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13/10/23 Briefing


The S&P 500 futures are down 1 points and are trading roughly in line with fair value. The Nasdaq 100 futures are down 45 points and are trading 0.3% below fair value. The Dow Jones Industrial Average futures are up 41 points and are trading 0.1% above fair value.

Stocks futures trade in mixed fashion despite a pullback in Treasury yields and some better than expected earnings results from JPMorgan Chase (JPM), Wells Fargo (WFC), and UnitedHealth (UNH). The 10-yr note yield is down ten basis points to 4.61% and the 2-yr note yield is down two basis points to 5.04%.

These moves are driven by safe-haven activity related to the Israel-Hamas conflicted escalating after Israel warned 1.1 million people in Gaza to evacuate ahead of an expected counteroffensive. 

Oil prices are moving higher in response. WTI crude oil futures are up 4.2% to $86.36/bbl. 

In addition, Rep. Steve Scalise dropped out of the race for Speaker after failing to get enough support. Some Republicans are suggesting empowering Speaker Pro Tempore Patrick McHenry so the House can resume business, according to CNN.

China reported some soft trade data and inflation data that has stirred concerns about the strength of China's economy. The U.S. economic calendar today is limited to the September Export-Import Price Index and the preliminary October University of Michigan Consumer Sentiment Index.

In corporate news:

  • JPMorgan Chase (JPM 147.24, +1.43, +1.0%): beats by $0.38, beats on revs

  • Wells Fargo (WFC 40.67, +0.93, +2.3%): beats by $0.15, beats on revs; raises outlook

  • PNC (PNC 121.06, -0.26, -0.2%): beats by $0.50, misses on revs

  • UnitedHealth (UNH 532.330, +6.76, +1.3%): beats by $0.23, beats on revs; guides FY23 EPS above consensus

  • Boeing (BA 186.50, -4.80, -2.5%): and Spirit AeroSystems (SPR) extended scope of 737 inspections, according to Air Current

  • Microsoft (MSFT 329.72, -1.44, -0.4%): The new deal for Microsoft (MSFT) to buy Activision Blizzard (ATVI) without cloud gaming rights has been cleared by UK CMA

  • JD.com(JD 26.58, -1.25, -4.5%): downgraded to Equal Weight from Overweight at Morgan Stanley; subject of unconfirmed rumors that Chairman was arrested, according to Bloomberg

  • Dollar General (DG 108.90, +7.07, +6.9%): appoints Todd Vasos as CEO; succeeds Jeff Owen, whose resignation was effective Oct. 12; projects FY24 EPS below consensus; upgraded to Buy from Hold at Gordon Haskett

  • Belden (BDC 81.79, -13.48, -14.2%): lowers Q3 EPS and revenue guidance below consensus due to ongoing pressures from channel destocking

  • SMART Global (SGH 17.01, -6.57, -27.9%): misses by $0.11, misses on revs; guides Q1 EPS below consensus, revs below consensus

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region ended the week on a mostly lower note. Japan's Nikkei: -0.6% (+4.3% for the week), Hong Kong's Hang Seng: -2.3% (+1.9% for the week), China's Shanghai Composite: -0.6% (-0.7% for the week), India's Sensex: -0.2% (+0.4% for the week), South Korea's Kospi: -1.0% (+2.0% for the week), Australia's ASX All Ordinaries: -0.6% (+1.4% for the week).

  • In economic data:

  • China's September CPI 0.2% m/m (expected 0.3%; last 0.3%); 0.0% yr/yr (expected 0.2%; last 0.1%). September PPI -2.5% yr/yr (expected -2.4%; last -3.0%). September trade surplus $77.71 bln (expected surplus of $70.00 bln; last surplus of $68.36 bln). September Imports -6.2% yr/yr (expected -6.0%; last -7.3%) and Exports -6.2% yr/yr (expected -7.6%; last -8.8%). September New Loans CNY2.31 trln (expected CNY2.50 trln; last CNY1.36 trln). September Outstanding Loan Growth 10.9% yr/yr (expected 11.1%; last 11.1%). September total social financing CNY4.12 trln (CNY3.80 trln; last CNY3.12 trln)

  • South Korea's September Unemployment Rate 2.6% (last 2.4%)

  • India's September trade deficit $19.37 bln (expected deficit of $23.25 bln; last deficit $24.16 bln)

  • Singapore's Q3 GDP 1.0% qtr/qtr (expected 0.5%; last 0.1%); 0.7% yr/yr (expected 0.4%; last 0.5%)

  • New Zealand's September Manufacturing PMI 45.3 (last 46.1). September Electronic Card Sales -0.8% m/m (last 0.6%); 1.6% yr/yr (last 4.2%)

  • In news:

  • China reported a larger than expected trade surplus for September, coupled with larger than expected total social financing for the month.

  • In addition, Chinese officials are looking into establishing a new stabilization fund to support the stock market and implementing policy to boost consumption.

  • Major European indices trade in the red. STOXX Europe 600: -0.7% (+1.3% week-to-date), Germany's DAX: -0.7% (+0.5% week-to-date), U.K.'s FTSE 100: -0.3% (+1.7% week-to-date), France's CAC 40: -0.7% (-0.1% week-to-date), Italy's FTSE MIB: -0.4% (+2.1% week-to-date), Spain's IBEX 35: -0.5% (+0.6% week-to-date).

  • In economic data:

  • Eurozone's August Industrial Production 0.6% m/m (expected 0.1%; last -1.1%); -5.1% yr/yr (expected -3.5%; last -2.2%)

  • France's September CPI -0.5% m/m, as expected (last 1.0%); 4.9% yr/yr, as expected (last 4.9%)

  • Spain's September CPI 0.2% m/m, as expected (last 0.5%); 3.5% yr/yr, as expected (last 2.6%)

  • Swiss September PPI -0.1% m/m (expected 0.2%; last -0.2%); -1.0% yr/yr (last -0.8%)

  • In news:

  • European Central Bank policymaker Visco said that he does not see signs suggesting that bond spreads will widen to levels that will warrant action from the ECB.

  • Meanwhile, policymaker Nagel said that the German economy is likely to show a contraction for 2023 and that inflation has likely passed its peak.

  • Bank of England Governor Bailey said that policy has to remain restrictive while Chancellor Hunt said that the U.K. is now in worse fiscal shape than it was in the spring.

 

U.S. equity futures:

  • S&P 500 Futures UNCH @ 4,349

  • DJIA Futures: +49 @ 33,680

  • Nasdaq 100 Futures: -40 @ 15,2144

Overseas:

  • Europe: DAX -0.7%, FTSE -0.3%, CAC -0.7%

  • Asia: Nikkei -0.6%, Hang Seng -2.3%, Shanghai Composite -0.6%

Commodities:

  • Crude Oil +3.47 @ 86.38

  • Nat Gas -0.065 @ 3.279

  • Gold +25.85 @ 1908.25

  • Silver +0.489 @ 22.448

  • Copper -0.0098 @ 3.5812

Earnings/Guidance:

  • Belden (BDC) lowers Q3 EPS and revenue guidance below consensus due to ongoing pressures from channel destocking

  • BlackRock (BLK) beats by $2.57, reports revs in-line

  • Comtech Telecom (CMTL) beats single analyst estimate by $0.58, beats on revs

  • Delta Air Lines (DAL) provides financial commentary in 10-Q filing: expects to continue generating positive cash flows from operations during the remainder of 2023

  • Dollar General (DG) provides updated FY24 (Jan) guidance; projects EPS below consensus, revs in-line; lowers comp outlook

  • EQT Corp. (EQT) disclosed last night that it expects to report a total gain on derivatives of $178 million for the three months ended September 30, 2023

  • IDT Corp (IDT) reports Q4 (Jul) earnings of $0.36, down from $0.67 in the year-ago period; increased recurring revs 6% yr/yr to $18.8 mln; added approximately 12,000 net2phone seats served; BOSS Money increased transactions 42% yr/yr

  • JPMorgan Chase (JPM) beats by $0.38, beats on revs

  • Nurix Therapeutics (NRIX) beats by $0.16, beats on revs

  • Outset Medical (OM) issues downside revenue guidance for Q3 and FY23

  • PNC (PNC) beats by $0.50, misses on revs

  • SMART Global (SGH) misses by $0.11, misses on revs; guides Q1 EPS below consensus, revs below consensus

  • UnitedHealth (UNH) beats by $0.23, beats on revs; guides FY23 EPS above consensus

  • Vertex Energy (VTNR) provides operational update for third quarter 2023

  • Wells Fargo (WFC) beats by $0.15, beats on revs; raises outlook

News:

  • Rep. Steve Scalise drops out of the race for Speaker after failing to get enough support. Some Republicans are suggesting empowering Speaker Pro Tempore Patrick McHenry so the House can resume business, according to CNN

  • Israel warns 1.1 mln people in Gaza to evacuate ahead of expected counteroffensive, according to CNN

  • China proposes a stock stabilization fund, according to Financial Times

  • President Biden considers extending artificial intelligence curbs, according to Reuters

  • Boston Fed President Collins (non FOMC voter) believes we may be at, or very near, the peak for this cycle, but not taking further tightening off the table yet

  • AbCellera Biologics (ABCL) provides antibody drug candidate update

  • Amylyx Pharmaceuticals (AMLX) announces that the Committee for Medicinal Products for Human Use of the European Medicines Agency confirmed its initial negative opinion on the Marketing Authorisation Application for AMX0035, under the trade name ALBRIOZA, for the treatment of amyotrophic lateral sclerosis in the European Union

  • Boeing (BA) and Spirit AeroSystems (SPR) extended scope of 737 inspections, according toAir Current

  • Cassava Sciences' (SAVA) co-developer of its Alzheimer's drug cited for misconduct, according to Science.org

  • Cassava Sciences (SAVA) issues statement regarding an internal CUNY report leaked to the press

  • Chevron (CVX) makes some progress with liquified natural gas unions in Australia, according to Reuters

  • Discover Financial Services (DFS): credit card delinquency rate for September was 1.63%, up from 1.51% in August and 1.12% in the year-ago period

  • Dollar General (DG) appoints Todd Vasos as CEO; succeeds Jeff Owen, whose resignation is effective today

  • Euronav (EURN) announced last night an agreement to lift the option for a second VLCC new build

  • JD.com(JD) subject of unconfirmed rumors that Chairman was arrested, according to Bloomberg

  • Lending Club (LC) announces 14% workforce reduction; guides Q3 revs in-line

  • Lockheed Martin (LMT) awarded $380 mln U.S. Navy order against a previously issued basic ordering agreement

  • Merck (MRK): EU's CHMP adopted a positive opinion recommending approval of KEYTRUDA, Merck's anti-PD-1 therapy, in combination with fluoropyrimidine- and platinum-containing chemotherapy

  • Mitek Systems (MITK) disclosed Nasaq Panel granted the Company's requested extension, providing the Company until November 3, 2023to file the Q3 Form 10-Q

  • Nuvalent (NUVL) Reports Preliminary Phase 1 Clinical Data from ALKOVE-1 Trial that Support Best-In-Class Potential of NVL-655 for Patients with ALK-Positive NSCLC

  • OPAL Fuels (OPAL) announces that Ann Anthony has notified the Co of her intention to resign as CFO; Scott Contino appointed interim CFO

  • OpenAI close to share sale that will value company at $90 bln, according to the New York Post

  • Orion Group (ORN) announces significant design-build contract award for grand Bahama shipyard dry dock and $121 million in additional awards

  • Ouster (OUST) Continues its patent case against Hesai (HSAI) in district court and seeks to bar infringing products in the United States

  • Pfizer (PFE): EU CHMP adopted a positive opinion, recommending the granting of a conditional marketing authorisation for the medicinal product Elrexfio, intended for the treatment of multiple myeloma

  • Qualcomm (QCOM) to lay off 1,258 employees in two of its California offices, according to CNBC

  • Relay Therapeutics (RLAY) Announces Initial RLY-4008 (lirafugratinib) Data Demonstrating Durable Responses Across Multiple FGFR2-Altered Solid Tumors

  • Reynolds Consumer Products (REYN) announces appointment of Scott Huckins as its Chief Financial Officer, effective November 13, 2023

  • Riley Exploration Permian (REPX) increases quarterly cash dividend to $0.36/share from $0.34/share

  • Sempra Energy's (SRE) SoCalGas confirmed DOE decision to award California up to $1.2 bln for a regional clean hydrogen hub

  • Sight Sciences (SGHT) Announces Presentation of Successful Phase I Results of the SAHARA Randomized Controlled Clinical Trial Comparing TearCare to Restasis for the Treatment of Dry Eye Disease at the American Academy of Optometry Annual Meeting

  • The Cigna Group (CI) expands Medicare Advantage presence to Nevada for the first time, launching in two counties in Las Vegas area

  • Vigil Neuroscience (VIGL) receives 30-day response letter from FDA regarding previously communicated partial clinical hold on its Investigational New Drug application for VG-3927; states non-clinical data will need to be provided

M&A:

  • Activision Blizzard (ATVI): The new deal for Microsoft (MSFT) to buy ATVI without cloud gaming rights has been cleared by UK CMA

  • Block (SQ) acquires Hifi

  • Bowman Consulting Group (BWMN) announces the acquisition of Dennis Corporation

  • Bridgetown Holdings (BTWN): MoneyHero Group successfully completes business combination with Bridgetown Holdings Limited

  • Comtech Telecom (CMTL): Stellant Systems to acquire power systems technology product line from Comtech for a total cash purchase of $40 mln

  • iRobot (IRBT) disclosed last night that stockholders voted to approve and adopt the amended Amazon (AMZN) merger agreement; expected to close promptly after all required regulatory clearances have been received

  • Kroger (KR): California AG preparing to block Kroger's pending purchase of Albertsons (ACI), according to Bloomberg Law

  • Sharecare (SHCR) confirms it received a takeover proposal from Claritas Capital for $1.35-1.80 per share

  • SunOpta (STKL) to sell frozen fruit assets to Nature's Touch for $141 mln; appoints Greg Gaba as new CFO; reports prelim Q3 guidance

Syndicate:

  • AGNC Investment (AGNC) implemented a new "at the market" common stock issuance program

IPOs:

  • Didi (DIDIY) planning Hong Kong listing next year, according to Bloomberg

  • Expected to Price: No IPOs expected.

Gapping Up/Down

  • Gapping up:

  • CMTL +17.3%, DG +7.5%, AVNT +4.4%, SHCR+1.8%, KR +1.3%, NWN +1.2%, BLK +1.2%, REYN +1.1%, NRIX +1.1%, UNH +0.7%, HSAI+0.6%

  • Gapping down:

  • OM -39.7%, SAVA -28.8%, SGH -25.8%, BDC-14.1%, VIGL -5.6%, IDT -3.2%, CI -3%, RLAY-2.5%, SGHT -2.3%, EQT -2.1%, QCOM-0.8%, DAL -0.7%, ACI -0.7%, MSFT -0.5%

 

Analyst Research (see Upgrades/Downgradescalendarfor full list):

  • Upgrades

  • Afya (AFYA) upgraded to Overweight from Equal-Weight at Morgan Stanley; tgt raised to $20.50

  • Hecla Mining (HL) upgraded to Buy from Neutral at ROTH MKM; tgt raised to $4.40

  • Kilroy Realty (KRC) upgraded to Buy from Hold at Jefferies; tgt raised to $35

  • MorphoSys (MOR) upgraded to Overweight from Underweight at Morgan Stanley; tgt raised to $9.20

  • Varonis Systems (VRNS) upgraded to Overweight from Equal Weight at Barclays; tgt raised to $37

  • Downgrades:

  • Eversource Energy (ES) downgraded to Neutral from Buy at Guggenheim; tgt $60

  • Fortinet (FTNT) downgraded to Equal Weight from Overweight at Barclays; tgt lowered to $63

  • InMode (INMD) downgraded to Hold from Buy at Canaccord Genuity; tgt lowered to $22

  • Netflix (NFLX) downgraded to Peer Perform from Outperform at Wolfe Research

  • TechnipFMC (FTI) downgraded to Hold from Buy at Jefferies; tgt raised to $22

  • Tractor Supply (TSCO) downgraded to Perform from Outperform at Oppenheimer; tgt lowered to $210

  • Others:

  • American Tower (AMT) initiated with a Sector Outperform at Scotiabank; tgt $208

  • Crown Castle (CCI) initiated with a Sector Perform at Scotiabank; tgt $110

  • Equinix (EQIX) initiated with a Sector Outperform at Scotiabank; tgt $856

  • Groupon (GRPN) initiated with a Buy at ROTH MKM; tgt $30

  • Mereo BioPharma (MREO) assumed with a Buy at BTIG Research; tgt $4

  • Ovid Therapeutics (OVID) initiated with an Outperform at Oppenheimer; tgt $8

  • Veeva Systems (VEEV) initiated with a Buy at Jefferies; tgt $265

Econ Data:

  • 08:30 ET: Export Prices for Sep (Briefing.comConsensus NA; Prior 1.3)

  • 08:30 ET: Export Prices ex-ag. for Sep (Briefing.comConsensus NA; Prior 1.7%)

  • 08:30 ET: Import Prices for Sep (Briefing.comConsensus NA; Prior 0.5%)

  • 08:30 ET: Import Prices ex-oil for Sep (Briefing.comConsensus NA; Prior -0.1%)

  • 10:00 ET: Univ. of Michigan Consumer Sentiment - Prelim for Oct (Briefing.comConsensus 67.5; Prior 68.1)

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 -0.6%, Hang Seng -2.3%, Shanghai Composite -0.6%

Equity indices in the Asia-Pacific region ended the week on a mostly lower note. China reported a larger than expected trade surplus for September, coupled with larger than expected total social financing for the month. In addition, Chinese officials are looking into establishing a new stabilization fund to support the stock market and implementing policy to boost consumption.

  • In economic data:

  • China's September CPI 0.2% m/m (expected 0.3%; last 0.3%); 0.0% yr/yr (expected 0.2%; last 0.1%). September PPI -2.5% yr/yr (expected -2.4%; last -3.0%). September trade surplus $77.71 bln (expected surplus of $70.00 bln; last surplus of $68.36 bln). September Imports -6.2% yr/yr (expected -6.0%; last -7.3%) and Exports -6.2% yr/yr (expected -7.6%; last -8.8%). September New Loans CNY2.31 trln (expected CNY2.50 trln; last CNY1.36 trln). September Outstanding Loan Growth 10.9% yr/yr (expected 11.1%; last 11.1%). September total social financing CNY4.12 trln (CNY3.80 trln; last CNY3.12 trln)

  • South Korea's September Unemployment Rate 2.6% (last 2.4%)

  • India's September trade deficit $19.37 bln (expected deficit of $23.25 bln; last deficit $24.16 bln)

  • Singapore's Q3 GDP 1.0% qtr/qtr (expected 0.5%; last 0.1%); 0.7% yr/yr (expected 0.4%; last 0.5%)

  • New Zealand's September Manufacturing PMI 45.3 (last 46.1). September Electronic Card Sales -0.8% m/m (last 0.6%); 1.6% yr/yr (last 4.2%)

---Equity Markets---

  • Japan's Nikkei: -0.6% (+4.3% for the week)

  • Hong Kong's Hang Seng: -2.3% (+1.9% for the week)

  • China's Shanghai Composite: -0.6% (-0.7% for the week)

  • India's Sensex: -0.2% (+0.4% for the week)

  • South Korea's Kospi: -1.0% (+2.0% for the week) 

  • Australia's ASX All Ordinaries: -0.6% (+1.4%for the week)

---FX---

  • USD/JPY: -0.1% to 149.60

  • USD/CNH: +0.1% to 7.3113

  • USD/INR: UNCH at 83.25

 

Europe: DAX -0.7%, FTSE -0.3%, CAC -0.7%

Major European indices trade in the red. European Central Bank policymaker Visco said that he does not see signs suggesting that bond spreads will widen to levels that will warrant action from the ECB. Meanwhile, policymaker Nagel said that the German economy is likely to show a contraction for 2023 and that inflation has likely passed its peak. Bank of England Governor Bailey said that policy has to remain restrictive while Chancellor Hunt said that the U.K. is now in worse fiscal shape than it was in the spring.

  • In economic data:

  • Eurozone's August Industrial Production 0.6% m/m (expected 0.1%; last -1.1%); -5.1% yr/yr (expected -3.5%; last -2.2%)

  • France's September CPI -0.5% m/m, as expected (last 1.0%); 4.9% yr/yr, as expected (last 4.9%)

  • Spain's September CPI 0.2% m/m, as expected (last 0.5%); 3.5% yr/yr, as expected (last 2.6%)

  • Swiss September PPI -0.1% m/m (expected 0.2%; last -0.2%); -1.0% yr/yr (last -0.8%)

---Equity Markets---

  • STOXX Europe 600: -0.7% (+1.3% week-to-date)

  • Germany's DAX: -0.7% (+0.5% week-to-date)

  • U.K.'s FTSE 100: -0.3% (+1.7% week-to-date)

  • France's CAC 40: -0.7% (-0.1% week-to-date)

  • Italy's FTSE MIB: -0.4% (+2.1% week-to-date)

  • Spain's IBEX 35: -0.5% (+0.6% week-to-date)

---FX---

  • EUR/USD: -0.1% to 1.0524

  • GBP/USD: UNCH at 1.2180

  • USD/CHF: UNCH at 0.9076

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