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23/11/22 Briefing

The S&P 500 futures are up 5 points and are trading 0.1% above fair value. The Nasdaq 100 futures are up 28 points and are trading 0.3% above fair value. The Dow Jones Industrial Average futures are up 21 points and are trading 0.6% above fair value.

There's not a lot of conviction in the equity futures market this morning. Seasonality has things slightly positive with additional support from Deere's (DE) better-than-expected earnings report and some better than expected flash PMI readings out of the eurozone.

China continues to push restrictions aimed at curbing COVID cases, according to Reuters.

The Reserve Bank of New Zealand raised its policy rate by 75 basis points (biggest rate hike on record) to 4.25%.

Also, EU member are meeting today to discuss a potential agreement on a price cap for Russian oil somewhere between $60-70, according to reports.

The weekly MBA Mortgage Application index rose 2.2% week-over-week.

Market participants have a big slew of economic data to digest today, including:

  • 8:30 ET: Weekly Initial Claims (Briefing.com consensus 226,000; prior 222,000), Continuing Claims (prior 1.507 mln), October Durable Orders (Briefing.com consensus 0.4%; prior 0.4%), and Durable Orders ex-transportation (Briefing.com consensus 0.1%; prior -0.5%)

  • 9:45 ET: Preliminary November IHS Markit Manufacturing PMI (prior 50.4) and preliminary November IHS Markit Services PMI (prior 47.8)

  • 10:00 ET: October New Home Sales (Briefing.com consensus 578,000; prior 603,000) and final November University of Michigan Consumer Sentiment survey (Briefing.com consensus 55.5; prior 54.7)

  • 10:30 ET: Weekly crude oil inventories (prior -5.40 mln)

  • 12:00 ET: Weekly natural gas inventories (prior +64 bcf)

In addition to the data, the FOMC minutes from the last meeting will be released today at 2:00 p.m. ET.

In corporate news:

  • Deere (DE 429.75, +13.19, +3.2%): beats by $0.33, beats on revs; provides FY23 net income guidance

  • HP Inc. (HPQ 30.14, +0.76, +2.6%): beats by $0.01, reports slight beat on revs; guides JanQ EPS below consensus; guides FY23 EPS below consensus; to reduce global headcount by 4,000-6,000; increases quarterly dividend by 5%

  • Nordstrom (JWN 20.88, -1.77, -7.8%): beats by $0.05, reports revs in-line; reaffirms FY23 EPS guidance, revs guidance

  • Autodesk (ADSK 188.14, -20.76, -9.9%): reports EPS in-line, revs in-line; guides Q4 EPS in-line, revs below consensus; lowers FY23 billings guidance; authorized additional $5 bln for share repurchases

  • Guess? (GES 18.26, -1.49, -7.5%): misses by $0.11, beats on revs; guides Q4 EPS below two analyst estimate, revs below two analyst estimate

  • Manchester United (MANU 16.0, +1.36, +9.1%): to explore strategic alternatives, including possibility of new investment into the club or sale of the club

  • Credit Suisse (CS 3.9900, -0.10, -2.4%): provides updated Q4 outlook; shareholders approve $4.2 billion capital raise

  • Apple (AAPL 149.88, -0.30, -0.2%): There are protests occurring at the Foxconn manufacturing facility in China, according to Bloomberg

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region ended the midweek session on a mostly higher note while markets in Japan were closed for a holiday. Japan's Nikkei: CLOSED, Hong Kong's Hang Seng: +0.6%, China's Shanghai Composite: +0.3%, India's Sensex: +0.2%, South Korea's Kospi: +0.5%, Australia's ASX All Ordinaries: +0.6%.

  • In economic data:

  • South Korea's December Manufacturing BSI Index 70 (last 75)

  • Australia's flash November Manufacturing PMI 51.5 (last 52.7) and flash Services PMI 47.2 (last 49.3)

  • Singapore's Q3 GDP 4.6% qtr/qtr (expected 1.3%; last 6.3%); 4.1% yr/yr (expected 4.3%; last 4.5%). October CPI 6.7% yr/yr (expected 7.1%; last 7.5%) and Core CPI 5.1% yr/yr (expected 5.3%; last 5.3%)


  • In news:

  • Two large cities in China are planning to conduct mass coronavirus testing over the next four days while Shenzhen will restrict access to public venues.

  • The Reserve Bank of New Zealand raised its official cash rate by 75 bps to 4.25%, as expected.

  • The central bank now expects a terminal official cash rate of 5.50% in 2023.



  • Major European indices trade near their flat lines. STOXX Europe 600: +0.1%, Germany's DAX: -0.2%, U.K.'s FTSE 100: +0.4%, France's CAC 40: UNCH, Italy's FTSE MIB: -0.1%, Spain's IBEX 35: -0.1%.

  • In economic data:

  • Eurozone's flash November Manufacturing PMI 47.3 (expected 46.0; last 46.4) and flash Services PMI 48.6 (expected 48.0; last 48.6)

  • Germany's flash November Manufacturing PMI 46.7 (expected 45.0; last 45.1) and flash Services PMI 46.4 (expected 46.2; last 46.5)

  • U.K.'s flash November Manufacturing PMI 46.2 (expected 45.7; last 46.2) and flash Services PMI 48.8 (expected 48.0; last 48.8)

  • France's flash November Manufacturing PMI 49.1 (expected 47.0; last 47.2) and flash Services PMI 49.4 (expected 50.6; last 51.7)


  • In news:

  • European Central Bank Vice President de Guindos said that the central bank will keep hiking rates, adding that a recession in Q4 and Q1 would not be a surprise.

  • The British Supreme Court ruled that Scotland can't host a second independence referendum without receiving approval from the British parliament.

  • Credit Suisse warned that it expects to report a pre-tax loss of CHF1.50 bln for Q4.



U.S. equity futures:

  • S&P 500 Futures: +7 @ 4,010

  • DJIA Futures: +31 @ 34,129

  • Nasdaq 100 Futures: +33 @ 11,757

Overseas:

  • Europe: DAX -0.2%, FTSE +0.4%, CAC UNCH

  • Asia: Nikkei CLOSED, Hang Seng +0.6%, Shanghai Composite +0.3%

Commodities:

  • Crude Oil -2.20 @ 78.75

  • Nat Gas +0.450 @ 7.229

  • Gold -2.90 @ 1737.00

  • Silver +0.128 @ 21.177

  • Copper +0.002 @ 3.6165

Earnings/Guidance:

  • Autodesk ( ADSK 1.16% ) reports EPS in-line, revs in-line; guides Q4 EPS in-line, revs below consensus; lowers FY23 billings guidance; authorized additional $5 bln for share repurchases

  • Credit Suisse ( CS 1.45% ) provides updated Q4 outlook

  • Deere ( DE 1.18% ) beats by $0.33, beats on revs; provides FY23 net income guidance

  • Guess? ( GES 1.49% ) misses by $0.11, beats on revs; guides Q4 EPS below two analyst estimate, revs below two analyst estimate

  • HP Inc. ( HPQ 0.75% ) beats by $0.01, reports slight beat on revs; guides JanQ EPS below consensus; guides FY23 EPS below consensus; to reduce global headcount by 4,000-6,000; increases quarterly dividend by 5%

  • Kingsoft Cloud ( KC 4.88% ) reports Q3 (Sep) results, misses on revs; guides Q4 revs below two analyst estimate

  • Nordstrom ( JWN 6.49% ) beats by $0.05, reports revs in-line; reaffirms FY23 EPS guidance, revs guidance

  • VMware ( VMW 1.39% ) misses by $0.13, misses on revs, note: co previously announced it is being acquired by AVGO

News:

  • China imposing more coronavirus restrictions, according to Reuters

  • Western nations could agree on $60/barrel Russian oil price cap today, according to the Wall Street Journal

  • Reserve Bank of New Zealand increased the official cash rate from 3.5% to 4.25%

  • New York passed law to limit cryptocurrency mining, according to the Wall Street Journal

  • UK CMA has launched a market investigation into cloud gaming and mobile browsers after receiving widespread support for its proposals first published in June

  • AbbVie ( ABBV 1.71% ) receives EC approval for SKYRIZI

  • Aclaris Therapeutics ( ACRS 1.64% ) announces several leadership changes, including the transition of its CEO to role of Chair of the Board

  • Amedisys ( AMED 1.06% ) names CFO Scott Ginn as its acting COO, effective immediately

  • Amneal ( AMRX 4.42% ) Launches Second Biosimilar with RELEUKO (filgrastim-ayow) in the United States

  • Apple ( AAPL 1.47% ): There are violent protests occurring at a China Apple plant (HNHPF), according to Bloomberg

  • Azenta ( AZTA 0.84% ) announces $500 mln accelerated share repurchase program

  • Berry Global ( BERY 2.92% ) announces appointment of three new directors and forms capital allocation committee

  • Blueprint Medicines ( BPMC 0.86% ) Submits Supplemental New Drug Application to FDA for AYVAKIT (avapritinib) for the Treatment of Indolent Systemic Mastocytosis

  • Disney's ( DIS 1.40% ) "Avatar: The Way Of Water" will be released in China on December 16, according to the Wall Street Journal

  • EchoStar ( SATS 0.34% ) announces amended agreement with Maxar Technologies (MAXR) for production of the EchoStar XXIV satellite, also known as JUPITER 3

  • Johnson & Johnson ( JNJ 0.48% ): A federal judge cancels an RSB Spine LLC patent for implant devices used in spinal fusion surgeries, according to Bloomberg Law

  • Manchester United ( MANU 14.66% ) to explore strategic alternatives, including possibility of new investment into the club or sale of the club

  • MDU Resources ( MDU 1.60% ) announced 5-year capital investment plan

  • New Found Gold Corp ( NFGC 5.06% ) Intercepts 18.6 g/t Au Over 15.95m Extending Keats West High-grade Discovery by 200m Up-dip & Intersects Broad Domains of Gold Mineralization

  • QuidelOrtho ( QDEL 0.11% ), Access Bio, iHealth Labs, and OraSure Technologies share a maximum $803 mln Defense Logistics Agency contract

  • Raymond James ( RJF 0.38% ) reports October operating metrics

  • Science Applications ( SAIC 0.42% ) received approximately $950 mln in space and intelligence contract awards during 3Q23, reflecting work in intelligence, space systems, JADC2 efforts, and model-based systems engineering

  • Sempra Energy ( SRE 0.98% ) subsidiary and ConocoPhillips (COP) executed a 20-year Sale and Purchase Agreement for 5 mln tonnes per annum (Mtpa) of LNG from Phase 1 of the proposed Port Arthur LNG project

  • Sterling Infrastructure ( STRL 0.75% ) awarded $45 mln Phase 4 Terminal Redevelopment Program at the Salt Lake City International Airport

  • uniQure ( QURE 7.08% ) announces FDA approval of first gene therapy for adults with hemophilia B

  • Walmart ( WMT 0.36% ): Multiple people were killed after shooting at Wal Mart store in Virginia

  • Xeris Biopharma ( XERS 2.31% ) announces research collaboration and option agreement with Horizon Therapeutics (HZNP) XeriJect formulation of teprotumumab

M&A:

  • Metals Acquisition Corp ( MTAL 0.10% ) and Glencore agree to amend terms of the CSA Mine Acquisition

  • News Corp ( NWSA 2.00% ) and Fox (FOXA) merger is opposed by key shareholder, according to

Syndicate:

  • Gritstone bio ( GRTS 7.02% ) files for 6,637,165 common stock offering by selling stockholders; also files for 13,274,923 shares of common stock issuable upon exercise of pre-funded warrant

IPOs:

  • Expect to Price:

  • No IPOs expected.


Gapping Up/Down

  • Gapping up:

  • GRTS +11.9%, MANU +10.8%, DE +3.2%, HPQ +1.4%, OPNT +1.3%, RJF +0.9%, AMRX +0.8%, SON +0.7%, GS +0.5%


  • Gapping down:

  • JWN -9.7%, ADSK -8.6%, KC -4.8%, CS -4.4%, GES -4.4%, MAXR -2%, VMW -1.2%



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

  • Upgrades

  • Alamos (AGI) upgraded to Sector Outperform from Sector Perform at Scotiabank; tgt raised to $11


  • Downgrades:

  • Autodesk (ADSK) downgraded to Neutral from Buy at Mizuho; tgt lowered to $210


  • Others:

  • Cigna (CI) assumed with an Overweight at Morgan Stanley; tgt raised to $347


Upcoming Events:

  • Econ Data:

  • 07:00 ET: MBA Mortgage Applications Index for Nov 19 (Briefing.com Consensus NA; Prior 2.7%)

  • 08:30 ET: Initial Claims for Nov. 19 (Briefing.com Consensus 226K; Prior 222K)

  • 08:30 ET: Continuing Claims for Nov. 12 (Briefing.com Consensus NA; Prior 1507K)

  • 08:30 ET: Durable Orders for Oct (Briefing.com Consensus 0.4%; Prior 0.4%)

  • 08:30 ET: Durable Orders ex-transportation for Oct (Briefing.com Consensus 0.1%; Prior -0.5%)

  • 09:45 ET: IHS Markit Manufacturing PMI - Prelim for Nov (Briefing.com Consensus NA; Prior 50.4)

  • 09:45 ET: IHS Markit Services PMI - Prelim for Nov (Briefing.com Consensus NA; Prior 47.8)

  • 10:00 ET: New Home Sales for Oct (Briefing.com Consensus 578K; Prior 603K)

  • 10:00 ET: Univ. of Michigan Consumer Sentiment - Final for Nov (Briefing.com Consensus 55.5; Prior 54.7)

  • 10:30 ET: EIA Crude Oil Inventories for Nov 19 (Briefing.com Consensus NA; Prior -5.4M)

  • 12:00 ET: EIA Natural Gas Inventories for Nov 19 (Briefing.com Consensus NA; Prior +64 bcf)

  • 14:00 ET: FOMC Minutes for Oct.


  • Earnings:

  • Monday (Nov 21)

  • Morning: SJM J

  • Afternoon: A DELL GDS MMS URBN ZM


  • Tuesday (Nov 22)

  • Morning: ANF AEO AMWD ADI BIDU BBY BURL CAL CSIQ ROAD DKS DLTR DY JACK MDT SGHC VIPS WMG

  • Afternoon: ADSK GES HPQ JWN


  • Wednesday (Nov 23)

  • Morning: DE KC



Asia & Europe detail:

Asia: Nikkei CLOSED, Hang Seng +0.6%, Shanghai Composite +0.3%

Equity indices in the Asia-Pacific region ended the midweek session on a mostly higher note while markets in Japan were closed for a holiday. Two large cities in China are planning to conduct mass coronavirus testing over the next four days while Shenzhen will restrict access to public venues. The Reserve Bank of New Zealand raised its official cash rate by 75 bps to 4.25%, as expected. The central bank now expects a terminal official cash rate of 5.50% in 2023.

  • In economic data:

  • South Korea's December Manufacturing BSI Index 70 (last 75)

  • Australia's flash November Manufacturing PMI 51.5 (last 52.7) and flash Services PMI 47.2 (last 49.3)

  • Singapore's Q3 GDP 4.6% qtr/qtr (expected 1.3%; last 6.3%); 4.1% yr/yr (expected 4.3%; last 4.5%). October CPI 6.7% yr/yr (expected 7.1%; last 7.5%) and Core CPI 5.1% yr/yr (expected 5.3%; last 5.3%)


---Equity Markets---

  • Japan's Nikkei: CLOSED

  • Hong Kong's Hang Seng: +0.6%

  • China's Shanghai Composite: +0.3%

  • India's Sensex: +0.2%

  • South Korea's Kospi: +0.5%

  • Australia's ASX All Ordinaries: +0.6%

---FX---

  • USD/JPY: +0.2% to 141.46

  • USD/CNH: +0.6% to 7.1736

  • USD/INR: +0.2% to 81.85

Europe: DAX -0.2%, FTSE +0.4%, CAC UNCH

Major European indices trade near their flat lines. European Central Bank Vice President de Guindos said that the central bank will keep hiking rates, adding that a recession in Q4 and Q1 would not be a surprise. The British Supreme Court ruled that Scotland can't host a second independence referendum without receiving approval from the British parliament. Credit Suisse warned that it expects to report a pre-tax loss of CHF1.50 bln for Q4.

  • In economic data:

  • Eurozone's flash November Manufacturing PMI 47.3 (expected 46.0; last 46.4) and flash Services PMI 48.6 (expected 48.0; last 48.6)

  • Germany's flash November Manufacturing PMI 46.7 (expected 45.0; last 45.1) and flash Services PMI 46.4 (expected 46.2; last 46.5)

  • U.K.'s flash November Manufacturing PMI 46.2 (expected 45.7; last 46.2) and flash Services PMI 48.8 (expected 48.0; last 48.8)

  • France's flash November Manufacturing PMI 49.1 (expected 47.0; last 47.2) and flash Services PMI 49.4 (expected 50.6; last 51.7)


---Equity Markets---

  • STOXX Europe 600: +0.1%

  • Germany's DAX: -0.2%

  • U.K.'s FTSE 100: +0.4%

  • France's CAC 40: UNCH

  • Italy's FTSE MIB: -0.1%

  • Spain's IBEX 35: -0.1%

---FX---

  • EUR/USD: +0.2% to 1.0320

  • GBP/USD: +0.4% to 1.1929

  • USD/CHF: -0.1% to 0.9507


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