Early premarket gappers
- Gapping up:
- MRTX +14.7%, FLNC +7%, PGEN +5.6%, CSV +5%, NRIX +4.9%, PLAB +3.6%, ORCL +3.2%, NYMT +3.1%, NFE +2.9%, IVZ +2.6%, ETNB +2.3%, HUT +2%, NYT +1.5%, GOOD +1.5%, FSLR +1.1%, A +1.1%, DEN +1%, AB +0.9%, SSRM +0.9%, PLL +0.9%, META +0.8%
- Gapping down:
- LEV -15.4%, IHG -5%, TRMB -3.9%, BLBD -3.6%, LLY -3.2%, GFI -3.2%, BMO -2.1%, JOAN -2.1%, TNDM -1%, MIRM -0.5%
>>> Up
* Aena Raised to Outperform at Oddo BHF; PT 148 euros (+)
* BP Raised to Add at AlphaValue/Baader
* Chr. Hansen Raised to Hold at Jefferies; PT 550 kroner
* Chr. Hansen Raised to Neutral at Exane
* Elior Group Raised to Buy at Citi; PT 4.10 euros
* Elior Group Raised to Buy at Citi; PT 4.10 euros
* Fraport Raised to Neutral at Oddo BHF; PT 47 euros (+)
* Neoen Raised to Overweight at Barclays; PT 47 euros
* CORRECT: Richemont Still Rated Neutral at Oddo BHF (+)
* Wizz Air Raised to Outperform at Oddo BHF; PT 2,900 pence (+)
>>> Down
>>> Down
* Air France-KLM Cut to Neutral at Oddo BHF; PT 1.30 euros (+)
* Bpost Cut to Neutral at Oddo BHF; PT 7 euros
* Danone Cut to Underperform at Credit Suisse
* EASYJET CUT TO SELL VS HOLD AT DEUTSCHE BANK (+)
* EasyJet Cut to Underperform at Oddo BHF; PT 300 pence (+)
* EMS-Chemie Cut to Hold at Stifel; PT 700 Swiss francs
* Erste Cut to Underperform at KBW; PT 32.10 euros
* CORRECT: Hermes Still Rated Outperform at Oddo BHF
* CORRECT: Hermes Still Rated Outperform at Oddo BHF
* IAG Cut to Underperform at Oddo BHF; PT 103.04 pence (+)
* IOG Plc Cut to Hold at Investec; PT 20 pence (+)
* Kojamo Cut to Hold at SEB Equities; PT 15.50 euros
* Novozymes Cut to Equal-Weight at Barclays; PT 430 kroner
* Reckitt Cut to Neutral at Credit Suisse
* Sanoma Cut to Hold at SEB Equities; PT 11.50 euros
* Sanoma Cut to Hold at SEB Equities; PT 11.50 euros
* SAP Cut to Hold at M.M. Warburg; PT 110 euros (+)
* SKF Cut to Sell at UBS; PT 150 kronor
* Tinybuild Cut at Liberum on ‘Concerning’ Hello Neighbor 2 Data
* Trelleborg Cut to Hold at Pareto Securities; PT 260 kronor (+)
>>> Initiation
>>> Initiation
* Domino's Pizza Group Rated New Buy at Panmure Gordon
* EDP Renovaveis Rated New Buy at Mirabaud Securities; PT 25 euros
* Eni Rated New Buy at Stifel; PT 19.10 euros
* Forterra Rated New Neutral at Redburn; PT 210 pence (+)
* Ibstock Rated New Sell at Redburn; PT 140 pence (+)
* Network International Assumed Buy at Jefferies
* Nexi Assumed Hold at Jefferies
* Orron Energy Rated New Equal-Weight at Barclays; PT 27 kronor
* Pantheon Infrastructure Rated New Hold at Stifel (+)
* Wise Rated New Hold at Jefferies; PT 624 pence
* Wise Rated New Hold at Jefferies; PT 624 pence
* Worldline Assumed Hold at Jefferies
>>> Call
* Adyen Top EU Payments Pick at Jefferies, Wise Started at Hold
>>> Call
* Adyen Top EU Payments Pick at Jefferies, Wise Started at Hold
* Elior Group Raised to Buy at Citi on Route Toward Deleveraging
* EMS-Chemie Cut With Weak 4Q and Tough Start to 2023 Seen: Stifel
* Erste Sentiment Too Optimistic, KBW Downgrades to Underperform
* Forterra Rated Neutral as Redburn Is Cautious on Brick Makers (+)
* Reckitt and Danone Cut as CS Positions in EU Staples for 2023
* Rolls-Royce Placed on Negative Catalyst Watch at JPMorgan
* Jefferies Strategists Are Bullish on European Stocks for 2023 (+)
GDP recessions vs earnings recessions
We and much of Wall Street have been singing from the same hymnal for some time now: recession is coming and earnings are going to roll over hard. Ever so slowly, analysts are starting to listen. This chart from Strategas shows how bottom-up earnings estimates for the next 12 months have climbed down since the 2021 peak:
But again: slowly. Yearly profits growth of 5.5 per cent is still the 2023 consensus expectation for the S&P 500. Some think this is plausible. Diane Jaffee, a portfolio manager at TCW, made the point to us last month that a little inflation tends to boost earnings, a nominal variable, and is especially helpful to sectors such as consumer staples. If there’s not a recession, she buys 5 ish per cent earnings growth next year.
A look at net profit margin estimates, derived from analyst revenue and profits estimates, inspires doubt, however. Analysts expect them to nudge up from 12 per cent this year to 12.3 per cent in 2023. According to John Butters of FactSet, such a result would make 2023 profit margins the second-widest since 2008 (when FactSet started tracking this), second only to the bull market of 2021.
That beggars belief, even if you are sceptical that a proper recession is coming. One reason is that sales don’t have to fall much to squish margins. Since most firms have some level of fixed costs, a slowdown or mild contraction in topline revenue can become a heavy weight on margins and earnings. In a note out yesterday, Michael Wilson of Morgan Stanley offers this chart showing how smallish swings in sales become big swings in margins:
Even a sales slowdown, as the chart shows, can significantly compress margins. Not to mention the abundance of recent data pointing to other pressures on margins: elevated wage growth raising fixed costs still higher, or discounted sales of excess inventory dragging down revenue. How all this adds up to 5.5 per cent earnings growth next year is something we cannot figure.
- Wacker Chemie (WCH TH) +3.2%
- Adyen (1N8 TH) +2.1%
- Adyen Top EU Payments Pick at Jefferies, Wise Started at Hold
- Wolters Kluwer (WOSB TH) +1.3%
- PZU (7PZ TH) +1%
- Axa (AXA TH) +0.8%
- VW (VOW3 TH) +0.6%
- Erste (EBO TH) -0.8%
- Erste Sentiment Too Optimistic, KBW Downgrades to Underperform
- Danone (BSN TH) -1.2%
- Reckitt and Danone Cut as CS Positions in EU Staples for 2023
- Haleon (H6D0 TH) -1.3%
- Reckitt and Danone Cut as CS Positions in EU Staples for 2023
- Nel (D7G TH) -1.5%
DAX:
- Puma (PUM TH) +1%
- Airbus (AIR TH) +0.7%
- SAP (SAP TH) +0.7%
- Watch SAP, Software Stocks After Oracle Revenue Tops Estimates
MDAX:
- Wacker Chemie (WCH TH) +3.2%
- Evonik (EVK TH) +1.1%
- Evonik to Save EU250 Mln in Costs Next Year, CEO Tells FAZ
- Thyssenkrupp (TKA TH) +0.8%
- Bechtle (BC8 TH) +0.7%
SDAX:
- Uniper (UN01 TH) +2.6%
- Medios (ILM1 TH) +1.3%
- flatexDEGIRO (FTK TH) +0.9%
- PNE AG (PNE3 TH) -0.9%
Stocks in Asia came off their session highs as investors redirected their focus toward US inflation data that may shape the outlook for interest-rate hikes into next year. An Asian equity benchmark pared gains, after an earlier advance that was spurred by Hong Kong’s decision to scrap its three-day Covid monitoring period for arriving travelers. US futures remained slightly lower. The dollar was steady. Treasury yields inched lower after gains on Monday that sent the 10-year rate to above 3.6%. Yields for Australian and New Zealand government bonds ticked higher. Oil advanced for a second day on signs of further easing of China’s Covid restrictions and as a key North American pipeline remained shut. Gold was little changed. US After Hours ORCL +1.9%, FLNC +1.5% on earnings; RTX +1.9% on $6 bln share repurchase program; JOAN -6.6% on earnings.
Nikkei +0.42% Hang Seng +0.56% CSI -0.33% Shanghai -0.21% Shenzen -0.61%
Eur$ 1.0540 CNH 6.9845 CNY 6.9797 JPY 137.69 GBP 1.2266 CHF 0.9362 RUB 62.9017 TRY 18.6472 WTI$ 74.15 +1.37% Gold 1,783 +0.09% BTC 17,172 -0.03% ETH 1,273 -0.16%
S&P -0.04% Nasdaq +0.03% EuroStoxx +0.31% FTSE +0.23% Dax +0.17% SMI +0.20%
Macro :
- Sam Bankman-Fried Arrested In the Bahamas
- VIX Fell Into a Death Cross. That’s Usually Good for the S&P 500
Keep an eye on :
Keep an eye on :
- ARB LN : Argo Blockchain Says Company at Risk of Having Insufficient Cash
- AZN LN : AstraZeneca UK Names David Brocklehurst Head of Oncology
- AUTN SW : Autoneum Names Eelco Spoelder as New CEO
- BAMI IM : Fondazione Enasarco to Buy Up to 1.97% of Banco BPM in Rev. ABB
- BATS LN : Supreme Court Refuses to Halt California Flavored Tobacco Ban
- CAST SS : Castellum’s CEO Continues to Sell Shares in Company
- CINA LN : Cineworld’s Forum Film Fined £150,000 by Israeli Court
- ENVI NA : Envipco Offering of 5.6m Shares Prices at EU2.66/Share
- EVK GY : Evonik to Save EU250 Mln in Costs Next Year, CEO Tells FAZ
- FRA GY : Fraport Nov. Frankfurt Airport Passengers +41.2% Vs. +45.3% M/M
- GLPG NA : Galapagos Presents ‘Encouraging’ Data From ATALANTA-1 Study
- GYC GY : Grand City Properties to Pay Coupons on Perpetual Notes
- HMB SS : H&M Signs Power Purchase Agreement for Swedish Solar Park
- HEIA NA : Heineken USA Chief Sees ‘A Lot of Runway’ for Alcohol-Free Beer
- HLE GY : HELLA Completes Exit From JV HBPO
- HNSA SS : Hansa Biopharma Offering of 7.85m Shares Prices at SEK53/Share
- KOG NO : Kongsberg Gets Naval Strike Missile Order From the Netherlands
- LOG SM : Logista to Join Spain’s IBEX 35 Benchmark, Pharma Mar Exits
- MEL SM : Melia Hotels Says Consolidated Assets Valued at €4.04B by CBRE
- NESN SW : Fonterra, Nestlé to Sell Brazil JV to Lactalis for BRL700m
- OLG FP : Raine Ventures Head to Join US Consortium in Lyon Football Deal
- SAP GY : Watch SAP, Software Stocks After Oracle Revenue Tops Estimates
- SHEL LN : Shell to Sell Non-Operated Interests in Malaysia’s Baram Delta
- SHEL LN : Shell to Sell Non-Operated Interests in Malaysia’s Baram Delta
- ENR GY : Siemens Energy Weighs Qatar as Investor to Fund Gamesa Deal: HB
- STLA IM : Stellantis to Supply UK Plant By Sea Amid Truck Driver Shortages
- UCG IM : UniCredit to Sell Up to €460 Million of NPLs to Kruk