US EARLY MORNING: US equity futures are around flat ahead of ISM and JOLTs data, as well as the FOMC's meeting minutes

US PREMARKETS: Following downbeat sessions on Wall Street Tuesday, overnight in Asia, as well as Wednesday's start in Europe, US equity futures are trading around flat ahead of a key window of risk events. There was not a specific headline catalyst for the more cautious approach to trading this week, though some have framed the downside as a pause after the solid rally we have seen of late; others note that upcoming events may also be driving some caution (US ISM and JOLTs data today, as well as the FOMC meeting minutes, ahead of the NFP report on Friday and Eurozone inflation metrics towards the end of the week); the potential for geopolitical escalation in the Middle East is also keeping traders cautious. Treasury yields are up by 3-4bps across the curve. The Dollar Index is slightly red. Crude benchmarks are a touch lower, in keeping with the risk mood; the newswire framing has put the price action in the context of traders weighing concerns about the health of the economy, though this is being offset by concerns about potential supply disruptions due to events in the Red Sea.

TODAY’S AGENDA:

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  DAY AHEAD: The US Day is busy. Key data comes by way of the ISM manufacturing report for December (see below for primer). JOLTs data for December will be eyed (8.85mln expected after the 8.733mln in October; quits rate was unchanged at 2.3% in October) ahead of Thursday’s ADP jobs data, which will provide a preview for Friday’s more widely viewed official jobs data out of the US. Weekly RedBook data is also due before the open. Elsewhere, the FOMC’s December meeting minutes, where it pivoted towards a more dovish direction policy direction, will be out in the afternoon (preview below). On the speaker’s front, Fed’s 2024 voter Barkin will deliver remarks in premarket trade; speaking in December, Barkin made the case that Fed policy was nicely positioned amid the retreat in inflation, adding that the Fed would be prepared to cut rates if inflation kept easing. Crude watchers will note the API weekly inventory data, due to be released after the US close today; this week, the consensus looks for headline crude stocks to draw 3mln, distillates to build 0.9mln, while gasoline inventories are expected to build by 0.7mln.


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  PREVIEW – ISM MANUFACTURING (10:00EST/15:00GMT): Analysts expect the headline will tick up slightly to 47.1 from 46.7, but remain sub-50 (the neutral mark); the Prices Paid sub-index is see easing to 47.5 from 49.9. As a comparison, the S&P Global PMI series saw the final December manufacturing PMI revised to 47.9 from 48.2, with the report stating that US manufacturing performance declined at sharper pace in December as demand conditions weaken. The report said that the picture is one of supply exceeding demand for many goods, which points to downside risks to production, employment and prices into 2024. On the jobs front, it said that Q4 has seen factories reduce employment at a pace not seen since 2009, barring only the early pandemic lockdown months. And on prices, it said that while there was some uplift in the rate of both raw material and factory gate selling price inflation, firms' costs notably continued to rise at a pace below the survey’s long-run average to hint at historically subdued industrial price pressures. Pantheon Macroeconomics is against the consensus, and expects a decline in the headline to 46.0 from 46.7, matching the recent low, reached in June 2023. "The regional Fed manufacturing surveys, for example, were generally poor, both when we consider the headline indexes and the average of comparable sub-indexes that are used to calculate the ISM manufacturing headline," adding that "similarly, the S&P Global manufacturing PMI fell for the second straight month in December, and the lagged impact of China’s manufacturing PMIs is not especially favourable." However, Pantheon is more optimistic on the outlook: noting that the recent fall in interest rates will soon start to lift capex intentions and sentiment among manufacturers, though an upturn in CapEx spending probably is still several months away, arguing that theISM manufacturing index will likely trend steadily higher throughout this year.


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  PREVIEW – FOMC MINUTES (14:00EST/19:00GMT): The minutes will be eyed to view the Fed's appetite on rate cuts in 2024 after the 2024 dot plot in the SEP implied three rate cuts from current levels throughout the year. Powell and Waller have sounded somewhat dovish, which has seen money markets price in c. 150bp of cuts throughout the year, more than the 75bp of cuts implied by the Fed's median SEP. Fed speakers have attempted to dial back these expectations since the latest Fed meeting, with Williams and Mester both noting the focus is still on determining whether policy is in the right place. Although the median dot looks for the target level for the FFR at 4.6% by the end of 2024 (currently 5.4%), the range of the dot plots was wide with eight participants pencilling a rate above 4.6% and five pencilling a rate beneath that level. The minutes will be viewed by the market to gather more information on the FOMC's thinking, but it is worth noting the minutes will only incorporate the information up to the latest meeting, therefore any development since the December 13th meeting, i.e. even more dovish market pricing, cooler than expected November PCE, cooler than expected Final Q3 GDP and the attempted pushback on market pricing from the FOMC, will not be incorporated. (Newsquawk)

EQUITY NEWS:

TECH:

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  GlobalWafers (6488 TT) - The Taiwanese tech manufacturing company has partially shut down its five fabs in Japan to assess for possible damage as a result of a major earthquake on Monday; says two of its five plants are located near the quake's epicenter.


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  Nvidia (NVDA) - CEO Huang will on January 9th participate in a conference call with JPMorgan Semiconductor/Semi Cap Equipment Analyst.


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  SK Hynix (HXSCL) - The world's second-biggest memory chipmaker SK Hynix has mandated eight banks for a potential USD bond deal, Reuters reports.


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  MongoDB (MDB) - Director Dwight Merriman sold 2.4K shares on December 28th for a total USD 987K.

COMMUNICATIONS:

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  Meta Platforms (META) - Chief Product Officer Christopher Cox sold 10K shares on December 28th for a total USD 3.6mln.

INDUSTRIALS:

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  Airbus (EADSY), Atos (AEXAY) - Airbus plans a EUR 1.5-1.8bn offer for Atos's big data and cybersecurity unit, aiming to reduce the French IT firm's EUR 2.25bln debt, FT reports. The aerospace company's due diligence marks a shift for Atos under new chair Jean Pierre Mustier, seeking a resolution for its 2025 debt maturity. This move signifies a change in strategic direction for Atos, FT said.

FINANCIALS/REAL ESTATE:

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  Bank OZK (OZK) - Board boosts dividend +2.7% to 0.38.shr.


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  KKR (KKR) - KKR-backed BrightSpring Health Services has revived its US IPO plan, having paused it in 2022 due to economic uncertainty, Reuters reports. The recent market rally amid eased recession concerns has renewed hope, the report added.


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  Pure Storage (PSTG) - CFO P. Kevan Krysler sold 26,257 shares on December 28th at USD 35.89/shr.

CONSUMER:

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  Bloomin' Brands (BLMN) - Bloomin' appoints Dave George and Jon Sagal to its Board of Directors, after agreement with activist investor Starboard Value which holds around 9.7% of the company's stock. Starboard has agreed to specific terms, to be detailed in a Form 8-K filing with the SEC.


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  Tesla (TSLA) - The EV maker sold 947,742 China-made vehicles in 2023, Reuters calculated using data from China's CPCA. Elsewhere, Citi maintains Neutral rating on Tesla after its production update; said reaching its 1.8mln volume target for 2023 would be seen positively despite the prevailing pessimism regarding EV demand though from here, though from here, the focus will shift to Q4 auto margins to gauge the price vs. cost equation.


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  Costco (COST) - Principal Accounting Officer Daniel Hines sold 1.4K shares on December 28th for a total USD 928K.


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  Cruise Names, Carnival Corp (CCL) - China's maiden voyage of the 135.5k-tonne Adora Magic City, its first domestically built large cruise ship, a moment hailed by authorities keen to chip away at the dominance of European shipbuilders in the cruise sector, FT reports. The venture was between China State Shipbuilding Corp and Carnival Corp.


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  J.M. Smucker (SJM), TreeHouse Foods (THS) - Has closed the transaction to sell its Bick's pickles, Habitant pickled beets, Woodman's horseradish and McLarens pickled onions brands to TreeHouse. The all-cash transaction is valued at approximately USD 20mln.


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  Herbalife (HLF) - Appointed Stephan Paulo Gratziani as President, effective January 2nd, as part of its management succession plan. Gratziani is former Chief Strategy Officer.

HEALTHCARE:

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  GlycoMimetics (GLYC), Thermo Fisher (TMO) - GlycoMimetics partners with Thermo Fisher unit to manufacture and supply uproleselan, pending FDA approval.


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  AstraZeneca (AZN) - Triggers a USD 1mln preclinical milestone payment to C4X Discovery under its NRF2 exclusive worldwide license agreement worth up to USD 402mln.

03 Jan 2024 - 09:30- Fixed IncomeData- Source: Newswires