The S&P 500 futures are down 13 points and are trading 0.3% below fair value. The Nasdaq 100 futures are down 75 points and are trading 0.7% below fair value. The Dow Jones Industrial Average futures are down 113 points and are trading 0.4% below fair value.
Equity futures are weak this morning as rates continue to rise. The 2-yr note yield is up one basis point to 4.61% and the 10-yr note yield is up five basis points to 4.27%. Market participants are also digesting a higher terminal fed funds rate than what was previously expected. The fed funds futures market is pricing in a 5.00% terminal rate by May 2023.
Snap's comments about a difficult advertising environment have created general growth concerns. Meta Platforms and Alphabet are trading down in sympathy with Snap's view.
In overseas news, the UK reported some disappointing retail sales for September and Japan's Core CPI grew at its fastest pace since late 2014 in the September reading.
The UK 10-yr gilt yield is climbing, up 12 basis points to 4.03%. The British pound is weakening (GBP/USD -1.2% to 1.1107). Continued weakness in the yen sent it to its lowest level against the dollar since mid-1990. The U.S. Dollar Index is climbing, up 0.6% to 113.53.
There is no U.S. economic data of note today.
In corporate news:
Twitter (TWTR 48.64, -3.80, -7.25%): Large job cuts are likely at Twitter when Elon Musk assumes control, according to the Washington Post
American Express (AXP 134.10, -8.32, -5.84%): beats by $0.05, reports revs in-line; reaffirms FY22 guidance
Schlumberger (SLB 46.65, +0.96, +2.10%): beats by $0.08, beats on revs
Snap (SNAP 7.78, -3.01, -27.90%): beats by $0.09, reports revs in-line, internal outlook for Q4 revs below consensus; ARPU declines to $3.11; also announces $500 mln stock buyback authorization
CSX â–´ 1.70% (CSX 28.24, +1.16, +4.28%): beats by $0.03, beats on revs
Verizon (VZ 36.75, -0.25, -0.68%): beats by $0.03, beats on revs; reaffirms FY22 EPS guidance
Whirlpool (WHR 124.99, -6.34, -4.83%): misses by $0.86, misses on revs; guides FY22 EPS below consensus, revs below consensus; strategic review of EMEA nears conclusion
Tenet Healthcare (THC 43.44, -10.88, -20.03%): beats by $0.22, reports revs in-line; guides Q4 EPS below consensus, revs below consensus; also authorizes a $1 bln share repurchase program
Reviewing overnight developments:
Equity indices in the Asia-Pacific region ended the week on a mostly lower note. Japan's Nikkei: -0.4% (-0.7% for the week), Hong Kong's Hang Seng: -0.4% (-2.3% for the week), China's Shanghai Composite: +0.1% (-1.1% for the week), India's Sensex: +0.2% (+2.4% for the week), South Korea's Kospi: -0.2% (UNCH for the week), Australia's ASX All Ordinaries: -0.7% (-1.1% for the week).
In economic data:
Japan's September CPI 0.4% m/m (last 0.4%); 3.0% yr/yr (last 3.0%). September National Core CPI 3.0% yr/yr, as expected (last 2.8%) o Hong Kong's September CPI 4.4% yr/yr (expected 2.0%; last 1.9%)
South Korea's September PPI 0.2% m/m (last -0.4%); 8.0% yr/yr (last 8.2%)
New Zealand's September trade deficit NZD1.62 bln (last deficit of NZD2.63 bln). September Credit Card Spending 34.1% yr/yr (last 29.3%)
In news:
Japan's Core CPI grew at its fastest pace since late 2014 in the September reading while continued weakness in the yen sent it to its lowest level against the dollar since mid-1990.
The Bank of Japan conducted an emergency bond buying operation after the 20-yr JGB yield increased to a level not seen since mid-2015.
Press reports suggest that the Biden administration will expand the ban on sales of advanced technology to China to include quantum computing and artificial intelligence.
Major European indices trade on a sharply lower note while the pound and Gilts are also under pressure again. STOXX Europe 600: -1.4% (+0.4% week-to-date), Germany's DAX: -1.3% (+1.4% week-to-date), U.K.'s FTSE 100: -0.6% (-0.6% week-to-date), France's CAC 40: -1.5% (+1.1% week-to-date), Italy's FTSE MIB: -1.5% (+2.2% week-to-date), Spain's IBEX 35: -1.8% (+1.6% week-to-date).
In economic data:
U.K.'s September Retail Sales -1.4% m/m (expected -0.5%; last -1.7%); -6.9% yr/yr (expected -5.0%; last -5.6%). September Core Retail Sales -1.5% m/m (expected -0.3%; last -1.7%); -6.2% yr/yr (expected -4.1%; last -5.3%). September Public Sector Net Borrowing GBP19.25 bln (expected GBP12.30 bln; last GBP8.58 bln). October GfK Consumer Confidence -47 (expected -52; last -49)
In news:
Press reports from the U.K. suggest that Penny Mordaunt, Rishi Sunak, and former Prime Minister Johnson are the front runners to replace Liz Truss.
Germany's parliament voted in favor of suspending its constitutional debt brake. Adidas lowered its guidance for the fiscal year for the third time this year.
Germany dropped its opposition to an EU gas price cap.
U.S. equity futures:
S&P 500 Futures: -16 @ 3,650
DJIA Futures: -141 @ 30,193
Nasdaq 100 Futures: -86 @ 10,961
Overseas:
Europe: DAX -1.3%, FTSE -0.6%, CAC -1.5%
Asia: Nikkei -0.4%, Hang Seng -0.4%, Shanghai Composite +0.1%
Commodities:
Crude Oil +0.35 @ 84.86
Nat Gas -0.221 @ 5.137
Gold -9.05 @ 1627.75
Silver -0.392 @ 18.297
Copper -0.0335 @ 3.377
U.S. Summary:
Earnings/Guidance:
America Movil SA (AMX) reports Q3 net income of MXN 17.70 bln, +14% yr/yr; revs +2% yr/yr to MXN 214.5 bln vs MXN 217.3 bln Capital IQ consensus
American Express (AXP) beats by $0.05, reports revs in-line; reaffirms FY22 guidance
Assoc Banc-Corp (ASB) beats by $0.03, net interest income increased 44% yr/yr
Autoliv (ALV) misses by $0.02, misses on revs
AXIS Capital (AXS) expects to report a small operating income for Q3; pre-tax loss estimate for catastrophe events of $212 mln, including $160 mln for Hurricane Ian
Bank OZK (OZK) reports Q3 (Sep) results, beats on revs
BJ Restaurants (BJRI) beats by $0.03, beats on revs
Boston Beer Co (SAM) reports Q3 (Sep) results, beats on revs; guides FY22 EPS in-line, expects depletions and shipments of (7%)-(4%)
Brandywine Realty (BDN) beats by $0.02, reports revs in-line
CSX (CSX) beats by $0.03, beats on revs
Diamondrock Hospitality (DRH) reports September update: RevPAR increase of 43.5% yr/yr; comparable revenue increase of 12.5% compared to 2019 to $93.4 mln
Euronet (EEFT) beats by $0.20, reports revs in-line; guides FY22 EPS above consensus
First Financial (FFBC) misses by $0.01, reports revs in-line
Glacier Bancorp (GBCI) misses by $0.01, misses on revs
HCA (HCA) beats by $0.07, reports revs in-line
Hilltop Holdings (HTH) beats by $0.29; declares dividend
Huntington Banc (HBAN) beats by $0.01
Intercontinental Hotels Group (IHG) reports Q3 update; Q3 RevPAR up 28% yr/yr; CFO steps down
Interpublic (IPG) beats by $0.05, reports revs in-line
P3 Health Partners (PIII) CFO Eric Atkins to resign, effective November 1; appoints Chief Accounting Officer Erin Darakjian as interim CFO; releases Q2 (Jun) earnings: increases revs 86% yr/yr and raises its FY22 sales forecast to $1.025-1.075 bln from $1.00 bln
Pebblebrook Hotel Trust (PEB) Provides Operating Update
Regions Fincl (RF) misses by $0.16, beats on revs
Robert Half (RHI) misses by $0.12, misses on revs
Schlumberger (SLB) beats by $0.08, beats on revs
Simply Good Foods (SMPL) beats by $0.07, beats on revs; provides FY23 outlook
Snap (SNAP) beats by $0.09, reports revs in-line, internal outlook for Q4 revs below consensus; ARPU declines to $3.11; also announces $500 mln stock buyback authorization; not providing formal Q4 guidance, but has set internal forecasts that revenue growth will be approximately flat in Q4
Sterling Infrastructure's (STRL) E-Infrastructure Solutions segment reports new awards totaling $309 mln in Q3
SVB Financial Group (SIVB) beats by $0.20, misses on revs
Tenet Healthcare (THC) beats by $0.22, reports revs in-line; guides Q4 EPS below consensus, revs below consensus; also authorizes a $1 bln share repurchase program
UFP Industries (UFPI) beats by $0.24, beats on revs; outlook remains mostly unchanged from Q2
Verizon (VZ) beats by $0.03, beats on revs; reaffirms FY22 EPS guidance
Western Alliance Bancorp (WAL) reports Q3 (Sep) results, misses on revs
Whirlpool (WHR) misses by $0.86, misses on revs; guides FY22 EPS below consensus, revs below consensus; strategic review of EMEA nears conclusion
News:
Germany removes opposition to EU gas price cap, according to Financial Times
Supreme Court refused to block President Biden's student loan forgiveness plan, CNBC
Automakers will spend $1.2 trillion through 2030, according to Reuters
Air Lease (AL) announces delivery of tenth Airbus A320-200 aircraft to Allegiant
Alphabet (GOOG): India's CCI imposes INR 1337.76 fine on GOOG for allegedly abusing market position in Android market
Amazon (AMZN) closes Fabric.com, according to Verge
Bristol-Myers (BMY): FDA accepts supplemental new drug application for CAMZYOS (mavacamten) in symptomatic obstructive hypertrophic cardiomyopathy to reduce the need for septal reduction therapy
Castle Biosciences (CSTL): New Data from DECIDE Study Show the Significant Role of DecisionDx-Melanoma Test Results and Patient Preference in Decisions to Perform the Sentinel Lymph Node Biopsy Surgical Procedure
Central Pacific Financial (CPF) appoints Arnold Martines as CEO
Cincinnati Fincl (CINF) discloses preliminary Q3 catastrophe losses of $252 mln, including loss estimate of $220 mln from Hurricane Ian
Credit Suisse (CS) to settle French tax case, according to Bloomberg
GlaxoSmithKline (GSK) receives regulatory submission acceptance in Japan for respiratory syncytial virus older adult vaccine candidate
ICF International (ICFI) selected by The Substance Abuse and Mental Health Services Administration as an awardee to support its mission in a five-year IDIQ contract with a ceiling value of $1.2 bln across all awardees
Immunic (IMUX) Reports Pre-Planned Phase 1b Interim Analysis of IMU-935 in Psoriasis Patients Confounded by High Placebo Rate
Jounce Therapeutics (JNCE) to Present Multiple Posters at the Society for Immunotherapy of Cancer's (SITC) 37th Annual Meeting and the European Society of Medical Oncology Immuno-Oncology (ESMO-IO) Annual Congress
Lockheed Martin (LMT) under contract to deliver three Orion spacecraft to NASA for its Artemis VI-VIII missions
Micron (MU): WiLAN subsidiaries enter into license agreement with Micron
Microsoft (MSFT) is in advanced talks to provide more funding to OpenAI in bid to help it grow Azure usage, according to The Information
Murphy USA (MUSA) increases its quarterly dividend 9% to $0.35/share
NuScale Power (SMR): U.S. Nuclear Regulatory Commission's Advisory Committee on Reactor Safeguards issues letter stating that SMR's Emergency Planning Zone boundary is acceptable
Pfizer (PFE) targets coronavirus vaccine price of $110/dose, according to the Wall Street Journal
PureCycle Technologies (PCT) and SK geo centric sign joint venture agreement to operate the first Polypropylene recycling plant in Asia; each company will have 50/50 ownership; plant expected to be completed by 2Q25
Scorpio Tankers (STNG) exercises purchase options on eight ships and has given notice to repay a credit facility that has $17.5 mln of outstanding debt
Sensient (SXT) beats by $0.03, reports revs in-line; reaffirms FY22 EPS guidance
Silverback Therapeutics (SBTX) announces the FDA's acceptance of ARS Pharmaceuticals' NDA for neffy (epinephrine nasal spray) for the treatment of allergic reactions (type I) including Anaphylaxis
Summit Therapeutics (SMMT) Presents Ri-CoDIFy Trial Results for Microbiome-Sparing Ridinilazole at IDWeek 2022
Taiwan Semi (TSM): Biren Technology will continue to work with Taiwan Semi despite export controls, according to Bloomberg
Toyota Motor (TM) will likely soon lower full year production targets, according to Reuters
Tuanche (TC) and YangMing New Energy Technology establish strategic cooperation to develop battery and energy storage technologies
Twitter (TWTR): The Biden Administration is discussing if some of Elon Musk's ventures including Twitter should be subject of national security review, according to Bloomberg
Twitter (TWTR): Large job cuts are likely at Twitter, according to the Washington Post
M&A:
FleetCor (FLT) signs definitive agreement to acquire European workforce lodging provider Roomex
Kroger (KR): Antitrust review of Kroger deal to purchase Albertsons (ACI) to look at local store overlap, according to the Wall Street Journal
Newpark Res (NR) to sell its Excalibar mineral grinding business to Cimbar Resources; expects to generate net cash of approximately $66 mln at closing
Tastemaker Acquisition Corp. (TMKR): Quality Gold to become a publicly traded company via business combination with Tastemaker Acquisition Corp.
Veris Residential (VRE) confirmed receipt of unsolicited proposals from Kushner Companies to externally manage the Company or to acquire the Company for $16.00 per share
Syndicate:
Biohaven (BHVN) prices offering of 25 mln shares of common stock at $10.50 per share
IPOs:
Instacart is not likely to launch IPO this year, according to the Wall Street Journal
Expected to Price:
No IPOs expected.
Gapping Up/Down
Gapping up:
VRE +18%, BJRI +5.1%, ASB +4.5%, UFPI +4.1%, PCT +3.6%, CSX +3.2%, MUSA +2.6%, PIII +2.1%, CINF +1.6%, AXS +1.4%, NR +1.2%, BDN +0.8%
Gapping down:
IMUX -68.7%, SNAP -26.9%, SIVB -16.5%, THC -14.1%, SMMT -10.8%, RHI -10.4%, TWTR -8.3%, PINS -7.4%, TTD -6.5%, BHVN -5.4%, FFBC -4.7%, IHG -4.3%, WHR -4.1%, META -4%, ROKU -2.8%, GOOG -1.8%, SAM -1.8%, MSFT -0.8%, WAL -0.8%
Analyst Research (see Upgrades/Downgrades calendar for full list):
Upgrades
Farmers and Merchants (FMAO) upgraded to Neutral from Underweight at Piper Sandler; tgt $27
HealthEquity (HQY) upgraded to Neutral from Sell at Goldman; tgt raised to $77
Qualys (QLYS) upgraded to Buy from Hold at Berenberg; tgt $168
Qualys (QLYS) upgraded to Buy from Hold at Needham; tgt $185
Downgrades:
Cognizant Tech (CTSH) downgraded to Neutral from Buy at BofA Securities; tgt lowered to $68
Hain Celestial (HAIN) downgraded to Neutral from Overweight at Piper Sandler; tgt lowered to $17
Rapid7 (RPD) downgraded to Hold from Buy at Berenberg; tgt $44
Rapid7 (RPD) downgraded to Hold from Buy at Needham
Others:
Air Transport Services Group (ATSG) initiated with a Hold at Truist; tgt $26
Amphastar Pharmaceuticals (AMPH) assumed with a Buy at Jefferies; tgt $36
Axalta Coating Systems (AXTA) initiated with an Underperform at Credit Suisse; tgt $20
Axonics Modulation (AXNX) initiated with an Outperform at RBC Capital Mkts; tgt $85
BlackLine (BL) initiated with a Sell at Goldman; tgt $57
E2open (ETWO) initiated with a Neutral at Goldman; tgt $5.50
NextGen Healthcare (NXGN) assumed with a Neutral at Piper Sandler; tgt $20
OptiNose (OPTN) assumed with a Buy at Jefferies; tgt $5
Vertex (VERX) initiated with a Buy at Goldman; tgt $20
Workiva (WK) initiated with a Buy at Goldman; tgt $101
Zuora (ZUO) initiated with a Neutral at Goldman; tgt $9
Upcoming Events:
Econ Data:
No economic data of note.
Earnings
Monday (Oct 17)
Morning: BAC BK SCHW
Afternoon: ELS MRTN
Tuesday (Oct 18)
Morning: ACI CBSH GS HAS JNJ LMT SBNY SI STT TFC
Afternoon: FNB FHN FULT HWC IBKR ISRG JBHT NFLX OMC PNFP UAL UCBI WTFC
Wednesday (Oct 19)
Morning: ABT ALLY ASML BMI BKR CFG CMA ELV HCSG LAD MTB MKTX NDAQ NTRS PG PLD SCL TRV UNF WGO
Afternoon: AA CNS CCI CVBF EFX FR IBM KALU KMI KNX LRCX LSTR LBRT PACW PPG REXR RLI SLG STLD TSLA TCBI UMPQ WDFC
Thursday (Oct 20)
Morning: ABB ALK AAL T AUB BANC BKU BHLB BX COLB DHR DOV DOW EWBC ERIC FITB FCX GPC HRI HOMB IRDM KEY LNN MAN MMC MSM NOK NUE PPBI PM POOL DGX SASR SNA SNV TSCO UNP WSO WBS WNS
Afternoon: ASB OZK BJRI SAM BDN CSX EEFT FFBC GBCI HTH RHI SNAP SIVB THC UFPI WAL WHR
Friday (Oct 21)
Morning: AXP ALV HCA HBAN IPG RF SLB SXT SMPL VZ
Afternoon: None
Asia & Europe detail:
Asia: Nikkei -0.4%, Hang Seng -0.4%, Shanghai Composite +0.1%
Equity indices in the Asia-Pacific region ended the week on a mostly lower note. Japan's Core CPI grew at its fastest pace since late 2014 in the September reading while continued weakness in the yen sent it to its lowest level against the dollar since mid-1990. The Bank of Japan conducted an emergency bond buying operation after the 20-yr JGB yield increased to a level not seen since mid-2015. Press reports suggest that the Biden administration will expand the ban on sales of advanced technology to China to include quantum computing and artificial intelligence.
In economic data:
Japan's September CPI 0.4% m/m (last 0.4%); 3.0% yr/yr (last 3.0%). September National Core CPI 3.0% yr/yr, as expected (last 2.8%) o Hong Kong's September CPI 4.4% yr/yr (expected 2.0%; last 1.9%)
South Korea's September PPI 0.2% m/m (last -0.4%); 8.0% yr/yr (last 8.2%)
New Zealand's September trade deficit NZD1.62 bln (last deficit of NZD2.63 bln). September Credit Card Spending 34.1% yr/yr (last 29.3%)
---Equity Markets---
Japan's Nikkei: -0.4% (-0.7% for the week)
Hong Kong's Hang Seng: -0.4% (-2.3% for the week)
China's Shanghai Composite: +0.1% (-1.1% for the week)
India's Sensex: +0.2% (+2.4% for the week)
South Korea's Kospi: -0.2% (UNCH for the week)
Australia's ASX All Ordinaries: -0.7% (-1.1% for the week)
---FX---
USD/JPY: +0.8% to 151.30
USD/CNH: +0.2% to 7.2677
USD/INR: -0.1% to 82.68
Europe: DAX -1.3%, FTSE -0.6%, CAC -1.5%
Major European indices trade on a sharply lower note while the pound and Gilts are also under pressure again. Press reports from the U.K. suggest that Penny Mordaunt, Rishi Sunak, and former Prime Minister Johnson are the front runners to replace Liz Truss. Germany's parliament voted in favor of suspending its constitutional debt brake. Adidas lowered its guidance for the fiscal year for the third time this year. Germany dropped its opposition to an EU gas price cap.
In economic data:
U.K.'s September Retail Sales -1.4% m/m (expected -0.5%; last -1.7%); -6.9% yr/yr (expected -5.0%; last -5.6%). September Core Retail Sales -1.5% m/m (expected -0.3%; last -1.7%); -6.2% yr/yr (expected -4.1%; last -5.3%). September Public Sector Net Borrowing GBP19.25 bln (expected GBP12.30 bln; last GBP8.58 bln). October GfK Consumer Confidence -47 (expected -52; last -49)
---Equity Markets---
STOXX Europe 600: -1.4% (+0.4% week-to-date)
Germany's DAX: -1.3% (+1.4% week-to-date)
U.K.'s FTSE 100: -0.6% (-0.6% week-to-date)
France's CAC 40: -1.5% (+1.1% week-to-date)
Italy's FTSE MIB: -1.5% (+2.2% week-to-date)
Spain's IBEX 35: -1.8% (+1.6% week-to-date)
---FX---
EUR/USD: -0.3% to 0.9755
GBP/USD: -0.9% to 1.1134
USD/CHF: +0.8% to 1.0105