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05/09/23 Briefing


The S&P 500 futures are down 5 points and are trading 0.1% below fair value. The Nasdaq 100 futures are down 37 points and are trading 0.3% below fair value. The Dow Jones Industrial Average futures are up 1 point and are trading roughly in line with fair value.

Equity futures point to a lower open after the holiday weekend. Some mega cap stocks sport pre-open losses, which is limiting the broader market, along with rising market rates. The 2-yr yield is up four basis points to 4.92% and the 10-yr note yield is up five basis points to 4.22%. 

Goldman Sachs lowered its U.S. recession probability to 15% from 20%.

The Reserve Bank of Australia left its cash rate at 4.10%, as expected.

China's Caixin Services PMI decelerated again in August, coming in at its lowest level of the year, while Australia's Services PMI remained in contraction for the second consecutive month. Elsewhere, eurozone's final Services PMI readings for August confirmed a renewed contraction in activity.

Today's U.S. economic data is limited to the July Factory Orders report at 10:00 a.m. ET.

In corporate news:

  • Oracle (ORCL 123.08, +2.15, +1.8%): upgraded to Overweight from Equal Weight at Barclays

  • American Express (AXP 160.45, +0.83, +0.5%): upgraded to Outperform from Sector Perform at RBC Capital Mkts

  • Blackstone (BX 108.50, +4.01, +3.8%): will replace Lincoln National (LNC) in the S&P 500, effective prior to the open of trading on Monday September 18

  • AirBnb (ABNB 140.23, +7.54, +5.6%): will replace Newell Brands (NWL) in the S&P 500, effective prior to the open of trading on Monday September 18; NYC struggling with backlog of AirBnb (ABNB) license requests amid new regulations, according to Bloomberg

  • NextGen Healthcare (NXGN 21.01, +1.68, +8.7%): Thomas Bravo in advanced discussions to purchase NXGN, according to Bloomberg

  • Walt Disney (DIS 81.50, -0.14, -0.2%): urges Spectrum (CHTR) customers to watch Hulu; says dispute is still ongoing

  • KLA Corporation (KLAC 505.19, -1.83, -0.4%): announces increase in quarterly dividend level to $1.45/share and $2 billion increase in total share repurchase authorization

  • Manchester United (MANU 21.20, -2.46, -10.4%): bidders failed to reach asking price, according to Daily Mail

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region ended Tuesday on a mostly lower note. Japan's Nikkei: +0.3%, Hong Kong's Hang Seng: -2.1%, China's Shanghai Composite: -0.7%, India's Sensex: +0.2%, South Korea's Kospi: -0.1%, Australia's ASX All Ordinaries: -0.1%.

  • In economic data:

  • China's August Services PMI 51.8 (expected 53.6; last 54.1)

  • Japan's July Household Spending -2.7% m/m (expected 0.7%; last 0.9%); -5.0% yr/yr (expected -2.5%; last -4.2%). August Services PMI 54.3, as expected (last 53.8)

  • South Korea's August CPI 1.0% m/m (expected 0.3%; last 0.1%); 3.4% yr/yr (expected 2.7%; last 2.3%). Q2 GDP 0.6% qtr/qtr (expected 0.3%; last 0.6%); 0.9% yr/yr, as expected (last 0.9%)

  • Hong Kong's August Manufacturing PMI 49.8 (last 49.4) o Singapore's July Retail Sales 0.6% m/m (last -0.8%); 1.1% yr/yr (last 1.0%)

  • India's August Services PMI 60.1 (expected 61.0; last 62.3)

  • Australia's Q2 Current Account surplus AUD7.7 bln (expected surplus of AUD8.0 bln; last surplus of AUD12.5 bln). August Services PMI 47.8 (expected 46.7; last 47.9)

  • In news:

  • China's Caixin Services PMI decelerated again in August, coming in at its lowest level of the year, while Australia's Services PMI remained in contraction for the second consecutive month.

  • Property names in Hong Kong saw renewed weakness after Monday'srally, which followed reports that China's government will announce additional stimulus measures.

  • South Korea's August CPI grew 1.0% m/m, its fastest pace since early 2011.

  • The Reserve Bank of Australia left its cash rate at 4.10%, as expected.

  • Major European indices trade near their flat lines. STOXX Europe 600: -0.2%, Germany's DAX: -0.2%, U.K.'s FTSE 100: +0.2%, France's CAC 40: -0.3%, Italy's FTSE MIB: -0.1%, Spain's IBEX 35: UNCH.

  • In economic data:

  • Eurozone's July PPI -0.5% m/m (expected -0.6%; last -0.4%); -7.6% yr/yr, as expected (last -3.4%). August Services PMI 47.9 (expected 48.3; last 50.9)

  • Germany's August Services PMI 47.3, as expected (last 52.3)

  • U.K.'s August Services PMI 49.5 (expected 48.7; last 51.5)

  • France's August Services PMI 46.0 (expected 46.7; last 47.1)

  • Italy's August Services PMI 49.8 (expected 50.2; last 51.5)

  • Spain's August Services PMI 49.3 (expected 51.5; last 52.8)

  • In news:

  • Eurozone's final PMI readings for August confirmed a renewed contraction in activity.

  • Corporate debt issuance has reportedly increased notably in recent days.

  • European Central Bank policymaker Nagel repeated that inflation remains too high.

  • The latest Consumer Expectations Survey from the ECB showed that year-ahead inflation expectations remain at 3.4% while the three-year outlook increased to 2.4% from 2.3%.

 

U.S. equity futures:

  • S&P 500 Futures -4 @ 4,512

  • DJIA Futures: +9 @ 34,847

  • Nasdaq 100 Futures: -37 @ 15,454

Overseas:

  • Europe: DAX -0.2%, FTSE +0.2%, CAC -0.3%

  • Asia: Nikkei +0.3%, Hang Seng -2.1%, Shanghai Composite -0.7%

Commodities:

  • Crude Oil -0.14 @ 85.41

  • Nat Gas -0.158 @ 2.607

  • Gold -11.35 @ 1955.75

  • Silver -0.714 @ 23.848

  • Copper -0.0273 @ 3.8247


 

Earnings/Guidance:

  • Brady (BRC) beats by $0.11, beats on revs; guides FY24 EPS in-line; authorized an additional $100 million of Class A Common Stock for repurchase under the Company's share buyback program

  • CME Group (CME) reported August 2023 ADV of 24.2 mln contracts, +14% yr/yr

  • Nomad Foods (NOMD) sees Q3 EPS and revs below consensus; reaffirms FY23 outlook

  • Novartis AG (NVS): Sandoz publishes supplement to Listing Prospectus including Sandoz H1 2023 financial statements

  • Trip.comGroup (TCOM) beats on top and bottom lines

  • UMH Properties (UMH) provides investors with an update on our third quarter 2023 operating results

  • Warner Bros. Discovery (WBD) expects to discuss impacts of the ongoing WGA and SAG-AFTRA strikes at investor conferences; expecting lower adjusted EBITDA for the full year

  • Xylem (XYL) reaffirms FY23 outlook

News:

  • North Korean leader Kim Jong-un will discuss possibility of supplying weapons to Russia, according to the New York Times

  • President Biden and Donald Trump are tied at 46% in 2024 election polling as 58% of voters believe economy had gotten worse over last 2 years, including large majorities of independents, according to the Wall Street Journal

  • Chinese developer Country Garden Holdings avoided default narrowly, according to the Wall Street Journal

  • China to launch new $40 bln fund to boost chip industry, according to Reuters

  • Russia will not rejoin Ukraine grain deal until demands are met, according to the Wall Street Journal

  • UAW strike seems more likely as automakers have two weeks to negotiate contract, according to the New York Times

  • AirBnb (ABNB): NYC struggling with backlog of AirBnb license requests amid new regulations, according to Bloomberg

  • Alibaba (BABA) cloud division wants to raise $3 bln from state owned enterprise, according to Bloomberg

  • Ardmore Shipping (ASC) authorized a new Share Repurchase Plan, expanding and replacing the Company's earlier plan which expires on September 30, 2023

  • AstraZeneca (AZN) reports Calquence approved in China for chronic lymphocytic leukaemia

  • Autolus Therapeutics (AUTL) announces data from AUTO1/22 trial in pediatric Acute Lymphoblastic Leukemia published in the journal Blood

  • Biohaven (BHVN) Announces Positive Data from its Exploratory Electroencephalogram (EEG) Biomarker Study of BHV-7000, Completion of Once-Daily Formulation Development, and Plan to Initiate Phase 3 Pivotal Studies

  • Brady (BRC) raises annual dividend to $0.94 per share from $0.92 per share

  • Brainsway (BWAY) forges strategic partnership with treatment provider in Northeast U.S.

  • Bristol-Myers (BMY): Zenas BioPharma announces strategic license and collaboration agreement with BMY to develop and commercialize novel bi-functional antibody obexelimab in Japan, South Korea, Taiwan, Singapore, Hong Kong and Australia

  • Cameco (CCJ) reports market update regarding challenges at the Cigar Lake mine and Key Lake mill impacting 2023 production forecast

  • Chevron (CVX) liquified natural gas workers in Australia plan two week strike, according to Reuters

  • Corp Office Props (OFC) rebrands to COPT Defense Properties

  • CytoSorbents (CTSO) CFO Alexander D'Amico has resigned

  • Deutsche Bank (DB): German regulators looking at Deutsche Bank over software issues at its retail unit Postbank, according to Bloomberg

  • enCore Energy (EU) provides update on the South Texas Alta Mesa ISR Uranium Central Processing Plant and Wellfield

  • Fate Therapeutics (FATE) issued an update on its litigation proceedings against Shoreline Biosciences

  • Fortuna (FSM) intersects 1,299 g/t Ag Eq over a true width of 9.9 meters at the San Jose Mine, Mexico

  • General Motors (GM): NLRB will investigate if General Motors and Stellantis (STLA) negotiated in good faith, according to Reuters

  • Green Thumb (GTBIF) authorized the Company to spend up to USD $50 million for the repurchase program

  • Illumina (ILMN) names Jacob Thaysen, Ph.D. as CEO effective Sept. 25, 2023

  • indie Semiconductor (INDI) expands operations to include a quality lab facility at its engineering center in Germany

  • Insmed (INSM) announces positive topline results from Phase 3 ARISE study of arikayce (amikacin liposome inhalation suspension) in patients with ntm lung disease caused by MAC

  • Intel (INTC) and Tower Semi (TSEM) announce foundry service agreement

  • Invivyd (IVVD) announces the appointment of William Duke as Chief Financial Officer

  • Johnson & Johnson (JNJ): Addex Therapeutics reports Addex ADX71149 Phase 2 Epilepsy study expected to readout data in Q2 2024

  • KLA Corporation (KLAC) announces increase in quarterly dividend level to $1.45/share and $2 billion increase in total share repurchase authorization

  • Krystal Biotech (KRYS) receives Orphan Drug Designation for KB408 for the treatment of Alpha-1 Antitrypsin Deficiency

  • National Grid (NGG) submits "Future Grid" plan to empower Massachusetts' smarter, stronger, cleaner and more equitable energy future

  • New Pacific Metals (NEWP) Reports Inaugural Resource Estimate for the Carangas Project

  • Nuvalent (NUVL) Initiates the Phase 2 Portion of ARROS-1 Clinical Trial for Patients with ROS1-Positive NSCLC and other Solid Tumors

  • Qualcomm (QCOM) to supply BMW (BMWYY) and Mercedes (MBGYY) with chips, according to Reuters

  • Rallybio (RLYB) presents Phase 1 single ascending dose data for RLYB116, an innovative subcutaneously injected inhibitor of complement component 5

  • Seagen (SGEN) and Genmab (GMAB) announce TIVDAK (tisotumab vedotin-tftv) improved overall survival in patients with recurrent or metastatic cervical cancer compared with chemotherapy alone

  • Spotify's (SPOT) podcast investments haven't paid off, according to the Wall Street Journal

  • Tesla (TSLA) is securing millions in federal grants for its electric vehicle charging infrastructure, according to the Wall Street Journal

  • Tesla (TSLA) China manufactured deliveries rise 9.1% in August, according to Reuters

  • Trivago (TRVG) announcing a renewed focus on its brand marketing strategy; plans to issue a special one-time extraordinary dividend; no longer expects to exceed adjusted EBITDA of 70 million in 2023

  • uniQure (QURE) announces that the U.S. Food and Drug Administration has cleared the Investigational New Drug application for AMT-260

  • Vale S.A. (VALE) confirms Samarco's Judicial Reorganization Plan

  • Verisk Analytics (VRSK) estimates industry insured losses from Hurricane Idalia will range from $2.5-4 bln

  • Viatris (VTRS) receives FDA Tentative approval of a Paediatric Formulation of Abacavir (ABC)/Dolutegravir (DTG)/Lamivudine (3TC)

  • Walt Disney (DIS) urges Spectrum (CHTR) customers to watch Hulu; says dispute is still ongoing

  • Wave Life Sciences (WVE) announces the submission of its first clinical trial application for WVE-006 in alpha-1 antitrypsin deficiency

  • Xenon Pharmaceuticals (XENE) showcases XEN1101 Epilepsy Program at 35th International Epilepsy Congress

  • Xylem (XYL) announces that President and Chief Executive Officer, Patrick Decker, has announced his plans to retire as CEO at the end of 2023

M&A:

  • Albemarle (ALB) confirms non-binding agreement to acquire Liontown

  • Barclays (BCS) mulling stake sale of UK payments unit, according to Reuters

  • Brunswick (BC) announced the acquisition of Fliteboard; terms not disclosed

  • Diversified Healthcare Trust (DHC) and Office Properties Income (OPI) trust mutually agree to terminate merger agreement

  • Dominion Energy (D) announces closure of the sale of its 50% noncontrolling limited partnership interest in Cove Point LNG, LP, to Berkshire Hathaway Energy (BRKB) for $3.3 billion

  • First Advantage Corp. (FA) to acquire Infinite ID for $41 mln in cash

  • HollySys (HOLI) receives notices of intention to request Special Meeting of Shareholders and additionally an unsolicited offer to acquire the company

  • Manchester United (MANU) bidders failed to reach asking price, according to Daily Mail

  • Nestle (NSRGY) divests its Palforzia business

  • NextGen Healthcare (NXGN): Thomas Bravo in advanced discussions to purchase NXGN, according to Bloomberg

  • Pennant Group (PNTG) acquires southern Arizona hospice provider; financial terms were not disclosed

  • Petrobras (PBR) informs about asset divestments; signs agreement on biofuels

  • Timken (TKR) has acquired Des-Case Corp., a Nashville, Tenn.-based manufacturer of specialty filtration products for industrial lubricants

  • Tredegar (TG) to sell its Terphane flexible packaging films business to Oben Group for $116 mln

  • Tremor (TRMR) Board notes the recent press speculation and confirms that it is not currently in a sale process

  • Viper Energy Partners (VNOM) acquires certain mineral and royalty interests from affiliates of Warwick Capital Partners and GRP Energy Capital in exchange for ~9.02 mln Viper common units and $750 mln of cash

  • Western Midstream (WES) to acquire Meritage Midstream Services II, LLC in an all-cash transaction for a purchase price of $885 million

Syndicate:

  • ALX Oncology (ALXO) files for 18,446,936 shares of common stock by selling shareholders

  • Can-Fite BioPharma (CANF) files for $100 mln mixed securities shelf offering

  • Centerspace (CSR) files mixed shelf securities offering

  • Empire Petroleum (EP) files for $350 mln mixed securities shelf offering

  • Intuit (INTU) files mixed securities shelf offering

  • Ramaco Resources (METC) files for $400 mln mixed securities shelf offering

  • REGENXBIO (RGNX) entered into a $150 mln ATM Equity Offering

  • Transocean (RIG) files for 82,596,498 shares of common stock by selling shareholder

IPOs:

  • Arm Holdings (ARM): Nvidia (NVDA) and Apple (AAPL) will support Arm Holdings IPO, according to Bloomberg

  • Arm Holdings (ARM) launches roadshow for the initial public offering of American depositary shares representing its ordinary shares

  • Expected to Price:

  • No IPOs expected.

Gapping Up/Down

  • Gapping up:

  • NXGN +11.2%, DHC +10.3%, TRVG +6.7%, ABNB +5.2%, BX +3.8%, XENE +3.6%, GNL+2.9%, VTRS +2.7%, CIFR +2%, HOLI +1.7%, FATE +0.7%, SGEN +0.5%

  • Gapping down:

  • MANU -9.1%, TCOM -4.8%, ALXO -2.7%, CCJ-2%, RPD -2%, LNC -1.7%, CANF -1.4%, VNOM -1.3%, PBR -1.2%, NWL -1%, RIG-0.7%, NVS -0.6%, VALE -0.5%, ALB -0.5%

 

Analyst Research (see Upgrades/Downgradescalendarfor full list):

  • Upgrades

  • AllianceBernstein (AB) upgraded to Buy from Neutral at BofA Securities; tgt raised to $47

  • American Express (AXP) upgraded to Outperform from Sector Perform at RBC Capital Mkts; tgt raised to $200

  • Centene (CNC) upgraded to Neutral from Underperform at BofA Securities; tgt lowered to $72

  • Stryker (SYK) upgraded to Buy from Neutral at BofA Securities; tgt raised to $315

  • Woodward (WWD) upgraded to Outperform from Market Perform at TD Cowen; tgt raised to $160

  • Downgrades:

  • Agiliti (AGTI) downgraded to Underperform from Neutral at BofA Securities; tgt lowered to $11

  • Eos Energy (EOSE) downgraded to Neutral from Buy at Seaport Research Partners

  • Synchrony Financial (SYF) downgraded to Sector Perform from Outperform at RBC Capital Mkts; tgt lowered to $37

  • Others:

  • Automatic Data (ADP) initiated with a Sector Perform at RBC Capital Mkts; tgt $267

  • Braze (BRZE) initiated with a Buy at Citigroup; tgt $60

  • Cabaletta Bio (CABA) initiated with a Buy at Citigroup; tgt $22

  • Diamond Offshore (DO) initiated with a Buy at BTIG Research; tgt $20

  • HubSpot (HUBS) initiated with a Buy at Citigroup; tgt $695

  • Mid-America Aptmt (MAA) initiated with a Neutral at BofA Securities; tgt $158

  • Paychex (PAYX) initiated with a Sector Perform at RBC Capital Mkts; tgt $130

  • Pyxis Oncology (PYXS) initiated with an Outperform at RBC Capital Mkts; tgt $7

  • Sana Biotechnology (SANA) initiated with a Buy at Citigroup; tgt $8

  • ZoomInfo (ZI) initiated with a Neutral at Citigroup; tgt $19

Econ Data:

  • 10:00 ET: Factory Orders for July (Briefing.comConsensus -2.4%; Prior 2.3%)

Earnings:

  • Tuesday (Sep 5)

  • Morning: BRC, CRMT

  • Afternoon: ASAN, ZS, GTLB, AVAV

  • Wednesday (Sep 6)

  • Morning:  PLAB, CNM

  • Afternoon: INTA, AEO, PATH, SPWH, AI, DSGX, PHR, CHPT, CXM, BASE, CVGW, PLAY, YEXT, CURV, GME, VRNT

  • Thursday (Sep 7)

  • Morning: SAIC, ABM, GIII, TTC, DOOO

  • Afternoon: GWRE, ZUMZ, SMAR, SMTC, BRZE, DOCU, SWBI

  • Friday (Sep 8) 

  • Morning: KR

Asia & Europe detail:

Asia: Nikkei +0.3%, Hang Seng -2.1%, Shanghai Composite -0.7%

Equity indices in the Asia-Pacific region ended Tuesday on a mostly lower note. China's Caixin Services PMI decelerated again in August, coming in at its lowest level of the year, while Australia's Services PMI remained in contraction for the second consecutive month. Property names in Hong Kong saw renewed weakness after Monday'srally, which followed reports that China's government will announce additional stimulus measures. South Korea's August CPI grew 1.0% m/m, its fastest pace since early 2011. The Reserve Bank of Australia left its cash rate at 4.10%, as expected.

  • In economic data:

  • China's August Services PMI 51.8 (expected 53.6; last 54.1)

  • Japan's July Household Spending -2.7% m/m (expected 0.7%; last 0.9%); -5.0% yr/yr (expected -2.5%; last -4.2%). August Services PMI 54.3, as expected (last 53.8)

  • South Korea's August CPI 1.0% m/m (expected 0.3%; last 0.1%); 3.4% yr/yr (expected 2.7%; last 2.3%). Q2 GDP 0.6% qtr/qtr (expected 0.3%; last 0.6%); 0.9% yr/yr, as expected (last 0.9%)

  • Hong Kong's August Manufacturing PMI 49.8 (last 49.4) o Singapore's July Retail Sales 0.6% m/m (last -0.8%); 1.1% yr/yr (last 1.0%)

  • India's August Services PMI 60.1 (expected 61.0; last 62.3)

  • Australia's Q2 Current Account surplus AUD7.7 bln (expected surplus of AUD8.0 bln; last surplus of AUD12.5 bln). August Services PMI 47.8 (expected 46.7; last 47.9)

---Equity Markets---

  • Japan's Nikkei: +0.3%

  • Hong Kong's Hang Seng: -2.1%

  • China's Shanghai Composite: -0.7%

  • India's Sensex: +0.2%

  • South Korea's Kospi: -0.1%

  • Australia's ASX All Ordinaries: -0.1%

---FX---

  • USD/JPY: +0.6% to 147.24

  • USD/CNH: +0.5% to 7.3089

  • USD/INR: +0.4% to 83.01

 

Europe: DAX -0.2%, FTSE +0.2%, CAC -0.3%

Major European indices trade near their flat lines. Eurozone's final PMI readings for August confirmed a renewed contraction in activity. Corporate debt issuance has reportedly increased notably in recent days. European Central Bank policymaker Nagel repeated that inflation remains too high. The latest Consumer Expectations Survey from the ECB showed that year-ahead inflation expectations remain at 3.4% while the three-year outlook increased to 2.4% from 2.3%.

  • In economic data:

  • Eurozone's July PPI -0.5% m/m (expected -0.6%; last -0.4%); -7.6% yr/yr, as expected (last -3.4%). August Services PMI 47.9 (expected 48.3; last 50.9)

  • Germany's August Services PMI 47.3, as expected (last 52.3)

  • U.K.'s August Services PMI 49.5 (expected 48.7; last 51.5)

  • France's August Services PMI 46.0 (expected 46.7; last 47.1)

  • Italy's August Services PMI 49.8 (expected 50.2; last 51.5)

  • Spain's August Services PMI 49.3 (expected 51.5; last 52.8)

---Equity Markets---

  • STOXX Europe 600: -0.2%

  • Germany's DAX: -0.2%

  • U.K.'s FTSE 100: +0.2%

  • France's CAC 40: -0.3%

  • Italy's FTSE MIB: -0.1%

  • Spain's IBEX 35: UNCH

---FX---

  • EUR/USD: -0.6% to 1.0730

  • GBP/USD: -0.7% to 1.2540

  • USD/CHF: +0.6% to 0.8891

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