06/03/23 Briefing

The S&P 500 futures are up 2 points and are trading roughly in line with fair value. The Nasdaq 100 futures are up 18 points and are trading slightly above fair value. The Dow Jones Industrial Average futures are down 13 points and are trading slightly below fair value.

Equity futures trade in mixed fashion, but investors lack conviction and moves are modest in scope. There's some hesitation in play this morning ahead of key events this week, including Fed Chair Powell's monetary policy testimony before Senate and House committees on Tuesday and Wednesday, respectively, followed by the February Employment Report on Friday. Questions about how the market will respond to Friday's positive finish have contributed to the wait and see trade this morning. 

China's Premier Li announced a 2023 growth target of 5.0%, which was on the low end of expectations. This has created some pressure for commodity prices. WTI crude oil futures are down 1.4% to $78.56/bbl. Copper futures are down 1.0% to $4.03/lb. Natural gas futures are down 10.0% to $2.83/mmbtu.

The 2-yr note yield is down two basis points to 4.84% and the 10-yr note yield is down six basis points to 3.91%. 

In corporate news:

• Apple (AAPL 153.12, +2.09, +1.4%):  initiated with a Buy at Goldman

• Ciena (CIEN 53.85, +4.76, +9.7%): beats by $0.28, beats on revs

• Tesla (TSLA 197.94, +0.15, +0.1%): lowered Model S version by 5% to $89,900 and Plaid to $109,990

• Norfolk Southern (NSC 225.00, -3.39, -1.5%): Second train derails in Ohio about a month after East Palestine derailment; no hazardous materials were involved, according to NYT

• Wendy's (WEN 21.59, -0.34, -1.6%): Trian Fund (Nelson Peltz) sold 3,627,569 shares worth approx. $80.0 mln; downgraded to Neutral from Buy at Northcoast

• Biogen (BIIB 271.79, +1.52, +0.6%): and Eisai receives Priority Review for traditional approval of LEQEMBI

• Altria (MO 46.55, +0.02, +0.04%): to acquire NJOY Holdings for approximately $2.75 bln in cash payable at closing; call at 9 a.m. ET

Reviewing overnight developments:

• Equity indices in the Asia-Pacific region began the week on a mostly higher note. Japan's Nikkei: +1.1%, Hong Kong's Hang Seng: +0.2%, China's Shanghai Composite: -0.2%, India's Sensex: +0.7%, South Korea's Kospi: +1.2%, Australia's ASX All Ordinaries: +0.6%.

  • In economic data:

    • South Korea's February CPI 0.3% m/m (expected 0.5%; last 0.8%); 4.8% yr/yr (expected 5.1%; last 5.2%)

    • Australia's February MI Inflation Gauge 0.4% m/m (last 0.9%)

  • In news:

    • China's Premier Li announced a 2023 growth target of 5.0%, which was on the low end of expectations. Defense spending is expected to increase by 7.2% yr/yr.

    • China's National Development Reform Commission reportedly inquired about a sharp rise in the price of ore.

    • The Reserve Bank of Australia is expected to announce a 25-bps rate hike tomorrow.

• Major European indices trade in mixed fashion. STOXX Europe 600: -0.2%, Germany's DAX: +0.2%, U.K.'s FTSE 100: -0.6%, France's CAC 40: +0.2%, Italy's FTSE MIB: +0.1%, Spain's IBEX 35: -0.1%.

  • In economic data:

    • Eurozone's January Retail Sales 0.3% m/m (expected 1.0%; last -1.6%); -2.3% yr/yr (expected -1.8%; last -2.8%). March Sentix Investor Confidence -11.1 (expected -6.3; last -8.0)

    • U.K.'s February Construction PMI 54.6 (expected 49.1; last 48.4)

    • Spain's February Consumer Confidence 71.6 (last 73.0)

    • Swiss February CPI 0.7% m/m (expected 0.4%; last 0.6%); 3.4% yr/yr (expected 3.1%; last 3.3%)

  • In news:

    • French Finance Minister Le Maire said that his country's government reached an agreement with retailers to limit food inflation and that retailers will take a hit to their margins.

    • European Central Bank policymaker Rehn hinted at a "fairly significant" rate hike in March while ECB policymaker Centeno said that the central bank is targeting headline inflation rate instead of the core rate.

U.S. equity futures:

• S&P 500 Futures: +1 @ 4,047

• DJIA Futures: -10 @ 33,381

• Nasdaq 100 Futures: +16 @ 12,306

Overseas:

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

• Asia: Nikkei +1.1%, Hang Seng +0.2%, Shanghai Composite -0.2%

Commodities:

• Crude Oil -1.12 @ 78.56

• Nat Gas -0.335 @ 2.674

• Gold +2.85 @ 1857.45

• Silver +0.029 @ 21.267

• Copper-0.0418 @ 4.0252

Earnings/Guidance:

• American Homes 4 Rent (AMH) reaffirms FY23 core FFO guidance in investor presentation

• Apartment Income REIT Corp. (AIRC) reaffirms pro forma FFO outlook for FY23 in slide presentation ahead of investor conference

• ArcBest (ARCB) reports monthly metrics; Feb Billed Revenue/Day was +1% vs prior month

• AvalonBay (AVB) reports February operating metrics

• Azul S.A. (AZUL) reports Q4 (Dec) results, misses on revs

• CECO Environ (CECO) beats by $0.05; beats on revs; raises FY23 outlook

• Ciena (CIEN) beats by $0.28, beats on revs

• Keros Therapeutics (KROS) provides anticipated 2023 corporate milestones; also reports earnings

• LGI Homes (LGIH) announces it closed 506 homes in Feb 2023

• Lordstown Motors (RIDE) misses by $0.21, misses on revs

• United Micro (UMC) reports February sales declined 18.6% yr/yr to NT$16.93 bln

News:

• Fed Chairman Powell to testify this week, according to Bloomberg

• Abbott Labs (ABT) reports Late-Breaking Data from Landmark COAPT Trial Show Long-Term Benefits of Abbott's MitraClip Device; reports New Data Show Superiority of Abbott's TriClip Device Compared to Medical Therapy for Tricuspid Regurgitation

• Abbott Labs (ABT): FDA has cleared its FreeStyle Libre 2 and FreeStyle Libre 3 integrated continuous glucose monitoring (iCGM) system sensors for integration with automated insulin delivery (AID) systems

• Aclaris Therapeutics (ACRS) announces preliminary topline data from 12-week phase 2a study of oral zunsemetinib; study did not meet primary or secondary efficacy endpoints

• Air Lease (AL) announced long-term lease placements for three new Airbus (EADSY) A350-900 widebody aircraft with Air France (AFLYY)

• Alphabet (GOOG) execs tell employees Bard A.I. is not just about search, according to CNBC

• Amarin (AMRN) reports New REDUCE-IT Data at ACC.23/WCC Showing Benefit of VASCEPA/VAZKEPA (Icosapent Ethyl) in High-Risk Patients with a Recent Acute Coronary Syndrome Event

• Ameriprise Financial (AMP) and Comerica Bank signed an agreement for Ameriprise to become Comerica's new investment program provider

• AstraZeneca (AZN) reports ENHERTU Showed clinically meaningful and durable responses across multiple HER2 expressing tumor types in DESTINY-PanTumor02 Phase 2 Trial

• AstraZeneca (AZN) and Daiichi Sankyo's (DSNKY) ENHERTU met prespecified criteria for objective response rate and duration of response

• atai Life Sciences (ATAI)  Announces Key Clinical Pipeline and Corporate Updates

• BAE Systems (BAESY) awarded a $245.6 mln US Army contract for Armored Multi-Purpose Vehicles

• Bath & Body Works (BBWI) announces appointment of Thomas J. Kuhn to Board of Directors

• Biogen (BIIB) and Eisai receives Priority Review for traditional approval of LEQEMBI

• BridgeBio (BBIO) Announces Positive Phase 2 Cohort 5 Results of Infigratinib in Achondroplasia Demonstrating Mean Increase in Annualized Height Velocity of 3.03 cm/year with No Treatment-related Adverse Events

• Caterpillar (CAT) will not close more union-represented plants, according to the Wall Street Journal

• Cboe Global Markets Reports Trading Volume for February 2023

• Community Healthcare Trust Chairman (CHCT) and CEO Timothy Wallace passed away

• Construction Partners (ROAD) announced Greg Hoffman will succeed Alan Palmer as Chief Financial Officer, effective following the close of business on March 31, 2023

• Cytokinetics (CYTK) Presents Results From Cohort 4 of REDWOOD-HCM and Long-Term Results From FOREST-HCM at the American College of Cardiology 72nd Annual Scientific Session

• Enstar Group (ESGR) names Paul Brockman as COO and Matthew Kirk as CFO, effective as of March 1

• Esperion Therapeutics (ESPR) reports Landmark CLEAR outcomes study demonstrates NEXLETOL tablet is the only LDL-C lowering therapy since statins to reduce hard ischemic events

• Grupo Aeroportuario del Pacifico (PAC) reports February traffic increased 24.3% yr/yr

• Hon Hai Precision (HNHPF): iPhone maker Foxconn reported slumping revenue over the weekend citing weaker demand for electronics, according to BBC

• IAMGOLD (IAG) appointed Renaud Adams as the Company's President and Chief Executive Officer, effective April 3, 2023

• Immuneering (IMRX) Presents Preclinical Data with Lead Program IMM-1-104 Supporting Universal-RAS Activity

• Incyte (INCY) to discontinue Phase 3 LIMBER-304 trial following results of a pre-planned interim analysis

• Intel (INTC) is canceling its upcoming Rialto Bridge series of data center Max GPUs and moving to a two-year cadence for data center GPU releases - Intel VP Jeff McVeigh

• Invitae's (NVTA) PCM Assay for Minimal Residual Disease Receives its First Commercial Coverage

• Invivyd (IVVD) announces the election of VYD222 to advance into the clinic as a novel monoclonal antibody therapeutic option for COVID-19

• Keurig Dr Pepper (KDP): Mondelez (MDLZ) board designee Michael Call notified the Executive Chairman that he will resign from the Board effective immediately

• Lexicon Pharma (LXRX) reports New Analyses of Sotagliflozin Showing Time to Clinical Benefit Presented at The American College of Cardiology's 72nd Annual Scientific Session Together With World Heart Federation's World Congress of Cardiology

• Lockheed Martin (LMT) awarded a $214.5 mln US Navy contract for multinational early start engineering efforts

• MediWound (MDWD) Expands its Global Leadership Team to Help Drive Company's Future Growth

• Merck (MRK) announced the FDA approved the addition of the intramuscular route of administration to the United States Product Insert for Merck's MMRV family of vaccines

• Meta Platforms' (META) price cuts on Quest headsets spurred by "disappointing" demand among corporate, mainstream customers, according to Bloomberg

• Milestone Pharmaceuticals (MIST) Progresses Clinical and Regulatory Activities for Etripamil in Patients with Paroxysmal Supraventricular Tachycardia

• Mineralys Therapeutics (MLYS) Presents Positive Lorundrostat Results from the Phase 2 Target-HTN Trial at ACC.23/WCC

• Norfolk Southern (NSC): Second NSC train derails in Ohio about a month after East Palestine derailment; no hazardous materials were involved, according to the New York Times

• Ocugen (OCGN) announces the appointment of Quan A. Vu to Chief Financial Officer & Chief Business Officer

• Paymentus (PAY) appointed Sanjay Kalra as Senior Vice President and Chief Financial Officer of the Company, effective March 6, 2023

• PGT Inc. (PGTI) CFO John Kunz has stepped down, effective Feb 27

• Quest Diagnostics (DGX) elects CEO and President James Davis , to serve in the additional position of Chairman of the Board of Directors, effective April 1, 2023

• Rallybio (RLYB) announced that clinical proof-of-concept has been achieved in a Phase 1b study for RLYB212, an anti-HPA-1a monoclonal antibody for the prevention of fetal and neonatal alloimmune thrombocytopenia

• Roche Hldg (RHHBY) receives FDA approval of label expansion for VENTANA PD-L1

• Sallie Mae (SLM) CFO Steven McGarry to retire in Feb 2024; co is conducting an extensive search to identify his successor

• South State (SSB) enters into separation and transition agreement with Exec Chairman

• Telecom Italia (TIIAY) received from CdP Equity and Macquarie a non-binding offer for the purchase of fixed network infrastructure and Sparkle

• Tesla (TSLA) lowered Model S version by 5% to $89,900 and Plaid to $109,990

• Tesla (TSLA) aiming to build cars at Mexico plant next year, according to the New York Times

• UBS (UBS) cutting bonus pool, according to Bloomberg

• Uranium Energy (UEC) intersects additional high-grade uranium mineralization with CB-183-1, at the Christie Lake Project

M&A:

• Adaptimmune Therapeutics (ADAP) and TCR Therapeutics (TCRR) announce strategic combination

• Altria (MO) to acquire NJOY Holdings for approximately $2.75 bln in cash payable at closing

• Commercial Metals (CMC) acquires metal recycling company Roane Metals Group LLC; financial details not disclosed

• Credit Suisse (CS): Harris Associates divests stake in Credit Suisse, according to Financial Times

• EMX Royalty (EMX) to sell its Rna battery metal project in Norway

• Gladstone Commercial (GOOD) entered into an at-the-market equity offering sales agreement on March 3

• NGL Energy Partners (NGL) signs agreements to sell marine assets for $111.65 mln

• Vistra Energy (VST) announced Energy Harbor (OTC: ENGH) will merge with and into a newly-formed subsidiary of Vistra; increases aggregate share repurchase authorization by $1 billion

Syndicate:

• Devon Energy (DVN) files mixed securities shelf offering

• DoubleVerify (DV) launches offering of 12.5 mln shares of common stock by Providence VII U.S. Holdings L.P. and Providence Butternut Co-Investment L.P.

• ICU Medical (ICUI) files for 2.5 mln share common stock offering by selling shareholder

• RingCentral (RNG) files for 1,265,456 share common stock offering by selling shareholders

• UnitedHealth (UNH) files mixed securities shelf offering

IPOs:

• Arm looking to raise $8 bln in U.S. IPO, according to Reuters

• Expected to Price:

Gapping Up/Down

• Gapping up:

  • TCRR +42.1%, SSB +4.1%, SLM +2%, ETNB +1.6%, CYTK +1.3%, GATO +1.3%, BIIB +0.8%, UMC +0.7%, GOOD +0.6%

• Gapping down:

  • ESPR -21.9%, ADAP -15.3%, PGTI -2.7%, RNG -2.1%, MLYS -2%, AVB -1.5%, INCY -1.5%, CBOE -1.1%, WEN -1%, DVN -0.8%

Analyst Research (see Upgrades/Downgradescalendarfor full list):

• Upgrades

  • Meritage (MTH) upgraded to Overweight from Neutral at JP Morgan; tgt $129

  • Vir Biotechnology (VIR) upgraded to Overweight from Neutral at JP Morgan; tgt lowered to $34

• Downgrades:

  • Allbirds (BIRD) downgraded to Neutral from Outperform at Wedbush; tgt $3

  • KB Home (KBH) downgraded to Underweight from Overweight at JP Morgan; tgt lowered to $32.50

  • Silvergate Capital (SI) downgraded to Underperform from Neutral at Wedbush; tgt lowered to $4

  • Wendy's (WEN) downgraded to Neutral from Buy at Northcoast

• Others:

  • Apple (AAPL) initiated with a Buy at Goldman; tgt $199

Upcoming Events:

• Econ Data:

  • 10:00 ET: Factory Orders for Jan (Briefing.comConsensus -1.8%; Prior 1.8%)

• Earnings:

  • Monday (Mar 6)

    • Morning:  AZUL CIEN RIDE

    • Afternoon: AVAV CVGW DOMO GWRE NTNX TCOM WW

  • Tuesday (Mar 7)

    • Morning: MASS DKS DOLE SWIM SE MCRB SQSP THO

    • Afternoon:  AGTI ARLO CASY BASE CRCT CRWD SFIX WTI YEXT

  • Wednesday (Mar 8)

    • Morning:  ABM BF.B CPB IMXI KFY LTH LFST REVG COCO UNFI VERX VRDN

    • Afternoon:  ASAN ESTE EOLS MDB NDLS ONL SMRT SOVO

  • Thursday (Mar 9)

    • Morning: BJ GCO HLLY JD PSFE TTC

    • Afternoon:  BIRD AOUT DOCU LOCO GPS HCP HRT AVO ORCL SWBI ULTA MTN WPM ZUMZ

  • Friday (Mar 10) 

    • Morning:  BKE GENI

Asia & Europe detail:

Asia: Nikkei +1.1%, Hang Seng +0.2%, Shanghai Composite -0.2%

Equity indices in the Asia-Pacific region began the week on a mostly higher note. China's Premier Li announced a 2023 growth target of 5.0%, which was on the low end of expectations. Defense spending is expected to increase by 7.2% yr/yr. China's National Development Reform Commission reportedly inquired about a sharp rise in the price of ore. The Reserve Bank of Australia is expected to announce a 25-bps rate hike tomorrow.

• In economic data:

  • South Korea's February CPI 0.3% m/m (expected 0.5%; last 0.8%); 4.8% yr/yr (expected 5.1%; last 5.2%)

  • Australia's February MI Inflation Gauge 0.4% m/m (last 0.9%)

---Equity Markets---

• Japan's Nikkei: +1.1%

• Hong Kong's Hang Seng: +0.2%

• China's Shanghai Composite: -0.2%

• India's Sensex: +0.7%

• South Korea's Kospi: +1.2%

• Australia's ASX All Ordinaries: +0.6%

---FX---

• USD/JPY: +0.2% to 136.15

• USD/CNH: +0.7% to 6.9432

• USD/INR: +0.3% to 81.88

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

Major European indices trade in mixed fashion. French Finance Minister Le Maire said that his country's government reached an agreement with retailers to limit food inflation and that retailers will take a hit to their margins. European Central Bank policymaker Rehn hinted at a "fairly significant" rate hike in March while ECB policymaker Centeno said that the central bank is targeting headline inflation rate instead of the core rate.

• In economic data:

  • Eurozone's January Retail Sales 0.3% m/m (expected 1.0%; last -1.6%); -2.3% yr/yr (expected -1.8%; last -2.8%). March Sentix Investor Confidence -11.1 (expected -6.3; last -8.0)

  • U.K.'s February Construction PMI 54.6 (expected 49.1; last 48.4)

  • Spain's February Consumer Confidence 71.6 (last 73.0)

  • Swiss February CPI 0.7% m/m (expected 0.4%; last 0.6%); 3.4% yr/yr (expected 3.1%; last 3.3%)

---Equity Markets---

• STOXX Europe 600: -0.2%

• Germany's DAX: +0.2% 

• U.K.'s FTSE 100: -0.6%

• France's CAC 40: +0.2%

• Italy's FTSE MIB: +0.1%

• Spain's IBEX 35: -0.1%

---FX---

• EUR/USD: +0.1% to 1.0640

• GBP/USD: -0.3% to 1.2006

• USD/CHF: -0.1% to 0.9346