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22/08/23 Briefing


The S&P 500 futures are up 25 points and are trading 0.6% above fair value. The Nasdaq 100 futures are up 114 points and are trading 0.8% above fair value. The Dow Jones Industrial Average futures are up 109 points and are trading 0.4% above fair value.

Equity futures indicate a higher open after yesterday's mega cap-driven gains in the S&P 500 and Nasdaq. The positive sentiment this morning has been supported by a pullback in the 10-yr Treasury note yield, which is down three basis points to 4.31%. A number of retailers, including Lowe's (LOW), Macy's (M), and Dick's Sporting Goods (DKS), have reported results and have been greeted with mixed responses. 

S&P Global downgraded its credit ratings and revised its outlook for multiple banks. This news follows last week's warning from Fitch Ratings that it might be forced to downgrade the ratings of dozens of additional banks and Moody's cutting the ratings of ten small to mid-sized U.S. banks a few weeks ago.

Separately, concerns about China continue to linger in the background, but have not upset market sentiment in the early going. 

Today's economic calendar will feature the July Existing Home Sales report (Briefing.comconsensus 4.15 million; prior 4.16 million) at 10:00 a.m. ET.

In corporate news:

  • Lowe's (LOW 222.38, +4.79, +2.2%): beats by $0.09, reports revs in-line; reaffirms FY24 EPS guidance, revs guidance

  • Dick's Sporting Goods (DKS 118.61, -28.43, -19.3%): misses by $0.99, reports revs in-line; guides FY24 EPS below consensus; announces business optimization

  • Zoom Video (ZM 67.71, +0.53, +0.8%): beats by $0.28, beats on revs; guides Q3 EPS above consensus, revs below consensus; guides FY24 EPS above consensus, revs in-line

  • Baidu (BIDU 129.41, +4.49, +3.6%): beats by RMB5.75, beats on revs

  • Activision Blizzard (ATVI 91.70, +0.98, +1.1%) and Microsoft (MSFT 326.00, +4.12, +1.3%): UK CMA says Microsoft (MSFT) submits new deal for review after CMA confirms original deal is blocked

  • Macy's (M 14.54, -0.19, -1.3%): beats by $0.12, beats on revs; guides Q3 EPS below consensus, revs below consensus; reaffirms FY24 EPS, rev, and comp guidance; Q2 comps -8.2%

  • AppLovin (APP 40.47, +1.46, +3.7%): entered into an agreement to repurchase 15 mln shares of its Class A common stock beneficially owned by KKR Denali Holdings in a private transaction at a price per share of $36.85, for an aggregate purchase price of $552.75 mln

  • Kenvue (KVUE 23.12, +0.22, +1.0%): will replace Advance Auto Parts (AAP) in the S&P 500, effective prior to the open on August 25.

  • Nordson (NDSN 222.70, -7.99, -3.5%): beats by $0.03, misses on revs; expects Q4 sales to be strongest of the year; guides FY23 EPS below consensus, revs in-line

  • Coinbase Global (COIN 77.04, +1.76, +2.3%): is increasing its support for stablecoins with an investment in Circle; Circle will take full control over USDC issuance and governance; Coinbase and Circle will also maintain a commercial relationship

  • SPDR S&P Regional Banking ETF (KRE 44.71, +0.26, +0.6%):S&P Global downgraded its credit ratings and revised its outlook for multiple banks

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region ended Tuesday on a higher note. Japan's Nikkei: +0.9%, Hong Kong's Hang Seng: +1.0%, China's Shanghai Composite: +0.9%, India's Sensex: UNCH, South Korea's Kospi: +0.3%, Australia's ASX All Ordinaries: +0.1%.

  • In economic data:

  • Japan's July BoJ Core CPI 3.3% yr/yr (expected 2.9%; last 3.0%)

  • South Korea's August Consumer Confidence 103.1 (expected 101.9; last 103.2)

  • In news:

  • State-owned banks in China intervened in the offshore market to support the yuan while the People's Bank of China announced a daily fix that was more than 1000 pips stronger than the market expected.

  • Concerns about China's real estate sector remained in place after a unit of Sino Ocean indicated that it will not be able to pay back the principal amount on its corporate bonds during the 30-day grace period.

  • Japan's Ministry of Finance raised its long-term interest rate forecast for FY24/25 to 1.5% from 1.1%

  • North Korea informed Japan that it plans to launch satellite between August 24and 31 while South Korea urged DPRK to abandon the plan.

  • Major European indices trade firmly in the green. STOXX Europe 600: +1.1%, Germany's DAX: +1.1%, U.K.'s FTSE 100: +0.7%, France's CAC 40: +1.2%, Italy's FTSE MIB: +1.1%, Spain's IBEX 35: +1.1%.

  • In economic data:

  • Eurozone's June Current Account surplus EUR35.8 bln (expected deficit of EUR6.9 bln; last surplus of EUR7.9 bln)

  • U.K.'s July Public Sector Net Borrowing GBP3.48 bln (expected GBP17.03 bln; last GBP17.11 bln). August CBI Industrial Trends Orders -15 (expected -13; last -9)

  • Swiss July trade surplus CHF3.129 bln (expected surplus of CHF4.300 bln; last surplus of CHF4.790 bln)

  • In news:

  • The Italian government may reduce the pace of its deficit reduction plan.

  • Meanwhile, Italy's Economy Minister Giorgetti said that he hopes that the EU Stability Pact will not return in 2024.

  • Swedish battery producer raised over $1 bln for new factory construction in Europe and North America.

 

U.S. equity futures:

  • S&P 500 Futures +24 @ 4,424

  • DJIA Futures: +98 @ 34,562

  • Nasdaq 100 Futures: +113 @ 15,050

Overseas:

  • Europe: DAX +1.1%, FTSE +0.7%, CAC +1.2%

  • Asia: Nikkei +0.9%, Hang Seng +1.0%, Shanghai Composite +0.9%

Commodities:

  • Crude Oil -0.42 @ 79.70

  • Nat Gas -0.060 @ 2.572

  • Gold +8.45 @ 1931.45

  • Silver +0.155 @ 23.495

  • Copper +0.0520 @ 3.7705


 

Earnings/Guidance:

  • Agora (API) reports Q2 results

  • Baidu (BIDU) beats by RMB5.75, beats on revs

  • BHP Group (BHP) reports FY23 results; provides production outlook

  • BJ's Wholesale (BJ) beats by $0.07, misses on revs; guides FY24 EPS in-line

  • Canadian Solar (CSIQ) beats by $0.87, misses on revs; guides Q3 revs below consensus; guides FY23 revs below consensus

  • Coty (COTY) misses by $0.01, beats on revs; guides FY24 EPS below consensus

  • Dick's Sporting Goods (DKS) misses by $0.99, reports revs in-line; guides FY24 EPS below consensus; announces business optimization

  • Fabrinet (FN) beats by $0.06, beats on revs; guides SepQ EPS in-line, revs in-line; adds $47.6 mln to repurchase authorization

  • GDS Holdings (GDS) beats by $0.98, reports revs in-line; reaffirms FY23 revs guidance

  • Kingsoft Cloud (KC) reports Q2 (Jun) results, misses on revs

  • Lowe's (LOW) beats by $0.09, reports revs in-line; reaffirms FY24 EPS guidance, revs guidance

  • Macy's (M) beats by $0.12, beats on revs; guides Q3 EPS below consensus, revs below consensus; reaffirms FY24 EPS, rev, and comp guidance; Q2 comps -8.2%

  • Medtronic (MDT) beats by $0.09, beats on revs; raises FY24 EPS and organic revenue growth guidance

  • Nordson (NDSN) beats by $0.03, misses on revs; expects Q4 sales to be strongest of the year; guides FY23EPS below consensus, revs in-line

  • Pebblebrook Hotel Trust (PEB) reports July metrcs with Hotel EBITDA of $41.5 mln

  • Premier (PINC) beats by $0.02, misses on revs

  • Sphere Entertainment Co. (SPHR) reports Q4 (Jun) results, beats on revs

  • Woodside Energy Group (WDS) reports H1 results; revs in0line

  • Zoom Video (ZM) beats by $0.28, beats on revs; guides Q3 EPS above consensus, revs below consensus; guides FY24EPS above consensus, revs in-line

News:

  • New York & California lost $1 trillion when financial firms moved to southern states, according to Bloomberg

  • There were no reports of deaths or major storm damage in Los Angeles or San Diego following Hurricane Hilary, according to theNew York Times

  • Auto loan delinquencies are surging, according to the Wall Street Journal

  • AerSale (ASLE) successfully completes certification flight testing for the AerAware enhanced flight vision system

  • Agiliti (AGTI) approves stock repurchase program for up to $50 mln of shares of common stock

  • Airbnb (ABNB): NYC rental regulations could eliminate large amount of Airbnb listings, according to the Wall Street Journal

  • Alphabet (GOOG) introduces YouTube's Music AI Incubator; co is working closely with its music partners, including Universal Music Group, to develop an AI framework

  • American Airlines (AAL) confirms new collective bargaining agreement with its mainline pilots represented by the Allied Pilots Association; provides CASM guidance

  • Amgen (AMGN) to discuss application for lumakras (sotorasib) for the treatment of KRAS G12C-positive NSCLC at FDA advisory committee meeting

  • Aris Water Solutions (ARIS) appoints Dylan Van Brunt, current EVP of Operations and Planning, to position of COO, effective immediately

  • AstraZeneca (AZN): FDA approves orphan drug designation for treatment of sickle cell disease

  • BioXcel Therapeutics (BTAI) announced that the FDA granted the Company a Type B/Breakthrough guidance meeting regarding the Company's TRANQUILITY clinical trial program, which is scheduled for October 11, 2023

  • Boeing (BA) receives commitment from Indonesia to acquire Boeing F-15EX

  • Bowman Consulting Group (BWMN): Illinois Department of Transportation authorizes additional $4.9 million in funding for consulting services relating to the Phase III Route I-80 Corridor Management Program

  • CenterPoint (CNP) appoints Earl Cummings as Independent Chair of the Board

  • Charles Schwab (SCHW) planning actions to streamline operations related to the integration of TD Ameritrade; to downsize corporate offices, reduce headcount; expects to realize at least $500 mln of incremental annual run-rate cost savings

  • Coinbase Global (COIN) is increasing its support for stablecoins with an investment in Circle; Circle will take full control over USDC issuance and governance; Coinbase and Circle will also maintain a commercial relationship

  • Coty (COTY) and Marc Jacobs sign and expand long-term license agreement

  • Eli Lilly (LLY) announces topline results from the LIBRETTO-531 study evaluating Retevmo versus physician's choice of the multikinase inhibitors cabozantinib or vandetanib as an initial treatment for patients with advanced or metastatic rearranged during transfection-mutant medullary thyroid cancer

  • Fidelity Nat'l Info (FIS) appoints James Kehoe as CFO effective August 21, 2023; reaffirms 2023 revenue and adjusted EBITDA guidance

  • Fulcrum Therapeutics (FULC) announces that the U.S. FDA has lifted the clinical hold on the Investigational New Drug application for FTX-6058 for the potential treatment of sickle-cell disease

  • Incannex Healthcare (IXHL) received approval from the FDA to conduct the Investigational New Drug opening pivotal IHL-42X Phase 2/3 clinical trial in the United States as planned

  • New Found Gold Corp. (NFGC) intercepts 86.9 g/t au over 5.30m & 29.4 g/t au over 7.75m at iceberg

  • Novavax (NVAX) reports updated protein-based XBB COVID vaccine induced neutralizing responses against emerging subvariants, including EG.5.1 and XBB.1.16.6

  • Oramed Pharmaceuticals (ORMP) amended Scilex Holding (SCLX) / Sorrento Therapeutics (SRNE / SRNEQ) stock purchase agreement

  • Pfizer (PFE): U.S. FDA Approves ABRYSVO, Pfizer's Vaccine for the Prevention of Respiratory Syncytial Virus (RSV) in Infants Through Active Immunization of Pregnant Individuals 32-36 Weeks of Gestational Age

  • PureCycle Technologies (PCT) in 8K filing: increases amount available to the Company under the indebtedness covenant basket for offerings of unsecured convertible notes from $200 mln to $250 mln

  • Rhythm Pharmaceuticals (RYTM) sold $50 mln in shares from its ATM program in recent weeks

  • Science Applications (SAIC) signs Strategic Collaboration Agreement with Amazon (AMZN) Web Services, expanding its cloud offerings to government customers

  • SOPHiA GENETICS SA (SOPH) announced the expansion of its relationship with Gustave Roussy, the leading cancer center in Europe

  • SS&C Techs (SSNC) increases quarterly dividend by 20% to $0.24/share; equates to new annualized yield of 1.7%

  • Teva Pharma (TEVA) settles price-fixing charges from 2020 with the U.S. Department of Justice; will pay $225 mln over five years

  • Valens Semiconductor (VLN) announces that its CFO is stepping down to pursue other opportunities; Vice President of Finance appointed interim CFO

  • Vanda Pharma (VNDA) disclosed last night that Court denied the Company's petition for a patent rehearing

  • Westport Fuel Systems (WPRT) announced today that David Johnson, Chief Executive Officer has decided to step down as chief executive officer and will resign from the Board, effective immediately

  • Wheels Up Experience (UP) disclosed last night that lenders determined to further extend the grace period for the payment of outstanding principal and interest currently due under such equipment notes to August 23, 2023

M&A:

  • Activision Blizzard (ATVI): UK CMA says Microsoft (MSFT) submits new deal for review after CMA confirms original deal is blocked

  • Coinbase Global (COIN) taking a minority stake in Circle Internet Financial, according to CoinDesk

  • Diversified Healthcare Trust (DHC): All three leading independent proxy advisory firms recommend shareholders of DHC vote against the proposed merger with Office Properties Income Trust (OPI)

  • MACOM Tech (MTSI) announces definitive agreement to acquire the RF business of Wolfspeed (WOLF); reaffirms Q1 EPS guidance; lowers Q1 revenue guidance

  • Newmont Goldcorp (NEM) cleared by Australia's Competition & Consumer Commission to acquire Newcrest (NCMGY)

  • TotalEnergies (TTE) acquires a 40% interest in a CO2 Storage exploration license

  • Uranium Energy (UEC) acquires portfolio of Canadian Uranium Exploration Projects in Saskatchewan's Athabasca Basin from Rio Tinto (RIO) Exploration Canada Inc

Syndicate:

  • Howmet Aerospace (HWM) files for 9,268,011 share common stock offering by selling shareholders

  • Landsea Homes (LSEA) prices offering by its stockholder Green Investment Alpha Limited of 4,207,574 shares at $9.75 per share

IPOs:

  • Arm Holdings files registration statement with SEC for proposed IPO; applies to list on the Nasdaq under symbol "ARM"

  • Instacart could launch IPO next year, according to Financial Times

  • Waystar eyeing $8.0 bln valuation for its U.S. IPO, according to Reuters

  • Expected to Price:

  • No IPOs expected.

Gapping Up/Down

  • Gapping up:

  • FN +18.6%, SCLX +13%, DHC +5.9%, MTRX+5.5%, BIDU +4.5%, ZM +4.3%, SOPH +3.8%, COTY +3.7%, LOW +2.9%, COIN +2.3%, SAIC+1.6%, MTSI +1.4%, TTE +1.1%, KVUE +1%, HWM +0.9%, TEVA +0.9%, NEM +0.9%, WOLF +0.9%, AGTI +0.8%, AZN +0.7%, MSFT+0.6%, BHP +0.5%

  • Gapping down:

  • PCT -12.8%, EBS -8.2%, LSEA -3.9%, BWMN-3.8%, NDSN -3.5%, RYTM -2.7%, AAP-1.7%, ARIS -1.7%, CSIQ -1.5%, API -1.4%, ORMP -1.2%, WDS -1.2%

 

Analyst Research (see Upgrades/Downgradescalendarfor full list):

  • Upgrades

  • AppLovin (APP) upgraded to Buy from Hold at Jefferies; tgt raised to $50

  • Aramark (ARMK) upgraded to Buy from Neutral at UBS; tgt $43

  • Cognizant Tech (CTSH) upgraded to Neutral from Underweight at JP Morgan; tgt raised to $77

  • Edison (EIX) upgraded to Buy from Neutral at Mizuho; tgt raised to $75

  • Emerson (EMR) upgraded to Overweight from Neutral at JP Morgan; tgt raised to $107

  • Iron Mountain (IRM) upgraded to Outperform from Sector Perform at RBC Capital Mkts; tgt raised to $68

  • Jefferies (JEF) upgraded to Buy from Neutral at Goldman; tgt raised to $40

  • Pinnacle West (PNW) upgraded to Buy from Neutral at Mizuho; tgt raised to $85

  • Provident Finl (PFS) upgraded to Overweight from Neutral at Piper Sandler; tgt $20

  • Restaurant Brands Int'l (QSR) upgraded to Buy from Neutral at Northcoast

  • Shift4 Payments (FOUR) upgraded to Outperform from Mkt Perform at Raymond James; tgt $74

  • Trinity Capital (TRIN) upgraded to Buy from Neutral at Compass Point; tgt $15.50

  • Downgrades:

  • Certara (CERT) downgraded to Hold from Buy at Jefferies; tgt lowered to $17

  • Evercore (EVR) downgraded to Neutral from Buy at Goldman; tgt lowered to $140

  • Genpact (G) downgraded to Underweight from Neutral at JP Morgan; tgt $40

  • Target (TGT) downgraded to Neutral from Outperform at Daiwa Securities; tgt $134

  • Xcel Energy (XEL) downgraded to Neutral from Buy at BofA Securities; tgt lowered to $60

  • Others:

  • Alphabet A (GOOGL) initiated with an Outperform at Wedbush; tgt $160

  • Amazon (AMZN) resumed with an Outperform at Wedbush and added to Best Ideas List; tgt $180

  • Axon (AXON) initiated with an Equal-Weight at Morgan Stanley; tgt $230

  • Celldex Therapeutics (CLDX) initiated with an Underweight at Wells Fargo; tgt $21

  • CRH Plc. (CRH) resumed with a Buy at Citigroup

  • Gulfport Energy (GPOR) initiated with a Buy at BofA Securities; tgt $155

  • GXO Logistics (GXO) initiated with a Buy at UBS; tgt $74

  • InterDigital (IDCC) resumed with an Outperform at William Blair

  • Karuna Therapeutics (KRTX) initiated with an Overweight at Wells Fargo; tgt $225

  • Light & Wonder (LNW) initiated with a Buy at Redburn; tgt $104

  • Madison Square Garden Entertainment (MSGE) initiated with a Buy at BofA Securities; tgt $41

  • MercadoLibre (MELI) initiated with an Outperform at Wedbush; tgt $1500

  • Meta Platforms (META) initiated with an Outperform at Wedbush; tgt $350

  • Osisko Gold Royalties (OR) resumed with a Sector Perform at Scotiabank

  • Pinterest (PINS) initiated with a Neutral at Wedbush; tgt $30

  • Portland Gen Elec (POR) initiated with a Neutral at UBS; tgt $46

  • Sea Limited (SE) initiated with an Outperform at Wedbush; tgt $48

  • Shopify (SHOP) initiated with an Outperform at Wedbush; tgt $62

  • Surf Air Mobility (SRFM) initiated with an Outperform at Bernstein

  • TripAdvisor (TRIP) initiated with a Neutral at Wedbush; tgt $17

Econ Data:

  • 10:00 ET: Existing Home Sales for July (Briefing.comConsensus 4.15M; Prior 4.16M)

Earnings:

  • Monday (Aug 21)

  • Afternoon: FN NDSN ZM

  • Tuesday (Aug 22)

  • Morning: BIDU BJ CSIQ COTY DKS GDS KC LOW M MDT PINC SCSC SPHR

  • Afternoon:  LZB TOL URBN

  • Wednesday (Aug 23)

  • Morning:  ANF AAP ADI BBWI DY FL GRAB KSS LANC PTON WSM

  • Afternoon:  ADSK GES NTAP NVDA SNOW SPLK ZUO

  • Thursday (Aug 24)

  • Morning: BURL DLTR FRO HAIN NTES OSIS WOOF RY TD WB

  • Afternoon:  AFRM CRDO GPS INTU MRVL JWN ULTA WDAY

 

Asia & Europe detail:

Asia: Nikkei +0.9%, Hang Seng +1.0%, Shanghai Composite +0.9%

Equity indices in the Asia-Pacific region ended Tuesday on a higher note. State-owned banks in China intervened in the offshore market to support the yuan while the People's Bank of China announced a daily fix that was more than 1000 pips stronger than the market expected. Concerns about China's real estate sector remained in place after a unit of Sino Ocean indicated that it will not be able to pay back the principal amount on its corporate bonds during the 30-day grace period. Japan's Ministry of Finance raised its long-term interest rate forecast for FY24/25 to 1.5% from 1.1%. North Korea informed Japan that it plans to launch satellite between August 24and 31 while South Korea urged DPRK to abandon the plan.

  • In economic data:

  • Japan's July BoJ Core CPI 3.3% yr/yr (expected 2.9%; last 3.0%)

  • South Korea's August Consumer Confidence 103.1 (expected 101.9; last 103.2)

---Equity Markets---

  • Japan's Nikkei: +0.9%

  • Hong Kong's Hang Seng: +1.0%

  • China's Shanghai Composite: +0.9%

  • India's Sensex: UNCH

  • South Korea's Kospi: +0.3%

  • Australia's ASX All Ordinaries: +0.1%

---FX---

  • USD/JPY: -0.4% to 145.68

  • USD/CNH: +0.3% to 7.3061

  • USD/INR: -0.2% to 82.95

 

Europe: DAX +1.1%, FTSE +0.7%, CAC +1.2%

Major European indices trade firmly in the green. The Italian government may reduce the pace of its deficit reduction plan. Meanwhile, Italy's Economy Minister Giorgetti said that he hopes that the EU Stability Pact will not return in 2024. Swedish battery producer raised over $1 bln for new factory construction in Europe and North America.

  • In economic data:

  • Eurozone's June Current Account surplus EUR35.8 bln (expected deficit of EUR6.9 bln; last surplus of EUR7.9 bln)

  • U.K.'s July Public Sector Net Borrowing GBP3.48 bln (expected GBP17.03 bln; last GBP17.11 bln). August CBI Industrial Trends Orders -15 (expected -13; last -9)

  • Swiss July trade surplus CHF3.129 bln (expected surplus of CHF4.300 bln; last surplus of CHF4.790 bln)

---Equity Markets---

  • STOXX Europe 600: +1.1%

  • Germany's DAX: +1.1%

  • U.K.'s FTSE 100: +0.7%

  • France's CAC 40: +1.2%

  • Italy's FTSE MIB: +1.1%

  • Spain's IBEX 35: +1.1%

---FX---

  • EUR/USD: -0.1% to 1.0884

  • GBP/USD: +0.1% to 1.2759

  • USD/CHF: -0.1% to 0.8780

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