11/09/23 Briefing

The S&P 500 futures are up 16 points and are trading 0.4% above fair value. The Nasdaq 100 futures are up 100 points and are trading 0.7% above fair value. The Dow Jones Industrial Average futures are up 33 points and are trading 0.1% above fair value.

Equity futures indicate a higher open after the market logged sizable declines last week. This week's calendar features some important economic releases, including the August Consumer Price Index on Wednesday, followed by the August Producer Price Index and Retail Sales report on Thursday. 

Treasury yields are moving higher. The 2-yr note yield is up two basis points to 4.99% and the 10-yr note yield is up 4.30%.

WTI crude oil futures are down 0.5% to $87.04/bbl.

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

In corporate news:

• Qualcomm (QCOM 114.22, +8.08, +7.6%): enters agreement with Apple (AAPL) for Snapdragon 5G Modem-RF Systems supply

• Meta Platforms (META 302.00, +4.11, +1.4%): looks to improve AI system, according to WSJ

• J.M. Smucker (SJM 138.00, -3.58, -2.5%): looking to buy Hostess Brands, according to WSJ

• Tesla (TSLA 263.57, +15.07, +6.1%): upgraded to Overweight from Equal Weight at Morgan Stanley

• RTX (RTX 80.92, -2.56, -3.1%): provides update on Pratt & Whitney GTF fleet; updates FY23 and FY25 outlooks; pre-tax operating profit impact is estimated to be between $3 billion and $3.5 billion over the next several years, inclusive of an approximately $3 billion pre-tax charge in Q3, after partners' share of charges

• Boeing (BA 213.14, +1.87, +0.9%): Vietnam to buy $7.8 bln worth of jets from Boeing, according to Bloomberg

Reviewing overnight developments:

• Equity indices in the Asia-Pacific region began the week on a mixed note. Japan's Nikkei: -0.4%, Hong Kong's Hang Seng: -0.6%, China's Shanghai Composite: +0.8%, India's Sensex: +0.8%, South Korea's Kospi: +0.4%, Australia's ASX All Ordinaries: +0.4%.

• In economic data:

• China's August CPI 0.3% m/m, as expected (last 0.2%); 0.1% yr/yr, as expected (last -0.3%). August PPI -3.0% yr/yr, as expected (last -4.4%). August New Loans CNY1.36 trln (expected CNY1.20 trln; last CNY345.9 bln) and August total social financing CNY3.12 trln (expected CNY2.46 trln; last CNY528.2 bln)

• Japan's August Machine Tool Orders -17.6% yr/yr (last -19.7%)

• In news:

• Banks in Japan outperformed after Bank of Japan Governor Ueda said that there is a chance that negative rates could end this year, though it was unclear if he was referencing the end of the calendar year or the end of the fiscal year in March.

• China Securities Journal speculated that the People's Bank of China will continue lowering the reserve requirement ratio.

• South Korea's exports were down 7.9% yr/yr during the first ten days of September with chip exports falling 28.2%.

• Chevron's LNG workers in Australia remain on strike.

• Major European indices trade on a higher note. STOXX Europe 600: +0.3%, Germany's DAX: +0.4%, U.K.'s FTSE 100: +0.1%, France's CAC 40: +0.5%, Italy's FTSE MIB: +0.8%, Spain's IBEX 35: +0.3%.

• In economic data:

• Italy's July Industrial Production -0.7% m/m (expected -0.3%; last 0.5%); -2.1% yr/yr (expected -1.7%; last -0.7%)

•  In news:

• The European Central Bank will meet later this week and expectations for a hawkish pause are being solidified.

• The European Commission's summer economic forecast lowered the 2023 growth outlook for the eurozone to 0.8% from 1.1% while Germany's forecast was lowered to -0.4% from +0.2%.

• Standard & Poor's affirmed Portugal's BBB+ rating and raised the outlook to Positive from Stable.

U.S. equity futures:

• S&P 500 Futures +23 @ 4,485

• DJIA Futures: +66 @ 34,674

• Nasdaq 100 Futures: +121 @ 15,418

Overseas:

• Europe: DAX +0.4%, FTSE +0.1%, CAC +0.5%

• Asia: Nikkei -0.4%, Hang Seng -0.6%, Shanghai +0.8%

Commodities:

• Crude Oil -0.24 @ 87.27

• Nat Gas +0.057 @ 2.636

• Gold +4.45 @ 1946.95

• Silver +0.048 @ 23.288

• Copper -0.0390 @ 3.723

Earnings/Guidance:

• ASE Technology (ASX) reports August revs decreased 18.1% yr/yr to NT$52.28 bln

• Bowlero (BOWL) reports Q4 revs of $239.4 vs $240.8 mln FactSet Consensus

• FuelCell Energy (FCEL) beats by $0.02, misses on revs

• RTX (RTX) provides update on Pratt & Whitney GTF fleet; updates FY23 and FY25 outlooks

News:

• Fed likely to pause interest rate hikes in September, according to the Wall Street Journal

• Executives from chipmakers and other companies meet in Vietnam, according to Reuters

• G-20 issues joint statement

• President Joseph R. Biden and General Secretary Nguyen Phu Trong announced the U.S.-Vietnam comprehensive strategic partnership

• Arrowhead (ARWR) announces data on its pipeline of pulmonary targeted RNA interference therapeutic candidates, including clinical results for ARO-RAGE

• AssetMark (AMK) names Michael Kim as its new CEO, effective immediately

• AstraZeneca (AZN) reports Tagrisso plus chemotherapy extended median progression-free survival by nearly 9 months in EGFR-mutated advanced lung cancer in FLAURA2 Phase III trial

• Bicycle Therapeutics (BCYC) will proceed with its plan to expedite development of BT8009 for metastatic bladder cancer following recent discussions with the U.S. Food and Drug Administration

• Boeing (BA) and Vietnam Airlines confirm the carrier has selected the 737 MAX family to expand its single-aisle fleet, with a commitment to order 50 737-8 airplanes

• Everest Group (EG) increases quarterly cash dividend to $1.75/share from $1.65/share

• EyePoint Pharmaceuticals (EYPT) reports "positive" masked safety update for lead product candidate EYP-1901 in ongoing PAVIA and DAVIO 2 Phase 2 clinical trials as of September 1, 2023

• Farmland Partners (FPI) provided business updates on several topics, including recent storms in California and the Southeast, the status of lease renewals, and updated disposition expectations for 2023

• Goodyear Tire (GT) announces rationalization plan and workforce reorganization in EMEA region

• InflaRx (IFRX) announces its topline results from the single ascending dose part of its randomized, double-blind, placebo-controlled Phase I trial of the orally administered, low molecular weight C5aR inhibitor INF904

• Johnson & Johnson's (JNJ) Janssen reports results from the Phase 1b/2 CHRYSALIS-2 study cohort evaluating the safety and tolerability of the combination of RYBREVANT

• Moog (MOG.A) was notified in writing by the U.S. Defense Counterintelligence and Security Agency that its existing facility security clearance has been "invalidated" on the basis that the Senior Management Official, Chief Executive Officer Pat Roche, is not a U.S. citizen

• Qualcomm (QCOM) enters agreement with Apple (AAPL) for Snapdragon 5G Modem-RF Systems supply

• Regeneron Pharma (REGN) CFO Robert Landry to retire in Feb 2024; Christopher Fenimore, current SVP, Head of Accounting and Controller at Regeneron, will succeed Mr. Landry as CFO upon his retirement

• Semtech (SMTC) appoints Mark Lin as its CFO, succeeding Emeka Chukwu; effective no later than October 4

• Vigil Neuroscience (VIGL) Announces Update on its Small Molecule TREM2 Agonist Program

M&A:

• Quipt Home Medical (QIPT) has acquired a business with operations in Mississippi, Texas and Louisiana reporting unaudited annual revenues of ~$9 mln ?with anticipated Adjusted EBITDA of $2 mln post integration

Syndicate:

• Catalyst Pharma (CPRX) files for $500 mln mixed securities shelf offering

• COMPASS Pathways (CMPS) files for 40,089,163 ADS offering by selling shareholders

• Globalstar (GSAT) files for 37,457,207 share common stock offering by selling shareholders

• HCI Group (HCI) files $150 mln mixed shelf securities offering

• Rekor Systems (REKR) files for 2,850,000 shares of common stock by selling shareholder

• UroGen Pharma (URGN) files for 12,579,156 shares of common stock by selling shareholders

• Washington Trust (WASH) files for $150 mln mixed securities shelf offering

IPOs:

• Expected to Price:

• Arm Holdings (ARM): The designer of CPUs and other chips for smartphones, PCs, data centers, vehicles, and networking equipment is expected to price its 95.5 M share IPO between $47-$51,

Gapping Up/Down

• Gapping up:

• CRNX +65.9%, TWNK +18.7%, IMTX +10.3%, VRNA +9.3%, VIGL +6.5%, IBRX +3.1%, CPRX+2%, MBLY +1.5%, CRMD +1.4%, REKR+1.1%, NVS +0.9%, SJM +0.9%, GSK +0.8%, GSAT +0.7%, IDYA +0.7%, DINO +0.7%

• Gapping down:

• CBAY -4.6%, CMPS -3.7%, OVV -3.1%, MRTX-3%, BUR -1.8%, GROV -1.7%, URGN -1.4%

Analyst Research (see Upgrades/Downgradescalendarfor full list):

• Upgrades

• Brown-Forman (BF.B) upgraded to Outperform from Mkt Perform at Bernstein; tgt raised to $76.40

• DoorDash (DASH) upgraded to Hold from Underperform at Jefferies; tgt raised to $90

• Nu Holdings (NU) upgraded to Overweight from Neutral at JP Morgan; tgt $9

• Prudential Plc (PUK) upgraded to Neutral from Underperform at Exane BNP Paribas

• Tenable (TENB) upgraded to Overweight from Neutral at JP Morgan; tgt raised to $56

• Tesla (TSLA) upgraded to Overweight from Equal-Weight at Morgan Stanley; tgt raised to $400

• Downgrades:

• Brunswick (BC) downgraded to Neutral from Overweight at JP Morgan; tgt lowered to $79

• Others:

• Blue Bird (BLBD) initiated with an Overweight at Barclays; tgt $25

• Raymond James (RJF) initiated with a Buy at BofA Securities; tgt $122

• Red Rock Resorts (RRR) initiated with a Positive at Susquehanna; tgt $52

• SharkNinja (SN) initiated with a Buy at Jefferies; tgt $67

Econ Data:

• No economic data of note.

Earnings:

• Monday (Sep 11)

• Morning:  FCEL

• Afternoon: CASY AVO ORCL

• Tuesday (Sep 12)

• Morning: CGNT

• Wednesday (Sep 13)

• Morning:  CBRL REVG

• Afternoon:  SMTC

• Thursday (Sep 14)

• Afternoon:  ADBE CPRT LEN

Asia & Europe detail:

Asia: Nikkei -0.4%, Hang Seng -0.6%, Shanghai +0.8%

Equity indices in the Asia-Pacific region began the week on a mixed note. Banks in Japan outperformed after Bank of Japan Governor Ueda said that there is a chance that negative rates could end this year, though it was unclear if he was referencing the end of the calendar year or the end of the fiscal year in March. China Securities Journal speculated that the People's Bank of China will continue lowering the reserve requirement ratio. South Korea's exports were down 7.9% yr/yr during the first ten days of September with chip exports falling 28.2%. Chevron's LNG workers in Australia remain on strike.

• In economic data:

• China's August CPI 0.3% m/m, as expected (last 0.2%); 0.1% yr/yr, as expected (last -0.3%). August PPI -3.0% yr/yr, as expected (last -4.4%). August New Loans CNY1.36 trln (expected CNY1.20 trln; last CNY345.9 bln) and August total social financing CNY3.12 trln (expected CNY2.46 trln; last CNY528.2 bln)

• Japan's August Machine Tool Orders -17.6% yr/yr (last -19.7%)

---Equity Markets---

• Japan's Nikkei: -0.4%

• Hong Kong's Hang Seng: -0.6%

• China's Shanghai Composite: +0.8%

• India's Sensex: +0.8%

• South Korea's Kospi: +0.4%

• Australia's ASX All Ordinaries: +0.4%

---FX---

• USD/JPY: -0.6% to 146.93

• USD/CNH: -0.6% to 7.3142

• USD/INR: UNCH at 82.99

Europe: DAX +0.4%, FTSE +0.1%, CAC +0.5%

Major European indices trade on a higher note. The European Central Bank will meet later this week and expectations for a hawkish pause are being solidified. The European Commission's summer economic forecast lowered the 2023 growth outlook for the eurozone to 0.8% from 1.1% while Germany's forecast was lowered to -0.4% from +0.2%. Standard & Poor's affirmed Portugal's BBB+ rating and raised the outlook to Positive from Stable.

• In economic data:

• Italy's July Industrial Production -0.7% m/m (expected -0.3%; last 0.5%); -2.1% yr/yr (expected -1.7%; last -0.7%)

---Equity Markets---

• STOXX Europe 600: +0.3%

• Germany's DAX: +0.4%

• U.K.'s FTSE 100: +0.1%

• France's CAC 40: +0.5%

• Italy's FTSE MIB: +0.8%

• Spain's IBEX 35: +0.3%

---FX---

• EUR/USD: +0.2% to 1.0724

• GBP/USD: +0.3% to 1.2507

• USD/CHF: -0.1% to 0.8918