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24/03/22 Briefing


The stock market is on track for a higher start as futures on the S&P 500 trade 29 points above fair value.

Barring an early reversal, the market will look to rebound from a midweek dip that returned the S&P 500 back below its 200-day moving average (4474).

Overnight action saw a mostly lower showing from markets in Asia while European markets trade near their flat lines.

President Biden is meeting with NATO allies in Europe with reports suggesting that more sanctions against Russia will be announced.

Crude oil holds a modest loss, slipping $0.63, or 0.6%, to $114.30/bbl.

Treasuries are on track to give back yesterday's gains at the open, as the 10-yr yield rises five basis points to 2.37%.

Weekly Initial Claims (Briefing.comconsensus 210,000; prior 214,000), Continuing Claims (prior 1.419 mln), February Durable Orders (Briefing.comconsensus -0.5%; prior 1.6%), Durable Orders ex-transportation (Briefing.comconsensus 0.5%; prior 0.7%), and Q4 Current Account Balance (prior -$214.80 bln) will be reported at 8:30 ET, followed by the preliminary March IHS Markit Manufacturing PMI (prior 57.3) at 9:45 ET.

In U.S. corporate news:

  • Darden Restaurants (DRI 129.00, -1.94): -1.5% after missing Q3 expectations and issuing below-consensus guidance for FY22 EPS.

  • KB Home (KBH 34.60, -1.43): -4.0% after missing Q1 expectations and reaffirming its guidance for FY22 revenue.

  • Traeger (COOK 7.25, -1.55): -17.6% as the company's below-consensus revenue guidance for Q1 and FY22 overshadows a Q4 beat.

  • Trip.com(TCOM 25.70, +1.68): +7.0% after beating Q4 expectations.

Reviewing overnight developments:

  • Asian markets ended mixed. Japan's Nikkei +0.3%, Hong Kong's Hang Seng -0.9%, and China's Shanghai Composite -0.6%

  • In economic data:

  • Japan's March Preliminary Manufacturing PMI 53.2 (expected 53.5; prior 52.7); Preliminary March Services PMI 48.7 (prior 44.2)

  • Australia's March Preliminary Manufacturing PMI 57.3 (prior 57.0); Preliminary March Services PMI 57.9 (prior 57.4)


  • In news:

  • China was warned by the U.S. that it will impose export controls if it is found to be helping Russia get around sanctions. Meanwhile, the USTR's determination of China Section 301 tariffs reinstated 352 of the 549 eligible exclusions

  • Minutes from the January BOJ meeting captured a belief that the BOJ needed to maintain its easy policy to help anchor higher inflation



  • Major European indices trade near their flat lines. Germany's DAX -0.1%, France's CAC +0.1%, and the U.K.'s FTSE +0.2%

  • In economic data:

  • Eurozone's Preliminary March Manufacturing PMI 57.0 (expected 56.0; prior 58.2); Services PMI 54.8 (expected 54.2; prior 55.5)

  • Germany's Preliminary March Manufacturing PMI 57.6 (expected 55.8; prior 58.4); Services PMI 55.0 (expected 53.8; prior 55.8)

  • UK's Preliminary March Manufacturing PMI 55.5 (expected 57.0; prior 58.0); Services PMI 61.0 (expected 58.0; prior 60.5)

  • France's Preliminary March Manufacturing PMI 54.8 (expected 55.0; prior 57.2); Services PMI 57.4 (expected 55.0; prior 55.5); March Business Survey 106 (expected 110; prior 112)


  • In news:

  • An ECB bulletin said that invasion is expected to have a material impact on the euro area economy due to higher inflation, disrupted trade, and weaker confidence The Swiss National Bank left its key policy rate unchanged at -0.75%, as expected

  • Norges Bank boosted its deposit rate by 25 bps to 0.75%, as expected, and said another rate hike in June is likely




U.S. equity futures:

  • S&P 500 Futures: +20 @ 4,476

  • DJIA Futures: +123 @ 34,482

  • Nasdaq 100 Futures: +82 @ 14,530

Overseas:

  • Europe: DAX -0.1%, FTSE +0.2%, CAC +0.1%

  • Asia: Nikkei +0.3%, Hang Seng -0.9%, CAC -0.6%

Commodities:

  • Crude Oil -0.24 @ 114.69

  • Nat Gas +0.016 @ 5.248

  • Gold +17.15 @ 1954.45

  • Silver +0.246 @ 25.435

  • Copper +0.0215 @ 4.7980

U.S. Summary:

  • Earnings/Guidance (Full Earnings Calendar):

  • Algoma Steel Group (ASTL) provides Q4 guidance; expects shipments of 540-550K tons and adjusted EBITDA of CAD$310-320 mln

  • Ameresco (AMRC) at investor day set a 2024 target of $300 million in Adjusted EBITDA, or double its recently reported 2021 Adjusted EBITDA results

  • Assurant (AIZ) sees FY22 8-10% growth in adjusted EBTIDA; sees 10 percent average annual growth in 2023-2024; sees EPS, excluding reportable catastrophes +16-20% in FY22 (no comparable ests)

  • Darden Restaurants (DRI) misses by $0.17, misses on revs; guides FY22 EPS below consensus, revs in-line

  • Enjoy Technology (ENJY) reports Q4 (Dec) results, misses on revs; guides FY22 revs in-line, expects profitability in its Mobile Store segment

  • Exscientia plc (EXAI) reports Q4 (Dec) results, revs grew 5.7% yr/yr to $5.6 mln

  • FactSet (FDS) beats by $0.30, reports revs in-line; guides FY22 EPS in-line, revs in-line

  • Fortuna Silver Mines (FSM) reports Q4 results; beats on revs

  • H.B. Fuller (FUL) beats by $0.07, beats on revs; raises FY22 EPS and organic revenue growth guidance

  • Hello Group (MOMO) misses by RMB0.35, beats on revs

  • JBT Corp (JBT) provides financial targets at Investor Day

  • KB Home (KBH) misses by $0.07, misses on revs, homes delivered essentially flat; reaffirms FY22 housing revenue guidance, raises average selling price guidance

  • Kingsoft Cloud (KC) beats by $2.24, beats on revs; guides Q1 revs below consensus

  • Nikola Corporation (NKLA) at investor day says it expects to deliver 300-500 BEV trucks largely in H2 of 2022; commercial truck production begun this week

  • Ollie's Bargain Outlet (OLLI) beats by $0.03, misses on revs, comps -10.5%; guides Q1 EPS and revs below consensus; guides FY23 EPS and revs below consensus; co also launches a store remodel program

  • Oxford Industries (OXM) beats by $0.23, beats on revs; guides Q1 EPS above two analyst estimate, revs above estimate; guides FY23 EPS above consensus, revs above consensus; increases quarterly dividend 31% to $0.55/share

  • ReneSola (SOL) misses by $0.04, misses on revs; guides Q4 revenue inline

  • Steelcase (SCS) misses by $0.02, reports revs in-line; guides MayQ EPS below consensus, revs in-line; guides FY23 EPS in-line, expects +15-20% organic revenue growth

  • Titan Machinery (TITN) reports Q4 (Jan) results, misses on revs; guides FY23 EPS in-line

  • Traeger (COOK) beats by $0.05, beats on revs; guides Q1 revs below consensus; guides FY22 revs below consensus

  • Trip.comGroup (TCOM) beats by RMB0.98, beats on revs


  • General News:

  • White House is developing response scenarios if Russia uses a biological, chemical, or nuclear weapon in Ukraine. NATO discussing how to respond if one of these weapons are used in Ukraine and fallout drifts into NATO countries, according to the New York Times

  • UK Foreign Secretary announces 65 new Russian sanctions to cut off vital industries fueling Putin's war machine

  • UK will provide 6,000 new defensive missiles and 25m for Ukraine's armed forces

  • NATO estimates 7-15K Russian troops have been killed in Ukraine, 20% of its forces sent to Ukraine, according to the Wall Street Journal

  • US plans to supply Europe with natural gas and hydrogen, according to Bloomberg

  • White House strongly condemns North Korea for its test of a long-range ballistic missile

  • President Biden plans to request increase defense spending to $813 bln, up 4%, according to Bloomberg

  • USTR issues determination of reinstatement of certain exclusions from China Section 301 tariffs

  • California Governor Gavin Newsom proposes $11 billion relief package for higher gas prices

  • NYC, Los Angeles, San Francisco, and Chicago lost 700,000 residents in 2021 as people moved to suburban areas and small towns in the southern states. Population loss is leading to funding reductions in large cities, according to the New York Times

  • Airline CEOs want President Biden to end mask mandate on airplanes, according to The Hill

  • 3D Systems (DDD) enters partnership with Enhatch to more efficiently meet a growing demand for personalized medical devices

  • Aerojet Rocketdyne (AJRD): Steel Partners Holdings has nominated seven highly qualified candidates for election to the Company's Board of Directors

  • Alaska Air (ALK) to update long-term growth strategy at today's Investor Day; company also extends credit card agreement with Bank of America through 2030

  • Arrowhead (ARWR) has filed an application for clearance to initiate a Phase 1/2a clinical trial of ARO-MUC5AC

  • Ashford (AINC) identified errors related to the recognition of cost reimbursement revenue and reimbursed expenses within subsidiary, Remington Lodging & Hospitality for certain insurance and hotel management related salaries

  • AstraZeneca (AZN) provides update on CALLA Phase III trial of concurrent use of Imfinzi and chemoradiotherapy in locally advanced cervical cancer

  • Bausch Health (BHC): New Data on Cost Impact of Treating Opioid-Induced Constipation (OIC) with FDA-Approved Medications, Including Salix's RELISTOR Subcutaneous Injection (Methylnaltrexone Bromide), in The Emergency Department Is Published in Advances In Therapy

  • BlackRock (BLK) CEO Larry Fink issues letter to shareholders; says "ussian invasion of Ukraine has put an end to the globalization we have experienced over the last three decades"

  • Boeing (BA): Jury finds former Boeing pilot not guilty of deception in 737 Max case, according to the Wall Street Journal

  • Credit Suisse (CS) says Bermuda court is expected to soon publish a judgment against an insurance subsidiary in excess of $500 mln

  • Eli Lilly (LLY) announced that the U.S. Food and Drug Administration (FDA) has issued a complete response letter (CRL) for the Biologics License Application (BLA) for the investigational medicine sintilimab injection, a PD-1 inhibitor in combination with pemetrexed and platinum chemotherapy

  • Granite Constr (GVA) awarded $75 mln roadway project in Las Vegas

  • Hertz (HTZ) will add Tesla (TSLA) Model Y to fleet, according to Reuters

  • Imago BioSciences (IMGO) appoints Michael Arenberg as Chief Operating and Business Officer

  • JD.com(JD) announces JD Logistics' proposed financing

  • KBR (KBR) secured a contract from a leading midstream company for a world-scale olefins production facility to be built on the U.S. Gulf Coast

  • Moderna (MRNA) finalizes strategic partnership with Australian Government

  • Molecular Partners (MOLN) Announces Publication of Preclinical Data from CD40 Therapeutic Candidate MP0317 in Cancer Immunology Research

  • NextDecade (NEXT) announces the execution of a binding Heads of Agreement with Guangdong Energy Group Natural Gas Co. for the long-term supply of liquefied natural gas for 20 years from NextDecade's Rio Grande LNG export project in Brownsville, Texas

  • Novartis AG (NVS): Pluvicto approved by FDA for the treatment of progressive, PSMA positive metastatic castration-resistant prostate cancer

  • PS Business Parks (PSB) announces departure of CEO Dan 'Mac' Chandler, III

  • Quest Diagnostics (DGX) awarded CDC contract for COVID-19 infection and vaccination seroprevalence research

  • Raymond James (RJF) reports client assets under administration up 17% yr/yr to $1.238 trln; Financial assets under management up 10% yr/yr to $191.5 bln

  • Riot Blockchain (RIOT) discloses entrance into separation and release agreement with COO Megan Brooks-Anderson

  • Spotify (SPOT) and Google (GOOG) announce user choice billing

  • Stagwell (STGW) authorizes up to $125 mln for share repurchases; expires on March 23, 2025

  • Vaalco Energy (EGY) signs contract to support subsea reconfiguration and FSO deployment at Etame Field

  • Wix.com(WIX) authorizes $500 mln securities repurchase program

  • WPP plc (WPP) entered into a non-discretionary agreement with Goldman Sachs for an aggregate purchase price of up to 300 mln


  • M&A:

  • Ligand Pharma (LGND) signs merger agreement with Avista Public Acquisition Corp. II, providing for the spin-off of OmniAb

  • Mitek Systems (MITK) announces acquisition of HooYu for 98 mln in cash

  • Playtika (PLTK) announces acquisition of JustPlay.LOL; terms not indicated

  • Veoneer (VNE) reports planned date for closing of merger and future CEO


  • Syndicate:

  • argenx (ARGX) prices offering of 1,551,044 ADSs at a price of $300.00 per ADS and the sale of 782,290 ordinary shares at a price of 273.10 per ordinary share

  • Ascendis Pharma (ASND) announces offering of US$500.0 mln aggregate principal amount of convertible senior notes due 2028

  • Blackstone Mortgage Trust (BXMT) commenced offering of $300 million aggregate principal amount of convertible senior notes due 2027

  • Rigetti Computing (RGTI) files for 19,354,059 share common stock offering; also files for 96,941,181 share common stock offering by selling shareholders; related to warrants

  • Super Group (SGHC) files for 481,074,588 share common stock offering by selling shareholders


  • IPOs:

  • Expected to Price:

  • No IPOs expected to price.



Gapping Up/Down

  • Gapping up:

  • OXM +6.5%, TCOM +6.2%, SOL +5.9%, PLTK +5.1%, FUL +5.1%, JBT +3.2%, STGW +3.1%, WIX +3%, RIOT +2.7%, MOLN +2.7%, EGY +2.7%, SGHC+2.2%, MITK +1.9%, FSM +1.9%, DDD +1.5%, KBR+0.6%


  • Gapping down:

  • COOK -18.6%, ENJY -10.7%, MOMO -8%, APLS-6.9%, SCS -5.8%, JD -4.1%, KBH -3.6%, ASND-3.5%, OLLI -1.9%, ASTL -1.9%, EXAI -1.6%, CS-1.1%, PRM -0.8%, ARGX -0.5%


Analyst Research (see Upgrades/Downgradescalendarfor full list):

  • Upgrades

  • Arcos Dorados (ARCO) upgraded to Buy from Neutral at BofA Securities; tgt raised to $10

  • British American Tobacco (BTI) upgraded to Overweight from Neutral at JP Morgan

  • Buenaventura SA (BVN) upgraded to Equal-Weight from Underweight at Morgan Stanley; tgt raised to $11.10

  • GDS Holdings (GDS) upgraded to Buy from Hold at Deutsche Bank; tgt $55

  • Johnson Controls (JCI) upgraded to Buy from Hold at Deutsche Bank; tgt lowered to $79

  • Liberty Global (LBTYA) upgraded to Outperform from Neutral at Credit Suisse

  • Ping Identity (PING) upgraded to Buy from Hold at Stifel; tgt raised to $30

  • Schnitzer Steel (SCHN) upgraded to Overweight from Sector Weight at KeyBanc Capital Markets; tgt $58

  • Transocean (RIG) upgraded to Hold from Sell at Pareto; tgt $5

  • Werner Enterprises (WERN) upgraded to Equal Weight from Underweight at Wells Fargo; tgt raised to $46


  • Downgrades:

  • Alcoa (AA) downgraded to Equal-Weight from Overweight at Morgan Stanley; tgt raised to $100

  • Atlantia SpA (ATASY) downgraded to Neutral from Buy at UBS

  • Bilibili (BILI) downgraded to Neutral from Outperform at KGI Securities; tgt $43

  • EOG Resources (EOG) downgraded to Hold from Buy at TD Securities; tgt $140

  • Intl Flavors (IFF) downgraded to Hold from Buy at Berenberg; tgt lowered to $144

  • Leidos (LDOS) downgraded to Equal Weight from Overweight at Wells Fargo; tgt raised to $113

  • NetApp (NTAP) downgraded to Neutral from Buy at BofA Securities; tgt lowered to $96

  • PaySign (PAYS) downgraded to Neutral from Buy at Ladenburg Thalmann

  • Post (POST) downgraded to Hold from Buy at Truist; tgt lowered to $70

  • Southern Copper (SCCO) downgraded to Underweight from Equal-Weight at Morgan Stanley; tgt raised to $63

  • Traeger (COOK) downgraded to Hold from Buy at Jefferies; tgt lowered to $7

  • Traeger (COOK) downgraded to Hold from Buy at Stifel; tgt $7.50

  • Vale S.A. (VALE) downgraded to Equal-Weight from Overweight at Morgan Stanley; tgt raised to $22


  • Others:

  • Atlantica Yield (AY) initiated with a Neutral at JP Morgan; tgt $40

  • Capital One (COF) assumed with a Buy at Citigroup; tgt raised to $189

  • Ciena (CIEN) initiated with a Buy at Rosenblatt; tgt $80

  • Citizens Financial Group (CFG) assumed with a Buy at Citigroup

  • Comerica (CMA) assumed with a Buy at Citigroup

  • Fifth Third (FITB) assumed with a Neutral at Citigroup

  • Infinera (INFN) initiated with a Buy at Rosenblatt; tgt $12

  • KeyCorp (KEY) assumed with a Neutral at Citigroup

  • Li Auto (LI) initiated with a Buy at China Renaissance; tgt $37.20

  • M&T Bank (MTB) assumed with a Buy at Citigroup

  • NanoString Technologies (NSTG) initiated with a Buy at Canaccord Genuity; tgt $50

  • NeoPhotonics (NPTN) initiated with a Neutral at Rosenblatt; tgt $16

  • NIO (NIO) initiated with a Buy at China Renaissance; tgt $32.40

  • Reata Pharmaceuticals (RETA) assumed with a Buy at Goldman; tgt $91

  • Regions Fincl (RF) assumed with a Buy at Citigroup

  • S&P Global (SPGI) resumed with an Outperform at Credit Suisse; tgt $495

  • XPeng (XPEV) initiated with a Buy at China Renaissance; tgt $55.60


Upcoming Events:

  • Econ Data:

  • 08:30 ET: Durable Orders for Feb. (Briefing.comConsensus -0.5%; Prior 1.6%)

  • 08:30 ET: Durable Orders ex-transportation for Feb. (Briefing.comConsensus 0.5%; Prior 0.7%)

  • 08:30 ET: Initial Claims for March 19 (Briefing.comConsensus 210K; Prior 214K)

  • 08:30 ET: Continuing Claims for March 12 (Briefing.comConsensus NA; Prior 1419K)

  • 08:30 ET: Current Account Balance for Q4 (Briefing.comConsensus NA; Prior -$214.8B)

  • 09:45 ET: IHS Markit Manufacturing PMI - Prelim for March (Briefing.comConsensus NA; Prior 57.3)

  • 10:30 ET: EIA Natural Gas Inventories for March 19 (Briefing.comConsensus NA; Prior -79 bcf)


  • Earnings:

  • Monday (Mar 21)

  • Afternoon: NKE TME


  • Tuesday (Mar 22)

  • Morning: CCL GDS HUYA

  • Afternoon: AIR ADBE GAN PAGS POSH WOR


  • Wednesday (Mar 23)

  • Morning: CTAS YOU EPAC EVGO GIS JKS WGO

  • Afternoon: FUL KBH OLLI OXM SCS COOK TCOM


  • Thursday (Mar 24)

  • Morning: DRI FDS MOMO KC NEOG SNX TITN

  • Afternoon: HNST NIO


  • Friday (Mar 25)

  • Morning: DOOO




Asia & Europe detail:

Asia: Nikkei +0.3%, Hang Seng -0.9%, CAC -0.6%

Equity indices in the Asia-Pacific region mostly hit a soft patch on Thursday, stymied by rising oil prices and a weak showing from the U.S. market on Wednesday. China was warned by the U.S. that it will impose export controls if it is found to be helping Russia get around sanctions. Meanwhile, the USTR's determination of China Section 301 tariffs reinstated 352 of the 549 eligible exclusions. Singapore eased its COVID restrictions and the White House issued a release condemning North Korea's test of a long-range ballistic missile in late February and early March. Minutes from the January BOJ meeting captured a belief that the BOJ needed to maintain its easy policy to help anchor higher inflation. On a related note, the BOJ's Kataoka (an outgoing dove) indicated in a recent speech that easing policies should be strengthened. USD/JPY +0.4% to 121.66.

  • In economic data:

  • Japan's March Preliminary Manufacturing PMI 53.2 (expected 53.5; prior 52.7); Preliminary March Services PMI 48.7 (prior 44.2)

  • Australia's March Preliminary Manufacturing PMI 57.3 (prior 57.0); Preliminary March Services PMI 57.9 (prior 57.4)


---Equity Markets---

  • Japan's Nikkei: +0.3%

  • Hong Kong's Hang Seng: -0.9%

  • China's Shanghai Composite: -0.6%

  • India's Sensex: -0.2%

  • South Korea's Kospi: -0.2%

  • Australia's ASX All Ordinaries: +0.1%

---FX---

  • USD/JPY: +0.4% to 121.66

  • USD/CNH: -0.04% to 6.3851

  • USD/INR: -0.3% to 76.345

Europe: DAX -0.1%, FTSE +0.2%, CAC +0.1%

Major European indices are mixed, but little changed following a round of preliminary Manufacturing and Services PMI readings for March that were mixed relative to expectations but still in expansion territory, albeit with some signs of deceleration from February. Brussels is a busy locale today, hosting G7, NATO, and European Council meetings with discussions about the response to Russia's invasion of Ukraine front and center. On a related note, an ECB bulletin said that invasion is expected to have a material impact on the euro area economy due to higher inflation, disrupted trade, and weaker confidence. The Swiss National Bank left its key policy rate unchanged at -0.75%, as expected. The Norges Bank boosted its deposit rate by 25 bps to 0.75%, as expected, and said another rate hike in June is likely.

  • In economic data:

  • Eurozone's Preliminary March Manufacturing PMI 57.0 (expected 56.0; prior 58.2); Services PMI 54.8 (expected 54.2; prior 55.5)

  • Germany's Preliminary March Manufacturing PMI 57.6 (expected 55.8; prior 58.4); Services PMI 55.0 (expected 53.8; prior 55.8)

  • UK's Preliminary March Manufacturing PMI 55.5 (expected 57.0; prior 58.0); Services PMI 61.0 (expected 58.0; prior 60.5)

  • France's Preliminary March Manufacturing PMI 54.8 (expected 55.0; prior 57.2); Services PMI 57.4 (expected 55.0; prior 55.5); March Business Survey 106 (expected 110; prior 112)


---Equity Markets---

  • STOXX Europe 600: -0.1%

  • Germany's DAX: -0.1%

  • U.K.'s FTSE 100: +0.2%

  • France's CAC 40: +0.1%

  • Italy's FTSE MIB: +0.6%

  • Spain's IBEX 35: -0.3%

---FX---

  • EUR/USD: -0.1% to 1.0989

  • GBP/USD: -0.1% to 1.3192

  • USD/CHF: +0.1% to 0.9313

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