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21/12/21 Briefing

Updated: Feb 15

The S&P 500 futures trade 55 points, or 1.2%, above fair value as the rebound-minded action carries over from yesterday afternoon.

Risk sentiment has been supported by better-than-expected earnings results from Nike (NKE 162.50, +5.52, +3.5%) and Micron (MU 88.98, +6.95, +8.5%), as well as news the U.S. will distribute 500 million at-home, rapid tests this winter to Americans for free.

While Omicron is now the dominant variant in the U.S., according to the CDC, the market has been encouraged that the U.S. isn't moving towards lockdowns like Europe and that booster shots protect against severe disease.

The Treasury market has corroborated the positive sentiment, as yields edge higher across the curve. The 2-yr yield is up three basis points to 0.65%, and the 10-yr yield is up three basis points to 1.45%. The U.S. Dollar Index is down 0.1% to 96.44. WTI crude futures are up 1.5%, or $1.06, to $69.67/bbl.

On a separate note, the S&P 500's 50-day moving average is now 4612, which is where the S&P 500 futures are currently trading. It'll be interesting if this key technical level acts as resistance or if the benchmark index could break through it today. The latter could lead to a fear of missing out on a rebound rally.

Economic data today will be limited to the Current Account Balance for the third quarter (Briefing.comconsensus -$204.8 billion), which will be released at 8:30 a.m. ET.

In U.S. Corporate news:

  • Nike (NKE 162.50, +5.52): +3.5% after beating top and bottom-line estimates.

  • Micron (MU 88.98, +6.95): +8.5% after beating EPS estimates and guiding the mid-points for Q2 EPS and revenue above consensus. MU has subsequently received Buy upgrades at BofA Securities and Summit Insights.

  • General Mills (GIS 66.50, -1.29): -1.9% after missing EPS estimates on above-consensus revenue.

  • FactSet (FDS 468.80, -2.17): -0.5% despite beating top and bottom-line estimates.

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region ended Tuesday on a higher note. Japan's Nikkei: +2.1% Hong Kong's Hang Seng: +1.0% China's Shanghai Composite: +0.9% India's Sensex: +0.9% South Korea's Kospi: +0.4% Australia's ASX All Ordinaries: +0.9%.

  • In economic data:

  • South Korea's November PPI 0.5% m/m (last 1.0%); 9.6% yr/yr (last 9.1%)

  • Hong Kong's November CPI 1.8% yr/yr (expected 1.9%; last 1.7%)

  • New Zealand's November Credit Card Spending -0.1% yr/yr (expected -2.1%; last -5.2%)


  • In news:

  • Japan's Cabinet office raised the country's overall economic assessment for the first time in 17 months.

  • Nikkei reported that the Japanese government will implement a JPY36 trln supplementary budget and increase its growth outlook for 2022.

  • The latest policy minutes from the Reserve Bank of Australia showed that asset purchases could be reduced in mid-February with a full wind-down by May 2022.

  • South Korea's exports through the first 20 days of December were up 20.0% yr/yr with chip exports growing 27.5%.

  • The People's Bank of China is expected to make additional loan prime rate and reserve requirement ratio cuts in 2022.



  • Major European indices trade higher across the board. STOXX Europe 600: +1.1% Germany's DAX: +1.1% U.K.'s FTSE 100: +1.0% France's CAC 40: +1.0% Italy's FTSE MIB: +1.2% Spain's IBEX 35: +1.3%.

  • In economic data:

  • Germany's January GfK Consumer Climate -6.8 (expected -2.7; last -1.8) U.K.'s November Public Sector Net Borrowing GBP18.62 bln (expected GBP15.40 bln; last GBP11.63 bln). December CBI Distributive Trades Survey 8 (expected 24; last 39)

  • Italy's October Industrial Sales 2.8% m/m (last 0.2%); 16.9% yr/yr (last 15.1%). November PPI 1.2% m/m (last 7.1%); 22.1% yr/yr (last 20.4%)

  • Swiss November trade surplus CHF6.161 bln (last surplus of CHF5.505 bln)


  • In news:

  • British Prime Minister Johnson will reportedly not announce any more new restrictions before Christmas.

  • European Central Bank policymaker Kazimir said that there is a risk of elevated inflation persisting for longer and that the governing council will act if the inflation outlook for 2023/24 is increased.

  • Greece's debt agency will look to raise EUR12 bln in 2022.




U.S. equity futures:

  • S&P 500 Futures: +47 @ 4,615

  • DJIA Futures: +320 @ 35,252

  • Nasdaq 100 Futures: +192 @ 15,820

Overseas:

  • Europe: DAX +1.1%, FTSE +1.0%, CAC +1.0%

  • Asia: Nikkei +2.1%, Hang Seng +1.0%, Shanghai Composite +0.9%

Commodities:

  • Crude Oil +1.02 @ 69.63

  • Nat Gas -0.044 @ 3.790

  • Gold +3.00 @ 1797.60

  • Silver +0.459 @ 22.750

  • Copper +0.0390 @ 4.3325

U.S. Summary:

  • Earnings/Guidance (Full Earnings Calendar):

  • Apogee Enterprises (APOG) beats by $0.10, beats on revs; raises bottom end of FY22 guidance

  • Braze (BRZE) reports Q3 earnings; beats by $0.44, beats on revs; issues upside JanQ guidance

  • Calavo Growers (CVGW) beats by $0.03, beats on revs

  • Cognyte Software (CGNT) beats by $0.11, beats on revs; guides FY22 EPS below consensus, revs below consensus

  • FactSet (FDS) beats by $0.25, beats on revs; reaffirms FY22 EPS guidance, revs guidance

  • General Mills (GIS) misses by $0.06, beats on revs; guides FY22 EPS inline, raises organic net sales growth guidance

  • Micron (MU) beats by $0.05, reports revs in-line; guides Q2 EPS and revs in-line, although mid-points for both are above consensus

  • NIKE (NKE) beats by $0.20, beats on revs, gross margin expanded 280 bps, NIKE Brand Digital generated revenue growth of 11%; expects FY22 revenue to grow mid-single digits yr/yr and JanQ revenue up low-single-digits

  • Rite Aid (RAD) reports Q3 (Nov) results, revs in-line; raises FY22 EPS guidance, lower revs guidance; plans to begin store closures to reduce costs, improve profitability

  • Schrodinger (SDGR) announces retirement of CFO Joel Lebowitz; company also reaffirms FY21 guidance


  • General News:

  • President Biden announced new actions to protect Americans and help communities and hospitals battle Omicron; is directing FEMA to activate additional staffing and capacity for hospitals; will purchase a half-billion at-home, rapid tests this winter to be distributed for free to Americans who want them

  • President Biden tests negative for COVID-19 after being exposed to a mid level staffer that tested positive; Mr. Biden will be tested again on Wednesday

  • CDC reports that Omicron is now the dominant variant in US, representing 73% of new cases

  • While venues in the northeastern US are cancelling events because of Omicron, people and businesses in the south and middle parts of the US are continuing with normal activities, according to the Wall Street Journal

  • President Biden and Senator Joe Manchin (D-WV) and kept door open to future talks on Build Back Better Act. but Mr. Manchin is insisting that all programs are funded for 10 years, which will not be easy for Democrats, according to NBC News

  • House progressives want President Biden to enact parts of Build Back Better Act through executive orders, but presidential powers are limited, according to Bloomberg

  • NHL will begin its holiday break early due to coronavirus and will resume practice Sunday

  • ACADIA Pharmaceuticals (ACAD) announces plan for resubmission of sNDA for NUPLAZID to the FDA

  • Aldeyra Therapeutics (ALDX): TRANQUILITY primary endpoint of ocular redness not met, but statistical significance achieved for secondary endpoint of Schirmer test

  • Alnylam Pharma (ALNY) initiates Phase 2 study evaluating lumasiran in patients with recurrent kidney stone disease

  • Amgen (AMGN): FDA approves Otezla for the treatment of plaque psoriasis

  • AstraZeneca (AZN): Ultomiris regulatory submission accepted under FDA Priority Review in the US for adults with generalised myasthenia gravis

  • Aquestive Therapeutics (AQST) receives notification from FDA that it will not be ready to take action by December 23, 2021for the Company's NDA for Libervant Buccal Film

  • BioDelivery Sciences (BDSI): US District Court of Delaware issues an opinion in favor of BDSI in its patent litigation against Alvogen Group

  • Boeing (BA) awarded $330 mln Air Force contract

  • Boeing (BA) and Airbus (EADSY) want US to delay 5G deployment, according to Reuters

  • Clearside Biomedical (CLSD) announces positive safety results from OASIS Phase 1/2a clinical trial of CLS-AX (axitinib injectable suspension) for the Treatment of Wet AMD

  • CytomX Therapeutics (CTMX) Announces Preliminary Results for Ongoing Phase 2 Expansion Study of CX-2029, a First-in-Class Antibody-Drug Conjugate Candidate Targeting the Transferrin Receptor, CD71

  • DBV Technologies (DBVT) announces plans to initiate Phase 3 study for modified Viaskin Peanut patch

  • Eli Lilly (LLY) lebrikizumab demonstrated significant skin improvement and itch relief when combined with topical corticosteroids in people with atopic dermatitis in third Phase 3 study

  • Fisker (FSR) partners with Bridgestone (BRDCY) for comprehensive after-sales and related maintenance solutions in France and Germany

  • Ford (F) Mustang Mac-E will be part of NYC taxi fleet, according to Verge

  • Fortress Transportation and Infrastructure (FTAI) submits documentation for potential spin-off of infrastructure business

  • Gilead Sciences (GILD): European Commission Expands Indication for Veklury (Remdesivir) for the Treatment of Adults Not on Supplemental Oxygen and Considered High Risk for COVID-19 Disease Progression

  • GlaxoSmithKline (GSK): FDA grants approval to Apretude for HIV pre-exposure prevention

  • GlaxoSmithKline (GSK): ViiV Healthcare announces US FDA approval of Apretude (cabotegravir extended-release injectable suspension), the first and only long-acting injectable option for HIV prevention

  • Hayward Holdings (HAYW) approves new $450 mln stock repurchase authorization

  • Inspired Entertainment (INSE) signs new agreement with Cristaltec, whereby Cristaltec will purchase INSE's video lottery terminal estate

  • KKR Real Estate Finance Trust (KREF) appoints Kendra Decious as CFO, effective March 2, 2022

  • Jabil (JBL) announces new partnership with Carnival Corporation to manufacturer the Princess Medallion in Bajos de Haina, Dominican Republic

  • LianBio (LIAN): Infigratinib was approved for the treatment of advanced or metastatic cholangiocarcinoma with a FGFR2 fusion or other rearrangement

  • Nikola Corporation (NKLA) confirms settlement agreement with SEC

  • Novartis AG's (NVS) Sandoz submits Biologics License Application for proposed biosimilar trastuzumab to US FDA

  • Otis Worldwide (OTIS) reaches agreement for euro-syns to tender its full stake in the cash tender offer for Zardoya Otis Shares

  • Parsons (PSN) awarded $38 mln task order from U.S. Army for tactical applications

  • Pfizer (PFE): publication of interim analysis shows treatment with VYNDAQEL/VYNDAMAX provided a clinically significant survival benefit at five years for patients with transthyretin amyloid cardiomyopathy

  • Progenity (PROG) completes exit from laboratory business through asset sale to Northwest Pathology

  • ServisFirst Bancshares (SFBS) increases quarterly cash dividend to $0.23/share from $0.20/share

  • Sol-Gel (SLGL) announces positive update related to FDA review status of EPSOLAY

  • Stratasys (SSYS) appoints Eitan Zamir as CFO, succeeding Lilach Payorski, who decided to step down from her role

  • Talos Energy (TALO) increases liquidity, adds additional lender and expands ccs financing flexibility as part of successful semi-annual borrowing base redetermination

  • TimkenSteel (TMST) authorizes share repurchase program for up to $50 mln of common stock; Board of Directors also approves 2022 capital expenditure budget for $40 mln


  • M&A:

  • AES (AES) announces acquisition of Community Energy Solar; terms of the deal were not disclosed

  • Citrix (CTXS): Elliott is patterning with Vista for potential bid for Citrix, according to Reuters

  • Griffon (GFF) shareholder Voss Capital issues statement in opposition to Griffon's planned acquisition of Hunter Fan

  • Heat Biologics (HTBX) to acquire commercial-stage biodefense company Elusys Therapeutics

  • Morningstar (MORN) to acquire wealth management platform provider Praemium's U.K. and international business

  • Sanofi (SNY) to acquire Amunix immuno-oncology pipeline with next generation Conditionally Activated Biologics

  • UFP Industries (UFPI) announces acquisition of Advantage Label & Packaging for approx. $16 mln


  • Syndicate:

  • No syndicate news of note.


  • IPOs:

  • Expected to Price:

  • No IPOs expected to price.



Analyst Research (see Upgrades/Downgradescalendarfor full list):

  • Upgrades

  • Bank of Montreal (BMO) upgraded to Outperform from Sector Perform at RBC Capital Mkts

  • BNP Paribas (BNPQY) upgraded to Buy from Hold at Kepler

  • Centrus Energy (LEU) upgraded to Buy from Neutral at ROTH Capital; tgt raised to $58

  • KLA Corporation (KLAC) upgraded to Overweight from Equal Weight at Wells Fargo; tgt raised to $500

  • Micron (MU) upgraded to Buy from Hold at Summit Insights

  • Micron (MU) upgraded to Buy from Neutral at BofA Securities; tgt raised to $100

  • Patterson-UTI (PTEN) upgraded to Overweight from Neutral at Piper Sandler; tgt raised to $10.25

  • Precision Drilling (PDS) upgraded to Overweight from Neutral at Piper Sandler; tgt raised to $57

  • ResMed (RMD) upgraded to Overweight from Sector Weight at KeyBanc Capital Markets; tgt $302

  • Sonoco Products (SON) upgraded to Buy from Neutral at Seaport Research Partners

  • UMB Financial Corporation (UMBF) upgraded to Buy from Neutral at Janney; tgt $115


  • Downgrades:

  • ACADIA Pharmaceuticals (ACAD) downgraded to Neutral from Buy at Guggenheim; tgt $28

  • Alibaba (BABA) downgraded to Neutral from Overweight at Atlantic Equities; tgt lowered to $140

  • Cigna (CI) downgraded to Neutral from Overweight at JP Morgan; tgt lowered to $248

  • HCA (HCA) downgraded to Neutral from Overweight at JP Morgan; tgt $270

  • Herc Holdings (HRI) downgraded to Neutral from Outperform at Robert W. Baird; tgt lowered to $161

  • Oracle (ORCL) downgraded to Sector Weight from Overweight at KeyBanc Capital Markets

  • United Rentals (URI) downgraded to Neutral from Outperform at Robert W. Baird; tgt lowered to $317

  • Vir Biotechnology (VIR) downgraded to Underperform from Neutral at Robert W. Baird; tgt $36


  • Others:

  • AbCellera Biologics (ABCL) initiated with a Buy at The Benchmark Company; tgt $27

  • APi Group (APG) resumed with a Buy at Citigroup; tgt $28

  • Bank of Marin (BMRC) assumed with an Outperform at Keefe Bruyette; tgt $45

  • Boot Barn Holdings (BOOT) initiated with a Buy at The Benchmark Company; tgt $135

  • Central Valley Bancorp (CVCY) assumed with a Mkt Perform at Keefe Bruyette; tgt $24

  • Clarivate (CLVT) resumed with a Buy at Citigroup; tgt $35

  • CSG Systems (CSGS) initiated with an Outperform at William Blair

  • DocGo (DCGO) initiated with a Buy at Canaccord Genuity; tgt $13

  • Five Star Bancorp (FSBC) assumed with a Mkt Perform at Keefe Bruyette; tgt $33

  • Hippo (HIPO) initiated with an Overweight at Morgan Stanley; tgt $4.60

  • Legend Biotech (LEGN) initiated with an Overweight at Piper Sandler; tgt $66

  • Local Bounti (LOCL) initiated with a Buy at ROTH Capital; tgt $8

  • Markforged Holding Corp. (MKFG) initiated with a Buy at Goldman; tgt $6.50

  • Marqeta (MQ) initiated with a Hold at Loop Capital; tgt $19

  • Nuvve (NVVE) initiated with a Buy at Chardan Capital Markets; tgt $24

  • Nyxoah S.A. (NYXH) assumed with an Overweight at Cantor Fitzgerald; tgt $47

  • Offerpad Solutions (OPAD) initiated with an Overweight at Cantor Fitzgerald; tgt $10

  • ShotSpotter (SSTI) resumed with a Mkt Perform at JMP Securities

  • Sierra Bancorp (BSRR) assumed with an Outperform at Keefe Bruyette; tgt $33

  • Tarsus Pharmaceuticals (TARS) initiated with a Buy at H.C. Wainwright; tgt $40

  • Vuzix (VUZI) initiated with a Buy at Dawson James; tgt $15

  • Wejo (WEJO) initiated with an Outperform at Wedbush; tgt $10


Upcoming Events:

  • Econ Data:

  • 08:30 ET: Current Account Balance for Q3 (Briefing.comConsensus -$204.8B; Prior -$190.3B)


  • Earnings:

  • Monday (Dec 20)

  • Afternoon: CVGW MU NKE


  • Tuesday (Dec 21)

  • Morning: APOG CGNT EPAC FDS GIS NEOG RAD

  • Afternoon: AIR BB CAMP


  • Wednesday (Dec 22)

  • Morning: KMX CTAS MSM PAYX




Asia & Europe detail:

Asia: Nikkei +2.1%, Hang Seng +1.0%, Shanghai Composite +0.9%

Equity indices in the Asia-Pacific region ended Tuesday on a higher note. Japan's Cabinet office raised the country's overall economic assessment for the first time in 17 months. Nikkei reported that the Japanese government will implement a JPY36 trln supplementary budget and increase its growth outlook for 2022. The latest policy minutes from the Reserve Bank of Australia showed that asset purchases could be reduced in mid-February with a full wind-down by May 2022. South Korea's exports through the first 20 days of December were up 20.0% yr/yr with chip exports growing 27.5%. The People's Bank of China is expected to make additional loan prime rate and reserve requirement ratio cuts in 2022.

  • In economic data:

  • South Korea's November PPI 0.5% m/m (last 1.0%); 9.6% yr/yr (last 9.1%)

  • Hong Kong's November CPI 1.8% yr/yr (expected 1.9%; last 1.7%)

  • New Zealand's November Credit Card Spending -0.1% yr/yr (expected -2.1%; last -5.2%)


---Equity Markets---

  • Japan's Nikkei: +2.1%

  • Hong Kong's Hang Seng: +1.0%

  • China's Shanghai Composite: +0.9%

  • India's Sensex: +0.9%

  • South Korea's Kospi: +0.4%

  • Australia's ASX All Ordinaries: +0.9%

---FX---

  • USD/JPY: +0.1% to 113.68

  • USD/CNH: UNCH at 6.3810

  • USD/INR: -0.3% to 75.56

Europe: DAX +1.1%, FTSE +1.0%, CAC +1.0%

Major European indices trade higher across the board. British Prime Minister Johnson will reportedly not announce any more new restrictions before Christmas. European Central Bank policymaker Kazimir said that there is a risk of elevated inflation persisting for longer and that the governing council will act if the inflation outlook for 2023/24 is increased. Greece's debt agency will look to raise EUR12 bln in 2022.

  • In economic data:

  • Germany's January GfK Consumer Climate -6.8 (expected -2.7; last -1.8)

  • U.K.'s November Public Sector Net Borrowing GBP18.62 bln (expected GBP15.40 bln; last GBP11.63 bln). December CBI Distributive Trades Survey 8 (expected 24; last 39)

  • Italy's October Industrial Sales 2.8% m/m (last 0.2%); 16.9% yr/yr (last 15.1%). November PPI 1.2% m/m (last 7.1%); 22.1% yr/yr (last 20.4%)

  • Swiss November trade surplus CHF6.161 bln (last surplus of CHF5.505 bln)


---Equity Markets---

  • STOXX Europe 600: +1.1%

  • Germany's DAX: +1.1%

  • U.K.'s FTSE 100: +1.0%

  • France's CAC 40: +1.0%

  • Italy's FTSE MIB: +1.2%

  • Spain's IBEX 35: +1.3%

---FX---

  • EUR/USD: +0.1% to 1.1288

  • GBP/USD: +0.3% to 1.3244

  • USD/CHF: +0.2% to 0.9219


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The S&P 500 futures are up 3 points and are trading % above fair value. The Nasdaq 100 futures are up 9 points and are trading roughly in-line with fair value. The Dow Jones Industrial Average futures