The S&P 500 futures trade 13 points, or 0.3%, above fair value on Fed-decision day. The S&P 500 enters the session down 1.7% over the past two sessions amid profit-taking interest and growth concerns.
The FOMC will release its policy statement along with projections for the economy and interest rates at 2:00 p.m. ET. Fed Chair Powell will follow up with a press conference at 2:30 p.m. ET. Expectations for the Fed to announce a more aggressive tapering plan have increased in light of hot inflation data and comments from Mr. Powell last week.
Before the Fed, investors will receive a large batch of economic data, starting with Retail Sales for November (Briefing.comconsensus 0.8%), Import and Export Prices for November, and the Empire State Manufacturing Survey for December (Briefing.comconsensus 25.0) at 8:30 a.m. ET.
Afterwards, the NAHB Housing Market Index for December and Business Inventories for October (Briefing.comconsensus 1.0%) will be released at 10:00 a.m. ET, followed by Net Long-Term TIC Flows for October at 4:00 p.m. ET.
In other developments, Eli Lilly (LLY 260.00, +10.62, +4.3%) provided upbeat guidance, while Lowe's (LOW 242.35, -10.11, -4.0%) provided underwhelming guidance. Congress passed the bill to raise the debt ceiling by $2.5 trillion, which will be enough to get the Treasury through early 2023.
U.S. Treasuries trade near their flat lines. The 2-yr yield is up one basis point to 0.67%, and the 10-yr yield is up one basis point to 1.45%. The U.S. Dollar Index is down 0.1% to 96.49. WTI crude futures are down 1.1%, or $0.78, to $69.95/bbl amid lingering demand concerns.
In U.S. Corporate news:
Eli Lilly (LLY 260.00, +10.62): +4.3% after issuing upside guidance for FY21 and FY22.
Lowe's (LOW 242.35, -10.11): -4.0% after reaffirming below-consensus revenue guidance for FY22 and issuing underwhelming guidance for FY23.
Nucor (NUE 117.00, -1.42): -1.2% after issuing downside guidance for Q4.
Booking Holdings (BKNG 2165.05, +40.12): +1.9% after the stock was upgraded to Overweight from Neutral at JP Morgan.
CMC Materials (CCMC 180.05, +34.08): +23.4% after agreeing to be acquired by Entegris (ENTG 138.99, -4.23, -3.0%) for an enterprise value of roughly $6.5 billion in cash and stock.
Reviewing overnight developments:
Equity indices in the Asia-Pacific region ended the midweek session on a mostly lower note. Japan's Nikkei: +0.1% Hong Kong's Hang Seng: -0.9% China's Shanghai Composite: -0.4% India's Sensex: -0.6% South Korea's Kospi: +0.1% Australia's ASX All Ordinaries: -0.8%.
In economic data:
China's November Retail Sales 3.9% yr/yr (expected 4.6%; last 4.9%), November Industrial Production 3.8% yr/yr (expected 3.6%; last 3.5%), November Fixed Asset Investment 5.2% yr/yr (expected 5.4%; last 6.1%), and November House Prices 3.0% yr/yr (last 3.4%)
South Korea's November trade surplus $3.06 bln (last surplus of $3.09 bln). November Imports 43.6% yr/yr (last 43.6%) and Exports 32.0% yr/yr (last 32.1%). November Unemployment Rate 3.1% (last 3.2%)
India's November trade deficit $22.91 bln (expected deficit of $23.15 bln; last deficit of $23.27 bln)
Australia's December Westpac Consumer Sentiment -1.0% (last 0.6%)
New Zealand's Q3 Current Account deficit 4.6% of GDP (expected 4.5% of GDP; last 3.3% of GDP)
Singapore's Q3 Unemployment Rate 2.6% (last 2.6%)
In news:
Bank of Japan Governor Kuroda acknowledged that prices of domestic corporate goods are rising significantly and the BoJ conducted its third consecutive repurchase operation.
Reserve Bank of New Zealand Governor Orr said that house prices in New Zealand are above sustainable levels and vulnerable to a correction.
Japan's Prime Minister Kishida acknowledged that inflated construction data was used in GDP calculations.
Bank of Korea Governor Lee will hold his briefing on inflation tomorrow.
Major European indices trade in mixed fashion with Spain's IBEX (-0.7%) showing relative weakness. STOXX Europe 600: +0.4% Germany's DAX: +0.3% U.K.'s FTSE 100: -0.2% France's CAC 40: +0.6% Italy's FTSE MIB: +0.4% Spain's IBEX 35: -0.7%.
In economic data:
U.K.'s November CPI 0.7% m/m (expected 0.4%; last 1.1%); 5.1% yr/yr (expected 4.7%; last 4.2%). November Core CPI 0.5% m/m (expected 0.3%; last 0.7%); 4.0% yr/yr (expected 3.7%; last 3.4%). November Input PPI 1.0% m/m (expected 0.5%; last 1.6%) and Output PPI 0.9% m/m (expected 0.8%; last 1.5%)
Germany's November WPI 1.3% m/m (last 1.6%); 16.6% yr/yr (last 15.2%)
France's November CPI 0.4% m/m, as expected (last 0.4%); 2.8% yr/yr, as expected (last 2.6%)
Italy's November CPI 0.6% m/m (expected 0.7%; last 0.7%); 3.7% yr/yr (expected 3.8%; last 3.8%)
Spain's November CPI 0.3% m/m (expected 0.4%; last 1.8%); 5.5% yr/yr (expected 5.6%; last 5.4%)
In news:
The U.K.'s CPI was above target for the fourth consecutive month ahead of Thursday's Bank of England policy meeting.
France raised its 2021 domestic growth forecast to 6.7% from 6.25%.
The European Central Bank continues projecting that inflation will be back below 2.0% in 2023.
Italy's Prime Minister Draghi said that more funds will be spent to offset higher household energy bills.
U.S. equity futures:
S&P 500 Futures: +2 @ 4,637
DJIA Futures: -14 @ 35,531
Nasdaq 100 Futures: -7 @ 15,908
Overseas:
Europe: DAX +0.3%, FTSE -0.2%, CAC +0.6%
Asia: Nikkei +0.1%, Hang Seng -0.9%, Shanghai Composite -0.4%
Commodities:
Crude Oil -0.79 @ 69.94
Nat Gas +0.163 @ 3.910
Gold -1.50 @ 1770.80
Silver -0.072 @ 21.852
Copper -0.0593 @ 4.1982
U.S. Summary:
Earnings/Guidance (Full Earnings Calendar):
ABM Industries (ABM) beats by $0.04, beats on revs; guides FY22 EPS in-line
Boxed (BOXD) provides Q3 operating metrics, revenue rose 20% yr/yr to $49.0 mln
Brinks (BCO) reaffirms FY21 revenue revenue guidance and provides longer term guidance
CleanSpark (CLSK) misses by $0.16; beats on revs
Cohu (COHU) updates mid-term financial target models to annual revenue of $1.0 bln and non-GAAP EPS of $4.00
Eli Lilly (LLY) provides better than expected outlook in investor presentation
Lennox Int'l (LII) reaffirms FY21 EPS guidance; sees FY22 guidance in line
Lowe's (LOW) reaffirms FY22 revenue guidance; sees FY23 EPS/rev guidance in line
Nucor (NUE) sees Q4 EPS below consensus
REV Group (REVG) misses by $0.02, misses on revs; guides FY22 revs below consensus
SkillSoft (SKIL) reports Q3 results, adjusted revenue up 6% yr/yr to $179 mln, raises FY22 adjusted revenue and bookings guidance
SMART Global (SGH) reaffirms NovQ prior guidance
General News:
Fed is expected to announce faster tapering this afternoonamid inflation concerns, according to Bloomberg
Senate votes to increase debt ceiling by $2.5 trillion, according to CNBC
President Biden and Senator Joe Manchin (D-WV) are "deadlocked" regarding Build Back Better Act talks over disagreements of length of programs. Vote will likely need to be delayed until 2022, according to Axios
US to add eight additional China companies to blacklist, according to Financial Times
The Biden administration is considering new sanctions against China's SMIC, according to Bloomberg
Economists feel housing demand will be strong for years because millennials now represent half of all home purchases, according to the Wall Street Journal
AbbVie (ABBV) receives FDA approval for RINVOQ
Alcoa (AA) de-risks certain US pension plans through additional annuity contracts
Apellis Pharmaceuticals (APLS) and Sobi receive EU approval of Aspaveli
atai Life Sciences N.V. (ATAI) announced that Apeiron Investment Group, the family office of its Founder and Chairman, has decided to voluntarily extend its lock-up for all of its pre-IPO common shares for another 24 months
Atea Pharmaceuticals (AVIR) introduces updated program for AT-527 in COVID-19; to close out Phase 3 MORNINGSKY trial
Aurora Cannabis (ACB) and 22nd Century Group (XXII) announce IP license agreement with Cronos Group (CRON)
BeiGene (BGNE) receives authorization in UK for BRUKINSA
BeyondSpring (BYSI) announces new data highlighting the mechanism of action of plinabulin in the prevention of chemotherapy-induced neutropenia
Canaan (CAN) secured purchase order of 30,000 Bitcoin mining machines
Capital One (COF) reports November card metrics
Cerence (CRNC) promotes Dr. Stefan Ortmanns to Chief Executive Officer and Director
Conn's (CONN) announces authorization of $150 million share repurchase program
Cummins (CMI) authorizes share repurchase up to $2 bln in shares of common stock upon completion of its 2019 $2 bln share repurchase program
Digital World Acquisition Corp (DWAC): Trump Media & Technology Group enters into technology and cloud services agreement with Rumble
Eli Lilly (LLY): mirikizumab met the primary endpoint of clinical remission and all key secondary endpoints at one year in Phase 3 maintenance study for patients with active ulcerative colitis
Eos Energy (EOSE) names Randall B. Gonzales CFO, effective January 11, 2022
Equity Commonwealth (EQC) authorizes an additional $150 mln for share repurchases through December 31, 2022
Fortune Brands Home & Security (FBHS) increases quarterly dividend 7.7% to $0.28/share
Genesco (GCO) signs three-year licensing agreement with ETONIC
GrowGeneration (GRWG) announces retirement of COO Tony Sullivan, effective immediately
Incyte (INCY) announces FDA acceptance and Priority Review of sNDA for ruxolitinib cream 1.5% for treatment of vitiligo
Intelligent Systems (INS) is changing its name to CoreCard Corporation, anticipates using new ticker "CCRD" on Dec. 29, 2021
JPMorgan Chase (JPM) reports November card metrics
KBR (KBR) awarded eight prime contracts on GSA's ASTRO program
KULR Technology (KULR) received three-year multi-million dollar deployment order for its Passive Propagation Resistant solution suite from Volta Energy Products, a subsidiary of Viridi Parente
Laureate Education (LAUR) raises existing share repurchase program to $600 mln up from $500 mln previously
Medtronic (MDT) receives FDA warning letter for its Diabetes Business headquarters
Merck (MRK): European Commission approves Merck's VAXNEUVANCE for individuals 18 years of age and older
MFA Financial (MFA) increases quarterly cash dividend to $0.11/share from $0.10/share
Motorola Solutions (MSI) CEO adopted a stock trading plan in accordance with Rule 10b5-1
Myriad Genetics (MYGN) promotes Nicole Lambert to COO
Nikola Corp (NKLA) tweets that pre-series BEV trucks came off-the-line at the NikolaCoolidgeFacility
Northern Oil & Gas (NOG) announced a long-term base dividend growth plan with base dividend growth plan ~20% avg growth per quarter) through 2023
Nuvation Bio (NUVB): FDA grants Fast Track designation to NUV-422 for treatment of patients with high-grade gliomas
Ocugen (OCGN) reports new data suggest COVAXIN (BBV152) vaccine candidate generates robust immune memory to COVID-19 and variants of concern for at least six months after vaccination
Oppenheimer Holdings (OPY) declares special cash dividend of $1.00/share
Pangea Logistics Solutions (PANL) announces the passing of CEO and founder Ed Coll
Pfizer (PFE) announces FDA approval of XELJANZ for treatment of active ankylosing spondylitis
Raytheon Technologies (RTX) awarded $270 mln Navy contract
REE Automotive (REE) forms strategic agreement with Hitachi America to accelerate the adoption of EVs
Sanofi (SNY) and GSK reports preliminary booster data for their COVID-19 vaccine candidate
Scientific Games (SGMS) awarded five-year contract for its digital second-chance drawing platform and services by the Connecticut Lottery Corporation
Tesla (TSLA): A taxi company suspends Tesla fleet, according to Electrek
Toro (TTC) raises quarterly dividend 14% to $0.30/share
Travere Therapeutics (TVTX) Announces Positive Topline Results from the Ongoing Phase 1/2 COMPOSE Study of Pegtibatinase in Classical Homocystinuria
UBS (UBS) aiming to close India global banking office, according to Bloomberg
Veracyte (VCYT) announces publication of data demonstrating clinical utility of Envisia Genomic Classifier
M&A:
Accenture (ACN) to acquire AFD.TECH, an independent network services company specializing in network engineering, ops and services; Financial terms not being disclosed
Brown & Brown (BRO) announces acquisition of Rainmaker; terms not disclosed
CI Financial Corp (CIXX) to acquire Columbia Pacific Wealth Management and make strategic investment in Columbia Pacific Advisors
Entegris (ENTG) and CMC Materials (CCMP) announce a definitive merger agreement under which Entegris will acquire CMC Materials in a cash and stock transaction with an enterprise value of ~$6.5 bln
Flywire (FLYW) acquired UK-based software provider WPM; expects deal to be accretive to rev and growth in 2022
OneWater Marine (ONEW) has entered into a definitive agreement to acquire a majority interest, in Quality Boats
RR Donnelley & Sons (RRD) to be acquired by Chatham Asset Mgmt for $10.85/sh all in cash; terminates prior merger deal with Atlas
Rush Enterprises (RUSHA) acquires certain assets of Summit Truck Group for approximately $205 mln; acquisition expected to be immediately accretive to cash flow and earnings
Syndicate:
BELLUS Health (BLU) prices offering of 25 mln shares of common stock at $8.00 per share
Coastal Financial (CCB) prices offering of 740,742 shares of its common stock at $40.50 per share
Legend Biotech (LEGN) announces public offering of $300.0 mln of ADSs
Leslie's (LESL) prices offering of 12,500,000 shares of common stock by certain non-management stockholders
LyondellBasell (LYB) files mixed securities shelf offering
Stock Yards Bancorp (SYBT) files mixed securities shelf offering
Unity Software (U) files for 3,468,362 share common stock offering by selling shareholder
IPOs:
Expected to Price:
Samsara (NYSE: IOT): The developer of a connected operations cloud platform that consolidates data from IoT devices is expected to price its 35.0 M share IPO between $20-$23.
Gapping Up/Down
Gapping up:
VIR +6%, XXII +6%, NILE +5.9%, CONN +4.8%, SKIL+4.4%, DWAC +4%, REE +2.7%, PANL +2.7%, INCY+2%, CAN +1.8%, LAZR +1.6%, KBR +1.3%, PFE+1.1%, AVIR +1%, RTX +0.7%, CMI +0.7%, LAUR+0.6%, SNY +0.6%
Gapping down:
LEGN -6.8%, BGNE -6.6%, LESL -5.6%, BOXD -4.4%, RRD -2.8%, AA -1%, TTC -0.8%, SGH -0.5%
Analyst Research (see Upgrades/Downgradescalendarfor full list):
Upgrades
AZEK (AZEK) upgraded to Overweight from Neutral at JP Morgan; tgt raised to $56
Booking Holdings (BKNG) upgraded to Overweight from Neutral at JP Morgan; tgt raised to $2690
Clarus Corporation (CLAR) upgraded to Outperform from Neutral at Exane BNP Paribas; tgt $33
Comerica (CMA) upgraded to Neutral from Underweight at JP Morgan; tgt $95
Compass Minerals (CMP) upgraded to Neutral from Sell at Goldman; tgt $51
Edwards Lifesciences (EW) upgraded to Buy from Neutral at Citigroup; tgt raised to $142
Endeavor Group (EDR) upgraded to Overweight from Equal-Weight at Morgan Stanley; tgt raised to $40
Fate Therapeutics (FATE) upgraded to Outperform from Neutral at Wedbush
Heritage Commerce Corp. (HTBK) upgraded to Buy from Neutral at DA Davidson; tgt $13.50
Host Hotels (HST) upgraded to Neutral from Sell at Goldman; tgt raised to $18
Huntsman (HUN) upgraded to Buy from Neutral at Goldman; tgt raised to $43
II-VI (IIVI) upgraded to Overweight from Equal-Weight at Morgan Stanley; tgt raised to $82
iRhythm (IRTC) upgraded to Buy from Neutral at Citigroup; tgt $120
KeyCorp (KEY) upgraded to Buy from Underperform at BofA Securities; tgt raised to $27
Masco (MAS) upgraded to Overweight from Equal Weight at Barclays; tgt raised to $83
Downgrades:
Adagio Therapeutics (ADGI) downgraded to Hold from Buy at Stifel; tgt lowered to $9
Adagio Therapeutics (ADGI) downgraded to Neutral from Buy at Guggenheim
Albemarle (ALB) downgraded to Sell from Neutral at Goldman; tgt raised to $205
Comcast (CMCSA) downgraded to Neutral from Buy at Citigroup; tgt lowered to $53
Domino's Pizza (DPZ) downgraded to Underweight from Equal Weight at Barclays; tgt lowered to $495
EverQuote (EVER) downgraded to Underweight from Neutral at JP Morgan; tgt lowered to $13
Gaming and Leisure Properties (GLPI) downgraded to Sector Perform from Sector Outperform at Scotiabank
Haemonetics (HAE) downgraded to Neutral from Buy at Citigroup; tgt lowered to $59
Hologic (HOLX) downgraded to Neutral from Buy at Citigroup; tgt lowered to $78
Installed Building Products (IBP) downgraded to Neutral from Overweight at JP Morgan; tgt $166
Jack Henry (JKHY) downgraded to Mkt Perform from Outperform at Raymond James
Livent (LTHM) downgraded to Sell from Neutral at Goldman; tgt raised to $23
MediaAlpha (MAX) downgraded to Neutral from Overweight at JP Morgan; tgt $16
Others:
Apollo Endosurgery (APEN) initiated with an Outperform at Cowen; tgt $13
Athira Pharma (ATHA) initiated with a Neutral at Goldman; tgt $16
CenterPoint (CNP) initiated with a Sector Perform at Scotiabank
eBay (EBAY) resumed with a Neutral at JP Morgan; tgt $70
Gemini Therapeutics (GMTX) initiated with a Buy at H.C. Wainwright; tgt $20
Genius Brands (GNUS) initiated with a Buy at Dawson James; tgt $5
Whole Earth Brands (FREE) initiated with an Outperform at Cowen; tgt $16
Upcoming Events:
Econ Data:
07:00 ET: MBA Mortgage Applications Index for Dec. 11 (Briefing.comConsensus NA; Prior 2.0%)
08:30 ET: Retail Sales for Nov (Briefing.comConsensus 0.8%; Prior 1.7%)
08:30 ET: Retail Sales ex-Auto for Nov (Briefing.comConsensus 0.9%; Prior 1.7%0
08:30 ET: Import Price Index for Nov (Briefing.comConsensus NA; Prior 1.2%)
08:30 ET: Import Price Index ex-oil for Nov (Briefing.comConsensus NA; Prior 0.4%)
08:30 ET: Export Price Index for Nov (Briefing.comConsensus NA; Prior 1.5%)
08:30 ET: Export Price Index ex-ag. for Nov (Briefing.comConsensus NA; Prior 1.5%)
08:30 ET: Empire State Manufacturing for Dec (Briefing.comConsensus 25.0; Prior 30.9)
10:00 ET: Business Inventories for Oct (Briefing.comConsensus 1.0%; Prior 0.7%)
10:00 ET: NAHB Housing Market Index for Dec (Briefing.comConsensus 84.0; Prior 83.0)
10:30 ET: EIA Crude Oil Inventories for Dec. 11 (Briefing.comConsensus NA; Prior 0.24M)
14:00 ET: FOMC Rate Decision for Dec (Briefing.comConsensus 0.125%; Prior 0.125%)
16:00 ET: Net Long-Term TIC Flows for Oct (Briefing.comConsensus NA; Prior $26.3B)
Earnings:
Wednesday (Dec 15)
Morning: ABM REVG TTC
Afternoon: HEI LEN NDSN TCOM
Thursday (Dec 16)
Morning: ACN ADBE JBL WOR
Afternoon: FDX NX SCS
Friday (Dec 17)
Morning: DRI WGO
Asia & Europe detail:
Asia: Nikkei +0.1%, Hang Seng -0.9%, Shanghai Composite -0.4%
Equity indices in the Asia-Pacific region ended the midweek session on a mostly lower note. Bank of Japan Governor Kuroda acknowledged that prices of domestic corporate goods are rising significantly and the BoJ conducted its third consecutive repurchase operation. Reserve Bank of New Zealand Governor Orr said that house prices in New Zealand are above sustainable levels and vulnerable to a correction. Japan's Prime Minister Kishida acknowledged that inflated construction data was used in GDP calculations. Bank of Korea Governor Lee will hold his briefing on inflation tomorrow.
In economic data:
China's November Retail Sales 3.9% yr/yr (expected 4.6%; last 4.9%), November Industrial Production 3.8% yr/yr (expected 3.6%; last 3.5%), November Fixed Asset Investment 5.2% yr/yr (expected 5.4%; last 6.1%), and November House Prices 3.0% yr/yr (last 3.4%)
South Korea's November trade surplus $3.06 bln (last surplus of $3.09 bln). November Imports 43.6% yr/yr (last 43.6%) and Exports 32.0% yr/yr (last 32.1%). November Unemployment Rate 3.1% (last 3.2%)
India's November trade deficit $22.91 bln (expected deficit of $23.15 bln; last deficit of $23.27 bln)
Australia's December Westpac Consumer Sentiment -1.0% (last 0.6%)
New Zealand's Q3 Current Account deficit 4.6% of GDP (expected 4.5% of GDP; last 3.3% of GDP)
Singapore's Q3 Unemployment Rate 2.6% (last 2.6%)
---Equity Markets---
Japan's Nikkei: +0.1%
Hong Kong's Hang Seng: -0.9%
China's Shanghai Composite: -0.4%
India's Sensex: -0.6%
South Korea's Kospi: +0.1%
Australia's ASX All Ordinaries: -0.8%
---FX---
USD/JPY: +0.1% to 113.80
USD/CNH: UNCH at 6.3702
USD/INR: +0.4% to 76.32
Europe: DAX +0.3%, FTSE -0.2%, CAC +0.6%
Major European indices trade in mixed fashion with Spain's IBEX (-0.7%) showing relative weakness. The U.K.'s CPI was above target for the fourth consecutive month ahead of Thursday's Bank of England policy meeting. France raised its 2021 domestic growth forecast to 6.7% from 6.25%. The European Central Bank continues projecting that inflation will be back below 2.0% in 2023. Italy's Prime Minister Draghi said that more funds will be spent to offset higher household energy bills.
In economic data:
U.K.'s November CPI 0.7% m/m (expected 0.4%; last 1.1%); 5.1% yr/yr (expected 4.7%; last 4.2%). November Core CPI 0.5% m/m (expected 0.3%; last 0.7%); 4.0% yr/yr (expected 3.7%; last 3.4%). November Input PPI 1.0% m/m (expected 0.5%; last 1.6%) and Output PPI 0.9% m/m (expected 0.8%; last 1.5%)
Germany's November WPI 1.3% m/m (last 1.6%); 16.6% yr/yr (last 15.2%)
France's November CPI 0.4% m/m, as expected (last 0.4%); 2.8% yr/yr, as expected (last 2.6%)
Italy's November CPI 0.6% m/m (expected 0.7%; last 0.7%); 3.7% yr/yr (expected 3.8%; last 3.8%)
Spain's November CPI 0.3% m/m (expected 0.4%; last 1.8%); 5.5% yr/yr (expected 5.6%; last 5.4%)
---Equity Markets---
STOXX Europe 600: +0.4%
Germany's DAX: +0.3%
U.K.'s FTSE 100: -0.2%
France's CAC 40: +0.6%
Italy's FTSE MIB: +0.4%
Spain's IBEX 35: -0.7%
---FX---
EUR/USD: +0.1% to 1.1274
GBP/USD: +0.2% to 1.3256
USD/CHF: +0.1% to 0.9243
Comments