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08/11/21 Briefing

The stock market is on track for a slightly higher open as futures on the S&P 500 trade two points above fair value.

Today's session will not see the release of any data, but the day starts with news that the House of Representatives voted in favor of $550 bln in new infrastructure spending with a plan to vote on another $1.75 trln in spending by Thanksgiving if cost estimates from the Congressional Budget Office meet expectations.

Overnight action saw more reports about imminent fiscal stimulus in Japan while France and the U.K. are still trying to solve their fishing dispute. Energy prices have been on the rise with WTI crude climbing $0.85, or 1.1%, to $82.12/bbl, approaching its high from Thursday.

U.S. Treasuries are on track for a lower start with the 10-yr yield rising four basis points to 1.49%. The U.S. Dollar Index is down 0.1% at 94.20.

In U.S. corporate news:

  • Tesla (TSLA 1162.83, -59.26): -4.9% after CEO Musk said he will abide by the results of a poll that suggested he should sell 10% of his stock.

  • Moderna (MRNA 232.00, -4.99): -2.1% continued selling after last week's plunge.

  • Treehouse Foods (THS 37.55, +1.61): +4.5% after missing Q3 EPS expectations on above-consensus revenue. Company lowered its FY21 EPS guidance.

  • United States Steel (X 27.44, +1.27): +4.9% ahead of expected infrastructure spending.

  • Coty (COTY 9.84, +0.55): +5.9% after beating Q1 EPS expectations and guiding FY22 EPS ahead of estimates.

Reviewing overnight developments:

  • Asian markets ended mixed. Japan's Nikkei -0.4%, Hong Kong's Hang Seng -0.4%, and China's Shanghai Composite +0.2%.

  • In economic data:

  • China's October exports +27.1% yr/yr (expected 24.5%; last 28.5%) and imports +20.6% (expected 25.0%; last 17.6%)

  • Japan's September Leading Index -1.6% m/m (last -2.8%)


  • In news:

  • China's State Grid Corporation said the electricity supply-demand situation is back in balance.

  • The BoJ Summary of Opinions projects an accelerated recovery in the first half of 2022. That would be aided by additional fiscal stimulus. To that end, reports indicate Japan is ready to introduce a stimulus package that exceeds JPY30 trln and includes JPY100,000 cash payments for kids 18 years and younger.



  • Major European indices trade near their flat lines. Germany's DAX -0.2%, France's CAC +0.2%, and the U.K.'s FTSE -0.1%.

  • In economic data:

  • Eurozone's November Sentix Investor Confidence 18.3 (expected 15.5; last 16.9)

  • Switzerland's October unemployment rate 2.7% (expected 2.7%; last 2.8%)


  • In news:

  • Press reports suggest the U.K. may soon trigger Article 16 over the Northern Ireland protocol, which enables it to take unilateral safeguard measures to protect its economic interests.



U.S. equity futures:

  • S&P 500 Futures: +2 @ 4,669

  • DJIA Futures: +67 @ 36,395

  • Nasdaq 100 Futures: -10 @ 16,349

Overseas:

  • Europe: DAX -0.2%, FTSE Flat, CAC +0.3%

  • Asia: Nikkei -0.4%, Hang Seng -0.4%, Shanghai Composite +0.2%

Commodities:

  • Crude Oil +0.84 @ 82.11

  • Nat Gas +0.029 @ 5.545

  • Gold +2.15 @ 1818.95

  • Silver +0.180 @ 24.337

  • Copper +0.0230 @ 4.3669

U.S. Summary:

  • Earnings/Guidance (Full Earnings Calendar):

  • American Electric (AEP) guides FY22 EPS in-line, also plans to invest $38 bln from 2022-26 on transmission, distribution and renewable energy

  • Axsome Therapeutics (AXSM) reports Q3 EPS of ($0.93) vs ($0.94) S&P Capital IQ Consensus

  • Berkshire Hathaway (BRK.A) reports Q3 results

  • Black Knight (BKI) beats by $0.03, beats on revs; raises FY21 guidance

  • ChipMOS TECHNOLOGIES (IMOS) beats by NT$0.17, misses on revs; reports October revs

  • Coty (COTY) beats by $0.06, reports revs in-line; guides FY22 EPS above consensus

  • Editas Medicine (EDIT) beats by $0.24, beats on revs

  • FirstEnergy (FE) announces $3.4 bln equity investment; provides FY22 outlook below consensus

  • Helios Technologies (HLIO) beats by $0.27, beats on revs; raises FY21 guidance

  • Kosmos Energy (KOS) beats by $0.02; misses on revs

  • Marriott Vacations (VAC) beats by $0.19, misses on revs

  • RadNet (RDNT) beats by $0.03, misses on revs; reaffirms FY21 revs guidance

  • Reata Pharmaceuticals (RETA) misses by $0.08, beats on revs

  • Softbank (SFTBY) reports H2 results; net income up 80.7% yr/yr to JPY 363 bln; +13% yr/yr to JPY 2.983 trillion

  • The Trade Desk (TTD) beats by $0.03, beats on revs; guides Q4 revs in-line

  • Tower Semi (TSEM) beats by $0.04, reports revs in-line; guides Q4 revs in-line

  • TreeHouse Foods (THS) misses by $0.04, beats on revs; lowers FY21 EPS outlook, revs light at the midpoint

  • Trinseo (TSE) reports Q3 (Sep) results, beats on revs; to divest of its styrenics businesses starting in 1Q22

  • US Foods (USFD) reports EPS in-line, beats on revs

  • Viasat (VSAT) beats by $0.03, beats on revs; Viasat will acquire Inmarsat (IMASY) in a transaction valued at $7.3 billion

  • Viatris (VTRS) reports Q3 (Sep) results, beats on revs; guides FY21 revs in-line

  • WideOpenWest (WOW) reports Q3 (Sep) results, beats on revs


  • General News:

  • Most progressives agreed to pass the $1.2 trillion bipartisan infrastructure bill (sending it to President Biden) after House moderates agreed to support larger reconciliation bill if Congressional Budget Office cost estimates meet projections. There is expected to be a House vote on reconciliation bill before Thanksgiving after Friday's successful procedural measure, but the bill will need to be amended in the Senate, according to Politico

  • House passes bipartisan infrastructure bill by a vote of 228-206; President Biden says he will sign the bill "soon"

  • Fifth Circuit Court of Appeals temporarily halted the Biden administration's coronavirus vaccine mandate for businesses with 100 or more employees after 27 states filed lawsuits. White House is confident that mandate is legal, according to NPR

  • President Biden is mulling options to lower oil prices including release from Strategic Petroleum Reserve, according to Bloomberg

  • Chinese health officials warn of a "grave challenge" ahead related to coronavirus, according to Financial Times

  • Higher natural gas prices will flow through utilities, according to the Wall Street Journal

  • Acushnet (GOLF) entered into an agreement with Magnus Holdings in connection with its existing $200.0 mln share repurchase authorization

  • Amarin (AMRN) reports latest research evaluating VASCEPA/VAZKEPA (Icosapent Ethyl) to be presented at American Heart Association Scientific Sessions 2021

  • Astra Space (ASTR) files application with FCC requesting authority to launch and operate satellite system

  • Autolus Therapeutics (AUTL): Blackstone (BX) to invest up to $250 mln in Autolus Therapeutics to develop obe-cel in adult Acute Lymphoblastic Leukemia

  • Bragg Gaming Group (BRAG) entered into an exclusive global content licensing agreement with Bluberi, a casino gaming content provider based in Las Vegas

  • Bristol-Myers (BMY) reports Neoadjuvant Opdivo (nivolumab) plus chemotherapy significantly improves event-free survival in patients with resectable non-small cell lung cancer in Phase 3 CheckMate -816 Trial

  • Canadian Solar (CSIQ) was awarded 52 MWp for the solar PV project Caracoli in the recent public auction by Colombia's Ministry of Energy

  • Chemomab Therapeutics (CMMB) announced that Donald R. Marvin has been named Chief Financial Officer, Executive Vice President and Chief Operating Officer

  • Credit Suisse (CS) closes account of Ai Weiwei due to missing paperwork, according to Reuters

  • Dave & Buster's (PLAY) in filing discloses resignation of CFO Scott J. Bowman

  • Disney (DIS) will offer one month of its streaming service for $2 for new subscribers, according to Verge

  • Edwards (EW) Announces Six-month Data From Transcatheter Tricuspid Replacement Program

  • Electric Last Mile Solutions (ELMS) announces its intention to move ahead with plans to launch the Urban Utility vehicle after the ELMS Board approved production

  • Emergent BioSolutions (EBS): FDA authorizes two additional batches of vaccine drug substance manufactured at the Emergent facility

  • Endo Intl (ENDP) signs agreement with Premier to supply VASOSTRICT

  • Eton Pharmaceuticals (ETON) receives FDA approval for EPRONTIA

  • GT Biopharma (GTBP) appoints Dr. Gregory Berk as Interim Chief Executive Officer

  • Haverty Furniture (HVT) authorizes special cash dividend, also approves new $25 mln share repurchase authorization

  • iRhythm (IRTC) receives second subpoena requesting info

  • KalVista Pharmaceuticals (KALV) presents data demonstrating KVD900 achieves rapid exposure and improves outcomes as oral on-demand treatment of HAE

  • Liquidia Technologies (LQDA) receives tentative approval for YUTREPIA from FDA

  • Lockheed Martin (LMT) wins $10.86 bln US Air Force contract to sustain and modernize the F-22 Raptor

  • Lottery.com (LTRY) commences development of a blockchain gaming platform

  • Mechel Steel (MTL) reports supplying ~22,000 tonnes of rails and other steel rolls for construction of Moscow Metro's Bolshaya Koltsevaya Line

  • Medtronic (MDT) announces early data for the Intrepid transcatheter mitral valve replacement (TMVR) system using new transfemoral delivery system

  • Palantir Technologies (PLTR) Comments on Rio Tinto's (RIO) Kemano T2 Project Breakthrough

  • Peloton (PTON) will freeze hiring, according to CNBC

  • Qiagen (QGEN) settles patent infringement lawsuit with Becton Dickinson (BDX), whereby QGEN will pay BDX a lump-sum payment of $53 mln

  • RedHill Biopharma (RDHL) and South Korea's Kukbo Co. announce a strategic investment of up to $10 million in RedHill

  • Regeneron Pharma (REGN) reports new Phase 3 data for REGEN-COV showing long-term protection against COVID-19

  • Starbucks (SBUX) Buffalo, NY workers will vote on whether or not to unionize Wednesday, according to Bloomberg

  • Sun Life (SLF) increases common shareholders' dividend payable in December 2021 by 20%

  • Tesla (TSLA) CEO Elon Musk's Twitter poll says he should sell 10% of his stock; he says he will abide by the results of this poll

  • TreeHouse Foods (THS) exploring strategic alternatives to maximize value

  • Uber (UBER) mulling possibility of dispatching yellow cabs, according to the New York Post

  • US Foods (USFD) wants new executives amid pressure from investors, according to Reuters

  • Wabash Natl (WNC) announced a 10-year agreement with Hydro

  • W.R. Berkley (WRB) declares special cash dividend of $1.00/share

  • Wyndham Hotels & Resorts (WH) enters agreement concerning CorePoint Lodging (CPLG) hotel management contracts

  • Yum China (YUMC) Chief Supply Chain Officer Danny Tan intends to resign on February 10, 2022


  • M&A:

  • BHP Group (BHP) signed a share sale and purchase agreement to divest its 80 per cent interest in BHP Mitsui Coal, an operated metallurgical coal joint venture in Queensland

  • CorePoint Lodging (CPLG) to be acquired through a joint venture between affiliates of Highgate and Cerberus Capital Management, L.P.; to receive $15.65 per share in cash

  • Coty (COTY) to sell an approximate 4.7% stake in Wella to KKR in exchange for the redemption of ~56% of KKR's remaining convertible preferred shares in Coty


  • Syndicate:

  • Aurora (AEP) files for 903,072,352 share common stock offering by selling shareholders

  • Chesapeake Energy (CHK) files for 13,017,653 share common stock offering by selling shareholders

  • Eagle Materials (EXP) files mixed securities shelf offering

  • Earthstone Energy (ESTE) files for 2,611,111 share common stock offering by selling shareholders

  • Science 37 (SNCE) files for 89,338,881 share common stock offering by selling shareholders

  • Surgery Partners (SGRY) commenced an underwritten public offering of 5,000,000 shares of its common stock

  • Verra Mobility (VRRM) files for 19,999,967 share common stock offering; also files for 13,207,821 share common stock offering by selling shareholder

  • Vivid Seats (SEAT) files for 187,267,173 share common stock offering by selling shareholders


  • IPOs:

  • Priced to Trade:

  • Backblaze (Nasdaq: BLZE): The storage cloud platform, providing businesses and consumers cloud services to store, use, and protect their data is expected to price its 6.3 M share IPO between $15-$17.

  • CI&T (NYSE: CINT): The provider of strategy, design and software engineering services is expected to price its 19.4 M share IPO between $17-$19.

  • Expensify (Nasdaq: EXFY): The developer of a cloud-based expense management software platform is expected to price its 9.7 M share IPO between $23-$25.

  • Hertz Global (Nasdaq: HTZ): The operator of a vehicle rental business primarily through the Hertz, Dollar and Thrifty brand, is expected to price its 37.1 M share IPO between $25-$29.

  • Lulu's Fashion Lounge (Nasdaq: LVLU): The digitally native fashion brand primarily serving Millennial and Gen Z women women is expected to price its 5.8 M share IPO between $16-$19.

  • Rivian Automotive (Nasdaq: RIVN): The designer, developer, and manufacturer of electric vehicles and accessories is expected to price its 135.0 M share IPO between $57-$62.

  • Weave Communications (NYSE: WEAV): The cloud-based software platform that streamlines the day-to-day operations of running a small business is expected to price its 5.0 M share IPO between $25-$28.



Gapping Up/Down

  • Gapping up:

  • AUTL +25.2%, COTY +9.3%, LQDA +5.1%, HVT +4.4%, RETA +4.4%, ETON +4.1%, MTL +3.9%, ASTR +3.2%, VAC +2.6%, KALV +2.4%, PRVA +1.9%, GOL +1.7%, DSAC +1.5%, WRB +1.3%, TEVA +0.9%, QGEN +0.8%, EW +0.8%, FE +0.6%


  • Gapping down:

  • CPLG -10.5%, TSLA -5.2%, TOST -5.1%, PTON -1.7%, VRRM -1.4%, SEAT -0.7%, BEAM -0.6%, EXP -0.5%


Analyst Research (see Upgrades/Downgrades calendar for full list):

  • Upgrades

  • Accel Entertainment (ACEL) upgraded to Buy from Hold at Deutsche Bank; tgt raised to $17

  • ACM Research (ACMR) upgraded to Buy from Hold at The Benchmark Company; tgt $125

  • Amerant Bancorp (AMTB) upgraded to Overweight from Equal-Weight at Stephens

  • Appian (APPN) upgraded to Buy from Hold at Truist; tgt raised to $116

  • AvalonBay (AVB) upgraded to Overweight from Equal-Weight at Morgan Stanley; tgt $265

  • BTRS Holdings (BTRS) upgraded to Overweight from Neutral at JP Morgan; tgt $15


  • Downgrades:

  • Aptiv (APTV) downgraded to Neutral from Overweight at Piper Sandler; tgt $177

  • Bluebirdbio (BLUE) downgraded to Underweight from Equal-Weight at Morgan Stanley; tgt $11

  • Ellington Residential Mtg (EARN) downgraded to Neutral from Buy at BTIG Research

  • Emergent BioSolutions (EBS) downgraded to Hold from Buy at The Benchmark Company

  • Krispy Kreme, Inc. (DNUT) downgraded to Hold from Buy at Truist; tgt lowered to $15


  • Others:

  • Apria (APR) resumed with a Buy at Citigroup; tgt $43

  • Dream Finders Homes (DFH) resumed with a Neutral at BofA Securities; tgt $18


Upcoming Events:

  • Econ Data:

  • No economic data of note.


  • Earnings:

  • Monday (Nov 8)

  • Morning: BKI IMOS COTY EDIT EHTH XPRO GTES HLIO VAC RDNT RETA TTD TSEM THS TSE USFD VTRS WOW

  • Afternoon: DDD ACAD AEIS AMC AEL AMRS ATCO BLDP BAND CBT CSII CXW ENV FIVN FRPT IPAR IFF NVTA JKHY BEKE LFST DOOR MRTX MRC MWA NCMI NHI NVRO NEWR NEX OSH PYPL PRAA PRI PRIM PRA RBLX SANM SWAV SDC SQSP TME REAL TPIC TREX TRIP TWO SPCE VUZI WPRT ZIXI ZNGA


  • Tuesday (Nov 9)

  • Morning: ADT ATC BSY BHVN BNTX CAH CEVA ECOM DHI EBIX ECVT EPZM FSS HAE HAIN HGV HUYA IIVI IGT ITCI MLCO MIDD MNTV MSGE NOVT PLTR PRPL SEAS STWD SYY TGI TUFN VCEL VSAT WNC WRK WKHS

  • Afternoon: TWOU AKA AMPL ARLO ASH AMK EPAY ELY CARG CERT CCXI COIN DAR DASH DV DOCS EVBG FGEN FLYW FUBO FLGT G GLBE GOCO GO HCAT TWNK NARI INO JAZZ DNUT LGND MCFE MODN MSGS NSTG NIO NUVA OLO ONTF LPRO PAAS PYCR POSH PUBM RPAY RNG SAIL SCSC SGMS SEER SILK STEP TOST TTEC TPTX U UPST VZIO VRM WES WYNN


  • Wednesday (Nov 10)

  • Morning: ME ADNT AER APG GIB DFH ENR FVRR IS KELYA KRNT MNDY EYE PFGC PRGO SHCR FOUR SHC FLOW VERX WEN WWW

  • Afternoon: DIBS AFRM AMWL APP ATO BZH BYND BRKS BMBL CCMP COMP CRCT MSP DUOL BROS ENS FICO FIGS ULCC GDRX HIMS HNST KGC LZ MRVI MQ MAX OPEN RRGB ROOT SDGR SOFI SPTN TASK DIS WISH ZIP


  • Thursday (Nov 11)

  • Morning: MT AZUL CAE CELH EPC GRWG NICE OGN PGTI SBH STNG TPR THRY UTZ WB WIX YETI

  • Afternoon: AQN ARRY BLNK CPNG FLO GAN JAMF RIDE PAGS PVG


  • Friday (Nov 12)

  • Morning: AZN CGEN ROLL SPB WRBY



Asia & Europe detail:

Asia: Nikkei -0.4%, Hang Seng -0.4%, Shanghai Composite +0.2%

Equity indices in the Asia-Pacific region were mixed to begin the week with modest changes for most markets. China posted better than expected export data, but imports lagged expectations, with domestic demand curtailed reportedly by the power supply cuts. On a related note, the State Grid Corporation said the electricity supply-demand situation is back in balance. Ample interest in China's sixth plenum (Nov. 8-11), which Bloomberg suggests could culminate with Xi introducing a doctrine that permits his rule indefinitely. The BOJ Summary of Opinions projects an accelerated recovery in the first half of 2022. That would be aided by additional fiscal stimulus. To that end, reports indicate Japan is ready to introduce a stimulus package that exceeds JPY30 trln and includes JPY100,000 cash payments for kids 18 years and younger.

  • In economic data:

  • China's October exports +27.1% yr/yr (expected 24.5%; last 28.5%) and imports +20.6% (expected 25.0%; last 17.6%)

  • Japan's September Leading Index -1.6% m/m (last -2.8%)


---Equity Markets---

  • Japan's Nikkei: -0.4%

  • Hong Kong's Hang Seng: -0.4%

  • China's Shanghai Composite: +0.2%

  • India's Sensex: +0.8%

  • South Korea's Kospi: -0.3%

  • Australia's ASX All Ordinaries: -0.1%

---FX---

  • USD/JPY: +0.1% to 113.46

  • USD/CNH: unch at 6.3924

  • USD/INR: -0.1% to 74.073

Europe: DAX -0.2%, FTSE Flat, CAC +0.3%

Major European indices are in a drift mode with major bourses little changed from Friday's close. The tension between the UK and EU over the Northern Ireland protocol is also little changed, meaning things aren't good. Press reports suggest the UK may soon trigger Article 16, which enables it to take unilateral safeguard measures to protect its economic interests. The ECB's position that inflation pressures should be transitory also hasn't changed, as ECB member Lane reiterated the view that the inflation rate is expected to drop in 2022.

  • In economic data:

  • Eurozone's November Sentix Investor Confidence 18.3 (expected 15.5; last 16.9)

  • Switzerland's October unemployment rate 2.7% (expected 2.7%; last 2.8%)


---Equity Markets---

  • STOXX Europe 600: -0.1%

  • Germany's DAX: -0.2%

  • U.K.'s FTSE 100: flat

  • France's CAC 40: +0.3%

  • Italy's FTSE MIB: -0.2%

  • Spain's IBEX 35: -0.2%

---FX---

  • EUR/USD: +0.1% to 1.1575

  • GBP/USD: +0.2% to 1.3518

  • USD/CHF: +0.3% to 0.9147


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