17/08/22 Briefing

The S&P 500 futures are down 35 points and are trading 0.9% below fair value. The Nasdaq 100 futures are down 132 points and are 1.1% below fair value. The Dow Jones Industrial Average futures are down 220 points and are trading 0.5% below fair value.

Futures for the major indices are down this morning ahead of the July 26-27 FOMC Minutes release at 2:00 p.m. ET today. Target's (TGT) weaker-than-expected quarterly results are adding to the hesitation in premarket action.

Overseas, the UK's CPI report was the highest reading in 40 years, up 10.1%year-over-year. The Reserve Bank of New Zealand raised its official cash rate by 50 bps to 3.00%, as expected, continuing a slate of aggressive rate hikes.

The weekly MBA Mortgage Applications Index was down 2.3% with weakness in both purchase and refinancing applications.

Other economic releases today include July retail sales (Briefing.comconsensus 0.2%; prior 1.0%) and retail sales excluding auto's (Briefing.comconsensus 0.1%; prior 1.0%) at 8:30 a.m. ET, June Business Inventories (Briefing.comconsensus 1.5%; prior 1.4%) at 10:00 a.m. ET, weekly EIA Crude Oil Inventories (prior +5.45 million), and July 26-27 FOMC Minutes release at 2:00 p.m. ET.

WTI crude oil futures are down 0.2% to $86.42/bbl. Natural gas futures are up 2.3% to $9.54/mmbtu.

The 2-yr note yield is up eight basis points to 3.32% while the 10-yr note yield is up seven basis points to 2.89%.

In corporate news:

• Lowe's (LOW 216.99, +2.87, +1.34%): beats by $0.08, misses on revs; Q2 US comps +0.2%; sees FY23 total sales and comp sales toward low end of prior guidance; sees FY23 EPS toward top end of its prior range

• Target (TGT 173.60, -6.59, -3.66%): misses by $0.33, misses on revs; Q2 comps +2.6%; Q2 operating margins below guidance; reaffirms revenue and operating margin guidance

• Stanley Black & Decker (SWK 102.13, -1.45, -1.40%): Deutsche Bank downgraded to Hold from Buy

• Krispy Kreme, Inc. (DNUT 12.65, -1.87, -12.88%): misses by $0.02, misses on revs; lowers FY22 EPS, revs guidance

• Analog Devices (ADI 174.00, -5.04, -2.82%): beats by $0.09, beats on revs; guides Q4 EPS in-line, revs in-line

• Agilent (A 140.19, +7.42, +5.59%): beats by $0.13, beats on revs; guides OctQ EPS above consensus, revs in-line

• Bed Bath & Beyond (BBBY 25.27, +4.62, +22.37%): continues to surge following yesterday's nearly 30% gain 

• The Children's Place (PLCE 53.03, -1.92, -3.49%):  misses by $1.52, misses on revs; guides Q3 EPS above consensus, revs below consensus; guides FY23 EPS below consensus, revs below consensus

• TJX (TJX 65.74, -0.91, -1.37%): beats by $0.02, misses on revs; guides Q3 EPS below consensus; guides Q4 (Jan) EPS in-line; Q2 comps -5%; lowers FY23 comp guidance

Reviewing overnight developments:

• Equity indices in the Asia-Pacific region ended the midweek session on a mostly higher note. Japan's Nikkei: +1.2%, Hong Kong's Hang Seng: +0.5%, China's Shanghai Composite: +0.5%, India's Sensex: +0.7%, South Korea's Kospi: -0.7%, Australia's ASX All Ordinaries: +0.3%.

  • In economic data:

    • Japan's July trade deficit JPY1.44 trln (expected deficit of JPY1.41 trln; last deficit of JPY1.40 trln). July Imports 47.2% yr/yr (expected 45.7%; last 46.1%) and Exports 19.0% yr/yr (expected 18.2%; last 19.3%). June Core Machinery Orders 0.9% m/m (expected 1.3%; last -5.6%); 6.5% yr/yr (expected 7.5%; last 7.4%)

    • Singapore's July non-oil exports 1.4% m/m (expected -3.8%; last 3.2%); 7.0% yr/yr (expected 6.0%; last 8.5%)

    • Hong Kong's July Unemployment Rate 4.3% (last 4.7%)

    • Australia's Q2 Wage Price Index 0.7% qtr/qtr (expected 0.8%; last 0.7%); 2.6% yr/yr (expected 2.7%; last 2.4%). July MI Leading Index -0.2% m/m (last -0.2%)

    • New Zealand's Q2 Input PPI 3.1% qtr/qtr (last 3.4%) and Output PPI 2.4% (last 2.6%)

  • In news:

    • Chinese authorities ordered a halt to this week's production at Toyota's factory in Sichuan due to a power shortage.

    • China's Premier Li reportedly requested local officials from six major provinces to increase pro-growth measures after weak July data.

    • Australia's wage price index for Q2 increased at its fastest yr/yr pace since 2014.

    • The Reserve Bank of New Zealand raised its official cash rate by 50 bps to 3.00%, as expected. The central bank increased its peak rate forecast for Q3 of next year to 4.10% from 3.95%.

• Major European indices trade in the red. STOXX Europe 600: -0.3%, Germany's DAX: -1.1%, U.K.'s FTSE 100: -0.4%, France's CAC 40: -0.6%, Italy's FTSE MIB: -0.3%, Spain's IBEX 35: -0.7%.

  • In economic data:

    • Eurozone's Q2 GDP 0.6% qtr/qtr (expected 0.7%; last 0.7%); 3.9% yr/yr (expected 4.0%; last 4.0%). Q2 Employment Change 0.3% qtr/qtr (last 0.6%); 2.4% yr/yr (last 2.9%)

    • U.K.'s July CPI 0.6% m/m (expected 0.4%; last 0.8%); 10.1% yr/yr (expected 9.8%; last 9.4%). July Core CPI 0.3% m/m (expected 0.2%; last 0.4%); 6.2% yr/yr (expected 5.9%; last 5.8%). July House Price Index 7.8% yr/yr (last 12.8%)

  • In news:

    • The U.K.'s CPI increased 10.1% yr/yr in July, representing the sharpest rate of growth in over 40 years.

    • The Bank of England expects that the inflation rate will accelerate to 13.0% by October.

    • The German government refuted reports that a decision has been made to keep the country's last remaining three nuclear plants operational past the end of this year.

U.S. equity futures:

• S&P 500 Futures: -37 @ 4,268

• DJIA Futures: -228 @ 33,924

• Nasdaq 100 Futures: -135 @ 13,501

Overseas:

• Europe: DAX -1.1%, FTSE -0.4%, CAC -0.6%

• Asia: Nikkei +1.2%, Hang Seng +0.5%, Shanghai Composite +0.5%

Commodities:

• Crude Oil -0.25 @ 86.28

• Nat Gas  +0.207 @ 9.536

• Gold -6.65 @ 1783.05

• Silver -0.310  @ 19.775

• Copper -0.0310 @ 3.5935

U.S. Summary:

• Earnings/Guidance:

  • Agilent (A) beats by $0.13, beats on revs; guides OctQ EPS above consensus, revs in-line

  • Analog Devices (ADI) beats by $0.09, beats on revs; guides Q4 EPS in-line, revs in-line

  • Jack Henry (JKHY) reports Q4 (Jun) results, revs in-line; guides FY23 revs in-line

  • Krispy Kreme, Inc. (DNUT) misses by $0.02, misses on revs; lowers FY22 EPS, revs guidance

  • Lowe's (LOW) beats by $0.08, misses on revs; Q2 US comps +0.2%; sees FY23 total sales and comp sales toward low end of prior guidance; sees FY23 EPS toward top end of its prior range

  • Performance Food Group (PFGC) beats by $0.03, reports revs in-line; guides Q1 revs in-line; guides Q2 (Dec) revs in-line; guides FY23 revs in-line

  • Ship Finance Intl (SFL) beats by $0.21

  • Sibanye-Stillwater (SBSW) provides H1 guidance

  • Target (TGT) misses by $0.33, misses on revs; Q2 comps +2.6%; Q2 operating margins below guidance; reaffirms revenue and operating margin guidance

  • Tencent (TCEHY) reports Q2 results

  • The Children's Place (PLCE) misses by $1.52, misses on revs; guides Q3 EPS above consensus, revs below consensus; guides FY23 EPS below consensus, revs below consensus

  • TJX (TJX) beats by $0.02, misses on revs; guides Q3 EPS below consensus; guides Q4 (Jan) EPS in-line; Q2 comps -5%; lowers FY23 comp guidance

• General News:

  • President Biden signs Inflation Reduction Act

  • US considering EU plan to reinstate Iran nuclear deal, according to Bloomberg

  • Department of Energy says about 20 EV models will qualify for $7,500 tax credit (Note: EV must be priced under $55K for cars and $80K for SUVs/trucks to qualify for tax credit)

  • US Government will stop buying COVID-19 vaccines, treatments, and tests as early as Fall 2022 as the government plans to get past the crisis phase of the pandemic, according to CNN

  • US will purchase Ukrainian grain, according to the Wall Street Journal

  • Amazon (AMZN) warehouse workers in Albany, NY filed a petition to hold a union election, according to Bloomberg

  • Ameresco's (AMRC) subsidiary, along with Sunel Group, selected by Cero Generation as the contractor for Delfini solar project

  • Apple (AAPL) will make Apple Watch in Vietnam, according to Nikkei

  • Blueprint Medicines (BPMC) Announces Positive Top-line Results from PIONEER Trial of AYVAKIT (avapritinib) in Patients with Non-Advanced Systemic Mastocytosis Achieving Primary and All Key Secondary Endpoints

  • Boeing (BA) and Northrop Grumman (NOC) will participate in White House advanced manufacturing program, according to Reuters

  • Centerra Gold (CGAU) announces that Paul Chawrun will be appointed as Chief Operating Officer, effective September 6, 2022

  • CF Acquisition Corp. VI (CFVI): Rumble launches free unlimited livestreaming for content creators with over 100 subscribers

  • Corporacin Amrica Airports (CAAP) reports July 2022 passenger traffic reaching 78.9% of June 2019 levels, a 99.3% jump yr/yr; Ecuador and Italy at 96% and 91% of pre-pandemic levels, respectively, while Armenia is at 112%

  • Cross Country (CCRN) authorizes the repurchase of up to $100 mln of common stock under new buyback program

  • Datadog (DDOG) announces expanded monitoring for Microsoft SQL Server and Microsoft Azure database platforms

  • Eagle Bancorp (EGBN) and its former CEO charged by the SEC for failing to disclose related party loans

  • GlaxoSmithKline (GSK): US FDA accepts New Drug Application for GSK's momelotinib for the treatment of myelofibrosis

  • Group 1 Auto (GPI) increases its share repurchase authorization by $130 mln to $250 mln; also increases quarterly cash dividend to $0.38/sh from $0.37/sh

  • Herbalife Nutrition (HLF) agrees to multi-year renewal of partnership with LA Galaxy soccer team

  • I-Mab (IMAB) amends license and collaboration agreement with AbbVie

  • Intercept Pharma (ICPT) settles patent litigation with Dr. Reddy Labs

  • Kronos (KRON) announces agreement with Invivoscribe to develop a companion diagnostic for use with entospletinib

  • Meta Platforms (META) says from Tuesday, November 1, 2022 through Tuesday, November 8, 2022no new ads about social issues, elections, or politics can be published, and most edits will be prohibited

  • Miniso Group (MNSO) announces special cash dividend

  • Opko Health (OPK) announces that Jon R. Cohen M.D. is retiring from his role as Executive Chairman and CEO of BioReference Laboratories, effective immediately

  • Plains All American's (PAA) subsidiary, Plains Midstream Canada, exploring expansion of its Fort Saskatchewan facility with strategic partners

  • Royal Caribbean (RCL) wants Hong Kong sailing approval, according to SCMP

  • Sanofi (SNY) is discontinuing the global clinical development program of amcenestrant, an investigational oral selective estrogen receptor degrader

  • Shell plc (SHEL) plans to shut Gulf of Mexico crude pipelines, Odyssey and Delta, for two week in September, according to Reuters

  • Tesla (TSLA) tweets "First Model Y deliveries in Australia and New Zealand"

  • Tesla (TSLA) aiming to offer supercharger membership to non Tesla owners, according to Electrek

  • Toyota (TM) among companies closing plants in China's Sichuan province due to drought conditions, according to Bloomberg

  • Vishay (VSH) approves the repurchase of an additional 6.0 mln shares of common stock

• M&A:

  • Fidelity National (FNF) acquires AllFirst Title Insurance Agency and its various regional brands; financial details not disclosed

  • Hill International (HIL) to be acquired by Global Infrastructure Solutions Inc. for $2.85/share

  • Laredo Petroleum (LPI) announces signing of a purchase and sale agreement to divest certain non-operated properties in Howard County for $110 million

  • LHC Group (LHCG) purchases Three Rivers Home Health in Georgia; acquisition not expected to materially effect 2022 EPS

  • Manchester United (MANU): Elon Musk says he was joking about buying MANU

• Syndicate: 

  • AerSale (ASLE) priced secondary offering by certain of its stockholders of 4,250,000 shares of common stock at $17.25/share

  • Bloom Energy (BE) priced its underwritten public offering of 13 mln shares of Class A common stock at $26.00/share

  • Oak Street Health (OSH) priced its previously announced underwritten public offering of 7,000,000 shares of its common stock by a selling stockholder at $25.75/share

  • Option Care Health (OPCH) announces 11 mln share offering by WBA

  • Viridian Therapeutics (VRDN) announces the pricing of an upsized underwritten public offering with gross proceeds of ~$270 mln

• IPOs:

  • Expected to Price:

    • No IPOs expected.

Gapping Up/Down

• Gapping up:

  • HIL +62.6%, SAVA +20.3%, A +6.6%, QTRX +3.6%, CCRN +3.1%, ICPT +2.9%, MANU +2.8%, LOW +1.8%

• Gapping down:

  • ASLE -10%, DNUT -8.7%, SNY -5.7%, PLCE -5.6%, OPCH -5.1%, JKHY -4.7%, IMAB -3.5%, TGT -3.4%, OSH -3.3%, BE -2.9%, ADI -2.8%, GSK -2.1%, VRDN-2%, FSM -1.5%, HYZN -1.3%

Analyst Research (see Upgrades/Downgradescalendarfor full list):

• Upgrades

  • Apple (AAPL) upgraded to Outperform from Neutral at Credit Suisse; tgt $201

• Downgrades:

  • Rockwell Automation (ROK) downgraded to Mkt Perform from Outperform at Bernstein; tgt $290

• Others:

  • Altair Engineering (ALTR) initiated with an Outperform at Wolfe Research; tgt $70

  • ANSYS (ANSS) initiated with an Outperform at Wolfe Research; tgt $320

  • AppLovin (APP) initiated with an Outperform at Wolfe Research; tgt $40

  • Aspen Tech (AZPN) initiated with a Peer Perform at Wolfe Research

  • Autodesk (ADSK) initiated with an Outperform at Wolfe Research; tgt $270

  • Bentley Systems (BSY) initiated with an Outperform at Wolfe Research; tgt $48

  • C3.ai (AI) initiated with a Peer Perform at Wolfe Research

  • Cadence Design (CDNS) initiated with an Outperform at Wolfe Research; tgt $210

Upcoming Events:

• Econ Data:

  • 07:00 ET: MBA Mortgage Applications Index for Aug 13 (Briefing.comConsensus NA; Prior 0.2%)

  • 08:30 ET: Retail Sales for Jul (Briefing.comConsensus 0.2%; Prior 1.0%)

  • 08:30 ET: Retail Sales ex-auto for Jul (Briefing.comConsensus 0.1%; Prior 1.0%)

  • 10:00 ET: Business Inventories for Jun (Briefing.comConsensus 1.5%; Prior 1.4%)

  • 10:30 ET: EIA Crude Oil Inventories for Aug 13 (Briefing.comConsensus NA; Prior +5.45M)

  • 14:00 ET: FOMC Minutes for July 26-27

• Earnings:

  • Monday (Aug 15)

    • Morning:  YOU DOYU LI TWKS WEBR

    • Afternoon: LFG BLND COMP FN FLNC GLBE NVTS SHLS TME TDUP ZIP

  • Tuesday (Aug 16)

    • Morning: GENI HD HUYA IHS LITE ONON PINC SE WMT

    • Afternoon:  A JKHY

  • Wednesday (Aug 17)

    • Morning:  ADI DNUT LOW PFGC SFL TGT TJX

    • Afternoon:  AMCR BBWI CSCO KEYS SNPS WOLF

  • Thursday (Aug 18)

    • Morning: BJ CSIQ EL KSS NTES NICE SLQT SPTN TPR

    • Afternoon:  AMAT BILL GLOB OSIS ROST

  • Friday (Aug 19) 

    • Morning:  BKE DE FL VIPS

Asia & Europe detail:

Asia: Nikkei +1.2%, Hang Seng +0.5%, Shanghai Composite +0.5%

Equity indices in the Asia-Pacific region ended the midweek session on a mostly higher note. Chinese authorities ordered a halt to this week's production at Toyota's factory in Sichuan due to a power shortage. China's Premier Li reportedly requested local officials from six major provinces to increase pro-growth measures after weak July data. Australia's wage price index for Q2 increased at its fastest yr/yr pace since 2014. The Reserve Bank of New Zealand raised its official cash rate by 50 bps to 3.00%, as expected. The central bank increased its peak rate forecast for Q3 of next year to 4.10% from 3.95%.

• In economic data:

  • Japan's July trade deficit JPY1.44 trln (expected deficit of JPY1.41 trln; last deficit of JPY1.40 trln). July Imports 47.2% yr/yr (expected 45.7%; last 46.1%) and Exports 19.0% yr/yr (expected 18.2%; last 19.3%). June Core Machinery Orders 0.9% m/m (expected 1.3%; last -5.6%); 6.5% yr/yr (expected 7.5%; last 7.4%)

  • Singapore's July non-oil exports 1.4% m/m (expected -3.8%; last 3.2%); 7.0% yr/yr (expected 6.0%; last 8.5%)

  • Hong Kong's July Unemployment Rate 4.3% (last 4.7%)

  • Australia's Q2 Wage Price Index 0.7% qtr/qtr (expected 0.8%; last 0.7%); 2.6% yr/yr (expected 2.7%; last 2.4%). July MI Leading Index -0.2% m/m (last -0.2%)

  • New Zealand's Q2 Input PPI 3.1% qtr/qtr (last 3.4%) and Output PPI 2.4% (last 2.6%)

---Equity Markets---

• Japan's Nikkei: +1.2%

• Hong Kong's Hang Seng: +0.5%

• China's Shanghai Composite: +0.5%

• India's Sensex: +0.7%

• South Korea's Kospi: -0.7%

• Australia's ASX All Ordinaries: +0.3%

---FX---

• USD/JPY: +0.5% to 134.89

• USD/CNH: UNCH at 6.7916

• USD/INR: +0.3% to 79.45

Europe: DAX -1.1%, FTSE -0.4%, CAC -0.6%

Major European indices trade in the red. The U.K.'s CPI increased 10.1% yr/yr in July, representing the sharpest rate of growth in over 40 years. The Bank of England expects that the inflation rate will accelerate to 13.0% by October. The German government refuted reports that a decision has been made to keep the country's last remaining three nuclear plants operational past the end of this year.

• In economic data:

  • Eurozone's Q2 GDP 0.6% qtr/qtr (expected 0.7%; last 0.7%); 3.9% yr/yr (expected 4.0%; last 4.0%). Q2 Employment Change 0.3% qtr/qtr (last 0.6%); 2.4% yr/yr (last 2.9%)

  • U.K.'s July CPI 0.6% m/m (expected 0.4%; last 0.8%); 10.1% yr/yr (expected 9.8%; last 9.4%). July Core CPI 0.3% m/m (expected 0.2%; last 0.4%); 6.2% yr/yr (expected 5.9%; last 5.8%). July House Price Index 7.8% yr/yr (last 12.8%)

---Equity Markets---

• STOXX Europe 600: -0.3%

• Germany's DAX: -1.1%

• U.K.'s FTSE 100: -0.4%

• France's CAC 40: -0.6%

• Italy's FTSE MIB: -0.3%

• Spain's IBEX 35: -0.7%

---FX---

• EUR/USD: -0.1% to 1.0163

• GBP/USD: -0.1% to 1.2082 

• USD/CHF: +0.4% to 0.9524