02/03/23 Briefing

The S&P 500 futures are down 17 points and are trading 0.4% below fair value. The Nasdaq 100 futures are down 78 points and are trading 0.6% below fair value. The Dow Jones Industrial Average futures are up 70 points and are trading 0.2% above fair value.

The equity futures market is somewhat lopsided this morning. The Dow Jones Industrial Average futures trade higher due to the big earnings-driven gain in Salesforce (CRM), which is up 15.0%, while the Nasdaq 100 and S&P 500 futures lose ground, reflecting ongoing concerns about rising market rates. 

The 10-yr Treasury note yield remains above 4.00% this morning, up four basis points to 4.04%, which has kept buyers on the sidelines. The U.S. Dollar Index is building up strength, up 0.4% to 104.95.

Also, the eurozone's Core CPI accelerated again in the February reading and European Central Bank President Lagarde spoke in favor of a 50 bps March rate hike again, adding that subsequent increases will depend on incoming data.

Market participants will receive the following economic data today:

• 8:30 ET: Revised Q4 Productivity (Briefing.com consensus 2.5%; prior 3.0%) and Unit Labor Costs (Briefing.com consensus 1.4%; prior 1.1%), weekly Initial Claims (Briefing.com consensus 197,000; prior 192,000) and Continuing Claims (prior 1.654 mln)

• 10:30 ET: Weekly natural gas inventories (prior -71 bcf)

In corporate news:

• Tesla (TSLA 189.62, -13.15, -6.5%): down in pre-market following investor day; the company did not announce any new vehicle specific details; plans to reduce production costs by as much as 50%; Cybertruck coming later this year; company will offer Texas residents unlimited overnight charging for $30/month starting in July

• Salesforce (CRM 192.59, +25.24, +15.1%): beats by $0.32, beats on revs; guides Q1 EPS and revs above consensus; guides FY24 EPS and revs above consensus; share repurchase program increased to $20 bln

• Okta (OKTA 82.72, +11.28, +15.8%): beats by $0.21, beats on revs; guides Q1 EPS above consensus, revs above consensus; guides FY24 EPS above consensus, revs in-line

• Snowflake (SNOW 143.20, -11.30, -7.3%): beats by $0.09, beats on revs, product revenue increased 54% yr/yr; provides guidance for Q1 and FY24; authorizes $2.0 bln stock buyback program

• Splunk (SPLK 98.40, -4.08, -4.0%): beats by $0.89, beats on revs; guides Q1 revs below consensus; guides FY24 revs below consensus

• Box (BOX 29.60, -3.98, -11.9%): beats by $0.03, reports revs in-line; guides Q1 EPS below consensus, revs below consensus; guides FY24 EPS in-line, revs below consensus

• Pure Storage (PSTG 25.60, -3.19, -11.1%): beats by $0.14, reports revs in-line; announces $250 mln buyback

• American Eagle (AEO 14.70, +0.57, +4.0%): beats by $0.07, beats on revs; guides FY24 revs in-line; reinstates dividend

• Macy's (M 22.30, +1.87, +9.2%): beats by $0.29, reports revs in-line; guides FY24 EPS in-line, revs below consensus

• Hormel Foods (HRL 42.11, -1.72, -3.9%): misses by $0.05, misses on revs; lowers FY23 EPS below consensus, revs in-line

• Best Buy (BBY 80.27, -2.27, -2.8%): beats by $0.47, reports revs in-line, comps -9.3%; guides FY24 EPS and revs below consensus

• Silvergate Capital (SI 8.12, -5.41, -40.0%): in 10K filing says it is currently evaluating the impact of events on its ability to continue as a going concern

Reviewing overnight developments:

• Equity indices in the Asia-Pacific region ended Thursday on a mostly lower note. Japan's Nikkei: -0.1%, Hong Kong's Hang Seng: -0.9%, China's Shanghai Composite: -0.1%, India's Sensex: -0.8%, South Korea's Kospi: +0.6%, Australia's ASX All Ordinaries: +0.1%.

  • In economic data:

    • Japan's Q4 Capital Spending 7.7% yr/yr (expected 6.9%; last 9.8%). February Household Confidence 31.1 (expected 32.0; last 31.0)

    • South Korea's January Industrial Production 2.9% m/m (expected -0.4%; last -3.1%); -12.7% yr/yr (expected -8.9%; last -10.5%). January Retail Sales -2.1% m/m (last -0.2%). February Nikkei Manufacturing PMI 48.5 (last 48.5)

    • Hong Kong's January Retail Sales 7.0% yr/yr (last 1.1%)

    • Australia's January Building Approvals -27.6% m/m (expected -8.0%; last 15.3%) and Private House Approvals -13.8% m/m (last -2.0%)

    • New Zealand's Q4 Terms of Trade Index 1.8% qtr/qtr (expected -1.3%; last -3.9%)

  • In news:

    • Bank of Japan policymaker Takata repeated that ultra-loose policy must be maintained. Meanwhile, a JGB market survey conducted by the BoJ noted that the market is functioning at its worst level since the series began in 2015.

    • The Reserve Bank of Australia will partner with Mastercard to test use cases for central bank digital currency.

• Major European indices trade near their flat lines while Germany's DAX (-0.4%) lags. STOXX Europe 600: UNCH, Germany's DAX: -0.4%, U.K.'s FTSE 100: -0.1%, France's CAC 40: UNCH, Italy's FTSE MIB: +0.1%, Spain's IBEX 35: UNCH.

  • In economic data:

    • Eurozone's February CPI 0.8% m/m (last -0.2%); 8.5% yr/yr (expected 8.2%; last 8.6%). February Core CPI 0.8% m/m (last -0.8%); 5.6% yr/yr (expected 5.3%; last 5.3%). January Unemployment Rate 6.7% (expected 6.6%; last 6.7%)

    • France's January government budget deficit EUR21.20 bln (last deficit of EUR151.50 bln)

    • Italy's January Unemployment Rate 7.9% (expected 7.8%; last 7.8%). February CPI 0.3% m/m (expected 1.4%; last 0.1%); 9.2% yr/yr (expected 8.8%; last 10.0%)

    • Spain's February Unemployment Change 2,600 (expected 11,500; last 70,700) 

  • In news:

    • Eurozone's Core CPI accelerated again in the February reading.

    • European Central Bank President Lagarde spoke in favor of a 50 bps March rate hike again, adding that subsequent increases will depend on incoming data.

    • A Bank of England survey showed that expectations for one-year CPI stand at 6.4%, down from 7.4% in the previous survey. CPI expectations for three years ahead slowed to 3.4% from 4.0%.

U.S. equity futures:

• S&P 500 Futures: -17 @ 3,935

• DJIA Futures: +61 @ 32,723

• Nasdaq 100 Futures: -80 @ 11,858

Overseas:

• Europe: DAX -0.4%, FTSE -0.1%, CAC UNCH

• Asia: Nikkei -0.1%, Hang Seng -0.9%, Shanghai Composite -0.1%

Commodities:

• Crude Oil +0.37 @ 78.06

• Nat Gas -0.054 @ 2.757

• Gold -7.35 @ 1838.05

• Silver -0.245 @ 20.852

• Copper -0.0935 @ 4.0665

Earnings/Guidance:

• AerCap (

• Agilon Health (

• Altra Industrial Motion (

• American Eagle (

• Amneal Pharmaceuticals (

• Anheuser-Busch InBev (

• argenx (

• Array Tech (

• Avid Tech (

• Axonics Modulation (

• Best Buy (

• Big Lots (

• Bilibili (

• Box (

• Buckle (

• Burlington Stores (

• Canadian Natrl Res (

• Cardlytics (

• CCC Intelligent Solutions (

• Celsius (

• Certara (

• Compass Diversified (

• Credo Technology Group (

• Crescent Point Energy (

• Cytokinetics (

• Descartes (

• Desktop Metal (

• DoubleVerify (DV) misses by $0.05, reports revs in-line; guides Q1 revs in-line; guides FY23 revs in-line

• Dream Finders Homes (

• Endeavour Silver (

• Funko (

• Frontdoor (

• GMS (

• Golden Entertainment (

• Greif (

• Haleon plc (

• Hormel Foods (

• Inovio Pharma (

• Intercept Pharma (

• Jazz Pharma (

• Light & Wonder (

• Macy's (

• Okta (

• Patterson Companies (

• Plug Power (

• Polestar Automotive Holding UK PLC (

• Principal Fincl (

• Pure Storage (

• Repay Holdings (

• Rush Street Interactive (

• Salesforce (

• Six Flags (

• Snowflake (

• Sociedad Quimica y Minera (

• Splunk (

• Sterling Check Corp. (

• Stevanato Group S.p.A. (

• Stoneridge (

• Stratasys (

• SunOpta (

• Tecnoglass (

• The Aaron's Company (

• Toronto-Dominion Bank (

• Utz Brands (

• Veeva Systems (

• Verra Mobility (

• Vuzix (

• Wynn Resorts (

• Xenon Pharmaceuticals (

• Zai Lab (

• ZimVie (

• Zuora (

News:

• US public support for arms shipments to Ukraine is softening and the Biden administration is concerned, according to the New York Times

• Senate votes to overturn a Labor Dept rule on ESG, Biden says he would veto, according to CNBC

• White House announces national cybersecurity strategy

• China is preventing Arm from selling Chinese joint venture., according to Financial Times

• AeroVironment (

• Aldeyra Therapeutics (

• Amneal Pharmaceuticals (

• Avadel Pharmaceuticals (

• Bristol Myers Squibb (

• Certara (

• CGI Group (

• Crescent Point Energy (

• Elbit Systems (

• Funko (

• Genenta S.p.A. (

• Gilat Satellite (

• Hess (

• HYZON Motors (

• IGT (

• Intellia Therapeutics (

• Intl Game Tech. PLC (

• Invitation Homes (

• Magnachip (

• Mercer Intl (

• Moog (MOG.A) elects Mark Trabert as COO, replacing Pat Roche who became the CEO effective February 1, 2023

• MorphoSys (

• Organogenesis (

• RBB Bancorp (

• Salesforce (

• Sanofi (

• Silvergate Capital (

• Summit Materials (

• Tesla (

M&A:

• Agilon Health (

• Microsoft (

• Microsoft (

• Radius Global Infrastructure (

Syndicate:

• Alight (

• Hayward Holdings (

• Nomad Foods (

• Option Care Health (

• Revolution Medicines (

• Viavi (

IPOs:

• Expected to Price:

Gapping Up/Down

• Gapping up:

  • OKTA +15.5%, CRM +15.5%, AMRX +13.4%, DM +11.3%, FTDR +8.9%, DV +7.7%, AGL +7.2%, AEO +6.3%, VEEV +5%, RADI +4.8%, JAZZ +4.6%, DSGX +4.3%, ZUO +3.7%, INNV +3.5%, STKL +3.1%, AVAV +3%, SIX +3%, ZLAB +2.8%, INO +2.4%, SQM +2.3%, MERC +2.2%, CERT +2%, CWT +1.8%, GDEN +1.7%, DNA +1.4%, ARRY +1.4%, SRI +1.2%, NOMD +1%, ARGO +0.8%

• Gapping down:

  • SI -29.9%, FNKO -26.1%, ZIMV -16.3%, CANO -15.9%, PSTG -12.1%, BOX -9.9%, CYTK -9.3%, AVID -8.4%, HAYW -7.7%, SNOW -6.5%, GEF -6.2%, CELH -5.9%, BILI -5.9%, TSLA -5.8%, AAN -5.2%, CDLX -5.1%, CNQ -4.9%, RVMD -4.8%, HLN -4%, VUZI -3.9%, PLUG -3.8%, SPLK -3.7%, ARGX -3.6%, OPCH -3.5%, CRDO -2.5%, ALIT -1.7%, CNI -1.6%, RKLB -1.4%, RSI -1.4%, BUD -1.4%, CCCS -1.3%, CODI -1.2%, FLS -0.8%

Analyst Research (see Upgrades/Downgrades calendarfor full list):

• Upgrades

  • Celanese (CE) upgraded to Buy from Neutral at BofA Securities; tgt raised to $140

  • MarketAxess (MKTX) upgraded to Overweight from Neutral at Atlantic Equities; tgt raised to $403

  • Sandstorm Gold (SAND) upgraded to Outperform from Sector Perform at RBC Capital Mkts; tgt $6.50

  • UWM Holdings (UWMC) upgraded to Mkt Perform from Underperform at Keefe Bruyette; tgt raised to $4

• Downgrades:

  • Focus Financial (FOCS) downgraded to Mkt Perform from Outperform at Keefe Bruyette; tgt $55

  • ON Semiconductor (ON) downgraded to Mkt Perform from Outperform at Raymond James

  • Shinhan Financial (SHG) downgraded to Neutral from Buy at BofA Securities; tgt lowered to $32.31

  • Stellus Capital (SCM) downgraded to Mkt Perform from Outperform at Raymond James

  • Woori Financial (WF) downgraded to Neutral from Buy at BofA Securities; tgt lowered to $31.15

• Others:

  • Advanced Micro (AMD) assumed with a Strong Buy at Raymond James; tgt $100

  • Array Tech (ARRY) initiated with a Sector Outperform at Scotiabank; tgt $26

  • Broadcom (AVGO) assumed with a Mkt Perform at Raymond James

  • Crestwood Equity Partners (CEQP) initiated with a Sector Outperform at Scotiabank; tgt $31

  • Intel (INTC) resumed with an Outperform at Raymond James; tgt $30

  • Marvell (MRVL) resumed with an Outperform at Raymond James; tgt $54

  • Micron (MU) resumed with an Outperform at Raymond James; tgt $70

  • Moderna (MRNA) initiated with an Outperform at RBC Capital Mkts; tgt $200

  • NVIDIA (NVDA) assumed with a Strong Buy at Raymond James; tgt $290

  • Qorvo (QRVO) resumed with an Outperform at Raymond James; tgt $120

  • Qualcomm (QCOM) resumed with a Mkt Perform at Raymond James

  • Skyworks (SWKS) assumed with a Mkt Perform at Raymond James

  • Stagwell (STGW) initiated with a Buy at Rosenblatt; tgt $10

  • Western Digital (WDC) initiated with an Outperform at Raymond James; tgt $46

Upcoming Events:

• Econ Data:

  • 08:30 ET: Productivity-Rev. for Q4 (Briefing.com Consensus 2.5%; Prior 3.0%)

  • 08:30 ET: Unit Labor Costs-Rev. for Q4 (Briefing.com Consensus 1.4%; Prior 1.1%)

  • 08:30 ET: Initial Claims for Feb 25 (Briefing.com Consensus 197K; Prior 192K)

  • 08:30 ET: Continuing Claims for Feb 18 (Briefing.com Consensus NA; Prior 1654K)

  • 10:30 ET: EIA Natural Gas Inventories for Feb 24 (Briefing.com Consensus NA; Prior -71 bcf)

• Earnings:

  • Monday (Feb 27)

    • Morning:  AES BGNE WTRG FSR FRPT FUBO HSC ITRI KOP TREE LI NE PNW TGNA VTRS

    • Afternoon: AAON ACHC ACAD ADUS AMRC BMRN CDNA DAR DRQ EBS FGEN FSK HEI HLIO HIMS ICUI NARI NGVT IIPR JRVR MKSI NSA OXY OKE PRAA PRIM PRA PGNY RRC RLJ ROVR TASK TREX TTEC UHS VRAY VMEO WDAY ZM

  • Tuesday (Feb 28)

    • Morning: AHCO ADT AAP AMWD APG AZO BMO BNS BSY BKI BLDR CBRL CRON DK XRAY DORM DEA ECVT EHTH EXPI FA FRO GOGO HAYW HSKA TILE IGT SJM JLL KTB NFE NXST NCLH OLPX OMI PCRX PRFT PRGO PLTK RDNT SEAS SRE FOUR SHC SRC TGT SKIN TWKS WRBY

    • Afternoon:  DDD A ALLO AMBA AMC AXON BGS BLNK CARG CLNE COMP CPNG CUTR DUOL EDR FATE FIGS FSLR FLYW FRG FLGT GDRX GO HCAT HPQ HURN ICFI IPAR NVTA IOVA JXN JAMF LXFR MQ MASI MRTX MNST MYGN NSTG NTRA KIND NVAX OMCL OSPN PAYO PETQ PUBM RGNX RIVN RKT ROST RYAN SRPT SDGR SHLS SILK SUPN TALO URBN VRSK SPCE VZIO

Asia & Europe detail:

Asia: Nikkei -0.1%, Hang Seng -0.9%, Shanghai Composite -0.1%

Equity indices in the Asia-Pacific region ended Thursday on a mostly lower note. Bank of Japan policymaker Takata repeated that ultra-loose policy must be maintained. Meanwhile, a JGB market survey conducted by the BoJ noted that the market is functioning at its worst level since the series began in 2015. The Reserve Bank of Australia will partner with Mastercard to test use cases for central bank digital currency.

• In economic data:

  • Japan's Q4 Capital Spending 7.7% yr/yr (expected 6.9%; last 9.8%). February Household Confidence 31.1 (expected 32.0; last 31.0)

  • South Korea's January Industrial Production 2.9% m/m (expected -0.4%; last -3.1%); -12.7% yr/yr (expected -8.9%; last -10.5%). January Retail Sales -2.1% m/m (last -0.2%). February Nikkei Manufacturing PMI 48.5 (last 48.5)

  • Hong Kong's January Retail Sales 7.0% yr/yr (last 1.1%)

  • Australia's January Building Approvals -27.6% m/m (expected -8.0%; last 15.3%) and Private House Approvals -13.8% m/m (last -2.0%)

  • New Zealand's Q4 Terms of Trade Index 1.8% qtr/qtr (expected -1.3%; last -3.9%)

---Equity Markets---

• Japan's Nikkei: -0.1%

• Hong Kong's Hang Seng: -0.9%

• China's Shanghai Composite: -0.1%

• India's Sensex: -0.8%

• South Korea's Kospi: +0.6%

• Australia's ASX All Ordinaries: +0.1%

---FX---

• USD/JPY: +0.4% to 136.67

• USD/CNH: +0.5% to 6.9120

• USD/INR: +0.1% to 82.52

Europe: DAX -0.4%, FTSE -0.1%, CAC UNCH

Major European indices trade near their flat lines while Germany's DAX (-0.4%) lags. Eurozone's Core CPI accelerated again in the February reading. European Central Bank President Lagarde spoke in favor of a 50 bps March rate hike again, adding that subsequent increases will depend on incoming data. A Bank of England survey showed that expectations for one-year CPI stand at 6.4%, down from 7.4% in the previous survey. CPI expectations for three years ahead slowed to 3.4% from 4.0%.

• In economic data:

  • Eurozone's February CPI 0.8% m/m (last -0.2%); 8.5% yr/yr (expected 8.2%; last 8.6%). February Core CPI 0.8% m/m (last -0.8%); 5.6% yr/yr (expected 5.3%; last 5.3%). January Unemployment Rate 6.7% (expected 6.6%; last 6.7%)

  • France's January government budget deficit EUR21.20 bln (last deficit of EUR151.50 bln)

  • Italy's January Unemployment Rate 7.9% (expected 7.8%; last 7.8%). February CPI 0.3% m/m (expected 1.4%; last 0.1%); 9.2% yr/yr (expected 8.8%; last 10.0%)

  • Spain's February Unemployment Change 2,600 (expected 11,500; last 70,700)

---Equity Markets---

• STOXX Europe 600: UNCH

• Germany's DAX: -0.4%

• U.K.'s FTSE 100: -0.1%

• France's CAC 40: UNCH

• Italy's FTSE MIB: +0.1%

• Spain's IBEX 35: UNCH

---FX---

• EUR/USD: -0.4% to 1.0626

• GBP/USD: -0.4% to 1.1985

• USD/CHF: +0.1% to 0.9399