>>> Europe : Brokers Upgrades & Downgrades - 31st of January 2024

>>> Up
* Elementis Raised to Buy at Jefferies; PT 170 pence
* Morgan Advanced Cut to Hold at Jefferies; PT 315 pence
* Qiagen Raised to Overweight at Morgan Stanley; PT 47 euros
* Shurgard Raised to Buy at HSBC; PT 50 euros
* Spirax Raised to Hold at Jefferies; PT 9,740 pence
* TAG Immobilien Raised to Buy at HSBC; PT 14.50 euros
* UCB Raised to Buy at Jefferies; PT 104 euros
* Var Energi Raised to Neutral at Goldman; PT 32 kroner
* XP Power Raised to Buy at Jefferies; PT 1,640 pence

>>> Down
* AB Dynamics Cut to Underperform at Jefferies; PT 1,500 pence
* Ambu Cut to Hold at Nordea
* Barry Callebaut Cut to Neutral at Citi; PT 1,400 Swiss francs
* BBVA Cut to Hold at HSBC; PT 9.40 euros
* Boeing PT Cut to $209 from $238 at CFRA
* Deutsche Bank Cut to Neutral at Citi; PT 13.40 euros
* Equinor Cut to Sell at ABG; PT 275 kroner
* Euronav Cut to Hold at Jefferies; PT 16.64 euros
* General Motors Cut to Hold at Punto Casa de Bolsa
* Harbour Energy Cut to Sell at Goldman; PT 260 pence
* Iberdrola Cut to Hold at SocGen; PT 11.60 euros
* Kesko Cut to Reduce at Inderes; PT 17 euros
* Rational Cut to Underperform at BNPP Exane; PT 690 euros
* Storebrand Cut to Hold at Arctic Securities; PT 104 kroner
* TF1 Cut to Add at AlphaValue/Baader
* Victrex Cut to Underperform at Jefferies; PT 1,190 pence

>>> Initiation
* Mobimo Rated New Add at Baader Helvea; PT 260 Swiss francs

>>> Call
* Deutsche Bank Offers Few Surprises, Citi Downgrades After Rally
* UCB Raised at Jefferies on Bimzelx Upside, Multiple Catalysts
* UK Industrials Face Mixed Year, Favor Self-Help: Jefferies

WSJ : Chinese Lithium Producers’ Shares Drop in Wake of Profit Warnings

Chinese Lithium Producers’ Shares Drop in Wake of Profit Warnings
Ganfeng Lithium and Tianqi Lithium expect steep profit drops amid lower selling prices and weakening profit margins

Chinese lithium producers’ shares fell following forecasts for sharp profit declines in 2023, indicating that slower demand growth from battery and electric-vehicle makers extended into the year’s final quarter.

The Hong Kong-listed shares of Ganfeng Lithium 002460 -6.95%decrease; red down pointing triangle were down 3.9% at 21.15 Hong Kong dollars (US$2.70) at midday Wednesday, widening year-to-date losses to 28%. Its Shenzhen-listed shares fell 5.3% to 35.01 yuan (US$4.89).

Tianqi Lithium’s 002466 -6.83%decrease; red down pointing triangle H-shares dropped 2.9% to HK$35.55, while its Shenzhen-listed shares shed 5.3%.

Both companies said late Tuesday that they expect to post steep drops in profit amid lower selling prices of lithium products and weakening profit margins.

Ganfeng Lithium expects 2023 net profit to drop 70% to 80%, widening from its 59% drop in bottom-line results through the first nine months of the year. Tianqi forecast a full-year profit decline of 63% to 73%, widening from the nine-month decline of 49%.

At the bottom end of those ranges, both companies would post net losses for the fourth quarter.

Prices of lithium chemical dropped significantly in 2023 due to slower demand growth from battery and EV makers, which dragged on both companies’ gross profit margin.

Most recently, Tianqi and joint venture partner IGO agreed to change their pricing mechanism for the Greenbushes lithium mine in Australia, the world’s largest hardrock lithium mine in operation.

The new pricing setting will reduce the production cost of the Greenbushes operation. Tianqi’s businesses are likely to benefit from the change, Nomura analysts led by Ethan Zhang said.

FT : Paris seeks UK loan guarantee after Hinkley Point nuclear plant costs soar

Paris seeks UK loan guarantee after Hinkley Point nuclear plant costs soar
French government in push to ease financing pressure on state-owned EDF from rising price tag

The French government is pushing British ministers to provide loan guarantees for Hinkley Point C to try to ease EDF’s financing costs on Britain’s new flagship nuclear power station as its price tag has soared.

EDF, the French state-owned utility, said last week that the cost of the new nuclear power station it is building in Somerset could hit as much as £46bn, up from £18bn in 2015 prices, as it pushed the completion date of the first of two reactors back by at least two years to 2029 at the earliest.

Under the contract drawn up a decade ago, any construction cost overruns at Hinkley fall on EDF rather than the British taxpayer.

But French officials are pushing the UK to provide EDF with state guarantees on new Hinkley-related loans, according to three people familiar with the matter. This could allow EDF to issue project-level debt and relieve pressure on the company’s finances.

Until now, the project has been equity-funded by EDF and CGN, the Chinese junior partner in the scheme. CGN has ceased contributing to the overruns, having already fulfilled its contractual obligations, after the UK government took steps to push the Chinese company out of the nuclear sector following a deterioration in relations with Beijing.

The UK government insists it would not shoulder any costs. “Hinkley Point C is not a government project and so any additional costs or schedule overruns are the responsibility of EDF and its partners and in no way will fall on taxpayers,” it said.

The proposal by French officials is similar to an initial offer by the UK government when the Hinkley contracts were first negotiated. In 2014 ministers offered EDF a loan guarantee of £10bn on the project.

But when the final investment decision was taken in 2016, British officials withdrew the offer due to concerns about mounting cost overruns at EDF’s project to build a new nuclear power station at Flamanville in France that uses the same reactor technology as Hinkley.

Instead, the British government agreed to a generous subsidy arrangement that guaranteed a minimum price for Hinkley’s future power supplies to help finance the build. An offer of a short-term guarantee on £2bn of loans was rejected by EDF.

People close to the talks said French officials had floated other options to ease the financial burden on EDF, including the British government bringing another partner into the project and reopening the subsidy arrangement on future power supplies.

“We’ve always said that at a certain moment, we could search for more partners if needed,” a person close to EDF said.

One British official acknowledged pressure from Paris to find a compromise was building. “In the end, governments always own failure in [their own] big national infrastructure,” said one person close to UK ministers. “The get out of jail card here is that we transferred the risk to another state but the question is whether, in extremis, we can enforce that transfer. Ultimately it becomes a potentially very messy government-to-government issue.”

Although EDF was fully nationalised by the French state last year its borrowings are not treated by bond markets as equivalent to sovereign debt. S&P rates EDF as BBB compared with AA for French government bonds.

Another French proposal could involve changes to the terms of the deal to build EDF’s other big UK nuclear project, a planned new power station at Sizewell in Suffolk.

This is being funded differently to Hinkley with the British government committing £2.5bn after taking a 50 per cent stake alongside EDF in the company set up to deliver the plant. They are looking to raise a further £20bn from outside investors. In theory EDF could put more money into Sizewell in return for greater government help with Hinkley.

Another French idea is to persuade the UK to bring forward some of its future financial support for Hinkley. But this is contingent on the sale of power produce by the plant once it is operational so it is unclear how this would work in practice.

FT : China’s manufacturing activity contracts for fourth month as economic recov

China’s manufacturing activity contracts for fourth month as economic recovery lags
Non-manufacturing index climbs into positive territory but concerns remain about weak confidence

China’s manufacturing activity contracted in January for the fourth month in a row, reflecting sluggish momentum in the world’s second-largest economy at the start of the year despite policymakers’ efforts to boost confidence in the recovery.

The country’s official manufacturing purchasing managers’ index released on Wednesday was 49.2 for the month, in line with a median forecast of analysts polled by Reuters and edging up from a reading of 49 in December. A reading below 50 marks a contraction from the previous month.

The non-manufacturing index, which covers services and construction, rose 0.3 points from the previous month to 50.7 — the highest level since September and indicative of “steady expansion”, the National Bureau of Statistics said.

However, analysts said the figures showed that a long-running property downturn, weak export demand and low investor and consumer confidence continued to weigh on the Chinese economy.

“Economic momentum remained muted as the deflationary pressure persists,” said Zhiwei Zhang, president and chief economist of Pinpoint Asset Management.

China has announced a series of measures to support the economy, in particular strengthening credit to stimulate the property sector, infrastructure building and other strategic sectors.

While gross domestic product grew 5.2 per cent last year, exceeding the official target of 5 per cent, that figure was flattered by a low-base effect from the previous year, when coronavirus pandemic lockdowns gripped the country.

The IMF has said China’s stimulus efforts, which include fiscal investment in disaster relief, will improve its outlook this year, and on Tuesday the multilateral lender raised its projection for 2024 growth to 4.6 per cent, up from 4.2 per cent in October.

“The upgrade reflects carry-over from stronger-than-expected growth in 2023 and increased government spending on capacity building against natural disasters,” the IMF said in its World Economic Outlook.

Chinese equities edged lower following the latest weak reading on China’s factory activity, with the CSI 300 index down 0.2 per cent and Hong Kong’s Hang Seng China Enterprises index shedding 1.3 per cent. The gauges are down roughly 6 per cent and 10 per cent, respectively, this year.

China’s NBS said that while large manufacturers reported an expansion of activity in January, medium-sized and small enterprises remained in contractionary territory.

In the non-manufacturing sector, construction activity also continued to expand, but growth slowed significantly, while services edged back into positive territory after a two-month contraction.

The composite index of manufacturing and non-manufacturing sectors was 50.9, up 0.6 from the previous month, “indicating that the overall production and operation activities of the nation’s enterprises continued to expand”, the NBS said.

HSBC wrote in a research note that one bright spot was an acceleration in production activity, which might reflect an improvement in domestic demand, previously a persistent weak point in the economy’s recovery after the pandemic.

The government is expected to set an economic growth target of 5 per cent for 2024 at the annual meeting of its rubber-stamp parliament in March.

But HSBC cautioned that more stimulus would be needed to achieve that goal. “We still see the need for ongoing policy support across multiple fronts, particularly on the fiscal side, to help shore up growth and help revive confidence,” it said.

Pinpoint’s Zhang noted that while China’s fiscal policy stance had become more proactive late last year, “the transmission to the economy has been slow”, possibly reflecting “the lack of suitable infrastructure projects”.

The government has been unwilling to unleash fiscal subsidies to directly boost consumption, and while the central bank has cut the level of reserves banks must hold to try to stimulate demand, real interest rates remain high because of deflationary pressures, deterring investors.

Zhang added that he expected the People’s Bank of China to follow up by cutting interest rates in the first half of 2024.

FT : Chinese investors buy gold as property and stock markets fall

Chinese investors buy gold as property and stock markets fall
‘Blistering’ demand from central banks also helps keep yellow metal above $2,000 per troy ounce

Chinese investors and households have been buying gold as a refuge from local property and stock market mayhem, helping to support record prices for the haven asset.

China was the principal bright spot globally for gold jewellery and investment flows in 2023, according to industry group the World Gold Council’s quarterly report, as local property, equity and currency markets disappointed following the country’s exit from Covid-19 lockdowns.

Together with “blistering” demand from central banks, according to the WGC, Chinese demand helped push the gold price to record highs last month and keep it above $2,000 per troy ounce this year.

Chinese investment demand for gold — spanning bars, coins and exchange traded funds — grew 28 per cent to 280 tonnes, largely offsetting a steep drop in Europe. The country’s jewellery consumption rose 10 per cent to 630 tonnes last year, even as global demand remained flat.

“China was key to a lot of what was happening last year,” said Louise Street, senior markets analyst at WGC. “When you look at the consumer sector, China is not the price-setting factor but it is providing a floor.”

The country’s CSI 300 equity index has fallen by more than a fifth in the last year, while the value of new home sales among the country’s biggest developers in December was down 35 per cent from a year earlier.

Chinese investors face an “ugliness contest” over where to put the huge level of savings they have accumulated during the Covid-19 pandemic, according to BMO analyst Colin Hamilton. “Gold exposure has become a necessity for Chinese portfolios as they continue to expect disinflation and income uncertainty,” he said.

Analysts at UBS said that Chinese demand has been “under-appreciated” as a factor driving gold prices.


Overall, gold demand slipped 5 per cent to 4,448 tonnes last year, cooling off from a strong 2022, according to the WGC report. However, after incorporating over-the-counter and stock flows — which capture an opaque source of buying by wealthy individuals, sovereign wealth funds and futures market speculators, as well as changes in exchanges’ inventories — annual demand was at its highest on record at 4,899 tonnes.

The record demand levels and soaring prices for gold have come despite interest rate rises last year, which increased the attractiveness of bonds relative to the non-yielding asset. That helped push investment demand for gold to a 10-year low of 945 tonnes.

But offsetting that weakness in investment demand was central bank buying led by China, Poland and Singapore, which helped keep net purchases above 1,000 tonnes.

However, more than half of the central bank buying was attributed to mystery buyers, as official financial institutions conceal the true volume of purchases from the IMF or use other sovereign vehicles to acquire the gold.

BMO’s Hamilton said gold was in a “new era”, having broken its correlation with real rates and instead being driven by central banks and Chinese household asset allocation.

“Surging demand in gold’s number one consumer nation shows no sign of letting up,” said Adrian Ash, director of research at BullionVault, an online precious metals investment service.

>>> US After Hours Summary: WMT +1% 3-for-1 stock split; SBUX +4.4%, SYK +3.8%,

After Hours Summary: WMT +1% 3-for-1 stock split; SBUX +4.4%, SYK +3.8%, SWKS +3.4% higher on earnings; MSFT flat on earnings; RHI -11.4%, AMD -5.6%, GOOG -5.3%, MDLZ -2.1%, EA -1.9% lower on earnings

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: POWL +17.5% (also increases dividend), SBUX +4.4%, SYK +3.8%, SWKS +3.4%, RNR +2.2%, ATGE +2.1%, ASH +1.9%, CB +1.9%, CP +0.4%, BXP +0.3%

Companies trading higher in after hours in reaction to news: WMT +1% (3-for-1 stock split), CNM +0.1% (to acquire Dana Kepner), JNJ +0.1% (submits supplemental BLA to FDA seeking approval of DARZALEX FASPRO)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: RHI -11.4%, MOD -8%, TER -6.3%, AMD -5.6%, FCF -5.6%, GOOG -5.3%, LC -5.1%, FBIN -5% (also increases share buyback auth by $650 mln), LFUS -4.3%, MDLZ -2.1%, EA -1.9%, HA -1.9%, MTCH -1.1%, EQR -0.4% (also buyback authorization replenished), APAM -0.3%, ENVA -0.1%

Companies trading lower in after hours in reaction to news: AMSC -10.9% (stock offering; also files $250 mln mixed shelf securities offering), SLDB -5.4% (stock offering by selling shareholders), TSLA -3.4% (Delaware judge agreed to void CEO Elon Musk's $56 bln compensation package according to CNBC), ORIC -2.6% (Viking Global discloses 5.9% stake), DELL -2.1% (DELL terminates Commercial Framework Agreement with AVGO), ATKR -2% (initiates dividend), NAVI -1.3% (to outsource student loan servicing, other actions), ICFI -1% (awarded a $33 mln digital modernization contract by Dept of HHS), DRS -0.7% (delivers 1,000th Solaris ruggedized laser system), AVGO -0.4% (DELL terminates Commercial Framework Agreement with AVGO)

TechCrunch : ChatGPT users can now invoke GPTs directly in chats

ChatGPT users can now invoke GPTs directly in chats

OpenAI is pushing adoption of GPTs, third-party apps powered by its AI models, by enabling ChatGPT users to invoke them in any chat.

Starting today, paid users of ChatGPT, OpenAI’s AI chatbot front end, can bring GPTs into a conversation by typing “@” and selecting a GPT from the list. The chosen GPT will have an understanding of the full conversation, and different GPTs can be “tagged in” for different use cases and needs — jumping into the conversation with context of things that were said previously.

“This allows you to add relevant GPTs with the full context of the conversation,” OpenAI said in a tweet.

The move to make GPTs more discoverable comes weeks after the launch of the GPT Store, a marketplace for GPTs accessible through the ChatGPT dashboard. Building GPTs doesn’t require coding experience, and GPTs can be as simple or complex as a developer wishes. A few available today include a trail recommender from AllTrails, a code tutor from Khan Academy and a content designer from Canva.

OpenAI plans to eventually introduce monetization for developers who wish to sell access to their GPTs. But the company might have to get traffic up first. According to data from Similarweb, the web analytics company, custom GPTs comprise only about 2.7% of ChatGPT’s worldwide web traffic so far — and custom GPT traffic has been declining month over month since November.

Moderation is proving to be another challenge. In the first week of its launch, the GPT Store was flooded with “romantic” chatbots apps, some of which were sexually suggestive — a clear violation of OpenAI’s terms. Developers also rushed to make political campaigning bots — like a chatbot that impersonated U.S. presidential candidate Dean Phillips — another obvious violation.

OpenAI, which claims to use a combination of human and automated review to flag GPTs, has since removed some of the offending apps. But if the volume of GPTs grows as the company’s clearly hoping, one imagines that the problem is only going to become more acute.

>>> US Close Dow +0.35% S&P -0.06% Nasdaq -0.76% Russell -0.76%

Closing Stock Market Summary
There was not a lot of conviction on either side of the tape today. Market breadth was negative, but modestly so, and volume was below-average at the NYSE. The Dow Jones Industrial Average closed with a 0.4% gain while the S&P 500 (-0.1%) and Nasdaq Composite (-0.8%) closed with losses.

Relative weakness in mega cap and semiconductor-related stocks weighed on the S&P 500 and Nasdaq Composite as participants waited on earnings results from influential names in both spaces this afternoon. The Vanguard Mega Cap Growth ETF (MGK) logged a 0.6% decline and the PHLX Semiconductor Index (SOX) fell 1.6%.

The Invesco S&P 500 Equal Weight ETF (RSP), though, settled just above yesterday's closing level.

Outsized moves in either direction were limited to stocks that reported quarterly results since yesterday's close, which contributed to the mixed feeling at the index level. General Motors (GM 38.15, +2.76, +7.8%) and HCA Healthcare (HCA 301.59, +14.86, +5.2%) logged big gains following pleasing earnings and/or guidance while shares of UPS (UPS 145.06, -12.96, -8.2%) and Whirlpool (WHR 110.01, -7.78, -6.6%) sank following their results.

The mixed action was also the result of a wait-and-see mentality in front of the FOMC decision tomorrow, which is followed by Fed Chair Powell's press conference. The market expects that the committee will leave rates unchanged, but participants are anxious to hear any tonal shifts in rhetoric.

Also, this morning's economic data bodes well for the market's soft landing narrative. The January Consumer Confidence Index climbed to 114.8 in January (consensus 113.0) from a downwardly revised 108.0 (from 110.7) in December. Meanwhile, the JOLTS Report showed 9.026 million job openings in December, up from 8.925 million in November.

The Treasury market also saw mixed action today. The 2-yr note yield, which was at 4.30% before the 10:00 ET data, peaked at 4.37% today before settling at 4.36%. The 10-yr note yield, at 4.04% before the reports, peaked at 4.10% before settling at 4.06%.
  • Nasdaq Composite: +3.3%
  • S&P 500: +3.3%
  • Dow Jones Industrial Average: +2.1%
  • S&P Midcap 400: +0.1%
  • Russell 2000: -1.5%

Reviewing today's economic data:
  • November FHFA Housing Price Index 0.3%; Prior 0.3%
  • November S&P Case-Shiller Home Price Index 5.4% (consensus 5.6%); Prior 4.9%
  • January Consumer Confidence 114.8 (consensus 113.0); Prior was revised to 108.0 from 110.7
    • The key takeaway from the report is that the uptick in confidence was seen across all age groups and fueled by factors that should support continued strength in consumer spending: slower inflation, expectations interest rates will continue to come down, and favorable employment conditions.
  • December JOLTS - Job Openings 9.026 mln; Prior was revised to 8.925 mln from 8.790 mln

Wednesday's economic calendar features:
  • 7:00 ET: Weekly MBA Mortgage Index (prior 3.7%)
  • 8:15 ET: January ADP Employment Change (consensus 140,000; prior 164,000)
  • 8:30 ET: Q4 Employment Cost Index (consensus 1.0%; prior 1.1%)
  • 9:45 ET: January Chicago PMI ( consensus 48.4; prior 46.9)
  • 10:30 ET: Weekly crude oil inventories (prior -9.23 mln)
  • 14:00 ET: January FOMC Decision ( consensus 5.25-5.50%; prior 5.25-5.50%)

>>> Juniper Networks misses by $0.02, misses on revs (37.18 -0.05)

Juniper Networks misses by $0.02, misses on revs (37.18 -0.05)
  • Reports Q4 (Dec) earnings of $0.61 per share, excluding non-recurring items, $0.02 worse than the FactSet Consensus of $0.63; revenues fell 5.8% year/year to $1.36 bln vs the $1.41 bln FactSet Consensus.
  • As announced on January 9, 2024, Hewlett Packard Enterprise (HPE) plans to acquire Juniper Networks in an all-cash transaction for $40.00 per share, representing an equity value of approximately $14 billion. The transaction is currently expected to close in late calendar year 2024 or early calendar year 2025, subject to receipt of regulatory approvals, approval of the transaction by Juniper Networks shareholders, and satisfaction of other customary closing conditions.