US EARLY MORNING: US index futures continue higher; Witching may result in some volatility around the open

EQUITIES: US equity futures are continuing to the upside in wake of the Fed's dovish pivot this week. Today's Quad Witching will see options with a value of USD 5.3tln rolling off, with the largest impact seen around the cash open. MarketWatch explains that "many traders will be cashing in bullish bets that are deep in the money, while some roll their positions, forcing market-makers to continue to hedge their exposure," while "managers of index-tracking funds will need to finish adjusting their holdings before the announced index changes take effect." This has already resulted in higher trading volumes this week, some strategists said.

TREASURIES: Treasury yields are a little lower across the curve, which is bull-steepening moderately. We started this week facing the prospects of four Fed rate cuts in 2024, with a chance of a fifth, but as we close out the week, the market has now fully priced six rate cuts next year. There is not a lot on the radar today that could change this dynamic, while next week's PCE data is likely to confirm the disinflationary trends seen in the CPI and PPI releases, which could help embolden these expectations as we close out the year.

TODAY’S AGENDA:

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


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  DAY AHEAD: Flash PMI data for December are on today’s slate; at the headline level, small improvements are expected in the UK, Germany, France and the Eurozone. Eurostat will release October trade data in the morning, while Eurozone Q3 labour costs and wages data is also due to be published. EMFX watchers are expecting Russia’s central bank to hike rates by 100bps. The US Day sees the release of the Empire manufacturing survey for December, which will help shape initial expectations on what the ISM could look like in the month; the S&P Global US flash PMI data is also due for release today. Manufacturing output and industrial production stats for November are due before the open. With regards to central bank speakers, BoE’s Ramsden and BoC’s Macklem are due to make remarks. On the energy front, Baker Hughes weekly rig count data is out in the afternoon. On the CRA docket, Moody’s may review Turkey (B3), Fitch may review Norway (AAA) and Hungary (BBB).

EQUITY NEWS:

MACRO:

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  EU-US - The EU plans to prolong its ceasefire with the US regarding steel tariffs enacted by former President Trump until after next year's presidential elections, FT reports. European trade commissioner aims to delay retaliatory tariffs on US goods, highlighting ongoing efforts to resolve the long-standing trade disagreement.

CONSUMER:

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  Costco Wholesale Corp (COST) - Costco topped Q1 earnings forecasts. Q1 EPS 3.58 (exp. 3.42), Q1 revenue USD 56.72bln (exp. 57.72bln). Q1 US comp. sales ex-gas and FX rose 2.6% (exp. 3.5%); Q1 total comp sales. including gas and FX rose 3.8% (exp. +4.3%). Announced a special cash dividend of USD 15/shr.


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  H&M (HNNMY) - FY24 sales +6% Y/Y at SEK 236.01bln (exp. 236.87bln). Q4 net sales in local currency -4% (exp. -3.11%) at SEK 62.6bln (exp. 63.2bn).


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  General Motors (GM) - General Motors will lay off 1,300 workers from Michigan's Orion and Lansing Grand River plants in the new year. The job cuts follow a delay in electric pickup truck production to 2025, affecting the Chevrolet Bolt EV and Bolt EUV plant workers. The announcement has no relation to the prior United Auto Workers' strike.


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  Unilever (UL) - Is in advanced talks to sell Elida Beauty to Yellow Wood Partners, expected to be sold for "less than" USD 1bln, according to Reuters sources.


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  Gildan Activewear (GIL) - Browning West expressed strong objections to Gildan Activewear's board for abruptly firing CEO Glenn Chamandy without a clear reason. It criticised the board's decision-making in appointing a successor and warned of risks to the company's stability, urging immediate actions to restore stakeholder trust.


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  Lennar Corp (LEN) - Q4 adj. EPS 5.17 (exp. 4.59), Q4 Revenue USD 10.97bln (exp. 10.22bln), Q4 deliveries +19% to 23.795 (exp. 22.1K), Q4 new orders 17.37k (+32% Y/Y, exp. 16.84k), Q4 ASP on delivered homes USD 441k (exp. 448k), backlog 14.9K units worth USD 6.6bln (prev. 21.3K and USD 9.9bln Q/Q). Sees Q1 new orders between 17.50-18.00k (exp. 16.49k). Is not guiding FY margin as rate environment is "rapidly evolving".


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  Lamb Weston (LW) - Raises quarterly cash dividend to USD 0.36/shr (prev. 0.28/shr).

INDUSTRIALS:

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  Air Lease (AL), Airbus (EADSY) - Air Lease announced two new Airbus aircraft delivered to Denmark's Sunclass Airlines of Denmark, including one new A321-200neo and one new A330-900neo.


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  RTX (RTX) - RTX announced that President and Chief Operating Officer Christopher Calio will succeed Gregory Hayes as CEO at the 2024 RTX Annual Shareowners Meeting, scheduled for May 2nd 2024. Hayes will continue to serve as executive chairman of RTX.


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  Global Payments (GPN), Shift4 (FOUR) - Global Payments is exploring acquiring Shift4 Payments, Bloomberg reports. Discussions are ongoing, but there is no certainty a deal can happen. Global Payments denied current talks with Shift4 regarding strategic transactions. Shift4 didn't responded to Bloomberg's requests for comment.


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  SpaceX (not listed), T-Mobile (TMUS) - SpaceX obtained US approval to run tests on signals between orbiting Starlink satellites and normal mobile phones on the ground using airwaves in partnership with T-Mobile, Bloomberg reports. SpaceX hsa been granted a six-month authorisation for trials that would involve about 2,000 test devices and 840 satellites.

TECH:

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  Apple (AAPL) - Apple plans to extend OLED screens to iPads and MacBooks, as well as potentially introducing foldable tablets, Nikkei reports. Samsung, LG, and BOE stand to benefit, while others like JDI, Sharp, AUO, and Innolux might face challenges, the newspaper said.

COMMUNICATIONS:

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  Meta Platforms (META) - Democrat Senator Elizabeth Warren queried Meta's content moderation during the Israel-Hamas conflict, Engadget reports. In a letter CEO Zuckerberg, Warren highlighted reported issues on Instagram, pressing for clarity on moderation policies and content takedowns related to the conflict.


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  Sony (SONY) - Sony's Naughty Dog has halted development on "The Last of Us Online" due to prioritising single-player games over long-term live service commitments.

MATERIALS:

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  US Steel (X) - Sees Q4 2023 adj. EPS between 0.20-0.25 (exp. 0.22), and EBITDA at USD 250mln (exp. 266mln). Said Q4 mini mill segment's adjusted EBITDA is expected to be lower than Q3. Looking ahead, domestic steel markets are improving, customer demand is growing, and spot selling prices are increasing. In 2024, it expects to complete remaining strategic investments, including our dual coating line at big river steel.


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  Nucor (NUE) - Increased quarterly cash dividend +5.9% to 0.54/shr (prev. 0.51).

ENERGY:

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  Shell (SHEL) - A disagreement between Shell and Venezuela's PDVSA over future LNG prices has gridlocked talks on a license for Shell and Trinidad's National Gas Company to operate a Venezuela gas field, Reuters reports.

FINANCIALS:

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  Citigroup (C) - Citi's Mexican retail unit Banamex is set to split off from its parent by H2 2024, Reuters reports, adding that the retail unit should then begin the process of going public in 2025. Separately, Citi plans to shut its municipal underwriting business due to financial viability concerns; the unit will be dissolved in Q1.


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  Blackstone (BX) - Blackstone, CPPIB, Rialto Capital, and FDIC established a joint venture, acquiring 20% equity in a USD 16.8bln senior mortgage portfolio from Signature Bank's receivership. FDIC retains 80% ownership, financing half the venture. The portfolio includes 2,600 loans on New York properties, mostly performing, with diverse credit profiles and primarily fixed-rate with strong debt coverage.

HEALTHCARE:

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  Pfizer (PFE) - Raises quarterly cash dividend to USD 0.42/shr (prev. 0.41/shr).


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  Merck (MRK) - Merck's WELIREG gained FDA approval for treating advanced renal cell carcinoma after prior immunotherapy and vascular targeted therapy, showing significant progression-free survival benefits in LITESPARK-005 trial for this specific patient group.


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  Sanofi (SNY) - EMA gives a positive opinion of Fexinidazole Winthrop as the first oral treatment of an acute form of sleeping sickness (rhodesiense) found in East and Southern Africa.

15 Dec 2023 - 09:30- Research Sheet- Source: Newsquawk