30/11/21 Briefing

The equity futures market is backpedaling from yesterday's rebound rally amid word from Moderna's (MRNA 358.71, -9.80, -2.7%) CEO that he expects current vaccines to be materially less effective against the Omicron variant. The S&P 500 futures trade 42 points, or 0.9%, below fair value but are off overnight lows.

Granted, there's still a lot of uncertainty surrounding the variant, but it's this uncertainty that seems to be rattling the market. Oxford University, according to Reuters, said there is no evidence at this time that vaccines will not protect against severe disease related to the Omicron variant.

Accordingly, Treasury yields are dropping in a trade resembling a flight to safety. The 10-yr yield is down nine basis points to 1.44%, and the 2-yr yield is down five basis points to 0.46%. The U.S. Dollar Index is down 0.6% to 95.78. WTI crude futures are down 2.7%, or $1.89, to $68.06/bbl.

Separately, Fed Chair Powell and Treasury Secretary Yellen will testify before the Senate Banking Committee today and the House Financial Services Committee tomorrow at 10:00 a.m. ET both days. In his prepared remarks, Mr. Powell said the Omicron variant poses downside risks to the labor market and economy and increased uncertainty for inflation.

On the data front, investors will receive the FHFA Housing Price Index for September and the S&P Case-Shiller Home Price Index for September (Briefing.com consensus 19.3%) at 9:00 a.m. ET, the Chicago PMI for November (Briefing.com consensus 67.0) at 9:45 a.m. ET, and the Consumer Confidence Index for November (Briefing.com consensus 111.00) at 10:00 a.m. ET.

Over in China, the Shanghai Composite (UNCH) staved off selling interest on Tuesday after the November Manufacturing PMI re-entered expansion territory with a reading of 50.1.

In U.S. Corporate news:

Moderna (MRNA 358.71, -9.80): -2.7%% after its CEO told the Financial Times that he expects current vaccines to struggle against the Omicron variant and that it would take months to produce a new vaccine at scale. The latter observation was roughly in-line with prior comments.

Pfizer (PFE 52.91, +0.51): +1.0% on news that it will soon ask the FDA for authorization for its COVID booster shot for 16-17 year-olds.

Dollar Tree (DLTR 137.83, -3.52): -2.5% after the stock was downgraded to Neutral from Buy at Goldman.

Reviewing overnight developments:

Equity indices in the Asia-Pacific region ended Tuesday on a mostly lower note. Japan's Nikkei: -1.6% Hong Kong's Hang Seng: -1.6% China's Shanghai Composite: UNCH India's Sensex: -0.3% South Korea's Kospi: -2.4% Australia's ASX All Ordinaries: +0.3%.

In economic data:

China's November Manufacturing PMI 50.1 (expected 49.6; last 49.2) and Non-Manufacturing PMI 52.3 (last 52.4)

Japan's October Industrial Production 1.1% m/m (expected 1.8%; last -5.4%). October jobs/applications ratio 1.15 (expected 1.17; last 1.16) and October Unemployment Rate 2.7% (expected 2.8%; last 2.8%). October Construction Orders 2.1% yr/yr (last 27.3%) and Housing Starts 10.4% yr/yr (expected 5.2%; last 4.3%)

South Korea's October Industrial Production -3.0% m/m (expected 0.4%; last -1.1%); 4.5% yr/yr (expected 3.0%; last -1.8%). October Retail Sales 0.2% m/m (last 2.4%) and October Service Sector Output -0.3% m/m (last 1.4%)

Hong Kong's October Retail Sales 12.0% yr/yr (last 7.3%)

Australia's October Building Approvals -12.9% m/m (expected -2.0%; last -3.9%) and October Private House Approvals 4.3% (last -16.0%). October Private Sector Credit 0.5% m/m (expected 0.6%; last 0.6%). Q3 Current Account surplus AUD23.90 bln (expected AUD27.80 bln; last AUD22.90 bln)

New Zealand's November ANZ Business Confidence -16.4 (last -13.4) and November NBNZ Own Activity 15.0% (last 21.7%)

In news:

China's Manufacturing PMI returned into expansionary territory in November while Non-Manufacturing PMI was above 50.0 for the third month in a row.

Japan's Industrial Production showed its first monthly increase since June.

United Microelectronics announced plans to raise prices on long term contracts by up to 12%.

Major European indices trade in the red as renewed fears about the effectiveness of current coronavirus vaccines against the new variant weigh on sentiment. STOXX Europe 600: -1.0% Germany's DAX: -1.3% U.K.'s FTSE 100: -0.7% France's CAC 40: -1.1% Italy's FTSE MIB: -1.1% Spain's IBEX 35: -1.6%.

In economic data:

Eurozone's November CPI 0.5% m/m (last 0.8%); 4.9% yr/yr (expected 4.5%; last 4.1%). November Core CPI 0.5% m/m (last 0.8%); 2.6% yr/yr (last 2.0%)

Germany's November Unemployment Change -34,000 (expected -25,000; last -39,000) and November Unemployment Rate 5.3%, as expected (last 5.4%)

France's Q3 GDP 3.0% qtr/qtr, as expected (last 3.0%). November CPI 0.4% m/m (last 0.4%); 2.8% yr/yr (last 2.6%). October PPI 2.9% m/m (last 1.7%) and October Consumer Spending -0.4% m/m (expected 0.3%; last 0.2%)

Italy's November CPI 0.7% m/m (expected 0.1%; last 0.7%); 3.8% yr/yr (expected 3.2%; last 3.0%). Q2 GDP 2.6% qtr/qtr, as expected (last 2.6%); 3.9% yr/yr (expected 17.3%; last 17.3%)

Spain's October Retail Sales -0.7% yr/yr (last -0.1%) and September Current Account surplus EUR2.22 bln (last surplus of EUR980 mln)

Swiss November KOF Leading Indicators 108.5 (expected 109.0; last 110.2)

U.S. equity futures:

S&P 500 Futures: -44 @ 4,612

DJIA Futures: -405 @ 34,731

Nasdaq 100 Futures: -79 @ 16,320

Overseas:

Europe: DAX -1.3%, FTSE -0.7%, CAC -1.1%

Asia: Nikkei -1.6%, Hang Seng -1.6%, Shanghai Composite UNCH

Commodities:

Crude Oil -2.12 @ 67.83

Nat Gas -0.292 @ 4.562

Gold +8.70 @ 1793.90

Silver +0.031 @ 22.883

Copper -0.0230 @ 4.3180

U.S. Summary:

Earnings/Guidance (Full Earnings Calendar):

Apogee Enterprises (APOG) announces 3 year targets

Arco Platform (ARCE) reports Q3 (Sep) results, misses on revs

Bank of Nova Scotia (BNS) beats by CAD 0.20, misses on revs

Baozun (BZUN) beats by RMB1.20, misses on revs; authorizes $50 mln share repurchase program

Golub Capital (GBDC) reports Q3 (Sep) results, misses on revs

Hello Group (MOMO) beats by RMB0.69, beats on revs; guides Q4 revs below consensus

JinkoSolar (JKS) beats by $0.03, misses on revs; guides Q4 revs below consensus

LIZHI (LIZI) reports Q3 (Sep) earnings; revs grew 40% yr/yr to RMB 361.5 mln

UnitedHealth (UNH) guides FY21 earnings in-line, revs above consensus; guides FY22 earnings below consensus, revs above consensus

UP Fintech (TIGR) beats bottom line single estimate; misses on top line

General News:

Moderna (MRNA) CEO Stephane Bancel expects "material drop" in effectiveness of vaccines against Omicron variant and it would take months to produce new vaccine at scale

Oxford University says there is no evidence at this time that vaccines will not protect against severe disease related to the Omicron variant, according to Reuters

Fed Chair Powell to note concerns about omicron variant potentially increasing inflation risk in Tuesday testimony on Coronavirus and CARES Act

House is planning vote as early as Wednesday on bill to fund government through mid-January. Bill must be passed by Friday night to avoid shutdown. This bill will not address the debt limit, which expires on December 15.

Senate Banking Committee releases prepared remarks from Treasury Secretary Janet Yellen; she will testify to Senate today at 10:00 ET; House tomorrow at 10:00 ET

CDC expands COVID-19 booster recommendations

Senator Joe Manchin (D-WV) has not committed to vote on Build Back Better Act by the end of the year, according to Bloomberg

Air Lease (AL) delivers first of six new Airbus A321-200neo aircraft to China Airlines

Arcus Biosciences (RCUS): Taiho Pharmaceutical exercises option for an exclusive license to Anti-TIGIT program in Japan and certain territories in Asia

AstraZeneca (AZN) receives Priority Review from FDA for BRCA-mutated HER2-negative high-risk early breast cancer

Becton Dickinson (BDX) releases statement regarding testing for the COVID-19 Omicron variant of concern Becton Dickinson releases statement regarding testing for the COVID-19 Omicron variant of concern

Berry Global (BERY) reiterates commitment to value creation; provides statement regarding Ancora Holdings Group LLC Letter

Chesapeake Energy (CHK) appoints Mohit Singh as CFO

Cinemark (CNK) reaches new COVID-era high for children's tickets sold at theatres

Cummins (CMI) has entered into an agreement with Sion Power Corporation to design and supply battery cells based on their proprietary lithium metal technology for commercial vehicle applications

Cybin (CYBN) announces FDA Investigational New Drug and Institutional Review Board approvals for a co-funded Phase 2 clinical trial to treat frontline clinicians experiencing COVID-related distress

Didi (DIDI): China issues more regulatory rules for Didi, according to Bloomberg

Elanco Animal Health (ELAN) announces changes to simplify organizational structure, drive profitable growth and focus investments on growth and innovation opportunities

Exact Sciences (EXAS) discloses entrance into amendment to Cologuard promotion agreement with Pfizer (PFE)

Fennec Pharmaceuticals (FENC) receives complete response letter from the FDA for its new drug application for PEDMARK to prevent ototoxicity associated with cisplatin in pediatric patients with localized, non-metastatic, solid tumors

Graham (GHM) announces that its CFO plans to retire in 2Q22 following appointment of his successor

Hologic (HOLX) reports its COVID-19 tests detect omicron variant

Immunogen (IMGN) announces "positive" top-line results from pivotal Soraya trial of mirvetuximab Soravtansine in ovarian cancer

KORE Group (KORE) announces departure of CFO Puneet Pamnani; appoints Paul Holtz as interim CFO

KULR Technology (KULR) received an initial order totaling approximately $500,000 for its passive propagation resistant battery systems from the Lockheed Martin Corporation (LMT)

Laboratory Corp (LH) is now offering observed self-collection for COVID-19 PCR testing in more than 500 of its patient service centers

Lithia Motors (LAD) announces an increase of $750 mln to its share repurchase authorization by its Board of Directors, bringing total funds available to ~$885 mln

Lululemon (LULU) files lawsuit against Peloton (PTON) over copied designs, according to the Wall Street Journal

MEI Pharma (MEIP) and Kyowa Kirin announce data from the ongoing global Phase 2 TIDAL study evaluating zandelisib as a single agent in patients with relapsed or refractory follicular lymphoma

Merck (MRK) receives approval in Japan for KEYTRUDA in combination with chemotherapy for first-line treatment of patients with radically unresectable, advanced or recurrent esophageal carcinoma

Mereo BioPharma (MREO) reports interim data from ACTIVATE phase 1b/2 open label study of etigilimab anti-TIGIT antibody in combination with nivolumab in solid tumors

Mersana Therapeutics (MRSN): Synaffix expands Mersana license deal to a total potential value exceeding $1 bln

Meta Platforms (FB) postpones ticker symbol change until Q1 2022

Meta Platforms (FB): UK CMA found that the completed acquisition by Facebook, Inc (now Meta Platforms, Inc) of GIPHY, Inc. may give rise to competition concerns in both the supply of display advertising in the UK

MindMed (MNMD) and Liechti Lab publish first human data on the interacting effects of an SSRI and psilocybin

Molecular Partners (MOLN) confirms retained activity of Ensovibep on the positions mutated in emerging Omicron Variant

National Vision (EYE) increases share repurchase program to $100 mln

NetEase (NTES) aiming to suspend availability of Harry Potter themed game, according to Morning Star

Olema Pharmaceuticals (OLMA) issues statement regarding falsified information on social media

Olema Pharmaceuticals (OLMA) announces first clinical data on OP-1250 in advanced ER+ / HER2- Breast Cancer

Oppenheimer Holdings (OPY) appoints Robert Lowenthal President

Outset Medical (OM): FDA granted 510(k) clearance for a sterilization method of the cartridge utilized in OM's Tablo Hemodialysis System enabling full production in North America

PerkinElmer (PKI): omicron variant does not impact SARS-CoV-2 detection in RT-PCR assays

Pfizer (PFE) will soon ask FDA for authorization for booster shots for 16-17 year olds, according to the Washington Post

PLAYSTUDIOS (MYPS) becomes exclusive developer and publisher of Tetris game franchise for mobile devices

Rapid7 (RPD) names Tim Adams as CFO, effective January 3, 2022

Regeneron Pharmaceuticals (REGN) antibody treatment is less effective against Omicron variant, according to the Wall Street Journal

Shopify (SHOP) President Harley Finkelstein says Cyber Monday merchant sales were above 2020 levels - CNBC

Turquoise Hill Resources (TRQ) announces approval of short-term increase in Oyu Tolgoi underground mine development budget

West Fraser (WFG) provides operational update

Zai Lab (ZLAB) announces positive phase 3 PRIME study results for ZEJULA (niraparib) for treatment of ovarian cancer

M&A:

Athene Holding (ATH) agrees to acquire a controlling stake in Aqua Finance from funds managed by Blackstone Tactical Opportunities for approx $1 bln

Edgewell Personal Care (EPC) announces acquisition of Billie for $310 mln in cash

Helen of Troy (HELE) to acquire Osprey for $414 mln in cash; acquisition expected to be accretive to adjusted EPS, gross margin, cash flow from operations

Latham Group (SWIM) acquired Radiant Pools for approx. $90 mln; to have minimal impact on FY21 outlook

NextEra Energy (NEE) agrees to sell 50% interest in an ~2,520-megawatt portfolio renewables project

RR Donnelley & Sons (RRD) receives offer to be acquired by Chatham Asset Management for $10.25/share in cash

Werner Enterprises (WERN) acquires NEHDS for $64 mln; acquisition expected to be accretive to EPS in 2022

Syndicate:

Array Tech (ARRY) announces private offering of $325 mln in aggregate principal amount of convertible senior notes due 2028

Intuit (INTU) announces that entities associated with Dan Kurzius, co-founder of Mailchimp, have commenced secondary offering of 1.55 mln shares of common stock; prices secondary offering of 1,548,700 shares of common stock at $668.95 per share

Krystal Biotech (KRYS) commences public offering of $200 mln of its common stock

IPOs:

Expected to Price:

Chicago Atlantic Real Estate Finance (Nasdaq: REFI): The commercial real estate finance company dedicated to making loans to operators and property owners in cannabis industry is expected to price its 6.3 M share IPO between $16-$18.

Gapping Up/Down

Gapping up:

ATHX +27.5%, VXX +10.4%, MEIP +8.2%, ADEX +5.5%, OM +5.1%, MYPS +4.2%, KRYS +3.4%, HELE +2.6%, NVAX +1.7%, TIGR +1.5%, PFE +1.4%, DVAX +1.4%, GBDC +1.4%, CXP +1.3%, EXAS +1.1%, GDX +0.8%, GLD +0.6%

Gapping down:

JKS -9.3%, ARRY -9%, LIZI -8.7%, ARCE -7.6%, BNTX -7%, BZUN -5.7%, MRNA -4.9%, INTU -3.6%, FENC -3.3%, XLE -2.3%, XLF -2.1%, OIH -2%, USO -1.9%, IWM -1.5%, UNH -1.2%, DIA -1.1%, MOMO -1%, SPY -0.9%, SMH -0.7%, QQQ -0.5%

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

Upgrades

Ayala Pharmaceuticals (AYLA) upgraded to Buy from Hold at Jefferies; tgt raised to $17

EngageSmart (ESMT) upgraded to Strong Buy from Outperform at Raymond James; tgt $40

HeadHunter Group (HHR) upgraded to Buy from Neutral at BofA Securities; tgt raised to $85

Kimbell Royalty Partners (KRP) upgraded to Overweight from Equal Weight at Wells Fargo; tgt raised to $18

PetroChina (PTR) upgraded to Overweight from Underweight at JP Morgan

Downgrades:

Cheniere Energy Partners (CQP) downgraded to Underweight from Equal Weight at Barclays; tgt $48

Dollar Tree (DLTR) downgraded to Neutral from Buy at Goldman; tgt raised to $150

Falcon Minerals (FLMN) downgraded to Equal Weight from Overweight at Wells Fargo; tgt $7

SolarEdge Technologies (SEDG) downgraded to Equal-Weight from Overweight at Morgan Stanley; tgt raised to $338

Others:

AES (AES) initiated with a Buy at Goldman; tgt $30

Annexon (ANNX) initiated with a Buy at H.C. Wainwright; tgt $40

Archer Aviation (ACHR) initiated with an Overweight at Cantor Fitzgerald; tgt $14

Arhaus (ARHS) initiated with an Overweight at Barclays; tgt $18

Beyond Meat (BYND) initiated with a Reduce at HSBC Securities; tgt $62

Caribou Biosciences (CRBU) initiated with a Buy at H.C. Wainwright; tgt $28

Cellectis (CLLS) initiated with a Mkt Outperform at JMP Securities; tgt $20

Consensus Cloud Solutions (CCSI) initiated with an Outperform at Wedbush; tgt $75

Crinetics Pharmaceuticals (CRNX) initiated with a Mkt Outperform at JMP Securities; tgt $43

DocGo (DCGO) initiated with an Overweight at Barclays; tgt $14

Fluence (FLNC) initiated with a Buy at Goldman; tgt $52

MP Materials (MP) resumed with a Buy at BofA Securities; tgt $52

Oatly Group AB (OTLY) initiated with a Reduce at HSBC Securities; tgt $7.80

PetIQ (PETQ) initiated with a Buy at The Benchmark Company; tgt $30

Redbox Entertainment (RDBX) initiated with an Outperform at Wedbush; tgt $15

Rocket Lab USA (RKLB) initiated with a Buy at BofA Securities; tgt $20

Shift4 Payments (FOUR) initiated with a Buy at Loop Capital; tgt $69

Sports Entertainment Acquisition Corp. (SEAH) initiated with a Buy at The Benchmark Company; tgt $16

Upcoming Events:

Econ Data:

09:00 ET: FHFA Housing Price Index for Sep (Briefing.com Consensus NA; Prior 1.0%)

09:00 ET: S&P Case-Shiller Home Price Index for Sep (Briefing.com Consensus 19.3%; Prior 19.7%)

09:45 ET: Chicago PMI for Nov (Briefing.com Consensus 67.0; Prior 68.4)

10:00 ET: Consumer Confidence for Nov (Briefing.com Consensus 111.0; Prior 113.8)

Earnings:

Monday (Nov 29)

Morning: FRO LI

Afternoon: GBDC

Tuesday (Nov 30)

Morning: BNS BZUN MOMO JKS

Afternoon: AMBA BOX HPE NTAP CRM ZS

Wednesday (Dec 1)

Morning: DCI GIII PDCO RY

Afternoon: AI CRWD DSGX ESTC FIVE NCNO OKTA PVH SMTC SNOW SPLK SNPS VEEV ZUO

Thursday (Dec 2)

Morning: CM DG GMS KR SCWX SIG TD

Afternoon: ASAN COO DOCU DOMO GWRE JOAN MRVL OLLI OOMA SMAR SWBI ULTA VRNT ZUMZ

Friday (Dec 3)

Morning: BMO BIG DOLE GCO HIBB

Asia & Europe detail:

Asia: Nikkei -1.6%, Hang Seng -1.6%, Shanghai Composite UNCH

Equity indices in the Asia-Pacific region ended Tuesday on a mostly lower note. China's Manufacturing PMI returned into expansionary territory in November while Non-Manufacturing PMI was above 50.0 for the third month in a row. Meanwhile, Japan's Industrial Production showed its first monthly increase since June. United Microelectronics announced plans to raise prices on long term contracts by up to 12%.

In economic data:

China's November Manufacturing PMI 50.1 (expected 49.6; last 49.2) and Non-Manufacturing PMI 52.3 (last 52.4)

Japan's October Industrial Production 1.1% m/m (expected 1.8%; last -5.4%). October jobs/applications ratio 1.15 (expected 1.17; last 1.16) and October Unemployment Rate 2.7% (expected 2.8%; last 2.8%). October Construction Orders 2.1% yr/yr (last 27.3%) and Housing Starts 10.4% yr/yr (expected 5.2%; last 4.3%)

South Korea's October Industrial Production -3.0% m/m (expected 0.4%; last -1.1%); 4.5% yr/yr (expected 3.0%; last -1.8%). October Retail Sales 0.2% m/m (last 2.4%) and October Service Sector Output -0.3% m/m (last 1.4%)

Hong Kong's October Retail Sales 12.0% yr/yr (last 7.3%)

Australia's October Building Approvals -12.9% m/m (expected -2.0%; last -3.9%) and October Private House Approvals 4.3% (last -16.0%). October Private Sector Credit 0.5% m/m (expected 0.6%; last 0.6%). Q3 Current Account surplus AUD23.90 bln (expected AUD27.80 bln; last AUD22.90 bln)

New Zealand's November ANZ Business Confidence -16.4 (last -13.4) and November NBNZ Own Activity 15.0% (last 21.7%)

---Equity Markets---

Japan's Nikkei: -1.6%

Hong Kong's Hang Seng: -1.6%

China's Shanghai Composite: UNCH

India's Sensex: -0.3%

South Korea's Kospi: -2.4%

Australia's ASX All Ordinaries: +0.3%

---FX---

USD/JPY: -0.5% to 112.95

USD/CNH: -0.2% to 6.3738

USD/INR: +0.1% to 75.11

Europe: DAX -1.3%, FTSE -0.7%, CAC -1.1%

Major European indices trade in the red as renewed fears about the effectiveness of current coronavirus vaccines against the new variant weigh on sentiment. European Central Bank policymaker De Guindos said that asset purchases could be restarted once they end in March, adding that the central bank must maintain an accommodative stance even after pandemic purchases end. Italy's Prime Minister Draghi said that his government is prepared to continue interventions to limit the impact of high energy prices on consumers. Italy sold 5- and 10-yr debt to good demand.

In economic data:

Eurozone's November CPI 0.5% m/m (last 0.8%); 4.9% yr/yr (expected 4.5%; last 4.1%). November Core CPI 0.5% m/m (last 0.8%); 2.6% yr/yr (last 2.0%)

Germany's November Unemployment Change -34,000 (expected -25,000; last -39,000) and November Unemployment Rate 5.3%, as expected (last 5.4%)

France's Q3 GDP 3.0% qtr/qtr, as expected (last 3.0%). November CPI 0.4% m/m (last 0.4%); 2.8% yr/yr (last 2.6%). October PPI 2.9% m/m (last 1.7%) and October Consumer Spending -0.4% m/m (expected 0.3%; last 0.2%)

Italy's November CPI 0.7% m/m (expected 0.1%; last 0.7%); 3.8% yr/yr (expected 3.2%; last 3.0%). Q2 GDP 2.6% qtr/qtr, as expected (last 2.6%); 3.9% yr/yr (expected 17.3%; last 17.3%)

Spain's October Retail Sales -0.7% yr/yr (last -0.1%) and September Current Account surplus EUR2.22 bln (last surplus of EUR980 mln)

Swiss November KOF Leading Indicators 108.5 (expected 109.0; last 110.2)

---Equity Markets---

STOXX Europe 600: -1.0%

Germany's DAX: -1.3%

U.K.'s FTSE 100: -0.7%

France's CAC 40: -1.1%

Italy's FTSE MIB: -1.1%

Spain's IBEX 35: -1.6%

---FX---

EUR/USD: +0.5% to 1.1348

GBP/USD: +0.2% to 1.3335

USD/CHF: -0.4% to 0.9189