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20/03/23 Briefing

There has been some fickle action in the futures market this morning. Currently, the S&P 500 futures are down 1 point and are trading roughly in line with fair value. The Nasdaq 100 futures are down 4 points and are trading slightly below fair value. The Dow Jones Industrial Average futures are down 8 points and are trading roughly in line with fair value.

Investors are lacking conviction this morning as worries about the health of the banking industry persist. News that UBS (UBS) is acquiring Credit Suisse (CS) in an brokered "emergency rescue," that S&P is downgrading Frist Republic Bank (FRC) to B+ from BB+, that central banks are taking a coordinated action to improve U.S. dollar liquidity, and that Warren Buffet has been speaking to members of the Biden Administration about banking issues, according to Bloomberg, has kept the market on edge. 

Treasury yields have moved off their overnight lows, but remain under pressure despite the news that CS will be acquired by UBS. The 2-yr note yield is down nine basis points to 3.74% and the 10-yr note yield is down two basis points to 3.37%. The U.S. Dollar Index is down 0.2% to 103.47.

Energy complex futures are mixed. WTI crude oil futures are down 1.5% to $65.81/bbl and natural gas futures are up 2.3% to $2.50/mmbtu. 

In corporate news:

  • First Republic Bank (FRC 18.33, -4.70, -20.4%): downgraded at S&P To 'B+' despite support received; rating remains on creditwatch negative; Tom Barrack advising First Republic Bank on its options, according to Bloomberg

  • Credit Suisse (CS 0.8450, -1.16, -58.0%): to be acquired by UBS (UBS 17.70, -0.50, -2.8%); Credit Suisse's Additional Tier 1 Capital in the aggregate nominal amount of approximately CHF 16 billion will be written off to zero

  • U.S. Bank (USB 33.90, +0.95, +2.9%): upgraded to Outperform from Neutral at Baird

  • PacWest Bancorp (PACW 10.76, +1.48, +16.0%): provides end of week update

  • New York Community (NYCB 8.48, +1.94, +29.7%): acquires certain assets and assumes certain liabilities of Signature Bridge Bank From the FDIC

  • Karuna Therapeutics (KRTX 216.88, +25.25, +13.2%): announces positive results from phase 3 emergent-3 Trial of KarXT in schizophrenia

  • Pinduoduo (PDD 78.93, -13.01, -14.2%): misses by RMB0.19, misses on revs

  • Foot Locker (FL 42.75, +0.49, +1.2%): beats by $0.47, beats on revs; guides FY24 EPS below consensus, revs below consensus

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region ended Monday on a lower note. Japan's Nikkei: -1.4%, Hong Kong's Hang Seng: -2.7%, China's Shanghai Composite: -0.5%, India's Sensex: -0.6%, South Korea's Kospi: -0.7%, Australia's ASX All Ordinaries: -1.4%.

    • There was no noteworthy data

    • In news:

      • The Bank of Japan is taking part in a coordinated central bank action to improve dollar liquidity through swap lines.

      • China's President Xi said that a peaceful resolution to the conflict in Ukraine needs to comply with the UN charter during his visit to Moscow.

      • The People's Bank of China made no changes to its one-year and five-year loan prime rates.

  • Major European indices trade on a higher note. STOXX Europe 600: +0.5%, Germany's DAX: +0.5%, U.K.'s FTSE 100: +0.2%, France's CAC 40: +0.7%, Italy's FTSE MIB: +0.4%, Spain's IBEX 35: +0.2%.

    • In economic data:

      • Eurozone's January trade deficit EUR30.60 bln (expected deficit of EUR12.50 bln; last deficit of EUR8.80 bln)

      • Germany's February PPI -0.3% m/m (expected -0.5%; last -1.2%); 15.8% yr/yr (expected 14.5%; last 17.6%)

    • In news:

      • UBS agreed to acquire Credit Suisse for $3.23 bln in a deal brokered by Swiss authorities and regulators. Credit Suisse will write down CHF16 bln worth of its Additional Tier 1 debt.

      • Meanwhile, the Swiss National Bank doubled the credit line to Credit Suisse to CHF100 bln. The Swiss National Bank is also taking part in coordinated action to improve dollar liquidity through swap lines along with the Fed, Bank of England, Bank of Canada, and Bank of Japan.

      • French President Macron's government will face a confidence vote after forcing through pension reform. Bank of France lowered its domestic inflation forecast for 2023 to 5.4% from 6.0% and boosted the growth forecast to 0.6% from 0.3%.

 

U.S. equity futures:

  • S&P 500 Futures: -5 @ 3,911

  • DJIA Futures: -40 @ 31,822

  • Nasdaq 100 Futures: -15 @ 12,505

Overseas:

  • Europe: DAX +0.5%, FTSE +0.2%, CAC +0.7%

  • Asia: Nikkei -1.4%, Hang Seng -2.7%, Shanghai Composite -0.5%

Commodities:

  • Crude Oil -1.13 @ 65.80

  • Nat Gas +0.048 @ 2.386

  • Gold +13.65 @ 1987.15

  • Silver +0.158 @ 22.62

  • Copper +0.0352 @ 3.9277


 

Earnings/Guidance:

  • Cactus (WHD) guides Q1, including one month of FlexSteel operations

  • Danimer Scientific (DNMR) sees FY22 revs slightly below consensus

  • Diversey Holdings (DSEY) misses by $0.01, reports revs in-line; co previously announced it is being acquired by Solenis

  • Foot Locker (FL) beats by $0.47, beats on revs; guides FY24 EPS below consensus, revs below consensus

  • Pinduoduo (PDD) misses by RMB0.19, misses on revs

  • Tattooed Chef (TTCF) guides FY22 revs in-line with consensus, but below prior guidance; increases expected benefit from cost cutting moves; to delay 10-K filing

News:

  • FDIC preparing for breakup of Silicon Valley Bank (SIVB) after failing to secure a buyer, according to Bloomberg

  • Coordinated central bank action to enhance the provision of U.S. dollar liquidity

  • US and Europe are highly skeptical of Chinese President Xi's claim that his trip to Russia to meet with Putin is a "peace mission", according to the New York Times

  • Warren Buffet (BRK.B) has been speaking to members of the Biden administration about banking issues, according to Bloomberg

  • Automakers in China are cutting prices, according to the Wall Street Journal

  • Senate expected to pass bill that remove war powers for military force in Iraq, according to the Wall Street Journal

  • Former President Trump says he expects to be arrested tomorrow following investigation into alleged hush money payments involving adult film actress Stormy Daniels, according to CNN

  • AbbVie (ABBV) reports Late-Breaking Results of Study Evaluating 52-Week Efficacy and Safety of SKYRIZI (risankizumab) in Plaque Psoriasis Patients With a Prior Suboptimal Response to IL-17 Inhibitor Therapy

  • American Equity Investment Life (AEL) announces $200 million accelerated share repurchase agreement

  • Arbor Realty Trust (ABR) approves share repurchase authorization up to $50 mln

  • Arcutis (ARQT) Presents Late-Breaking Data from the INTEGUMENT Phase 3 Trials in Atopic Dermatitis at American Academy of Dermatology Annual Meeting

  • Arrowhead (ARWR) announces the U.S. FDA has granted Fast Track designation to ARO-APOC3 for reducing triglycerides in adult patients with familial chylomicronemia syndrome

  • Bayer AG (BAYRY) receives approval for Nubeqa for additional prostate cancer indication in China

  • Bed Bath & Beyond (BBBY) to hold a special meeting of shareholders to seek approval for a reverse stock split

  • BioNTech (BNTX) and OncoC4 announce exclusive worldwide license and collaboration agreement to develop and commercialize OncoC4's next-generation anti-CTLA-4 monoclonal antibody candidate, ONC-392

  • Boeing (BA) was awarded a $1.95 bln modification to US Army contract for the Apache AH-64E

  • Canadian Pacific (CP) reaches tentative collective agreement with the Teamsters Canada Rail Conference Maintenance of Way Employees Division

  • CF Industries (CF) agrees to purchase Waggaman ammonia production facility from Incitec Pivot

  • Credit Suisse (CS): Some Credit Suisse clients might want to move wealth assets following UBS (UBS) deal, according to Reuters

  • Dollar Tree (DLTR) pulls eggs from shelves due to high cost, according to the New York Post

  • Dr. Reddy's (RDY): Coya Therapeutics (COYA) announces an agreement with RDY to license its proposed biosimilar abatacept for the development and commercialization of COYA 302 for the treatment of neurodegenerative diseases

  • Ecopetrol (EC) obtains authorization to borrow COP1.0 trillion from a local bank

  • Enerflex (EFXT) provides succession plan for CFO

  • Exelixis (EXEL) has authorized the repurchase of up to $550 mln of the company's common stock before the end of 2023

  • First Financial (FFBC) CFO James Anderson will become CFO and COO

  • First Republic Bank (FRC) downgraded at S&P To 'B+' despite support received; rating remains on creditwatch negative

  • Goldman (GS) preparing claims against Credit Suisse (CS) debt, according to Bloomberg

  • Illumina (ILMN) underscores commitment to shareholder value and responds to Carl Icahn's statements; engaged with regulators for GRAIL, Icahn's director nominees "do not add value" to Board

  • Incyte (INCY) Announces Long-Term Extension Data from Phase 3 TRuE-V Program Demonstrating Long-Term Safety and Durability of Response of Opzelura (Ruxolitinib) Cream in Vitiligo

  • iStar (STAR) announces details for anticipated spin-off in connection with the Safehold merger

  • Karuna Therapeutics (KRTX) announces positive results from phase 3 emergent-3 Trial of KarXT in schizophrenia

  • Meta Platforms (META): Former President Trump posted on Facebook for the first time, according to Reuters

  • Microsoft (MSFT) aiming to introduce mobile application store, according to Financial Times

  • Netflix (NFLX) advertising supported streaming service reached 1 mln users, according to Bloomberg

  • New York Times (NYT): Labor tensions increasing at New York Times, according to the Wall Street Journal

  • Novartis AG (NVS) and Biogen terminate their collaboration and license agreements with Sangamo

  • Novartis AG (NVS) reports Zolgensma long-term data demonstrating sustained durability up to 7.5 years post-dosing

  • PacWest Bancorp (PACW) provides end of end of week update

  • Proterra (PTRA) reaches binding letter of intent with Cowen convertible note holders

  • Regeneron Pharma (REGN) and Sanofi (SNY) report Dupixent (dupilumab) Late-Breaking Data at AAD Show Significant Improvements in Signs and Symptoms of Moderate-to-severe Atopic Hand and Foot Dermatitis

  • Roche Hldg (RHHBY) reports new four-year data for Genentech's Evrysdi reinforce long-term efficacy and safety profile in some of the most severely affected people with Types 2 and 3 Spinal Muscular Atrophy

  • Rocket Lab USA (RKLB) to launch pair of satellites on an Electron mission for BlackSky (BKSY) through global Spaceflight, Inc. on March 22

  • Takeda (TAK) Announces Positive Results in Phase 2b Study of Investigational TAK-279, an Oral, Once-Daily TYK2 Inhibitor, in People with Moderate-to-Severe Plaque Psoriasis

  • Talos Energy (TALO) announces $100 million share repurchase authorization

  • Telus (TU) CEO Darren Entwistle announces purchase of additional TELUS shares

  • Zymeworks (ZYME) and Daiichi Sankyo terminate collaboration, enter into license agreement

M&A:

  • Commercial Metals (CMC) acquires Tendon Systems

  • Credit Suisse (CS) to be acquired by UBS; Credit Suisse's Additional Tier 1 Capital in the aggregate nominal amount of approximately CHF 16 billion will be written off to zero

  • First Horizon (FHN): Investors have concerns about Toronto-Dominion Bank's (TD) deal to purchase FHN amid regional bank issues, according to Bloomberg

  • First Republic Bank (FRC) plans to sell shares privately, according to New York Times

  • Granite Constr (GVA) acquires quarry and asphalt plant in Nevada

  • Manchester United (MANU): Jim Ratcliffe wants to bid for Manchester United and conduct a U.S. expansion, according to the Wall Street Journal

  • New York Community (NYCB) acquires certain assets and assumes certain liabilities of Signature Bridge Bank From the FDIC

Syndicate:

  • Americold Realty Trust (COLD) files mixed securities shelf offering

  • AVANGRID (AGR) files mixed securities shelf offering

  • Century Aluminum (CENX) files for $350 mln mixed securities shelf offering

  • Distribution Solutions Group (DSGR) files for $500 mln mixed securities shelf offering

  • Exact Sciences (EXAS) files for 5,171,577 share common stock offering by selling shareholders, relates to convertible notes offering

  • Invitae (NVTA) files for 111,627,888 share common stock offering by selling shareholders, relates to convertible notes offering

  • Ladder Capital (LADR) files mixed securities shelf offering

  • Nkarta (NKTX) files for $350 mln mixed securities shelf offering

  • Nuvectis Pharma (NVCT) files for $150 mln mixed securities shelf offering

  • Summit Therapeutics (SMMT) files for 19,720,291 share common stock offering by selling shareholders

IPOs:

  • Expected to Price:

    • No IPOs expected.

Gapping Up/Down

 

Analyst Research (see Upgrades/Downgradescalendarfor full list:

  • Upgrades

    • Aspen Aerogels (ASPN) upgraded to Buy from Hold at The Benchmark Company; tgt $14

    • Brookfield Corp. (BN) upgraded to Outperform from Neutral at Credit Suisse; tgt $41

    • Meta Platforms (META) upgraded to Buy from Hold at Edward Jones

    • New York Community (NYCB) upgraded to Outperform from Mkt Perform at Keefe Bruyette; tgt raised to $11

  • Downgrades:

    • Cyxtera Technologies (CYXT) downgraded to Market Perform from Outperform at TD Cowen; tgt lowered to $1

  • Others:

    • Dell (DELL) initiated with a Buy at Goldman; tgt $43

    • Genius Sports (GENI) initiated with a Buy at BTIG Research; tgt $6

    • Genius Sports (GENI) initiated with a Mkt Outperform at JMP Securities; tgt $7

  • Econ Data:

    • No economic data of note.

  • Earnings:

    • Monday (Mar 20)

      • Morning:  FL PDD

    • Tuesday (Mar 21)

      • Morning: CSIQ HUYA ONON TME

      • Afternoon:  AIR ARRY GME NKE

    • Wednesday (Mar 22)

      • Morning:  BZUN OLLI WOOF WGO

      • Afternoon:  CHWY KBH MLKN PHR SCS WOR

    • Thursday (Mar 23)

      • Morning: ACN CMC DRI FDS GIS

      • Afternoon:  HRTX OXM CURV

Asia & Europe detail:

Asia: Nikkei -1.4%, Hang Seng -2.7%, Shanghai Composite -0.5%

Equity indices in the Asia-Pacific region ended Monday on a lower note. The Bank of Japan is taking part in a coordinated central bank action to improve dollar liquidity through swap lines. China's President Xi said that a peaceful resolution to the conflict in Ukraine needs to comply with the UN charter during his visit to Moscow. The People's Bank of China made no changes to its one-year and five-year loan prime rates.

  • There was no noteworthy data

---Equity Markets---

  • Japan's Nikkei: -1.4% 

  • Hong Kong's Hang Seng: -2.7%

  • China's Shanghai Composite: -0.5%

  • India's Sensex: -0.6%

  • South Korea's Kospi: -0.7%

  • Australia's ASX All Ordinaries: -1.4%

---FX---

  • USD/JPY: -0.3% to 131.36

  • USD/CNH: -0.2% to 6.8754

  • USD/INR: +0.1% to 82.55

 

Europe: DAX +0.5%, FTSE +0.2%, CAC +0.7%

Major European indices trade on a higher note. UBS agreed to acquire Credit Suisse for $3.23 bln in a deal brokered by Swiss authorities and regulators. Credit Suisse will write down CHF16 bln worth of its Additional Tier 1 debt. Meanwhile, the Swiss National Bank doubled the credit line to Credit Suisse to CHF100 bln. The Swiss National Bank is also taking part in coordinated action to improve dollar liquidity through swap lines along with the Fed, Bank of England, Bank of Canada, and Bank of Japan. French President Macron's government will face a confidence vote after forcing through pension reform. Bank of France lowered its domestic inflation forecast for 2023 to 5.4% from 6.0% and boosted the growth forecast to 0.6% from 0.3%.

  • In economic data:

    • Eurozone's January trade deficit EUR30.60 bln (expected deficit of EUR12.50 bln; last deficit of EUR8.80 bln)

    • Germany's February PPI -0.3% m/m (expected -0.5%; last -1.2%); 15.8% yr/yr (expected 14.5%; last 17.6%)

---Equity Markets---

  • STOXX Europe 600: +0.5%

  • Germany's DAX: +0.5%

  • U.K.'s FTSE 100: +0.2%

  • France's CAC 40: +0.7%

  • Italy's FTSE MIB: +0.4%

  • Spain's IBEX 35: +0.2%

---FX---

  • EUR/USD: +0.3% to 1.0692

  • GBP/USD: +0.4% to 1.2218

  • USD/CHF: +0.3% to 0.9285


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