14/11/22 Briefing

The S&P 500 futures are down 10 points and are trading 0.3% below fair value. The Nasdaq 100 futures are down 54 points and are trading 0.5% below fair value. The Dow Jones Industrial Average futures are down 48 points and are trading 0.2% below fair value.

There is a negative disposition in the equity futures market this morning that reflects a normal consolidation period coming off a big week.

Treasury yields are rising again. The 2-yr note yield is up six basis points to 4.38% and the 10-yr note yield is up seven basis points to 3.88%.

Fed Governor Christopher Waller said "we've still got a ways to go" before stopping interest rate hikes, according to Bloomberg.

Democrats will keep control of the Senate following wins in Arizona and Nevada. Republicans are likely to have small majority in House once all votes are counted.

China is introducing a 16-point plan to support its property market. On a related note, President Xi and President Biden met ahead of the G-20 summit.

The U.S. Dollar Index is up 0.6% to 106.91.

In corporate news:

• Bank of America (BAC 38.05, -0.36, -0.94%) : Citigroup downgraded from Neutral to Buy

• Walt Disney (DIS 95.02, +0.01, +0.01%): plans a targeted hiring freeze and job cuts, according to CNBC

• Tesla (TSLA 194.30, -1.67, -0.85%) : Elon Musk said "I have too much work on my plate," according to Reuters

• Advanced Micro Devices (AMD 74.68, +2.31, +3.19%): Baird upgraded to Outperform and UBS upgraded to Buy 

• Teva Pharma (TEVA 9.29, -0.19, -2.00%): JPMorgan downgraded to Underweight from Neutral 

• Hasbro (HAS 59.50, -3.91, -6.17%) : Bank of America downgraded to Underperform from Buy 

• Dentsply Sirona (XRAY 29.24, -2.81, -8.77%): misses by $0.17, misses on revs; guides FY22 EPS in-line, revs below consensus

• Tyson Foods (TSN 68.02, +0.61, +0.90%): misses by $0.09, beats on revs; guides FY23 revs above consensus   

Reviewing overnight developments:

• Equity indices in the Asia-Pacific region began the week on a mostly lower note. Japan's Nikkei: -1.1%, Hong Kong's Hang Seng: +1.7%, China's Shanghai Composite: -0.1%, India's Sensex: -0.3%, South Korea's Kospi: -0.3%, Australia's ASX All Ordinaries: UNCH.

  • In economic data:

    • China's October FDI 15.6% yr/yr (last 15.6%)

    • India's October WPI Inflation 8.39% yr/yr (expected 8.70%; last 10.70%). WPI Food 8.33% yr/yr (last 11.03%)

  • In news:

    • Property names outperformed in Hong Kong after China announced a 16-point plan to rescue developers.

    • China Securities Journal reported that authorities are expected to inject up to CNY1 trln in liquidity through a medium-term lending facility.

    • South Korea may increase electricity prices for 2023.

    • There is growing speculation that the Reserve Bank of New Zealand will only raise its official cash rate by 50 bps next week.

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

  • In economic data:

    • Eurozone's September Industrial Production 0.9% m/m (expected 0.3%; last 2.0%); 4.9% yr/yr (expected 2.8%; last 2.8%)

    • Swiss October PPI 0.0% m/m (expected 0.2%; last 0.2%); 4.9% yr/yr (last 5.4%)

  • In news:

    • British Chancellor Hunt will present the Autumn Budget Statement on Thursday.

    • European Commission President von der Leyen repeated that the price cap on Russian oil will be ready by the end of the year.

    • Germany's Chemical Industry Association reiterated its forecast for a 5.5% yr/yr decrease in 2022 production.

U.S. equity futures:

• S&P 500 Futures: -11 @ 3,982

• DJIA Futures: -51 @ 33,697

• Nasdaq 100 Futures: -59 @ 11,758

Overseas:

• Europe: DAX +0.3%, FTSE +0.4%, CAC +0.2%

• Asia: Nikkei -1.1%, Hang Seng +1.7%, Shanghai Composite -0.1%

Commodities:

• Crude Oil -1.16 @ 87.80

• Nat Gas  +0.403 @ 6.282

• Gold +6.20 @ 1763.20

• Silver -0.052 @ 21.615

• Copper -0.0785 @ 3.835

Earnings/Guidance:

• 908 Devices (MASS) beats by $0.01, reports revs in-line; lowers FY22 revs below consensus

• Aecom Tech (ACM) misses by $0.01, misses on revs; guides FY23 EPS in-line

• Akoustis Technologies (AKTS) misses by $0.10; beats on revs

• American Electric (AEP) reaffirms operating EPS guidance for FY22 and FY23; will continue to invest in its regulated operations

• Baozun (BZUN) reports total record high total order value for the 2022 11.11 Shopping Festival

• Clear Secure (YOU) beats by $0.05, beats on revs; guides Q4 revs above consensus

• Cogent Biosciences (COGT) beats by $0.02

• Dentsply Sirona (XRAY) misses by $0.17, misses on revs; guides FY22 EPS in-line, revs below consensus

• Embraer SA reports Q3 EPS per ADS of ($0.16) vs. ($0.07) Capital IQ two estimate average; revs -4% yr/yr to $929 mln; reaffirms FY22 net income guidance of $4.5.5.0 bln; reaffirms commercial aviation deliveries for FY22 of 60-70

• Monday.com(MNDY) beats by $0.59, beats on revs; guides Q4 revs above consensus

• NuScale Power (SMR) reports Q3 results

• Oatly Group AB (OTLY) misses by $0.07, misses on revs; lowers FY22 revs below consensus

• PNM Resources (PNM) reaffirms FY22/ sees FY23 revs in line

• Roivant Sciences (ROIV) reports Q2 results

• Stoke Therapeutics (STOK) beats by 0.02; beats on revs

• Thoughtworks (TWKS) misses by $0.03, beats on revs; guides Q4 EPS below consensus, revs below consensus

• Tower Semi (TSEM) beats by $0.01, reports revs in-line

• Tyson Foods (TSN) misses by $0.09, beats on revs; guides FY23 revs above consensus

News:

• Democrats keep control of Senate following wins in Arizona and Nevada. Republicans are likely to have small majority in House once all votes are counted, according to the New York Times

• Former President Trump is expected to announce his presidential run tomorrow despite pressure from his allies to wait, according to CBS News

• House Speaker Nancy Pelosi wants to raise debt ceiling in lame duck session, according to Bloomberg

• Fed Governor Christopher Waller says Fed "still got a ways to go" before stopping interest rate hikes, according to Bloomberg

• Beijing coronavirus cases hit record, according toReuters

• At least $1 bln in client funds are missing at FTX, according to Reuters

• Medical device companies experienced supply chain issues, according to the Wall Street Journal

• 4D Molecular Therapeutics (FDMT) announces interim clinical data from cohort 1 of the Phase 1/2 clinical trial of intravitreal 4D-150 for wet AMD

• Alphabet's (GOOG) Google Cloud announced three new Healthcare Data Engine (HDE) accelerators-developed in collaboration with Hackensack Meridian Health, Lifepoint Health, and others

• Apple (AAPL) aiming to introduce 3D world and video service, according to Bloomberg

• Ascendis Pharma (ASND) reports Once-Weekly TransCon CNP Achieved Primary Efficacy Objective, with Superiority at 100 g/kg/week, in Ascendis Pharma's Phase 2 ACcomplisH Trial of Children with Achondroplasia Aged 2 to 10 Years

• AstraZeneca (AZN) reports Imfinzi plus chemotherapy recommended for approval in the EU by CHMP as first immunotherapy regimen for advanced biliary tract cancer

• AstraZeneca (AZN) and Merck (MRK) reports Lynparza in combination with abiraterone recommended for approval in the EU by CHMP

• AstraZeneca' (AZN) ENHERTU recommended for approval in the EU by CHMP for patients with previously treated HER2 positive advanced gastric cancer

• Azul S.A. (AZUL) reports October traffic increased 11% yr/yr

• Babcock & Wilcox Enterprises (BW) unit awarded more than $42 mln in significant upgrade and maintenance projects within the electrical utility, pulp & paper, and oil & gas segments in North America

• Blackrock (BLK) suspends plans for China bond ETF., according to Financial Times

• Clear Secure (YOU) declares $0.25 special cash dividend

• Cronos Group (CRON) names James Holm as CFO

• CureVac (CVAC) presented preliminary data from Phase 1 study expansion of oncology candidate CV8102

• Daseke (DSKE) entered into an agreement with its founder, Mr. Don R. Daseke, and affiliates, to repurchase their total holdings (17,932,725 shares) at $6.00 per share

• Emergent BioSolutions (EBS) announced a research US DoD award to evaluate efficacy of the company's single-dose chikungunya virus virus-like particle (CHIKV VLP) vaccine candidate

• Eve Holding (EVEX) files to delay its 10-Q; is currently performing a further assessment of the condensed consolidated financial statements to determine the full extent of any adjustments in the amounts previously reported

• HF Sinclair (DINO) entered into a Stock Purchase Agreement pursuant to which the Company agreed to repurchase from the Selling Stockholder 1,650,165 shares of the common stock

• HUTCHMED (HCM) Announces Positive Topline Result in Fruquintinib Phase III FRUTIGA Study in Second-Line Gastric Cancer in China

• Infinity Pharmaceuticals (INFI) Provides MARIO-3 Update in Patients with Front Line Metastatic Triple Negative Breast Cancer Suggesting Potential Long-Term Patient Benefit of Eganelisib

• Intellia Therapeutics (NTLA) Presents New Interim Data from First-in-Human Study of NTLA-2002 for the Treatment of Hereditary Angioedema (HAE) at the American College of Allergy, Asthma & Immunology 2022 Annual Scientific Meeting

• Ionis (IONS) presents positive Phase 2 data from open label extension study of donidalorsen at 2022 ACAAI Annual Meeting

• iQIYI (IQ) elected Mr. Junjie He as Chairman of the Board of Directors

• JP Morgan (JPM) avoided buyout lending deals that cost competitors, according to the Wall Street Journal

• KalVista Pharmaceuticals (KALV) presents patient-focused data at American College of Allergy, Asthma & Immunology 2022 Meeting

• Kezar Life Sciences (KZR) Presents Positive Complete Results from the MISSION Phase 2 Trial Evaluating Zetomipzomib in Lupus Nephritis at the American College of Rheumatology Convergence 2022

• Lantheus Holdings (LNTH) and POINT Biopharma (PNT) announce strategic collaboration and exclusive license agreements for the commercialization of PNT2002 & PNT2003

• Merck (MRK): LYNPARZA in combination with abiraterone and prednisone or prednisolone receives positive opinion from EU CHMP as treatment for certain patients with metastatic castration-resistant prostate cancer

• Mizuho Financial (MFG) revised its estimates of the year-end and annual dividends per share for the fiscal year ending March 31, 2023

• MSG Network (MSGE, MSGS) aiming to introduce paid application, according to the New York Post

• Roche Hldg (RHHBY) provides update on Phase III GRADUATE programme evaluating gantenerumab in early Alzheimer's disease; studies did not meet their primary endpoints of slowing clinical decline in people with early Alzheimer's

• Scotts Miracle-Gro (SMG) names Matthew Garth executive vice president and chief financial officer, effective December 1, 2022

• Silvergate Capital (SI) issues statement regarding its exposure to FTX

• Stantec (STN) announces renewal of Normal Course Issuer Bid and Automatic Share Purchase Plan

• Tesla (TSLA) will assist police in China crash investigation., according to Reuters

• Viridian Therapeutics (VRDN) announces positive data from ongoing phase 1/2 trial evaluating vrdn-001 in patients with thyroid eye disease

• Visa (V) terminated debit card agreements with FTX, according to Reuters

• Walt Disney (DIS) plans a targeted hiring freeze and job cuts, according to CNBC

M&A:

• BioNTech (BNTX) acquires GMP Manufacturing Site in Singapore

• Bruker (BRKR) announces agreement to acquire Neurescence Inc., bolstering neuroscience research portfolio

• Energy Fuels (UUUU) to sell three wholly-owned subsidiaries that together hold Energy Fuels' Alta Mesa ISR Project for total consideration of $120 mln; Transaction is expected to close by the end of 2022 or early 2023

• KKR (KKR) aiming to invest $500 mln in Freyr Battery, according to Bloomberg

• MedTech Acquisition Corp (MTAC): TriSalus Life Sciences to become publicly traded through merger with MTAC

• United Rentals (URI) to acquire Ahern Rentals for $2 billion

• Wash. Federal (WAFD) and Luther Burbank Corporation (LBC) merge to form $29 bln asset Western US bank

Syndicate: 

• Alight (ALIT) announced the commencement of an underwritten secondary public offering of up to 20 mln shares of Alight's Class A common stock

• Envestnet (ENV) to offer $350 million of convertible notes

• ESAB Corp. (ESAB) commencement of an underwritten offering of 6,003,431 shares of its common stock currently owned by Enovis Corporation (ENOV), ESAB's former parent company

IPOs:

• Expect to Price:

  • No IPOs expected.

Gapping Up/Down

• Gapping up:

  • SI +16.5%, HCM +14.7%, BZUN +2.8%, YOU +2.2%, MSGS +2.1%, DSKE +2%, NTLA +1.9%, AZN +1.4%, AEP +1.4%, ERJ +1.2%, DINO +0.8%, PFSW +0.6%

• Gapping down:

  • XRAY -9.5%, HOOD -3.9%, URI -3.1%, AZUL -2.2%, COIN -1.8%, BNTX -1.4%, MSTR -0.7%

Analyst Research (see Upgrades/Downgradescalendarfor full list):

• Upgrades

  • Allete (ALE) upgraded to Buy from Neutral at BofA Securities; tgt raised to $66

  • Americold Realty Trust (COLD) upgraded to Buy from Neutral at BofA Securities; tgt raised to $33.50

  • ASML (ASML) upgraded to Positive from Neutral at Susquehanna; tgt raised to $850

  • Atlas Copco AB (ATLKY) upgraded to Buy from Neutral at Citigroup

  • Beam Global (BEEM) upgraded to Buy from Neutral at H.C. Wainwright; tgt $30

  • Blend Labs (BLND) upgraded to Mkt Perform from Underperform at Keefe Bruyette; tgt $2.25

  • Oak Street Health (OSH) upgraded to Overweight from Equal-Weight at Morgan Stanley

  • Ritchie Bros. (RBA) upgraded to Buy from Neutral at Northcoast; tgt $65

• Downgrades:

  • Alexander & Baldwin (ALEX) downgraded to Neutral from Overweight at Piper Sandler; tgt $20

  • Ares Management (ARES) downgraded to Market Perform from Outperform at BMO Capital Markets; tgt $93

  • Bank of America (BAC) downgraded to Neutral from Buy at Citigroup; tgt $40

  • Barings BDC (BBDC) downgraded to Mkt Perform from Outperform at Keefe Bruyette; tgt lowered to $10

  • Omega Health (OHI) downgraded to Neutral from Buy at BofA Securities; tgt lowered to $33

  • Oscar Health (OSCR) downgraded to Equal-Weight from Overweight at Morgan Stanley; tgt $5

  • Sierra Bancorp (BSRR) downgraded to Mkt Perform from Outperform at Keefe Bruyette; tgt lowered to $24

• Others:

  • Sachem Capital (SACH) initiated with a Mkt Perform at JMP Securities

Upcoming Events:

• Econ Data:

  • No economic data of note.

• Earnings:

  • Monday (Nov 14)

    • Morning:  MASS ACM YOU CGEN XRAY MNDY OTLY TWKS TSEM TSN

    • Afternoon: AZTA DLO HLLY JJSF SHLS VVV

  • Tuesday (Nov 15)

    • Morning: ARMK BERY DAVA ENR AQUA HD HUYA DNUT SE TME WKME WMT

    • Afternoon:  AAP VREX

  • Wednesday (Nov 16)

    • Morning:  LOW ONON SR TGT TJX

    • Afternoon:  BBWI CSCO CPA CPRT GLBE HP HI KLIC NVDA SONO

  • Thursday (Nov 17)

    • Morning: BABA BJ BRC BV CAMT CLBT DOLE KSS M NTES NJR WB

    • Afternoon:  AMAT BRBR DLB ESE FTCH GPS GLOB KEYS PANW POST ROST STNE UGI WSM WWD

  • Friday (Nov 18) 

    • Morning:  ATKR BKE FL JD SPB TWST

Asia & Europe detail:

Asia: Nikkei -1.1%, Hang Seng +1.7%, Shanghai Composite -0.1%

Equity indices in the Asia-Pacific region began the week on a mostly lower note. Property names outperformed in Hong Kong after China announced a 16-point plan to rescue developers. China Securities Journal reported that authorities are expected to inject up to CNY1 trln in liquidity through a medium-term lending facility. South Korea may increase electricity prices for 2023. There is growing speculation that the Reserve Bank of New Zealand will only raise its official cash rate by 50 bps next week.

• In economic data:

  • China's October FDI 15.6% yr/yr (last 15.6%)

  • India's October WPI Inflation 8.39% yr/yr (expected 8.70%; last 10.70%). WPI Food 8.33% yr/yr (last 11.03%)

---Equity Markets---

• Japan's Nikkei: -1.1%

• Hong Kong's Hang Seng: +1.7%

• China's Shanghai Composite: -0.1%

• India's Sensex: -0.3%

• South Korea's Kospi: -0.3%

• Australia's ASX All Ordinaries: UNCH

---FX---

• USD/JPY: +1.3% to 140.61

• USD/CNH: -0.2% to 7.0760

• USD/INR: +1.0% to 81.26

Europe: DAX +0.3%, FTSE +0.4%, CAC +0.2%

Major European indices trade in positive territory. British Chancellor Hunt will present the Autumn Budget Statement on Thursday. European Commission President von der Leyen repeated that the price cap on Russian oil will be ready by the end of the year. Germany's Chemical Industry Association reiterated its forecast for a 5.5% yr/yr decrease in 2022 production.

• In economic data:

  • Eurozone's September Industrial Production 0.9% m/m (expected 0.3%; last 2.0%); 4.9% yr/yr (expected 2.8%; last 2.8%)

  • Swiss October PPI 0.0% m/m (expected 0.2%; last 0.2%); 4.9% yr/yr (last 5.4%)

---Equity Markets---

• STOXX Europe 600: +0.2%

• Germany's DAX: +0.3%

• U.K.'s FTSE 100: +0.4%

• France's CAC 40: +0.2%

• Italy's FTSE MIB: +0.5%

• Spain's IBEX 35: +0.4%

---FX---

• EUR/USD: -0.7% to 1.0279

• GBP/USD: -0.6% to 1.1761

• USD/CHF: +0.6% to 0.9469