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04/10/22 Briefing


The S&P 500 futures are up 61 points and are trading 1.7% above fair value. The Nasdaq 100 futures are up 228 points and are trading 2.1% above fair value. The Dow Jones Industrial Average futures are up 378 points and are trading 1.3% above fair value.

Equity futures are up sharply this morning as market participants look to build on yesterday's gains, aided by contrarian-minded thinking that stems from an awareness that sentiment readings denote extremely bearish views.

There's also growing excitement in the market about the Fed potentially slowing the pace of its rate hikes and potentially nearing the end of its rate hike cycle. That excitement has been stoked by the Reserve Bank of Australia (RBA), which raised its cash rate by only 25 basis points, instead of the 50 basis points expected, to 2.60%. The decision was tied to a recognition that the cash rate has been increased substantially in a short period of time, and a desire among RBA officials to see how the prior rate increases are affecting the outlook for inflation and economic growth.

The US dollar has weakened in the wake of the RBA move. The U.S. Dollar Index is down 0.5% to 111.19, with the euro (EUR/USD +0.6% to 0.9886) showing some strength against the greenback. Falling Treasury yields have been another supportive factor for equities. 

The 2-yr note yield is down seven basis points to 4.03% and the 10-yr note yield is down seven basis points to 3.58%. Gilt yields have also moved lower, driven by the news that Finance Minister Kwarteng will release his fiscal plan and forecasts from the OBR later this month instead of November 23, as previously indicated.

Energy complex futures trade in mixed fashion. WTI crude oil futures are up 1.2% to $84.67/bbl and natural gas futures are down 0.3% to $6.46/mmbtu.

Separately, market participants will receive the August Factory Orders report (Briefing.comconsensus +0.4%; prior -1.0%) and the August JOLTS Job Openings report (prior 11.239 million) at 10:00 a.m. ET.

In corporate news:

  • Gilead Sciences (GILD 64.32, +2.00, +3.21%): upgraded to overweight from neutral at JPMorgan

  • Poshmark (POSH 17.57, +1.99, +12.85%): to be acquired for $17.90 per share in cash by Naver Corp., Korea's largest internet company

  • Rivian Automotive (RIVN 34.67, +2.78, +8.72%): reports Q3 production of 7,363 vehicles, deliveries of 6,584 vehicles, and says it remains on track to deliver on its 25,000 annual production guidance

  • Maravai Life Sciences (MRVI 23.00, -1.78, -7.18%): appoints William "Trey" Martin as CEO, who joins company from Danaher Corporation

  • Blackbaud (BLKB 47.61, +2.60, +5.78%): Clearlake Capital Group discloses 18.4% stake; may seek review of strategic alternatives 

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region followed Wall Street's lead on Monday before getting an extra boost from one of its own, namely the Reserve Bank of Australia (RBA). Japan's Nikkei: +3.0%, Hong Kong's Hang Seng: closed for holiday, China's Shanghai Composite: closed for holiday, India's Sensex: +2.3%, South Korea's Kospi: +2.5%, Australia's All Ordinaries: +3.7%.

  • In economic data:

  • Japan's September Tokyo CPI 2.8% yr/yr (prior 2.9%) and Tokyo core CPI 2.8% yr/yr (expected 2.8%; prior 2.6%); Monetary Base -3.3% yr/yr (expected +0.6%; prior +0.4%)

  • Australia's August Building Approvals +28.1% m/m (expected +5.0%; prior -18.2%)

  • South Korea's September Nikkei Manufacturing PMI 47.3 (prior 47.6)

  • In news:

  • The RBA excited the stock market masses with a decision to raise its cash rate by only 25 basis points, instead of the 50 basis points expected, to 2.60%.

  • The decision was tied to a recognition that the cash rate has been increased substantially in a short period of time, and a desire among RBA officials to see how the prior rate increases are affecting the outlook for inflation and economic growth.

  • The strong response by the All Ordinaries (+3.7%) and other indices open for trading (Hong Kong and China were closed for holidays) has now left European bourses and the U.S. equity futures market following their lead.

  • The policy response has overshadowed the news that North Korea fired a missile over Japan for the first time since 2017 and that Tokyo's core CPI, up 2.8% yr/yr in September, hit its highest level since 2014.

  • Major European indices are up strongly, rallying in response to Wall Street's strong showing on Monday and the smaller-than-expected rate increase by the Reserve Bank of Australia. STOXX Europe 600: +2.4%,, Germany's DAX: +2.8%, U.K.'s FTSE 100: +1.8%, France's CAC 40: +3.2%, Italy's FTSE MIB: +2.5%, Spain's IBEX 35: +2.5%.

  • In economic data:

  • Eurozone's August PPI +5.0% m/m (expected +4.9%; prior +4.0%) and +43.3% yr/yr (expected 43.1%; prior 38.0%)

  • Spain's September Unemployment Change 17.7K (prior 40.4K)

  • In news:

  • The latter has sparked some hope that the Federal Reserve could soon temper the pace of its rate increases and be closer to the end of its rate-hike campaign, a view that is manifesting itself in a weaker dollar.

  • The U.S. Dollar Index is down 0.6% to 111.12, with the euro (EUR/USD +0.6% to 0.9880) showing some strength against the greenback. Falling gilt yields have been another supportive factor for equities.

  • They have continued lower today following the news that Finance Minister Kwarteng will release his fiscal plan and forecasts from the OBR later this month instead of November 23, as previously indicated.

  • Amid the excitement for stock markets, it was also reported that producer prices in the eurozone increased 43.3% yr/yr in August versus 38.0% in July.

 

U.S. equity futures:

  • S&P 500 Futures: +58 @ 3,736

  • DJIA Futures: +375 @ 29,868

  • Nasdaq 100 Futures: +218 @ 11,447

Overseas:

  • Europe: DAX +2.8%, FTSE +1.8%, CAC +3.2%

  • Asia: Nikkei +3.0%, Hang Seng CLOSED, Shanghai Composite CLOSED

Commodities:

  • Crude Oil +1.04 @ 84.67

  • Nat Gas  -0.017 @ 6.453

  • Gold +10.20 @ 1712.20

  • Silver +0.208  @ 20.797

  • Copper +0.0110 @ 3.4210

U.S. Summary:

  • Earnings/Guidance:

  • Acuity Brands (AYI) beats by $0.34, beats on revs

  • AXT (AXTI) lowers Q3 revenue guidance

  • BMW Group (BMWYY) reports BMW brand sales in the US in Q3 totaled 78,031vehicles, a 3.2% yr/yr increase

  • Broadstone Net Lease (BNL) reaffirms its FY22 AFFO guidance

  • CME Group (CME) reports 36% ADV growth in September

  • Rivian Automotive (RIVN) reports Q3 production of 7,363 vehicles, deliveries of 6,584 vehicles, and says it remains on track to deliver on its 25,000 annual production guidance

  • Utz Brands (UTZ) reaffirms FY22 total net sales, organic net sales, and adjusted EBITDA growth guidance

  • Welltower (WELL) sees Q3 FFO trending below the midpoint of prior guidance

  • General News:

  • UK Chancellor Kwasi Kwarteng will release plan to cut UK debt later this month, according to Financial Times

  • Germany might need to lower energy exports to France to prevent issues with power grid, according to Financial Times

  • Supreme Court will hear case that could decide if social media companies can be sued for content of users despite section 230 protections, according to the New York Times

  • White House issues statement by NSC Spokesperson Adrienne Watson on the North Korea's ballistic missile launch

  • Reserve Bank of Australia decided to increase the cash rate target by 25 basis points to 2.60%

  • American Homes 4 Rent (AMH) provides update on Hurricane Ian; preliminary assessments indicate limited damage

  • Amneal Pharmaceuticals (AMRX) announces commercial launch of ALYMSYS

  • Autolus Therapeutics (AUTL) has entered into an agreement with Bristol Myers Squibb (BMY)

  • Bed Bath Beyond (BBBY) creditors are organizing, according to the Wall Street Journal

  • Bluebirdbio (BLUE) collaborates with Real Endpoints Marketplace to help scale delivery of a first-of-its-kind value-based contract for one-time gene therapy

  • Boeing (BA) is not expecting 737 Max 10 will get approval before mid-2023, according to Reuters

  • CACI Intl (CACI) announces that Thomas Mutryn will retire as CFO, and that Jeffrey MacLauchlan will assume role of EVP, CFO, and Treasurer, effective November 1, 2022

  • Cannae Holdings (CNNE) seeks approval to redeem Austerlitz Acquisition (ASZ), a SPAC

  • Carriage Services (CSV) announces departure of Ben Brink, CFO and Executive Vice President, who is leaving for a new opportunity

  • Cars.com(CARS) reappoints Sonia Jain as CFO

  • Centerra Gold (CGAU) Announces Highlights of New Life of Mine Plan for the Mount Milligan Mine, Including an Extension of Mine Life to 2033

  • Credit Suisse (CS) investors want to know restructuring costs, according to Bloomberg

  • Credit Suisse (CS) bonds recovering

  • Dorchester Minerals (DMLP) announces consummation of Midland Basin lease transaction

  • Eldorado Gold (EGO) provides exploration update highlighting resource expansion upside at Lamaque, Efemcukuru, and Olympias

  • Essex Property (ESS) announces planned retirement of its President and CEO; appoints Senior Executive Vice President and COO as next President and CEO

  • Ferroglobe PLC (GSM) to restart its 55,000-ton silicon metal facility in South Africa

  • First Financial Northwest (FFNW) authorizes the repurchase of up to 5% of its outstanding common shares

  • First Watch Restaurant Group (FWRG) provides update on its company-owned restaurants in Florida; as of today, all but 10 of 85 restaurants that closed have now reopened

  • Galapagos NV (GLPG) says EMA committee has adopted a positive opinion on Jyseleca

  • General Dynamics (GD) awarded a $533 mln US Navy modification to previously awarded contract for Virginia-class submarines

  • HF Sinclair (DINO) entered into another Stock Purchase Agreement with REH Company

  • Hut 8 Mining (HUT) provides September production and operations update

  • KalVista Pharmaceuticals (KALV) announces termination of KVD824 Phase 2 Komplete trial for prophylactic treatment of hereditary angioedema

  • Kezar Life Sciences (KZR) Receives FDA Clearance of IND for Zetomipzomib for the Treatment of Autoimmune Hepatitis

  • Kura Sushi (KRUS) names Jeff Uttz as its new CFO

  • Lockheed Martin (LMT) and others are awarded a ceiling of $5.1 bln modifications to a previously awarded US Navy contract

  • Lumen Technologies (LUMN): Brightspeed begun operations as a new company following the completion of the previously announced acquisition of incumbent local exchange carrier assets and associated operations across 20 states from LUMN by Apollo-managed funds

  • Materion (MTRN) announces $20m in investments in Massachusetts facility to expand capacity for the semiconductor industry

  • Meta (META) aiming to scale back NYC expansion and freeze hiring, according to Bloomberg

  • Mosaic (MOS) says its North American Phosphates was negatively impacted by damage caused by Hurricane Ian

  • Olin (OLN) expects to cease methylene chloride and chloroform production at its Stade, Germany facility by 3Q23; will continue to product both products at Freeport, TX facility

  • Pfizer (PFE) Announces positive topline results from phase 3 talapro-2 trial; Study achieves primary endpoint of radiographic progression-free survival

  • Playtika (PLTK) Provides Update on Shares Tendered to Date in its Tender Offer for its Common Stock

  • Roche Hldg (RHHBY) receives FDA approval for first companion diagnostic to identify patients with HER2 low metastatic breast cancer eligible for ENHERTU

  • Samsung (SSNLF) targets mass production of 2nm process technology by 2025 and 1.4nm by 2027

  • SiTime (SITM) delivers precision timing solution for Tesla Dojo AI Supercomputer

  • Spotify (SPOT) aiming to release podcast by Kim Kardashian, according to TechCrunch

  • SWK Holdings (SWKH) promotes Yvette Heinrichson to the role of CFO

  • Takeda Pharma (TAK) to discontinue manufacturing of NATPAR/NATPARA at end of 2024

  • Tilray (TLRY) successfully relaunched its EU GMP-produced medical cannabis oral solution in Ireland under the country's Medical Cannabis Access Program

  • Twitter (TWTR): Former employee could testify that the site's bot problem is much larger than Twitter has acknowledged, according to the New York Post

  • Uranium Energy Corp (UEC) Intersects 68.7% eU3O8 over 2.1 meters at Newly Acquired Christie Lake Project in Eastern Athabasca Basin, Canada

  • Urstadt Biddle Prop (UBA) authorizes share repurchase program of up to 2.0 mln shares of common stock

  • Utz Brands (UTZ) announces CEO succession plan; Howard Friedman, currently COO of Post Holdings, will join company as CEO and serve as member of the Board

  • Valaris (VAL) announces new contracts and contract extensions, with associated contract backlog of $95 mln

  • Western Midstream (WES) and OXY to explore carbon capture, transportation, sequestration, and utilization opportunities

  • M&A:

  • Addus HomeCare (ADUS) acquires Apple Home Healthcare, with annual revs of approximately $10 mln

  • Arcosa (ACA) completes sale of its storage tanks business

  • BlueLinx (BXC) acquires Vandermeer Forest Products for $67 mln; Vandermeer's trailing 12-month sales were just over $150 mln

  • Brinks (BCO) announces acquisition of NoteMachine, an ATM network in the U.K., for approximately $179 mln; acquisition expected to be accretive to earnings in first year

  • Enhabit (EHAB) acquires hospice agency in Texas

  • Everi (EVRI) discloses that it has entered into an agreement to acquire certain strategic assets of Venuetize; co will make an initial payment at the time of closing of $18 million less any deposit previously provided

  • Ginkgo Bioworks (DNA) acquires Circularis to strengthen capabilities in cell and gene therapy

  • Global Blue (GB) announces the acquisition of a majority stake in Shipup; terms not disclosed

  • Manitowoc's (MTW) subsidiary, MGX Equipment Services, completes acquisition of certain assets of the crane rental fleet of Honnen Equipment Company

  • Maravai Life Sciences (MRVI) appoints William "Trey" Martin as CEO, who joins company from Danaher Corporation

  • Micro Focus (MFGP) provides update on recommended offer

  • Poshmark (POSH) to be acquired for $17.90 per share in cash

  • TreeHouse Foods (THS) completes sale of a significant portion of its Meal Prep business

  • Syndicate

  • Lilium GmbH (LILM) files for 193,560,280 share common stock offering by selling shareholders; also files for 51,663,116 share common stock offering

  • Rocket Pharmaceuticals (RCKT) prices offering of 6.8 mln shares of common stock at $14.75 per share

  • Tyra Biosciences (TYRA) files for $400 mln mixed securities shelf offering

  • IPOs:

  • Expected to Price:

  • No IPOs expected.

Gapping Up/Down

  • Gapping up:

  • POSH +11.4%, RIVN +8.8%, GSM +6.4%, BLKB+6.2%, KZR +5.7%, WES +4.4%, AMRX +4.3%, GLPG+3.7%, OLN +3.4%, BLUE +2.8%, ALGN +2%, UBA+1.6%, SITM +1.6%, OXY +1.5%, LILM +1.4%, KRUS+1.3%, CNNE +1.3%, LMT +1.1%, MOS +1%

  • Gapping down:

  • MRVI -7.2%, RCKT -3.9%, AXTI -3.4%, EHAB -3.1%, PLTK -2.8%, CGAU -2.8%, OZK -1%, EVRI -0.8%, TYRA -0.6%

 

Analyst Research (see Upgrades/Downgradescalendarfor full list):

  • Upgrades

  • BNY Mellon (BK) upgraded to Buy from Neutral at Citigroup; tgt $46

  • Commscope (COMM) upgraded to Outperform from Neutral at Credit Suisse; tgt raised to $17

  • Credicorp LTD (BAP) upgraded to Buy from Neutral at Citigroup; tgt raised to $161

  • Domino's Pizza (DPZ) upgraded to Buy from Neutral at UBS; tgt lowered to $385

  • Gilead Sciences (GILD) upgraded to Overweight from Neutral at JP Morgan; tgt raised to $80

  • Downgrades:

  • M&T Bank (MTB) downgraded to Neutral from Buy at Citigroup; tgt $200

  • Paramount Global (PARA) downgraded to Equal Weight from Overweight at Wells Fargo; tgt lowered to $19

  • Others:

  • Alaunos Therapeutics (TCRT) assumed with an Overweight at Wells Fargo; tgt $3

  • Archaea Energy (LFG) initiated with an Overweight at Wells Fargo; tgt $25

  • Bowlero (BOWL) initiated with an Outperform at Oppenheimer; tgt $16

  • Butterfly Network (BFLY) initiated with a Buy at B. Riley Securities; tgt $9.50

  • Core Scientific (CORZ) initiated with an Overweight at Barclays; tgt $3

  • Ginkgo Bioworks (DNA) initiated with an Equal-Weight at Morgan Stanley; tgt $5

  • Glaukos (GKOS) initiated with a Buy at Needham; tgt $66

  • Inotiv (NOTV) initiated with a Buy at Jefferies; tgt $27

  • JPMorgan Chase (JPM) placed on Positive Catalyst Watch at Citigroup

  • Leslie's (LESL) initiated with a Neutral at MKM Partners; tgt $14

  • Mister Car Wash (MCW) initiated with a Neutral at MKM Partners; tgt $9

  • Mister Car Wash (MCW) initiated with a Neutral at Robert W. Baird; tgt $10

  • Prologis (PLD) resumed with a Buy at Citigroup; tgt $120

  • Schlumberger (SLB) placed on Catalyst Watch at Citigroup

  • TD Synnex (SNX) initiated with a Sector Perform at RBC Capital Mkts; tgt $95

  • TFI International (TFII) initiated with an Overweight at Wells Fargo; tgt $111

  • Zymeworks (ZYME) assumed with an Overweight at Wells Fargo; tgt lowered to $9

Upcoming Events:

  • Econ Data:

  • 10:00 ET: Factory Orders for Aug (Briefing.comConsensus 0.4%; Prior -1.0%)

  • 10:00 ET: JOLTS - Job Openings for Aug (Briefing.comConsensus NA; Prior 11.239M)

  • Earnings

  • Tuesday (Oct 4)

  • Morning: AYI

  • Afternoon:  SGH

  • Wednesday (Oct 5)

  • Morning:  HELE LW RPM

  • Afternoon:  RGP

  • Thursday (Oct 6)

  • Morning: ANGO CAG STZ MKC

  • Afternoon:  ACCD LEVI

  • Friday (Oct 7) 

  • Morning:  TLRY


Asia & Europe detail:

Asia: Nikkei +3.0%, Hang Seng CLOSED, Shanghai Composite CLOSED

Equity indices in the Asia-Pacific region followed Wall Street's lead on Monday before getting an extra boost from one of its own, namely the Reserve Bank of Australia (RBA). The RBA excited the stock market masses with a decision to raise its cash rate by only 25 basis points, instead of the 50 basis points expected, to 2.60%. The decision was tied to a recognition that the cash rate has been increased substantially in a short period of time, and a desire among RBA officials to see how the prior rate increases are affecting the outlook for inflation and economic growth. The strong response by the All Ordinaries (+3.7%) and other indices open for trading (Hong Kong and China were closed for holidays) has now left European bourses and the U.S. equity futures market following their lead. The policy response has overshadowed the news that North Korea fired a missile over Japan for the first time since 2017 and that Tokyo's core CPI, up 2.8% yr/yr in September, hit its highest level since 2014.

  • In economic data:

  • Japan's September Tokyo CPI 2.8% yr/yr (prior 2.9%) and Tokyo core CPI 2.8% yr/yr (expected 2.8%; prior 2.6%); Monetary Base -3.3% yr/yr (expected +0.6%; prior +0.4%)

  • Australia's August Building Approvals +28.1% m/m (expected +5.0%; prior -18.2%)

  • South Korea's September Nikkei Manufacturing PMI 47.3 (prior 47.6)

---Equity Markets---

  • Japan's Nikkei: +3.0%

  • Hong Kong's Hang Seng:  closed for holiday

  • China's Shanghai Composite: closed for holiday

  • India's Sensex: +2.3%

  • South Korea's Kospi: +2.5%

  • Australia's All Ordinaries: +3.7%

---FX---

  • USD/JPY: +0.1% to 144.72

  • USD/CNH: -0.4% to 7.0741

  • USD/INR: +0.1% to 81.554

Europe: DAX +2.8%, FTSE +1.8%, CAC +3.2%

Major European indices are up strongly, rallying in response to Wall Street's strong showing on Monday and the smaller-than-expected rate increase by the Reserve Bank of Australia. The latter has sparked some hope that the Federal Reserve could soon temper the pace of its rate increases and be closer to the end of its rate-hike campaign, a view that is manifesting itself in a weaker dollar. The U.S. Dollar Index is down 0.6% to 111.12, with the euro (EUR/USD +0.6% to 0.9880) showing some strength against the greenback. Falling gilt yields have been another supportive factor for equities. They have continued lower today following the news that Finance Minister Kwarteng will release his fiscal plan and forecasts from the OBR later this month instead of November 23, as previously indicated. Amid the excitement for stock markets, it was also reported that producer prices in the eurozone increased 43.3% yr/yr in August versus 38.0% in July.

  • In economic data:

  • Eurozone's August PPI +5.0% m/m (expected +4.9%; prior +4.0%) and +43.3% yr/yr (expected 43.1%; prior 38.0%)

  • Spain's September Unemployment Change 17.7K (prior 40.4K)

---Equity Markets---

  • STOXX Europe 600: +2.4%

  • Germany's DAX: +2.8%

  • U.K.'s FTSE 100: +1.8%

  • France's CAC 40: +3.2%

  • Italy's FTSE MIB: +2.5%

  • Spain's IBEX 35: +2.5%

---FX---

  • EUR/USD: +0.6% to 0.9880

  • GBP/USD: +0.1% to 1.1334

  • USD/CHF: -0.3% to 0.9884


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