The S&P 500 futures are up 24 points and are trading 0.6% above fair value. The Nasdaq 100 futures are up 94 points and are trading 0.9% above fair value. The Dow Jones Industrial Average futures are up 140 points and are trading 0.4% above fair value.
Equity futures are showing some strength this morning. There appears to be a willingness to defend the 3,600 level for the S&P 500 after dropping below that level yesterday. Also, better than expected earnings and guidance from PepsiCo are helping investor sentiment.
Market participants continue to play a waiting game ahead of the September PPI report at 8:30 a.m. ET this morning and the FOMC Minutes from the September meeting at 2:00 p.m. ET.
President Biden says there is a chance of a "slight recession," but he doesn't think it will happen. He said there will be "consequences" for Saudi Arabia related to the OPEC decision, according to CNN.
There is some speculation that British Prime Minister Truss will scrap some elements of her government's budget and the FT reported that the Bank of England signaled willingness to extend its emergency bond buying scheme past Friday, but a follow-up report noted that the BoE reiterated its intention to end the program this week.
China reported stronger-than-expected new yuan loan activity for September.
The 10-yr note yield is up two basis points to 3.96% and the 2-yr note yield is unchanged at 4.30%.
In corporate news:
Intel (INTC 25.29 +0.25 +1.00%): is planning thousands of job cuts, according to Bloomberg
PepsiCo (PEP 167.50 +4.91 +3.02%): beats by $0.12, beats on revs; raises FY22 EPS above consensus
Norwegian Cruise Line (NCLH 12.06 +0.43 +3.70%): UBS upgrades to Buy from Neutral
Philips (PHG 13.67 -1.24 -8.32%): sees Q3 revs below consensus
Cameco (CCJ 22.80 -3.02 -11.70%): and Brookfield Renewable Partners (BEP) are forming a strategic partnership to acquire Westinghouse Electric Company, whose total EV is $7.875 bln; announces 29,615,000 common shares bought deal offering at $21.95/share for gross proceeds of approximately $650 mln
Diamondback Energy (FANG 140.40 +1.03 +0.74%): enters into definitive purchase agreement to acquire all leasehold interest and related assets of FireBird Energy in exchange for 5.86 million shares of Diamondback common stock and $775 mln of cash
Lyft (LYFT 11.78 +0.51 +4.53%): Gordon Haskett upgrades to Buy from Hold
Reviewing overnight developments:
Equity indices in the Asia-Pacific region ended the midweek session on a mixed note. Japan's Nikkei: UNCH, Hong Kong's Hang Seng: -0.8%, China's Shanghai Composite: +1.5%, India's Sensex: +0.8%, South Korea's Kospi: +0.5, Australia's ASX All Ordinaries: UNCH.
In economic data:'
China's September New Loans CNY2.47 trln (expected CNY1.80 trln; last CNY1.25 trln) and September total social financing CNY3.53 trln (expected CNY2.725 trln; last CNY2.43 trln)
Japan's August Core Machinery Orders -5.8% m/m (expected -2.3%; last 5.3%); 9.7% yr/yr (expected 12.6%; last 12.8%). September Machine Tool Orders 4.3% yr/yr (last 10.7%). October Reuters Tankan Index 5 (last 10)
New Zealand's August Visitor Arrivals -3.3% m/m (last 41.8%)
In news:
Japan's Finance Minister Suzuki said that currency moves are being watched with close urgency as continued weakness in the yen drove it to its lowest level against the dollar since 1998.
The Bank of Korea raised its base rate by 50 bps to 3.00%, as expected.
Reserve Bank of Australia Assistant Governor Ellis said that one-year inflation expectations remain within the 2-3% range.
Major European indices trade near their flat lines while Spain's IBEX (-0.6%) lags. STOXX Europe 600: +0.1%, Germany's DAX: +0.3%, U.K.'s FTSE 100: -0.1%, France's CAC 40: +0.1%, Italy's FTSE MIB: -0.3%, Spain's IBEX 35: -0.6%.
In economic data:
Eurozone's August Industrial Production 1.5% m/m (expected 0.6%; last -2.3%); 2.5% yr/yr (expected 1.2%; last -2.5%)
U.K.'s August GDP -0.3% m/m (expected 0.0%; last 0.2%); 2.0% yr/yr (expected 2.4%; last 4.4%). August Construction Output 0.4% m/m (expected 0.5%; last 0.1%); 6.0% yr/yr (expected 5.6%; last 4.8%). August Industrial Production -1.8% m/m (expected -0.2%; last -1.1%); -5.2% yr/yr (expected 0.6%; last -3.2%). August Manufacturing Production -1.6% m/m (expected 0.2%; last -1.1%); -6.7% yr/yr (expected 0.8%; last -5.2%). August trade deficit GBP19.26 bln (expected deficit of GBP20.40 bln; last deficit of GBP17.59 bln)
In news:
FT reported that the Bank of England signaled willingness to extend its emergency bond buying scheme past Friday, but a follow-up report noted that the BoE reiterated its intention to end the program this week.
The 10-yr Gilt yield is up ten basis points at 4.54% while the pound is up nearly 1.0% against the dollar.
There is some speculation that British Prime Minister Truss will scrap some elements of her government's budget.
Bank of France Governor Villeroy de Galhau said that recession fears should not derail the European Central Bank's rate hike plans.
U.S. equity futures:
S&P 500 Futures: +21 @ 3,610
DJIA Futures: +112 @ 29,352
Nasdaq 100 Futures: +91 @ 10,882
Overseas:
Europe: DAX +0.3%, FTSE -0.1%, CAC +0.1%
Asia: Nikkei UNCH, Hang Seng -0.8%, Shanghai Composite +1.5%
Commodities:
Crude Oil +0.15 @ 89.50
Nat Gas +0.118 @ 6.714
Gold -10.50 @ 1675.50
Silver -0.335 @ 19.152
Copper -0.0205 @ 3.4335
U.S. Summary:
Earnings/Guidance:
ARMOUR Residential REIT (ARR) provides financial metrics for Q3
Braemar Hotels & Resorts (BHR) reports preliminary Q3 RevPAR of $288, representing an increase of about 19% yr/yr; expects to report occupancy of approximately 71%
Cameco (CCJ) provides preliminary Q3 operating update: deliveries in uranium segment to be 5.0-5.5 mln pounds; deliveries in fuel services segment to be 2.1-2.4mln kilograms of uranium
E2open (ETWO) misses by $0.01, misses on revs; guides FY23 revs in-line
EQT Corp. (EQT) expects to report a total loss on derivatives for Q3 at $1,627 mln
Gatos Silver (GATO) increases production guidance and lowers cost guidance for 2022
Owens & Minor (OMI) lowers outlook; names new CFO
PepsiCo (PEP) beats by $0.12, beats on revs; raises FY22 EPS above consensus
Philips (PHG) sees Q3 revs below consensus
News:
Bank of England spokesperson says bond buying will end on Friday, according to Reuters
President Biden says there is a chance of a "slight recession", but he doesn't think it will happen. He said there will be "consequences" for Saudi Arabia related to OPEC decision, according to CNN
US is trying to prevent supply chain issues after China export restrictions, according to Reuters
U.S. chip equipment suppliers pull staff based in China and pause business activities to gauge impact of Commerce Dept. restrictions, according to the Wall Street Journal
Treasury Sec Yellen appears on CNBC to discuss inflation, the economy, and markets
Adeia Inc. (ADEA) receives decision by the Federal Court of Canada finding in favor of Bell Canada and Telus and their respective cable platforms
AllianceBernstein (AB) reports Sept AUM decreased to $613 bln; market depreciation coupled with net outflows across each channel resulted in an 8% AUM decrease
Amarin (AMRN) Board of Directors Issues Statement in Response to Sarissa
ANSYS (ANSS) to acquire Thermal Desktop maker Cullimore and Ring Technologies, Inc; financial details not disclosed; not expected to have a material impact on financial statements in 2022
Artisan Partners Asset Mgmt (APAM) reports preliminary assets under management of $120.6 bln for September 2022
AstraZeneca (AZN) reports results from CHAMPION-NMOSD trial demonstrated zero relapses with a median treatment duration of 73 weeks
atai Life Sciences N.V. (ATAI) announces positive initial results for phase 1 trial of KUR-101, an oral formulation of mitragynine for OUD
Autolus Therapeutics (AUTL) announces that Moderna, a biotechnology company pioneering messenger RNA therapeutics and vaccines, has exercised its option to license Autolus' proprietary binders against an undisclosed immuno-oncology target for the development and commercialization of mRNA therapeutics
Avidity Biosciences (RNA) Announces Phase 1/2 EXPLORE44 Trial of AOC 1044 for Duchenne Muscular Dystrophy Mutations Amenable to Exon 44 Skipping
Bayer AG's (BAYRY) Vividion Therapeutics and Tavros Therapeutics announce strategic collaboration to discover and enhance targeted oncology programs
BeiGene (BGNE) announces positive topline results from final progression-free survival analysis of BRUKINSA (zanubrutinib) Compared to IMBRUVICA (ibrutinib) in Phase 3 Chronic Lymphocytic Leukemia Trial
BigBear.ai (BBAI) CEO steps down; names former IBM exec Amanda 'Mandy' Long as new CEO
Caledonia Mining (CMCL) reports record quarterly production at Blanket Mine
Cango (CANG) approves special dividend of $0.50 per ordinary share or $1 per ADS
Cellectis (CLLS) Presents Data on Two TALEN-based Gene Therapy Preclinical Programs for Patients with Sickle Cell Disease and Mucopolysaccharidosis type I at ESGCT 2022
Clover Health (CLOV) receives 3.5 Star Rating for its PPO Medicare Advantage plan for 2023; HMO Medicare Advantage plan increased to 3.5 stars from 3.0
Coherus (CHRS) and Junshi Biosciences Announce Publication of Positive Results from CHOICE-01, a Phase 3 Clinical Trial Evaluating Toripalimab in Combination with Chemotherapy as First-Line Treatment for Non-Small Cell Lung Cancer, in the Journal of Clinical Oncology
Copa Holdings (CPA) reports September traffic: ASMs +1.2% higher than September 2019; passenger traffic (RPMs) +3.5%, which resulted in an 86.9% load factor
Corcept Therapeutics (CORT) Initiates DAZALS - A Phase 2 Trial in Amyotrophic Lateral Sclerosis
Diamondback Energy (FANG) enters into definitive purchase agreement to acquire all leasehold interest and related assets of FireBird Energy in exchange for 5.86 million shares of Diamondback common stock and $775 mln of cash
Dyne Therapeutics (DYN) Presents Preclinical Data from its Duchenne Muscular Dystrophy Programs Targeting Exons 51 and 53 at World Muscle Society 2022 Congress
Eagle Pharma (EGRX) has submitted an investigational new drug application to the FDA for CAL02 for the treatment of severe community-acquired bacterial pneumonia
Earthstone Energy (ESTE) has purchased 3.0 mln shares of common stock from certain affiliates of Warburg Pincus, LLC
El Pollo Loco (LOCO) declares special dividend of $1.50/share on common stock and also approves new share repurchase program authorization for up to $20 mln of shares
Franklin Resources (BEN) reports Sept AUM of $1,297.4 bln vs $1,387.6 bln at Aug 31; decrease reflected the impact of negative markets and long-term net outflows
Granite Constr (GVA) awarded an approximately $11 mln construction contract by the California Department of Transportation; to be included in GVA's Q4 CAP
GreenLight Biosciences (GRNA) announces realignment to focus on near-term value drivers
Howmet Aerospace (HWM) updates legal charges
ICF International (ICFI) wins $15 mln contract from US govt
Intel (INTC) planning thousands of job cuts, according to Bloomberg
Intel (INTC) planning to separate chip designers and chip production, according to the Wall Street Journal
Invesco (IVC) reports preliminary month-end assets under management (AUM) of $1.32 bln for September, down 6.5% from previous month end
iRobot (IRBT) announces positive initial determination in patent lawsuit
Kinnate Biopharma Inc. (KNTE) Announces Recent Corporate Updates, Including on the Ongoing KIN-2787 Monotherapy Dose Escalation from Global Phase 1 Trial
Lazard (LAZ) reports September 2022 assets under management
Merus (MRUS) announces publication of abstract on MCLA-129 at the 34th EORTC/NCI/AACR Symposium on Molecular Targets and Cancer Therapeutics
Moderna (MRNA) & Merck (MRK) announce exercise of option by Merck for joint development and commercialization of investigational personalized cancer vaccine
MSC Industrial (MSM) increases its quarterly dividend 5% to $0.79/share payable on November 29
RCM Tech (RCMT) announces acquisition of TalentHerder; terms of deal not disclosed
Regeneron Pharma (REGN): FDA accepts for priority review the sBLA for EYLEA (aflibercept) Injection to treat Retinopathy of Prematurity (ROP) in preterm infants
Roche Hldg (RHHBY) reports positive new data for Genentech's Evrysdi in Largest Trial Ever Undertaken in Patients With Previously-Treated Spinal Muscular Atrophy
Rocket Pharmaceuticals (RCKT) Announces Presentations Highlighting Lentiviral Gene Therapies at the 29th Annual Congress of the European Society of Gene & Cell Therapy
Ryman Hospitality (RHP) announces that Chairman and CEO Colin Reed will transition to Executive Chairman; company appoints President Mark Fioravanti to succeed Reed as CEO
Sangamo Therapeutics (SGMO) Announces Updated Preliminary Phase 1/2 Data in Fabry Disease Showing Continued Tolerability and Sustained Elevated a-Gal A Enzyme Activity in Nine Patients
Sempra Energy (SRE) and AVANGRID (AGR) announce plans to develop U.S. green hydrogen and ammonia projects
TopBuild (BLD) appointed Joseph Viselli to COO role, effective October 10
TripAdvisor (TRIP) CFO Ernst Teunissen to retire; to be succeeded by Michael Noonan, effective October 31
Twitter (TWTR) is reviewing policies around permanent user bans, according to Financial Times
Uber (UBER): FTC investigating accusations against Uber (UBER) related to rewards program, according to the New York Post
Universal Insurance (UVE) provides update on Hurricane Ian impact; estimates overall gross ultimate loss to be approx $1 bln, well below its $3 bln overall reinsurance tower
Virtus Investment Partners (VRTS) reports Sept AUM of $145 bln, a decrease from June 30due to market depreciation and net outflows
M&A:
Activision Blizzard (ATVI): UK CMA publishes full phase 1 opinion on Microsoft (MSFT) / ATVI merger
American Water Works (AWK) subsidiary to purchase Butler Area Sewer Authority for $231.5 mln; the system serves nearly 15,000 customers over 32.5 square miles
Bassett Furniture (BSET) comments on proposal by CSC Generation Holdings stating that its proposals to acquire Bassett at $21.00/share in cash significantly undervalues the company
Booz Allen (BAH): Judge will not halt Booz Allen purchase of Everwatch Corporation, according to Reuters
Cameco (CCJ) and Brookfield Renewable Partners (BEP) are forming a strategic partnership to acquire Westinghouse Electric Company, whose total EV is $7.875 bln
Diamondback Energy (FANG) enters into definitive purchase agreement to acquire all leasehold interest and related assets of FireBird Energy in exchange for 5.86 million shares of Diamondback common stock and $775 mln of cash
DuPont (DD): EU Commission approves Celanese's (CE) acquisition of DuPont's Mobility and Materials Business, subject to conditions
General Motors (GM) makes a strategic investment in Queensland Pacific Metals of Australia; expects to invest up to $69 mln
KnowBe4 (KNBE) is close to a deal to be acquired by Vista Equity Partners, according to the Wall Street Journal
Peabody Energy (BTU): Coronado confirms that it is in confidential discussions with BTU regarding a potential combination transaction
RCM Tech (RCMT) announces acquisition of TalentHerder; terms of deal not disclosed
Tractor Supply (TSCO) receives FTC clearance to close Orscheln Farm and Home acquisition
Tricon Residential (TCN) sells interest in multi-family portfolio
Uranium Energy (UEC) to acquire Roughrider from Rio Tinto (RIO) for $150 mln
Vaalco Energy (EGY) confirmed that the Court of King's Bench of Alberta has made an order approving the business combination with TransGlobe Energy Corporation (TGA)
Syndicate:
AMC Entertainment's (AMC) subsidiary Odeon Finco Plc announces offering of $400 mln senior secured notes due 2027 to refinance Odeon's term loan facility
Arcus Biosciences (RCUS) files for 11,613,029 share common stock offering by selling shareholder
Cameco (CCJ) announces 29,615,000 common shares bought deal offering at $21.95/share for gross proceeds of approximately $650 mln
CTO Realty Growth (CTO) files $500 mln mixed securities shelf offering
DICE Therapeutics (DICE) proposes public offering of $250 mln of shares of common stock
Eagle Pharma (EGRX) files $200 mln mixed securities shelf offering
Weber (WEBR) mulling debt financing, according to Bloomberg
IPOs:
Expected to Price:
No IPOs expected.
Gapping Up/Down
Gapping up:
CANG +18.6%, LOCO +14.7%, GATO +13.2%, ESTE+4.4%, AB +4.1%, RCMT +3.4%, RCKT +3.2%, BBAI+3.1%, BEP +3%, GRIN +2.7%, UEC +2.3%, AHT+2.1%, ANGI +1.9%, UVE +1.9%, PEP +1.8%, DICE+1.7%, AMRN +1.7%, MSM +1.7%, IAC +1.3%, TRIP+1%, GM +0.7%, BHR +0.7%, AZN +0.6%, TSCO+0.6%, GE +0.5%
Gapping down:
ADEA -9.9%, CCJ -9.8%, PHG -7.5%, TCN -2.7%, EGRX -1.3%, RCUS -1.2%, APAM -1%, CLOV -0.6%, CTO -0.5%
Analyst Research (see Upgrades/Downgradescalendarfor full list):
Upgrades
American Intl (AIG) upgraded to Buy from Hold at Jefferies; tgt raised to $64
NOV Inc. (NOV) upgraded to Buy from Neutral at Citigroup; tgt $25
Downgrades:
Cooper (COO) downgraded to Hold from Buy at Jefferies; tgt lowered to $295
Pioneer Natural Resources (PXD) downgraded to Neutral from Buy at Citigroup; tgt lowered to $240
Playtika (PLTK) downgraded to Neutral from Buy at BTIG Research
Skillz (SKLZ) downgraded to Sell from Neutral at BTIG Research; tgt $0.65
Others:
argenx (ARGX) initiated with a Perform at Oppenheimer
BlackSky Technology (BKSY) initiated with an Outperform at Credit Suisse
Boeing (BA) initiated with an Underperform at Credit Suisse; tgt $98
BWX Technologies (BWXT) initiated with an Outperform at Credit Suisse; tgt $65
Cboe Global Markets (CBOE) initiated with a Neutral at Citigroup; tgt $130
CONMED (CNMD) initiated with a Hold at Jefferies; tgt $85
General Dynamics (GD) initiated with a Neutral at Credit Suisse; tgt $238
HEICO (HEI) initiated with an Outperform at Credit Suisse; tgt $185
Huntington Ingalls (HII) initiated with a Neutral at Credit Suisse; tgt $245
Interactive Brokers (IBKR) initiated with a Buy at Citigroup; tgt $85
Intercontinental Exchange (ICE) initiated with a Neutral at Citigroup; tgt $102
L3Harris (LHX) initiated with an Outperform at Credit Suisse; tgt $267
Lockheed Martin (LMT) initiated with an Underperform at Credit Suisse; tgt $375
LPL Financial (LPLA) initiated with a Buy at Citigroup; tgt $290
MarketAxess (MKTX) initiated with a Buy at Citigroup; tgt $285
Mynaric AG (MYNA) initiated with an Outperform at Credit Suisse; tgt $10
Northrop Grumman (NOC) initiated with an Outperform at Credit Suisse; tgt $560
Raytheon Technologies (RTX) initiated with a Neutral at Credit Suisse; tgt $85
Rocket Lab USA (RKLB) initiated with an Underperform at Credit Suisse; tgt $3
Spire Global (SPIR) initiated with a Neutral at Credit Suisse; tgt $2
Tradeweb Markets (TW) initiated with a Buy at Citigroup; tgt $67
Transdigm Group (TDG) initiated with an Outperform at Credit Suisse; tgt $661
Virgin Orbit Holdings (VORB) initiated with an Underperform at Credit Suisse; tgt $1
Virtu Financial (VIRT) initiated with a Buy at Citigroup; tgt $26
Upcoming Events:
Econ Data:
07:00 ET: MBA Mortgage Applications Index for Oct. 8 (Briefing.comConsensus NA; Prior -14.2%)
08:30 ET: PPI for Sep (Briefing.comConsensus 0.2%; Prior -0.1%)
08:30 ET: Core PPI for Sep (Briefing.comConsensus 0.3%; Prior 0.4%)
14:00 ET: FOMC Minutes
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 UNCH, Hang Seng -0.8%, Shanghai Composite +1.5%
Equity indices in the Asia-Pacific region ended the midweek session on a mixed note. Japan's Finance Minister Suzuki said that currency moves are being watched with close urgency as continued weakness in the yen drove it to its lowest level against the dollar since 1998. The Bank of Korea raised its base rate by 50 bps to 3.00%, as expected. Reserve Bank of Australia Assistant Governor Ellis said that one-year inflation expectations remain within the 2-3% range.
In economic data:
China's September New Loans CNY2.47 trln (expected CNY1.80 trln; last CNY1.25 trln) and September total social financing CNY3.53 trln (expected CNY2.725 trln; last CNY2.43 trln)
Japan's August Core Machinery Orders -5.8% m/m (expected -2.3%; last 5.3%); 9.7% yr/yr (expected 12.6%; last 12.8%). September Machine Tool Orders 4.3% yr/yr (last 10.7%). October Reuters Tankan Index 5 (last 10)
New Zealand's August Visitor Arrivals -3.3% m/m (last 41.8%)
---Equity Markets---
Japan's Nikkei: UNCH
Hong Kong's Hang Seng: -0.8%
China's Shanghai Composite: +1.5%
India's Sensex: +0.8%
South Korea's Kospi: +0.5%
Australia's ASX All Ordinaries: UNCH
---FX---
USD/JPY: +0.5% to 146.48
USD/CNH: +0.2% to 7.1788
USD/INR: +0.1% to 82.31
Europe: DAX +0.3%, FTSE -0.1%, CAC +0.1%
Major European indices trade near their flat lines while Spain's IBEX (-0.6%) lags. FT reported that the Bank of England signaled willingness to extend its emergency bond buying scheme past Friday, but a follow-up report noted that the BoE reiterated its intention to end the program this week. The 10-yr Gilt yield is up ten basis points at 4.54% while the pound is up nearly 1.0% against the dollar. There is some speculation that British Prime Minister Truss will scrap some elements of her government's budget. Bank of France Governor Villeroy de Galhau said that recession fears should not derail the European Central Bank's rate hike plans.
In economic data:
Eurozone's August Industrial Production 1.5% m/m (expected 0.6%; last -2.3%); 2.5% yr/yr (expected 1.2%; last -2.5%)
U.K.'s August GDP -0.3% m/m (expected 0.0%; last 0.2%); 2.0% yr/yr (expected 2.4%; last 4.4%). August Construction Output 0.4% m/m (expected 0.5%; last 0.1%); 6.0% yr/yr (expected 5.6%; last 4.8%). August Industrial Production -1.8% m/m (expected -0.2%; last -1.1%); -5.2% yr/yr (expected 0.6%; last -3.2%). August Manufacturing Production -1.6% m/m (expected 0.2%; last -1.1%); -6.7% yr/yr (expected 0.8%; last -5.2%). August trade deficit GBP19.26 bln (expected deficit of GBP20.40 bln; last deficit of GBP17.59 bln)
---Equity Markets---
STOXX Europe 600: +0.1%
Germany's DAX: +0.3%
U.K.'s FTSE 100: -0.1%
France's CAC 40: +0.1%
Italy's FTSE MIB: -0.3%
Spain's IBEX 35: -0.6%
---FX---
EUR/USD: UNCH at 0.9706
GBP/USD: +0.8% to 1.1057
USD/CHF: -0.1% to 0.9958
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