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21/01/22 Briefing

The futures market remains under pressure after Netflix (NFLX 408.00, -100.25, -19.7%) forecasted slower subscriber growth for the first quarter, keeping a lid on other growth stocks despite a decline in interest rates. The S&P 500 futures trade 14 points, or 0.3%, below fair value while the Nasdaq 100 futures trade 0.8% below fair value.

The 20% decline in NFLX is also factoring in a miss on Q4 global paid net additions and downside Q1 revenue guidance. The Netflix story dovetails with the Peloton (PTON 25.65, +1.43, +5.9%) story yesterday insofar that investors have grown wary about what could still happen to growth stocks that don't live up to expectations, even though they've already been hit hard.

The good news for Peloton is that the stock is seeing some relief from yesterday's 24% decline after the CEO reportedly told employees that he isn't looking to halt production of all its bikes, contrary to a report yesterday. The company also provided upside adjusted EBITDA guidance.

As mentioned, interest rates are heading lower, reflecting some defensive positioning amid the downside momentum in risk assets. The 10-yr yield is down five basis points to 1.78%, and the 2-yr yield is down two basis points to 1.03%. The U.S. Dollar Index is down 0.1% to 95.60. WTI crude is down 1.6%, or $1.35, to $84.19/bbl.

Today's economic data will be limited to the Conference Board's Leading Economic Index for December (Briefing.comconsensus 0.8%) at 10:00 a.m. ET.

In U.S. Corporate news:

  • Netflix (NFLX 408.00, -100.25): -19.7% after missing estimates for global paid net additions and guiding Q1 revenue below consensus. Guidance for Q1 global streaming paid net adds was only 2.5 mln, versus 3.98 mln in 1Q21.

  • Peloton (PTON 25.65, +1.43): +5.9% after falling 24% yesterday. The company's CEO reportedly told employees that yesterday's reporting of production halts was false, and the company issued upside adjusted EBITDA above guidance. Stifel upgraded PTON to Buy from Hold.

  • PPG Industries (PPG 155.00, -4.70): -2.9% after guiding Q1 EPS below consensus amid a downtick in sales volume and higher costs, overshadowing its better-than-expected earnings results.

  • CSX (CSX 34.90, -0.34): -1.0% despite beating top and bottom-line estimates.

  • Intel (INTC 52.02, -0.02): UNCH after announcing plans for an initial investment of more than $20 billion in the construction of two new leading-edge chip factories in Ohio.

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region ended the week on a mostly lower note. Japan's Nikkei: -0.9% (-2.1% for the week) Hong Kong's Hang Seng: +0.1% (+2.4% for the week) China's Shanghai Composite: -0.9% (UNCH for the week) India's Sensex: -0.7% (-3.6% for the week) South Korea's Kospi: -1.0% (-3.0% for the week) Australia's ASX All Ordinaries: -2.3% (-2.9% for the week).

  • In economic data:

  • Japan's December CPI 0.0% m/m (last 0.2%). December National CPI 0.1% m/m (last 0.3%); 0.8% yr/yr (last 0.6%). December National Core CPI 0.5% yr/yr (expected 0.6%; last 0.5%)

  • New Zealand's December Business PMI 53.7 (last 50.6)


  • In news:

  • The People's Bank of China lowered its standing liquid facility rate corridor by ten basis points.

  • China's Premier Li said that the country's domestic economy is facing more uncertainty in 2022, adding that demand needs to be boosted and cross-cyclical adjustments need to be stepped up.

  • The pace of mortgage loan approvals in China is reportedly accelerating.

  • South Korea's exports through the first 20 days of January were up 22.0% yr/yr with chip exports increasing 29.5%.

  • South Korea will issue KRW11.3 trln in debt over the course of the year to finance its extra budget.



  • Major European indices trade in the red amid weakening investor sentiment. STOXX Europe 600: -1.7% (-1.2% week-to-date) Germany's DAX: -1.8% (-1.6% week-to-date) U.K.'s FTSE 100: -1.1% (-0.5% week-to-date) France's CAC 40: -1.6% (-0.9% week-to-date) Italy's FTSE MIB: -1.6% (-1.4% week-to-date) Spain's IBEX 35: -0.9% (-0.8% week-to-date).

  • In economic data:

  • U.K.'s December Retail Sales -3.7% m/m (expected -0.6%; last 1.0%); -0.9% yr/yr (expected 3.4%; last 4.3%). December Core Retail Sales -3.6% m/m (expected -0.5%; last 0.7%); -3.0% yr/yr (expected 1.1%; last 2.2%). January GfK Consumer Confidence -19 (expected -15; last -15)


  • In news:

  • Brexit negotiators will meet on Monday to continue discussing potential solutions to trade issues related to the Northern Ireland protocol.

  • Renault and Geely agreed to joint development of hybrid and gasoline vehicles in South Korea.

  • The German government is looking to attract 400,000 skilled immigrants per year.

  • Siemens Energy lowered its guidance due to supply chain issues impacting wind turbine manufacturer Siemens Gamesa.



U.S. equity futures:

  • S&P 500 Futures: -22 @ 4,460

  • DJIA Futures: -71 @ 34,644

  • Nasdaq 100 Futures: -118 @ 14,728

Overseas:

  • Europe: DAX -1.8%, FTSE -1.1%, CAC -1.6%

  • Asia: Nikkei -0.9%, Hang Seng +0.1%, Shanghai Composite +0.1%

Commodities:

  • Crude Oil -1.36 @ 84.19

  • Nat Gas +0.089 @ 3.891

  • Gold -8.45 @ 1834.15

  • Silver -0.286 @ 24.427

  • Copper -0.0595 @ 4.5230

U.S. Summary:

  • Earnings/Guidance (Full Earnings Calendar):

  • Ally Financial (ALLY) beats by $0.05, beats on revs

  • ASE Technology (ASX) sees Q4 revs above consensus; reports December revs increased 18.6% yr/yr to NT$59.7 bln

  • Assoc Banc-Corp (ASB) beats by $0.07, net interest income down 1% yr/yr; also announces CFO transition

  • Bank OZK (OZK) beats by $0.20, beats on revs

  • CSX (CSX) beats by $0.01, beats on revs

  • Ecolab (ECL) lowers Q4 EPS guidance due to COVID related effects, guides revenue inline

  • Huntington Banc (HBAN) beats by $0.01

  • IHS Markit (INFO) beats by $0.01, beats on revs

  • Intuitive Surgical (ISRG) beats by $0.02, reports revs in-line with guidance from January 12, worldwide da Vinci procedure growth of 19%, also inline with recent guidance; Sees procedure growth of 11-15% in FY22, with low end contemplating COVID-related impacts and hospital staff shortages

  • Limelight Networks (LLNW) beats by $0.01, beats on revs; guides FY22 EPS in-line, revs in-line

  • National Bank (NBHC) beats by $0.13, beats on revs

  • Netflix (NFLX) reports Q4 (Dec) results, revs in-line, misses on global paid net adds; guides Q1 revs below consensus

  • New Oriental Education & Technology (EDU) anticipates a net loss of $800-$900 mln for the six months ended November 30, 2021

  • Peloton (PTON) sees Q2 revs in-line; sees Adjusted EBITDA above guidance

  • People's United Financial (PBCT) beats by $0.01, misses on revs

  • Playa Hotels & Resorts (PLYA) provides preliminary Q4 operating results, including occupancy rate of 66% at average daily rate of $325

  • PPG Industries (PPG) beats by $0.06, beats on revs; guides Q1 EPS below consensus

  • Ribbon Communications (RBBN) issues downside Q4 revenue guidance due to supply chain and logistics disruptions

  • Schlumberger (SLB) beats by $0.02, beats on revs

  • SVB Financial Group (SIVB) misses by $0.01, beats on revs; raises FY22 avg. loan growth guidance

  • Texas Capital (TCBI) beats by $0.28


  • General News:

  • Democrats remain at odds over smaller Build Back Better bill with disagreements on state and local tax deduction and child tax credit. A key progressive does not want anything cut from the original bill, according to Bloomberg

  • Senator Joe Manchin (D-WV) suggested Congress should first take care of COVID-19, national debt, and inflation before smaller Build Back Better Act and wants to start over with a "clean sheet", according to the New York Times

  • Secretary of State Antony Blinken will meet with Russian counterparts today over Ukraine issue, according to the New York Times

  • Activision (ATVI) might move away from annual releases of Call of Duty game after Microsoft (MSFT) deal, according to Bloomberg

  • Alibaba (BABA): Ant Group was implicated in an alleged corruption scandal in China, according to Financial Times

  • Alnylam (ALNY) Pharma Presents Positive 18-Month Results from HELIOS-A Phase 3 Study of Investigational Vutrisiran in Patients with hATTR Amyloidosis with Polyneuropathy

  • Boeing (BA) expands UK military support with apache AH-64E long-term services contract

  • Boeing (BA) 737 Max test flight in China was completed, according to Reuters

  • Con Edison (ED) declares a quarterly dividend of $0.79/share, an annualized increase of $0.06 or 1.9%

  • Elanco Animal Health (ELAN) announces FDA approval of Zorbium

  • Kura Oncology (KURA) receives FDA authorization to proceed with KOMET-001 Phase 1b study of KO-539

  • Mercado Libre (MELI) announces investments in Mercado Bitcoin and Paxos

  • Mesa Air (MESA) reported 26,920 block hours in December 2021, +3.8% y/y

  • National Bank (NBHC) increases quarterly cash dividend to $0.23/share from $0.22/share

  • NCR Corp (NCR) expands strategic partnership with Google Cloud (GOOG)

  • Peloton (PTON) to delay opening of Ohio factory to 2024 in connection with lower demand conditions, according to the New York Post

  • Perdoceo Education (PRDO) appoints Andrew Hurst as CEO, replacing Todd Nelson, who has been named Executive Chairman, effective January 20

  • PetSmart is in discussions to go public through SPAC merger, according to Bloomberg

  • Provention Bio (PRVB) initiates Phase 2a PREVAIL-2 study of PRV-3279 in SLE

  • RIO (RIO): Serbia ends RIO lithium exploration licenses, according to Reuters

  • Robinhood Markets (HOOD) begins Beta roll-out of crypto Wallets to first 1,000 customers from waitlist

  • Sensata Tech (ST) authorizes new $500 mln share repurchase authorization

  • Sonoco Products (SON) announces price increase for uncoated recycled paperboard

  • Sorrento Therapeutics (SRNE) announces Covishield (Sti-9167), a broad-spectrum neutralizing antibody, potently neutralizes Omicron

  • Spire Global (SPIR) and Dragonfly Aerospace announce partnership to support Australian Office of National Intelligence

  • Targa Resources (TRGP) increases its quarterly dividend 350% to $0.35/share

  • Titan Intl (TWI) issues comments from Chairman Morry Taylor regarding market outlook

  • TotalEnergies SE (TTE) withdraws from Myanmar

  • United Therapeutics (UTHR) announces historic achievements in its xenotransplantation programs


  • M&A:

  • Curtiss-Wright (CW) to acquire Safran Aerosystems Arresting company for $240 mln in cash

  • IDT Corp (IDT) acquires a majority stake in Sochitel; financial terms not disclosed

  • Snap One (SNPO) announces acquisition of Staub Electronics; terms not disclosed

  • Vistas Media Acquisition Company (VMAC) shareholders approve business combination with Anghami


  • Syndicate:

  • A


  • IPOs:

  • No IPOs expected to price.


Gapping Up/Down

  • Gapping up:

  • VMAC +15.6%, PTON +5.9%, KURA +4.3%, LLNW+4%, ELAN +1.7%, PBCT +1.5%, TREB +1.4%, NBHC+0.8%, CRHC +0.7%, TCBI +0.6%


  • Gapping down:

  • NFLX -19.8%, RBBN -6%, ISRG -5.7%, SNPO -5.6%, ROKU -5.3%, ECL -3.9%, IDT -3.7%, DIS -3.7%, PPG-2.9%, CSX -1.8%, PRVB -1.2%, SIVB -1.2%, PRDO-1.1%, HOOD -0.9%, TWI -0.8%, MELI -0.7%, PLYA-0.6%


Analyst Research (see Upgrades/Downgradescalendarfor full list):

  • Upgrades

  • Acumen Pharmaceuticals (ABOS) upgraded to Buy from Neutral at BofA Securities; tgt lowered to $14

  • Antero Resources (AR) upgraded to Buy from Neutral at Goldman; tgt raised to $24

  • Ardagh Metal Packaging S.A. (AMBP) upgraded to Outperform from Market Perform at BMO Capital Markets; tgt $11

  • BankUnited (BKU) upgraded to Outperform from Mkt Perform at Keefe Bruyette; tgt $50

  • Beyond Meat (BYND) upgraded to Hold from Reduce at HSBC Securities; tgt $62

  • Boise Cascade (BCC) upgraded to Neutral from Sell at Goldman; tgt raised to $77

  • Centennial Resource Development (CDEV) upgraded to Neutral from Underweight at JP Morgan; tgt $8

  • Cognizant Tech (CTSH) upgraded to Neutral from Sell at UBS; tgt raised to $89

  • Commercial Metals (CMC) upgraded to Outperform from Neutral at Exane BNP Paribas; tgt $45

  • Coty (COTY) upgraded to Buy from Neutral at DA Davidson

  • Inovio Pharma (INO) upgraded to Neutral from Underperform at BofA Securities; tgt raised to $10

  • Intuitive Surgical (ISRG) upgraded to Buy from Neutral at Citigroup; tgt lowered to $360


  • Downgrades:

  • Callon Petroleum (CPE) downgraded to Underweight from Neutral at JP Morgan; tgt $62

  • CureVac (CVAC) downgraded to Underperform from Neutral at BofA Securities; tgt lowered to $20

  • Devon Energy (DVN) downgraded to Neutral from Buy at Goldman; tgt raised to $52

  • Ecolab (ECL) downgraded to Sector Perform from Outperform at RBC Capital Mkts; tgt lowered to $225

  • H.B. Fuller (FUL) downgraded to Neutral from Overweight at JP Morgan; tgt lowered to $73


  • Others:

  • AeroVironment (AVAV) initiated with a Hold at Berenberg; tgt $66

  • Aflac (AFL) initiated with a Peer Perform at Wolfe Research; tgt $63

  • Brighthouse Financial (BHF) initiated with an Outperform at Wolfe Research; tgt $79

  • Carter Bank & Trust (CARE) initiated with a Neutral at Piper Sandler; tgt $17

  • Curtiss-Wright (CW) initiated with a Buy at Berenberg; tgt $170

  • Globe Life (GL) initiated with an Underperform at Wolfe Research; tgt $85

  • Kratos Defense and Security (KTOS) initiated with a Buy at Berenberg; tgt $23


Upcoming Events:

  • Econ Data:

  • 10:00 ET: Leading Economic Index for Dec (Briefing.comConsensus 0.8%; Prior 1.1%)


  • Earnings:

  • Tuesday (Jan 18)

  • Morning: BK SCHW FMBI GS ONB PNC SBNY SI TFC

  • Afternoon: FULT HWC IBKR JBHT PNFP PRGS UCBI


  • Wednesday (Jan 19)

  • Morning: ASML BAC BOKF CFG CMA CBSH FAST MS PG PLD STT USB UNH

  • Afternoon: AA COLB DFS FNB FUL KMI STL UMPQ UAL WTFC


  • Thursday (Jan 20)

  • Morning: AAL BKR BKU FITB FHN HOMB KEY MTB NTRS PPBI RF SASR SNV TRV UNP WBS WNS

  • During Market Hours: WABC

  • Afternoon: ASB OZK CSX ISRG LLNW NBHC NFLX PBCT PPG SIVB TCBI


  • Friday (Jan 21)

  • Morning: ALLY FHB HBAN INFO SLB




Asia & Europe detail:

Asia: Nikkei -0.9%, Hang Seng +0.1%, Shanghai Composite +0.1%

Equity indices in the Asia-Pacific region ended the week on a mostly lower note. The People's Bank of China lowered its standing liquid facility rate corridor by ten basis points. China's Premier Li said that the country's domestic economy is facing more uncertainty in 2022, adding that demand needs to be boosted and cross-cyclical adjustments need to be stepped up. The pace of mortgage loan approvals in China is reportedly accelerating. South Korea's exports through the first 20 days of January were up 22.0% yr/yr with chip exports increasing 29.5%. South Korea will issue KRW11.3 trln in debt over the course of the year to finance its extra budget.

  • In economic data:

  • Japan's December CPI 0.0% m/m (last 0.2%). December National CPI 0.1% m/m (last 0.3%); 0.8% yr/yr (last 0.6%). December National Core CPI 0.5% yr/yr (expected 0.6%; last 0.5%)

  • New Zealand's December Business PMI 53.7 (last 50.6)


---Equity Markets---

  • Japan's Nikkei: -0.9% (-2.1% for the week)

  • Hong Kong's Hang Seng: +0.1% (+2.4% for the week)

  • China's Shanghai Composite: -0.9% (UNCH for the week)

  • India's Sensex: -0.7% (-3.6% for the week)

  • South Korea's Kospi: -1.0% (-3.0% for the week)

  • Australia's ASX All Ordinaries: -2.3% (-2.9% for the week)

---FX---

  • USD/JPY: -0.2% to 113.81

  • USD/CNH: UNCH at 6.3450

  • USD/INR: -0.1% to 74.37

Europe: DAX -1.8%, FTSE -1.1%, CAC -1.6%

Major European indices trade in the red amid weakening investor sentiment. Brexit negotiators will meet on Monday to continue discussing potential solutions to trade issues related to the Northern Ireland protocol. Renault and Geely agreed to joint development of hybrid and gasoline vehicles in South Korea. The German government is looking to attract 400,000 skilled immigrants per year. Siemens Energy lowered its guidance due to supply chain issues impacting wind turbine manufacturer Siemens Gamesa.

  • In economic data:

  • U.K.'s December Retail Sales -3.7% m/m (expected -0.6%; last 1.0%); -0.9% yr/yr (expected 3.4%; last 4.3%). December Core Retail Sales -3.6% m/m (expected -0.5%; last 0.7%); -3.0% yr/yr (expected 1.1%; last 2.2%). January GfK Consumer Confidence -19 (expected -15; last -15)


---Equity Markets---

  • STOXX Europe 600: -1.7% (-1.2% week-to-date)

  • Germany's DAX: -1.8% (-1.6% week-to-date)

  • U.K.'s FTSE 100: -1.1% (-0.5% week-to-date)

  • France's CAC 40: -1.6% (-0.9% week-to-date)

  • Italy's FTSE MIB: -1.6% (-1.4% week-to-date)

  • Spain's IBEX 35: -0.9% (-0.8% week-to-date)

---FX---

  • EUR/USD: +0.2% to 1.1335

  • GBP/USD: -0.3% to 1.3562

  • USD/CHF: -0.4% to 0.9125


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