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06/09/23 Briefing


The S&P 500 futures are down 11 points and are trading 0.2% below fair value. The Nasdaq 100 futures are down 48 points and are trading 0.2% below fair value. The Dow Jones Industrial Average futures are down 72 points and are trading 0.2% below fair value.

Stock futures indicate a lower open, pressured by several airlines warning about rising jet fuel costs, concerns about a slowdown in discretionary spending due to high gas prices, and festering worries about rising interest rates.

The weekly MBA Mortgage Applications Index dropped 2.9% with purchase applications falling 2.0% and refinance applications declining 5.0%.

The 2-yr note yield is down two basis points to 4.94% and the 10-yr note yield is down two basis points to 4.24%.

Other economic data today include:

  • 8:30 ET: July Trade Balance (Briefing.comconsensus -$68.0 bln; prior -$65.5 bln)

  • 9:45 ET: Final August S&P Global US Services PMI (prior 51.0)

  • 10:00 ET: August ISM Non-Manufacturing Index (Briefing.comconsensus 52.4%; prior 52.7%)

  • 14:00 ET: September Fed Beige Book

In corporate news:

  • Toast (TOST 22.70, +1.03, +4.8%): upgraded to Buy from Neutral at UBS

  • Constellation Brands (STZ 260.27, +2.77, +1.1%): upgraded to Outperform from market perform at TD Cowen

  • Roku (ROKU 94.07, +10.34, +12.4%): sees Q3 revs above consensus; to reduce workforce by 10%

  • Enbridge (ENB 32.76, -2.53, -7.2%): acquires three U.S.-based utilities from Dominion Energy (D) for an aggregate purchase price of $14.0 bln; to be accretive to adjusted EPS in first full-year of ownership

  • Zscaler (ZS 160.10, -2.64, -1.6%): beats by $0.15, beats on revs; guides Q1 EPS above consensus, revs above consensus; guides FY24 EPS above consensus, revs above consensus

  • HealthEquity (HQY 68.11, +1.27, +1.9%): beats by $0.05, beats on revs; guides FY24 EPS above consensus, revs in-line

  • GitLab (GTLB 52.89, +3.15, +6.3%): beats by $0.04, beats on revs; guides Q3 EPS above consensus, revs above consensus; guides FY24 EPS above consensus, revs above consensus

  • AeroVironment (AVAV 110.68, +15.39, +16.2%): beats by $0.74, beats on revs; reaffirms FY24 EPS guidance, raises FY24 revenue guidance

  • Block (SQ 57.15, -1.59, -2.7%): downgraded to Neutral from Buy at UBS

  • Southwest Air (LUV 29.35, -1.42, -4.6%): updates Q3 guidance metrics; sees Q3 RASM of down 5-7% versus prior guidance down 3-7%

  • NextGen Healthcare (NXGN 23.49, +2.94, +14.3%): enters into definitive agreement to be acquired by Thoma Bravo for $23.95/share in cash

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region ended the midweek session on a mixed note. Japan's Nikkei: +0.6 %, Hong Kong's Hang Seng: UNCH, China's Shanghai Composite: +0.1%, India's Sensex: +0.2%, South Korea's Kospi: -0.7%, Australia's ASX All Ordinaries: -0.7%.

  • In economic data:

  • Australia's Q2 GDP 0.4% qtr/qtr (expected 0.3%; last 0.4%); 2.1% yr/yr (expected 1.8%; last 2.4%). August AIG Construction Index -9.9 (last -9.2) and Manufacturing Index -19.8 (last -25.6)

  • New Zealand's GDT Price Index 2.7% (last -7.4%)

  • In news:

  • Property names listed in Hong Kong rebounded amid ongoing speculation about more incoming support from the government.

  • Securities Times called on the Chinese government to lift "unnecessary" limits on home purchases.

  • Bank of Japan policymaker Takata said that there are early signs of the 2.0% inflation target being reached, but easy policy stance should be maintained at this time.

  • Australia's New South Wales will raise its coal mining royalties by 2.6% next year, representing the first increase in 15 years.

  • Major European indices trade in the red. STOXX Europe 600: -0.7%, Germany's DAX: -0.5%, U.K.'s FTSE 100: -0.7%, France's CAC 40: -0.8%, Italy's FTSE MIB: -1.0%, Spain's IBEX 35: -0.8%

  • In economic data:

  • Eurozone's July Retail Sales -0.2% m/m (expected -0.1%; last 0.2%); -1.0% yr/yr (expected -1.2%; last -1.0%)

  • Germany's July Factory Orders -11.7% m/m (expected -4.0%; last 7.6%)

  • U.K.'s August Construction PMI 50.8 (expected 50.5; last 51.7)

  • In news:

  • European Central Bank policymaker Knot said that markets may be underestimating the likelihood of a rate hike at the September meeting, adding that the decision could be a "close call."

  • Separately, policymaker Villeroy de Galhau said that while the economy is slowing down, there is still no recession on the horizon and lowering inflation should remain the priority.

  • German Chancellor Scholz said that his country's budget should return to "normality" in 2024.

 

U.S. equity futures:

  • S&P 500 Futures -10 @ 4,486

  • DJIA Futures: -76 @ 34,567

  • Nasdaq 100 Futures: - @ 15,466

Overseas:

  • Europe: DAX -0.5%, FTSE -0.7%, CAC -0.8%

  • Asia: Nikkei +0.6%, Hang Seng UNCH, Shanghai Composite +0.1%

Commodities:

  • Crude Oil -0.29 @ 86.40

  • Nat Gas -0.003 @ 2.579

  • Gold -0.80 @ 1951.80

  • Silver -0.05 @ 23.83

  • Copper -0.0342 @ 3.8143


 

Earnings/Guidance:

  • AeroVironment (AVAV) beats by $0.74, beats on revs; reaffirms FY24 EPS guidance, raises FY24 revenue guidance

  • Alaska Air (ALK) narrows FY23 revenue guidance

  • Alight (ALIT) reaffirms FY23 guidance in slide presentation

  • Asana (ASAN) beats by $0.07, beats on revs; guides Q3 EPS above consensus, revs above consensus; guides FY24 EPS above consensus, revs in-line

  • Ascendis Pharma (ASND) beats by 0.36, beats on revs; raises US SKYTROFA revenue outlook

  • Baker Hughes (BKR) sees Q3 and FY23 revs in-line with expectations

  • Bristow Group (VTOL) reaffirms FY23 and FY24 revs in investor presentation

  • Centene (CNC) reaffirms FY23 and FY24 outlooks at investor conference

  • Core & Main (CNM) misses by $0.01, reports revs in-line; guides FY23 revs in-line

  • General Mills (GIS) reaffirms FY24 guidance at Barclays Global Consumer Staples Conference

  • GitLab (GTLB) beats by $0.04, beats on revs; guides Q3 EPS above consensus, revs above consensus; guides FY24 EPS above consensus, revs above consensus

  • Hammerhead Energy (HHRS) raises FY23 production guidance

  • Hawaiian Holdings (HA) provides Q3 updates; expects capacity to be up approximately 4.0-5.5% compared to 3Q22, changed from 4.5-7.5%

  • HealthEquity (HQY) beats by $0.05, beats on revs; guides FY24 EPS above consensus, revs in-line

  • Hilton Grand Vacations (HGV) provides update on Maui Wildfires impact; estimates Q3 contract sales to be adversely affected by $20-25 mln and adjusted EBITDA by $12-15 mln

  • Honest Company (HNST) reaffirmed FY23 revenue guidance calling for low-single to mid-single digit increase; also reaffirms FY23 adjusted EBITDA of $(22) to $(26) million

  • Humana (HUM) reaffirms FY23 EPS of at least $28.25 vs. the $28.27 FactSet Consensus

  • MarketAxess (MKTX) reports August volume statistics; Total credit average daily volume was up 2.3%

  • Photronics (PLAB) misses by $0.01, misses on revs; guides Q4 EPS in-line, revs in-line

  • Roku (ROKU) sees Q3 revs above consensus

  • Southwest Air (LUV) updates Q3 guidance metrics

  • Tradeweb Markets (TW) reports August 2023 total trading volume of $33.0 trillion and average daily volume of $1.44 trillion

  • United Airlines (UAL) provides Q3 guidance update; all-in fuel price is now expected to be between $2.95 to $3.05 per gallon; reaffirms Q3 capacity, operating revenue, and CASM guidance

  • United Micro (UMC) reports August revs declined 25.2% yr/yr to NT$18.95 bln

  • Zscaler (ZS) beats by $0.15, beats on revs; guides Q1 EPS above consensus, revs above consensus; guides FY24 EPS above consensus, revs above consensus

News:

  • China premier Li Qiang will attend G-20 summit, according to Bloomberg

  • Senate votes 83-10 to begin debate on nomination of Philip Jefferson to be Fed Vice Chair

  • EU Commission designates six gatekeepers

  • Tropical Storm Lee is expected to become major hurricane in Atlantic

  • August Class 8 net orders were 19,000 units, down 9% yr/yr, Act Research

  • US suburbs have fastest growing rents, an indication that migration from cities is a long term trend, according to the Wall Street Journal

  • Apple (AAPL): China bans Apple iPhone use for government officials while working, according to the Wall Street Journal

  • Aramark's (ARMK) Board approves tax-free spin-off of Vestis, the company's uniforms and workplace supplies business; Vestis to trade on NYSE under ticker "VSTS" on Oct. 2, 2023

  • AstraZeneca (AZN) receives complete response letter for Ultomiris for NMOSD

  • Baidu (BIDU) artificial intelligence product might launch sooner than expected, according to Bloomberg

  • BridgeBio Pharma (BBIO) announces positive feedback from the FDA and EU EMA on the regulatory path for a pivotal phase 3 trial of infigratinib in children with achondroplasia

  • C4 Therapeutics (CCCC) appoints Kendra Adams as CFO, effective September 18; succeeds Lauren White

  • Carmell Therapeutics Corporation (CTCX) completes of post-merger integration with Axolotl Biologix and new organizational structure aligned with focus on aesthetics

  • Centrus Energy (LEU) expects to begin first-of-a-kind production of High-Assay Low-Enriched Uranium (HALEU) in October 2023, approximately two months ahead of schedule

  • Coinbase (COIN) aiming to introduce new lending platform, according to Reuters

  • COMPASS Pathways (CMPS) announces publication of first study evaluating potential of AI model to predict outcomes of COMP360 psilocybin treatment in treatment-resistant depression

  • FREYR Battery (FREY) provides operations update

  • Gevo (GEVO) and USDA sign agreement providing Gevo a grant to incentivize, track, and verify acreage of low-carbon corn to accelerate production of sustainable aviation fuel and other biofuels

  • Gogo (GOGO) approves a share repurchase program for up to $50 mln of common stock

  • Google (GOOG) reaches tentative settlement in Play store lawsuit, according to Reuters

  • Grupo Aeroportuario del Pacifico (PAC) releases preliminary passenger traffic figures for August; total terminal passengers increased 14.1% yr/yr

  • Honest Company (HNST) appoints Dave Loretta as CFO

  • Intercontinental Exchange (ICE) announced that Enterprise Products Partners (EPD) and Magellan Midstream Partners (MMP) extended fee waiver arrangement between the Enterprise Crude Houston and Magellan East Houston terminals

  • IperionX (IPX) signed an agreement to underpin a 100% recycled titanium supply chain using scrap titanium metal from the aerospace industry

  • Lockheed Martin (LMT) has updated its F-35 Technology Refresh 3 schedule projections - currently anticipate delivering the first TR-3 jet between April and June 2024

  • Mersana Therapeutics (MRSN): CEO Anna Protopapas will retire effective Sept. 10, 2023; Martin Huber, M.D., named as replacement effective Sept. 11, 2023

  • Novartis (NVS) CCO steps down

  • Paychex (PAYX) CFO Efrain Rivera to retire, effective October 12; succeeded by Robert L. Schrader, current VP of Finance and Investor Relations

  • Phibro Animal Health (PAHC) announces departure of CFO Damian Finio; Richard Johnson, who previously served as CFO until 2020, will assume role of interim CFO

  • RH (RH) announces proposal to reimagine and restore One Ocean Drive, Miami Beach

  • Roche Hldg (RHHBY) receives FDA acceptance of BLA for crovalimab

  • Roku (ROKU) to reduce workforce by 10%

  • Royalty Pharma (RPRX) and Ascendis Pharma (ASND) enter into $150 million royalty funding agreement

  • Saia (SAIA) is providing LTL shipment and tonnage data for July and August 2023

  • Schneider National (SNDR) names Darrell Campbell Executive Vice President and CFO

  • Siemens (SIEGY) and Alstom battling to supply Los Angeles to Las Vegas rail link, according to the Wall Street Journal

  • Southern Missouri Bancorp (SMBC) hired Stefan Chkautovich to serve as the Company's Executive Vice President, Chief Financial Officer and Principal Accounting Officer, effective September 18

  • Standard Lithium (SLI) announces results of definitive feasibility study for first commercial lithium extraction plant at LANXESS South Plant

  • Tango Therapeutics (TNGX): FDA clears IND for TNG348, a novel inhibitor of USP1 (ubiquitin-specific protease 1), for the treatment of BRCA1/2 mutant and other HRD+ (homologous recombination deficient) cancers

  • Tesla (TSLA) Shanghai factory hits 2 million production milestone, according to Reuters

  • Tesla (TSLA): Elon Musk borrowed $1 bln from SpaceX, according to the Wall Street Journal

  • Vitru (VTRU) announces proposed group restructuring and migration of listing

  • Warner Music (WMG) aiming to purchase stake in 10K projects, according to Financial Times

  • XPO, Inc. (XPO) provides North American LTL operating data for August 2023

M&A:

  • Abbott Labs (ABT) to acquire Bigfoot, a smart insulin management systems developer; financial details not disclosed

  • Desktop Metal (DM) in SEC filing: expects previously announced merger with Stratasys (SSYS) to close in Q4

  • Dominion Energy (D) executes three separate definitive agreements to sell three natural gas distribution companies to Enbridge (ENB) for aggregate transaction value of $14.0 bln

  • Dr. Reddy's (RDY) will not comment on story that it is exploring joint bid for the promoters of Cipla

  • Enbridge (ENB) acquires three U.S.-based utilities for an aggregate purchase price of $14.0 bln; to be accretive to adjusted EPS in first full-year of ownership

  • Magnolia Oil & Gas (MGY) to acquire certain oil and gas producing properties in Giddings for $300 mln

  • NextGen Healthcare (NXGN) enters into definitive agreement to be acquired by Thoma Bravo for $23.95/share in cash

  • Rockwell Automation (ROK) signs agreement to acquire Clearpath Robotics; financial terms were not disclosed

  • TreeHouse Foods (THS) to sell its Lakeville, MN manufacturing facility and snack bars business to John B. Sanfilippo & Son, Inc. (JBSS) for approximately $63 million in cash

Syndicate:

  • CSG Systems (CSGS) announces proposed offering of $350 mln convertible senior notes due 2028

  • Enbridge (ENB) files for CDN$4.0 bln bought-deal offering of common shares

  • Parker-Hannifin (PH) files mixed shelf securities offering

  • Patterson-UTI (PTEN) files mixed shelf securities offering

IPOs:

  • KKR (KKR) planning Tokyo IPO of Hitachi Kokusai Electric, according to Financial Times

  • Expected to Price:

  • No IPOs expected.

Gapping Up/Down

  • Gapping up:

  • SST +26.1%, AVAV +14.6%, MITK +12.7%, ROKU +8.4%, GTLB +7.5%, CTCX +6.2%, CCCC +3.4%, GOGO +3.3%, ASND +3.3%, GEVO +2.3%, CMPS +2%, ACRS +1.8%, HGV+1.5%, PTEN +1.2%, PAC +1%, GBX +0.9%

  • Gapping down:

  • PLAB -9.5%, ENB -8.6%, CSGS -6.3%, LUV-5.8%, VRNA -4.5%, ASAN -2.1%, UAL -2%, RPD -1.9%, VTRU -1.2%, ASR -1.2%, ARMK-1.1%, ALK -1.1%, NVS -0.8%, ZS -0.7%, DM-0.6%, AMZN -0.6%

 

Analyst Research (see Upgrades/Downgradescalendarfor full list):

  • Upgrades

  • Adecoagro S.A. (AGRO) upgraded to Neutral from Underperform at BofA Securities; tgt raised to $12.50

  • AeroVironment (AVAV) upgraded to Outperform from Neutral at Robert W. Baird; tgt raised to $128

  • American Airlines (AAL) upgraded to Outperform from Neutral at Exane BNP Paribas; tgt $20

  • CME Group (CME) upgraded to Neutral from Underperform at BofA Securities; tgt raised to $204

  • Constellation Brands (STZ) upgraded to Outperform from Market Perform at TD Cowen; tgt raised to $300

  • Downgrades:

  • Enbridge (ENB) downgraded to Equal Weight from Overweight at Wells Fargo

  • Olin (OLN) downgraded to Neutral from Buy at Goldman; tgt lowered to $57

  • Others:

  • Fair Isaac (FICO) initiated with an Outperform at Raymond James; tgt $1007

  • Fed Agricult Mortg (AGM) initiated with an Outperform at Keefe Bruyette; tgt $220

  • The Trade Desk (TTD) initiated with an Outperform at William Blair

Econ Data:

  • 07:00 ET: MBA Mortgage Applications Index for September 2 (Briefing.comConsensus NA; Prior 2.3%)

  • 08:30 ET: Trade Balance for July (Briefing.comConsensus -$68.0B; Prior -$655B)

  • 09:45 ET: S&P Global US Services PMI - Final for August (Briefing.comConsensus NA; Prior 51.0)

  • 10:00 ET: ISM Non-Manufacturing Index for August (Briefing.comConsensus 52.4%; Prior 52.7%)

  • 14:00 ET: Fed's Beige Book for September

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 +0.6%, Hang Seng UNCH, Shanghai Composite +0.1%

Equity indices in the Asia-Pacific region ended the midweek session on a mixed note. Property names listed in Hong Kong rebounded amid ongoing speculation about more incoming support from the government. Securities Times called on the Chinese government to lift "unnecessary" limits on home purchases. Bank of Japan policymaker Takata said that there are early signs of the 2.0% inflation target being reached, but easy policy stance should be maintained at this time. Australia's New South Wales will raise its coal mining royalties by 2.6% next year, representing the first increase in 15 years.

  • In economic data:

  • Australia's Q2 GDP 0.4% qtr/qtr (expected 0.3%; last 0.4%); 2.1% yr/yr (expected 1.8%; last 2.4%). August AIG Construction Index -9.9 (last -9.2) and Manufacturing Index -19.8 (last -25.6)

  • New Zealand's GDT Price Index 2.7% (last -7.4%)

---Equity Markets---

  • Japan's Nikkei: +0.6 %

  • Hong Kong's Hang Seng: UNCH

  • China's Shanghai Composite: +0.1%

  • India's Sensex: +0.2%

  • South Korea's Kospi: -0.7%

  • Australia's ASX All Ordinaries: -0.7%

---FX---

  • USD/JPY: -0.2% to 147.34

  • USD/CNH: +0.1% to 7.3073

  • USD/INR: +0.1% to 83.10

 

Europe: DAX -0.5%, FTSE -0.7%, CAC -0.8%

Major European indices trade in the red. European Central Bank policymaker Knot said that markets may be underestimating the likelihood of a rate hike at the September meeting, adding that the decision could be a "close call." Separately, policymaker Villeroy de Galhau said that while the economy is slowing down, there is still no recession on the horizon and lowering inflation should remain the priority. German Chancellor Scholz said that his country's budget should return to "normality" in 2024.

  • In economic data:

  • Eurozone's July Retail Sales -0.2% m/m (expected -0.1%; last 0.2%); -1.0% yr/yr (expected -1.2%; last -1.0%)

  • Germany's July Factory Orders -11.7% m/m (expected -4.0%; last 7.6%)

  • U.K.'s August Construction PMI 50.8 (expected 50.5; last 51.7)

---Equity Markets---

  • STOXX Europe 600: -0.7%

  • Germany's DAX: -0.5%

  • U.K.'s FTSE 100: -0.7%

  • France's CAC 40: -0.8%

  • Italy's FTSE MIB: -1.0%

  • Spain's IBEX 35: -0.8%

---FX---

  • EUR/USD: +0.2% to 1.0746

  • GBP/USD: -0.1% to 1.2556

  • USD/CHF: +0.2% to 0.8899

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