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10/10/23 Briefing


The S&P 500 futures are flat and are trading in line with fair value. The Nasdaq 100 futures are down 2 point and are trading roughly in line with fair value. The Dow Jones Industrial Average futures are up 29 points and are trading 0.1% above fair value.

The stock market is poised for a higher open following yesterday's afternoon rally. A drop in market rates has contributed to the positive bias despite ongoing geopolitical uncertainty around the situation in Israel and Gaza. 

The 2-yr note yield is down six basis points to 5.00% and the 10-yr note yield is down eight basis points to 4.70%.

WTI crude oil futures are down 0.6% to $85.95/bbl after climbing 4.0% yesterday. 

In other news, the IMF lowered its 2024 global growth outlook to 2.9% from 3.0%. 

China's troubled property developer Country Garden missed another bond payment and warned of liquidity pressures, stoking concerns that it may end up announcing a restructuring of its offshore debt, according to Reuters.

Today's economic data is limited to the September NFIB Small Business Optimism at 6:00 a.m. ETand the August Wholesale Inventories report at 10:00 a.m. ET.

In corporate news:

  • Unity Software (U 31.50, +1.80, +6.1%): Chairman and CEO John Riccitiello to retire; James M. Whitehurst appointed Interim CEO, effective immediately; Roelof Botha, Lead Independent Director, appointed Chairman; reiterates Q3 guidance

  • PepsiCo (PEP 162.68, +1.32, +0.8%): beats by $0.10, reports revs in-line; raises FY23 EPS above consensus

  • PG&E (PCG 12.42, -0.16, -1.0%) will pay $45 mln penalty for California wildfire, according to Bloomberg

  • Rivian (RIVN 19.38, +0.60, +3.2%): upgraded to Buy from Neutral at UBS

  • General Motors (GM 31.08, +0.09, +0.3%): Unifor members begin strike at GM

  • Electronic Arts (EA 126.81, +2.22, +1.8%): upgraded to Buy from Neutral at BofA Securities

  • Honeywell (HON 188.81, +2.29, +1.2%): realigns portfolio; sees Q3 revs in-line with expectations; EPS within or above prior guidance

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region ended Tuesday's session mostly higher, with China and South Korea the underperforming exceptions. Japan's Nikkei: +2.5%, Hong Kong's Hang Seng: +0.8%, China's Shanghai Composite: -0.7%, India's Sensex: +0.9%, South Korea's Kospi: -0.3%, Australia's All Ordinaries: +1.0%.

  • In economic data:

  • Japan's August Current Account JPY2.280 trln (expected JPY3.091 trln; last JPY2.772 trln); September Economy Watchers Current Index 49.9 (expected 53.2; last 53.6)

  • Australia's September NAB Business Confidence 1.0 (last 1.0)

  • In news:

  • China's challenges had links to property developer Country Garden, which didn't make a scheduled debt payment and warned of liquidity pressures, fomenting concerns that it may end up announcing a restructuring of its offshore debt, according to Reuters.

  • That news seemingly trumped a Bloomberg report that said China is considering increasing its budget deficit for 2023 as part of a plan to introduce more stimulus.

  • Japan's Nikkei looked stimulated on the return from a three-day weekend, rising 2.5% to score its largest jump in nine months.

  • Major European indices are trading with a decidedly positive disposition, taking their cue it seems from the U.S. market, which traded higher on Monday despite the uncertainty surrounding the Israel-Hamas War. STOXX Europe 600: +1.6%, Germany's DAX: +1.7%, U.K.'s FTSE 100: +1.7%, France's CAC 40: +1.6%, Italy's FTSE MIB: +1.8%, Spain's IBEX 35: +1.9%.

  • In economic data:

  • Italy's August Industrial Production +0.2% m/m (expected 0.0%; last -0.9%) and -4.2% yr/yr (expected -5.0%; last -2.3%)

  • In news:

  • Thus far, there has been no indication of a broadening out of that two-party war, so today's rally effort is a bit of a relief trade that worst-case scenarios have not unfolded.

  • That view has tempered the move in oil and natural gas prices, which is a plus for Europe.

  • Separately, Bank of England member Mann in a speech to the NABE maintained a tough line about the need to be more aggressive with monetary policy to prevent a drift in inflation expectations and inflation staying above target.

 

U.S. equity futures:

  • S&P 500 Futures -1 @ 4,335

  • DJIA Futures: +23 @ 33,627

  • Nasdaq 100 Futures: -1 @ 15,046

Overseas:

  • Europe: DAX +1.7% FTSE +1.7%, CAC +1.6%

  • Asia: Nikkei +2.5%, Hang Seng +0.8%, Shanghai Composite -0.7%

Commodities:

  • Crude Oil -0.30 @ 86.08

  • Nat Gas +0.052 @ 3.428

  • Gold +5.50 @ 1869.80

  • Silver -0.107 @ 21.817

  • Copper -0.0435 @ 3.6025

Earnings/Guidance:

  • BMW Group (BMWYY) reports third-quarter sales up +5.8%; BEV deliveries climb +79.6% in Q3

  • Honeywell (HON) realigns portfolio; sees Q3 revs in-line with expectations; EPS within or above prior guidance

  • NASDAQ (NDAQ) releases September and Q3 metrics

  • Neogen (NEOG) beats by $0.08, reports revs in-line; reaffirms FY24 revs guidance

  • PepsiCo (PEP) beats by $0.10, reports revs in-line; raises FY23 EPS above consensus

  • Public Service (PEG) sees +5-7% long-term earnings growth rate for 2023-2027

  • Terreno Realty (TRNO) reports Q3 operating data

News:

  • Israel regained control over towns near Gaza and prepares for next phase of the war, according to the New York Times

  • White House confirms at least 11 American citizens were among those killed in Israel

  • China property company Country Garden failed to make debt payment, according to the Wall Street Journal

  • China considers stimulus and additional deficit spending, according to Bloomberg

  • IMF says global recovery remains slow, with growing regional divergences and little margin for policy error

  • EU planning investigation of Chinese steel makers, according to Financial Times

  • Gartner says worldwide PC shipments fell 9% in Q3, but are expected to expand in Q4

  • WGA ratifies 2023 tentative agreement with AMPTP

  • Office vacancies in US and London reach 20 year highs, according to Financial Times

  • Air Lease (AL) announced an update on aircraft investments and sales activities occurring in the third quarter of 2023

  • Akero Therapeutics (AKRO) reports encouraging 36-week analysis of 96-week phase 2b symmetry study, with a trend on fibrosis improvement and statistically significant results for nash resolution, markers of liver injury and fibrosis, insulin sensitization and lipoproteins

  • Annexon (ANNX) announces clinical and regulatory progress for ANX005 pivotal program in guillain-barr syndrome

  • Associated Capital Group (AC) reports preliminary September 30 book value of $41.35 to $41.55 per share

  • BridgeBio Pharma (BBIO) announces New England Journal of Medicine publication of positive encaleret proof-of-concept phase 2b results in patients with autosomal dominant hypocalcemia type 1

  • Brookdale Senior Living (BKD) reports September 2023 occupancy; increased 60 bps from August to 78.2%

  • Carpenter Tech (CRS) to increase base prices on specialty alloy portfolio

  • Cohen & Steers (CNS) reports preliminary assets under management of $75.2 bln as of September 30, 2023, a decrease of $4.9 billion from assets under management at August 31, 2023

  • Coherent (COHR) announced that Denso (DNZOY) and Mitsubishi Electric (MIELY) have agreed to invest $1 billion in its silicon carbide business; COHR narrows Q1 revs guidance

  • Cryoport (CYRX) and Be The Match BioTherapies form new strategic partnership to expand the capabilities of IntegriCell for the global cell therapy market

  • Enerflex (EFXT) appoints Preet Dhindsa as interim Chief Financial Officer

  • Equinor (EQNR) says world's largest offshore wind farm Dogger Bank produces power for the first time

  • Fluor (FLR) receives five-year contract extension for US Naval nuclear propulsion program

  • Fortuna Silver Mines (FSM) pays down $40 mln of debt from increased cash flow

  • General Motors (GM): Unifor members begin strike at GM

  • Hut 8 Mining (HUT) reports Sept metrics

  • Kamada (KMDA) continues to conduct its business operations in Israel with no effect on business continuity, and its global supply of products is not expected to be interrupted

  • Lexicon Pharmaceuticals (LXRX): INPEFA (Sotagliflozin) Receives Preferred Formulary Status With Express Scripts For Medicare Patients

  • Merck (MRK) announces pivotal KEYNOTE-671 trial meets dual primary endpoint of overall survival in resectable stage II, IIIA or IIIB non-small cell lung cancer

  • Merck (MRK) highlights innovative oncology portfolio and pipeline at ESMO Congress 2023 underscoring commitment to advancing cancer research and improving patient outcomes across multiple stages of disease

  • Mistras Group (MG) announces leadership changes; CEO departs

  • Mobilicom Ltd. (MOB) announces extension to voluntarily delisting date

  • Oceaneering Intl (OII) subsidiary secures five-year contract from Petrobras (PBR) for the operation of three existing drill pipe riser systems; valued up to $75 mln during the five-year period

  • Oculis Holding AG (OCS) reports "positive" phase 3 stage 1 DIAMOND trial results of OCS-01 in diabetic macular edema presented at 23rd EURETINA Congress

  • Olema Pharmaceuticals (OLMA) announces an amendment to our existing clinical collaboration and supply agreement with Novartis Institutes for BioMedical Research to increase the size of the ongoing Phase 1/2 clinical study testing palazestrant in combination with ribociclib to approximately 60 patients

  • Par Pacific (PARR), U.S. Oil & Refining Co., and McChord Pipeline entered into that certain Wind-Down and Termination Agreement

  • Poseida Therapeutics (PSTX) appoints Mark Gergen as Executive Chairman and Kristin Yarema as President and CEO, each expected to be effective January 1

  • Roche Hldg (RHHBY): Genentech's Vabysmo Maintained Vision Improvements With Extended Treatment Intervals Up to Four Months for People With Retinal Vein Occlusion (RVO) in Phase III Trials

  • Standard Lithium's (SLI) East Texas drilling program delivers new highest confirmed grade lithium brine in North America

  • Stellantis (STLA) announces due to UAW strike actions, Stellantis announces additional 570 employees on layoff

  • Supernus Pharma (SUPN) resubmits NDA for SPN-830 Apomorphine Infusion Device

  • Unity Software (U) Chairman and CEO John Riccitiello to retire; James M. Whitehurst appointed Interim CEO, effective immediately; Roelof Botha, Lead Independent Director, appointed Chairman; reiterates Q3 guidance

  • Ventyx Biosciences (VTYX) Announces Positive Results from the Phase 2 Trial of VTX002 in Patients with Moderate-to-Severely Active Ulcerative Colitis

  • Xenon Pharmaceuticals (XENE) announces publication of results from XEN1101 Phase 2b 'X-TOLE' clinical trial in Peer-Reviewed journal article in JAMA Neurology

  • Zevra Therapeutics (ZVRA) appoints Neil McFarlane as President and CEO

M&A:

  • Haemonetics (HAE) acquires OpSens for $253 mln

  • MiX Telematics (MIXT): PowerFleet (PWFL) and MIXT announce business combination

  • Truist (TFC) in talks to sell insurance unit for $10 bln, according to Semofor

Syndicate:

  • Burford Capital (BUR) issuance of new ordinary shares in connection with LTIP

  • PagerDuty (PD) announces proposed private placement of $350 million of convertible senior notes

  • Uranium Royalty (UROY) has entered into an agreement with a syndicate of underwriters, led by BMO Capital Markets as sole bookrunner, under which the underwriters have agreed to purchase, on a bought deal basis, 10,205,000 common shares, at a price of $2.94/share, for gross proceeds of approximately $30 mln

IPOs:

  • Expected to Price:

  • Birkenstock Holding (NYSE: BIRK): The Germany-based maker of sandals and footwear is expected to price its 32.3 M share IPO price between $44-$49.

Gapping Up/Down

  • Gapping up:

  • NSTG +20%, AKRO +14.1%, U +7.7%, LXRX+7%, H +5.3%, PSTX +4.4%, PEP +2.8%, STLA +2.7%, BKD +1.6%, AOS +1.5%, NDAQ+1%, INMD +0.8%, HON +0.8%, FLR +0.6%

  • Gapping down:

  • VTYX -17.5%, PD -6.2%, XENE -0.7%

 

Analyst Research (see Upgrades/Downgradescalendarfor full list):

  • Upgrades

  • ACADIA Pharmaceuticals (ACAD) upgraded to Overweight from Neutral at JP Morgan; tgt raised to $32

  • Ameris Bancorp (ABCB) upgraded to Buy from Neutral at DA Davidson; tgt $44

  • Electronic Arts (EA) upgraded to Buy from Neutral at BofA Securities; tgt raised to $150

  • Omega Health (OHI) upgraded to Buy from Neutral at BofA Securities; tgt $36

  • Pinnacle Finl (PNFP) upgraded to Hold from Underperform at Jefferies; tgt $71

  • Rivian Automotive (RIVN) upgraded to Buy from Neutral at UBS; tgt lowered to $24

  • Sabra Health Care REIT (SBRA) upgraded to Buy from Neutral at BofA Securities; tgt raised to $16

  • Downgrades:

  • Corning (GLW) downgraded to Neutral from Overweight at JP Morgan; tgt lowered to $36

  • Juniper Networks (JNPR) downgraded to Neutral from Overweight at JP Morgan; tgt lowered to $29

  • NETSTREIT (NTST) downgraded to Underperform from Neutral at BofA Securities; tgt lowered to $15

  • NextEra Energy Partners (NEP) downgraded to Neutral from Buy at UBS; tgt lowered to $20

  • Realty Income (O) downgraded to Neutral from Buy at BofA Securities; tgt lowered to $52

  • Spirit Realty Capital (SRC) downgraded to Underperform from Neutral at BofA Securities; tgt lowered to $33

  • Starwood Property Trust (STWD) downgraded to Mkt Perform from Outperform at Keefe Bruyette; tgt lowered to $20

  • Others:

  • Dollar General (DG) initiated with a Neutral at Exane BNP Paribas; tgt $116

  • Dollar Tree (DLTR) initiated with an Outperform at Exane BNP Paribas; tgt $139

  • Mannkind (MNKD) initiated with an Outperform at Wedbush; tgt $10

  • Northern Trust (NTRS) resumed with a Buy at BofA Securities; tgt $90

  • Popular (BPOP) initiated with a Neutral at BofA Securities; tgt $63

Econ Data:

  • 06:00 ET: NFIB Small Business Optimism for Sep (Briefing.comConsensus NA; Prior 91.3)

  • 10:00 ET: Wholesale Inventories for Aug (Briefing.comConsensus -0.1%; Prior -0.2%)

Earnings:

  • Monday (Oct 9)

  • Morning: None

  • Afternoon: None

  • Tuesday (Oct 10)

  • Morning: NEOG, PEP

  • Afternoon:  AZZ

  • Wednesday (Oct 11)

  • Morning: None

  • Afternoon: None

  • Thursday (Oct 12)

  • Morning: DAL, DPZ, FAST, WBA

  • Afternoon: SGH

  • Friday (Oct 13)

  • Morning: BLK, C, UNH, JPM, WFC

  • Afternoon: None

 

Asia & Europe detail:

Asia: Nikkei +2.5%, Hang Seng +0.8%, Shanghai Composite -0.7%

Equity indices in the Asia-Pacific region ended Tuesday's session mostly higher, with China and South Korea the underperforming exceptions. China's challenges had links to property developer Country Garden, which didn't make a scheduled debt payment and warned of liquidity pressures, fomenting concerns that it may end up announcing a restructuring of its offshore debt, according to Reuters. That news seemingly trumped a Bloomberg report that said China is considering increasing its budget deficit for 2023 as part of a plan to introduce more stimulus. Japan's Nikkei looked stimulated on the return from a three-day weekend, rising 2.5% to score its largest jump in nine months.

  • In economic data:

  • Japan's August Current Account JPY2.280 trln (expected JPY3.091 trln; last JPY2.772 trln); September Economy Watchers Current Index 49.9 (expected 53.2; last 53.6)

  • Australia's September NAB Business Confidence 1.0 (last 1.0)

---Equity Markets---

  • Japan's Nikkei: +2.5%

  • Hong Kong's Hang Seng: +0.8%

  • China's Shanghai Composite: -0.7%

  • India's Sensex: +0.9%

  • South Korea's Kospi: -0.3%

  • Australia's All Ordinaries: +1.0%

---FX---

  • USD/JPY: +0.3% to 148.94

  • USD/CNH: +0.1% to 7.2990

  • USD/INR: -0.2% to 83.254

 

Europe: DAX +1.7% FTSE +1.7%, CAC +1.6%

Major European indices are trading with a decidedly positive disposition, taking their cue it seems from the U.S. market, which traded higher on Monday despite the uncertainty surrounding the Israel-Hamas War. Thus far, there has been no indication of a broadening out of that two-party war, so today's rally effort is a bit of a relief trade that worst-case scenarios have not unfolded. That view has tempered the move in oil and natural gas prices, which is a plus for Europe. Separately, Bank of England member Mann in a speech to the NABE maintained a tough line about the need to be more aggressive with monetary policy to prevent a drift in inflation expectations and inflation staying above target.

  • In economic data:

  • Italy's August Industrial Production +0.2% m/m (expected 0.0%; last -0.9%) and -4.2% yr/yr (expected -5.0%; last -2.3%)

---Equity Markets---

  • STOXX Europe 600: +1.6%

  • Germany's DAX: +1.7%

  • U.K.'s FTSE 100: +1.7%

  • France's CAC 40: +1.6%

  • Italy's FTSE MIB: +1.8%

  • Spain's IBEX 35: +1.9%

---FX---

  • EUR/USD: +0.3% to 1.0589

  • GBP/USD: +0.1% to 1.2249

  • USD/CHF: -0.1% to 0.

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