Early Look

Tuesday, December 13, 2022

Futures	Up/Down	%	Last
Dow	176.00	0.51%	34,445
S&P 500	19.25	0.48%	4,044
Nasdaq	58.50	0.50%	11,888

 

 

S&P futures are rising, currently at the overnight high as stocks jump further ahead of the CPI data at 8:30 AM. U.S. stocks jumped late Monday as well, closing at the highs as investors brace for consumer-price data and the main event, the conclusion of the FOMC meeting, on Wednesday where the Fed is widely expected to increase rates by a smaller 50-bps, though a 25% chance of another 75bp hike is still priced in, according to CME Group. The ECB and Bank of England are also slated to make rate decisions Thursday. After falling last week, the Dow gained 500 points on Monday on hopes that the inflation reading will be “only 7.3%” and investors look for a 50-basis point rate hike into a recession, all while the CBOE Volatility index (VIX) was up 10% (rising another 2.6% this morning in a bit of disconnect). Dow Transports outperformed Monday, rising over 3% back above its 200-day MA resistance of 14,130. In the crypto world, the SEC charges Samuel Bankman-Fried with defrauding investors in crypto asset trading platform FTX. According to the statement, “Bankman-Fried was orchestrating a massive, years-long fraud, diverting billions of dollars of the trading platform’s customer funds for his own personal benefit and to help grow his crypto empire.” In stock news, Oracle rises after earnings. In Asian markets, The Nikkei Index rose 112 points to 27,954, the Shanghai Index was little changed at 3,176, and the Hang Seng Index gained 132 points to 19,596. In Europe, the German DAX is up 116 points to 14,423, while the FTSE 100 gains 32 points to 7,478.

 

It’s all about the November Consumer Price Index (CPI) later this morning (for now – until the FOMC meeting tomorrow), as data is expected to show prices rose 7.3% in November on an annual basis, easing from the 7.7% rise in the previous month. While the core rate, which excludes food and energy prices, is expected to have moderated to 6.1% from 6.3% in October. On a month-over-month basis, headline CPI expected to rise +0.3%, down from the +0.4% reading last month and core M/M expected to rise +0.3%, in line with prior month. After the anticipated volatile move following the CPI data – all eyes will quickly turn to the FOMC interest rate meeting on Wednesday.

Market Closing Prices Yesterday

·     The S&P 500 Index spiked 56.21 points, or 1.43%, to 3,990.59

·     The Dow Jones Industrial Average rose 528.35 points, or 1.58%, to 34,004.81

·     The Nasdaq Composite surged 139.12 points, or 1.26%, to 11,143.74

·     The Russell 2000 Index advanced 21.95 points, or 1.22% to 1,818.61

 

Economic Calendar for Today

·     6:00 AM ET           NFIB Small Business Optimism for Nov

·     7:45 AM ET           ICSC Weekly Retail Sales

·     8:30 AM ET           Consumer Price Index (CPI) M/M for Nov…est. +0.3%

·     8:30 AM ET           Consumer Price Index (CPI) Y/Y for Nov…est. +7.3%

·     8:30 AM ET           CPI Core – Ex: Food & Energy M/M for Nov…est. +0.3%

·     8:30 AM ET           CPI Core – Ex: Food & Energy Y/Y for Nov…est. +6.1%

·     8:55 AM ET           Johnson/Redbook Weekly Sales

·     1:00 PM ET           US Treasury to sell $21B in 30-year notes

·     4:30 PM ET           API Weekly Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: CNM PLAB

·     Earnings After the Close: ABM ASPU BRZE MIND PETM PHX

 

Other Key Events:

·     American Society of Hematology (ASH) Annual Meeting & Expo, 12/10-12/12, in New Orleans

·     Cowen Digital Engineering Services Summit (virtual), 12/12-12/13

·     Seaport Global Annual Airlines Corporate Access Day (virtual)

 

 

Macro	Up/Down	Last
Nymex	0.44	73.61
Brent	0.91	78.80
Gold	6.30	1,798.60
EUR/USD	0.0008	1.0543
JPY/USD	-0.12	137.54
10-Year Note	-0.018	3.593%

 

 

World News

·     Sam Bankman-Fried, founder of the cryptocurrency exchange FTX, which suffered a colossal collapse this year, was arrested in the Bahamas on Monday. He is now facing criminal charges in the United States, according to a Bahamian official.

·     John J. Ray III, the new chief executive of FTX, is scheduled to make his first public comments on the bankrupt crypto exchange at a congressional hearing Tuesday, following the arrest of company founder Sam Bankman-Fried

·     UK unemployment rate increased to 3.7% in the three months to October from 3.6% in the three months to September. Vacancies in the September-to-November period fell on an annual basis for the first time since early 2021 when Britain was under lockdown.

·     German index of economic expectations increased to minus 23.3 in December from minus 36.7 in November, according to data from the ZEW economic research institute

·     The National Federation of Independent Business said its small-business optimism index rose to 91.9 in November from 91.3 the previous month, beating the 90.8 consensus forecast

 

Sector News Breakdown

Consumer

·     Norwegian Cruise Line (NCLH) downgraded to Neutral at UBS after outperformance and lower price tgt to $19 from $24

·     Joann inc. (JOAN) Q3 sales fell -7.9% y/y to $562.8M vs. est. $569.5M; Q3 adj Ebitda fell -45% y/y to $40.2M vs. est. $42.6M; pausing quarterly dividend to strengthen balance sheet and improve operational flexibility

·     Lumber Liquidators (LL) said it intends to slow the pace of new store openings and restart share buybacks in 2023, in a move aimed at better positioning the company in the current macroenvironment.

·     MasterBrand Inc. (MBC) will replace Conn’s Inc. (CONN) in the S&P SmallCap 600 effective prior to the opening of trading on Monday, December 19

 

Energy, Industrials and Materials

·     First Solar (FSLR) to replace Fortune Brands (FBHS) in S&P 500 at open on 12/19 and FBHS to replace FSLR in the S&P 400 Index

·     BHP Group (BHP) downgraded to Sell from Neutral at UBS

·     Rio Tinto (RIO) downgraded to Sell from Neutral at UBS

·     United Airlines Holdings Inc (UAL) said it would buy 100 wide-body jets from Boeing Co (BA) as the U.S. carrier adds more long-haul aircraft to capture a rebound in demand for int’ travel; sees 2024 adj CAPEX about $11B and sees 2023 adj CAPEX about $9B

·     Blue Bird Corp. (BLBD) 4Q adj EPS ($0.66) vs est. $0.04, adj EBITDA ($16.4Mm) vs est. $7.8Mm on sales $257.7Mm vs est. $221.7Mm; guides FY23 net revs $900Mm-1.0B vs est. $999.6Mm; reconfirms long-term outlook of profitable growth towards $2B in revs and adj EBITDA mgn of 12%

 

Financials

·     AllianceBernstein L.P. (AB) preliminary assets under management increased to $658 billion during November 2022 from $627 billion at the end of October. The 5% AUM increase was driven by market appreciation, partially offset by firm-wide net outflows

·     Invesco Ltd. (IVZ) reported preliminary month-end assets under management (AUM) of $1,437.9 billion, an increase of 5.7% versus previous month-end. The firm experienced net long-term inflows of $1.3 billion in the month.

·     Affirm (AFRM), Symphony (SYF) downgraded to Neutral from Buy at Bank America and fir cut Discover Card (DFS) to Underperform

 

Healthcare

·     Magenta Therapeutics (MGTA) rises 64%; released a positive update on clinical trial data for a drug called MGTA-117 treating acute myeloid leukemia patients.

·     Mirati Therapeutics Inc. (MRTX) rises 15% company won FDA accelerated approval for Krazati in certain patients with non-small cell lung cancer; said the accelerated FDA green light is based on objective response rate and duration of response

·     Pfizer (PFE), Humana (HUM) and Inspire Medical (INSP) all upgraded to Buy from Neutral at Goldman Sachs wile firm downgraded Bright Health (BHG) to Sell

·     Tandem Diabetes Care Inc. (TNDM) entered a definitive agreement to acquire AMF Medical SA, a Swiss privately held maker of the Sigi Patch Pump.

 

Technology, Media & Telecom

·     Oracle Corp. (ORCL) 2Q adj EPS $1.21 vs est. $1.18 on revs $12.3B vs est. $12.1B, adj op mgn 41%; Q2 total cloud revenue $3.8B, up 18% in USD, up 25% in constant currency; says strengthening of the U.S. dollar had ‘significant’ impact on Q2

·     Photronics (PLAB) Q4 EPS $0.60 vs. est. $0.48; Q1 revs in-line at $210.3M; sees Q1 revenue $203M-$213M vs. est. $209M

·     New York Times (NYT) Chief Financial Officer Roland Caputo plans to retire next year. He will continue to serve as C.F.O. until his successor is identified

·     Trimble Inc. (TRMB) agreed to acquire Transporeon, a cloud-based transportation management software platform, in an all-cash transaction valued at EUR1.88 billion ($1.98 billion).

·     China is working on a more than 1 trillion-yuan ($143 billion) support package for its semiconductor industry, three sources said, in a major step towards self-sufficiency in chips and to counter U.S. moves aimed at slowing its technological advances – Reuters

·     NetApp (NTAP) downgraded to Underweight from Equal Weight at Morgan Stanley