>>> What to look at today - 22nd of December 2023

European and US stock futures fell on speculation investors are trimming positions before the release of a US inflation gauge that may help shape the outlook for Federal Reserve policy. Shares in Asia slipped after China announced new curbs on online gaming, pummeling some of the region’s largest technology shares including Tencent Holdings Ltd. and NetEase Inc. Oil extended its biggest weekly gain in two months as shippers avoided the Red Sea amid increased attacks, while Angola’s exit from OPEC after 16 years put the spotlight on the group’s unity. The US core personal consumption expenditures price index probably fell to 3.3% in November from 3.5% the previous month, according to a Bloomberg survey of economists before the numbers are released later Friday.  Asian shares gave up earlier gains after technology shares in Hong Kong plummeted when China unveiled a slew of new measures to rein in spending and content in online games. The sweeping restrictions suggest Beijing is getting ready to launch another crackdown on the world’s largest mobile gaming arena. Treasuries traded in tight ranges before the PCE data, while the dollar rose against most of its Group-of-10 peers and gold was on track for a weekly gain. Swaps traders are pricing in around 150 basis points of Fed cuts next year, twice as much as the central bank has signaled as US GDP growth was revised lower Thursday to a 4.9% annualized reading in the third quarter. Personal consumption data also came in softer than economists had anticipated.  In corporate news, Sumitomo Life Insurance Co. agreed to buy TPG Inc.’s stake in Singapore Life Holdings Pte as the Japanese insurer seeks to bolster its presence in Southeast Asia. The acquirer will pay $1.2 billion to purchase the roughly 35.5% stake.
Nike’s shares fell more than 10% in late trading after the company said it’s looking for as much as $2 billion in cost savings by dismissing workers and simplifying the apparel giant’s product assortment amid a weaker sales outlook.  US After Hours NKE -9.4% drops on earnings, takes down FL -4.7%, UAA -4%, DKS -2.6%; RKLB +17.4% on US deal to make 18 space vehicles; AIR -5.4%, AVO -2% lower on earnings.

Nikkei +0.09% Hang Seng -1.42% CSI +0.19% Shanghai -0.14% Shenzen -0.88%

Eur$ 1.10 CNH 7.1520 CNY 7.1455 JPY 142.29 GBP 1.2696 CHF 0.8568 RUB 92.1270 TRY 29.20 WTI$ 74.53 +0.87% Gold 2,049 +0.16% BTC 43,835 -0.35% ETH 2,270 +0.96%

S&P -0.16% Nasdaq -0.30% EuroStoxx -0.22% FTSE -0.30% Dax -0.14% SMI -0.12%

Macro :
- EU Commission to Examine Italy’s Tax Case Against Meta: Reuters

Keep an eye on :
- ADS GY : Watch Adidas, Puma After Nike Slumps on Weaker Sales Outlook
- AF FP : Air France Adds Seven Destinations to Summer 2024 Schedule
- ALSN SW : ( Also Buys 3 Companies in Czech Republic, Slovakia; No Terms
- BFIT NA : Basic-Fit to Buy 47 Spanish Clubs of RSG Group
- BSIF LN : Bluefield Solar, GLIL Infrastructure Agree UK Solar Investment
- BHG SS : BHG Makes Structural Changes to Reduce Costs
- CAPMAN FH : Finnish Capman Buys Asset Manager Dasos Capital for €35m
- DLG IM : De’ Longhi Combines Eversys With La Marzocco for $374m (Earlier)
- EPROB SS : Electrolux Professional to Buy Tosei for SEK1.65b
- ENQ LN : EnQuest to Sell 15% in Bressay Field, FPSO to RockRose for £46m
- GET FP : French Transport Minister Says Channel Tunnel Blockage Lifted
- SIGHT FP : GenSight Biologics Names Ex-Sanofi Manager Rodriguez as New CEO
- BAER SW : Julius Baer Probed by Regulator Finma Over Signa Risk Lapses
- LEA NO : Lea Buys Captum Consumer Credit Business From Stena Adactum
- NAS NO : Norway’s Competition Authority Approves Norwegian’s Wideroe Deal
- NXI FP : Nexity Explores Sale Of Residential Property Mgmt Services Ops
- NKE US : Nike Drops After Quarterly Revenue Trails Estimate: Snapshot (1)
- NOVOB DC : FDA Warns Against Counterfeit Ozempic in U.S. Drug Supply Chain
- ORA FP : Ripplewood Makes Offer for Orange Bank Again: Le Figaro
- RI FP : Pernod Ricard to Sell Czech Liqueur Becherovka to Maspex Group
- RWE GY : Vattenfall to Divest Norfolk Offshore Wind Zone to RWE
- RWE GY : German Regulator Prohibits Coal Shutdown Before 2031 (1)
- SFL IM : Eyewear Firm Safilo Ends Licensing Deal With Influencer Ferragni
- SALM NO : Salmar Cuts Expected Harvest Volumes for 2023
- SESL FP : SES-Imagotag Announces €150M Bank Financing, €40M Bond Issue
- SHEL LN : Venezuela Will Issue Trinidad, Shell Natural Gas Export License
- SKAB SS : Skanska Gets Contract Valued at About SEK1.9b in Baltimore
- TEF SM : Telefonica to Spend Up to €2 Billion to Lay Off Spanish Staff
- TTE FP : TotalEnergies Sells 25.5% Stake in Seagreen to Thailand’s PTTEP
- UCG IM : UniCredit, Hines, Prelios to Develop FS’s Areas in Milan
- DG FP : Vinci Mandates Services Provider to Buy Up to €600M of Shares

>>> US After Hours Summary: NKE -9.4% drops on earnings, takes down FL -4.7%, UA

After Hours Summary: NKE -9.4% drops on earnings, takes down FL -4.7%, UAA -4%, DKS -2.6%; RKLB +17.4% on US deal to make 18 space vehicles; AIR -5.4%, AVO -2% lower on earnings
After Hours Gainers:
Companies trading higher in after hours in reaction to earnings/guidance: None
Companies trading higher in after hours in reaction to news: RKLB +17.4% (to manufacture 18 space vehicles for US govt), ALDX +3.3% (ABBV extends period during which it may exercise its option to enter into co-development deal), CPLP +2.5% (acquires 11 Newbuild LNG Carriers for $3.13 bln), MPC +1.6% (names new CFO), TAK +1.3% (China NMPA approves LIVTENCITY for the treatment of CMV), IONS +0.8% (FDA approves Wainua), RYAN +0.4% (to acquire Castel Underwriting Agencies), MPLX +0.1% (names new CFO), MRK +0.1% (MRSN and MRK mutually agree to terminate collaboration and commercial license agreement and supply agreement), BYON +0.1% (increases buyback auth to $150 mln), NVAX +0.1% (R21/Matrix-M malaria vaccine granted prequalification by WHO)
After Hours Losers:
Companies trading lower in after hours in reaction to earnings/guidance: NKE -9.4% (also announces enterprise initiative targeting up to $2 bln in cost savings), AIR -5.4%, AVO -2%, WS -0.2%
Companies trading lower in after hours in reaction to news: FL -4.7% (in sympathy with NKE earnings), UAA -4% (in sympathy with NKE earnings), DKS -2.6% (in sympathy with NKE earnings), SSTK -2.6% (stock offering), ALPN -2.3% (ALPN amends Acazicolcept option and license agreement with ABBV), JAZZ -2.2% (provides update on Phase 2 trial of JZP150), SKX -2.2% (in sympathy with NKE earnings), LULU -1.9% (in sympathy with NKE earnings), X -0.3% (NEA advisor says X transaction deserves serious scrutiny), RTX -0.2% (awarded $408 mln U.S. Air Force contract modification), SSYS -0.2% (adopts limited duration shareholder rights), VTLE -0.1% (acquires additional working interests in recent high-value acquisitions in the Permian Basin)

>>> US Close

Closing Stock Market Summary
The stock market rebounded today following a late-session slide on Wednesday. The Dow Jones Industrial Average rose 0.9%; the S&P 500 climbed 1.0%; the Nasdaq Composite jumped 1.3%; and the Russell 2000 gained 1.7%.

Gains had been less robust throughout most of the session until buying increased over the last 30 minutes of trading, leaving the major indices near their highs of the day.

Today's buying activity was broad-based. The Invesco S&P 500 Equal Weight ETF (RSP) closed with a 1.2% gain and all 11 S&P 500 sectors traded higher.

Advancers had a better than 4-to-1 lead over decliners at the NYSE and a nearly 3-to-1 lead at the Nasdaq.

Semiconductor stocks were noticeably strong, providing a measure of support to the broader market, after better-than-expected results and guidance from Micron (MU 85.48, +6.79, +8.6%). The PHLX Semiconductor Index registered a 2.8% gain.
The upside bias was also supported by a continued inclination to buy on weakness, a batch of economic data that meshed with the soft landing narrative, and a drop in oil prices ($73.89/bbl, -0.35, -0.5%) related to a Reuters report that Angola is leaving OPEC, which may leave OPEC with less control on production levels. WTI crude oil futures had dropped below $73.00/bbl earlier in the session.

The 2-yr note yield fell two basis points to 4.33% and the 10-yr note yield settled one basis point higher at 3.89%.

As a reminder, the November Personal Income and Spending report will be released 8:30 a.m. ET on Friday. This report will feature the Fed's preferred inflation gauge in the form of the core PCE Price Index.
  • Nasdaq Composite: +43.0%
  • S&P 500: +23.6%
  • Russell 2000: +14.5%
  • S&P Midcap 400: +14.3%
  • Dow Jones industrial Average: +12.8%
Reviewing today's economic data:
  • November Leading Economic Index -0.5% (Briefing.com consensus -0.4%) vs downwardly revised -1.0% (from -0.8%) for October
  • Initial jobless claims for the week ending December 16 increased by 2,000 to 205,000 (Briefing.com consensus 218,000) and continuing jobless claims for the week ending December 9 decreased by 1,000 to 1.865 million.
    • The key takeaway from the report is virtually the same as last week, because initial claims were virtually the same in the latest week: the level of initial claims is still a long way from being associated with levels registered during a recession.
  • The third estimate for Q3 real GDP was revised lower, but it was still a heady 4.9% (Briefing.com consensus 5.2%) versus the second estimate of 5.2% and 2.1% in the second quarter. The GDP Price Deflator was revised down to 3.3% (Briefing.com consensus 3.6%) from 3.6% in the second estimate and 1.7% in the second quarter.
    • The key takeaway from the report is that the downward revision largely reflected a downward revision to consumer spending growth to 3.1% from 3.6% in the second estimate.
  • The December Philadelphia Fed Index checked in at -10.5 (Briefing.com consensus -3.0) versus -5.9 for November. A number below 0.0 for this series is indicative of contraction.
    • The key takeaway from this report for a market anticipating a soft landing is that most future activity indicators rose, which points to widespread expectations for overall growth for the next six months.
Friday's economic calendar features:
  • 08:30 ET: November Personal Income (consensus 0.4%; Prior 0.2%)
  • 08:30 ET: November Personal Spending (consensus 0.2%; Prior 0.2%)
  • 08:30 ET: November PCE Price Index ( consensus 0.1%; Prior 0.0%)
  • 08:30 ET: November Core PCE Price Index (consensus 0.2%; Prior 0.2%)
  • 08:30 ET: November Durable Goods Orders (consensus 2.5%; Prior -5.4%)
  • 08:30 ET: November Durable Goods Orders - Ex Transportation (consensus 0.2%; Prior 0.0%)
  • 10:00 ET: November New Home Sales( consensus 689K; Prior 679K)
  • 10:00 ET: December Univ. of Michigan Consumer Sentiment - Final (consensus 69.7; Prior 69.4)

FT : Vattenfall sells North Sea wind developments to RWE in £1bn deal

Vattenfall sells North Sea wind developments to RWE in £1bn deal
UK disposal by Swedish group to German utility highlights divergent views on sector

Vattenfall is selling its flagship UK offshore wind developments to rival RWE in a deal worth almost £1bn that highlights the divergent views on the sector following a troubled year. 

The Swedish state-owned company is disposing of the three ventures off the coast of eastern England, five months after suspending work on the most advanced of them, Norfolk Boreas, blaming rising costs. 

Frankfurt-listed RWE said it would resume work on Norfolk Boreas and expected all of the developments to be producing electricity by the end of the decade. The three are designed to have a total capacity of 4.5 gigawatts, enough to supply millions of homes.

Vattenfall said the £963mn sale meant it would reverse the SKr5.5bn ($537mn) impairment charge it booked this year when it suspended work on Norfolk Boreas. 

This leaves it with 1.1GW of installed offshore and onshore wind farms in the UK. It is also developing a 798-megawatt floating project off the Scottish coast and about 500MW of onshore wind.

Anna Borg, Vattenfall’s chief executive, said both the UK and offshore markets were “attractive over the long term” but Vattenfall would “focus our offshore investments in projects which are appropriate to our current risk appetite”.

The global offshore wind sector has struggled this year due to a surge in costs linked to high interest rates and supply chain strains. Ørsted, the world’s largest offshore wind developer, has walked away from two projects in the US and others are trying to negotiate sales.  

RWE’s decision to beef up its UK portfolio comes after the UK government increased the maximum electricity price available to developers through the “contracts for difference” (CFD) subsidy scheme after developers complained it was too low to offset rising costs.  

RWE said it would now try to secure a CFD from the government in the next auction round in 2024. The contracts guarantee developers a certain price for their electricity, but if the wholesale price is higher than the guaranteed price they have to pay back the difference. 

Writing on LinkedIn, Markus Krebber, RWE chief executive, said: “The recent decisions of the UK government on future offshore wind auctions are a positive sign and give us the confidence to make further significant investments.”

The deal means RWE is now developing 10 offshore wind projects in Britain with a total potential capacity of 11.2GW. These include the Sofia project it is building 195km off England’s north-east coast.

Last week, RWE said it planned to invest €55bn globally between 2024 and 2030, with just over one-third of that going to offshore wind. 

Vattenfall’s North Sea projects are well advanced, with seabed rights, grid connections and planning permission secured. 

The deal comes a day after Denmark’s Ørsted said it would press ahead with developing its 2.9GW Hornsea 3 farm off England’s north-east coast, a decision also helped by the increased support on offer from the government.

Duncan Clark, head of Ørsted’s UK operation, said the wind farm was “strategically very significant for the company; we have had it in our sights for a long time”.

Dan McGrail, chief executive of trade group RenewableUK, said Britain was “regaining its position as the leading market for offshore wind investment”.

>>> US Research Calls

Research Calls
  • Upgrades:
    • Amgen (AMGN) upgraded to Buy from Neutral at Daiwa Securities; tgt raised to $320
    • Annexon (ANNX) upgraded to Buy from Neutral at BofA Securities; tgt raised to $6
    • Extra Space Storage (EXR) upgraded to Equal-Weight from Underweight at Morgan Stanley; tgt raised to $150
    • Glaukos (GKOS) upgraded to Overweight from Neutral at JP Morgan; tgt raised to $91
    • Insulet (PODD) upgraded to Outperform from Neutral at Robert W. Baird; tgt raised to $238
    • JFrog (FROG) upgraded to Overweight from Equal-Weight at Morgan Stanley; tgt raised to $42
    • Merit Medical (MMSI) upgraded to Buy from Hold at Canaccord Genuity; tgt $100
    • Regency Centers (REG) upgraded to Overweight from Equal-Weight at Morgan Stanley; tgt raised to $75
    • Salesforce (CRM) upgraded to Overweight from Equal-Weight at Morgan Stanley; tgt raised to $350
    • Spotify (SPOT) upgraded to Buy from Hold at Pivotal Research Group; tgt raised to $265
    • Urban Edge Properties (UE) upgraded to Equal-Weight from Underweight at Morgan Stanley; tgt raised to $18
  • Downgrades:
    • Eli Lilly (LLY) downgraded to Outperform from Buy at Daiwa Securities; tgt lowered to $610
    • Highwoods Prop (HIW) downgraded to Underweight from Equal-Weight at Morgan Stanley; tgt lowered to $18
    • Nevro (NVRO) downgraded to Hold from Buy at Canaccord Genuity; tgt $23
    • POINT Biopharma (PNT) downgraded to Hold from Buy at Brookline
    • Simon Properties (SPG) downgraded to Equal-Weight from Overweight at Morgan Stanley; tgt raised to $143
  • Others:
    • Catalyst Pharma (CPRX) initiated with an Outperform at Oppenheimer; tgt $30
    • Crinetics Pharmaceuticals (CRNX) initiated with a Hold at Jefferies; tgt $35
    • J. Jill (JILL) initiated with an Outperform at William Blair
    • Myriad Genetics (MYGN) resumed with a Neutral at Piper Sandler; tgt $23
    • Ovid Therapeutics (OVID) initiated with a Buy at BTIG Research; tgt $11
    • Rollins (ROL) initiated with an Equal-Weight at Morgan Stanley; tgt $42