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Writer's pictureSimon Charles Hooper

23/12/22 Briefing


The S&P 500 futures are up 8 points and are trading 0.3% above fair value. The Nasdaq 100 futures are up 31 points and are trading 0.4% above fair value. The Dow Jones Industrial Average futures are up 79 points and are trading 0.2% above fair value.

The equity futures market indicates a modestly higher open coming off yesterday's retreat, waiting on some key economic data at 8:30 a.m. ET. Today marks the official start of the so-called Santa Claus rally period, which includes the last five sessions of the year and the first two sessions of the new year. 

Airlines canceled thousands of flights due to the winter storm ahead of the year-end holidays, according to CNBC.

The House will vote on the $1.7 trillion government funding bill today, where it is expected to pass, according to CNBC

China estimates 37 million residents per day getting infected with COVID, according to Bloomberg.

Japan's core CPI was up 3.7% yr/yr in the November reading, increasing at its fastest pace since early 1982. Market participants will receive the following U.S. data releases today:

  • 8:30 ET: November Personal Income (Briefing.comconsensus 0.3%; prior 0.7%), Personal Spending (Briefing.comconsensus 0.1%; prior 0.8%), PCE Prices (Briefing.comconsensus 0.2%; prior 0.3%), and core PCE Prices (Briefing.comconsensus 0.3%; prior 0.2%), November Durable Orders (Briefing.comconsensus -1.0%; prior 1.0%), Durable Orders ex-transportation (Briefing.comconsensus 0.1%; prior 0.5%)

  • 10:00 ET: November New Home Sales (Briefing.comconsensus 600,000; prior 632,000) and final December University of Michigan Consumer Sentiment survey (Briefing.comconsensus 59.1; prior 59.1)

Treasury yields are inching higher ahead of the Fed's preferred inflation gauge, the PCE Price Index and core- PCE Price Index. The 2-yr note yield is up three basis points to 4.28% and the 10-yr note yield is up four basis points to 3.71%. 

In corporate news:

  • Nutanix (NTNX 23.40, -4.52, -16.2%): weakness attributed to speculation that Hewlett Packard Enterprise (HPE) is losing interest in acquiring the company

  • Apple (AAPL 132.36, +0.13, +0.1%): workers in Australia go on strike, according to Reuters

  • Meta (META 117.65, +0.53, +0.5%): will pay $725 mln to settle privacy lawsuit, according to Bloomberg 

  • Tesla (TSLA 126.99, +1.64, +1.3%):  CEO Elon Musk says in interview that he will not sell Tesla shares for 18-24 months and buybacks will depend on economy, according to WSJ

  • Mission Produce (AVO 12.57, -2.04, -14.0%): misses by $0.23, misses on revs as prices declined rapidly; expects more normal marketplace in 2023

Reviewing overnight developments: 

  • Equity indices in the Asia-Pacific region ended the week on a lower note. Japan's Nikkei: -1.0% (-4.7% for the week), Hong Kong's Hang Seng: -0.4% (+0.7% for the week), China's Shanghai Composite: -0.3% (-3.9% for the week), India's Sensex: -0.4% (-0.8% for the week), South Korea's Kospi: -1.8% (-2.0% for the week), Australia's ASX All Ordinaries: -0.7% (-0.7% for the week).

    • In economic data:

      • China's November FDI 9.9% YTD (last 14.4%) o Japan's November CPI 0.2% m/m (last 0.6%); 3.8% yr/yr (last 3.7%). November National Core CPI 3.7% yr/yr, as expected (last 3.6%)

      • Singapore's November Industrial Production -1.2% m/m, as expected (last 0.6%); -3.2% yr/yr (expected -1.1%; last -0.9%). November CPI 6.7% yr/yr (expected 6.5%; last 6.7%) and Core CPI 5.1% yr/yr (expected 5.0%; last 5.1%)

      • Australia's November Housing Credit 0.4% m/m (last 0.4%) and Private Sector Credit 0.5% m/m (expected 0.6%; last 0.5%)

    • In news:

      • Japan's Prime Minister Kishida is reportedly considering a cabinet reshuffle early next year.

      • Japan's core CPI was up 3.7% yr/yr in the November reading, increasing at its fastest pace since early 1982.

      • The Japanese government expects that the next spike in food prices is likely to happen in February.

      • South Korea's vice finance minister said that the government will focus on stabilizing prices and creating jobs.

      • Markets in Hong Kong, Singapore, Australia, and New Zealand will be closed on Monday.

  • Major European indices are little changed in quiet pre-holiday trade. STOXX Europe 600: +0.2% (+0.8% week-to-date), Germany's DAX: +0.2% (+0.4% week-to-date), U.K.'s FTSE 100: UNCH (+1.9% week-to-date), France's CAC 40: -0.2% (+0.8% week-to-date), Italy's FTSE MIB: UNCH (+0.6% week-to-date), Spain's IBEX 35: UNCH (+1.9% week-to-date).

    • In economic data:

      • France's November PPI 1.2% m/m (last -0.2%)

      • Italy's December Business Confidence 101.4 (expected 102.7; last 102.5) and Consumer Confidence 102.5 (expected 98.5; last 98.1)

      • Spain's Q3 GDP 0.1% qtr/qtr (expected 0.2%; last 2.0%); 4.4% yr/yr (expected 3.8%; last 7.6%)

    • In news:

      • Russia's Deputy Prime Minister Novak said oil output may be reduced by up to 7% next year in response to the EU price cap.

      • Contract chipmaker TSMC is reportedly looking to build a chip fab in Germany.

      • Markets in Germany, France, U.K., Italy, Spain, and Switzerland will be closed on Monday.

 

U.S. equity futures:

  • S&P 500 Futures: +10 @ 3,832

  • DJIA Futures: +85 @ 33,112

  • Nasdaq 100 Futures: +40 @ 10,996

Overseas:

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

  • Asia: Nikkei -1.0%, Hang Seng -0.4%, Shanghai Composite -0.3%

Commodities:

  • Crude Oil +1.78 @ 79.27

  • Nat Gas -0.148 @ 4.851

  • Gold +9.75 @ 1805.05

  • Silver +0.316 @ 23.938

  • Copper +0.0315 @ 3.7885

 

Earnings/Guidance:

  • Mission Produce (AVO) misses by $0.23, misses on revs as prices declined rapidly; expects more normal marketplace in 2023

  • Stifel Financial (SF) reports selected operating results for November: Total client assets fell 5.3% yr/yr but grew 4.5% from October month-end to $399.63 mln

News:

  • Russian President Putin claims that Russia wants to end war with Ukraine and find a diplomatic solution, according to Reuters

  • Russia could lower daily oil production by 500,000-700,000 barrels a day, according to Bloomberg

  • Airlines cancel thousands of flights due to winter storm, CNBC

  • China estimates that COVID-19 is infecting about 37 million residents every day, according to Bloomberg

  • Apple (AAPL) workers in Australia go on strike, according to Reuters

  • atai Life Sciences N.V. (ATAI) announces results from the Kures Therapeutics phase 1 trial of KUR-101

  • AT&T (T) and BlackRock (BLK) to form Gigapower Joint venture - a wholesale fiber services provider

  • Bausch + Lomb (BLCO) CEO to continue serving successor appointed

  • Coinbase Global (COIN) on website says "Investigating - Withdrawals for BSV have been temporarily paused while we investigate difficulties in transaction processing. Our teams are working on a fix"

  • Cue Health (HLTH) selected by Minnesota Department of Health to provide COVID-19 telehealth to treatment program to state residents

  • Enfusion (ENFN) appoints Oleg Movchan as CEO, effective today; was serving as Interim CEO since August 21

  • Eve Holding (EVEX) announces BNDES approval of $92.5 million line of credit to support eVTOL development program

  • ForgeRock (FORG) receives request for additional info from the DoJ regarding its review of the company's previously announced merger with Project Fortress Parent, LLC

  • Gilead (GILD): Yescarta Now Approved in Japan for Initial Treatment of Relapsed/Refractory Large B-Cell Lymphoma

  • Humana (HUM) Government Business selected by U.S. Defense Health Agency to provide managed care support; total potential contract value, including all transition and options periods, estimated at $70.85 bln

  • Inogen (INGN) to dispose of technology intangible assets acquired from New Aera, Inc. by December 31as continued development not economically feasible; to incur loss of approximately $53.4 mln and loss on inventory of $0.2-0.3 mln

  • Loop Industries (LOOP) to sell Bcancour, Qubec site for CDN $18.5 million; announces cost-reduction measures to ensure ongoing liquidity; CFO Drew Hickey to depart, effective December 30; appoints Nicolas Lafond as Interim CFO

  • Mersana Therapeutics (MRSN) Announces Research Collaboration and Commercial License Agreement with Merck KGaA, Darmstadt, Germany to Develop Novel Immunosynthen Antibody-Drug Conjugates

  • Meta (META) will pay $725 mln to settle privacy lawsuit, according to Bloomberg

  • Neurocrine Biosciences (NBIX) announces that the FDA has accepted its supplemental New Drug Application for valbenazine as a treatment for chorea associated with Huntington disease

  • Tesla (TSLA) CEO Elon Musk says in interview that he will not sell Tesla shares for 18-24 months and buybacks will depend on economy, according to the Wall Street Journal

  • TSMC (TSM) could setup plant in Europe, according to Financial Times

  • Vale S.A. (VALE) informs on the composition of the audit and risk committee

  • VICI Properties (VICI) enters into sales leaseback transaction with Foundation Gaming & Entertainment related to Fitz Casino & Hotel in Tunica, MS

  • Weatherford (WFRD) signs multi-year agreement with DataRobot to deliver advanced AI tech in its digital platforms

M&A:

  • American Water Works (AWK) to acquire West San Martin Water Works potable water distribution system serving roughly 309 customer connections; financial details not disclosed

  • Microsoft (MSFT) challenged FTC lawsuit regarding Activation (ATVI) acquisition, according to the Wall Street Journal

  • Nutanix (NTNX): Speculation that Hewlett Packard Enterprise (HPE) is losing interest in acquiring the company

  • Open Text (OTEX) On Track to Buy Micro Focus International (MFGP)

  • Seadrill Ltd (SDRL) announces agreement to acquire Aquadrill LLC in all-stock transaction

  • Stellantis (STLA) plans to acquire stake in Symbio, a Faurecia Michelin hydrogen company

Syndicate:

  • Arhaus (ARHS) files for 30,524,202 share common stock offering by selling shareholders

  • Loop Media (LPTV) files for $150 mln mixed securities shelf offering

  • Vaxcyte (PCVX) files for 167,780 share common stock offering by selling shareholder

IPOs:

  • Expect to Price:

    • No IPOs expected.

Gapping Up/Down

  • Gapping up: LPTV +11.7%, EVEX +3.1%, AWK +2.7%, MRSN +1.5%

  • Gapping down: AVO -13.7%, FORG -0.9%

 


Analyst Research (see Upgrades/Downgradescalendarfor full list):

  • Upgrades

    • Charter Comm (CHTR) upgraded to Equal Weight from Underweight at Wells Fargo; tgt lowered to $340

    • Toro (TTC) upgraded to Outperform from Mkt Perform at Raymond James; tgt $130

  • Downgrades:

    • No downgrades of note.

  • Others:

    • Anixa Biosciences (ANIX) initiated with a Buy at Chardan Capital Markets; tgt $8

    • Array Tech (ARRY) initiated with an Overweight at Cantor Fitzgerald; tgt $26

    • Compass Diversified (CODI) resumed with a Buy at Jefferies; tgt $26

    • Enphase Energy (ENPH) initiated with an Outperform at Daiwa Securities; tgt $335

    • First Solar (FSLR) initiated with an Outperform at Daiwa Securities; tgt $175

    • Marsh McLennan (MMC) initiated with a Neutral at Credit Suisse; tgt $157

    • SolarEdge Technologies (SEDG) initiated with a Neutral at Daiwa Securities; tgt $325

Upcoming Events:

  • Econ Data:

    • 08:30 ET: Durable Orders for Nov (Briefing.comConsensus -1.0%; Prior 1.0%)

    • 08:30 ET: Durable Orders, Ex-Transportation for Nov (Briefing.comConsensus 0.1%; Prior 0.5%)

    • 08:30 ET: Personal Income for Nov (Briefing.comConsensus 0.3%; Prior 0.7%)

    • 08:30 ET: PCE Prices for Nov (Briefing.comConsensus 0.2%; Prior 0.3%)

    • 08:30 ET: Personal Spending for Nov (Briefing.comConsensus 0.1%; Prior 0.8%)

    • 08:30 ET: PCE Prices - Core for Nov (Briefing.comConsensus 0.3%; Prior 0.2%)

    • 10:00 ET: New Home Sales for Nov (Briefing.comConsensus 600K; Prior 632K)

    • 10:00 ET: Univ. of Michigan Consumer Sentiment for Dec (Briefing.comConsensus 59.1; Prior 59.1)

  • Earnings:

    • Monday (Dec 19)

      • Afternoon: HEI SCS

    • Tuesday (Dec 20)

      • Morning: FDS FCEL GIS

      • Afternoon:  AIR BB CVGW EPAC NKE WOR

    • Wednesday (Dec 21)

      • Morning:  CCL CTAS RAD TTC

      • Afternoon:  MU MLKN

    • Thursday (Dec 22)

      • Morning: APOG KMX PAYX

      • Afternoon:  AVO

Asia & Europe detail:

Asia: Nikkei -1.0%, Hang Seng -0.4%, Shanghai Composite -0.3%

Equity indices in the Asia-Pacific region ended the week on a lower note. Japan's Prime Minister Kishida is reportedly considering a cabinet reshuffle early next year. Japan's core CPI was up 3.7% yr/yr in the November reading, increasing at its fastest pace since early 1982. The Japanese government expects that the next spike in food prices is likely to happen in February. South Korea's vice finance minister said that the government will focus on stabilizing prices and creating jobs. Markets in Hong Kong, Singapore, Australia, and New Zealand will be closed on Monday.

  • In economic data:

    • China's November FDI 9.9% YTD (last 14.4%) o Japan's November CPI 0.2% m/m (last 0.6%); 3.8% yr/yr (last 3.7%). November National Core CPI 3.7% yr/yr, as expected (last 3.6%)

    • Singapore's November Industrial Production -1.2% m/m, as expected (last 0.6%); -3.2% yr/yr (expected -1.1%; last -0.9%). November CPI 6.7% yr/yr (expected 6.5%; last 6.7%) and Core CPI 5.1% yr/yr (expected 5.0%; last 5.1%)

    • Australia's November Housing Credit 0.4% m/m (last 0.4%) and Private Sector Credit 0.5% m/m (expected 0.6%; last 0.5%)

---Equity Markets---

  • Japan's Nikkei: -1.0% (-4.7% for the week)

  • Hong Kong's Hang Seng: -0.4% (+0.7% for the week)

  • China's Shanghai Composite: -0.3% (-3.9% for the week)

  • India's Sensex: -0.4% (-0.8% for the week)

  • South Korea's Kospi: -1.8% (-2.0% for the week)

  • Australia's ASX All Ordinaries: -0.7% (-0.7% for the week)

---FX---

  • USD/JPY: +0.2% to 132.69

  • USD/CNH: -0.1% to 6.9995

  • USD/INR: -0.2% to 82.76

 

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

Major European indices are little changed in quiet pre-holiday trade. Russia's Deputy Prime Minister Novak said oil output may be reduced by up to 7% next year in response to the EU price cap. Contract chipmaker TSMC is reportedly looking to build a chip fab in Germany. Markets in Germany, France, U.K., Italy, Spain, and Switzerland will be closed on Monday.

  • In economic data:

    • France's November PPI 1.2% m/m (last -0.2%)

    • Italy's December Business Confidence 101.4 (expected 102.7; last 102.5) and Consumer Confidence 102.5 (expected 98.5; last 98.1)

    • Spain's Q3 GDP 0.1% qtr/qtr (expected 0.2%; last 2.0%); 4.4% yr/yr (expected 3.8%; last 7.6%)

---Equity Markets---

  • STOXX Europe 600: +0.2% (+0.8% week-to-date)

  • Germany's DAX: +0.2% (+0.4% week-to-date)

  • U.K.'s FTSE 100: UNCH (+1.9% week-to-date)

  • France's CAC 40: -0.2% (+0.8% week-to-date)

  • Italy's FTSE MIB: UNCH (+0.6% week-to-date)

  • Spain's IBEX 35: UNCH (+1.9% week-to-date)

---FX---

  • EUR/USD: +0.2% to 1.0615

  • GBP/USD: +0.3% to 1.2073

  • USD/CHF: -0.1% to 0.9302

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