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16/09/22 Briefing

Updated: Sep 22

The S&P 500 futures are down 30 points and are trading 1.2% below fair value. The Nasdaq 100 futures are down 105 points and are trading 1.5% below fair value. The Dow Jones Industrial Average futures are down 209 points and are trading 1.0% below fair value.

Equity futures are decidedly weak on this options expiration day following the warning from FedEx (FDX), which piled onto existing concerns about inflation and rate hikes with a backdrop of slowing global growth.  

Overseas, the UK had weaker-than-expected retail sales in August. Reserve Bank of Australia Governor Lowe said that rates are still too low at this time, adding that he sees "a few" rate hikes in the coming months. South Korea's unemployment rate reached its lowest level in the 23-year history of the series.

Separately, the 2-yr note yield is up two basis points to 3.88% and the 10-yr note yield is unchanged at 3.46%.

Energy complex futures are mixed ahead of the open. WTI crude oil futures are up 1.1% to $85.98/bbl while natural gas futures are down 1.2% to $8.22/mmbtu.

Market participants will receive the preliminary University of Michigan Consumer Sentiment reading (Briefing.comconsensus 60.0; prior 58.2) for September at 10:00 a.m. ETand Net Long-Term TIC Flows for July at 4:00 p.m. ET

In corporate news:

  • FedEx (FDX 162.61, -42.26, -20.63%): guides 1Q23 EPS well below consensus and guides Q2 EPS and revenue below consensus, citing global volume softness, particularly due to macroeconomic weakness in Asia and service challenges in Europe; also withdraws FY23 earnings guidance

  • Uber (UBER 31.84, -1.29, -3.89%): lower on security breach news

  • NCR Corp (NCR 24.20, -4.91, -16.87%): to separate into two independent companies

  • Roblox (RBLX 42.78, -0.72, -1.66%): reports August metrics - Daily active users were 59.9 million, up 24% yr/yr

  • Texas Instruments (TXN 163.03, +0.36, +0.22%): raises its quarterly dividend 8% to $1.24/share, payable November 15; authorizes an additional $15 bln for share repurchases

  • Adobe (ADBE 300.55, -8.58, -2.78%):BofA Securities downgrades to Neutral from Buy

  • General Electric (GE 66.00, -2.91, -4.22%): CFO acknowledges that supply chain issues will reduce profit, according to Bloomberg

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region ended the week on a lower note. Japan's Nikkei: -1.1% (-2.3% for the week), Hong Kong's Hang Seng: -0.9% (-3.1% for the week), China's Shanghai Composite: -2.3% (-4.2% for the week), India's Sensex: -1.8% (-1.6% for the week), South Korea's Kospi: -0.8% (-0.1% for the week), Australia's ASX All Ordinaries: -1.5% (-2.3% for the week).

  • In economic data:

  • China's August Industrial Production 4.2% yr/yr (expected 3.8%; last 3.8%), August Fixed Asset Investment 5.8% yr/yr (expected 5.5%; last 5.7%), August Retail Sales 5.4% yr/yr (expected 3.5%; last 2.7%), August House Prices -1.3% yr/yr (last -0.9%), and August Unemployment Rate 5.3% (expected 5.4%; last 5.4%)

  • South Korea's August trade deficit $9.49 bln (last deficit of $9.47 bln). August Imports 28.2% yr/yr (last 25.6%) and Exports 6.6% yr/yr (last 15.9%). August Unemployment Rate 2.5% (last 2.9%). August Import Price Index 22.9% yr/yr (last 25.6%) and Export Price Index 13.4% yr/yr (last 15.9%)

  • Singapore's August trade surplus SGD3.755 bln (last SGD3.538 bln). August non-oil exports -3.9% m/m (expected -3.8%; last 1.4%); 11.4% yr/yr (expected 8.3%; last 7.0%)

  • New Zealand's August Business PMI 54.9 (last 53.5)

  • In news:

  • Japan's Finance Minister Suzuki spoke again about the potential for an intervention in the currency market.

  • South Korea's unemployment rate reached its lowest level in the 23-year history of the series.

  • Reserve Bank of Australia Governor Lowe said that rates are still too low at this time, adding that he sees "a few" rate hikes in the coming months. The RBA governor also said that inflation expectations for the mid-term are well anchored.

  • Major European indices trade on a mostly lower note while the U.K.'s FTSE (+0.1%) outperforms despite the release of weaker than expected retail sales for August. STOXX Europe 600: -0.9% (-2.3% week-to-date), Germany's DAX: -1.7% (-2.7% week-to-date), U.K.'s FTSE 100: +0.1% (-0.9% week-to-date), France's CAC 40: -1.3% (-2.2% week-to-date), Italy's FTSE MIB: -1.0% (+0.3% week-to-date), Spain's IBEX 35: -0.9% (-0.2% week-to-date).

  • In economic data:

  • Eurozone's August CPI 0.6% m/m (expected 0.5%; last 0.1%); 9.1% yr/yr, as expected (last 9.1%). August Core CPI 0.5% m/m, as expected (last 0.5%); 4.3% yr/yr, as expected (last 4.3%)

  • U.K.'s August Retail Sales -1.6% m/m (expected -0.5%; last 0.4%); -5.4% yr/yr (expected -4.2%; last -3.2%). August Core Retail Sales -1.6% m/m (expected -0.7%; last 0.4%); -5.0% yr/yr (expected -3.4%; last -3.1%)

  • Italy's July trade deficit EUR361 mln (expected deficit of EUR1.50 bln; last deficit of EUR2.51 bln). August CPI 0.8% m/m, as expected (last 0.8%); 8.4% yr/yr, as expected (last 8.4%)

  • In news:

  • Bank of France raised its domestic growth forecast for 2022 to 2.6% from 2.3% and it now expects a 0.5% contraction in 2023, down from the previous forecast for growth of 0.8%.

  • The central bank expects inflation of 5.8% this year and between 4.2% and 6.9% next year.

  • European Central Bank President Lagarde said that rate hikes are sending a signal that the central bank will achieve its price target.

  • Germany placed Rosneft Deutschland and Schwedt refinery under trusteeship.

 

U.S. equity futures:

  • S&P 500 Futures: -31 @ 3,871

  • DJIA Futures: -208 @ 30,754

  • Nasdaq 100 Futures: -107 @ 11,821

Overseas:

  • Europe: DAX -1.7%, FTSE +0.1%, CAC -1.3%

  • Asia: Nikkei -1.1%, Hang Seng -0.9%, Shanghai Composite -2.3%

Commodities:

  • Crude Oil -0.81 @ 85.91

  • Nat Gas  -0.103 @ 8.221

  • Gold -2.70 @ 1674.60

  • Silver -0.207  @ 19.662

  • Copper -0.0167 @ 3.4733

U.S. Summary:

  • Earnings/Guidance:

  • Bowlero (BOWL) reports JunQ results, beats on revs

  • FedEx (FDX) guides 1Q23 EPS well below consensus and guides Q2 EPS and revenue below consensus, citing global volume softness, particularly due to macroeconomic weakness in Asia and service challenges in Europe; also withdraws FY23 earnings guidance

  • Huntsman (HUN) lowers Q3 guidance

  • JetBlue Airways (JBLU) raises flown capacity and revenue per available seat mile guidance for Q3

  • Travel + Leisure Co (TNL) reaffirms Q3 and FY22 guidance ahead of investor conference next week

  • General News:

  • World Bank says risk of global recession in 2023 rises amid simultaneous rate hikes; Study highlights need for policies to curb inflation without exacerbating recession risk

  • Germany places Schwedt Refinery and Rosneft Deutschland under trusteeship, according to Reuters

  • EC proposes rules to protect media pluralism and independence in the EU

  • China expected to sanction Boeing (BA) Defense and Raytheon (RTX), according to Reuters

  • Lithium prices surged to new records as EV-fueled demand pressures supply, according to Bloomberg

  • ADC Therapeutics (ADCT) and Swedish Orphan Biovitrum AB (BIOVF) confirms positive CHMP opinion for ZYNLONTA for the treatment of relapsed or refractory diffuse large B-cell lymphoma

  • Agios Pharma (AGIO) receives Positive CHMP Opinion for PYRUKYND for the treatment of Pyruvate Kinase

  • Allison Transmission (ALSN): Santa Clara Valley Transportation Authority signs agreement for GILLIG buses equipped with ALSN's eGen Flex

  • Amazon (AMZN) to release Blade Runner 2099 series, according to Deadline

  • Amryt Pharma plc (AMYT) confirms positive CHMP opinion for Acromegaly treatment, Mycapssa

  • AstraZeneca (AZN) reports Danicopan (ALXN2040) add-on to Ultomiris or Soliris met primary endpoint in ALPHA Phase III trial

  • AstraZeneca (AZN): Evusheld long-acting antibody combination recommended for approval in the EU for the treatment of COVID-19

  • AstraZeneca (AZN): Beyfortus (nirsevimab) recommended for approval in the EU by CHMP

  • AstraZeneca (AZN): Danicopan (ALXN2040) Add-On to ULTOMIRIS (ravulizumab-cwvz) or SOLIRIS (eculizumab) Met Primary Endpoint in ALPHA Phase III Trial for Patients with Paroxysmal Nocturnal Hemoglobinuria Who Experience Clinically Significant Extravascular Hemolysis

  • Centene's (CNC) subsidiary, Superior HealthPlan, awarded six-year contract by Texas Health and Human Services Commission to continue providing children and youth in foster care with healthcare coverage

  • China Eastern Airlines (CEA) reports August passenger transportation capacity (measured by available seat- kilometres) increased by 35.10% yr/yr, passenger transportation capacity of its domestic routes increased by 37.49% yr/yr

  • CME Group (CME) FX Futures and Options reach new volume and open interest records

  • Devon Energy (DVN) to appoint Barbara Baumann as Board Chair, succeeding Dave Hager who notified the Board of his retirement plans effective January 2023

  • Edgewell Personal Care (EPC) announces organizational changes

  • FirstEnergy (FE) CEO Steven Strah to retire; Board Chair John Somerhalder II named interim CEO, effective September 16

  • Genius Sports (GENI) secured an agreement with Amazon (AMZN) to provide augmented video technology and data-related services in connection with an alternate feed of Prime Video's Thursday NightFootball NFL broadcast in the U.S.

  • Gevo (GEVO) breaks ground on its first commercial-scale sustainable aviation fuel facility, Net-Zero 1

  • Gilead Sciences (GILD): WHO expands recommendation for Veklury (Remdesivir) to patients with severe disease in latest update to COVID-19 Guideline

  • Gilead Sciences' (GILD) unit Kite reports CAR T-cell Therapy Yescarta First in Europe to Receive Positive CHMP Opinion for Use in Second-line Diffuse Large B-cell Lymphoma and High-grade B-cell Lymphoma

  • Gogo (GOGO) Repurchases 1.5 million shares of common stock from BlackRock (BLK)

  • GOL Linhas Aereas Inteligentes (GOL) will pay over $41 million in resolution of foreign bribery investigations in the United States and Brazil

  • HF Sinclair (DINO) appoints Atanas H. Atanasov as CFO of HF Sinclair, effective September 30

  • IAMGOLD (IAG) announced the departure of Daniella Dimitrov, Chief Financial Officer and Executive Vice President, Strategy & Corporate Development

  • Intellia Therapeutics (NTLA) Announces Positive Interim Clinical Data for its Second Systemically Delivered Investigational CRISPR Candidate, NTLA-2002 for the Treatment of Hereditary Angioedema

  • Intellia Therapeutics (NTLA) and Regeneron (REGN) announce positive interim results from an ongoing Phase 1 clinical trial of NTLA-2001 for the treatment of transthyretin (ATTR) amyloidosis

  • Jacobs Engineering (J) announces leadership succession plan as COO Bob Pragada will succeed Steve Demetriou as CEO and join the Board of Directors

  • Kforce (KFRC) enters into a corporate stock repurchase plan

  • Maxar Technologies (MAXR) CFO Biggs Porter to retire sometime in 2023

  • Merck (MRK) confirms the European Medicines Agency's Committee for Medicinal Products for Human Use (CHMP) has recommended the approval of VAXNEUVANCE

  • Meta (META) slims down experimental products division, according to Platformer

  • Methanex (MEOH) approves 5% share repurchase program

  • Methanex (MEOH) CEO to retire at the end of the year

  • Mondee Holdings (MOND) commences offer to purchase and consent solicitation relating to its warrants

  • NCR Corp (NCR) to separate into two independent companies

  • Philips (PHG) showcases clinical data and solutions designed to deliver better cardiac care with greater efficiency at TCT 2022

  • Qiagen (QGEN) announces new additions to its NeuMoDx assay menu for organ transplant-associated viruses

  • Regeneron Pharma (REGN) reports Positive Dupixent (dupilumab) Phase 3 Data in Children Aged 6 Months to 5 Years with Moderate-to-severe Atopic Dermatitis Published in The Lancet

  • Revance (RVNC) to Present Data from Phase 2 JUNIPER Clinical Trial Evaluating DAXXIFY (DaxibotulinumtoxinA-lanm) Injection for the Treatment of Upper Limb Spasticity at the International Congress of Parkinson and Movement Disorder Society

  • Roblox (RBLX) reports August metrics - Daily active users were 59.9 million, up 24% yr/yr

  • Texas Instruments (TXN) raises its quarterly dividend 8% to $1.24/share, payable November 15; authorizes an additional $15 bln for share repurchases

  • VNET Group (VNET) CEO resigns for personal reasons

  • Uber (UBER) reports security breach

  • Xenia Hotels (XHR) reinstates quarterly common stock dividend and authorizes quarterly cash dividend of $0.10 per share

  • M&A:

  • Allegiance Bancshares (ABTX) and CBTX (CBTX) announce receipt of regulatory approval from Board of Governors of the Federal Reserve System to complete previously announced merger

  • Churchill Downs (CHDN) acquires Ellis Park for $79 mln

  • CNB Financial (CCNE) prices offering of 3,702,127 shares of common stock at $23.50 per share resulting in gross proceeds of ~$87 mln

  • Commercial Metals (CMC) acquires Advanced Steel Recovery; financial details not disclosed

  • DigitalBridge (DBRG): EC clears acquisition of DFMG by Deutsche Telecom (DTEGY), DigitalBridge (DBRG), and Brookfield (BAM)

  • Goldman Sachs (GS): EC clears acquisition of the Norgine Group by Goldman Sachs

  • Intuitive Machines (IPAX) to merge with Inflection Point Acquisition, according to the Wall Street Journal

  • Viasat (VSAT) and Inmarsat (IMASY) received approval of the proposed combination of their businesses by the UK Government under the National Security & Investment Act

  • Syndicate

  • Alignment Healthcare (ALHC) files mixed securities shelf offering; commences of 9 mln share offering by selling stockholders

  • Bowlero (BOWL) files for 216,956,397 share common stock offering by selling shareholders

  • Celularity (CELU) files for $40 mln common stock offering directly to YA II PN or YA, in connection with the Pre-Paid Advance Agreement

  • Core & Main (CNM) announces launch of 10 mln share offering by selling shareholders

  • Kilroy Realty (KRC) files mixed securities shelf offering

  • Know Labs (KNW) prices offering of 3.6 mln shares of common stock at $2.00 per share

  • IPOs:

  •  Expected to Price:

  • No IPOs expected.

Gapping Up/Down

  • Gapping up:

  • GOGO +5%, BOWL +4%, RVNC +3%, AZN +1.8%, CELU +0.9%, DINO +0.7%

  • Gapping down:

  • FDX -19.9%, NCR -14.8%, UPS -6.8%, ALHC -5.4%, UBER -5.2%, CNM -3.8%, RBLX -3.2%, AMZN -2.7%, NVTA -2.3%, CMC -1.9%, MAXR -1.7%, SPY -1.2%, QQQ -1.0%, IWM -0.8%, DIA -0.8%, DVN -0.6%

 

Analyst Research (see Upgrades/Downgradescalendarfor full list):

  • Upgrades

  • Alcoa (AA) upgraded to Overweight from Equal-Weight at Morgan Stanley; tgt raised to $66

  • ANSYS (ANSS) upgraded to Overweight from Underweight at JP Morgan; tgt $275

  • Downgrades:

  • Arrow Electronics (ARW) downgraded to Underweight from Equal Weight at Wells Fargo; tgt lowered to $87

  • Autodesk (ADSK) downgraded to Neutral from Overweight at JP Morgan; tgt lowered to $203

  • Avnet (AVT) downgraded to Underweight from Equal Weight at Wells Fargo; tgt lowered to $35

  • Others:

  • Alight (ALIT) initiated with an Overweight at KeyBanc Capital Markets; tgt $15

  • Allscripts Healthcare (MDRX) initiated with a Sector Weight at KeyBanc Capital Markets

  • Annexon (ANNX) initiated with a Buy at Jefferies; tgt $12

  • Baidu (BIDU) initiated with a Buy at UBS

  • Benefitfocus (BNFT) initiated with an Overweight at KeyBanc Capital Markets; tgt $10

  • Doximity (DOCS) initiated with a Sector Weight at KeyBanc Capital Markets

  • GoodRx (GDRX) initiated with a Sector Weight at KeyBanc Capital Markets

  • Health Catalyst (HCAT) initiated with a Sector Weight at KeyBanc Capital Markets

  • HealthEquity (HQY) initiated with an Overweight at KeyBanc Capital Markets; tgt $85

  • Omnicell (OMCL) initiated with an Overweight at KeyBanc Capital Markets; tgt $130

  • Phreesia (PHR) initiated with an Overweight at KeyBanc Capital Markets; tgt $40

  • Progyny (PGNY) initiated with an Overweight at KeyBanc Capital Markets; tgt $55

  • R1 RCM (RCM) initiated with an Overweight at KeyBanc Capital Markets; tgt $30

  • Recursion Pharmaceuticals (RXRX) initiated with an Overweight at KeyBanc Capital Markets; tgt $20

  • Teladoc (TDOC) initiated with a Sector Weight at KeyBanc Capital Markets

  • Veeva Systems (VEEV) initiated with an Overweight at KeyBanc Capital Markets; tgt $220

Upcoming Events:

  • Econ Data:

  • 10:00 ET: Univ. of Michigan Consumer Sentiment - Prelim for Sep (Briefing.comConsensus 60.0; Prior 58.2)

  • 16:00 ET: Net Long-Term TIC Flows for Jul (Briefing.comConsensus NA; Prior $121.8B)


Asia & Europe detail:

Asia: Nikkei -1.1%, Hang Seng -0.9%, Shanghai Composite -2.3%

Equity indices in the Asia-Pacific region ended the week on a lower note. Japan's Finance Minister Suzuki spoke again about the potential for an intervention in the currency market. South Korea's unemployment rate reached its lowest level in the 23-year history of the series. Reserve Bank of Australia Governor Lowe said that rates are still too low at this time, adding that he sees "a few" rate hikes in the coming months. The RBA governor also said that inflation expectations for the mid-term are well anchored.

  • In economic data:

  • China's August Industrial Production 4.2% yr/yr (expected 3.8%; last 3.8%), August Fixed Asset Investment 5.8% yr/yr (expected 5.5%; last 5.7%), August Retail Sales 5.4% yr/yr (expected 3.5%; last 2.7%), August House Prices -1.3% yr/yr (last -0.9%), and August Unemployment Rate 5.3% (expected 5.4%; last 5.4%)

  • South Korea's August trade deficit $9.49 bln (last deficit of $9.47 bln). August Imports 28.2% yr/yr (last 25.6%) and Exports 6.6% yr/yr (last 15.9%). August Unemployment Rate 2.5% (last 2.9%). August Import Price Index 22.9% yr/yr (last 25.6%) and Export Price Index 13.4% yr/yr (last 15.9%)

  • Singapore's August trade surplus SGD3.755 bln (last SGD3.538 bln). August non-oil exports -3.9% m/m (expected -3.8%; last 1.4%); 11.4% yr/yr (expected 8.3%; last 7.0%)

  • New Zealand's August Business PMI 54.9 (last 53.5)

---Equity Markets---

  • Japan's Nikkei: -1.1% (-2.3% for the week)

  • Hong Kong's Hang Seng: -0.9% (-3.1% for the week)

  • China's Shanghai Composite: -2.3% (-4.2% for the week)

  • India's Sensex: -1.8% (-1.6% for the week)

  • South Korea's Kospi: -0.8% (-0.1% for the week)

  • Australia's ASX All Ordinaries: -1.5% (-2.3% for the week)

---FX---

  • USD/JPY: -0.2% to 143.17

  • USD/CNH: +0.1% to 7.0195

  • USD/INR: -0.2% to 79.70

Europe: DAX -1.7%, FTSE +0.1%, CAC -1.3%

Major European indices trade on a mostly lower note while the U.K.'s FTSE (+0.1%) outperforms despite the release of weaker than expected retail sales for August. Bank of France raised its domestic growth forecast for 2022 to 2.6% from 2.3% and it now expects a 0.5% contraction in 2023, down from the previous forecast for growth of 0.8%. The central bank expects inflation of 5.8% this year and between 4.2% and 6.9% next year. European Central Bank President Lagarde said that rate hikes are sending a signal that the central bank will achieve its price target. Germany placed Rosneft Deutschland and Schwedt refinery under trusteeship.

  • In economic data:

  • Eurozone's August CPI 0.6% m/m (expected 0.5%; last 0.1%); 9.1% yr/yr, as expected (last 9.1%). August Core CPI 0.5% m/m, as expected (last 0.5%); 4.3% yr/yr, as expected (last 4.3%)

  • U.K.'s August Retail Sales -1.6% m/m (expected -0.5%; last 0.4%); -5.4% yr/yr (expected -4.2%; last -3.2%). August Core Retail Sales -1.6% m/m (expected -0.7%; last 0.4%); -5.0% yr/yr (expected -3.4%; last -3.1%)

  • Italy's July trade deficit EUR361 mln (expected deficit of EUR1.50 bln; last deficit of EUR2.51 bln). August CPI 0.8% m/m, as expected (last 0.8%); 8.4% yr/yr, as expected (last 8.4%)

---Equity Markets---

  • STOXX Europe 600: -0.9% (-2.3% week-to-date)

  • Germany's DAX: -1.7% (-2.7% week-to-date)

  • U.K.'s FTSE 100: +0.1% (-0.9% week-to-date)

  • France's CAC 40: -1.3% (-2.2% week-to-date)

  • Italy's FTSE MIB: -1.0% (+0.3% week-to-date)

  • Spain's IBEX 35: -0.9% (-0.2% week-to-date)

---FX---

  • EUR/USD: -0.2% to 0.9974

  • GBP/USD: -0.6% to 1.1403

  • USD/CHF: UNCH at 0.9612



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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