01/09/23 Briefing

The S&P 500 futures are up 15 points and are trading 0.4% above fair value. The Nasdaq 100 futures are up 30 points and are trading 0.2% above fair value. The Dow Jones Industrial Average futures are up 125 points and are trading 0.4% above fair value.

Equity futures indicate a higher open. Pre-open gains in lululemon athletica (LULU), Dell (DELL), and MongoDB (MDB) following their earnings reports have offered a measure of support to the broader market, along with expected inflows on the first day of a new trading month.

The tone of the market could change with the release of the August Employment Situation Report at 8:30 a.m. ET. Other U.S. data today includes:

• 9:45 ET: Final August S&P Global U.S. Manufacturing PMI (prior 47.0)

• 10:00 ET: July Construction Spending (Briefing.comconsensus 0.6%; prior 0.5%) and August ISM Manufacturing Index (Briefing.comconsensus 46.7%; prior 46.4%)

Manufacturing PMIs from the eurozone and Asia remained in contractionary territory in their final readings for August.

The People's Bank of China will lower the foreign exchange reserve requirement ratio to 4.00% from 6.00%, effective September 15.The PBoC also confirmed speculation about rate cuts on some existing mortgages, effective September 25.

In corporate news:

• Broadcom (AVGO 886.70, -36.19, -3.9%): beats by $0.11, reports revs in-line; guides Q4 revs in-line

• lululemon athletica (LULU 390.00, +8.74, +2.3%): beats by $0.14, beats on revs, comparable store sales of +7%; guides Q3 EPS in-line, revs above consensus; raises FY24 EPS and revenue guidance above consensus

• MongoDB (MDB 402.00, +20.70, +5.4%): beats by $0.47, beats on revs; guides Q3 EPS above consensus, revs above consensus; guides FY24 EPS above consensus, revs above consensus

• Dell (DELL 61.60, +5.36, +9.5%): beats by $0.60, beats on revs; sees Q3 EPS mostly above consensus, revs above consensus; raises FY24 EPS and revenue forecasts

• PagerDuty (PD 22.74, -3.02, -11.7%): beats by $0.08, beats on revs; guides Q3 EPS below consensus, revs in-line; reaffirms FY24 EPS guidance, guides FY24 revs in-line; downgraded to Neutral from Outperform at Robert W. Baird

• Elastic (ESTC 71.55, +9.67, +15.6%): beats by $0.14, beats on revs; guides Q2 EPS above consensus, revs above consensus; guides FY24 EPS above consensus, revs in-line

• Vale S.A. (VALE 13.35, +0.18, +1.4%): begins load tests at the first iron ore briquette plant in Brazil; upgraded to Overweight from Neutral at JP Morgan

• Oxford Industries (OXM 95.75, -5.24, -5.2%): beats by $0.05, reports revs in-line; guides FY24 EPS below consensus, revs below consensus

• SentinelOne (S 17.38, +0.75, +4.5%): beats by $0.06, beats on revs; guides Q3 revs above consensus; guides FY24 revs above consensus

• Nutanix (NTNX 37.13, +6.03, +19.4%): beats by $0.08, beats on revs; guides Q1 revs above consensus; guides FY24 revs above consensus; authorizes $350 mln for repurchases

• Charter (CHTR 435.00, -3.12, -0.7%): customers will not be able to watch Disney (DIS) networks this weekend amid dispute; provides presentation and update on distribution agreement with Disney (DIS)

• Li Auto (LI 42.690, +0.95, +2.3%): reports August deliveries increased 663.8% yr/yr

• Walgreens Boots Alliance (WBA 25.65, +0.34, +1.3%): announces leadership transition; Rosalind Brewer steps down as CEO and member of the board; Ginger Graham, current lead independent director, appointed interim CEO; sees FY23 EPS at or near low end of prior range

Reviewing overnight developments:

• Equity indices in the Asia-Pacific region ended the week on a mostly higher note while markets in Hong Kong were closed due to a typhoon. Japan's Nikkei: +0.3% (+3.4% for the week), Hong Kong's Hang Seng: CLOSED (+2.4% for the week), China's Shanghai Composite: +0.4% (+2.3% for the week), India's Sensex: +0.9% (+0.8% for the week), South Korea's Kospi: +0.3% (+1.8% for the week), Australia's ASX All Ordinaries: -0.4% (+2.2% for the week).

• In economic data:

• China's August Caixin Manufacturing PMI 51.0 (expected 49.3; last 49.2)

• Japan's Q2 Capital Spending 4.5% yr/yr (expected 5.4%; last 11.0%) and August Manufacturing PMI 49.6 (expected 49.7; last 49.6)

• South Korea's August trade surplus $870 mln (expected surplus of $1.65 bln; last surplus of $1.65 bln). August Imports -22.8% yr/yr (expected -25.4%; last -25.4%) and Exports -8.4% yr/yr (expected -16.4%; last -16.4%). August Manufacturing PMI 48.9 (last 49.4)

• India's August Manufacturing PMI 58.6 (expected 57.5; last 57.7)

• Australia's July Home Loans -2.3% m/m (expected -1.0%; last -3.0%) and Invest Housing Finance -0.1% m/m (last 1.3%)

• In news:

• Australia's Manufacturing PMI remained in contraction for the sixth consecutive month while Japan's Manufacturing PMI contracted for the third month in a row.

• Meanwhile, South Korea's Manufacturing PMI remained in contractionary territory for the 14th consecutive month.

• The People's Bank of China will lower the foreign exchange reserve requirement ratio to 4.00% from 6.00%, effective September 15.

• The PBoC also confirmed speculation about rate cuts on some existing mortgages, effective September 25.

• In addition, the Chinese government is raising the personal income tax deductions for child care.

• Major European indices are seeking a mostly higher finish to the week. STOXX Europe 600: +0.4% (+1.9% week-to-date), Germany's DAX: -0.1% (+1.9% week-to-date), U.K.'s FTSE 100: +0.6% (+2.0% week-to-date), France's CAC 40: +0.2% (+1.4% week-to-date), Italy's FTSE MIB: +0.1% (+2.3% week-to-date), Spain's IBEX 35: +0.3% (+2.1% week-to-date).

• In economic data:

• Eurozone's August Manufacturing PMI 43.5 (expected 43.7; last 42.7)

• Germany's August Manufacturing PMI 39.1, as expected (last 38.8)

• U.K.'s August Nationwide HPI -0.8% m/m (expected -0.3%; last -0.3%); -5.3% yr/yr (expected -3.9%; last -3.8%). August Manufacturing PMI 43.0 (expected 42.5; last 45.3)

• France's July government budget deficit EUR169.0 bln (last deficit of EUR116.2 bln). August Manufacturing PMI 46.0 (expected 46.4; last 45.1)

• Italy's August Manufacturing PMI 45.4 (expected 46.0; last 44.5). Q2 GDP -0.4% qtr/qtr (expected -0.3%; last 0.6%); 0.4% yr/yr (expected 0.6%; last 1.9%). July PPI -0.1% m/m (last -0.3%); -10.2% yr/yr (last -5.5%)

• Spain's August Manufacturing PMI 46.5 (expected 48.8; last 47.8)

• Swiss August CPI 0.2% m/m, as expected (last -0.1%); 1.6% yr/yr (expected 1.5%; last 1.6%). August procure.chPMI 39.9 (expected 40.0; last 38.5)

• In news:

• European Central Bank policymaker Villeroy de Galhau said that the interest rate peak is near, fueling additional speculation about a potential pause at the September meeting.

• Manufacturing PMIs from Germany, France, Italy, Spain, and the U.K. remained in contractionary territory in their final readings for August.

U.S. equity futures:

• S&P 500 Futures +17 @ 4,525

• DJIA Futures: +147 @ 34,869

• Nasdaq 100 Futures: +40 @ 15,541

Overseas:

• Europe: DAX -0.1%, FTSE +0.6%, CAC +0.2%

• Asia: Nikkei +0.3%, Hang Seng CLOSED, Shanghai Composite +0.4%

Commodities:

• Crude Oil +0.87 @ 84.50

• Nat Gas -0.023 @ 2.745

• Gold +4.95 @ 1970.85

• Silver +0.181 @ 24.993

• Copper +0.0613 @ 3.8833

Earnings/Guidance:

• A-Mark Precious Metals (AMRK) misses by $0.05, beats on revs; declares special dividend of $1.00/share

• Broadcom (AVGO) beats by $0.11, reports revs in-line; guides Q4 revs in-line

• Dell (DELL) beats by $0.60, beats on revs; ees Q3 EPS mostly above consensus, revs above consensus; raises FY24 EPS and revenue forecasts

• Elastic (ESTC) beats by $0.14, beats on revs; guides Q2 EPS above consensus, revs above consensus; guides FY24 EPS above consensus, revs in-line

• HashiCorp (HCP) beats by $0.05, beats on revs; guides Q3 EPS in-line, revs above consensus; guides FY24 EPS above consensus, revs above consensus

• Li Auto (LI) reports August deliveries increased 663.8% yr/yr

• Lovesac (LOVE) postpones release of Q2 results; guides Q2 revs above consensus

• lululemon athletica (LULU) beats by $0.14, beats on revs, comparable store sales of +7%; guides Q3 EPS in-line, revs above consensus; raises FY24 EPS and revenue guidance above consensus

• MongoDB (MDB) beats by $0.47, beats on revs; guides Q3 EPS above consensus, revs above consensus; guides FY24 EPS above consensus, revs above consensus

• NIO (NIO) reports August deliveries increased 81% yr/yr

• Nutanix (NTNX) beats by $0.08, beats on revs; guides Q1 revs above consensus; guides FY24 revs above consensus; authorizes $350 mln for repurchases

• Old National Bancorp (ONB) provides FY23 guidance update

• Oxford Industries (OXM) beats by $0.05, reports revs in-line; guides FY24 EPS below consensus, revs below consensus

• PagerDuty (PD) beats by $0.08, beats on revs; guides Q3 EPS below consensus, revs in-line; reaffirms FY24 EPS guidance, guides FY24 revs in-line

• Quanex (NX) beats by $0.32, beats on revs; guides FY23 revs to lower end of prior guidance but raises adjusted EBITDA guidance

• Samsara (IOT) beats by $0.03, beats on revs; guides Q3 EPS in-line, revs above consensus; guides FY24 EPS above consensus, revs above consensus

• SentinelOne (S) beats by $0.06, beats on revs; guides Q3 revs above consensus; guides FY24 revs above consensus

• VMware (VMW) beats by $0.12, misses on revs

• XPeng (XPEV) reports August deliveries increased 24% yr/yr

News:

• White House wants Congress to pass short term continuing resolution to avoid government shutdown, according to the Washington Post

• China increasing measures to support the renminbi, according to Financial Times

• Bank of America believes US stocks are at risk for a hard landing, according to Bloomberg

• The Biden administration will propose expanded background checks for gun sales, according to the New York Times

• U.S. SEC delays decision to approve Bitcoin ETF, according to Bloomberg

• EU Commission authorizes adapted COVID-19 vaccine for Member States' autumn vaccination campaigns

• Macau Gaming Inspection and Coordination Bureau reported August gross revs +686% yr/yr to HKD 17.2 bln versus -50.7% in August of 2022

• 23andMe (ME) Granted New FDA Clearance to Report Additional BRCA Variants

• Avista (AVA) receives approval from Idaho Public Utilities Commission regarding its electric and natural gas rate increases

• BAE Systems (BAESY) awarded $433 mln U.S. Army contract modification

• Baidu (BIDU) had 1 million users try its AI chatbot, according to Tech Node

• Barclays (BCS) earmarked cash from balance sheet to compete with private credit funds, according to Bloomberg

• Bitfarms (BITF) reports it mined 383 BTC in August

• Carnival (CCL): AIDA Cruises and Hamburg confirm long-term cooperation

• Charter (CHTR) customers will not be able to watch Disney (DIS) networks this weekend amid dispute, according to the Wall Street Journal

• Chevron (CVX): Both sides will have talks to avert Australia CVX LNG strike in Australia, according to Reuters

• Denison Mines (DNN) CFO on temporary medical leave of absence, interim CFO appointed

• Eos Energy (EOSE) announces $500 million expansion program to scale annual production to 8 GWh storage capacity by 2026 to meet demand for Long Duration Energy Storage

• Flowers Foods (FLO) entered into a binding settlement term sheet

• Ford Motor (F) makes substantial UAW contract offer: significant pay increases, tiers eliminated, 25% faster growth to top wage

• GDS Holdings (GDS) and INA collaborate to co-invest in a data center platform, enriching Indonesia's digital infrastructure landscape

• General Motors (GM): United Auto Workers filed unfair labor practice charges against General Motors and Stellantis (STLA), according to CNBC

• GlaxoSmithKline's (GSK) regulatory submission accepted for review by Japanese regulator for use of Nucala

• Globalstar disclosed (GSAT) that it entered into an Intellectual Property License Agreement with XCOM Labs

• High Tide (HITI) announces at-the-market program of up to CAD30 mln for strategic initiatives to replace previous at-the-market program

• Leidos (LDOS) awarded $7.9 bln U.S. Army contract with estimated completion date of August 30, 2033

• Methode Electronics (MEI) announces that President and CEO Donald Duda will retire

• Millicom International Cellular (TIGO) appoints CEO Mauricio Ramos as Interim Chairman

• Nutanix (NTNX) announces share repurchase program of up to $350 million of its class A common stock

• Oceaneering Intl (OII) awarded two international contracts totaling over $100 mln

• Olin (OLN) announced a mutual agreement that Scott Sutton will step down as President, Chief Executive Officer, and Chairman of the Board in the first half of 2024 (

• OPAL Fuels (OPAL) disclosed that it entered into a Landfill Gas Purchase and Sale Agreement with Waste Management of California

• Restaurant Brands Int'l (QSR) announces share repurchase authorization of $1 bln common shares over the next 2 years through September 30, 2025

• Roche Hldg's (RHHBY) Alecensa delivers unprecedented Phase III results for people with ALK-Positive Early-Stage Lung Cancer

• Ross Stores (ROST) announces changes to its Board of Directions, including George Orban stepping down as Chairman

• Scilex Holding (SCLX) disclosed that Bankruptcy Court entered an order approving the Oramed Transaction

• Shopify (SHOP) launching TikTok Shop integration, according to The Information

• Sony (SONY) PlayStation Portal remote player launches starting November 15

• Tesla (TSLA) introduced new Model 3 in China with increased range and higher price, according to the Wall Street Journal

• Tesla (TSLA) lowered prices of some cars in China, according to Bloomberg

• Universal Stainless/Alloy (USAP) has reached a new five-year collective bargaining agreement with the hourly employees at its Bridgeville facility represented by Local 9531 of the United Steelworkers

• Walgreens Boots Alliance (WBA) announces leadership transition; Rosalind Brewer steps down as CEO and member of the board; Ginger Graham, current lead independent director, appointed interim CEO; sees FY23 EPS at low end of prior range

M&A:

• Banco Bradesco (BBD) unit to acquire 20% of Hospital Santa Lcia S.A. capital stock

• Booking Holdings (BKNG) proposed acquisition of ETraveli Group will face EU antitrust veto, according to Reuters

• Natl Instruments (NATI): EU Commission clears acquisition of NATI by Emerson Electric (EMR)

• Shell plc (SHEL) agrees to sell its home energy business in UK and Germany to Octopus Energy

• Wolverine (WWW) divests Hush Puppies IP in China, Hong Kong, and Macau; sells U.S. Leathers business

Syndicate:

• Chesapeake Utilities (CPK) files common stock offering

• MoonLake Immunotherapeutics (MLTX) files $1.0 bln mixed shelf securities offering

IPOs:

• Expected to Price:

• No IPOs expected.

Gapping Up/Down

• Gapping up:

• EOSE +52%, ME +19.1%, NTNX +18.9%, ESTC +17.1%, DELL +9.5%, MDB +6.4%, S+6.1%, SPRY +5.1%, NX +3.9%, XPEV +2.8%, HITI +2.7%, LULU +2.5%, AMRK +2.4%, LI+1.8%, NIO +1.7%, SCLX +1.7%, GDS +1.6%, BBD +1.4%, ROST +1%, QSR +1%, SCU+0.9%

• Gapping down:

• PD -10.8%, MLTX -10.5%, OXM -4.9%, AVGO-4.3%, HCP -4.1%, VMW -1.2%

Analyst Research (see Upgrades/Downgradescalendarfor full list):

• Upgrades

• Afya (AFYA) upgraded to Buy from Neutral at BTG Pactual

• Aramark (ARMK) upgraded to Buy from Neutral at Citigroup; tgt raised to $47

• Eos Energy (EOSE) upgraded to Buy from Neutral at Guggenheim; tgt $10

• Equinor (EQNR) upgraded to Equal-Weight from Underweight at Morgan Stanley

• J.M. Smucker (SJM) upgraded to Equal Weight from Underweight at Consumer Edge Research; tgt $154

• MercadoLibre (MELI) upgraded to Buy from Neutral at New Street; tgt raised to $1650

• Papa John's (PZZA) upgraded to Outperform from Neutral at Wedbush; tgt raised to $95

• Vale S.A. (VALE) upgraded to Overweight from Neutral at JP Morgan; tgt raised to $16

• Downgrades:

• BCE Inc (BCE) downgraded to Hold from Buy at TD Securities

• Dollar General (DG) downgraded to In-line from Outperform at Evercore ISI; tgt lowered to $150

• Dollar General (DG) downgraded to Hold from Buy at Loop Capital; tgt lowered to $140

• Dollar General (DG) downgraded to Market Perform from Outperform at Telsey Advisory Group; tgt lowered to $145

• Dollar General (DG) downgraded to Outperform from Strong Buy at Raymond James; tgt lowered to $160

• PagerDuty (PD) downgraded to Neutral from Outperform at Robert W. Baird; tgt lowered to $25

• Others:

• Alamo Group (ALG) initiated with an Outperform at Robert W. Baird; tgt $201

• Builders FirstSource (BLDR) initiated with a Buy at Loop Capital; tgt $180

• Camping World (CWH) initiated with a Buy at Citigroup; tgt $32

• Chicago Atlantic Real Estate Finance (REFI) initiated with a Neutral at Piper Sandler; tgt $16

• Confluent (CFLT) initiated with a Buy at Canaccord Genuity; tgt $40

• Ecolab (ECL) initiated with a Hold at Berenberg; tgt $180

• Ferguson plc (FERG) initiated with an Outperform at Raymond James; tgt $175

• P3 Health Partners (PIII) initiated with a Buy at BTIG Research; tgt $5

• Veeco Instruments (VECO) initiated with a Buy at Needham; tgt $35

Econ Data:

• 08:30 ET: Nonfarm Payrolls for Aug (Briefing.comConsensus 175K; Prior 187K)

• 08:30 ET: Nonfarm Private Payrolls for Aug (Briefing.comConsensus 160K; Prior 172K)

• 08:30 ET: Avg. Hourly Earnings for Aug (Briefing.comConsensus 0.3%; Prior 0.4%)

• 08:30 ET: Unemployment Rate for Aug (Briefing.comConsensus 3.6%; Prior 3.5%)

• 08:30 ET: Average Workweek for Aug (Briefing.comConsensus 34.3; Prior 34.3)

• 09:45 ET: S&P Global US Manufacturing PMI - Final for Aug (Briefing.comConsensus NA; Prior 47.0)

• 10:00 ET: Construction Spending for July (Briefing.comConsensus 0.6%; Prior 0.5%)

• 10:00 ET: ISM Manufacturing Index for Aug (Briefing.comConsensus 46.7%; Prior 46.4%)

Earnings:

• Monday (Aug 28)

• Morning:  BZUN

• Afternoon: HEI

• Tuesday (Aug 29)

• Morning: AMWD BMO BNS BBY BIG CTLT DCI SJM MBUU NIO PDD

• Afternoon:  AMBA BOX HPE HPQ NCNO PVH ZTO

• Wednesday (Aug 30)

• Morning:  BF.B CONN MCFT PDCO

• Afternoon:  CHWY COO CRWD FIVE GEF OKTA CRM VEEV VSCO

• Unspecified: PSTG

• Thursday (Aug 31)

• Morning: FLWS ASO CAL CPB CM CIEN DG GCO GMS MOMO HRL BEKE OLLI SIG TITN UBS

• Afternoon:  AVGO DELL ESTC HCP LULU MDB NTNX OXM PD S VMW

Asia & Europe detail:

Asia: Nikkei +0.3%, Hang Seng CLOSED, Shanghai Composite +0.4%

Equity indices in the Asia-Pacific region ended the week on a mostly higher note while markets in Hong Kong were closed due to a typhoon. Australia's Manufacturing PMI remained in contraction for the sixth consecutive month while Japan's Manufacturing PMI contracted for the third month in a row. Meanwhile, South Korea's Manufacturing PMI remained in contractionary territory for the 14th consecutive month. The People's Bank of China will lower the foreign exchange reserve requirement ratio to 4.00% from 6.00%, effective September 15.The PBoC also confirmed speculation about rate cuts on some existing mortgages, effective September 25.In addition, the Chinese government is raising the personal income tax deductions for child care.

• In economic data:

• China's August Caixin Manufacturing PMI 51.0 (expected 49.3; last 49.2)

• Japan's Q2 Capital Spending 4.5% yr/yr (expected 5.4%; last 11.0%) and August Manufacturing PMI 49.6 (expected 49.7; last 49.6)

• South Korea's August trade surplus $870 mln (expected surplus of $1.65 bln; last surplus of $1.65 bln). August Imports -22.8% yr/yr (expected -25.4%; last -25.4%) and Exports -8.4% yr/yr (expected -16.4%; last -16.4%). August Manufacturing PMI 48.9 (last 49.4)

• India's August Manufacturing PMI 58.6 (expected 57.5; last 57.7)

• Australia's July Home Loans -2.3% m/m (expected -1.0%; last -3.0%) and Invest Housing Finance -0.1% m/m (last 1.3%)

---Equity Markets---

• Japan's Nikkei: +0.3% (+3.4% for the week)

• Hong Kong's Hang Seng: CLOSED (+2.4% for the week)

• China's Shanghai Composite: +0.4% (+2.3% for the week)

• India's Sensex: +0.9% (+0.8% for the week)

• South Korea's Kospi: +0.3% (+1.8% for the week)

• Australia's ASX All Ordinaries: -0.4% (+2.2%for the week)

---FX---

• USD/JPY: -0.1% to 145.44

• USD/CNH: -0.2% to 7.2583

• USD/INR: UNCH at 82.69

Europe: DAX -0.1%, FTSE +0.6%, CAC +0.2%

Major European indices are seeking a mostly higher finish to the week. European Central Bank policymaker Villeroy de Galhau said that the interest rate peak is near, fueling additional speculation about a potential pause at the September meeting. Manufacturing PMIs from Germany, France, Italy, Spain, and the U.K. remained in contractionary territory in their final readings for August.

• In economic data:

• Eurozone's August Manufacturing PMI 43.5 (expected 43.7; last 42.7)

• Germany's August Manufacturing PMI 39.1, as expected (last 38.8)

• U.K.'s August Nationwide HPI -0.8% m/m (expected -0.3%; last -0.3%); -5.3% yr/yr (expected -3.9%; last -3.8%). August Manufacturing PMI 43.0 (expected 42.5; last 45.3)

• France's July government budget deficit EUR169.0 bln (last deficit of EUR116.2 bln). August Manufacturing PMI 46.0 (expected 46.4; last 45.1)

• Italy's August Manufacturing PMI 45.4 (expected 46.0; last 44.5). Q2 GDP -0.4% qtr/qtr (expected -0.3%; last 0.6%); 0.4% yr/yr (expected 0.6%; last 1.9%). July PPI -0.1% m/m (last -0.3%); -10.2% yr/yr (last -5.5%)

• Spain's August Manufacturing PMI 46.5 (expected 48.8; last 47.8)

• Swiss August CPI 0.2% m/m, as expected (last -0.1%); 1.6% yr/yr (expected 1.5%; last 1.6%). August procure.chPMI 39.9 (expected 40.0; last 38.5)

---Equity Markets---

• STOXX Europe 600: +0.4% (+1.9% week-to-date)

• Germany's DAX: -0.1% (+1.9% week-to-date)

• U.K.'s FTSE 100: +0.6% (+2.0% week-to-date)

• France's CAC 40: +0.2% (+1.4% week-to-date)

• Italy's FTSE MIB: +0.1% (+2.3% week-to-date)

• Spain's IBEX 35: +0.3% (+2.1% week-to-date)

---FX---

• EUR/USD: +0.1% to 1.0849

• GBP/USD: +0.1% to 1.2685

• USD/CHF: -0.1% to 0.8820