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27/12/21 Briefing

The S&P 500 futures trade 24 points, or 0.5%, above fair value to start the seasonally-favorable Santa Claus rally period, which is defined as the last five trading sessions of the year and the first two trading sessions of the new year. Amid a lack of market-moving news, the path of least resistance remains to the upside.

If Santa were to come to Wall Street this year, investors are hoping he comes to the Nasdaq since the S&P 500 is already up 3.5% this month and the Nasdaq Composite is only up 0.7% this month.

Airlines, meanwhile, are struggling in pre-market action after thousands of flights were cancelled over the Christmas weekend due to staffing issues related to COVID-19. The U.S. Global Jets ETF (JETS 21.07, -0.31) is currently down 1.5%.

In other developments, the People's Bank of China said there will be more proactive use of policy tools, according to Bloomberg, while retail sales grew 8.5% year-over-year this holiday season, according to Mastercard SpendingPulseTM.

U.S. Treasuries trade little changed. The 2-yr yield is up one basis point to 0.70%, and the 10-yr yield is down one basis point to 1.48%. The U.S. Dollar Index is up 0.2% to 96.25. WTI crude futures are down 1.4%, or $1.00, to $72.79/bbl.

In U.S. Corporate news:

  • U.S. Global Jets ETF (JETS 21.07, -0.31): -1.5% after thousands of flights were cancelled over Christmas Eve and Christmas Day due to staffing issues related to COVID-19.

  • GoDaddy (GDDY 79.25, +3.25): +4.3% on news that Starboard Value is aiming to take a "sizeable" stake in the company, as reported by The Wall Street Journal.

  • Cigna (CI 227.00, +1.11): +0.5% after reaffirming its FY21 EPS guidance.

  • CNH Industrial (CNHI 19.40, +0.51): +2.7% after the stock was resumed with an Overweight rating at Morgan Stanley.

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region began the week on a mostly flat note while markets in Australia, Hong Kong, and New Zealand remained closed for Christmas. Japan's Nikkei: -0.4% Hong Kong's Hang Seng: CLOSED China's Shanghai Composite: -0.1% India's Sensex: +0.5% South Korea's Kospi: -0.4% Australia's ASX All Ordinaries: CLOSED.

  • In economic data:

  • China's November Industrial Profit 38.0% YTD (last 42.2%)

  • Japan's November Housing Starts 3.7% yr/yr (expected 7.1%; last 10.4%) and November Construction Orders 0.0% yr/yr (last 2.1%). November Retail Sales 1.9% yr/yr (expected 1.7%; last 0.9%)

  • Singapore's November Industrial Production 2.3% m/m (expected -0.4%; last 2.4%); 14.6% yr/yr (expected 13.4%; last 17.0%)


  • In news:

  • South Australia is tightening its coronavirus restrictions.

  • The Bank of Japan's summary of opinions for the December meeting showed expectations for CPI to rise moderately into positive territory in the short run.

  • Japan's industry ministry will hold an auction to sell some oil from its strategic reserve on February 9.

  • The People's Bank of China pledged to support the real economy with more "proactive" policy tools.



  • Major European indices trade near their flat lines while markets in the U.K. remain closed for Christmas. STOXX Europe 600: +0.2% Germany's DAX: +0.2% U.K.'s FTSE 100: CLOSED France's CAC 40: +0.2% Italy's FTSE MIB: +0.4% Spain's IBEX 35: +0.6%.

  • In economic data:

  • France's November jobseekers 3.088 mln (last 3.143 mln)


  • In news:

  • The U.K.'s FTSE will be closed again tomorrow for Boxing Day.

  • Russia's Gazprom did not book export capacity for the seventh consecutive day, serving as a reminder that the region continues dealing with a low supply of energy.

  • Reuters reported that talks between Intel and Italy about establishing a chip packaging plant are advancing.




U.S. equity futures:

  • S&P 500 Futures: +14 @ 4,740

  • DJIA Futures: +55 @ 36,006

  • Nasdaq 100 Futures: +66 @ 16,374

Overseas:

  • Europe: DAX +0.2%, FTSE closed for holiday, CAC +0.2%

  • Asia: Nikkei -0.4%, Hang Seng closed for holiday, Shanghai Composite -0.1%

Commodities:

  • Crude Oil -1.00 @ 72.79

  • Nat Gas +0.079 @ 3.810

  • Gold -4.70 @ 1807.00

  • Silver -0.019 @ 22.750

  • Copper -0.0075 @ 4.3850

U.S. Summary:

  • Earnings/Guidance (Full Earnings Calendar):

  • Cigna (CI) reaffirms FY21 EPS guidance


  • General News:

  • Thousands of flights were cancelled due to staffing issues related to Omicron. NY Times

  • Mastercard SpendingPulse reports retail sales grew 8.5% this holiday season

  • Dr. Anthony Fauci says studies show omicron is less severe, but high cases levels could "neutralize the positive effect of having less severity." ABC News

  • Lawmakers want President Biden to push for more laws on technology companies. WSJ

  • China implemented tighter lockdown in Xi'an amid increasing coronavirus cases (FXI). FT

  • China Central Bank will provide additional economic support (FXI). Bloomberg

  • US will remove travel ban from South Africa on December 31.Politico

  • Amazon (AMZN) settles with NLRB, making unions more likely. NPR

  • Amazon (AMZN): WHole Foods customers are upset about delivery fee. NY Post

  • Apple (AAPL): Netherlands Authority for Consumers and Markets has ordered Apple to adjust the unreasonable conditions in its App Store that apply to dating-app providers

  • Blackstone (BX) had disappointing IPOs this year. NY Post

  • DiDi Global (DIDI) bans current and former employees from selling shares, according to FT

  • Ford Motor (F) Mustang Mach-E is delivered to first customers in China

  • GoDaddy (GDDY): Starboard Value aiming to take "sizeable" stake in GDDY, according to WSJ

  • Merck (MRK) reports KEYTRUDA plus LENVIMA approved in Japan

  • Merck (MRK) and Ridgeback Biotherapeutics' Oral Antiviral COVID-19 Treatment receives Special Approval for Emergency in Japan

  • Moderna (MRNA) is experiencing shareholder pressure over vaccine costs. FT

  • Northrop Grumman (NOC) awarded a $1.4 bln US Army contract for production of the Integrated Battle Command System

  • Novavax (NVAX) expands manufacturing agreement with SK bioscience

  • Roche Hldg (RHHBY) COVID-19 At-Home test granted FDA emergency use authorization to expand access to rapid self-testing solutions in the United States

  • Sutro Biopharma (STRO) enters in exclusive license agreement for STRO-002 with Tasly Biopharmaceuticals in Greater China


  • M&A:

  • Altimar Acquisition Corp. II (ATMR) completes SPAC combination with Fathom Digital Manufacturing

  • Ares Management (ARES) to acquire AMP's PrivateMarketsCo Infrastructure Debt platform

  • FS Development Corp. II (FSII) and Pardes Biosciences complete business combination; deal includes $75 mln PIPE investment, to trade under "PRDS" on NasdaqGM

  • Orange (ORAN) acquires 75% of VOO SA

  • TriNet Group (TNET) agrees to acquire Zenefits; terms not disclosed


  • Syndicate:

  • Fisker (FSR) files for $2 bln mixed securities shelf offering

  • Inari (NARI) files mixed securities shelf offering


  • IPOs:

  • Expected to Price:

  • No IPOs expected to price.



Gapping Up/Down

  • Gapping up:

  • BORR +6%, DBDR +4.2%, XXII +3.6%, VLD +3.1%, TNET +2%, ORAN +0.8%, PFE +0.6%, FSR +0.5%, IEP +0.5%, MRK +0.5%


  • Gapping down:

  • UAL -3%, CCL -2.8%, DAL -2.1%, AAL -2.1%, RCL -2%, NCLH -1.9%, JETS -1.8%, NVAX -1.7%, LUV -1.5%, BABA -0.9%, HA -0.9%



Analyst Research (see Upgrades/Downgradescalendarfor full list):

  • Upgrades

  • No upgrades of note


  • Downgrades:

  • InnovAge (INNV) downgraded to Equal Weight from Overweight at Barclays; tgt lowered to $6.50


  • Others:

  • CNH Industrial (CNHI) resumed with an Overweight at Morgan Stanley; tgt $24

  • DouYu (DOYU) resumed with an Underperform at BofA Securities; tgt $3.30

  • HUYA (HUYA) resumed with a Neutral at BofA Securities; tgt $10

  • Innovid Corp. (CTV) initiated with an Outperform at BMO Capital Markets; tgt $13

  • Lucid Diagnostics (LUCD) initiated with a Buy at Ascendiant Capital Markets; tgt $16


Upcoming Events:

  • Econ Data:

  • No economic data of note


  • Earnings:

  • Monday (Dec 27)

  • Morning: None of note

  • Afternoon: None of note


  • Tuesday (Dec 28)

  • Morning: None of note

  • Afternoon: CALM


  • Wednesday (Dec 29)

  • Morning: FCEL

  • Afternoon: None of note


  • Thursday (Dec 30)

  • Morning: None of note

  • Afternoon: None of note


  • Friday (Dec 31)

  • Morning: None of note

  • Afternoon: None of note




Asia & Europe detail:

Asia: Nikkei -0.4%, Hang Seng closed for holiday, Shanghai Composite -0.1%

Equity indices in the Asia-Pacific region began the week on a mostly flat note while markets in Australia, Hong Kong, and New Zealand remained closed for Christmas. South Australia is tightening its coronavirus restrictions. The Bank of Japan's summary of opinions for the December meeting showed expectations for CPI to rise moderately into positive territory in the short run. Japan's industry ministry will hold an auction to sell some oil from its strategic reserve on February 9.The People's Bank of China pledged to support the real economy with more "proactive" policy tools.

  • In economic data:

  • China's November Industrial Profit 38.0% YTD (last 42.2%)

  • Japan's November Housing Starts 3.7% yr/yr (expected 7.1%; last 10.4%) and November Construction Orders 0.0% yr/yr (last 2.1%). November Retail Sales 1.9% yr/yr (expected 1.7%; last 0.9%)

  • Singapore's November Industrial Production 2.3% m/m (expected -0.4%; last 2.4%); 14.6% yr/yr (expected 13.4%; last 17.0%)


---Equity Markets---

  • Japan's Nikkei: -0.4%

  • Hong Kong's Hang Seng: CLOSED

  • China's Shanghai Composite: -0.1%

  • India's Sensex: +0.5%

  • South Korea's Kospi: -0.4%

  • Australia's ASX All Ordinaries: CLOSED

---FX---

  • USD/JPY: +0.3% to 114.66

  • USD/CNH: +0.1% to 6.3753

  • USD/INR: -0.1% to 74.99

Europe: DAX +0.2%, FTSE closed for holiday, CAC +0.2%

Major European indices trade near their flat lines while markets in the U.K. remain closed for Christmas. The U.K.'s FTSE will be closed again tomorrow for Boxing Day. Russia's Gazprom did not book export capacity for the seventh consecutive day, serving as a reminder that the region continues to deal with a low supply of energy. Reuters reported that talks between Intel and Italy about establishing a chip packaging plant are advancing.

  • Economic data was limited:

  • France's November jobseekers 3.088 mln (last 3.143 mln)


---Equity Markets---

  • STOXX Europe 600: +0.2%

  • Germany's DAX: +0.2%

  • U.K.'s FTSE 100: CLOSED

  • France's CAC 40: +0.2%

  • Italy's FTSE MIB: +0.4%

  • Spain's IBEX 35: +0.6%

---FX---

  • EUR/USD: -0.1% to 1.1309

  • GBP/USD: +0.1% to 1.3400

  • USD/CHF: +0.1% to 0.9195


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The S&P 500 futures are up 3 points and are trading % above fair value. The Nasdaq 100 futures are up 9 points and are trading roughly in-line with fair value. The Dow Jones Industrial Average futures