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30/12/21 Briefing

Updated: Feb 15

The S&P 500 futures trade 18 points, or 0.4%, above fair value as the market's positive bias carries over from yesterday's record-setting gains in the S&P 500 and Dow Jones Industrial Average.

The futures market is grinding higher without a discernible catalyst, adhering to the Santa Claus rally phenomenon in these thinly-traded conditions. To be fair, Johnson & Johnson (JNJ 172.00, +0.45, +0.3%) did provide some reassuring vaccine data this morning.

J&J said preliminary results from a South African Phase 3b Sisonke study showed that a booster shot of its COVID-19 vaccine was 85 percent effective against hospitalization. The data was acquired when Omicron became the dominant variant in the region.

The Omicron variant is affecting certain industries more than others right now, but as far as the market is concerned, the variant's impact on the economy will be transient or not as bad as originally feared. On a related note, Micron (MU 94.49, -1.68, -1.8%) warned of possible delays because of the lockdown in the Chinese city of Xi'an.

On the data front, investors will receive the weekly Initial Claims (Briefing.comconsensus 190,000) and Continuing Claims report at 8:30 a.m. ET.

U.S. Treasury yields have edged lower across the curve. The 2-yr yield is down one basis point to 0.74%, and the 10-yr yield is down one basis point to 1.53%. The U.S. Dollar Index is little changed at 95.91. WTI crude futures are down 0.4% to $76.22/bbl.

In U.S. Corporate news:

  • Biogen (BIIB 241.12, -17.19): -6.7% after Samsung Group denied yesterday's report that it was in talks to acquire the company.

  • Micron (MU 94.49, -1.68): -1.8% after warning of possible delays for its DRAM memory chips because of China's lockdown of Xi'an, according to CNBC.

  • JetBlue (JBLU 14.34, -0.04): -0.3% after reducing its flight schedule in January amid weather and Omicron issues, according to The Wall Street Journal.

  • Lucid Motors (LCID 36.75, -0.22): -0.6% despite being resumed with a Buy rating at Citigroup.

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region ended Thursday on a mixed note. Japan's Nikkei: -0.4% Hong Kong's Hang Seng: +0.1% China's Shanghai Composite: +0.6% India's Sensex: UNCH South Korea's Kospi: -0.5% Australia's ASX All Ordinaries: UNCH.

  • In economic data:

  • South Korea's November Industrial Production 5.1% m/m (expected 2.5%; last -2.9%); 5.9% yr/yr (expected 3.2%; last 4.5%). November Retail Sales -1.9% m/m (last 0.1%) and November Service Sector Output 2.0% m/m (last -0.4%)


  • In news:

  • A former People's Bank of China official called for an immediate loosening of macroeconomic policy to "boost vitality of participants."

  • An official with China's Finance Ministry said that China is planning record bond issuance in 2022.

  • A poll conducted by Nikkei showed that only about 18% of Japanese companies plan to raise wages by 3.0%, which is Prime Minister Kishida's wage growth goal.

  • Japan's Nikkei will be closed tomorrow while markets in Australia and Hong Kong will close early.



  • Major European indices trade on a modestly higher note. STOXX Europe 600: +0.3% Germany's DAX: +0.1% U.K.'s FTSE 100: +0.1% France's CAC 40: +0.3% Italy's FTSE MIB: +0.2% Spain's IBEX 35: +0.3%.

  • In economic data:

  • U.K.'s December Nationwide HPI 1.0% m/m (expected 0.5%; last 0.9%); 10.4% yr/yr (last 10.0%)

  • Spain's December CPI 1.3% m/m (last 0.3%); 6.7% yr/yr (last 5.5%). October Current Account surplus EUR2.14 bln (last surplus of EUR1.21 bln)

  • Swiss December KOF Leading Indicators 107.0 (expected 106.4; last 107.5)


  • In news:

  • Bank of Italy Governor Visco said that he expects inflation in the eurozone to average 3.0% in 2022 and slip below the ECB's 2.0% target in 2023/24.

  • Austrian National Bank Governor Holzmann said he expects inflation to peak around the turn of the year and slowly ease through 2022, adding that the ECB should take steps to abandon negative rates in 2022.

  • Spain's CPI increased at its fastest yr/yr pace in 30 years in the December reading.

  • Markets in Germany, Italy, and Spain will be closed tomorrow while markets in France and the U.K. will close early.




U.S. equity futures:

  • S&P 500 Futures: +7 @ 4,800

  • DJIA Futures:+48 @ 36,537

  • Nasdaq 100 Futures: +38 @ 16,529

Overseas:

  • Europe: DAX +0.1%, FTSE +0.1%, CAC +0.3%

  • Asia: Nikkei -0.4%, Hang Seng +0.1%, Shanghai Composite +0.6%

Commodities:

  • Crude Oil -0.32 @ 76.24

  • Nat Gas -0.061 @ 3.994

  • Gold -2.60 @ 1803.20

  • Silver -0.068 @ 22.790

  • Copper -0.001 @ 4.41

U.S. Summary:

  • Earnings/Guidance (Full Earnings Calendar):

  • DiDi Global (DIDI) posts Q3 results; revs fell 1.7% yr/yr to RMB 42.68 bln; company still plans to delist from NYSE


  • General News:

  • T cell immunity protects people from Omicron. Bloomberg

  • Essential services like police, fire, 911, and subway transportation are all being impacted by surge of coronavirus cases and related labor issues in NYC. Restaurants and courts are also closing. NY Times

  • Alcoa (AA) to curtail aluminum smelter in San Ciprin for two years with commitment to restart

  • Biogen (BIIB): Samsung Group in regulatory filing denies report that it is in discussions to acquire BIIB

  • Ford Motor (F) CEO Jim Farley confirms NYC has ordered Mustang Mach-E GT vehicles for NYPD fleet

  • Immunovant Sciences (IMVT) to initiate Phase 3 study for batoclimab in 1H22

  • JetBlue (JBLU) lowers flight schedule in January amid weather and Omicron issues. WSJ

  • Johnson & Johnson (JNJ) COVID-19 vaccine demonstrates 85 percent effectiveness against hospitalization in South Africa when Omicron was dominant

  • Kimberly-Clark (KMB) and Dada Group (DADA) announced a plan to strengthen their strategic partnership.

  • Lockheed Martin (LMT) awarded $847 mln contract modification relating to Joint Strike Fighter aircraft

  • Nu Skin (NUS) to exit its Grow Tech segment, which focuses on agriculture technology

  • Siemens AG (SIEGY): FDA provides EUA for Clinitest rapid COVID-19 antigen self-test

  • Walmart (WMT) and Sam's Club pharmacies ready to dispense FDA authorized COVID-19 antiviral medication


  • M&A:

  • CEMEX S.A. (CX) signed an agreement for the sale of its operations in Costa Rica and El Salvador with Cementos Progreso Holdings for $335 mln

  • Intel (INTC): SK hynix completes the first phase of Intel NAND and SSD business acquisition. In exchange, SK hynix will pay $7 billion in consideration.

  • R.R. Donnelley & Sons Company (RRD) announced the receipt of an unsolicited non-binding "Alternative Acquisition Proposal" as defined in its previously announced definitive merger agreement with affiliates of Chatham Asset Management, LLC, dated as of December 14, 2021, from a strategic party to acquire all of the outstanding shares of RRD's common stock for $11.00 per share in cash, subject to other terms and conditions.

  • Simpson Manufacturing (SSD) to acquire Etanco Group for 725 million; expected to close near the end of 1Q22

  • TPG Pace Beneficial Finance Corp. (TPGY) and EVBox Group mutually agree to terminate business combination agreement


  • Syndicate:

  • American Virtual Cloud Technologies (AVCT) files for 37,916,668 share common stock offering by selling shareholders

  • Columbia Banking (COLB) files mixed securities shelf offering

  • Vaalco Energy (EGY) files for $150 mln mixed securities shelf offering


  • IPOs:

  • Expected to Price:

  • No IPOs expected to price.



Gapping Up/Down

  • Gapping up:

  • EGY +18.5%, VSCO +0.9%, XLU +0.5%, TLT +0.4%, INTC +0.3%


  • Gapping down:

  • AVCT -6.7%, BIIB -5.6%, COLB -4.4%, DIDI -4%, ICL -1%, AA -0.9%, TPGY -0.9%, BCTX -0.7%



Analyst Research (see Upgrades/Downgradescalendarfor full list):

  • Upgrades

  • No upgrades of note


  • Downgrades:

  • No downgrades of note


  • Others:

  • CURO Group (CURO) resumed with a Buy at Jefferies; tgt $25

  • Lucid Motors USA (LCID) resumed with a Buy at Citigroup; tgt $57

  • Zoom Video (ZM) initiated with a Buy at Citic Securities; tgt $260


Upcoming Events:

  • Econ Data:

  • 08:30 ET: Weekly Initial Claims (prior 205,000) and Continuing Claims (prior 1.859 mln)

  • 10:30 ET: Weekly natural gas inventories (prior -55 bcf)


  • 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 +0.1%, Shanghai Composite +0.6%

Equity indices in the Asia-Pacific region ended Thursday on a mixed note. A former People's Bank of China official called for an immediate loosening of macroeconomic policy to "boost vitality of participants." An official with China's Finance Ministry said that China is planning record bond issuance in 2022. A poll conducted by Nikkeishowed that only about 18% of Japanese companies plan to raise wages by 3.0%, which is Prime Minister Kishida's wage growth goal. Japan's Nikkei will be closed tomorrow while markets in Australia and Hong Kong will close early.

  • In economic data:

  • South Korea's November Industrial Production 5.1% m/m (expected 2.5%; last -2.9%); 5.9% yr/yr (expected 3.2%; last 4.5%). November Retail Sales -1.9% m/m (last 0.1%) and November Service Sector Output 2.0% m/m (last -0.4%)


---Equity Markets---

  • Japan's Nikkei: -0.4%

  • Hong Kong's Hang Seng: +0.1%

  • China's Shanghai Composite: +0.6%

  • India's Sensex: UNCH

  • South Korea's Kospi: -0.5%

  • Australia's ASX All Ordinaries: UNCH

---FX---

  • USD/JPY: +0.2% to 115.14

  • USD/CNH: +0.1% to 6.3743

  • USD/INR: -0.3% to 74.38

Europe: DAX +0.1%, FTSE +0.1%, CAC +0.3%

Major European indices trade on a modestly higher note. Bank of Italy Governor Visco said that he expects inflation in the eurozone to average 3.0% in 2022 and slip below the ECB's 2.0% target in 2023/24. Austrian National Bank Governor Holzmann said he expects inflation to peak around the turn of the year and slowly ease through 2022, adding that the ECB should take steps to abandon negative rates in 2022. Spain's CPI increased at its fastest yr/yr pace in 30 years in the December reading. Markets in Germany, Italy, and Spain will be closed tomorrow while markets in France and the U.K. will close early.

  • In economic data:

  • U.K.'s December Nationwide HPI 1.0% m/m (expected 0.5%; last 0.9%); 10.4% yr/yr (last 10.0%)

  • Spain's December CPI 1.3% m/m (last 0.3%); 6.7% yr/yr (last 5.5%). October Current Account surplus EUR2.14 bln (last surplus of EUR1.21 bln)

  • Swiss December KOF Leading Indicators 107.0 (expected 106.4; last 107.5)


---Equity Markets---

  • STOXX Europe 600: +0.3%

  • Germany's DAX: +0.1%

  • U.K.'s FTSE 100: +0.1%

  • France's CAC 40: +0.3%

  • Italy's FTSE MIB: +0.2%

  • Spain's IBEX 35: +0.3%

---FX---

  • EUR/USD: -0.2% to 1.1322

  • GBP/USD: UNCH at 1.3486

  • USD/CHF: +0.1% to 0.9156


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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