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14/09/22 Briefing


The S&P 500 futures are down 6 points and are trading 0.7% below fair value. The Nasdaq 100 futures are down 23 points and are trading 0.8% below fair value. The Dow Jones Industrial Average futures are down 55 points and are trading 0.5% below fair value.

Equity futures are modestly weaker as participants weigh concerns over the Fed raising rates higher than expected for longer than expected and the potential for a hard landing. This comes ahead of another inflation reading out later this morning, the August PPI release. 

Overseas, there was some speculation that the Bank of Japan is preparing to intervene in the currency market to slow the yen's depreciation against the dollar.

The MBA Mortgage Application Index fell 1.2% compared to last week. Purchase applications rose 0.2% while refinancing applications fell 4.0%. 

Other economic data released today includes August PPI (Briefing.comconsensus -0.1%; prior -0.5%) and core PPI (Briefing.comconsensus +0.3%; prior +0.2%) at 8:30 a.m. ETand EIA Crude Oil Inventories (prior +8.84 million) at 10:30 a.m. ET.

Treasury yields are on the rise this morning with the 2-yr note yield up seven basis points to 3.83% and the 10-yr note yield up four basis points to 3.46%. The US Dollar Index is down 0.2% to 109.61.

In corporate news:

  • Warner Bros. Discovery (WBD 12.90, -0.05, -0.39%): lower on report it plans to layoff about 30% of its ad sales employees, according to Deadline

  • Johnson & Johnson (JNJ 161.83, +0.50, +0.31%): authorized the repurchase of up to $5 billion of the company's common stock; reaffirms its full-year 2022 guidance

  • Stellantis (STLA 13.61, +0.20, +1.49%): Company and General Motors (GM) to execute a share repurchase transaction

  • Starbucks (SBUX 89.25, +1.41, +1.61%):  provides new growth targets in Reinvention Plan

  • Raytheon Technologies (RTX 84.30, +0.58, +0.69%): lowers its FY22 free cash flow outlook to account for the impact of certain legislation; reaffirms FY22 sales and EPS guidance

  • Flowserve (FLS 30.02, -0.77, -2.50%): provides an update on expected Q3 results, disclosing that two events are expected to negatively impact EPS by $0.18-$0.22

  • Alphabet (GOOG 105.53, +0.22, +0.21%):  EU General Court largely confirms the Commission's decision that Google imposed unlawful restrictions on manufacturers of Android mobile devices and mobile network operators in order to consolidate the dominant position of its search engine

  • Akero Therapeutics (AKRO 28.70, -0.35, -1.20%): commences $175 mln common stock offering; upgraded to Outperform from In-line at Evercore ISI

  • Nucor (NUE 129.25, -6.85, -5.03%): sees Q3 earnings below consensus

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region ended the midweek session on a lower note after yesterday's sharp slide on Wall Street. Japan's Nikkei: -2.8%, Hong Kong's Hang Seng: -2.5%, China's Shanghai Composite: -0.8%, India's Sensex: -0.4%, South Korea's Kospi: -0.4%, Australia's ASX All Ordinaries: -2.5%.

  • In economic data:

  • Japan's July Core Machinery Orders 5.3% m/m (expected -0.8%; last 0.9%); 12.8% yr/yr (expected 6.6%; last 6.5%). September Reuters Tankan Index 10 (last 13). July Industrial Production 0.8% m/m (expected 1.0%; last 9.2%) and Capacity Utilization 2.4% m/m (last 9.6%)

  • India's August WPI Inflation 12.41% yr/yr (expected 13.00%; last 13.93%)

  • Singapore's Q2 Unemployment Rate 2.1% (last 2.1%)\

  • New Zealand's Q2 Current Account -7.7% of GDP (expected -7.4% of GDP; last -6.5% of GDP)

  • In news:

  • There was some speculation that the Bank of Japan is preparing to intervene in the currency market to slow the yen's depreciation against the dollar.

  • South Korea's Finance Ministry also reiterated that it will closely monitor currency and financial markets.

  • India's wholesale inflation slowed a bit in August.

  • Major European indices trade on a mostly lower note while Spain's IBEX (+0.2%) and Italy's MIB (+0.4%) outperform with financials contributing to the relative strength. STOXX Europe 600: -0.6%, Germany's DAX: -0.7%, U.K.'s FTSE 100: -1.1%, France's CAC 40: -0.5%, Italy's FTSE MIB: +0.4%, Spain's IBEX 35: +0.2%.

  • In economic data:

  • Eurozone's July Industrial Production -2.3% m/m (expected -1.0%; last 1.1%); -2.4% yr/yr (expected 0.4%; last 2.2%)

  • U.K.'s August CPI 0.5% m/m (expected 0.6%; last 0.6%); 9.9% yr/yr (expected 10.2%; last 10.1%). August Core CPI 0.8% m/m, as expected (last 0.3%); 6.3% yr/yr, as expected (last 6.2%). August Input PPI -1.2% m/m (expected 0.3%; last 0.0%) and Output PPI -0.1% m/m (expected 0.9%; last 1.6%)

  • In news:

  • The U.K. reported a slight unexpected deceleration in its yr/yr CPI growth rate.

  • European Commission President von der Leyen announced measures aimed at dealing with the region's energy crisis.

  • French Finance Ministry announced that its domestic growth forecast for 2023 was reduced to 1.0% from 1.4%.

 

U.S. equity futures:

  • S&P 500 Futures: -1 @ 3,932

  • DJIA Futures: -12 @ 31,093

  • Nasdaq 100 Futures: -4 @ 12,030

Overseas:

  • Europe: DAX -0.7%, FTSE -1.1%, CAC -0.5%

  • Asia: Nikkei -2.8%, Hang Seng -2.5%, Shanghai Composite -0.8%

Commodities:

  • Crude Oil -0.59 @ 86.72

  • Nat Gas  +0.062 @ 8.346

  • Gold -5.70 @ 1711.70

  • Silver -0.036  @ 19.455

  • Copper -0.0450 @ 3.5105

U.S. Summary:

  • Earnings/Guidance:

  • Ashland (ASH) provides long term growth objectives in presentation with organic sales growth 5-6% and EBITDA margin expansion +100 bps per year; reaffirms 2022 confirmed - tracking to high-end of sales and EBITDA ranges

  • Broadridge Financial (BR) reaffirms FY23 outlook in investor presentation

  • BRP Inc. (DOOO) beats by CAD0.31, beats on revs; guides FY23 EPS above consensus, revs above consensus

  • Evolution Petroleum (EPM) beats on top and bottom lines

  • Flowserve (FLS) provides an update on expected Q3 results, disclosing that two events are expected to negatively impact EPS by $0.18-$0.22

  • Goosehead Insurance (GSHD) reaffirms FY22 outlook

  • Li-Cycle (LICY) misses by $0.03

  • Nucor (NUE) sees Q3 earnings below consensus

  • O-I Glass (OI) raises EPS guidance for Q3 and FY22, raises free cash flow guidance for FY22

  • Radiant Logistics (RLGT) beats single est by $0.18, beats single est on revs

  • Raytheon Technologies (RTN) lowers its FY22 free cash flow outlook to account for the impact of certain legislation; reaffirms FY22 sales and EPS guidance

  • General News:

  • EU Commission President announces plan for dealing with energy crisis, according to Reuters

  • Conflicting high-level opinions about appropriate rate-hike path, according to Bloomberg

  • IEA releases September Oil Market Report - growth in global oil demand continues to decelerate

  • Aditx (ADTX) announced 1-for-50 reverse stock split effective pre-market opening on September 14, 2022

  • Altimmune (ALT) Announces Significant Reductions in Liver Fat Content and Body Weight in 12-Week Phase 1b Clinical Trial of Pemvidutide in Subjects with NAFLD

  • Amazon (AMZN) workers in upstate NY to vote on unionization in October, according to the Wall Street Journal

  • Alphabet (GOOG): EU General Court largely confirms the Commission's decision that Google imposed unlawful restrictions on manufacturers of Android mobile devices and mobile network operators in order to consolidate the dominant position of its search engine

  • Apple (AAPL) planning ad placement changes in App store, according to CNBC

  • BankUnited (BKU) authorizes the repurchase of up to $150 mln of its stock

  • BWXT Medical (BWXT) Submits Tc-99m Generator New Drug Application to FDA

  • Canadian Solar's (CSIQ) subsidiary to launch SolBank, a manufactured energy storage battery solution for utility-scale applications

  • Centrus Energy (LEU) secures $320 mln in new sales contracts and commitments

  • Compass Minerals (CMP) announces $252 mln strategic equity investment partnership with Koch Minerals & Trading LLC

  • Denison (DNN) Announces Intersection of Additional High-Grade Uranium Mineralization at Waterfound

  • Emerald Holding (EEX) receives final proceeds relating to insurance litigation settlement

  • General Motors (GM) to use own chip in self-driving cars, according to Reuters

  • Granite Constr (GVA) awarded approximately $20 mln construction contract by the Tucson Airport Authority to reconstruct on outboard taxiway

  • IBM (IBM) to transfer approximately $16 bln of defined benefit pension obligations

  • Johnson & Johnson (JNJ) authorized the repurchase of up to $5 billion of the company's common stock; reaffirms its full-year 2022 guidance

  • Laureate Education's (LAUR) Sumadi business joins Amazon Web Services Partner Network

  • Manning & Napier Advisors (MN) reports preliminary assets under management of $18.7 bln as of August 31, 2022, down 3.1% from July 31, 2022

  • NGM Bio (NGM) Presents Updated Preliminary Findings from the Ongoing Phase 1b Dose Escalation Trial of NGM120 in Combination with Gemcitabine and Nab-paclitaxel in Patients with Metastatic Pancreatic Cancer at AACR Special Conference: Pancreatic Cancer

  • Regional Mgmt (RM) expands operations into Louisiana with the opening of its first branch

  • Rio Tinto (RIO) and Baowu agree to form joint venture to develop Western Range

  • SilverCrest Metals (SILV) provides update on commissioning activities at Las Chispas Mine; Processing plant metallurgical recovery and daily throughput are trending ahead of Feasibility Study ramp-up projections

  • Starbucks (SBUX) provides new growth targets in Reinvention Plan

  • Starbucks (SBUX): Controversy surrounding unionization effort at Starbucks in NY, according to the New York Times

  • Stellantis (STLA) and General Motors (GM) to execute a share repurchase transaction

  • Taboola (TBLA) announces restructuring program, including global headcount reduction of approximately 6%, that will result in $50 mln in savings in 2023; also reaffirms guidance for Q3

  • Tencent (TCEHY) receives first game approval in over a year, according to the Wall Street Journal

  • Tesla (TSLA) hired a senior government official in Ontario to lead its mineral supply chain efforts in Canada, according to Electrek

  • Treace Medical Concepts (TMCI) provides updated ALIGN3D data at 2022 AOFAS annual meeting

  • Warner Bros. Discovery (WBD) plans to layoff about 30% of its ad sales employees, according to Deadline

  • M&A:

  • Alpha Star Acquisition Corporation (ALSA) signed letter of intent for a business combination with Cyclebit Group

  • Altair Engineering (ALTR) signs definitive agreement to acquire RapidMiner; terms of deal not disclosed

  • CatchMark Timber Trust (CTT) shareholders approve previously announced merger of CatchMark with and into a subsidiary of PotlatchDeltic (PCH)

  • Cross Country (CCRN) acquires assets of Mint Medical Physician Staffing and Lotus Medical Staffing

  • Primo Water (PRMW) unit has acquired Eureau Sources and Defeaus, two French companies specializing in the marketing and packaging of spring water; no financial terms disclosed

  • Twitter (TWTR) stockholders approve previously announced merger agreement for Twitter to be acquired by affiliates of Elon Musk for $54.20/share in cash

  • Syndicate

  • Akero Therapeutics (AKRO) commences $175 mln common stock offering

  • CoStar Group (CSGP) announces public offering of common stock in conjunction with inclusion into the S&P 500 Index

  • Edgewise Therapeutics (EWTX) prices offering of 11,627,907 shares of its common stock at $10.32 per share

  • POINT Biopharma (PNT) prices offering of 13.9 mln shares of common stock at $9.00 per share

  • IPOs:

  •  Expected to Price:

  • Corebridge Financial (NYSE: CRBG): The spin-off of AIG (AIG), which is one of the largest providers of retirement solutions and insurance products in the United States, is expected to price its 80.0 M share IPO between $21-$24.

Gapping Up/Down

  • Gapping up:

  • DWIN +18.5%, EPM +11%, NGM +6.1%, RLGT +5.3%, TBLA +4.5%, SBUX +2.6%, APEI +2.3%, STLA +2.3%, EWTX +2.1%, CCRN +1.9%, DOOO +1.4%, RTX +1.2%, RIO +1.1%, LICY +1.1%, O+0.8%, BWXT +0.8%

  • Gapping down:

  • PNT -8.5%, AKRO -2.5%, FLS -2.5%, GSHD -1.2%, CPA -1%, TWTR -0.8%, WBD -0.5%

 

Analyst Research (see Upgrades/Downgradescalendarfor full list):

  • Upgrades

  • Akero Therapeutics (AKRO) upgraded to Outperform from In-line at Evercore ISI; tgt raised to $50

  • SL Green Realty (SLG) upgraded to Buy from Hold at Truist; tgt $59

  • SoFi Technologies (SOFI) upgraded to Buy from Neutral at BofA Securities; tgt raised to $9

  • Downgrades:

  • Avantor (AVTR) downgraded to Market Perform from Outperform at Cowen; tgt lowered to $28

  • Block (SQ) downgraded to Underperform from Outperform at Evercore ISI; tgt lowered to $55

  • Union Pacific (UNP) downgraded to Mkt Perform from Outperform at Bernstein; tgt lowered to $230

  • Others:

  • ADTRAN (ADTN) initiated with a Hold at WestPark Capital

  • Calix Networks (CALX) initiated with a Buy at WestPark Capital; tgt $75

  • Clearfield (CLFD) initiated with a Hold at WestPark Capital

  • Extreme Networks (EXTR) initiated with a Buy at WestPark Capital; tgt $20

  • Ribbon Communications (RBBN) initiated with a Hold at WestPark Capital

Upcoming Events:

  • Econ Data:

  • 07:00 ET: MBA Mortgage Applications Index for Sept. 10 (Briefing.comConsensus NA; Prior -0.8%)

  • 08:30 ET: PPI for Aug (Briefing.comConsensus -0.1%; Prior -0.5%)

  • 08:30 ET: Core PPI for Aug (Briefing.comConsensus 0.3%; Prior 0.2%)

  • 10:30 ET: EIA Crude Oil Inventories for Sept 10 (Briefing.comConsensus NA; Prior +8.84M)


Asia & Europe detail:

Asia: Nikkei -2.8%, Hang Seng -2.5%, Shanghai Composite -0.8%

Equity indices in the Asia-Pacific region ended the midweek session on a lower note after yesterday's sharp slide on Wall Street. There was some speculation that the Bank of Japan is preparing to intervene in the currency market to slow the yen's depreciation against the dollar. South Korea's Finance Ministry also reiterated that it will closely monitor currency and financial markets. India's wholesale inflation slowed a bit in August.

  • In economic data:

  • Japan's July Core Machinery Orders 5.3% m/m (expected -0.8%; last 0.9%); 12.8% yr/yr (expected 6.6%; last 6.5%). September Reuters Tankan Index 10 (last 13). July Industrial Production 0.8% m/m (expected 1.0%; last 9.2%) and Capacity Utilization 2.4% m/m (last 9.6%)

  • India's August WPI Inflation 12.41% yr/yr (expected 13.00%; last 13.93%)

  • Singapore's Q2 Unemployment Rate 2.1% (last 2.1%)

  • New Zealand's Q2 Current Account -7.7% of GDP (expected -7.4% of GDP; last -6.5% of GDP)

---Equity Markets---

  • Japan's Nikkei: -2.8%

  • Hong Kong's Hang Seng: -2.5%

  • China's Shanghai Composite: -0.8% 

  • India's Sensex: -0.4%

  • South Korea's Kospi: -0.4%

  • Australia's ASX All Ordinaries: -2.5%

---FX---

  • USD/JPY: -1.0% to 143.25

  • USD/CNH: -0.2% to 6.9702

  • USD/INR: -0.2% to 79.44

Europe: DAX -0.7%, FTSE -1.1%, CAC -0.5%

Major European indices trade on a mostly lower note while Spain's IBEX (+0.2%) and Italy's MIB (+0.4%) outperform with financials contributing to the relative strength. The U.K. reported a slight unexpected deceleration in its yr/yr CPI growth rate. European Commission President von der Leyen announced measures aimed at dealing with the region's energy crisis. French Finance Ministry announced that its domestic growth forecast for 2023 was reduced to 1.0% from 1.4%.

  • In economic data:

  • Eurozone's July Industrial Production -2.3% m/m (expected -1.0%; last 1.1%); -2.4% yr/yr (expected 0.4%; last 2.2%)

  • U.K.'s August CPI 0.5% m/m (expected 0.6%; last 0.6%); 9.9% yr/yr (expected 10.2%; last 10.1%). August Core CPI 0.8% m/m, as expected (last 0.3%); 6.3% yr/yr, as expected (last 6.2%). August Input PPI -1.2% m/m (expected 0.3%; last 0.0%) and Output PPI -0.1% m/m (expected 0.9%; last 1.6%)

---Equity Markets---

  • STOXX Europe 600: -0.6%

  • Germany's DAX: -0.7%

  • U.K.'s FTSE 100: -1.1%

  • France's CAC 40: -0.5%

  • Italy's FTSE MIB: +0.4%

  • Spain's IBEX 35: +0.2%

---FX---

  • EUR/USD: +0.3% to 0.9997

  • GBP/USD: +0.5% to 1.1545

  • USD/CHF: -0.1% to 0.9608


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The S&P 500 futures are up 3 points and are trading % above fair value. The Nasdaq 100 futures are up 9 points and are trading roughly in-line with fair value. The Dow Jones Industrial Average futures