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20/09/22 Briefing

Updated: Sep 22

The S&P 500 futures are down 17 points and are trading 0.4% below fair value. The Nasdaq 100 futures are down 67 points and are trading 0.5% below fair value. The Dow Jones Industrial Average futures are down 114 points and are trading 0.3% below fair value.

Equity futures indicate a lower open as Treasury yields tick higher. The 2-yr note yield is climbing towards 4.00%, up four basis points to 3.97%. The 10-yr note yield is back above 3.50%, up seven basis points to 3.54%.

In overseas news, Sweden's Riksbank announced a 100-bps rate hike to 1.75%, its largest increase since 1992. Germany's August PPI was a big surprise to the upside at 7.9% month-over-month versus an expected 1.6% month-over-month increase. Japan's August National CPI came in at 3.0% year-over-year following a 2.6% increase in July. 

The September FOMC meeting starts today and market participants will receive the rate hike decision at 2:00 p.m. ET tomorrowalong with an updated summary of economic projections. 

Later this morning, the August Housing Starts (Briefing.comconsensus 1.448 million; prior 1.446 million) and Building Permits (Briefing.comconsensus 1.610 million; prior 1.674 million) report will be released at 8:30 a.m. ET

In corporate news:

  • Western Digital (WDC 36.05, -0.57, -1.56%): downgraded to Hold from Buy at Deutsche Bank

  • Ford Motor (F 14.30, -0.63, -4.22%): reaffirms FY22 adjusted EBIT of $11.5-12.5 bln; expects Q3 adjusted EBIT of $1.4-1.7 bln; expects 40,000-45,000 vehicles in inventory by end of Q3 lacking parts in short supply

  • NIKE (NKE 104.76, -2.45, -2.29%): downgrade to Equal Weight from Overweight at Barclays

  • Apogee Enterprises (APOG 42.08, +2.73, +6.94%): beats by $0.23, beats on revs; raises FY23 EPS above consensus, revs above consensus

  • Cognex (CGNX 43.30, +1.58, +3.79%): raises its Q3 revenue guidance due to its ability to fulfill customer demand sooner than anticipated

  • Peloton (PTON 10.08, +0.16, +1.61%): unveiled Peloton Row, marking its highly anticipated entry into rowing

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region ended Tuesday on a higher note. Japan's Nikkei: +0.4%, Hong Kong's Hang Seng: +1.2%, China's Shanghai Composite: +0.2%, India's Sensex: +1.0%, South Korea's Kospi: +0.5%, Australia's ASX All Ordinaries: +1.2%.

  • In economic data:

  • Japan's August National CPI 3.0% yr/yr (last 2.6%) and National Core CPI 2.8% yr/yr (expected 2.7%; last 2.4%)

  • In news:

  • Casino stocks in Hong Kong outperformed amid reports that travelers will no longer be required to quarantine at a hotel upon arriving to the city.

  • The People's Bank of China made no changes to its one- and five-year loan prime rates against some expectations for a cut.

  • The Minutes from the Reserve Bank of Australia's latest policy meeting showed some members making the case for a slower pace of rate hikes. The central bank expects inflation to peak this year and decelerate into the 2-3% target range.

  • Kia is reportedly planning to start production of electric vehicles in the U.S. in 2024.

  • Major European indices trade in the red. STOXX Europe 600: -0.5%, Germany's DAX: -0.7%, U.K.'s FTSE 100: UNCH, France's CAC 40: -0.8%, Italy's FTSE MIB: -0.7%, Spain's IBEX 35: -0.6%.

  • In economic data:

  • Eurozone's July Current Account deficit EUR19.90 bln (expected surplus of EUR5.30 bln; last surplus of EUR4.20 bln)

  • Germany's August PPI 7.9% m/m (expected 1.6%; last 5.3%); 45.8% yr/yr (expected 37.1%; last 37.2%)

  • Spain's July trade deficit EUR6.56 bln (last deficit of EUR5.39 bln)

  • Swiss August trade surplus EUR3.424 bln (last surplus of EUR3.522 bln)

  • In news:

  • The German government is reportedly nearing an agreement to nationalize energy giant Uniper.

  • The Dutch government is planning to cap the price of energy from the start of 2023.

  • British Prime Minister Truss said that her government is not planning to begin trade negotiations with the U.S. anytime soon.

  • Switzerland's growth forecasts for 2022 and 2023 were lowered.

  • Sweden's Riksbank announced a 100-bps rate hike to 1.75%, its largest increase since 1992.

 

U.S. equity futures:

  • S&P 500 Futures: -15 @ 3,885

  • DJIA Futures: -92 @ 30,927

  • Nasdaq 100 Futures: -58 @ 11,895

Overseas:

  • Europe: DAX -0.7%, FTSE UNCH, CAC -0.8%

  • Asia: Nikkei +0.4%, Hang Seng +1.2%, Shanghai Composite +0.2%

Commodities:

  • Crude Oil +0.08 @ 85.44

  • Nat Gas  +0.086 @ 7.838

  • Gold -1.30 @ 1676.90

  • Silver -0.041  @ 19.317

  • Copper -0.0085 @ 3.5040

U.S. Summary:

  • Earnings/Guidance:

  • Apogee Enterprises (APOG) beats by $0.23, beats on revs; raises FY23 EPS above consensus, revs above consensus

  • Arthur J. Gallagher (AJG) CFO provides updates on various metrics in slide presentation; sees Q2 Adjusted EBITDAC Margin for brokerage segment of 32.0%

  • Cognex (CGNX) raises its Q3 revenue guidance due to its ability to fulfill customer demand sooner than anticipated

  • Ericsson (ERIC) publishes restated segment financials

  • Ford Motor (F) reaffirms FY22 adjusted EBIT of $11.5-12.5 bln; expects Q3 adjusted EBIT of $1.4-1.7 bln; expects 40,000-45,000 vehicles in inventory by end of Q3 lacking parts in short supply

  • ONE Gas (OGS) reaffirms FY22 EPS guidance in slide presentation

  • General News:

  • Treasury yields could reach 4% before Fed decision, according to Bloomberg

  • Arrests of undocumented immigrants on southern border reached 2 million in one year for the first time, according to the New York Times

  • Republicans say approval of coronavirus funding for vaccines, testing, and treatments will be more difficult after President Biden said the pandemic is over, according to CNN

  • Office use reaches new pandemic high of 47.5%, according to the Wall Street Journal

  • China aiming to ease foreign entry requirements for tourists, according to CNN

  • Aemetis (AMTX) signs agreement with Cathay Pacific to supply 38 million gallons of sustainable aviation fuel

  • America Movil SA (AMX) informs about the listing of Sitios Latinoamrica S.A.B. de C.V. incorporated as result of AMX's spin-off

  • Allison Transmission (ALSN) announces joint cooperation agreement with Anadolu Isuzu in which its eGen Power 100S electric axles will be integrated into Anadolu Isuzu's light-duty truck and midibus platforms

  • Alnylam Pharma (ALNY) announces that the European Commission has granted marketing authorization for AMVUTTRA

  • Apple (AAPL) will increase App Store prices in Europe and Asia next month, according to Bloomberg

  • AstraZeneca (AZN) receives EU approval for Evusheld

  • BeiGene (BGNE) receives NICE recommendation for BRUKINSA

  • Beyond Meat (BYND) COO Doug Ramsey was arrested for allegedly biting a man's nose in a parking garage, according to KTLA

  • Biomea Fusion (BMEA) Presents New Preclinical Data at the European Association for the Study of Diabetes (EASD) Annual Meeting Describing BMF-219's Potential as a Novel, Oral, Long-Acting Treatment for Type 2 Diabetes

  • Boeing (BA) met with regulators in China about returning 737 Max to flight, according to Reuters

  • Braskem SA (BAK) launches Oxygea, a company that will foster the appearance and development of new business initiatives

  • BridgeBio Pharma (BBIO) and Sentynl Therapeutics receive marketing authorization in the EU for NULIBRY for the Treatment of MoCD Type A

  • ClearPoint Neuro (CLPT) obtained 510k clearance from FDA for version 2.1 of the ClearPoint Neuro Navigation software

  • Coinbase Global (COIN) announces new fee structures on its blog to account for changes in global crypto trading volumes and asset prices

  • CRH Plc. (CRH) continues share buyback program

  • Decibel Therapeutics (DBTX) the submission of an Investigational New Drug application for a Phase 1/2 clinical trial in pediatric patients of DB-OTO

  • eGain Comm. (EGAN) announced that one of the world's largest fleet management companies has selected the eGain Knowledge Hub to automate digital self-service and augment contact center agents

  • Fisker (FSR) and Wallbox (WBX) partner globally for home EV charging solutions

  • General Dynamics (GD) awarded $415 mln U.S. Defense Logistic Agency modification contract

  • Goldman Sachs (GS) will introduce transaction banking services in EU, according to Financial Times

  • Immunic (IMUX) Announces Positive Results from Single and Multiple Ascending Dose Parts of Its Phase 1 Clinical Trial of IMU-856 in Healthy Human Subjects

  • Infosys (INFY) announced its collaboration with Telenor Norway, Telenor's wholly owned Norwegian telecommunications operator, in its business transformation program to become a digital telecommunications company

  • Insight Enterprises (NSIT) authorizes up to $300 mln for stock repurchases, including $50 mln which remained available under the prior authorization

  • Insulet (PODD) receives CE Mark Approval for Omnipod 5

  • Invitae (NVTA) reports real-world ciitizen data utilized in Praxis Precision Medicines' PRAX-222 IND Filing

  • Nikola (NKLA) CEO Mark Russell was worried about exaggeration in founder's statements, according to the Wall Street Journal

  • ON Semiconductor (ON) approves exit plan to wind down one of its divisions within the Advanced Solutions Group segment

  • Ouster (OUST) announced a comprehensive cost reduction initiative across its business, streamlining its cost structure and extending its expected cash runway

  • Patria Investments (PAX) names Ana Russo as incoming CFO, succeeding Marco Nicola D'Ippolito who will assume the role of Chief Corporate Development Officer, effective January 1, 2023

  • Pebblebrook Hotel Trust (PEB) details operating trends - August estimated operating results were in-line with expectations

  • Peloton (PTON) releases Peloton row

  • PepsiCo (PEP) aiming to end Pepsi and 7UP production in Russia, according to Reuters

  • Perpetua Resources (PPTA) receives DOD funding to study antimony from Stibnite Gold Project

  • Repligen (RGEN) enters into strategic partnership and exclusive license agreement with DRS Daylight Solutions to expand use of mid-infrared tech in the bioprocessing market

  • Royal Caribbean (RCL) extended the maturity date of loan advances held by consenting lenders by twelve months to October 2024

  • Scholar Rock (SRRK) appointed Jay Backstrom, M.D., M.P.H., as Chief Executive Officer-Elect

  • Stantec (STN) awarded US$16 mln feasibility study for Resolution Copper

  • Tanger Factory (SKT) announces appointment of Michael Bilerman as company's CFO and Chief Investment Officer

  • Tremor (TRMR) announces $20 million share repurchase program

  • Twilio (TWLO) aiming to eliminate 11% of its workforce, according to the New York Post

  • UBS (UBS) executive expects positive client flows this quarter, according to Reuters

  • United Therapeutics (UTHR) announced the termination of the PERFECT clinical study evaluating Tyvaso

  • Wave Life Sciences (WVE) announces a positive update to the ongoing Phase 1b/2a SELECT-HD clinical trial of WVE-003, the company's clinical candidate for Huntington's disease

  • Zimmer Biomet (ZBH) receives FDA Clearance for Identity Shoulder System for shoulder replacement

  • M&A:

  • BorgWarner (BWA) acquires charging business of Hubei Surpass Sun Electric

  • Oxford Industries (OXM) announces acquisition of apparel brand Johnny Was; raises guidance to account for acquisition and for strong DTC sales at Tommy Bahama and Lilly Pulitzer

  • Renovacor (RCOR): Rocket (RCKT) will acquire Renovacor in an all-stock transaction for an implied value of approximately $2.60 per share; expected to close by the first quarter of 2023

  • United Healthcare (UNH): Judge has rejected antitrust challenges to United Healthcare deal to acquire Change Healthcare (CHNG), according to the Wall Street Journal

  • Zendesk (ZEN) shareholders vote to approve ZEN being acquired by a consortium led by Hellman & Friedman and Permira for $77.50/sh in cash

  • Syndicate

  • Biohaven Pharmaceutical (BHVN) filed a prospectus supplement to its Registration Statement on Form S-3 with respect to the resale by the selling shareholder of 493,254 common shares

  • Roivant Sciences (ROIV) files for $1 bln mixed securities shelf offering

  • SoundHound AI (SOUN) files for 25,250,000 share common stock offering by selling shareholders

  • Ventas (VTR) files for 3,515,211 share common stock offering

  • IPOs:

  • Expected to Price:

  • No IPOs expected.

Gapping Up/Down

  • Gapping up:

  • PPTA +13.1%, ROIV +12.3%, CGNX +5.4%, CLPT+4.4%, APOG +1.7%, AMX +1.1%, BAK +0.9%, GD+0.4%

  • Gapping down:

  • F -4.8%, ZEN -4.4%, SOUN -3.1%, COIN -1.3%, LICY-0.5%

 

Analyst Research (see Upgrades/Downgradescalendarfor full list):

  • Upgrades

  • America Movil SA (AMX) upgraded to Buy from Neutral at UBS; tgt lowered to $20.40

  • Downgrades:

  • Adyen (ADYYF) downgraded to Hold from Buy at HSBC Securities

  • AENA (ANNSF) downgraded to Underweight from Equal Weight at Barclays

  • Air China (AIRYY) downgraded to Reduce from Hold at HSBC Securities

  • Western Digital (WDC) downgraded to Hold from Buy at Deutsche Bank; tgt lowered to $40

  • Weyerhaeuser (WY) downgraded to Neutral from Buy at BofA Securities; tgt lowered to $34

  • Others:

  • Alnylam Pharma (ALNY) placed on Upside Catalyst Watch at Citigroup

  • Ascendis Pharma (ASND) placed on Focus List at Citigroup

  • Black Stone Minerals (BSM) initiated with an Overweight at KeyBanc Capital Markets; tgt $22

  • Brigham Minerals (MNRL) initiated with a Sector Weight at KeyBanc Capital Markets

  • Callon Petroleum (CPE) initiated with a Sector Weight at KeyBanc Capital Markets

  • Civitas Resources (CIVI) initiated with an Overweight at KeyBanc Capital Markets; tgt $80

  • Comstock (CRK) initiated with an Overweight at KeyBanc Capital Markets; tgt $26

  • Denbury (DEN) initiated with an Overweight at KeyBanc Capital Markets; tgt $102

  • EOG Resources (EOG) initiated with an Overweight at KeyBanc Capital Markets; tgt $157

  • Gulfport Energy (GPOR) initiated with a Sector Weight at KeyBanc Capital Markets

  • Ionis Pharma (IONS) removed from Focus List at Citigroup

  • Kimbell Royalty Partners (KRP) initiated with a Sector Weight at KeyBanc Capital Markets

  • Magnolia Oil & Gas (MGY) initiated with an Overweight at KeyBanc Capital Markets; tgt $28

  • Matador Resources (MTDR) initiated with an Overweight at KeyBanc Capital Markets; tgt $72

  • PDC Energy (PDCE) initiated with a Sector Weight at KeyBanc Capital Markets

  • Pioneer Natural Resources (PXD) initiated with an Overweight at KeyBanc Capital Markets; tgt $290

  • SM Energy (SM) initiated with an Overweight at KeyBanc Capital Markets; tgt $64

  • Viper Energy Partners (VNOM) initiated with an Overweight at KeyBanc Capital Markets; tgt $39

Upcoming Events:

  • Econ Data:

  • 08:30 ET: Housing Starts for Aug (Briefing.comConsensus 1448K; Prior 1446K)

  • 08:30 ET: Building Permits for Aug (Briefing.comConsensus 1610K; Prior 1674K)

  • 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 +0.4%, Hang Seng +1.2%, Shanghai Composite +0.2%

Equity indices in the Asia-Pacific region ended Tuesday on a higher note. Casino stocks in Hong Kong outperformed amid reports that travelers will no longer be required to quarantine at a hotel upon arriving to the city. The People's Bank of China made no changes to its one- and five-year loan prime rates against some expectations for a cut. The Minutes from the Reserve Bank of Australia's latest policy meeting showed some members making the case for a slower pace of rate hikes. The central bank expects inflation to peak this year and decelerate into the 2-3% target range. Kia is reportedly planning to start production of electric vehicles in the U.S. in 2024.

  • In economic data:

  • Japan's August National CPI 3.0% yr/yr (last 2.6%) and National Core CPI 2.8% yr/yr (expected 2.7%; last 2.4%)

---Equity Markets---

  • Japan's Nikkei: +0.4%

  • Hong Kong's Hang Seng: +1.2%

  • China's Shanghai Composite: +0.2%

  • India's Sensex: +1.0%

  • South Korea's Kospi: +0.5%

  • Australia's ASX All Ordinaries: +1.2%

---FX---

  • USD/JPY: +0.2% to 143.56

  • USD/CNH: +0.2% to 7.0169

  • USD/INR: UNCH at 79.68

Europe: DAX -0.7%, FTSE UNCH, CAC -0.8%

Major European indices trade in the red. The German government is reportedly nearing an agreement to nationalize energy giant Uniper. The Dutch government is planning to cap the price of energy from the start of 2023. British Prime Minister Truss said that her government is not planning to begin trade negotiations with the U.S. anytime soon. Switzerland's growth forecasts for 2022 and 2023 were lowered. Sweden's Riksbank announced a 100-bps rate hike to 1.75%, its largest increase since 1992.

  • In economic data:

  • Eurozone's July Current Account deficit EUR19.90 bln (expected surplus of EUR5.30 bln; last surplus of EUR4.20 bln)

  • Germany's August PPI 7.9% m/m (expected 1.6%; last 5.3%); 45.8% yr/yr (expected 37.1%; last 37.2%)

  • Spain's July trade deficit EUR6.56 bln (last deficit of EUR5.39 bln)

  • Swiss August trade surplus EUR3.424 bln (last surplus of EUR3.522 bln)

---Equity Markets---

  • STOXX Europe 600: -0.5%

  • Germany's DAX: -0.7%

  • U.K.'s FTSE 100: UNCH

  • France's CAC 40: -0.8%

  • Italy's FTSE MIB: -0.7%

  • Spain's IBEX 35: -0.6%

---FX---

  • EUR/USD: -0.2% to 1.0005

  • GBP/USD: +0.1% to 1.1439

  • USD/CHF: +0.2% to 0.9653



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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