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10/10/22 Briefing


The S&P 500 futures are down 4 points and are trading 0.1% below fair value. The Nasdaq 100 futures are down 23 points and are trading 0.2% below fair value. The Dow Jones Industrial Average futures are down 14 points and are trading roughly in-line with fair value.

Equity futures indicate a lower thanks to negative carryover momentum from Friday'sretreat; however, they are off their overnight lows. There is some hesitation ahead of the FOMC minutes from the September meeting on Wednesday, new inflation data with PPI out on Wednesday and CPI out on Thursday, and earnings reports from major financial institutions on Friday. 

The Bank of England announced additional measures to support market functioning ahead of, and following, the expiration of its Gilt purchases on October 14.

Reports indicate that COVID cases are rebounding in China, pressuring stocks with high exposure to that market, and that Russia is stepping up its missile attacks on Ukraine following the Crimea bridge blast over the weekend. 

Energy complex futures are mixed. WTI crude oil futures are down 0.8% to $91.91/bbl and natural gas futures are up 0.5% to $6.78/mmbtu. 

The U.S Treasury market is closed today for a holiday. 

There is no U.S. economic data of note today.

In corporate news:

  • Kraft Heinz (KHC 33.70 +0.67 +2.03%): upgraded to buy from neutral at Goldman

  • Procter & Gamble (PG 122.72 -1.55 -1.25%): downgraded to neutral from buy at Goldman

  • Ford (F 11.73 -0.47 -3.85%): downgraded to Sell from Neutral at UBS

  • General Motors (GM 32.43 -1.19 -3.54%): downgraded to Neutral from Buy at UBS

  • Tesla (TSLA 222.21 -0.86 -0.39%):  delivered 83,135 China produced EVs last month, according to Reuters.

  • Merck & Co. (MRK 89.75 +2.15 +2.45%): announces positive top-line results from pivotal phase 3 stellar trial evaluating Sotatercept for the treatment of adults with pulmonary arterial hypertension; upgraded to Buy from Neutral at Guggenheim

  • Rivian (RIVN 31.17 -2.78 -8.19%): aiming to recall nearly all of its vehicles due to a steering issue, according to The Wall Street Journal.

  • Las Vegas Sands (LVS 41.26 -1.24 -2.92%): lower amid reports that COVID cases are rebounding in China, according to Bloomberg.

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region began the week on a lower note while markets in Japan and South Korea were closed for holidays. Japan's Nikkei: CLOSED, Hong Kong's Hang Seng: -3.0%, China's Shanghai Composite: -1.7%, India's Sensex: -0.3%, South Korea's Kospi: CLOSED, Australia's ASX All Ordinaries: -1.5%.

  • In economic data:

  • China's September Caixin Services PMI 49.3 (expected 54.5; last 55.0)

  • Australia's September AIG Services Index 48.0 (last 53.5)

  • In news:

  • China's Shanghai Composite (-1.7%) retreated after returning from a weeklong break.

  • Bank of Korea warned that about 380,000 South Korean households are at a high risk of default due to excessive debt.

  • China's Caixin Services PMI returned into contractionary territory in the September reading.

  • Japan's Prime Minister Kishida is expected to meet with his Australian counterpart in Perth later this month.

  • Major European indices trade on a mostly lower note while Germany's DAX (+0.6%) outperforms. STOXX Europe 600: -0.1%, Germany's DAX: +0.6%, U.K.'s FTSE 100: -0.2%, France's CAC 40: -0.2%, Italy's FTSE MIB: -0.1%, Spain's IBEX 35: -0.2%.

  • In economic data:

  • Eurozone's October Sentix Investor Confidence -38.3 (expected -34.7; last -31.8)

  • In news:

  • BMW reported a 0.9% yr/yr decrease in unit sales in Q3 and reaffirmed its sales guidance for the year.

  • The Bank of England announced that the limit for Gilt purchases was doubled to GBP10 bln but the program is still due to expire on Friday.

  • The British government is expected to announce a medium-term fiscal plan on October 31.

  • Renault is reportedly being pressured by Nissan to reduce its stake in Nissan to 15%.

 

U.S. equity futures:

  • S&P 500 Futures: -3 @ 3,637

  • DJIA Futures: -4 @ 29,293

  • Nasdaq 100 Futures: -15 @ 11,024

Overseas:

  • Europe: DAX +0.6%, CAC -0.2%, FTSE -0.1%

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

Commodities:

  • Crude Oil -0.75 @ 91.91

  • Nat Gas  +0.031 @ 6.779

  • Gold -25.30 @ 1684.00

  • Silver -0.443  @ 19.812

  • Copper +0.0500 @ 3.4365

U.S. Summary:

  • Earnings/Guidance:

  • No earnings news of note.

  • General News:

  • Fed officials want to raise rates to 4.5% and hold them there, according to Bloomberg

  • Russia fired missiles into Kyiv and other Ukrainian cities. Ukraine was preparing for a retaliatory strike following explosion that damaged a bridge that connected Russia with Crimea, according to the New York Times

  • Bank of England announces additional measures to support market functioning

  • Paris is shutting down electricity to various monuments to save energy, according to the Wall Street Journal

  • Treasury Secretary Janet Yellen in interview says OPEC production cut is bad for the global economy, according to the Financial Times

  • Coronavirus cases are rebounding in China, according to Bloomberg

  • White House issues readout of President Biden's call with Chancellor Olaf Scholz of Germany

  • Banks will likely provision $4 bln for bad loans, according to Financial Times

  • Saudi Aramco will maintain oil supplies to Asia despite production cuts, according to Reuters

  • Half of Medicare beneficiaries will have a private Medicare Advantage plan by 2023 despite fraud allegations, according to the New York Times

  • Abbott Labs (ABT): FDA issues Emergency Use Authorization to Abbott Molecular for the Alinity m MPXV

  • Azul S.A. (AZUL) announces preliminary traffic results for September

  • Blackrock (BLK) lost $1 bln in asset management business from Republican states due to criticism of ESG policies, according to Financial Times

  • FREYR Battery (FREY) signs license and services agreement with Aleees to produce active cathode material

  • Gaming and Leisure Properties (GLPI) and PENN Entertainment (PENN) agree to new master lease terms and development funding

  • GlaxoSmithKline (GSK) receives FDA approval for Boostrix

  • HUTCHMED (HCM) Initiates a Phase II/III Trial of Sovleplenib for Warm Antibody Autoimmune Hemolytic Anemia in China

  • Immatics N.V. (IMTX) announces a clinical data update for the IMA203 monotherapy covering the completed Phase 1a dose escalation part of the trial and initial data from the first 5 patients in the ongoing Phase 1b dose expansion cohort A

  • Iovance Biotherapeutics (IOVA) announces first patient dosed with PD-1 inactivated tumor infiltrating lymphocyte therapy

  • KalVista Pharmaceuticals (KALV) Presents New Patient-Centric Data at 2022 HAEi Global Leadership Workshop

  • Lockheed Martin (LMT): DOD issues statement for acquisition and sustainment william laplante on F-35 waiver

  • Merck (MRK) announces positive top-line results from pivotal phase 3 stellar trial evaluating Sotatercept for the treatment of adults with pulmonary arterial hypertension

  • Meta Platforms (META): FTC pares back lawsuit seeking to block acquisition of co with virtual-reality fitness apps, according to the Wall Street Journal

  • National Grid (NGG) provides H1 pre-close update

  • Nevro (NVRO) comments on UnitedHealthcare (UNH) medical coverage policy update; does not expect this coverage decision to have a material impact on its go-forward revenue, and currently estimates the potential impact on 2023 revenues could be no more than the low to mid-single digit millions of dollars

  • Post (POST) confirmed COO Howard A. Friedman will be leaving Post Holdings effective December 15, 2022, to join Utz Brands (UTZ), as announced by Utz on October 3, 2022

  • PyroGenesis Canada (PYR) announces that the negotiation for the land-based system to destroy PFAS contract has been suspended and discontinued

  • Pzena (PZN) announced that it has received all regulatory approvals required under the merger agreement to complete the proposed transaction announced on July 26, 2022

  • Restaurant Brands Intl (QSR): Burger King aiming to direct $400 million to advertising and restaurant remodels, according to the Wall Street Journal

  • Rivian Automotive (RIVN) aiming to recall nearly all of its vehicles due to a steering issue, according to the Wall Street Journal

  • Stellantis (STLA) signs non-binding MOU with GME Resources for future offtake of battery grade nickel and cobalt sulphate

  • Tesla (TSLA) delivered 83,135 China produced EVs last month, according to Reuters

  • Teva Pharma (TEVA) says it will have challenges supplying Adderall for the next 2-3 months, according to Bloomberg

  • Teva Pharma (TEVA): EU Commission sends statement of objections to TEVA over misuse of the patent system and disparagement of rival multiple sclerosis medicine

  • M&A:

  • Chardan NexTech Acquisition 2 Corp. (CNTQ): Dragonfly Energy completes business combination with Chardan NexTech Acquisition 2 Corp. and commences trading on Nasdaq under ticker symbol 'DFLI'

  • Syndicate

  • CCC Intelligent Solutions (CCCS) files for 17.8 mln common share offering; also files for 483,499,227 share common stock offering by selling shareholders

  • Definitive Healthcare (DH) files mixed securities shelf offering

  • Heron Therapeutics (HRTX) files for 24,677,419 share common stock offering by selling shareholders

  • Immatics N.V. (IMTX) has agreed to sell, by way of an underwritten public offering, 10,905,000 of its ordinary shares at a price of $10.09/share

  • MasTec (MTZ) files for 128,205 share common stock offering, relates to warrants

  • Tilray (TLRY) files mixed securities shelf offering

  • Vicarious Surgical (RBOT) files for $400 mln mixed securities shelf offering

  • IPOs:

  • Expected to Price:

  • No IPOs expected.

Gapping Up/Down

  • Gapping up:

  • PYR +5.9%, VXX +2.2%, LMT +1%, GSK +0.5%

  • Gapping down:

  • RIVN -5.9%, EDU -5.4%, HRTX -3.3%, TLRY -2.5%, AZUL -1.9%, TEVA -1.9%, RBOT -1.8%, BKNG -1.1%, KALV -1%, CCCS -0.9%, QCOM -0.8%, NGG -0.8%

 

Analyst Research (see Upgrades/Downgradescalendarfor full list):

  • Upgrades

  • AENA (ANNSF) upgraded to Buy from Neutral at Goldman

  • Fortinet (FTNT) upgraded to Overweight from Equal-Weight at Morgan Stanley; tgt raised to $69

  • Kraft Heinz (KHC) upgraded to Buy from Neutral at Goldman; tgt $43

  • Kroger (KR) upgraded to Outperform from Neutral at Exane BNP Paribas; tgt $51

  • Merck (MRK) upgraded to Buy from Neutral at Guggenheim

  • Satsuma Pharmaceuticals (STSA) upgraded to Outperform from Mkt Perform at SVB Leerink; tgt $15

  • TELUS International (TIXT) upgraded to Neutral from Underperform at BofA Securities; tgt raised to $28

  • Toast (TOST) upgraded to Buy from Neutral at Mizuho; tgt raised to $24

  • Downgrades:

  • Affimed Therapeutics (AFMD) downgraded to Hold from Buy at Stifel; tgt lowered to $2

  • Argo Blockchain Plc (ARBK) downgraded to Equal Weight from Overweight at Barclays; tgt lowered to $3

  • Axonics Modulation (AXNX) downgraded to Hold from Buy at Needham

  • Bristol-Myers (BMY) downgraded to Neutral from Buy at Guggenheim

  • Ford Motor (F) downgraded to Sell from Neutral at UBS; tgt lowered to $10

  • General Motors (GM) downgraded to Neutral from Buy at UBS; tgt lowered to $38

  • Global Medical REIT (GMRE) downgraded to Neutral from Outperform at Robert W. Baird; tgt $9

  • H&M (HNNMY) downgraded to Sector Perform from Outperform at RBC Capital Mkts

  • Highwoods Prop (HIW) downgraded to Neutral from Outperform at Robert W. Baird; tgt $31

  • Kilroy Realty (KRC) downgraded to Neutral from Outperform at Robert W. Baird; tgt $49

  • Lincoln National (LNC) downgraded to Hold from Buy at Jefferies; tgt lowered to $51

  • Lowe's (LOW) downgraded to Hold from Buy at R5 Capital; tgt $223

  • Novozymes (NVZMY) downgraded to Underperform from Neutral at Exane BNP Paribas

  • Omega Health (OHI) downgraded to Neutral from Outperform at Robert W. Baird; tgt $30

  • Procter & Gamble (PG) downgraded to Neutral from Buy at Goldman; tgt $143

  • Qiagen (QGEN) downgraded to Neutral from Outperform at Oddo BHF; tgt $47

  • Sabra Health Care REIT (SBRA) downgraded to Neutral from Outperform at Robert W. Baird; tgt $13

  • Tata Motors (TTM) downgraded to Neutral from Overweight at JP Morgan

  • Tenable (TENB) downgraded to Neutral from Buy at BTIG Research

  • TTEC Holdings (TTEC) downgraded to Neutral from Buy at BofA Securities; tgt lowered to $48

  • Turning Point Brands (TPB) downgraded to Equal Weight from Overweight at Barclays; tgt lowered to $22

  • Ventas (VTR) downgraded to Neutral from Outperform at Robert W. Baird; tgt $38

  • Volkswagen AG (VWAGY) downgraded to Neutral from Buy at UBS

  • Welltower (WELL) downgraded to Neutral from Outperform at Robert W. Baird; tgt $66

  • Others:

  • American Intl (AIG) resumed with a Buy at BofA Securities; tgt $58

  • American Intl (AIG) resumed with a Buy at Goldman; tgt $83

  • Ascendis Pharma (ASND) placed on 90-day upside Catalyst Watch at Citigroup

  • Cipher Mining (CIFR) initiated with a Neutral at H.C. Wainwright; tgt $1.50

  • Corebridge Financial (CRBG) initiated with an Equal-Weight at Morgan Stanley; tgt $25

  • Corebridge Financial (CRBG) initiated with a Buy at BofA Securities; tgt $24

  • Corebridge Financial (CRBG) initiated with a Neutral at Goldman; tgt $23

  • Corebridge Financial (CRBG) initiated with an Outperform at RBC Capital Mkts; tgt $25

  • Corebridge Financial (CRBG) initiated with an Overweight at Piper Sandler

  • Corebridge Financial (CRBG) initiated with an Overweight at Wells Fargo; tgt $23

  • Etsy (ETSY) initiated with a Buy at Goldman; tgt $130

  • Grab (GRAB) initiated with an Equal Weight at Barclays; tgt $3

  • Howmet Aerospace (HWM) initiated with a Buy at BofA Securities; tgt $40

  • Third Harmonic Bio (THRD) initiated with an Outperform at Cowen

  • Third Harmonic Bio (THRD) initiated with an Overweight at Morgan Stanley; tgt $34

  • Wayfair (W) initiated with a Neutral at Goldman; tgt $36

Upcoming Events:

  • Econ Data:

  • No economic data of note.

  • Earnings

  • Tuesday (Oct 11)

  • Morning: AZZ

  • Afternoon:  PEP

  • Wednesday (Oct 12)

  • Afternoon:  DCT

  • Thursday (Oct 13)

  • Morning: BLK CMC DAL DPZ FAST PGR TSM WBA

  • Friday (Oct 14) 

  • Morning:  C FRC JPM MS PNC USB UNH WFC


Asia & Europe detail:

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

Equity indices in the Asia-Pacific region began the week on a lower note while markets in Japan and South Korea were closed for holidays. China's Shanghai Composite (-1.7%) retreated after returning from a weeklong break. Bank of Korea warned that about 380,000 South Korean households are at a high risk of default due to excessive debt. China's Caixin Services PMI returned into contractionary territory in the September reading. Japan's Prime Minister Kishida is expected to meet with his Australian counterpart in Perth later this month.

  • In economic data:

  • China's September Caixin Services PMI 49.3 (expected 54.5; last 55.0)

  • Australia's September AIG Services Index 48.0 (last 53.5)

---Equity Markets---

  • Japan's Nikkei: CLOSED 

  • Hong Kong's Hang Seng: -3.0%

  • China's Shanghai Composite: -1.7%

  • India's Sensex: -0.3%

  • South Korea's Kospi: CLOSED

  • Australia's ASX All Ordinaries: -1.5%

---FX---

  • USD/JPY: +0.1% to 145.52

  • USD/CNH: +0.4% to 7.1557

  • USD/INR: -0.5% to 82.36

 

Europe: DAX +0.6%, CAC -0.2%, FTSE -0.1%

Major European indices trade on a mostly lower note while Germany's DAX (+0.6%) outperforms. BMW reported a 0.9% yr/yr decrease in unit sales in Q3 and reaffirmed its sales guidance for the year. The Bank of England announced that the limit for Gilt purchases was doubled to GBP10 bln but the program is still due to expire on Friday. The British government is expected to announce a medium-term fiscal plan on October 31.Renault is reportedly being pressured by Nissan to reduce its stake in Nissan to 15%.

  • In economic data:

  • Eurozone's October Sentix Investor Confidence -38.3 (expected -34.7; last -31.8)

---Equity Markets---

  • STOXX Europe 600: -0.1%

  • Germany's DAX: +0.6%

  • U.K.'s FTSE 100: -0.2%

  • France's CAC 40: -0.2%

  • Italy's FTSE MIB: -0.1%

  • Spain's IBEX 35: -0.2%

---FX---

  • EUR/USD: -0.4% to 0.9701

  • GBP/USD: -0.3% to 1.1055

  • USD/CHF: +0.6% to 0.9991



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