>>> What to look at today - 12th of April 2023

Asian stocks gave up much of their gains as traders weigh the potential for US inflation data due Wednesday to spur volatility across global markets.   A gauge of Asia Pacific equities and US futures were flat, a sign that investors were holding back on taking new positions before the release of a data point seen as crucial for the next Federal Reserve policy decision. Treasury two-year yields remained above 4%, while the dollar held Tuesday’s loss.  US headline inflation is expected to slow, with the core reading forecast to ease both on a monthly and yearly basis. Expect the S&P 500 index to drop at least 2% should the year-over-year inflation rate come in above the previous reading of 6%, Goldman Sachs Group Inc. partner John Flood wrote. Swap contracts are pricing in about three-in-four odds of another quarter-point Fed hike next month. Traders predict US rates will peak around 5%, with policymakers then cutting by at least 50 basis points by year-end. In currency markets, Group-of-10 currencies traded in a tight range against the dollar, while the yen fell into a fifth day. China’s 10-year bond yields fell to the lowest since November on expectations of more monetary easing. Japanese stocks led gains in Asia, with sentiment boosted by Warren Buffett saying that he’s mulling buying more equities in the country.  The International Monetary Fund said in a report Tuesday it’s too soon to sound the all-clear from the turmoil that’s shaken the financial system, saying the banking breakdowns will likely be a drag on global economic growth. US banks on Friday will kick off what’s forecast to be the worst earnings season since the depths of the pandemic. Bitcoin dipped, after climbing above $30,000 on Tuesday for the first time in 10 months. Oil steadied as traders tracked supply constraints and gold edged higher. US After Hours Quiet after hours session; GTLS +4.1% higher on strong Q1 demand; PG flat after increasing dividend.

Nikkei +0,55% Hang Seng -0,67% CSI +0,05% Shanghai +0,42% Shenzen +0,31%

Eur$ 1,0928 CNH 6,8933 CNY 6,8872 JPY 133,77 GBP 1,2438 CHF 0,9026 RUB 81,8068 TRY 19,3030 WTI$ 81,56 Gold 2,019 +0,75% BTC 29,959 -0,70% ETH 1,869

S&P +0,07% Nasdaq +0,02% EuroStoxx -0,12% FTSE -0,04% Dax +0,06% SMI +0,24%

Macro :
- IMF Warns It’s Too Soon to Sound All-Clear on Financial Turmoil
- Meloni Unveils Italy 2023 Budget With Touch of Extra Stimulus

Keep an eye on :
- CA FP : Carrefour Brasil Agrees to Cut Grupo Big Purchase by Up To BRL1b
- CLNX SM : Cellnex to Name External CEO Within Weeks, JPMorgan Says
- DBK GY : Ex-Deutsche Bank Investment Banker Charged With Crypto Fraud
- EDF FP : EDF Nuclear Output Must Exceed 350 TWh in Medium Term: Minister
- EDP PL : EDP Adjusts EDP Brasil Offer Price to Reflect Dividend Payment
- EMR US : Emerson Electric Said to Near Deal for National Instruments
- ENX FP : Euronext March Total Cash Market Transaction Value M/M +23%
- EVN NA : EVN Supervisory Board Chair Glatz-Kremsner Resigns
- FLTR LN : Flutter Holder Fastball Offers About 2.2m Shares: Terms
- GTT FP : GTT Gets Order From Hyundai Samho for Tank Design of 2 LNGCs
- IOM LN : iomart Sees Earnings in Line With Market Expectations
- LKOH RM : Italy Backs Sale of Lukoil Refinery to GOI Energy: Officials
- NAVAL Group : France’s Naval Group Eyes Submarine Contract in Netherlands
- OMV AV : OMV 1Q Refining Margin Beats Estimates
- PLT NO : PoLight Sets Rights Subscription Price; Now Fully Underwritten
- REP SM : Repsol 1Q Downstream Refining Margin/BBL $15.60 Vs. $6.80 Y/y
- SAABB SS : Saab, Embraer Sign MOU for Business & Engineering Opportunities
- SGO FP : Saint-Gobain Says Inflation Peak Has Passed, CEO Says on Radio
- SAS SS : SAS Will Probably Delist Later This Year, Berlingske Says
- SCR FP : Scor Sees FY23 Solvency Ratio in 185%-220% Range Under IFRS 17
- STMPA FP : Silicon Nears Limits, May Be Replaced by Silicon Carbide for EVs
- UBSG SW : Swiss Lower House Votes Against Government’s UBS Deal Guarantees
- UBXN SW : u-blox 1Q Revenue CHF166M
- UMG NA : Universal Music Told Streaming Cos. to Block AI Services: FT
- URW NA : It's Getting Ugly for European REITs as Interest Rates Near Peak
- VIV FP : Vivendi Pressuring Telecom Italia on Top Management Pay
- VOLVB SS : Volvo Prelim 1Q Net Sales Beats Estimates
- ROSE SW : Zur Rose Seeks to Create Capital Band, New Conditional Capital

>>> Europe : Brokers Upgrades & Downgrades - 12th of April 2023

>>> Up
* Aker BP Raised to Buy at Jefferies; PT 315 kroner
* Archer Raised to Buy at DNB Markets; PT 1.50 kroner
* Castellum Raised to Buy at Handelsbanken
* Dios Raised to Buy at Handelsbanken
* Entra Raised to Hold at Handelsbanken
* Equinor Raised to Add at AlphaValue/Baader
* Fastighets AB Trianon Raised to Hold at Handelsbanken
* John Mattson Raised to Hold at Handelsbanken
* Lazard Raised to Equal-Weight at Morgan Stanley; PT $36
* NP3 Fastigheter Raised to Hold at Handelsbanken
* Outokumpu Raised to Buy at SEB Equities; PT 5.70 euros
* Raytheon Technologies Raised to Outperform at Wolfe; PT $117
* SOITEC PT Raised to 245 euros from 219 euros at Credit Suisse
* Thule Raised to Hold at Handelsbanken
* Topdanmark Raised to Buy at SEB Equities; PT 430 kroner
* Wihlborgs Raised to Buy at Handelsbanken

>>> Down
* Bombardier Cut to Peerperform at Wolfe
* Energean Cut to Hold at Jefferies; PT 1,460 pence
* EnQuest Cut to Hold at Jefferies; PT 20 pence
* L'Oreal Cut to Hold at Deutsche Bank; PT 410 euros
* Tullow Cut to Underperform at Jefferies; PT 25 pence

>>> Initiation
* Know IT Rated New Buy at Nordea; PT 263 kronor
* Link Mobility Group Holding Rated New Buy at Arctic Securities
* Meyer Burger Rated New Buy at Stifel; PT 0.75 Swiss francs
* *OCADO INITIATED NEUTRAL AT GOLDMAN SACHS, PT 600P
* Serica Reinstated Buy at Jefferies; PT 340 pence
* Smartoptics Group Rated New Buy at ABG; PT 37 kroner

>>> Call
* Aker BP Raised, Tullow and Three Other Oil Stocks Cut: Jefferies
* Grifols Upgraded as MS Sees Low Threshold for Outperformance
* Fertilizer Maker Price Targets Cut at MS on Lower Price Forecast

FT : Europe’s cosmic dreams have a billionaire problem

Europe’s cosmic dreams have a billionaire problem
Old world, meet final frontier

Virgin Orbit’s Chapter 11 bankruptcy filing brought European ambitions for local space launch services back down to Earth, with a bang.

Despite great fanfare for the first rocket launch on British soil — subsidised by the UK government — the Richard Branson-founded startup failed to achieve its goal of reaching its required orbit, setting in motion a full shutdown of the business.

Sure, rocket failures are an inevitable part of a highly-risky, capital intensive industry surrounded by technical and business model unknowns. But if rival billionaire-backed space ventures SpaceX and Blue Origin have persisted despite such snags, why hasn’t Virgin Orbit?

But arguably, it was not Virgin Orbit’s failed launch in January that caused it to now cease operations — its days were numbered a long time before that. The executive team began putting nails in its coffin on December 30th, 2021 — the very day it went public via SPAC.

The problem with innovating in the public markets is simple: you can’t. And there’s a really good reason Elon Musk and Jeff Bezos, the two remaining billionaires in Space Club, don’t. Long-term, high-risk innovation in an extremely capital-intensive industry cannot be sustained by financing that is at the whims of retail investors looking for a short-term win.

Just recently, ESA’s High Level Advisory Group released its first report, which outlined the necessity for Europe to become a leader in rocket launching and human spaceflight. Neither capability looks technically feasible in the next decade. But if Europe is serious about its bold ambition of unlocking “Sovereignty in Space”, how does it plan to actually do this?

Much of the US space strategy relies on the private sector, financed by private markets, to spur rapid innovation. The well-documented rivalry between Musk and Bezos may well be the first and only time that a pissing contest has worked in the favour of US national security and defence.

While Musk, worth around $175 billion, has managed to finance SpaceX’s trajectory with venture and other private market debt financing, Bezos, worth around $125 billion, has managed to maintain full control of Blue Origin by not bringing in any external shareholders.

Branson, on the other hand, is the extremely (relatively) poor British cousin, worth only $3bn, a mirror of the UK’s falling global relevance. As such, the European equivalent of private capital innovation has, out of necessity, recently relied on the public markets via SPACs for much-needed liquidity.

The narrative that European billionaires are starting to take an interest in creating novel space or defence technology, whether for a return on investment like Musk or philanthropically like Bezos, is often misguided.

Most European wealth is not generated by large exits in tech industries, and therefore most European wealth does not seek to diversify into such high-risk endeavours. To date, Branson, Daniel Ek of Spotify and Niklas Zennström of Skype are the best known European billionaires in the deep tech startup world, but their net worths are between $1–3bn each — they won’t be financing an entire space sector any time soon.

The world’s richest person, Bernard Arnault (worth about $200bn), does indeed belong to Europe. However, there’s little indication that LVMH’s handbags-and-gladrags mogul aspires to become the next modern defence industrialist. Indeed, his failed attempt to bring private companies to the public markets via Europe’s largest SPAC has no doubt left a further scar.

And so Europe and the UK continue their decades-long struggle to manifest a space industry, in an economy that does not have the right billionaires. Unlike US counterparts which seek to create wealth, European family offices seek merely to preserve it.

More than twenty years after being founded, and despite being a top national security asset, SpaceX has still not shown that its launch services are anything but loss-seeking, heavily subsidised by venture capitalists in a zero-interest rate environment. NASA and the US Department of Defense’s partnership with the private sector is heavily de-risked by the robustness of private market capital flows and the desire of such VCs to invest, decade after decade, in The New Thing.

Europe doesn’t have that luxury. The risk for governments to create substantial infrastructure to enable private sector space companies, such as in the UK for Virgin Orbit’s Cornwall launchpad, is high. The closest thing to rocket launchers that European VCs invested in were scooters, much to the derision of the Parisians who have just banned them.

So what mechanisms are left to fund Europe’s goals of strategic autonomy? Could it be the government?

Potentially. But from which budget? Unlike the US, there is no mandate, neither intellectually nor from a single budget perspective along the lines of “European National Security and Defense”. As I was told by a member of the European Space Policy Institute’s Advisory Council recently, “The problem with national security is: whose national security? Because in Europe, we don’t even share a common enemy, let alone a shared strategy of how to defend ourselves against them.”

In Europe, the D(efence)-word is dirty. But if not for defence, then why build such high-risk, expensive infrastructure in the first place?

Which then leaves venture capital, private equity or billionaires.

NASA’s greatest innovation by far was not the Space Shuttle; instead, it was the mechanisms it created to unlock creative public-private partnerships and to engage the private markets. If the European Space Agency cannot afford to be bold in how it finances its ambitions, it’s time for it to be bold in how it engages with creating credible alternative solutions.

Failing that, Mr Arnault — how do you fancy a trip to the Moon?

WWD : Michael Jordan’s 1998 NBA Finals Game 2 Air Jordan 13s Break Auction Recor

Michael Jordan’s 1998 NBA Finals Game 2 Air Jordan 13s Break Auction Record
Sotheby’s auctioned off the coveted sneakers for a record-breaking $2.2 million.

Sotheby’s has broken an auction world record with its latest sports memorabilia sale.

The auction house said Tuesday it sold the Michael Jordan 1998 NBA Finals Game 2 Air Jordan 13s for $2.2 million at auction, making them the highest publicly recorded price for a pair of sneakers. The sneakers’ price fell within the $2 million to $4 million estimate Sotheby’s originally placed on the item.

“Today’s record-breaking result further proves that the demand for Michael Jordan sports memorabilia continues to outperform and transcend all expectations,” said Brahm Wachter, Sotheby’s head of streetwear and modern collectibles. “Sotheby’s is extremely proud to hold the world record for most valuable game-worn sports memorabilia at auction and the most valuable sneakers ever sold, both of which — to no surprise — are directly tied to the global icon, Michael Jordan.”

The sneakers are from Jordan’s famed “The Last Dance” season, which was the athlete’s final season with the Chicago Bulls where the team earned its sixth NBA Championship of that decade.

Jordan’s Air Jordan 13s, known as “bred” as a shorthand synonym for “black and red,” is a style the NBA star wore consistently throughout his basketball career. According to Sotheby’s, the NBA would reportedly fine Jordan $5,000 per game when he wore the sneakers because the colors violated the league’s uniform code.

The sneakers, which were part of Sotheby’s Victoriam two-part online auction, follow the sale of Jordan’s 1998 NBA Finals Game 1 jersey auction last September, where the item broke records and sold for $10.1 million, making it the most valuable basketball jersey sold at auction.

The auction comes as Air Jordan and the basketball star have gotten a new wave of interest thanks to the new film “Air,” which chronicles the inception of the Air Jordan brand at the beginning of Jordan’s NBA career.

WSJ : California Could Face Cuts to Colorado River Usage Under Federal Proposal

California Could Face Cuts to Colorado River Usage Under Federal Proposal
If it fails to reach an agreement with other states, California could lose protections for current water access

California would have to reduce its use of Colorado River water more than current agreements require under a proposal the Interior Department unveiled Tuesday that could upend a longstanding system of water rights.

The federal agency proposed two methods by which water usage could be reduced as much as 25% next year. The seven states that tap the Colorado have been negotiating with each other since August to make voluntary cuts that could offset any new mandatory ones.

One proposal calls for equal percentage cuts for the three states at the bottom of the river: California, Arizona and Nevada. That would upend current agreements that give water districts in California more senior rights. The cuts would take effect in 2024.

The Bureau of Reclamation, part of the Interior Department, warned in August it would impose large cuts if the states that rely on the river didn’t come up with a satisfactory plan by Jan. 31. Six of the seven states—Arizona, Colorado, New Mexico, Nevada, Utah and Wyoming—in January submitted a possible framework for an agreement that would call for voluntary cuts and conservation totaling between 2 million acre-feet and 4 million acre-feet annually.

California officials said then that the other states’ approach would make the state bear an unfair share of the cuts and submitted their own proposal. It would more closely follow established agreements, calling for other states including Arizona to take larger cuts, along with more voluntary conservation.

The new federal proposal could spur California water officials to reach an agreement with the other states, said Gary Wockner, executive director of Save the Colorado, an environmental group.

“It adds legal pressure to the negotiations,” he said. “The federal government has never stepped in and said, ‘You have to cut water use, and here are the choices.’”

The other Interior Department proposal calls for making cuts based on existing water rights arrangements.

Interior officials said savings of as much as two million acre-feet of water could be needed next year to maintain hydropower operations at the river’s two largest reservoirs, Lake Mead and Lake Powell, as well as adequate water deliveries to 40 million people. An acre-foot is roughly the amount of water used by one family for a year.

The action comes after an unusually wet winter in the West. Interior Department Deputy Secretary Tommy Beaudreau said a series of rainstorms over the past several months hasn’t changed the Colorado’s longstanding challenges amid a drier climate.

“Everyone who lives and works in the basin knows one good year will not save us from two decades of drought,” he said, pointing out the rings on Lake Mead, which is 28% full.

Under federal rules issued last year, Arizona has to cut 21% of its Colorado River use while Nevada has to cut 8%. Due to its more senior rights, California hasn’t been ordered to cut anything, although water agencies in the state say they have been conserving a great deal.

Water officials in California’s Imperial County, a large user of the Colorado River for farming, and Arizona issued statements Tuesday saying they hoped the states could reach their own agreement.

FT : European aviation industry warns of €‎800bn bill to reach net zero

European aviation industry warns of €‎800bn bill to reach net zero
Estimated cost of hitting target by 2050 comes as sector steps up lobbying for green incentives

European aviation faces more than €‎800bn in extra costs to reach net zero emissions by 2050, according to industry estimates that highlight the challenge facing the sector as it decarbonises.

The industry has committed to hitting net zero carbon emissions through a mix of new technologies, notably alternative fuels, as well as carbon offsets and more efficient aircraft, engines and air traffic management. 

Reaching net zero would need “considerable additional efforts compared to business as usual”, and would cost €820bn over a 32-year period from 2018 to 2050, according to a report commissioned by airline industry bodies.

By far the biggest expense would be €441bn spent on cleaner fuels, which are not made from fossil fuels but from feedstocks such as animal fat, cooking oil or household waste, the report said.

These “sustainable aviation fuels” can reduce the total emissions from a flight by about 70 per cent, but are more expensive than jet fuel and are only produced in extremely limited quantities.

The report by research groups SEO Amsterdam Economics and the Royal Netherlands Aerospace Centre was commissioned by a group of aviation lobby groups including Airlines for Europe (A4E) and airport trade body ACI Europe.

It warned that aviation companies including airlines and airports would be unable to fund the climate transition alone, partly because the industry has struggled to be consistently profitable in the past.

“Since [profits] are historically low due to high levels of competition and compounded by recent crises, the absorption capacity by the sector, in particular that of European airlines and hubs is expected to be low,” the report said. 

The industry has called for significant new support from European policymakers, including classifying newer and more efficient aircraft powered by conventional jet fuel as a green investment under EU rules for sustainable finance, to help attract private capital. 

Environmental groups have said this would amount to “a huge act of greenwashing” as it would effectively classify highly polluting planes as sustainable. 

“The report illustrates that Europe will need a stable and predictable investment environment and a consistent policy framework to ensure that European aviation can access the necessary capital,” said A4E.

A separate analysis from S&P Global, a rating agency, this month found that planes “currently have no cost-effective alternative to fossil fuels”.

It added that environmental regulations, including EU taxes on carbon emissions, could “incentivise innovation”, but added that investment in low-carbon and no-carbon power sources “is costly and thus risky, especially given the long investment lead times”.

>>> US After Hours Summary: Quiet after hours session; GTLS +4.1% higher on strong Q1 demand; PG flat after increasing dividend


After Hours Summary: Quiet after hours session; GTLS +4.1% higher on strong Q1 demand; PG flat after increasing dividend

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: SKIL +0.2%

Companies trading higher in after hours in reaction to news: NUTX +8.8% (enters into $100 mln prepaid advance agreement with Yorkville Advisors), GTLS +4.1% (experienced strong Q1 demand including $740 mln in orders), CLPT +1.9% (expands license and research agreement with Philips), BMY +0.1% (releases estimated Q1 impact of acquired IPR&D and licensing income)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: None

Companies trading lower in after hours in reaction to news: IFRX -1% (commences stock offering), LLY -0.1% (Q1 results to include acquired IPR&D charges of $105 mln), AVA -0.1% (signs deal to purchase renewable natural gas)

>>> US Close Dow +0,29% S&P +o,00% Nasdaq -0,43-%

Closing Stock Market Summary

The stock market held up okay today on relatively light volume, again showing resilience to selling efforts ahead of tomorrow's Consumer Price Index report for March and the release of the minutes for the March 21-22 FOMC meeting. Relative weakness from some mega cap names limited index level performance, leading the Nasdaq to lag its peers. The Russell 2000 (+0.8%), however, was able to maintain its performance edge over other major indices. 

Some of the mega cap stocks were able to climb off their session lows as the broader market settled into a steady grind higher in the afternoon. The main indices took a sharp turn lower, though, with about 30 minutes left in the session as names like Microsoft (MSFT 282.83, -6.56, -2.3%), Apple (AAPL 160.80, -1.23, -0.8%), and NVIDIA (NVDA 271.69, -4.10, -1.5%) retested early session lows. 

The Vanguard Mega Cap Growth ETF (MGK) logged a 0.6% decline while the Invesco S&P 500 Equal Weight ETF (RSP) gained 0.7%, reflecting underlying strength in the market. In turn, advancers led decliners by a nearly 3-to-1 margin at the NYSE and a 5-to-3 margin at the Nasdaq. 

Nine of the 11 S&P 500 sectors closed with a gain led by the cyclical energy (+0.9%), financial (+0.9%), materials (+0.7%), and industrial (+0.6%) sectors. Losses from their respective mega cap components drove the information technology (-1.0%), communication services (-0.4%), and consumer discretionary (flat) sectors to the bottom of the pack.

On a individual basis, Coinbase Global (COIN 70.19, +4.06, +6.1%) made an outsized move today after Bitcoin reached $30,000, Moderna (MRNA 155.25, -4.90, -3.1%) dropped 3.1% following its acknowledgment that its influenza vaccine candidate did not accrue sufficient cases at the interim efficacy analysis to declare early success, and CarMax (KMX 72.21, +6.35, +9.6%) logged a nearly 10% gain after its better than expected fiscal Q4 earnings results.

Treasury yields settled somewhat higher in front of tomorrow's inflation data. The 2-yr note yield rose five basis points to 4.05% and the 10-yr note yield rose two basis points to 3.43%.

  • Nasdaq Composite: +15.0% YTD
  • S&P 500: +7.0% YTD
  • S&P Midcap 400: +2.8% YTD
  • Dow Jones Industrial Average: +1.6% YTD
  • Russell 2000: +1.4% YTD

Today's economic data was limited to the NFIB Small Business Optimism Survey at 6:00 ET, which fell to 90.1 in March from 90.9 in February.

Looking ahead to Wednesday, market participants will be keenly focused on the March Consumer Price Index report (consensus +0.3%; prior +0.4%) and core Consumer Price Index (consensus +0.4%; prior +0.5%) at 8:30 a.m. ET. Other data releases tomorrow include:

  • 7:00 ET: Weekly MBA Mortgage Index (prior -4.1%) 
  • 10:30 ET: Weekly crude oil inventories (prior -3.74 mln)
  • 14:00 ET: March Treasury Budget (consensus -$253.00 bln; prior -$262.40 bln)