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20/09/23 Briefing


The S&P 500 futures are up 10 points and are trading 0.2% above fair value. The Nasdaq 100 futures are up 30 points and are trading 0.2% above fair value. The Dow Jones Industrial Average futures are up 95 points and are trading 0.3% above fair value.

The stock market is poised for a higher open in front of the FOMC announcement today at 2:00 p.m. ET. That announcement will be accompanied by an updated Summary of Economic Projections and dot plot, and will be followed by Fed Chair Powell's press conference at 2:30 p.m. ET.

The positive bias has been supported by a falling market rates and oil prices. WTI crude oil futures slipped back below $90.00/bbl, down 0.9% to $89.69/bbl. The 2-yr note yield is down four basis points to 5.07% and the 10-yr note yield is down two basis points to 4.35%, helped in part by some better than expected August CPI data out of the UK.

In addition, Klaviyo (KVYO) has priced its initial public offering at $30 per share, above the expected $27-29 range, according to CNBC.

The People's Bank of China made no changes to its one-year and five-year loan prime rates, as expected.

The weekly MBA Mortgage Applications Index rose 5.4% with refinance applications jumping 13.0% and purchase applications increasing 2.0%.

In corporate news:

  • IBM 1.81% (IBM 147.50, +0.98, +0.7%): initiated with an Outperform at RBC Capital Mkts

  • Ford (F 12.61, +0.05, +0.4%): and Canadian auto workers union Unifor confirmed yesterday they have reached tentative agreement on new national labor contract

  • JPMorgan Chase (JPM 149.10, +0.17, +0.1%): increases quarterly dividend by 5% to $1.05/sh

  • ARS Pharmaceuticals (SPRY 2.73, -3.88, -58.7%): receives Complete Response Letter from FDA for neffy NDA

  • Coty (COTY 12.13, +0.66, +5.8%): raises FY24 outlook

  • General Mills (GIS 66.45, +0.57, +0.9%): beats by $0.06, reports revs in-line; reaffirms FY24 EPS guidance

  • Pinterest (PINS 27.17, +0.96, +3.7%): authorizes $1 bln stock repurchase program; upgraded to Buy from Neutral at both Citigroup and DA Davidson

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region ended the midweek session on a lower note. Japan's Nikkei: -0.7%, Hong Kong's Hang Seng: -0.6%, China's Shanghai Composite: -0.5%, India's Sensex: -1.2%, South Korea's Kospi: UNCH, Australia's ASX All Ordinaries: -0.5%.

  • In economic data:

  • Japan's August trade deficit JPY560 bln, as expected (last deficit of JPY600 bln). August Imports -17.8% yr/yr (expected -19.4%; last -13.6%) and Exports -0.8% yr/yr (expected -1.7%; last -0.3%)

  • South Korea's August PPI 0.9% m/m (last 0.3%); 1.0% yr/yr (last -0.3%)

  • Australia's August MI Leading Index 0.0% m/m (last 0.0%)

  • New Zealand's Q2 Current Account deficit 7.5% of GDP (last 8.5% of GDP)


  • In news:

  • The People's Bank of China made no changes to its one-year and five-year loan prime rates, as expected.

  • China exported no gallium nor germanium in August, according to customs data.

  • China's Transport Ministry announced that international cruise arrivals and departures will be fully resumed.

  • There was some speculation that the Reserve Bank of India intervened in the foreign exchange market to stop the rupee from continuing to a fresh record low against the dollar.

  • Standard & Poor's affirmed Australia's AAA rating with a Stable outlook.



  • Major European indices trade in the green. STOXX Europe 600: +0.6%, Germany's DAX: +0.6%, U.K.'s FTSE 100: +0.8%, France's CAC 40: +0.4%, Italy's FTSE MIB: +1.0%, Spain's IBEX 35: +1.2%.

  • In economic data:

  • Eurozone's July Construction Output 0.8% m/m (last -1.2%)

  • Germany's August PPI 0.3% m/m (expected 0.2%; last -1.1%); -12.6% yr/yr, as expected (last -6.0%)

  • U.K.'s August CPI 0.3% m/m (expected 0.7%; last -0.4%); 6.7% yr/yr (expected 7.0%; last 6.8%). Core CPI 0.1% m/m (expected 0.6%; last 0.3%); 6.2% yr/yr (expected 6.8%; last 6.9%) Input PPI 0.4% m/m (expected 0.2%; last -0.4%) and Output PPI 0.2% m/m (expected 0.1%; last 0.2%)


  • In news:

  • There is growing speculation that the Bank of England will refrain from hiking again at tomorrow's policy meeting after the release of cooler than expected inflation figures for August.

  • European Central Bank policymaker Schnabel said that unit labor costs are the largest driver of domestic inflation while policymaker Panetta spoke in favor of countercyclical fiscal policy that would foster public investment.



U.S. equity futures:

  • S&P 500 Futures +10 @ 4,454

  • DJIA Futures: +92 @ 34,610

  • Nasdaq 100 Futures: +27 @ 15,219

Overseas:

  • Europe: DAX +0.6%, FTSE +0.8%, CAC +0.4%

  • Asia: Nikkei -0.7%, Hang Seng -0.6%, Shanghai Composite -0.5%

Commodities:

  • Crude Oil -0.72 @ 89.76

  • Nat Gas -0.079 @ 2.769

  • Gold -1.15 @ 1952.55

  • Silver +0.111 @ 23.567

  • Copper +0.0288 @ 3.7758


Earnings/Guidance:

  • Coty ( COTY 6.10% ) raises FY24 outlook

  • General Mills ( GIS 1.12% ) beats by $0.06, reports revs in-line; reaffirms FY24 EPS guidance

  • Intl Flavors ( IFF 4.69% ) reaffirms FY23 gudiance for sales and adjusted operating EBITDA; continues to pursue sale of its Cosmetic Ingredients business

  • STAAR Surgical ( STAA 0.83% ) clarifies presentation slide; CapEx Expected to be approximately $20-30 mln annually resulting in 2026E Free Cash Flow of approximately $75-110 mln

  • Steelcase ( SCS 21.68% ) beats by $0.11, beats on revs; guides Q3 EPS above consensus, revs below consensus; guides FY24 EPS above consensus, expects modest organic revenue decline yr/yr

News:

  • Impeachment inquiry hearing for President Biden expected next week, according to Reuters

  • UK Government unveils new Board of Trade with UK's top CEOs

  • Akamai Tech ( AKAM 0.92% ) amends by-laws, effective immediately

  • Allbirds ( BIRD 1.98% ) completes previously announced agreements with distributor partners in Canada and South Korea

  • Alvotech ( ALVO 0.00% ) provides U.S. regulatory update on AVT02

  • Amazon ( AMZN 0.90% ) expands use of cashierless RFID tags for stores, according to Bloomberg

  • Apple ( AAPL 0.53% ) employees in France planning strike for iPhone launch day, according to Bloomberg

  • Argan ( AGX 4.07% ) increases quarterly dividend by 20% from $0.25/share to $0.30/share

  • ARS Pharmaceuticals ( SPRY 54.88% ) receives Complete Response Letter from FDA for neffy NDA

  • AstraZeneca ( AZN 1.92% ) unit Alexion completes Pfizer (PFE) gene therapy agreement

  • Biophytis SA ( BPTS 0.00% ) provided an update yesterday on its early access programs for Sarconeos (BIO101) in the treatment of severe forms of COVID-19; exploring possibilities of launching early access programs in other key countries in Europe

  • Boeing ( BA 0.71% ): Fast-growing China domestic air travel driving 20-year demand for 8,560 airplanes

  • Container Store ( TCS 0.00% ) announces temporary 10% reduction to CEO Satish Malhotra salary for six months, effective October 1

  • Danimer Scientific ( DNMR 5.65% ) is expanding its collaboration with Chevron (CVX) Phillips Chemical to explore development and commercialization of cast extrusion films, blown extrusion films, injection molded parts and rotational molded parts using Rinnovo polymers produced in a loop slurry reactor process

  • Enviva ( EVA 0.77% ) disclosed that John K. Keppler resigned as Executive Chairman effective immediately, as he continues to focus on treatment and recovery from recent heart health challenges

  • Ethan Allen's ( ETD 1.53% ) manufacturing plant in Orleans, Vermont, resumes operations and continues to make progress following July flooding

  • Exscientia ( EXAI 1.98% ) announces AI drug discovery collaboration with Merck KGaA (MKKGY)

  • Ford ( F 0.40% ) of Canada and Unifor confirmed yesterday have reached tentative agreement on new national labor contract

  • General Dynamics ( GD 0.53% ) Electric Boat awarded $517 mln for Virginia-class submarine parts

  • HanesBrands ( HBI 1.11% ) announces evaluation of strategic options for global Champion Business

  • Hanesbrands ( HBI 1.11% ): Barington Capital comments on Hanesbrands' review of strategic options for global Champion Business

  • Hewlett Packard Enterprise ( HPE 0.91% ) announces changes to its organizational structure and executive leadership

  • Ionis Pharma ( IONS 0.23% ) treatment of hereditary angioedema granted orphan designation yesterday

  • JPMorgan Chase ( JPM 0.76% ) increases quarterly dividend by 5% to $1.05/sh

  • Merck ( MRK 0.48% ) announces FDA granted priority review to Merck's application for KEYTRUDA (pembrolizumab) plus concurrent chemoradiotherapy as treatment for patients with newly diagnosed high-risk locally advanced cervical cancer

  • Meta Platforms ( META 0.71% ) announced that it is expanding Meta Verified to Businesses

  • Meta Platforms ( META 0.71% ) launches WhatsApp business payment app in India, according to The Hindu

  • Microsoft ( MSFT 0.06% ) Gaming CEO Phil Spencer on Twitter: will share real plans when ready regarding leaked documents surrounding video game business

  • Microsoft ( MSFT 0.06% ) reported that "Starfield"has already surpassed 10 mln players

  • Nano Dimension ( NNDM 6.32% ) receives approval from the Israeli court to resume its share repurchase plan immediately

  • New Found Gold Corp ( NFGC 0.68% ) intercepts 17.8 g/t Au Over 8.3m at 421 Zone, Drills Mineralization 2.7km South of Keats at Grouse Zone

  • Pearson Plc ( PSO 0.73% ) announces the appointment of Omar Abbosh as its new Chief Executive Officer and Executive Director, effective early 2024

  • Pinterest ( PINS 6.12% ) authorizes $1 bln stock repurchase program

  • Puma Biotech's ( PBYI 0.00% ) treatment of small cell lung cancer (alisertib) granted orphan designation yesterday

  • RE/MAX Holdings ( RMAX 1.40% ) issues housing report for August; new listings rose 1.8% sequentially, bucking a typical seasonal decline trend

  • Sempra Energy's ( SRE 0.38% ) SoCalGas and ClearSign (CLIR) collaboration awarded U.S. Department of Energy grant to scale-up ultra-low-NOx hydrogen-powered industrial burner prototype

  • SkillSoft ( SKIL 7.48% ) approves 1-for-20 reverse stock split; stock will begin trading on a split-adjusted basis at open on October 2

  • Smith & Wesson Brands ( SWBI 4.04% ) authorizes $50 million stock repurchase program through September 19, 2024

  • SomaLogic ( SLGC 2.61% ) announces partnership with DNA Link to offer the 7,000 plex SomaScan platform to their customers

  • Spire Global ( SPIR 3.04% ) was awarded a $2.8 million, 12-month contract by the National Oceanic and Atmospheric Administration for satellite weather data

  • STMicroelectronics ( STM 1.27% ) announces that it has asked Jean-Marc Chery, President and CEO, to be available for a reappointment in his current role; Mr. Chery has accepted the proposal

  • Sylvamo ( SLVM 6.29% ) increases quarterly cash dividend 20% to $0.30/share from $0.25/share and declares a special dividend of $0.30/share

  • Taysha Gene Therapies ( TSHA 5.06% ) Provides Update on TSHA-120 Program in Giant Axonal Neuropathy

  • Textron ( TXT 4.28% ) and NetJets announced a record-breaking fleet agreement for the option for NetJets to purchase up to 1,500 additional Cessna Citation business jets over the next 15 years

  • TotalEnergies SE ( TTE 1.04% ) to Invest in a New 1,050 MWac Renewable Portfolio JV, Equally Owned With Adani Green Energy Limited

  • Treace ( TMCI 1.80% ) Highlights New Product Innovations and Updated ALIGN3D Clinical Study Data at the American Orthopaedic Foot & Ankle Society Annual Meeting 2023

  • Tutor Perini ( TPC 2.96% ) awarded $47 mln National Park Services project in Florida

  • Uber ( UBER 0.75% ) could downsize in Europe if drivers are classified as employees, according to Financial Times

  • Uxin ( UXIN 6.17% ) announces RMB1.5 bln equity investment in its Hefei Subsidiary

  • Vir Biotechnology ( VIR 0.20% ) announced that Johanna Friedl-Naderer, the Company's Executive Vice President and Chief Operating Officer, will be leaving the Company on September 29, 2023

  • Vulcan Materials ( VMC 0.16% ) names Tom Baker II as President; promotes Ronnie Pruitt to COO

  • Xylem ( XYL 0.94% ) and LORENTZ announces that they will enter into a distribution agreement to expand the availability of solar-powered pumping systems, globally

M&A:

  • Arthur J. Gallagher ( AJG 0.17% ) signs definitive agreement to acquire Eastern Insurance Group for consideration of $510 million net of agreed seller funded expense

  • Cambridge Bancorp ( CATC 23.00% ) to merge with Eastern Bankshares

  • Ceva ( CEVA 1.67% ): Cadence Design (CDNS) to acquire Intrinsix Corporation from CEVA; deal expected to be immaterial to revenue and earnings

  • Goldman Sachs ( GS 0.04% ) looking to sell GreenSky to consortium, according to the Wall Street Journal

  • Liberty Global ( LBTYA 0.48% ) will reopen its offer as a simplified squeeze-out on Sep 22; Telenet will become 100% owned by Liberty Global

  • Microsoft ( MSFT 0.06% ): UK's CMA to decide on MSFT/Activision Blizzard (ATVI) deal next week, according to The Verge

  • Philip Morris ( PM 0.29% ) may sell Vectura Group stake, according to the Wall Street Journal

Syndicate:

  • Brookfield Infrastructure ( BIP 1.14% ) receives all regulatory approvals required to complete previously announced acquisition of Triton International (TRTN)

  • HilleVax ( HLVX 8.73% ) prices offering of 8.0 mln shares of common stock at $12.50 per share

  • Madison Square Garden Entertainment ( MSGE 0.73% ) prices secondary offering of 7.15 shares of common stock at $32.50 per share

  • Permian Resources ( PR 0.78% ) prices secondary offering of 21.45 mln shares of common stock at $13.05 per share

  • Playa Hotels & Resorts ( PLYA 0.55% ) files mixed shelf securities offering

IPOs:

  • Priced to Trade:

  • Klaviyo (NYSE: KVYO): The provider of a cloud-based customer experience platform priced its 19.2 M share IPO at $30, above the $27-$29 upwardly revised price range.


Gapping Up/Down

  • Gapping up:

  • CATC +22.2%, EXAI +18.2%, ATRA +6.3%, SCS +6%, PBYI +5.7%, HAIN +4%, NNDM +3.6%, PINS +3.4%, NIO +2.7%, TRTN +2%, AZN +1.8%, AGX +1.3%, STM +1.1%, SLVM +0.9%, GD +0.8%, BXP +0.7%, HPE +0.5%, BA +0.5%


  • Gapping down:

  • SPRY -46.9%, HLVX -9.2%, TSHA -5.2%, IONS -4.3%, SKIL -3.7%, PR -3.2%, VIR -2%, BPTS -1.7%, PLYA -0.8%


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

  • Upgrades

  • Azul S.A. (AZUL) upgraded to Buy from Neutral at Goldman; tgt raised to $18.30

  • Bausch Health (BHC) upgraded to Buy from Hold at Jefferies; tgt raised to $16

  • Cemig (CIG) upgraded to Buy from Neutral at BofA Securities

  • Goosehead Insurance (GSHD) upgraded to Outperform from Market Perform at BMO Capital Markets; tgt raised to $90

  • Hudson Pacific Properties (HPP) upgraded to Outperform from Market Perform at BMO Capital Markets; tgt raised to $10

  • Kimco Realty (KIM) upgraded to Equal Weight from Underweight at Wells Fargo; tgt $20

  • Louisiana-Pacific (LPX) upgraded to Buy from Hold at TD Securities; tgt $78

  • Pinterest (PINS) upgraded to Buy from Neutral at Citigroup; tgt raised to $36

  • Pinterest (PINS) upgraded to Buy from Neutral at DA Davidson; tgt raised to $35

  • Sabra Health Care REIT (SBRA) upgraded to Buy from Hold at Jefferies; tgt raised to $15

  • SITE Centers (SITC) upgraded to Overweight from Equal Weight at Wells Fargo; tgt $15

  • Western Digital (WDC) upgraded to Outperform from Neutral at Exane BNP Paribas; tgt $58

  • Wingstop (WING) upgraded to Outperform from Neutral at Wedbush; tgt raised to $200


  • Downgrades:

  • ARS Pharmaceuticals (SPRY) downgraded to Mkt Perform from Outperform at William Blair

  • Chewy (CHWY) downgraded to Perform from Outperform at Oppenheimer

  • Dollar General (DG) downgraded to Underweight from Neutral at JP Morgan; tgt lowered to $116

  • nCino (NCNO) downgraded to Underweight from Equal-Weight at Morgan Stanley; tgt $24

  • Phillips Edison & Company (PECO) downgraded to Underweight from Equal Weight at Wells Fargo; tgt $35

  • P. T. Telekomunikasi (TLK) downgraded to Neutral from Buy at BofA Securities

  • Retail Opportunity Investments (ROIC) downgraded to Equal Weight from Overweight at Wells Fargo; tgt raised to $15

  • Skyworks (SWKS) downgraded to Neutral from Outperform at Exane BNP Paribas; tgt $110

  • WPP plc (WPP) downgraded to Neutral from Outperform at Exane BNP Paribas

  • Zebra Tech (ZBRA) downgraded to Underweight from Equal-Weight at Morgan Stanley; tgt lowered to $220


  • Others:

  • Build-A-Bear Workshop (BBW) initiated with a Buy at Jefferies; tgt $42

  • CareTrust REIT (CTRE) initiated with a Buy at Jefferies; tgt $23

  • CoStar Group (CSGP) resumed with a Mkt Outperform at JMP Securities; tgt $100

  • First Citizens BancShares (FCNCA) initiated with an Overweight at JP Morgan; tgt $1850

  • IBM (IBM) initiated with an Outperform at RBC Capital Mkts; tgt $188

  • LTC Properties (LTC) initiated with a Hold at Jefferies; tgt $29

  • Mirum Pharmaceuticals (MIRM) initiated with a Mkt Outperform at JMP Securities; tgt $70

  • National Health (NHI) initiated with a Hold at Jefferies; tgt $52

  • Reviva Pharmaceuticals (RVPH) initiated with a Buy at ROTH MKM; tgt $12

  • Sonos (SONO) initiated with a Buy at Rosenblatt; tgt $20


Econ Data:

  • 07:00 ET: MBA Mortgage Applications Index for Sep 16 (Briefing.com Consensus NA; Prior -0.8%)

  • 10:30 ET: EIA Crude Oil Inventories for Sep 16 (Briefing.com Consensus NA; Prior +3.96M)

  • 14:00 ET: FOMC Rate Decision (Briefing.com Consensus 5.25-5.50%; Prior 5.25-5.50%)

Earnings:

  • Monday (Sep 18)

  • Afternoon: SFIX


  • Tuesday (Sep 19)

  • Morning: APOG AZO DAVA

  • Afternoon: SCS


  • Wednesday (Sep 20)

  • Morning: GIS

  • Afternoon: FDX KBH


  • Thursday (Sep 21)

  • Morning: DRI FDS


Asia & Europe detail:

Asia: Nikkei -0.7%, Hang Seng -0.6%, Shanghai Composite -0.5%

Equity indices in the Asia-Pacific region ended the midweek session on a lower note. The People's Bank of China made no changes to its one-year and five-year loan prime rates, as expected. China exported no gallium nor germanium in August, according to customs data. China's Transport Ministry announced that international cruise arrivals and departures will be fully resumed. There was some speculation that the Reserve Bank of India intervened in the foreign exchange market to stop the rupee from continuing to a fresh record low against the dollar. Standard & Poor's affirmed Australia's AAA rating with a Stable outlook.

  • In economic data:

  • Japan's August trade deficit JPY560 bln, as expected (last deficit of JPY600 bln). August Imports -17.8% yr/yr (expected -19.4%; last -13.6%) and Exports -0.8% yr/yr (expected -1.7%; last -0.3%)

  • South Korea's August PPI 0.9% m/m (last 0.3%); 1.0% yr/yr (last -0.3%)

  • Australia's August MI Leading Index 0.0% m/m (last 0.0%)

  • New Zealand's Q2 Current Account deficit 7.5% of GDP (last 8.5% of GDP)


---Equity Markets---

  • Japan's Nikkei: -0.7%

  • Hong Kong's Hang Seng: -0.6%

  • China's Shanghai Composite: -0.5%

  • India's Sensex: -1.2%

  • South Korea's Kospi: UNCH

  • Australia's ASX All Ordinaries: -0.5%

---FX---

  • USD/JPY: +0.1% to 147.86

  • USD/CNH: +0.1% to 7.3063

  • USD/INR: -0.3% to 83.06

Europe: DAX +0.6%, FTSE +0.8%, CAC +0.4%

Major European indices trade in the green. There is growing speculation that the Bank of England will refrain from hiking again at tomorrow's policy meeting after the release of cooler than expected inflation figures for August. European Central Bank policymaker Schnabel said that unit labor costs are the largest driver of domestic inflation while policymaker Panetta spoke in favor of countercyclical fiscal policy that would foster public investment.

  • In economic data:

  • Eurozone's July Construction Output 0.8% m/m (last -1.2%)

  • Germany's August PPI 0.3% m/m (expected 0.2%; last -1.1%); -12.6% yr/yr, as expected (last -6.0%)

  • U.K.'s August CPI 0.3% m/m (expected 0.7%; last -0.4%); 6.7% yr/yr (expected 7.0%; last 6.8%). Core CPI 0.1% m/m (expected 0.6%; last 0.3%); 6.2% yr/yr (expected 6.8%; last 6.9%) Input PPI 0.4% m/m (expected 0.2%; last -0.4%) and Output PPI 0.2% m/m (expected 0.1%; last 0.2%)


---Equity Markets---

  • STOXX Europe 600: +0.6%

  • Germany's DAX: +0.6%

  • U.K.'s FTSE 100: +0.8%

  • France's CAC 40: +0.4%

  • Italy's FTSE MIB: +1.0%

  • Spain's IBEX 35: +1.2%

---FX---

  • EUR/USD: +0.2% to 1.0701

  • GBP/USD: -0.2% to 1.2361

  • USD/CHF: UNCH at 0.8973

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