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19/09/22 Briefing

Updated: Sep 22

The S&P 500 futures are down 34 points and are trading 0.9% below fair value. The Nasdaq 100 futures are down 118 points and are trading 1.0% below fair value. The Dow Jones Industrial Average futures are down 264 points and are trading 0.8% below fair value.

Equity futures indicate a lower open driven by carryover downside momentum and rising Treasury yields, which continue to pressure investor sentiment.

The 2-yr note yield is up seven basis points to 3.92% and the 10-yr note yield is up five basis points to 3.50%. The former is the highest since 2007 while the latter is the highest since 2011.

There's likely an element of geopolitical angst in play this morning, too, after President Biden said during a weekend interview that the U.S. military would defend Taiwan in the event of an invasion by China. Market participants also await the September 20-21FOMC meeting and rate hike decision this week.

Economic data today is limited to the September NAHB Housing Market Index (Briefiing.comconsensus 48; prior 49) at 10:00 a.m. ET.

Energy complex futures are making downside moves. WTI crude oil futures are down 2.8% to $82.77/bbl and natural gas futures are down 4.0% to $7.45/mmbtu. 

In corporate news:

  • Adobe (ADBE 294.90, -4.60, -1.54%): downgraded to Equal Weight from Overweight at Wells Fargo

  • AutoZone (AZO 2,210.00, +44.35, +2.05%): beats by $1.89, beats on revs

  • Purple Innovation (PRPL 3.7300, +0.94, +33.69%): confirms it received an unsolicited, non-binding proposal from Coliseum Capital Management to acquire all of the outstanding capital stock of Purple for $4.35 per share

  • Bluebirdbio (BLUE 6.74, +0.40, +6.31%): receives FDA accelerated approval for SKYSONA Gene Therapy

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region began the week on a mostly lower note while Japan's Nikkei was closed for Respect for the Aged Day. Japan's Nikkei: CLOSED, Hong Kong's Hang Seng: -1.0%, China's Shanghai Composite: -0.4%, India's Sensex: +0.5%, South Korea's Kospi: -1.1%, Australia's ASX All Ordinaries: -0.4%.

  • In economic data:

  • Hong Kong's August Unemployment Rate 4.1% (last 4.3%)

  • In news:

  • Tokyo has been placed under a flood advisory as Typhoon Nanmadol travels toward the city.

  • China reportedly lifted lockdown measures in Chengdu.

  • Expectations for a 50-bps October rate hike from the Reserve Bank of Australia are on the rise.

  • President Biden said during a weekend interview that the U.S. military would defend Taiwan in the event of an invasion by China.

  • Major European indices trade in the red while the U.K.'s FTSE is closed for the funeral of Queen Elizabeth II. STOXX Europe 600: -0.8%, Germany's DAX: -0.4%, U.K.'s FTSE 100: CLOSED, France's CAC 40: -1.0%, Italy's FTSE MIB: -0.9%, Spain's IBEX 35: -0.6%.

  • In economic data:

  • Eurozone's July Construction Output 0.27% m/m (last -1.16%)

  • In news:

  • Workers at the port of Liverpool went on strike that is expected to last two weeks.

  • European Central Bank Chief Economist Lane said that the ECB could raise rates over the next few meetings and into 2023.

  • The EU is implementing a "single market emergency instrument" that will allow Brussels to force member states to stockpile certain products.

 

U.S. equity futures:

  • S&P 500 Futures: -32 @ 3,841

  • DJIA Futures: -251 @ 30,571

  • Nasdaq 100 Futures: -105 @ 11,756

Overseas:

  • Europe: DAX -0.4%, FTSE CLOSED, CAC -1.0%

  • Asia: Nikkei CLOSED, Hang Seng -1.0%, Shanghai Composite -0.4%

Commodities:

  • Crude Oil -2.48 @ 89.28

  • Nat Gas  -0.294 @ 7.470

  • Gold -12.95 @ 1670.53

  • Silver -0.021  @ 19.360

  • Copper -0.0325 @ 3.4840

U.S. Summary:

  • Earnings/Guidance:

  • AutoZone (AZO) beats by $1.89, beats on revs

  • Jacobs Engineering (J) reaffirms Q4 EPS and adjusted EBITDA guidance

  • General News:

  • President Biden in interview says he thinks inflation will be controlled and the pandemic is over. He said his firm decision on running again in 2024 "remains to be seen." - 60 Minutes

  • President Biden in interview says he doesn't plan on changing the federal income tax bracket for individuals - 60 Minutes

  • President Biden says US troops would defend Taiwan if China attacks them, but White House officials say that is not the policy of US - 60 Minutes

  • Russian President Putin warns of escalation in Ukraine as China and India are distancing themselves from Russia, according to the New York Times

  • President Biden approves Puerto Rico emergency declaration following landfall of Hurricane Fiona

  • USGS reported 6.9 magnitude earthquake 86 km SE of Lugu, Taiwan on 9/18; Tsunami warnings issued

  • China ends lockdown of Chengdu, according to Bloomberg

  • Bitcoin falls below 19,000

  • Appeals Court upholds Texas social media law which allows lawsuits if companies censor political viewpoints, according to the New York Times

  • US electricity and heat costs are expected to increase this winter in U.S. amid high natural gas prices, according to the Wall Street Journal

  • Regulators considering new rules for regional banks, according to the Wall Street Journal

  • Pentagon wants defense contractors to limit supplies from China, according to the Wall Street Journal

  • Abbott Labs (ABT) reports late-breaking data showing breadth of Abbott's minimally invasive structural heart technologies

  • AbbVie (ABBV) secures Positive CHMP Opinion for Risankizumab

  • Agios Pharma (AGIO) appoints Cecilia Jones as CFO

  • Apple (AAPL) iPhone 14 has Qualcomm (QCOM) satellite chips, according to Reuters

  • Beam Therapeutics (BEAM) Presents First In Vivo Data Demonstrating Potential of Multiplex Base Editing Approach to Target Disease Drivers of Chronic Hepatitis B Infection

  • BeiGene (BGNE) receives Positive CHMP Opinion for BRUKINSA

  • Bluebirdbio (BLUE) receives FDA accelerated approval for SKYSONA Gene Therapy

  • Boston Scientific (BSX) reports Late-Breaking Data from PROTECTED TAVR Trial Demonstrate Reduced Risk of Disabling Stroke, Low Complication Rate with SENTINEL Cerebral Protection System

  • Bristol Myers Squibb (BMY) Receives European Commission Approval for LAG-3-Blocking Antibody Combination, Opdualag (nivolumab and relatlimab), for the Treatment of Unresectable or Metastatic Melanoma with Tumor Cell PD-L1 Expression < 1%

  • CNH Industrial (CNHI) commences a first tranche of $50 mln share buyback in the framework of its $300 mln share buyback program previously announced

  • Coherus BioSciences (CHRS) to launch CIMERLI in the US on Oct 3

  • Credit Suisse (CS) is considering rebranding as First Boston, according to BNN Bloomberg

  • Digital World Acquisition Corporation (DWAC) did not pay proxy company, according to Financial Times

  • Edwards (EW) announces six-month data confirming teer as safe and effective for DMR in first head-to-head trial

  • Eversource Energy (ES) exec chairman Jim Judge to retire on Dec 31; CEO Joe Nolan will become chairman

  • First Solar (FSLR) entered into an agreement to supply 600 megawatts to Azure Power Global (AZRE)

  • GAMCO Investors (GBL) announced Friday voluntary NYSE delisting and SEC deregistration

  • Gamida Cell (GMDA) appoints Abigail Jenkins as President and CEO

  • GrafTech International (EAF) says Mexico govt has issued a temporary suspension notice for its Monterrey facility

  • Hersha Hospitality Trust (HT) reinstates quarterly cash dividend; approves Q3 cash dividend of $0.05 per common share

  • Kinross Gold (KGC) announces enhanced share buyback program

  • Kosmos Energy (KOS) provides update on Typhoon Muifa

  • Medtronic (MDT) reports SYMPLICITY HTN-3 trial data show sustained long-term blood pressure reductions with Medtronic renal denervation procedure

  • Microsoft (MSFT): Xbox head Phil Spencer discussed keeping console prices where they are and buying more studios, according to Kotaku

  • New Pacific (NEWP) Reports Drill Hole Assay Results and Remains On Schedule to Complete the PEA For the Silver Sand Project

  • Novartis AG (NVS) unit Sandoz announces further progress on its biosimilar pipeline, with release of positive results for denosumab integrated Phase I/III clinical trial

  • Pfizer (PFE) announces positive top-line results from phase 3 study in 20-valent pneumococcal conjugate vaccine in infants in the European Union

  • Sage Therapeutics (SAGE) and Biogen (BIIB) Present New Analyses at Psych Congress Further Evaluating the Efficacy and Safety of Zuranolone

  • Semtech (SMTC) provides several updates on product releases

  • Tesla (TSLA) wants to double German sales this year, according to Bloomberg

  • Teva (TEVA) execs expect opioid settlement next year, according to Reuters

  • Theravance Biopharma (TBPH) initiates $250 million capital return program

  • T-Mobile (TMUS) to Accelerate Winning 5G Strategy After Auction 108

  • Trevi Therapeutics (TRVI) announces positive data from full set of subjects in phase 2 canal Trial of Haduvio in the treatment of chronic cough in idiopathic pulmonary fibrosis

  • trivago (TRVG) the resignation of Peter Kern as chairman of the Company's supervisory board

  • Wix.com(WIX): Activist hedge fund Starboard Value building an approximately 9% stake in the company, according to Reuters

  • Zealand Pharma (ZEAL) Presents Data from Phase 3 Trial of Dasiglucagon in Congenital Hyperinsulinism at the 60th Annual ESPE Meeting

  • M&A:

  • American Water Works (AWK) acquires Warring Water Services, a privately owned water utility in California for $4.6 mln

  • CF Acquisition Corp. VI (CFVI) closes on combination with Rumble

  • Coeur Mining (CDE) announces agreement to sell Southern Nevada Holdings for upfront cash consideration of $150 million

  • Genfit (GNFT) to acquire clinical-stage biopharmaceutical company Versantis, expanding its portfolio in liver diseases

  • Granite Construction (GVA) announces change in divestiture plans

  • H&E Equipment (HEES) announces the signing of a definitive agreement to acquire One Source Equipment Rental, Inc.

  • KnowBe4 (KNBE) received a non-binding proposal from Vista Equity Partners Management to acquire all of the outstanding shares at $24/share

  • Lumen Technologies (LUMN) has been advised that Connect Holding II (dba Brightspeed), an affiliate of funds advised by Apollo Global Management (APO) commenced marketing a debt financing to fund previously-announced acquisition of a portion of the Company's facilities-based incumbent local exchange carrier business

  • Purple Innovation (PRPL) ~45% shareholder Coliseum Capital Management sent letter with non-binding proposal to acquire all of the outstanding shares of Common Stock for $4.35 per share

  • Transglobe Energy (TGA): Horizon releases statement responding to the "desperate and false statements" made by TransGlobe; repeats its call for all shareholders to vote against the Vaalco (EGY) proposed transaction

  • Syndicate

  • AEye (LIDR) entered into a Securities Purchase Agreement to finance an aggregate principal amount of up to $21,000,000 with a certain institutional investor

  • Alignment Healthcare (ALHC) prices offering of 9.0 mln shares of common stock at $14.75 per share

  • Allakos (ALLK) priced an underwritten offering of 29,882,000 shares of its common stock at an offering price of $5.02/share

  • Applied Blockchain (APLD) files for 48,287,076 share common stock offering by selling shareholders

  • Beam Global (BEEM) files for 2,015,985 share common stock offering by selling shareholder

  • CoStar Group (CSGP) prices offering of 10,656,436 shares of its common stock at $70.38 per share

  • Edgewise Therapeutics (EWTX) announces closing of its upsized offering of 13,372,093 shares at a price to the public of $10.32 per share

  • EQT Corp. (EQT) files mixed securities shelf offering

  • Global Ship Lease (GSL) files mixed securities shelf offering

  • National Bank (NBHC) receives all regulatory approvals for the previously announced acquisition of Bancshares of Jackson Hole

  • Skeena Resources (SKE) announced C$30 mln bought deal financing

  • The Metals Company (TMC) files for $100 mln mixed securities shelf offering; also files for 38,266,180 share common stock offering by selling shareholders

  • IPOs:

  • Volkswagen (VWAGY) mulling EUR 70-75 billion target for Porsche (POAHY) IPO, according to Bloomberg

  • Expected to Price:

  • No IPOs expected.

Gapping Up/Down

  • Gapping up:

  • BLUE +15.6%, VXX +3.9%, WIX +2.1%, EWTX +2%, KDP +1.6%, EW +0.8%, UHAL +0.7%

  • Gapping down:

  • TMC -8.8%, EAF -7.7%, APLD -3.3%, CS -2.7%, KOS-2.6%, GSL -1.6%, ZEAL -1.6%, IWM -1.2%, QQQ-1%, DIA -1%, SPY -0.9%, AWK -0.9%, EQT -0.6%

 

Analyst Research (see Upgrades/Downgradescalendarfor full list):

  • Upgrades

  • Array Tech (ARRY) upgraded to Overweight from Neutral at Piper Sandler; tgt raised to $28

  • D.R. Horton (DHI) upgraded to Overweight from Sector Weight at KeyBanc Capital Markets; tgt $84

  • Innovative Industrial Properties (IIPR) upgraded to Buy from Neutral at Compass Point; tgt raised to $175

  • Lennar (LEN) upgraded to Overweight from Underweight at KeyBanc Capital Markets; tgt $89

  • Meritage (MTH) upgraded to Overweight from Sector Weight at KeyBanc Capital Markets; tgt $87

  • PulteGroup (PHM) upgraded to Overweight from Sector Weight at KeyBanc Capital Markets; tgt $47

  • Toll Brothers (TOL) upgraded to Sector Weight from Underweight at KeyBanc Capital Markets

  • TopBuild (BLD) upgraded to Overweight from Sector Weight at KeyBanc Capital Markets; tgt $205

  • Downgrades:

  • Adobe (ADBE) downgraded to Equal Weight from Overweight at Wells Fargo; tgt lowered to $310

  • Adobe (ADBE) downgraded to Hold from Buy at Edward Jones

  • Essex Property (ESS) downgraded to Neutral from Buy at Mizuho; tgt lowered to $264

  • Others:

  • AgileThought (AGIL) initiated with an Overweight at Cantor Fitzgerald; tgt $6

  • Aon (AON) resumed with a Neutral at BofA Securities; tgt $294

  • Zillow (ZG) initiated with a Buy at Compass Point; tgt $50

Upcoming Events:

  • Econ Data:

  • 07:00 ET:

  • Earnings

  • Monday (Sep 19)

  • Morning:  AZO

  • Tuesday (Sep 20)

  • Morning: APOG

  • Afternoon:  SFIX

  • Wednesday (Sep 21)

  • Morning:  GIS

  • Afternoon:  FUL KBH LEN

  • Thursday (Sep 22)

  • Morning: CAN DRI FDS

  • Afternoon:  AIR CAMP COST

  • Friday (Sep 23) 

  • None


Asia & Europe detail:

Asia: Nikkei CLOSED, Hang Seng -1.0%, Shanghai Composite -0.4%

Equity indices in the Asia-Pacific region began the week on a mostly lower note while Japan's Nikkei was closed for Respect for the Aged Day. Tokyo has been placed under a flood advisory as Typhoon Nanmadol travels toward the city. China reportedly lifted lockdown measures in Chengdu. Expectations for a 50-bps October rate hike from the Reserve Bank of Australia are on the rise. President Biden said during a weekend interview that the U.S. military would defend Taiwan in the event of an invasion by China.

  • In economic data:

  • Hong Kong's August Unemployment Rate 4.1% (last 4.3%)

---Equity Markets---

  • Japan's Nikkei: CLOSED

  • Hong Kong's Hang Seng: -1.0%

  • China's Shanghai Composite: -0.4%

  • India's Sensex: +0.5%

  • South Korea's Kospi: -1.1%

  • Australia's ASX All Ordinaries: -0.4%

---FX---

  • USD/JPY: +0.4% to 143.48

  • USD/CNH: +0.2% to 7.0171

  • USD/INR: +0.1% to 79.74

Europe: DAX -0.4%, FTSE CLOSED, CAC -1.0%

Major European indices trade in the red while the U.K.'s FTSE is closed for the funeral of Queen Elizabeth II. Workers at the port of Liverpool went on strike that is expected to last two weeks. European Central Bank Chief Economist Lane said that the ECB could raise rates over the next few meetings and into 2023. The EU is implementing a "single market emergency instrument" that will allow Brussels to force member states to stockpile certain products.

  • In economic data:

  • Eurozone's July Construction Output 0.27% m/m (last -1.16%)

---Equity Markets---

  • STOXX Europe 600: -0.8%

  • Germany's DAX: -0.4%

  • U.K.'s FTSE 100: CLOSED

  • France's CAC 40: -1.0%

  • Italy's FTSE MIB: -0.9%

  • Spain's IBEX 35: -0.6%

---FX---

  • EUR/USD: -0.2% to 0.9992

  • GBP/USD: -0.3% to 1.1382

  • USD/CHF: +0.1% to 0.9654



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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