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19/12/22 Briefing


The S&P 500 futures are up 12 points and are trading 0.2% above fair value. The Nasdaq 100 futures are up 50 points and are trading 0.4% above fair value. The Dow Jones Industrial Average futures are up 73 points and are trading 0.2% above fair value.

Equity futures are up this morning presumably fueled by some bargain hunting activity following the poor finish last week and larger losses over the last two weeks. 

There are ongoing reports about COVID cases increasing rapidly in China. 

There was speculation that the Bank of Japan and the Japanese government will revise their objective, opening the door to a modification of the BoJ's ultra-loose monetary policy, according to Reuters. However, Japan's chief cabinet secretary pushed back against the speculation.

Lawmakers are expected to work on $1.7 trillion government funding bill this week ahead of Friday's funding deadline, according to The Wall Street Journal. 

The 2-yr Treasury note yield is flat at 4.19% while the 10-yr note yield is up six basis points to 3.54%. 

Economic data today is limited to the December NAHB Housing Market Index (Briefing.comconsensus 34; prior 33) at 10:00 a.m. ET.

In corporate news:

  • Aerojet Rocketdyne (AJRD 55.80, +0.91, +1.7%):  to be acquired by L3Harris Technologies (LHX) for $58.00/share in an all-cash transaction valued at $4.7 billion, inclusive of net debt

  • Moderna (MRNA 199.67, +6.38, +3.3%): upgraded from to Buy from Hold at Jefferies

  • Tesla (TSLA 154.89, +4.66, +3.1%): CEO Elon Musk posts poll asking if he should step down as head of Twitter; poll is 57% on YES

  • Madrigal Pharmaceuticals (MDGL 200.50, +136.70, +214.3%):  announces positive topline results from pivotal Phase 3 MAESTRO-NASH Clinical Trial of resmetirom; trial achieved both liver histological improvement endpoints that FDA proposed

  • Intel (INTC 27.03, +0.11, +0.4%): aiming to delay German chip plant, according to Bloomberg

  • Walt Disney (DIS 89.98, -0.10, -0.1%): Avatar 2 had $134 mln in box office sales, coming up slightly short of expectations

  • Meta Platforms (META 117.93, -1.50, -1.3%): EU Commission sends statement of objections to Meta over abusive practices benefiting Facebook Marketplace

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region began the week on a lower note. Japan's Nikkei: -1.1%, Hong Kong's Hang Seng: -0.5%, China's Shanghai Composite: -1.9%, India's Sensex: +0.8%, South Korea's Kospi: -0.3%, Australia's ASX All Ordinaries: -0.2%.

  • Economic data was limited:

  • New Zealand's Q4 Westpac Consumer Sentiment 75.6 (last 87.6)

  • In news:

  • There was speculation that the Bank of Japan and the Japanese government will revise their objective, opening the door to a modification of the BoJ's ultra-loose monetary policy. However, Japan's chief cabinet secretary pushed back against the speculation. Japan is reportedly planning a JPY114 trln budget for FY23/24.

  • South Korea's Finance Minister Choo said that the South Korean economy is slowing more rapidly than expected and that the slowdown will be at its worst pace in the first half of 2023.

  • Major European indices trade in the green after the release of a better than expected ifo Business Climate Index from Germany. STOXX Europe 600: +0.6%, Germany's DAX: +0.6%, U.K.'s FTSE 100: +0.6%, France's CAC 40: +0.6%, Italy's FTSE MIB: +0.5%, Spain's IBEX 35: +0.8%.

  • In economic data:

  • Eurozone's Q3 wages 2.1% yr/yr (last 3.2%), Q3 Labor Cost Index 2.9% yr/yr (last 3.8%), and October Construction Output 1.27% m/m (last 0.45%)

  • Germany's December ifo Business Climate Index 88.6 (expected 87.4; last 86.4). December Current Assessment 94.4 (expected 93.5; last 93.2) and Business Expectations 83.2 (expected 82.0; last 80.2)

  • U.K.'s December CBI Industrial Trends Orders -6 (expected -9; last -5)

  • In news:

  • Ifo economists said that a silver lining has been observed and that the likelihood of a recession has decreased.

  • EU politicians are still trying to agree on a proper level for a gas price cap.

  • Three European Central Bank policymakers spoke about the high likelihood of another 50-bps rate hike in February and the potential for more hikes after that.

  • Bank of France expects the French economy to grow 0.3% in 2023. 

 

U.S. equity futures:

  • S&P 500 Futures: +12 @ 3,865

  • DJIA Futures: +71 @ 32,992

  • Nasdaq 100 Futures: +48 @ 11,292

Overseas:

  • Europe: DAX +0.6%, FTSE +0.6%, FTSE +0.5%

  • Asia: Nikkei -1.1%, Hang Seng -0.5%, Shanghai Composite -1.9%

Commodities:

  • Crude Oil +0.54 @ 75.00

  • Nat Gas -0.496 @ 6.104

  • Gold +4.00 @ 1804.20

  • Silver +0.079 @ 23.407

  • Copper +0.0392 @ 3.8007

 

Earnings/Guidance:

  • No earnings news of note.

News:

  • Coronavirus spreading rapidly in Chinese cities, according to Financial Times

  • Lawmakers are expected to work on $1.7 trillion government funding bill this week ahead of Friday's funding deadline, according to the Wall Street Journal

  • Russian President Putin's visit to Belarus is causing concerns that the country could join Russia in war against Ukraine, according to the Wall Street Journal

  • January 6thHouse Committee will ask DOJ to pursue insurrection, obstruction of an official proceeding, and conspiracy charges against former President Trump, according to Politico

  • El Paso declared state of emergency ahead of expiration of Title 42 which is expected to bring in a surge of migrants at southern border, according to Axios

  • Texas Governor Greg Abbott will resume construction of southern border wall, according to Fox News

  • Tesla CEO Elon Musk posts poll asking if he should step down as head of Twitter; poll is 57% on YES

  • AbbVie (ABBV): FDA approves VRAYLAR as an adjunctive treatment for major depressive disorder

  • Activision Blizzard (ATVI) COO Daniel Alegre says he plans to leave for another opportunity upon completion of his employment agreement, which expires on March 31, 2023

  • ADC Therapeutics (ADCT) announces the appointment of Jose Carmona as Chief Financial Officer, effective December 19, 2022

  • Albertsons (ACI) issues statement regarding Washington Supreme Court's decision to extend the temporary restraining order against its previously announced special dividend payment

  • Alibaba (BABA): Zhejiang provincial party secretary's visit to BABA could be an indication of party support for tech, according to SCMP

  • Amazon (AMZN) German union wants workers to strike during holiday season, according to Bloomberg

  • American Airlines (AAL) and Mesa Airlines (MESA) will end ties, according to CNBC

  • Amryt Pharma plc (AMYT): COMP Adopts Positive Opinion on Orphan Designation for Mycapssa for the Treatment of Carcinoid Syndrome Associated with Neuroendocrine Tumors

  • Aptiv (APTV) announces that William Presley, currently SVP of S&PS had been named Aptiv's SVP and COO, while continuing in his current role as President of S&PS, effective immediately

  • Ardelyx (ARDX) provides update on FDA appeal for XPHOZAH for the control of serum phosphorus in adult patients with Chronic Kidney Disease on Dialysis

  • AstraZeneca (AZN): Update on PEARL Phase III trial of Imfinzi monotherapy in Stage IV non-small cell lung cancer

  • Atara Biotherapeutics' (ATRA) Ebvallo receives European Commission approval as first ever therapy for adults and children with EBV+ PTLD

  • BAE Systems (BAESY), L3Harris, Leidos awarded a $4.1 bln US Navy contract for CANES production units, software

  • Biogen (BIIB) announces agreement with Roche Hldg's (RHHBY) Genentech related to the commercialization and sharing of economics for glofitamab

  • Bluebirdbio (BLUE): FDA lifts partial clinical hold for BLUE Sickle Cell Disease Studies for Patients Under the Age of 18

  • Cardinal Health (CAH) names Aaron Alt as CFO

  • Cerevel Therapeutics (CERE) announces positive results in emraclidine ambulatory blood pressure monitoring trial

  • Credit Suisse (CS): Fed and FDIC identify two deficiencies in 2021 plan submission

  • Disney (DIS): Avatar 2 had $134 mln in box office sales, according to Bloomberg

  • Eagle Pharma (EGRX) receives FDA approval for additional indication for PEMFEXY in combination with pembrolizumab and platinum chemotherapy

  • Eni S.p.A. (E) and Snam form a joint venture to develop the first CCS project in Italy

  • Intel (INTC) aiming to delay German chip plant, according to Bloomberg

  • Jefferies (JEF) Board of Directors declares spin-off dividend of Vitesse Energy common stock

  • Leidos (LDOS) awarded a $334 mln US Air Force contract relating to Mayhem program

  • Lockheed Martin (LMT) awarded a $302 mln US Navy contract related to the MK 48 heavyweight torpedo; also awarded a $246 mln US Navy order

  • Madrigal Pharmaceuticals (MDGL) announces positive topline results from pivotal Phase 3 MAESTRO-NASH Clinical Trial of resmetirom; trial achieved both liver histological improvement endpoints that FDA proposed

  • MediWound (MDWD) announces "positive" data from its Phase I/II study to evaluate the safety and efficacy of MW005 in the treatment of low-risk Basal Cell Carcinoma

  • Melco Resorts & Entertainment (MLCO) announces further details of gaming concession

  • Meta Platforms (META): EU Commission sends statement of objections to meta over abusive practices benefiting Facebook Marketplace

  • Puma Biotech. (PBYI) and Wyeth entered into settlement and license agreement with Sandoz, fully settling and releasing all claims regarding the Hatch Waxman patent infringement litigation

  • PureTech's (PRTC) LYT-300 (Oral Allopregnanolone) Demonstrates Oral Bioavailability, Tolerability and GABAA Receptor Target Engagement in Healthy Volunteers

  • RadNet (RDNT) received FDA clearance of its mammography density assessment software, Saige-Density

  • Red Robin Gourmet (RRGB) announces departure of COO and Senior Vice President Michael Buchmeier, effective January 31, 2023

  • Revolution Medicines (RVMD) announces publication describing design and synthesis of RMC-5552, a First-in-Class, Bi-Steric mTORC1-selective inhibitor

  • Ritchie Bros. (RBA) sells US$86+ million of equipment in its largest ever December Fort Worth auction

  • Sands China (SCHYY) presents its vision and investment for the next decade in Macao company believes in long-term growth of Macao

  • Sanofi (SNY) and Innate Pharma expand collaboration for natural killer cell therapeutics in oncology

  • Taysha Gene Therapies (TSHA) announces executive leadership changes; Chair of the Board of Directors, Sean Nolan, appointed CEO

  • Tesla (TSLA) aiming to announce Mexico EV plant this week, according to Bloomberg

  • Tesla (TSLA): Pepsi (PEP) aiming to unveil 100 Tesla semi trucks next year, according to Reuters

  • Toyota (TM) President Akio Toyoda says there is a "silent majority" of auto industry representatives that are questioning EVs, according to the Wall Street Journal

  • TuSimple Holdings (TSP) aiming to eliminate half of workforce, according to the Wall Street Journal

  • Uber (UBER): NYC Uber drivers to strike, according to Bloomberg

  • United Airlines (UAL): Mesa Air Group (MESA) plans for a significant restructuring in its operations with American Airlines (AAL) and United Airlines

  • Vanda Pharma (VNDA): Fanapt shown to be effective in bipolar I disorder in phase III clinical study

  • Wave Life Sciences (WVE) announces a positive update from the initial cohort of the Phase 1b/2a proof-of-concept study of WVE-N531 in three boys with Duchenne muscular dystrophy amenable to exon 53 skipping

  • Weber (WEBR) names Alan Matula as CEO, effective immediately; he had been interim CEO; CFO William Horton to resign

  • ZipRecruiter (ZIP) enters into accelerated share repurchase agreement to repurchase $50 mln of its common stock

  • Zymeworks (ZYME) announces "positive" topline results from the pivotal Phase 2b HERIZON-BTC-01 open-label, single-arm clinical trial investigating zanidatamab, as monotherapy in patients with previously treated HER2-amplified and expressing BTC

M&A:

  • Aerojet Rocketdyne (AJRD) to be acquired by L3Harris Technologies (LHX) for $58.00/share in an all-cash transaction valued at $4.7 billion, inclusive of net debt

  • Equifax (EFX) to acquire Boa Vista Servios for R$8/share

  • John B. Sanfilippo & Son (JBSS) acquires Just the Cheese Brand business from Specialty Cheese Co; financial terms were not disclosed

  • JP Morgan (JPM) to purchase 48.5% stake in Viva Wallet, according to Reuters

  • Microsoft (MSFT) expects to challenge FTC regarding Activision (ATVI) acquisition, according to the Wall Street Journal

  • Pearson Plc (PSO) to acquire Workforce Assessment Provider, PDRI

  • TEGNA (TGNA): Standard General says regulatory authorities have expressed concerns about TEGNA deal, co has committed to waive certain contractual rights

Syndicate:

  • Kanzhun Limited (BZ) files for Class A ordinary share offering

  • On (ONON) files mixed securities shelf offering

  • Plains GP (PAG) files for Class A share offering representing limited partner interests, not to exceed $938.9 mln

  • PTC Therapeutics (PTCT) files for 1,095,290 share common stock offering by selling shareholders

  • Rani Therapeutics (RANI) files for 6,009,542 share common stock offering by selling shareholders

IPOs:

  • Expect to Price:

  • No IPOs expected.

Gapping Up/Down

  • Gapping up: MDGL +150.8%, TSHA +16.8%, ZIP +5.6%, AJRD +1.6%,

  • Gapping down: ARDX -5.6%, YMAB -5.2%

 


Analyst Research (see Upgrades/Downgradescalendarfor full list):

  • Upgrades

  • American Equity Investment Life (AEL) upgraded to Strong Buy from Outperform at Raymond James; tgt $48

  • Glaukos (GKOS) upgraded to Neutral from Underweight at JP Morgan; tgt lowered to $42

  • Downgrades:

  • Ameriprise Financial (AMP) downgraded to Mkt Perform from Outperform at Keefe Bruyette; tgt $325

  • AXIS Capital (AXS) downgraded to Mkt Perform from Outperform at Keefe Bruyette; tgt lowered to $60

  • Baxter (BAX) downgraded to Neutral from Overweight at JP Morgan; tgt lowered to $55

  • Others:

  • Bank of Montreal (BMO) resumed with an Outperform at Credit Suisse

  • F&G Annuities & Life (FG) initiated with an Equal Weight at Barclays; tgt $22

Upcoming Events:

  • Econ Data:

  • 10:00 ET: NAHB Housing Market Index for Dec (Briefing.comConsensus 34; Prior 33)

  • Earnings:

  • Monday (Dec 19)

  • Afternoon: HEI SCS

  • Tuesday (Dec 20)

  • Morning: FDS FCEL GIS

  • Afternoon:  AIR BB CVGW EPAC NKE WOR

  • Wednesday (Dec 21)

  • Morning:  CCL CTAS RAD TTC

  • Afternoon:  MU MLKN

  • Thursday (Dec 22)

  • Morning: APOG KMX PAYX

  • Afternoon:  AVO

Asia & Europe detail:

Asia: Nikkei -1.1%, Hang Seng -0.5%, Shanghai Composite -1.9%

Equity indices in the Asia-Pacific region began the week on a lower note. There was speculation that the Bank of Japan and the Japanese government will revise their objective, opening the door to a modification of the BoJ's ultra-loose monetary policy. However, Japan's chief cabinet secretary pushed back against the speculation. Japan is reportedly planning a JPY114 trln budget for FY23/24. South Korea's Finance Minister Choo said that the South Korean economy is slowing more rapidly than expected and that the slowdown will be at its worst pace in the first half of 2023.

  • Economic data was limited:

  • New Zealand's Q4 Westpac Consumer Sentiment 75.6 (last 87.6)

---Equity Markets---

  • Japan's Nikkei: -1.1%

  • Hong Kong's Hang Seng: -0.5%

  • China's Shanghai Composite: -1.9%

  • India's Sensex: +0.8%

  • South Korea's Kospi: -0.3%

  • Australia's ASX All Ordinaries: -0.2%

---FX---

  • USD/JPY: -0.3% to 136.22

  • USD/CNH: UNCH at 6.9748

  • USD/INR: -0.1% to 82.62

Europe: DAX +0.6%, FTSE +0.6%, FTSE +0.5%

Major European indices trade in the green after the release of a better than expected ifo Business Climate Index from Germany. Ifo economists said that a silver lining has been observed and that the likelihood of a recession has decreased. EU politicians are still trying to agree on a proper level for a gas price cap. Three European Central Bank policymakers spoke about the high likelihood of another 50-bps rate hike in February and the potential for more hikes after that. Bank of France expects the French economy to grow 0.3% in 2023.

  • In economic data:

  • Eurozone's Q3 wages 2.1% yr/yr (last 3.2%), Q3 Labor Cost Index 2.9% yr/yr (last 3.8%), and October Construction Output 1.27% m/m (last 0.45%)

  • Germany's December ifo Business Climate Index 88.6 (expected 87.4; last 86.4). December Current Assessment 94.4 (expected 93.5; last 93.2) and Business Expectations 83.2 (expected 82.0; last 80.2)

  • U.K.'s December CBI Industrial Trends Orders -6 (expected -9; last -5)

---Equity Markets---

  • STOXX Europe 600: +0.6%

  • Germany's DAX: +0.6%

  • U.K.'s FTSE 100: +0.6%

  • France's CAC 40: +0.6%

  • Italy's FTSE MIB: +0.5%

  • Spain's IBEX 35: +0.8%

---FX---

  • EUR/USD: +0.2% to 1.0603

  • GBP/USD: +0.4% to 1.2179

  • USD/CHF: -0.2% to 0.9326

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