12/9/2022 4:06:23 PM
US stocks came into the week with a negative tone after the S&P was unable to hold the 200-day moving average and economic data releases remained strong enough to keep the Fed vigilant in its tightening policy. China continued to signal further easing of its zero Covid policy, following a rhetorical shift out of top officials away from enforcing restrictions to downplaying Omicron's severity. Nevertheless, stocks tracked lower mid-week amid a raft of cautious corporate developments. Big tech continued to grapple with regulators, as the FTC confirmed it will seek to block Microsoft’s Activision deal, and the EU privacy watchdog will reportedly restrict Meta from using targeted behavioral ads. Costco rung up a disappointing quarter as same store sales fell to mid-single digits, while Walmart’s CEO noted the big box retailer has seen modest improvement in supply chains, but stressed the situation will likely remain a challenge into 2023. JP Morgan CEO Dimon reiterated that he believes the Fed when they say interest rates will stay higher for longer to cool off the economy. Higher rates and elevated geopolitical hurdles continue to present considerable uncertainty around the outlook for the US economy. The Treasury curve remained stubbornly inverted, reflecting those concerns about a potential 2023 recession.
Oil prices slid to the lows of the year after OPEC+ producers left their output plans unchanged coming into the week. The EU instituted the long awaited $60/bbl price cap on Russian seaborne oil on Monday. By Friday, President Putin was warning Russia could consider cutting output as part of a formal response to the EU embargo. Deflationary forces were not only evident in oil markets. The November Manheim used care index dropped 14% to its lowest level in more than a year. Adobe Analytics reported its November Digital Price Index (DPI) at -2.0% y/y, which was the biggest drop since the start of the pandemic, and particularly broad based with prices falling on a monthly basis in 15 of 18 categories. Toll Brother management emphasized the need for higher incentives to get homes closed in the current market on their earnings conference call. The benchmark US 10-year Treasury yield spent much of the week below 3.5%, in part reflecting ongoing worries of a potential Fed policy mistake. US stocks finally broke a 5-day losing streak on Thursday, a day after US Q3 labor productivity saw a welcome revision higher. Any momentum was short-lived though. Friday’s hotter than expected November PPI reading put modest downward pressure on stocks and bonds as investors turned their attention to next week’s CPI and Fed meeting. For the week, the S&P fell 3.3%, the DJIA was off 2.8%, and the Nasdaq gave up 4%.
SUN 12/4
(CN) CHINA NOV CAIXIN PMI SERVICES: 46.7 V 48.0E [3rd straight contraction ]OPEC+ makes no changes in its current oil output policy (as expected); Agrees to keep 2MBpd production cuts through Jan 2023; Notes it is ready to meet at short notice to address any oil market imbalance - press
(UR) IAEA chief Grossi: Hope to reach agreement on safety zone around Ukraine’s Zaporizhzhia nuclear power plant by the end-2022
(CN) CHINA NOV CAIXIN PMI SERVICES: 46.7 V 48.0E [3rd straight contraction ]
MON 12/5
TSLA Reportedly plans to reduce Shanghai output by up to 20% due to sluggish demand; The output cuts will take effect as soon as this week - press
(US) According to the latest CNBC Supply Chain Heat Map data, US manufacturing orders in China down 40% y/y; China to US container volume during Aug-Nov was down 21% y/y - CNBC
2317.TW Foxconn reports Nov (NT$) Rev 551.1B -11.4% y/y; Q4 expected to be roughly in line with market consensus; Notes Nov was the most affected period by the pandemic
*(CN) CHINA MAY ANNOUNCE DOWNGRADE OF COVID-19 TO LESS STRICT CATEGORY OF MANAGEMENT (CATEGORY B) AS EARLY AS IN JAN 2023 - PRESS
(US) Los Angeles Port Chief Gene Seroka: Expect a labor contract agreement in Feb/March 2023 time frame - CNBC
ODFL Reports Nov Rev per day +7.3%; LFL tons/day -8.6% primarily due to continued softness in the domestic economy
(SA) Saudi Arabia cuts most of its oil prices for Asia and Europe for Jan 2023; Maintains prices for US - press
(US) NOV FINAL S&P/MARKIT SERVICES PMI: 46.2 V 46.1E
(US) NOV ISM SERVICES INDEX: 56.5 V 53.3E; New Orders Index: 56, steady m/m
(CN) Reportedly US and EU considering new climate based tariffs on Chinese steel and aluminum aimed at addressing carbon output and overcapacity - press
(CN) Beijing City will no longer require COVID-19 results to enter most public venues except restaurants, gyms, aged-care centers, schools, and hospitals from Dec 6th; To still require 48-hour COVID results for bars and restaurants
(AU) RESERVE BANK OF AUSTRALIA (RBA) RAISES CASH RATE TARGET BY 25BPS TO 3.10%; AS EXPECTED
TUES 12/6
GS Head of Digital Assets unit: Planning to invest tens of millions of dollars to buy or invest in crypto companies after the collapse of the FTX exchange hit valuations and dampened investor interest - financial press
(RU) Russia Dep PM Novak: Reiterates Russia may reduce oil production, but not by much; Price cap will only lead to higher prices; Russia finds smaller oil traders, new insurers
International Air Transport Association (IATA) Director Walsh: Cuts 2022 airlines losses forecast to $6.9B (prior $9.7B) v $42B y/y; Sees 2023 passenger demand at 85.5% of 2019 levels
FAST Reports Nov net sales $577.8M +10.2% y/y
VVNT To be acquired by NRG Energy for $12/shr in $2.8B cash deal; NRG intends to complete its existing $1B share repurchase program over the near term
(US) US Pres Biden to visit TSMC building plant in Phoenix, Arizona later today; TSMC confirms to increase its investment in Arizona from current $12B to $40B in order to build a second plant in Arizona by 2026 - press
(CN) China Former Editor in Chief of Global Times Hu Xijin tweets: Chinese govt may soon announce new steps of COVID responses, and there will be follow-up actions in various parts of China. The cage of the epidemic is being shattered, and the appearance of Chinese society will change every week. We’ll definitely return to normal life.
META Regulators seek to restrict Meta's targeted ad model in Europe; Reportedly EU privacy regulators say as a condition of service Meta should not make 'behavioral ads' on Facebook and Instagram platforms - press
(NZ) Fonterra Global Dairy Trade Auction Dairy Trade price index: +0.6% v +2.4% prior
(US) Atlanta Fed GDPNow: Raises Q4 GDP forecast to 3.4% from 2.8%
MA Approves $9B share repurchase program (2.7% of market cap)
(JP) Japan Nov FX Reserves: $1.23T v $1.19T prior [6-year high]
(CN) China Dec 6th Politburo Meeting: Reiterates China to continue prudent monetary policy, monetary policy should be targeted and forceful; Urging coordinating covid controls and economic development - Chinese press
(IN) INDIA CENTRAL BANK (RBI) RAISES REPURCHASE RATE BY 35BPS TO 6.25%; AS EXPECTED
WED 12/7
*(CN) China Health Commission announces new coronavirus guidelines, Will allow home quarantines for asymptomatic or mild symptom patients (in line); No longer to require coronavirus tests for most public venues nationwide
(UK) NOV HALIFAX HOUSE PRICE INDEX M/M: -2.3% V -0.4% PRIOR; Y/Y: 4.7% V 8.3% PRIOR (biggest monthly drop since 2008 and 5th straight decline in annual pace)
(CN) China Health Commission official: We are close to returning to pre-pandemic living conditions; China's COVID infection rate and death remain lowest globally; The latest 10 measures are aimed at more precise and scientific pandemic control
6981.JP Key Apple's supplier Murata Manufacturing said to expect Apple to reduce iPhone 14 production plans further in the coming months because of weak demand - financial press
(CN) CHINA NOV FOREIGN RESERVES: $3.118T V $3.111TE
LOW Guides initial FY23 Rev $87-92B v $95.3Be v $97-98B y/y, SSS -4% to +2% y/y; Expecting to return $33B in capital over next 3 years - Investor Day slides
(CN) Beijing official: Beijing city will Not adopt any form of temporary COVID control measures; To restore normal production and living order, and resume work and production as soon as possible
(US) Q3 FINAL NONFARM PRODUCTIVITY: 0.8% V 0.6%E; UNIT LABOR COSTS: 2.4% V 3.1%E (lowest Unit Labor Costs Q/Q increase since Q4 2021)
Nov Manheim Used Vehicle Value Index: -0.3% M/M; -14.2% Y/Y; All eight major market segments lower, again
(US) OCT CONSUMER CREDIT: $27.1B V $28.0BE
CVX Adjusts FY23 Capex top end of $17.0B (prior close to $17.0B v below $15.0B expected for FY22); Includes $2B of lower carbon capex - analyst day
ASML.NL Netherlands expected to impose export restrictions on Tech Exports to China under agreement with US - press
THRS 12/8
(CN) Shanghai official: To scrap COVID test requirements for restaurants and entertainment venues from Dec 9th
(CN) China's NHC: Asymptomatic COVID patients need no treatment but health monitoring
(HK) Hong Kong Health Official Lee: To maintain most COVID restrictions; Social distancing measures to remain; Cuts quarantine time; effective from Dec 9th
TRP Reportedly shut down Keystone oil pipeline [622Kbpd] and mobilized equipment and people following confirmed oil leak near Steel City, NE - press
CIEN Reports Q4 $0.61 v $0.08e, Rev $971.0M v $851Me
BAC (US) BoA estimates Nov total card spending per household +1.7% y/y; Holiday spending continues to lag 2021 levels, forecast a 0.2% m/m decrease in core control retail sales in Nov
(US) INITIAL JOBLESS CLAIMS: 230K V 230KE; CONTINUING CLAIMS: 1.67M V 1.62ME (highest since Feb 202
(US) Pres Biden: Confirms US basketball star Griner will soon come back; Will continue to work to bring home all Americans
XOM Affirms annual Capex through FY27 $20-25B, Earnings and cash flow to double by FY27 v FY19; Expands share repurchases up to $50B through FY24 inc $15B in FY22
XOM CEO: Expects $100B in surplus cash by 2027, above Capex and dividends
ATVI US FTC formally sues to block Microsoft's $69B acquisition of Activision Blizzard
(US) US House passes several bills, including the $45B Defense Policy bill to boost military spending to to $857.9B in FY23 and the bill protecting same-sex marriage
AVGO Reports Q4 $10.45 v $10.27e, Rev $8.93B v $8.90Be; Raises quarterly dividend 12.2% to $4.60 from $4.10 (indicated yield 3.55%)
LULU CEO: Q3 will be high point for inventory; Comfortable with quantity, quality of inventory; factories have now returned to pre-pandemic levels of production efficiency - earnings call comments
COST Reports Q1 $3.07 v $3.14e, Rev $54.4B v $54.7Be
COST CFO: Guides FY23 Capex $3.8-4.0B v $3.89B y/y, Seeing modest improvement in inflation; Special dividend is likely question of when, not if - conf call comments
(CN) CHINA NOV CPI M/M: -0.2% V -0.2%E; Y/Y: 1.6% V 1.6%E
FRI 12/9
(CN) China official: No COVID tests required for entertainment venues, scenic areas and theaters; All hospitals must accept COVID patients; To renovate COVID makeshift hospitals for serious cases
(CN) China Finance Ministry (MOF) to sell CNY750B in special sovereign 3-year bonds to help domestic economy on Monday, Dec 12th
(US) Sen Sinema (D-AZ) said to be switching to independent - Politico
(EU) ECB announcement on TLTRO repayments: Banks to repay €447.5B of TLTRO III funds v €296B m/m
(RU) RUSSIA PRES PUTIN: WE ARE READY FOR AGREEMENTS ON UKRAINE; MAY CUT OUTPUT AS PART OF OIL-CAP RESPONSE; DECREE ON OIL-CAP RESPONSE TO COME IN A FEW DAYS
(US) DEC PRELIMINARY UNIVERSITY OF MICHIGAN CONFIDENCE: 59.1 V 57.0E; 1 year inflation expectations 4.6% v 4.9%e
(US) USDA WORLD AGRICULTURAL SUPPLY AND DEMAND ESTIMATES (WASDE) CROP REPORT: End 2022/2023 US Stocks (M bu) Soybeans: 220 v 236e; Corn: 1,257 v 1,241e; Wheat: 571 v 578e
(US) Q3 FINANCIAL ACCOUNT HOUSEHOLD CHANGE IN NET WORTH: -$392B V -$6.28T PRIOR
(US) Atlanta Fed GDPNow: Cuts Q4 GDP forecast to 3.2% from 3.4%
