27/12/22 Briefing

The S&P 500 futures are up 17 points and are trading 0.5% above fair value. The Nasdaq 100 futures are up 22 points and are trading 0.2% above fair value. The Dow Jones Industrial Average futures are up 183 points and are trading 0.5% above fair value.

Equity futures indicate a higher open after sizable losses recently. The upside bias is partially due to a general seasonal bias during this Santa Claus rally period (last five trading days of the year plus the first two trading sessions of the new year).

Market participants are also reacting to reports that China is aiming to end quarantine requirements for international travelers on January 8despite a coronavirus surge, which is expected to peak on New Years Day at 2 million cases per day, according to The Wall Street Journal. 

On a related note, China stepped up military drills, sending a swath of warplanes near Taiwan, according to The Wall Street Journal. 

Russian President Putin says he is ready to negotiate with Ukraine, but Ukraine says Russia does not want talks, according to Reuters. 

A report from Mastercard SpendingPulse showed that U.S. retail sales grew 7.6% this holiday season.

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

The 2-yr Treasury note yield is up two basis points to 4.34% and the 10-yr note yield is flat at 3.74%. 

Energy complex futures are inching higher this morning. WTI crude oil futures are up 0.7% to $80.15/bbl and natural gas futures are up 2.7% to $5.22/mmbtu.

In corporate news:

• Tesla (TSLA 115.64, -7.51, -6.1%): suspended Shanghai plant production, according to Reuters

• Southwest (LUV 34.67, -1.42, -3.9%): canceled more than 66% of flights yesterday and expects more cancellations due to winter storm, according to WSJ

• NIO (NIO 10.19, -0.78, -7.1%): adjusts fourth quarter 2022 delivery outlook; now expects to deliver 38,500 to 39,500 vehicles in the fourth quarter of 2022, adjusted from previously released outlook of 43,000 to 48,000 vehicles 

Reviewing overnight developments:

• Equity indices in the Asia-Pacific region ended Tuesday on a mostly higher note while markets in Australia, Hong Kong, and New Zealand remained closed for Christmas. Japan's Nikkei: +0.2%, Hong Kong's Hang Seng: CLOSED, China's Shanghai Composite: +1.0%, India's Sensex: +0.6%, South Korea's Kospi: +0.7%, Australia's ASX All Ordinaries: -0.7%.

  • In economic data:

    • China's November Industrial Profit -3.6% YTD (last -3.0%)

    • Japan's November Housing Starts -1.4% yr/yr (expected 1.5%; last -1.8%) and Construction Orders -9.7% yr/yr (last 7.9%). November BoJ Core CPI 2.9% yr/yr (expected 2.8%; last 2.7%). November Retail Sales 2.6% yr/yr (expected 3.7%; last 4.4%), November jobs/applications ratio 1.35 (expected 1.36; last 1.35), and November Unemployment Rate 2.5%, as expected (last 2.6%)

    • South Korea's December Consumer Confidence 89.9 (last 86.5)

  • In news:

    • China will lift all coronavirus-related restrictions on incoming international travelers on January 8.

    • Japan will begin requiring negative coronavirus test for visitors from China before the end of the year.

    • China revised its 2021 growth to 8.4% from 8.1%.

• Major European indices trade in the green while the U.K.'s FTSE is closed. STOXX Europe 600: +0.4%, Germany's DAX: +0.7%, U.K.'s FTSE 100: CLOSED, France's CAC 40: +1.0%, Italy's FTSE MIB: +0.3%, Spain's IBEX 35: +0.3%.

  • There was no notable data

  • In news:

    • European Central Bank policymaker Knot said that the tightening cycle has only passed its halfway point.

    • The Association of German Chambers of Industry and Commerce noted that supply chain disruptions have eased a bit and that freight rates have returned toward normal levels.

U.S. equity futures:

• S&P 500 Futures: +18 @ 3,863

• DJIA Futures: +176 @ 33,380

• Nasdaq 100 Futures: +20 @ 11,006

Overseas:

• Europe: DAX +0.7%, FTSE CLOSED, CAC +1.0%

• Asia: Nikkei +0.2%, Hang Seng CLOSED, Shanghai Composite +1.0%

Commodities:

• Crude Oil +0.68 @ 80.24

• Nat Gas +0.102 @ 5.082

• Gold +12.70 @ 1816.90

• Silver +0.390 @ 24.31

• Copper +0.0938 @ 3.9028

Earnings/Guidance:

• B. Riley Financial (RILY) provides Q4 guidance; estimates operating adjusted EBITDA range of $90-100 mln for Q4 2022

• Entergy (ETR): Federal Energy Regulatory Commission issues key orders regarding System Energy Resources, Inc; Entergy affirms adjusted EPS guidance and outlooks; commits to continue to work with regulators on behalf of customers

• NIO (NIO) adjusts fourth quarter 2022 delivery outlook; now expects to deliver 38,500 to 39,500 vehicles in the fourth quarter of 2022, adjusted from previously released outlook of 43,000 to 48,000 vehicles

News:

• China sends warplanes near Taiwan, according to the Wall Street Journal

• Russian President Putin says he is ready to negotiate with Ukraine, but Ukraine says Russia does not want talks, according to Reuters

• China aiming to end quarantine requirements for international travelers on January 8thdespite coronavirus surge which is expected to peak on New Years Day at 2 million cases per day, according to the Wall Street Journal

• Mastercard SpendingPulse: U.S. retail sales grew 7.6% this holiday season

• Airlines cancel at least 12,000 flights due to winter storm, CNBC

• At least 1.5 million people lost power at some point during winter storm, according to the Washington Post

• FDA aiming to grant review of non profit overdose reversal drug, according to the Wall Street Journal

• Russia might increase oil exports if EU ban impacts refineries, according to Bloomberg

• Merger talks between two cryptocurrency lenders haven't resulted in agreement, according to Bloomberg

• Biden Administration pushing for sale of TikTok US operations due to security concerns, according to the Wall Street Journal

• Altus Power (AMPS) announces definitive agreement to acquire approximately 220 megawatts from True Green Capital Management LLC

• Apple (AAPL): Japan charges Apple with $98 mln in back taxes, according to Nikkei 

• AT&T (T) to expand broadband, according to the Wall Street Jouirnal

• BIT Mining (BTCM) subsidiary experiences cyberattack

• Buenaventura SA (BVN) announces resumption of Julcani and Orcopampa operations

• Coherus BioSciences (CHRS) and Junshi Biosciences share update on the FDA Review of the biologics license application for toripalimab as treatment for recurrent or metastatic nasopharyngeal carcinoma

• Dominion Energy (D) encourages customers to conserve energy

• Duke Energy (DUK) Carolinas asks customers to voluntarily reduce electric usage

• Duke Energy (DUK) resumes normal power operations

• Ipsen S.A. (IPSEY): FDA issues CRL regarding the NDA for palovarotene; co expects to respond in Q1

• Peloton (PTON) introduces Peloton Certified Refurbished, offering refurbished peloton bikes

• Rayonier Adv. Materials (RAYM) Jesup facility impacted by natural gas supply disruption

• Samsung (SSNLF) to expand chip production at large plant next year, according to

• Southwest Air (LUV) recovering from operational challenges

• Southwest (LUV) canceled more than 66% of flights yesterday and expects more cancellations due to winter storm, according to the Wall Street Journal

• SpringWorks Therapeutics (SWTX) completes submission of new drug application to the FDA for nirogacestat for the treatment of adults with desmoid tumors

• Talos Energy (TALO) successfully completes fall borrowing base redetermination with maturity extension to 2027

• Tesla (TSLA) suspended Shanghai plant production, according to Reuters

• Toyota (TM) reached record production in November, according to Bloomberg

M&A:

• Fanhua (FANH): Founder/CEO withdraws his preliminary non-binding going private proposal

• Mitsubishi Financial (MUFG) to invest in Akulaku

• ProFrac Holding (ADCD)closed its previously-announced acquisition of the Eagle Ford sand mining operations of Monarch Silica, LLC; also discloses two new acquisitions

• UMH Properties (UMH) closes on its acquisition of newly developed all-age, manufactured home community located in Sebring, Florida for a total purchase price of $15.1 million

Syndicate:

• ADTRAN (ADTN) files mixed securities shelf offering

• Arcturus Therapeutics (ARCT) files for $500 mln mixed securities shelf offering

• International Seaways (INSW) files mixed securities shelf offering

• KalVista Pharmaceuticals (KALV) announces $58 million registered direct offering

• Karyopharm Therapeutics (KPTI) files for 41,329,471 share common stock offering by selling shareholders

• Nine Energy Service (NINE) files for $350 mln mixed securities shelf offering

• Proterra (PTRA) files for $500 mln mixed securities shelf offering

• Sterling Check Corp. (STER) files for 61,029,536 share common stock offering by selling shareholders

IPOs:

• Expect to Price:

  • No IPOs expected.

Gapping Up/Down

• Gapping up: KALV +7.6%, BTCM +3.3%

• Gapping down: NIO -6.3%, LUV -4.4%, PTRA -2.9%, CHRS -2.3%

Analyst Research (see Upgrades/Downgradescalendarfor full list):

• Upgrades

  • No upgrades of note.

• Downgrades:

  • No downgrades of note.

• Others:

  • Gesher I Acquisition Corp. (GIAC) initiated with a Buy at Chardan Capital Markets; tgt $13

  • Century Therapeutics (IPSC) initiated with a Buy at Chardan Capital Markets; tgt $19

  • McDonald's (MCD) removed from 90-day negative catalyst watch at Citigroup

Upcoming Events:

• Econ Data:

  • 08:30 ET: Adv. Intl. Trade in Goods for Nov (Briefing.comConsensus NA; Prior -$99.0B)

  • 08:30 ET: Adv. Retail Inventories for Nov (Briefing.comConsensus NA; Prior -0.2%)

  • 08:30 ET: Adv. Wholesale Inventories for Nov (Briefing.comConsensus NA; Prior 0.8%)

  • 09:00 ET: FHFA Pricing Index for Oct (Briefing.comConsensus NA; Prior 0.1%)

  • 09:00 ET: S&P Case-Shiller Home Price Index for Oct (Briefing.comConsensus 8.0%; Prior 10.4%)

• Earnings:

  • Wednesday (Dec 28)

    • Afternoon:  CALM

Asia & Europe detail:

Asia: Nikkei +0.2%, Hang Seng CLOSED, Shanghai Composite +1.0%

Equity indices in the Asia-Pacific region ended Tuesday on a mostly higher note while markets in Australia, Hong Kong, and New Zealand remained closed for Christmas. China will lift all coronavirus-related restrictions on incoming international travelers on January 8.Japan, however, will begin requiring negative coronavirus test for visitors from China before the end of the year. China revised its 2021 growth to 8.4% from 8.1%.

• In economic data:

  • China's November Industrial Profit -3.6% YTD (last -3.0%)

  • Japan's November Housing Starts -1.4% yr/yr (expected 1.5%; last -1.8%) and Construction Orders -9.7% yr/yr (last 7.9%). November BoJ Core CPI 2.9% yr/yr (expected 2.8%; last 2.7%). November Retail Sales 2.6% yr/yr (expected 3.7%; last 4.4%), November jobs/applications ratio 1.35 (expected 1.36; last 1.35), and November Unemployment Rate 2.5%, as expected (last 2.6%)

  • South Korea's December Consumer Confidence 89.9 (last 86.5)

---Equity Markets---

• Japan's Nikkei: +0.2%

• Hong Kong's Hang Seng: CLOSED

• China's Shanghai Composite: +1.0%

• India's Sensex: +0.6%

• South Korea's Kospi: +0.7%

• Australia's ASX All Ordinaries: -0.7%

---FX---

• USD/JPY: +0.3% to 133.25

• USD/CNH: UNCH at 6.9748

• USD/INR: +0.2% to 82.81

Europe: DAX +0.7%, FTSE CLOSED, CAC +1.0%

Major European indices trade in the green while the U.K.'s FTSE is closed. European Central Bank policymaker Knot said that the tightening cycle has only passed its halfway point. The Association of German Chambers of Industry and Commerce noted that supply chain disruptions have eased a bit and that freight rates have returned toward normal levels.

• There was no notable data

---Equity Markets---

• STOXX Europe 600: +0.4%

• Germany's DAX: +0.7%

• U.K.'s FTSE 100: CLOSED

• France's CAC 40: +1.0%

• Italy's FTSE MIB: +0.3%

• Spain's IBEX 35: +0.3%

---FX---

• EUR/USD: +0.2% to 1.0655

• GBP/USD: -0.2% to 1.2039

• USD/CHF: -0.4% to 0.9287