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22/12/22 Briefing


The S&P 500 futures are down 9 points and are trading 0.3% below fair value. The Nasdaq 100 futures are down 39 points and are trading 0.3% below fair value. The Dow Jones Industrial Average futures are down 62 points and are trading 0.2% below fair value.

Equity futures skew slightly negative as market participants react to disappointing earnings reports from Micron (MU) and CarMax (KMX). This is amid thinner holiday trading conditions as many participants bow out ahead of the weekend. 

Congress is at a standstill on the government funding bill due to a dispute regarding an immigration amendment ahead of Friday's deadline, according to Politico

China will lower quarantine requirements for overseas travelers next month, according to Bloomberg

Treasury yields are modestly lower. The 2-yr note yield is down one basis point to 4.21% and the 10-yr note yield is down three basis points to 3.65%.

UK Q3 GDP was revised to -0.3% from -0.2% quarter-over-quarter versus +0.2% in Q2. Market participants will receive the following U.S. economic data today:

  • 8:30 a.m. ET: Q3 GDP Third Estimate (Briefing.comconsensus 2.9%; prior 2.9%) and GDP Deflator Third Estimate (Briefing.comconsensus 4.3%; prior 4.3%)

  • 8:30 a.m. ET: Weekly initial jobless claims (Briefing.comconsensus 225K; prior 211K) and continuing claims (prior 1671K)

  • 10:00 a.m. ET: November Leading Economic Index (Briefing.comconsensus -0.4%; prior -0.8%)

  • 10:30 a.m. ET: Weekly EIA Natural Gas Inventories (prior -50 bcf)

In corporate news:

  • CarMax (KMX 51.60, -7.77, -13.1%): misses by $0.43, misses on revs

  • Micron (MU 49.66, -1.53, -3.0%): misses by $0.02, misses on revs; guides FebQ EPS below consensus, revs in-line; expects improving customer inventories to enable higher revs in 2H23;  announces restructuring plan in response to challenging industry conditions; to reduce headcount by approximately 10% over CY23

  • Under Armour C (UA 8.70, +0.07, +0.8%): appoints Stephanie Linnartz as President and CEO; effective Feb 27, 2023

  • Apogee Enterprises (APOG 45.95, 1.15, +2.6%): beats by $0.10, beats on revs; raises bottom end of FY23 EPS guidance

  • MillerKnoll (MLKN 18.70, +0.43, +2.4%): beats by $0.04, beats on revs; guides FebQ EPS in-line, revs in-line

  • Tesla (TSLA 138.30, +0.73, +0.5%):  will offer $7,500 discounts on Model 3 and Model Y cars this month, according to Reuters

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region ended Thursday on a mostly higher note. Japan's Nikkei: +0.5%, Hong Kong's Hang Seng: +2.7%, China's Shanghai Composite: -0.5%, India's Sensex: -0.4%, South Korea's Kospi: +1.2%, Australia's ASX All Ordinaries: +0.6%.

  • In economic data:

  • Japan's October Leading Index 98.6 (last 98.2)

  • South Korea's November PPI -0.2% m/m (last 0.5%); 6.3% yr/yr (last 7.3%)

  • In news:

  • Japan's Prime Minister Kishida is reportedly looking to invest JPY100 trln as soon as possible and wants to host a special session of the Council on Economic and Fiscal Policy early next year.

  • Japan's Ministry of Industry expects that steel production in Q1 will be down 4.0% yr/yr, but up 0.3% qtr/qtr.

  • The Japanese government maintained its forecast for FY23 CPI at 1.7% while the growth forecast was increased to 1.5% from 1.1%.

  • Bank Indonesia raised its reverse repurchase rate by 25 bps to 5.50%, as expected.

  • Major European indices trade near their flat lines while the U.K.'s FTSE (+0.4%) outperforms even though Q3 GDP was revised down to reflect a contraction. STOXX Europe 600: UNCH, Germany's DAX: -0.3%, U.K.'s FTSE 100: +0.4%, France's CAC 40: -0.1%, Italy's FTSE MIB: -0.2%, Spain's IBEX 35: -0.1%.

  • In economic data:

  • U.K.'s Q3 GDP -0.3% qtr/qtr (expected -0.2%; last 0.2%); 1.9% yr/yr (expected 2.4%; last 4.4%). Q3 Current Account deficit GBP19.40 bln (expected deficit of GBP20.80 bln; last deficit of GBP35.10 bln). Q3 Business Investment -2.5% qtr/qtr (last 6.2%); 1.3% yr/yr (last 5.5%)

  • Italy's October Industrial Sales -0.8% m/m (last -1.2%); 12.5% yr/yr (last 18.0%). November non-EU trade surplus EUR2.01 bln (last deficit of EUR2.04 bln). November PPI 2.6% m/m (last -3.5%); 29.4% yr/yr (last 27.7%)

  • In news:

  • Household incomes fell for the fourth consecutive quarter in Q3.

  • European Central Bank policymaker Centeno said that inflation should reach its peak in the current quarter while policymaker de Guindos said that 50 bps rate hikes could become the new normal.

  • Germany's Finance Ministry expects subdued growth during the winter months and an easing CPI in 2023.

 

U.S. equity futures:

  • S&P 500 Futures: -10 @ 3,869

  • DJIA Futures: -62 @ 33,315

  • Nasdaq 100 Futures: -43 @ 11,193

Overseas:

  • Europe: DAX -0.3%, FTSE +0.4%, CAC -0.1%

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

Commodities:

  • Crude Oil +1.20 @ 79.49

  • Nat Gas +0.019 @ 5.351

  • Gold -0.05 @ 1825.35

  • Silver -0.237 @ 23.957

  • Copper -0.0030 @ 3.807

 

Earnings/Guidance:

  • Apogee Enterprises (APOG) beats by $0.10, beats on revs; raises bottom end of FY23 EPS guidance

  • Braemar Hotels & Resorts (BHR) guides for Q4 net income and Adjusted EBITDAre

  • CarMax (KMX) misses by $0.43, misses on revs

  • Micron (MU) misses by $0.02, misses on revs; guides FebQ EPS below consensus, revs in-line; expects improving customer inventories to enable higher revs in 2H23

  • MillerKnoll (MLKN) beats by $0.04, beats on revs; guides FebQ EPS in-line, revs in-line

  • Park Hotels & Resorts (PK) provides update on recent operating trends and capital allocation activity; sees Q4 FFO of $0.35-0.43 vs. $0.38 Capital IQ consensus

  • Par Pacific (PARR) expects 2023 CapEx of $60-70 mln; expects no material turnaround outlays during 2023

  • Ryman Hospitality (RHP) provides hospitality business update; reports total October/November occupancy of 74.1% versus 79.7% in same months of 2019; RevPar of $441.42 versus $418.16 in 2019

News:

  • Congress is at a standstill on government funding bill due a dispute regarding an immigration amendment ahead of Friday's deadline. Senate Minority Leader Mitch McConnell has threatened to switch support to short term continuing resolution into early next year if vote doesn't occur today, according to Politico

  • Senate Majority Leader Chuck Schumer (D-NY) says progress is being made and took steps to force vote on omnibus on Friday, but Senator Chris Coons (D-DE) says the bill is "hanging by a thread.", according to CNN

  • President Biden says US will continue to support Ukraine "for as long as it takes" and Ukrainian President Volodymyr Zelensky asks Congress to approve additional funding and said he will not compromise the territorial integrity of his country, according to the New York Times

  • China will lower quarantine requirements for overseas travelers next month, according to Bloomberg

  • China's securities regulator wants more market reforms, according to Reuters

  • TikTok is ramping up efforts to secure US security deal, according to Reuters

  • Over 1000 flights were cancelled due to winter storm, CNN

  • Akero Therapeutics (AKRO) Completes Enrollment of Phase 2b SYMMETRY Study and Announces Expected 2023 Milestones

  • Alvotech (ALVO) provides update on U.S. regulatory status of AVT02, Alvotech's proposed high-concentration, interchangeable biosimilar to humira

  • BellRing Brands (BRBR) enters into Manufacturing Agreement with Stremicks Heritage Foods, LLC and Jasper Products, L.L.C. for the manufacturing of Premier Nutrition's Premier Protien ready-to-drink shakes

  • BridgeBio Pharma (BBIO) announces the initiation of its multicenter, international, pivotal Phase 3 randomized trial of encaleret in patients with autosomal dominant hypocalcemia type 1

  • Clarivate (CLVT) Adopts tax benefits preservation plan to protect availability of net operating losses

  • Dover (DOV) subsidiary Pole/Zero awarded $53.5 mln contract by U.S. Department of Defense

  • Eli Lilly (LLY) and and ProQR (PRQR) to expand RNA editing collaboration

  • EnLink Midstream (ENLC) authorizes common unit repurchase program for the repurchase of up to $200 mln during 2023

  • Fiserv (FISV) Chairman Frank Bisignano enters into a new employment agreement to serve as President and CEO through Dec 2027

  • Futu Holdings (FUTU) proposed dual primary listing on The Stock Exchange of Hong Kong Limited

  • General Dynamics (GD) Electric Boat Corp awarded $5.13 bln U.S. Navy contract modification

  • Global Net Lease (GNL) announces over $33 mln of acquisitions and $56 mln of dispositions in 2022 and a 2023 acquisition pipeline of approximately $65 mln

  • Lexicon (LXRX) Announces Topline Results From Phase 2 Proof-of-Concept Study of LX9211in Postherpetic Neuralgia

  • LiveRamp (RAMP) increases share repurchase program by $100 mln to $1.1 bln, extends to December 31, 2024

  • MasTec (MTZ) CFO George L. Pita to retire, effective March 31, 2023; promotes Paul DiMarco to CFO, effective upon Mr. Pita's retirement

  • McEwen Mining (MUX) reports production for October and November; production increasing and costs per ounce falling

  • Merck (MRK) and and Kelun-Biotech announce exclusive license and collaboration agreement for seven investigational antibody-drug conjugate candidates for the treatment of cancer

  • Micron (MU) announces restructuring plan in response to challenging industry conditions; to reduce headcount by approximately 10% over CY23

  • Mirati (MRTX) announces Adagrasib (KRAZATI) Receives Breakthrough Therapy Designation from FDA for Patients with Advanced, KRAS-Mutated Colorectal Cancer and NEJM Publishes Phase 1b/2 Data from Adagrasib With or Without Cetuximab in Colorectal Cancer

  • MSP Recovery (MSPR) announces it will be rebranding from MSP Recovery to its nationally recognized brand, 'Lifewallet'

  • ORIC Pharmaceuticals (ORIC) announces clinical development collaboration with Pfizer (PFE) for ORIC-533 in multiple myeloma and concurrent $25 mln equity investment by Pfizer (PFE)

  • Raymond James (RJF) reports operating data for November 2022; closings for investment banking continued to be challenged in Nov

  • Regeneron (REGN): Positive Dupixent (dupilumab) Phase 3 Results in Adults and Adolescents with Eosinophilic Esophagitis Published in the New England Journal of Medicine

  • Rocket Pharmaceuticals (RCKT) provides update on anticipated registration path for RP-A501 in danon disease following end-of-phase 1 FDA meeting

  • Super Micro Computer (SMCI) announces expanded product line with new ARM-based series of servers

  • TechTarget (TTGT) announces that it has promoted Rebecca Kitchens from Executive Vice President & Publisher to President and Steve Niemiec from Chief Revenue Officer to COO & Chief Revenue Officer, effective January 1, 2023

  • Tesla (TSLA) will offer $7,500 discounts on Model 3 and Model Y cars this month, according to Reuters

  • Tesla (TSLA) has placed chip orders with TSMC (TSM), according to Digitimes

  • TuSimple Holdings (TSP) announces restructuring: to trim 25% of its total workforce as it focuses on investing in R&D to advance autonomous trucking tech

  • Tyson Foods (TSN): Hundreds of Tyson Foods employees expected to leave, according to the Wall Street Journal

  • Under Armour (UAA) appoints Stephanie Linnartz as President and CEO; effective Feb 27, 2023

  • WNS (WNS) announced that effective end of day December 31, 2022, Michael Menezes and Gareth Williams will retire from the WNS Board of Directors and step down as Chairman of their respective Committees

M&A:

  • Berkeley Lights (BLI) to acquire IsoPlexis (ISO) in an all-stock transaction valued at $57.8 mln; expected to deliver approximately $70 mln annualized cost synergies by 2024

  • Clear Channel Outdoor (CCO) to sell its Switzerland business to Goldbach Group, an affiliate of TX Group, for CHF 86 mln

  • dMY Technology Group, Inc. VI (DMYS): Rain Enhancement Technologies to become publicly traded via SPAC merger with DMYS; plans to trade under ticker "RANY"

  • MoneyGram (MGI) nearing completion of previously announced merger with Madison Dearborn Partners; receives all but one regulatory approval and expects to close the transaction in early 1Q23

Syndicate:

  • Madrigal Pharmaceuticals (MDGL) raised $239 mln in gross equity from equity securities issuances and additional $50 mln in liquidity commitments

IPOs:

  • Expect to Price:

  • No IPOs expected.

Gapping Up/Down

  • Gapping up: ORIC +56.3%, ALVO +9.6%, MLKN +5.1%, MRTX +4.1%, FUTU +3.5%, BHR +2.4%, PK +2.3%, TSP +2.1%, RAMP +2.1%, GNL +1.4%

  • Gapping down: BLI -11.7%, LXRX -8.4%, MU -2.4%, MTZ -1.2%, UAA -1.1%, MDGL -1%

 


Analyst Research (see Upgrades/Downgradescalendarfor full list):

  • Upgrades

  • Helen of Troy (HELE) upgraded to Buy from Neutral at DA Davidson; tgt raised to $126

  • Downgrades:

  • Celularity (CELU) downgraded to Perform from Outperform at Oppenheimer

  • Jefferies (JEF) downgraded to Mkt Perform from Outperform at Keefe Bruyette; tgt lowered to $37

  • Nkarta (NKTX) downgraded to Perform from Outperform at Oppenheimer

  • Others:

  • Alcon (ALC) initiated with a Buy at Mizuho; tgt $85

  • Applied Digital Corporation (APLD) initiated with a Buy at H.C. Wainwright; tgt $4

  • Boston Scientific (BSX) initiated with a Neutral at Mizuho; tgt $52

  • Brookfield Asset Mgmt (BAM) initiated with an Outperform at RBC Capital Mkts; tgt $35

  • ConnectOne Bancorp (CNOB) assumed with a Mkt Perform at Raymond James

  • Cooper (COO) initiated with a Buy at Mizuho; tgt $375

  • dLocal Limited (DLO) resumed with a Buy at BofA Securities; tgt $18

  • Getty Images (GETY) initiated with an Outperform at Wedbush; tgt $6

  • Glaukos (GKOS) initiated with a Neutral at Mizuho; tgt $48

  • Global Business Travel Group (GBTG) initiated with an Outperform at Evercore ISI; tgt $8

  • Ivanhoe Electric (IE) initiated with a Sector Perform at Scotiabank; tgt $14

  • KLX Energy Services (KLXE) assumed with a Buy at EF Hutton; tgt $30

  • Markel Corp (MKL) initiated with a Buy at Janney; tgt $1550

  • Parsons (PSN) initiated with a Neutral at Robert W. Baird; tgt $50

  • Procore Technologies (PCOR) initiated with a Buy at Loop Capital; tgt $70

  • WesBanco Inc (WSBC) assumed with a Mkt Perform at Raymond James

  • X4 Pharmaceuticals (XFOR) initiated with an Overweight at Cantor Fitzgerald; tgt $3

Upcoming Events:

  • Econ Data:

  • 08:30 ET: GDP - Third Estimate for Q3 (Briefing.comConsensus 2.9%; Prior 2.9%)

  • 08:30 ET: GDP Deflator - Third Estimate for Q3 (Briefing.comConsensus 4.3%; Prior 4.3%)

  • 08:30 ET: Initial Claims for Dec 17 (Briefing.comConsensus 225K; Prior 211K)

  • 08:30 ET: Continuing Claims for Dec 10 (Briefing.comConsensus NA; Prior 1671K)

  • 10:00 ET: Leading Economic Index for Nov (Briefing.comConsensus -0.4%; Prior -0.8%)

  • 10:30 ET: EIA Natural Gas Inventories for Dec 17 (Briefing.comConsensus NA; Prior -50 bcf)

  • 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 +0.5%, Hang Seng +2.7%, Shanghai Composite -0.5%

Equity indices in the Asia-Pacific region ended Thursday on a mostly higher note. Japan's Prime Minister Kishida is reportedly looking to invest JPY100 trln as soon as possible and wants to host a special session of the Council on Economic and Fiscal Policy early next year. Japan's Ministry of Industry expects that steel production in Q1 will be down 4.0% yr/yr, but up 0.3% qtr/qtr. The Japanese government maintained its forecast for FY23 CPI at 1.7% while the growth forecast was increased to 1.5% from 1.1%. Bank Indonesia raised its reverse repurchase rate by 25 bps to 5.50%, as expected.

  • In economic data:

  • Japan's October Leading Index 98.6 (last 98.2)

  • South Korea's November PPI -0.2% m/m (last 0.5%); 6.3% yr/yr (last 7.3%)

---Equity Markets---

  • Japan's Nikkei: +0.5%

  • Hong Kong's Hang Seng: +2.7%

  • China's Shanghai Composite: -0.5%

  • India's Sensex: -0.4%

  • South Korea's Kospi: +1.2%

  • Australia's ASX All Ordinaries: +0.6%

---FX---

  • USD/JPY: -0.3% to 133.05

  • USD/CNH: +0.1% to 6.9881

  • USD/INR: -0.2% to 82.74

 

Europe: DAX -0.3%, FTSE +0.4%, CAC -0.1%

Major European indices trade near their flat lines while the U.K.'s FTSE (+0.4%) outperforms even though Q3 GDP was revised down to reflect a contraction. Household incomes fell for the fourth consecutive quarter in Q3. European Central Bank policymaker Centeno said that inflation should reach its peak in the current quarter while policymaker de Guindos said that 50 bps rate hikes could become the new normal. Germany's Finance Ministry expects subdued growth during the winter months and an easing CPI in 2023.

  • In economic data:

  • U.K.'s Q3 GDP -0.3% qtr/qtr (expected -0.2%; last 0.2%); 1.9% yr/yr (expected 2.4%; last 4.4%). Q3 Current Account deficit GBP19.40 bln (expected deficit of GBP20.80 bln; last deficit of GBP35.10 bln). Q3 Business Investment -2.5% qtr/qtr (last 6.2%); 1.3% yr/yr (last 5.5%)

  • Italy's October Industrial Sales -0.8% m/m (last -1.2%); 12.5% yr/yr (last 18.0%). November non-EU trade surplus EUR2.01 bln (last deficit of EUR2.04 bln). November PPI 2.6% m/m (last -3.5%); 29.4% yr/yr (last 27.7%)

---Equity Markets---

  • STOXX Europe 600: UNCH

  • Germany's DAX: -0.3%

  • U.K.'s FTSE 100: +0.4%

  • France's CAC 40: -0.1%

  • Italy's FTSE MIB: -0.2%

  • Spain's IBEX 35: -0.1%

---FX---

  • EUR/USD: +0.2% to 1.0618

  • GBP/USD: -0.3% to 1.2051

  • USD/CHF: +0.1% to 0.9271

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