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25/11/22 Briefing

The S&P 500 futures are up 5 points and are trading in line with fair value. The Nasdaq 100 futures are down 21 points and are trading 0.4% below fair value. The Dow Jones Industrial Average futures are up 69 points and are trading slightly above fair value.

There's not a lot of conviction in premarket action this morning. Futures for the main indices trade in mixed fashion amid thinner holiday conditions. Attention will turn to retailers as this Black Friday gets underway.

Reports indicate that China's daily coronavirus cases reached a record high as lockdowns continue, halting a lot of activity in Beijing.

On a related note, the People's Bank of China lowered its reserve requirement ratio by 25 bps going into effect on December 5th.

Tokyo reported record high CPI, up 3.8% up year over year.

EU energy ministers have not reached an agreement on a price cap for Russian oil and natural gas.

Treasury yields are climbing off earlier lows. The 10-yr note yield, which hit 3.65% overnight, sits at 3.72% now. The 2-yr note yield, which hit 4.43% overnight, now sits at 4.48%.

There is no U.S. economic data of note today.

As a reminder, the market will close at 1:00 p.m. ET today.

In corporate news:

  • Activision (ATVI 74.05, -2.54, -3.3%): FTC likely will file an antitrust lawsuit to block Microsoft's (MSFT) acquisition of Activision, according to Politico

  • Amazon (AMZN 94.15, +0.05, +0.1%): experiencing Black Friday protests and strikes, according to Bloomberg

  • Tesla (TSLA 186.89, +3.66, +2.0%): to recall 80,000 vehicles in China, according to The Wall Street Journal

  • Apple (AAPL 150.16, -0.91, -0.6%): Foxconn (HNHPF) issues could impact November Apple (AAPL) iPhone shipments from that plant by 30%, according to Reuters

  • Visa (V 212.30, +0.57, +0.3%): discloses November U.S. payments volume on a year-over-year basis was up 9%

  • Credit Suisse (CS 3.7400, 0.00, 0.0%): shareholders approved capital increase; increase is to be carried out through two capital increases with expected aggregate gross proceeds of approximately CHF 4.0 bln

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region ended the week on a mixed note. Japan's Nikkei: -0.4% (+1.4% for the week), Hong Kong's Hang Seng: -0.5% (-2.3% for the week), China's Shanghai Composite: +0.4% (+0.1% for the week), India's Sensex: UNCH (+1.0% for the week), South Korea's Kospi: -0.1% (-0.3% for the week), Australia's ASX All Ordinaries: +0.2% (+1.3% for the week).

  • In economic data:

  • Japan's November Tokyo CPI 3.8% yr/yr (last 3.5%) and Tokyo Core CPI 3.6% yr/yr (expected 3.5%; last 3.4%)

  • New Zealand's Q3 Retail Sales 0.4% qtr/qtr (expected 0.5%; last -2.3%)

  • Singapore's October Industrial Production 0.9% m/m (expected -0.3%; last 0.2%); -0.8% yr/yr (expected -0.9%; last 1.6%)


  • In news:

  • Concerns about near-term growth remained in place as China expanded its lockdown measures. Meanwhile, the People's Bank of China lowered its reserve requirement ratio by 25 bps, freeing roughly CNY500 bln of liquidity.

  • The Bank of Korea raised its base rate by 25 bps to 3.25% on Wednesday evening, as expected. Governor Rhee said that the terminal rate could reach 3.50%.



  • Major European indices trade just above their flat lines. STOXX Europe 600: +0.1% (+1.8% week-to-date), Germany's DAX: UNCH (+0.8% week-to-date), U.K.'s FTSE 100: +0.3% (+1.4% week-to-date), France's CAC 40: +0.2% (+1.1% week-to-date), Italy's FTSE MIB: +0.1% (+0.3% week-to-date), Spain's IBEX 35: +0.1% (+3.3% week-to-date).

  • In economic data:

  • Germany's Q3 GDP 0.4% qtr/qtr (expected 0.3%; last 0.1%); 1.2% yr/yr (expected 1.1%; last 1.7%). December GfK Consumer Climate -40.2 (expected -39.6; last -41.9)

  • France's November Consumer Confidence 83, as expected (last 82)

  • Italy's November Business Confidence 102.5 (expected 99.6; last 100.7) and Consumer Confidence 98.1 (expected 91.0; last 90.1). October non-EU trade deficit EUR2.04 bln (last deficit of EUR5.44 bln)

  • Spain's October PPI 26.1% yr/yr (last 35.6%) o Swiss Q3 Employment Level 5.362 mln (last 5.316 mln)


  • In news:

  • Germany's GDP was revised higher in the second estimate for Q3, but GfK Consumer Confidence was below expectations once again.

  • European Central Bank Chief Economist Lane said that long term inflation expectations are well anchored.

  • NHS Nurses in the U.K. are planning a strike for December 15 and December 20.

  • Spain's plan to impose a windfall tax on banks and energy companies is making its way through parliament.



U.S. equity futures:

  • S&P 500 Futures: +5 @ 4,038

  • DJIA Futures: +69 @ 34,280

  • Nasdaq 100 Futures: -21 @ 11,839

Overseas:

  • Europe: DAX unch, FTSE +0.3%, CAC +0.2%

  • Asia: Nikkei -0.4%, Hang Seng -0.5%, Shanghai Composite +0.4%

Commodities:

  • Crude Oil +1.75 @ 79.69

  • Nat Gas -0.046 @ 7.662

  • Gold +5.30 @ 1750.90

  • Silver -0.047 @ 21.320

  • Copper +0.0515 @ 3.6695

Earnings/Guidance:

  • Lufax ( LU 14.18% ) reports Q3 (Sep) results, total income fell 17.2% yr/yr; lowers FY22 total income outloook

News:

  • The People's Bank of China lowered its reserve requirement ratio by 25 bps, freeing roughly CNY500 bln of liquidity. from December 5

  • China daily coronavirus cases reach record high as lockdowns spread. Economists are expecting supply chain problems, according to The Wall Street Journal

  • The Bank of Korea raised its base rate by 25 bps to 3.25% on Wednesday evening, as expected

  • The Biden administration is trying to prevent rail strike, according to Reuters

  • FTC likely will file an antitrust lawsuit to block Microsoft's ( MSFT 0.59% ) acquisition of Activision (ATVI), according to Politico

  • Changpeng Zhao plans to purchase $1 bln in distressed cryptocurrency assets, according to Bloomberg

  • Spain's plan to impose a windfall tax on banks and energy companies is making its way through parliament

  • Airport traffic reaches pre pandemic levels for the holiday travel period, according to NY Daily News

  • Airbus ( EADSY ) settled corruption allegations with French officials, according to Bloomberg

  • Amazon ( AMZN 1.71% ) experiencing Black Friday protests and strikes, according to Bloomberg

  • Apple ( AAPL 2.11% ): Foxconn issues could impact November Apple (AAPL) iPhone shipments from that plant by at least 30%, according to Reuters

  • Bed Bath & Beyond ( BBBY 4.61% ) is struggling to keep stores stocked up for the holidays, according to The Wall Street Journal

  • Ford ( F 0.15% ) recalled 634K vehicles, according to Reuters

  • JinkoSolar ( JKS 1.80% ) announced that its principal operating subsidiary JKS will supply approximately 522 MW of Tiger Neo 78 Cell modules for Phase l of the Santa Luzia Complex Project in Paraba State, Brazil

  • Richardson Elec ( RELL 1.49% ) announces global distribution agreement with Gallium Semiconductor

  • Rocket Lab USA ( RKLB 1.25% ) selected by NASA to launch the Time-Resolved Observations of Precipitation Structure and Storm Intensity with a Constellation of Smallsats (TROPICS) mission

  • Stellantis ( STLA 1.13% ) wants to enter India's EV market, according to Digitimes

  • Tesla ( TSLA 1.14% ) to recall 80,000 vehicles in China, according to The Wall Street Journal

  • Turquoise Hill Resources ( TRQ 0.60% ) announces new meeting date and additional information in connection with arrangement with Rio Tinto (RIO)

  • Visa ( V 1.04% ) discloses November U.S. payments volume on a year-over-year basis was up 9%

  • Yandex ( YNDX 21.33% ) aiming to eliminate ties with Russia, according to New York Times

M&A:

  • Brookfield ( BAM 0.79% ) aiming to acquire Nike (NKE) supplier Trimco Group, according to Bloomberg

  • FTC likely will file an antitrust lawsuit to block Microsoft's ( MSFT 0.59% ) acquisition of Activision (ATVI), according to Politico

  • Inbursa ends bid for Citigroup's ( C 0.72% ) Mexico retail unit, according to Reuters

  • Manchester United ( MANU 4.38% ): Saudi Arabia will support private sector bids for MANU, according to BBC

  • Vitru ( VTRU 2.27% ) receives purchase price reduction of CESUMAR of R$73.1 mln

Syndicate:

  • Genius Sports ( GENI 1.72% ) files for 7,668,381 ordinary share offering, relates to warrants

  • Gladstone Commercial ( GOOD 0.98% ) files mixed securities shelf offering

  • Virgin Orbit Holdings ( VORB 2.24% ) elects not to proceed with a securities offering due to current market conditions

IPOs:

  • Expect to Price:

  • No IPOs expected.


Gapping Up/Down

  • Gapping up:

  • RKLB +5.2%, MUFG +1.9%, LYG, +2.3%


  • Gapping down:

  • CS -2.3%, GENI -2.9%



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

  • Upgrades

  • Deutsche Bank (DB) upgraded to Outperform from Sector Perform at RBC Capital Mkts

  • Lloyds Banking (LYG) upgraded to Outperform from Underperform at RBC Capital Mkts


  • Downgrades:

  • Kforce (KFRC) downgraded to Mkt Perform from Outperform at William Blair

  • Korn/Ferry (KFY) downgraded to Mkt Perform from Outperform at William Blair

  • Lufax (LU) downgraded to Underperform from Neutral at Credit Suisse; tgt lowered to $1.40

  • Lufax (LU) downgraded to Underweight from Overweight at JP Morgan; tgt lowered to $1.60

  • NatWest Group plc (NWG) downgraded to Sector Perform from Outperform at RBC Capital Mkts


  • Others:

  • Nothing of note


Upcoming Events:

  • Econ Data:

  • There is no U.S. economic data of note


  • 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 -0.4%, Hang Seng -0.5%, Shanghai Composite +0.4%

Equity indices in the Asia-Pacific region ended the week on a mixed note. Concerns about near-term growth remained in place as China expanded its lockdown measures. Meanwhile, the People's Bank of China lowered its reserve requirement ratio by 25 bps, freeing roughly CNY500 bln of liquidity. The Bank of Korea raised its base rate by 25 bps to 3.25% on Wednesday evening, as expected. Governor Rhee said that the terminal rate could reach 3.50%.

  • In economic data:

  • Japan's November Tokyo CPI 3.8% yr/yr (last 3.5%) and Tokyo Core CPI 3.6% yr/yr (expected 3.5%; last 3.4%)

  • New Zealand's Q3 Retail Sales 0.4% qtr/qtr (expected 0.5%; last -2.3%)

  • Singapore's October Industrial Production 0.9% m/m (expected -0.3%; last 0.2%); -0.8% yr/yr (expected -0.9%; last 1.6%)


---Equity Markets---

  • Japan's Nikkei: -0.4% (+1.4% for the week)

  • Hong Kong's Hang Seng: -0.5% (-2.3% for the week)

  • China's Shanghai Composite: +0.4% (+0.1% for the week)

  • India's Sensex: UNCH (+1.0% for the week)

  • South Korea's Kospi: -0.1% (-0.3% for the week)

  • Australia's ASX All Ordinaries: +0.2% (+1.3% for the week)

---FX---

  • USD/JPY: +0.7% to 139.43

  • USD/CNH: +0.3% to 7.1882

  • USD/INR: UNCH at 81.64

Europe: DAX unch, FTSE +0.3%, CAC +0.2%

Major European indices trade just above their flat lines. Germany's GDP was revised higher in the second estimate for Q3, but GfK Consumer Confidence was below expectations once again. European Central Bank Chief Economist Lane said that long term inflation expectations are well anchored. NHS Nurses in the U.K. are planning a strike for December 15 and December 20. Spain's plan to impose a windfall tax on banks and energy companies is making its way through parliament.

  • In economic data:

  • Germany's Q3 GDP 0.4% qtr/qtr (expected 0.3%; last 0.1%); 1.2% yr/yr (expected 1.1%; last 1.7%). December GfK Consumer Climate -40.2 (expected -39.6; last -41.9)

  • France's November Consumer Confidence 83, as expected (last 82)

  • Italy's November Business Confidence 102.5 (expected 99.6; last 100.7) and Consumer Confidence 98.1 (expected 91.0; last 90.1). October non-EU trade deficit EUR2.04 bln (last deficit of EUR5.44 bln)

  • Spain's October PPI 26.1% yr/yr (last 35.6%) o Swiss Q3 Employment Level 5.362 mln (last 5.316 mln)


---Equity Markets---

  • STOXX Europe 600: +0.1% (+1.8% week-to-date)

  • Germany's DAX: UNCH (+0.8% week-to-date)

  • U.K.'s FTSE 100: +0.3% (+1.4% week-to-date)

  • France's CAC 40: +0.2% (+1.1% week-to-date)

  • Italy's FTSE MIB: +0.1% (+0.3% week-to-date)

  • Spain's IBEX 35: +0.1% (+3.3% week-to-date)

---FX---

  • EUR/USD: -0.2% to 1.0387

  • GBP/USD: -0.2% to 1.2083

  • USD/CHF: +0.4% to 0.9465


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