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12/04/23 Briefing

The S&P 500 futures are up 8 points and are trading 0.1% above fair value. The Nasdaq 100 futures are up 17 points and are trading 0.1% above fair value. The Dow Jones Industrial Average futures are up 88 points and are trading 0.2% above fair value.

The stock market is poised for mixed open, little changed from yesterday's closing levels. There will presumably be more conviction in the equity futures market after investors receive the March Consumer Price Index at 8:30 a.m. ET. Market participants are also awaiting to FOMC Minutes from the March 21-22 meeting, released at 2:00 p.m. ET.

Philadelphia Federal Reserve Bank President Patrick Harker (FOMC voter) said rates should go to 5% and the Fed should hold them there, according to Reuters.

The 2-yr Treasury note yield is up one basis point to 4.05% and the 10-yr note yield is up two basis point to 3.45%.

The weekly MBA Mortgage Applications Index rose 5.3% with purchase applications jumping 8.0% while refinance applications were flat.

Other data releases today include:

  • 8:30 ET: March CPI (Briefing.comconsensus 0.3%; prior 0.4%) and Core CPI (Briefing.comconsensus 0.4%; prior 0.5%)

  • 10:30 ET: Weekly crude oil inventories (prior -3.74 mln)

  • 14:00 ET: March Treasury Budget (Briefing.comconsensus -$253.00 bln; prior -$262.40 bln)

In corporate news:

  • Johnson & Johnson (JNJ 164.20, -0.07, -0.04%): defends attempts to resolve talc lawsuits in bankruptcy, according to Reuters

  • National Instruments (NATI 57.00, +4.42, +8.4%): Emerson Electric (EMR) is in discussions to acquire National Instruments, according to Reuters.

  • Shopify (SHOP 45.73, +0.95, +2.1%): JMP upgraded to Market Outperform from Market Perform

  • Triton International (TRTN 82.24, +19.23, +30.5%): to be acquired by Brookfield Infrastructure (BIP) in a $13.3 bln take-private transaction

  • Goldman Sachs (GS 328.99, +1.62, +0.5%): UBS upgraded to Buy from Neutral

  • Cirrus Logic (CRUS 96.70, -5.12, -5.0%): shares lower by 4% after Apple (AAPL) analyst Ming-Chi Kuo tweets "Two iPhone 15 Pro models' removal of solid-state button design negatively affects Cirrus Logic and AAC"

  • Procter & Gamble (PG 151.30, +0.64, +0.4%): increases quarterly dividend to $0.9407/share from $0.9133/share

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region ended the midweek session on a mostly higher note. Japan's Nikkei: +0.6%, Hong Kong's Hang Seng: -0.9%, China's Shanghai Composite: +0.4%, India's Sensex: +0.4%, South Korea's Kospi: +0.1%, Australia's ASX All Ordinaries: +0.4%.

  • In economic data:

  • Japan's February Core Machinery Orders -4.5% m/m (expected -7.8%; last 9.5%); 9.8% yr/yr (expected 2.9%; last 4.5%). March PPI 0.0% m/m (expected -0.3%; last -0.3%); 7.2% yr/yr (expected 7.1%; last 8.3%). March Bank Lending 3.0% yr/yr (expected 1.8%; last 3.3%)

  • South Korea's March Unemployment Rate 2.7% (expected 3.0%; last 2.6%)

  • Australia's February Private House Approvals 11.3% m/m, as expected (last -13.5%)

  • New Zealand's March Electronic Card Retail Sales 0.7% m/m (expected 1.5%; last -0.1%); 15.5% yr/yr (expected 9.5%; last 11.7%) 

  • In news:

  • People's Daily commented on the need for tighter supervision over algorithms of technology firms.

  • Taiwan Semiconductor Manufacturing will slow its plans for an expansion of its facility in Taiwan.

  • Australia's foreign minister spoke in favor of diversifying the country's export market. 

  • Major European indices trade in the green. STOXX Europe 600: +0.3%, Germany's DAX: +0.2%, U.K.'s FTSE 100: +0.6%, France's CAC 40: +0.4%, Italy's FTSE MIB: +0.5%, Spain's IBEX 35: +0.5%.

  • There was no noteworthy data 

  • In news:

  • EU Foreign Minister Borell and Germany's Foreign Minister Babcock will visit China over the next three days.

  • European Central Bank policymaker Villeroy de Galhau said that ECB policy should move from a "sprint to a long-distance run" and that the central bank remains committed to reigning in inflation.

  • Volvo Group reported record results for Q1. 

 

U.S. equity futures:

  • S&P 500 Futures: +8 @ 4,145

  • DJIA Futures: +88 @ 33,940

  • Nasdaq 100 Futures: +17 @ 13,092

Overseas:

  • Europe: DAX +0.2%, FTSE +0.6%, CAC+0.4%

  • Asia: Nikkei +0.6%, Hang Seng -0.9%, Shanghai Composite +0.4%

Commodities:

  • Crude Oil -0.13 @ 81.40

  • Nat Gas +0.021 @ 2.207

  • Gold +5.60 @ 2024.60

  • Silver +0.109 @ 25.295

  • Copper -0.0220 @ 3.997


 

Earnings/Guidance:

  • American Airlines (AAL) raises Q1 EPS guidance

  • Apogee Enterprises (APOG) beats by $0.01, reports revs in-line; guides FY24 EPS in-line

  • Chart Industries (GTLS) reaffirms FY23 adjusted EBITDA guidance of $1 bln; FY24 adjusted EBITDA guidance of $1.3 bln

  • ConocoPhillips (COP) details operating and financial plan that features durable returns and cash flow growth ahead of today's Investor Day

  • Eli Lilly (LLY) expects Q1 results to include acquired IPR&D charges of approximately $105 mln, representing a charge of $0.10 to GAAP and non-GAAP EPS

  • EOG Resources (EOG) anticipates Q1 net gain of $376 mln on the mark-to-market of its financial commodity derivative contracts

  • Greenbrier (GBX) says recurring revenue to more than double over the next five years; sees gross margin increasing to mid teens by 2026

  • InMode (INMD) sees Q1 EPS and revs above consensus

  • Mirum Pharmaceuticals (MIRM) sees Q1 revs above consensus

  • SkillSoft (SKIL) misses by $0.12, beats on revs; guides FY24 revs above consensus

News:

  • Philadelphia Federal Reserve Bank President Patrick Harker (voting FOMC member) says rates should go to 5% and be held there, according to Reuters

  • The Biden administration confirms strongest-ever pollution standards for cars and trucks to accelerate transition to a clean-transportation future

  • European Central Bank policymaker Villeroy de Galhau said that ECB policy should move from a "sprint to a long-distance run" and that the central bank remains committed to reining in inflation

  • Warren Buffet says recent banking problems are not like 2008; some banks have been mismanaged; is willing to bet that no American depositor will lose money from a bank failure

  • Universal Music Group tells Apple (AAPL) and Spotify (SPOT) to limit AI generated music, according to FT

  • Atea Pharmaceuticals (AVIR) announces the presentation of the full results from the MORNINGSKY Phase 3 trial evaluating bemnifosbuvir for the treatment of COVID-19

  • Carlyle Group (CG) ends discussions to purchase stake in Cotiviti, according to Bloomberg

  • Cohen & Steers (CNS) reports March AUM 4% decline from Feb

  • Cutera (CUTR) CEO and Executive Chairman terminated for cause; appoints Sheila A. Hopkins as Interim CEO; withdraws 2023 outlook

  • Emerson Electric (EMR) is in discussions to acquire National Instruments (NATI), according to Reuters

  • Fisker (FSR) announces that the all-electric Fisker Ocean Extreme equipped with optional 22' wheels and tires achieved a combined WLTP range of up to 701 km/436 miles

  • Gladstone Investments (GAIN) will pay a supplemental distribution of $0.12 per share to holders of its common stock in June 2023; declared unchanged monthly dividends of $0.08/share for April, May, and June

  • Johnson & Johnson (JNJ) defends attempts to resolve talc lawsuits in bankruptcy, according to Reuters

  • National CineMedia (NCMI) filed a voluntary Chapter 11 petition in the United States Bankruptcy Court and has entered into a comprehensive Restructuring Support Agreement

  • Novo Nordisk (NVO) and Aspect Biosystems enter partnership to develop bioprinted tissue therapeutics for diabetes and obesity

  • Ouster (OUST) files patent infringement complaint with ITC against Hesai (HSAI) and seeks to bar the infringing products from the United States

  • Parsons (PSN) awarded 3-year $750 mln State Department humanitarian support contract

  • Procter & Gamble (PG) increases quarterly dividend to $0.9407/share from $0.9133/share

  • Taiwan Semiconductor Manufacturing (TSM) will slow its plans for an expansion of its facility in Taiwan

M&A:

  • Carlyle Group (CG) ends discussions to purchase stake in Cotiviti, according to Bloomberg

  • Colliers (CIGI) acquired a controlling interest in Greenstone Group Ltd.

  • Emerson Electric (EMR) is in discussions to acquire National Instruments (NATI), according to Reuters

  • Horizon Acquisition Corporation II (HZON) terminates business combination agreement with Flexjet

  • Triton International (TRTN) to be acquired by Brookfield Infrastructure (BIP) in a $13.3 bln cash-and-stock take-private transaction

Syndicate:

  • Core & Main (CNM) announces launch of 5 mln share offering by selling stockholders; co also announces concurrent share repurchase

  • InflaRx (IFRX) prices offering of 9,411,765 ordinary shares at $4.25 per share

  • Mirum Pharmaceuticals (MIRM) announces its intention to offer, subject to market and other conditions, $200.0 mln aggregate principal amount of convertible senior notes due 2029 in a private offering to qualified institutional buyers

IPOs:

  • Expected to Price:

  • No IPOs expected.

Gapping Up/Down

  • Gapping up:

  • TRTN +30.6%, NUTX +23.4%, GTLS +4.5%, APOG +4.2%, SKIL +3.0%, INMD +2.2%, NVO +1.5%, LICY +1.4%, PG +0.5%, ASX +0.5%, LLY +0.4%

  • Gapping down:

  • MIRM -9.2%, IFRX -6%, TRNO -1.7%, FSM -1.7%, AAL -1.8%, CUTR -0.8%

 

Analyst Research (see Upgrades/Downgradescalendarfor full list):

  • Upgrades

  • Arrowhead (ARWR) upgraded to Outperform from Market Perform at SVB Securities; tgt raised to $35

  • Celanese (CE) upgraded to Neutral from Underweight at Piper Sandler; tgt raised to $120

  • Dow (DOW) upgraded to Overweight from Neutral at Piper Sandler; tgt raised to $68

  • Eastman Chemical (EMN) upgraded to Overweight from Neutral at Piper Sandler; tgt raised to $99

  • LyondellBasell (LYB) upgraded to Overweight from Neutral at Piper Sandler; tgt $118

  • Methanex (MEOH) upgraded to Neutral from Underweight at Piper Sandler; tgt raised to $49

  • Westlake Corporation (WLK) upgraded to Overweight from Neutral at Piper Sandler; tgt $140

  • Becton Dickinson (BDX) upgraded to Overweight from Sector Weight at KeyBanc Capital Markets; tgt $304

  • Confluent (CFLT) upgraded to Overweight from Equal-Weight at Morgan Stanley; tgt raised to $30

  • Essex Property (ESS) upgraded to Sector Outperform from Sector Underperform at Scotiabank; tgt $240

  • Evercore (EVR) upgraded to Buy from Sell at UBS

  • Evercore (EVR) upgraded to Overweight from Equal-Weight at Morgan Stanley; tgt raised to $131

  • Raytheon Technologies (RTX) upgraded to Outperform from Peer Perform at Wolfe Research; tgt $117

  • Realty Income (O) upgraded to Sector Outperform from Sector Perform at Scotiabank; tgt $69

  • Shopify (SHOP) upgraded to Mkt Outperform from Mkt Perform at JMP Securities; tgt $65

  • Downgrades:

  • ADS-TEC Energy GmbH (ADSE) downgraded to Neutral from Buy at DA Davidson; tgt lowered to $5

  • Audiocodes (AUDC) downgraded to Underperform from Neutral at BofA Securities; tgt lowered to $9.50

  • Insight Enterprises (NSIT) downgraded to Hold from Buy at Stifel; tgt $150

  • ADTRAN (ADTN) downgraded to Market Perform from Outperform at Northland Capital; tgt $13

  • Arconic (ARNC) downgraded to Peer Perform from Outperform at Wolfe Research

  • Bombardier (BDRBF) downgraded to Peer Perform from Outperform at Wolfe Research

  • Empire State Realty Trust (ESRT) downgraded to In-line from Outperform at Evercore ISI; tgt lowered to $7

  • Kaiser Alum (KALU) downgraded to Underperform from Peer Perform at Wolfe Research; tgt $67

  • Lockheed Martin (LMT) downgraded to Neutral from Outperform at Robert W. Baird; tgt $513

  • Mid-America Aptmt (MAA) downgraded to Sector Underperform from Sector Perform at Scotiabank; tgt $150

  • NETSTREIT (NTST) downgraded to Sector Perform from Sector Outperform at Scotiabank

  • Take-Two (TTWO) downgraded to Neutral from Outperform at Exane BNP Paribas; tgt $120

  • Others:

  • Accolade (ACCD) initiated with an Overweight at Stephens; tgt $18

  • Apollo Medical (AMEH) initiated with a Neutral at BofA Securities; tgt $44

  • Certara (CERT) initiated with an Overweight at Stephens; tgt $28

  • Computer Programs (CPSI) initiated with an Equal-Weight at Stephens; tgt $30

  • DoubleVerify (DV) initiated with an Overweight at Piper Sandler; tgt $35

  • Globant (GLOB) initiated with a Buy at Needham; tgt $205

  • Lazydays Holdings (LAZY) initiated with a Neutral at DA Davidson; tgt $12

  • Phreesia (PHR) initiated with an Overweight at Stephens; tgt $37

  • Privia Health (PRVA) initiated with an Overweight at Stephens; tgt $33

  • R1 RCM (RCM) initiated with an Overweight at Stephens; tgt $18

  • Teladoc (TDOC) initiated with an Equal-Weight at Stephens; tgt $25

  • Veradigm (MDRX) initiated with an Equal-Weight at Stephens; tgt $13

  • Alerus Financial (ALRS) initiated with a Mkt Perform at Keefe Bruyette; tgt $18

  • Concentrix (CNXC) initiated with a Buy at Canaccord Genuity; tgt $150

  • FS KKR Capital (FSK) initiated with a Perform at Oppenheimer; tgt $21

  • Integral Ad Science (IAS) initiated with a Sector Weight at KeyBanc Capital Markets

  • Las Vegas Sands (LVS) initiated with a Buy at ROTH MKM; tgt $74

  • NextGen Healthcare (NXGN) initiated with an Overweight at Stephens; tgt $24

  • ZipRecruiter (ZIP) initiated with a Sector Weight at KeyBanc Capital Markets

Econ Data:

  • 07:00 ET: MBA Mortgage Applications Index (Actual +5.3%; prior -4.1%)

  • 08:30 ET: March CPI (Briefing.comconsensus 0.3%; prior 0.4%) and core CPI (Briefing.comconsensus 0.4%; prior 0.5%)

  • 14:00 ET: FOMC Minutes for March 21-22 meeting

  • 14:00 ET: March Treasury Budget (Briefing.comconsensus -$253.0B; prior -$262.4B)

Earnings:

  • Monday (Apr 10)

  • Morning: GBX

  • Afternoon: PSMT, TLRY

  • Tuesday (Apr 11)

  • Morning: ACI, KMX

  • Afternoon: Nothing of note

  • Wednesday (Apr 12)

  • Morning: APOG

  • Afternoon:  SPWH

  • Thursday (Apr 13)

  • Morning: DAL, FAST, PGR

  • Afternoon: WAFD

  • Friday (Apr 14)

  • Morning: BLK, C, JPM, PNC, UNH, WFC

  • Afternoon: Nothing of note

Asia & Europe detail:

Asia: Nikkei +0.6%, Hang Seng -0.9%, Shanghai Composite +0.4%

Equity indices in the Asia-Pacific region ended the midweek session on a mostly higher note. People's Dailycommented on the need for tighter supervision over algorithms of technology firms. Taiwan Semiconductor Manufacturing will slow its plans for an expansion of its facility in Taiwan. Australia's foreign minister spoke in favor of diversifying the country's export market.

  • In economic data:

  • Japan's February Core Machinery Orders -4.5% m/m (expected -7.8%; last 9.5%); 9.8% yr/yr (expected 2.9%; last 4.5%). March PPI 0.0% m/m (expected -0.3%; last -0.3%); 7.2% yr/yr (expected 7.1%; last 8.3%). March Bank Lending 3.0% yr/yr (expected 1.8%; last 3.3%)

  • South Korea's March Unemployment Rate 2.7% (expected 3.0%; last 2.6%)

  • Australia's February Private House Approvals 11.3% m/m, as expected (last -13.5%)

  • New Zealand's March Electronic Card Retail Sales 0.7% m/m (expected 1.5%; last -0.1%); 15.5% yr/yr (expected 9.5%; last 11.7%)

---Equity Markets---

  • Japan's Nikkei: +0.6%

  • Hong Kong's Hang Seng: -0.9%

  • China's Shanghai Composite: +0.4%

  • India's Sensex: +0.4%

  • South Korea's Kospi: +0.1%

  • Australia's ASX All Ordinaries: +0.4%

---FX---

  • USD/JPY: UNCH at 133.67

  • USD/CNH: -0.1% to 6.8865

  • USD/INR: UNCH at 82.02

 

Europe: DAX +0.2%, FTSE +0.6%, CAC+0.4%

Major European indices trade in the green. EU Foreign Minister Borell and Germany's Foreign Minister Babcock will visit China over the next three days. European Central Bank policymaker Villeroy de Galhau said that ECB policy should move from a "sprint to a long-distance run" and that the central bank remains committed to reigning in inflation. Volvo Group reported record results for Q1.

  • There was no noteworthy data

---Equity Markets---

  • STOXX Europe 600: +0.3%

  • Germany's DAX: +0.2%

  • U.K.'s FTSE 100: +0.6%

  • France's CAC 40: +0.4%

  • Italy's FTSE MIB: +0.5%

  • Spain's IBEX 35: +0.5%

---FX---

  • EUR/USD: +0.1% to 1.0923

  • GBP/USD: -0.2% to 1.2400

  • USD/CHF: -0.1% to 0.9024


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