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31/01/22 Briefing

The S&P 500 futures trade six points, or 0.1%, below fair value on the final day of a turbulent month. The S&P 500 enters the session down 7.0% in January, versus 12% declines in the Nasdaq Composite (-12.0%) and Russell 2000 (-12.3%). The market continues to factor in expectations for a more hawkish Fed after Atlanta Fed President Bostic (not a voting FOMC member) teased the idea of a 50-basis-point hike in an interview with the Financial Times. That's not a novel idea for the market, but it might be pressuring sentiment in these fragile times. The 2-yr yield, which tracks expectations for the fed funds rate, is currently up three basis points to 1.20%. The 10-yr yield is up two basis points to 1.80%. The U.S. Dollar Index is down 0.1% to 97.20. WTI crude futures are up 0.5% to 87.29% ahead of an OPEC+ meeting later this week. The earnings and economic calendars are on the lighter side today, but the rest of the week should be more eventful. Today's data will be limited to the Chicago PMI for January (Briefing.com consensus 62.5) at 9:45 a.m. ET. Looking ahead, investors will receive the January ISM Manufacturing Index on Tuesday and the January Employment Situation report on Friday. In earnings, Alphabet (GOOG 2672.00, +6.21, +0.2%) will report on Tuesday, followed by Meta Platforms (FB 301.66, -0.05, unch) on Wednesday and Amazon.com (AMZN 2878.61, -0.95, unch) on Thursday. In U.S. Corporate news:

  • Citrix (CTXS 101.84, -3.71): -3.5% after The Wall Street Journal reported that the company is nearing a deal to go private for $13 billion. CTXS currently has a market capitalization of $13.2 billion.

  • L3Harris (LHX 214.80, -3.87): -1.8% after missing revenue estimates and guiding FY22 EPS and revenue below consensus.

  • Otis Worldwide (OTIS 82.10, -0.67): -0.8% after guiding the midpoint of FY22 EPS and revenue below consensus, overshadowing its EPS beat.

  • Netflix (NFLX 395.03, +10.67): +2.8% after the stock was upgraded to Buy from Neutral at Citigroup.

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region began the week on a mostly higher note while markets in Hong Kong, China, South Korea, and Singapore were closed for Lunar New Year. Japan's Nikkei: +1.1% Hong Kong's Hang Seng: CLOSED China's Shanghai Composite: CLOSED India's Sensex: +1.4% South Korea's Kospi: CLOSED Australia's ASX All Ordinaries: UNCH.

  • In economic data:

  • China's January Manufacturing PMI 50.1 (expected 50.0; last 50.3) and Non-Manufacturing PMI 51.1 (last 52.7). January Caixin Manufacturing PMI 49.1 (expected 50.4; last 50.9)

  • Japan's December Industrial Production -1.0% m/m (expected -0.8%; last 7.0%), December Retail Sales 1.4% yr/yr (expected 2.7%; last 1.9%), and December Housing Starts 4.2% yr/yr (expected 7.8%; last 3.7%). January Household Confidence 36.7 (expected 36.9; last 39.1)

  • Australia's December Private Sector Credit 0.8% m/m (expected 0.7%; last 0.9%)

  • Singapore's Q4 Business Expectations 8.00 (last 16.00)

  • Hong Kong's December Retail Sales 6.2% yr/yr (last 7.1%)


  • In news:

  • China's official Manufacturing and Non-Manufacturing PMI readings remained just above 50.0 while Caixin Manufacturing PMI dipped into contraction.

  • The Caixin report noted that the weakness was due to contracting demand, supply shocks, and weakening expectations.

  • North Korea conducted its seventh missile test of the month.



  • Major European indices trade in mixed fashion. STOXX Europe 600: +0.3% Germany's DAX: +0.2% U.K.'s FTSE 100: UNCH France's CAC 40: -0.2% Italy's FTSE MIB: +0.5% Spain's IBEX 35: -0.4%.

  • In economic data:

  • Eurozone's Q4 GDP 0.3% qtr/qtr, as expected (last 2.2%); 4.6% yr/yr (expected 4.7%; last 3.9%)

  • Italy's Q4 GDP 0.6% qtr/qtr (expected 0.5%; last 2.6%); 6.4% yr/yr (expected 6.2%; last 3.9%)

  • Spain's January CPI -0.5% m/m (expected 1.3%; last 1.2%); 6.0% yr/yr (expected 6.7%; last 6.5%). December Retail Sales -2.3% yr/yr (last 5.1%). November Current Account surplus EUR1.01 bln (last surplus of EUR2.14 bln)


  • In news:

  • Italy's President Mattarella was convinced to accept another term after the country's parliament failed to elect a new leader.

  • British leaders are laying the groundwork for higher taxes, including a national insurance increase.

  • Saipem fell to its low from 2020 after withdrawing its guidance and warning about a potential need to raise cash.



U.S. equity futures:

  • S&P 500 Futures: -16 @ 4,281

  • DJIA Futures: -185 @ 33,765

  • Nasdaq 100 Futures: +2 @ 14,456

Overseas:

  • Europe: DAX +0.2%, FTSE UNCH, CAC -0.2%

  • Asia: Nikkei +1.1%, Hang Seng CLOSED, Shanghai Composite CLOSED

Commodities:

  • Crude Oil +0.46 @ 87.28

  • Nat Gas +0.234 @ 4.873

  • Gold +6.00 @ 1790.90

  • Silver +0.272 @ 22.573

  • Copper +0.0210 @ 4.3310

U.S. Summary:

  • Earnings/Guidance (Full Earnings Calendar):

  • Akoustis Technologies (AKTS) misses by $0.06, beats on revs

  • Atkore International (ATKR) beats by $1.02, beats on revs; guides FY22 EPS above consensus

  • Otis Worldwide (OTIS) beats by $0.02, reports revs in-line; guides FY22 EPS and revs mid points below consensus

  • Quantum FinTech Acquisition Corporation (QFTA): TradeStation reports its Q3 results; revs rise 1.8% yr/yr


  • General News:

  • Atlanta Fed President Raphael Bostic (not a voting FONC member) in interview says Fed could increase rates by 50 basis points if necessary, according to Financial Times

  • Ukraine believes White House is unnecessarily spreading warnings of Russian attack, but Pentagon believes Russia has capability to invade the entire country, according to the New York Times

  • US and Russia preparing for confrontation at today's UN meeting, according to the New York Times

  • White House Economic Advisor Brian Deese in CNBC interview says January jobs report "could look a little strange" due to people being on sick leave related to Omicron variant

  • Senate close to agreement on Russian sanctions bill, which could include sanctions even if Russia doesn't invade Ukraine, according to Bloomberg

  • Global health officials are beginning to acknowledge that world has to live with coronavirus and end restrictions, according to the Wall Street Journal

  • The sister Omicron variant is not a cause for concern, but could slow case decline, according to the New York Times

  • Some Democrats are willing to accept whatever Senator Joe Manchin wants to pass from Build Back Better, but it could take months for a deal, according to the Wall Street Journal

  • House aiming to consider legislation on China competitiveness and semiconductor industry this week, according to Reuters

  • Thousands experienced power outages due to winter storm

  • California cannabis store owners fear that legal business could soon collapse amid high taxes and competition from illegal market, according to NBC News

  • Akoustis Technologies (AKTS) received five new Wi-Fi design wins from multiple customers, each of which is expected to ramp into production and ship in the current calendar year

  • Alphabet (GOOG): Google Cloud shifts leadership of its sales and partnerships operations, according to CNBC

  • Altimmune (ALT) receives FDA Clearance of Pemvidutide; Enrollment in 48-week Phase 2 clinical trial expected to begin in Q1 2022

  • Bed Bath and Beyond (BBBY) customers are frustrated with product shortages, according to the Wall Street Journal

  • BHP Group (BHP) unifies its corporate structure under BHP Group Limited

  • Blackstone (BX) wants to invest $11 bln in Asia deals, according to Bloomberg

  • Ceragon (CRNT) has signed a deal with Globacom to further expand its network and enable it to maintain its technology

  • Cheniere Energy Partners (CQP) increases quarterly distribution to $0.70/unit from $0.68/unit

  • Diversified Healthcare Trust (DHC) has entered into a $703 mln joint venture for 10 properties in DHC's Office Portfolio segment with two global institutional investors

  • GeoPark (GPRK) Announces Consolidated 2021 Certified 2P Reserves of 159 Million BOE With Net Present Value (After Tax) of $2.3 Billion

  • GoHealth (GOCO) CFO Vance Johnston to resign

  • Humacyte (HUMA) Announces Clinical Case Series Demonstrating Potential of Human Acellular Vessel (HAV) to Expand Opportunities for Limb Salvage in Multiple Complex Vascular Reconstruction Scenarios

  • IAMGOLD (IAG) Chairman retires

  • ImmunoPrecise (IPA) antibodies PolyTope potently neutralizes the SARS-CoV-2 Omicron Variant - moves towards FDA/IND-submission

  • Landsea Homes (LSEA) approved a $10 million stock repurchase program

  • LXP Industrial Trust (LXP) to Review Letter from Land & Buildings

  • Madrigal Pharmaceuticals (MDGL) announces "positive" topline clinical data from the placebo-controlled, double-blind portion of its Phase 3 MAESTRO-NAFLD-1 safety study of resmetirom

  • NextEra Energy (NEE) and Daimler Truck Holding AG (DTRUY) announce MOU for a proposed joint venture for medium and heavy-duty battery electric and hydrogen fuel cell vehicles

  • OraSure's (OSUR) InteliSwab COVID-19 rapid tests have been authorized by the FDA for use in children ages 2-14

  • Penn National Gaming (PENN) issues statement following announcement that Ontario's regulated sports betting and igaming market will open to private operators on April 4, 2022

  • Petrobras (PBR) provides proved reserves updates and Urucu Cluster divestment update

  • Pfizer (PFE) and and Ionis (IONS) announce discontinuation of vupanorsen clinical development program

  • Regeneron Pharma (REGN) receives CHMP recommendation for approval of Dupixent

  • Robinhood (HOOD): Cathie Wood (ARKK) to purchase 2.4 mln shares of Robinhood, according to Bloomberg

  • Roche Hldg (RHHBY) receives FDA approval for Genentech's Vabysmo

  • SJW (SJW) appoints Andrew Walters as CFO, effective on January 26

  • Sono Group N.V. (SEV) provides corporate update

  • Spotify (SPOT): Barry Manilow denies rumor he's pulling his music from Spotify; issues platform rules regarding COVID-19

  • Taysha Gene Therapies (TSHA) Reports Positive Clinical Efficacy and Safety Data for High Dose Cohort and Long-term Durability Data for TSHA-120 in Giant Axonal Neuropathy

  • TreeHouse Foods (THS): JANA affirmed active stake and delivered a notice of their intent to propose Wendy Beck, Christopher Sliva, and Scott Ostfeld for election at the 2022 annual meeting of stockholders

  • Xeris Biopharma (XERS) announced that Recorlev (levoketoconazole) is now available for prescription

  • XOMA (XOMA) became eligible to receive a 0.5% commercial payment stream on net sales associated with faricimab for a ten-year period following its first commercial sale in the United States


  • M&A:

  • ADTRAN (ADTN): Threshold met for takeover of ADVA Optical Networking

  • Citrix Systems (CTXS) near deal to become private, according to the Wall Street Journal

  • GrowGeneration (GRGW) acquires specialty marketing and sales organization of horticultural products company Horticultural Rep Group; financial terms not disclosed

  • Pearson Plc (PSO) announced it has acquired Credly

  • Petrobras (PBR) approves sale of its total stake in 22 concessions of onshore and shallow water production fields in Potiguar Basin

  • Walgreens (WBA) aiming to begin Boots sale, according to Bloomberg


  • Syndicate:

  • Wolfspeed (WOLF) to offer $500 million aggregate principal amount of its Convertible Senior Notes due 2028 in a private offering

  • Xeris Biopharma (XERS) files for $250 mln mixed securities shelf offering; also files for 15,358,362 share common stock offering by selling shareholder


  • IPOs:

  • Expected to Price:

  • No IPOs expected to price.



Gapping Up/Down

  • Gapping up:

  • SEV +6.4%, ATKR +5.7%, LXP +5%, MESO +2.9%, NFLX +2.6%, HUBS +2.2%, WCC +2.2%, TSLA +1.8%, TSM +1.5%, CRNT +1.4%, SPOT +1.2%, AMAT +1.2%, GOOG +0.9%, MU +0.9%, ASML +0.9%, QCOM +0.7%


  • Gapping down:

  • XERS -3.4%, HOOD -2.5%, WBA -0.8%


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

  • Upgrades

  • Arcturus Therapeutics (ARCT) upgraded to Mkt Perform from Underperform at Raymond James

  • AZEK (AZEK) upgraded to Overweight from Equal-Weight at Stephens; tgt lowered to $41

  • Beyond Meat (BYND) upgraded to Overweight from Underweight at Barclays; tgt raised to $80

  • Booz Allen Hamilton (BAH) upgraded to Outperform from Mkt Perform at Raymond James; tgt $90

  • CACI Intl (CACI) upgraded to Outperform from Mkt Perform at Raymond James; tgt $300

  • Con Edison (ED) upgraded to Buy from Neutral at Mizuho

  • Corteva (CTVA) upgraded to Buy from Neutral at Redburn

  • Deutsche Bank (DB) upgraded to Buy from Hold at Kepler

  • dLocal Limited (DLO) upgraded to Buy from Hold at HSBC Securities; tgt $42

  • Equifax (EFX) upgraded to Outperform from Sector Perform at RBC Capital Mkts; tgt $300

  • EOG Resources (EOG) upgraded to Buy from Hold at Truist; tgt raised to $135

  • First Busey Corp (BUSE) upgraded to Outperform from Mkt Perform at Raymond James; tgt $31

  • Genmab (GMAB) upgraded to Buy from Neutral at H.C. Wainwright; tgt $47

  • Intuitive Surgical (ISRG) upgraded to Overweight from Neutral at Piper Sandler; tgt raised to $310

  • KE Holdings (BEKE) upgraded to Hold from Reduce at HSBC Securities


  • Downgrades:

  • Banco Macro (BMA) downgraded to Underweight from Neutral at JP Morgan; tgt lowered to $12

  • Booz Allen Hamilton (BAH) downgraded to Underperform from Buy at BofA Securities; tgt lowered to $80

  • Chevron (CVX) downgraded to Hold from Buy at Truist

  • First Comm Banc (FCBC) downgraded to Neutral from Overweight at Piper Sandler; tgt lowered to $35

  • Grupo Financiero Galicia (GGAL) downgraded to Underweight from Neutral at JP Morgan; tgt lowered to $8

  • Kellogg (K) downgraded to Market Perform from Outperform at BMO Capital Markets; tgt lowered to $70


  • Others:

  • AppLovin (APP) resumed with a Neutral at BofA Securities; tgt $70

  • Crescent Capital BDC (CCAP) initiated with a Buy at BofA Securities; tgt $19.50

  • FMC Corp (FMC) initiated with a Buy at Redburn

  • Henry Schein (HSIC) initiated with an Underweight at Morgan Stanley; tgt $67

  • Howard Hughes (HHC) initiated with an Overweight at JP Morgan; tgt $125


ZUpcoming Events:

  • Econ Data:

  • 09:45 ET: Chicago PMI for Jan (Briefing.com Consensus 62.5; Prior 63.1)


  • Earnings:

  • Monday (Jan 31)

  • Morning: AKTS ATKR OTIS TT

  • Afternoon: AGNC ARE AXTA CBT CRUS CACC FN GGG HLIT HTLF HP JJSF KMPR KRC NXPI PCH SANM WWD


  • Tuesday (Feb 1)

  • Morning: ALGM ARCB TECH BR CTLT ENTG EPD AQUA XOM BEN GFF HLNE IMO LII MAN MDC NVR PNR PBI PINC PHM SMG ST SIRI SWK UBS UPS WAT

  • Afternoon: AMD GOOG AMCR DOX APAM ASH CB EA EHC EQR GM GILD HMN IEX LFUS MANH MTCH MRCY MSTR OI PYPL PKI SBUX SMCI TENB UNM


  • Wednesday (Feb 2)

  • Morning: ABBV ATI ABC AVY BSX EAT BIP CHRW CPRI CRS GIB DHI DT EMR EVR RACE HWM HUM IDXX JCI MMP MPC MPLX NYT NVS ODFL ROP SAIA SBH SLAB SR SPR TMO VNE WNC WM

  • Afternoon: EGHT ADTN AFL ALGN ALGT ALL AVB BDN CCS CHNG CCMP CTSH CLB CTVA DXC ELF ESS FORM FBHS GL THG HI HOLX KLIC LNC MXL MCK FB MET MTG MAA MUSA NTGR OHI OMF QRVO QCOM RYN RRR RRX SITM SKY SPOT TMUS TTEK TBI UGI YELL


  • Thursday (Feb 3)

  • Morning: ABB ABMD WMS AME APTV ARW AZEK BCE BDX BERY BIIB BV CAH CSII CG CHKP CI CMS COP CMI DLX LLY EL FTV GWW HAIN HBI HSY HON HUBB ITW INGR ICE JHG LANC LAZ LITE MMS MPW MRK MTOR MSGS NJR NOK NS PH PENN PBH DGX RL SNDR RDS.A SNA TKR TW VSAT VSTO WD WEC WRK XYL

  • Afternoon: ATVI AMZN AINV AVTR BECN BHE BILL BYD CPT CDK CLX COLM CUZ DECK DLB ENVA EXPO F FTNT GPRO HIG LCI LESL LGF.A LPLA MCHP MIME MTX MWA NFG NWSA NLOK NOV OTEX PYCR PCTY PFSI PINS POST POWI PRU RGA SIGI SKX SKYW SWKS SNAP SYNA U VIAV WERN WWE


  • Friday (Feb 4)

  • Morning: ADNT APD AON BMY BEP CBOE ROAD ETN REGN SNY SPB TWST



Asia & Europe detail: Asia: Nikkei +1.1%, Hang Seng CLOSED, Shanghai Composite CLOSED Equity indices in the Asia-Pacific region began the week on a mostly higher note while markets in Hong Kong, China, South Korea, and Singapore were closed for Lunar New Year. China's official Manufacturing and Non-Manufacturing PMI readings remained just above 50.0 while Caixin Manufacturing PMI dipped into contraction. The Caixin report noted that the weakness was due to contracting demand, supply shocks, and weakening expectations. North Korea conducted its seventh missile test of the month.

  • In economic data:

  • China's January Manufacturing PMI 50.1 (expected 50.0; last 50.3) and Non-Manufacturing PMI 51.1 (last 52.7). January Caixin Manufacturing PMI 49.1 (expected 50.4; last 50.9)

  • Japan's December Industrial Production -1.0% m/m (expected -0.8%; last 7.0%), December Retail Sales 1.4% yr/yr (expected 2.7%; last 1.9%), and December Housing Starts 4.2% yr/yr (expected 7.8%; last 3.7%). January Household Confidence 36.7 (expected 36.9; last 39.1)

  • Australia's December Private Sector Credit 0.8% m/m (expected 0.7%; last 0.9%)

  • Singapore's Q4 Business Expectations 8.00 (last 16.00)

  • Hong Kong's December Retail Sales 6.2% yr/yr (last 7.1%)


---Equity Markets---

  • Japan's Nikkei: +1.1%

  • Hong Kong's Hang Seng: CLOSED

  • China's Shanghai Composite: CLOSED

  • India's Sensex: +1.4%

  • South Korea's Kospi: CLOSED

  • Australia's ASX All Ordinaries: UNCH

---FX---

  • USD/JPY: +0.3% to 115.49

  • USD/CNH: +0.3% to 6.3771

  • USD/INR: -0.5% to 74.69

Europe: DAX +0.2%, FTSE UNCH, CAC -0.2% Major European indices trade in mixed fashion. Italy's President Mattarella was convinced to accept another term after the country's parliament failed to elect a new leader. British leaders are laying the groundwork for higher taxes, including a national insurance increase. Saipem fell to its low from 2020 after withdrawing its guidance and warning about a potential need to raise cash.

  • In economic data:

  • Eurozone's Q4 GDP 0.3% qtr/qtr, as expected (last 2.2%); 4.6% yr/yr (expected 4.7%; last 3.9%)

  • Italy's Q4 GDP 0.6% qtr/qtr (expected 0.5%; last 2.6%); 6.4% yr/yr (expected 6.2%; last 3.9%)

  • Spain's January CPI -0.5% m/m (expected 1.3%; last 1.2%); 6.0% yr/yr (expected 6.7%; last 6.5%). December Retail Sales -2.3% yr/yr (last 5.1%). November Current Account surplus EUR1.01 bln (last surplus of EUR2.14 bln)


---Equity Markets---

  • STOXX Europe 600: +0.3%

  • Germany's DAX: +0.2%

  • U.K.'s FTSE 100: UNCH

  • France's CAC 40: -0.2%

  • Italy's FTSE MIB: +0.5%

  • Spain's IBEX 35: -0.4%

---FX---

  • EUR/USD: UNCH at 1.1148

  • GBP/USD: +0.1% to 1.3405

  • USD/CHF: +0.4% to 0.9338


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