US EARLY MORNING: US equity futures regain poise after Wednesday slide

US PREMARKETS: US equity futures have regained poise after Wednesday afternoon's slide. That downside came without a specific headline catalyst, though some suggest technical factors may have been in play (the two-month trend line from late October was said to be a key level in focus). Wednesday's downside came amid decent volumes relative to recent days, though some analysts suggested thinner conditions as we approach the holiday window could have exacerbated moves. The VIX saw its largest daily jump in two months. But US equity futures are recouping some of the losses, with index futures all in positive territory, led higher by the small-cap Russell 2000 (Dow lags). Treasury yields are mixed, but not too far off neutral. The Dollar Index is flat. Today's focus will be on weekly claims data (initial jobless claims coincides with the BLS' survey window for the November jobs report), as well as final GDP stats for Q3, ahead of Friday's release of November PCE inflation data.

TODAY’S AGENDA:

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


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  EUROPEAN DAY: The European data slate is quiet, with only remarks due from ECB chief economist Lane, who will speak at the Central Bank of Ireland's Economics Winter Workshop. The ECB itself will release its five-yearly capital key adjustment today. The CBRT is expected to hike its Weekly Repo Rate by 250bps taking it to 42.5%; JPMorgan said the risk of Turkey pivoting from orthodox monetary policy moves was not significant.


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  US DAY: Final GDP stats for Q3 are expected to see the headline rate of growth confirmed at 5.2%; the deflator is expected to be revised up to 3.6% from 3.5%, while core PCE is seen unrevised at 2.3% (note the more timely November PCE data will be released on Friday). This week's initial jobless claims data coincides with the survey window for the BLS November jobs report, and is expected to tick up to 215k from 202k; continuing claims (next week's print will coincide with the BLS data) is seen inching up a touch to 1.888mln from 1.876mln. Elsewhere, the Philly Fed will continue to help shape expectations around what the ISM manufacturing report for December may look like when it is released in early January (KC data is out after the open). The Leading Index for November is also out after the open, and is expected to slip again. CAD watchers will note retail sales data out in the premarket. On the earnings slate, Cintas (CTAS) and Nike (NKE) are the notable corporates reporting today (expectations here). On the energy front, weekly EIA natgas inventories are seen drawing 80bcf (prev. -55bcf).

EQUITY NEWS:

MACRO:

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  China - Biden administration reportedly mulls raising tariffs on some Chinese goods, including EVs, in an attempt to bolster US clean energy against cheaper Chinese exports, WSJ reports. Other targets for potential tariff-rate increases are Chinese solar products and EV battery packs. Biden also mulls lowering tariffs on some Chinese consumer products that officials do not see as strategically important, in addition to the potential increases on clean-energy products.


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  China Rates - China's large banks are to cut deposit rates on Friday, Guangzhou Daily reported. Major commercial banks are to cut time deposits, with the 1yr and 2yr rates expected to be cut by 10bps and 20bps respectively, while the 3yr and 5yr rates will be cut by 25bps, Reuters said.


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  EU - EU Finance Ministers reach agreement on new fiscal rules, Bloomberg reported. Revamp will grant more leeway for national defence spending. Germany succeeded in introducing guardrails for debt reduction.

TECH:

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  Micron Technology (MU) - Q1 adj. EPS -0.95 (exp. -0.97), Q1 revenue USD 4.726bln (exp. 4.64bln). Expects business fundamentals to improve throughout 2024 with record industry TAM projected for calendar year 2025. The largest US maker of memory semiconductors gave a strong revenue forecast for the current period, indicating that data centre demand was helping make up for a slowly recovering market for PCs and smartphones, Bloomberg said. Micron sees Q2 revenue between USD 5.1-5.5bln (exp. 5.03bln), and sees Q2 EPS between -0.35 to -0.21 (exp. -0.62). Exec expects pricing to continue to strengthen through the course of 2024. Said inventories for memory and storage were at or near normal levels for customers across PC, mobile, automotive and industrial end markets.


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  Apple (AAPL) - Apple is accelerating production of its Vision Pro mixed-reality headset in China, targeting a launch by February, Bloomberg said. Aims for customer-ready units by late January and a subsequent retail debut in the following month.


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  Nvidia (NVDA) - VP Debora Shoquist sold 20,000 shares at USD 500.04/shr for a total USD 10mln.


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  BlackBerry (BB) - Q3 adj. EPS 0.01 (exp. -0.03), Q3 revenue USD 175mln (exp. 173.5mln). Exec noted particular strength in Automotive, and also a strong quarter for the Cybersecurity. Expects to reduce operating cashflow usage further in Q4. Sees Q4 sales between USD 150-159mln (exp. 200.4mln).


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  Unity Software (U) - IGrow Solutions President Tomer Bar-Zeev sold 150K shares on December 19th for a total USD 6.14mln.

COMMUNICATIONS:

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  Warner Bros. Discovery (WBD), Paramount Global (PARA) - Warner CEO Zaslav met Paramount CEO Bakish in NYC to discus a potential merger, Axios reports. The move aims to create a powerhouse in news and entertainment, with talks on combining streaming services. Paramount, under debt pressure, seeks a strategic partner; WBD's market value was around USD 29bln as of Wednesday, while Paramount's was just over USD 10bln, so any merger would not be of equals. The deal could leverage international reach and merge assets like CBS News and CBS Sports. WSJ later reported that no formal talks were currently underway between Warner and Paramount.

INDUSTRIALS:

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  Boeing (BA) - China is said to approve its first Boeing 787 delivery since April 2021, Bloomberg reports; its signed off on the first delivery of a 787 jet in two-and-a-half years, is an indication that strained US-China trade relations may be easing and a potential precursor to the more significant resumption of 737 Max deliveries, the report added.


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  Airbus (EADSY) - Awarded EUR 1.7bln order for 16 military aircraft by the Spanish MoD.


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  Southwest Airlines (LUV) - Southwest Airlines has reached a tentative agreement with the Southwest Airlines Pilots Association (SWAPA). The contract will undergo a vote by nearly 11,000 pilots, with SWAPA set to share contract specifics and voting procedures.


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  Joby Aviation (JOBY) - Joby and NASA's Ames Research Centre conducted successful air traffic simulations, achieving up to 120 electric air taxi operations per hour in busy airspace like the Dallas-Fort Worth region, utilising existing air traffic control tools and procedures.


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  Northrop Grumman (NOC) - Awarded USD 121.5mln Defense Logistics Agency contract for B-1 Bomber AN/APQ-164 offensive radar low observable antennas.


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  Lockheed Martin (LMT) - Awarded a USD 220.7mln Navy contract modification to support calendar year 2024 modification and retrofit activities for the F-35 Joint Strike Fighter programme.

ENERGY:

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  Gulf of Mexico - The latest Gulf of Mexico oil and gas auction Wednesday saw more than two dozen companies submitting nearly USD 442mln worth of bids to lease tens of millions of acres for offshore drilling, The Advocate reports. The American Petroleum Institute said Wednesday's total was the highest for an offshore auction in nearly a decade.

MATERIALS:

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  Norsk Hydro ASA (NHYDY) - Norsk Hydro will report Q4 impairment losses of about NOK 5.9bln due to challenging alumina markets and Australian power price uncertainties. Impairments include goodwill in Bauxite & Alumina in Brazil and property/equipment related to various operations. These impairments won't affect the 2023 dividend and are considered adjusting items in Hydro’s Adjusted Net Income.


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  US Steel (X) - President and CEO David Burritt sold 252,458 shares on December 18th at USD 50.013/shr.

CONSUMER:

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  Tesla (TSLA) - Norway safety regulator has opened an inquiry into Tesla suspension issues, Reuters reports. Regulator says a decision on whether to recommend recalling affected vehicles could be made by Christmas.


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  AutoZone (AZO) - AutoZone Board authorised an additional USD 2bln stock buybacks.


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  Costco (COST) - CFO Richard Galanti sold 1,111.78 shares on December 19th at USD 680.2139/shr.


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  Signet Jewelers (SIG) - CEO Virginia Drosos sold 10k shares on December 19th at USD 103.1668/shr.


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  DraftKings (DKNG) - CEO Jason Robins sold 483.5K shares on December 20th, part of an option exercise, for a total USD 17.1mln.

FINANCIALS:

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  Wells Fargo (WFC) - Employees at a branch in Albuquerque voted to form a union, marking the first within a major US bank, WSJ reports. Eight employees participated, with five in favour and three against. Similar votes are expected in three other branches, with an Alaskan branch expected to vote Thursday. The union would represent only a small fraction of Wells Fargo's workforce of over 200k employees, the report adds.


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  BNPL - US Senators urged CFPB Director Chopra to oversee the risks of 'buy now, pay later' services, FRN reports. Senators emphasised monitoring BNPL usage, particularly during the holiday season, citing concerns about potential financial risks to consumers.


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  Euronext (ERNXY) - CEO said it was unlikely to make another bid for Allfunds as it pursues acquisitions that can grow and diversify returns. Expects 64 listings in 2023 with a combined EUR 50bln market cap.


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  Commerzbank (CRZBY) - Receives approval for up to EUR 600mln share buyback programme from ECB.


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  HSBC (HSBC), BNP Paribas (BNPQY) - South Korea's financial watchdog proposed minimum fines of KRW 10bln each on HSBC Holdings and BNP Paribas for naked short selling.

HEALTHCARE:

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  Merck (MRK) - Merck's gefapixant for chronic cough received a FDA Complete Response Letter due to insufficient evidence of effectiveness, not safety concerns. Merck is reviewing feedback.


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  Regeneron (REGN) - FDA grants Regeneron's Hemophilia B treatment received orphan designation.


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  Sanofi (SNY) - Tusamitamab ravtansine's Phase 3 trial for 2L NSCLC concluded without meeting its primary endpoint. Sanofi will further investigate antibody tusamitamab-based ADCs and CEACAM5 research in various cancer types despite the trial's outcome.


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  Fresenius SE (FSNUY) - Receives US FDA NDA supplement 25 approval for MORPHINE SULFATE.


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  Hikma (HKMPY) - Receives US FDA ANDA supplement 33 approval for BUPRENORPHINE HYDROCHOLORIDE.

21 Dec 2023 - 09:30- Fixed IncomeData- Source: Newsquawk