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23/01/23 Briefing

Updated: Jan 24, 2023


The S&P 500 futures are up 3 points and are trading slightly above fair value. The Nasdaq 100 futures are up 21 points and are trading 0.2% above fair value. The Dow Jones Industrial Average futures are up 31 points and are trading 0.1% above fair value.

There's not a lot of conviction in the equity futures market as investors await earnings reports from influential names like Microsoft (MSFT) and Tesla (TSLA) later this week, along with key economic data that includes the advanced Q4 GDP reading and the Personal Income and Spending report for December.

An article from Nick Timiraos in The Wall Street Journalover the weekend indicated that the Fed is likely to raise rates by 25 basis points at the next FOMC meeting and could begin debating when to pause rate increases.

According to Reuters, the latest survey of businesses by the National Association of Business Economics (NABE) indicated a 56% possibility that the economy was in, or will be in, a recession this year versus a nearly two-thirds possibility at the time of the last survey. 

In corporate news:

  • Salesforce (CRM 158.73, +7.48, +5.0%): Elliott Management aiming to take stake in Salesforce (CRM), according to WSJ

  • Baker Hughes (BKR 31.59, +0.52, +1.7%): misses by $0.02, misses on revs 

  • Synchrony Financial (SYF 36.35, +0.94, +2.7%): beats by $0.13

  • Wayfair (W 51.60, +4.81, +10.3%): upgraded to Overweight from Underweight at JPMorgan

  • PayPal (PYPL 77.89, -1.20, -1.5%): Banks are planning new payment wallet program to compete with PYPL, according to WSJ

  • Spotify (SPOT 102.75, +4.84, +4.9%): expects to cut about 6% of the employee base

  • Shopify Inc. (SHOP 42.35, +1.87, +4.6%): upgraded to Buy from Hold at Deutsche Bank

  • Abbott (ABT 109.41, -3.41, -3.0%): being investigated by federal authorities over baby formula issues, according to WSJ

  • Pliant Therapeutics (PLRX 39.85, +17.34, +77.0%): reports positive data from the INTEGRIS-IPF Phase 2a trial demonstrating Bexotegrast 320 mg was well tolerated and achieved statistically significant FVC increase

  • Evoqua Water (AQUA 47.89, +6.86, +16.7%):  to be acquired by Xylem (XYL) in $7.5 bln all-stock transaction

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region began the week on a higher note, though markets in China, Hong Kong, South Korea, and Singapore were closed for Lunar New Year celebrations. Japan's Nikkei: +1.3%, Hong Kong's Hang Seng: CLOSED, China's Shanghai Composite: CLOSED, India's Sensex: +0.5%, South Korea's Kospi: CLOSED, Australia's ASX All Ordinaries: +0.1%.

    • There was no notable data

    • In news:

      • Japan's Prime Minister Kishida said that it is too soon to say whether the government's accord with the Bank of Japan will be changed, adding that the economic situation will be taken into consideration when choosing the next BoJ governor.

      • In New Zealand, Chris Hipkins will replace outgoing Prime Minister Ardern.

  • Major European indices trade on a mostly higher note while Italy's MIB (-0.5%) underperforms. STOXX Europe 600: +0.2%, Germany's DAX: +0.1%, U.K.'s FTSE 100: +0.3%, France's CAC 40: +0.1%, Italy's FTSE MIB: -0.5%, Spain's IBEX 35: +0.2%.

    • There was no notable data

    • In news:

      • European Central Bank policymakers Rehn and Knot spoke in favor of 50 bps rate hikes at the next few policy meetings.

      • The European Commission is looking to complete the tenth package of sanctions against Russia by February 24.

      • General elections in Turkey will be moved up to May 14from June 18.

      • Fitch affirmed Ireland's AA- rating with a Stable outlook.

 

U.S. equity futures:

  • S&P 500 Futures: -2 @ 3,971

  • DJIA Futures: +15 @ 33,390

  • Nasdaq 100 Futures: +5 @ 11,624

Overseas:

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

  • Asia: Nikkei +1.3%, Hang Seng CLOSED, Shanghai Composite CLOSED

Commodities:

  • Crude Oil +0.77 @ 82.41

  • Nat Gas +0.099 @ 3.135

  • Gold -0.05 @ 1928.15

  • Silver -0.087 @ 23.848

  • Copper +0.0225 @ 4.274

 

Earnings/Guidance:

  • Baker Hughes (BKR) misses by $0.02, misses on revs; sees Q1 and FY23 revs in line

  • Noble Corporation (NE) provides Q4 operational and financial update; sees Adjusted EBITDA below guidance

  • Synchrony Financial (SYF) beats by $0.13

News:

  • Fed expected to slow interest rate increases in February, according to the Wall Street Journal

  • FBI conducted a search of President Biden's Delaware home and found more classified documents, according to CNN

  • The Biden administration has decided not to negotiate with House Speaker Kevin McCarthy on the debt ceiling, but President Biden will meet with him, according to Bloomberg

  • White House Chief of Staff Ron Klain to leave his position and will be replaced by Jeff Zients, according to CNN

  • ECB member Klaas Knot expects central bank will raise rates by 50 basis points in February and March, according to Reuters

  • Banks are preparing for large layoffs, according to Finacial Times

  • Multiple people were killed at California dance studio, LA Times

  • Agenus (AGEN) Presents Clinical Data Demonstrating Durable Responses of Botensilimab/Balstilimab Combination in Metastatic Microsatellite Stable Colorectal Cancer at ASCO GI

  • Abbott (ABT) being investigated by federal authorities over baby formula issues, according to the Wall Street Journal

  • Airbus (EADSY) aiming to spin off Zephyr, according toFinancial Times

  • Bank of Hawaii (BOH) beats by $0.08

  • BioCryst Pharma (BCRX) enters collaboration with Swixx BioPharma AG to commercialize ORLADEYO (berotralstat) in Central and Eastern Europe

  • Bitcoin reached highest level since August over the weekend

  • Carvana (CVNA) and Ally amended Master Purchase and Sale Agreement to clarify the Commitment Period to purchase up to $4.0 bln of automotive finance receivables

  • CONSOL Energy (CEIX) appoints Mitesh Thakkar as President and CFO

  • Digital World Acquisition Corp (DWAC): Former President Trump might end contract with Truth Social, according to Rolling Stone

  • EyePoint Pharmaceuticals (EYPT) enters lease agreement for manufacturing facility

  • Fifth Third (FITB) entered into a new ~$200 mln share repurchase agreement

  • Goldman Sachs (GS) to lower investments in asset management, according to Reuters

  • GoldMining Inc. (GLDG) Triples gold equivalent inferred resource estimate to 1.45 mln ounces at La mina project with La Garrucha discovery

  • Honda Motor (HMC) signed a memorandum of understanding with GS Yuasa International for collaboration in a high-capacity and high-output Lithium-ion Battery

  • InterDigital (IDCC) commenced a modified "Dutch auction" tender offer to purchase for cash up to $200 million of its common stock at $60.00-69.00

  • Mallinckrodt (MNK) Presents New TERLIVAZ (terlipressin) for Injection Data on Hepatorenal Syndrome (HRS) Reversal at the Society of Critical Care Medicine (SCCM) 2023 Critical Care Congress

  • Marriott (MAR) reports 2022 deal signings accelerated again

  • Morphic (MORF) disclosed that Janssen has elected to terminate the Research Collaboration

  • Nokia (NOK) signs 5G patent license agreement with Samsung (SSNLF)

  • PayPal (PYPL): Banks are planning new payment wallet program to compete with PYPL, according to the Wall Street Journal

  • Pitney Bowes (PBI): Hestia Capital Nominates Seven Highly Qualified, Independent Candidates for Election to Pitney Bowes' Long-Tenured, Underperforming Board of Directors

  • Pliant Therapeutics (PLRX) reports positive data from the INTEGRIS-IPF Phase 2a trial demonstrating Bexotegrast 320 mg was well tolerated and achieved statistically significant FVC increase

  • REGENXBIO (RGNX) Announces Phase I/II Trial of RGX-202, a Novel Gene Therapy Candidate for Duchenne Muscular Dystrophy, is Active and Recruiting Patients

  • Ritchie Bros. (RBA) announces $500 million strategic investment from Starboard Value

  • Salesforce (CRM): Elliott Management aiming to take stake in Salesforce, according to the Wall Street Journal

  • Sigma LIthium (SGML) announces initiation of commissioning of Dense Medium Separation processing plant and go forward leadership as it evolves to lithium producer

  • Silvergate Capital (SI): exposure to Genesis was limited with deposit relationship under $2.5 mln

  • Spotify (SPOT) announced a reduction in the Company's employee base by about 6%

  • Tata Motors (TTM) confirms its delisting from the NYSE and termination of its ADS program will become effective close of trading on the NYSE on January 23, 2023

  • U.S. Silica (SLCA) COO Michael Winkler to retire, effective mid to late 2023

  • ViewRay (VRAY) reached an agreement with Hudson Executive Capital LP ") to appoint Sai Nanduri, Senior Investment Analyst and representative of HEC, as an observer of the ViewRay Board of Directors

  • Vornado Realty Trust (VNO) will bid for NYC casino license, according to the New York Post

M&A:

  • American Tower (AMT) and Brookfield (BAM) mulling bid for Cellnex Telecom, according to Okdiario

  • CinCor Pharma (CINC) AstraZeneca (AZN) begins tender offer to acquire CinCor Pharma

  • Evoqua Water (AQUA) to be acquired by Xylem in $7.5 bln all-stock transaction

  • HUTCHMED (HCM): Takeda (TAK) to acquire exclusive worldwide (ex-China) license of HUTCHMED's Fruquintinib

  • Natl Instruments (NATI): Emerson (EMR) provides an update on all-cash proposal to acquire National Instruments for $53 per share

  • Ritchie Bros. (RBA) and IAA (IAA) announce amended merger agreement that enhances value for RBA shareholders while increasing cash consideration for IAA shareholders

  • Western Digital (WDC) merger discussions with Kioxia Holdings are progressing, according to Bloomberg

Syndicate:

  • Altus Power (AMPS) files for $600 mln mixed securities shelf offering

  • Alvotech (ALVO) announced the completion of a private placement of ~$137 mln of its ordinary shares at a purchase price of $11.57 per Share

  • LifeWallet (LIFW) files for up tp 325,000,000 share common stock offering by selling shareholder

  • Orchid Island Capital (ORC) files for $1.0 bln mixed securities shelf offering

  • Xponential Fitness (XPOF) files for 20,065,479 share common stock offering by selling shareholders

IPOs:

  • Expected to Price:

    • TXO Energy Partners (NYSE: TXO): The developer and acquirer of conventional oil, natural gas, and natural gas liquid reserves in North America is expected to price its 5.0 M share IPO between $19-$21.

Gapping Up/Down

  • Gapping up:

    • PLRX +80.2%, HCM +9.9%, CLLS +9.2%, TV +4.3%, SGML +3.4%, SYF +3.2%, SI +3.1%, CVNA +2.5%, TROW +2.4%, SMR +2.1%, ASML +2%, HMC +1%, DNOW +0.9%, NOK +0.7%

  • Gapping down:

    • XPOF -2.9%, ABT -2.6%, VRAY -2.1%, MORF -1.8%, MNK -0.6%, NE -0.5%

 


Analyst Research (see Upgrades/Downgradescalendarfor full list):

  • Upgrades

    • Advanced Micro (AMD) upgraded to Overweight from Equal Weight at Barclays; tgt raised to $85

    • Qualcomm (QCOM) upgraded to Overweight from Equal Weight at Barclays; tgt raised to $150

    • Seagate Tech (STX) upgraded to Overweight from Equal Weight at Barclays; tgt raised to $70

    • Shopify (SHOP) upgraded to Buy from Hold at Deutsche Bank; tgt raised to $50

    • Skyworks (SWKS) upgraded to Overweight from Equal Weight at Barclays; tgt raised to $125

    • Sotera Health (SHC) upgraded to Neutral from Underweight at JP Morgan; tgt raised to $18

  • Downgrades:

    • Applied Materials (AMAT) downgraded to Underweight from Equal Weight at Barclays; tgt raised to $90

    • Ingredion (INGR) downgraded to Equal Weight from Overweight at Barclays; tgt raised to $110

    • KLA Corporation (KLAC) downgraded to Underweight from Equal Weight at Barclays; tgt raised to $325

    • Range Resources (RRC) downgraded to Hold from Buy at The Benchmark Company

    • SentinelOne (S) downgraded to Hold from Buy at Deutsche Bank; tgt lowered to $15

    • Tapestry (TPR) downgraded to Equal Weight from Overweight at Barclays; tgt $43

    • Veeco Instruments (VECO) downgraded to Equal Weight from Overweight at Barclays; tgt raised to $20

    • Warner Music Group (WMG) downgraded to Equal Weight from Overweight at Barclays; tgt $35

    • Workday (WDAY) downgraded to Hold from Buy at Deutsche Bank; tgt lowered to $195

  • Others:

    • Rain Oncology (RAIN) initiated with a Buy at Mizuho; tgt $18

Upcoming Events:

  • Econ Data:

    • 10:00 ET: Leading Indicators for Dec (Briefing.comConsensus -0.7%; Prior -1.0%)

  • Earnings:

    • Monday (Jan 23)

      • Morning:  BKR BOH SYF

      • Afternoon: BRO CR FNB HOPE IBTX LOGI UMPQ ZION

    • Tuesday (Jan 24)

      • Morning: MMM AUB COLB CBU DHI DHR GATX GE HAL IVZ JNJ LMT ONB PCAR RTX SFNC TRV UNP VZ

      • Afternoon:  AGYS CNI COF FFIV FCF ISRG MRTN MSFT NBHC NAVI NXGN RNST SLGN LRN TXN TRMK UMBF VBTX WSBC WAL

    • Wednesday (Jan 25)

      • Morning:  ABT APH ASML T ADP BA BOKF ELV EXTR FCX GD GPI HES KMB LKFN MKTX MNRO NDAQ NEE NEP NSC BPOP PGR PB RES TEL TDY TXT USB

      • Afternoon:  AMP AZPN AXTA AXS BOOT CACI CALX CATY CLS CNS CCI CSX CVBF ETD FLEX HXL IBM KNX LRCX LVS LC LEVI LBRT PKG CASH PLXS XM RJF RLI STX SEIC NOW SLG STLD TER TSLA URI WOLF

    • Thursday (Jan 26)

      • Morning: ALK AAL AIT ADM BHLB BX BFH CRS CNX CMCSA CFR DOW EXP EWBC JBLU HZO MMC MA MKC MUR NTCT NOK NOC NUE OSIS PPBI ROK SASR SAP SHW LUV STM TROW TSCO VLO VLY VIRT WBS XEL XRX

      • Afternoon:  ABCB AJG ASB AX EMN FICO FHI FFBC FIBK GBCI HTH INTC KLAC LHX OLN PACW RMD RHI SSB V WRB WY WSFS

    • Friday (Jan 27) 

      • Morning:  AXP ALV BMI BAH CHTR CVX CL FBP FHB GNTX HCA PFS ROP SBSI STEL

Asia & Europe detail:

Asia: Nikkei +1.3%, Hang Seng CLOSED, Shanghai Composite CLOSED

Equity indices in the Asia-Pacific region began the week on a higher note, though markets in China, Hong Kong, South Korea, and Singapore were closed for Lunar New Year celebrations. Japan's Prime Minister Kishida said that it is too soon to say whether the government's accord with the Bank of Japan will be changed, adding that the economic situation will be taken into consideration when choosing the next BoJ governor. In New Zealand, Chris Hipkins will replace outgoing Prime Minister Ardern.

  • There was no notable data

---Equity Markets---

  • Japan's Nikkei: +1.3%

  • Hong Kong's Hang Seng: CLOSED

  • China's Shanghai Composite: CLOSED

  • India's Sensex: +0.5%

  • South Korea's Kospi: CLOSED

  • Australia's ASX All Ordinaries: +0.1%

---FX---

  • USD/JPY: +0.6% to 130.27

  • USD/CNH: -0.1% to 6.7782

  • USD/INR: +0.5% to 81.38

 

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

Major European indices trade on a mostly higher note while Italy's MIB (-0.5%) underperforms. European Central Bank policymakers Rehn and Knot spoke in favor of 50 bps rate hikes at the next few policy meetings. The European Commission is looking to complete the tenth package of sanctions against Russia by February 24.General elections in Turkey will be moved up to May 14from June 18.Fitch affirmed Ireland's AA- rating with a Stable outlook.

  • There was no notable data

---Equity Markets---

  • STOXX Europe 600: +0.2%

  • Germany's DAX: +0.1%

  • U.K.'s FTSE 100: +0.3%

  • France's CAC 40: +0.1%

  • Italy's FTSE MIB: -0.5%

  • Spain's IBEX 35: +0.2%

---FX---

  • EUR/USD: +0.2% to 1.0874

  • GBP/USD: -0.3% to 1.2357

  • USD/CHF: +0.2% to 0.9218

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