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22/12/23 Briefing

The S&P 500 futures are down 3 points and are trading 0.1% below fair value, the Nasdaq 100 futures are down 11 points and are trading 0.1% below fair value, and the Dow Jones Industrial Average futures are down 131 points and are trading 0.3% below fair value.

Equity futures indicate a lower open on this last session ahead of the holiday weekend. Markets will be closed on Monday for Christmas Day. Market participants still need to get through the November Personal Income and Spending report, though, at 8:30 a.m. ET this morning. This report contains the core PCE Price Index, which is the Fed's preferred gauge on inflation. 

The 2-yr note yield is unchanged from yesterday at 4.33% and the 10-yr note yield is down four basis points to 3.85%.

In other news, the US will support a UN Security Council resolution calling for a pause in fighting to allow for more humanitarian aid to enter Gaza, according to Washington Post.

In corporate news:

  • NIKE

  • C.H. Robinson (CHRW 86.36, +0.51, +0.6%): announces retirement of Mike Zechmeister as CFO; he will remain with the co until a succesor is named or no later than May 31, 2024

  • Karuna Therapeutics (KRTX 315.00, +99.81, +46.4%): confirms it will be acquired by Bristol-Myers (BMY) for $330.00/share in cash, for a total equity value of $14.0 bin

  • Rocket Lab (RKLB 4.97, +0.54, +12.2%): USA enters into agreement with a U.S. Government customer to manufacture 18 space vehicles; total value of $515 mln

  • AAR Corp (AIR 69.37, -1.42, -2.0%): beats by $0.01, misses on revs

  • Mission Produce (AVO 9.48, -0.09, -0.9%): beats by $0.01 (two ests), misses on revs (two ests); expects Q1 volumes to be slighter lower yr/yr and prices to be higher

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region were little changed on Friday with the exception of Hong Kong's Hang Seng Index (-1.8%). Japan's Nikkei: flat (+0.5% for the week), Hong Kong's Hang Seng: -1.8% (-4.2% for the week), China's Shanghai Composite: -0.1% (-0.9% for the week), India's Sensex: +0.3% (-0.5% for the week), South Korea's Kospi: flat (+1.4% for the week), Australia's All Ordinaries: flat (+0.9% for the week).

  • In economic data:

  • Japan's November National CPI 2.8% yr/yr (last 3.3%) and National Core CPI 2.5% yr/yr (expected 2.5%; last 2.9%)

  • Australia's November Private Sector Credit 0.4% (last 0.3%); November Housing Credit 0.4% (last 0.4%)

  • In news:

  • Gaming stocks like Tencent and Netease plunged on a Reuters report that Chinese regulators are toughening oversight that includes setting spending limits and curtailing rewards programs for online video gaming.

  • Large banks in China cut deposit interest rates for the third time this year in a bid to spur growth.

  • China's Ministry of State said it will increase efforts in 2024 to guard against "subversion, terrorism, secession and espionage."

  • The minutes from the Bank of Japan meeting note that officials don't see certainty yet with meeting inflation target.

  • Japan's National Core CPI was up 2.5% yr/yr in November, as expected, marking the lowest annual pace since July 2022.

  • Major European indices are effectively flat in today's trade, reflecting a lack of conviction and an increase in distraction going into the extended holiday weekend. STOXX Europe 600: flat (flat for the week), Germany's DAX: flat (-0.3% for the week), UK's FTSE 100: +0.1% (+1.7% for the week), France's CAC 40: flat (-0.3% for the week), Italy's FTSE MIB: flat (-0.3% for the week), Spain's IBEX 35: flat (+0.1% for the week).

  • In economic data:

  • Germany's November Import Price Index -0.1% m/m (expected -0.4%; last 0.3%) and -9.0% yr/yr (last -13.0%)

  • UK's Q3 GDP -0.1% qtr/qtr (expected 0.0%; last 0.2%) and 0.3% yr/yr (expected 0.6%; last 0.6%); November Retail Sales 1.3% m/m (expected 0.4%; last -0.3%) and 0.1% yr/yr (expected -1.8%; last -2.5%); Core Retail Sales 1.3% m/m (expected 0.0%; last 0.2%) and 0.3% yr/yr (last -2.1%); Q3 Business Investment -3.2% qtr/qtr (expected -4.2%; last 1.4%) and 2.3% yr/yr (expectd 2.8%; last 8.0%); Q3 Current Account GBP -17.2B (expected GBP -13.1B; last GBP -24.0B)

  • France's December Consumer Confidence 89 (last 88); November PPI 2.4% m/m (last -0.1%) and 0.3% yr/yr (last -1.4%)

  • Italy's December Consumer Confidence 106.7 (expected 103.8; last 103.6); December Business Confidence 95.4 (last 96.6)

  • Spain's Q3 GDP 0.3% qtr/qtr (expected 0.3%; last 0.5%) and 1.8% yr/yr (expected 1.8%; last 2.2%)

  • In news:

  • Markets will be closed Monday for Christmas Day and then most European markets will be closed Tuesday as well for Boxing Day.

  • There was a good bit of data released today, including the UK's final Q3 GDP report, which was revised lower to show a small contraction (-0.1%) in activity.

  • Separately, some weakness in consumer discretionary stocks, like Adidas and Puma, was seen following Nike's earnings report and disappointing guidance.

 

U.S. equity futures:

  • S&P 500 Futures +1 @ 4,748

  • DJIA Futures: -113 @ 37,291

  • Nasdaq 100 Futures: -5 @ 16,753

Overseas:

  • Europe: DAX Flat, FTSE +0.1%, CAC Flat

  • Asia: Nikkei Flat, Hang Seng -1.8%, Shanghai Composite -0.1%

Commodities:

  • Crude Oil +0.59 @ 74.48

  • Nat Gas +0.035 @ 2.607

  • Gold +20.85 @ 2072.15

  • Silver +0.127 @ 24.712

  • Copper -0.0055 @ 3.9120

Earnings/Guidance:

  • AAR Corp (

  • Limoneira (

  • Mission Produce (

  • NIKE (

  • Par Pacific (

  • Stifel Financial (

  • Worthington Steel (

News:

  • US will support UN Security Council resolution calling for pause in fighting to allow for more humanitarian aid to enter Gaza, according to the Washington Post

  • President Biden to sign a new executive order that strengthens U.S. sanctions authorities against Russia, with a focus on financial facilitators for Russia's war

  • Texas and Florida gained the most residents in 2023 while New York & California lost the most residents, according to the New York Post

  • U.S. Commerce Department published report earlier, announcing it's launching new survey in 2024 that will help analyze capabilities and challenges in semiconductor supply chain

  • China drafts new regulations for online gaming

  • Aecom Tech (

  • AerCap (

  • Air Lease (

  • Aldeyra Therapeutics (

  • AlloVir (

  • Alpine Immune Sciences (

  • Applied Optoelectronics (

  • Barrick (

  • Becton Dickinson (

  • BeiGene (

  • Beyond, Inc. (

  • Brunswick (

  • Capital Product Partners (

  • Chemours (

  • C.H. Robinson (

  • Credicorp LTD (

  • Cummins (

  • enCore Energy Corp. (

  • Gilead Sciences (

  • Hannon Armstrong Sust. Infr. (

  • HIVE Digital Technologies (

  • i3 Verticals (

  • Incannex Healthcare's (

  • Immuron (

  • Ionis Pharma's (

  • Jazz Pharmaceuticals (

  • Kinsale Capital (

  • Legend Biotech (

  • Marathon Petroleum (

  • Mersana Therapeutics (

  • Meta (

  • Mineralys Therapeutics (

  • MPLX LP (

  • Novavax (

  • OptiNose (

  • Pebblebrook Hotel Trust (

  • Primis Financial (

  • Puyi (

  • Rocket Lab USA (

  • RTX (

  • Sea Limited (

  • Silvercorp Metals (

  • Sony (

  • Stratasys (

  • Takeda (

  • Talos Energy (

  • Tesla (

  • Ultragenyx Pharma (

  • Univ Elec (

  • ZipRecruiter (

M&A:

  • Ansys (

  • Bristol Myers (

  • Dune Acquisition Corporation (

  • EG Acquisition Corp. (

  • Equinor (

  • Karuna Therapeutics (

  • Petrobras (

  • Royal Bank of Canada (

  • Ryan Specialty Group (

  • Theseus Pharmaceuticals (

  • U.S. Steel (

  • Vital Energy (

  • Warner Brothers Discovery (

Syndicate:

  • Diversified Healthcare Trust (

  • Shutterstock (

IPOs:

  • No IPOs expected to price.

Gapping Up/Down

 

Analyst Research (see Upgrades/Downgrades calendar for full list):

  • Upgrades

  • Analog Devices (ADI) upgraded to Buy from Hold at Edward Jones

  • Lumentum (LITE) upgraded to Buy from Hold at Craig Hallum

  • Downgrades:

  • Cingulate (CING) downgraded to Hold from Buy at Laidlaw

  • LianBio (LIAN) downgraded to Hold from Buy at Jefferies; tgt lowered to $4

  • Netflix (NFLX) downgraded to Hold from Buy at DZ Bank; tgt $495

  • NIKE (NKE) downgraded to Market Perform from Outperform at TD Cowen; tgt lowered to $104

  • Paychex (PAYX) downgraded to Market Perform from Outperform at TD Cowen; tgt lowered to $123

  • Others:

  • Altair Engineering (ALTR) initiated with an Overweight at JP Morgan; tgt $86

  • Ameriprise Financial (AMP) resumed with an Equal-Weight at Morgan Stanley; tgt raised to $383

  • Apollo Medical (AMEH) initiated with a Hold at Truist; tgt $41

  • Biohaven (BHVN) initiated with a Buy at H.C. Wainwright; tgt $50

  • CVS Health (CVS) initiated with a Buy at HSBC Securities; tgt $94

  • F&G Annuities & Life (FG) initiated with a Neutral at Piper Sandler; tgt $48

  • GlycoMimetics (GLYC) initiated with an Overweight at CapitalOne; tgt $12

  • Keurig Dr Pepper (KDP) initiated with a Hold at HSBC Securities; tgt $37

  • Kura Oncology (KURA) initiated with a Buy at Mizuho; tgt $26

  • MSCI (MSCI) initiated with a Buy at Edward Jones

  • Syndax Pharmaceuticals (SNDX) initiated with a Buy at Mizuho; tgt $45

  • Walgreens Boots Alliance (WBA) initiated with a Hold at HSBC Securities; tgt $27

Econ Data:

  • 08:30 ET: Personal Income for Nov (Briefing.com Consensus 0.4%; Prior 0.2%)

  • 08:30 ET: Personal Spending for Nov (Briefing.com Consensus 0.2%; Prior 0.2%)

  • 08:30 ET: PCE Prices for Nov (Briefing.com Consensus 0.1%; Prior 0.0%)

  • 08:30 ET: PCE Prices - Core for Nov (Briefing.com Consensus 0.2%; Prior 0.2%)

  • 08:30 ET: Durable Orders for Nov (Briefing.com Consensus 2.5%; Prior -5.4%)

  • 08:30 ET: Durable Orders ex-transportation for Nov (Briefing.com Consensus 0.2%; Prior 0.0%)

  • 10:00 ET: New Home Sales for Nov (Briefing.com Consensus 689K; Prior 679K)

  • 10:00 ET: Univ. of Michigan Consumer Sentiment - Final for Dec (Briefing.com Consensus 69.7; Prior 69.4) 

Earnings:

  • Monday (Dec 18)

  • Afternoon: HEI

  • Tuesday (Dec 19)

  • Morning: ACN FDS FCEL

  • Afternoon:  FDX SCS WOR

  • Wednesday (Dec 20)

  • Morning:  GIS TTC WGO

  • Afternoon: BB MLKN MU

  • Thursday (Dec 21)

  • Morning: APOG CCL KMX CTAS PAYX

  • Afternoon: AIR AVO NKE

 

Asia & Europe detail:

Asia: Nikkei Flat, Hang Seng -1.8%, Shanghai Composite -0.1%

Equity indices in the Asia-Pacific region were little changed on Friday with the exception of Hong Kong's Hang Seng Index (-1.8%). The latter slumped badly under the weight of gaming stocks like Tencent and Netease, which plunged on a Reuters report that Chinese regulators are toughening oversight that includes setting spending limits and curtailing rewards programs for online video gaming. Large banks in China cut deposit interest rates for the third time this year in a bid to spur growth. At the same time, China's Ministry of State said it will increase efforts in 2024 to guard against "subversion, terrorism, secession and espionage." The minutes from the Bank of Japan meeting note that officials don't see certainty yet with meeting inflation target. In related news, Japan's National Core CPI was up 2.5% yr/yr in November, as expected, marking the lowest annual pace since July 2022.

  • In economic data:

  • Japan's November National CPI 2.8% yr/yr (last 3.3%) and National Core CPI 2.5% yr/yr (expected 2.5%; last 2.9%)

  • Australia's November Private Sector Credit 0.4% (last 0.3%); November Housing Credit 0.4% (last 0.4%)

---Equity Markets---

  • Japan's Nikkei: flat (+0.5% for the week)

  • Hong Kong's Hang Seng: -1.8% (-4.2% for the week)

  • China's Shanghai Composite: -0.1% (-0.9% for the week)

  • India's Sensex: +0.3% (-0.5% for the week)

  • South Korea's Kospi: flat (+1.4% for the week)

  • Australia's All Ordinaries: flat (+0.9% for the week)

---FX---

  • USD/JPY: -0.1% to 141.97

  • USD/CNH: -0.1% to 7.1370

  • USD/INR: -0.1% to 83.158

 

Europe: DAX Flat, FTSE +0.1%, CAC Flat

Major European indices are effectively flat in today's trade, reflecting a lack of conviction and an increase in distraction going into the extended holiday weekend. Markets will be closed Monday for Christmas Day and then most European markets will be closed Tuesday as well for Boxing Day. There was a good bit of data released today, including the UK's final Q3 GDP report, which was revised lower to show a small contraction (-0.1%) in activity. Separately, some weakness in consumer discretionary stocks, like Adidas and Puma, was seen following Nike's earnings report and disappointing guidance.

  • In economic data:

  • Germany's November Import Price Index -0.1% m/m (expected -0.4%; last 0.3%) and -9.0% yr/yr (last -13.0%)

  • UK's Q3 GDP -0.1% qtr/qtr (expected 0.0%; last 0.2%) and 0.3% yr/yr (expected 0.6%; last 0.6%); November Retail Sales 1.3% m/m (expected 0.4%; last -0.3%) and 0.1% yr/yr (expected -1.8%; last -2.5%); Core Retail Sales 1.3% m/m (expected 0.0%; last 0.2%) and 0.3% yr/yr (last -2.1%); Q3 Business Investment -3.2% qtr/qtr (expected -4.2%; last 1.4%) and 2.3% yr/yr (expectd 2.8%; last 8.0%); Q3 Current Account GBP -17.2B (expected GBP -13.1B; last GBP -24.0B)

  • France's December Consumer Confidence 89 (last 88); November PPI 2.4% m/m (last -0.1%) and 0.3% yr/yr (last -1.4%)

  • Italy's December Consumer Confidence 106.7 (expected 103.8; last 103.6); December Business Confidence 95.4 (last 96.6)

  • Spain's Q3 GDP 0.3% qtr/qtr (expected 0.3%; last 0.5%) and 1.8% yr/yr (expected 1.8%; last 2.2%)

---Equity Markets---

  • STOXX Europe 600: flat (flat for the week)

  • Germany's DAX: flat (-0.3% for the week)

  • UK's FTSE 100: +0.1% (+1.7% for the week)

  • France's CAC 40: flat (-0.3% for the week)

  • Italy's FTSE MIB: flat (-0.3% for the week)

  • Spain's IBEX 35: flat (+0.1% for the week)

---FX---

  • EUR/USD: +0.2% to 1.1031

  • GBP/USD: +0.3% to 1.2730

  • USD/CHF: -0.3% to 0.8531

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