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05/10/23 Briefing


The S&P 500 futures are up 1 points and are trading in line with fair value. The Nasdaq 100 futures are up 20 points and are trading 0.2% below fair value. The Dow Jones Industrial Average futures are down 31 points and are trading 0.1% below fair value.

The stock market is poised for a mixed open after yesterday's gains. Treasury yields are down again this morning, but lingering concerns about rates staying higher for longer remain an overhang for the stock market. The 2-yr note yield is down three basis points to 5.03% and the 10-yr note yield is down one basis point to 4.72%.

WTI crude oil futures have extended their losses this morning, down 1.2% to $83.21/bbl.

Looking ahead, the weekly jobless claims report will be released at 8:30 a.m. ET. Other economic data today includes the August Trade Balance at 8:30 a.m. ETand the weekly natural gas inventories at 10:30 a.m. ET.

In corporate news:

  • Rivian Automotive (RIVN 21.57, -2.12, -9.0%): proposes $1.5 bln aggregate principal amount of green convertible senior notes due 2030

  • Clorox (CLX 126.32, -5.51, -4.2%): guides Q1 EPS and revs below consensus after assessing financial impact of previously announced cybersecurity attack

  • Ford (F 11.92, -0.07, -0.6%):  to eliminate 400 jobs in Michigan, according to the Detroit Free Press

  • AT&T (T 14.62, -0.03, -0.2%): mulling options for DirectTV stake, according to Bloomberg

  • General Motors (GM 31.00, -0.04, -0.1%), Stellantis (STLA 18.78, +0.03, +0.2%), and Ford: UAW and automakers making progress, according to Reuters

  • Exxon Mobil (XOM  110.31, -1.19, -1.1%): details items that will impact Q3 results; changes in gas prices positively impacting Q3 upstream earnings by $0.2-0.6 bln

  • BlackBerry (BB 4.41, +0.14, +3.2%): updates previously announced review of its businesses; to separate IoT and Cybersecurity units into two independently-operated entities

  • O'Reilly Automotive (ORLY 906.00, +8.80, +1.0%): upgraded to Buy from Neutral at Citi

  • Constellation Brands (STZ 245.50, -3.86, -1.6%): beats by $0.43, reports revs in-line; guides FY24 EPS above consensus

  • McDonald's (MCD 255.98, +0.17, +0.1%): raises quarterly dividend by 10% to $1.67 per share

  • Microsoft (MSFT 319.98, +1.03, +0.3%) and Amazon (AMZN 127.36, +0.36, +0.3%): UK Ofcom?has referred the supply of public cloud infrastructure services in the UK to the?CMA?for a market investigation.

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region ended Thursday's trade mostly higher. Japan's Nikkei: +1.7%, Hong Kong's Hang Seng: +0.2%, China's Shanghai Composite: CLOSED, India's Sensex: +0.6%, South Korea's Kospi: -0.1%, Australia's ASX All Ordinaries: +0.5%.

  • In economic data:

  • South Korea's September CPI 0.6% m/m (expected 0.3%; last 1.0%) and 3.7% yr/yr (expected 3.4%; last 3.4%)

  • Australia's August Imports -0.4% m/m (last 3.4%) and Exports 4.0% m/m (last -1.8%)

  • Hong Kong's September S&P Global Manufacturing PMI 49.6 (last 49.8)

  • Singapore's August Retail Sales 1.7% m/m (last 0.8%) and 4.0% yr/yr (last 1.3%)

  • India's September S&P Global Services PMI 61.0 (expected 59.5; last 60.1)

  • In news:

  • Japan's Nikkei ended a five-day losing streak, bolstered by Wall Street's rebound-minded angle and led by its automaker components.

  • A 30-yr bond auction in Japan, however, did not go as well. It was met with lower demand, which sent yields close to levels last seen in 2013.

  • Hong Kong saw its third straight contraction in its manufacturing PMI.

  • Meanwhile, South Korea reported higher than expected inflation for September.

  • On a somewhat related note, South Korean chip giant Samsung is planning to boost NAND chip prices by at least 10% in Q4, according to DigiTimes.

  • Major European indices are trading flat to modestly higher, battling to overcome lingering concerns about rising interest rates that were exacerbated earlier this week when the German bund yield hit its highest level since 2011. STOXX Europe 600: +0.4%, Germany's DAX: +0.1%, U.K.'s FTSE 100: +0.5%, France's CAC 40: +0.1%, Italy's FTSE MIB: +0.2%, Spain's IBEX 35: +0.4%.

  • In economic data:

  • Eurozone's September HCOB Construction PMI 43.6 (last 43.4)

  • Germany's August Exports -1.2% m/m (expected -0.4%; last -1.9%) and Imports -0.4% m/m (expected 0.5%; last -1.3%); September HCOB Construction PMI 39.3 (last 41.5)

  • France's August Industrial Production -0.3% m/m (expected -0.4%; last 0.5%); September HCOB Construction PMI 43.7 (last 42.4)

  • Spain's August Industrial Production -3.4% yr/yr (expected -2.1%; last -2.2%); Consumer Confidence 77.2 (last 94.4)

  • Italy's September HCOB Construction PMI 49.8 (last 47.7)

  • UK's September S&P Global Construction PMI 45.0 (expected 49.9; last 50.8)

  • In news:

  • Today, Germany reported a decline in both its exports and imports for August.

  • On a better policy rate note, ECB member Kazimir thinks the ECB is done raising rates, according to Bloomberg.

  • In corporate news, UK regulators are investigating Amazon.comand Microsoft for their cloud dominance, and French train manufacturer Alstom has seen its stock price plummet after cutting its free cash flow guidance.

 

U.S. equity futures:

  • S&P 500 Futures -2 @ 4,262

  • DJIA Futures: -45 @ 33,084

  • Nasdaq 100 Futures: +12 @ 14,788

Overseas:

  • Europe: DAX +0.1%, FTSE +0.5%, CAC +0.1%

  • Asia: Nikkei +1.7%, Hang Seng +0.2%, Shanghai Composite CLOSED

Commodities:

  • Crude Oil -1.25 @ 82.97

  • Nat Gas +0.048 @ 3.010

  • Gold +1.45 @ 1836.25

  • Silver +0.094 @ 21.240

  • Copper -0.0195 @ 3.5695


 

Earnings/Guidance:

  • AbbVie (ABBV) guides Q3 and FY23 EPS below consensus after unfavorable $0.04 impact due to acquired IPR&D and milestones expense

  • Accolade (ACCD) beats by $0.11, beats on revs; guides Q3 revs in-line; reaffirms FY24 revs guidance

  • AirSculpt Technologies (AIRS) sees Q3 revs above consensus and raises FY23 outlook

  • Buckle (BKE) reports comparable store net sales for the 5-week period ended September 30, 2023 decreased 11.1% yr/yr

  • Caleres (CAL) reiterates Q3 and FY23 outlook ahead of Investor Day; provides 3-year growth plan

  • Cambium Networks (CMBM) lowers its Q3 revenue forecast due several headwinds, including a delay in government defense orders and continued economic challenges

  • Clorox (CLX) guides Q1 EPS and revs below consensus after assessing financial impact of previously announced cybersecurity attack

  • Conagra (CAG) beats by $0.06, misses on revs; reaffirms FY24 EPS guidance

  • Constellation Brands (STZ) beats by $0.43, reports revs in-line; guides FY24 EPS above consensus

  • Costco (COST) reports Sept comps of +3.7%, ex-gas and FX

  • Exxon Mobil (XOM) details items that will impact Q3 results; changes in gas prices positively impacting Q3 upstream earnings by $0.2-0.6 bln

  • Fortuna Silver Mines (FSM) reports record gold equivalent production of 128,671 ounces in Q3

  • Heritage Insurance (HRTG) estimates that retained catastrophe losses for 3Q23 were approximately $40.0 million

  • MaxCyte (MXCT) lowers its FY23 revenue outlook due to ongoing volatility in customer activity within the life science tools sector

  • National Grid (NGG) provides pre-close update ahead of half year results

  • Plymouth Industrial REIT (PLYM) provides activity update for third quarter 2023

  • Resources Connection (RGP) beats by $0.04, reports revs in-line

  • VinFast Auto (VFS) reports Q3 results; reaffirms FY23 delivery target

  • WEC Energy Group (WEC) reaffirms FY23 guidance in slide presentation

News:

  • Increasing interest rates putting focus back on large budget deficits, according to the Wall Street Journal

  • Rep. Matt Gaetz says he will support both Representatives Steve Scalise and Jim Jordan for House Speaker, according to Bloomberg

  • House Speaker contender Jim Jordan opposes additional Ukraine aid while contender Steve Scalise supports it, according to Axios

  • President Biden's latest $9 bln student loan forgiveness plan will likely be challenged in the courts, according to CNN

  • UAW and automakers making progress, according to Reuters

  • SAG-AFTRA and the AMPTP conclude bargaining for October 4

  • AerSale (ASLE) updates status of AerAware certification by the FAA; nears conclusion of process applicable to the Boeing 737NG and MAX aircraft

  • Alibaba (BABA) accused of espionage, according to Financial Times

  • Apellis Pharmaceuticals (APLS) provides an update on the launch of SYFOVRE for geographic atrophy secondary to age-related macular degeneration

  • AT&T (T) mulling options for DirectTV stake, according to Bloomberg

  • Autoliv (ALV) provides update on headcount reductions

  • Bit Digital (BTBT) announces monthly production update for September 2023

  • BlackBerry (BB) updates previously announced review of its businesses; to separate IoT and Cybersecurity units into two independently-operated entities

  • Cannae Holdings (CNNE) and Trasimene Capital Management amend/restate the Management Services Agreement

  • Castle Biosciences (CSTL): DecisionDx-Melanoma outperforms Memorial Sloan Kettering Cancer Center nomogram in predicting sentinel lymph node positivity in patients with cutaneous melanoma

  • Cboe Global Markets (CBOE) reports trading volume statistics for September; achieved several new volume records for the month, including combined monthly ADV of more than 3.9 mln contracts

  • Chevron's (CVX) efforts to finalize work agreements in Australia have hit a roadblock, according to Reuters

  • Citigroup (C) reviewing staff roasters for potential November layoffs, according to Reuters

  • Clear Secure (YOU) expands into financial services, launches its first reusable KYC solution with fast, frictionless consumer experience

  • Comcast (CMCSA): Oaktree Capital Management bid 1.0 bln to back Italian soccer league TV channel, according to Bloomberg Law

  • Emergent BioSolutions (EBS) issued a statement announcing recent communications it received from the FDA related to the Company's Camden manufacturing facility in Baltimore, Maryland

  • Ford (F) to eliminate 400 jobs in Michigan, according to Detroit Free Press

  • General Motors (GM) says thousands of automotive employees negatively impacted by UAW strike

  • Grupo Aeroportuario (OMAB) received a notification from the Federal Civil Aviation Agency; also reports that terminal passenger traffic at its 13 airports increased 16.6% in September 2023, as compared to September 2022

  • Healthcare Realty (HR) publishes investor day presentation and provides update on asset sales and new leasing momentum

  • Horizon Therapeutics plc (HZNP) disclosed High Court of Ireland sanctioned the Scheme - expected to become effective on October 6, 2023

  • Ironwood Pharma (IRWD) to present new data at Naspghan annual meeting reinforcing impact of linaclotide on functional constipation in children and adolescents ages 6-17 years-old

  • ITT (ITT) announces $1 billion share repurchase program

  • Kaman (KAMN) announces that the U.S. Army awarded Near Earth Autonomy and Kaman Air Vehicles a contract to demonstrate heavy lift VTOL capability

  • McDonald's (MCD) raises quarterly dividend by 10% to $1.67 per share

  • MediciNova (MNOV) receives gene therapy milestone payment

  • Merck (MRK) announces that the Phase 3 AMBASSADOR trial evaluating KEYTRUDA met one of its dual primary endpoints of disease-free survival for the adjuvant treatment of patients with localized muscle-invasive urothelial carcinoma and locally advanced urothelial carcinoma versus observation

  • Metropolitan Bank (MCB) CFO of Metropolitan Holding Corp Gregory A. Sigrist intends to resign from his roles at the Company and the Bank, to be effective October 31, 2023

  • Microsoft (MSFT): UK Ofcom?has referred the supply of public cloud infrastructure services in the UK to the?CMA?for a market investigation

  • Neurocrine Biosciences (NBIX) Announces Phase 3 Pediatric Study Results of Crinecerfont in Children and Adolescents for the Treatment of Congenital Adrenal Hyperplasia Met Primary and Key Secondary Endpoints

  • NIO (NIO) loses $35K on every car that they sell, according to NY Times

  • OKYO Pharma (OKYO) Announces Positive Safety Data Profile for the ongoing OK-101 Phase 2 Clinical Trial to Treat Dry Eye Disease

  • Otter Tail Power (OTTR) announces that CFO Kevin Moug will retire on December 31, Todd Wahlund appointed CFO

  • Patterson-UTI (PTEN) reports drilling activity for September; had average of 117 drilling rigs in U.S., bringing total average for three months ending September to 119

  • Performant Financial (PFMT) awarded 2023 Recovery Audit Contractor (RAC) contract by New York State's Office of the Medicaid Inspector General

  • Polestar Automotive Holding UK PLC (PSNY) reports its global deliveries for the third quarter of 2023

  • QIAGEN (QGEN) launches QuantiFERON-EBV RUO assay, facilitating research of cell-mediated immune response to Epstein-Barr virus

  • Rocket Lab USA (RKLB) opens its engine development center in CA today

  • Samsung (SSNLF) to increase NAND contract prices by at least 10% in Q4, according to Digitimes

  • Semtech (SMTC) announces that Mark Lin has joined the company as Executive Vice President and CFO, effective October 2

  • uniQure (QURE) announced a strategic reorganization aimed at reducing operating expenses

  • Veracyte (VCYT): new data from phase 3 trial further validate prognostic value of Veracyte's decipher prostate genomic classifier

M&A:

  • Dover (DOV) to acquire FW Murphy, a supplier of control and optimization solutions for the reciprocating compression industry for $530 mln

  • Laboratory Corp (LH) to acquire Baystate Health's outreach laboratory business and select operating assets; to build upon Labcorp's and Baystate Health's existing reference laboratory relationship

  • Mativ Holdings (MATV) entered into a final, binding and irrevocable offer letter for Evergreen Hill Enterprise to acquire the Company's Engineered Papers business for $620 million in cash

  • Orchard Therapeutics (ORTX) to be acquired by Kyowa Kirin for $16.00 per ADS in cash plus an additional contingent value right of $1.00 per ADS

  • Suncor Energy (SU) to purchase TotalEnergies EP Canada (TTE) for a total consideration of C$1.47 bln; to close before the end of 2023

  • TotalEnergies (TTE) closes the sale of its 50% interest in Surmont to ConocoPhillips (COP); Sells the remainder of its upstream Canadian assets to Suncor (SU)

Syndicate:

  • ALX Oncology (ALXO) announces proposed public offering

  • Kratos Defense and Security (KTOS) files for 1,845,064 shares of common stock by selling shareholders

  • Mercury (MRCY) files mixed shelf securities offering

  • Pagaya (PGY) files $500 mln mixed shelf securities offering

  • Rivian Automotive (RIVN) proposes $1.5 bln aggregate principal amount of green convertible senior notes due 2030

IPOs:

  • Priced to Trade:

  • No IPOs expected.

Gapping Up/Down

  • Gapping up:

  • ORTX +95.6%, VCYT +4.3%, BB +4%, PFMT+3%, ASLE +2.4%, ALXO +2.2%, MNOV +2%, KAMN +1.9%, ITT +1.7%

  • Gapping down:

  • CMBM -28.3%, MXCT -22.9%, ACCD -9.2%, RIVN -8.9%, RGP -8.5%, YOU -4.9%, CLX-4.4%, HRTG -4.3%, PGY -3.9%, GRTS -2.7%, MRCY -1.5%, XOM -1.2%, TTE -1%, SU-0.8%, COP -0.7%

 

Analyst Research (see Upgrades/Downgradescalendarfor full list):

  • Upgrades

  • America Movil SA (AMX) upgraded to Buy from Neutral at BofA Securities; tgt raised to $25

  • Beacon Roofing Supply (BECN) upgraded to Outperform from Sector Perform at RBC Capital Mkts; tgt raised to $94

  • Parker-Hannifin (PH) upgraded to Buy from Neutral at BofA Securities; tgt raised to $475

  • TelevisaUnivision (TV) upgraded to Buy from Neutral at BofA Securities; tgt lowered to $4.70

  • Trane (TT) upgraded to Neutral from Underperform at BofA Securities; tgt raised to $210

  • UWM Holdings (UWMC) upgraded to Buy from Neutral at BTIG Research; tgt $6

  • Downgrades:

  • Bread Financial (BFH) downgraded to Neutral from Buy at BofA Securities; tgt lowered to $36

  • Canadian Nat'l Rail (CNI) downgraded to Neutral from Buy at BofA Securities; tgt lowered to $115

  • Carrier Global (CARR) downgraded to Underperform from Neutral at BofA Securities; tgt lowered to $55

  • Cooper (COO) downgraded to Neutral from Buy at Redburn Atlantic; tgt lowered to $343

  • Others:

  • Alpine Immune Sciences (ALPN) initiated with an Outperform at RBC Capital Mkts; tgt $19

  • Cheesecake Factory (CAKE) resumed with a Neutral at BofA Securities; tgt $33

  • HF Sinclair (DINO) initiated with an Outperform at BMO Capital Markets; tgt $65

  • Jack In The Box (JACK) resumed with a Buy at BofA Securities; tgt $85

  • Johnson & Johnson (JNJ) initiated with an Outperform at RBC Capital Mkts; tgt $178

  • PBF Energy (PBF) initiated with an Outperform at BMO Capital Markets; tgt $60

  • Shake Shack (SHAK) initiated with a Neutral at BofA Securities; tgt $66

  • Wingstop (WING) initiated with a Buy at BofA Securities; tgt $218

Econ Data:

  • 08:30 ET: Initial Claims for Sept 30 (Briefing.comConsensus 225K; Prior 204K)

  • 08:30 ET: Continuing Claims for Sept 23 (Briefing.comConsensus NA; Prior 1670K)

  • 08:30 ET: Trade Balance for Aug (Briefing.comConsensus -$65.1B; Prior -$65.0B)

  • 10:30 ET: EIA Natural Gas Inventories for Sept 30 (Briefing.comConsensus NA; Prior +90 bcf)

Earnings:

  • Tuesday (Oct 3)

  • Morning: MKC

  • Afternoon:  CALM

  • Wednesday (Oct 4)

  • Morning:  ANGO HELE RPM TLRY

  • Afternoon:  ACCD RGP

  • Thursday (Oct 5)

  • Morning: CAG STZ LW

  • Afternoon:  LEVI

 

Asia & Europe detail:

Asia: Nikkei +1.7%, Hang Seng +0.2%, Shanghai Composite CLOSED

Equity indices in the Asia-Pacific region ended Thursday's trade mostly higher. Japan's Nikkei ended a five-day losing streak, bolstered by Wall Street's rebound-minded angle and led by its automaker components. A 30-yr bond auction in Japan, however, did not go as well. It was met with lower demand, which sent yields close to levels last seen in 2013. Hong Kong saw its third straight contraction in its manufacturing PMI. Meanwhile, South Korea reported higher than expected inflation for September. On a somewhat related note, South Korean chip giant Samsung is planning to boost NAND chip prices by at least 10% in Q4, according to DigiTimes.

  • In economic data:

  • South Korea's September CPI 0.6% m/m (expected 0.3%; last 1.0%) and 3.7% yr/yr (expected 3.4%; last 3.4%)

  • Australia's August Imports -0.4% m/m (last 3.4%) and Exports 4.0% m/m (last -1.8%)

  • Hong Kong's September S&P Global Manufacturing PMI 49.6 (last 49.8)

  • Singapore's August Retail Sales 1.7% m/m (last 0.8%) and 4.0% yr/yr (last 1.3%)

  • India's September S&P Global Services PMI 61.0 (expected 59.5; last 60.1)

---Equity Markets---

  • Japan's Nikkei: +1.7%

  • Hong Kong's Hang Seng: +0.2%

  • China's Shanghai Composite: CLOSED

  • India's Sensex: +0.6%

  • South Korea's Kospi: -0.1%

  • Australia's ASX All Ordinaries: +0.5%

---FX---

  • USD/JPY: -0.2% to 148.85

  • USD/CNH: UNCH at 7.3171

  • USD/INR: -0.2% to 83.251

 

Europe: DAX +0.1%, FTSE +0.5%, CAC +0.1%

Major European indices are trading flat to modestly higher, battling to overcome lingering concerns about rising interest rates that were exacerbated earlier this week when the German bund yield hit its highest level since 2011. Today, Germany reported a decline in both its exports and imports for August. On a better policy rate note, ECB member Kazimir thinks the ECB is done raising rates, according to Bloomberg. In corporate news, UK regulators are investigating Amazon.comand Microsoft for their cloud dominance, and French train manufacturer Alstom has seen its stock price plummet after cutting its free cash flow guidance.

  • In economic data:

  • Eurozone's September HCOB Construction PMI 43.6 (last 43.4)

  • Germany's August Exports -1.2% m/m (expected -0.4%; last -1.9%) and Imports -0.4% m/m (expected 0.5%; last -1.3%); September HCOB Construction PMI 39.3 (last 41.5)

  • France's August Industrial Production -0.3% m/m (expected -0.4%; last 0.5%); September HCOB Construction PMI 43.7 (last 42.4)

  • Spain's August Industrial Production -3.4% yr/yr (expected -2.1%; last -2.2%); Consumer Confidence 77.2 (last 94.4)

  • Italy's September HCOB Construction PMI 49.8 (last 47.7)

  • UK's September S&P Global Construction PMI 45.0 (expected 49.9; last 50.8)

---Equity Markets---

  • STOXX Europe 600: +0.4%

  • Germany's DAX: +0.1%

  • U.K.'s FTSE 100: +0.5%

  • France's CAC 40: +0.1%

  • Italy's FTSE MIB: +0.2%

  • Spain's IBEX 35: +0.4%

---FX---

  • EUR/USD: +0.1% to 1.0514

  • GBP/USD: +0.1% to 1.2136

  • USD/CHF: -0.2% to 0.9153

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