>>> Europe : Brokers Upgrades & Downgrades - 20th of January 202

>>> Up
* 3i Infra Raised to Buy at Jefferies
* Cellavision Raised to Buy at Pareto Securities; PT 260 kronor
* Credito Emiliano Raised to Buy at Deutsche Bank; PT 9.30 euros
* Flutter PT Raised to 17,210 pence from 15,370 pence at Goodbody
* Lufthansa Raised to Outperform at Oddo BHF; PT 10.50 euros
* PVH Raised to Overweight at Barclays
* Ralph Lauren Raised to Overweight at Barclays

>>> Down
* Continental Cut to Hold at Jefferies; PT 70 euros
* Credit Suisse Cut to Underperform at Oddo BHF
* Europris Cut to Hold at Nordea
* FinecoBank Cut to Hold at Deutsche Bank; PT 17.60 euros
* Geberit Cut to Sell at Deutsche Bank; PT 430 Swiss francs
* Harbour Energy Cut to Hold at Peel Hunt; PT 325 pence
* Hargreaves Lansdown Cut to Underperform at Jefferies
* Michelin Cut to Sector Perform at RBC; PT 28 euros
* Sabadell Cut to Underperform at Oddo BHF; PT 1.05 euros
* Sinch Cut to Neutral at JPMorgan; PT 55 kronor
* Virgin Money UK Cut to Hold at Deutsche Bank; PT 220 pence
* Vitesco Cut to Hold at Jefferies; PT 58 euros
* Wizz Air Cut to Neutral at Oddo BHF; PT 3,140 pence

>>> Initiation
* SIG Group Rated New Buy at Berenberg; PT 28 Swiss francs

>>> Call
* Auto Supplier Cost Inflation Risk Sees 3 Downgrades by Jefferies
* Citi’s Buckland Says US Stocks More Vulnerable to Fund Outflows
* Ericsson Sees ‘Uncertainties’ After Earnings Miss Estimates
* Hargreaves Lansdown Cut at Jefferies on Customer Growth Concerns
* Orsted’s ‘Low Ball’ Guidance is Below Expectations: Street Wrap
* RBC Prefers Trucks and Ferrari in 2023, Downgrades Michelin
* SIG Benefits From Position, Scholle Deal, Berenberg Rates Buy

>>> What to look at today - 20th of January 2023

Asian stocks shook off worries from rising interest rates and economic risks to advance on Friday before Lunar New Year holidays interrupt trading across many markets in the region next week. Hong Kong equities led gains and shares in Japan reversed small initial losses. Futures for US stocks rose after the selloff on Wall Street showed some signs of easing Thursday, when the S&P 500 fell for a third day. Commodities and Asian equities have overcome some of the bearish news this week out of the US as traders bet on China’s economic revival. JPMorgan Chase & Co. raised its estimate for the nation’s oil demand growth and said it’s reopening sooner and more rapidly than the bank originally expected. Bitcoin trimmed its advance after cryptocurrency lender Genesis Global Holdco filed for bankruptcy. Treasuries fell slightly with the 10-year yield climbing two basis points to take the edge off a drop in the rate earlier in the week. Japan’s benchmark 10-year yield fell half a basis point to 0.4% versus the central bank’s 0.5% ceiling, while bond futures rallied. Australian 10-year yields were up eight basis points.  Japan’s benchmark 10-year yield fell half a basis point to 0.4% versus the central bank’s 0.5% ceiling, while bond futures rallied. Australian 10-year yields were up eight basis points.  A gauge of dollar strength edged slightly higher on the day and the week.  Oil headed for a second weekly gain as optimism over stronger Chinese demand overshadowed a weaker outlook in other major economies.  Copper was poised for a fifth weekly increase, its best run since May 2021, with global supply risks persisting and inventories near historic lows. Gold steadied in Asia after jumping to an eight-month high in the previous session. US After Hours ATRO +13.1% on Q4 guidance, NFLX +7.2%, PPG +2.9% on earnings, COST +1.3% on reauthorized repurchase program; JWN -6.3% on FY22 guidance, TMUS -1.8% after noting a data breach could lead to significant expenses

Nikkei +0.65% Shenzen +0.70% Shanghai +0.59% CSI +1.61% Hang Seng +0.56%

Eur$ 1.0830 CNH 6.7798 CNY 6.7805 JPY 129.11 GBP 1.2371 CHF 0.9167 RUB 68.9992 TRY 18.7966 WTI$ 80.50 +0.10% ETH 1,547 +0.17% BTC 20,975 -0.27% Gold 1,927 +0.21%

S&P SMI +0.43% Dax +0.47% FTSE +0.44% EuroStoxx +0.43% Nasdaq +0.24%+0.13%

Macro :
- Citi’s Buckland Says US Stocks More Vulnerable to Fund Outflows

Keep an eye on :
- AGS BB : BE Group Said to Make Fresh Takeover Approach for Insurer Ageas
- AUTN SW : Autoneum FY Sales Misses Estimates, Sees FY Result at Lower End
- AZA SS : Avanza 4Q Operating Income Beats Estimates
- BMPS IM : Banca Monte Dei Paschi Chairman Grieco to Leave Role
- BOO LN : Boohoo Slashes Inventory by 27%, 100 Jobs to Likely Be Cut: FT
- CSGN SW : Credit Suisse Sees ‘Focused’ Acquisitions as Option: Finews
- DPW GY : German Union Calls Postal Staff to Strike as Wage Talks Flounder
- ERICB SS : Ericsson 4Q Adjusted Ebit Misses Estimates
- HOLN SW : Holcim Eyes Acquisition Drive to Push Beyond Cement, CEO Says
- HUBN SW : Huber+Suhner FY Revenue Beats Estimates
- INTC US : Intel CEO Says Italy Still a Candidate for €3b Plant: Corriere
- ORP FP : Orpea Talks With CDC, Creditors to Restructure Debt Fall Apart
- ORSTED DC : Orsted Prelim FY Ebitda Meets Estimates
- RNO FP : Nissan, Renault Announcement May Come as Soon as Feb. 1: Reuters
- ROG SW : Genentech Gets Accelerated FDA Approval for Lunsumio
- SPM IM : Saipem Gets Two Offshore Contracts for About $900m Total Amount
- BUMP LN : Seraphine to Be Taken Private by Mayfair at 30p/Share: Sky
- SFSN SW : SFS Prelim. 2022 Gross Sales Rise 45.1% to CHF2.75B
- ENR GY : Siemens Energy Cuts 2023 Outlook to Net loss on 2022 Level
- SWEDA SS : Swedbank Seen Facing Significantly Lower US AML Fine Than Danske
- UBSG SW : UBS Plans to Hire Dealmakers From Boutique Banks: FT

>>> US After Hours Summary: ATRO +13.1% on Q4 guidance, NFLX +7.2%, PPG +2.9% on

After Hours Summary: ATRO +13.1% on Q4 guidance, NFLX +7.2%, PPG +2.9% on earnings, COST +1.3% on reauthorized repurchase program; JWN -6.3% on FY22 guidance, TMUS -1.8% after noting a data breach could lead to significant expenses

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: ATRO +13.1% (Q4 guidance), NFLX +7.2%, PPG +2.9%, OZK +0.6%

Companies trading higher in after hours in reaction to news: CMPX +4.5% (announces Phase 2 data of CTX-009 to be presented), FTK +2.2% (appoints interim CEO and Chairman upon current CEO and Chairman's departure), COST +1.3% (reauthorizes repurchase program), MGNI +1.1% (reducing workforce by 6%), EOSE +0.7% (investors pour $13.75 mln into convertible senior notes), SAVE +0.1% (selling 29 aircraft)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: JWN -6.3% (FY22 guidance), CNXC -4.9%

Companies trading lower in after hours in reaction to news: TMUS -1.8% (continuing investigation on data breach), PTRA -1.1% (concentrating manufacturing at SC facilities), SPT -0.3% (acquires Respustate), MRTX -0.3% (announces IND clearance by FDA), OPNT -0.2% (announces FDA acceptance of NDA for OPNT003)

FT : Space funding plunges 58% from record year as investors shun risk

Space funding plunges 58% from record year as investors shun risk
Many put off by ‘disappointing’ performance of companies that were highly valued during 2021 space boom

Investors retreated from the space economy last year with private investment tumbling 58 per cent after a record 2021, according to Space Capital, an early stage venture capital provider. 

Last year was “the most difficult investment year since the great recession 15 years ago”, according to Chad Anderson, managing partner at Space Capital, which on Thursday produced its quarterly assessment of the sector.

Anderson said there was little immediate prospect of recovery. “Overall, we expect the macro market will continue to disproportionately affect funding for these capital-intensive companies for the foreseeable future,” he told the Financial Times.

Since 2013 some $272.3bn has been invested in the space sector by private investors, with 2021 logging a record $47.4bn. However, last year just $20.1bn was invested in 420 rounds, the lowest volume since 2015, according to Space Capital. SpaceX was the outlier, the report noted, raising $2bn in 2022, its second highest annual fundraising after a $2.6bn call in 2020.

But investors are wary of betting on growth momentum elsewhere in the sector, as the global economy struggles with rising inflation and the threat of recession.

“They are now paying more attention to the fundamentals of their investments, and not just looking at growth,” said Thomas Coudry, analyst at Bryan Garnier. “Profitability now means something again.”

Anderson said many investors had been put off the sector by the performance of companies that had been highly valued at the peak of the space boom in 2021. Several space companies, such as Virgin Galactic, Astra and Spire, went public between 2019 and 2021 via special purpose acquisition companies, or Spacs. They are now trading substantially below their opening prices.

“Impossibly optimistic projections fuelled by hype were funded by investors who did little, if any, diligence in a white hot market,” he said. “The disappointing performance of many Spac companies, like Virgin Galactic, has caused many investors to view space as a higher risk asset class, in line with other speculative technology fields like cryptocurrency and the metaverse.”

This was an inaccurate view of a sector that provided crucial data and connectivity to industry and government, he said. 

“Government spending . . . will be even more vital to companies this year amid a choppy economy,” he said. Space was one of the fastest growing areas of spending at the Department of Defense, and the 2023 Space Force budget of $26bn was now larger than Nasa’s at $25bn.

Chinese investors also continued to show strong interest in space infrastructure such as satellites and launch systems. China now accounted for 8 per cent of global infrastructure investment, which last year scored $6.3bn in funding — the third highest on record. “China’s latest focus, Satcom, is expected to further accelerate investments,” Space Capital said.

FT : Anglo-US group completes test flight of propeller aircraft powered by hydro

Anglo-US group completes test flight of propeller aircraft powered by hydrogen
Start-up ZeroAvia hails flight as major breakthrough for industry

An Anglo-US start-up has successfully completed a test flight of a propeller aircraft partially powered by hydrogen fuel cells in what it hailed as a major breakthrough for the industry.

The 10-minute flight by ZeroAvia took place in Gloucestershire on Thursday using a modified 19-seat Dornier 228 propeller plane.

It was the largest aircraft powered by a hydrogen-electric engine, according to the start-up.

Val Miftakhov, who founded ZeroAvia in 2017, described the test flight as a “historic day for sustainable aviation”, promising that the technology would be in “commercial use in just a couple of short years”. 

The aerospace industry is working on a number of different technologies, from “sustainable aviation fuels” to electric batteries and hydrogen.

Flying is one of the most difficult industries to decarbonise. Before the pandemic led to the grounding of much of the world’s aircraft, aviation accounted for roughly 2.4 per cent of global emissions.

While differences remain about the speed at which the industry can make hydrogen propeller flight a reality, there is a growing consensus that it will have a role to play in powering short to medium-haul aircraft.

Since it was launched ZeroAvia has pulled in about $150mn in backing from a range of high-profile investors including Bill Gates and Jeff Bezos, and agreed partnerships with the likes of British Airways, United Airlines and Shell, which is supplying it with the hydrogen.

Two-thirds of ZeroAvia’s 150 staff are in the UK, although the business is based in California.

The company plans to install its engines on existing airframes to simplify getting regulatory approval and reduce the time to market.

It has already conducted a number of test flights on smaller propeller planes. It hopes to have a 9-19 seat turboprop ready for commercial flights by 2025, with a 40-80 seat aircraft entering service by 2027.

For the test flight, the company retrofitted the Dornier aircraft with a full-sized prototype hydrogen-electric engine on the left wing.

The tanks storing the hydrogen and fuel cell power generation systems were housed inside the cabin of the aircraft.

Miftakhov said the company had already received 1,500 pre-orders for its engines, including 600-700 for the size tested during Thursday’s flight.

The company will announce its launch operators shortly. It will need to raise additional funds to support full-scale commercialisation of its engines.

Thursday’s flight was partially funded by the UK government’s HyFlyer II project backed by the Aerospace Technology Institute, which allocates state funding for innovation in the sector.

Grant Shapps, UK business secretary, hailed the flight as a “hugely exciting vision of the future — guilt-free flying and a big step forward for zero-emission air travel”.

>>> US Close Dow -0.76% S&P -0.76% Nasdaq -0.96% Russell -0.97%

Closing Stock Market Summary

The stock market retreat continued today, building on Wednesday's sizable losses. Today's negative bias was fueled by lingering growth and rate hike concerns following a slate of economic data this morning. 

Weekly initial claims (actual 190,000; consensus 212,000) decreased to their lowest level since late September, implying no new difficulties in the labor market that could put a quick stop to the Fed's hiking cycle.

At the same time, investors received weak building permits data for December (actual 1.330 mln; consensus 1.370 mln), highlighting the deteriorating economic backdrop and rising risk of a policy mistake triggering a deeper setback. However, that report contained one positive element, as single-family starts grew 11.3% month-over-month.

Piling onto the market's concerns, JPMorgan Chase CEO Jamie Dimon said in a CNBC interview this morning "I think there's a lot of underlying inflation, which won't go away so quick," adding that he thinks rates will top 5.0%.

In addition to the aforementioned growth and rate hike worries, there may have been an element of profit taking behind the recent weakness after a big run to start 2023. Including today's losses, the S&P 500 and Nasdaq Composite are still up 1.6% and 3.7%, respectively, this year.

The main indices were pinned in negative territory for the entire session, but there was a recovery attempt in the afternoon trade that seemed to coincide with Fed Vice Chair Brainard giving a speech. Ms. Brainard's remarks did not include anything surprising. She said "Even with the recent moderation, inflation remains high, and policy will need to be sufficiently restrictive for some time to make sure inflation returns to 2 percent on a sustained basis."

The recovery attempt didn't last, however, and the main indices faded from session highs ahead of the closing bell.

Most of the S&P 500 sectors traded down with the industrial (-2.1%) sector showing the steepest loss. Other influential laggards included the consumer discretionary (-1.7%), financial (-1.2%), and information technology (-1.1%) sectors. 

The energy sector (+1.1%) led the outperformers amid rising oil prices. WTI crude oil futures rose 1.5% to $80.73/bbl.

Treasury yields made relatively small upside moves today. The 2-yr note yield rose three basis points to 4.12% and the 10-yr note yield rose two basis points to 3.40%.

In an expected development, Treasury Secretary Yellen notified Congress via a letter that the debt ceiling has been reached, prompting the Treasury Department to begin employing extraordinary measures.

  • Russell 2000: +4.3% YTD
  • Nasdaq Composite: +3.7% YTD
  • S&P Midcap 400: +3.6% YTD
  • S&P 500: +1.6% YTD
  • Dow Jones Industrial Average: -0.3% YTD

Reviewing today's economic data:

  • Initial jobless claims for the week ending January 14 decreased by 15,000 to 190,000 ( consensus 212,000). Continuing jobless claims for the week ending January 7 increased by 17,000 to 1.647 million.
    • The key takeaway from the report is that new claims were at their lowest level since late September, implying no new difficulties in the labor market that could put a quick stop to the Fed's hiking cycle.
  • Total housing starts declined 1.4% month-over-month in December to a seasonally adjusted annual rate of 1.382 million units ( consensus 1.355 million) while total building permits declined 1.6% month-over-month to a seasonally-adjusted annual rate of 1.330 million ( consensus 1.370 million).
    • The key takeaway from the report is that new single-family starts increased by 11.3% month-over-month even though total starts recorded a month-over-month decrease. This element lends some optimism regarding a sector that has been pressured by rising rates and decreasing affordability. That said, building permits, which have a leading indicator status, decreased for the third consecutive month.
  • The Philadelphia Fed Index fell to -8.9 in January ( consensus -11.0) from -13.8 in December.
  • Weekly EIA Natural Gas Inventories showed a draw of 82 bcf versus a build of 11 bcf last week.
  • Weekly Crude Oil Inventories showed a build of 8.41 million barrels after a build of 18.96 million barrels last week.

Economic data tomorrow is limited to the December Existing Home Sales ( consensus 3.96 million; prior 4.09 million) at 10:00 a.m. ET.