>>> Europe : Brokers Upgrades & Downgrades - 16th of February 2022

>>> Up
* Adyen Raised to Buy at Deutsche Bank
* BAT PT Raised to 3,500 pence from 2,850 pence at Cowen
* Bravida Raised to Buy at Carnegie; PT 140 kronor
* Bravida Raised to Buy at SEB Equities; PT 125 kronor
* F-Secure Raised to Buy at Carnegie; PT 4.80 euros
* Segro Raised to Buy at Goodbody; PT 1,400 pence
* Wihlborgs Raised to Buy at ABG; PT 210 kronor
* Wihlborgs Raised to Hold at Handelsbanken; PT 200 kronor

>>> Down
* BAE Cut to Equal-Weight at Morgan Stanley; PT 642 pence
* Delivery Hero Cut to Hold at Deutsche Bank; PT 80 euros
* Exel Composites Cut to Reduce at Inderes; PT 7.50 euros
* Tower Semiconductor Cut to Hold at Needham

>>> Initiation
* Evraz Resumed Buy at Citi; PT 490 pence
* Gym Group Rated New Buy at Jefferies; PT 340 pence
* Zeal Network Rated New Buy at Jefferies; PT 47 euros

>>> Call
* Telenet Upgraded at Citi as Focus Moves to Upcoming Catalysts
* Thales Upgraded, Named Among Top Defense Picks at Morgan Stanley

>>> US Close Dow +1,22% S&P +1,58% Nasdaq +2,53% Russell +2,76%

Closing Stock Market Summary

The S&P 500 rallied 1.6% on Tuesday, as the market welcomed a potential de-escalation in the Russia-Ukraine situation. The Nasdaq Composite (+2.5%) and Russell 2000 (+2.8%) both gained at least 2.5% while the Dow Jones Industrial Average gained 1.2%. 

Prior to the open, reports indicated that Russia pulled back some troops from its border with Ukraine, which the market construed as a sign that Russia was indeed looking to resolve security issues through diplomacy. Most of today's gains were registered at the open following the de-escalation news. 

The market proceeded to trade sideways the rest of the session, albeit with minor volatility after President Biden cautioned that the U.S. hadn't verify the withdrawal and that Russia could still attack. Nevertheless, the S&P 500 closed at session highs, reclaiming its 200-day moving average (4455), amid gains in nine of its 11 sectors. 

The information technology (+2.7%) and consumer discretionary (+2.1%) sectors led the advance with gains over 2.0%. Conversely, the energy (-1.4%) and utilities (-0.6%) sectors closed lower. 

Energy stocks struggled with the retracement in oil prices ($92.07, -3.41, -3.6%), which was a result of easing geopolitical angst. The latter was also the primary driver behind the five-basis-point increase in the 10-yr yield (2.05%), the softer dollar (96.01, -0.36, -0.4%), and the modest decline in gold prices ($1856.40, -13.00, -0.7%). 

Interestingly, the 10-yr yield barely reacted to a much hotter-than-expected Producer Price Index (PPI) report. The index for final demand rose 1.0% m/m in January (consensus +0.5%), leaving it up 9.7% yr/yr. Excluding food and energy, the index for final demand rose 0.8% m/m (Briefing.com consensus +0.4%), leaving it up 8.3% yr/yr.

The PPI report may not have that surprising considering the hot CPI print last week while others interpreted the data as a sign of peak inflation, especially if the Fed follows through on being more aggressive in tightening policy. The 2-yr yield decreased two basis points to 1.57%. 

In corporate news, Marriott (MAR 181.20, +8.97, +5.8%) reported better-than-expected earnings results, providing a boost for travel-related names. Intel (INTC 48.44, +0.86, +1.8%) announced an acquisition of Tower Semi (TSEM 47.07, +13.94, +42.1%) for $5.4 billion, or $53.00 per share, in cash. 

Reviewing Tuesday's economic data:

  • The Producer Price Index for final demand jumped 1.0% month-over-month in January (consensus +0.5%) following an upwardly revised 0.4% increase (from +0.2%) in December. Excluding food and energy, the index for final demand increased 0.8% month-over-month (consensus +0.4%) following an upwardly revised 0.6% increase (from 0.5%) in December. On a year-over-year basis, the index for final demand was up 9.7% year-over-year on an unadjusted basis while the index for final demand, less food and energy, was up 8.3% year-over-year on an unadjusted basis.
    • The key takeaway from the report is that producer inflation pressures are clearly elevated. That is going to crimp profit margins unless those higher costs can be passed onto consumers, which is a problem unto itself. Net-net, inflation is all around and it has yet to show any meaningful signs of abating.
  • The Empire State Manufacturing Survey for February increased to 3.1 (consensus 25.0) from -0.7 in January.

Looking ahead, investors will receive a big batch of data on Wednesday, including Retail Sales for January, Industrial Production and Capacity Utilization for January, and the NAHB Housing Market Index for February along with the FOMC Minutes from the January meeting.

  • Dow Jones Industrial Average -3.7% YTD
  • S&P 500 -6.2% YTD
  • Russell 2000 -7.5% YTD
  • Nasdaq Composite -9.6% YTD

>>> US After Hours Summary: UPST +23.6%, AYX +8%, ABNB +3.8% higher on earnings;

After Hours Summary: UPST +23.6%, AYX +8%, ABNB +3.8% higher on earnings; RBLX -14.5%, TOST -13%, LZB -12.9%, ZI -10.9%, ANGI -10.7%, VIAC -6.6% lower on earnings

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: UPST +23.6% (also approves $400 mln share repurchase authorization), ESMT +9.7%, AYX +8%, ACCO +5.7% (also CFO plans to retire this year), ANDE +5.4%, WIRE +5.1%, LSCC +4.4%, ABNB +3.8%, MRC +3.7%, GXO +3.4%, ALC +1.9%, NMIH +1.5% (also authorizes $125 mln share repurchase program), DVN +0.8% (also increases dividend and expands share repurchase program), REZI +0.8%, CLW +0.4%, IAC +0.2%, WFG +0.1%

Companies trading higher in after hours in reaction to news: CRSR +8.7% (to be added to S&P SmallCap 600), CELU +6% (FDA grants Orphan Drug Designation for CYNK-101), ENLC +4.4% (TALO and ENLC execute MoU for carbon capture, transportation, and sequestration solution), MO +0.6% (Admin Law Judge dismisses FTC complaint against Altria's minority investment in Juul), KNSL +0.3% (increases dividend), ADI +0.3% (increases dividend), LMT +0.2% (Sikorsky Aircraft awarded $370 mln Defense Logistics Agency contract), MRNA +0.1% (to expand its commercial network across Asia)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: RBLX -14.5%, TOST -13%, LZB -12.9%, ZI -10.9%, ANGI -10.7%, PACB -8.8%, VIAC -6.6% (also to change its name to Paramount Global), MASI -6.5% (also acquires Sound United for $1.025 bln), NVTS -5.8%, AKAM -5.3% (also acquires IaaS platform provider Linode for $900 mln), WH -4.7% (also increases share repurchase program by $400 mln), CF -3.8%, PDFS -3.8%, TX -2.9%, WYNN -2.7% (also to sell land and real estate assets of Encore Boston Harbor to Realty Income for $1.70 bln in cash), DENN -2.6% (also increases share repurchase program by $10.7 mln), ATRC -1.7%, CORT -1.7%, INVH -1.4%, CRSP -1.2%, QTWO -1%, SEDG -0.8%, CINF -0.6%, CRK -0.5%, WELL -0.5% (also provides business update; also forms strategic partnership with Reuben Brothers), AMK -0.1%

Companies trading lower in after hours in reaction to news: MRTX -8.7% (FDA accepts NDA for adagrasib for non-small cell lung cancer), ATOM -3.7% (files $100 mln mixed securities shelf offering), ONB -1.7% (moving to S&P MidCap 400 from the S&P SmallCap 600), AKR -0.5% (increases dividend), CCL -0.4% (CDC lowers cruise ship COVID-19 THN from Level 4 to Level 3), O -0.3% (to acquire land and real estate assets of Encore Boston Harbor from WYNN for $1.7 bln in cash), DHX -0.2% (approves $15 mln share repurchase program), TALO -0.2% (TALO and ENLC execute MoU for carbon capture, transportation, and sequestration solution), X -0.2% (CFO to leave company), WU -0.2% (expands Travel Wallet App in South Korea), RCL -0.1% (CDC lowers cruise ship COVID-19 THN from Level 4 to Level 3)

FT : Prince Andrew settles lawsuit from Jeffrey Epstein accuser

Prince Andrew settles lawsuit from Jeffrey Epstein accuser
Lawyers for UK royal say he will make donation to victims charity run by Virginia Roberts Giuffre

Prince Andrew has settled a lawsuit brought by Virginia Roberts Giuffre, an accuser of Jeffrey Epstein, who had alleged the British royal sexually assaulted her when she was 17.

The settlement was announced in a court filing on Tuesday. Its precise terms were not disclosed, although it will include a “substantial donation” from Prince Andrew to a victims charity run by Giuffre, as well as an acknowledgment that she had “suffered both as an established victim of abuse and as a result of unfair public attacks”.

In return, Prince Andrew will be spared a trial that threatened to heap further embarrassment on the royal family for his association with a convicted sex offender.

The Duke of York was forced to abandon his royal duties in 2019 after a catastrophic BBC interview in which he struggled to account for his friendship with Epstein, who was found hanged in a Manhattan jail cell while awaiting trial on charges of trafficking underage girls for sex.

Giuffre has been among the most prominent of Epstein’s victims. She claimed to have been abused by Epstein and his longtime confidante, Ghislaine Maxwell, beginning when she was 16.

She filed a civil suit against Prince Andrew last August, claiming that she had been pressured by Epstein and Maxwell to have sex with the royal on three occasions when she was under 18. Prince Andrew denied this and said he had no recollection of ever meeting Giuffre despite a widely-circulated photograph of the pair together.

In a joint court filing on Tuesday, lawyers for the two sides said: “Prince Andrew intends to make a substantial donation to Ms Giuffre’s charity in support of victims’ rights.”

The statement continued: “It is known that Jeffrey Epstein trafficked countless young girls over many years. Prince Andrew regrets his association with Epstein, and commends the bravery of Ms. Giuffre and other survivors in standing up for themselves and others.”

Prince Andrew intended to demonstrate his regret by “supporting the fight against the evils of sex trafficking”, the filing said.

Prince Andrew came under mounting scrutiny in late December when Maxwell was convicted on five of six criminal charges by a New York jury for her role in luring underage girls for Epstein to abuse. She is appealing against the verdict.

A federal judge in January rejected Prince Andrew’s attempt to have the case dismissed.

Jon Oakley, a partner at London law firm Simkins, called the settlement “the best of the bad options available” to the royal. “For some time it has been clear that this was only ever going to end badly for Prince Andrew unless he settled,” he said.

Anna Rothwell, a lawyer at Corker Binning, said the BBC interview had created a “wealth of material” that Giuffre’s lawyers, David Boies and Sigrid McCawley, would have been able to use against him during cross-examination.

FT : EU takes on SpaceX and Amazon with its own satellite internet system

EU takes on SpaceX and Amazon with its own satellite internet system
Brussels seeks standalone coverage despite internal watchdog previously raising doubts over proposals

The European Commission has approved plans for a €6bn satellite internet system to compete with the likes of Amazon and SpaceX despite previous objections from its internal watchdog.

Brussels’ initiative to provide encrypted broadband coverage was twice rejected by the European Commission’s Regulatory Scrutiny Board. The board, which vets impact assessments for proposals put forward by the commission, believed the scheme would waste money and compete with commercial services.

The Secured Connectivity regulation is the brainchild of Thierry Breton, the internal market commissioner, who wants the EU to build a third satellite system in lower earth orbit (LEO) for secured communications and access to the internet. The EU already has Galileo, a global navigation system, and Copernicus, which is used for earth observation.

The signals from the new system would be encrypted and offered to Europe as well as Africa to give that continent an alternative to Chinese-built infrastructure. It would also provide a back-up in case of cyber attacks on broadband networks.

Breton told a press conference in Strasbourg on Tuesday: “This is of central importance in terms of our strategic and technical sovereignty.”

He added that it would be connected to other unnamed satellite constellations to save money. Regarding obtaining the spectrum to broadcast the signals, he said: “We know where to find this frequency. It is not an issue.”

The commission’s scrutiny board rejected the impact assessment for the project twice on the basis that other options had not been fully considered. This in effect ruled out cheaper options such as renting space on a commercial provider’s network or using an earth-based system.

Some amendments were made following the rejections, with commitments to involve small companies in the design and building of the system to boost the EU’s space industry. The commission has earmarked €2.4bn from its budget, with the rest coming from member states and industry in a public-private partnership. Brussels will ask consortiums to bid to build and run the system as a concession.

It is rare for a project to be rebuffed twice by the commission’s internal watchdog and a scheme would usually then be blocked. But Maros Sefcovic, vice-president of the commission for interinstitutional relations, agreed to take it forward with some amendments, citing the need for urgent action.

The plan still needs approval from the European parliament and EU member states. One diplomat said although several countries had reservations, they would not block it.

The commission contracted companies, including Airbus, SES and Eutelsat, to carry out a technical study for the project. The running costs are significant, with LEO satellites needing to be replaced roughly every five to seven years.

The EU conceived the idea after the UK bought a stake in OneWeb, the satellite operator, in 2020. Last year Eutelsat, in which the French government has a stake, invested in OneWeb, causing Breton to question whether Eutelsat could take part in the EU project.

SpaceX, owned by Tesla co-founder Elon Musk, has launched close to 2,000 satellites under the Starlink name and has applied for licences to fly more than 40,000.

Amazon’s Project Kuiper will comprise more than 3,000 satellites.

The EU intends to offer services to consumers in remote places without broadband. But Starlink heavily subsidises the hardware needed to receive it, charging $499 against a cost of at least four times that. Satellite broadband costs $99 a month in the US, around double the price of a fibre-optic service.

WSJ : Russia Says Some Troops Pulling Back From Ukraine Border as NATO Hopes for

Russia Says Some Troops Pulling Back From Ukraine Border as NATO Hopes for Diplomacy
Mixed military signals from Moscow come as Germany’s chancellor holds talks with Putin

Russian President Vladimir Putin said negotiations are still possible in the standoff over Ukraine and his Defense Ministry said it was pulling back some troops from near the border, but Western leaders were uncertain what to make of the Kremlin’s mixed messaging because other Russian military activities continue unabated.

The announced troop pullback would scale down a total force that is still estimated to number more than 120,000, and came amid a new round of shuttle diplomacy aimed at defusing the crisis. Moscow has warned of unspecified consequences if the U.S. and its allies reject its security demands.

“We are also ready to follow the negotiation track,” Mr. Putin said at a press conference with German Chancellor Olaf Scholz in Moscow. “But all issues must be considered as a whole,” he said, adding that the U.S. and its allies had ignored Russian security concerns.

Mr. Scholz nodded to Mr. Putin’s concern without offering concessions. “For us Germans and for all Europeans it is clear that sustainable security can only be achieved with Russia and not against Russia,” he said.

U.S. Ambassador to the North Atlantic Treaty Organization Julianne Smith said a Russian pullback wasn’t yet evident. “What’s important is that we verify,” she said. “This is something that we’ll have to look at closely and verify in the days ahead.”

Meanwhile, Mr. Scholz arrived in Moscow for talks with Russian President Vladimir Putin over the situation, a day after Mr. Scholz visited Ukrainian President Volodymyr Zelensky in Kyiv. The Kremlin said the talks were expected to last for hours.

Ukrainian officials voiced skepticism that Russia’s position was softening and it was unclear what signals Moscow was intending to send with its statement on troop deployments and other recent moves.

On Monday, during a made-for-television discussion between Mr. Putin and Russia’s foreign minister, Sergei Lavrov, Mr. Lavrov said the West had shown itself completely unwilling to accommodate Russian interests, but ended by indicating diplomacy should continue and that “our possibilities are far from exhausted.”

Then, on Tuesday, Russia’s parliament voted to ask Mr. Putin to recognize two Russian-backed separatist republics in the eastern Ukrainian region of Donbas as independent states. Such a step could set the stage for Russia to openly move its armed forces into those areas but could also give Mr. Putin cover to reduce his forces around Ukraine.

“In our country, the vast majority of people sympathize with the residents of Donbas,” Mr. Putin said.

British Prime Minister Boris Johnson said he saw “mixed signals” coming from the Kremlin. “Clearly there are signs for a diplomatic opening…we are seeing Russian openness to conversation,” he said.

However, Mr. Johnson said the intelligence coming from the Ukrainian border was “not encouraging,” with more troops gathering there and field hospitals being built. “We think there is an avenue for more diplomacy. We have seen some positive signs,” he said. “If that is correct let’s build on that.”

NATO Secretary-General Jens Stoltenberg also noted potentially hopeful signs of a diplomatic opening from Moscow. “But so far we have not seen any sign of de-escalation on the ground,” he said.

President Biden plans to deliver remarks at 3:30 p.m. Eastern Standard Time Tuesday to provide an update on the situation in Ukraine.

The White House said Mr. Biden would reiterate the U.S. remains open to diplomacy in coordination with allies that would build on “the multiple diplomatic off-ramps we and our Allies and partners have offered Russia in recent months.”

U.S. officials have said Russia could launch an attack on Ukraine as soon as Wednesday. Russia has said it has no intention of invading Ukraine. Western officials and intelligence analysts say the crisis could continue for an extended period even if Russia doesn’t stage an outright attack.

Oleksii Danilov, the head of Ukraine’s National Security and Defense Council, played down the importance of Russia’s troop-withdrawal announcement, saying the soldiers could be quickly returned to Ukraine’s borders.

“We have to await confirmation from our intelligence community that this is in fact occurring,” Mr. Danilov said. “The turning point will be when the Russian Federation realizes that we are a separate state, that we have the full right to be one, and stops trying to liquidate us.”

U.S. officials on Monday said the Russian military presence near Ukraine had grown to 105 battalion tactical groups, from 83 groups earlier this month. Russia has also moved around 500 combat aircraft within range of Ukraine and has 40 combat ships in the Black Sea, according to U.S. officials.

Tuesday’s announcement prompted a rally in U.S. stock futures and European indexes following days of losses. Oil prices, which had been driven higher by the prospect of disruption to Russian exports in the event of an invasion, fell sharply.

Russia’s Foreign Ministry criticized repeated Western warnings of a Russian attack on Ukraine, slamming what it has consistently described as a U.S.-led disinformation effort aimed at vilifying Russia.

“February 15, 2022 will go down in history as the day Western propaganda for war failed,” Maria Zakharova, the ministry’s spokeswoman, wrote on Facebook. “Humiliated and destroyed without a single shot being fired.”

Ukrainian Foreign Minister Dmytro Kuleba said Tuesday that any move by Russia to recognize the Moscow-backed separatist statelets in Ukraine’s east would signify the Kremlin’s withdrawal from international agreements that Kyiv signed with Moscow over the regions.

“Such a move will cause a serious blow to the politico-diplomatic settlement that Ukraine and its partners have been actively engaged to promote,” he said in a statement on his ministry’s website.

Recognition by Moscow of the two separatist republics as independent would effectively end diplomatic efforts that began in 2015 when an agreement known as Minsk-2 stopped most hostilities in eastern Ukraine’s Donbas region. The so-called Donetsk and Luhansk People’s Republics were carved out following an armed insurgency that began in 2014 and haven’t been recognized by any country.

Russia has recently been increasing pressure on Kyiv to abide by the terms of that agreement, which Ukraine had agreed to under military pressure. The Minsk-2 accord called for the decentralization of political power in Ukraine and constitutional changes that, under an interpretation favored by Moscow, could give Russia veto power over Ukraine’s major policies.

The impact of Russia’s potential recognition of the two breakaway regions isn’t immediately evident. If Mr. Putin grants the lawmakers’ request, he may be able to declare he is standing up for Russian interests and has made the West listen to Moscow’s security demands with his military buildup. At the same time, recognition of the republics could give him the chance to send weapons and troops onto their territories following scripted appeals for his help, and potentially give him a pretext to attack Ukraine in the name of defending Russia’s allies while continuing to weaken Kyiv using economic and other tools.

Russia has long accused Ukraine of discriminating against Russian speakers in Donbas.

Several Russian deputies said the vote could give Mr. Putin more leverage in his negotiations over obtaining security guarantees for Russia and could help resolve the crisis in the Kremlin’s favor.

Mr. Danilov, the Ukrainian national-security official, said recognition of the Russian-controlled statelets in Donetsk and Luhansk wouldn’t change much on the ground because the areas are already controlled by Moscow, which has distributed Russian passports to their residents. He said Kyiv has no intention of seizing the region by force because that would result in civilian casualties.

WSJ : SEC Probes Trading Affiliates of Crypto Giant Binance’s U.S. Arm

SEC Probes Trading Affiliates of Crypto Giant Binance’s U.S. Arm
Regulator is interested in trading firms with links to Binance’s founder, people familiar with the probe say

The Securities and Exchange Commission is examining the relationship between the U.S. arm of Binance, the world’s largest cryptocurrency exchange, and two trading firms with ties to Binance’s founder, people familiar with the probe say.

The two trading firms, Sigma Chain AG and Merit Peak Ltd., act as market makers that trade cryptocurrencies on the Binance.US exchange. One area of focus for regulators is how Binance.US disclosed to customers its links to the trading firms, the people say.

On its website, Binance.US says that affiliated market makers may trade on the exchange, though it doesn’t name which firms might do so.

The SEC requested information about the two entities from Binance.US, which is Binance’s U.S. affiliate and is the subject of an existing enforcement probe, the people said.

Corporate documents from 2019 tie Changpeng Zhao, Binance’s founder and chief executive officer, to the two trading firms, and former executives say that as of late last year Mr. Zhao controlled them both.

A spokesman for Binance.US, Zachary Tindall, declined to comment on the SEC probe and any relationship with the two trading firms. “Binance.US is committed to upholding the highest standards of compliance,” he said.

A spokesman for Binance, Stephen Milton, said as a private company it doesn’t need to disclose details of its investor or corporate structure. “However, that information is shared with regulators when requested.” Mr. Milton said Mr. Zhao wasn’t available for comment. Mr. Zhao is the majority owner of Binance and Binance.US, The Wall Street Journal previously reported.

Market makers are important actors in the trading world. They help smooth price fluctuations by continually buying and selling, even when markets are choppy. They get paid by collecting a small difference between the bid and offer price.

The SEC has brought enforcement actions against trading venues that didn’t disclose they had affiliates trading on their platforms. In 2015, Investment Technology Group Inc., which was later acquired by Virtu, paid $20 million and admitted wrongdoing, including that it operated a secret trading desk that interacted with orders sent to ITG’s trading platform, known as a dark pool.

The issue, said James Angel, a finance professor at Georgetown University’s McDonough School of Business, is “are you giving your affiliate some sort of unfair advantage? Do they get preferential access? Do they get to trade faster?”

Unlike market makers that trade regulated securities such as stocks or exchange-traded funds, those in cryptocurrency markets aren’t regulated and their practices can vary widely, said Rob Catalanello, co-CEO of cryptocurrency market maker B2C2 Ltd.

“There’s a huge lack of standardization,” he said.

FTX, a Binance competitor, and Alameda Research, one of FTX’s market makers, have the same founder, Sam Bankman -Fried. Mr. Bankman-Fried said while Alameda trades on FTX, “their volume is a very small fraction of overall exchange volume, and their account’s access is the same as others’.”

A spokesman for Coinbase Global Inc., another large cryptocurrency exchange, said that no market makers are affiliated with the company, its executives, or board of directors.

To bring enforcement action against Binance’s U.S. arm, the SEC would need to show that it has jurisdiction over some cryptocurrencies that Binance.US has offered. The SEC says many digital coins are securities and thus fall under its supervision, while crypto firms say regulators haven’t proven which tokens are securities. Binance has its own digital coin, BNB, which was sold to the public in 2017 and is traded on Binance.US and Binance.

The Binance.US spokesman, Mr. Tindall, declined to comment on BNB. Mr. Milton, the Binance spokesman, said the exchange doesn’t list any securities.

The SEC sometimes begins and closes probes without making allegations of wrongdoing or taking enforcement action.

The SEC originally sent a subpoena to Binance’s U.S. arm in late 2020, The Wall Street Journal previously reported. It asked for information about who controls Binance, how it makes money, what disclosures it makes to customers and whether trading on Binance.US is independent from activity on the bigger, global exchange, according to the subpoena, which was viewed by the Journal.

The regulatory agency, whose mission is investor protection, has taken nearly 100 enforcement actions involving cryptocurrency. SEC Chairman Gary Gensler has said the crypto market is a “wild west” that needs formal rules to protect traders. Mr. Gensler has focused attention on cryptocurrency exchanges.

Binance was founded in Shanghai in 2017 by Mr. Zhao, a Canadian-Chinese computer programmer, and has grown to process billions of dollars of cryptocurrency transactions a day. It built its operations with little or no regulatory oversight, creating its trading systems from scratch.

The two trading firms being examined by the SEC, Sigma and Merit Peak, began trading cryptocurrencies on Binance.US shortly after the exchange was launched in 2019, according to former executives. The former executives said Binance.US’s legal and compliance teams worried that they didn’t have a clear understanding of where the funds the two firms used to trade were coming from.

Sigma executed all orders on Binance.US in which users buy or sell a certain cryptocurrency at the current market price, the former executives said. Merit, and later other market makers, handled orders that would only execute if the price of a cryptocurrency moved to a certain value, they added.

Neither the Binance nor the Binance.US spokesman commented on the two market makers or their relationship with Mr. Zhao.

Mr. Zhao was listed as chairman of the board of directors of Sigma in a January 2019 Swiss incorporation document, although he was later replaced by another person with ties to Binance. In late 2019, Mr. Zhao, on behalf of Merit, signed a document approving an infusion of capital from Merit into Binance.US in exchange for shares in the company. In the December 2020 SEC subpoena, the SEC referred to Merit as a Binance entity.

>>> US Gapping down

Gapping down
In reaction to earnings/guidance
:

  • ALLT -11.8%, FIS -6.4%, OMCL -5.3%, CLR -5% (also increases share buyback program by $500 mln), LDOS -4.9%, BKD -4.5%, ZD -2.8%, LGIH -2%, BHP -1.9%, VNO -1.7%, USAC -1.5%, CIEN -1.2%, INTU -1% (lowers JanQ revenue guidance)

Other news:

  • LRMR -58.4% (provides update on CTI-1601 clinical program; FDA maintains clinical hold)
  • SBEV -22.3% (prices offering of 2 mln shares of common stock at $4.00 per share)
  • ANGH -6.1% (stock offering)
  • CYTK -5.3% (topline results from METEORIC-HF)
  • ALSN -2.1% (announces delivery of electric hybrid-equipped buses to Southern Nevada Transit Coalition)
  • FHTX -1.1% (files for $300 mln mixed securities shelf offering)

Analyst comments:

  • WEBR -2.8% (downgraded to Neutral from Overweight at JP Morgan)

>>> US Gapping up

Gapping up
In reaction to earnings/guidance
:

  • ANET +9.9%, CPSS +9%, RLGT +8.7%, AMKR +8.7%, ALLE +8.2%, ARCH +6.8%, ABG +5.9%, OTTR +5.3%, TNET +4.6% (also stock repurchase program increased by $300 mln), HSIC +3.6%, TRTN +3.5%, WCC +3.4%, KRG +2.9% (also increases dividend), HUN +2.6%, CEVA +2.6%, POWW +2.4%, MAR +2.4%, BWA +1.7%, IQV +1.7%, SCI +1.6%, ZTS +1.6%, SAFE +1.5%, CAR +1.4%, QSR +1.4%, NTB +1% (also announces new 2 mln share repurchase program)

Other news:

  • TSEM +41.9% (to be acquired by Intel (INTC) for $53.00 per share in cash)
  • IBRX +12.5% (announces positive data from bladder cancer trial)
  • SPCE +12.4% (to open ticket sales to the general public starting February 16)
  • JOBY +9.5% (announces partnership with ANA HOLDINGS to bring air taxi service to Japan)
  • DCFC +8.7% (announces a partnership with Wise EV for fast chargers for a new national EV charging network)
  • VRAY +7.3% (Interim Findings from MIRAGE Phase III Randomized Trial Signal Superiority of MRIdian MRI-guidance in Stereotactic Body Radiotherapy (SBRT) for Localized Prostate Cancer)
  • AUR +5.3% (AUR and USX announce partnership for the deployment of autonomous trucks)
  • QSI +5.1% (names interim CEO)
  • TGTX +4.9% (Announces Data Presentations from the ULTIMATE I & II Phase 3 Trials of Ublituximab in Multiple Sclerosis to be Presented at the Americas Committee for Treatment and Research in Multiple Sclerosis Annual Forum)
  • FSR +4.5% (opens reservations for second product the Fisker PEAR)
  • MNST +4.2% (MNST in discussions with STZ re possible combination according to Bloomberg)
  • AZN +3.4% (LYNPARZA plus Abiraterone reduced risk of disease progression by 34%)
  • EXEL +3.3% (BMY and EXEL announce that Opdivo in combination with CABOMETYX demonstrates continued survival benefits)
  • VMEO +3.1% (reports performance metrics for January)
  • NVAX +3% ( Singapore Health Sciences issues interim authorization for Nuvaxovid)
  • NTLA +3% (announces collaboration and licensing agreement with ONK Therapeutics)
  • IMGN +2.9% (announces a global multi-year definitive licensing agreement whereby it granted Eli Lilly and Company (LLY) exclusive rights to research develop and commercialize ADCs directed to targets selected by Lilly based on ImmunoGen's novel camptothecin technology)
  • SGH +2.7% (names new chair)
  • HUN +2.6% (increases dividend)
  • GDDY +2.1% (executes $750 million accelerated share repurchase agreements)
  • MET +1.8% (aims to sell $1 bln of private-equity assets through secondary sale according to WSJ)
  • MRTN +1.7% (expands dry truckload operations into Mexico)
  • GS +1.5% (federal investigators are probing block trading on Wall Street according to WSJ)
  • LLY +1.4% (awarded $1.08 bln Army contract for Bebtelovimab)
  • SWAG +1.1% (announces combination agreement with Nogin)

Analyst comments:

  • COLL +4.5% (upgraded to Overweight from Neutral at Cantor Fitzgerald)
  • CPA +3.6% (upgraded to Buy from Hold at HSBC Securities)

>>> US Early premarket gappers

Early premarket gappers

  • Gapping up:
    • TSEM +46.9%, IBRX +9.9%, AMKR +9.3%, ANET +9.2%, CPSS +9%, JOBY +8.2%, ALLE +8.2%, RLGT +7.8%, TNET +6.6%, OTTR +5.3%, POWW +5%, AVEO +4.9%, DCFC +4.8%, MNST +3.5%, NVAX +3.3%, AZN +3%, KRG +2.9%, AUR +2.6%, HUN +2.3%, HUN +2.3%, STZ +2.2%, GDDY +2.2%, QSI +1.8%, SGH +1.7%, MRTN +1.7%, SCI +1.6%, OTIS +1.6%, EXEL +1.5%, INTC +1.5%, MS +1.2%, WHR +1.2%, SWAG +1.1%, VMEO +1%, NTB +1%, LLY +0.8%, GS +0.8%, WCC +0.8%
  • Gapping down:
    • SBEV -18.3%, OMCL -5.3%, ANGH -4.2%, BKD -3.3%, ZD -2.8%, CLR -2.4%, BHP -2%, ALSN -1.9%, LDOS -1.9%, VNO -1.7%, FHTX -1.1%, INTU -1.1%, AAP -0.6%, CAR -0.5%