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31/12/21 Briefing

Updated: Feb 15

The S&P 500 futures trade six points, or 0.1%, above fair value on this New Year's Eve, as the market looks to end an impressive year on a quiet note.

Once again, there isn't a specific catalyst driving the futures market, and trading volume is expected to be thin with many participants taking the day off for the new year. Several markets in Asia and Europe were closed today while others closed early. The U.S. stock market will be open for a full day of trading.

Conditions are ripe for profit taking, but sellers have had a hard time exerting influence on the market. That could always change as the day progresses, as observed yesterday into the close.

Highlighting some of the morning's headlines, Columbia University researchers believe coronavirus cases in the U.S. will peak in the middle of January, according to the Washington Post. The White House said President Biden and Russian President Putin discussed the importance of pragmatic, results-oriented diplomacy.

U.S. Treasury yields have edged lower. The 2-yr yield is down one basis point to 0.73%, and the 10-yr yield is down two basis points to 1.50%. The U.S. Dollar Index is little changed at 95.93. WTI crude futures are down 1.7%, or $1.28, to $75.71/bbl.

In U.S. Corporate news:

  • Peloton (PTON 36.75, -0.44): -1.2% after the stock was downgraded to Mkt Perform from Mkt Outperform at JMP Securities, citing declining website traffic read throughs.

  • Advanced Micro Devices (AMD 146.24, +1.09): +0.8% after pushing back the timing of its Xilinx (XLNX 209.25, -4.64, -2.2%) acquisition close into 1Q22. The two companies previously expected to close the deal by the end of this year.

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region ended 2021 on a mostly higher note, though markets in South Korea and Japan were closed throughout the day while markets in Australia, Hong Kong, and Singapore closed early. Japan's Nikkei: CLOSED (+4.9% in 2021) Hong Kong's Hang Seng: +1.2% (-14.1% in 2021) China's Shanghai Composite: +0.6% (+4.8% in 2021) India's Sensex: +0.8% (+22.0% in 2021) South Korea's Kospi: CLOSED (+3.6% in 2021) Australia's ASX All Ordinaries: -0.8% (+13.6% in 2021).

  • In economic data:

  • China's December Manufacturing PMI 50.3 (expected 50.0; last 50.1) and December Non-Manufacturing PMI 52.7 (expected 52.0; last 52.3)

  • South Korea's December CPI 0.2% m/m (expected 0.1%; last 0.4%); 3.7% yr/yr (expected 3.6%; last 3.7%)

  • India's November Infrastructure Output 3.1% yr/yr (last 7.5%)


  • In news:

  • South Korea's CPI increased at its fastest yr/yr pace in a decade in the December reading.

  • China's Manufacturing PMI reached its highest level since July.

  • Xinhua reported that railway traffic during the Spring Festival is expected to be up 29% yr/yr.



  • Equity markets in Germany, Italy, Spain, and Switzerland are closed in observance of New Year's Day. STOXX Europe 600: -0.1% (+21.4% in 2021) Germany's DAX: CLOSED (+15.7% in 2021) U.K.'s FTSE 100: -0.6% (+13.9% in 2021) France's CAC 40: -0.5% (+28.6% YTD) Italy's FTSE MIB: CLOSED (+23.0% in 2021) Spain's IBEX 35: CLOSED (+7.9% in 2021).

  • In economic data:

  • There was no notable data


  • In news:

  • Russian officials said that a phone call between Presidents Biden and Putin went well and that their conversation will continue in early 2022.




U.S. equity futures:

  • S&P 500 Futures: -3 @ 4,776

  • DJIA Futures: -40 @ 36,357

  • Nasdaq 100 Futures: -7@ 16,422

Overseas:

  • Europe: DAX closed for holiday, FTSE -0.6%, CAC -0.5%

  • Asia: Nikkei closed for holiday, Hang Seng +1.2%, Shanghai Composite +0.6%

Commodities:

  • Crude Oil -1.49 @ 75.50

  • Nat Gas +0.067 @ 3.502

  • Gold +6.40 @ 1820.50

  • Silver +0.100 @ 23.16

  • Copper +0.03 @ 4.42

U.S. Summary:

  • Earnings/Guidance (Full Earnings Calendar):

  • BGC Partners (BGCP) reaffirms guidance for Q4

  • Zepp Health (ZEPP) lowers Q4 revenue guidance, sees Q4 (Dec) revs of RMB 1.6-1.75 bln from RMB 1.75-2.0 bln


  • General News:

  • Columbia University researchers believe coronavirus cases in US will peak in the middle of January. Washington Post

  • South Africa has passed peak in Omicron cases with only a "marginal" increase in deaths. Experts expect proportion of US hospitalized cases will be lower than prior waves of virus. NY Times

  • White House recaps call between President Biden and President Putin, saying "President Biden laid out two paths, two aspects of the U.S. approach that will really depend on Russia's actions in the period ahead. One is a path of diplomacy leading toward a de-escalation of the situation, and the other is a path that's more focused on deterrence"

  • Israel will offer fourth coronavirus vaccine to nursing home residents. Reuters

  • Airlines want FCC to delay 5G rollout. Bloomberg

  • Additional airline cancellations have occurred and are expected this weekend amid winter weather and coronavirus cases. NY Times

  • Boeing (BA) awarded $471 mln contract action for F-15 Japan Super Interceptor Program

  • China Yuchai (CYD) launches China's first operating hydrogen engine for commercial vehicles

  • Colfax (CFX) will hold a shareholders meeting on February 28to discuss plans for reverse stock split

  • Exxon Mobil (XOM) in SEC filing provides summary of factors it believes will impact Q4 relative to Q3

  • Great Ajax (AJX) declares special dividend of $0.10/share, payable on January 25to holders of record as of January 10

  • JP Morgan (JPM) and Citigroup (C) will begin next year using remote work. Bloomberg

  • Lexicon Pharma (LXRX) submits a New Drug Application to the FDA seeking approval for the marketing and sale of sotagliflozin for adults with type 2 diabetes

  • Lockheed Martin (LMT): Israel announces agreement with US for the purchase of 12 Lockheed Martin-Sikorsky helicopters, and an additional agreement for the procurement of two Boeing (BA) KC-46 refueling aircraft

  • Pfizer (PFE): Oral COVID-19 antiviral, Paxlovid, approved by UK regulator


  • M&A:

  • Advanced Micro (AMD) and Xilinx (XLNX) push back the timing of acquisition close into 1Q22

  • Athena Technology Acquisition Corp. (ATHN) closes combination with Heliogen; to trade under symbol "HLGN" starting December 31

  • Centene (CNC) and Magellan Health (MGLN) receive all regulatory approvals to close pending acquisition

  • Four Corners Property Trust (FCPT) announces several property acquisitions

  • Sonoco Products(SON) unit announces acquisition of American Recycling of Western North Carolina; terms not disclosed


  • Syndicate:

  • AnaptysBio (ANAB) files for $300 mln mixed securities shelf offering

  • Arcimoto (FUV) files for $300 mln mixed securities shelf offering

  • Grab (GRAB) files for 2.47 bln Class A ordinary share offering by selling shareholders

  • MP Materials (MP) files for $2 bln mixed securities shelf offering; also files for $690 mln green convertible senior notes offering

  • Spruce Biosciences (SPRB) files for $200 mln mixed securities shelf offering

  • SRAX (SRAX) files for $100 mln mixed securities shelf offering


  • IPOs:

  • Expected to Price:

  • No IPOs expected to price.



Gapping Up/Down

  • Gapping up:

  • XERS +18.5%, FUV +1.8%, MCFT +1.2%, FTCV +0.8%, CNC +0.5%, MESO +0.5%


  • Gapping down:

  • SPRB -7%, MKFG -4.1%, XLNX -1.7%, MP -0.6%



Analyst Research (see Upgrades/Downgradescalendarfor full list):

  • Upgrades

  • No upgrades of note


  • Downgrades:

  • Peloton (PTON) downgraded to Market Perform from Market Outperform at JMP Securities


  • Others:

  • Apellis Pharmaceuticals (APLS) named a Top Pick for 2022 at Needham; adds to Conviction List and reiterates Buy rating; $70 price target

  • Constellation Brands (STZ) target raised to $271 from $268 at Barclays


Upcoming Events:

  • Econ Data:

  • No economic data of note


  • 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 closed for holiday, Hang Seng +1.2%, Shanghai Composite +0.6%

Equity indices in the Asia-Pacific region ended 2021 on a mostly higher note, though markets in South Korea and Japan were closed throughout the day while markets in Australia, Hong Kong, and Singapore closed early. South Korea's CPI increased at its fastest yr/yr pace in a decade in the December reading. China's Manufacturing PMI reached its highest level since July. Xinhua reported that railway traffic during the Spring Festival is expected to be up 29% yr/yr.

  • In economic data:

  • China's December Manufacturing PMI 50.3 (expected 50.0; last 50.1) and December Non-Manufacturing PMI 52.7 (expected 52.0; last 52.3)

  • South Korea's December CPI 0.2% m/m (expected 0.1%; last 0.4%); 3.7% yr/yr (expected 3.6%; last 3.7%)

  • India's November Infrastructure Output 3.1% yr/yr (last 7.5%)


---Equity Markets---

  • Japan's Nikkei: CLOSED (+4.9% in 2021)

  • Hong Kong's Hang Seng: +1.2% (-14.1% in 2021)

  • China's Shanghai Composite: +0.6% (+4.8% in 2021)

  • India's Sensex: +0.8% (+22.0% in 2021)

  • South Korea's Kospi: CLOSED (+3.6% in 2021)

  • Australia's ASX All Ordinaries: -0.8% (+13.6% in 2021)

---FX---

  • USD/JPY: +0.1% to 115.12

  • USD/CNH: -0.4% to 6.3506

  • USD/INR: -0.1% to 74.35

Europe: DAX closed for holiday, FTSE -0.6%, CAC -0.5%

Equity markets in Germany, Italy, Spain, and Switzerland are closed in observance of New Year's Day while the U.K.'s FTSE closed early. France's CAC will close in about 90 minutes. Russian officials said that a phone call between Presidents Biden and Putin went well and that their conversation will continue in early 2022.

  • There was no notable data

---Equity Markets---

  • STOXX Europe 600: -0.1% (+21.4% in 2021)

  • Germany's DAX: CLOSED (+15.7% in 2021)

  • U.K.'s FTSE 100: -0.6% (+13.9% in 2021)

  • France's CAC 40: -0.5% (+28.6% YTD)

  • Italy's FTSE MIB: CLOSED (+23.0% in 2021)

  • Spain's IBEX 35: CLOSED (+7.9% in 2021)

---FX---

  • EUR/USD: UNCH at 1.1324

  • GBP/USD: -0.2% to 1.3478

  • USD/CHF: UNCH at 0.9130


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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