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24/01/22 Briefing

The S&P 500 futures trade 17 points, or 0.4%, below fair value in a continuation of last week's sell-off in which the major indices fell between 4.6% (Dow Jones Industrial Average) and 8.1% (Russell 2000).

The market is bracing for an eventful week, featuring Microsoft's (MSFT 295.34, -0.69, -0.2%) earnings report on Tuesday; the FOMC policy decision on Wednesday; the advance estimate for Q4 GDP and Apple's (APPL 160.16, -2.25, -1.4%) earnings report on Thursday; and the PCE price index on Friday.

These events could either ease or exacerbate the market's concerns about corporate profits, the Fed's tightening plans, and inflation.

In the meantime, President Biden is considering sending troops, warships, and aircraft to Eastern Europe amid fears that Russia will invade Ukraine. House Speaker Pelosi acknowledged that discussions for a smaller Build Back Better Act will be put on the "back burner" amid other priorities.

The Treasury market is trading mixed, causing some minor curve-flattening action. The 2-yr yield is up two basis points to 1.01%, and the 10-yr yield is down one basis point to 1.74%. The U.S. Dollar Index is up 0.4% to 95.97. WTI crude futures are down 0.1% to $85.03/bbl.

Separately, IHS Markit will release its preliminary Manufacturing and Services PMIs for January at 9:45 a.m. ET. Investors will receive no other data today.

In U.S. Corporate news:

  • Kohl's (KSS 59.10, +12.26): +26.2% after The Wall Street Journal reported that a Starboard Value consortium is aiming to bid $64/share for the company.

  • Halliburton (HAL 27.73, +0.19): +0.7% after beating top and bottom-line estimates.

  • Snap (SNAP 30.51, -1.61): -5.0% after the stock was downgraded to Neutral from Outperform at Wedbush.

  • Peloton (PTON 26.48, -0.58): -2.5% amid news that Blackwells Capital sent a letter to the company's board of directors, calling for new leadership and proposing the company sell itself to a strategic acquirer.

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region began the week on a mostly lower note. Japan's Nikkei: +0.2% Hong Kong's Hang Seng: -1.2% China's Shanghai Composite: UNCH India's Sensex: -2.6% South Korea's Kospi: -1.5% Australia's ASX All Ordinaries: -0.7%.

  • In economic data:

  • Japan's January flash Manufacturing PMI 54.6 (expected 55.0; last 54.3) and flash Services PMI 46.6 (last 52.1)

  • Singapore's December CPI 4.0% yr/yr (expected 3.8%; last 3.8%)

  • Australia's January flash Manufacturing PMI 55.3 (last 57.7) and flash Services PMI 45.0 (last 55.1)


  • In news:

  • Japan's Manufacturing PMI reached its highest level since the start of 2018 in the flash reading for January while Australia's flash Manufacturing PMI fell to its lowest level since August.

  • Osaka and 15 other prefectures in Japan are reportedly seeking new coronavirus measures.

  • The U.S. Trade Representative is scheduled to meet with South Korea's trade minister on Thursday.



  • Major European indices trade in the red. STOXX Europe 600: -2.1% Germany's DAX: -1.9% U.K.'s FTSE 100: -1.2% France's CAC 40: -1.9% Italy's FTSE MIB: -2.4% Spain's IBEX 35: -1.9%.

  • In economic data:

  • Eurozone's January flash Manufacturing PMI 59.0 (expected 57.5; last 58.0) and flash Services PMI 51.2 (expected 52.2; last 53.1)

  • Germany's January flash Manufacturing PMI 60.5 (expected 57.0; last 57.4) and flash Services PMI 52.2 (expected 48.8; last 48.7)

  • U.K.'s January flash Manufacturing PMI 56.9 (expected 57.7; last 57.9) and flash Services PMI 53.3 (expected 53.9; last 53.6)

  • France's January flash Manufacturing PMI 55.5, as expected (last 55.6) and flash Services PMI 53.1 (expected 55.3; last 57.0)


  • In news:

  • European Central Bank policymaker Rehn said that drivers of inflation will subside over the course of the year, returning toward the 2.0% target over the next two years.

  • British Deputy Prime Minister Raab said that Russia would face severe economic consequences if it tries to force out Ukraine's current government.

  • Former Italian Prime Minister Berlusconi removed his name from consideration for president.



U.S. equity futures:

  • S&P 500 Futures: -24 @ 4,374

  • DJIA Futures: -127 @ 34,138

  • Nasdaq 100 Futures: -127 @ 14,312

Overseas:

  • Europe: DAX -1.9%, FTSE -1.2%, CAC -1.9%

  • Asia: Nikkei +0.2%, Hang Seng -1.2%, Shanghai Composite UNCH

Commodities:

  • Crude Oil -0.22 @ 84.92

  • Nat Gas +0.019 @ 3.801

  • Gold +6.15 @ 1837.95

  • Silver -0.255 @ 24.065

  • Copper -0.0850 @ 4.4305

U.S. Summary:

  • Earnings/Guidance (Full Earnings Calendar):

  • Arbutus (ABUS) announces 2022 corporate objectives and provides financial update

  • Bank of Hawaii (BOH) beats by $0.20

  • Community Bank (CBU) misses by $0.01

  • Daqo New Energy (DQ) provided estimate of its subsidiary net profit; proposes offering of RMB11 Billion in ordinary shares for its 100,000 MT polysilicon expansion project in China

  • Halliburton (HAL) beats by $0.58, beats on revs

  • Hayward Holdings (HAYW) sees Q4 revs below consensus

  • MaxCyte (MXCT) sees Q4 revs above consensus

  • McAfee (MCFE) sees Q4 revs above consensus

  • Missfresh Ltd. (MF): In 2021, sales of 3R products on MF's platform increased by more than 300% compared to 2020

  • Philips (PHG) misses by 0.05, reports revs in-line

  • Talos Energy (TALO) Provides Operational and Financial Update for the Fourth Quarter and Full Year 2021


  • General News:

  • President Biden considering sending troops, warships, and aircraft to Eastern Europe amid fears that Russia will invade Ukraine. UK believes Russia wants to install a pro Russian leader in Ukraine, according to the New York Times

  • State Department ordered the departure of family members of U.S. Government employees at the U.S. Embassy in Kyiv, Ukraine

  • House Speaker Nancy Pelosi (D-CA) acknowledged that smaller Build Back Better Act discussions will be put on the "back burner" while they discuss other topics like China competitiveness and government funding, according to CNN

  • Goldman Sachs believes inflation could result in the Fed hiking rates by over four times this year, according to CNBC

  • NY residents gambled over $600 mln during sports betting launch, according to the New York Post

  • Bitcoin continues its decline on Saturday

  • China flies about 39 warplanes near Taiwan amid tensions, according to Sky News, according to Sky News

  • AbbVie (ABBV): FDA approves SKYRIZI for the treatment of adults with active psoriatic arthritis

  • Apple (AAPL) will soon introduce new iPhone SE and iPad, according to Bloomberg

  • Archer Aviation (ACHR) appoints Mark Mesler as CFO

  • BeiGene (BGNE) Announces Positive Findings from Phase 3 Trial of Tislelizumab in Combination with Chemotherapy in First-Line Gastric or Gastroesophageal Junction Cancer

  • Camping World (CWH) increases stock repurchase program

  • Connect Biopharma (CNTB) Presents Data and Analyses from the Global Phase 2b Trial of CBP-201 at the Maui Derm Conference

  • CytoSorbents (CTSO): New Publication Reports Significant Reductions in Perioperative Bleeding Complications Following Acute Aortic Dissection Surgery using CytoSorbents' Antithrombotic Drug Removal Technology

  • DHT (DHT) co-CEO to retire

  • Embraer SA (ERJ): Azorra places order for 20 Embraer E2 aircraft; order is valued at $3.9 bln at list prices

  • Eli Lilly (LLY) and Innovent report final clinical results and biomarker analysis of Phase Ib Study of TYVYT (Sintilimab Injection) plus Bevacizumab biosimilar injection

  • Gilead Sciences (GILD) receives FDA approval for Veklury

  • Greenwich LifeSciences (GLSI) to implement stock repurchase program for up to $10 mln and to extend lock-up of insiders for an additional year

  • Ionis Pharma (IONS) announces eplontersen receives orphan drug designation from U.S. FDA

  • KalVista Pharmaceuticals (KALV) Announces Publication of Oral HAE Therapy KVD900 Phase 1 Data in Journal of Allergy and Clinical Immunology

  • Karyopharm Therapeutics (KPTI) receives FDA orphan drug designation for eltanexor, the company's treatment of myelodysplastic syndromes

  • Kraft Heinz (KHC) US CFO Andre Maciel to move into Global CFO role, effective March 2

  • Merck (MRK) received Complete Response Letter regarding its New Drug Application for gefapixant

  • Natera (NTRA): Landmark CIRCULATE-Japan Study Shows Natera's Signatera MRD Test is Predictive of Chemotherapy Benefit in Colorectal Cancer

  • Opthea Ltd. (OPT) received a A$6.6 million (US$4.9 million) research and development tax credit from the Australian Taxation Office

  • Opko Health (OPK) and Pfizer (PFE) receive Complete Response Letter for BLA for somatrogon

  • Parsons (PSN) unanimously elected Carey Smith as chairwoman, effective April 14, 2022

  • Pebblebrook Hotel Trust (PEB) announces operational update; December marked the best performing month compared to 2019 since the pandemic began; Total Revenue was down just 20% versus December 2019

  • Peloton (PTON): Blackwells Capital wants Peloton to fire CEO John Foley and consider a sale, according to the Wall Street Journal

  • Pfizer (PFE) and BioNTech (BNTX) publish data from two laboratory studies on COVID-19 vaccine-induced antibodies ability to neutralize SARS-CoV-2 omicron variant

  • Playtika's (PLTK) largest stockholder exploring potential sale of a portion of its shares of Playtika

  • SAB Biotherapeutics (SABS) Reports Positive Phase 2 Virology Data Demonstrating SAB-185 Met Criteria for Advancement to Phase 3 in NIH ACTIV-2 Trial for Treatment of COVID-19

  • Silvercorp Metals (SVM) report additional high-grade intercepts from its 2021 exploration program at the SGX mine

  • SQZ Biotechnologies (SQZ) announced that the FDA cleared the IND application for SQZ-eAPC-HPV, authorizing the company to proceed with initiating a Phase 1/2 clinical trial of the novel cell therapy candidate

  • Tango Therapeutics (TNGX) announces clearance of TNG908 IND by FDA and recent pipeline progress updates

  • Viking Therapeutics (VKTX): FDA places Phase 1b clinical trial of VK0214 on clinical hold; trial delay "is in keeping with industry guidance for Phase 2 studies and is not based on data from previously submitted or ongoing studies"

  • Vodafone (VOD) and Iliad in discussions to combine Italian units, according to Reuters

  • XPO Logistics (XPO) digital truck brokerage platform exceeds 600,000 app download


  • M&A:

  • Adtalem Global Education (ATGE) divests Financial Services Segment

  • Cian PLC (CIAN) announced that it has entered into an agreement for the acquisition of SmartDeal

  • Docebo (DCBO) has acquired Skillslive; financial terms not disclosed

  • HollySys (HOLI) receives non-binding offer to be acquired for $25 per share

  • Kohl's (KSS): Starboard Value consortium aiming to bid $64/share for Kohl's, according to the Wall Street Journal

  • Vodafone (VOD) mulling acquisition of Three UK, according to Sunday Times UK

  • Wynn Resorts (WYNN) wants to sell online sports betting unit, according to the New York Post


  • Syndicate:

  • Nouveau Monde Graphite (NMG) files prospectus supplement establishing a new at-the-market equity offering


  • IPOs:

  • Expected to Price:

  • Credo (Nasdaq: CRDO): The semiconductor company providing secure, high-speed connectivity solutions that deliver improved power and cost efficiency is expected to price its 25.0 M share IPO between $10-$12.



Gapping Up/Down

  • Gapping up:

  • KSS +28.3%, HOLI +10%, VOD +6.9%, UL +6.6%, SABS +4.6%, ATGE +3.9%, PTON +1.4%, OPT +0.7%


  • Gapping down:

  • OPK -12%, PHG -4%, DQ -3.8%, PFE -3.7%, NMG-3.4%, ACHR -3.3%, SBSW -3.3%, MRNA -2.8%, BNTX -2.5%


Analyst Research (see Upgrades/Downgradescalendarfor full list):

  • Upgrades

  • Affirm (AFRM) upgraded to Equal-Weight from Underweight at Stephens; tgt $72

  • Arista Networks (ANET) upgraded to Buy from Neutral at Citigroup; tgt $150

  • Booz Allen Hamilton (BAH) upgraded to Overweight from Equal Weight at Barclays; tgt raised to $105

  • Charter Comm (CHTR) upgraded to Outperform from Sector Perform at RBC Capital Mkts; tgt lowered to $690

  • Comcast (CMCSA) upgraded to Outperform from Sector Perform at RBC Capital Mkts; tgt $60

  • Discover Financial Services (DFS) upgraded to Overweight from Neutral at Piper Sandler; tgt raised to $142

  • Equifax (EFX) upgraded to Outperform from Neutral at Robert W. Baird; tgt lowered to $281

  • Fox Corporation (FOXA) upgraded to Buy from Neutral at UBS; tgt raised to $50

  • FVCBankcorp (FVCB) upgraded to Strong Buy from Outperform at Raymond James; tgt raised to $25

  • Infinera (INFN) upgraded to Buy from Neutral at B. Riley Securities; tgt raised to $11.50

  • M&T Bank (MTB) upgraded to Overweight from Neutral at Piper Sandler; tgt raised to $190

  • Orchid Island Capital (ORC) upgraded to Buy from Hold at Jones Trading; tgt $4.25

  • ResMed (RMD) upgraded to Neutral from Underperform at BofA Securities; tgt raised to $250

  • Saia (SAIA) upgraded to Buy from Hold at Deutsche Bank; tgt $363

  • Science Applications (SAIC) upgraded to Overweight from Equal Weight at Barclays; tgt lowered to $90

  • Splunk (SPLK) upgraded to Buy from Neutral at BTIG Research; tgt $155

  • UBS AG (UBS) upgraded to Equal Weight from Underweight at Barclays


  • Downgrades:

  • Dun & Bradstreet (DNB) downgraded to Equal Weight from Overweight at Barclays; tgt $22

  • EVERTEC (EVTC) downgraded to Neutral from Positive at Susquehanna; tgt lowered to $49

  • First Hawaiian (FHB) downgraded to Neutral from Buy at Compass Point; tgt $29

  • Greentree Hospitality (GHG) downgraded to Equal-Weight from Overweight at Morgan Stanley; tgt lowered to $7.50

  • Netflix (NFLX) downgraded to Hold from Buy at Jefferies; tgt lowered to $415

  • PPG Industries (PPG) downgraded to Equal Weight from Overweight at Wells Fargo; tgt $170

  • Snap (SNAP) downgraded to Neutral from Outperform at Wedbush; tgt $36


  • Others:

  • Banco Bradesco (BBD) initiated with an Overweight at Barclays; tgt $5

  • Banco Santander Brasil (BSBR) initiated with an Equal Weight at Barclays; tgt $6

  • Blue Owl Capital (OWL) initiated with a Buy at BofA Securities; tgt $18

  • Fathom Digital Manufacturing (FATH) initiated with a Buy at Needham; tgt $12

  • Grab (GRAB) initiated with an Overweight at Morgan Stanley; tgt $8.40

  • Healthcare Capital Corp. (HCCC) initiated with a Buy at Ladenburg Thalmann; tgt $18

  • Itau Unibanco Holding SA (ITUB) initiated with an Equal Weight at Barclays; tgt $4.50

  • Reviva Pharmaceuticals (RVPH) initiated with a Buy at H.C. Wainwright; tgt $10

  • Sonder (SOND) initiated with a Mkt Outperform at JMP Securities; tgt $12

  • Sylvamo (SLVM) initiated with a Sector Perform at RBC Capital Mkts; tgt $34

  • Victoria's Secret (VSCO) initiated with a Neutral at UBS; tgt $59

  • Victory Capital (VCTR) resumed with a Buy at BofA Securities; tgt $44


Upcoming Events:

  • Econ Data:

  • 09:45 ET: FHFA Housing Price Index for Nov (Briefing.comConsensus NA; Prior 1.1%)

  • 09:45: ET: IHS Markit Services - Prelim for Jan (Briefing.comConsensus NA; Prior 57.6)


  • Earnings:

  • Monday (Jan 24)

  • Morning: BOH CBU HAL PHG

  • Afternoon: BRO CR ELS HOPE IBM IBTX LOGI SSB STLD WSFS ZION


  • Tuesday (Jan 25)

  • Morning: MMM AXP ADM AUB BANC CVLT ERIC GATX GE IVZ JNJ LKFN LMT NEE NEP PCAR PII RTX UMC VZ XRX

  • Afternoon: AGYS BXP CADE CNI COF FFIV FCF HA MRTN MSFT NAVI NXGN RNR RNST SLGN LRN TXN TRMK UMBF VBTX WSBC


  • Wednesday (Jan 26)

  • Morning: ABT APH ANTM T ADP BA GLW FBP FBC FCX GD HES KMB KNX MKTX MNRO NDAQ NYCB NSC OSK PGR PB ROL RES SF TEL

  • Afternoon: AMP AZPN AVT AXS CACI CALX CLS CNS CNMD CCI CVBF DRE EW FLEX HXL INTC ISBC LRCX LSTR LVS LC LEVI MTH CASH MEOH MKSI PKG PLXS PTC XM RJF RLI SLM STX SEIC NOW SIMO SLG TER TSLA URI VRTX WHR WOLF XLNX


  • Thursday (Jan 27)

  • Morning: FLWS AOS ALK ADS MO AIT BLL BX BC CNX CMCO CMCSA CFR DHR DOV DOW EXP EWBC EXTR HCA IP JBLU KEX MTSI HZO MMC MA MKC MCD MSCI MUR NTCT NOC NUE OSIS BPOP ROK RCI SAP SHW SFNC LUV STM TROW TDY TXT TSCO VLO VLY XEL

  • Afternoon: ABCB AAPL AJG TEAM AX BZH BOOT CP CATY CE EMN ETD FICO FHI FFBC FIBK GBCI HTH JNPR KLAC MITK MDLZ NATI OLN RMD RHI HOOD SYK X V WRB WAL WDC


  • Friday (Jan 28)

  • Morning: ALV BMI BAH CAT CHTR CVX CHD CL GNTX LYB MOG.A PSX PFS SBSI SYF VFC WY WETF




Asia & Europe detail:

Asia: Nikkei +0.2%, Hang Seng -1.2%, Shanghai Composite UNCH

Equity indices in the Asia-Pacific region began the week on a mostly lower note. Japan's Manufacturing PMI reached its highest level since the start of 2018 in the flash reading for January while Australia's flash Manufacturing PMI fell to its lowest level since August. Osaka and 15 other prefectures in Japan are reportedly seeking new coronavirus measures. The U.S. Trade Representative is scheduled to meet with South Korea's trade minister on Thursday.

  • In economic data:

  • Japan's January flash Manufacturing PMI 54.6 (expected 55.0; last 54.3) and flash Services PMI 46.6 (last 52.1)

  • Singapore's December CPI 4.0% yr/yr (expected 3.8%; last 3.8%)

  • Australia's January flash Manufacturing PMI 55.3 (last 57.7) and flash Services PMI 45.0 (last 55.1)


---Equity Markets---

  • Japan's Nikkei: +0.2%

  • Hong Kong's Hang Seng: -1.2%

  • China's Shanghai Composite: UNCH

  • India's Sensex: -2.6%

  • South Korea's Kospi: -1.5%

  • Australia's ASX All Ordinaries: -0.7%

---FX---

  • USD/JPY: +0.1% to 113.77

  • USD/CNH: -0.2% to 6.3243

  • USD/INR: +0.3% to 74.58

Europe: DAX -1.9%, FTSE -1.2%, CAC -1.9%

Major European indices trade in the red. French Finance Minister Le Maire said that there have been no recent changes to France's economic outlook. European Central Bank policymaker Rehn said that drivers of inflation will subside over the course of the year, returning toward the 2.0% target over the next two years. British Deputy Prime Minister Raab said that Russia would face severe economic consequences if it tries to force out Ukraine's current government. Former Italian Prime Minister Berlusconi removed his name from consideration for president.

  • In economic data:

  • Eurozone's January flash Manufacturing PMI 59.0 (expected 57.5; last 58.0) and flash Services PMI 51.2 (expected 52.2; last 53.1)

  • Germany's January flash Manufacturing PMI 60.5 (expected 57.0; last 57.4) and flash Services PMI 52.2 (expected 48.8; last 48.7)

  • U.K.'s January flash Manufacturing PMI 56.9 (expected 57.7; last 57.9) and flash Services PMI 53.3 (expected 53.9; last 53.6)

  • France's January flash Manufacturing PMI 55.5, as expected (last 55.6) and flash Services PMI 53.1 (expected 55.3; last 57.0)


---Equity Markets---

  • STOXX Europe 600: -2.1%

  • Germany's DAX: -1.9%

  • U.K.'s FTSE 100: -1.2%

  • France's CAC 40: -1.9%

  • Italy's FTSE MIB: -2.4%

  • Spain's IBEX 35: -1.9%

---FX---

  • EUR/USD: -0.3% to 1.1309

  • GBP/USD: -0.4% to 1.3493

  • USD/CHF: +0.1% to 0.911


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