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Writer's pictureSimon Charles Hooper

13/04/23 Briefing

The S&P 500 futures are down 1 point and are trading in line with fair value. The Nasdaq 100 futures are up 8 points and are trading fractionally above fair value. The Dow Jones Industrial Average futures are down 18 points and are trading slightly below fair value.

The equity futures market has a tentative disposition as participants await the March Producer Price Index and weekly jobless claims report at 8:30 a.m. ET. In addition, there's some hesitancy ahead of Q1 earnings reporting season, starting tomorrow with several large banks.

There is a growing sense that the European Central Bank will announce a 25-bps rate increase at its May meeting, according to Reuters.

China reported much better than expected trade data for March. The trade surplus narrowed to $88.19 billion (expected $39.2 billion) from $116.88 billion with exports jumping 14.8% on a year-over-year basis (expected -7.0%) and imports declining by a less than expected 1.4% (expected -5.0%).

Treasury yields are slightly higher. The 2-yr note yield is up one basis point to 3.99% and the 10-yr note yield is up one basis point to 3.43%. The U.S. Dollar Index is down 0.2% to 101.35.

WTI crude oil futures are down 0.2% to $83.08/bbl and natural gas futures are up 0.5% to $2.10/mmbtu.

In corporate news:

  • Delta Air Lines (DAL 34.55, +0.81, +2.4%): misses by $0.05, beats on revs; guides Q2 EPS above consensus, revs above two analyst estimate; reaffirms FY23 EPS guidance, revs guidance

  • Alibaba (BABA 95.19, +1.35, +1.4%): SoftBank moves to sell down most of its Alibaba stake, according to FT

  • Sarepta (SRPT 123.53, -14.15, -10.3%): FDA staff leaned towards rejecting Sarepta gene therapy before another official intervened, according to Stat News

  • Apple (AAPL 160.88, +0.78, +0.5%): tripled India iPhone production to $7 billion, according to Bloomberg

  • First Solar (FSLR 205.00, -2.89, -1.4%): downgraded to Hold from Buy at Deutsche Bank

  • Harley-Davidson (HOG 35.99, -1.37, -3.7%): announces that Gina Goetter will step down as CFO at the end of April 2023, David Viney to serve as Interim CFO

  • Hasbro (HAS 52.20, +0.90, +1.8%): Hasbro appoints Gina Goetter as CFO, effective May 18; joining from Harley-Davidson

  • Fastenal (FAST 51.50, -1.06, -2.0%): beats by $0.01, reports revs in-line

  • Amazon.com (AMZN 98.05, +0.22, +0.2%): CEO Andy Jassy releases letter to shareholders

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region ended Thursday on a slightly higher note. Japan's Nikkei: +0.3%, Hong Kong's Hang Seng: +0.2%, China's Shanghai Composite: -0.3%, India's Sensex: +0.1%, South Korea's Kospi: +0.4%, Australia's ASX All Ordinaries: -0.2%.

    • In economic data:

      • China's March trade surplus $88.19 bln (expected surplus of $39.20 bln; last surplus of $116.88 bln). March Imports -1.4% yr/yr (expected -5.0%; last -10.2%) and Exports 14.8% yr/yr (expected -7.0%; last -6.8%)

      • South Korea's March Import Price Index -6.9% yr/yr (expected -0.5%; last -0.7%) and Export Price Index -6.4% yr/yr (expected -2.4%; last -2.6%)

      • India's March trade deficit $19.73 bln (expected deficit of $18.30 bln; last deficit of $17.43 bln). March Imports $58.11 bln (last $51.31 bln) and Exports $38.38 bln (last $33.88 bln)

      • Australia's March Employment Change 53,000 (expected 20,000; last 63,600) and full employment change 72,200 (expected 8,000; last 79,200). March Unemployment Rate 3.5% (expected 3.6%; last 3.5%) and Participation Rate 66.7% (expected 66.6%; last 66.7%). March MI Inflation Expectations 4.6% (expected 4.8%; last 5.0%)


  • In news:

    • Softbank is selling most of its stake in Alibaba.

    • Japan's Fast Retailing reported strong results for the first half of the year after markets closed for the day.

    • Australia reported strong employment figures for March, but the market continues expecting that the Reserve Bank of Australia will not raise its cash rate at the policy meeting in May.

    • South Korea may increase electricity and gas prices in Q2.



  • Major European indices trade near their flat lines while France's CAC (+1.0%) outperforms thanks to strength in consumer names after solid results from LVMH. STOXX Europe 600: +0.2%, Germany's DAX: UNCH, U.K.'s FTSE 100: UNCH, France's CAC 40: +1.0%, Italy's FTSE MIB: UNCH, Spain's IBEX 35: +0.1%.

    • In economic data:

      • Eurozone's February Industrial Production 1.5% m/m (expected 1.0%; last 1.0%); 2.0% yr/yr (expected 1.5%; last 0.9%)

      • Germany's March CPI 0.8% m/m, as expected (last 0.8%); 7.4% yr/yr, as expected (last 8.7%)

      • U.K.'s February GDP 0.0% m/m (expected 0.1%; last 0.4%). February Construction Output 2.4% m/m (expected 0.9%; last -1.7%); 5.7% yr/yr (expected 1.6%; last 3.3%). February Industrial Production -0.2% m/m (expected 0.2%; last -0.5%); -3.1% yr/yr (expected -3.7%; last -3.2%). February trade deficit GBP17.53 bln (expected deficit of GBP17.00 bln; last deficit of GBP16.09 bln)

      • Italy's February Industrial Production -0.2% m/m (expected 0.5%; last -0.5%); -2.3% yr/yr (expected 2.9%; last 1.6%)


  • In news:

    • Bank of England Governor Bailey said that institutional structures are being tested by the banking crisis, but the BoE should not turn away from its fight against inflation.

    • There is a growing sense that the European Central Bank will announce a 25-bps rate increase at its May meeting.



U.S. equity futures:

  • S&P 500 Futures: +4 @ 4,096

  • DJIA Futures: +4 @ 33,651

  • Nasdaq 100 Futures: +28 @ 12,876

Overseas:

  • Europe: DAX UNCH, FTSE UNCH, CAC +1.0%

  • Asia: Nikkei +0.3%, Hang Seng +0.2%, Shanghai Composite -0.3%

Commodities:

  • Crude Oil -0.19 @ 83.07

  • Nat Gas +0.008 @ 2.101

  • Gold +17.05 @ 2041.95

  • Silver +0.257 @ 25.715

  • Copper +0.0233 @ 4.1043


Earnings/Guidance:

  • Barrick ( GOLD 1.08% ) on track to achieve 2023 targets

  • Delta Air Lines ( DAL 2.43% ) misses by $0.05, beats on revs; guides Q2 EPS above consensus, revs above two analyst estimate; reaffirms FY23 EPS guidance, revs guidance

  • Fastenal ( FAST 0.19% ) beats by $0.01, reports revs in-line

  • Gatos Silver ( GATO 0.42% ) reports Q1 production results; ended the quarter with record mill throughput at its 70%-owned Cerro Los Gatos mine in Mexico

  • Hecla ( HL 0.91% ) Announces First Quarter Production

  • Horizon Technology Finance ( HRZN 0.26% ) provides Q1 update: originates $47 mln new loans, including $40 mln of loans for HRZN

  • Novo Nordisk A/S ( NVO 3.25% ) raises sales and operating profit outlook for 2023

  • Orla Mining ( ORLA 1.53% ) provided first quarter 2023 operational results

  • Rent the Runway ( RENT 0.63% ) beats by $0.11, beats on revs; guides Q1 and FY23 revs below consensus; co names new CFO

  • Sportsman's Warehouse ( SPWH 4.92% ) beats by $0.04, reports revs in-line; guides Q1 EPS below consensus, revs in-line; CEO to retire; Chairman appointed Interim CEO

  • ViewRay ( VRAY 2.27% ) sees Q1 revs below consensus; lowers FY23 outlook; to evaluate strategic alternatives

News:

  • Fed officials signaled they could increase rates next month despite higher odds of a recession, according to the Wall Street Journal

  • ECB will likely hike rates by 25 basis points in May, according to Reuters

  • White House announces new investments repairing bridges across America

  • US Appeals Court says abortion drug can remain on market with restrictions, according to the New York Times

  • Alibaba ( BABA 5.93% ): SoftBank moves to sell down most of its Alibaba stake, according to Financial Times

  • Amazon ( AMZN 2.09% ) CEO Andy Jassy releases letter to shareholders

  • Apple ( AAPL 0.44% ) tripled India iPhone production to $7 billion, according to Bloomberg

  • Apple ( AAPL 0.44% ) in discussions to produce MacBooks in Thailand, according to Nikkei

  • Ardelyx ( ARDX 2.17% ) presents positive data further supporting efficacy and safety of XPHOZAH (tenapanor) at national kidney foundation 2023 spring clinical meetings

  • Artisan Partners Asset Mgmt ( APAM 0.03% ) reports that its preliminary assets under management as of March 31, 2023 totaled $138.5 billion

  • Boeing ( BA 0.01% ), Republic of Korea explore joint advanced weapons systems collaboration

  • Blackstone ( BX 0.95% ) eyeing junk bonds to replace Emerson private credit loan, according to Bloomberg

  • Cutera's ( CUTR 28.19% ) J. Daniel Plants and David Mowry taking legal action after being stripped of Executive Chairman and CEO positions, respectively

  • Didi Global ( DIDIY ) aiming to introduce robotaxis in 2025, according to Reuters

  • Digital World Acquisition Corp ( DWAC 0.69% ) names several key executives

  • Fox ( FOXA 1.35% ): Judge imposes sanction on Fox for withholding evidence in Dominion case, according to the New York Times

  • Franklin Resources ( BEN 2.72% ) reports preliminary month-end assets under management (AUM) of $1,422.1 billion at March 31, 2023, compared to $1,416.5 billion at February 28, 2023

  • Fusion Pharmaceuticals ( FUSN 4.51% ) announces IND clearance for FPI-2068

  • Garrett Motion ( GTX 0.12% ) reaches agreements with Centerbridge and Oaktree to transform capital structure; also announced an increase in the Company's share repurchase authorization to $250 million

  • Gevo ( GEVO 3.20% ) and LG Chem enter into a joint development agreement to develop bio-propylene for renewable chemicals using Gevo's Ethanol-to-Olefins technology

  • Google ( GOOG 0.85% ) wants judge to end antitrust case, according to the Wall Street Journal

  • Greenwich LifeSciences ( GLSI 5.41% ) provides GP2 Phase IIb clinical trial and Phase III clinical trial updates

  • Harley-Davidson ( HOG 1.32% ) announces that Gina Goetter will step down as CFO at the end of April 2023, David Viney to serve as Interim CFO

  • Hasbro ( HAS 2.12% ) appoints Gina Goetter as CFO, effective May 18; joining from Harley-Davidson (HOG)

  • HEICO ( HEI 0.10% ) disclosed last night a cybersecurity incident that impacted certain of its information technology systems

  • IBM ( IBM 1.44% ) is exploring the sale of its weather operation, which could fetch over $1.0 bln, according to the Wall Street Journal

  • Invesco ( IVZ 1.16% ) reports preliminary month-end assets under management (AUM) of $1,483.0 billion, an increase of 1.7% versus previous month-end

  • Lazard ( LAZ 0.78% ) reports March 2023 assets under management

  • Merck ( MRK 1.12% ) announces the FDA accepted application for KEYTRUDA plus chemotherapy as first-line treatment for locally advanced unresectable or metastatic gastric or gastroesophageal junction adenocarcinoma

  • Occidental Petro ( OXY 0.73% ): CEO Vicki Hollub noted the U.S. Permian basin not seen peak production, according to Reuters; article posted on Financial Post

  • Ring Energy ( REI 0.48% ) announces exercise and price reduction of nearly all of its outstanding warrants

  • Roche Hldg ( RHHBY ) unit Genentech data highlights strength of ophthalmology portfolio and commitment to advancing eye care at ARVO 2023

  • Sana Biotechnology ( SANA 2.74% ) Announces Preclinical Data Published in Science Translational Medicine Showing its Hypoimmune Pancreatic Islet Cells Evaded Allogeneic and Autoimmune Rejection and Controlled Type 1 Diabetes in Preclinical Model

  • Sarepta ( SRPT 1.02% ): FDA staff leaned towards rejecting Sarepta gene therapy before another official intervened, according to Stat News

  • STMicroelectronics ( STM 1.02% ) receives multi-year supply agreement from ZF worth more than 30 billion

  • Tiziana Life Sciences ( TLSA 0.00% ) announces it plans to investigate intranasal foralumab for the treatment of Long COVID

  • Victory Capital ( VCTR 1.94% ) reports assets under management (AUM) of $158.6 billion as of March 31, 2023, and average assets under management for the first quarter of $157.8 billion

  • Virtus Investment Partners ( VRTS 1.29% ) reports preliminary assets under management of $154.8 billion as of March 31, 2023

M&A:

  • Hudbay Minerals ( HBM 0.58% ) to acquire outstanding common shares of Copper Mountain

  • Matador Resources ( MTDR 0.90% ) announces closing of strategic bolt-on Delaware Basin acquisition

  • PNM Resources ( PNM 0.14% ) and Avangrid agree to 3-mo extension of merger agreement thru July 20

  • SiriusPoint ( SPNT 10.05% ) acknowledges indication of interest from Third Point LLC disclosed earlier today to explore potential acquisition of the company

  • Stratasys ( SSYS 2.09% ) Board of Directors unanimously rejects the Nano Dimension (NNDM) revised unsolicited proposal of $20.05/share

Syndicate:

  • BigBear.ai ( BBAI 10.00% ) files mixed shelf securities offering

  • SunPower ( SPWR 2.75% ) secures financing commitments of over $450 mln for its residential solar and storage loan program from HASI (HASI)

  • Talos Energy ( TALO 0.40% ) files 25,467,840 common stock offering by selling shareholders

IPOs:

  • Expected to Price:

    • No IPOs expected.


Gapping Up/Down

  • Gapping up:

    • GLSI +12.6%, FUSN +4.3%, SANA +3.5%, SPWR +3.1%, BEN +3%, HASI +2.9%, STM +2.8%, ARDX +2.4%, SPNT +2%, HAS +1.8%, IVZ +1.7%, BABA +1.4%, PNM +1.3%, GATO +1.1%, GEVO +0.8%


  • Gapping down:

    • SPWH -16.5%, BBAI -7.8%, RENT -4.8%, HOG -3.6%, GTX -3.3%, AGR -1%


Analyst Research (see Upgrades/Downgrades calendar for full list):

  • Upgrades

    • Chevron (CVX) upgraded to Sector Outperform from Sector Perform at Scotiabank; tgt raised to $200

    • DraftKings (DKNG) upgraded to Neutral from Underperform at Exane BNP Paribas; tgt $17

    • EOG Resources (EOG) upgraded to Sector Outperform from Sector Perform at Scotiabank; tgt lowered to $145

    • Merck (MRK) upgraded to Buy from Neutral at Citigroup; tgt raised to $130

    • Steven Madden (SHOO) upgraded to Buy from Neutral at Citigroup; tgt raised to $42

    • SunPower (SPWR) upgraded to Neutral from Underperform at BofA Securities; tgt raised to $15

    • V.F. Corp (VFC) upgraded to Buy from Hold at Edward Jones

    • World Wrestling (WWE) upgraded to Overweight from Equal-Weight at Morgan Stanley; tgt raised to $120


  • Downgrades:

    • BRF SA (BRFS) downgraded to Underperform from Neutral at BofA Securities

    • LSB Industries (LXU) downgraded to Hold from Buy at Jefferies; tgt lowered to $10

    • LyondellBasell (LYB) downgraded to Hold from Buy at Jefferies; tgt lowered to $90

    • CubeSmart (CUBE) downgraded to Peer Perform from Outperform at Wolfe Research

    • Exxon Mobil (XOM) downgraded to Sector Perform from Sector Outperform at Scotiabank; tgt lowered to $135

    • First Solar (FSLR) downgraded to Hold from Buy at Deutsche Bank; tgt raised to $230

    • National Storage Affiliates (NSA) downgraded to Underperform from Peer Perform at Wolfe Research

    • Playtika (PLTK) downgraded to Underperform from Neutral at BofA Securities; tgt $10

    • POSCO (PKX) downgraded to Underweight from Neutral at JP Morgan


  • Others:

    • Broadcom (AVGO) initiated with a Buy at The Benchmark Company; tgt $770

    • CCC Intelligent Solutions (CCCS) initiated with an Overweight at JP Morgan; tgt $11

    • Costco (COST) initiated with an Outperform at William Blair

    • CRISPR Therapeutics (CRSP) initiated with an Overweight at Cantor Fitzgerald; tgt $72

    • FTC Solar (FTCI) initiated with a Buy at H.C. Wainwright; tgt $5

    • General Motors (GM) initiated with a Neutral at Mizuho; tgt $39

    • Intellia Therapeutics (NTLA) initiated with a Buy at Canaccord Genuity; tgt $66

    • Magnite (MGNI) initiated with a Buy at B. Riley Securities; tgt $15

    • Pliant Therapeutics (PLRX) initiated with an Outperform at Robert W. Baird; tgt $44

    • PubMatic (PUBM) initiated with a Buy at B. Riley Securities; tgt $20

    • Primerica (PRI) initiated with a Strong Buy at Raymond James; tgt $244

    • Relay Therapeutics (RLAY) initiated with an Outperform at Raymond James; tgt $29

    • RxSight (RXST) initiated with an Outperform at Oppenheimer; tgt $23

    • Strategic Education (STRA) resumed with a Neutral at BofA Securities; tgt $103

    • Verve Therapeutics (VERV) initiated with a Buy at Canaccord Genuity; tgt $29

    • Vital Farms (VITL) initiated with a Hold at Needham


Econ Data:

  • 08:30 ET: PPI for Mar (Briefing.com Consensus 0.1%; Prior -0.1%)

  • 08:30ET: Core PPI for Mar (Briefing.com Consensus 0.2%; Prior 0.0%)

  • 08:30 ET: Initial Claims for Apr 8 (Briefing.com Consensus 236K; Prior 228K)

  • 08:30 ET: Continuing Claims for Apr 1 (Briefing.com Consensus NA; Prior 1823K)

  • 10:30 ET: EIA Natural Gas Inventories for Apr 8 (Briefing.com Consensus NA; Prior -23 bcf)

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 +0.3%, Hang Seng +0.2%, Shanghai Composite -0.3%

Equity indices in the Asia-Pacific region ended Thursday on a slightly higher note. Softbank is selling most of its stake in Alibaba. Japan's Fast Retailing reported strong results for the first half of the year after markets closed for the day. Australia reported strong employment figures for March, but the market continues expecting that the Reserve Bank of Australia will not raise its cash rate at the policy meeting in May. South Korea may increase electricity and gas prices in Q2.

  • In economic data:

    • China's March trade surplus $88.19 bln (expected surplus of $39.20 bln; last surplus of $116.88 bln). March Imports -1.4% yr/yr (expected -5.0%; last -10.2%) and Exports 14.8% yr/yr (expected -7.0%; last -6.8%)

    • South Korea's March Import Price Index -6.9% yr/yr (expected -0.5%; last -0.7%) and Export Price Index -6.4% yr/yr (expected -2.4%; last -2.6%)

    • India's March trade deficit $19.73 bln (expected deficit of $18.30 bln; last deficit of $17.43 bln). March Imports $58.11 bln (last $51.31 bln) and Exports $38.38 bln (last $33.88 bln)

    • Australia's March Employment Change 53,000 (expected 20,000; last 63,600) and full employment change 72,200 (expected 8,000; last 79,200). March Unemployment Rate 3.5% (expected 3.6%; last 3.5%) and Participation Rate 66.7% (expected 66.6%; last 66.7%). March MI Inflation Expectations 4.6% (expected 4.8%; last 5.0%)


---Equity Markets---

  • Japan's Nikkei: +0.3%

  • Hong Kong's Hang Seng: +0.2%

  • China's Shanghai Composite: -0.3%

  • India's Sensex: +0.1%

  • South Korea's Kospi: +0.4%

  • Australia's ASX All Ordinaries: -0.2%

---FX---

  • USD/JPY: +0.2% to 133.29

  • USD/CNH: +0.1% to 6.8827

  • USD/INR: -0.2% to 81.79

Europe: DAX UNCH, FTSE UNCH, CAC +1.0%

Major European indices trade near their flat lines while France's CAC (+1.0%) outperforms thanks to strength in consumer names after solid results from LVMH. Bank of England Governor Bailey said that institutional structures are being tested by the banking crisis, but the BoE should not turn away from its fight against inflation. There is a growing sense that the European Central Bank will announce a 25-bps rate increase at its May meeting.

  • In economic data:

    • Eurozone's February Industrial Production 1.5% m/m (expected 1.0%; last 1.0%); 2.0% yr/yr (expected 1.5%; last 0.9%)

    • Germany's March CPI 0.8% m/m, as expected (last 0.8%); 7.4% yr/yr, as expected (last 8.7%)

    • U.K.'s February GDP 0.0% m/m (expected 0.1%; last 0.4%). February Construction Output 2.4% m/m (expected 0.9%; last -1.7%); 5.7% yr/yr (expected 1.6%; last 3.3%). February Industrial Production -0.2% m/m (expected 0.2%; last -0.5%); -3.1% yr/yr (expected -3.7%; last -3.2%). February trade deficit GBP17.53 bln (expected deficit of GBP17.00 bln; last deficit of GBP16.09 bln)

    • Italy's February Industrial Production -0.2% m/m (expected 0.5%; last -0.5%); -2.3% yr/yr (expected 2.9%; last 1.6%)


---Equity Markets---

  • STOXX Europe 600: +0.2%

  • Germany's DAX: UNCH

  • U.K.'s FTSE 100: UNCH

  • France's CAC 40: +1.0%

  • Italy's FTSE MIB: UNCH

  • Spain's IBEX 35: +0.1%

---FX---

  • EUR/USD: +0.2% to 1.1015

  • GBP/USD: +0.2% to 1.2509

  • USD/CHF: -0.6% to 0.8905


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