>>> What to look at today - 1st of November 2022

The dollar and Treasury yields fell as investors adjusted positions ahead of the Federal Reserve’s policy meeting while Chinese technology stocks led a rebound in equities during the Asian trading session. A gauge of the region’s shares rallied for a second day, with large gains in Hong Kong-listed internet companies after the Hang Seng Index on Monday slumped to the lowest since 2009. Technology and EV battery companies pushed South Korea’s benchmark index higher.
US equity futures advanced after the S&P 500 declined, weighed down by big tech. US energy shares had whipsawed on news that President Joe Biden would call on Congress to consider tax penalties for producers accruing record profits.  While Treasury yields slid, they remained elevated. Swap markets are pricing in a 75-basis-point hike this week amid the Fed’s most-aggressive tightening campaign in four decades. The strong rebound in Chinese stocks likely reflected some bottom fishing, Strategists including JPMorgan Chase & Co.’s Marko Kolanovic believe the Fed’s aggressive hiking is nearing an end, providing the prospect of relief for markets. The US will likely raise rates by 50 basis points in December and pause after one more 25-basis-point hike in the first quarter, he said.  Indicators such as the inversion of the yield curve between 10-year and three-month Treasuries “all support a Fed pivot sooner rather than later,” wrote Morgan Stanley’s Michael Wilson. The yen strengthened slightly while remaining within reach of the 150 level versus the dollar. Japan spent a record 6.3 trillion yen ($42 billion) in October to counter the yen’s sharp slide against the dollar, as it tried to limit speculative moves adding to pressure on the currency.  oil climbed above $87 a barrel after losing around 3% over the previous two sessions. Gold rose.

Nikkei +0.33% Hang Seng +5.24% CSI +3.05% Shanghai +2.12% Shenzen +2.45%

Eur$ 0.9928 CNH 7.2941 CNY 7.2830 JPY 147.93 GBP 1.1539 CHF 0.9985 RUB 61.9275 TRY 18.6187 WTI$ 87.75 +1.41% Gold 1,644.75 +0.68% BTC 20,625 +1.05% ETH 1,,595.61 +1.96%

S&P +0.63% Nasdaq +0.75% EuroStoxx +0.75% FTSE +0.58% Dax +0.64% SMI +0.50%

Macro :
- Russia Says It’s ‘Unacceptable’ to Move Grain Ships Via Corridor
- Russian Missile Strikes Cut Ukrainian Power, Water Supplies
- JPMorgan Trading Desk Says Dovish Fed Could Spark 10% S&P Rally

Keep an eye on :
- AUTN SW : Autoneum Agrees on New Loan With Syndicate Led by UBS, CS
- BCP PL : BCP 9M Net Income EU97.2M Vs. EU59.5M Y/y
- BMPS IM : What Analysts Are Saying About Canadian Stocks: Research Digest
- BP/ LN : BP 3Q Adjusted EPS Beats Estimates, *BP ANNOUNCES FURTHER $2.5B SHARE BUYBACK
- BCHN SW : Burckhardt Maintains FY Revenue Forecast
- CINE LN : Cineworld Gets OK to Borrow $150 Million Following Creditor Deal
- CON GY : Goodyear 3Q Adjusted EPS Misses Estimates
- CSGN SW : Credit Suisse’s Lehmann Says Bank Not for Sale Amid Revamp Plan
- DSM NA : DSM 3Q Adjusted Ebitda Misses Estimates
- DSM NA : DSM Faces Cost Pressures, Watch Firmenich Deal: Preview
- ENGI FP : Orascom Construction Group to Build 500MW Wind Farm in Egypt
- ENI IM : Eni to Invest $8B to Develop Gas Fields in Western Libya: NOC
- EUCAR FP : Avis Budget 3Q Adjusted EPS Beats Estimates
- FFARM NA : ForFarmers 3Q Underlying Ebitda Down 17.3%; Terminates Buyback
- IMPN SW : Implenia Plans Cautious Resumption of Dividend Payments From ‘23
- INTER NA : CSC Declares Offer for Intertrust Unconditional
- IPCO SS : Intl Petroleum 3Q Net Income $90.5M Vs. $30.6M Y/y
- ML FP : Goodyear 3Q Adjusted EPS Misses Estimates
- NCCB SS : NCC 3Q Net Sales Beats Estimates
- SN/ LN : Stryker Q3 EPS $2.12 Misses $2.23 Estimate, Sales $4.48B Beat $4.47B Estimate
- VAIAS FH : Vaisala Names Heli Lindfors as CFO

>>> Europe : Brokers Upgrades & Downgrades - 1st 0f November 202

>>> Up
* Campari Raised to Buy at Deutsche Bank; PT 12 euros
* EQT Raised to Buy at Goldman; PT 295 kronor
* Wood Raised to Buy at HSBC; PT 282 pence

>>> Down
* Arjo Cut to Hold at Handelsbanken

>>> Initiation
* Argo Blockchain ADRs Cut to Hold at Jefferies; PT $1.10
* Auction Technology Group Rated New Overweight at Barclays
* Edda Wind Rated New Buy at Pareto Securities; PT 32 kroner
* Kone Rated New Hold at Deutsche Bank; PT 41 euros
* Logista Rated New Overweight at Barclays; PT 25 euros
* Next Fifteen Reinstated Buy at Berenberg; PT 1,450 pence
* Schindler Rated New Buy at Deutsche Bank; PT 184 Swiss francs

>>> Call
* Energy Windfall Tax Would Hurt Oil Investment, Saxo Analyst Says

>>> US After Hours Summary: HOLX +6%, LSCC +5.3%, AMKR +2.8%, CAR +2.8% higher o

After Hours Summary: HOLX +6%, LSCC +5.3%, AMKR +2.8%, CAR +2.8% higher on earnings; VRNS -18.8%, GT -7.9%, TREX -6.4%, HLIT -6.1%, SYK -5.1%, HLF -3% lower on earnings

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: HOLX +6%, LSCC +5.3%, BSM +3.9%, AWK +2.9%, AMKR +2.8%, CAR +2.8%, CLW +1.5%, CIVI +0.8%, VAC +0.7%, NXPI +0.4%, RMBS +0.4%, PLOW +0.3%, TEN +0.3% (also names new CFO), WMB +0.2%, LEG +0.1%, RRX +0.1%

Companies trading higher in after hours in reaction to news: KPTI +2.1% (EC grants orphan designation for selinexor for myelofibrosis), GE +0.3% (awarded a not-to-exceed $1.085 bln U.S. Navy contract), DEN +0.2% (executes CO2 Services Agreement with Clean Hydrogen Works)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: VRNS -18.8% (also authorizes new $100 mln share repurchase program), GT -7.9%, TREX -6.4%, HLIT -6.1%, AXNX -5.7%, SYK -5.1%, HLF -3% (also CEO steps down, plans to name replacement in 2023; also withdraws FY22 guidance), IMAX -2.4%, AFL -2%, FLS -1.1%, ACHC -0.4%, ANET -0.4%, CNO -0.3%, BCC -0.2%, KMT -0.1%, NTB -0.1%, SON -0.1%

Companies trading lower in after hours in reaction to news: VIR -4.2% (announces multiple abstracts highlighting new Hep B data), NVTA -1.9% (study shows therapy informed by genetic testing reduces seizures in some patients with epilepsy), DAL -0.1% (pilots vote to authorize strike if necessary, according to Reuters), OXY -0.1% (signs leases to support large-scale DAC projects)

NBC : Biden lost temper with Zelenskyy in June phone call when Ukrainian leader

Biden lost temper with Zelenskyy in June phone call when Ukrainian leader asked for more aid
Biden had barely finished telling Zelenskyy he’d just greenlighted another $1 billion in military assistance when the Ukrainian president started listing all the additional help he needed.

It’s become routine since Russia invaded Ukraine: President Joe Biden and Ukrainian President Volodymyr Zelenskyy speak by phone whenever the U.S. announces a new package of military assistance for Kyiv.

But a phone call between the two leaders in June played out differently from previous ones, according to four people familiar with the call. Biden had barely finished telling Zelenskyy he’d just greenlighted another $1 billion in U.S. military assistance for Ukraine when Zelenskyy started listing all the additional help he needed and wasn’t getting. Biden lost his temper, the people familiar with the call said. The American people were being quite generous, and his administration and the U.S. military were working hard to help Ukraine, he said, raising his voice, and Zelenskyy could show a little more gratitude.

Administration officials said Biden and Zelenskyy’s relationship has only improved since the June phone call, after which Zelenskyy made a statement praising the U.S. for its generous assistance. But the clash reflects Biden’s early awareness that both congressional and public support for sending billions of dollars to Ukraine could begin to fade. That moment has arrived just as the president prepares to ask Congress to greenlight even more money for Ukraine.

President Joe Biden speaks with Ukrainian President Volodymyr Zelenskyy from the Oval Office of the White House on Dec. 9, 2021. Susan Walsh / AP file
Biden now faces resistance from some Republicans and Democrats that wasn’t present when Congress approved previous Ukraine funds. The White House has discussed asking Congress for billions of dollars during the lame-duck legislative session after the midterm elections.

The White House hasn’t specified an amount publicly. Lawmakers and Ukraine lobbyists hope for $40 billion to $60 billion, and some officials familiar with the discussions expect the number to be roughly $50 billion.

A source familiar with the conversation said that Biden was direct with Zelenskyy about handling the issues in the appropriate military channels but that the exchange wasn’t heated or angry.

A spokesperson for the National Security Council declined to comment on the story.

A spokesperson for Zelenskyy didn’t respond to a request for comment.

Top U.S. officials warn there are no signs the war is ending any time soon.

Ukrainian soldiers prepare to fire a BM-21 'Grad' multiple rocket launcher near Kharkiv, on Oct. 4, 2022.Yasuyoshi Chiba / AFP - Getty Images
Before the June 15 phone call, the president’s frustrations with Zelenskyy had been building for weeks, three people familiar with the call said. Biden and some of his top aides felt that the administration was doing as much as it could as quickly as it could but that Zelenskyy continued to focus publicly on only what wasn’t being done.

From Zelenskyy’s perspective — as well as that of some Eastern European governments and U.S. lawmakers from both parties — there has been repeated frustration that the Biden White House moves too slowly on weapons requests, initially hesitating to approve certain capabilities Ukraine requested most urgently, only to relent weeks or months later under pressure, according to two sources familiar with the Ukraine government’s view, congressional aides and two European officials.

After the pushback Zelenskyy got in their June phone call, his team decided to try to defuse tensions, concluding it wasn’t productive to have friction with the U.S. president, according to two sources familiar with the Ukraine government’s view, congressional aides and two European officials.

Zelenskyy responded publicly that day by thanking Biden for the promised assistance.

“I had an important conversation with U.S. President Biden today,” he said in videotaped remarks. “I am grateful for this support. It is especially important for our defense in Donbas.”

In his statement after the call, Biden said he had informed Zelenskyy of the $1 billion in aid and vowed the U.S. “will not waver in our commitment to the Ukrainian people as they fight for their freedom.”

The effort to get Ukraine weapons and equipment has intensified in recent weeks as Ukraine tries to make significant gains before harsh winter temperatures set in.

Oath Keeper who stormed the Capitol says he thought Jan. 6 was a 'Bastille-type' attack
The Ukrainian military is focused on driving thousands of Russian troops away from Kherson, trying to encircle them and retake the southern city from Russian control. The battle for Kherson could be one of the most consequential battles in Ukraine since the invasion. If Ukraine is able to retake the area, it could be a major morale booster for Zelenskyy’s forces and a serious blow to Russian troop confidence. But if Russia holds on, it could maintain its grip on the south, including the Zaporizhzhia nuclear power plant, through the winter months. “This could be a turning point,” a defense official said.

Concerns about fading support for Ukraine are also driving the current offensives, according to a defense official and a former official, as Ukraine tries to show momentum on the battlefield to encourage the flow of more weapons.

On Oct. 12, Defense Secretary Lloyd Austin convened a meeting of the Ukraine Contact Group in Brussels, a periodic gathering of allies, to discuss how to get more weapons and equipment into Ukrainian military hands. While past meetings have yielded assistance from ammunition to missile launchers, this month’s meeting took on new urgency, according to three defense officials familiar with the discussions.

“Everyone was stepping up,” said an official in the meeting. Countries were scouring their stockpiles and warehouses to find anything that could help the Ukrainian military, the official said. “There was an urgency to get them air defenses and anything we could before winter and so they can be successful in this current offensive.”

The meeting was so successful that Austin was giddy as he walked out, two defense officials said.

Ukraine still needs more air defense systems to defend against Russian military aircraft, missiles and drones, and the U.S. continues to discuss providing longer-range missile systems like the ATACMS and even some advanced fighter aircraft in the future.

The proportion of Americans who are extremely or very concerned about Ukraine’s losing the war has dropped by 17 percentage points since May, from 55% to 38%, according to a Pew Research Center survey conducted last month. And the proportion of Americans who say they’re not too concerned or not at all concerned about Russia’s winning was up from 16% to 26%, according to the survey.

The potential change in political will in the U.S. for continuing to send aid to Ukraine could upend how both the White House and Zelenskyy have approached the issue so far.

Since Russia invaded Ukraine in February, the Biden administration has been criticized for moving too cautiously. Now the president faces potential pushback from some Republican lawmakers and progressive Democrats that he’s providing too much aid.

The shifting dynamics on Capitol Hill also could force Zelenskyy’s team to rethink how it engages with Washington, as it has often tried to leverage its support in Congress to get more out of the White House.

>>> US Close Dow -0,39% S&P -0,75% Nasdaq -1,03% Russell +0,00% VIX 25.88 +0,5%

Closing Stock Market Summary

The last trading session in October had a negative disposition. Part of that disposition could be attributed to some normal consolidation activity after a big run recently. The Dow Jones Industrial Average, the Russell 2000, and the S&P Mid Cap 400 all logged double digit gains this month. 

The Dow had its best monthly performance since 1976 with a 14.0% gain. 

There was likely some hesitation in play today ahead of the November 1-2 FOMC meeting and rate hike decision at 2:00 p.m. ET on Wednesday, which is followed by Fed Chair Powell's press conference at 2:30 p.m. ET. The hesitation was related to Mr. Powell's press conference and whether or not his comments will signal a softer approach from the Fed starting at the December meeting.

Market participants also digested an article from the The Wall Street Journal by Nick Timiraos that highlighted the risk of the Fed's terminal rate ultimately being higher than the market expects and staying there for longer due to excess savings and the resilience of consumer spending.

On top of that, participants received some economic news that played into some stagflation fears. China's official manufacturing PMI for October checked in at 49.2 while its non-manufacturing PMI checked in at 48.7. A reading below 50.0 is indicative of contraction. Separately, the eurozone CPI hit a record-high 10.7% year-over-year in October.

Rising Treasury yields kept pressure on the stock market today. The 2-yr note yield rose seven basis points to 4.49%. The 10-yr note yield settled the session up seven basis points to 4.08%, but hit 4.10% soon after the close of the cash session. This move coincided with the stock market taking a noticeable turn lower. 

Mega cap stocks had a weak showing today, leading the market lower. The Vanguard Mega Cap Growth ETF (MGK) was down 1.2% versus a 0.8% loss in the S&P 500 and a 0.4% loss in the Invesco S&P 500 Equal Weight ETF (RSP). Apple (AAPL 153.34, -2.40, -1.5%) suffered a decent loss after Reuters reported COVID measures in China could adversely affect iPhone production volume in November at the Foxconn manufacturing facility.

Broad based selling left ten of the 11 S&P 500 sectors in negative territory. Communication services (-1.7%) and information technology (-1.3%) brought up the rear while energy (+0.6%) sat alone in the green. 

It was reported that the Biden administration might be considering a windfall tax on energy producers, although a follow up report from the Associated Press suggested that the tax is not likely to pass congress. WTI crude oil futures fell 1.6% to $86.50/bbl while natural gas futures rose 10.6% to $6.59/mmbtu.

Arconic (ARNC), BP (BP), Eaton (ETN), Eli Lilly (LLY), Fox Corp. (FOXA), Gartner (IT), Lear (LEA), Marathon Petroleum (MPC), Molson Coors Brewing (TAP), Pfizer (PFE), Phillips 66 (PSX), Simon Properties (SPG), Sysco (SYY), and Uber (UBER) headline the earnings reports ahead of Tuesday's open.

Economic data today was limited to the October Chicago PMI, which came in at 45.2 (consensus 47.1) following the prior reading of 45.7.

Looking ahead to Tuesday, market participants will receive the following economic data:

  • 9:00 ET: September Job Openings (prior 10.053 mln)
  • 10:00 ET: September Construction Spending ( consensus -0.5%; prior -0.7%) and October ISM Manufacturing Index (consensus 50.0%; prior 50.9%)

Dow Jones Industrial Average: -9.9% YTD
S&P Midcap 400: -14.4% YTD
S&P 500: -18.8% YTD
Russell 2000: -17.8% YTD
Nasdaq Composite: -29.8% YTD

FT : Swiss veto of weapons re-exports to Ukraine angers Germany

Swiss veto of weapons re-exports to Ukraine angers Germany
Bern politicians say transfer of ammunition to Kyiv would jeopardise nation’s neutrality

German politicians have called for an end to arms deals with Switzerland as a political dispute deepens over Bern’s refusal to allow arms to be shipped to Ukraine.

Swiss lawmakers responded on Monday with accusations — and thinly veiled references to the second world war — that Germany “no longer respects” Switzerland’s political neutrality. The issue has become more urgent since Russia escalated an aerial campaign targeting Ukraine’s infrastructure and as Kyiv’s weapon stocks have dwindled, German officials said.

German defence minister Christine Lambrecht wrote to the Swiss government 10 days ago, urging it to lift a re-export veto on anti-aircraft shells for German-made “Cheetah” flak guns that Berlin has donated to Kyiv. Bern first refused a request by Berlin to lift the veto in April.

Germany wants to send 12,000 Swiss-made 35-milimetre rounds that were bought by Berlin decades ago to restock the 50 Cheetah flak cannons it has pledged to Ukraine.

The Swiss government, as part of the original sales contract with Germany, has a veto over the munitions’ resale or donation. Politicians in the wealthy alpine state believe that sending them to Ukraine would jeopardise its neutrality. Switzerland refused a request from Denmark for the re-export of two dozen Swiss-made “Piranha” armoured personnel carriers to Ukraine in May.

The German government has been struggling to find more shells to send to Kyiv. Brazil, which makes suitable munitions for the Cheetah guns, has also refused to allow their re-export.

The Cheetah system, though phased out of Germany’s military in 2010, has proved effective against the slow-moving Iranian “kamikaze” drones that have been used to pummel Ukrainian civilian targets this autumn.

The Swiss company that manufactured the ordnance for them, Oerlikon-Bührle, no longer exists. It was a major supplier of arms to the Third Reich at time when the safeguarding of Swiss neutrality was even more important.

“For once, the Swiss government is right,” said Thomas Borer, former Swiss ambassador to Germany and an architect of Switzerland’s current laws on neutrality. “It’s clear that delivering arms of weapons into a conflict would infringe the core principle of what neutrality means for Switzerland. As a friendly neighbour that is aware of our laws and obligations, Germany shouldn’t put Switzerland in this position.”

Lambrecht wrote to her Swiss counterpart Viola Amherd saying the Cheetah munitions were purely defensive. In the letter, she said the weapons were “vital” for the protection of Black Sea grain exports from potential bombardment, according to Ukraine’s military.

Bern has yet to formally respond to Berlin’s renewed request, which has been made in parallel with diplomatic lobbying from Ukrainian officials. The Swiss defence ministry has passed the new German request on to the finance ministry, which handles export licences, a Swiss government spokesperson said, declining to comment further.

A spokesperson for Germany’s defence ministry said: “We are always actively finding ways to support Ukraine through our partners and alliances.” Discussions with Switzerland were part of that process, they added.

Senior German politicians, including members of parties in the governing coalition, have been more forthright, with Germany being Switzerland’s largest arms export market.

“Anyone who does not deliver munition to an attacked state for national defence can no longer be a reliable supplier of ammunition for us either,” Marcus Faber, head of the liberal Free Democratic party’s parliamentary defence group, wrote on Twitter on Sunday. “If Switzerland refuses this to Ukraine . . . then for security reasons, we can no longer get anything from there.”

Roderich Kiesewetter of the opposition conservative Christian Democrats and a member of the Bundestag foreign affairs committee told the Frankfurter Allgemeine Zeitung newspaper on Monday that he would also support an end to weapons purchases from Switzerland.

“Whoever shirks away in this situation has to accept the accusation of failing to provide assistance,” he said.

Swiss politicians responded angrily to the comments. “It has never turned out particularly well when Germany has interfered in the politics of other countries,” said Marco Chiesa, head of the rightwing populist Swiss People’s party, on Monday.

“Germany no longer perceives and respects Switzerland as a neutral country,” Chiesa, who leads Switzerland’s largest political party, told the Tages-Anzeiger newspaper.