The S&P 500 futures are rallying 39 points, or 0.8%, above fair value following yesterday's well-received Fed decision.
The Fed announced a more aggressive tapering plan yesterday, and signaled three rate hikes next year, but the market was already expecting that and is taking comfort in the observation that Fed Chair Powell didn't sound as hawkish as feared. There is hope that a few rate hikes can keep inflation in check without affecting economic growth.
Over in Europe, the European Central Bank left its key rates unchanged and said it will discontinue net asset purchases under its emergency program at the end of March 2022. Interestingly, the Bank of England raised its bank rate to 0.25% from 0.1%, and Norway's central bank raised its key rate to 0.50% from 0.25%.
In economic data, investors will receive Housing Starts (Briefing.comconsensus 1.570 mln) and Building Permits (Briefing.comconsensus 1.670 mln) for November, weekly Initial Claims (Briefing.comconsensus 195,000), and the Philadelphia Fed Index for December (Briefing.comconsensus 30.0) at 8:30 a.m. ET.
Industrial Production (Briefing.comconsensus 0.8%) and Capacity Utilization (Briefing.comconsensus 76.8%) for November will be available at 9:15 a.m. ET, followed by the preliminary IHS Markit Manufacturing and Services PMIs for December at 9:45 a.m. ET.
U.S. Treasuries trade little changed. The 2-yr yield is unchanged at 0.67%, and the 10-yr yield is up one basis point to 1.47%. The U.S. Dollar Index is down 0.6% to 95.97. WTI crude futures are up 0.4% to $71.15/bbl.
In U.S. Corporate news:
Accenture (ACN 410.71, +35.41): +9.4% after beating top and bottom-line estimates, guiding Q2 revenue above consensus, and raising its FY22 EPS and revenue guidance above consensus.
Lennar (LEN 106.31, -6.78): -6.0% after missing EPS estimates. Lennar said the housing industry continues to exhibit strong demand, outweighing supply, and is confident the company can continue to generate solid growth.
Nordson (NDSN 260.00, -9.12): -3.4% after missing top and bottom-line estimates, although it guided fiscal Q1 EPS and revenue above consensus.
Jabil (JBL 66.50, +2.72): +4.3% after beating top and bottom-line estimates, raises its FY22 EPS above consensus, and guiding FY22 revenue above consensus.
Reviewing overnight developments:
Equity indices in the Asia-Pacific region ended Thursday on a mostly higher note. Japan's Nikkei: +2.1% Hong Kong's Hang Seng: +0.2% China's Shanghai Composite: +0.8% India's Sensex: +0.2% South Korea's Kospi: +0.6% Australia's ASX All Ordinaries: -0.2%.
In economic data:
Japan's November trade deficit JPY954.80 bln (expected deficit of JPY675.00 bln; last deficit of JPY68.50 bln). November Imports 43.8% (expected 40.0%; last 26.7%) and Exports 20.5% yr/yr (expected 21.2%; last 9.4%)
Australia's November Employment Change 366,100 (expected 205,000; last -46,300) and full Employment Change 128,300 (last -40,400). November Participation Rate 66.1% (expected 65.5%; last 64.7%) and Unemployment Rate 4.6% (expected 5.0%; last 5.2%). November HIA New Home Sales 7.7% m/m (last 11.1%). Flash December Manufacturing PMI 57.4 (last 59.2) and flash Services PMI 55.1 (last 55.7)
New Zealand's Q3 GDP -3.7% qtr/qtr (expected -4.5%; last 2.4%); -0.3% yr/yr (expected -1.6%; last 17.9%)
Hong Kong's November Unemployment Rate 4.1% (last 4.3%)
In news:
Bank of Korea Governor Lee said that South Korea's CPI is expected to remain above 2.0% for "quite some time."
South Korea's Finance Ministry expects domestic growth in the low 3.0% range in 2022.
Reserve Bank of Australia Governor Lowe said that conditions for a rate hike will not be met in 2022 and that underlying inflation will hit recede to in 2023. Inflation expectations in December hit a nine-year high of 4.8%.
Australia's Treasury expects FY21/22 growth of 3.75%, followed by 3.50% growth in FY22/23.
Major European indices trade on a firmly higher note. STOXX Europe 600: +1.7% Germany's DAX: +1.7% U.K.'s FTSE 100: +1.0% France's CAC 40: +1.6% Italy's FTSE MIB: +1.2% Spain's IBEX 35: +1.8%.
In economic data:
Eurozone's December flash Manufacturing PMI 58.0 (expected 57.8; last 58.4) and flash Services PMI 53.3 (expected 54.1; last 55.9). Q3 eurozone wages 2.3% yr/yr
Germany's December flash Manufacturing PMI 57.9 (expected 56.8; last 57.4) and flash Services PMI 48.4 (expected 51.0; last 52.7)
U.K.'s December flash Manufacturing PMI 57.6 (last 58.1) and flash Services PMI 53.2 (last 58.5)
France's December flash Manufacturing PMI 54.9 (expected 55.5; last 55.9) and flash Services PMI 57.1 (expected 56.0; last 57.4). December Business Survey 111 (expected 109; last 110)
Italy's October trade surplus EUR3.89 bln (last surplus of EUR2.44 bln)
In news:
The Bank of England voted 8-1 to increase its bank rate by 15 bps to 0.25% while Norway's central bank raised its key rate to 0.50% from 0.25%, projecting another hike in March. The Swiss National Bank left its policy rate at -0.75%.
Major European economies reported mostly expansionary flash PMI readings for December, but Germany's Services PMI (48.4) fell into contractionary territory amid renewed restrictions.
Germany is planning 2022 debt issuance of around EUR410 bln, representing the second highest amount on record.
U.S. equity futures:
S&P 500 Futures: +32 @ 4,742
DJIA Futures: +223 @ 36,150
Nasdaq 100 Futures: +104 @ 16,394
Overseas:
Europe: DAX +1.7%, FTSE +1.0%, CAC +1.6%
Asia: Nikkei +2.1%, Hang Seng +0.2%, Shanghai Composite +0.8%
Commodities:
Crude Oil +0.32 @ 71.19
Nat Gas +0.096 @ 3.898
Gold +19.45 @ 1783.95
Silver +0.635 @ 22.180
Copper +0.1285 @ 4.3110
U.S. Summary:
Earnings/Guidance (Full Earnings Calendar):
Accenture (ACN) beats by $0.15, beats on revs; guides Q2 revs above consensus; raises FY22 EPS above consensus, revs above consensus
APi Group (APG) raises FY21 revenue guidance ahead of consensus as revenue momentum in Q3 continued into Q4
Blue Bird (BLBD) misses by $0.12, misses on revs as supply chain disruptions continued in SepQ
Circor (CIR) reaffirms Q4 earnings and revenue guidance
Delta Air Lines (DAL) announces three-year financial targets and outlook
Flexsteel Ind (FLXS) raises revenue guidance, but lowers margin guidance due to supply chain issues
HEICO (HEI) beats by $0.04, beats on revs
IronNet (IRNT) reports Q3 (Oct) results, misses on revs; guides FY22 revs below consensus
Jabil (JBL) beats by $0.12, beats on revs; guides Q2 EPS in-line, revs in-line; raises FY22 EPS above consensus, sees revs above consensus
Lennar (LEN) misses by $0.24, reports revs in-line
Nordson (NDSN) misses by $0.22, misses on revs; guides JanQ EPS above consensus, revs above consensus; guides FY22 EPS in-line, revs in-line
Smith & Nephew (SNN) outlines 'Strategy for Growth', provides mid-term guidance and announces share buyback
Trip.comGroup (TCOM) reports Q3 (Sep) results, beats on revs
Turning Point Brands (TPB) announces the appointment of Yavor Efremov as President and Chief Executive Officer, effective January 11, 2022; sees FY21 revs at higher end of guidance
Worthington (WOR) beats by $0.26, beats on revs
General News:
Senate Democrats are expected to delay talks on Build Back Better Act until next year because talks between President Biden and Senator Joe Manchin (D-WV) are "very far apart." Mr. Manchin wants the child tax credit extension (which expires this month) removed from the bill, but that is getting pushback from progressives. There are also disagreements around the state and local tax deduction, according to CNN
Omicron variant infects 70 times faster than Delta, but it likely causes "much lower" severe disease, according to Bloomberg
ECB keeps rates unchanged
60% of Americans are "worn out" by COVID's impact on their daily lives. Support for requiring proof of vaccination to enter offices or public settings has dropped to 46%, according to Monmouth
100 NFL players have tested positive for COVID-19. 66% of those cases are asymptomatic and the rest have very mild symptoms. NFL is reexamining protocols, such as allowing asymptomatic players to return sooner. NFL is not considering cancelling any games, according to the NFL
The Biden administration believes demand for coronavirus tests could double or triple with Omicron wave, according to Politico
Bank of England raises interest rates to 0.25% from 0.1%
Canada planning digital services tax, which has US officials concerned, according to Bloomberg
ABM Industries (ABM) announces "ELEVATE" strategy at 2021 Investor Day
Aerie Pharma (AERI) announced that Raj Kannan will join the company as Chief Executive Officer and a director, effective December 20, 2021
AFC Gamma (AFCG) increases quarterly dividend to $0.50/share from $0.43/share
American Airlines (AAL) CEO Doug Parker and Southwest (LUV) CEO Gary Kelly say masks are not necessary on planes, according to CNN
Apellis Pharmaceuticals (APLS) receives EU orphan drug approval for Aspaveli
Apple (AAPL) delays returning to office, according to Bloomberg
Apple (AAPL) iPhone 13 sales are slowing down in China, according to DigiTimes
Ares Management (ARES) announces that Leonard Green & Partners and funds managed by Harvest Partners have purchased equity in Convergint from a fund managed by Ares' Private Equity Group and other existing shareholders
AutoZone (AZO) authorizes repurchase of an additional $1.5 bln of common stock
Avanos Medical (AVNS) approves share repurchase program for up to $30 mln of common stock
Avita Medical (RCEL) completes enrollment for pivotal trial for use of RECELL System for repigmentation of stable vitiligo
Balchem (BCPC) raises dividend by 10% to $0.64 per share
Biogen (BIIB) and Eisai Co. provide an important update on the continuing progress of the Phase 4 post-marketing confirmatory study of ADUHELM 100 mg/mL injection for intravenous use in Alzheimer's disease
Blue Apron (APRN) announces plans for co-branded credit card with Aspiration
Calliditas Therapeutics (CALT): FDA approves TARPEYO for immunoglobulin A nephropathy (IgAN)
Canoo (GOEV) to accelerate and shift production of electric vehicles from Europe to U.S.; increases production guidance and targets; to explore partnership opportunities with VDL Groep that will exclude VDL Nedcar
Circor's (CIR) Senior Vice President and CFO plans to step down to pursue another opportunity
Compugen (CGEN) announces updated phase 1/2a data for CLN-081 in NSCLC EGFR exon 20 patients; CLN-081 continues to demonstrate a differentiated clinical profile at the recommended Phase 2 dose of 100mg BID
Dave & Buster's (PLAY) appoints Michael Quartieri as Chief Financial Officer, effective January 1, 2022
Delta Air Lines (DAL) CEO Ed Bastian CNBC interview: Omicron variant is not impacting holiday travel, but there will be impact on international travel in January/February
eBay (EBAY) announces change to Gross Merchandise Volume definition
Endeavour Silver (EXK) Reports Positive Drill Results for the Parral Project
Ethan Allen (ETD) promotes current Treasurer and VP of Finance Matthew McNulty to CFO
Forma Therapeutics (FMTX) announces that the company's investigational oral, selective mIDH1 inhibitor combined with azacitidine yielded durable complete remission or CR with partial hematologic recovery responses with favorable tolerability in patients with the mIDH1 form of acute myeloid leukemia
FormFactor (FORM) opens new manufacturing facility to expand wafer probe card production capacity
G1 Therapeutics (GTHX) announces expansion of COSELA (trilaciclib) sales force; G1 and Boehringer Ingelheim mutually agree to end co-promotion agreement
Genuine Parts (GPC) enters definitive agreement to acquire Kaman Distribution Group
Grocery Outlet (GO) announces organizational changes to advance strategic growth
Immutep (IMMP) enters Manufacturing Service Agreement with Northway Biotech to manufacture IMP761 ahead of clinical testing
Inter Parfums (IPAR) enters into 10-year licensing agreement with Emanuel Unagro
Kaixin Auto (KXIN) reached a strategic partnership agreement with Beijing Bujia International Logistics, which agrees to order at least 10,000 new energy trucks from Kaixin in the next 5 years
LiveOne (LVO) announces departure of Michael Quartieri as CFO, effective December 31
Matinas BioPharma (MTNB) receives unanimous DSMB approval to progress into fourth and final cohort of patients in the EnACT Trial of MAT2203
MMG Limited (COPX) provides update regarding transport disruption on the public roads in the Chumbivilcas province of Peru, 200 kilometres from the Las Bambas mine; dialogue with the Chumbivilcas communities has continued to be unsuccessful with no resolution
NeoGames (NGMS) signs agreement with Sinsal Sans, granting Lottery access to portfolio of games for Lottery's online site Milli Piyango
Novartis (NVS) initiates new $15 bln share buyback
Novavax (NVAX) submits NDA for approval of COVID-19 vaccine in Japan
Old Dominion (ODFL) announces a general rate increase of 4.9% applicable to rates established under the existing ODFL 559, 670, and 550 tariffs, effective January 3, 2022
Petrobras Brasileiro (PBR) Board approved the model for the sale of up to 100% of the preferred shares it holds in Braskem S.A. (BAK), to be conducted through secondary public offering of shares together with Novonor S.A.
Plug Power (PLUG) and Edison Motors sign agreement for mass-production of hydrogen-powered city buses
Sema4 Holdings (SMFR) Corphas decided to discontinue COVID-19 testing services by March 31, 2022and begun notifying its COVID-19 testing solutions customers of this decision
Seres Therapeutics (MCRB) announces preliminary microbiome data analyses from the Phase 2b ECO-RESET study evaluating SER-287 in patients with mild-to-moderate ulcerative colitis
Synchrony Financial (SYF) increases share repurchase authorization by $1.0 bln
Tesla (TSLA): NYPD could order 250 Tesla cars, according to Bloomberg
uniQure (QURE) Announces Clinical Update on First Patients in Phase I/II Clinical Trial of AMT-130 Gene Therapy for the Treatment of Huntington's Disease
Universal Display (OLED) extends supply and license agreements with Tianma Micro-electronics
Visa (V) discloses new $12.0 bln share repurchase program
Verona Pharma (VRNA) Reports TQT Study Successfully Demonstrated No Clinically Relevant Effect on Cardiac Conduction
Verrica Pharmaceuticals' (VRCA) New Drug Application for VP-102 for treatment of molluscum contagiosum accepted by FDA
Western Midstream (WES) appoints current Director and President Peter J. Bennett as Chairman of the Board, effective December 17
Xeris Biopharma (XERS) launches Ogluo in UK
Zai Lab (ZLAB) receives approval for NUZYRA as a Category 1 Innovative Drug
M&A:
Antares Pharma (ATRS) divests Otrexup
Emerson (EMR) has acquired Mita-Teknik in an all-cash transaction; financial terms not disclosed
Genuine Parts (GPC): Littlejohn & Co. announces sale of Kaman Distribution Group for $1.3 bln
J.M. Smucker (SJM) divests natural beverages and grains businesses for $110 mln
MoneyLion (ML) to acquire Even Financial
Repligen (RGEN) discloses acquisition of BioFlex Solutions
Stantec (STN) agrees to acquire Cox|McLain Environmental Consulting; terms not indicated
Stem (STEM) to acquire Also Energy Holdings for $695 mln
Vishay (VSH) to acquire Barry Industries for $21 mln; all cash transaction expected to close on December 31, 2021
Syndicate:
Blue Bird (BLBD) announces $75 mln private placement
Danimer Scientific (DNMR) proposes offering of $175 mln of convertible senior notes due 2026
Focus Financial (FOCS) files for 3,204,448 share common stock offering
HomeStreet (HMST) files mixed securities shelf offering
Syndax Pharmaceuticals (SNDX) prices offering of 3,157,144 shares of its common stock at $17.50 per share
IPOs:
Expected to Price:
No IPOs expected to price.
Gapping Up/Down
Gapping up:
CALT +38.8%, VRCA +11.5%, APG +7.9%, MESO+7.8%, GOEV +6.4%, AFCG +5.5%, FREY +5.5%, PLUG +5.3%, APRN +5%, HEI +4.2%, NVS +3.9%, ZLAB +3.6%, MAXR +3.4%, TCOM +3.4%, HOFV+2.8%, ATRS +2.8%, NVAX +2.5%, MARA +2.3%, RGLD +1.8%, SYF +1.7%, FLXS +1.6%, SAND +1.5%, V +1.2%
Gapping down:
IRNT -19.7%, SNDX -7.8%, DNMR -7.4%, LEN -7%, BLBD -6.7%, FOCS -4.1%, VSH -3.2%, NDSN -2.8%, ABM -0.6%, ETD -0.5%
Analyst Research (see Upgrades/Downgradescalendarfor full list):
Upgrades
Atlantic Capital (ACBI) upgraded to Outperform from Mkt Perform at Raymond James
Atlantic Union Bankshares (AUB) upgraded to Overweight from Neutral at Piper Sandler; tgt raised to $42
BNY Mellon (BK) upgraded to Overweight from Neutral at JP Morgan; tgt raised to $67
Booking Holdings (BKNG) upgraded to Outperform from Sector Perform at RBC Capital Mkts; tgt $2700
Brookfield Renewable Partners (BEP) upgraded to Buy from Hold at TD Securities; tgt $41
CrossFirst Bankshares (CFB) upgraded to Strong Buy from Outperform at Raymond James; tgt $18
Downgrades:
Adient (ADNT) downgraded to Equal Weight from Overweight at Barclays; tgt lowered to $43
Airbnb (ABNB) downgraded to Sector Perform from Outperform at RBC Capital Mkts; tgt lowered to $175
CDK Global (CDK) downgraded to Equal-Weight from Overweight at Morgan Stanley; tgt lowered to $48
Others:
Affiliated Managers (AMG) initiated with a Neutral at BofA Securities; tgt $186
Agenus (AGEN) initiated with a Buy at H.C. Wainwright; tgt $12
Apollo Global Management (APO) initiated with an Overweight at Wells Fargo; tgt $91
Apollo Global Management (APO) initiated with an Underperform at BofA Securities; tgt $78
Ares Management (ARES) initiated with a Buy at BofA Securities; tgt $117
Ares Management (ARES) initiated with an Overweight at Wells Fargo; tgt $96
Atlantica Yield (AY) initiated with a Neutral at CIBC
Aurora (AUR) initiated with a Neutral at Goldman; tgt $13
Bridge Investment Group (BRDG) resumed with an Overweight at Wells Fargo; tgt $24
Burlington Stores (BURL) initiated with a Buy at Truist; tgt $350
Carlyle Group (CG) initiated with a Buy at BofA Securities; tgt $79
Cerevel Therapeutics (CERE) initiated with a Buy at H.C. Wainwright; tgt $50
Colgate-Palmolive (CL) initiated with a Neutral at Redburn
Upcoming Events:
Econ Data:
08:30 ET: Housing Starts for Nov (Briefing.comConsensus 1570K; Prior 1520K)
08:30 ET: Building Permits for Nov (Briefing.comConsensus 1670K; Prior 1650K)
08:30 ET: Initial Claims for Dec 11 (Briefing.comConsensus 195K; Prior 184K)
08:30 ET: Continuing Claims for Dec 4 (Briefing.comConsensus NA; Prior 1.992M)
08:30 ET: Philadelphia Fed Index for Dec (Briefing.comConsensus 30.0; Prior 39.0)
09:15 ET: Industrial Production for Nov (Briefing.comConsensus 0.8%; Prior 1.6%)
09:15 ET: Capacity Utilization for Nov (Briefing.comConsensus 76.8%; Prior 76.4%)
09:45 ET: IHS Markit Manufacturing PMI - Prelim for Dec (Briefing.comConsensus NA; Prior 58.3)
09:45 ET: IHS Markit Services PMI - Prelim for Dec (Briefing.comConsensus NA; Prior 58.0)
10:30 ET: EIA Natural Gas Inventories for Dec 11 (Briefing.comConsensus NA; Prior -59 bcf)
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 +2.1%, Hang Seng +0.2%, Shanghai Composite +0.8%
Equity indices in the Asia-Pacific region ended Thursday on a mostly higher note. Bank of Korea Governor Lee said that South Korea's CPI is expected to remain above 2.0% for "quite some time." South Korea's Finance Ministry expects domestic growth in the low 3.0% range in 2022. Reserve Bank of Australia Governor Lowe said that conditions for a rate hike will not be met in 2022 and that underlying inflation will hit recede to in 2023. Inflation expectations in December hit a nine-year high of 4.8%. Australia's Treasury expects FY21/22 growth of 3.75%, followed by 3.50% growth in FY22/23.
In economic data:
Japan's November trade deficit JPY954.80 bln (expected deficit of JPY675.00 bln; last deficit of JPY68.50 bln). November Imports 43.8% (expected 40.0%; last 26.7%) and Exports 20.5% yr/yr (expected 21.2%; last 9.4%)
Australia's November Employment Change 366,100 (expected 205,000; last -46,300) and full Employment Change 128,300 (last -40,400). November Participation Rate 66.1% (expected 65.5%; last 64.7%) and Unemployment Rate 4.6% (expected 5.0%; last 5.2%). November HIA New Home Sales 7.7% m/m (last 11.1%). Flash December Manufacturing PMI 57.4 (last 59.2) and flash Services PMI 55.1 (last 55.7)
New Zealand's Q3 GDP -3.7% qtr/qtr (expected -4.5%; last 2.4%); -0.3% yr/yr (expected -1.6%; last 17.9%)
Hong Kong's November Unemployment Rate 4.1% (last 4.3%)
---Equity Markets---
Japan's Nikkei: +2.1%
Hong Kong's Hang Seng: +0.2%
China's Shanghai Composite: +0.8%
India's Sensex: +0.2%
South Korea's Kospi: +0.6%
Australia's ASX All Ordinaries: -0.2%
---FX---
USD/JPY: +0.1% to 114.16
USD/CNH: +0.1% to 6.3762
USD/INR: -0.3% to 76.12
Europe: DAX +1.7%, FTSE +1.0%, CAC +1.6%
Major European indices trade on a firmly higher note. The Bank of England voted 8-1 to increase its bank rate by 15 bps to 0.25% while Norway's central bank raised its key rate to 0.50% from 0.25%, projecting another hike in March. The Swiss National Bank left its policy rate at -0.75%. Major European economies reported mostly expansionary flash PMI readings for December, but Germany's Services PMI (48.4) fell into contractionary territory amid renewed restrictions. Germany is planning 2022 debt issuance of around EUR410 bln, representing the second highest amount on record.
In economic data:
Eurozone's December flash Manufacturing PMI 58.0 (expected 57.8; last 58.4) and flash Services PMI 53.3 (expected 54.1; last 55.9). Q3 eurozone wages 2.3% yr/yr
Germany's December flash Manufacturing PMI 57.9 (expected 56.8; last 57.4) and flash Services PMI 48.4 (expected 51.0; last 52.7)
U.K.'s December flash Manufacturing PMI 57.6 (last 58.1) and flash Services PMI 53.2 (last 58.5)
France's December flash Manufacturing PMI 54.9 (expected 55.5; last 55.9) and flash Services PMI 57.1 (expected 56.0; last 57.4). December Business Survey 111 (expected 109; last 110)
Italy's October trade surplus EUR3.89 bln (last surplus of EUR2.44 bln)
---Equity Markets---
STOXX Europe 600: +1.7%
Germany's DAX: +1.7%
U.K.'s FTSE 100: +1.0%
France's CAC 40: +1.6%
Italy's FTSE MIB: +1.2%
Spain's IBEX 35: +1.8%
---FX---
EUR/USD: +0.1% to 1.1304
GBP/USD: +0.7% to 1.3354
USD/CHF: UNCH at 0.9241
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