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29/11/22 Briefing

The S&P 500 futures are up 8 points and are trading 0.3% above fair value. The Nasdaq 100 futures are up 44 points and are trading 0.5% above fair value. The Dow Jones Industrial Average futures are down 1 point and are trading slightly above fair value.

Equity futures are mixed, but things are generally more positive as speculation grows that China may temper its zero-COVID measures. The country reported its first decline in COVID infections in more than a week and Chinese officials announced they're aiming to increase vaccination rates among older people, according to Bloomberg. Hong Kong's Hang Seng rose 5.2% on the news.

WTI crude oil futures have continued to rebound ($78.92/bbl, +1.67, +2.1%) on these latest developments.

Treasury yields are moving lower. The 10-yr note yield is down four basis points to 3.66% and the 2-yr note yield is down two basis points to 4.43% with some cooler-than-expected inflation readings out of Europe contributing to the buying interest.

Market participants will receive the following economic data today:

  • 9:00 a.m. ET: September FHFA Housing Price Index (prior -0.7%)

  • 9:00 a.m. ET: September S&P Case-Shiller Home Price Index (Briefing.com consensus 10.7%; prior 13.1%)

  • 10:00 a.m. ET: November Consumer Confidence (Briefing.com consensus 100.0; prior 102.5)

In corporate news:

  • Roku (ROKU 52.35, -1.56, -2.9%): downgraded to Sector Weight from Overweight at KeyBanc Capital Markets

  • UnitedHealth (UNH 530.10, -2.17, -0.4%): updates FY22 outlook and introduces FY23 outlook ahead of its Investor Conference; reaffirms FY22 earnings, guides revs ahead of consensus; guides FY23 earnings below consensus, revs above

  • Microchip (MCHP 75.25, +0.91, +1.2%): reiterates its Q3 (Dec) net sales guidance and expectations for sequential revenue growth for Q4 (Mar)

  • Hibbett (HIBB 63.70, -3.90, -5.8%): misses by $0.57, misses on revs; guides FY23 EPS in-line, revs in-line

  • Bilibili (BILI 13.88, +1.29, +10.3%): beats by RMB0.20, beats on revs; guides Q4 revs below consensus

  • UPS 2.77% (UPS 182.50, +2.59, +1.4%): upgraded to Buy from Hold at Deutsche Bank

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region ended Tuesday on a mostly higher note. Japan's Nikkei: -0.5%, Hong Kong's Hang Seng: +5.2%, China's Shanghai Composite: +2.3%, India's Sensex: +0.3%, South Korea's Kospi: +1.0%, Australia's ASX All Ordinaries: +0.3%.

  • In economic data:

  • Japan's October Retail Sales 4.3% yr/yr (expected 5.0%; last 4.8%). October Unemployment Rate 2.6% (expected 2.5%; last 2.6%) and October Jobs/Application Ratio 1.35 (expected 1.35; last 1.34)


  • In news:

  • Chinese equities rallied amid speculation that the government is looking to speed up coronavirus shots for the elderly and is aiming to avoid excessive restrictions.

  • China Securities Regulatory Commission said that the ban on share sales by developers will be lifted on Monday.

  • The Reserve Bank of New Zealand's Shadow Board sees the official cash rate peaking at 5.00% in 2023 with a risk of "overcorrecting."

  • Japan's Finance Minister Suzuki said that a budget that directs 2.0% of GDP to defense spending is being prepared.

  • The South Korean government ordered drivers of cement trucks to return to work from a strike.

  • Taiwan's domestic growth forecast for 2022 was cut to 3.06% from 3.76% while the outlook for 2023 was lowered to 2.75% from 3.05%.



  • Major European indices trade near their flat lines while the U.K.'s FTSE (+0.7%) outperforms. STOXX Europe 600: +0.2%, Germany's DAX: +0.2%, U.K.'s FTSE 100: +0.7%, France's CAC 40: +0.2%, Italy's FTSE MIB: UNCH, Spain's IBEX 35: -0.1%.

  • In economic data:

  • Eurozone's November Business and Consumer Survey 93.7 (expected 93.5; last 92.7)

  • U.K.'s October Mortgage Lending GBP3.97 bln (expected GBP5.02 bln; last GBP5.88 bln) and net Lending to Individuals GBP4.70 bln (expected GBP6.70 bln; last GBP6.50 bln)

  • Italy's September Industrial Sales -1.2% m/m (last 3.4%); 18.0% yr/yr (last 22.9%). October PPI -3.3% m/m (last 2.7%); 28.0% yr/yr (last 41.7%)

  • Spain's November CPI -0.1% m/m (last 0.3%); 6.8% yr/yr (expected 7.4%; last 7.3%)

  • Swiss Q3 GDP 0.2% qtr/qtr (expected 0.3%; last 0.1%); 0.5% yr/yr (expected 1.0%; last 2.2%)


  • In news:

  • Spain's November CPI and Italy's October PPI showed a deceleration on a month-over-month basis ahead of tomorrow's release of the November CPI report for the eurozone.

  • The Airbus CEO said that the supply chain environment is still "very complex."

  • British Prime Minister Sunak said that the "golden era" of U.K. relations with China has come to an end.

  • Germany signed an agreement to purchase LNG from Qatar beginning in 2026.



U.S. equity futures:

  • S&P 500 Futures: +8 @ 3,978

  • DJIA Futures: -1 @ 33,870

  • Nasdaq 100 Futures: +44 @ 11,660

Overseas:

  • Europe: DAX +0.2%, FTSE +0.7%, CAC +0.2%

  • Asia: Nikkei -0.5%, Hang Seng +5.2%, Shanghai Composite +2.3%

Commodities:

  • Crude Oil +2.23 @ 78.96

  • Nat Gas +0.103 @ 7.299

  • Gold +12.60 @ 1752.90

  • Silver +0.310 @ 21.225

  • Copper +0.0325 @ 3.644

Earnings/Guidance:

  • Arrowhead ( ARWR 7.11% ) reports FY22 (Sep) results, misses on revs

  • AZEK ( AZEK 1.95% ) misses by $0.02, beats on revs; guides DecQ revs below consensus; expects FY23 volume to fall 10% yr/yr

  • Bank of Nova Scotia ( BNS 2.97% ) beats by CAD 0.09, misses on revs

  • Baozun ( BZUN 3.60% ) misses by RMB0.33, reports revs in-line

  • Bilibili ( BILI 22.32% ) beats by RMB0.20, beats on revs; guides Q4 revs below consensus

  • Geo Group ( GEO 16.23% ) sees FY22 EPS and revs in line with consensus

  • Hibbett ( HIBB 11.54% ) misses by $0.57, misses on revs; guides FY23 EPS in-line, revs in-line

  • Microchip ( MCHP 0.16% ) reiterates its Q3 (Dec) net sales guidance and expectations for sequential revenue growth for Q4 (Mar)

  • Nestle ( NSRGY ) raises FY22 organic sales outlook

  • TC Energy ( TRP 6.78% ) reaffirms long-term comparable EBITDA growth outlook

  • UnitedHealth ( UNH 0.80% ) updates FY22 outlook and introduces FY23 outlook ahead of its Investor Conference; reaffirms FY22 earnings, guides revs ahead of consensus; guides FY23 earnings below consensus, revs above

News:

  • China aiming to increase COVID-19 vaccination rates among older people. Note: CNBC reported that China is officially sticking by Zero COVID-19 policy, however there are "unverified rumors" that Chinese President Xi is looking for a way to exit from zero COVID policy, according to Bloomberg

  • President Biden wants Congress to pass legislation immediately to adopt the tentative agreement between railroad workers and operators; House Speaker Nancy Pelosi (D-CA) says House will proceed with that legislation

  • Spain's November CPI and Italy's October PPI showed a deceleration on a month-over-month basis

  • British Prime Minister Sunak said that the "golden era" of U.K. relations with China has come to an end

  • The Reserve Bank of New Zealand's Shadow Board sees the official cash rate peaking at 5.00% in 2023 with a risk of "overcorrecting."

  • AMC Networks ( AMCX 5.34% ) announced that its Chief Executive Officer Christina Spade has stepped down from her role

  • Apollo Global Management ( APO 1.29% ) co-founder Leon Black was accused of rape, according to FT

  • Baidu ( BIDU 5.28% ) to build world's largest fully driverless ride-hailing service area in 2023

  • Brookfield Infrastructure ( BIP 0.86% ) to renew its normal course issuer bid for its outstanding limited partnership units

  • ConocoPhillips ( COP 0.33% ) and QatarEnergy announce the signing of two agreements to supply long-term liquefied natural gas to Germany

  • Micron ( MU 1.13% ) aiming to increase 1-beta DRAM shipments, according to Digitimes

  • Silvergate Capital ( SI 0.04% ) announced a business update, citing that its deposit relationship with BlockFi is limited to less than $20 million of its total deposits from all digital asset customers as of November 28, 2022

  • Snap ( SNAP 0.20% ) staff will be required to be in the office four days a week, according to Bloomberg

  • Suncor Energy ( SU 2.22% ) to retain and optimize its Petro-Canada retail business

  • Toyota ( TM 0.76% ) global output has slowed, according to Bloomberg

  • uniQure ( QURE 5.97% ) and Bristol-Myers Squibb (BMY) collaboration and license agreement will terminate effective February 21, 2023

  • Uranium Royalty ( UROY 4.55% ) notified Orano Canada of its election to receive royalty proceeds from the recently re-started world-class McArthur River mine through delivery of physical uranium

M&A:

  • Apollo Endosurgery ( APEN 67.83% ) to be acquired by Boston Scientific (BSX) for $10 per share

  • AstraZeneca ( AZN 0.20% ) acquires Neogene Therapeutics for total consideration up to $320 mln

  • Bionano Genomics ( BNGO 6.86% ) to acquire Purigen Biosystems to enable simplified and accelerated DNA isolation for optical genome mapping for up to $64 mln, including $32 mln in cash paid at closing

  • Royal Bank of Canada ( RY 0.23% ) to strengthen premium Canadian business with agreement to acquire HSBC Canada for an all-cash purchase price of $13.5 billion

  • USANA ( USNA 2.57% ) acquires Rise Bar and Oola

Syndicate:

  • There is no syndicate activity of note

IPOs:

  • Expect to Price:

  • No IPOs expected.


Gapping Up/Down

  • Gapping up:

  • BILI +8.3%, NXST +6.5%, BIDU +5.7%, BZUN +5.5%, BIGC +4.4%, SABR +4.1%, NUS +2.6%, CNI +1.4%, PBF +1.1%, AZN +0.9%, NSC +0.8%, UNP +0.7%, CP +0.7%, AAPL +0.6%, MCHP +0.6%, TRP +0.6%


  • Gapping down:

  • AZEK -8.1%, SI -3.7%, AMR -2.7%, USNA -2.5%, ENFN -2.4%, SF -1.4%, ICHR -1.2%, BNGO -1%, UNH -0.5%



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

  • Upgrades

  • Canadian Pacific (CP) upgraded to Buy from Hold at Deutsche Bank; tgt raised to $98

  • Geo Group (GEO) upgraded to Outperform from Neutral at Wedbush; tgt raised to $14

  • NovoCure (NVCR) upgraded to Overweight from Equal Weight at Wells Fargo; tgt raised to $89

  • UPS (UPS) upgraded to Buy from Hold at Deutsche Bank; tgt raised to $220


  • Downgrades:

  • Darden Restaurants (DRI) downgraded to Neutral from Outperform at Robert W. Baird; tgt raised to $150

  • Evergy (EVRG) downgraded to Underperform from Outperform at Credit Suisse; tgt lowered to $57

  • Roku (ROKU) downgraded to Sector Weight from Overweight at KeyBanc Capital Markets

  • American Homes 4 Rent (AMH) downgraded to Outperform from Strong Buy at Raymond James

  • CinCor Pharma (CINC) downgraded to Equal-Weight from Overweight at Morgan Stanley; tgt lowered to $22

  • CinCor Pharma (CINC) downgraded to Perform from Outperform at Oppenheimer

  • Generac (GNRC) downgraded to Underperform from Hold at Jefferies; tgt lowered to $85

  • Invitation Homes (INVH) downgraded to Outperform from Strong Buy at Raymond James

  • PagSeguro Digital (PAGS) downgraded to Neutral from Overweight at JP Morgan; tgt lowered to $12


  • Others:

  • 23andMe (ME) initiated with a Buy at Berenberg; tgt $7

  • Atlantic Union Bankshares (AUB) initiated with an Outperform at Hovde Group; tgt $41

  • OmniAb (OABI) initiated with an Outperform at SVB Leerink; tgt $6

  • Toast (TOST) initiated with a Peer Perform at Wolfe Research

  • VersaBank (VBNK) initiated with an Outperform at Keefe Bruyette

  • American Express (AXP) initiated with a Neutral at Redburn

  • Mastercard (MA) initiated with a Neutral at Redburn

  • Visa (V) initiated with a Sell at Redburn


Upcoming Events:

  • Econ Data:

  • 09:00 ET: September FHFA Housing Price Index (Prior -0.7%)

  • 09:00 ET: September S&P Case-Shiller Home Price Index (Prior 13.1%)

  • 10:00 ET: November Consumer Confidence (Prior 102.5)


  • 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 -0.5%, Hang Seng +5.2%, Shanghai Composite +2.3%

Equity indices in the Asia-Pacific region ended Tuesday on a mostly higher note. Chinese equities rallied amid reports that the government is looking to speed up coronavirus shots for the elderly and is aiming to avoid excessive restrictions. China Securities Regulatory Commission said that the ban on share sales by developers will be lifted on Monday. The Reserve Bank of New Zealand's Shadow Board sees the official cash rate peaking at 5.00% in 2023 with a risk of "overcorrecting." Japan's Finance Minister Suzuki said that a budget that directs 2.0% of GDP to defense spending is being prepared. The South Korean government ordered drivers of cement trucks to return to work from a strike. Taiwan's domestic growth forecast for 2022 was cut to 3.06% from 3.76% while the outlook for 2023 was lowered to 2.75% from 3.05%.

  • In economic data:

  • Japan's October Retail Sales 4.3% yr/yr (expected 5.0%; last 4.8%). October Unemployment Rate 2.6% (expected 2.5%; last 2.6%) and October Jobs/Application Ratio 1.35 (expected 1.35; last 1.34)


---Equity Markets---

  • Japan's Nikkei: -0.5%

  • Hong Kong's Hang Seng: +5.2%

  • China's Shanghai Composite: +2.3%

  • India's Sensex: +0.3%

  • South Korea's Kospi: +1.0%

  • Australia's ASX All Ordinaries: +0.3%

---FX---

  • USD/JPY: -0.7% to 137.97

  • USD/CNH: -1.1% to 7.1702

  • USD/INR: UNCH at 81.65

Europe: DAX +0.2%, FTSE +0.7%, CAC +0.2%

Major European indices trade near their flat lines while the U.K.'s FTSE (+0.7%) outperforms. Spain's November CPI and Italy's October PPI showed a deceleration on a month-over-month basis ahead of tomorrow's release of the November CPI report for the eurozone. The Airbus CEO said that the supply chain environment is still "very complex." British Prime Minister Sunak said that the "golden era" of U.K. relations with China has come to an end. Germany signed an agreement to purchase LNG from Qatar beginning in 2026.

  • In economic data:

  • Eurozone's November Business and Consumer Survey 93.7 (expected 93.5; last 92.7)

  • U.K.'s October Mortgage Lending GBP3.97 bln (expected GBP5.02 bln; last GBP5.88 bln) and net Lending to Individuals GBP4.70 bln (expected GBP6.70 bln; last GBP6.50 bln)

  • Italy's September Industrial Sales -1.2% m/m (last 3.4%); 18.0% yr/yr (last 22.9%). October PPI -3.3% m/m (last 2.7%); 28.0% yr/yr (last 41.7%)

  • Spain's November CPI -0.1% m/m (last 0.3%); 6.8% yr/yr (expected 7.4%; last 7.3%)

  • Swiss Q3 GDP 0.2% qtr/qtr (expected 0.3%; last 0.1%); 0.5% yr/yr (expected 1.0%; last 2.2%)


---Equity Markets---

  • STOXX Europe 600: +0.2%

  • Germany's DAX: +0.2%

  • U.K.'s FTSE 100: +0.7%

  • France's CAC 40: +0.2%

  • Italy's FTSE MIB: UNCH

  • Spain's IBEX 35: -0.1%

---FX---

  • EUR/USD: +0.4% to 1.0375

  • GBP/USD: +0.5% to 1.2012

  • USD/CHF: +0.1% to 0.9500


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