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15/09/22 Briefing


The S&P 500 futures are down 7 points and are trading 0.7% below fair value. The Nasdaq 100 futures are down 43 points and are trading 0.9% below fair value. The Dow Jones Industrial Average futures are down 4 points and are trading 0.3% below fair value.

Equity futures are mixed and little changed this morning. Market participants are in wait-and-see mode in front of a heavy slate of economic data this morning that includes August Retail Sales and weekly initial jobless claims. 

Reports indicate that rail companies and unions came to a tentative agreement to avoid a strike that would have begun at midnight tonight

In central bank news, the PBOC left its key interest rates unchanged. European Central Bank policymaker De Guindos acknowledged that price pressures in the eurozone have continued strengthening and broadening while policymaker Kazaks said that rates may have to continue rising after February to get inflation back to the 2.0% target.

Treasury yields are on the rise with the 2-yr note yield up six basis points to 3.83% and the 10-yr note yield up three basis points to 3.45%.  

Energy complex futures are making downside moves. WTI crude oil futures are down 1.1% to $87.49/bbl. Natural gas futures are down 6.1% to $8.56/mmbtu. 

In corporate news:

  • CSX (CSX 32.30, +1.07, +3.43%); Union Pacific (UNP 226.99, +9.04, +4.15%); Norfolk Southern (NSC 245.50, +7.46, +3.13%): US Department of Labor says rail companies, unions came to tentative pact, according to Bloomberg TV; separately, CSX announced a new CEO 

  • Okta (OKTA 61.37, +0.57, +0.94%): initiated with a Buy at Jefferies

  • Netflix (NFLX 229.24, +5.12, +2.28%): upgraded to Outperform from In Line at Evercore ISI

  • Humana (HUM 476.85, +18.00, +3.92%): raises FY22EPS guidance, introduces mid-term adjusted EPS target of $37.00 for FY25

  • Southwest Air (LUV 38.00, -0.03, -0.08%): provides Q3 guidance update; narrows operating revs; Operating revenue compared with 2019: Up 9% to 11% vs Up 8% to 12% prior

  • Danaher (DHR 291.88, +10.15, +3.60%): to separate its Environmental & Applied Solutions segment to create an independent, publicly traded company

  • Arconic (ARNC 23.50, -1.98, -7.77%):  lowers FY22revenue and adjusted EBITDA guidance to reflect the impact of operational issues and the combination of demand declines and higher unhedged energy costs in Europe

  • APA Corp. (APA 42.50, +0.76, +1.82%): doubles quarterly dividend to $0.25/sh and increases share buyback authorization by 40 mln shares

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region ended Thursday on a mixed note. Japan's Nikkei: +0.2%, Hong Kong's Hang Seng: +0.4%, China's Shanghai Composite: -1.2%, India's Sensex: -0.7%

  • Major European indices trade on a mostly higher note. STOXX Europe 600: UNCH, Germany's DAX: +0.1%, U.K.'s FTSE 100: +0.4%, France's CAC 40: -0.3%, Italy's FTSE MIB: +0.4%, Spain's IBEX 35: +0.7%.

  • In economic data:

  • Eurozone's July trade deficit EUR34.00 bln (expected deficit of EUR20.00 bln; last deficit of EUR25.40 bln). Q2 eurozone wages 4.1% yr/yr (last 3.7%) and labor cost index 4.0% yr/yr (last 4.2%)

  • Germany's August WPI 0.1% m/m (expected 0.5%; last -0.4%); 18.9% yr/yr (last 19.5%)

  • France's August CPI 0.5% m/m (expected 0.4%; last 0.3%); 5.9% yr/yr (expected 5.8%; last 5.8%)

  • In news:

  • Italy is expected to spend EUR13.50 bln on an energy aid package.

  • European Central Bank policymaker De Guindos acknowledged that price pressures in the eurozone have continued strengthening and broadening while policymaker Kazaks said that rates may have to continue rising after February to get inflation back to the 2.0% target.

  • Sweden's prime minister resigned after her party lost support in last weekend's general election.

  • Shell named a new CEO.

 

U.S. equity futures:

  • S&P 500 Futures: -3 @ 3,943

  • DJIA Futures: +18 @ 31,153

  • Nasdaq 100 Futures: -29 @ 12,105

Overseas:

  • Europe: DAX +0.1%, FTSE +0.4%, CAC -0.3%

  • Asia: Nikkei +0.2%, Hang Seng +0.4%, Shanghai Composite -1.2%

Commodities:

  • Crude Oil -0.92 @ 87.56

  • Nat Gas  -0.555 @ 8.559

  • Gold -13.15 @ 1695.95

  • Silver -0.151  @ 19.418

  • Copper -0.0343 @ 3.4852

U.S. Summary:

  • Earnings/Guidance:

  • Arconic (ARNC) lowers FY22revenue and adjusted EBITDA guidance to reflect the impact of operational issues and the combination of demand declines and higher unhedged energy costs in Europe

  • Humana (HUM) raises FY22EPS guidance, introduces mid-term adjusted EPS target of $37.00 for FY25

  • Southwest Air (LUV) provides Q3 guidance update; narrows operating revs

  • Vimeo (VMEO) reports August 2022 total sales +9% yr/yr, subscribers +1% yr/yr, ARPU +8% yr/yr

  • General News:

  • President Joe Biden confirms tentative railway labor agreement

  • U.S. Senate committee advances legislation to enhance military support for Taiwan, according to Reuters

  • US Department of Labor says rail companies, unions came to tentative pact - Bloomberg TV

  • Inflation expectations in the U.K. reach record high, according to Reuters

  • AbbVie (ABBV) to Present Data from Growing Neuroscience and Movement Disorders Portfolio at 2022 MDS International Congress

  • APA Corp. (APA) doubles quarterly dividend to $0.25/sh and increases share buyback authorization by 40 mln shares

  • B2Gold (BTG) Announces Positive Exploration Drill Results from the Anaconda Area at the Fekola Complex

  • Booz Allen Hamilton (BAH) CFO to retire, names new CFO

  • Brainstorm Cell Therapeutics (BCLI) announces peer reviewed publication of results from the NurOwn Phase 2 Progressive MS Trial

  • Bristol Myers Squibb (BMY) Announces Adjuvant Treatment with Opdivo (nivolumab) Demonstrated Statistically Significant and Clinically Meaningful Improvement in Recurrence-Free Survival (RFS) in Patients with Stage IIB/C Melanoma in the CheckMate -76K Trial

  • Capital One (COF) reports August card metrics

  • China Southern Airlines (ZNH) reports Aug passenger capacity (measured by available seat kilometres - ASK) +46.91% yr/yr

  • Compass Minerals (CMP) provides strategic updates on its previously identified lithium carbonate equivalent resource on the Great Salt Lake

  • CSX (CSX) names Joseph Hinrichs as President and CEO

  • Danaher (DHR) to separate its Environmental & Applied Solutions segment to create an independent, publicly traded company

  • Disney (DIS) may merge Hulu with Disney+, according to Bloomberg

  • Electronic Arts (EA) increasing focus on user-created content, according to Axios

  • Eneti (NETI) authorizes up to $50 mln for share repurchases

  • Estee Lauder (EL) implementing organizational changes across its brand portfolio

  • Expedia Group (EXPE) appoints Julie Whalen as Executive Vice President and CFO, effective September 26, 2022; Whalen most recently served as CFO of Williams-Sonoma and is a member of EXPE's Board of Directors

  • Fortuna (FSM) provides construction update at its Sgula gold Project in Cte dIvoire

  • FTC Solar (FTCI) introduced a new and differentiated, one module in portrait (1P) Solar Tracker Solution

  • Granite Constr (GVA) awarded approximately $17 mln Duncan Creek Diversion Dam construction contract

  • Laureate Education (LAUR) announces special cash distribution equal to $0.83 per each share of common stock

  • Innovative Industrial Properties (IIPR) increases quarterly dividend to $1.80 from $1.75/share

  • J.M. Smucker (SJM) announces creation of a Transformation Office, which will support company's margin enhancement efforts

  • JPMorgan Chase (JPM) reports August card metrics

  • Kymera Therapeutics (KYMR) receives Orphan Drug Designation for KT-333 from FDA

  • Mallinckrodt plc (MNK) receives FDA approval for Terlivaz

  • Meta Platforms (META) introduces payment feature in chat on Instagram, allowing businesses to accept payments in direct messages -- Instagram Blog

  • Miniso Group (MNSO) announces substantial completion of independent investigation

  • Pan Am Silver (PAAS) reports large increase to the mineral resource estimate for its La Colorada Skarn Deposit

  • PayPal (PYPL) CFO Blake Jorgensen is taking a leave of absence citing health reasons

  • Pfizer (PFE) Announces Positive Top-Line Results from Phase 3 Trial of Pentavalent Meningococcal Vaccine Candidate (MenABCWY) in Adolescents

  • Qiagen (QGEN) to collaborate with Neuron23 to develop a companion diagnostic for Neuron23's LRRK2 inhibitor

  • Regeneron (REGN) and Alnylam (ALNY) Report Promising Data from Ongoing Phase 1 Study of ALN-HSD in NASH Patients and Healthy Volunteers

  • Reinsurance Group of America (RGA) Board Chair J. Cliff Eason to retire on December 31; current Board member Stephen T. O'Hearn to assume the role of Chair on January 1, 2023

  • Samsung (SSNLF) expected to reduce TV shipment target for the year, according to Digitimes

  • Shell plc (SHEL) CEO to step down at end of year; appoints Wael Sawan as successor

  • TechnipFMC (FTI) awarded a significant contract, which it defines between $75-250 mln, by TotalEnergies for its Lapa North East field in the pre-salt Santos Basin offshore Brazil

  • Teleflex (TFX): Co-Author of the Karolinska 1000 Consecutive MANTA Vascular Closure Device Study to Present Learnings at the Transcatheter Cardiovascular Therapeutics (TCT) 2022 Conference

  • Tencent Music (TME) proposes secondary listing on Hong Kong Stock Exchange

  • Tesla (TSLA) facing class-action suit over autopilot claims, according to Reuters

  • Uranium Energy (UEC) files Technical Report Summary for Wyoming ISR Hub and Spoke Project; Total Measured and Indicated Resources disclosed across the assets are 66,198,200 lbs

  • Wabtec (WAB) won an order to supply 300 half-height platform screen doors across Metro de Panama's L3 monorail stations being built by Hitachi Rail, as part of the Grupo de Empresas Sunrise Monorail

  • Walmart (WMT) introduces virtual try-on for apparel technology

  • Williams-Sonoma (WSM) announces appointment of Jeff Howie to CFO; former CFO has accepted CFO position at Expedia Group

  • Zoetis (ZTS): Australian Competition and Consumer Commission confirms Zoetis' proposed acquisition of Jurox not opposed, subject to divestiture

  • M&A:

  • Activision Blizzard (ATVI): UK CMA has referred the anticipated acquisition by Microsoft (MSFT) of Activision Blizzard for an in-depth investigation

  • Adobe (ADBE) near deal to buy startup Figma, according to Bloomberg

  • Oaktree Specialty Lending Corp (OCSL) and Oaktree Strategic Income II entered into an agreement to merge together with OCSL as the surviving company

  • Sylvamo (SLVM) acquires paper mill in Sweden for EUR150 mln

  • Velo3D (VLD): Kevton Industries subsidiary acquires seven Sapphire printers, one of the largest purchases ever with Velo3D from a contract manufacturer

  • Syndicate

  • Akero Therapeutics (AKRO) prices offering of 7,692,308 shares of its common stock at $26.00 per share

  • Altus Power (AMPS) redeems public and private placement warrants

  • Ares Management (ARES) raises $3.7 billion of sports, media and entertainment capital

  • Bank of America (BAC): Agility Bank completes its capital raise

  • DoubleDown Interactive (DDI) files for 10,013,620 ADS offering by selling shareholder

  • First Watch Restaurant Group (FWRG) prices offering of 4.5 mln shares of common stock at $15.50 per share

  • Hecla Mining (HL) files for 1,190,000 share common stock offering by selling shareholders

  • IDEAYA Biosciences (IDYA) prices offering of 7,619,048 shares of its common stock at $10.50 per share

  • Li-Cycle (LICY) files for 96,579,362 share common stock offering by selling shareholders

  • Ribbon Communications (RBBN) files for 92,807,928 share common stock offering by selling shareholders

  • Rhythm Pharmaceuticals (RYTM) prices offering of 4.8 mln shares of common stock at $26.00 per share

  • Spire Global (SPIR) files for $180 mln mixed securities shelf offering

  • IPOs:

  •  Priced to Trade:

  • 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, priced its 80.0 M share IPO at $21, the low end of the $21-$24 expected price range.

Gapping Up/Down

  • Gapping up:

  • NETI +8.2%, VLD +7.8%, FTI +6.2%, CMP +5.1%, DHR+4.2%, UNP +3.5%, OCSL +3.4%, APA+3.3%, VMEO+3.1%, WSM +2.6%, CSX +1.9%, NSC +1.7%, BCLI+1.4%, HL +1.3%, FSM +1.2%, EL+1.1%, LICY +1%, SPIR +0.7%

  • Gapping down:

  • RYTM -12.5%, IDYA -12.1%, ARNC -9.7%, RBBN-3.5%, DDI -3.5%, NEE -3%, SJM -3%, PYPL -0.8%, AKRO -0.7%

 

Analyst Research (see Upgrades/Downgradescalendarfor full list):

  • Upgrades

  • Activision Blizzard (ATVI) upgraded to Overweight from Neutral at Atlantic Equities; tgt lowered to $84

  • Hilton (HLT) upgraded to Buy from Hold at Berenberg; tgt raised to $152

  • Hyatt Hotels (H) upgraded to Buy from Hold at Berenberg; tgt raised to $105

  • Marriott (MAR) upgraded to Buy from Hold at Berenberg; tgt raised to $185

  • Downgrades:

  • Electronic Arts (EA) downgraded to Neutral from Overweight at Atlantic Equities; tgt lowered to $130

  • Others:

  • Alkami Technology (ALKT) initiated with an Overweight at Stephens; tgt $18

  • AppFolio (APPF) initiated with a Buy at Berenberg; tgt $130

  • Axon (AXON) initiated with an Overweight at Barclays; tgt $147

  • Euronet (EEFT) initiated with an Equal-Weight at Stephens; tgt $95

  • Fortinet (FTNT) initiated with a Buy at Jefferies; tgt $65

  • KemPharm (KMPH) initiated with a Buy at Canaccord Genuity; tgt $20

  • KnowBe4 (KNBE)initiated with a Buy at DA Davidson; tgt $25

  • Okta (OKTA) initiated with a Buy at Jefferies; tgt $90

  • Zscaler (ZS) initiated with a Hold at Jefferies; tgt $200

Upcoming Events:

  • Econ Data:

  • 08:30 ET: Retail Sales for Aug (Briefing.comConsensus 0.0%; Prior 0.0%)

  • 08:30 ET: Retail Sales ex-Auto for Aug (Briefing.comConsensus 0.0%; Prior 0.4%)

  • 08:30 ET: Initial Claims for Sept. 10 (Briefing.comConsensus 233K; Prior 222K)

  • 08:30 ET: Continuing Claims for Sept. 3 (Briefing.comConsensus NA; Prior NA)

  • 08:30 ET: Empire State Manufacturing for Sept (Briefing.comConsensus -13.5; Prior -31.3)

  • 08:30 ET: Philadelphia Fed Index for Sept (Briefing.comConsensus 3.0; Prior 6.2)

  • 08:30 ET: Import Prices for Aug (Briefing.comConsensus NA; Prior -1.4%)

  • 08:30 ET: Import Prices ex-Oil for Aug (Briefing.comConsensus NA; Prior -0.5%)

  • 08:30 ET: Export Prices for Aug (Briefing.comConsensus NA; Prior-3.3%)

  • 08:30 ET: Export Prices ex-ag. for Aug (Briefing.comConsensus NA; Prior -3.3%)

  • 09:15 ET: Industrial Production for Aug (Briefing.comConsensus 0.0%; Prior 0.6%)

  • 09:15 ET: Capacity Utilization for Aug (Briefing.comConsensus 80.3%; Prior 80.3%)

  • 10:00 ET: Business Inventories for Jul (Briefing.comConsensus 0.6%; Prior 1.4%)

  • 10:30 ET: EIA Natural Gas Inventories for Sept. 10 (Briefing.comConsensus NA; Prior +54 bcf)


Asia & Europe detail:

Asia: Nikkei +0.2%, Hang Seng +0.4%, Shanghai Composite -1.2%

Equity indices in the Asia-Pacific region ended Thursday on a mixed note. Japan's Finance Minister Suzuki said that a potential intervention in the currency market will not be announced ahead of time and would be "swift and without pause." There was some press speculation that Japan will call on citizens to conserve power during the winter. South Korea reportedly sold dollars to support the won. Some banks in China have reportedly cut personal deposit rates. ASB Bank expects that the Reserve Bank of New Zealand's official cash rate will peak at 4.25%, 25 bps above the prior forecast.

  • In economic data:

  • Japan's August trade deficit JPY2.817 trln (expected deficit of JPY2.398 trln; last deficit of JPY1.434 trln). August Imports 49.9% yr/yr (expected 46.7%; last 47.2%) and Exports 22.1% yr/yr (expected 23.6%; last 19.0%). July Tertiary Industry Activity Index -0.6% m/m (expected -0.1%; last -0.4%)

  • Australia's August Employment Change 33,500 (expected 35,000; last -41,000) and full employment change 58,800 (last -86,900). August Participation Rate 66.6%, as expected (last 66.4%) and August Unemployment Rate 3.5% (expected 3.4%; last 3.4%). MI Inflation Expectations 5.4% (last 5.9%)

  • New Zealand's Q2 GDP 1.7% qtr/qtr (expected 1.0%; last -0.2%); 0.4% yr/yr (expected 0.2%; last 1.2%)

---Equity Markets---

  • Japan's Nikkei: +0.2%

  • Hong Kong's Hang Seng: +0.4% 

  • China's Shanghai Composite: -1.2%

  • India's Sensex: -0.7%

  • South Korea's Kospi: -0.4%

  • Australia's ASX All Ordinaries: +0.2%

---FX---

  • USD/JPY: +0.2% to 143.47

  • USD/CNH: +0.5% to 7.0071

  • USD/INR: +0.4% to 79.77

Europe: DAX +0.1%, FTSE +0.4%, CAC -0.3%

Major European indices trade on a mostly higher note. Italy is expected to spend EUR13.50 bln on an energy aid package. European Central Bank policymaker De Guindos acknowledged that price pressures in the eurozone have continued strengthening and broadening while policymaker Kazaks said that rates may have to continue rising after February to get inflation back to the 2.0% target. Sweden's prime minister resigned after her party lost support in last weekend's general election. Shell named a new CEO.

  • In economic data:

  • Eurozone's July trade deficit EUR34.00 bln (expected deficit of EUR20.00 bln; last deficit of EUR25.40 bln). Q2 eurozone wages 4.1% yr/yr (last 3.7%) and labor cost index 4.0% yr/yr (last 4.2%)

  • Germany's August WPI 0.1% m/m (expected 0.5%; last -0.4%); 18.9% yr/yr (last 19.5%)

  • France's August CPI 0.5% m/m (expected 0.4%; last 0.3%); 5.9% yr/yr (expected 5.8%; last 5.8%)

---Equity Markets---

  • STOXX Europe 600: UNCH

  • Germany's DAX: +0.1%

  • U.K.'s FTSE 100: +0.4%

  • France's CAC 40: -0.3%

  • Italy's FTSE MIB: +0.4% 

  • Spain's IBEX 35: +0.7%

---FX---

  • EUR/USD: UNCH at 0.9979

  • GBP/USD: -0.3% to 1.1507

  • USD/CHF: -0.6% to 0.9558


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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