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06/10/22 Briefing

Updated: Oct 10

The S&P 500 futures are down 19 points and are trading 0.6% below fair value. The Nasdaq 100 futures are down 47 points and are trading 0.5% below fair value. The Dow Jones Industrial Average futures are down 140 points and are trading 0.5% below fair value. 

Equity futures indicate a lower open. The market continues to contend with concerns that it has gotten ahead of itself in expecting a Fed policy pivot.

Concerns about the geopolitical scene are in play this morning after the contentious move by OPEC+ to cut production at this time. WTI crude oil futures are down 0.5% to $87.35/bbl. Natural gas futures are up 1.8% to $7.05/mmbtu.

Atlanta Fed President Bostic (non FOMC voter) said he's in favor of getting rates to 4.0%-4.5% by the end of the year and added were "still in the early days of fighting inflation." He added "not so fast" as it relates to the  market expecting a rate cut in 2023, according to Bloomberg.

The 2-yr note yield is up three basis points to 4.16% and the 10-yr note yield is up one basis point to 3.77%.

Market participants will receive the weekly Initial Claims (Briefing.comconsensus 203,000; prior 193,000) and Continuing Claims (prior 1.347 mln) at 8:30 a.m. ET. The weekly natural gas inventories (prior +103 bcf) will be out at 10:30 a.m. ET.

In corporate news:

  • Pinterest (PINS 25.86 +1.23 +4.99%): upgraded to Buy from Neutral at Goldman

  • Twitter (TWTR 50.25 -1.05 -2.05%): still negotiating terms to close deal with Elon Musk, according the The Wall Street Journal; Apollo Global Management (APO), which was looking to provide $1.0 bln for Elon Musk's Twitter buyout, is no longer in talks with Mr. Musk, according to Reuters

  • Shell plc (SHEL 51.08 -2.94 -5.44%):  Q3 profit will be impacted by reduced chemical and oil refining margins and weaker natural gas trading

  • Eli Lilly (LLY 330.00 -1.78 -0.54%): receives FDA Fast Track designation for tirzepatide for the treatment of adults with obesity, or overweight with weight-related comorbidities

  • McCormick (MKC 72.99 -0.32 -0.44%): misses by $0.04, reports revs in-line; reaffirms FY22 EPS guidance, revs guidance

  • Splunk (SPLK 80.01 -3.30 -3.96%): files lawsuit against Cribl, alleging patent infringement, copyright infringement, unfair competition, and other claims

  • Verizon (VZ 39.31 +0.56 +1.45%): upgraded to Outperform from Perform at Oppenheimer

  • Constellation Brands (STZ 241.01 +5.06 +2.14%): beats by $0.36, beats on revs; guides FY23 EPS above consensus

  • Conagra (CAG 34.86 +1.06 +3.14%): beats by $0.05, beats on revs; reaffirms FY23 EPS guidance

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region ended Thursday on a mostly higher note while markets in China remained closed for holidays. Japan's Nikkei: +0.7%, Hong Kong's Hang Seng: -0.4%, China's Shanghai Composite: CLOSED, India's Sensex: +0.3%, South Korea's Kospi: +1.0%, Australia's ASX All Ordinaries: UNCH.

  • In economic data:

  • India's September Nikkei Services PMI 54.3 (expected 57.0; last 57.2)

  • Hong Kong's September Manufacturing PMI 48.0 (last 51.2)

  • Australia's August trade surplus AUD8.32 bln (expected AUD10.10 bln; last AUD8.73 bln). August Imports 4.0% m/m (last 5.0%) and Exports 3.0% m/m (last -10.0%). September AIG Construction Index 46.5 (last 47.9)

  • New Zealand's September ANZ Commodity Price Index -0.5% m/m (last -3.4%)

  • In news:

  • South Korean press reported that Samsung is not planning to cut memory chip production. South Korea's foreign reserves fell at their fastest pace in 14 years in September, reaching their lowest level since July 2020.

  • The Reserve Bank of Australia is expected to release the findings of its financial stability review tomorrow.

  • Major European indices trade in the red. STOXX Europe 600: -0.5%, Germany's DAX: -0.2%, U.K.'s FTSE 100: -0.6%, France's CAC 40: -0.5%, Italy's FTSE MIB: -0.8%, Spain's IBEX 35: -0.4%.

  • In economic data:

  • Eurozone's August Retail Sales -0.3% m/m (expected -0.4%; last -0.4%); -2.0% yr/yr (expected -1.7%; last -1.2%)\

  • Germany's August Factory Orders -2.4% m/m (expected -0.7%; last 1.9%)

  • U.K.'s September Construction PMI 52.3 (expected 48.0; last 49.2)

  • Spain's August Industrial Production 5.5% yr/yr (expected 4.8%; last 5.4%)

  • In news:

  • Shell noted that Q3 profit will be impacted by reduced chemical and oil refining margins and weaker natural gas trading.

  • The Bank of England's decision maker panel survey showed that companies are planning to hike prices by 6.6% next year.

  • Fitch affirmed the U.K.'s AA- rating but lowered the outlook to Negative from Stable.

 

U.S. equity futures:

  • S&P 500 Futures: -21 @ 3,762

  • DJIA Futures: -158 @ 30,116

  • Nasdaq 100 Futures: -28 @ 11,149

Overseas:

  • Europe: DAX -0.2%, FTSE -0.6%, CAC -0.5%

  • Asia:  Nikkei +0.7%, Hang Seng -0.4%, Shanghai Composite CLOSED

Commodities:

  • Crude Oil -0.43 @ 87.33

  • Nat Gas  +0.109 @ 7.039

  • Gold +1.95 @ 1722.75

  • Silver +0.089  @ 20.633

  • Copper +0.0007 @ 3.5012

U.S. Summary:

  • Earnings/Guidance:

  • AbbVie's (ABBV) Q3 earnings expected to include acquired IPR&D and milestone expenses of $40 mln; representing an unfavorable impact of $0.02 to adjusted EPS

  • AngioDynamics (ANGO) misses by $0.04, misses on revs; reaffirms FY23 EPS guidance, revs guidance

  • Buckle (BKE) reports September comparable store net sales increased 2.7% yr/yr

  • Conagra (CAG) beats by $0.05, beats on revs; reaffirms FY23 EPS guidance

  • Constellation Brands (STZ) beats by $0.36, beats on revs; guides FY23 EPS above consensus

  • Costco (COST) reports September adjusted comparable sales growth of 8.6%

  • Diageo (DEO) reaffirms medium term guidance

  • Fortuna Silver Mines (FSM) reports Q3 production of 101,840 gold equivalent ounces

  • Integer Holdings (ITGR) guides Q3 EPS and revs below consensus; trims FY22 guidance; expects FY23 sales growth of +7-9%; cites deteriorating delivery performance for weak near-term guidance

  • McCormick (MKC) misses by $0.04, reports revs in-line; reaffirms FY22 EPS guidance, revs guidance

  • Perion Network (PERI) sees Q3 revs above consensus

  • Resources Connection (RGP) beats by $0.11, beats on revs

  • Richardson Elec (RELL) reports Q1 (Aug) earnings of $0.45 compared to (one analyst) estimates of $0.24; grows revs 25.8% yr/yr to $67.6 mln compared to (one analyst) estimates of $62.4 ml

  • Shell plc (SHEL) provides Q3 segment guidance

  • United Micro (UMC) reports September revs increased 34.5% yr/yr to NT$25.2 bln

  • General News:

  • US intelligence believes Ukrainian government authorized car bomb that killed Daria Dugina in Russia, according to the New York Times

  • Fed's Bostic favors lifting interest rates to 4.0-4.5% by the end of this year, according to Bloomberg

  • London Metal Exchange to restrict new deliveries of copper and zinc from Russia's UMMC and one of its subsidiaries following UK sanctions, according to Bloomberg

  • EU agrees on eighth package of sanctions against Russia; package marks the beginning of the implementation within the EU of the G7 agreement on Russian oil exports

  • AAR Corp (AIR) expands relationship with Unison; to become global exclusive distributor for multiple product offerings

  • Air Lease (AL) announces long-term lease placements for six Boeing 737-8 aircraft

  • Aldeyra Therapeutics (ALDX) Achieves Primary Endpoint in Part 1 of Phase 3 GUARD Trial of ADX-2191 in Proliferative Vitreoretinopathy

  • Amazon (AMZN) announces plans to hire 150K employees

  • American Express (AXP) ends coronavirus vaccine mandates for office work, according to Reuters

  • AN2Therapeutics (ANTX) Provides Update on Epetraborole Ex-U.S. Development Plan in Treatment-Refractory MAC Lung Disease

  • Annovis Bio (ANVS) announced the FDA authorized the Phase 2/3 clinical study of buntanetap in moderate Alzheimer's Disease

  • Blackrock (BLK): Louisiana will remove $794 million from Blackrock funds because of its ESG stance, according to Reuters

  • Cboe Global Markets (CBOE) provides trading volume data for September

  • Chevron (CVX): US considering easing sanctions on Venezuela to enable Chevron to produce more oil, according to the Wall Street Journal

  • Compass (COMP) spokeswoman denies report that it is going private, according to The Real Deal

  • Coursera (COUR) promotes Shravan K. Goli to COO

  • Credit Suisse (CS) looking for outside investor to inject funds into spinoff of its advisory & investment banking unit, according to Bloomberg

  • Eli Lilly (LLY) receives FDA Fast Track designation for tirzepatide for the treatment of adults with obesity, or overweight with weight-related comorbidities

  • Ford Motor (F) planning price hikes on its F-150 Lightning Pro for the 2023 model year by nearly 11%, according to Reuters

  • General Electric (GE) to eliminate hundreds of jobs in wind unit, according to Bloomberg

  • GOL Linhas Aereas (GOL) reports September air traffic data

  • Grupo Aeroportuario del Pacifico (PAC) Reports in September 2022 a Passenger Traffic Increase of 27.4% Compared to 2019 (Increase of 25.9% Compared to 2021)

  • Grupo Aeroportuario Del Sureste (ASR) reports that passenger traffic for September reached 4.9 mln, 28.5% above September 2019 levels

  • Huawei aiming to introduce new 5G phone, according to Financial Times

  • IBM (IBM) and CEO Arvind Krishna welcome President Biden to Poughkeepsie site, company plans to invest $20 billion in the Hudson Valley region over 10 years

  • Intl Game Tech. PLC (IGT) subsidiary signs a new 10-year scratch ticket printing and services contract with the Texas Lottery Commission

  • LGI Homes (LGIH) reports closing 574 homes in September

  • Life Storage (LSI) says all 161 of its properties in Florida are operational

  • Loop Industries (LOOP) details recent SEC complaint

  • Open Text (OTEX) to integrate OpenText Core Content with Google Workspace (GOOG), bringing Google Workspace collaboration to the business processes that Core Content supports

  • Peloton (PTON) plans to cut addition 500 jobs, about 12% of workforce, in fourth round of layoffs this year, according to the Wall Street Journal

  • Silvercorp (SVM) intercepts new high-grade structures at LMW mine, Ying Mining District, China, including vein LM26: 5.39 metres true width grading 2,896 grams per tonne silver and 2.58% copper

  • Splunk (SPLK) files lawsuit against Cribl, alleging patent infringement, copyright infringement, unfair competition, and other claims

  • Sysco (SYY) reached an impasse with the International Brotherhood of Teamsters, Local 653 in Boston and Local 317 in Syracuse

  • Toyota (TM) aiming to restart production of its first electric vehicle, according to Reuters

  • Tradeweb Markets (TW) reports total volume for Sept. of $25.1 trln; ADV +17.2% yr/yr to $1.20 trln

  • United Sec Bancshares (UBFO) appoints interim CFO

  • Viasat (VSAT) and Inmarsat (IMASY) main committed to working with the UK's CMA to demonstrate how their planned transaction will benefit airline, passenger, and enterprise users of In-Flight Connectivity in aviation businesses

  • ViewRay (VRAY) announced that SUNY Upstate Cancer Center in Syracuse, New York has selected MRIdian MRI-Guided Radiation Therapy System and will be the first in Upstate New York to offer the precision of MRIdian's advanced MRI-guided radiation therapy to cancer patients throughout the region for pancreas, prostate, lung, liver, breast, and oligometastatic cancers

  • WestRock (WRK) to permanently close the corrugated medium manufacturing operations at its St. Paul, MN mill

  • M&A:

  • Apollo Medical (AMEH) enters into definitive agreement to acquire Valley Oaks Medical Group, expanding its presence into Nevada and Texas

  • Constellation Brands (STZ) reached an agreement with The Wine Group to divest a portion of its mainstream and premium wine portfolio; transaction is expected to close later today

  • Harmony Gold (HMY): Copper Mountain Mining announces agreement to sell the Eva Copper Project and the Australian exploration tenements for total consideration of up to $230 mln

  • Harrow Health (HROW) sells its non-ophthalmic compounding business, wants to focus exclusively on ophthalmic medicines

  • Ingersoll-Rand (IR) to acquire SPX FLOW's Air Treatment business for ~$525 mln

  • LMP Automotive (LMPX) terminate certain asset sale agreements with affiliates

  • Microsoft (MSFT) aiming to invest in Zupee, according to TechCrunch

  • Northern Oil & Gas (NOG) announces closing of midland basin bolt-on acquisition and shareholder return update; intends to submit a request to the Board for a 20% increase to NOG's quarterly dividend to $0.30/share

  • Softbank (SFTBY) unchanged on reports it is considering a sale of its stake in TelevisaUnivision, according to Bloomberg

  • Twitter (TWTR): Apollo Global Management (APO), which was looking to provide $1.0 bln for Elon Musk's Twitter buyout, is no longer in talks with Mr. Musk, according to Reuters

  • Twiiter (TWTR): Elon Musk & Twitter are still negotiating terms to close deal, according to the Wall Street Journal

  • Twitter (TWTR): Elon Musk had previously discussed lowering price of Twitter acquisition before reviving $44 bln offer, according to Bloomberg

  • Syndicate

  • Berkshire Grey (BGRY) enters into purchase agreement and registration rights agreement for up to $75 mln with Lincoln Park Capital Fund

  • Semtech (SMTC) proposes private offering of $250 mln of convertible senior notes due 2027

  • IPOs:

  • Expected to Price:

  • No IPOs expected.

Gapping Up/Down

  • Gapping up:

  • RELL +8.5%, HROW +5%, COUR +3.3%, PERI +3.1%, IGT +2.8%, GOL +0.5%

  • Gapping down:

  • SHEL -5.4%, SPLK -3.8%, ITGR -2.2%, TSLA -1.2%, TWTR -1.2%, F -0.9%, AIR -0.8%, QQQ -0.8%, SPY-0.7%, IWM -0.7%, DIA -0.6%, DEO -0.5%

 

Analyst Research (see Upgrades/Downgradescalendarfor full list):

  • Upgrades

  • Credit Suisse (CS) upgraded to Neutral from Underweight at JP Morgan

  • Group 1 Auto (GPI) upgraded to Overweight from Neutral at JP Morgan; tgt $210

  • Pinterest (PINS) upgraded to Buy from Neutral at Goldman; tgt raised to $31

  • RPM Inc (RPM) upgraded to Overweight from Neutral at JP Morgan; tgt raised to $100

  • Sonic Automotive (SAH) upgraded to Overweight from Neutral at JP Morgan; tgt $60

  • Steel Dynamics (STLD) upgraded to Buy from Neutral at Goldman; tgt lowered to $88

  • Take-Two (TTWO) upgraded to Buy from Neutral at Goldman; tgt raised to $165

  • TechnipFMC (FTI) upgraded to Overweight from Equal Weight at Barclays; tgt raised to $14

  • Transocean (RIG) upgraded to Overweight from Underweight at Barclays; tgt raised to $5

  • Verizon (VZ) upgraded to Outperform from Perform at Oppenheimer; tgt $50

  • Westlake Corporation (WLK) upgraded to Neutral from Sell at UBS; tgt raised to $95

  • Downgrades:

  • ArcelorMittal (MT) downgraded to Neutral from Buy at UBS

  • AutoNation (AN) downgraded to Neutral from Overweight at JP Morgan; tgt $125

  • BTRS Holdings (BTRS) downgraded to Sector Weight from Overweight at KeyBanc Capital Markets

  • Equity Residential (EQR) downgraded to Market Perform from Outperform at BMO Capital Markets; tgt lowered to $74

  • Fair Isaac (FICO) downgraded to Neutral from Outperform at Robert W. Baird; tgt lowered to $475

  • First Quantum Minerals (FQVLF) downgraded to Neutral from Outperform at Exane BNP Paribas

  • Freeport-McMoRan (FCX) downgraded to Neutral from Outperform at Exane BNP Paribas; tgt $29

  • Global Medical REIT (GMRE) downgraded to Market Perform from Outperform at BMO Capital Markets; tgt lowered to $9

  • Reliance Steel (RS) downgraded to Neutral from Buy at Goldman; tgt lowered to $201

  • Silvergate Capital (SI) downgraded to Underweight from Overweight at Wells Fargo; tgt lowered to $70

  • Venator Materials (VNTR) downgraded to Sell from Neutral at UBS; tgt lowered to $0.65

  • Others:

  • Aclaris Therapeutics (ACRS) initiated with a Buy at BTIG Research; tgt $32

  • Akoya Biosciences (AKYA) initiated with an Overweight at Stephens; tgt $16

  • Bally's Corporation (BALY) initiated with a Hold at Deutsche Bank; tgt $23

  • Bread Financial (BFH) initiated with a Neutral at Credit Suisse; tgt $38

  • CrowdStrike (CRWD) initiated with an Outperform at Evercore ISI; tgt $250

  • DraftKings (DKNG) initiated with an Underperform at Exane BNP Paribas

  • Element Solutions (ESI) initiated with an Underperform at Credit Suisse; tgt $15

  • Entegris (ENTG) initiated with an Outperform at Credit Suisse; tgt $108

  • Guardant Health (GH) initiated with an Overweight at Stephens; tgt $99

  • Myriad Genetics (MYGN) initiated with an Equal-Weight at Stephens; tgt $22

  • Okta (OKTA) initiated with an Underperform at Evercore ISI; tgt $45

  • Palo Alto Networks (PANW) assumed with an Outperform at Evercore ISI; tgt $207

  • PENN Entertainment (PENN) initiated with a Buy at Canaccord Genuity; tgt $50

  • Verve Therapeutics (VERV) initiated with a Neutral at Credit Suisse; tgt $48

  • Viavi (VIAV) initiated with a Buy at Rosenblatt; tgt $18

  • Western Alliance Bancorp (WAL) initiated with a Neutral at JP Morgan; tgt $85

  • Zscaler (ZS) initiated with an Outperform at Evercore ISI; tgt $23

Upcoming Events:

  • Econ Data:

  • 08:30 ET: Initial Claims for Oct 1 (Briefing.comConsensus 203K; Prior 193K)

  • 08:30 ET: Continuing Claims for Sept 24 (Briefing.comConsensus NA; Prior NA)

  • 10:30 ET: EIA Natural Gas Inventories for Oct 1 (Briefing.comConsensus NA; Prior +103 bcf)

  • 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 +0.7%, Hang Seng -0.4%, Shanghai Composite CLOSED

Equity indices in the Asia-Pacific region ended Thursday on a mostly higher note while markets in China remained closed for holidays. South Korean press reported that Samsung is not planning to cut memory chip production. South Korea's foreign reserves fell at their fastest pace in 14 years in September, reaching their lowest level since July 2020. The Reserve Bank of Australia is expected to release the findings of its financial stability review tomorrow.

  • In economic data:

  • India's September Nikkei Services PMI 54.3 (expected 57.0; last 57.2)

  • Hong Kong's September Manufacturing PMI 48.0 (last 51.2)

  • Australia's August trade surplus AUD8.32 bln (expected AUD10.10 bln; last AUD8.73 bln). August Imports 4.0% m/m (last 5.0%) and Exports 3.0% m/m (last -10.0%). September AIG Construction Index 46.5 (last 47.9)

  • New Zealand's September ANZ Commodity Price Index -0.5% m/m (last -3.4%)

---Equity Markets---

  • Japan's Nikkei: +0.7%

  • Hong Kong's Hang Seng: -0.4%

  • China's Shanghai Composite: CLOSED

  • India's Sensex: +0.3%

  • South Korea's Kospi: +1.0%

  • Australia's ASX All Ordinaries: UNCH

---FX---

  • USD/JPY: +0.1% to 144.74

  • USD/CNH: -0.1% to 7.0613

  • USD/INR: +0.7% to 82.18

 

Europe: DAX -0.2%, FTSE -0.6%, CAC -0.5%

Major European indices trade in the red. Shell noted that Q3 profit will be impacted by reduced chemical and oil refining margins and weaker natural gas trading. The Bank of England's decision maker panel survey showed that companies are planning to hike prices by 6.6% next year. Fitch affirmed the U.K.'s AA- rating but lowered the outlook to Negative from Stable.

  • In economic data:

  • Eurozone's August Retail Sales -0.3% m/m (expected -0.4%; last -0.4%); -2.0% yr/yr (expected -1.7%; last -1.2%)

  • Germany's August Factory Orders -2.4% m/m (expected -0.7%; last 1.9%)

  • U.K.'s September Construction PMI 52.3 (expected 48.0; last 49.2)

  • Spain's August Industrial Production 5.5% yr/yr (expected 4.8%; last 5.4%)

---Equity Markets---

  • STOXX Europe 600: -0.5%

  • Germany's DAX: -0.2%

  • U.K.'s FTSE 100: -0.6%

  • France's CAC 40: -0.5%

  • Italy's FTSE MIB: -0.8%

  • Spain's IBEX 35: -0.4%

---FX---

  • EUR/USD: UNCH at 0.9885

  • GBP/USD: -0.5% to 1.1268

  • USD/CHF: +0.1% to 0.9833



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