US EARLY MORNING: US futures slide lower in sympathy with Europe; today's Quad Witching will see USD 4tln of options roll-off

SERVICE NOTE: Your friendly neighbourhood squawk analyst is taking an extended break for Christmas, and this note will therefore return on Tuesday, January 3rd, 2023. We wish our readers a very Holiday Holiday. Please also note that on Friday 16th December, the desk will be closing at the earlier time of 18:05GMT/13:05EST after coverage of the Baker Hughes Rig Count.

SNAPSHOT: US index futures were horizontal in overnight trade, but have tilted lower after the London start, as European equities opened lower, with the region continuing to digest a hawkish ECB policy announcement on Thursday. There are a handful of ECB hawks due to speak today, which may influence the macro landscape. In the US, the Senate passed a stopgap funding bill, which averts a partial government shutdown, and gives politicians an additional week to come to a deal to fund federal agencies through the fiscal year. Flash PMI data and some Fedspeak is on today’s docket.

INTO YEAR END: With year-end looming, and with traders eying early exits after most of the key macro releases are now out of the way, the trading tone into the end of the year could take a technical feel. Thursday's downside, which came after a hawkish ECB policy announcement, could suggest equities will consolidate into year-end between 3,900-4,120 parameters, according to some technicians. For 2023, the consensus looks for the S&P 500 to rise to 4,200, according to a recent Reuters poll, although the outcome will hinge on how far the Fed tightens policy. While it has talked a hawkish game this week, guiding its expectations for the terminal rate above the analyst expectations, the market remains unconvinced, and is pricing in a slightly more dovish trajectory. Analysts have warned that any hawkish data could bring the market more in line with the Fed's thinking, which would be a headwind for stocks (given that higher index prices represent a loosening of financial conditions, something the Fed is keen to avoid for now). On that front, there could be a bit of outsized attention on today's flash PMI data for December, given the mixed tone already seen in the regional Empire and Philly Fed reports this week - these data all help to form expectations for the key ISM data, which are due to be released early January.

DAY AHEAD: S&P Global will report flash US PMI data for December, which are expected to also see slight improvement; the regional Empire and Philly Fed releases have been mixed thus far. On the speaker's front, ECB policymaker commentary from hawks Holzmann and Knot, as well as Centeno is due following the ECB's hawkish policy announcement on Thursday; there has been some sourced articles suggesting President Lagarde offered back-to-back 50bps rate hikes to woo the dissenters. Meanwhile, some calendars have Fed's Williams (voter) listed, while remarks from 2024 voters Daly and Mester are due. In EMs, the CBR is expected to stand pat on rates today. It is the second day of the European Council’s meeting. Weekly Baker Hughes rig count data rounds out the day’s releases. Traders should be aware that today sees Quad Witching options expiries, which can result in bouts of choppy, volatile trading conditions. Our full day ahead schedule note can be accessed here.

COMMUNICATIONS:

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  Manchester United plc (MANU), TeamViewer AG (TMVWY) - The world's best football team Manchester United reached an agreement with TeamViewer, where Man Utd has the option to buy back the rights to the club's shirt front sponsorship. Having agreed its partnership with TeamViewer at the height of the Covid-19 pandemic, Manchester United will be taking the opportunity to commence a focused sales process for a new shirt front partner in a normalised market.


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  Apple Inc. (AAPL) - Apple TV+ announced that its comedy series "Mythic Quest" will expand its universe of with "Mere Mortals," a new eight-episode extension series.


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  Vimeo (VMEO) - November revenue -1%, November subscribers -4%, November ARPU +2%.


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  Scholastic Corporation (SCHL) - Q2 EPS 2.12 (vs 1.91 Y/Y), Q2 revenue USD 587.9mln (vs 524.2M Y/Y). Boosts share repurchase authorisation to USD 75mln, an additional USD 48.8mln. Reiterates FY23 revenue outlook for growth of 8-10%.

INDUSTRIALS:

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  US Steel (X) - Sees Q4 adj. EPS between USD 0.58-0.63 (exp. 0.43), and sees Q4 adjusted EBITDA at around USD 375mln. Expects USD 150mln of direct returns to stockholders in the quarter. Exec said December commercial demand in the US was better, and scrap prices have begun to increase this month, flat-rolled customer inquiries were accelerating, spot steel selling prices were improving.


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  Steel Dynamics (STLD) - Sees Q4 adj. EPS between USD 4.10-4.14 (exp. 3.84). Expects to realise a benefit of approximately USD 17mln, or 0.10/shr, related to state and federal prior year return to provision reconciliations. Said that Q4 profitability from steel operations was expected to be significantly lower than sequential Q3 results, based on seasonally lower shipments and metal spread compression, particularly within the flat roll operations. Exec said it believes flat roll steel prices have bottomed, expects them to increase into 2023 as underlying steel demand and corresponding order activity remain intact from the automotive, non-residential construction, industrial, and energy sectors with some weakness in the residential sector. Q4 earnings from metals recycling operations expected to moderately improve vs Q3, based on increased volume more than offsetting lower average price realisation. Q4 earnings from steel fabrication operations expected to be strong, remain steady vs Q3, expanding metal spreads more than offsetting slightly lower seasonal volumes. Said that the non-residential construction sector remains steady as evidenced by customer order activity supporting a continuing historically strong order backlog, which the company anticipates will continue through 2023.


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  Raytheon Technologies Corporation (RTX) - Awarded a USD 619mln Navy contract modification, which adds scope to procure long-lead materials, parts and components for Lot 17 F135 propulsion systems in support of the F-35 Lighting II Joint Strike Fighter aircraft.


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  AAR Corp. (AIR) - AAR Corp. expands its partnership with Ontic, signs military customer support distribution contract extension and a new long-term global commercial distribution agreement.

TECH:

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  Adobe Inc (ADBE) - Q4 adj. EPS 3.60 (exp. 3.50), Revenue 4.53bln (exp. 4.53bln). Sees Q1 2023 adj. EPS 3.65-3.70 (exp. 3.61), and sees Q1 revenue between USD 4.60bln-4.64bln (exp. 4.62bln). Reiterates FY23 adj. EPS outlook of between USD 15.15-15.45 (exp. 15.25), and its FY23 revenue outlook of USD 19.1-19.3bln (exp. 19.4bln). Exec said the regulatory process for its Figma acquisition was proceeding as expected, and it is currently in DOJ's second request process for the acquisition.

ENERGY:

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  Chevron Corporation (CVX) - Chevron unit and Svante announced that Chevron was the lead investor in Svante's Series E fundraising round, which raised USD 318mln; funds will be used to accelerate the manufacturing of Svante's carbon capture technology.


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  Aker BP (AKERBP) - Aker and partners to invest over NOK 200bln to develop several oil & gas fields off of Norway.

UTILITIES:

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  American Electric Power Company, Inc. (AEP) - The Federal Energy Regulatory Commission denied authorisation for a proposed transaction, where Liberty Utilities Co. seeks to acquire all issued and outstanding common shares of AEP Kentucky Transmission Company, Inc. and Kentucky Power Company.

FINANCIALS:

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  Synchrony Financial (SYF) - Announced leadership transition: Executive Chair Margaret Keane announced her intention to retire; Board member Jeffrey Naylor will succeed Margaret as Chair.


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  First Bancorp (FBNC) - Boosts quarterly dividend +10% Y/Y to 0.22/shr.


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  LPL Financial Holdings Inc. (LPLA) - November monthly activity sees total advisory and brokerage assets +49.3bln (+4.5%) at USD 1.14tln. Total net new assets USD 5.6bln (+6.2% Y/Y). Total net new advisory assets +7.6% Y/Y at USD 3.6bln. Total client cash -2.7bln at USD 62.5bln.


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  Annaly Capital Management, Inc. (NLY) - Board appointed CFO Steven F. Campbell to the additional office of President.

CONSUMER:

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  Unilever plc (UL) - Unilever announced that its litigation with the independent board of Ben & Jerry’s over the sale of its Israeli ice cream business has 'been resolved', the Guardian reported. The company did not provide details of how.


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  D.R. Horton, Inc. (DHI) - Acquires homebuilding the operations of Riggins Custom Homes, one of the largest builders in Northwest Arkansas. The homebuilding assets of Riggins include around 3,000 lots, 170 homes in inventory, 173 homes in sales order backlog.


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  Aptiv PLC (APTV) - Appoints Benjamin Lyon as Senior VP, and Chief Technology Officer, succeeding Glen De Vos, who is transitioning to the role of Senior VP, Transformation and Special Programmes.


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  Bright Horizons Family Solutions Inc. (BFAM) - Determined that a ransomware cyber-incident had impacted and disrupted a number of the company's operational and information technology systems. The company's investigation is ongoing, currently does not believe that client, customer, family or employee data have been compromised.

HEALTH CARE:

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  Bristol Myers Squibb (BMY), Evotec (EVO) - BMY announced results of new research from its multiple myeloma portfolio being presented at ASH highlight scientific progress across bispecific T cell engagers, chimeric antigen receptor T cell therapies and novel CELMoDTM agents in advancing the treatment of relapsed/refractory multiple myeloma. Also said it achieved further progress in neuroscience collab with Evotec.


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  Spire Inc. (SR) - Spire STL Pipeline gained a new certificate from the Federal Energy Regulatory Commission, ensuring the project can continue its operations in the aftermath of a 2021 court ruling that said FERC did not adequately scrutinise whether the natural gas pipeline project was needed, S&P Global reports.


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  Veracyte, Inc. (VCYT) - Findings demonstrating strong performance of the Afirma Genomic Sequencing Classifier were published in The Journal of Clinical Endocrinology & Metabolism.


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  Zai Lab Limited (ZLAB) - Presented new interim overall survival data in Chinese patients with platinum-sensitive recurrent ovarian cancer from the Phase 3 NORA study for Zejula.

16 Dec 2022 - 09:10- Research Sheet- Source: Newswires