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Writer's pictureSimon Charles Hooper

28/11/22 Briefing

The S&P 500 futures are down 29 points and are trading 0.9% below fair value. The Nasdaq 100 futures are down 86 points and are trading 1.1% below fair value. The Dow Jones Industrial Average futures are down 188 points and are trading 0.7% below fair value.

There's a negative tone in the equity futures market that is being fed reportedly by concerns over protests in China due to the zero-COVID policy. Also, it appears as if a consolidation mindset is kicking in after some strong gain of late and as the S&P 500 approaches its 200-day moving average (4054).

OPEC+ will decide on production amounts ahead of the planned December 5 EU ban on most Russian crude imports, according to The Wall Street Journal.

On a related note, energy complex futures are trading down this morning on growth concerns connected to China. WTI crude oil futures are down 3.0% to $74.03/bbl and natural gas futures are down 3.7% to $7.05/mmbtu.

There is no U.S. economic data of note today, but market participants have a big slate of data coming up this week that includes: November Consumer Confidence at 10:00 a.m. ET Tuesday, Q3 GDP Second Estimate at 8:30 a.m. ET Wednesday, October PCE Price Index at 8:30 a.m. ET and November ISM Manufacturing Index at 10:00 a.m. ET on Thursday, and the November Employment Report at 8:30 a.m. ET on Friday.

In corporate news:

  • Williams-Sonoma (WSM 117.01, -5.41,, -4.4%): downgraded to Underweight from Equal Weight at Morgan Stanley

  • Anheuser-Busch InBev (BUD 58.97, +2.38, +4.2%): upgraded to Overweight from Underweight at JPMorgan

  • Las Vegas Sands (LVS 44.51, +1.34, +3.1%), Wynn Resort (WYNN 79.41, +4.48, +6.0%), and MGM Resorts (MGM 36.53, +0.80, +2.2%): Chinese government renewed casino licenses for Macau

  • Chevron (CVX 180.31, -3.39, -1.9%): U.S. government granted license to resume oil production in Venezuela, according to Bloomberg

  • Axsome Therapeutics (AXSM 64.30, +7.48, +13.2%): announces AXS-05 achieves primary endpoint in the ACCORD phase 3 Trial in Alzheimer's Disease Agitation

  • Biogen (BIIB 293.99, -11.16, -3.7%): Another death was linked to Lecanemab, according to Science.Org

  • Apple (AAPL 145.50, -2.61, -1.8%): could lose 6 million iPhone Pro models from events at the Foxconn plant, according to Bloomberg.

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region began the week on a mostly lower note. Japan's Nikkei: -0.4%, Hong Kong's Hang Seng: -1.6%, China's Shanghai Composite: -0.8%, India's Sensex: +0.3%, South Korea's Kospi: -1.2%, Australia's ASX All Ordinaries: -0.4%.

    • In economic data:

      • China's October Industrial Profit -3.0% YTD (last -2.3%)

      • Hong Kong's October trade deficit HKD20.90 bln (last deficit of HKD44.90 bln). October Imports -11.9% m/m (last -7.8%) and Exports -10.4% m/m (last -9.1%)

      • Australia's October Retail Sales -0.2% m/m (expected 0.5%; last 0.6%)


  • In news:

    • Investor sentiment was pressured by reports of tighter lockdown measures in China, which prompted protests in several cities.

    • Goldman Sachs speculated that China could lift its zero-covid policy before April, though Q2 is still projected as the most likely time for an exit.

    • Japan is expected to fine three power companies on anti-trust grounds.



  • Major European indices trade in the red. STOXX Europe 600: -0.9%, Germany's DAX: -0.9%, U.K.'s FTSE 100: -0.3%, France's CAC 40: -0.9%, Italy's FTSE MIB: -0.9%, Spain's IBEX 35: -0.9%.

    • In economic data:

      • Eurozone's October Private Sector Loans 4.2% yr/yr (expected 4.5%; last 4.4%) and Loans to nonfinancials 8.9% yr/yr (last 8.9%)

      • U.K.'s November CBI Distributive Trades Survey -19 (expected 2; last 18)


  • In news:

    • EU officials will reportedly continue discussing a potential price cap for Russian oil.

    • There is ongoing speculation that the Bank of England and the European Central Bank will shift down to 50-bp rate hikes.

    • European Central Bank policymaker Knot said that underlying inflation trends are concerning but a recession in Q4 is not a foregone conclusion. However, ECB policymaker Kazimir said that the risk of a recession is on the rise.



U.S. equity futures:

  • S&P 500 Futures: -29 @ 4,003

  • DJIA Futures: -188 @ 34,168

  • Nasdaq 100 Futures: -86 @ 11,696

Overseas:

  • Europe: DAX -0.9%, FTSE -0.3%, CAC -0.9%

  • Asia: Nikkei -0.4%, Hang Seng -1.6%, Shanghai Composite -0.8%

Commodities:

  • Crude Oil -2.34 @ 73.94

  • Nat Gas -0.265 @ 7.065

  • Gold +3.00 @ 1757.00

  • Silver +0.005 @ 21.435

  • Copper -0.0200 @ 3.6075

Earnings/Guidance:

  • There are no earnings reports of note

News:

  • OPEC will decide on production amounts ahead of planned December 5th EU ban on most Russian crude imports, according to The Wall Street Journal

  • Protests are continuing in several Chinese cities over zero coronavirus policy and associated restrictions, according to The Wall street Journal

  • Black Friday online sales reach a new record while in person shopping increased 2.9%, according to New York Post

  • EU aiming to increase cigarette taxes, according to FT

  • FCC bans authorizations for devices that pose national security threat

  • White House COVID-19 Response Coordinator Dr. Ashish Jha says updated vaccines are effective against Omicron sub variants. Only 11% of Americans have received updated coronavirus vaccine booster, according to ABC News

  • European Central Bank policymaker Knot said that underlying inflation trends are concerning but a recession in Q4 is not a foregone conclusion. However, ECB policymaker Kazimir said that the risk of a recession is on the rise.

  • ABB ( ABB â–¾ 0.16% ) close to $325 mln settlement over bribery allegations, according to The Wall Street Journal

  • Amazon ( AMZN â–¾ 1.71% ) aiming to close some India businesses, according to Bloomberg

  • ANI Pharma ( ANIP â–´ 1.62% ) receives FDA approval for Fluoxetine Oral Solution USP

  • Apple ( AAPL â–¾ 2.11% ) could lose 6 million iPhone Pro models from events at Foxconn (HNHPF) plant, according to Bloomberg

  • Apple ( AAPL â–¾ 2.11% ), Google (GOOG), Amazon (AMZN), and ESPN (DIS) are interested in NFL Sunday Ticket streaming rights, according to New York Times

  • Axsome Therapeutics ( AXSM â–¾ 5.22% ) announces AXS-05 achieves primary endpoint in the ACCORD phase 3 Trial in Alzheimer's Disease Agitation

  • Barclays PLC ( BCS â–´ 2.75% ) and Barclays Bank PLC announces that its CEO, C.S. Venkatakrishnan, has informed the Barclays Board and his colleagues that he will be undergoing treatment for Non-Hodgkin Lymphoma

  • BioCryst Pharma ( BCRX â–´ 3.10% ) receives approval for ORLADEYO in Israel

  • Biogen ( BIIB â–¾ 0.17% ): Another death was linked to Lecanemab, according to Science.Org

  • Builders FirstSource ( BLDR â–´ 2.13% ) announced that its Board of Directors approved an increase to the company's existing stock repurchase plan in the amount of $1 bln, for a total of approximately $1.5 bln

  • Chevron ( CVX â–´ 1.50% ) granted license to resume oil production in Venezuela, according to Bloomberg

  • KKR ( KKR 0.00% ): APRIL signs strategic partnership with KKR for its next phase of growth

  • Melco Resorts & Entertainment Limited ( MLCO â–´ 9.81% ) announced that the Macau government has provisionally awarded a ten-year concession to operate games of fortune and chance in casinos in Macau to Melco Resorts Limited, a subsidiary of the Company

  • OneSpaWorld ( OSW â–¾ 0.72% ) announces new contract with Norwegian Cruise Line Holdings (NCLH)

  • Philip Morris International's ( PM â–´ 0.16% ) Philip Morris Holland Holdings becomes the owner of 93.11% of the shares in Swedish Match, and intends to initiate compulsory redemption and request delisting

  • Sarepta Therapeutics ( SRPT â–¾ 0.87% ) announces that the U.S. Food and Drug Administration has accepted the Company's Biologics License Application seeking accelerated approval of SRP-9001 for the treatment of ambulant individuals with Duchenne muscular dystrophy

  • Shopify ( SHOP â–¾ 2.31% ) Black Friday sales were up 17% yr/yr, according to Charged Retail

  • Taboola ( TBLA â–¾ 6.44% ) and Yahoo enter 30-year commercial agreement; partnership to generate ~$1 bln in annual revenue

  • The Sands China group, part of Las Vegas Sands Corp. ( LVS â–´ 2.31% ), has been awarded a new 10-year gaming concession in Macao, as announced by the Macao government Saturday

  • US Foods ( USFD â–´ 1.01% ) announced that Dave Flitman will become CEO effective Jan. 5, 2023

  • Walt Disney's ( DIS â–¾ 1.05% ) Strange World had a disappointing box office result, according to The Wall Street Journal

  • Wynn Resorts ( WYNN â–´ 2.67% ) announced that Wynn Resorts Macau received a provisional award of a gaming concession from the Macau government

M&A:

  • First Majestic Silver ( AG â–´ 3.43% ) sells strategic silver focused royalty portfolio to Metalla, which will acquire eight royalties for $20 million of common shares of Metalla

  • Univar Solutions ( UNVR â–´ 1.33% ) confirms preliminary indication of interest from Brenntag SE

Syndicate:

  • There is no syndicate activity of note

IPOs:

  • Expect to Price:

    • No IPOs expected.


Gapping Up/Down

  • Gapping up:

    • UNVR +11.3%, MLCO +6.5%, WYNN +6%, LVS +3.5%, MGM +2.9%, BCS +0.9%, TLT +0.5%


  • Gapping down:

    • USO -3.2%, ADCT -3.1%, JBLU -3.1%, AAPL -1.8%, BSX -1.3%, AAL -1%, QQQ -0.9%, SPY -0.7%, IWM -0.7%, SAVE -0.7%, DIA -0.5%, DIS -0.5%, DAL -0.5%, UAL -0.5%



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

  • Upgrades

    • Anheuser-Busch InBev (BUD) upgraded to Overweight from Underweight at JP Morgan; tgt raised to $70

    • BorgWarner (BWA) upgraded to Equal-Weight from Underweight at Morgan Stanley; tgt raised to $45


  • Downgrades:

    • Aptiv (APTV) downgraded to Equal-Weight from Overweight at Morgan Stanley; tgt lowered to $105

    • Beyond Meat (BYND) downgraded to Underweight from Equal Weight at Barclays; tgt lowered to $10

    • Diamondback Energy (FANG) downgraded to Underperform from Neutral at BofA Securities; tgt $143

    • Tyson Foods (TSN) downgraded to Underweight from Equal Weight at Barclays; tgt lowered to $58


  • Others:

    • Ambac (AMBC) initiated with a Neutral at Compass Point; tgt $18

    • Assured Guaranty (AGO) initiated with a Buy at Compass Point; tgt $84

    • MBIA (MBI) initiated with a Neutral at Compass Point; tgt $14


Upcoming Events:

  • Econ Data:

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


  • Earnings:

    • Monday (Nov 28)

      • Morning: None of note

      • Afternoon: ARWR, AZEK


  • Tuesday (Nov 29)

    • Morning: BNS, BZUN, BILI, CRNC, HIBB, SJR

    • Afternoon: CMP, CRWD, HPE, INTU, NTAP, WDAY


  • Wednesday (Nov 30)

    • Morning: DCI, FRO, HRL, BEKE, LESL, WOOF, RY, SFL, TITN

    • Afternoon: BOX, CRDO, ESTC, FIVE, LZB, NCNO, NTNX, OKTA, PSTG, PVH, CRM, SMTC, SNOW, SPLK, SNPS, VSCO, YEXT


  • Thursday (Dec 01)

    • Morning: BMO, BIG, CM, DBI, DG, KR, PDCO, SCWX, TD

    • Afternoon: AMBA, AOUT, ASAN, CHPT, MRVL, PD, SMAR, PATH, ULTA, VEEV, ZS, ZUMZ


  • Friday (Dec 02)

    • Morning: CBRL, GCO

    • Afternoon: None of note



Asia & Europe detail:

Asia: Nikkei -0.4%, Hang Seng -1.6%, Shanghai Composite -0.8%

Equity indices in the Asia-Pacific region began the week on a mostly lower note. Investor sentiment was pressured by reports of tighter lockdown measures in China, which prompted protests in several cities. Goldman Sachs speculated that China could lift its zero-covid policy before April, though Q2 is still projected as the most likely time for an exit. Japan is expected to fine three power companies on anti-trust grounds.

  • In economic data:

    • China's October Industrial Profit -3.0% YTD (last -2.3%)

    • Hong Kong's October trade deficit HKD20.90 bln (last deficit of HKD44.90 bln). October Imports -11.9% m/m (last -7.8%) and Exports -10.4% m/m (last -9.1%)

    • Australia's October Retail Sales -0.2% m/m (expected 0.5%; last 0.6%)


---Equity Markets---

  • Japan's Nikkei: -0.4%

  • Hong Kong's Hang Seng: -1.6%

  • China's Shanghai Composite: -0.8%

  • India's Sensex: +0.3%

  • South Korea's Kospi: -1.2%

  • Australia's ASX All Ordinaries: -0.4%

---FX---

  • USD/JPY: -0.7% to 138.11

  • USD/CNH: +0.4% to 7.2152

  • USD/INR: -0.1% to 81.64

Europe: DAX -0.9%, FTSE -0.3%, CAC -0.9%

Major European indices trade in the red. EU officials will reportedly continue discussing a potential price cap for Russian oil. There is ongoing speculation that the Bank of England and the European Central Bank will shift down to 50-bp rate hikes. European Central Bank policymaker Knot said that underlying inflation trends are concerning but a recession in Q4 is not a foregone conclusion. However, ECB policymaker Kazimir said that the risk of a recession is on the rise.

  • In economic data:

    • Eurozone's October Private Sector Loans 4.2% yr/yr (expected 4.5%; last 4.4%) and Loans to nonfinancials 8.9% yr/yr (last 8.9%)

    • U.K.'s November CBI Distributive Trades Survey -19 (expected 2; last 18)


---Equity Markets---

  • STOXX Europe 600: -0.9%

  • Germany's DAX: -0.9%

  • U.K.'s FTSE 100: -0.3%

  • France's CAC 40: -0.9%

  • Italy's FTSE MIB: -0.9%

  • Spain's IBEX 35: -0.9%

---FX---

  • EUR/USD: +0.7% to 1.0468

  • GBP/USD: -0.1% to 1.2085

  • USD/CHF: -0.3% to 0.9429


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