North American Morning Briefing: Stock Futures Gain as Bonds Rally Afresh

MARKET WRAPS

Watch For:

GDP for 3Q, second estimate; EIA Weekly Petroleum Status Report; Beige Book

Today's Top Headlines/Must Reads:

- Tech's New Normal: Microcuts Over Growth at All Costs

- Binance Begins Again With U.S. Oversight. Will It Survive?

- Welcome to COP28, the U.N. Climate Conference Hosted by an Oil Giant

Opening Call:

Stock futures gained ground on Wednesday as Treasury yields continued to fall on increased hopes the Federal Reserve will start cutting interest rates next year.

The yield on the 10-year Treasury slid close to 4.25% at one point in early trading as investors boosted bets that easing inflation will encourage the Fed to begin trimming rates within several months.

The chances of the central bank cutting rates in March by at least 25 basis points is priced at 42%, up from just 21% early Tuesday, according to the CME FedWatch tool.

The shift follows comments on Tuesday from the Fed's Waller, in which he suggested current policy is well-positioned to slow the economy and bring inflation back to 2%, SPI Asset Management said.

"His remarks...were seen by the market as confirmation that the Federal Reserve is done raising interest rates, which aligns with the market sentiment as additional hikes had already been largely priced out earlier in the month," SPI added.

Investors will be keen to see if Waller's supposedly more dovish stance is replicated by Jerome Powell when he speaks on Friday.

Premarket Movers

Berkshire Hathaway's class B shares were up slightly after Charlie Munger, Warren Buffett's right-hand man and vice chairman of the investment conglomerate, died at 99 years old.

CrowdStrike Holdings third-quarter earnings and revenue beat analysts' expectations and the cybersecurity company boosted its fiscal-year forecast. CrowdStrike said it expects adjusted profit of $2.95 to $2.96 a share in the fiscal year on revenue of about $3.05 billion. The stock was up 1.1%.

Fluence Energy was rising 19% after the company reported a surprise profit in its fiscal fourth quarter.

Intuit posted better-than-expected fiscal first-quarter profit and revenue but the company issued an earnings forecast for the second quarter below expectations. The stock was up 0.3%.

GameStop rose more than 14% premarket. Bullish GameStop call options in particular are seeing renewed volume, according to Cboe Global Markets data, as traders look ahead to the retailer's quarterly results next week.

Jabil lowered its guidance for the fiscal first quarter and year as a whole due to softer demand for its products. Shares declined 5.1%.

Las Vegas Sands declined 5.6% after disclosing that Miriam Adelson sold $2 billion of stock and plans to use the proceeds to "fund the purchase of a majority interest in a professional sports franchise."

Leslie's fell 15% premarket after reporting another quarter of sliding sales. Shares are already down 52% this year.

Workday raised its outlook for the year after posting higher-than-expected revenue in the fiscal third quarter. The stock rose 7.6%.

Forex:

The dollar was falling as the market reverses a trend of "excessive" optimism towards the currency amid growing evidence that the Fed has likely finished raising interest rates, Commerzbank said.

"What we are seeing is typical for the greenback at the end of a Fed rate hike cycle: Excessive dollar optimism on the part of market participants who had seen the dollar as a one-way street has to be priced out," it said.

Standard Chartered said the unemployment rate has begun rising from a cyclical trough, marking a turning point which is "associated with dollar weakness."

"Confirmation that the labor market is softening while inflation is on a steady downtrend could encourage policy rate cuts and weaken the dollar."

Typically after a point when unemployment keeps rising, the dollar tends to rebound, it said.

Energy:

Crude futures weakened slightly as the market awaits OPEC+'s crucial decision to extend or deepen supply cuts.

"The outlook for the oil market in 2024 will largely depend on OPEC+ policy," ING said.

DNB Markets said OPEC's core members could be motivated by geopolitical tensions in the Middle East to take on deeper output cutsbut a quota rollover is still seen as the easiest way forward.

"Any deeper cut has primarily to be shouldered by Saudi, Russia, UAE and Kuwait," DNB said. "However, a pressure for deeper cuts could result in a non-deal."

Reaching consensus among the group's members will be challenging amid disputes over production targets and Brent crude above $80 a barrel. Therefore, it is more likely that the meeting will result in Saudi Arabia extending its unilateral production cut into 2024.

Further support to prices on Wednesday likely stemmed from disruptions to oil loadings in the Black Sea, with Kazakhstan's energy ministry indicating that output at its largest fields has been cut by 56%, ING added.

Metals:

Base metals were mixed, with gold continuing to strengthen, helped by a weakening dollar and buoyed by the Fed's Waller, according to CBA.

"Given his typically hawkish bias in the past, the comments suggest that the FOMC are done raising rates and may be on track to cut rates next year," CBA said.

TODAY'S TOP HEADLINES

Cybersecurity Firm BlueVoyant Buys Conquest Cyber, Discloses $140 Million Funding Round

Cybersecurity company BlueVoyant has bought Conquest Cyber, a startup focused on the government and defense sectors, its fifth acquisition since 2020.

BlueVoyant Chief Executive James Rosenthal said his company also closed a Series E funding round of more than $140 million, which facilitated the acquisition. Private-equity firm Liberty Strategic Capital and cybersecurity investor Istari led the round.

Hawaiian Electric Refocuses Grid Plan on Wildfire Risk

Hawaiian Electric said it wasn't sufficiently focused on wildfire risk before August's deadly blaze on Maui and proposed nearly tripling the money it would now spend on the effort.

The utility, in regulatory filings this week, said it had been more concerned with hurricanes than with wildfire risk before the Aug. 8 fire that killed 100 people and leveled the town of Lahaina. The company said it now wants to revise a plan to improve its power grid to focus more on wildfires.

Mark Cuban Is Set to Sell Majority Stake in Dallas Mavericks to Adelson Family

One week before the NBA touches down in Las Vegas for the final of its inaugural In-Season Tournament, Sin City has forged another link to the hardwood. The family of the late casino mogul Sheldon Adelson has agreed to buy a majority stake in the Dallas Mavericks from entrepreneur Mark Cuban, a source familiar with the deal said Tuesday.

Las Vegas Sands disclosed plans by Miriam Adelson, Sheldon Adelson's widow, to sell an estimated $2 billion in stock in the company, which a regulatory filing said would be "used to fund the purchase of a majority interest in a professional sports franchise...subject to customary league approvals." NBA reporter Marc Stein first reported that the franchise in question would be the Mavericks.

SEC's Year-End Rule Blitz Continues. What It Means for Financial Stocks.

The Securities and Exchange Commission is showing no signs of letting up on its flurry of rule-making in the waning weeks of 2023, and the potential costs for big banks and other financial firms impacted by them is starting to add up.

The latest salvo came Monday, when the SEC finalized a rule meant to prevent conflicts of interest in the asset-backed securitization market. The provision is supposed to put a stop to firms shorting or otherwise betting against asset-backed securities that they had a hand in creating.

Charlie Munger, Warren Buffett's Partner and 'Abominable No-Man,' Dies at 99

No equal business partner has ever played second fiddle better than Charlie Munger.

Warren Buffett's closest friend and consigliere for six decades, the billionaire vice chairman of Berkshire Hathaway died Tuesday at age 99 in a California hospital. A news release from Berkshire confirmed his death.

Senate Races to Finish Border Talks, Pass Ukraine, Israel Aid

WASHINGTON-Senate Republicans and Democrats are headed for a showdown over the government's power to admit immigrants into the U.S. on humanitarian grounds, one element of tougher border restrictions GOP lawmakers are demanding to win their support for President Biden's aid package for Ukraine, Israel and Taiwan.

While bipartisan talks have made progress on tightening the initial screening process for migrants seeking asylum-a central demand of Republicans-a separate policy known as humanitarian parole has now emerged as a sticking point in negotiations, lawmakers said.

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TODAY IN CANADA

Earnings:

VersaBank 4Q

Economic Calendar (ET):

0830 Q3 Balance of Payments

Stocks to Watch:

Star Diamond to Buy Rio Tinto's 75% Interest in Fort a la Corne Diamond Project

Expected Major Events for Wednesday

00:01/UK: CBI Service Sector Survey

00:30/JPN: Oct Detailed Import & Export Statistics

06:30/GER: Nov North Rhine Westphalia CPI

06:30/FRA: 3Q Job creation

07:00/GER: Oct Foreign trade price indices

09:00/ITA: Nov Consumer Confidence Survey

09:00/ITA: Nov Business Confidence Survey

09:00/GER: Nov Saxony CPI

09:00/GER: Nov Hesse CPI

09:00/GER: Nov Baden-Wuerttemberg CPI

09:00/GER: Nov Brandenburg CPI

09:30/UK: Oct Money and Credit - Lending to Individuals, Lending to Businesses, Broad Money and Credit

09:30/UK: Oct Monetary & Financial Statistics

09:30/UK: Oct Bank of England effective interest rates

10:00/ITA: Oct PPI

11:00/ITA: Sep Industrial turnover

12:00/US: 11/24 MBA Weekly Mortgage Applications Survey

13:00/GER: Nov Provisional CPI

13:30/CAN: 3Q Balance of Payments

13:30/US: 3Q 2nd estimate GDP

13:30/US: Oct Advance Economic Indicators Report

13:30/US: 3Q Preliminary Corporate Profits

15:30/US: 11/24 EIA Weekly Petroleum Status Report

17:59/UK: REC JobsOutlook survey

19:00/US: U.S. Federal Reserve Beige Book

23:50/JPN: Oct Preliminary Retail Sales

23:50/JPN: Oct Preliminary Industrial Production

All times in GMT. Powered by Kantar Media and Dow Jones.

Expected Earnings for Wednesday

Arrowhead Pharmaceuticals Inc (ARWR) is expected to report $-0.80 for 4Q.

Construction Partners Inc (ROAD) is expected to report $0.52 for 4Q.

Costco Wholesale Corp (COST) is expected to report.

Credo Technology Group Holding Ltd (CRDO) is expected to report for 2Q.

Donaldson Co (DCI) is expected to report $0.72 for 1Q.

Essential Energy Services Ltd (EEYUF,ESN-T) is expected to report $0.02 for 3Q.

Exco Technologies (XTC.T) is expected to report $0.29 for 4Q.

Farfetch Ltd (FTCH) is expected to report $-0.39 for 3Q.

Five Below (FIVE) is expected to report $0.22 for 3Q.

Foot Locker Inc (FL) is expected to report $0.20 for 3Q.

General Motors (GM,GMM.U-T) is expected to report.

Hormel Foods Corp (HRL) is expected to report $0.45 for 4Q.

Ingles Markets Inc (IMKTA) is expected to report for 4Q.

Inspired Entertainment (INSE) is expected to report $-0.12 for 3Q.

La-Z-Boy Inc (LZB) is expected to report $0.62 for 2Q.

Near Intelligence Inc (NIR) is expected to report for 3Q.

Nutanix Inc (NTNX) is expected to report $-0.13 for 1Q.

Ocean Biomedical Inc (OCEA) is expected to report for 3Q.

Okta Inc (OKTA) is expected to report $-0.80 for 3Q.

PVH Corp (PVH) is expected to report $2.71 for 3Q.

Patterson Companies (PDCO) is expected to report $0.51 for 2Q.

Petco Health & Wellness Co Inc (WOOF) is expected to report for 3Q.

Pure Storage Inc (PSTG) is expected to report $0.11 for 3Q.

Quantum Corp (QMCO) is expected to report $-0.11 for 2Q.

Rogers Sugar Inc (RSGUF,RSI.T) is expected to report for 4Q.

Scully Royalty Ltd (SRL) is expected to report for Interim.

Snowflake Inc (SNOW) is expected to report for 3Q.

Synopsys Inc (SNPS) is expected to report $2.20 for 4Q.

TRX Gold Corp (TNX.T,TRX) is expected to report for 4Q.

Victoria's Secret & Co (VSCO) is expected to report for 3Q.

Yellow Corp (YELLQ) is expected to report for 3Q.

Zuora Inc (ZUO) is expected to report $-0.13 for 3Q.

nCino Inc (NCNO) is expected to report for 3Q.

Powered by Kantar Media and Dow Jones.

ANALYST RATINGS ACTIONS

Affirm Holdings Raised to Hold From Underperform by Jefferies

American Axle Cut to Underperform From Neutral by B of A Securities

Boeing Raised to Outperform From Sector Perform by RBC Capital

Booz Allen Hamilton Cut to Equal-Weight From Overweight by Wells Fargo

ChargePoint Cut to Neutral From Buy by UBS

Crocs Raised to Strong Buy From Outperform by Raymond James

Edwards Lifesciences Cut to Underperform From Peer Perform by Wolfe Research

EQT Raised to Overweight From Equalweight by Morgan Stanley

Intl Flavors & Fragrances Raised to Buy From Hold by Argus Research

Mid-America Apartment Raised to Buy From Neutral by Colliers Securities

Mondelez Raised to Buy From Hold by Argus Research

Morgan Stanley Cut to Hold From Buy by Societe Generale

nLIGHT Raised to Speculative Buy From Hold by Benchmark

RLJ Lodging Trust Raised to Outperform From Perform by Oppenheimer

Welltower Cut to Sector Perform From Outperform by RBC Capital

This article is a text version of a Wall Street Journal newsletter published earlier today.

(END) Dow Jones Newswires

November 29, 2023 06:15 ET (11:15 GMT)

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