US EARLY MORNING: US equity futures are a little higher; ADP, Challenger and weekly claims all on tap ahead of Friday's NFP data

US PREMARKETS: US equity futures are slightly higher, Treasury yields are mixed. European equities have bucked the gloom seen in yesterday's US and overnight APAC sessions, trading with some gains after CPI data out of some German regions alludes to cooling core inflation pressures; a slight revision higher in final German and French services PMI data has also helped support the mood ahead of Friday's Eurozone inflation data. Minutes to the Fed's December meeting released on Wednesday haven't shifted the dial too much; the market is still pricing around six 25bps rate cuts this year (a more aggressive cutting cycle than the Fed's forecasts imply) - we recap the meeting minutes below. The US Day will be centred around the labour market, with the ADP's gauge of national employment and Challenger's job cuts data due before the weekly initial jobless claims release (this week's claims data does not coincide with Friday's BLS nonfarm payrolls report). We are also due to get earnings from WBA, LW and CAG.

TODAY’S AGENDA:

• Our interactive calendar can be accessed here; a pdf version can be downloaded here.


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  EUROPEAN DAY: Over the course of the European morning, traders will be eying CPI releases from German regions (ahead of the national data later in the session), ahead of the Eurozone inflation stats out on Friday. Final services PMI data out of the block will also be on tap. From the UK, the BoE’s monthly Decision Maker Panel will be released, along with money supply and lending stats.


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  US DAY: The US Day features ADP jobs data, which will help guide expectations for Friday’s release of the official BLS nonfarm payrolls report; Challenger job cuts data for the month is also out before the open. On the energy front, the DoE will publish its weekly energy inventory stats; the API’s gauge reportedly saw crude stocks -7.4mln (exp. -3.7mln), Cushing +0.8mln, gasoline +6.9mln (exp. -0.2mln), and distillate stocks +6.7mln (exp. +0.6mln). On the corporate earnings front, numbers are due today from Walgreens (WBA), Lamb Weston (LW), Conagra Brands (CAG); our Daily US Earnings Estimates sheet can be found here.


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  REVIEW - FOMC MINUTES: Participants viewed the policy rate as likely having peaked, or near its peak. Members generally viewed the addition of the word 'any' to comments on possible additional firming as relaying their judgment that rates were likely at or near the peak of the cycle. A number of participants highlighted uncertainty around how long restrictive policy would need to be maintained. Several observed that circumstances might warrant keeping the policy rate at the current level longer than they currently anticipate. Participants generally reaffirmed it would be appropriate for policy to remain restrictive until inflation was 'clearly moving down sustainably'. Officials said they "need to see more evidence that inflation pressures were abating to become confident in a sustained return of inflation to 2%", and several "assessed that healing in supply chains and labour supply was largely complete, and therefore that continued progress in reducing inflation may need to come mainly from further softening in product and labour demand, with restrictive monetary policy continuing to play a central role." Elsewhere, the minutes noted that "based on better-than-expected data on inflation, participants revised down their inflation projections for 2023 and, to a lesser extent, in subsequent years," and accordingly, "participants viewed the policy rate as likely at or near its peak for this tightening cycle" while "almost all participants" indicated that "reflecting the improvements in their inflation outlooks, their baseline projections implied that a lower target range for the federal funds rate would be appropriate by the end of 2024." On the balance sheet, "several" remarked that the FOMC's plans indicated that it would slow and then stop the decline in the size of the balance sheet when reserve balances are somewhat above the level judged consistent with ample reserves, arguing that it would be appropriate to begin discussions about technical factors that would guide a decision to slow the pace of runoff well before such a decision was reached. "The minutes of the mid-December FOMC meeting were slightly more dovish than we were expecting – more in line with the message delivered by Fed Chair Jerome Powell in his press conference than the hawkish post-meeting comments from a number of other Fed officials," Capital Economics said, adding that "if we’re right that the annual core PCE inflation rate is headed back to 2% by mid-year, then there is nothing in these minutes to dissuade us that the Fed will start to cut interest rates from this March onwards."


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  GERMANY INFLATION: Inflation metrics out of German regions will be released across the morning; already, the North Rhine-Westphalia State reported CPI at 3.5% Y/Y in December (prev. 3.0%), with the core rate easing to 3.4% Y/Y (prev. 3.7%); the release of the data resulted in some modest pressure in the EUR and upside in EGBs, a dovish reaction driven by the developments of the core figure and the impact of base effects on the energy related components particularly district heating. The release said that the increase in prices for various household energies was due, among other things, to base effects relating to the “December one-off payment” to relieve the burden on private households for natural gas and district heating in December 2022." The aggregated German inflation data, due 1pm London time, is expected to see the headline rise to 3.7% Y/Y from 3.2%, while the monthly rate is see climbing +0.1% M/M after the -0.4% previously.

EQUITY NEWS:

TECH:

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  Alphabet (GOOG) - A US District Court Judge set a March 2025 trial date for Texas and other states' lawsuit against Google over alleged advertising technology market abuses, despite Texas urging for an earlier trial date.


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  Apple (AAPL) - Apple is set to settle a lawsuit alleging it allowed scammers to exploit its gift cards, intending to keep stolen funds. A pending agreement between Apple and plaintiffs will undergo review by a US District Court judge.


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  Intel (INTC) - Appointed Justin Hotard Executive VP and GM of its Data Center and AI Group, effective February 1st. With over 20 years of experience in computing and data centers, Hotard will lead Intel's data center products, including Xeon processors and AI systems, reporting directly to CEO Pat Gelsinger. His role includes advancing Intel's AI initiatives across various sectors.


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  HP Inc. (HPQ) - President and CEO Enrique Lores sold 38k shares on January 2nd at USD 29.75.shr.


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  Palo Alto Networks (PANW) - CTO Nir Zuk sold 36K shares on January 2nd for a total USD 10.4mln.


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  Badger Meter (BMI), Trimble (TRMB) - Badger Meter plans to purchase remote water-monitoring technology, Telog brand units, and Trimble Unity Remote Monitoring software from Trimble. No financial details were disclosed. The deal aligns with Trimble's focus on core sectors, excluding water-related businesses serving marine construction and infrastructure monitoring.


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  Cognex (CGNX) - Senior VP and CFO Paul Todgham will step down on March 15th; will continue as CFO until then, provide consulting services to the company afterwards. Company conducting search for new CFO.

COMMUNICATIONS:

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  Disney (DIS), Reliance (ZEE IS) - Disney and Reliance have commenced antitrust diligence of planned India merger, according to Reuters.


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  ByteDance (not listed), Amazon (AMZN) - ByteDance's TikTok plans to increase its US e-commerce business by tenfold, aiming for up to USD 17.5bln in 2024, BBG reports, posing a significant challenge to Amazon. The target for TikTok Shop was discussed internally and relies on its social media influence and viral content to attract buyers, differing from discounters like Temu and Shein.


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  TEGNA (TGNA), Comcast (CMCSA) - TEGNA and Comcast's NBC struck a multi-year deal renewing station affiliation agreements for 20 TEGNA markets, including 10 of NBC's top 25 markets, spanning more than 21 million households, approximately 17% of US TV households. TEGNA stands as the largest independent owner of NBC affiliates.


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  Nexstar (NXST), FuboTV (FUBO) - Nexstar and FuboTV inked a multi-year deal covering 89 Nexstar-owned local TV stations (including The CW, MyNetworkTV, ABC, and independents) and extending FuboTV's access to NewsNation. No financial terms were disclosed.

CONSUMER:

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  McDonald's (MCD) - VP Heidi Capozzi sold 2,750 shares at USD 295.84/shr for a total USD 0.814mln.


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  US Auto Sales - General Motors (GM) maintained its lead as the top-selling automaker in the US in 2023, surpassing Toyota Motor (TM). GM sold around 2.6mln (+14.1% Y/Y), while Toyota's sales rose +6.6% Y/Y to around 2.25mln. Overall US new vehicle sales reached about 15.5mln units, with nearly 17% being electrified vehicles, signalling a robust recovery, Reuters said.


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  Tesla (TSLA), SpaceX (not listed) - A regional NLRB official filed a complaint against SpaceX, alleging the company violated workers' federal labour rights by firing eight employees who circulated a letter criticising CEO Elon Musk, Reuters reports. Separately, a Florida court ruled Tesla CEO Musk cannot be compelled to testify in a fatal crash lawsuit involving a Tesla sedan, upholding Musk's protection as a corporate leader from deposition.


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  Hyundai Motor (HYMTF), Samsung Electronics (SSNLF) - Samsung, Hyundai, and Kia collaborate for a Car-to-Home and Home-to-Car service, allowing car users to control home devices via in-car systems and manage vehicles through AI speakers, TVs, and apps using SmartThings.


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  Cal-Maine Foods (CALM) - Slips over 5% afterhours following Q2 results. Q2 EPS 0.35 (exp. 0.83), Q2 revenue USD 523.2mln (exp. 525.4mln). CEO noted dynamic market conditions, and significantly lower average selling prices for conventional eggs. But total volumes sold were up slightly Y/Y. CEO added that it can mitigate the HPAI-related loss of production.


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  Chipotle Mexican Grill (CMG) - Chair Brian Niccol sold 1,100 shares at USD 2,278.45/shr on January 2nd for a total USD 2.51mln.

HEALTHCARE:

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  Cigna (CI) - Health insurer Cigna is in talks to sell its Medicare Advantage business to Health Care Service Corp in a deal that could value the unit between USD 3-4bln, Reuters reports.


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  CVS (CVS), AbbVie (ABBV) - CVS Caremark will replace AbbVie's Humira with biosimilars in major commercial formularies from April 1st, maintaining it in specific plans. This move aims to enhance choices and reduce long-term costs, aligning with the growing U.S. biosimilars market.


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  Evotec AG (EVO) - Announced CEO transition, with Dr Werner Lanthaler to step down and Mario Polywka, former COO, to step in as interim CEO. Confirms FY23 adj. EBITDA EUR 70-90mln and Revenue EUR 765-805mln.

ENERGY:

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  Energy Inventories - API weekly energy inventory data reportedly showed crude stocks -7.4mln (exp. -3.7mln), Cushing +0.8mln, gasoline +6.9mln (exp. -0.2mln), and distillate stocks +6.7mln (exp. +0.6mln). The more widely-followed DoE inventory report is out later today.


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  Equinor (EQNR), BP (BP) - Equinor and BP terminated their power agreement with the State of New York for 1.3 GW wind farm in the Atlantic Ocean, due to economic circumstances that made the Empire Wind 2 project being unviable, Bloomberg reports.

INDUSTRIALS:

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  Crane (CR) - Crane acquired aerospace and defense lubrication technology company Vian Enterprises for about USD 103mln. Financing via Crane's revolving credit facility. Crane said the deal will be accretive to segment EBITDA margins immediately.


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  L3Harris Technologies (LHX) - L3Harris awarded USD 479mln contract for the continued procurement of next generation tactical communications radios and associated sustainment and support services as required in support of US Special Operations Command.


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  BAE Systems (BAESY) - BAE announced that it will recommence production of M777 parts for the US Army, WSJ reports.


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  AerCap (AER) - The aviation leasing company announced that it leased, purchased and sold 953 assets in the FY23, and 267 assets in Q4; repurchased approximately 44mln shares in the FY23.


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  Nordson (NDSN) - VP Stephen Lovass SOLD 2,000 shares on January 2nd at USD 258.68/shr.

MATERIALS

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  Cipher Mining (CIFR) - Gained 3.8% afterhours following news that its JV Bear and Chief Mountain has agreed with Canaan to acquire 16,700 Avalon A1466 miners. These will be split between Bear and Chief facilities, adding around 30 MW and ~1.25 EH/s to each data centre. Payment terms allow for up to 30% of the total payment post-delivery.


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  Teck Resources (TECK) - Q4 steelmaking coal sales 6.1mln tonnes (prev. guided 5.8-6.2mln tonnes); Realised steelmaking coal price in Q4 averaged USD 270/t. Says QB is now operating near design throughput capacity.

04 Jan 2024 - 09:30- EquitiesData- Source: Newsquawk