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21/09/23 Briefing

The S&P 500 futures are down 34 points and are trading 0.8% below fair value. The Nasdaq 100 futures are down 165 points and are trading 1.0% below fair value. The Dow Jones Industrial Average futures are down 185 points and are trading 0.5% below fair value.

Equity futures have a decidedly negative disposition, pressured by ongoing fallout after the latest updates from the Fed that suggested rates will remain higher for longer. The 10-yr Treasury note yield is up seven basis points to 4.44%, which is acting as a headwind for stocks.

In other central bank news, the Bank of England left its bank rate at 5.25% against expectations that were split between a pause and another hike. The Swiss National Bank also left its policy rate unchanged, at 1.75%, while central banks in Sweden and Norway raised their rates by 25 bps apiece. Additionally, the Hong Kong Monetary Authority held its policy rate at 5.75%, as expected.

Separately, a CNBC report suggested that Hollywood writers and studios are close to reaching an agreement that would end the strike; meanwhile, Reuters reports that the UAW and the Big Three are still far apart in their negotiations. 

Today's economic calendar features the following releases:

  • 8:30 ET: Weekly Initial Claims (Briefing.comconsensus 225,00; prior 220,000), Continuing Claims (prior 1.688 mln), Q2 Current Account Balance (Briefing.comconsensus -$222.0 bln; prior -$219.3 bln), and September Philadelphia Fed Survey (Briefing.comconsensus -2.0; prior 12.0)

  • 10:00 ET: August Existing Home Sales (Briefing.comconsensus 4.10 mln; prior 4.07 mln) and August Leading Indicators (Briefing.comconsensus -0.4%; prior -0.4%)

  • 10:30 ET: Weekly natural gas inventories (prior +57 bcf)

In corporate news:

  • FedEx (FDX 263.05, +12.53, +5.0%):  beats by $0.84, reports revs in-line; guides FY24 EPS in-line, expects flat yr/yr revs; to repurchase additional $1.5 bln of stock during FY24

  • Broadcom (AVGO 771.76, -58.81, -7.1%):Alphabet (GOOG) looking to replace Broadcom chips with Marvell, according to The Information

  • KB Home (KBH 46.41, -1.65, -3.4%): beats by $0.37, beats on revs, deliveries decreased 7%, housing gross profit margin decreased 520 bps; Raises FY23 housing revenue guidance; weakness likely attributable to an 8% drop in average selling prices as company ramps up homebuyer concessions

  • Five9 (FIVN 67.36, +0.94, +1.4%): upgraded to Buy from Hold at Deutsche Bank

  • Darden Restaurants (DRI 147.51, -1.95, -1.3%): beats by $0.04, reports revs in-line; guides FY24 EPS midpoint below consensus

  • FactSet (FDS 412.00, -11.77, -2.8%): misses by $0.58, reports revs in-line; guides FY24 EPS below consensus, revs in-line

  • Warner Bros. Discovery (WBD 11.57, +0.07, +0.6%) and Paramount Global (PARA 13.40, +0.16, +1.2%): Hollywood writers and studios close to reaching agreement, according to CNBC

  • Splunk (SPLK halted): Cisco (CSCO) to acquire Splunk for $157 per share in cash, representing approximately $28 billion in equity value

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region ended Thursday on a lower note. Japan's Nikkei: -1.4%, Hong Kong's Hang Seng: -1.3%, China's Shanghai Composite: -0.8%, India's Sensex: -0.9%, South Korea's Kospi: -1.8%, Australia's ASX All Ordinaries: -1.3%.

  • In economic data:

  • Hong Kong's August CPI 0.0% m/m (last 0.0%); 1.8% yr/yr (expected 2.0%; last 1.8%)

  • New Zealand's Q2 GDP 0.9% qtr/qtr (expected 0.5%; last 0.0%); 1.8% yr/yr (expected 1.2%; last 2.2%). Q2 GDP Expenditure 1.3% qtr/qtr (last -0.2%)

  • In news:

  • China's State Cabinet pledged to speed up the development of advanced manufacturing.

  • Former Reserve Bank of Australia Governor Macfarlane said that new Governor Bullock risks losing control over the RBA board due to structural changes.

  • There were growing hopes that Chevron and its LNG workers in Australia will reach a contract agreement on Friday.

  • The Hong Kong Monetary Authority held its policy rate at 5.75%, as expected.

  • Major European indices trade in the red. STOXX Europe 600: -1.0%, Germany's DAX: -1.2%, U.K.'s FTSE 100: -0.2%, France's CAC 40: -1.5%, Italy's FTSE MIB: -1.7%, Spain's IBEX 35: -1.4%.

  • In economic data:

  • U.K.'s August Public Sector Net Borrowing GBP10.76 bln (expected GBP9.80 bln; last -GBP1.20 bln)

  • France's September Business Survey 99 (expected 97; last 97)

  • Spain's July trade deficit EUR4.90 bln (last deficit of EUR2.36 bln)

  • In news:

  • The Bank of England left its bank rate at 5.25% against expectations that were split between a pause and another hike.

  • Elsewhere, the Swiss National Bank also left its policy rate unchanged, at 1.75%, while central banks in Sweden and Norway raised their rates by 25 bps apiece.

  • European Central Bank policymaker Nagel said that it is unclear if rates have peaked while policymaker Kazaks said that rates will have to remain restrictive for quite a while.

  • Poland's Prime Minister Morawiecki said that his country will no longer arm Ukraine.

 

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 -1.2%, FTSE -0.2%, CAC -1.5%

  • Asia: Nikkei -1.4%, Hang Seng -1.3%, Shanghai Composite -0.8%

Commodities:

  • Crude Oil -0.44 @ 89.22

  • Nat Gas -0.039 @ 2.694

  • Gold -26.55 @ 1940.55

  • Silver -0.398 @ 23.6780

  • Copper -0.0980 @ 3.6780


 

Earnings/Guidance:

  • Assurant (AIZ) discloses in a filing that it expects its Global Housing segment to record less than $50 mln pre-tax of reportable catastrophe losses for Q3

  • CrowdStrike (CRWD) raises Target Model objectives in investor presentation

  • Darden Restaurants (DRI) beats by $0.04, reports revs in-line; guides FY24 EPS below consensus

  • FactSet (FDS) misses by $0.58, reports revs in-line; guides FY24 EPS below consensus, revs in-line

  • FedEx (FDX) beats by $0.84, reports revs in-line; guides FY24 EPS in-line, expects flat yr/yr revs; to repurchase additional $1.5 bln of stock during FY24

  • KB Home (KBH) beats by $0.37, beats on revs, deliveries decreased 7%, housing gross profit margin decreased 520 bps; Raises FY23 housing revenue guidance

  • Procore Technologies (PCOR) issues financial framework

  • VinFast Auto (VFS) reports Q2 results with updated outlook

News:

  • Fed hints at higher neutral rate, according to the Wall Street Journal

  • Bank of England leaves key interest rate unchanged at 5.25%

  • Detroit automakers urged to reduce reliance on temporary workers, according to the Wall Street Journal

  • Hollywood writers and studios close to reaching agreement, according to CNBC

  • House of Representatives to vote on defense appropriations bill, according to Reuters

  • White House released fact sheet on U.S. Action on Global Development

  • White House details advances offshore wind transmission, strengthens regional supply chain buildout, and drives innovation

  • UK CMA partially upholds appeal on energy distribution licence changes

  • AAR Corp (AIR) signs exclusive foreign military distribution agreement with Pall Corp.

  • Alphabet (GOOG) looking to replace Broadcom (AVGO) chips with Marvell (MRVL), according toThe Information

  • Apple (AAPL) still relying on Qualcomm components, according to the Wall Street Journal

  • argenx (ARGX) announces VYVGART authorized for sale by Health Canada

  • Aurinia Pharma (AUPH) enters cooperation agreement with shareholder MKT Capital

  • Avinger (AVGR) again increases the amount available for sale under the ATM Agreement

  • AXT (AXTI) subsidiary in Beijing meets applicable legal and commercial requirements and receives initial export permits to resume shipping gallium arsenide and germanium substrates to certain customers

  • Central Garden (CENT) CEO Tim Cofer to step down; reaffirms FY23 EPS guidance

  • Clear Secure (YOU) is launching its identity verification technology at Buffalo Niagara International Airport's (BUF) Main Terminal

  • Custom Truck One Source (CTOS) approves stock repurchase program of up to $25mln of shares

  • Disc Medicine (IRON) receives FDA fast track designation for MWTX-003 for the treatment of Polycythemia Vera

  • D.R. Horton (DHI) promotes Paul Romanowski to CEO; David Auld will transition from CEO to Executive Vice Chair; Michael Murray will continue to serve as COO

  • Dyne Therapeutics (DYN) Receives FDA Orphan Drug Designation for DYNE-101 for the Treatment of Myotonic Dystrophy Type 1

  • General Motors (GM) President issues an editorial published in the Detroit Free Press to provide clarity surrounding UAW concerns

  • GlobalFoundries (GFS) awarded $3.127 bln U.S. Defense Microelectronics Activity 10-year ordering period contract

  • Greenbrier (GBX) announces orders for 15,300 new railcars valued at $1.9 billion

  • Gulfport Energy (GPOR) expands its common stock repurchase authorization by 63% to $650 mln, extending authorization program through December 31, 2024

  • I-80 Gold Corp (IAUX) announces $20 mln gold prepay accordion with Orion Mine Finance

  • ICF International (ICFI) recently awarded blanket purchase agreement by U.S. Department of the Interior with ceiling value up to $30 mln

  • Immutep (IMMP) announces the regulatory authorization of eftilagimod alpha manufactured at commercial 2,000L scale for use in clinical trials across multiple European countries including Germany, Belgium, Denmark, and the United Kingdom

  • Inventiva (IVA) signs exclusive licensing agreement to develop and commercialize lanifibranor in Japan and South Korea

  • Keurig Dr Pepper (KDP) appoints Tim Cofer as COO, will join on November 6; to transition to CEO in 2Q24, succeeding Robert Gamgort who will thereafter serve as Executive Chairman

  • LifeMD (LFMD) and ASCEND Therapeutics launch integrated direct-to-consumer telehealth model for hormone therapy

  • MediWound (MDWD) announces commercial availability of NexoBrid in the US

  • Mesoblast (MESO) provides update on key outcomes from FDA Type A Meeting and next steps to achieve RYONCIL approval

  • nCino (NCNO) selected by Bendigo and Adelaide Bank to simplify their business banking operations

  • NewAmsterdam Pharma (NAMS) Announces Initial Data from Phase 2a Clinical Trial Evaluating Obicetrapib in Patients with Early Alzheimer's Disease Who Carry an ApoE4 Mutation

  • Paranaense de Energia (ELP) Board approved the hiring of the necessary advisors for structuring and executing the potential divestment project in Companhia Paranaense de Gas - Compagas

  • Raymond James (RJF) reports selected operating data for August

  • Starbucks (SBUX) raises quarterly dividend to $0.57 per share from $0.53 per share

  • Starbucks (SBUX) aiming to reduce order times, according to Bloomberg

  • Toshiba (TOSBF) shareholders approve deal to take company private

  • Travere Therapeutics (TVTX) Announces Confirmatory Data from the Phase 3 PROTECT Study of FILSPARI Demonstrating Long-Term Kidney Function Preservation in IgA Nephropathy; Narrowly Missing eGFR Total Slope Endpoint versus Active Control, Irbesartan

  • Uber Eats (UBER) introduces new features to help save money and time

  • U.S. Steel (X) and Cleveland Cliffs (CLF) in dispute over sale process, according to Yahoo Finance

  • Vericel (VCEL) Announces U.S. Commercial Availability of NexoBrid (anacaulase-bcdb) for the Treatment of Severe Thermal Burns in Adults

  • Viavi (VIAV) unveiled Observer Sentry, Software-as-a-Service-based Threat Exposure Management providing SecOps, DevOps, and cloud architects much-needed threat visibility into ever-changing AWS environments

  • Weyerhaeuser (WY) announces approval from the American Carbon Registry for its Improved Forest Management carbon credit project in Maine

  • W.P. Carey (WPC) provides strategic plan to exit Office; Large majority of office portfolio to be spun-off into a separate publicly-traded REIT

M&A:

  • CTG (CTG) and Cegeka Announce Extension of Tender Offer for All Outstanding Shares of CTG

  • Enovix (ENVX) acquires Routejade, a Korea-based coating supplier

  • Maxeon Solar (MAXN) and Complete Solaria's (CSLR) subsidiary enter into agreement for the sale of certain assets to Maxeon; also includes supply agreement for Maxeon

  • Splunk (SPLK): Cisco (CSCO) to acquire Splunk for $157 per share in cash, representing approximately $28 billion in equity value

  • UFP Industries (UFPI) subsidiary UFP Global Holdings acquired 80% of the equity in a newly formed company, UFP Palets y Embalajes SL, for ~$52 mln

  • W&T Offshore (WTI) announces accretive acquisition of producing properties in the Gulf of Mexico from an undisclosed private seller

Syndicate:

  • iCoreConnect (ICCT) files for 74,420,908 shares of common stock; also files for 15,089,966 shares of series A preferred stock; relates to warrants

  • Transcat (TRNS) files common stock offering (size not specified)

IPOs:

  • Priced to Trade:

  • No IPOs expected.

Gapping Up/Down

  • Gapping up:

  • IVA +16.7%, IRON +11.4%, AXTI +9.9%, FDX+5.4%, MESO +5.3%, CRWD +2.8%, IMMP+2.5%, GPOR +2.4%, ENVX +1.9%, CTOS+1.6%, EFX +1.6%, VCEL +1.5%, PMVP+1.4%, GFS +1.2%, UPS +0.8%, ARGX +0.7%

  • Gapping down:

  • MDWD -11.4%, TRNS -8.5%, CENT -3.2%, DYN -3%, MARA -2.4%, KBH -2.2%, UFPI-1.9%, LFMD -1.9%, NCNO -1.5%, RJF-0.9%, DHI -0.8%

 

Analyst Research (see Upgrades/Downgradescalendarfor full list):

  • Upgrades

  • HealthEquity (HQY) upgraded to Outperform from Neutral at Robert W. Baird; tgt raised to $87

  • Int'l Paper (IP) upgraded to Buy from Hold at Truist; tgt raised to $43

  • Nutanix (NTNX) upgraded to Buy from Neutral at BofA Securities; tgt raised to $50

  • Truist (TFC) upgraded to Outperform from Mkt Perform at Keefe Bruyette; tgt lowered to $36

  • Downgrades:

  • ARS Pharmaceuticals (SPRY) downgraded to Market Perform from Outperform at Leerink Partners; tgt lowered to $3

  • Others:

  • Agree Realty (ADC) initiated with an Overweight at Wells Fargo; tgt $70

  • EPR Properties (EPR) initiated with an Underweight at Wells Fargo; tgt $40

  • Essential Properties Realty Trust (EPRT) initiated with an Overweight at Wells Fargo; tgt $27

  • Four Corners Property Trust (FCPT) initiated with an Overweight at Wells Fargo; tgt $28

  • Gaming and Leisure Properties (GLPI) initiated with an Equal Weight at Wells Fargo; tgt $50

  • NNN REIT (NNN) initiated with an Equal Weight at Wells Fargo; tgt $40

  • Overstock.com(OSTK) initiated with a Neutral at BTIG Research

  • Realty Income (O) initiated with an Equal Weight at Wells Fargo; tgt $59

  • Spirit Realty Capital (SRC) initiated with an Underweight at Wells Fargo; tgt $36

  • VICI Properties (VICI) initiated with an Overweight at Wells Fargo; tgt $36

  • W.P. Carey (WPC) initiated with an Equal Weight at Wells Fargo; tgt $66

Econ Data:

  • 08:30 ET: Initial Claims for Sep 16 (Briefing.comConsensus 225K; Prior 220K)

  • 08:30 ET: Continuing Claims for Sep 9 (Briefing.comConsensus NA; Prior 1688K)

  • 08:30 ET: Philadelphia Fed Index for Sep (Briefing.comConsensus -2.0; Prior 12.0)

  • 08:30 ET: Current Account Balance for Q2 (Briefing.comConsensus -$222.0B; Prior -$219.3)

  • 10:00 ET: Existing Home Sales for Aug (Briefing.comConsensus 4.10 M; Prior 4.07M)

  • 10:00 ET: Leading Indicators for Aug (Briefing.comConsensus -0.4%; Prior -0.4%)

  • 10:30 ET: EIA Natural Gas Inventories for Sep 16 (Briefing.comConsensus NA; Prior +57 bcf)

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 -1.4%, Hang Seng -1.3%, Shanghai Composite -0.8%

Equity indices in the Asia-Pacific region ended Thursday on a lower note. China's State Cabinet pledged to speed up the development of advanced manufacturing. Former Reserve Bank of Australia Governor Macfarlane said that new Governor Bullock risks losing control over the RBA board due to structural changes. There were growing hopes that Chevron and its LNG workers in Australia will reach a contract agreement on Friday. The Hong Kong Monetary Authority held its policy rate at 5.75%, as expected.

  • In economic data:

  • Hong Kong's August CPI 0.0% m/m (last 0.0%); 1.8% yr/yr (expected 2.0%; last 1.8%)

  • New Zealand's Q2 GDP 0.9% qtr/qtr (expected 0.5%; last 0.0%); 1.8% yr/yr (expected 1.2%; last 2.2%). Q2 GDP Expenditure 1.3% qtr/qtr (last -0.2%)

---Equity Markets---

  • Japan's Nikkei: -1.4%

  • Hong Kong's Hang Seng: -1.3%

  • China's Shanghai Composite: -0.8%

  • India's Sensex: -0.9%

  • South Korea's Kospi: -1.8%

  • Australia's ASX All Ordinaries: -1.3%

---FX---

  • USD/JPY: -0.3% to 147.75

  • USD/CNH: UNCH at 7.3088

  • USD/INR: +0.1% to 83.00

 

Europe: DAX -1.2%, FTSE -0.2%, CAC -1.5%

Major European indices trade in the red. The Bank of England left its bank rate at 5.25% against expectations that were split between a pause and another hike. Elsewhere, the Swiss National Bank also left its policy rate unchanged, at 1.75%, while central banks in Sweden and Norway raised their rates by 25 bps apiece. European Central Bank policymaker Nagel said that it is unclear if rates have peaked while policymaker Kazaks said that rates will have to remain restrictive for quite a while. Poland's Prime Minister Morawiecki said that his country will no longer arm Ukraine.

  • In economic data:

  • U.K.'s August Public Sector Net Borrowing GBP10.76 bln (expected GBP9.80 bln; last -GBP1.20 bln)

  • France's September Business Survey 99 (expected 97; last 97)

  • Spain's July trade deficit EUR4.90 bln (last deficit of EUR2.36 bln)

---Equity Markets---

  • STOXX Europe 600: -1.0%

  • Germany's DAX: -1.2%

  • U.K.'s FTSE 100: -0.2% 

  • France's CAC 40: -1.5%

  • Italy's FTSE MIB: -1.7%

  • Spain's IBEX 35: -1.4%

---FX---

  • EUR/USD: -0.2% to 1.0645

  • GBP/USD: -0.6% to 1.2273

  • USD/CHF: +0.8% to 0.9052

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