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24/01/23 Briefing


The S&P 500 futures are down 9 points and are trading 0.2% below fair value. The Nasdaq 100 futures are down 49 points and are trading 0.4% below fair value. The Dow Jones Industrial Average futures are down 89 points and are trading 0.2% below fair value.

Equity futures indicate a lower open for the stock market due to some profit-taking activity following a big run over the last two sessions. 

Flash Manufacturing and Services PMI readings for the eurozone were mostly better than expected, but Manufacturing PMI remained below 50.0, indicating continued contraction in the sector.

The 2-yr Treasury note yield is flat at 4.23% and the 10-yr note yield is down one basis point to 3.51%. The U.S. Dollar Index is down 0.1% to 102.09.

Energy complex futures are moving higher this morning. WTI crude oil futures are up 0.6% to $82.11/bbl and natural gas futures are up 1.2% to $3.26/mmbtu. 

In corporate news:

  • 3M (MMM 116.00, -6.62, -5.4%): misses by $0.11, reports revs in-line; guides FY23 revs below consensus; guides FY23 EPS below consensus; to cut 2500 roles

  • Johnson & Johnson (JNJ 168.93, +0.62, +0.4%): beats by $0.11, reports revs in-line; guides FY23 EPS above consensus, revs in-line

  • Verizon (VZ 38.72, -0.91, -2.3%): reports EPS in-line, revs in-line; guides FY23 EPS below consensus

  • Travelers (TRV 185.99, -0.37, -0.2%): reports EPS in-line, revs in-line

  • Adv. Micro Devices (AMD 74.69, -1.84, -2.4%): downgraded to Market Perform from Outperform at Bernstein

  • General Electric (GE 80.43, +0.66, +0.8%): beats by $0.08, misses on revs; guides FY23 EPS below consensus

  • Alphabet (GOOG 100.08, -1.13, -1.2%): US expected to file antitrust lawsuit against Google (GOOG) today over alleged dominance in digital advertising, according to Bloomberg

  • lululemon athletica (LULU 309.60, -6.48, -2.1%): downgraded to Underperform from Market Perform at Bernstein

  • Halliburton (HAL 40.80, +0.23, +0.6%): beats by $0.05, reports revs in-line

  • Raytheon Technologies (RTX 97.50, +1.25, +1.3%): beats by $0.02, reports revs in-line; guides FY23 EPS in-line, revs in-line; plans to realign into three business segments

  • Lockheed Martin (LMT 448.74, +7.64, +1.7%): beats by $0.42, beats on revs; guides FY23 EPS in-line, revs in-line 

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region ended Tuesday on a higher note while markets in China, Hong Kong, South Korea, and Singapore remained closed for Lunar New Year. Japan's Nikkei: +1.5%, Hong Kong's Hang Seng: CLOSED, China's Shanghai Composite: CLOSED, India's Sensex: +0.1%, South Korea's Kospi: CLOSED, Australia's ASX All Ordinaries: +0.5%.

  • In economic data:

  • Japan's flash January Manufacturing PMI 48.9 (expected 49.4; last 48.9) and flash Services PMI 52.4 (expected 51.4; last 51.1). December BoJ Core CPI 3.1% yr/yr (expected 2.9%; last 2.9%)

  • Australia's flash January Manufacturing PMI 49.8 (last 50.2) and flash Services PMI 48.3 (last 47.3). December NAB Business Confidence -1 (expected 3; last -4) and NAB Business Survey 12 (last 20)

  • In news:

  • Markets in South Korea and Singapore will reopen tomorrow while Hong Kong will return from holiday on Thursday.

  • Japan's Manufacturing PMI remained in contraction for the third consecutive month in the flash reading for January, reaching its lowest level since late 2020.

  • Foxconn is reportedly increasing its investment in a manufacturing facility in Mexico.

  • Major European indices trade on a modestly lower note. STOXX Europe 600: -0.3%, Germany's DAX: -0.3%, U.K.'s FTSE 100: -0.3%, France's CAC 40: UNCH, Italy's FTSE MIB: -0.1%, Spain's IBEX 35: -0.1%.

  • In economic data:

  • Eurozone's flash January Manufacturing PMI 48.8 (expected 48.5; last 47.8) and flash Services PMI 50.7 (expected 50.2; last 49.8)

  • Germany's flash January Manufacturing PMI 47.0 (expected 47.9; last 47.1) and flash Services PMI 50.4 (expected 49.6; last 49.2). February GfK Consumer Climate -33.9 (expected -33.0; last -37.6)

  • U.K.'s flash January Manufacturing PMI 46.7 (expected 45.4; last 45.3) and flash Services PMI 48.0 (expected 49.6; last 49.9). January CBI Industrial Trends Orders -17 (expected -8; last -6). December Public Sector Net Borrowing GBP26.58 bln (expected GBP22.30 bln; last GBP18.82 bln)

  • France's flash January Manufacturing PMI 50.8 (expected 49.6; last 49.2) and flash Services PMI 49.2 (expected 49.8; last 49.5). January Business Survey 103 (expected 102; last 102)

  • Italy's Q3 Public Debt 4.7% (last 3.1%)

  • Swiss December trade surplus CHF2.827 bln (expected surplus of CHF3.23 bln; last surplus of CHF2.405 bln)

  • In news:

  • Flash Manufacturing and Services PMI readings for the eurozone improved from their December levels, but Manufacturing PMI remained below 50.0, indicating continued contraction in the sector.

  • European Central Bank President Lagarde and other ECB policymakers have spoken in favor of more rate hikes.

  • French Finance Minister Le Maire said that inflation is expected to slow around the middle of this year.

 

U.S. equity futures:

  • S&P 500 Futures: -9 @ 4,011

  • DJIA Futures: -83 @ 33,547

  • Nasdaq 100 Futures: -46 @ 11,826

Overseas:

  • Europe: DAX -0.3%, FTSE -0.3%, CAC UNCH

  • Asia: Nikkei +1.5%, Hang Seng CLOSED, Shanghai Composite CLOSED

Commodities:

  • Crude Oil +0.49 @ 82.11

  • Nat Gas +0.045 @ 3.267

  • Gold +9.45 @ 1938.05

  • Silver +0.246 @ 23.80

  • Copper -0.0025 @ 4.254

 

Earnings/Guidance:

  • 3M (MMM) misses by $0.11, reports revs in-line; guides FY23 revs below consensus; guides FY23 EPS below consensus; to cut 2500 roles

  • Albemarle (ALB) guides Q4 EPS above consensus, revs in-line; guides FY23 EPS in-line, revs above consensus

  • Atlantic Union Bankshares (AUB) beats by $0.08

  • Brown & Brown (BRO) beats by $0.04, reports revs in-line

  • Community Bank (CBU) beats by $0.03

  • Crane (CR) beats by $0.23, reports revs in-line; guides for Pro Forma 2023 EPS

  • Danaher (DHR) beats by $0.34, beats on revs

  • D.R. Horton (DHI) beats by $0.52, beats on revs

  • F.N.B. Corp (FNB) beats by $0.02, net interest income increased 50%

  • General Electric (GE) beats by $0.08, misses on revs; guides FY23 EPS below consensus

  • Genmab (GMAB) reports 2022 net sales of DARZALEX totaled $7,977 mln

  • Halliburton (HAL) beats by $0.05, reports revs in-line

  • HighPeak Energy, Inc. (HPK) Announces Strategic Alternatives Process and Guidance for 2023 and 2024

  • Hope Bancorp (HOPE) misses by $0.02, net interest income increased 12.9% yr/yr

  • Independent Bank Group (IBTX) misses by $0.07

  • Inter Parfums (IPAR) reaffirms FY22 EPS guidance, expects FY22 revs slightly above prior guidance; reaffirms FY23 EPS and revs

  • Invesco (IVZ) beats by $0.03, beats on revs

  • Johnson & Johnson (JNJ) beats by $0.11, reports revs in-line; guides FY23 EPS above consensus, revs in-line

  • Lockheed Martin (LMT) beats by $0.42, beats on revs; guides FY23 EPS in-line, revs in-line

  • Logitech Int'l SA (LOGI) misses by $0.17, misses on revs; reaffirms FY23 revs guidance

  • Magna (MGA) sees FY22 revs in-line with guidance; sees Adjusted EBIT margin below guidance

  • Raytheon Technologies (RTX) beats by $0.02, reports revs in-line; guides FY23 EPS in-line, revs in-line; plans to realign into three business segments

  • Sasol (SSL) reports H1 production and sales metrics

  • Selective Insurance (SIGI) issues upside EPS guidance for Q4

  • Travelers (TRV) reports EPS in-line, revs in-line

  • Umpqua Holdings (UMPQ) reports earnings

  • Union Pacific (UNP) misses by $0.10, misses on revs; provides FY23 guidance metrics

  • Verizon (VZ) reports EPS in-line, revs in-line; guides FY23 EPS below consensus

  • Zions Bancorp (ZION) beats by $0.18

News:

  • Senate Minority leader Mitch McConnell plans to stay out of debt ceiling negotiations between White House and House Republicans, according to CNN

  • OPEC+ delegates expect production in February to remain unchanged, according to Bloomberg

  • Alphabet (GOOG): US expected to file antitrust lawsuit against Google today over alleged dominance in digital advertising, according to Bloomberg

  • American Lithium Corp. (AMLI) announces royalty buyback at its TLC lithium project in Nevada

  • Babcock & Wilcox Enterprises (BW) awarded a contract for ~$65 mln by Lostock Sustainable Energy Plant

  • Blackstone (BX) in discussions with Bain Capital to sell approximately half of stake in Embassy Office Parks, according to Reuters

  • Capri Holdings (CPRI) appoints Cedric Wilmotte as CEO of Michael Kors brand; Wilmotte recently served as interim CEO for Versace from January through September 2022 and is currently Versace's COO

  • Cardlytics (CDLX) announces appointment of Amit Gupta as its COO, effective today

  • Civitas Resources (CIVI) has agreed to repurchase ~4.9 mln shares of its common stock, par value $0.01 per share at a price per share of $61.00, resulting in aggregate consideration of ~$300 mln from its largest shareholder, Canada Pension Plan Investment Board

  • Clean Energy Fuels (CLNE) has been awarded a contract by San Diego Metropolitan Transit System to provide an expected 86 million gallons of renewable natural gas to operate its bus fleet

  • Codexis (CDXS) announces appointment of Sri Ryali as Chief Financial Officer, effective immediately

  • Eli Lilly (LLY) to invest additional $450 mln at manufacturing site in Research Triangle Park

  • Entegris (ENTG) CFO Greg Graves to retire in 2023 after a successor is named; co has initiated a search to identify its next CFO

  • FEMSA (FMX) signs agreement with Volaris, an ultra-low-cost carrier serving Mexico, the United States, Central, and South America, to become the first third-party partner of its coalition loyalty program

  • Ford Motor (F) expects to record a pre-tax remeasurement gain in Q4 of approximately $50 mln related to pension and OPEB plans

  • Four Corners Property Trust (FCPT) appoints James Brat as Chief Operating Officer, who was serving as company's Chief Transaction Officer

  • Honda (HMC) aiming to create new unit to accelerate electric vehicle development, according to Reuters

  • Independent Bank Group (IBTX) authorized the company to repurchase up to $125 million of its outstanding common stock through December 31, 2023, at the discretion of management

  • Innovid Corp. (CTV) announces a reduction of its global full-time headcount by approximately 10%, expects headcount reduction will be completed by end of 1Q23

  • Intel (INTC) appoints Frank Yeary as new independent chair of its board of directors, following Dr. Omar Ishrak's decision to step down as chair

  • Jacobs Engineering (J) confirms Bob Pragada has been named Chief Executive Officer effective Jan. 24, 2023

  • Kura Oncology (KURA): FDA clears IND for KO-2806, the Company's next-generation farnesyl transferase inhibitor (FTI), for the treatment of advanced solid tumors

  • Main Street Capital (MAIN) announces $40 mln follow-on investment in an existing portfolio company

  • New Found Gold Corp. (NFGC) Intercepts 6.7 g/t Au Over 24m at Keats West & Discovers New Vein Between Golden Joint and Keats North Intercepting 50.3 g/t Au Over 2.5m

  • Ocwen Fincl (OCN) CEO Glen Messina also named as Chair of the Board, effective Jan 23

  • Pfizer (PFE): FDA releases briefing documents for future vaccination regimens addressing COVID-19; meeting will take place on Thursday

  • Primo Water (PRMW) announces appointment of David Hass as CFO

  • Rayonier (RYN) CFO Mark McHugh also named as President

  • Southwest Air's (LUV) dispatchers to vote on new contract

  • Tesla (TSLA) aiming to build $3.5 bln plant in Nevada for semi trucks, according to Inside EV

  • Verrica Pharmaceuticals (VRCA) has resubmitted the New Drug Application for VP-102 for the treatment of molluscum contagiosum to the U.S. Food and Drug Administration

  • Yext (YEXT) to implement a restructuring plan to reduce operating expenses, improve margins, and position company for profitable growth; plan includes workforce reduction of about 8% of full-time employees

M&A:

  • Elevance Health (ELV) to acquire Blue Cross and Blue Shield of Louisiana; financial terms were not disclosed

  • Matador Resources (MTDR) announces strategic bolt-on Delaware basin acquisition

  • Novartis' (NVS) Sandoz unit to acquire Mycamine from Astellas (ALPMY)

Syndicate:

  • PennantPark Floating Rate Capital (PFLT) prices offering of 4.25 mln shares of common stock at $11.20 per share

  • Pliant Therapeutics (PLRX) announces $175.0 mln proposed public offering of common stock

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:

  • HPK +15.2%, CBAY +4.7%, YEXT +4.5%, PLRX +4.4%, SSL +4.1%, GATO +2.3%, CDLX +1.8%, DHR +1.8%, HESM +1.2%, FNB +1.2%, IPAR +1.1%

  • Gapping down:

  • MGA -14%, PFLT -7%, ZION -2.7%, UMPQ -1.8%, ENTG -1.3%, ENVX -1%, ALB -0.8%, BRO -0.7%, INTC -0.6%, CR -0.5%, IBTX -0.5%

 


Analyst Research (see Upgrades/Downgradescalendarfor full list):

  • Upgrades

  • Allogene (ALLO) upgraded to Overweight from Neutral at JP Morgan; tgt lowered to $11

  • Blackstone (BX) upgraded to Overweight from Neutral at JP Morgan; tgt raised to $105

  • Lyft (LYFT) upgraded to Overweight from Sector Weight at KeyBanc Capital Markets; tgt $24

  • Marathon Oil (MRO) upgraded to Overweight from Equal-Weight at Morgan Stanley; tgt raised to $28

  • Downgrades:

  • Advanced Micro (AMD) downgraded to Mkt Perform from Outperform at Bernstein; tgt lowered to $80

  • American Electric (AEP) downgraded to In-line from Outperform at Evercore ISI; tgt raised to $102

  • APA Corp. (APA) downgraded to Equal-Weight from Overweight at Morgan Stanley; tgt lowered to $44

  • Cheesecake Factory (CAKE) downgraded to Mkt Perform from Outperform at Raymond James

  • lululemon athletica (LULU) downgraded to Underperform from Mkt Perform at Bernstein; tgt lowered to $290

  • Martin Marietta (MLM) downgraded to Neutral from Overweight at Atlantic Equities; tgt lowered to $350

  • Ovintiv (OVV) downgraded to Equal-Weight from Overweight at Morgan Stanley; tgt lowered to $51

  • Others:

  • Akoustis Technologies (AKTS) initiated with a Buy at B. Riley Securities; tgt $9.25

  • Apartment Income REIT Corp. (AIRC) initiated with an Outperform at Wolfe Research; tgt $39

  • Biohaven (BHVN) initiated with an Outperform at SVB Securities; tgt $24

  • Chipotle Mexican Grill (CMG) initiated with an Overweight at Wells Fargo; tgt $1800

  • McDonald's (MCD) initiated with an Equal Weight at Wells Fargo; tgt $280

Upcoming Events:

  • Econ Data:

  • 09:45 ET: IHS Markit Manufacturing PMI - Prelim for Jan (Briefing.comConsensus NA; Prior 46.2)

  • 09:45 ET: IHS Markit Services PMI - Prelim for Jan (Briefing.comConsensus NA; Prior 44.7)

  • 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 +1.5%, Hang Seng CLOSED, Shanghai Composite CLOSED

Equity indices in the Asia-Pacific region ended Tuesday on a higher note while markets in China, Hong Kong, South Korea, and Singapore remained closed for Lunar New Year. Markets in South Korea and Singapore will reopen tomorrow while Hong Kong will return from holiday on Thursday. Japan's Manufacturing PMI remained in contraction for the third consecutive month in the flash reading for January, reaching its lowest level since mid-2020. Foxconn is reportedly increasing its investment in a manufacturing facility in Mexico.

  • In economic data: 

  • Japan's flash January Manufacturing PMI 48.9 (expected 49.4; last 48.9) and flash Services PMI 52.4 (expected 51.4; last 51.1). December BoJ Core CPI 3.1% yr/yr (expected 2.9%; last 2.9%)

  • Australia's flash January Manufacturing PMI 49.8 (last 50.2) and flash Services PMI 48.3 (last 47.3). December NAB Business Confidence -1 (expected 3; last -4) and NAB Business Survey 12 (last 20)

---Equity Markets---

  • Japan's Nikkei: +1.5%

  • Hong Kong's Hang Seng: CLOSED

  • China's Shanghai Composite: CLOSED

  • India's Sensex: +0.1%

  • South Korea's Kospi: CLOSED

  • Australia's ASX All Ordinaries: +0.5%

---FX---

  • USD/JPY: -0.4% to 130.15

  • USD/CNH: +0.2% to 6.7845

  • USD/INR: +0.1% to 81.56

 

Europe: DAX -0.3%, FTSE -0.3%, CAC UNCH

Major European indices trade on a modestly lower note. Flash Manufacturing and Services PMI readings for the eurozone improved from their December levels, but Manufacturing PMI remained below 50.0, indicating continued contraction in the sector. European Central Bank President Lagarde and other ECB policymakers have spoken in favor of more rate hikes. French Finance Minister Le Maire said that inflation is expected to slow around the middle of this year.

  • In economic data:

  • Eurozone's flash January Manufacturing PMI 48.8 (expected 48.5; last 47.8) and flash Services PMI 50.7 (expected 50.2; last 49.8)

  • Germany's flash January Manufacturing PMI 47.0 (expected 47.9; last 47.1) and flash Services PMI 50.4 (expected 49.6; last 49.2). February GfK Consumer Climate -33.9 (expected -33.0; last -37.6)

  • U.K.'s flash January Manufacturing PMI 46.7 (expected 45.4; last 45.3) and flash Services PMI 48.0 (expected 49.6; last 49.9). January CBI Industrial Trends Orders -17 (expected -8; last -6). December Public Sector Net Borrowing GBP26.58 bln (expected GBP22.30 bln; last GBP18.82 bln)

  • France's flash January Manufacturing PMI 50.8 (expected 49.6; last 49.2) and flash Services PMI 49.2 (expected 49.8; last 49.5). January Business Survey 103 (expected 102; last 102)

  • Italy's Q3 Public Debt 4.7% (last 3.1%)

  • Swiss December trade surplus CHF2.827 bln (expected surplus of CHF3.23 bln; last surplus of CHF2.405 bln)

---Equity Markets---

  • STOXX Europe 600: -0.3%

  • Germany's DAX: -0.3%

  • U.K.'s FTSE 100: -0.3%

  • France's CAC 40: UNCH

  • Italy's FTSE MIB: -0.1%

  • Spain's IBEX 35: -0.1%

---FX---

  • EUR/USD: -0.1% to 1.0865

  • GBP/USD: -0.6% to 1.2307

  • USD/CHF: +0.3% to 0.9237

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