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21/12/22 Briefing


The S&P 500 futures are up 25 points and are trading 0.7% above fair value. The Nasdaq 100 futures are up 44 points and are trading 0.4% above fair value. The Dow Jones Industrial Average futures are up 266 points and are trading 0.8% above fair value.

The futures for the main indices, especially the Dow, are getting a boost today as market participants react positively to earnings reports from Nike (NKE) and FedEx (FDX). Some speculative buying interest following large losses this month also offers a measure of support to the equity futures market. 

The Senate passed a procedural measure on the $1.7 trillion government funding bill. A final Senate vote could happen later today, according to Politico.

Ukraine's President Zelenskyy is visiting Washington DC today to meet with President Biden and speak in front of Congress.

Treasury yields are moving lower this morning. The 2-yr note yield is down six basis points to 4.21% and the 10-yr note yield is down two basis points to 3.66%.

Energy complex futures are on the rise. WTI crude oil futures are up 2.3% to $77.97/bbl and natural gas futures are up 2.8% to $5.47/mmbtu.

The weekly MBA Mortgage Applications Index rose 0.9% with refinancing applications jumping 6.0% while purchase applications fell 0.1%. Other data releases today include:

  • 8:30 a.m. ET: Q3 Current Account Balance (Briefing.comconsensus -$224.0B; prior -$251.1B)

  • 10:00 a.m. ET: December Consumer Confidence (Briefing.comconsensus 101.0; prior 100.2)

  • 10:00 a.m. ET: November Existing Home Sales (Briefing.comconsensus 4.20M; prior 4.43M)

  • 10:30 a.m. ET: Weekly EIA Crude Oil Inventories (prior +10.23M)

In corporate news:

  • FedEx (FDX 171.21, +6.86, +4.2%): beats by $0.36, misses on revs; guides FY23 EPS below consensus, reduces capital spending outlook by $400 mln; expects to generate FY23 cost savings of approx. $3.7 bln

  • NIKE (NKE 114.83, +11.62, +11.3%): beats by $0.20, beats on revs, gross margin down 300 bps, which is better than its prior guidance of down 350-400 bps; North America up 30%, Greater China down 3%; guides FY23 revs to grow low teens in cc, up from low double-digits

  • Starbucks (SBUX 96.79, -1.21, -1.2%): downgraded to Hold from Buy at Jefferies

  • Workday (WDAY 169.73, -2.36, -1.4%): announces appointment of Carl Eschenbach to co-CEO, effective immediately; Chano Fernandez has stepped down as co-CEO and as a member of the board of directors

  • Tesla (TSLA 139.55, +1.75, +1.3%): CEO Elon Musk says "I will resign as CEO (of Twitter) as soon as I find someone foolish enough to take the job! After that, I will just run the software & servers teams"; aiming to implement a hiring freeze and announce layoffs, according to Electrek 

  • Pebblebrook Hotel Trust (PEB 14.10, -0.33, -2.3%): lowers Q4 guidance due to the impact from Hurricane Nicole and due to weaker business and leisure demand during second half of November

  • Six Flags (SIX 22.41, +1.49, +7.1%): 3% shareholder Land & Buildings issues presentation highlighting opportunity to unlock substantial real estate value

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region ended the midweek session on a mostly lower note. Japan's Nikkei: -0.7%, Hong Kong's Hang Seng: +0.3%, China's Shanghai Composite: -0.2%, India's Sensex: -1.0%, South Korea's Kospi: -0.2%, Australia's ASX All Ordinaries: +1.3%.

  • In economic data:

  • New Zealand's November trade deficit NZD1.86 bln (last deficit of NZD2.30 bln). November Credit Card Spending 16.0% yr/yr (last 24.6%)

  • In news:

  • Japan's Cabinet maintained the overall economic assessment in the December report, noting that the economy is recovering moderately.

  • South Korea's Finance Ministry expects 2023 growth of 1.6%, coupled with CPI growth of 3.5%.

  • India imposed a five-year anti-dumping duty on stainless steel tubes and pipes from China.

  • China will conduct strict reviews of M&A action that could impact national security.

  • Major European indices trade in the green. STOXX Europe 600: +1.0%, Germany's DAX: +0.7%, U.K.'s FTSE 100: +0.9%, France's CAC 40: +1.0%, Italy's FTSE MIB: +1.0%, Spain's IBEX 35: +0.8%.

  • In economic data:

  • Germany's January GfK Consumer Climate -37.8 (expected -38.0; last -40.1)

  • U.K.'s December CBI Distributive Trades Survey 11 (expected -23; last -19). November Public Sector Net Borrowing GBP21.20 bln (last GBP13.37 bln)

  • In news:

  • Germany's GFK Consumer Climate index remained in negative territory for the 14th consecutive month due to persistent concerns about recession and the rising cost of living.

  • Ambulance workers in England and Wales went on strike today after nurses did the same yesterday.

  • The European Commission cleared a EUR34.50 bln plan to recapitalize German energy giant Uniper.

 

U.S. equity futures:

  • S&P 500 Futures: +24 @ 3,845

  • DJIA Futures: +265 @ 33,115

  • Nasdaq 100 Futures: +48 @ 11,121

Overseas:

  • Europe: DAX +0.7%, FTSE +0.9%, CAC +1.0%

  • Asia: Nikkei -0.7%, Hang Seng +0.3%, Shanghai Composite -0.2%

Commodities:

  • Crude Oil +1.58 @ 77.81

  • Nat Gas +0.134 @ 5.46

  • Gold -0.25 @ 1825.15

  • Silver -0.106 @ 24.165

  • Copper +0.0035 @ 3.8025

 

Earnings/Guidance:

  • AAR Corp (AIR) beats by $0.01, beats on revs; believes demand for aftermarket services will continue to increase

  • BlackBerry (BB) beats by $0.02, beats on revs

  • CalAmp (CAMP) reports EPS in-line, beats on revs; expects revs to be flat sequentially in Q4

  • Calavo Growers (CVGW) misses by $0.29, misses on revs; expects Mexican avocado crop with be 10-20% larger in 2023

  • Enerpac Tool Group (EPAC) reports Q1 results

  • FedEx (FDX) beats by $0.36, misses on revs; guides FY23 EPS below consensus, reduces capital spending outlook by $400 mln; expects to generate FY23 cost savings of approx. $3.7 bln

  • Great Lakes Dredge & Dock (GLDD) provides an update on Q4, says revenue and gross profit margin are expected to be lower than previously anticipated

  • NIKE (NKE) beats by $0.20, beats on revs, gross margin down 300 bps, which is better than its prior guidance of down 350-400 bps; North America up 30%, Greater China down 3%;  FY23 revs to grow low teens in cc, up from low double-digits

  • Pebblebrook Hotel Trust (PEB) lowers Q4 guidance due to the impact from Hurricane Nicole and due to weaker business and leisure demand during second half of November

  • Rite Aid (RAD) beats by $0.17, beats on revs; lowers FY23 EPS guidance; narrows FY23 rev guidance

  • SITE Centers (SITC) announces $100 mln stock repurchase program

  • Worthington (WOR) misses by $0.17 (single estimate), beats on revs

News:

  • Senate passes procedural measure on $1.7 trillion government funding bill. Final Senate vote could happen later today, according to Politico

  • China's coronavirus outbreak is impacting businesses, according to Reuters

  • Ukraine President Volodymyr Zelensky to visit U.S. Capitol on Wednesday; expected to meet with congressional leaders and national security chiefs

  • US will offer Ukraine $2 bln Patriot missile battery, according to Bloomberg

  • Bank of Japan decided to conduct the outright purchases of Japanese government securities as follows, effective from December 20, 2022

  • Winter storm expected to disrupt holiday travel

  • NYC might limit subway service on Monday and Friday amid remote work trends, according to

  • ADC Therapeutics (ADCT) and Sobi announce European Commission approval of ZYNLONTA for the treatment of relapsed or refractory diffuse large b-cell lymphoma

  • Akoustis Technologies (AKTS) completed qualification and released its internally developed proprietary wafer-level-packaging (WLP) technology for the 5G mobile, Wi-Fi, timing control, and other markets

  • Alamos (AGI) announces renewal of normal course issuer bid

  • Aldeyra Therapeutics (ALDX) announces the submission of a New Drug Application to the U.S. Food and Drug Administration for ADX-2191

  • Applied Materials (AMAT) to make multi-billion-dollar investments in innovation infrastructure in the U.S. and expand global manufacturing capacity between now and 2030

  • AstraZeneca (AZN): Imfinzi plus chemotherapy approved in the EU as first immunotherapy regimen for patients with advanced biliary tract cancer

  • Boeing (BA) awarded $2.02 bln U.S. Navy contract

  • Boston Omaha (BOC) appoints Max Meisinger as CFO

  • Calliditas Therapeutics AB (CALT) announces that CEO Rene Aguiar-Lucander has net purchased 50,000 shares through Calliditas' warrant program 2019/2022

  • Codexis (CDXS) treatment of Maple Syrup Urine Disease granted FDA orphan designation

  • Coty (COTY) sells fragrance license back to Lacoste, advancing strategic objectives

  • Credit Suisse (CS) clients are returning to the firm, according to Reuters

  • Elbit Systems (ESLT) awarded a framework contract with a maximum value of $410 mln to supply Watchkeeper X Tactical UAS for the Romanian Ministry of National Defense

  • Enviva (EVA) signed new 10-year take-or-pay off-take fuel supply contract with an existing European customer, extendable for up to five years

  • FedEx (FDX), Polar Air Cargo (AAWW), and UPS (UPS) awarded $2.24 bln U.S. Transportation Command contract

  • First Internet Bancorp (INBK) announces $25.0 mln stock repurchase program

  • Fulton Fincl (FULT) approves a stock repurchase program of up to $100 mln of common stock

  • General Motors (GM) aiming to recall 140K Chevy Bolts based on fire risk, according to Reuters

  • Genmab (GMAB) announces that the company has submitted a Japan New Drug Application to the Ministry of Health, Labor and Welfare of Japan for subcutaneous epcoritamab

  • Google (GOOG): NFL in discussions with YouTube for rights to Sunday Ticket, according to the Wall Street Journal

  • Granite Constr (GVA) selected for ~$174 mln contract by the City of Los Angeles and Los Angeles World Airports to construct new exit taxiways and reconstruct sections of existing runways

  • IAMGOLD (IAG) intersects 21.00 M of 5.35 G/T Gold at maga hill at its Bombor gold mine

  • Imago BioSciences (IMGO) Announces First Participant Dosed in Investigator-Sponsored Phase 2 Study of Bomedemstat in Combination with Ruxolitinib in Myelofibrosis

  • Jack In The Box (JACK) signs franchise agreement for 37 new restaurants and 46 existing stores in four southeast markets

  • Jazz Pharma (JAZZ) and Zymeworks (ZYME) announce JAZZ has exercised options to continue with its exclusive development and commercialization rights to Zymeworks' zanidatamab in key markets

  • Lockheed Martin's (LMT) Sikorsky Aircraft awarded $677 mln U.S. Navy contract

  • Lucid Group (LCID) begins deliveries of Lucid Air Dream Edition to customers in Europe, confirms official WLTP driving range of up to 883 km

  • Medtronic (MDT): Acutus Medical (AFIB) achieved the second milestone under the asset purchase agreement with Medtronic of its left-heart access portfolio with the submission for CE Mark of this portfolio under European Union (EU) Medical Device Regulations

  • MGM Resorts (MGM): Bet MGM Notifies patrons of data security issue

  • Novonix Limited (NVX) provides update on scaling U.S. production of synthetic graphite anode materials

  • Palantir Technologies (PLTR) UK, LTD. today announced a landmark Enterprise Agreement (EA) with the UK Ministry of Defence

  • Pfizer (PFE) announces FDA and EMA acceptance of etrasimod regulatory submissions for ulcerative colitis

  • Philips (PHG) provides update on completed set of test results for first-generation DreamStation sleep therapy devices

  • REGENXBIO (RGNX) reports update on advancement of programs for CLN2 disease

  • Restaurant Brands' (QSR) Popeyes brand and Centras Group announced new plans to develop and open dozens of Popeyes restaurants across Kazakhstan in the coming year

  • RingCentral (RNG) has concluded that a material charge for impairment to the remaining prepaid sales commission balance under its strategic partnership with Avaya (AVYA) is required

  • Sutro Biopharma (STRO) and Vaxcyte (PCVX) announce option grant agreement through which Vaxctye acquires option to access expanded rights to develop and manufacture cell-free extract, among other rights

  • Takeda Pharma (TAK) announces company split (simplified absorption-type company split) and transfer of shares for succession of Takeda's Shonan iPark Operation Business

  • Tesla (TSLA): CEO Elon Musk says "I will resign as CEO (of Twitter) as soon as I find someone foolish enough to take the job! After that, I will just run the software & servers teams"

  • Tesla (TSLA) aiming to implement a hiring freeze and announce layoffs, according to Electrek

  • TotalEnergies SE (TTE) announces a new gas discovery in offshore block 6

  • Universal Insurance (UVE) authorizes up to $8.0 mln for share repurchases through December 15, 2024

  • Vimeo (VMEO) President Mark Kornfilt notified the Company of his intention to resign effective as of March 31, 2023, to pursue other non-competitive opportunities

  • Viridian Therapeutics (VRDN) Announces First Patient Enrolled in the 'THRIVE' Phase 3 Trial in Patients With Thyroid Eye Disease

  • Workday (WDAY) announces appointment of Carl Eschenbach to co-CEO, effective immediately; Chano Fernandez has stepped down as co-CEO and as a member of the board of directors

M&A:

  • American Equity Investment Life (AEL) confirms that it reviewed and rejected an acquisition offer of $45/share from Prosperity Group Holdings LP and its principal shareholder, Elliott Investment Management

  • Petrobras (PBR) begins the non-binding phase for the sale of POSA; concludes the sale of E&P assets in Sergipe

  • Six Flags (SIX): Land & Buildings takes stake in Six Flags and wants to push for sale, according to the Wall Street Journal

  • Sterling Infrastructure (STRL) acquires Concrete Construction Services of Arizona for $22 mln

  • Tremor (TRMR) considering sale, according to Sky News

Syndicate:

  • Terns Pharmaceuticals (TERN) priced its underwritten public offering of 10,350,000 shares of its common stock at $7.25/share

  • Ventyx Biosciences (VTYX) files mixed securities shelf offering

IPOs:

  • Expect to Price:

  • No IPOs expected.

Gapping Up/Down

  • Gapping up: ADCT +24.8%, NKE +12.4%, RAD +8.6%, FDX +4.2%, PHG +2.9%, LCID +2.1%, CCL +2.1%, TTE +1.9%, TCX +1.8%, PBR +1.4%,

  • Gapping down: ICCM -14.6%, CVGW -14.4%, TERN -8%, AIR -6%, NVX -5.2%, WOR -3.5%, GLDD -2.8%, AEL -1.2%,

 


Analyst Research (see Upgrades/Downgradescalendarfor full list):

  • Upgrades

  • Adaptive Biotechnologies (ADPT) upgraded to Overweight from Neutral at Piper Sandler; tgt raised to $14

  • Comerica (CMA) upgraded to Buy from Neutral at DA Davidson; tgt raised to $80

  • PagSeguro Digital (PAGS) upgraded to Buy from Neutral at New Street; tgt lowered to $17

  • Downgrades:

  • Altra Industrial Motion (AIMC) downgraded to Market Perform from Outperform at BMO Capital Markets; tgt raised to $62

  • Carvana (CVNA) downgraded to Hold from Buy at Truist; tgt lowered to $5

  • Denny's (DENN) downgraded to Neutral from Outperform at Wedbush; tgt lowered to $10

  • dLocal Limited (DLO) downgraded to Neutral from Buy at New Street; tgt $25

  • Papa John's (PZZA) downgraded to Neutral from Outperform at Wedbush

  • Red Robin Gourmet (RRGB) downgraded to Hold from Buy at Jefferies; tgt lowered to $7.50

  • Redfin (RDFN) downgraded to Hold from Buy at Truist; tgt lowered to $5.50

  • Others:

  • Citizens Financial Group (CFG) initiated with a Buy at DA Davidson; tgt $47

  • Cullen/Frost (CFR) initiated with a Buy at DA Davidson; tgt $147

  • Phibro Animal Health (PAHC) initiated with a Buy at ROTH Capital; tgt $18

  • ProKidney Corp. (PROK) initiated with a Buy at Jefferies; tgt $15

  • Regions Fincl (RF) initiated with a Buy at DA Davidson; tgt $25

Upcoming Events:

  • Econ Data:

  • 07:00 ET: MBA Mortgage Applications Index for Dec 17 (Briefing.comConsensus NA; Prior 3.2%)

  • 08:30 ET: Current Account Balance for Q3 (Briefing.comConsensus -$224.0B; Prior -$251.1B)

  • 10:00 ET: Consumer Confidence for Dec (Briefing.comConsensus 101.0; Prior 100.2)

  • 10:00 ET: Existing Home Sales for Nov (Briefing.comConsensus 4.20M; Prior 4.43M)

  • 10:30 ET: EIA Crude Oil Inventories for Dec 17 (Briefing.comConsensus NA; Prior +10.23M)

  • 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 -0.7%, Hang Seng +0.3%, Shanghai Composite -0.2%

Equity indices in the Asia-Pacific region ended the midweek session on a mostly lower note. Japan's Cabinet maintained the overall economic assessment in the December report, noting that the economy is recovering moderately. South Korea's Finance Ministry expects 2023 growth of 1.6%, coupled with CPI growth of 3.5%. India imposed a five-year anti-dumping duty on stainless steel tubes and pipes from China. China will conduct strict reviews of M&A action that could impact national security.

  • In economic data:

  • New Zealand's November trade deficit NZD1.86 bln (last deficit of NZD2.30 bln). November Credit Card Spending 16.0% yr/yr (last 24.6%)

---Equity Markets---

  • Japan's Nikkei: -0.7%

  • Hong Kong's Hang Seng: +0.3%

  • China's Shanghai Composite: -0.2%

  • India's Sensex: -1.0%

  • South Korea's Kospi: -0.2%

  • Australia's ASX All Ordinaries: +1.3%

---FX---

  • USD/JPY: +0.1% to 131.86

  • USD/CNH: +0.3% to 6.9814

  • USD/INR: +0.2% to 82.77

 

Europe: DAX +0.7%, FTSE +0.9%, CAC +1.0%

Major European indices trade in the green. Germany's GFK Consumer Climate index remained in negative territory for the 14th consecutive month due to persistent concerns about recession and the rising cost of living. Ambulance workers in England and Wales went on strike today after nurses did the same yesterday. The European Commission cleared a EUR34.50 bln plan to recapitalize German energy giant Uniper.

  • In economic data:

  • Germany's January GfK Consumer Climate -37.8 (expected -38.0; last -40.1)

  • U.K.'s December CBI Distributive Trades Survey 11 (expected -23; last -19). November Public Sector Net Borrowing GBP21.20 bln (last GBP13.37 bln)

---Equity Markets---

  • STOXX Europe 600: +1.0%

  • Germany's DAX: +0.7%

  • U.K.'s FTSE 100: +0.9%

  • France's CAC 40: +1.0%

  • Italy's FTSE MIB: +1.0%

  • Spain's IBEX 35: +0.8%

---FX---

  • EUR/USD: -0.2% to 1.0606

  • GBP/USD: -0.7% to 1.2095

  • USD/CHF: +0.2% to 0.9271

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