North American Morning Briefing: Stock Futures Up as Investors Bet on Fed Rate Cuts -2-

Stocks

Summary:

U.S. stock futures rose as investors bet on Fed rate cuts. Corporate headlines, earnings expectations, a packed economic calendar, and numerous analyst rating changes shaped sentiment, with Canadian and mining sector deals announced.

North American Construction Group Strengthens Its Presence In Western Australia With The Acquisition Of Iron Mine Contracting, A Diversified Mining Services Contractor; to Buy Iron Mine Contracting for About C$115M

Reitmans Canada 3Q Net Income CAD 0.9M; 3Q Gross Profit CAD 109.6M; 3Q Revenue CAD 194.9M; 3Q Adj EBITDA CAD 5.6M; 3Q EPS CAD 0.02; Reports 3Q Revenue of CAD 194.9 Million

Sony to Take Control of 'Peanuts' Franchise

TransAlta Provides Notice to Mothball Sheerness Unit 1; Sheerness Unit 1 to Be Temporarily Mothballed April 1; Sheerness Unit 1 to Be Mothballed for Up to Two Years

Expected Major Events for Friday

00:01/UK: Dec UK Consumer Confidence Survey

00:01/UK: Nov UK monthly automotive manufacturing figures

00:01/UK: Nov Zoopla House Price Index

07:00/GER: Dec GfK consumer climate survey

07:00/GER: Nov PPI

07:00/UK: Nov Public sector finances

07:00/UK: Nov UK monthly retail sales figures

07:45/FRA: Nov PPI

08:59/JPN: Japan Monetary Policy Meeting decision

08:59/JPN: Dec Monthly Economic Report

09:00/ITA: Dec Consumer Confidence Survey

09:00/ITA: Dec Business Confidence Survey

09:30/UK: Nov Monthly Insolvency statistics

09:30/UK: 3Q Bank of England statistics on UK banks' external claims

10:00/ITA: Oct Balance of Payments

10:00/ITA: Oct Industrial turnover

11:00/UK: Dec CBI Distributive Trades Survey

13:30/CAN: Nov New Housing Price Index

13:30/CAN: Oct Retail trade

15:00/US: Oct Employment Trends Index

15:00/US: Nov Employment Trends Index

15:00/US: Nov Existing Home Sales

15:00/US: Dec University of Michigan Survey of Consumers - final

All times in GMT. Powered by Onclusive and Dow Jones.

Expected Earnings for Friday

Bio-Path Holdings Inc (BPTH) is expected to report for 3Q.

Carnival Corp (CCL) is expected to report $0.24 for 4Q.

Conagra Brands Inc (CAG) is expected to report $0.43 for 2Q.

Lamb Weston Holdings Inc (LW) is expected to report $0.60 for 2Q.

Paychex Inc (PAYX) is expected to report $1.12 for 2Q.

TX Rail Products Inc (TXRP) is expected to report for 4Q.

Winnebago Industries Inc (WGO) is expected to report $0.00 for 1Q.

ANALYST RATINGS ACTIONS

ABM Industries Cut to Neutral From Buy by UBS

Allstate Cut to Market Perform From Outperform by William Blair

Americold Realty Trust Cut to Neutral From Outperform by Baird

Camden Property Trust Raised to Neutral From Underweight by JP Morgan

Cinemark Cut to Equal-Weight From Overweight by Morgan Stanley

Core Scientific Raised to Market Outperform From Market Perform by Citizens

Edwards Lifesciences Raised to Overweight From Neutral by JP Morgan

Energy Transfer Cut to Equal-Weight From Overweight by Morgan Stanley

Enphase Energy Raised to Neutral From Sell by Goldman Sachs

Enterprise Pdts Partners Cut to Underweight From Equal-Weight by Morgan Stanley

Evergy Cut to Neutral From Outperform by Mizuho

Federal Realty Raised to Overweight From Neutral by JP Morgan

GE Vernova Raised to Buy From Hold by Jefferies

Glacier Bancorp Raised to Overweight From Neutral by Piper Sandler

Helmerich & Payne Raised to Overweight From Neutral by Piper Sandler

Heritage Commerce Cut to Neutral From Buy by DA Davidson

Kemper Corp Cut to Underperform From Market Perform by William Blair

Kennedy-Wilson Holdings Cut to Underweight From Neutral by JP Morgan

Lennar Cut to Underperform From In-Line by Evercore ISI Group

Lennar Cut to Underperform From Neutral by B of A Securities

Lennar Cut to Underperform From Sector Perform by RBC Capital

Lineage Cut to Neutral From Outperform by Baird

Merck Raised to Outperform From Market Perform by BMO Capital

Micron Technology Raised to Buy From Neutral by B of A Securities

Nabors Raised to Overweight From Underweight by Piper Sandler

NMI Holdings Raised to Outperform From Market Perform by Keefe, Bruyette & Woods

PayPal Holdings Cut to Underweight From Equal-Weight by Morgan Stanley

PennyMac Mtg Invt Tr Raised to Outperform From Market Perform by Keefe, Bruyette & Woods

Penumbra Raised to Overweight From Neutral by JP Morgan

Public Storage Cut to Neutral From Overweight by JP Morgan

Ranger Energy Services Raised to Overweight From Neutral by Piper Sandler

Realty Income Cut to Underweight From Neutral by JP Morgan

Regency Centers Cut to Neutral From Overweight by JP Morgan

Rivian Automotive Raised to Outperform From Neutral by Baird

Sealed Air Cut to Neutral From Outperform by Baird

Shake Shack Raised to Neutral From Underweight by JP Morgan

Sherwin-Williams Raised to Buy From Neutral by Citigroup

Simulations Plus Cut to Neutral From Buy by BTIG

SmartStop Self REIT Cut to Underweight From Neutral by JP Morgan

Sphere Entertainment Raised to Overweight From Equal-Weight by Morgan Stanley

Two Harbors Cut to Hold From Buy by Maxim Group

UDR Inc Cut to Underweight From Neutral by JP Morgan

Verrica Pharmaceuticals Raised to Buy From Hold by Brookline Capital

Warner Music Group Raised to Overweight From Equal-Weight by Morgan Stanley

Welltower Cut to Neutral From Overweight by JP Morgan

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

Source: morningstar

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Glendon

Political

Commodity

U.S. crude oil prices were stable on Friday after President Donald Trump told NBC News that he will not rule out war with OPEC member Venezuela.

"I don't rule it out, no," Trump told the news outlet in a phone interview. He declined to say whether overthrowing President Nicolas Maduro is his goal.

"He knows exactly what I want," Trump told NBC. "He knows better than anybody."

The oil market right now is not indicating a major risk of a supply disruption. U.S. crude oil rose 29 cents, or 0.5%, to $56.44 per barrel, while global benchmark Brent was up 31 cents, or 0.5% to $60.31.

The U.S. benchmark fell to four year lows earlier this week as traders priced in the possibility of a peace agreement in Ukraine that would bring more Russian crude into a well supplied market.

Trump has been ramping up pressure on Maduro. He ordered a blockade of sanctions oil tankers off the South American nation's coast after seizing a vessel a last week.

The U.S. has staged a major military buildup in the Caribbean and launched deadly strikes on boats that it claims are trafficking drugs to the U.S. The legality of those strikes is disputed and has been the subject of scrutiny by Congress.

Venezuela is a founding member of OPEC and has the largest proven oil reserves in the world. It is exporting about 749,000 barrels per day this year with at least half that oil going to China, according to data from Kpler. Venezuela exports about 132,000 bpd to the U.S., according to Kpler.

Source: CNBC

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Adam

Bond

Japanese government bond yields jumped and the yen weakened on Friday after the Bank of Japan raised interest rates to a three-decade high and left the door wide open to further tightening.

Global stocks saw some gains, with European stocks edging 0.1% higher (.STOXX) but failed to match much stronger trading sessions in Asia and the U.S. overnight. Wall Street futures pointed to gains of between 0.3% and 0.5%, after rallying Thursday on stellar results from chipmaker Micron Technology. (MU.O).

Investors were also digesting news that the European Union would provide Ukraine with 90 billion euros ($105.4 billion) of support over the next two years, but failed to agree on an ambitious plan to use frozen Russian assets to finance this.

The BOJ's widely expected rate hike led investors to sell the yen on the fact and drove some profit-taking. The dollar was last up as much as 1% on the yen at 157.07. , while Japan's 10-year government bond yield hit a 26-year peak and the Nikkei closed up 1%. (.N225)

The BOJ's decision to raise short-term rates to 0.75% marks another step in ending decades of huge monetary support in the country. Analysts said it would need to plot a careful path to manage inflation as Japan's new government prepares major fiscal stimulus.

“Markets expect the Bank of Japan will have to raise rates more," said Shaniel Ramjee, co-head of multi-asset at Pictet Asset Management. "That extra fiscal spending might continue to weaken the yen, which exacerbates inflation.”

Capital Economics senior economist Abhijit Surya said he expected BOJ rates reaching 1.75% by 2027.

ECB, BoE OFFER DIFFERENT LEVELS OF HAWKISHNESS

Wider sentiment got a boost from a surprise slowdown in U.S. consumer price inflation to 2.7%, though analysts cautioned the data were clearly distorted lower by the government shutdown and could not be taken at face value.

Pricing for the Federal Reserve moved only marginally with a rate cut in January implied at just 27%, while 10-year Treasury yields were at 4.1354% , some way from the recent 3-1/2-month top of 4.209%.

Overnight, British bonds had taken a hit after the Bank of England cut rates as expected but only after a very tight 5-4 vote. Policymakers also signalled caution about the pace of future easing and another cut is now not fully priced in until June.

The European Central Bank was even more hawkish as it held rates at 2.0% and signalled a likely end to the easing cycle. Markets imply only a minor chance of a cut for all of 2026.

In commodity markets, gold slipped 0.1% to $4,329 an ounce , trading still below its October peak of $4,381.

Brent fell 0.5% to $59.51 a barrel, while U.S. crude eased 0.5% to $55.89 per barrel.

($1 = 0.8536 euros)

Source: reuters

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Samantha Luan

Political

Economic

· Board votes to rename Kennedy Center to Trump Kennedy Center

· Renaming requires an act of Congress, ex officio board members say

· Trump's name previously affixed to US Institute of Peace building

The board of the John F. Kennedy Center for the Performing Arts, which President Donald Trump filled with allies during a broad takeover earlier this year, decided on Thursday to add Trump's name to the institution, horrifying Democrats and raising questions about the legality of the change.

Trump, a Republican who is serving his second term as president, has been eager to put his stamp on Washington and his name on buildings. The administration recently added his name to the United States Institute of Peace building near the White House.

Democrats who serve on the Kennedy Center board said it could not change the name without congressional approval.

After taking little interest in it during his first term, Trump launched a revamp of the Kennedy Center shortly after returning to power. He ousted its chair and installed a new board that made him chair instead. He also fired the center's longtime president, tapping Richard Grenell, a former ambassador to Germany, to run it in her place.

The addition of Trump's name is the latest and perhaps most visible change he and his allies have made to an institution that for decades has been seen as a living memorial to Kennedy, who was assassinated in 1963.

"The Kennedy Center Board of Trustees voted unanimously today to name the institution The Donald J. Trump and The John F. Kennedy Memorial Center for the Performing Arts," Center spokeswoman Roma Daravi said in a statement. "The new Trump Kennedy Center reflects the unequivocal bipartisan support for America's cultural center for generations to come."

The Center did not respond to a question about whether congressional approval was required or would be sought for the new name.

DEMOCRATS OBJECT

U.S. Representative Joyce Beatty, a Democrat and ex officio board member, said she had not been allowed to weigh in on the change during the meeting. "For the record. This was not unanimous. I was muted on the call and not allowed to speak or voice my opposition to this move," she wrote on X.

Beatty and other ex officio members including Senate Democratic leader Chuck Schumer and House of Representatives Democratic leader Hakeem Jeffries said participants were prevented from speaking at the meeting. Ex officio board members receive their positions because of their government roles and through an act of Congress.

"Beyond using the Kennedy Center to reward his friends and political allies, President Trump is now attempting to affix his name to yet another public institution without legal authority," they said in a statement. "Federal law established the Center as a memorial to President Kennedy and prohibits changing its name without Congressional action."

Daravi said the full board was invited to attend in person and "the privilege of listening in on the meeting was granted to all members, even those without a vote, such as ex officio member Joyce Beatty."

Earlier this month Trump hosted the Kennedy Center Honors, the institution's flagship awards show for the arts, and referred to it as the "Trump Kennedy Center" at one point from the stage. Yet on Thursday, he told reporters he was surprised and honored by the board's decision, while adding that his administration is "saving" the center's building through fundraising and renovation efforts.

"We saved the building," Trump said. "The building was in such bad shape, both physically, financially and every other way."

Trump has complained that the center had become run-down and has worked to raise funds, including at a performance of "Les Miserables" this summer, to make renovations.

"Congratulations to President Donald J. Trump, and likewise, congratulations to President Kennedy, because this will be a truly great team long into the future!" White House spokeswoman Karoline Leavitt said on X.

Kennedy's grandnephew, former U.S. Representative Joe Kennedy, said the board did not have the right to change the Center's name.

"The Kennedy Center is a living memorial to a fallen president and named for President Kennedy by federal law. It can no sooner be renamed than can someone rename the Lincoln Memorial, no matter what anyone says," he wrote on X.

Source: Reuters

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Michelle

Forex

Economic

New York Federal Reserve President John Williams said Friday that "technical factors" likely distorted November's inflation data, pushing the headline reading lower than it otherwise would have been.

"There were some special factors of practical factors that really are related to the fact that they weren't able to collect date in October and not in the first half of November. And because of that, I think the data were distorted in some of the categories, and that pushed down the CPI reading, probably by a tenth or so," Williams said on CNBC's "Squawk Box."

"It's hard to know, we'll get some when we'll get to December date, I think we'll get a better reading of how much that distortion, how big the effect was, but I do think that that was pushed down a bit by these technical facts," he added.

The consumer price index rose at a 2.7% annualized rate last month, a delayed report from the Bureau of Labor Statistics showed. Economists polled by Dow Jones expected the CPI to have risen 3.1%.

Because the October CPI release was canceled, Thursday's report lacked several of the standard data points typically included in a CPI report. The Bureau of Labor Statistics said it could not go back and collect October survey data, though it relied on "nonsurvey data sources" to construct the index.

As a result, economists may be cautious about interpreting the report as clear evidence that inflation is on a sustained downward path, given the absence of an October comparison.

Source: CNBC

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Adam

Central Bank

Economic

The Bank of Japan raised its benchmark interest rate to the highest in 30 years and signaled more hikes are likely in the pipeline, yet the yen weakened from disappointment that the messaging from the central bank wasn’t stronger.

Governor Kazuo Ueda’s policy board increased the rate by a quarter percentage point to 0.75% in a unanimous decision, according to its statement Friday. The central bank cited the rising likelihood of its economic outlook being realized, and pointed to data showing solid wage growth momentum and receding risks from US tariffs. The rate change was expected by all 50 economists surveyed by Bloomberg.

The BOJ made it clear that the hiking cycle will continue by asserting that it intends to keep raising borrowing costs if its economic outlook is realized, and the chances of that happening are increasing. It also said that underlying inflation is continuing to rise moderately.

“We’ll keep making appropriate decisions at each policy meeting,” Ueda said during his post-decision press conference. “The pace at which we adjust our rate will depend on the state of the economy and prices.”

While market participants were closely watching whether Ueda will give further clarity on where he sees the neutral rate — the level at which the policy rate is neither stimulative nor restrictive — the governor continued to say it’s difficult to judge where that rate may precisely be. The central bank sees the rate as roughly somewhere between 1% and 2.5%.

“Of course it would be great if we can have a better idea of where the neutral rate is, but it’s not easy,” said Ueda, while noting that the current rate was still below the lower end of the estimated range.

What Bloomberg Economics Says...

“The decision statement describes rates as “at significantly low levels,” even as they edge toward the BOJ’s 1% estimate for the lower bound of neutral. That suggests the bank now sees neutral as higher, giving it room to tighten further.”

The yen weakened past 157.10 against the dollar after Ueda spoke, suggesting that traders were looking for stronger messaging around further hikes ahead. It was trading around 155.80 before the decision.

“The market was looking for clear hawkish signals,” said Masamichi Adachi, chief Japan economist at UBS Securities and a former BOJ official. “Of course, the BOJ said that Japan’s real rate is significantly low and that suggests more hikes to come, but Ueda’s comments alone almost sounded like the rate hike cycle could end soon.”

Japanese government bond yields rose after the decision, with the yield on the benchmark 10-year bond climbing above 2% and hitting the highest level since 1999. The Nikkei 225 Stock Average had earlier closed 1% higher.

The policy change underscored Ueda’s determination to keep raising rates, as inflation gradually embeds itself into the economy in a major shift from decades of weak prices, following the early 1990s bursting of an asset bubble. Earlier Friday, data showed that a key gauge of consumer prices rose 3% in November, extending the streak of months at or above the BOJ’s 2% inflation target to 44.

“I think the BOJ will continue raising rates at a pace of around once every six months or so,” Kazuo Momma, a former BOJ executive director, said on Bloomberg TV shortly after the decision, a comment largely in line with market consensus. “Maybe two rate hikes in 2026 and one more in 2027, reaching the level of 1.5%.”

While the emergence of monetary easing advocate Sanae Takaichi as prime minister in October raised doubts about Ueda’s leeway to keep normalizing policy, the political costs of continued inflationary pressure and yen weakness helped ensure that the government didn’t discourage the move.

Ueda sought to ensure there’s no perception that the central bank is working against the government’s efforts to stimulate the economy. In the policy statement the BOJ assured that accommodative monetary conditions will continue to support the economy.

“We’ve been conducting monetary policy according to our joint statement with the government,” Ueda said, referring to the agreement to seek sustainable 2% inflation established in 2013 that ushered in a period of unprecedented easing under his predecessor, Haruhiko Kuroda. “We’re now in the final phase of our efforts.”

Ueda raised borrowing costs for the first time since January following economic data signaling that President Donald Trump’s tariffs aren’t delivering a major blow to the economy. Also, various labor unions have set targets ahead of annual wage talks similar to what they set a year ago, when the process resulted in historic gains in pay, indicating that wage momentum is intact.

The market’s focus is now on the timing for future hikes, with most BOJ watchers anticipating the pace will be once every six months.

The action underscores the BOJ’s outlier status among its global peers as the only major central bank raising rates this year. Last week the Federal Reserve cut its rate for a third time this year. Even after Friday’s hike, Japan’s interest rate remains well below its inflation level, while US borrowing costs are higher than price growth there. The movements show that the two rates are converging.

This was the first unanimous rate hike decision under Ueda, projecting a united front after two of the nine board members voted against keeping the rate unchanged at the last two gatherings. Still, two of the board’s most hawkish members objected to the description of the outlook for prices. Both Naoki Tamura and Hajime Takata said the price trend would be consistent with the bank’s inflation goal at an earlier stage than outlined.

Friday’s decision wasn’t a surprise after Ueda dropped clear hints for the change earlier this month. The central bank also flagged a likely move ahead of its previous hike back in January. Those actions suggest the central bank has sought to make its messaging clearer after a rate increase in July 2024 caught some investors by surprise and helped trigger global market turmoil.

Most BOJ watchers suspect the recent depreciation of the yen was a key reason prompting Ueda to drop such strong hints before taking action. The yen hit the lowest level in 10 months last month, approaching the key threshold of 160 against the greenback and prompting warnings from financial authorities.

Takaichi made no explicit attempt to stop the BOJ from hiking rates this time, with some 98% of surveyed BOJ watchers citing the yen’s fall as the likely reason for that. The weak currency could intensify domestic inflationary pressures via higher import costs, jeopardizing her goal of reducing the hit to households from inflation.

Public discontent over soaring costs of living led to Takaichi’s ruling Liberal Democratic Party taking major hits in the last two national elections before she took office in October.

With a history of political backlash against the BOJ’s rate hikes in the 2000s, analysts will be closely looking at Ueda’s communications with Takaichi’s government to forecast the BOJ’s path ahead.

“The BOJ has to run alongside the fiscally expansionary Takaichi administration,” said Daisuke Karakama, chief market economist at Mizuho Bank. “The bottom line was Ueda wasn’t able to say something that would clearly increase hawkish messaging.”

Source:Bloomberg

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Adam

Commodity

Gold and silver hovered near record highs, after slower-than-expected inflation in the US supported bets for more interest-rate cuts.

Spot gold was near $4,330 an ounce by mid-morning in London on Friday, and on track for a second weekly gain. The core US consumer price index rose at the slowest pace since early 2021, according to data released on Thursday, bolstering the case for lower borrowing costs – a tailwind for non-yielding precious metals.

However, the latest inflation report was muddled by a record six-week government shutdown that ended last month. Since delivering its third straight rate cut last week, the Federal Reserve has been ambiguous about the future pace of monetary easing. Traders are assigning a roughly 25% chance of a reduction in January, while US President Donald Trump has advocated aggressively for lowering rates next year.

In Asia, the yen dropped against the dollar after the Bank of Japan raised its interest rate to the highest level since 1995 but offered no clear guidance on future monetary tightening.

Geopolitical tensions, including in Venezuela, have also enhanced gold’s haven appeal. Trump has ordered a blockade of all sanctioned oil tankers off the country’s coast as he ratchets up pressure on Caracas amid a buildup of America’s military presence in the region.

Precious metals have been on a scorching rally this year, with both gold and silver set for their best annual performances since 1979. Silver has more than doubled and gold has jumped about two-thirds on a run underpinned by elevated central-bank buying and inflows into bullion-backed exchange-traded funds.

Falling US interest rates have led ETF investors “to start competing for limited bullion with central banks,” Goldman Sachs Group Inc. analysts including Daan Struyven said in a note. “We expect the same two drivers — structurally high central-bank demand and cyclical support from Fed cuts — to lift the gold price further.”

Platinum has also more than doubled this year. The metal’s surge to above $1,980 an ounce — the highest since 2008 — has come as the London market shows signs of tightening, with banks parking supplies in the US to insure against the risk of tariffs. Exports to China have also been robust this year, with demand bolstered by the start of futures trading in Guangzhou.

Gold was little changed at $ an ounce as of 10:46 a.m. in London, up about 0.7% for the week. It hit an all-time high above $4,381 in October. Silver rose to $, trading near a record of $66.89 set on Wednesday. Platinum edged lower, while palladium rose . The Bloomberg Dollar Spot Index was up .