17/11/23 Briefing

The S&P 500 futures are up 11 points and are trading 0.3% above fair value. The Nasdaq 100 futures are up 10 points and are trading 0.1% above fair value. The Dow Jones Industrial Average futures are up 95 points and are trading 0.3% above fair value.

Equity futures point to a higher open. Strong positive reactions to earnings results from Ross Stores (ROST) and Gap (GPS) have contributed to buying activity along with an ongoing dip in market rates.

The 10-yr note yield is down three basis points to 4.42% after hitting 4.38% earlier. The 2-yr note yield is down one basis point to 4.84% after hitting 4.79% earlier.

WTI crude oil futures are up this morningafter sharp declines recently, trading up 1.6% to $74.05/bbl.

Looking ahead, October Housing Starts (Briefing.comconsensus 1.365 mln; prior 1.358 mln) and Building Permits (Briefing.comconsensus 1.445 mln; prior 1.473 mln) will be released at 8:30 a.m. ET.

In corporate news:

• Applied Materials (AMAT 143.20, -11.61, -7.5%): beats by $0.13, beats on revs; guides Q1 EPS in-line, revs in-line; also co is being probed for shipments sent to China's SMICY according to Reuters

• Ross Stores (ROST 127.53, +7.38, +6.1%): beats by $0.11, beats on revs, comps +5%; guides Q4 EPS in-line

• Gap (GPS 16.13, +2.46, +18.0%): beats by $0.39, beats on revs, comps of -2%; guides Q4 revs below consensus; reaffirms FY24 revs guidance

• ChargePoint (CHPT 2.22, -0.91, -29.1%): names new CEO, CFO steps down; lowers Q3 revenue guidance substantially; says its core markets of North America and Europe both came under pressure late in Q3

• The Duckhorn Portfolio (NAPA 10.29, -0.41, -3.8%): to acquire Sonoma-Cutrer Vineyards from Brown-Forman Corporation (BF.B) for approximately $400 mln in cash and stock

• Zoom Video (ZM 64.70, +1.30, +2.1%): upgraded to Neutral from Sell at Citi

• Airbnb (ABNB 125.46, -0.82, -0.7%): downgraded to In-Line from Outperform at Evercore ISI; Some NYC Airbnb hosts are nearing foreclosure following new rules, according to the NY Post

• Analog Devices (ADI 183.74, +3.66, +2.0%): upgraded to Overweight from Equal Weight at Morgan Stanley

• Boeing (BA 207.76, +1.16, +0.6%): could face delays for Air Force One jets, according to Bloomberg

• BJ's Wholesale (BJ 64.41, -3.19, -4.7%): beats by $0.03, misses on revs; reaffirms FY24 EPS guidance; Q3 comps +0.3%

Reviewing overnight developments:

• Equity indices in the Asia-Pacific region ended the week on a mixed note. Japan's Nikkei: +0.5% (+3.1% for the week), Hong Kong's Hang Seng: -2.1% (+1.5% for the week), China's Shanghai Composite: +0.1% (+0.5% for the week), India's Sensex: -0.3% (+1.4% for the week), South Korea's Kospi: -0.7% (+2.5% for the week), Australia's ASX All Ordinaries: -0.1% (+1.2% for the week).

• In economic data:

• China's October FDI -9.4% YTD (last -8.4%)

• Singapore's October trade surplus $6.524 bln (last surplus of $5.118 bln). September non-oil exports 3.4% m/m (expected 1.5%; last 11.1%); -3.4% yr/yr (expected -6.5%; last -13.2%)

• New Zealand's Q3 Input PPI 1.2% qtr/qtr (last -0.2%) and Output PPI 0.8% qtr/qtr (last 0.2%)

• In news:

• Shares of Alibaba lost nearly 10.0% in Hong Kong after the company canceled plans for an IPO of its cloud business and noted that tighter U.S. export restrictions are creating uncertainties.

• Q3 mortgage arrears in Australia increased for the first time in over 15 years.

• ANZ expects the Reserve Bank of New Zealand to leave its official cash rate at 5.50% until early 2025.

• Japan's Prime Minister Kishida expressed hopes for improved ties with China.

• Bangko Sentral ng Pilipinas left its policy rate at 6.50% and signaled readiness for more hikes, if needed.

• Major European indices are looking for a higher finish to the week. STOXX Europe 600: +1.0% (+2.8% week-to-date), Germany's DAX: +0.8% (+4.4% week-to-date), U.K.'s FTSE 100: +0.8% (+1.5% week-to-date), France's CAC 40: +0.9% (+2.7% week-to-date), Italy's FTSE MIB: +0.8% (+3.4% week-to-date), Spain's IBEX 35: +0.7% (+3.9% week-to-date).

• In economic data:

• Eurozone's CPI 0.1% m/m, as expected (last 0.3%); 2.9% yr/yr, as expected (last 4.3%). October Core CPI 0.2% m/m, as expected (last 0.2%); 4.2% yr/yr, as expected (last 4.5%). September Current Account surplus EUR31.2 bln (expected surplus of EUR20.3 bln; last surplus of EUR30.8 bln)

• U.K.'s October Retail Sales -0.3% m/m (expected 0.3%; last -1.1%); -2.7% yr/yr (expected -1.5%; last -1.3%). Core Retail Sales -0.1% m/m (expected 0.4%; last -1.3%); -2.4% yr/yr (expected -1.5%; last -1.5%)

• Spain's September trade deficit EUR3.8 bln (last deficit of EUR4.4 bln)

• Swiss Q3 Industrial Production 2.0% yr/yr (last -0.7%)

• In news:

• Retail sales in the U.K. disappointed in October, fueling speculation that the Bank of England has hiked enough.

• Eurozone's CPI decelerated for the seventh consecutive month, slowing to 2.9% yr/yr in October.

• EU Commission President Von der Leyen is reportedly urging member states to reduce reliance on China.

• Moody's is scheduled to release its review of Italy's rating later today.

U.S. equity futures:

• S&P 500 Futures -6 @ 4,497

• DJIA Futures: -91 @ 34,901

• Nasdaq 100 Futures: -39 @ 15,778

Overseas:

• Europe: DAX +0.8%, FTSE +0.8%, CAC +0.9%

• Asia: Nikkei +0.5%, Hang Seng -2.1%, Shanghai Composite +0.1%

Commodities:

• Crude Oil +0.99 @ 73.89

• Nat Gas -0.004 @ 3.058

• Gold +5.75 @ 1993.05

• Silver +0.204 @ 24.137

• Copper +0.0087 @ 3.7112

Earnings/Guidance:

• American Software (AMSWA) misses by $0.01, misses on revenue, guides FY24 revenue below consensus

• Applied Materials (AMAT) beats by $0.13, beats on revs; guides Q1 EPS in-line, revs in-line

• Atkore International (ATKR) beats by $0.21, misses on revs; guides Q1 EPS below estimate; guides FY24 EPS in-line

• Beazer Homes (BZH) beats by $0.41, beats on revs, net new orders up 42.5%

• BJ's Wholesale (BJ) beats by $0.03, misses on revs; reaffirms FY24 EPS guidance; Q3 comps +0.3%

• Buckle (BKE) beats by $0.09, reports revs in-line; Q3 comps -9.2%

• Compass Minerals (CMP) reports Q3 (Sep) results, beats on revs

• Copart (CPRT) beats by $0.01, beats on revs

• Dolby Labs (DLB) misses by $0.13, reports revs in-line; guides Q1 EPS below consensus, revs below consensus; guides FY24 EPS below consensus, revs below consensus

• Esco Tech (ESE) beats by $0.03, beats on revs; guides FY24 EPS in-line, revs above consensus

• Fluence (FLNC) reiterates its FY23 (Sep) revenue outlook; names Ahmed Pasha as CFO

• Gap (GPS) beats by $0.39, beats on revs, comps of -2%; guides Q4 revs below consensus; reaffirms FY24 revs guidance

• Globant (GLOB) beats by $0.01, reports revs in-line; guides Q4 EPS slightly below consensus, revs slightly above consensus

• Haynes Intl (HAYN) beats by $0.28, reports revs in-line; expects continued volume and sales growth in FY24 (Sep)

• Post (POST) beats by $0.29, reports revs in-line

• Ross Stores (ROST) beats by $0.11, beats on revs, comps +5%; guides Q4 EPS in-line; expects Q4 (Jan) earnings in-line with consensus, revs below consensus; reiterates comps of +1-2%

• Spectrum Brands (SPB) beats by $0.33, reports revs in-line

• Twist Bioscience (TWST) beats by $0.11, beats on revs; guides Q1 revs above consensus; guides FY24 revs below consensus

• Woodward (WWD) beats by $0.02, beats on revs; guides FY24 EPS in-line, revs in-line

• ZTO Express (ZTO) beats by RMB 0.09, misses on revs

News:

• US will lift restrictions on Chinese agency in exchange for China's planned crackdown on fentanyl trafficking, according to Bloomberg

• President Biden signs bill to extend government funding through January 19and February 2

• US electric car sales have plateaued around 100,000/month as demand cools, according to the Wall Street Journal

• Airbnb (ABNB): Some NYC Airbnb hosts are nearing foreclosure following new rules, according to the New York Post

• Apple (AAPL) will support new messaging standard, according to the Wall Street Journal

• Applied Materials (AMAT) is being probed for shipments sent to China's SMIC (SMICY), according to Reuters

• Assured Guaranty (AGO) announced that it has guaranteed principal and interest payments on 140 million of primary wrapped bonds issued by Heathrow Airport, the UK's largest airport

• AstraZeneca (AZN): Truqap (capivasertib) plus Faslodex approved in the US for patients with advanced HR-positive breast cancer

• BancFirst (BANF) CFO Kevin Lawrence to resign, effective in 2Q24

• BeiGene (BGNE) receives European Commission approval for BRUKINSA (zanubrutinib) for the treatment of relapsed or refractory follicular lymphoma

• Boeing (BA) could face delays for Air Force One jets, according to Bloomberg

• Brighthouse Financial (BHF) announces $750 million stock repurchase program

• Caledonia Mining (CMCL) announces that Dana Roets will step down from his role as COO with effect from February 29, 2024

• Calix Networks (CALX) increases stock repurchase authorization by an additional $100 mln under existing stock repurchase program

• ChargePoint (CHPT) names new CEO, CFO steps down; lowers Q3 revenue guidance substantially; says its core markets of North America and Europe both came under pressure late in Q3

• Clorox (CLX) elects CEO Linda Rendle to the role of Chair, effective January 1; current Board Chair Matthew Shattock to become lead independent director

• Cohu (COHU) announces launch of Artificial Intelligence (AI) Inspection software, creating opportunity to deliver approximately $5 mln annual subscription revenue

• CoreCivic (CXW) signs new management contract with Wyoming for the housing of up to 240 male inmates at its Correctional Facility in Mississippi

• Day One (DAWN) Announces Tovorafenib FIREFLY-1 Data Published in Nature Medicine

• Dillard's (DDS) announces special dividend of $20/share on Class A and Class B Common Stock

• EVgo Inc. (EVGO) announces joint promotion to offer special charging rates to drivers renting any EV model at Hertz locations

• Exact Sciences (EXAS) filed a lawsuit against Geneoscopy

• Fisker (FSR) changed its distribution strategy to rapidly increase global sales and deliveries of the Fisker Ocean SUV

• FMC Corp (FMC) outlines new strategic growth plan

• Freeport-McMoRan (FCX) recommends rejection of below-market price mini-tender offer

• Google (GOOG) delays release of Gemini artificial intelligence tool, according to The Information

• Hanesbrands (HBI) enters into cooperation agreement with Barington Companies Equity Partners

• ICF International (ICFI) awarded a new $32 mln task order by U.S. Department of Homeland Security to modernize ICE's homeland security investigations systems

• Joby Aviation (JOBY) awarded a $9.8 million California Competes grant by the Governor's Office of Business and Economic Development (GO-Biz) to support continued statewide expansion

• Karuna Therapeutics (KRTX) Announces Positive Results from Phase 1b Ambulatory Blood Pressure Monitoring Trial of KarXT in Schizophrenia

• Li Auto (LI) unveiled Li MEGA, its high-tech flagship family MPV; orders for Li MEGA have exceeded 10,000 in 2 hours

• MarketWise (MKTW) announces it appointed Charles N. Curlett, Jr. as COO, effective November 10

• Merck (MRK): FDA Approves Merck's KEYTRUDA (pembrolizumab) Plus Chemotherapy as First-Line Treatment for Locally Advanced Unresectable or Metastatic HER2-Negative Gastric or Gastroesophageal Junction (GEJ) Adenocarcinoma

• Motorola Solutions (MSI) increases quarterly dividend by 11% to $0.98/share and approves a $2.0 bln increase to share repurchase program

• Myriad Genetics (MYGN) collaborating with Personalis to market its biomarker discovery platform to its pharmaceutical partners; financial details of the partnership were not disclosed

• Novavax (NVAX) names John Trizzino to the newly created role of President and Chief Operating Officer

• ONE Gas (OGS) CFO Caron A. Lawhorn to retire, effective December 31; names Christopher P. Sighinolfi as successor

• O'Reilly Auto (ORLY) approves an increase to its share repurchase program by an additional $2.0 bln, raising the aggregate authorization to $25.75 bln

• Paramount Global (PARA) announces early tender results of its maximum tender offers for certain outstanding debt securities

• Perimeter Solutions (PRM) discloses Charles Kropp will no longer serve as Chief Financial Officer or Principal Accounting Officer of the Company effective November 16, 2023

• Petrobras (PBR) signs agreement with European Energy to evaluate e-methanol business opportunities

• Pfizer (PFE) and and Astellas' (ALPMY) XTANDI approved by U.S. FDA in earlier prostate cancer treatment setting

• POINT Biopharma (PNT): Lilly (LLY) extends tender offer to acquire POINT Biopharma to Dec 1from Nov 16

• Primerica (PRI) announces $425 million share repurchase program for 2024

• PureTech Health plc (PRTC) announces positive results from phase 1b ambulatory blood pressure monitoring trial of KarXT in schizophrenia

• Samsung (SSNLF): South Korea wants 5 year jail term for Samsung chair Lee Jae-yong, according to Financial Times

• Sasol (SSL) announce the appointment of Simon Baloyi as the President and CEO and executive director of the Company with effect from 1 April 2024

• UGI Corp (UGI) reports Q4 (Sep) results; guides FY24 EPS below consensus

• Vigil Neuroscience (VIGL) Reports Positive Interim Data from Phase 2 IGNITE Proof-of-Concept Clinical Trial Evaluating Iluzanebart (VGL101) as a Treatment for ALSP and from Ongoing Natural History Study ILLUMINATE

M&A:

• Abcam (ABCM) acquisition by Danaher (DHR) has received all identified clearances; transaction expected to close on December 6, 2023

• Sterling Infrastructure (STRL) acquires Texas-Based professional Plumbers Group for a cash payment of $50 million and an earnout opportunity contingent upon achieving future EBITDA targets

• Tenet Healthcare (THC) to sell three Tenet hospitals and related operations in South Carolina for approximately $2.4 billion in cash to Novant Health

• The Duckhorn Portfolio (NAPA) to acquire Sonoma-Cutrer Vineyards from Brown-Forman Corporation (BF.B) for approximately $400 mln in cash and stock

Syndicate:

• Immunome (IMNM) files for 21,690,871 shares of common stock by selling shareholders

• Leonardo DRS (DRS) announces the pricing of an upsized public secondary offering of 18,000,000 shares of its common stock at an offering price of $17.75/share by Leonardo US Holding, LLC

• NiSource (NI) announced the unsuccessful final remarketing of its Series C Mandatory Convertible Preferred Stock with a liquidation preference of $1,000 per share

• Wrap Technologies (WRAP) files for 910,610 shares of common stock by selling shareholders

IPOs:

• No IPOs expected to price.

Gapping Up/Down

• Gapping up:

• GPS +17.8%, ROST +7.0%, BZH +3.5%, DDS+2.6%, BHF +2.5%, FLNC +2.0%

• Gapping down:

• CHPT -26.5%, AMSWA -13.5%, VIGL -11.1%, AMAT -7.4%, DLB -6.0%, CMP -5.4%, ATKR-4.6%, NAPA -2.1%, KLAC -2.1%, WWD-2.1%, LRCX -1.8%, HAYN -1.8%

Analyst Research (see Upgrades/Downgradescalendarfor full list):

• Upgrades

• Analog Devices (ADI) upgraded to Overweight from Equal-Weight at Morgan Stanley; tgt raised to $225

• Roblox (RBLX) upgraded to Peer Perform from Underperform at Wolfe Research

• Zoom Video (ZM) upgraded to Neutral from Sell at Citigroup; tgt $66

• Downgrades:

• Agilent (A) downgraded to Neutral from Buy at UBS; tgt lowered to $125

• Airbnb (ABNB) downgraded to In-line from Outperform at Evercore ISI; tgt $136

• Air Products (APD) downgraded to Sell from Buy at Redburn Atlantic; tgt $240

• CareMax (CMAX) downgraded to Neutral from Buy at UBS; tgt lowered to $1

• Cisco (CSCO) downgraded to Hold from Buy at DZ Bank; tgt $50

• Others:

• Academy Sports + Outdoors (ASO) initiated with a Buy at Truist; tgt $57

• Amphastar Pharmaceuticals (AMPH) initiated with a Neutral at BofA Securities; tgt $63

• CAVA Group (CAVA) initiated with a Mkt Perform at Raymond James

• Dick's Sporting Goods (DKS) initiated with a Buy at Truist; tgt $134

• Kenvue (KVUE) initiated with a Neutral at Piper Sandler; tgt $20

• lululemon athletica (LULU) initiated with a Buy at Truist; tgt $500

• NIKE (NKE) initiated with a Hold at Truist; tgt $108

• Under Armour (UAA) initiated with a Hold at Truist; tgt $8

Econ Data:

• 08:30 ET: Housing Starts for Oct (Briefing.comConsensus 1365K; Prior 1358K)

• 08:30 ET: Building Permits for Oct (Briefing.comConsensus 1445K; Prior 1473K)

Earnings:

• Monday (Nov 13)

• Morning:  FTRE GENI HSIC MNDY NABL ROIV SKIN TSEM TSN

• Afternoon: ACM AZTA FSR HROW SLF

• Tuesday (Nov 14)

• Morning: ARMK CAE CAMT CSIQ CLBT ENR HD HUYA IHS OCSL ONON PSFE SBH SE TME VIPS WKME

• Afternoon:  HRTX VERX

• Wednesday (Nov 15)

• Morning:  AAP CTLT DAVA GLBE GFF JD NTES RSKD TGT

• During Market Hours: TJX

• Afternoon:  CSCO CPA HI JJSF KLIC MAXN MMS PANW SQM SONO TTEK

• Thursday (Nov 16)

• Morning: BABA BBWI BERY BRC BV DOLE M NICE SCVL SR SSYS WMT WMG WSM

• Afternoon:  AMAT BZH DLB ESE GPS GLOB POST ROST UGI WWD ZTO

• Friday (Nov 17)  

• Morning:  BJ BKE SPB TWST

• Afternoon:  ATKR

Asia & Europe detail:

Asia: Nikkei +0.5%, Hang Seng -2.1%, Shanghai Composite +0.1%

Equity indices in the Asia-Pacific region ended the week on a mixed note. Shares of Alibaba lost nearly 10.0% in Hong Kong after the company canceled plans for an IPO of its cloud business and noted that tighter U.S. export restrictions are creating uncertainties. Q3 mortgage arrears in Australia increased for the first time in over 15 years. ANZ expects the Reserve Bank of New Zealand to leave its official cash rate at 5.50% until early 2025. Japan's Prime Minister Kishida expressed hopes for improved ties with China. Bangko Sentral ng Pilipinas left its policy rate at 6.50% and signaled readiness for more hikes, if needed.

• In economic data:

• China's October FDI -9.4% YTD (last -8.4%)

• Singapore's October trade surplus $6.524 bln (last surplus of $5.118 bln). September non-oil exports 3.4% m/m (expected 1.5%; last 11.1%); -3.4% yr/yr (expected -6.5%; last -13.2%)

• New Zealand's Q3 Input PPI 1.2% qtr/qtr (last -0.2%) and Output PPI 0.8% qtr/qtr (last 0.2%)

---Equity Markets---

• Japan's Nikkei: +0.5% (+3.1% for the week)

• Hong Kong's Hang Seng: -2.1% (+1.5% for the week)

• China's Shanghai Composite: +0.1% (+0.5% for the week)

• India's Sensex: -0.3% (+1.4% for the week)

• South Korea's Kospi: -0.7% (+2.5% for the week)

• Australia's ASX All Ordinaries: -0.1% (+1.2%for the week)

---FX---

• USD/JPY: -0.8% to 149.49

• USD/CNH: -0.3% to 7.2219

• USD/INR: +0.1% to 83.21

Europe: DAX +0.8%, FTSE +0.8%, CAC +0.9%

Major European indices are looking for a higher finish to the week. Retail sales in the U.K. disappointed in October, fueling speculation that the Bank of England has hiked enough. Eurozone's CPI decelerated for the seventh consecutive month, slowing to 2.9% yr/yr in October. EU Commission President Von der Leyen is reportedly urging member states to reduce reliance on China. Moody's is scheduled to release its review of Italy's rating later today.

• In economic data:

• Eurozone's CPI 0.1% m/m, as expected (last 0.3%); 2.9% yr/yr, as expected (last 4.3%). October Core CPI 0.2% m/m, as expected (last 0.2%); 4.2% yr/yr, as expected (last 4.5%). September Current Account surplus EUR31.2 bln (expected surplus of EUR20.3 bln; last surplus of EUR30.8 bln)

• U.K.'s October Retail Sales -0.3% m/m (expected 0.3%; last -1.1%); -2.7% yr/yr (expected -1.5%; last -1.3%). Core Retail Sales -0.1% m/m (expected 0.4%; last -1.3%); -2.4% yr/yr (expected -1.5%; last -1.5%)

• Spain's September trade deficit EUR3.8 bln (last deficit of EUR4.4 bln)

• Swiss Q3 Industrial Production 2.0% yr/yr (last -0.7%)

---Equity Markets---

• STOXX Europe 600: +1.0% (+2.8% week-to-date)

• Germany's DAX: +0.8% (+4.4% week-to-date)

• U.K.'s FTSE 100: +0.8% (+1.5% week-to-date)

• France's CAC 40: +0.9% (+2.7% week-to-date)

• Italy's FTSE MIB: +0.8% (+3.4% week-to-date)

• Spain's IBEX 35: +0.7% (+3.9% week-to-date)

---FX---

• EUR/USD: +0.1% to 1.0865

• GBP/USD: +0.2% to 1.2431

• USD/CHF: -0.1% to 0.8874