Sunday, November 28, 2021

Biden Lands on Powell but Pandemic Fears Resurface from South Africa's Omicron Variant 

Weekly Market Update: Biden Lands on Powell but Pandemic Fears Resurface from South Africa's Omicron Variant


US stocks opened the week with a bit of a relief rally after it was confirmed President Biden was nominating Federal Reserve Chairman Jerome Powell for a second term. US Treasury yields extended higher, particularly at the short end of the curve and futures markets saw projections for multiple Fed rate hikes next year solidify. Heading towards the Thanksgiving break indices traded mixed with lingering relative weakness seen in the NASDAQ amid rising rates. US and EU manufacturing data largely remained solid while weekly initial jobless claims fell below 200K for the first time since 1969. US retailer earnings largely met or bested expectations, albeit amid ongoing gross margin headwinds which caused consternation among some investors. As expected, the US led a cadre of countries in formally announcing plans to tap strategic petroleum reserves into the end of the year in an attempt to alleviate upward pressure on oil prices.

By Friday though, when US markets resumed trading investor sentiment plunged. Global risk off trade momentum exploded after dozens of countries restricted travel to and from South Africa and neighboring nations, in an attempt to contain a fast-spreading new COVID variant that may be more contagious and potentially evade current MRNA vaccines. The World Health Organization convened an emergency meeting where they named this new South African variant (Omicron) and labeled it a “variant of concern”. MRNA vaccine makers were quick to remind everyone they could easily pivot production by manufacturing a tailor made vaccine against the variant within fairly short order, but they would need a couple weeks of data before determining what path will be necessary. Oil prices plunged more than 12%, further calling into question whether OPEC+ producers will continue to bring on additional barrels when they meet early next month. The VIX surged more than 50% on Black Friday. The US 10-year yield fell right back to 1.5% and traders pared bets for the 2nd and 3rd Fed rate hikes in 2022. The Greenback moved away from recent 16-month highs on Friday while Bitcoin and cryptos came under pressure too. For the week the S&P fell 2.2%, the Dow lost 2% and the NASDAQ gave back 3.5%.

SUN 11/21
(RU) Ukraine Defense Intelligence Agency chief Budanov: Russian troops prepare to attack Ukraine by end-Jan 2022 or early Feb 2022
TIT.IT Reportedly KKR expected to make a €0.505/shr cash offer for Telecom Italia in €10.8B deal - press

MON 11/22
VG To be acquired by Ericsson for $21.00/shr in ~$6.2B all-cash deal; Transaction expected to be accretive to Ericsson’s EPS from 2024
(EU) EU commission said to issue a set of new recommendations on non-essential travel in the region on Wednesday, Nov 24th - press
(DE) German Chancellor Merkel: Tighter curbs are needed as the pandemic situation remain dramatic and worse than anything seen so far
AVYA Reports Q4 $0.77 v $0.72e, Rev $760M v $744Me
(TR) Turkey President Erodogan: Will punish those who raise prices unjustly; Happy to see that CBRT kept rate low; Inflation will not come down with tightening
(US) Treasury Sec Yellen: We do have to be concerned about inflation
KEYS Reports Q4 $1.82 v $1.65e, Rev $1.29B v $1.28Be; Authorizes new $1.2B share buyback (3% of market cap)
(RU) US is reportedly considering sending extra weaponry and military advisers to Ukraine amid growing fears of Russian invasion - CNN
(US) Treasury Sec Yellen: Expect monthly CPI 0.2-0.3% in H2 2022, price pressures to subside as life normalizes in 2022
005935.KR Expected to build $17B US Chip factory in Taylor, Texas [in line], to begin production by end of 2024 - press

TUES 11/23
BINANCE.IPO Said to be in talks with sovereign wealth funds on investments into Crypto [the specific funds were not mentioned] - FT
*(FR) FRANCE NOV PRELIMINARY MANUFACTURING PMI: 54.6 V 53.1E (12th month of expansion)
*(DE) GERMANY NOV PRELIMINARY MANUFACTURING PMI: 57.6 V 56.9E (17th month of expansion but (lowest reading since Jan 2021)
*(EU) EURO ZONE NOV PRELIMINARY MANUFACTURING PMI: 58.6 V 57.4E (17th month of expansion)
*(UK) NOV PRELIMINARY MANUFACTURING PMI: 58.2 V 57.3E (18th straight expansion)
XPEV Reports Q3 (CNY) -0.88 v -2.16 y/y, Rev 5.72B v 1.99B y/y
ADI Reports Q4 $1.73 v $1.69e, Rev $2.34B v $2.30Be; Says as it enters FY22, its backlog and bookings remain robust, and it continues to invest in capacity
BBY Reports Q3 $2.08 v $1.93e, Rev $11.9B v $11.6Be; Raises FY21 outlook, but guides Q4 below consensus
(US) White House: President Biden confirms to release 50M barrels of oil from Strategic oil reserves in coordination with releases from China, India, Japan, South Korea and UK (as anticipated)
(US) Administration official: President Biden continues to look at additional measures including potential oil export ban - press
DKS Reports Q3 $3.19 v $1.88e, Rev $2.75B v $2.42Be; Raises guidance, again
DLTR Reports Q3 $0.96 v $0.95e, Rev $6.42B v $6.42Be; Announces new $1.25 price points in more than 2,000 additional legacy Dollar Tree stores in Dec 2021; Notes freight and supply chain disruptions continue to be the company's biggest challenge in the near term
(US) Nov Philadelphia Fed Non-Manufacturing Index:46.1 v 33.4 prior
*(US) NOV PRELIMINARY MARKIT MANUFACTURING PMI: 59.1 V 59.1E (17th consecutive month of expansion)
HPQ Reports Q4 $0.94 v $0.88e, Rev $16.7B v $15.4Be
DELL Reports Q3 $2.37 v $2.33e, Rev $28.4B v $27.4Be
(JP) Renewed reports that Japan govt plans to set aside ¥600B ($5.2B) for fund to support semiconductor firms - Nikkei
(TW) Taiwan said to be considering an entry ban on senior China officials - press

WEDS 11/24
(EU) ECB's De Guindos (Spain): Inflation drivers becoming more structural - financial press
(EU) EU said to be preparing new COVID-19 travel recommendations inside union called 'Recommendation on free movement'; To be unveiled as soon as Nov 25th - press
*(DE) GERMANY NOV IFO BUSINESS CLIMATE SURVEY: 96.5 V 96.7E (5th straight decline)
700.HK China Industry Ministry (MIIT) said to have freezed all Tencent apps from releasing and updating on data privacy concerns - press
(DE) Speculation that the new German govt could announce a full lockdown to contain the virus
(DE) German parties in newly formed govt announce several talking points; Will continue to exclude nuclear power from energy mix - press
DE Reports Q4 $4.12 v $3.82e, Rev (equipment ops) $10.3B v $10.3Be; Sees healthy demand in 2022
MAERSKB.DK Exec: still sees 12-15% capacity cut from delays and congestions; Sees an improvement in equipment availability in Asia
*(US) INITIAL JOBLESS CLAIMS: 199K V 260KE; CONTINUING CLAIMS: 2.05M V 2.03ME (post pandemic lows)
(US) Atlanta Fed GDPNow: raises Q4 GDP forecast to 8.6% from 8.2%
(US) Association of American Railroads weekly rail traffic report for week ending Nov 20th: 508.3K total units, -4.9% y/y

THUR 11/25
*US market closed for Thanksgiving
*(EU) ECB said to have held early talks on firm limits on riskiest leveraged loans - press
*(EU) New COVID variant known as B.1.1.529 found in South Africa reportedly shows high number of mutations in spike - press
*(UK) UK has suspended flights to 6 countries in Africa on new COVID variant - press

FRI 11/26
(IL) Israel PM office: Widens "no travel" restrictions to most of African countries - press
(US) NIH's Fauci: New COVID-19 variant from South Africa has some mutations that are raising concern; Travel ban like one imposed by UK is a possibility

Sunday, November 14, 2021

Big firms announce breakups, while others post disappointing quarterly results; Inflation continues to run hot 

Weekly Market Update: Big firms announce breakups, while others post disappointing quarterly results; Inflation continues to run hot


The US stock market finally saw its five-week winning streak come to an end this week. Equity markets encountered some resistance after US CPI data showed inflation rose to a three-decade high in October and broadened to impact a wide array of goods and services. Initially the US Treasury curve flattened and the US dollar firmed up. Signs that the flare-up in inflation will last longer than central bankers had forecast prompted traders to placer further bets the Federal Reserve would raise borrowing costs by next summer. The Biden administration further vented its frustration with stubbornly high oil prices calling on OPEC producers to help bring prices down. Government officials and central bankers on both sides of the pond continued to assert that much of the current upward pressure on prices will ultimately prove to be transitory.

Stocks found support on Friday despite the November University of Michigan sentiment reading falling to a 10-year low. September JOLTS jobs openings remained very strong while the quits rate pushed up to the highest level on record, suggesting the employment market will remain tight. US natural gas prices remained below $5 holding near a 3-month low while WTI crude drifted back towards $80/bbl providing some hope that the worst of the inflation spike may have passed. For the week, the S&P lost 0.3%, the DJIA was off 0.6%, and the Nasdaq slipped 0.7%.

In corporate news this week, breakups were in the air: Johnson & Johnson announced it plans to split into two companies, spinning off its consumer and pharmaceutical/medical device divisions into separate entities. GE also said it would break up, forming three public companies: GE Aviation; GE Healthcare; and the combined GE Renewable Energy, GE Power, and GE Digital businesses. Toshiba confirmed it too planned to separate into three standalone companies.

On the earnings front, Disney shares plummeted after reporting across-the-board misses and seeing decelerated streaming growth. PayPal missed on its top line and cut its FY outlook, sending the stock lower despite announcing a new partnership with Amazon. Beyond Meat posted a much wider loss than anticipated and analysts worried its Q4 forecast show that faux meat products could be reaching market saturation faster than expected. Rivian Automotive launched its IPO with great fanfare and earned a market cap greater than GM, while Tesla shares took a breather as Elon Musk sold some shares to pay his tax obligations.

SUN 11/7
BRK.A Reports Q3 EPS (Class A) $6,882 v $18,994 y/y, Rev $70.6B v $63.0B y/y
(US) House passes bipartisan $1.2T infrastructure bill, clearing the way for President Biden's signature

MON 11/8
(IE) Ireland Foreign Min Coveney: Evidence suggests UK govt is preparing to trigger Article 16 of the Northern Ireland Protocol; Sees this very severe and something the EU would want to prevent
(CN) China to issue more than a dozen licenses for companies to conduct after school tutoring - press
(DE) German Social Democrats (SPD) official Walter-Borjans: Every chance govt will be in place in early Dec; SPD-led coalition talks making good progress
CRS Increases base prices by 6-8% on specialty alloy portfolio; Effective on new orders placed after Nov 8
(US) Fed Vice Chair Clarida: Sees interest rate liftoff test met by end of 2022; We are clearly a ways away from considering raising rates
RBLX Reports Q3 -$0.13 v -$0.26 y/y, Rev $509.3M v $251.9M y/y; Based on our October results, we appear to be having a great start to Q4
PYPL Reports Q3 $1.11 v $1.07e, Rev $6.18B v $6.21Be; Venmo users in the US will be able to pay with Venmo on starting in 2022
(CN) Follow Up: More cities in China [including Tianjin, Shijiazhuang, Suzhou and Jiangsu] have tightened the use of proceeds from property pre-sales - Chinese press

TUES 11/9
7201.JP Reports H1 Net +¥54.1B v -¥16.7Be, Op +¥63.5B v -¥1.7Be; Rev ¥3.95T v ¥3.09T y/y; Cuts FY21 Rev outlook on lower deliveries. but raises profit outlook
TSLA Reportedly "likely" to open second factory in Shanghai, China - DigiTimes
(EU) EU said to ban payment for order flow as part of Mifid review to stem a practice helping meme-stocks - press
TSM Confirms to build $7B chip plant in Japan with Sony Semiconductor Solutions as minority shareholder; Sony to make $0.5B investment; Construction to begin in 2022 with production planned by end-2024 (as speculated)
GE Plans to form 3 public companies, GE Aviation, GE Healthcare, and the combined GE Renewable Energy, GE Power, and GE Digital businesses; Plans to execute tax-free spin-offs of Healthcare in early 2023, Renewable Energy and Power company in early 2024
DHI Reports Q4 $3.70 v $3.40e, Rev $8.11B v $7.88Be
SYY Reports Q1 $0.83 v $0.85e, Rev $16.5B v $15.8Be; Product cost inflation +13.4% in U.S.
*(US) OCT PPI FINAL DEMAND M/M: 0.6% V 0.6%E; Y/Y: 8.6% V 8.6%E
CLX CEO: Higher costs have been more pervasive than our earlier expectations; Supply chain situation is 'starting to ease' - press interview
COIN Reports Q3 $1.62 v $1.79e, Rev $1.31B v $1.56Be

WEDS 11/10
ADS.DE Reports Q3 Op €672M v €680Me, Rev €5.75B v €5.80Be; Cuts FY21 gross margin outlook
ALO.FR Reports H1 Adj Net €172M v €168M y/y, Rev €7.44B v €3.52B y/y
700.HK Reports Q3 (CNY) Net 39.5B v 38.5B y/y, Rev 142.4B v 125.5B y/y
ADS.DE CFO: Expects flattish Q4; Have developed action plan to address weakness in China - post earnings comments
VOW3.DE CEO: it is evident Volkswagen must break up certain structures and find new ways of working; It is not about job cuts, but new ways of thinking
3333.HK Reportedly some USD offshore bond holders of Evergrande have not received coupon payments by the end of 30-day grace periods on Wed, Nov 10th; Non-payment would trigger default condition - financial press
*(US) OCT CPI M/M: 0.9% V 0.6%E; Y/Y: 6.2% V 5.9%E (highest annual pace since Nov 1990)
*(US) INITIAL JOBLESS CLAIMS: 267K V 260KE; CONTINUING CLAIMS: 2.16M V 2.05ME (both post pandemic lows)
BAS.DE To raise prices by up to 35% on home care, industrial and institutional cleaning, and industrial formulators portfolio in Europe - press
*(US) DOE CRUDE: +1.0M V +1.5ME; GASOLINE: -1.6M V -0.5ME; DISTILLATE: -2.6M V -1ME
(US) Atlanta Fed GDPNow: cuts Q4 GDP forecast to 8.2% from 8.5%
RIVN IPO opens for trade at $106.75
DIS Reports Q4 $0.37 v $0.52e, Rev $18.5B v $18.8Be

THURS 11/11
SIE.DE Reports Q4 Net €1.33B v €1.23Be, Industrial Business EBITA €2.27B v €2.45Be, Rev €17.4B v €16.7Be
SIE.DE Sees complex environment remains, easing challenges from Covid-19 & supply chain constraints during FY22 - earnings slides
*(UK) Q3 PRELIMINARY GDP Q/Q: 1.3% V 1.5%E; Y/Y: 6.6% V 6.8%E
(RU) Russia Parliament (Duma) said to be discussing legalizing crypto assets - financial press
(RU) US has privately warned Europe that Russian troops could plan an invasion of Ukraine - press
OPFI Reports Q3 Adj $0.21 v $0.16e, Adj Rev $92.0M v $62.8M y/y; Net Charge-Offs up to 36%
MOS Reports Oct Phosphates Rev $437M,+49% y/y; Volumes shipped 569K tonnes, -20% y/y
7203.JP Planning 800K vehicle production in Dec (vs ~760K y/y); Affirms FY21/22 production plan of 9.0M units

FRI 11/12
2317.TW Reports Q3 (NT$) Net 37B v 30.8B y/y; Op 36.2B v 32.4B y/y; Expects component shortage to last into H2 2022
6502.JP Reports H1 Net ¥59.8B v ¥3.5B y/y, Pretax ¥82.1B v ¥20.0B y/y, Op ¥45.0B v ¥3.1B y/y, Rev ¥1.55T v ¥1.37T y/y; Confirms Board approved to split into 3 companies focused on Infrastructure Service, Devices, Kioxia and Toshiba TEC
2317.TW Chairman: Has a cautious outlook for FY22 Rev; expects component shortage to last into H2 2022 - post earnings comments
(RU) Russia govt spokesperson Peskov: talk of possible Russia invasion of Ukraine unfounded; To supply gas to Europe regardless of Belarus
JNJ Confirms plans to separate consumer health business; Separation expected to complete in 18-24 months
6502.JP Confirms strategic reorganization to separate into three standalone companies to enhance shareholder value
(EU) EU's Sefcovic: The EU is committed to finding practical solutions; Nothing has changed with regard to our position on ECJ; We must make serious headway by end of next week

Sunday, November 7, 2021

Animal spirits continue to outweigh fears of stagflation 

Weekly Market Update: Animal spirits continue to outweigh fears of stagflation


Stock markets were already riding a wave of momentum and this week’s developments only added to investors’ willingness to take on risk. On Wednesday, the Fed delivered on the long promised tapering announcement, but investors clearly still favored the belief that the bond-buying program and low interest rates will continue to provide accommodation. The next day the Bank of England surprised some analysts by deciding to hold rates steady, though three hawkish members of the MPC Board dissented. Both Fed Chairman Powell and BOE Governor Bailey emphasized they were sensitive to the burden that rising prices put on segments of society least equipped to deal with it, but again played down the prospect of an imminent turn to raising interest rates. Each reiterated their stance still holds that much of the inflation coming through the pipe will ultimately be viewed as transitory, but also acknowledged it remains unclear when supply shocks will subside, allowing prices to move back down. Rates moved lower globally. The US 10-year yield dipped to its lowest level in more than a month, back below 1.50%. Market-implied 2022 central bank rate hike expectations came in only marginally despite the rally in sovereign bond markets. Central bankers in Poland and the Czech Republic showed more concern about inflation and took aggressive action, each raising rates by more than analysts expected.

Friday’s news that Pfizer’s oral antiviral candidate reduced risk of hospitalization or death from COVID by 89% further invigorated animal spirits. Also, October payroll data was a pleasant surprise, with strength seen across a broad number of industries. Nonfarm payrolls rose by 531K in the latest month and saw a 235K upward revision to August and September job gains. Payrolls have now reversed 85% of their initial pandemic losses. The S&P surged above 4,700 and the NASDAQ composite topped 16K for the first time ever. The VIX spent much of the week hovering near 15, just above multi-year lows. WTI crude lost ground heading into another OPEC+ meeting where producers agreed to stay on course by easing their coordinated cuts by another 400K bpd in December. Crude oil prices moved up after the announcement amid jawboning by the Biden Administration, which clearly remains frustrated by the elevated levels. Meanwhile Congressional Democrats continued to wrangle over the infrastructure and reconciliation bills. For the week, the S&P gained 2%, the DJIA added 1.4%, and the Nasdaq was up 3.1%.

In corporate news this week, Google said it would invest $1B into CME Group as part of a 10-year partnership to improve the global derivatives markets through cloud adoption. Moderna shares were battered by an FDA delay to its vaccine EUA request, a poor earnings report, and news of the Pfizer COVID oral antiviral treatment. Bed Bath and Beyond was buoyed after launching a shift in its business model including a collaboration with Kroger. Peloton slashed its outlook and profitability forecast, though it said it still expects to have positive adjusted EBITDA in 2023. Uber posted its first ever quarter of positive adjusted EBITDA and the CEO gave an upbeat outlook, though the ride-share giant reported a larger than expected net losses due to its investment in Didi.

DuPont said it plans to acquire engineered materials and components manufacturer Rogers Corp for $5B, a move to bolster DuPont's existing electronics and industrial business. Coca-Cola confirmed it would acquire the remaining 85% stake in sports drink maker BodyArmor for $5.6B in cash. Tesla CEO Musk rebuffed earlier reports of a deal with Hertz, saying they have yet to reach agreement with the rental car company over the timing of potential vehicle deliveries. On the supply chain front, the CEO of global logistics company Expeditors said he didn’t foresee a meaningful reduction in cargo and port backlogs for at least the rest of the year and that he expects current conditions likely to last well into 2022.

SUN 10/31
MRNA Confirms US FDA requires additional time to complete assessment of EUA request for use of COVID-19 vaccine ("Spikevax", mRNA-1273) at 100 µg dose level in adolescents 12 to 17 years of age due to risk of myocarditis and indicates review may not be completed before Jan 2022
GFS CEO: company's semiconductor chip capacity sold out through end-2023
(US) Goldman Sachs analysts now see Fed to hike interest rates in July 2022 (prior saw in Q3 2023) due to inflation concerns
*(CN) CHINA OCT MANUFACTURING PMI (GOVT OFFICIAL): 49.2 V 49.7E (2nd consecutive contraction)
(CN) China President Xi campaign to reduce the burden of homework and after school tuition for Chinese kids is creating a boom for sports and arts clubs, with 33.0K new arts and sports schools being created

MON 11/1
(HK) Macau Sept Casino Rev (MOP) 4.37B v 5.88B prior; Y/Y +57.3% v 165.9% prior
RYA.UK CEO O'Leary: Raises FY22 passengers 102-103M (prior 90-100M); Sees load factors rising up towards 90% this winter - post earnings comments
(DE) German day-ahead baseload power price at €210.0/MWh +158% d/d
(CN) Global Times' Hu Xijin: Reunification of Taiwan island is inevitable, the most important thing is not the timetable, but at which point and in which specific way the reunification will be most beneficial to China's overall national strategy.
(US) Atlanta Fed GDPNow: raises Q4 GDP forecast to 8.2% from 6.6%
(US) Treasury quarterly financing estimates: to borrow $1.02T in Oct-Dec quarter v $830Be (prior estimate to borrow $703B)

TUES 11/2
BP.UK Reports Q3 adj Net $3.32B v $3.0Be, Rev $37.9B v $26.3B y/y; Further $1.25B share buyback planned
MAERSKB.DK CEO: high rates will continue through Q1 2022 - post earnings comments
ROG Confirms to be acquired by DuPont for $277/shr in ~$5.2B deal; DuPont announces intent to divest a substantial portion of its Mobility & Materials segment
PFE Reports Q3 $1.34 v $1.08e, Rev $24.1B v $22.4Be
GPN Reports Q3 $2.18 v $2.14e, Rev $2.20B v $1.99Be
EXPD Reports Q3 $2.12 v $1.67e, Rev $4.32B v $3.45Be; CEO - Doesn't foresee a meaningful reduction in cargo, port backlogs
(NZ) Fonterra Global Dairy Trade Auction Dairy Trade price index: +4.3% v +2.2% prior
(US) Sen Maj Leader Schumer: An agreement has been reached on lowering prescription drug costs
TMUS Reports Q3 $0.55 v $0.54e, Rev $19.6B v $20.1Be
Z Reports Q3 GAAP Net -$328M v +$39.6M y/y, Rev $1.74B v $2.01Be; Confirms plan to wind down Zillow Offers operations; will take several quarters and cut workforce by approximately 25%
MDLZ Reports Q3 $0.71 v $0.70e, Rev $7.18B v $7.04Be
BBBY Kroger collaborates with Bed Bath & Beyond Inc. on a national e-commerce experience and in-store pilot to expand Kroger's Home and Baby Offering
(CN) China increases development of subsidized rental housing - Chinese press
(US) Republican Glenn Youngkin projected to win in the Virginia Governor's race
DE Striking workers Rejected tentative 6-year labor agreement; 55% of workers voted against the agreement - US financial press

WEDS 11/3
(TR) Turkey Oct CPI M/M: 2.4% v 2.8%e; Y/Y: 19.9% v 20.4%e
FUN Reports Q3 $2.60 v $2.19e, Rev $753.4M v $643Me; Demand remains strong through October Halloween events
BMW.DE CFO: sees more disruption from chip shortage in Q4; Does not expect short-term magnesium shortage to affect production - post earnings comments
*(UK) OCT FINAL PMI SERVICES: 59.1 V 58.0E (confirms 8th month of expansion)
CVS Reports Q3 $1.97 v $1.79e, Rev $73.8B v $70.2Be; Raises guidance
(RU) Moscow mayor confirms lockdown measures to be ended on Sunday, Nov 7th due to stabilization in COVID-19 situation - press
WBA To provide Pfizer COVID-19 Vaccines to Children Ages 5 to 11 at Select Stores Nationwide Beginning Saturday, Nov 6th
*(US) OCT ADP EMPLOYMENT CHANGE: +571K V +400KE; Job gains are accelerating across all industries
RFL European Medicines Agency grants Orphan Drug Designation to Unit Rafael Pharmaceuticals’ CPI-613 (Devimistat) for treatment of patients with relapsed or refractory Burkitt's lymphoma
*(US) OCT ISM SERVICES INDEX: 66.7 V 62.0E (record high since 1997)
*(US) DOE CRUDE: +3.3M V +1.5ME; GASOLINE: -1.5M V -1.5ME; DISTILLATE: +2.2M V -1ME
(US) DOD report warns China's nuclear stockpile is outpacing forecasts; China may have least 1K warheads by 2030 - press
COST Reports Oct total SSS +11.8% (ex-gas and FX) y/y
(US) New Jersey re-elects Murphy (D) as Gov (1st time a Democratic Gov has been re-elected since 1977)
2282.HK Reports Q3 (HK$) adj EBITDA 100.5M v -730.6M y/y; Rev 2.25B v 363.2M y/y
386.HK Signs 20-year agreement for 4.0Mt/year purchase from US Venture Global LNG valued at $30B

THURS 11/4
7203.JP Reports H1 Net ¥1.52T v ¥629.4B y/y; Op ¥1.75T v ¥520.0B y/y; Rev ¥15.5T v ¥11.4B y/y; Announces share buyback for ¥150B (0.86% of shares)
CSGN.CH Reports Q3 (CHF) Net 434M v 546M y/y, Rev 5.44B v 5.20B y/y; Investment Bank unit plans to exit prime services
NOVN.CH To divest 53.3M Roche bearer shares (~33% stake) at CHF356.93/shr for ~$20.7B; Roche affirms FY21 outlook and aiming at increasing the dividend in CHF for 2021
*(FR) FRANCE OCT FINAL PMI SERVICES: 56.6 V 56.6E (confirms 7th straight expansion)
*(DE) GERMANY OCT FINAL PMI SERVICES: 52.4 V 52.4E (confirms 6th month of expansion)
880.HK Reports Q3 (HKD) Net -1.25B v -1.03B y/y, Rev 2.41B v 879M y/y
CI Reports Q3 $5.73 v $5.23e, Rev $44.3B v $43.0Be; Raises FY21 outlook
ABC Reports Q4 $2.39 v $2.36e, Rev $58.9B v $56.7Be; Raises Quarterly dividend 4.5% to $0.46 from $0.44 (indicated yield 1.43%)
MRNA Reports Q3 $7.70 v $8.96e, Rev $5.0B v $6.05Be; Announces share buyback of up to $1B over 2 years; Sees some international shipments and exports may shift vaccine deliveries to early 2022
FAST Reports Oct net sales $531.6M +8.9% y/y
K Reports Q3 $1.09 v $0.94e, Rev $3.62B v $3.53Be
*(US) INITIAL JOBLESS CLAIMS: 269K V 275KE (new post-pandemic low); CONTINUING CLAIMS: 2.11M V 2.15ME
(UK) BOE Gov Bailey: Cautions on the scale of rate rises seen in market; Inflation peak is materially higher than estimated in Aug - post rate decision press conference
CME Signs 10-year partnership with Google Cloud to transform global derivatives markets through cloud adoption
OPEC+ JMMC reportedly supports no change to OPEC policy - Energy Intel's Bakr
(US) Atlanta Fed GDPNow: raises Q4 GDP forecast to 8.5% from 8.2%

FRI 11/5
PFE Novel COVID-19 oral (pill) antiviral treatment candidate (PAXLOVID) reduced risk of hospitalization or death by 89% in interim analysis of Phase 2/3 EPIC-HR study; First oral antiviral of its kind
(UK) RTE Connelly tweets: growing expectation that the UK will trigger Article 16; Much more intense discussion in the European Commission about how the EU should respond
*(EU) EURO ZONE SEPT RETAIL SALES M/M: -0.3% V 0.2%E; Y/Y: 2.5% V 1.5%E
DKNG Reports Q3 -$0.82 v -$1.11e, Rev $213M v $225Me
*(US) OCT AVERAGE HOURLY EARNINGS M/M: 0.4% V 0.4%E; Y/Y: 4.9% V 4.9%E
(JP) The economic stimulus plan being considered by Japan govt is reportedly around ¥35T ($308B) - Nikkei

Sunday, October 31, 2021

Stocks continue to climb the ‘wall of worry’ despite flattening yield curve and some notable earnings misses 

Weekly Market Update: Stocks continue to climb the ‘wall of worry’ despite flattening yield curve and some notable earnings misses


US stock markets continued probe new all-time highs this week as earnings season reached a crescendo. Equities remained in favor in spite of several notable Q3 disappoints that revealed supply-chain problems and tight labor markets have hit even some of the leading corporations quite hard. Investors were also forced to factor in an escalating central bank pivot away from emergency policy measures that will eventually open the door for rate normalization. Worries about the pandemic lingered as portions of Eastern Europe and Asia revisited lockdowns but future US vaccination rates may be heading substantially higher after the FDA approved the Pfizer/Biontech Covid-19 vaccine for use in children as young as five years old.

US housing and manufacturing data largely rebounded from prior months while inflation figures globally continued to run hot. Following meetings by the Bank of Canada and ECB, market based rate hike expectations continued to get pulled forward on the 2022 calendar. ECB President Lagarde even pushed back on that notion specifically at her press conference, but traders clearly favored her incrementally more hawkish view for the 2022 inflation horizon. Some EU sovereign yields returned to levels not seen since July 2020 while the US Treasury curve flattened noticeably amid continued upward pressure on short rates alongside solid demand for Treasury bonds. Washington remained a source of uncertainty as President Biden went off to Europe for key G20 and climate meetings without a vote on his infrastructure spending package. For the week, the S&P gained 1.3%, the DJIA added 0.4%, and the Nasdaq was up 2.7%.

In corporate news this week, a slew of major earnings made headlines. Apple shares fell as the company failed to meet profit expectations for the first time since 2016, as CEO Cook said supply chain constraints crimped revenues by $6B and that the impact would be even greater in the next quarter. Amazon posted a big miss on its top and bottom line as labor costs and supply chain hiccups weighed on the retail giant's outlook. Microsoft’s stronger than expected earnings pushed its market cap up enough to overtake Apple's amid growth in its cloud computing division. Facebook missed consensus estimates and cut its guidance as Apple restrictions on consumer data hurt its ad revenue. Alphabet’s Google on the other hand posted strong growth as small businesses continued to buy digital ads on its various platforms. Twitter missed on its top and bottom lines, though the social media company said the impact from Apple’s data curbs had been less than anticipated. Western Digital was negatively affected this quarter by supply chain troubles, leading it to guide Q2 below analyst expectations. Ford posted a beat and raised guidance, sending shares to their highest levels since late 2014. UPS also had a positive quarter, notching a higher than expected increase in profit amid strong e-commerce demand. On the M&A front, PayPal confirmed it will not be pursuing an acquisition of Pinterest at this time.

SUN 10/24
BMPS.IT UniCredit and Italy's Ministry of Economy and Finance confirm decision to cease the negotiations on potential acquisition of Monte dei Paschi
(US) Treasury Sec Yellen: Do not think we are about to lose control of inflation; Inflation will remain high until next year; Expects improvement in inflation rate in H2 2022
(TR) Turkey President Erdogan said to have ordered 10 foreign envoys be ousted, including envoys from US, France and Germany - press
(CN) China to launch pilot property tax schemes in some regions; the specific regions and other details will be determined by the State Council - Xinhua

MON 10/25
5.HK Reports Q3 Net $3.54B v $1.36B y/y, adj Pretax $6.00B v $4.4B y/y ($4.87Be), Rev $12.0B v $11.9B y/y ($12.3Be); To buy back up to $2.0B in shares
(US) US Senator Manchin (D-WV) said to be 'agreeable' to wealth tax for President Biden plan - US press
PINS PayPal confirms it is not pursuing an acquisition of Pinterest at this time
*(DE) GERMANY OCT IFO BUSINESS CLIMATE SURVEY: 97.7 V 98.0E (4th straight lower reading)
KMB Reports Q3 $1.62 v $1.66e, Rev $5.01B v $5.00Be; Cuts FY21 outlook citing significantly higher input cost inflation
MU Spokesperson: Taiwan earthquake on Oct 24th caused impact to production
ML.FR Reports 9M Rev €17.20B v €14.9B y/y
MRNA Spikevax: EMA recommendation on booster; EMA’s human medicines committee (CHMP) concludes booster dose of COVID-19 vaccine Spikevax may be considered in people aged 18 years and above
UNP Takes additional action to alleviate supply chain congestion; To offer $60/container refund for containers in-gated on Saturdays and Sundays
FB Reports Q3 $3.22 v $3.20e, Rev $29.0B v $29.6Be; Increases share repurchase program by $50B; Notes significant uncertainty ahead of Q4 and continued headwinds from Apple's iOS 14 changes
(HK) Hong Kong Chief Exec Lam: To remove most coronavirus quarantine exemptions

TUES 10/26
UBSG.CH Reports Q3 Net $2.28B v $2.1B y/y; Rev $9.13B v $8.94B y/y, To give strategic update Feb 1, 2022
NOVN.CH Reports Q3 Core EPS $1.71 v $1.65e, Rev $13.0B v $13.0Be; Commences review of options for Sandoz unit
Carmakers and other users of aluminium could be forced to halt production within weeks amid a “catastrophic” shortage of magnesium across Europe - financial press
LEN To partner with Icon to build community of 100 3D-printed homes - US financial press
UPS Reports Q3 $2.71 v $2.52e, Rev $23.2B v $22.6Be; Raises FY21 outlook
GE Reports Q3 $0.57 v $0.41e, Rev $18.4B v $19.1Be; Cuts FY21 Rev outlook, but raises FY21 profit outlook
MMM Reports Q3 $2.45 v $2.18e, Rev $8.94B v $8.67Be
HAS Reports Q3 $1.96 v $1.73e, Rev $1.97B v $1.96Be; Says it has orders to support the high end of the Rev growth range
RTX Reports Q3 $1.26 v $1.07e, Rev $17.0B v $16.5Be
SHW Reports Q3 $2.09 v $2.07e, Rev $5.15B v $5.11Be; Do not expect any moderation in raw material inflation any sooner than next year
WM Reports Q3 $1.26 v $1.33e, Rev $4.67B v $4.55Be; Cites additional labor costs and other inflationary cost pressures
GLW Reports Q3 $0.56 v $0.58e, Rev $3.60B v $3.66Be
LMT Guides initial FY22 Rev ~$66B** v $70.2Be, segment Op margin ~11% - earnings slides
0728.HK FCC votes to revoke China Telecom America's authority to provide telecom services within the US - press
MSFT Reports Q1 $2.27 adj v $2.06e, Rev $45.3B v $43.9Be
GOOGL Reports Q3 $27.99 v $23.13e, Rev $53.6B (ex TAC) v $51.8Be
V Reports Q4 $1.62 v $1.53e, Rev $6.6B v $6.48Be; Raises Quarterly dividend 17.2% to $0.375 from $0.32 (indicated yield 0.65%)
AMD Reports Q3 $0.73 v $0.67e, Rev $4.31B v $4.12Be; 3rd Gen EPYC processor shipments ramped significantly in Q3
(US) Puerto Rico Senate and House have approved the debt restructuring bond bill; the final vote in the Senate was 14 to 13 - press
PFE VRBPAC Panel Votes In Favor (17 Yes; 0 No; 1 Abstain) that based on the totality of scientific evidence available, the benefits of PFE-BNTX COVID-19 Vaccine when administered as a 2-dose series (10 µg each dose, 3 weeks apart) outweigh risks for use in children 5-11 years of age - VRBPAC Meeting

WEDS 10/27
DBK.DE Reports Q3 Net €194M v €812M y/y, Rev €6.04B v €5.8Be; Rev performance developing in line with or better than previous 2022 ambitions
BAS.DE Reports Q3 Net €1.25B v €1.30Be, Adj EBITDA €2.77B v €2.69Be, Rev €19.7B v €17.8Be; Raises FY21 outlook
(DK) GERMANY NOV GFK CONSUMER CONFIDENCE: +0.9 V -0.5E (2nd straight month of positive readings)
HEIA.NL Issues Q3 Trading Update: Organic Beer volume -5.1% y/y
MCD Reports Q3 $2.76 v $2.46e, Rev $6.20B v $6.02Be
IP Reports Q3 $1.35 v $1.46e, Rev $5.71B v $5.84Be; Expect this inflationary environment to continue for the foreseeable future
GSK.UK Reports Q3 Adj EPS 36.6p v 29.1pe, Rev £9.08B v £8.8Be
GM Reports Q3 $1.52 v $0.89e, Rev $26.8B v $26.5Be; Raises guidance
(FR) France govt spokesperson Attal: Sanctions against UK will come into effect on Mon, Nov 1st; Announcement could come tomorrow
(US) Nevada reports Sept casino gaming Rev $1.16B, +41.1% y/y; Las Vegas strip Rev $640.6M, +80.6% y/y
*(CA) BANK OF CANADA (BOC) LEAVES INTEREST RATES UNCHANGED AT 0.25%; AS EXPECTED; Ending QE and moving into reinvestment phase
*(US) DOE CRUDE: +4.3M V +0.5ME; GASOLINE: -2.0M V -2ME; DISTILLATE: -0.4M V -2ME
(US) Atlanta Fed GDPNow: cuts Q3 GDP forecast to 0.2% from 0.5%
COST Reportedly raised its minimum wage to $17/hr (had raised it to $16/hr in Feb) - CNN
F Reports Q3 $0.51 v $0.29e, Rev $35.7B v $34.2Be; Raises FY21 outlook; Says Ford has momentum from and expects to build on its strong performance in 2021
005930.KR Reports final Q3 (KRW) Net 12.3T v 9.36T y/y; Op 15.8T v 12.4T y/y, Rev 74.0T v 67.0T y/y

THURS 10/28
AIR.FR Reports Q3 adj Net €404M v -€767M y/y, Adj EBIT €666M v €820M y/y, Rev €10.5B v €11.2B y/y
NOKIA.FI Reports Q3 €0.08 v €0.05 y/y, Op €633M v €486M y/y, Rev €5.40B v €5.29B y/y; Works to mitigate the unprecedented component cost inflation the industry faces
ABI.BE Reports Q3 $0.85 v $0.64e, EBITDA $5.21B v $4.9Be; Rev $14.27B v $13.6Be
VOW3.DE Reports Q3 Net €2.90B v €2.75B y/y, Op €2.80B v €3.18B y/y, Rev €56.9B v €59.4B y/y; Says operating business in Q3 noticeably down due to semiconductor bottlenecks; Cuts FY21 deliveries outlook
SAN.FR Reports Q3 Business EPS €1.85 v €1.55 y/y, Op €3.04B v €2.52B y/y, Rev €10.4B v €9.48B y/y
066570.KR Reports final Q3 (KRW) Net 384.9B v 626.1B y/y; Op 540.7B v 959B y/y, Rev 18.8BT v 16.9T y/y
RDSA.NL Reports Q3 $0.53 v $0.12 y/y, Rev $61.6B (total Rev and other income) v $44.7B y/y
STLA Reports Q3 Rev €32.6B v €37.7B y/y; CFO says chip supplies improving in Oct and Sept
6758.JP Reports H1 Net ¥424.9B v ¥652.2B y/y, Pretax ¥566.3B v ¥572.3B y/y, Op ¥598.5B v ¥537.0B y/y, Rev ¥4.6T v ¥4.1T y/y
(FR) France EU Affairs Min Beaune: UK could face higher electricity prices
VOW3.DE CEO: Cuts FY21 Rev growth +10% (prior: +15%); Chip supplies should be much better in Q4 and to improve further in coming quarters despite some constraints persisting in 2022 - post earnings comments
(DE) German day-ahead baseload power price at €122.0/MWh -21.4% d/d
RDS.A CFO: energy supply shortage to be mostly resolved over 2022 - post earnings comments
CAT Reports Q3 $2.66 v $2.26e, Rev $12.4B v $12.6Be; Says it is working to mitigate supply chain issues
MRK Reports Q3 $1.75 v $1.54e, Rev $13.2B v $12.4Be
AVNT Reports Q3 $0.70 adj v $0.68e, Rev $1.22B v $1.17Be; Notes unprecedented combination of inflation, supply chain disruptions, and labor shortages
HSY Reports Q3 $2.10 v $2.00e, Rev $2.36B v $2.31Be; Raises FY21 outlook to reflect elevated consumer demand across markets, an improved tax outlook and optimized brand investment
LH Reports Q3 $6.82 v $4.77e, Rev $4.06B v $3.58Be
MO Reports Q3 $1.22 v $1.26e, Rev $6.79B v $5.77Be; Expands share buyback program to $3.5B from $2B
RFL AVENGER 500 Phase 3 clinical trial for CPI-613 (devimistat) in Metastatic Pancreatic did NOT meet primary endpoint; Independent Data Monitoring Committee recommends Phase 3 clinical trial in relapsed or refractory acute myeloid leukemia be stopped due to lack of efficacy
*(EU) ECB LEAVES 7-DAY MAIN REFINANCING RATE UNCHANGED AT 0.00%; AS EXPECTED; Reiterates forward guidance on rates and QE program pace
CAT CFO: Sees supply-chain impacts lasting into 2022; Sees China demand falling in Q4, full year demand flat - media call
*(DE) GERMANY OCT PRELIMINARY CPI M/M: 0.5% V 0.4%E; Y/Y: 4.5% V 4.4%E (highest annual pace since 1993 reunification)
MA Reports Q3 $2.37 v $2.18e, Rev $5.0B v $4.96Be
*(US) Q3 ADVANCE GDP PRICE INDEX: 5.7% V 5.3%E; CORE PCE Q/Q: 4.5% V 4.5%E
(EU) ECB chief Lagarde: Recovery continues but has "Moderated"; Inflation expected to rise further but ease during course of 2022 - prepared remarks
(EU) ECB chief Lagarde: Analysis does not support market-based lift-off expectations
(EU) ECB chief Lagarde: In her view the PEPP will end next March (as scheduled) - Q&A
*(US) SEPT PENDING HOME SALES M/M: -2.3% V 0.5%E; Y/Y: -7.2% V -3.1%E
(EU) ECB Policymakers said to be split about second round effect of inflation, some doubt CPI will ease below 2% in 2023 - press
HPE Guides initial FY22 $1.96-2.10 v $2.00e, Rev growth 3-4% (cc) y/y; Targets FY22-24 annual Rev CAGR 2-4% (prior 3-yr view 1-3%)
FB Rebranding company name to 'Meta' to reflect our full breadth of products and focus on Metaverse - Facebook Connect
AMZN Reports Q3 $6.12 v $8.71e, Rev $110.8B v $111.8Be
X Reports Q3 $5.36 v $4.85e, Rev $5.96B v $5.73Be; Raises dividend to $0.05 from $0.01; Announces $300M share repurchase program
AAPL Reports Q4 $1.24 v $1.24e, Rev $83.4B v $85.5Be; Supply chain constraints hurt sales by $6B in Q4; Expects continued supply constraints in Q1 resulting in larger headwinds
AAPL CEO Cook: Supply constraints now affecting ALL of Apple's product lines, but have seen improvement in disruptions in Southeast Asia as of late Oct - post earnings comments
KO Reportedly near deal to buy controlling stake in sports drink maker BodyArmor, valuing company at $8B - press

FRI 10/29
DAI.DE CFO: volume should come back in Q4; Market demand is so high, could expect higher passenger car sales in 2022 - post earnings comments
*(FR) FRANCE OCT PRELIMINARY CPI M/M: 0.4% V 0.3%E; Y/Y: 2.6% V 2.5%E
(DE) German day-ahead baseload power price at €82.0/MWh -32.2% d/d
*(DE) GERMANY Q3 PRELIMINARY GDP Q/Q: 1.8% V 2.2%E; Y/Y: 2.5% V 2.6%E
3328.HK Reports Q3 (CNY) Net 22.3B v 16.2B y/y, NII 40.8B v 40.2B y/y
*(EU) EURO ZONE OCT ADVANCE CPI ESTIMATE Y/Y: 4.1% V 3.7%E; CPI CORE Y/Y: 2.1% V 1.9%E (4th month above target and highest annual pace since 2008)
*(EU) EURO ZONE Q3 ADVANCE GDP Q/Q: 2.2% V 2.1%E; Y/Y: 3.7% V 3.5%E
CVX Reports Q3 $2.96 v $2.21e, Rev $44.7B v $42.5Be; Notes Q3 FCF was best ever reported
X Guides Q4 flat rolled segment EBITDA to be near the Q3 record level - earnings call
XOM Reports Q3 $1.58 v $1.57e, Rev $73.8B v $73.3Be; Expects up to $10B share buyback over 12-24 months, starting in 2022
CCJ Reports Q3 -C$0.14 v -C$0.20 y/y, Rev C$361M v C$379M y/y
FDA approves PFE-BNTX Covid-19 Vaccine, BNT162b2 (Comirnaty), for use in children 5 through 11 years of age

Sunday, October 24, 2021

Markets remain calm as central banks take steps to unwind stimulus with a backdrop of rising inflation 

 Weekly Market Update: Markets remain calm as central banks take steps to unwind stimulus with a backdrop of rising inflation


US stock markets rode winning streaks this week to new all-time highs for both the Dow and S&P. Boosted in part by strong Q3 earnings reports, while shaking off concerns about inflation and supply-chain problems that have threatened the post-pandemic economic recovery. Volatility edged lower as investors looked to add risk while continuing to migrate away from US Treasuries. The CBOE Volatility Index closed at 15.01 Thursday, its lowest close since February 2020. Bitcoin surged above $66K for the first time ever before backing off late in the week, marking the launch of the first Bitcoin futures ETF. Crude prices continued to march higher hitting fresh 7-year highs fanning inflation worries.

Inflation remained the key theme in both earnings conference call discussions and for Central bankers globally. Implied market inflation expectations rose noticeably. The US 10-year TIPS break-even rate moved above 2.6%, its highest level since 2011, and well above the Federal Reserve’s long-run inflation target. The five-year break-even tested 3.0% for the first time ever, prompting one Fed official to opine they preferred survey based inflation expectation indicators over market based ones. Meanwhile, central bankers continue to take steps toward unwinding their massive stimulus programs. The Russian Central Bank raised rates 75bps and debated going by 100bps, which was more than expected to fight what they referred to as potentially “dangerous” inflation situation. Market watchers are looking for the UK central bank to raise rates next month as the BOE’s chief economist said that November is a “live” meeting and forecasted inflation to rise to 5% or even slightly higher. Stocks dipped midway through Friday’s session after Fed Chairmen Powell all but confirmed tapering would start next month while acknowledging they will react if they see serious risks of higher inflation expectations. The US curve continued to flatten as traders brought forward rate liftoff expectations for next year. For the week, the S&P gained 1.6%, the DJIA added 1.1%, and the Nasdaq rose 1.3%.

In corporate news this week, earnings season shifted into high gear and results have been largely positive, with JPMorgan noting almost 9 out of 10 companies have beaten expectations so far. Netflix profits came in higher than anticipated, adding more users than predicted amid the global appetite for drama series ‘Squid Game.’ Tesla successfully navigated rough supply chain waters to notch another record quarterly profit amid an uptick in EV sales in China. American Express stock was boosted after the credit card company reported stronger than expected profit as more of its customers dine out.

Notable earnings misses included IBM, which saw shares fall after its 3Q revenues missed consensus as the tech giant struggled with its cloud business and a slowdown in client spending. Intel also moved lower on weaker than expected revenue, blaming supply shortages for its PC division struggles. Snap shares had their biggest ever one-day decline, falling back almost 25% after the social media platform posted disappointing results and guidance, warning that it expects growth to slow because changes to the Apple iOS have crimped its ad business. Twitter and Facebook fell in sympathy ahead of their earnings next week.

SUN 10/17
Z Reportedly paused purchasing US houses as it is now working through a backlog of properties already acquired in its pipeline - press
(UK) BOE Gov Bailey: have already signaled that we will have to act to fight inflation; Action to come in our monetary policy meetings
3333.HK Will officially be in default on Oct 23rd, the end of grace period on first non-payment
(CN) China PBOC Gov Yi Gang: China is able to contain risk from Evergrande; Domestic economy is doing well, but faces challenges such as default risks for certain firms due to mismanagement
(CN) China has tested its first hyper-sonic missile with nuclear capabilities in August - FT

MON 10/18
STLA.IT Forms JV with LG Energy to build 40GW factory in NA, planning to invest €30B through 2025 in electrification and software development
(CN) China Foreign Ministry spokesman Zhao Lijian: recent test was not a missile but a spacecraft test
(UK) UK reported +45,140 new coronavirus cases (biggest daily increase in 3 months)
GAZP.RU Natural gas exports to non-CIS countries at 152.2B CM between Jan and mid-Oct
*(US) OCT NAHB HOUSING MARKET INDEX: 80 V 75E (highest since July)
STLD Reports Q3 $4.96 v $0.51 y/y, Rev $5.09B v $2.33B y/y
(HK) Macau Q3 Casino Rev (MOP) 5.96B, +155% y/y; Mass Market gaming Rev 12.8B, +403% y/y
BHP.AU Reports Q1 Waio Iron Ore Production: 70.6Mt v 74.0Mt y/y; Shipments 70.8Mt v 71.0Mte
(US) FDA reportedly will allow 'mix and match' vaccine booster regimens - NY Times

TUES 10/19
(CN) Zhuhai, China lifts quarantine requirement for people traveling from Macau, effective today - press
(FR) France said to set a two-week deadline for Britain and Jersey to give French fisherman more licences or risk retaliatory measures - financial press
(DE) German day-ahead baseload power price at €61.0/MWH v €152.5/MWh d/d
(RU) Russia govt said to have signaled no extra gas for Europe without Nord Stream 2 approval
JNJ Reports Q3 $2.60 v $2.37e, Rev $23.3B v $23.6Be
HAL Reports Q3 $0.28 v $0.28e, Rev $3.86B v $3.93Be; Says it sees a multi-year upcycle unfolding with increased demand for its services
TRV Reports Q3 $2.60 v $2.04e, Rev $8.81B v $8.52Be
PM Reports Q3 $1.58 v $1.54e, Rev $8.12B v $7.85Be; Sees device constraints could persist into H1 2022, with temporarily lower IQOS user growth rates
AVIR Phase 2 MOONSONG trial evaluating AT-527 in the outpatient setting did not meet the primary endpoint in in reducing virus in mild to moderate COVID-19 in overall study population; Now anticipate Phase 3 MORNINGSKY data in 2H22
PG Reports Q1 $1.61 v $1.59e, Rev $20.3B v $19.8Be
MAN Reports Q3 $1.93 adj v $1.90e, Rev $5.14B v $5.30Be
KSU Suspending previously provided guidance due to lack of visibility on impact of auto plant shutdowns, Lazaro Cardenas service interruptions, and refined fuel product supply chain disruptions - earnings slides
(US) SEC Chair Gensler: Bitcoin futures have been regulated by CFTC for 4 -years now and major reason we felt comfortable allowing an ETF to begin trading - CNBC
(CN) Reportedly China to scale down test of property tax plan after Pres Xi saw largely negative feedback and resistance from within the Party - press
(NZ) Fonterra Global Dairy Trade Auction Dairy Trade price index: +2.2% v +0.0% prior
(US) Atlanta Fed GDPNow: cuts Q3 GDP forecast to 0.5% from 1.2%
EAT Reports prelim Q1 $0.34 v $0.69e, Rev $859.6M v $877Me amid COVID surge
*(CN) CHINA SEPT NEW HOMES PRICES M/M: -0.1% V +0.2% PRIOR; Y/Y: 3.8% V 4.2% PRIOR (first decline since 2015)
FB Reportedly to change its name this week to better reflect its focus on building the metaverse - The Verge
NVAX According to internal sources methods used to test the purity of COVID vaccine have fallen short of regulators’ standards and has not been able to prove that it can produce a shot that is consistently correct - Politico
(PR) Puerto Rico House of representatives approves bill to restructure debt, Senate to vote on measure Thursday

WEDS 10/20
2354.TW Chairman Yong Liu: To set up EV plants in Europe, India and South America by 2024
(UK) Road Haulage Association: UK supply chain crisis to last until at least 2023; Truck driver shortages looking to continue for another year - FT
ASML.NL Reports Q3 Net €1.74B v €1.6B y/y, Rev €5.24B v €5.27Be; Raises Quarterly dividend 12.3% to €1.80 from €1.603 (indicated yield 0.9%); Sees chip shortage continuing into 2022
ROG.CH Reports Q3 (CHF) Rev 16.0B v 15.5Be; Raises FY21 outlook
NESN.CH Reports 9M (CHF) Rev 63.3B v 62.9Be; Raises FY21 Organic Rev outlook
*(UK) SEPT CPI M/M: 0.3% V 0.4%E; Y/Y: 3.1% V 3.2%E (2nd month above target)
(DE) German day-ahead baseload power price at €45.0/MWh v €61.0/MWh d/d v €152.5/MWh prior
NESN.CH CEO: sees inflation situation to worsen - post earnings comments
(CN) Chinese property developer Sinic Holdings Group Co's said to have officially defaulted after interest payment missed on Oct 18th - press
*(EU) EURO ZONE SEPT FINAL CPI Y/Y: 3.4% V 3.4%E; CPI CORE Y/Y: 1.9% V 1.9%E
MU Announces over $150B in global manufacturing and R&D investments over next 10 years to meet demand; Sees chip shortage could remain until 2023
BIIB Reports Q3 $4.77 v $4.15e, Rev $2.78B v $2.68Be; Raises FY21 outlook assuming minimal ADUHELM Rev in 2021, ramping thereafter
ABT Reports Q3 $1.40 adj v $0.92e, Rev $10.9B v $9.48Be; Raises FY21 guidance
MGA Cuts FY21 Rev $35.4-36.4B (prior $38.0-39.5B) citing declines in anticipated 2021 light vehicle production; Notes a provision on engineering service contracts with Evergrande
RNO.FR Said to produce at least 300K fewer vehicles in 2021 (prior anticipated ~220K fewer) due to chip shortage - press
BPOP Reports Q3 $3.09 v $2.00 y/y, Rev $658.7M v $589.8M y/y
(US) CDC Director Walensky: There is no sign that AY4.2 COVID variant affects the efficacy of vaccine shots; New AY4.2 variant has been found in the US but not in any clusters
KNX Reports Q3 $1.30 v $1.07e, Rev $1.64B v $1.55Be; Raises guidance
TSLA Reports Q3 $1.86 v $1.35e, Rev $13.8B v $13.2Be; Continues to ramp up Gigafactory Shanghai; Still expect final permit approval for Gigafactory Berlin by end-2021
MRNA Moderna and JNJ Covid vaccine booster shots receive FDA approval; EUA's amended to permit “mix and match”
HPQ Guides initial FY22 $4.07-4.27 v $3.74e, FCF 'at least' $4.5B - investor day
MRNA Confirms FDA authorization of a booster dose of COVID-19 vaccine (mRNA-1273 "Spikevax") in the U.S.

THURS 10/21
SAP.DE Reports final Q3 €1.74 v €1.32 y/y, adj EBIT €1.25B v €1.47B y/y, Rev €6.85B v €6.54B y/y
UNA.NL Reports Q3 Rev €13.5B v €12.9B y/y; Sees cost inflation to continue into 2022
UNA.NL CFO: we think inflation to continue in the rest of 2021 and into 2022; Expect next year '22 inflation to be higher y/y - post earnings comments
(DE) German day-ahead baseload power price at €69.0/MWh v €45.0/MWh d/d
(RU) Moscow confirms lockdown measures from Oct 28th to Nov 7th due to COVID-19 situation - press
(TW) Reportedly automotive IDMs plan 10-20% price increases for their chips starting 2022 - DigiTimes
DOW Reports Q3 $2.75 v $2.59e, Rev $14.8B v $14.4Be; Sees robust end-market demand that is expected to extend into 2022
DWAC Confirms Trump Media to go public through SPAC transaction with Digital World Acquisition Corp valued at EV of $875M
T Reports Q3 adj $0.87 v $0.78e, Rev $39.9B v $40.5Be
DOW Guides Q4 Rev ~$14.0-14.5B v $13.6Be - earnings slides
LUV Reports Q3 -$0.23 v -$0.27e, Rev $4.68B v $4.55Be; In OCT bookings for holiday travel trending in-line with 2019 levels
VLO Reports Q3 $1.22 v $0.87e, Rev $29.5B v $26.0Be
PFE Phase 3 trial data shows high efficacy of a booster dose of their COVID-19 vaccine; 95.6% against disease during a period when Delta was the prevalent strain
SON Reports Q3 $0.91 v $0.90e, Rev $1.42B v $1.39Be; Projects certain raw materials, energy, freight, packaging and other costs pressures will continue well into 2022
NUE Reports Q3 $7.28 v $7.46e, Rev $10.3B v $10.1Be; Current demand trends expected to continue "well into" 2022
AMZN (US) Consumer Financial Protection Bureau (CFPB) said to probe Facebook, Amazon, Apple, Google and other firms over their consumer data practices - press
*(US) INITIAL JOBLESS CLAIMS: 290K V 297KE (new post-pandemic low); CONTINUING CLAIMS: 2.48M V 2.55ME
WMT CEO: Wage rates are going to keep rising - investor conf comments
AMZN Launches new local selling capabilities to help small businesses grow by reaching more customers in their area
INTC CEO: Semiconductor shortage will continue until 2023
GOOGL Reportedly plans to cut commissions from subscriptions on Play Store to 15% from 30%, beginning Jan 1st - press
(US) Fed to limit active trading and have timelier reporting of trades for Fed officials
INTC Reports Q3 $1.71 v $1.11e, Rev $18.1B v $18.2Be
MRNA (US) CDC Advisory Committee on Immunization Practices (ACIP) votes (15 yes; 0 No), in favor of Moderna COVID-19 Vaccine (mRNA-1273 "Spikevax") for use under EUA as a booster dose
*(AU) RBA OFFERS TO BUY A$1.0B IN GOVT SECURITIES IN UNSCHEDULED OPERATIONS (1st purchase since Feb to defend Yield Curve)

FRI 10/22
AAPL Reportedly Apple's EV battery talks with CATL and BYD mostly stalled; Now considering to partner with Panasonic - press
*(FR) FRANCE OCT PRELIMINARY PMI MANUFACTURING: 53.5 V 54.0E (11th month of expansion and lowest reading since Jan 2021)
*(DE) GERMANY OCT PRELIMINARY PMI MANUFACTURING: 58.2 V 56.6E (16th month of expansion and lowest reading Jan 2021)
*(EU) EURO ZONE OCT PRELIMINARY PMI MANUFACTURING: 58.5 V 57.1E (16th month of expansion but lowest reading Feb 2021)
*(UK) OCT PRELIMINARY PMI MANUFACTURING: 57.7 V 56.0E (17th straight expansion)
3333.HK Main unit Hengda Exec: no significant progress in Evergrande asset sales, cannot guarantee it will be able to continue to meet financial obligations under contracts
HON Reports Q3 $2.02 adj v $2.01e, Rev $8.47B v $8.72Be; Cuts FY21 Rev outlook for 1st time citing persistent effects of the macro-challenged environment
SON Sonoco-Alcore to increase Tube & Core Prices in the EMEA Region by €50/£50 per ton due to continued inflationary pressure
SLB Reports Q3 $0.36 adj v $0.36e, Rev $5.85B v $5.94Be; Sees Q4 as another quarter of growth; Expect to close 2021 with strong momentum
VFC Reports Q2 $1.11 adj v $1.17e, Rev $3.20B v $3.50Be; Raises Quarterly dividend 2% to $0.50/shr
HCA Reports Q3 $4.57 (adj) v $4.10e, Rev $15.3B v $14.6Be; Raises guidance
(RU) Russia Central Bank (CBR) Gov Nabiullina: We may consider raising rate again by 100bps; Inflation situation potentially dangerous; No signs of easing inflationary pressures in Oct - post rate decision press conference
STX Reports Q1 $2.35 v $2.21e, Rev $3.12B v $3.10Be; Raises Quarterly dividend 4.5% to $0.70 from $0.67 (indicated yield 3.4%)
*(US) OCT PRELIMINARY MARKIT PMI MANUFACTURING: 59.2 V 60.5E (16th consecutive month of expansion)
(US) Fed Chair Powell: Fed on track to begin taper and complete it by mid-2022; Will raise rates if we see serious risks of higher inflation expectations - SARB virtual event

Sunday, October 10, 2021

Debt ceiling truce gives markets some relief, though energy crunch and supply chain problems still loom 

Weekly Market Update: Debt ceiling truce gives markets some relief, though energy crunch and supply chain problems still loom


Stock volatility remained elevated coming into this week as a surge in global energy prices compounded inflationary concerns that could stall the economy's post-pandemic recovery. The Atlanta Fed cut is Q3 GDP forecast to a paltry 1.3%. With oil prices trading at the highest levels in seven years, thanks in part to price spikes in coal and natural gas, benchmark government bond yields moved higher in response to the anticipated inflationary effects of the growing energy crunch. In the UK, where the nation's power grid relies heavily on natural gas imports, prices surged by 37% on Wednesday alone to a fresh record high of more than $40 per British Thermal Units, a level that is around eight times higher than spot prices in the United States. Inflation and supply chain concerns were further aggravated by Beijing stepping up rhetorical threats toward Taiwan alone with its now daily military incursions into Taiwanese airspace.

Worries over whether the US Treasury would be able to raise money to pay its bills also weighed heavily on investors this week. By Thursday though, Democrats and Republicans reached a truce that would extend the debt ceiling into December. That news along with a roll over in natural gas prices, and other key input costs measures like freight benchmarks convinced investors to get more aggressive ahead of the September employment report. Friday’s payroll number was the second disappointing reading in a row, though still robust enough to keep expectations on track for the Fed to launch its QE tapering plan in November. With relief rallies in the latter part of the week, the S&P gained 0.8%, the DJIA rose 1.2%, and the Nasdaq edged up 0.1%.

In corporate news this week, ongoing global distribution hitches continued to weigh on outlooks. Home construction firm Hovnanian cuts its full year outlook amid supply chain delays. Marvell’s CEO forecast that the semiconductor shortage could extend through 2022. Defense manufacturer Oshkosh cut its outlook following significant materials and logistics disruptions. For the airline sector, Delta’s CEO affirmed its Q3 earnings guidance and noted that bookings bottomed out in September and have been improving. Kellogg workers announced they would go on strike at all US cereal facilities, though later in the week the company countered it was readying to restart plant operations with salaried employees and third-party workers. Sweden paused its Moderna COVID-19 vaccine rollout for people under 30, citing rare side effects from the injection. Shares in pharma company ChemoCentryx ripped almost 90% higher after the FDA approved the first drug in a decade to treat the autoimmune disease vasculitis. Twitter agreed to sell its MoPub monetization solution for app publishers to AppLovin for $1.1B in cash.

SUN 10/3
TSLA Reports Q3 deliveries 241.3K v 221Ke v 201.3K q/q
DAL CEO Bastian: Affirms Q3 earnings to be within guidance; bookings bottomed out in Sept and have been improving
(HK) Hong Kong Govt adviser David Hui: Reopening border with China will take 4-5 months of talks - SCMP
(UK) Brexit Min Frost said to be planning to issue a threat that the UK was prepared to trigger Article 16 unless the EU agreed to replace the Northern Ireland Protocol; Talk of early NOV deadline - UK press
(TW) China sent 77 warplanes into Taiwan defense zone over the past 2 days - Taiwan press citing Govt
(HK) Macau halts border resumption plan with China Zhuhai city (Guangdong Province)
6666.HK Hopson Development to acquire 51% stake in Evergrande's Property management unit Evergrande Real Estate for HK$40B (~$5.0B) - Chinese press

MON 10/4
BNTX CEO: a new COVID-19 vaccine version is likely to be needed by mid-2022 to protect against potential virus mutations - FT interview
(TR) Turkey Sept CPI M/M: 1.3% v 1.3%e; Y/Y: 19.6% v 19.7%e
(ES) ECB's De Guindos (Spain): Forward looking indicators shows that expansion has lost some momentum due to supply constraints, higher energy costs and bottlenecks
(UK) Brexit Min Frost: Northern Ireland protocol is not working and needs to change; cannot wait forever; Triggering Article 16 may be only way to protect UK (in line with speculation)
MRVL CEO: Chip shortage could extend through 2022 - press interview
DVAX Collaborates with US DoD to develop an adjuvanted plague vaccine using CpG 1018 adjuvant; Anticipates Phase 2 trial will commence in 2022
KRT Raises Q3 sales $102-103M (prior $100-102M) v $101Me, initial FY21 sales $365-368M v $368Me; Cites strong SEP demand
Reportedly OPEC+ ministers agree to maintain existing policy of increasing production by 400K bpd in Nov, in line with the JMMC recommendation – press
(CN) China Foreign Min: China will take all necessary measures to resolutely crush any Taiwan independence plots
1777.HK Misses $206M principal payment on 2021 notes due Oct 4th; shares halted until further notice
(US) Fed's Bullard (non-voter, hawk): Inflation is higher than the US has seen for a decade; Concerned about inflation risks are to the upside
(TW) China again sent 56 warplanes into Taiwan air defense zone Monday, Taiwan called on China to stop "irresponsible provocative actions"

TUES 10/5
(JP) Japan Fin Min Suzuki: PM has instructed me to be flexible on policy; will seek a new type of capitalism and peruse fiscal health and growth at the same time
(FR) FRANCE SEPT FINAL PMI SERVICES: 56.2 V 56.0E (confirms 5th straight expansion but lowest reading since Apr 2021)
(DE) GERMANY SEPT FINAL PMI SERVICES: 56.2 V 56.0E (confirms 5th month of expansion but lowest reading since May 2021)
(UK) SEPT FINAL PMI SERVICES: 55.4 V 54.6E (confirms 7th month of expansion)
(NZ) Fonterra Global Dairy Trade Auction Dairy Trade price index: +0.0% v +1.0% prior
(US) Atlanta Fed GDPNow: Cuts Q3 GDP forecast to 1.3% from 2.3%
K Workers go on strike at All US cereal facilities - press
(US) SEC Chair Gensler: US will not follow China in banning crypto tokens; Does not answer whether the SEC is examining Federal Reserve members' stock trading - press
HOV Cuts FY21 outlook amid supply chain delays; Cuts Q4 Rev $780-830M v $683M y/y, adj EBITDA $85-100M v $84.5M y/y (prior: Rev $830-880M, adj EBITDA $100-115M)
(UK) PM Johnson reportedly plans to announce a 'significant' boost to minimum wage within next few weeks - UK's Times
(TW) Taiwan Ministry of National Defense (MND): China is unsure if an attack on Taiwan would succeed, could be ready for full scale invasion of Taiwan by 2025 – Taiwanese

WED 10/6
(FR) France govt to present retaliatory measure on UK fishing soon
DOW Outlines investment plan: Targets underlying EBITDA >$3.0B, ROIC >13%, adj debt/EBITDA 2.0-2.5x over investment cycle - PR ahead of investor day
RPM Reports Q1 $1.04 v $1.00e, Rev $1.65B v $1.66Be; Cuts Q2 adj EBIT outlook; Expects raw material, freight and wage inflation to persist in Q2
MRNA Reportedly Sweden pauses Moderna's COVID-19 vaccine rollout for people born in 1991 and later citing rare side effects - press
(RU) Russia Pres Putin: Country is a reliable gas supplier to Europe and Asia; Russia is increasing its gas supplies to Europe; Have increased transit via Ukraine
(US) SEPT ADP EMPLOYMENT CHANGE: +568K V +430KE; Current bottlenecks in hiring should fade as the health conditions tied to the COVID-19 variant continue to improve
SAFM Increased pay rates for hourly employees to $16.70/hr; Effective Sept 26th
(US) Fed's Barkin (FOMC voter, hawk): Demand very strong, consumers spending and profits high
GM Announces Ultra Cruise, enabling true hands-free driving across 95% of driving scenarios
NIH's Fauci: Confirms US FDA examining data on mixing and matching boosters (as announced on 10/1)
(US) GOP Sen Leader McConnell reportedly just told a closed meeting of Senate Republicans that he would offer a short-term debt ceiling extension today (Defined & fixed Dollar amount) - press
(EU) ECB reportedly studying new bond buying plan for when PEPP ends, plan to prevent widening of spreads - press
(US) Energy Sec Granholm: Release of crude oil from Strategic Petroleum Reserve is a 'tool that's under consideration' to tame fuel price rises; Does not rule out a ban on crude oil exports - FT interview
K Spokesperson: Company is preparing to begin plant operations again amid strike; To use salaried employees and third-party workers to restart facilities
COST Reports Sep total SSS +9.4% (ex-gas and FX) vs 5.6% in 2019
TWTR Enters into definitive agreement to sell MoPub to AppLovin for $1.05B cash

THRS 10/7
NG.UK Reportedly sees UK has enough gas supply capacity to meet demand, but warns of tight electricity supplies this winter - financial press
SON Implementing 5th price increase of 2021 of $60/Ton for uncoated recycled paperboard; Cites continued inflationary pressures
CAG Reports Q1 $0.50 v $0.48e, Rev $2.65B v $2.55Be
UAL Reportedly plans >3.5K domestic flights in Dec (largest domestic schedule since the pandemic star and 91% of 2019 rate) - press
(US) Sen Maj Leader Schumer: Deal has been reached with GOP Leader McConnell on short-term debt ceiling raise until early Dec
(US) Energy Dept spokesperson: We are not planning to tap the Strategic Petroleum Reserve or to pursue a ban on crude exports - press
TSLA CEO Musk: hopeful chip shortage will resolve soon; To volume produce Tesla Semi trucks and Roadster in 2023; No stock split expected any time soon - Annual Meeting
005930.KR Reports prelim Q3 (KRW) Op 15.8T v 12.4T y/y (16.1Te), Rev 73.0T v 67.0T y/y (73.5Te)
(US) Senate votes 50-48 to increase debt ceiling until early Dec 2021; the measure will now move to the US House; White House has said that President Biden would sign the bill

FRI 10/8
(HU) Hungary Fin Min Varga: Govt has accepted OECD global minimum tax agreement (**Note: move follows Ireland recently)
OSK Cuts outlook following significant supply chain and logistics disruptions; Guides Q4 $0.90-0.95 v $1.77e; Cuts Q4 Rev ~$2.05B v $2.15Be (prior ~$2.10B); Approves FY change
(CN) Global Times' Editorial article: We must resolutely define the US troops deployment in Taiwan as an invasion; The mainland has the right to carry out military strikes against them at any time
(US) SEPT AVERAGE HOURLY EARNINGS M/M: 0.6% V 0.4%E; Y/Y: 4.6% V 4.6%E
(US) White House reportedly considering wide-ranging effort on oversight of crypto assets - press