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16/08/23 Briefing


The S&P 500 futures are down 31 points and are trading 0.7% below fair value. The Nasdaq 100 futures are down 94 points and are trading 0.7% below fair value. The Dow Jones Industrial Average futures are down 277 points and are trading 0.8% below fair value.

The stock market is poised for a lower open after yesterday's gains. Dow component Home Depot (HD) is trading down in pre-open action despite reporting better than expected earnings and reaffirming FY24 EPS guidance.

Concerns about the banking industry have weighed on investor sentiment after Fitch ratings analyst Chris Wolfe warned that the agency might be forced to downgrade dozens of more banks, according to CNBC.

Global growth concerns have also kept the market in check after China reported weaker than expected economic data for July, including retail sales (actual 2.5% year-over-year; expected 4.5%), industrial production (actual 3.7% year-over-year; expected 4.4%), and fixed asset investment (actual 3.4% year-over-year; expected 3.8%).

Also, the People's Bank of China lowered its one-year medium-term lending facility rate to 2.50% from 2.65% and lowered the seven-day reverse repurchase rate by ten basis points to 1.80%.

The 10-yr note yield is up four basis points to 4.23% and the 2-yr note yield is up one basis point to 4.97%.

In corporate news:

  • Home Depot (HD 329.03, -0.92, -0.3%): beats by $0.20, beats on revs; reaffirms FY24 EPS guidance, revs guidance; authorizes new $15 bln share repurchase program

  • NVIDIA (NVDA 444.00, +6.47, +1.5%): continues rally after news that Saudi Arabia & United Arab Emirates purchase Nvidia (NVDA) chips, according to FT

  • Cardinal Health (CAH 93.00, +0.01, +0.01%): beats by $0.05, beats on revs; raises FY24 EPS in-line

  • Tesla (TSLA 236.75, -2.96, -1.2%): introduced two new less expensive spec models, according to Bloomberg

  • SPDR S&P Regional Banking ETF (KBE 10.09, -0.60, -1.5%): Fitch ratings analyst Chris Wolfe in interview warned that agency might be forced to downgrade dozens of more banks, according to CNBC

  • Lennar (LEN 126.00, +2.13, +1.7%), D.R. Horton (DHI 126.41, +3.13, +2.5%), and NVR (NVR 6202.12, +43.42, +0.7%): Berkshire Hathaway (Warren Buffett) discloses new DHI NVR LEN positions in 13F filing

  • On (ONON 32.19, -2.42, -7.0%): misses by CHF0.07, beats on revs; guides FY23 revs below consensus

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region ended Tuesday on a mixed note while markets in India and South Korea were closed for holidays. Japan's Nikkei: +0.5%, Hong Kong's Hang Seng: -1.3%, China's Shanghai Composite: -0.1%, India's Sensex: CLOSED, South Korea's Kospi: CLOSED, Australia's ASX All Ordinaries: +0.4%.

  • In economic data:

  • China's July Retail Sales 2.5% yr/yr (expected 4.5%; last 3.1%), July Industrial Production 3.7% yr/yr (expected 4.4%; last 4.4%), July Fixed Asset Investment 3.4% yr/yr (expected 3.8%; last 3.8%), and July Unemployment Rate 5.3%, as expected (last 5.2%)

  • Japan's Q2 GDP 1.5% qtr/qtr (expected 0.8%; last 0.9%); 6.0% yr/yr (expected 3.1%; last 3.7%). Q2 GDP External Demand 1.8% qtr/qtr (expected 0.9%; last -0.3%) and GDP Private Consumption -0.5% qtr/qtr (expected 0.1%; last 0.6%). June Industrial Production 2.4% m/m (expected 2.0%; last -2.2%) and Capacity Utilization 3.8% m/m (expected -1.6%; last -6.3%)

  • Australia's Q2 Wage Price Index 0.8% qtr/qtr (expected 0.9%; last 0.8%); 3.6% yr/yr (expected 3.7%; last 3.7%)


  • In news:

  • China reported weak growth data for July, adding to concerns about the strength of the country's economy.

  • In addition, China's National Bureau of Statistics discontinued publishing of youth unemployment figures after the youth unemployment rate reached 21.3%.

  • The People's Bank of China lowered its one-year medium-term lending facility rate to 2.50% from 2.65% and lowered the seven-day reverse repurchase rate by ten basis points to 1.80%.

  • Japan Q2 GDP expanded at its fastest qtr/qtr pace in more than two years, though private consumption decreased.



  • Major European indices trade on a lower note while Italy's MIB is closed for Assumption Day. STOXX Europe 600: -1.2%, Germany's DAX: -1.1%, U.K.'s FTSE 100: -1.5%, France's CAC 40: -1.3%, Italy's FTSE MIB: CLOSED, Spain's IBEX 35: -1.1%.

  • In economic data:

  • Eurozone's August ZEW Economic Sentiment -5.5 (expected -12.0; last -12.2)

  • Germany's August ZEW Economic Sentiment -12.3 (expected -14.7; last -14.7) and Current Conditions -71.3 (expected -63.0; last -59.5)

  • U.K.'s June Average Earnings Index + Bonus 8.2% yr/yr (expected 7.3%; last 7.2%). June three-month employment change -66,000 (expected 75,000; last 102,000) and Unemployment Rate 4.2% (expected 4.0%; last 4.0%).

  • Swiss July PPI -0.1% m/m (expected 0.2%; last 0.0%); -0.6% yr/yr (expected -0.5%; last -0.6%)


  • In news:

  • The U.K. reported an unexpected increase in its Unemployment Rate while earnings growth exceeded June expectations after public sector workers received a raise, which is boosting expectations for another BoE rate hike in September.

  • Retailer Marks & Spencer raised its profit outlook for the year.

  • Germany's ZEW Economic Survey improved in August, but the Current Conditions Index worsened.



U.S. equity futures:

  • S&P 500 Futures -31 @ 4,470

  • DJIA Futures: -277 @ 35,094

  • Nasdaq 100 Futures: -94 @ 15,176

Overseas:

  • Europe: DAX -1.1%, FTSE -1.5%, CAC -1.3%

  • Asia: Nikkei +0.5%, Hang Seng -1.3%, Shanghai Composite -0.1%

Commodities:

  • Crude Oil -0.82 @ 81.69

  • Nat Gas -0.021 @ 2.774

  • Gold -9.70 @ 1934.40

  • Silver -0.243 @ 22.465

  • Copper -0.057 @ 3.668


Earnings/Guidance:

  • Arcellx ( ACLX 0.25% ) beats by $0.23, misses on revs; iMMagine-1 hold lifted by FDA

  • Cardinal Health ( CAH 0.40% ) beats by $0.05, beats on revs; raises FY24 EPS in-line

  • Definitive Healthcare ( DH 1.83% ) beats by $0.02, reports revs in-line; guides Q3 EPS in-line, revs below consensus; guides FY23 EPS in-line, revs in-line

  • Getty Images ( GETY 5.41% ) reports Q2 results, misses on revs; lowers FY23 guidance for revs and adjusted EBITDA

  • Grindr GRND 2.36% reports Q2 results; revs rose 32% yr/yr; raises FY23 sales growth forecast

  • Heron Therapeutics ( HRTX 5.97% ) misses by $0.13, reports revs in-line; reiterates FY23 net product revenue outlook

  • Home Depot ( HD 1.29% ) beats by $0.20, beats on revs; reaffirms FY24 EPS guidance, revs guidance; authorizes new $15 bln share repurchase program

  • HUYA ( HUYA 1.52% ) beats by RMB0.01, misses on revs; authorizes $100 mln share repurchase program

  • IHS Holding Limited ( IHS 2.32% ) reports Q2 (Jun) results, beats on revs; lowers FY23 guidance

  • Legend Biotech ( LEGN 0.04% ) misses by $0.21, beats on revs

  • Navitas Semiconductor ( NVTS 5.05% ) beats by $0.02, beats on revs; guides Q3 revs above consensus

  • On ( ONON 2.49% ) misses by CHF0.07, beats on revs; guides FY23 revs below consensus

  • Paysafe ( PSFE 0.51% ) beats by $0.20, beats on revs; raises FY23 revs above consensus

  • Riskified ( RSKD 2.41% ) beats by $0.08, beats on revs; guides FY23 revs in-line; authorizes $75 million share repurchase program

  • Seadrill Ltd ( SDRL 2.62% ) beats by $0.36; beats on revs; approves $250 mln share repurchase

  • Sea Limited ( SE 1.11% ) misses by $0.11, misses on revs

  • Tencent Music ( TME 2.99% ) misses by RMB0.06, reports revs in-line

  • Terran Orbital ( LLAP 0.00% ) beats by $0.04; misses on revs; reaffirms revs outlook

  • XP ( XP 2.45% ) reports EPS in-line, revs in-line

News:

  • White House announces student loan debt cancellation for more than 800,000 borrowers

  • The People's Bank of China lowered its one-year medium-term lending facility rate to 2.50% from 2.65% and lowered the seven-day reverse repurchase rate by ten basis points to 1.80%

  • Fitch ratings analyst Chris Wolfe in interview warned that agency might be forced to downgrade dozens of more banks

  • Secretary of the Treasury Janet Yellen notes that the economy is on the right track

  • Russian central bank holds emergency meeting and raises rates 350 basis points to 12%

  • Hollywood studios make new offer to screenwriters, according to Bloomberg

  • Former President Trump was indicted for the fourth time for trying to overturn 2020 election in Georgia, according to New York Times

  • Japan reports Q2 GDP of 6.0% year-over-year versus 3.7% prior

  • US homeless population increased by 11% versus last year, a record rate, according to The Wall Street Journal

  • China will stop reporting youth unemployment data, according to The Wall Street Journal

  • Saudi Arabia and UAE buying up thousands of NVIDIA ( NVDA 0.89% ) chips for AI, according to FT

  • Boston Beer Co ( SAM 1.06% ) Chief Sales Officer John C. Geist informed the Company that he intends to retire in 2024

  • Cosan ( CSAN 0.68% ) approved a new share buyback program for the common shares issued by the Company

  • Discover Financial Services ( DFS 1.54% ) CEO Roger Hochschild resigning, effective immediately; will be an advisor to the Chair through December 31; appointed John Owen as Interim CEO

  • Hawaii Electric HE 9.13% investigation related to wildfires could take months to complete, according to Bloomberg

  • LL Flooring ( LL 5.38% ) board of directors announces exploration of strategic alternatives to maximize shareholder value

  • Maui Land & Pineapple Co. ( MLP 0.28% ) files to delay form 10-Q

  • Molina Healthcare ( MOH 0.16% ) of New Mexico receives notification of intent to award new medicaid contract

  • Netflix ( NFLX 0.27% ) confirms it is testing games on more devices

  • Tesla ( TSLA 0.18% ) introduced two new less expensive spec models, according to Bloomberg

M&A:

  • Bentley Systems ( BSY 1.79% ) acquires Blyncsy; financial details not disclosed

  • Black Spade Acquisition Co ( BSAQ 29.49% ): VinFast And Black Spade Acquisition Co complete business combination

  • Glatfelter Co ( GLT 0.25% ) announced the sale of Glatfelter Ober-Schmitten GmbH and certain related distributor operations in Asia to Ostrest GmbH

  • Phreesia ( PHR 0.98% ) acquires Access eForms, an electronic forms management and automation provider; financial details not disclosed

  • Tenaris ( TS 0.84% ) to acquire a pipe coating business unit of Mattr

  • TortoiseEcofin Acquisition Corp. III ( TRTL 0.00% ) and One Energy Enterprises announce execution of a definitive business combination agreement to form One Power Company

Syndicate:

  • Akamai Tech ( AKAM 0.75% ) to offer $1 bln in convertible senior notes

  • Outlook Therapeutics ( OTLK 3.23% ) files for 515,755 shares of common stock by selling shareholder

  • Public Storage ( PSA 0.18% ) files mixed shelf securities offering

  • SLB ( SLB 0.23% ) files mixed shelf securities offering

  • Workiva ( WK 0.89% ) prices offering of $625 mln of 1.250% Convertible Senior Notes due 2028

IPOs:

  • Expected to Price:

  • No IPOs expected.


Gapping Up/Down

  • Gapping up:

  • GRND +22.4%, LL +9.9%, ACLX +8.7%, NVTS +6.7%, PSFE +5.8%, SDRL +3.9%, SKY +3.0%, DHI +2.9%, XP +2.4%, NVDA +1.8%, LEN +1.6%, LEGN +0.9%, RSKD +0.9%, LLAP +0.8%


  • Gapping down:

  • DSGN -45.4%, GETY -15.8%, SE -12.5%, ONON -7.9%, TME -7.3%, DFS -6.7%, HRTX -6.6%, DH -5.5%, SLRN -5%, DXLG -4.9%, RUM -1.8%


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

  • Upgrades

  • CareDx (CDNA) upgraded to Outperform from Mkt Perform at Raymond James; tgt $12

  • Edison (EIX) upgraded to Neutral from Sell at Ladenburg Thalmann

  • Hannon Armstrong Sust. Infr. (HASI) upgraded to Buy from Neutral at BofA Securities; tgt $27

  • Hexcel (HXL) upgraded to Outperform from Sector Perform at RBC Capital Mkts; tgt raised to $85

  • NextDecade (NEXT) upgraded to Buy from Hold at Stifel; tgt raised to $9

  • Pharvaris N.V. (PHVS) upgraded to Overweight from Equal-Weight at Morgan Stanley; tgt raised to $34

  • Shore Bancshares (SHBI) upgraded to Buy from Neutral at Janney


  • Downgrades:

  • Agiliti (AGTI) downgraded to Neutral from Buy at Citigroup; tgt lowered to $13

  • BioXcel Therapeutics (BTAI) downgraded to Neutral from Buy at Mizuho; tgt lowered to $4

  • Design Therapeutics (DSGN) downgraded to Market Perform from Outperform at SVB Securities; tgt $6

  • Design Therapeutics (DSGN) downgraded to Neutral from Outperform at Wedbush; tgt lowered to $6

  • Design Therapeutics (DSGN) downgraded to Sector Perform from Outperform at RBC Capital Mkts; tgt lowered to $7

  • Forward Air (FWRD) downgraded to Neutral from Outperform at Robert W. Baird; tgt lowered to $80

  • GOL Linhas Aereas Inteligentes S.A. (GOL) downgraded to Neutral from Buy at Citigroup; tgt $4.20

  • HF Sinclair (DINO) downgraded to Neutral from Buy at BofA Securities; tgt raised to $65

  • Marathon Petroleum (MPC) downgraded to Neutral from Buy at BofA Securities; tgt raised to $162

  • PBF Energy (PBF) downgraded to Neutral from Buy at BofA Securities; tgt raised to $56

  • PennantPark Investment (PNNT) downgraded to Neutral from Buy at Compass Point; tgt $6.75

  • Valero Energy (VLO) downgraded to Neutral from Buy at BofA Securities; tgt lowered to $152


  • Others:

  • Computer Programs (CPSI) initiated with an Overweight at Cantor Fitzgerald; tgt $24

  • New Found Gold Corp. (NFGC) initiated with a Buy at ROTH MKM; tgt $9

  • R1 RCM (RCM) initiated with an Overweight at Cantor Fitzgerald; tgt $20

  • Savers Value Village (SVV) initiated with a Buy at Loop Capital; tgt $31


Econ Data:

  • 08:30 ET: July Retail Sales (Briefing.com consensus 0.4%; prior 0.2%) and Retail Sales ex-auto (Briefing.com consensus 0.4%; prior 0.2%)

  • 08:30 ET: July Import Prices (prior -0.2%), Import Prices ex-oil (prior -0.4%), Export Prices (prior -0.9%), Export Prices ex-agriculture (prior -0.9%)

  • 08:30 ET: August Empire State Manufacturing survey (Briefing.com consensus 2.4; prior 1.1)

  • 10:00 ET: June Business Inventories (Briefing.com consensus 0.1%; prior 0.2%)

  • 10:00 ET: August NAHB Housing Market Index (Briefing.com consensus 56; prior 56)

  • 16:00 ET: June Net Long-Term TIC Flows (prior $25.8 bln)

Earnings:

  • Monday (Aug 14)

  • Morning: BTAI ERJ JKS MNDY ROIV

  • Afternoon: DH HRTX NVTS


  • Tuesday (Aug 15)

  • Morning: CAH HD HUYA IHS ONON PSFE RSKD SE TME

  • Afternoon: A CAVA COHR DLO HRB JKHY MRCY LRN


  • Wednesday (Aug 16)

  • Morning: EAT JD PFGC TGT TJX

  • Afternoon: AVT CSCO PYCR SQM STNE SNPS WOLF


  • Thursday (Aug 17)

  • Morning: WMT TPR SPTN NICE MSGS LITE DOLE BILI

  • Afternoon: AMAT BILL FTCH GLOB KEYS ROST


  • Friday (Aug 18)

  • Morning: BKE DE EL VIPS

  • Afternoon: PANW


Asia & Europe detail:

Asia: Nikkei +0.5%, Hang Seng -1.3%, Shanghai Composite -0.1%

Equity indices in the Asia-Pacific region ended Tuesday on a mixed note while markets in India and South Korea were closed for holidays. China reported weak growth data for July, adding to concerns about the strength of the country's economy. In addition, China's National Bureau of Statistics discontinued publishing of youth unemployment figures after the youth unemployment rate reached 21.3%. The People's Bank of China lowered its one-year medium-term lending facility rate to 2.50% from 2.65% and lowered the seven-day reverse repurchase rate by ten basis points to 1.80%. Japan Q2 GDP expanded at its fastest qtr/qtr pace in more than two years, though private consumption decreased.

  • In economic data:

  • China's July Retail Sales 2.5% yr/yr (expected 4.5%; last 3.1%), July Industrial Production 3.7% yr/yr (expected 4.4%; last 4.4%), July Fixed Asset Investment 3.4% yr/yr (expected 3.8%; last 3.8%), and July Unemployment Rate 5.3%, as expected (last 5.2%)

  • Japan's Q2 GDP 1.5% qtr/qtr (expected 0.8%; last 0.9%); 6.0% yr/yr (expected 3.1%; last 3.7%). Q2 GDP External Demand 1.8% qtr/qtr (expected 0.9%; last -0.3%) and GDP Private Consumption -0.5% qtr/qtr (expected 0.1%; last 0.6%). June Industrial Production 2.4% m/m (expected 2.0%; last -2.2%) and Capacity Utilization 3.8% m/m (expected -1.6%; last -6.3%)

  • Australia's Q2 Wage Price Index 0.8% qtr/qtr (expected 0.9%; last 0.8%); 3.6% yr/yr (expected 3.7%; last 3.7%)


---Equity Markets---

  • Japan's Nikkei: +0.5%

  • Hong Kong's Hang Seng: -1.3%

  • China's Shanghai Composite: -0.1%

  • India's Sensex: CLOSED

  • South Korea's Kospi: CLOSED

  • Australia's ASX All Ordinaries: +0.4%

---FX---

  • USD/JPY: UNCH at 145.53

  • USD/CNH: +0.5% to 7.3144

  • USD/INR: +0.2% to 83.36

Europe: DAX -1.1%, FTSE -1.5%, CAC -1.3%

Major European indices trade on a lower note while Italy's MIB is closed for Assumption Day. The U.K. reported an unexpected increase in its Unemployment Rate while earnings growth exceeded June expectations after public sector workers received a raise, which is boosting expectations for another BoE rate hike in September. Retailer Marks & Spencer raised its profit outlook for the year. Germany's ZEW Economic Survey improved in August, but the Current Conditions Index worsened.

  • In economic data:

  • Eurozone's August ZEW Economic Sentiment -5.5 (expected -12.0; last -12.2)

  • Germany's August ZEW Economic Sentiment -12.3 (expected -14.7; last -14.7) and Current Conditions -71.3 (expected -63.0; last -59.5)

  • U.K.'s June Average Earnings Index + Bonus 8.2% yr/yr (expected 7.3%; last 7.2%). June three-month employment change -66,000 (expected 75,000; last 102,000) and Unemployment Rate 4.2% (expected 4.0%; last 4.0%).

  • Swiss July PPI -0.1% m/m (expected 0.2%; last 0.0%); -0.6% yr/yr (expected -0.5%; last -0.6%)


---Equity Markets---

  • STOXX Europe 600: -1.2%

  • Germany's DAX: -1.1%

  • U.K.'s FTSE 100: -1.5%

  • France's CAC 40: -1.3%

  • Italy's FTSE MIB: CLOSED

  • Spain's IBEX 35: -1.1%

---FX---

  • EUR/USD: +0.3% to 1.0933

  • GBP/USD: +0.1% to 1.2700

  • USD/CHF: -0.1% to 0.8770

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