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07/09/22 Briefing


The S&P 500 futures are up 1 point and are trading in-line with fair value. The Nasdaq 100 futures are down 7 points and are trading slightly below fair value. The Dow Jones Industrial Average futures are up 6 points and are trading slightly above fair value.

Equity futures are mixed and little changed. There's a lingering feeling the market is oversold on a short-term basis after the Nasdaq closed down for the seventh consecutive session.

The US dollar continues to run with the US Dollar Index up 0.4% to 110.70 while the yen keeps weakening (USD/JPY +1.5% to 144.87). Meanwhile, China Securities Times pushed back against concerns regarding the yuan's fall to 7.0000 per dollar.

On a related note, China's trade surplus missed August expectations due to below-consensus growth in imports and exports.

In other overseas news, Russia's President Putin warned that oil and gas contracts will not be respected if prices are capped.

Richmond Fed President Barkin (not an FOMC voter) said in an interview that rates must remain high until easing of inflation. The Wall Street Journal reported that the Fed is on track to raise interest rates by 75 basis points at the September meeting. This come ahead of the ECB meeting on tomorrow, which participants are closely watching to see if the central bank raises its key policy rate by 50 basis points or 75 basis points.

Treasury yields are modestly lower with the 2-yr note yield down two basis points to 3.49% while the 10-yr note yield is down one basis point to 3.33%. 

Also, the weekly MBA Mortgage Applications Index showed a 0.8% decline compared to last week's 3.7% decline. 

In corporate news:

  • Apple (AAPL 155.05, +0.52, +0.34%) will unveil new iPhones, Apple Watches, and other products at event today at 13:00 ET

  • Target (TGT 163.00, -0.58, -0.35%)announces Brian Cornell plans to remain on as CEO for approx. three more years; chief supply chain and logistics officer to retire

  • Newell Brands (NWL 16.30, -0.78, -4.57%): lowers Q3 and FY22 EPS and revenue guidance below consensus due to greater than expected pullback in retailer orders

  • Coupa Software (COUP 62.54, +6.72, +12.04%): beats by $0.11, beats on revs; guides OctQ EPS above consensus, revs below consensus; guides FY23 EPS above consensus, revs in-line; also announces a $100 mln share repurchase program

  • NIO (NIO 16.12, -0.99, -5.79%): beats by CNY0.03, beats on revs; guides Q3 revs below consensus

  • Guidewire Software (GWRE 66.50, -0.69, -1.03%): beats by $0.04, beats on revs; guides OctQ revs above consensus; guides FY23 mid-point of revs above consensus

  • UiPath (PATH 12.14, -3.45, -22.13%): beats by $0.09, beats on revs; guides OctQ revs below consensus; guides FY23 revs below consensus

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region ended the midweek session on a mostly lower note. Japan's Nikkei: -0.7%, Hong Kong's Hang Seng: -0.8%, China's Shanghai Composite: +0.1%, India's Sensex: -0.3%, South Korea's Kospi: -1.4%, Australia's ASX All Ordinaries: -1.4%.

  • In economic data:

  • China's August trade surplus $79.39 bln (expected surplus of $92.70 bln; last surplus of $101.26 bln). August Imports 0.3% yr/yr (expected 1.1%; last 2.3%) and Exports 7.1% yr/yr (expected 12.8%; last 18.0%)

  • Japan's July Leading Index 99.6 (last 100.3) and Coincident Indicator 1.4% m/m (last 3.3%)

  • South Korea's July Current Account surplus $1.09 bln (last surplus of $5.61 bln)

  • Australia's Q2 GDP 0.9% qtr/qtr (expected 1.0%; last 0.7%); 3.6% yr/yr (expected 3.5%; last 3.3%). August AIG Services Index 53.3 (last 51.7)

  • In news:

  • Japan's former top currency diplomat Watanabe said that the Bank of Japan should only respond to persistent yen weakness if margins become impacted.

  • China Securities Times pushed back against concerns regarding the yuan's fall to 7.0000 per dollar.

  • China's trade surplus missed August expectations due to below-consensus growth in imports and exports.

  • Reserve Bank of Australia Governor Lowe will speak about inflation and monetary policy tomorrow.

  • Major European indices trade in the red while Spain's IBEX (unch) outperforms. STOXX Europe 600: -0.6%, Germany's DAX: -0.3%, U.K.'s FTSE 100: -0.4%, France's CAC 40: -0.3%, Italy's FTSE MIB: -0.1%, Spain's IBEX 35: UNCH.

  • In economic data:

  • Eurozone's Q2 GDP 0.8% qtr/qtr (expected 0.6%; last 0.5%); 4.1% yr/yr (expected 3.9%; last 5.4%). Q2 Employment Change 0.4% qtr/qtr (expected 0.3%; last 0.7%); 2.7% yr/yr (expected 2.4%; last 3.1%)

  • Germany's July Industrial Production -0.3% m/m (expected -0.5%; last 0.8%)

  • U.K.'s August Halifax House Price Index 0.4% m/m (last -0.1%); 11.5% yr/yr (last 11.8%)

  • Italy's July Retail Sales 1.3% m/m (last -1.1%); 4.2% yr/yr (last 1.3%)

  • In news:

  • European Commission President von der Leyen confirmed that a limit on the price of Russian gas will be proposed.

  • Russia's President Putin warned that oil and gas contracts will not be respected if prices are capped.

  • British Prime Minister Truss is not expected to trigger article 16 in the Northern Ireland Protocol, effectively delaying a confrontation with the European Union.

U.S. equity futures:

  • S&P 500 Futures: -2 @ 3,907

  • DJIA Futures: +2 @ 31,148

  • Nasdaq 100 Futures: -12 @ 11,999

Overseas:

  • Europe: DAX -0.6%, FTSE -0.4%, CAC -0.3%

  • Asia: Nikkei -0.7%, Hang Seng -0.8%, Shanghai Composite +0.1%

Commodities:

  • Crude Oil -0.13 @ 86.75

  • Nat Gas  -0.125 @ 8.020

  • Gold -0.25 @ 1712.65

  • Silver +0.139  @ 18.047

  • Copper -0.0232 @ 3.4380

U.S. Summary:

  • Earnings/Guidance:

  • Avid Bioservices (CDMO) misses by $0.02, beats on revs; reaffirms FY23 revs guidance

  • Coupa Software (COUP) beats by $0.11, beats on revs; guides OctQ EPS above consensus, revs below consensus; guides FY23 EPS above consensus, revs in-line; also announces a $100 mln share repurchase program

  • G-III Apparel (GIII) reports Q2 (Jul) results, beats on revs

  • GitLab (GTLB) beats by $0.08, beats on revs; guides Q3 EPS above consensus, revs above consensus; guides FY23 EPS above consensus, revs above consensus

  • Guidewire Software (GWRE) beats by $0.04, beats on revs; guides OctQ revs above consensus; guides FY23 mid-point of revs above consensus

  • HealthEquity (HQY) reports EPS in-line, beats on revs; guides FY12 EPS and revs above consensus

  • Korn/Ferry (KFY) misses by $0.01, reports revs in-line; guides Q2 EPS in-line, revs in-line

  • Newell Brands (NWL) lowers Q3 and FY22 EPS and revenue guidance below consensus due to greater than expected pullback in retailer orders

  • NIO (NIO) beats by CNY0.03, beats on revs; guides Q3 revs below consensus

  • Old Dominion (ODFL) provides update for Q3

  • REV Group (REVG) beats by $0.02, reports revs in-line; guides FY22 revs in-line

  • UiPath (PATH) beats by $0.09, beats on revs; guides OctQ revs below consensus; guides FY23 revs below consensus

  • United Airlines (UAL) raises Q3 guidance

  • Wesco (WCC) reaffirms FY22 outlook; plans dividend of $1.50 per share annually in 1Q23

  • General News:

  • Richmond Fed President Thomas Barkin (not a voting FOMC member) in interview says rates must remain high until easing of inflation, according to Financial Times

  • EU planning price cap on non-gas generated electricity, according to Financial Times

  • Russian President Putin says that Russia will not supply oil to countries that introduce price caps, according to Reuters

  • White House issues statement on new Omicron COVID-19 vaccines

  • California officials are warning residents to prepare for rolling blackouts, according to Bloomberg

  • White House issues readout of President Joe Biden's call with UK Prime Minister Liz Truss

  • 2seventy bio (TSVT) to initiate the KarMMa-9 study to evaluate Abecma (idecabtagene vicleucel) in newly diagnosed multiple myeloma patients who have suboptimal response to transplant

  • 3D Systems (DDD) and HII co-developed and announce CuNi30 to enable production of traditionally cast parts

  • ABB Ltd (ABB) shareholders approve Accelleron spin-off

  • Agora (API) announced that Mr. Tony Zhao, founder, chairman and CEO of Agora, has informed Agora's board of directors of his intention to use his personal funds to purchase up to an aggregate of $30 million of Agora's ADSs or Class A ordinary shares for the next 12 months

  • Apple (AAPL) will unveil new iPhones, Apple Watches, and other products at event today at 13:00 ET 

  • Avaya Holdings (AVYA) authorizes a reduction in force, which together with incremental cost reduction actions will operationalize over $250 mln of annual cost reductions

  • Axsome Therapeutics (AXSM) announces publication of post-hoc analysis of Sunosi effect on excessive daytime sleepiness in narcolepsy or obstructive sleep apnea patients with a history of depression in the Journal of Psychiatric Research

  • Bicycle Therapeutics (BCYC) announces Phase I dose escalation top-line results from its Phase I/II trial of BT5528, a BTC targeting EphA2, in patients with advanced solid tumors

  • Bristol-Myers (BMY): Cipla receives USFDA approval for generic version of Bristol Myers Squibb's (Celgene) Revlimid (Lenalidomide) capsules

  • Chevron (CVX): Anti-ESG investor Vivek Ramaswamy wants Chevron to increase oil production, according to the Wall Street Journal

  • Eastern Bankshares (EBC) announces new share repurchase program

  • Evelo Biosciences (EVLO) Presents Biomarker Data Demonstrating Anti-inflammatory Effects of EDP1815 in Psoriasis at the 2022 European Academy of Dermatology and Venereology (EADV) Congress

  • Gilead Sciences (GILD) receives European Marketing Authorization for Tecartus

  • Glaukos (GKOS) announces "positive" topline data for both Phase 3 pivotal trials of iDose TR that successfully achieved its pre-specified primary efficacy endpoints through 3 months in both Phase 3 trials and demonstrated excellent tolerability and a favorable safety profile through 12 months

  • Hartford Financial (HIG) President Doug Elliot will retire effective Dec. 31

  • Homology Medicines (FIXX) promotes Albert Seymour, Ph.D., to Chief Executive Officer

  • Ionis (IONS) presents positive results from Phase 3 NEURO-TTRansform study at International Symposium on Amyloidosis

  • Lamb Weston (LW) to construct new $240 mln manufacturing facility in Argentina, expanding its french fry processing capacity

  • Marathon Digital Holdings (MARA) announces bitcoin production and mining operation updates for August 2022

  • Meta Platforms (META): Instagram may significantly cut back on shopping features as it focuses on short-form video business, according to The Information

  • Microsoft (MSFT) aiming to invest in CloudKitchens, according to Financial Times

  • Mission Produce (AVO) enters a long-term third-party logistics partnership with NatureSweet to support the expansion of its greenhouse portfolio

  • Nordson (NDSN) authorizes the repurchase of up to an additional $500 mln of common stock, adding to the $160 mln remaining from the 2018 authorization

  • Pacira BioSciences (PCRX) announces positive topline data from phase 3 study of Exparel as a single-dose femoral nerve block in the adductor canal for total knee arthroplasty

  • Peloton (PTON) discloses Consumer Product Safety Commission investigation

  • Pfizer (PFE): FDA grants breakthrough therapy designation to Pfizer's group b streptococcus vaccine candidate to help prevent infection in infants via immunization of pregnant women

  • Philips (PHG) alerts customers of updated instructions and labeling of specific sleep therapy masks

  • Primoris Services (PRIM) receives pipeline project award valued over $120 mln

  • Priority Technology Holdings (PRTH) announces the appointment of Tim O'Leary to the position of Chief Financial Officer

  • Rhythm Pharmaceuticals (RYTM) Announces IMCIVREE (setmelanotide) Granted Marketing Authorization by European Commission for Treatment of Obesity and Control of Hunger in Bardet-Biedl Syndrome

  • Riot Blockchain (RIOT) provides production and operations update for August

  • Rocket Lab USA (RKLB) signs Cooperative Research and Development Agreement with the United States Transportation Command

  • Samsung (SSNLF) co-CEO Kyung Kye-hyun is cautious about second half of this year and next year regarding chip sales, according to the Wall Street Journal

  • Select Energy Services (WTTR) initiates quarterly dividend of $0.05 per share beginning after the third quarter

  • Sleep Number (SNBR) renews three-year commitment with the Los Angeles Rams through the 2024 season

  • SM Energy (SM) announces new shareholder capital return plans including share repurchases and dividends

  • Standard Lithium (SLI) provides an update on its first commercial lithium plant in Arkansas

  • Target (TGT) announces Brian Cornell plans to remain on as CEO for approx. three more years; chief supply chain and logistics officer to retire

  • Tesla (TSLA) lowers wait times for some cars, according to Reuters

  • Tradeweb Markets (TW) reports total trading volume for August 2022

  • Traeger (COOK) promoted Jim Hardy to Chief Operating Officer and Cole VandenAkker to Chief Sales Officer

  • Transocean (RIG) receives $181 mln in contracts for ultra-deepwater drillship Deepwater Asgard

  • Twitter (TWTR): Elon Musk and Twitter had disagreements at hearing, according to the Wall Street Journal

  • United (UAL) threatened to end JFK service without additional flights, according to Bloomberg

  • UnitedHealth (UNH) and Walmart (WMT) collaborate to deliver access to health care

  • Valaris (VAL) receives $40 mln payment from its joint venture ARO Drilling

  • Vaxcyte (PCVX) Completes Enrollment of Phase 2 Study Evaluating Safety, Tolerability and Immunogenicity of VAX-24 in Adults 65 Years and Older

  • ViewRay (VRAY) receives China NMPA approval of its MRIdian MRI-Guided Radiation Therapy

  • Voyager Therapeutics (VYGR) appoints Peter Pfreundschuh as CFO; Todd Carter, Ph.D., as Chief Scientific Officer

  • M&A:

  • Bassett Furniture (BSET) acquires Noa Home, a mid-priced e-commerce furniture retailer headquartered in Montreal, Canada

  • Cogent Communications (CCOI) to acquire T-Mobile US's (TMUS) Wireline Business

  • Eni S.p.A. (E) acquires BP's (BP) business in Algeria, operating two major gas fields

  • EQT Corp. (EQT) to acquire THQ Appalachia I's upstream assets and THP-EcL Midstream's gathering and processing assets for total consideration of $5.2 bln; doubles share repurchase authorization to $2.0 bln; raises 2023 debt reduction target to $4.0 bln

  • FleetCor (FLT) acquires Plugsurfing, a European electric vehicle software provider to vehicle OEMs, charge point operators, and fleets; financial details not disclosed

  • Group 1 Auto (GPI) acquires a BMW/MINI dealership and a collision center in the U.K.; acquisition expected to generate $80 mln in annual revenues

  • Helios Technologies (HLIO) has entered into a definitive agreement to acquire the assets of Daman Products Company 'Daman'; financial terms were not disclosed

  • Premier (PINC) subsidiary Contigo Health to acquire key assets from TRPN Direct Pay and Devon Health for $177.5 mln in cash; expects to be accretive to FY23earnings

  • State Street (STT) provided an update regarding its proposed acquisition of Brown Brothers Harriman's Investor Services business

  • Wesco (WCC) announces agreement to acquire Rahi Systems for $217 million

  • Syndicate

  • ADC Therapeutics (ADCT) files for 4,412,840 share common stock offering by selling shareholders; files for 1,260,863 share common stock offering by selling shareholders

  • Blue Apron (APRN) and RJB Partners amended purchase agreement

  • Crescent Energy (CRGY) commences 5 mln share public offering

  • Paycor (PYCR) prices 5.0 mln share offering by selling shareholders at $27.35/share

  • Rockley Photonics (RKLY) files for $300 mln mixed securities shelf offering

  • IPOs:

  • American Intl (AIG) launches IPO of its majority-owned subsidiary, Corebridge Financial; shares expected to price between $21-$24 and trade on the NYSE under ticker symbol "CRBG"

  • Expected to Price:

  • No IPOs expected.

Gapping Up/Down

  • Gapping up:

  • COUP +12.5%, AVYA +9%, TUP +5.8%, BSET +5%, FIXX +4.6%, SLI +3.4%, PRIM +2.7%, RIG +2.2%, APRN +1.8%, EQT +1.7%, RKLB +1.7%, UAL +1.4%, RIOT +0.8%, AIG +0.7%

  • Gapping down:

  • PATH -20.8%, CRGY -6%, NWL -4.6%, NIO -4.4%, IOT-4.1%, PYCR -3.6%, NKTR -2.7%, EVLO -2.6%, AVO-2.3%, CDMO -2.3%, RYTM -1.9%, GWRE -1.6%, ADCT -1.3%, PINC -1.1%, DDD -1%, MARA -0.6%, HQY -0.6%

 

Analyst Research (see Upgrades/Downgradescalendarfor full list):

  • Upgrades

  • Netflix (NFLX) upgraded to Neutral from Underperform at Macquarie; tgt raised to $230

  • Ryman Hospitality (RHP) upgraded to Buy from Hold at Truist; tgt raised to $103

  • Downgrades:

  • GMS (GMS) downgraded to Hold from Buy at Truist; tgt lowered to $46

  • Others:

  • Accolade (ACCD) initiated with a Buy at Truist; tgt $15

  • Agilon Health (AGL) assumed with a Buy at Truist; tgt lowered to $29

  • AllianceBernstein (AB) resumed with a Neutral at BofA Securities; tgt $45

  • Alvotech (ALVO) initiated with an Equal-Weight at Morgan Stanley; tgt $10

  • Ameriprise Financial (AMP) initiated with a Buy at BofA Securities; tgt $336

  • Amwell (AMWL) initiated with a Hold at Truist; tgt $5

  • Cano Health (CANO) initiated with a Hold at Truist; tgt $7

  • Change Healthcare (CHNG) initiated with a Hold at Truist; tgt $27.75

  • Doximity (DOCS) initiated with a Hold at Truist; tgt $35

  • GCM Grosvenor (GCMG) initiated with a Neutral at BofA Securities; tgt $10

  • GoodRx (GDRX) initiated with a Hold at Truist; tgt $6.50

  • Hims & Hers Health (HIMS) initiated with a Hold at Truist; tgt $7

  • Janus Henderson Group (JHG) resumed with a Neutral at BofA Securities; tgt $26

  • NextGen Healthcare (NXGN) initiated with a Hold at Truist; tgt $20

  • Patria Investments (PAX) resumed with a Neutral at BofA Securities; tgt $17

  • Privia Health (PRVA) resumed with a Buy at Truist; tgt raised to $54

  • Progyny (PGNY) initiated with a Buy at Truist; tgt $56

  • R1 RCM (RCM) initiated with a Buy at Truist; tgt $29

  • StepStone Group (STEP) initiated with a Buy at BofA Securities; tgt $42

  • Teladoc (TDOC) initiated with a Hold at Truist; tgt $35

Upcoming Events:

  • Econ Data:

  • 07:00 ET: MBA Mortgage Applications Index for Sept. 3 (Briefing.comConsensus NA; Prior -3.7%)

  • 08:30 ET: Trade Balance for Jul (Briefing.comConsensus -$70.2B; Prior -$79.6B)

  • 14:00 ET: Beige Book 

  • Earnings:

  • Tuesday (Sep 6)

  • Morning: KC

  • Afternoon:  COUP GTLB GWRE PATH

  • Wednesday (Sep 7)

  • Morning:  ASO GIII KFY NIO REVG

  • Afternoon:  AVAV AEO ASAN CASY CPRT BASE PLAY DSGX GME PHR CURV VRNT YEXT

  • Thursday (Sep 8)

  • Morning: BILI FCEL LOVE

  • Afternoon:  AOUT DOCU AVO RH SWBI CXM ZS ZUMZ

  • Friday (Sep 9) 

  • Morning:  ABM KR


Asia & Europe detail:

Asia: Nikkei -0.7%, Hang Seng -0.8%, Shanghai Composite +0.1%

Equity indices in the Asia-Pacific region ended the midweek session on a mostly lower note. Japan's former top currency diplomat Watanabe said that the Bank of Japan should only respond to persistent yen weakness if margins become impacted. China Securities Timespushed back against concerns regarding the yuan's fall to 7.0000 per dollar. China's trade surplus missed August expectations due to below-consensus growth in imports and exports. Reserve Bank of Australia Governor Lowe will speak about inflation and monetary policy tomorrow.

  • In economic data:

  • China's August trade surplus $79.39 bln (expected surplus of $92.70 bln; last surplus of $101.26 bln). August Imports 0.3% yr/yr (expected 1.1%; last 2.3%) and Exports 7.1% yr/yr (expected 12.8%; last 18.0%)

  • Japan's July Leading Index 99.6 (last 100.3) and Coincident Indicator 1.4% m/m (last 3.3%)

  • South Korea's July Current Account surplus $1.09 bln (last surplus of $5.61 bln)

  • Australia's Q2 GDP 0.9% qtr/qtr (expected 1.0%; last 0.7%); 3.6% yr/yr (expected 3.5%; last 3.3%). August AIG Services Index 53.3 (last 51.7)

---Equity Markets---

  • Japan's Nikkei: -0.7%

  • Hong Kong's Hang Seng: -0.8%

  • China's Shanghai Composite: +0.1%

  • India's Sensex: -0.3%

  • South Korea's Kospi: -1.4%

  • Australia's ASX All Ordinaries: -1.4%

---FX---

  • USD/JPY: +1.2% to 144.53

  • USD/CNH: +0.4% to 6.9930 

  • USD/INR: +0.1% to 79.94

Europe: DAX -0.6%, FTSE -0.4%, CAC -0.3%

Major European indices trade in the red while Spain's IBEX (unch) outperforms. European Commission President von der Leyen confirmed that a limit on the price of Russian gas will be proposed. Russia's President Putin warned that oil and gas contracts will not be respected if prices are capped. British Prime Minister Truss is not expected to trigger article 16 in the Northern Ireland Protocol, effectively delaying a confrontation with the European Union.

  • In economic data:

  • Eurozone's Q2 GDP 0.8% qtr/qtr (expected 0.6%; last 0.5%); 4.1% yr/yr (expected 3.9%; last 5.4%). Q2 Employment Change 0.4% qtr/qtr (expected 0.3%; last 0.7%); 2.7% yr/yr (expected 2.4%; last 3.1%)

  • Germany's July Industrial Production -0.3% m/m (expected -0.5%; last 0.8%)

  • U.K.'s August Halifax House Price Index 0.4% m/m (last -0.1%); 11.5% yr/yr (last 11.8%)

  • Italy's July Retail Sales 1.3% m/m (last -1.1%); 4.2% yr/yr (last 1.3%)

---Equity Markets---

  • STOXX Europe 600: -0.6%

  • Germany's DAX: -0.3%

  • U.K.'s FTSE 100: -0.4%

  • France's CAC 40: -0.3%

  • Italy's FTSE MIB: -0.1%

  • Spain's IBEX 35: UNCH

---FX---

  • EUR/USD: -0.1% to 0.9898

  • GBP/USD: -0.6% to 1.1443 

  • USD/CHF: +0.1% to 0.9847


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The S&P 500 futures are up 3 points and are trading % above fair value. The Nasdaq 100 futures are up 9 points and are trading roughly in-line with fair value. The Dow Jones Industrial Average futures