US EARLY MORNING: US equity futures are lower ahead of PCE inflation data

US PREMARKETS: US equity futures are trading with a defensive bias, Treasury yields are lower by a couple of basis points across the curve, while the Dollar Index is flat; the Japanese yen has eased in wake of inflation data, which showed CPI falling to a 16-month low, putting less pressure on the BoJ to tighten policy in the near-term. Markets are winding down ahead of the Christmas period, but before then, US PCE data for November is expected to confirm the disinflationary trends seen in the CPI and PPI reports (see below for primer). Markets are pricing in six full rate cuts in 2024 – the Fed has guided towards just three. Elsewhere, final University of Michigan sentiment data will be looked to, durable goods and new home sales data for November are also due.

PREVIEW - US PCE (13:30GMT/08:30EST) - Headline PCE is expected to be unchanged M/M (matching the prior rate), which should bring down the annual rate to 2.8% Y/Y from 3.0%. The core PCE measure is expected to rise 0.2% M/M, matching the rate in October, and the annual rate of core inflation is seen easing to 3.3% Y/Y from 3.5%. Analysts expect to see PCE inflation cooling further in November after similar outcomes seen within the CPI and PPI inflation reports. WSJ’s Fedwatcher Nick Timiraos says core PCE inflation is projected to have been a very mild 0.06% in Nov, and that could see the annual reading of core PCE fall to 3.1% in November from 3.5% in October. And it would also imply that the six-month annualised rate would have eased to 1.9%, below the Fed’s 2% price goal.

EQUITY NEWS:

CONSUMER:

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  Nike Inc (NKE) - Shares slid over 10% afterhours following earnings publication, where it announced a USD 2bln cost saving plan and cut its outlook. Q2 EPS 1.03 (exp. 0.85), Q2 revenue USD 13.39bln (exp. 13.43bln). Said it would identify up to USD 2bln cost savings over the next three years. Taking steps to streamline organization, which is expected to result in pre-tax restructuring charges of USD 400-450mln. Restructuring to be substantially completed by end of FY 24. It is facing a softer H2 revenue outlook. Guides Q3 revenue slightly negative Y/Y; cuts its FY24 revenue growth estimate to +1% (prev. saw mid-single digit growth), confirmed gross margin increase of between 140-160bps, ad sees 400bps headwinds from supply chain disruptions.


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  Tesla (TSLA) - Launched its new megapack battery manufacturing plant in Shanghai, Xinhua reports. The project is capable of producing 10,000 megapacks per annum.


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  General Motors (GM). Ford Motors (F) - Starting January 1st, General Motors' Cadillac Lyriq and Chevrolet Blazer EV won't qualify for the US electric vehicle tax credit temporarily; only the Chevrolet Bolt EV remains eligible for the credit. Ford Motor's E-Transit, Mach-E, and Lincoln Aviator Grand Touring plug-in hybrid will lose tax credits, while the F-150 EV Lightning retains a USD 7,500 credit and the Lincoln Corsair Grand Touring keeps a USD 3,750 credit.


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  Airbnb (ABNB) - CEO Brian Chesky sold 76.3K shares on December 19th for a total USD 11.3mln.

FINANCIALS/REAL ESTATE:

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  Royal Bank of Canada (RY), HSBC (HSBC) - Canada approved RBC's CAD 13.5bln acquisition of HSBC's domestic Canadian unit. The deal is conditional on RBC establishing a global banking hub in Vancouver, waiving fees associated with the transfer of mortgages from HSBC to RBC and protecting HSBC's Canadian workforce, Reuters reports. Following the sale, HSBC said it was committed to considering payment of a special dividend of USD 0.21/shr as a priority use of proceeds from this sale in the first half of 2024.


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  Prologis (PLD) - Director James Connor sold 124.8K shares on December 20th as part of option exercise, for a total USD 16.6mln.

TECH:

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  Semiconductors - Department of Commerce to initiate a survey in January to assess the US semiconductor supply chains. Aims to understand how companies source current and mature-node chips, aiding policy decisions to strengthen the supply chain and mitigate national security risks from China.


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  Samsung Electronics (005930 KS) - Samsung and other smartphone manufacturers are planning to increase production in 2024, according to Nikkei, a sign the industry is finally pulling out of its yearlong slump. Sources said that the planned increases range from around 6-9%, with bigger rises expected in more premium segments, which would be a marked improvement vs 2023.

COMMUNICATIONS:

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  Gaming Names - China regulators issue drafts for online game management, requires online games to set spending limits, ban daily login rewards, Reuters reports. Online game approvals to be processed by regulators within 60 days. Bans live-streaming of heavy tipping within games. Bans online games from offering probability-based luck draw features to minors. It was also reported that China has approved new licenses for 40 imported online games.


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  Meta Platforms (META) - Italy escalates a tax dispute with Meta in the EU over a potential EUR 870mln tax bill. It questions if user registrations involving personal data could be taxable, posing broader implications for tech taxation, Reuters reports.


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  Meta Platforms (META) - Chief Product Officer Christopher Cox sold 10K shares on December 19th for a total USD 3.5mln.


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  Social Media - FTC proposed changes to COPPA Rule, intending to restrict children's personal info use, limit data monetisation, and shift responsibility to service providers for ensuring online safety. The rule aims to adapt to evolving data collection methods and ensure digital services are secure for children.

MATERIALS:

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  US Steel (X) - National Economic Advisor Lael Brainard highlighted US Steel's historical importance and expressed concern about a foreign acquisition impacting national security and supply chains. The Biden Administration aims to scrutinise such transactions through established investigative channels.

INDUSTRIALS:

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  AAR (AIR) - Q2 EPS 0.81 (vs 0.69 Y/Y), Q2 revenue USD 545.4mln (vs 469.8mln Y/Y). Exec said the recovery in global flight hours led to growth in Integrated Solutions segment. Demand for MRO services continued to be strong, hangars remained largely full throughout the quarter.


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  Rocket Lab (RKLB) - Rocket Lab National Security entered into an agreement with a US government to design, manufacture, deliver, and operate 18 space vehicles; contract has a total value of USD 515mln.


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  RTX (RTX) - awarded USD 407.6mln Air Force contract modification for Hypersonic Attack Cruise Missile-Southern Cross Integrated Flight Research Experiment.

ENERGY:

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  Occidental Petroleum (OXY), Berkshire Hathaway (BRK) - Berkshire buys another 5.2mln shares of Occidental as part of option exercise on December 19th, for a total USD 312.1mln.


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  Marathon Petroleum (MPC), MPLX (MPLX) - Announced that Maryann Mannen, Executive VP and CFO of MPC, has been appointed president of MPC. John Quaid, EVP and CFO of the general partner of MPLX, has been appointed EVP and CFO of MPC. C. Kristopher Hagedorn has been appointed executive vice president and CFO of the general partner of MPLX, succeeding John Quaid.

HEALTHCARE:

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  AbbVie (ABBV), Aldeyra Therapeutics (ALDX) - Aldeyra announced AbbVie is to extend its option to enter a Co-Development, Co-Commercialisation, and License Agreement by paying a USD 5mln fee.


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  Gilead (GILD) - FDA approves label update for Gilead's Kite for Yescarta to include OS analysis.


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  Becton, Dickinson (BDX) - Seeks US District Court approval for an USD 85mln settlement to resolve a class action regarding certain statements about its infusion pumps.


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  AstraZeneca (AZN), Ionis (IONS) - AstraZeneca and Ionis received US FDA approval for WAINUA to treat hereditary transthyretin-mediated amyloidosis.

22 Dec 2023 - 09:30- Data- Source: Newsquawk