%, China's Shanghai Composite: -0.3%, India's Sensex: +1.3%, South Korea's Kospi: +1.3%, Australia's All Ordinaries: +1.7%.

  • In economic data:

  • Japan's October Core Machinery Orders 0.7% m/m (expected -0.5%; last 1.4%) and -2.2% yr/yr (expected -5.1%; last -2.2%); October Industrial Production 1.3% (expected 1.0%; last 0.5%) and Capacity Utilization 1.5% (last 0.4%)

  • Australia's November Employment Change 61.5K (expected 11.0K; last 42.7K); November Unemployment Rate 3.9% (expected 3.8%; last 3.8%)

  • India's November WPI Inflation 0.26% yr/yr (expected 0.08%; last -0.52%)

  • New Zealand's Q3 GDP -0.3% qtr/qtr (expected 0.2%; last 0.5%) and -0.6% yr/yr (expected 0.5%; last 1.5%)

  • Singapore Q3 Unemployment Rate 2.0% (expected 2.0%; last 2.0%)

  • In news:

  • Japan's Nikkei (-0.8%) felt the drag of exporter stocks as the yen surged following the Fed decision and China's Shanghai Composite slacked off on growth concerns following some softer than expected new loan data for November.

  • The Hong Kong Monetary Authority followed the Fed's lead and left its policy rate unchanged at 5.75%, as expected.

  • The Bank of Korea, meanwhile, said in a monetary policy report that it will maintain a restrictive policy stance because of the continuance of high inflation.

  • In Japan, multiple Cabinet members with LDP ties resigned as expected. USD/JPY, which saw 145.99 yesterday, is down 1.1% to 141.37.

  • Major European indices have their rally caps on, feeding off a drop in sovereign bond yields that has followed the Fed's dovish-looking pivot. STOXX Europe 600: +1.4%, Germany's DAX: +0.6%, UK's FTSE 100: +1.7%, France's CAC 40: +1.2%, Italy's FTSE MIB: +0.3%, Spain's IBEX 35: +1.2%.

  • In economic data:

  • Spain's November CPI -0.3% m/m (expected -0.4%; last 0.3%) and 3.2% yr/yr (expected 3.2; last 3.5%)

  • Switzerland's November PPI -0.9% m/m (Expected 0.1%; last 0.2%) and -1.3% yr/yr (last -0.9%)

  • In news:

  • Central bank action/inaction is the focal point of European markets today.

  • The Bank of England left its policy rate unchanged at 5.25%, as expected, noting policy will need to be sufficiently restrictive for sufficiently long to get inflation to the 2% target on a sustainable basis in the medium term.

  • The Swiss National Bank left its policy rate unchanged at 1.75%, as expected, but said it is not talking about rate cuts now.

  • The Norges Bank, meanwhile, surprised with a 25 basis points hike in its policy rate to 4.50% because it views inflation as being too high still.

  • The ECB will make its policy announcement at 8:15 a.m. ET. It is expected to leave its corridor of key policy rates unchanged. EUR/USD +0.5% to 1.0926.

 

U.S. equity futures:

  • S&P 500 Futures +17 @ 4,724

  • DJIA Futures: +132 @ 37,223

  • Nasdaq 100 Futures: +67 @ 16,629

Overseas:

  • Europe: DAX +0.6%, FTSE +1.7%, CAC +1.2%

  • Asia: Nikkei -0.8%, Hang Seng +0.7%, Shanghai Composite -0.3%

Commodities:

  • Crude Oil +1.46 @ 70.93

  • Nat Gas +0.019 @ 2.354

  • Gold +55.05 @ 2052.35

  • Silver +1.519 @ 24.440

  • Copper +0.1070 @ 3.8945

Earnings/Guidance:

  • Adobe (

  • Alaska Air (

  • Canadian Nat'l Rail (

  • Cenovus Energy (

  • Glaukos (

  • Mueller Water (

  • Nordson (

  • Nucor (

News:

  • House votes to open formal impeachment inquiry into President Biden with all Republicans voting in favor, according to the New York Times

  • Donald Trump beats President Biden in all seven swing states for the 2024 election, according to Bloomberg

  • White House offers Republicans immigration concessions to get deal on Ukraine, agitating Democrats. Deal has not been reached yet, according to CNN

  • Senate passes $886 bln national defense bill. House will vote today, according to the New York Times

  • Bank of England keeps rates unchanged at 5.25%

  • IEA says world oil demand is on track to rise 2.3 mb/d to 101.7 mb/d in 2023, but this masks the impact of a further weakening of the macroeconomic climate

  • India will not lower EV import taxes, according to Digitimes

  • HHS announced a new list of 48 Medicare Part B drugs that raised their prices faster than inflation, and may be subject to inflation rebates in the first quarter of 2024 as a result of the Inflation Reduction Act

  • EU reaches deal to ease its capital rules for insurers, according to Reuters

  • 3D Systems (

  • 10x Genomics (

  • ACADIA Pharmaceuticals (

  • Airbus (

  • Alibaba (

  • Align Technology (

  • Amazon (

  • American Eagle (

  • Amgen (

  • Apellis Pharmaceuticals (

  • ARMOUR Residential REIT (

  • Asure Software (

  • Bicycle Therapeutics (

  • Biogen (

  • Bluebirdbio (

  • Bristol-Myers (

  • Brookfield Renewable (

  • Cadence Bank (

  • Carisma Therapeutics (

  • Chanson Int'l Holding (

  • Codexis (

  • Crown Castle (

  • Digital World Acquisition Corp (

  • EOG Resources (

  • General Motors (

  • Glaukos (

  • Grupo Aeroportuario Del Sureste (

  • H & R Block (

  • Ispire Technology (

  • Jumia (

  • KB Financial (

  • Light & Wonder (

  • Marten Transport (

  • Mattel (

  • Medtronic (

  • Mercury General (

  • MindMed (

  • Moderna (

  • Occidental Petro (

  • Preferred Bank (

  • Quanex (

  • Robinhood Markets (

  • Rocket Lab USA (

  • Seadrill (

  • SITE Centers (

  • Teck Resources (

  • Toll Brothers (

  • Tourmaline (

  • Travere Therapeutics (

  • Veradigm Inc. (

  • Vir Biotechnology (

  • Wabtec (

  • Wheaton Precious Metals (

M&A:

  • Alkermes Plc (

  • Carrier Global (

  • Certara (

  • Equinor (

  • JBT Corp (

  • Pembina Pipeline (

  • Pfizer (

Syndicate:

  • AerSale (

  • NextDecade (

  • Ocular Therapeutix (

  • Osisko Gold Royalties (

IPOs:

  • No IPOs expected to price.

Gapping Up/Down

  • Gapping up:

  • ESPR +14.6%, CDXS +12.9%, SDRL +5.9%, CHSN +2.7%, NX +2.3%, HOOD +2.3%, TXG +2.3%, OXY +2.2%, JMIA +2%, RKLB +1.8%, CVE +1.8%, MAT +1.7%, CARR +1.6%, EOG +1.3%, DWAC +1.3%, TOL +1.2%, DDD +1%, ALK +1%, LNW +0.9%, CADE +0.8%, MDT +0.8%

  • Gapping down:

  • OCUL -17%, ASLE -10.5%, MDRX -10%, ADBE -5%, PBA -3.1%, ACAD -2.8%, RILY -2.3%, OR -1.4%, AEO -1.1%

 

Analyst Research (see Upgrades/Downgrades calendar for full list):

  • Upgrades

  • Alector (ALEC) upgraded to Buy from Hold at Stifel; tgt raised to $15

  • Beacon Roofing Supply (BECN) upgraded to Overweight from Neutral at JP Morgan; tgt raised to $103

  • Choice Hotels (CHH) upgraded to Neutral from Underweight at JP Morgan; tgt $115

  • Host Hotels (HST) upgraded to Neutral from Underweight at JP Morgan; tgt $15

  • Installed Building Products (IBP) upgraded to Overweight from Neutral at JP Morgan; tgt raised to $199

  • Invesco (IVZ) upgraded to Outperform from Mkt Perform at Keefe Bruyette; tgt raised to $20

  • Live Nation (LYV) upgraded to Overweight from Equal-Weight at Morgan Stanley; tgt raised to $110

  • Marathon Petroleum (MPC) upgraded to Overweight from Equal Weight at Wells Fargo; tgt raised to $169

  • TopBuild (BLD) upgraded to Overweight from Neutral at JP Morgan; tgt raised to $387

  • Downgrades:

  • ACADIA Pharmaceuticals (ACAD) downgraded to Hold from Buy at Deutsche Bank; tgt $25

  • Deckers Outdoor (DECK) downgraded to Hold from Buy at Stifel; tgt raised to $709

  • Equitrans Midstream (ETRN) downgraded to Underweight from Equal Weight at Wells Fargo; tgt raised to $10

  • Excelerate Energy (EE) downgraded to Equal Weight from Overweight at Wells Fargo; tgt lowered to $18

  • FMC Corp (FMC) downgraded to Market Perform from Outperform at BMO Capital Markets; tgt lowered to $63

  • Gaming and Leisure Properties (GLPI) downgraded to Neutral from Overweight at JP Morgan; tgt $48

  • Green Dot (GDOT) downgraded to Underweight from Equal Weight at Barclays; tgt lowered to $7

  • Others:

  • Akoya Biosciences (AKYA) initiated with a Neutral at Guggenheim

  • American Tower (AMT) initiated with a Buy at HSBC Securities; tgt $245

  • Arch Capital (ACGL) initiated with an In-line at Evercore ISI; tgt $88

  • Cardinal Health (CAH) initiated with an Underweight at Wells Fargo; tgt $96

  • Castle Biosciences (CSTL) initiated with a Buy at Guggenheim; tgt $25

  • Cencora (COR) initiated with an Equal Weight at Wells Fargo; tgt $213

  • CRH Plc. (CRH) initiated with a Buy at Truist; tgt $81

  • Crown Castle (CCI) initiated with a Hold at HSBC Securities; tgt $110

  • Cytek Biosciences (CTKB) initiated with an Overweight at Stephens; tgt $9

  • Everest Group (EG) initiated with an In-line at Evercore ISI; tgt $431

  • Exact Sciences (EXAS) initiated with a Buy at Guggenheim; tgt $90

  • Guardant Health (GH) initiated with a Neutral at Guggenheim

  • Illumina (ILMN) initiated with a Buy at Guggenheim; tgt $155

  • Illumina (ILMN) initiated with an Overweight at Stephens; tgt $170

  • Ironwood Pharma (IRWD) initiated with an Overweight at Wells Fargo; tgt $20

  • McKesson (MCK) initiated with an Equal Weight at Wells Fargo; tgt $502

  • Myriad Genetics (MYGN) initiated with a Buy at Guggenheim; tgt $23

  • WK Kellogg Co (KLG) initiated with an Equal-Weight at Morgan Stanley; tgt $13

Econ Data:

  • 08:30 ET: Initial Claims for Dec 9 (Briefing.com Consensus 222K; Prior 220K)

  • 08:30 ET: Continuing Claims for Dec 2 (Briefing.com Consensus NA; Prior 1861K)

  • 08:30 ET: Retail Sales for Nov (Briefing.com Consensus -0.1%; Prior -0.1%)

  • 08:30 ET: Retail Sales ex-auto for Nov (Briefing.com Consensus 0.0%; Prior 0.1%)

  • 08:30 ET: Export Prices for Nov (Briefing.com Consensus NA; Prior -1.1%)

  • 08:30 ET: Export Prices ex-ag for Nov (Briefing.com Consensus NA; Prior -1.0%)

  • 08:30 ET: Import Prices for Nov (Briefing.com Consensus NA; Prior -0.8%)

  • 08:30 ET: Import Prices ex-oil for Nov (Briefing.com Consensus NA; Prior -0.2%)

  • 10:00 ET: Business Inventories for Oct (Briefing.com Consensus 0.1%; Prior 0.4%)

  • 10:30 ET: EIA Natural Gas Inventories for Dec 9 (Briefing.com Consensus NA; Prior -117 bcf)

Earnings:

  • Monday (Dec 11)

  • Afternoon: CASY ORCL

  • Wednesday (Dec 13)

  • Morning: ABM CGNT PLAB REVG

  • Afternoon:  ADBE NDSN

  • Thursday (Dec 14)

  • Morning: JBL

  • Afternoon: COST LEN

  • Friday (Dec 15)

  • Morning: DRI

 

Asia & Europe detail:

Asia: Nikkei -0.8%, Hang Seng +0.7%, Shanghai Composite -0.3%

Equity indices in the Asia-Pacific region were mostly higher, riding the momentum of Wall Street's big rally in response to a dovish-sounding Fed and falling interest rates. The outliers were Japan's Nikkei (-0.8%), which felt the drag of exporter stocks as the yen surged following the Fed decision, and China's Shanghai Composite, which slacked off on growth concerns following some softer than expected new loan data for November. The Hong Kong Monetary Authority followed the Fed's lead and left its policy rate unchanged at 5.75%, as expected. The Bank of Korea, meanwhile, said in a monetary policy report that it will maintain a restrictive policy stance because of the continuance of high inflation. In Japan, multiple Cabinet members with LDP ties resigned as expected. USD/JPY, which saw 145.99 yesterday, is down 1.1% to 141.37.

  • In economic data:

  • Japan's October Core Machinery Orders 0.7% m/m (expected -0.5%; last 1.4%) and -2.2% yr/yr (expected -5.1%; last -2.2%); October Industrial Production 1.3% (expected 1.0%; last 0.5%) and Capacity Utilization 1.5% (last 0.4%)

  • Australia's November Employment Change 61.5K (expected 11.0K; last 42.7K); November Unemployment Rate 3.9% (expected 3.8%; last 3.8%)

  • India's November WPI Inflation 0.26% yr/yr (expected 0.08%; last -0.52%)

  • New Zealand's Q3 GDP -0.3% qtr/qtr (expected 0.2%; last 0.5%) and -0.6% yr/yr (expected 0.5%; last 1.5%)

  • Singapore Q3 Unemployment Rate 2.0% (expected 2.0%; last 2.0%)

---Equity Markets---

  • Japan's Nikkei: -0.8%

  • Hong Kong's Hang Seng: +0.7%

  • China's Shanghai Composite: -0.3%

  • India's Sensex: +1.3%

  • South Korea's Kospi: +1.3%

  • Australia's All Ordinaries: +1.7%

---FX---

  • USD/JPY: -1.1% to 141.37

  • USD/CNH: +0.1% to 7.1421

  • USD/INR: flat at 83.312

 

Europe: DAX +0.6%, FTSE +1.7%, CAC +1.2%

Major European indices have their rally caps on, feeding off a drop in sovereign bond yields that has followed the Fed's dovish-looking pivot. The latter has triggered risk-on price action to the benefit of equities. Central bank action/inaction is the focal point of European markets today. The Bank of England left its policy rate unchanged at 5.25%, as expected, noting policy will need to be sufficiently restrictive for sufficiently long to get inflation to the 2% target on a sustainable basis in the medium term. The Swiss National Bank left its policy rate unchanged at 1.75%, as expected, but said it is not talking about rate cuts now. The Norges Bank, meanwhile, surprised with a 25 basis points hike in its policy rate to 4.50% because it views inflation as being too high still. The ECB will make its policy announcement at 8:15 a.m. ET. It is expected to leave its corridor of key policy rates unchanged. EUR/USD +0.5% to 1.0926.

  • In economic data:

  • Spain's November CPI -0.3% m/m (expected -0.4%; last 0.3%) and 3.2% yr/yr (expected 3.2; last 3.5%)

  • Switzerland's November PPI -0.9% m/m (Expected 0.1%; last 0.2%) and -1.3% yr/yr (last -0.9%)

---Equity Markets---

  • STOXX Europe 600: +1.4%

  • Germany's DAX: +0.6%

  • UK's FTSE 100: +1.7%

  • France's CAC 40: +1.2%

  • Italy's FTSE MIB: +0.3%

  • Spain's IBEX 35: +1.2%

---FX---

  • EUR/USD: +0.5% to 1.0926

  • GBP/USD: +0.8% to 1.2716

  • USD/CHF: -0.3% to 0.8687

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