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16/10/23 Briefing


The S&P 500 futures are up 14 points and are trading 0.4% above fair value. The Nasdaq 100 futures are up 21 points and are trading 0.2% above fair value. The Dow Jones Industrial Average futures are up 158 points and are trading 0.5% above fair value.

Equity futures are positive, reflecting some relief that the weekend did not produce a widening of the Israel-Hamas conflict. A potential escalation is still top of mind for participants, though, as Israel prepares to invade Gaza in a few days with tens of thousands of soldiers, according to The New York Times.

Iran's foreign minister Hossein Amirabdollahian warned Israel that Hezbollah might join the conflict, and that it could suffer "large earthquake" if it doesn't stop its attacks on Gaza, according to ABC News.

WTI crude oil futures are down 0.2% to $87.54/bbl and Brent Crude futures are down 0.3% to $90.60/bbl.

The 2-yr note yield is up one basis point to 5.06% and the 10-yr note yield is up six basis points to 4.69%.

Separately, the People's Bank of China injected liquidity through the medium-term lending facility in a bid to support economic growth, but left the medium-term lending facility rate at 2.50%.

In corporate news:

  • Pfizer (PFE 31.65, -0.43, -1.3%): amends U.S. Government Paxlovid agreement; lowers FY23 revenue and earnings guidance solely due to COVID products

  • Lululemon Athletica (LULU 398.75, +21.06, +5.6%): will replace Activision Blizzard (ATVI) in the S&P 500, effective prior to the opening of trading on Wednesday, October 18

  • D.R Horton (DHI 105.70, +2.04, +2.0%): upgraded to Buy from Neutral at Goldman Sachs

  • Stellantis (STLA 19.54, -0.14, -0.7%) and Ford (F 11.87, +0.06, +0.5%): furloughed another 1250 workers, according to Reuters

  • UnitedHealth (UNH 543.89, +4.49, +0.8%): upgraded to Buy from Neutral at UBS

  • Hubbell (HUBB 301.44, +6.65, +2.3%): will replace Organon (OGN) in the S&P 500, effective prior to the opening of trading on Wednesday, October 18

  • Manchester United (MANU 17.73, -2.25, -10.5%): Sheikh Jassim bin Hamad Al Thani withdraws from efforts to purchase Manchester United; Jim Ratcliffe would have to pay over $1.5 bln for a 25% stake in Manchester United (MANU) if bid was accepted, according to Reuters

  • Apple (AAPL 177.85, -1.00, -0.6%): iPhone 15 had disappointing start to sales in China, according to Bloomberg

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region began the week on a lower note. Japan's Nikkei: -2.0%, Hong Kong's Hang Seng: -0.9%, China's Shanghai Composite: -0.5%, India's Sensex: -0.2%, South Korea's Kospi: -0.8%, Australia's ASX All Ordinaries: -0.4%.

  • In economic data:

  • Japan's August Industrial Production -0.7% m/m (expected 0.0%; last -1.8%) and Capacity Utilization 0.5% m/m (last -2.2%)

  • India's September WPI Inflation -0.26% yr/yr (expected 0.50%; last -0.52%) and WPI Manufacturing Inflation -1.34% yr/yr (last -2.37%)

  • New Zealand's September Performance of Services Index 50.7 (last 47.7)


  • In news:

  • New Zealand will have a new, more conservative, government after incumbent Prime Minister Hipkins's Labour party lost a weekend election.

  • The People's Bank of China injected liquidity through the medium-term lending facility, but left the interest rate at 2.50%.

  • Separately, China's deposit ratios for securities lending were increased and there was ongoing speculation about more cuts to the reserve requirement ratio before the end of this year.

  • South Korea is extending oil-related subsidies through the end of the year.



  • Major European indices trade on a modestly higher note despite ongoing concerns about a potential escalation between Israel and Gaza. STOXX Europe 600: +0.2%, Germany's DAX: +0.1%, U.K.'s FTSE 100: +0.4%, France's CAC 40: +0.1%, Italy's FTSE MIB: +0.3%, Spain's IBEX 35: +0.4%.

  • In economic data:

  • Germany's September WPI 0.2% m/m (expected 0.3%; last 0.2%); -4.1% yr/yr (last -2.7%)

  • Italy's September CPI 0.2% m/m, as expected (last 0.3%); 5.3% yr/yr, as expected (last 5.4%). August trade surplus EUR2.07 bln (last surplus of EUR6.11 bln)


  • In news:

  • European Central Bank policymaker Nagel said that inflation remains too high, and that policy will remain restrictive for the foreseeable future while ECB President Lagarde said that the labor market is not showing any real signs of weakening.

  • Bank of England Chief Economist Pill said that there is more work to do before inflation returns to target.

  • Poland's ruling Law and Justice party lost its parliamentary majority in a Sunday election.

  • Spain raised its 2023 growth forecast to 2.4% from 2.1%.



U.S. equity futures:

  • S&P 500 Futures +17 @ 4,345

  • DJIA Futures: +164 @ 33,835

  • Nasdaq 100 Futures: +34 @ 15,029

Overseas:

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

  • Asia: Nikkei -2.0%, Hang Seng -0.9%, Shanghai Composite -0.5%

Commodities:

  • Crude Oil -0.18 @ 86.17

  • Nat Gas -0.090 @ 3.146

  • Gold -13.55 @ 1927.95

  • Silver -0.150 @ 22.745

  • Copper +0.0258 @ 3.5968

Earnings/Guidance:

  • Orla Mining ( ORLA 2.53% ) provides third quarter 2023 operational results and increases 2023 annual gold production guidance

  • Pfizer ( PFE 2.46% ) amends U.S. Government Paxlovid agreement; lowers FY23 revenue and earnings guidance solely due to COVID products

  • Vaalco Energy ( EGY 1.71% ) provides operational and financial update including production and sales volumes for Q3

  • Xeris Biopharma ( XERS 0.00% ) raises FY23 guidance

News:

  • Israel is preparing to invade Gaza in a few days with tens of thousands of soldiers, according to the New York Times

  • Iran foreign minister Hossein Amirabdollahian warned Israel it could suffer "large earthquake" if it doesn't stop its attacks on Gaza, according to ABC News

  • US increasing efforts to prevent wider conflict following Iran's comments, according to Bloomberg

  • White House National Security Adviser Jake Sullivan says US can't rule out that Iran would choose to get directly engaged some way, according to CBS News

  • Republicans nominated Rep. Jim Jordan as Speaker, but he still lacks the votes to get the job. House is expected to vote Tuesday for Speaker, but it could take multiple ballots for a winner, according to CNN

  • New Zealand elected the most conservative government in decades, according to the New York Times

  • SEC not expected to appeal court ruling on Bitcoin ETF, according to Reuters

  • Artificial intelligence chip export rules will prevent workarounds, according to Reuters

  • White House announces new actions on homeownership

  • AbbVie's ( ABBV 0.23% ) SKYRIZI (risankizumab) Versus STELARA (ustekinumab) Head-to-Head Study in Crohn's Disease Meets All Primary and Secondary Endpoints

  • Analog Devices ( ADI 0.00% ) names James Mollica as interim CFO until a successor is named; co previously announced a search for permanent replacement is ongoing

  • Apple ( AAPL 0.00% ) iPhone 15 had disappointing start to sales in China, according to Bloomberg

  • AstraZeneca ( AZN 0.00% ) reports Tagrisso plus chemotherapy granted Priority Review in the US for patients with EGFR-mutated advanced lung cancer

  • BeiGene ( BGNE 0.00% ) presentations at ESMO 2023 demonstrate robust clinical strategy for tislelizumab as monotherapy and in combination with pipeline assets

  • Biohaven ( BHVN 0.00% ) Presents Preclinical Data Demonstrating Taldefgrobep alfa Reduces Fat and Improves Lean Mass at The Obesity Society's Annual Meeting, ObesityWeek

  • BioNTech ( BNTX 0.00% ) provides update regarding Pfizer's (PFE) statement on COMIRNATY-related write-offs

  • Black Diamond Therapeutics ( BDTX 0.00% ) Presents Dose Escalation Data Demonstrating Durable Responses in Patients with NSCLC from Phase 1 Trial of BDTX-1535

  • Bristol-Myers ( BMY 0.37% ) receives FDA approval for Opdivo as adjuvant treatment for eligible patients with completely resected Stage IIB or Stage IIC Melanoma

  • Cogent Biosciences ( COGT 0.00% ) Presents Preclinical Data Highlighting Precision Oncology Pipeline at the 2023 AACR-NCI-EORTC International Conference on Molecular Targets and Cancer Therapeutics

  • Coherus ( CHRS 0.00% ) Announces Toripalimab Data at 2023 AACR-NCI-EORTC International Conference on Molecular Targets and Cancer Therapeutics

  • CVS Health ( CVS 0.87% ): Percentage of Aetna Medicare Advantage members in 4+ Star plans is expected to increase to 87%; expects to be eligible for bonus payments

  • CVS Health ( CVS 0.87% ) CFO to take leave of absence due to family health reasons

  • DBV Technologies ( DBVT 0.00% ) appoints Virginie Boucinha as CFO

  • Disney+ ( DIS 0.00% ) gets record viewership during cricket match, according to Bloomberg

  • Elevance Health ( ELV 0.13% ): Members of Elevance Health affiliated health plans in 4 Star or higher-rated plans is expected to drop

  • Establishment Labs ( ESTA 0.00% ) announces FDA clearance of motiva flora smoothsilk tissue expander

  • EyePoint Pharmaceuticals ( EYPT 0.00% ) strengthens board and executive leadership team; appoints Stuart Duty to its Board of Directors and the promotion of George Elston to Executive Vice President

  • Ferrari ( RACE 0.95% ) to accept cryptocurrency as payments, according to Reuters

  • GE HealthCare ( GEHC 0.00% ) Announces Study Results Demonstrating Portrait Mobile Continuous Monitoring Solution Performance with Patients and Care Teams in the Ward

  • General Dynamics ( GD 2.38% ) awarded a $216.5 mln US Navy contract for material associated with the Virginia Class Submarines

  • Gilead ( GILD 0.00% ) Demonstrates the Impact of Global Collaboration in Advancing HIV Research and Health Equity at EACS 2023

  • Gilead Sciences ( GILD 0.00% ) present important new data across multiple difficult-to-treat cancers at ESMO Congress 2023

  • GlaxoSmithKline ( GSK 0.89% ) receives positive CHMP opinion recommending approval of Jemperli plus chemotherapy as a new frontline treatment for dMMR/MSI-H primary advanced or recurrent endometrial cancer

  • Goldman Sachs ( GS 0.18% ) wants to move out of consumer lending, according to the Wall Street Jouirnal

  • Henry Schein ( HSIC 0.00% ) provides information on cybersecurity incident

  • IDEAYA Biosciences ( IDYA 0.00% ) Announces Phase 2 Expansion of Darovasertib and Crizotinib Combination in GNAQ/11 Metastatic Cutaneous Melanoma

  • Ironwood Pharma ( IRWD 0.00% ) presents positive final data from STARS nutrition, a phase II study of apraglutide in short bowel syndrome with intestinal failure and colon in continuity at United European Gastroenterology Week

  • Kymera Therapeutics ( KYMR 0.00% ) presents preclinical data demonstrating activity of MDM2 degraders in acute myeloid leukemia and merkel cell carcinoma

  • Lilly's ( LLY 0.21% ) tirzepatide shows additional 21.1% weight loss after 12 weeks of intensive lifestyle intervention, for a total mean weight loss of 26.6% from study entry over 84 weeks

  • Lloyds ( LYG 0.00% ) wants court order to dissolve a Barclay family company, according to Sunday Times UK

  • Merck ( MRK 0.41% ) to open GBP 1 bln London research facility, according to Financial Times

  • MoonLake Immunotherapeutics ( MLTX 0.00% ) announces the full dataset from its 24-week MIRA clinical trial, establishing the Nanobody sonelokimab as a highly promising and differentiated therapeutic solution for Hidradenitis Suppurativa

  • NCR Corp ( NCR 0.34% ) changes name to NCR Voyix Corporation

  • News Corp ( NWSA 0.00% ): Starboard Value aiming to take stake in News Corp, according to the Wall Street Journal

  • Novavax ( NVAX 0.00% ): EU expected to delay approval of NVAX COVIVD-19 vaccine, according to Financial Times

  • Omeros ( OMER 0.00% ) provides update on interim analysis of ARTEMIS-IGAN phase 3 trial of narsoplimab in iga nephropathy; The ARTEMIS-IGAN trial did not reach statistical significance on the primary endpoint of reduction in proteinuria from baseline compared to placebo

  • Pfizer ( PFE 2.46% ): Everest Medicines' Licensing Partner Pfizer Announces U.S. FDA Approves Etrasimod for Adults with Moderately to Severely Active Ulcerative Colitis

  • Puma Biotechnology ( PUMA ) Announces Presentation of Findings from a Phase I/II Study of Alisertib and Pembrolizumab for Rb-Deficient Head and Neck Squamous Cell Carcinomas at the 2023 AACR-NCI-EORTC Molecular Targets and Cancer Therapeutics Meeting

  • Rite Aid ( RAD 16.81% ) initiates voluntary Chapter 11 process; receives commitment for $3.45 bln in new financing to support business operations; appoints Jeffrey Stein as CEO

  • RTX ( RTX 0.07% ) awarded a $156.2 mln US Army contract for Patriot ground support equipment

  • Southwest Air ( LUV 0.31% ): Material Specialists have ratified their most recent collective bargaining agreement with the Teamsters, according to Teamsters

  • Stellantis ( STLA 0.46% ) and Ford (F) furloughed another 1250 workers, according to Reuters

  • Summit Therapeutics ( SMMT 0.00% ) appoints Manmeet Soni as COO effective immediately

  • Teck Resources ( TECK 1.09% ) provides steelmaking coal sales and pricing update

  • Turkcell ( TKC 1.69% ) names Dr. Ali Taha Ko as CEO

  • Ultragenyx ( RARE 0.00% ) and Mereo BioPharma Announce Interim Phase 2 Data from Phase 2/3 Orbit Study Demonstrating Setrusumab (UX143) Significantly Reduced Fracture Rates in Patients with Osteogenesis Imperfecta

  • Verastem Oncology ( VSTM 0.00% ) Announces Initial Results of RAMP 203 Trial of Avutometinib and LUMAKRAS (sotorasib) in KRAS G12C-Mutant Non-Small Cell Lung Cancer

M&A:

  • Albemarle ( ALB 4.34% ) withdraws non-binding offer to acquire Liontown Resources

  • Amphenol ( APH 2.66% ) acquires PCTEL (PCTI) for ~ $139.7 million, or $7.00 per share

  • Manchester United ( MANU 1.22% ): Sheikh Jassim bin Hamad Al Thani withdraws from efforts to purchase Manchester United, according to ESPN

  • Manchester United ( MANU 1.22% ): Jim Ratcliffe would have to pay over $1.5 bln for a 25% stake in Manchester United if bid was accepted, according to Reuters

  • Mesa Laboratories ( MLAB 0.00% ) acquires GKE-GmbH complementary sterilization indicators and healthcare channels to Mesa's SDC Platform

  • Novo Nordisk A/S ( NVO 1.96% ) to acquire ocedurenone for uncontrolled hypertension from KBP Biosciences

  • Patria Investments ( PAX 0.00% ) acquires Private Equity Solutions Business from abrdn

  • Rayonier Adv. Materials ( RYAM 2.09% ) to explore potential sale of its paperboard and high-yield pulp assets located at its Temiscaming site

Syndicate:

  • Ameren ( AEE 1.60% ) files mixed securities shelf offering

  • FuelCell Energy ( FCEL 0.00% ) files for common stock offering

  • Mirum Pharmaceuticals ( MIRM 0.00% ) files for 7,937,448 share common stock offering by selling shareholders

  • NextNav ( NN 0.00% ) files for 4,768,491 shares of common stock by selling shareholders

IPOs:

  • No IPOs expected.

Gapping Up/Down

  • Gapping up:

  • RARE +7.2%, EGY +5.5%, MLTX +5.3%, LULU +5.2%, RAD +4.9%, ORLA +4.6%, PAX +4.5%, DBVT +3.4%, HUBB +3.1%, PRLD +2.9%, VSTM +2.4%, NN +2%, ESTA +2%, CVS +1.9%, RYAM +1.8%, MRUS +1.7%, TECK +1%, ALB +1%, RTX +0.9%, GD +0.8%


  • Gapping down:

  • BNTX -6%, MRNA -4.4%, FCEL -3.9%, BDTX -3.1%, PFE -3.1%, IRWD -2%, BGNE -1%, AZN -0.9%, REGN -0.6%, CHRS -0.5%


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

  • Upgrades

  • Alignment Healthcare (ALHC) upgraded to Strong Buy from Outperform at Raymond James; tgt raised to $10

  • Check Point Software (CHKP) upgraded to Equal-Weight from Underweight at Morgan Stanley; tgt raised to $144

  • Chesapeake Utilities (CPK) upgraded to Equal Weight from Underweight at Wells Fargo; tgt lowered to $100

  • Greenbrier (GBX) upgraded to Positive from Neutral at Susquehanna; tgt raised to $50

  • Patterson-UTI (PTEN) upgraded to Buy from Neutral at BofA Securities; tgt raised to $16

  • Sabra Health Care REIT (SBRA) upgraded to Equal Weight from Underweight at Wells Fargo; tgt raised to $15

  • Trinity Industries (TRN) upgraded to Positive from Neutral at Susquehanna; tgt raised to $32

  • Varonis Systems (VRNS) upgraded to Overweight from Equal-Weight at Morgan Stanley; tgt raised to $39

  • Wayfair (W) upgraded to Hold from Sell at Loop Capital; tgt lowered to $50


  • Downgrades:

  • Boise Cascade (BCC) downgraded to Underperform from Neutral at BofA Securities; tgt $111

  • Cactus (WHD) downgraded to Underperform from Neutral at BofA Securities; tgt raised to $47

  • Crown Castle (CCI) downgraded to Sector Perform from Outperform at RBC Capital Mkts; tgt lowered to $100

  • Enphase Energy (ENPH) downgraded to Market Perform from Outperform at BMO Capital Markets; tgt lowered to $148

  • Medical Properties Trust (MPW) downgraded to Underweight from Equal Weight at Wells Fargo; tgt lowered to $4

  • Pioneer Natural Resources (PXD) downgraded to Market Perform from Outperform at BMO Capital Markets


  • Others:

  • Nextracker (NXT) initiated with a Buy at Janney; tgt $43

  • Vitesse (VTS) initiated with a Buy at ROTH MKM; tgt $30.50

  • WK Kellogg Co (KLG) initiated with a Neutral at BofA Securities; tgt $11.50

  • Zynex (ZYXI) initiated with an Outperform at RBC Capital Mkts; tgt $13


Econ Data:

  • 08:30 ET: Empire State Manufacturing for Oct (Briefing.com Consensus -4.0; Prior 1.9)

Earnings:

  • Monday (Oct 16)

  • Morning: SCHW

  • Afternoon: ELS


  • Tuesday (Oct 17)

  • Morning: ACI BAC BK ERIC GS JNJ LMT PLD

  • Afternoon: FULT HWC IBKR JBHT OMC PNFP UAL WTFC


  • Wednesday (Oct 18)

  • Morning: ABT ALLY ASML CFG CBSH ELV FHM MTB MS NDAQ NTRS PG STT SCL TRV USB UNF UCBI WGO

  • Afternoon: AA CNS COLB CCI DFS EFX FNB FR KMI LRCX LVS LBRT MRTN NFLX PPG REXR SAP SLG STLD SNV TSLA ZION


  • Thursday (Oct 19)

  • Morning: ALK AAL T AUB BMI BKU BX EWBC FITB FCX GPC HOMB IRDM KEY LNN MAN MMC NOK PM POOL SNA TSM TCBI TFC UNP WBS WNS

  • Afternoon: ASB OZK CSX GBCI ISRG KNX WDFC


  • Friday (Oct 20)

  • Morning: AXP ALV BHLB CMA EEFT FBP HBAN IPG RF SXT SLB

  • Afternoon: HTH


Asia & Europe detail:

Asia: Nikkei -2.0%, Hang Seng -0.9%, Shanghai Composite -0.5%

Equity indices in the Asia-Pacific region began the week on a lower note. New Zealand will have a new, more conservative, government after incumbent Prime Minister Hipkins's Labour party lost a weekend election. The People's Bank of China injected liquidity through the medium-term lending facility, but left the interest rate at 2.50%. Separately, China's deposit ratios for securities lending were increased and there was ongoing speculation about more cuts to the reserve requirement ratio before the end of this year. South Korea is extending oil-related subsidies through the end of the year.

  • In economic data:

  • Japan's August Industrial Production -0.7% m/m (expected 0.0%; last -1.8%) and Capacity Utilization 0.5% m/m (last -2.2%)

  • India's September WPI Inflation -0.26% yr/yr (expected 0.50%; last -0.52%) and WPI Manufacturing Inflation -1.34% yr/yr (last -2.37%)

  • New Zealand's September Performance of Services Index 50.7 (last 47.7)


---Equity Markets---

  • Japan's Nikkei: -2.0%

  • Hong Kong's Hang Seng: -0.9%

  • China's Shanghai Composite: -0.5%

  • India's Sensex: -0.2%

  • South Korea's Kospi: -0.8%

  • Australia's ASX All Ordinaries: -0.4%

---FX---

  • USD/JPY: UNCH at 149.54

  • USD/CNH: +0.1% to 7.3138

  • USD/INR: UNCH at 83.23

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

Major European indices trade on a modestly higher note despite ongoing concerns about a potential escalation between Israel and Gaza. European Central Bank policymaker Nagel said that inflation remains too high, and that policy will remain restrictive for the foreseeable future while ECB President Lagarde said that the labor market is not showing any real signs of weakening. Bank of England Chief Economist Pill said that there is more work to do before inflation returns to target. Poland's ruling Law and Justice party lost its parliamentary majority in a Sunday election. Spain raised its 2023 growth forecast to 2.4% from 2.1%.

  • In economic data:

  • Germany's September WPI 0.2% m/m (expected 0.3%; last 0.2%); -4.1% yr/yr (last -2.7%)

  • Italy's September CPI 0.2% m/m, as expected (last 0.3%); 5.3% yr/yr, as expected (last 5.4%). August trade surplus EUR2.07 bln (last surplus of EUR6.11 bln)


---Equity Markets---

  • STOXX Europe 600: +0.2%

  • Germany's DAX: +0.1%

  • U.K.'s FTSE 100: +0.4%

  • France's CAC 40: +0.1%

  • Italy's FTSE MIB: +0.3%

  • Spain's IBEX 35: +0.4%

---FX---

  • EUR/USD: +0.2% to 1.0529

  • GBP/USD: +0.1% to 1.2135

  • USD/CHF: UNCH at 0.9025

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