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10/03/23 Briefing

The S&P 500 futures are down 5 points and are trading 0.1% below fair value. The Nasdaq 100 futures are up 15 points and are trading 0.2% above fair value. The Dow Jones Industrial Average futures are down 93 points and are trading 0.3% below fair value.

Equity futures skew negative, but there is not a lot of conviction behind this morning's trade due to hesitancy ahead of the February employment report released at 8:30 a.m. ET. There is also added uncertainty around the banking sector amid the ongoing fallout in shares of SVB Financial (SIVB), which is down another 60% today.

Treasury yields are sliding this morning in what appears to be a flight to safety trade. The 2-yr note yield is down 12 basis points to 4.77% and the 10-yr note yield is down nine basis points to 3.83%. The U.S. Dollar Index is down 0.2% to 105.13.

Energy complex futures are losing ground this morning. WTI crude oil futures are down 0.7% to $75.20/bbl and natural gas futures are down 1.6% to $2.64/mmbtu.

In corporate news:

  • DocuSign (DOCU 55.38, -9.03, -14.0%): beats by $0.13, beats on revs, beats on billings; guides Q1 revs in-line; guides FY24 revs above consensus; CFO will step down in the coming months; announces that Cynthia Gaylor intends to step down as CFO in the coming months

  • Oracle (ORCL 82.61, -4.26, -4.9%): beats by $0.02, reports revs in-line, increases quarterly dividend by 25% to $0.40/share; company expected to issue guidance during earnings call at 5:00 p.m; Guides MayQ EPS above consensus and revenue in-line

  • Gap (GPS 10.80, -0.78, -6.7%): misses by $0.29, misses on revs, comps -5%; guides Q1 revs below consensus; guides FY24 revs below consensus; anounces actions to optimize operating structure; CEO of Athleta is exiting the business

  • Ulta Beauty (ULTA 512.16, -7.77, -1.5%): beats by $1.08, beats on revs, comps of +15.6%; guides FY24 EPS above consensus, revs above consensus, comps of +4-5%

  • Roblox (RBLX 41.13, +1.19, +3.0%): upgraded to Buy from Hold at Jefferies

  • SVB Financial (SIVB 43.70, -62.34, -58.8%) : Founders Fund urges portfolio companies to pull money out of SVB Financial, according to Bloomberg

  • United Airlines (UAL 52.70, +0.58, +1.1%): upgraded to Overweight from Equal Weight at Barclays

  • JinkoSolar (JKS 50.00, -6.16, -11.0%): misses by $0.48, beats on revs

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region ended the week on a broadly lower note. Japan's Nikkei: -1.7% (+0.8% for the week), Hong Kong's Hang Seng: -3.0% (-6.1% for the week), China's Shanghai Composite: -1.4% (-3.0% for the week), India's Sensex: -1.1% (-1.1% for the week), South Korea's Kospi: -1.0% (-1.5% for the week), Australia's ASX All Ordinaries: -2.2% (-1.8% for the week).

  • In economic data:

  • China's February New Loans CNY1.81 trln (expected CNY1.50 trln; last CNY4.90 trln) and February total social financing CNY3.16 trln (expected CNY2.20 trln; last CNY5.98 trln)

  • Japan's February PPI -0.4% m/m (expected -0.3%; last 0.7%); 8.2% yr/yr (expected 8.4%; last 9.5%). January Household Spending 2.7% m/m (expected 1.4%; last -2.1%); -0.3% yr/yr (expected -0.1%; last -1.3%)

  • South Korea's January Current Account deficit $4.52 bln (last surplus of $2.68 bln)

  • New Zealand's February Business PMI 52.0 (last 50.8). Q4 Manufacturing Sales Volume -4.7% qtr/qtr (last 3.1%)


  • In news:

  • China's President Xi received unanimous support for a third term.

  • The Bank of Japan made no changes to its policy stance in Governor Kuroda's final policy meeting. Meanwhile, the appointment of Kazuo Ueda was confirmed by Japan's government.

  • South Korea reported a record current account deficit for January.



  • Major European indices trade in negative territory. STOXX Europe 600: -1.2% (-2.1% week-to-date), Germany's DAX: -1.2% (-0.9% week-to-date), U.K.'s FTSE 100: -1.7% (-2.5% week-to-date), France's CAC 40: -1.1% (-1.5% week-to-date), Italy's FTSE MIB: -1.5% (-1.9% week-to-date), Spain's IBEX 35: -1.4% (-1.8% week-to-date).

  • In economic data:

  • Germany's February CPI 0.8% m/m, as expected (last 1.0%); 8.7% yr/yr, as expected (last 8.7%)

  • U.K.'s January GDP 0.3% m/m (expected 0.1%; last -0.5%). January Industrial Production -0.3% m/m (expected -0.1%; last 0.3%); -4.3% yr/yr (expected -4.0%; last -4.0%). January Manufacturing Production -0.4% m/m (expected -0.1%; last 0.0%); -5.2% yr/yr (expected -5.0%; last -5.7%). January Construction Output -1.7% m/m (expected -0.1%; last -0.5%); 0.6% yr/yr (expected 2.4%; last 3.7%). January trade deficit GBP17.86 bln (expected deficit of GBP17.75 bln; last deficit of GBP19.27 bln)\

  • France's January trade deficit EUR12.90 bln (last deficit of EUR14.70 bln)

  • Italy's January PPI -7.5% m/m (last 2.9%); 11.1% yr/yr (last 31.7%)

  • Spain's January Retail Sales 5.5% yr/yr (last 4.8%)


  • In news:

  • Bank stocks are under pressure amid concerns about fallout from the collapse of SVB Financial.

  • Norway's stats office raised its domestic 2023 growth forecast to 1.3% from 1.2% and raised the inflation forecast to 5.4% from 4.4%.

  • Junior doctors in the U.K. are planning a 72-hour strike for next week.

  • Sweden and Finland will meet with Turkish officials in search of support for NATO accession.



U.S. equity futures:

  • S&P 500 Futures: -8 @ 3,910

  • DJIA Futures: -87 @ 32,168

  • Nasdaq 100 Futures: -2 @ 11,994

Overseas:

  • Europe: DAX -1.2%, FTSE -1.7%, CAC -1.1%

  • Asia: Nikkei -1.7%, Hang Seng -3.0%, Shanghai Composite -1.4%

Commodities:

  • Crude Oil -0.70 @ 75.02

  • Nat Gas -0.033 @ 2.51

  • Gold +4.70 @ 1839.30

  • Silver -0.010 @ 20.155

  • Copper -0.0487 @ 3.9903

Earnings/Guidance:

  • Allbirds ( BIRD ) misses by $0.05, misses on revs; guides Q1 revs below consensus

  • American Outdoor Brands ( AOUT ) misses by $0.10, misses on revs

  • AvePoint ( AVPT ) misses on Q4 earnings, misses on revs; guides Q1 and FY23 revs below consensus

  • Buckle ( BKE ) beats by $0.14, beats on revs

  • ChipMOS TECHNOLOGIES ( IMOS ) reports February revs declined 31.5% yr/yr to NT$1.44 bln or $46.8 mln

  • DocuSign ( DOCU ) beats by $0.13, beats on revs, beats on billings; guides Q1 revs in-line; guides FY24 revs above consensus; CFO will step down in the coming months

  • El Pollo Loco ( LOCO ) beats by $0.02, reports revs in-line; comps +4.7%

  • Gap ( GPS ) misses by $0.29, misses on revs, comps -5%; guides Q1 revs below consensus; guides FY24 revs below consensus; anounces actions to optimize operating structure; CEO of Athleta is exiting the business

  • Genius Sports ( GENI 12.14% ) misses by $0.51, reports revs in-line

  • HashiCorp ( HCP ) beats by $0.15, beats on revs; guides Q1 EPS, revs above consensus; guides FY24 EPS above consensus, revs in-line

  • HireRight Holdings ( HRT ) beats by $0.12, beats on revs; guides FY23 EPS above consensus, revs below consensus

  • JinkoSolar ( JKS ) misses by $0.48, beats on revs

  • Lion Electric ( LEV ) beats by $0.11; beats on revs

  • Mission Produce ( AVO ) misses by $0.06, beats on revs; expects higher volumes yr/yr in Q2 (Apr)

  • National Beverage ( FIZZ ) beats by $0.05, beats on revs

  • Oracle ( ORCL ) beats by $0.02, reports revs in-line, increases quarterly dividend by 25% to $0.40/share; Guides MayQ EPS above consensus and revenue in-line

  • Public Service ( PEG ) reiterates FY23 earnings guidance; reaffirms +5-7% long-term earnings growth rate for 2023-2027; to retain nuclear fleet, exit offshore wind as previously announced

  • Smith & Wesson Brands ( SWBI ) beats by $0.02 (two estimates), beats on revs

  • Taiwan Semiconductor Manufacturing ( TSM ) reports February sales increased 13.8% yr/yr to NT$163.17 bln

  • Target Hospitality ( TH ) reports Q4 results

  • Ulta Beauty ( ULTA ) beats by $1.08, beats on revs, comps of +15.6%; guides FY24 EPS above consensus, revs above consensus, comps of +4-5%

  • Vail Resorts ( MTN ) reports Q2 (Jan) results, beats on revs; lowers FY23 guidance due to significant weather disruptions at its Eastern U.S. resorts; increase quarterly dividend 8% to $2.06/share; raises authorization for share repurchases by 2.5 mln shares

  • Wheaton Precious Metals ( WPM ) misses by $0.02, misses on revs

  • Yellow Corporation ( YELL ) Provided Quarter-To-Date Operating Data for First Quarter 2023

  • Zumiez ( ZUMZ ) beats by $0.10, beats on revs; guides Q1 EPS below estimate, revs below estimate

News:

  • SEC increasing focus on potential earnings manipulation, according to the Wall Street Journal

  • Growing scrutiny on zero days to expiry options, Reuters

  • EU agrees stronger rules to boost energy efficiency

  • AbbVie ( ABBV ): Endo Intl's (ENDP) Par Pharma begins shipping first generic version of Allergan's Pylera

  • Allbirds ( BIRD ) announces appointment of Annie Mitchell as Chief Financial Officer, effective April 24, 2023

  • Apple ( AAPL 1.39% ): UK CMA Apple AppStore investigation extended from January 2023 to May 2023

  • Artisan Partners Asset Mgmt ( APAM ) reports that its preliminary assets under management as of February 28, 2023 totaled $134.8 billion

  • Azul S.A. ( AZUL ) reports traffic results for February

  • Blackbaud ( BLKB ) has reached a settlement with the SEC in connection with the Company's previously disclosed 2020 security incident

  • CME Group ( CME ) announced its foreign exchange futures and options reached a new single-day volume record of 3.15 mln contracts on March 8, 2023, equivalent to $296 bln in USD notional

  • DocuSign ( DOCU ) announces that Cynthia Gaylor intends to step down as CFO in the coming months

  • Invesco ( IVZ ) reports preliminary month-end assets under management of $1.458 bln, down 1.7% vs prior month-end

  • Enovix ( ENVX ) says its first high-volume manufacturing facility will be located in Malaysia

  • Franklin Resources ( BEN ) reports preliminary month-end assets under management (AUM) of $1,416.5 billion at February 28, 2023, compared to $1,451.9 billion at January 31, 2023

  • Gap ( GPS ) announces changes to executive leadership team

  • Lazard ( LAZ ) reports preliminary AUM as of February 28, 2023 totaled approx. $224.2 bln (vs $230.6 bln prior month-end)

  • LivaNova ( LIVN ) Receives U.S. FDA 510(k) Clearance for Essenz Heart-Lung Machine for Cardiopulmonary Bypass Procedures

  • MediciNova ( MNOV ) receives additional extension of BARDA contract to develop MN-166

  • Merck ( MRK ) reports KEYTRUDA plus chemotherapy significantly improved overall survival versus chemotherapy alone as first-line treatment for advanced malignant pleural mesothelioma

  • Meta Platforms ( META 1.20% ) building new social network, according to Platformer

  • National Fuel Gas ( NFG ) announces planned transition for Principal Financial Officer, effective May 1, 2023

  • Neurocrine Biosciences ( NBIX ) Announces Results from the Real-World RE-KINECT Study Published in the Journal of Patient-Reported Outcomes Demonstrating the Effects of Possible Tardive Dyskinesia (TD) on Patient Health and Social Functioning

  • Norfolk Southern ( NSC 1.29% ) determines urgent railcar safety issue

  • Petrobras ( PBR ) CEO Jean Paul Prates and Shell (SHEL) CEO Wael Sawan sign Memorandum of Understanding to encourage collaboration between the two firms; will work together on identifying potential upstream opportunities

  • Pfizer's ( PFE ) ZAVZPRET (zavegepant) migraine nasal spray receives FDA approval

  • Roche Hldg ( RHHBY ) receives FDA Advisory Committee Votes in favor of the clinical benefit of Genentech's Polivy combination

  • Seagen ( SGEN ) and Astellas (ALPMY) receive China's National Medical Products Administration accepts Biologics License Application for Enfortumab Vedotin

  • SVB Financial Group ( SIVB 44.08% ): Founders Fund, the VC fund co-founded by Peter Thiel, has advised cos to pull money from Silicon Valley Bank, according to Bloomberg

  • Toll Brothers ( TOL ) increases quarterly cash dividend 5% to $0.21/share from $0.20/share

  • Victory Capital ( VCTR ) reports assets under management of $157.7 billion as of February 28, 2023; average AUM for February of $160.2 bln

M&A:

  • Altra Industrial Motion ( AIMC ): EC clears acquisition of Altra Industrial Motion by Regal Rexnord (RRX)

  • Bank of Montreal ( BMO ) confirms agreement to acquire LoyaltyOne's AIR MILES reward program business

  • Hut 8 Mining ( HUT ) provides update on business combination with USBTC; received a no-action letter from the Competition Bureau of Canada

  • Nano Dimension ( NNDM ) makes formal offer to acquire Stratasys (SSYS) for $18.00/share in cash valued at approximately $1.1 bln

  • Trinity Industries ( TRN ) acquires RSI Logistics for $70 mln

Syndicate:

  • Republic First ( FRBK ) announces $125 mln equity capital raise; Castle Creek affiliates to lead investment round at a purchase price of $2.25 per share of common stock equivalent securities

  • Stagwell ( STGW 3.08% ) prices secondary offering of 16.0 mln shares of common stock at $6.75 per share

IPOs:

  • Expected to Price:

  • No IPOs expected.


Gapping Up/Down

  • Gapping up:

  • SSYS +14.4%, HRT +8%, ENVX +6.8%, AZUL +4.1%, SWBI +3.7%, AB +3.5%, TRN +2.6%, BEN +2.5%, AOUT +2.1%, HCP +1.2%, LIVN +0.5%


  • Gapping down:

  • SIVB -42.5%, BIRD -22.9%, DOCU -13.5%, AVO -11.3%, ZUMZ -9.9%, GPS -5.9%, NNDM -4.5%, AVPT -4.5%, VCTR -4.3%, ORCL -4%, MTN -2.1%, ULTA -1.3%, CME -1.2%, NSC -1%, TTMI -0.8%, TSM -0.6%, TOL -0.5%, WPC -0.5%, CL -0.5%


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

  • Upgrades

  • Alaska Air (ALK) upgraded to Overweight from Equal Weight at Barclays; tgt raised to $62

  • PLAYSTUDIOS (MYPS) upgraded to Buy from Hold at Craig Hallum; tgt raised to $5

  • Roblox (RBLX) upgraded to Buy from Hold at Jefferies; tgt raised to $48

  • United Airlines (UAL) upgraded to Overweight from Equal Weight at Barclays; tgt raised to $80


  • Downgrades:

  • Allegiant Travel (ALGT) downgraded to Equal Weight from Overweight at Barclays; tgt raised to $105

  • Apple (AAPL) downgraded to Sell from Neutral at LightShed Partners; tgt $120

  • Fulcrum Therapeutics (FULC) downgraded to Neutral from Outperform at Credit Suisse; tgt lowered to $8

  • Southwest Air (LUV) downgraded to Equal Weight from Overweight at Barclays; tgt lowered to $38


  • Others:

  • Eldorado Gold (EGO) resumed with an Underperform at BofA Securities; tgt $8.90

  • Pool (POOL) initiated with an Outperform at Oppenheimer; tgt $408

  • Privia Health (PRVA) initiated with an Outperform at RBC Capital Mkts; tgt $36

  • Rivian Automotive (RIVN) resumed with a Buy at BofA Securities; tgt lowered to $40

  • Voyager Therapeutics (VYGR) initiated with an Outperform at Oppenheimer; tgt $14


Upcoming Events:

  • Econ Data:

  • 08:30 ET: Nonfarm Payrolls for Feb (Briefing.com Consensus 205K; Prior 517K)

  • 08:30 ET: Nonfarm Private Payrolls for Feb (Briefing.com Consensus 203K; Prior 443K)

  • 08:30 ET: Unemployment Rate for Feb (Briefing.com Consensus 3.4%; Prior 3.4%)

  • 08:30 ET: Avg. Hourly Earnings for Feb (Briefing.com Consensus 0.3%; Prior 0.3%)

  • 08:30 ET: Average Workweek for Feb (Briefing.com Consensus 34.6; Prior 34.7)

  • 14:00 ET: Treasury Budget for Feb (Briefing.com Consensus NA; Prior -$38.8B)


  • 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 -1.7%, Hang Seng -3.0%, Shanghai Composite -1.4%

Equity indices in the Asia-Pacific region ended the week on a broadly lower note. China's President Xi received unanimous support for a third term. The Bank of Japan made no changes to its policy stance in Governor Kuroda's final policy meeting. Meanwhile, the appointment of Kazuo Ueda was confirmed by Japan's government. South Korea reported a record current account deficit for January.

  • In economic data:

  • China's February New Loans CNY1.81 trln (expected CNY1.50 trln; last CNY4.90 trln) and February total social financing CNY3.16 trln (expected CNY2.20 trln; last CNY5.98 trln)

  • Japan's February PPI -0.4% m/m (expected -0.3%; last 0.7%); 8.2% yr/yr (expected 8.4%; last 9.5%). January Household Spending 2.7% m/m (expected 1.4%; last -2.1%); -0.3% yr/yr (expected -0.1%; last -1.3%)

  • South Korea's January Current Account deficit $4.52 bln (last surplus of $2.68 bln)

  • New Zealand's February Business PMI 52.0 (last 50.8). Q4 Manufacturing Sales Volume -4.7% qtr/qtr (last 3.1%)


---Equity Markets---

  • Japan's Nikkei: -1.7% (+0.8% for the week)

  • Hong Kong's Hang Seng: -3.0% (-6.1% for the week)

  • China's Shanghai Composite: -1.4% (-3.0% for the week)

  • India's Sensex: -1.1% (-1.1% for the week)

  • South Korea's Kospi: -1.0% (-1.5% for the week)

  • Australia's ASX All Ordinaries: -2.2% (-1.8% for the week)

---FX---

  • USD/JPY: +0.5% to 136.78

  • USD/CNH: -0.2% to 6.9596

  • USD/INR: UNCH at 82.03

Europe: DAX -1.2%, FTSE -1.7%, CAC -1.1%

Major European indices trade in negative territory. Bank stocks are under pressure amid concerns about fallout from the collapse of SVB Financial. Norway's stats office raised its domestic 2023 growth forecast to 1.3% from 1.2% and raised the inflation forecast to 5.4% from 4.4%. Junior doctors in the U.K. are planning a 72-hour strike for next week. Sweden and Finland will meet with Turkish officials in search of support for NATO accession.

  • In economic data:

  • Germany's February CPI 0.8% m/m, as expected (last 1.0%); 8.7% yr/yr, as expected (last 8.7%)

  • U.K.'s January GDP 0.3% m/m (expected 0.1%; last -0.5%). January Industrial Production -0.3% m/m (expected -0.1%; last 0.3%); -4.3% yr/yr (expected -4.0%; last -4.0%). January Manufacturing Production -0.4% m/m (expected -0.1%; last 0.0%); -5.2% yr/yr (expected -5.0%; last -5.7%). January Construction Output -1.7% m/m (expected -0.1%; last -0.5%); 0.6% yr/yr (expected 2.4%; last 3.7%). January trade deficit GBP17.86 bln (expected deficit of GBP17.75 bln; last deficit of GBP19.27 bln)

  • France's January trade deficit EUR12.90 bln (last deficit of EUR14.70 bln)

  • Italy's January PPI -7.5% m/m (last 2.9%); 11.1% yr/yr (last 31.7%)

  • Spain's January Retail Sales 5.5% yr/yr (last 4.8%)


---Equity Markets---

  • STOXX Europe 600: -1.2% (-2.1% week-to-date)

  • Germany's DAX: -1.2% (-0.9% week-to-date)

  • U.K.'s FTSE 100: -1.7% (-2.5% week-to-date)

  • France's CAC 40: -1.1% (-1.5% week-to-date)

  • Italy's FTSE MIB: -1.5% (-1.9% week-to-date)

  • Spain's IBEX 35: -1.4% (-1.8% week-to-date)

---FX---

  • EUR/USD: +0.1% to 1.0588

  • GBP/USD: +0.5% to 1.1982

  • USD/CHF: -0.4% to 0.9286


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