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22/09/22 Briefing

The S&P 500 futures are down 2 points and are trading slightly below fair value. The Nasdaq 100 futures are down 16 points and are trading slightly below fair value. The Dow Jones Industrial Average futures are up 18 points and are trading slightly above fair value.

Equity futures are little changed from the flat line as participants process the Fed's latest moves and guidance. Rates are still moving higher from here and the Fed is signaling that they will not come down anytime soon.

Many other central banks are following suit. The Swiss National Bank announced a 75-basis point rate hike to 0.5%. That key policy rate had been negative since 2015. Not long ago, the Bank of England raised its bank rate by 50 basis points to 2.25% with three policymakers voting for a 75-bps increase. Norway's Norges Bank raised rates by 50 basis points to 2.25%, as expected, but said future rate hikes would be more gradual. 

Separately, the Bank of Japan left its key rate unchanged at -0.1% and Governor Kuroda said the bank won't be raising rates for some time. In related news, the Ministry of Finance has intervened to support the yen (USD/JPY -1.8% to 141.34).

Rising Treasury yields continue to pressure investor sentiment. The 10-yr note yield is up four basis points to 3.55% and the 2-yr note yield is up ten basis points to 4.08%. 

Market participants will receive the Q2 Current Account Balance report (Briefing.comconsensus -$260.0 billion; prior -$291.4 billion) and weekly initial jobless claims (Briefing.comconsensus 220,000; prior 213,000) and continuing claims (prior 1.403 million) at 8:30 a.m. ET, the August Leading Economic Index (Briefing.comconsensus -0.1%; prior -0.4%) at 10:00 a.m. ET, and weekly EIA Natural Gas Inventories (prior +73 bcf) at 10:30 a.m. ET.

In corporate news:

  • Eli Lilly (LLY 301.10 +4.62 (+1.56%): UBS upgraded to Buy from Hold; receives FDA approval for Retevmo

  • Block (SQ 58.29 -1.16 (-1.95%): downgraded to Neutral from Buy at Mizuho

  • NIKE (NKE 100.19 +0.40 (+0.40%): initiated with an Outperform at RBC Capital Mkts

  • Target (TGT 158.55 -0.48 (-0.30%): will introduce holiday savings earlier than ever, starting with the "biggest Target Deal Days event yet" - expects to hire up to 100,000 seasonal team members

  • Accenture (ACN 264.00 -1.42 (-0.54%): beats by $0.03, reports revs in-line; guides FY23 EPS below consensus; raises dividend; approves $3.0 bln of additional share repurchase authority

  • Darden Restaurants (DRI 128.00 -3.28 (-2.50%): reports EPS in-line, revs in-line; reaffirms FY23 EPS guidance, revs guidance; Q1 comps +4.2%

  • FactSet (FDS 425.00 -5.45 (-1.27%): misses by $0.08, beats on revs; guides FY23 EPS in-line, revs above consensus

  • Salesforce (CRM 150.99 +3.36 (+2.28%):  targets $50 bln in revs by FY26, a 17% CAGR; expects $31 bln in revs for FY23

  • Lennar (LEN 75.00 -0.92 (-1.21%): beats by $0.32, misses on revs, deliveries increased 13%; Sees Q4 new orders of 14-15K and deliveries of 20-21K

  • KB Home (KBH 27.40 -0.62 (-2.21%): beats by $0.19, misses on revs, homes delivered increased 6% yr/yr; expects housing revs of $1.95-2.05 bln in Q4

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region ended Thursday on a lower note while markets in Australia were closed for a holiday. Japan's Nikkei: -0.6%, Hong Kong's Hang Seng: -1.6%, China's Shanghai Composite: -0.3%, India's Sensex: -0.6%, South Korea's Kospi: -0.6%, Australia's ASX All Ordinaries: CLOSED.

  • In economic data:

  • Japan's August BoJ Core CPI 1.9% yr/yr, as expected (last 1.8%)

  • Hong Kong's August CPI 1.9% yr/yr (expected 2.0%; last 1.9%)

  • New Zealand's August trade deficit NZD2.447 bln (expected deficit of NZD500 mln; last deficit of NZD1.406 bln). Q3 Westpac Consumer Sentiment 87.6 (last 78.7)

  • In news:

  • The Bank of Japan made no changes to its ultra-loose policy stance and the country's finance ministry intervened in the currency market to strengthen the yen.

  • Japan's Prime Minister Kishida said that border controls will be eased as soon as next month.

  • The Hong Kong Monetary Authority raised its base rate by 75 bps to 3.50% in the wake of the Fed rate hike.

  • Goldman Sachs lowered its forecast for 2023 growth in China to 4.5% from 5.3%.

  • Major European indices trade on a lower note with Italy's MIB (-0.2%) outperforming thanks to relative strength in bank stocks. STOXX Europe 600: -0.8%, Germany's DAX: -0.9%, U.K.'s FTSE 100: -0.4%, France's CAC 40: -1.0%, Italy's FTSE MIB: -0.2%, Spain's IBEX 35: -0.5%.

  • In economic data:

  • France's September Business Survey 102 (expected 102; last 103)

  • In news:

  • EU Foreign Minister Borrell said that new sanctions against Russia will be prepared as soon as possible.

  • Germany's Finance Ministry noted that tax revenue was down yr/yr in August, representing the first decrease this year.

  • The Swiss National Bank announced a 75-bps rate hike to 50 bps, and not long ago, the Bank of England raised its bank rate by 50 bps to 2.25% with three policymakers voting for a 75-bps increase.

 

U.S. equity futures:

  • S&P 500 Futures: -5 @ 3,785

  • DJIA Futures: -2 @ 30,185

  • Nasdaq 100 Futures: -26 @ 11,612

Overseas:

  • Europe: DAX -0.9%, FTSE -0.4%, CAC -1.0%

  • Asia: Nikkei -0.6%, Hang Seng -1.6%, Shanghai Composite -0.3%

Commodities:

  • Crude Oil +1.09 @ 84.03

  • Nat Gas  -0.106 @ 7.673

  • Gold +2.85 @ 1678.55

  • Silver +0.125  @ 19.605

  • Copper -+0.0385 @ 3.5055

U.S. Summary:

  • Earnings/Guidance:

  • Accenture (ACN) beats by $0.03, reports revs in-line; guides FY23 EPS below consensus; raises dividend; approves $3.0 bln of additional share repurchase authority

  • AVANGRID (AGR) reaffirms FY22 guidance, provides strategic update at Investor Day

  • Darden Restaurants (DRI) reports EPS in-line, revs in-line; reaffirms FY23 EPS guidance, revs guidance; Q1 comps +4.2%

  • Deutsche Bank (DB) at Bank of America conference says it expects FY22 revenue to come in at the high end of its EUR 26-27 bln guidance range

  • FactSet (FDS) misses by $0.08, beats on revs; guides FY23 EPS in-line, revs above consensus

  • H.B. Fuller (FUL) beats by $0.02, reports revs in-line; guides Q4 EPS in-line, raises low end of FY22 adjusted EBITDA guidance range

  • KB Home (KBH) beats by $0.19, misses on revs, homes delivered increased 6% yr/yr; expects housing revs of $1.95-2.05 bln in Q4

  • Lennar (LEN) beats by $0.32, misses on revs, deliveries increased 13%; Sees Q4 new orders of 14-15K and deliveries of 20-21K

  • Manchester United (MANU) beats by 6 pence, misses on revs

  • NorthWestern (NWE) reaffirms FY22EPS guidance ahead of Sidoti Small-Cap Virtual Conference

  • Salesforce (CRM) during Investor Day: targets $50 bln in revs by FY26, a 17% CAGR; expects $31 bln in revs for FY23

  • Sportsman's Warehouse (SPWH) provides 2025 targets in slide presentation: Co targeting FY25revenue of $1.8-2.0 bln and EBITDA growth of +8-10%

  • Steelcase (SCS) beats by $0.08, misses on revs; guides Q3 EPS below consensus, revs below consensus

  • Trip.comGroup (TCOM) misses by $0.47, beats on revs

  • General News:

  • DoubleLine Capital CEO Jeffrey Gundlach says 2023 recession odds are 75% and Fed should slow down interest rate hikes, CNBC

  • Bank of England raises rates by 50 basis points to 2.25%

  • Senate passes amendment to legislation that would reduce refrigerant chemicals in air conditioning units, according to the Wall Street Journal

  • Senator Joe Manchin (D-WV) releases legislation that will enhance energy permitting process in US

  • Swiss National Bank tightens monetary policy further and raises SNB policy rate to 0.5%

  • ADC Therapeutics (ADCT) Announces Abstracts to be Presented at the Tenth Annual Meeting of the Society of Hematologic Oncology

  • Amazon (AMZN): Jeff Bezos will need to testify at Amazon Prime FTC investigation, according to the Wall Street Journal

  • American Tower (AMT) increases quarterly cash distribution to $1.47/share from $1.43/share

  • Ashland (ASH) to increase prices up to 15% or as contracts allow to cover inflation related to raw materials, energy, freight, and labor

  • AstraZeneca (AZN) and Merck (MRK) reports Lynparza approved in China

  • Biogen (BIIB): The New England Journal of Medicine Publishes Pivotal Tofersen Data that Show Benefits in Rare, Genetic Form of ALS

  • Blackbaud (BLKB) extends CEO Mike Gianoni's employment contract for an additional three years; targeting the Rule of 40 by end of 2025

  • Chimera Investment (CIM) lowers its quarterly dividend by 30.3% to $0.23/share

  • Citrix (CTXS): Banks lose $700 mln from Citrix debt, according to Reuters

  • Credit Suisse (CS) mulling splitting investment bank into three parts, according to Financial Times

  • CTI BioPharma (CTIC) Announces Presentation of New Anemia Benefit Data from Pacritinib Program at the Society of Hematologic Oncology (SOHO) Tenth Annual Meeting

  • DBV Technologies (DBVT) receives partial clinical hold notice for VITESSE Phase 3 Trial

  • Eli Lilly (LLY) receives FDA approval for Retevmo

  • General Motors (GM) and Lithion announce an investment and strategic partnership agreement to pursue a circular EV battery ecosystem

  • GlaxoSmithKline (GSK) and Spero Therapeutics (SPRO) Announce Exclusive License Agreement for Late-Stage Antibiotic Asset, Tebipenem HBr

  • HarborOne Bancorp (HONE) authorizes a new share repurchase program to buy back up to 2,450,208 shares, or approximately 5% of shares outstanding

  • Hersha Hospitality Trust (HT) Founder and Chairman Hasu P. Shah to retire; CEO Jay H. Shah to become Executive Chairman

  • HF Sinclair (DINO) entered into a Stock Purchase Agreement with shareholder REH Company; authorized a new $1 bln share repurchase program

  • Honda (HMC) aiming to reduce production by 40% at two Japanese plants, according to Reuters

  • Kinnate Biopharma Inc. (KNTE) Receives Fast Track Designation from the U.S. Food and Drug Administration for KIN-2787, an Investigational Pan-RAF Inhibitor

  • Kohl's (KSS): Ancora Holdings pushing for CEO removal, according to Reuters

  • Krystal Biotech (KRYS) receives a positive opinion from the European Medicines Agency (EMA) Pediatric Committee (PDCO) on the Pediatric Investigation Plan (PIP) for beremagene geperpavec for the treatment of dystrophic epidermolysis bullosa

  • Marinus Pharmaceuticals (MRNS) exercises first contract option by the BARDA

  • McDonald's (MCD) will face $10 bln racial discrimination lawsuit, according to the New York Post

  • Merck (MRK): LYNPARZA approved in China as first-line maintenance treatment with bevacizumab for homologous recombination deficient positive advanced ovarian cancer

  • Meta (META) aiming to reduce costs by 10%, according to the Wall Street Journal

  • Meta (META) will pay $174.5 mln in damages for alleged patient infringement, according to Bloomberg

  • Methanex (MEOH) receives approval from TSX for its 5% share repurchase program

  • Novartis (NVS) unveils new focused strategy, underpinned by eight potential multi-billion dollar peak sales brands & deep pipeline

  • Novo Nordisk (NVO) presents data showing more participants achieved greater treatment satisfaction when switching to once-weekly insulin icodec in ONWARDS 2 trial

  • Peloton (PTON) CIO Shobhana (Shobz) Ahluwalia leaves the company

  • Pfizer (PFE) to supply up to six million treatment courses of its COVID-19 oral treatment PAXLOVID to Global Fund

  • Precigen (PGEN) names Rutul Shah as COO, effective October 1, 2022

  • Robinhood Markets (HOOD): SEC will soon allow payment for order flow transactions to continue - CNBC

  • Social Capital Hedosophia Holdings Corp. IV (IPOD): NYSE determined to commence proceedings to delist the Company's warrants from the NYSE

  • SoftBank (SFTBY) will meet with Samsung (SSNLF) regarding Arm (ARMH) alliance, according toFinancial Times

  • Scorpio Tankers (STNG) reports it purchased its common shares in the open market and exercised a purchase option for an LR2 product tanker that is currently leased

  • Spire Global (SPIR) awarded $9.9 mln contract by National Oceanographic and Oceanic Administration for commercially available space-based radio occultation

  • SSR Mining (SSRM) is pleased to announce the receipt of the required regulatory approvals from Trkiye's Government authorities and will commence restart of all operations at the ??pler mine as of September 22nd, 2022

  • Starry (STRY) is eligible to receive ~$170 mln of RDOF funding, payable over 10 years

  • Sterling Infrastructure (STRL) awarded $45 mln design-bid-build contract for Rivian's electric vehicle plant

  • Target (TGT) will introduce holiday savings earlier than ever, starting with the "biggest Target Deal Days event yet" - expects to hire up to 100,000 seasonal team members

  • Tilray (TLRY) announces that FL Group S.R.L., a division of Tilray Medical in Italy, has received approval from the Italian Ministry of Health to import and distribute Tilray's medical cannabis oral solution THC25 across the country

  • Triumph Group (TGI) entered into an agreement to provide Pylon Conversion Actuators (PCA) spare units for the V-22 Osprey

  • Two Harbors Investment (TWO) announces a 1-for-4 reverse stock split expected to occur on November 1after hours

  • M&A:

  • Global Partners (GLP) acquires Tidewater Convenience, expanding its retail footprint in the mid-Atlantic region; financial details not disclosed

  • Talos Energy (TALO) Announces strategic acquisition of EnVen Energy, Increasing operational scale and improving financial profile through the addition of oil-weighted, deepwater assets with significant infrastructure

  • Syndicate

  • Cipher Mining (CIFR) files for $500 mln mixed securities shelf offering; also files for 23,265,565 share common stock offering by selling shareholders, relates to warrants

  • Loop Media (LPTV) priced an underwritten public offering of 2,400,000 shares of its common stock at $5.00/share

  • IPOs:

  • Expected to Price:

  • No IPOs expected.

Gapping Up/Down

  • Gapping up:

  • CTIC +4.7%, STNG +3.8%, FUL +2.2%, CRM +1.7%, LEN +1.5%, SCS +1.4%, BIIB +1.1%, MEOH +1%, HONE +0.6%, TCOM +0.5%

  • Gapping down:

  • DBVT -12.7%, CIM -4.1%, SPIR -2.6%, CIFR -2.3%, AGR -2.3%, NVS -1.7%

 

Analyst Research (see Upgrades/Downgradescalendarfor full list):

  • Upgrades

  • Downgrades:

  • Alcoa (AA) downgraded to Peer Perform from Outperform at Wolfe Research

  • Block (SQ) downgraded to Neutral from Buy at Mizuho; tgt lowered to $57

  • Novavax (NVAX) downgraded to Underweight from Neutral at JP Morgan; tgt lowered to $27

  • Others:

  • 23andMe (ME) initiated with an Outperform at Cowen; tgt $6

  • Arcutis Biotherapeutics (ARQT) assumed with a Buy at Jones Trading

  • Asana (ASAN) initiated with a Market Perform at MoffettNathanson; tgt $26

  • CS Disco (LAW) initiated with an Outperform at MoffettNathanson; tgt $20

  • DocuSign (DOCU) initiated with an Underperform at MoffettNathanson; tgt $58

  • Globe Life (GL) initiated with a Strong Buy at Raymond James; tgt $138

  • Gracell Biotechnologies (GRCL) initiated with a Buy at Citigroup; tgt $12

  • Intuit (INTU) initiated with an Outperform at MoffettNathanson; tgt $500

  • LegalZoom.com(LZ) initiated with an Underperform at MoffettNathanson; tgt $11

  • Littelfuse (LFUS) initiated with a Hold at The Benchmark Company

  • Marqeta (MQ) initiated with a Neutral at Wedbush; tgt $8

  • MetLife (MET) initiated with a Mkt Perform at Raymond James

  • Monday.com(MNDY) initiated with an Outperform at MoffettNathanson; tgt $170

  • nCino (NCNO) initiated with a Market Perform at MoffettNathanson; tgt $40

  • NETSTREIT (NTST) initiated with an Outperform at Robert W. Baird; tgt $23

  • NIKE (NKE) initiated with an Outperform at RBC Capital Mkts; tgt $125

  • Principal Fincl (PFG) initiated with a Mkt Perform at Raymond James

  • Prudential (PRU) initiated with a Strong Buy at Raymond James; tgt $115

  • Red Rock Resorts (RRR) initiated with a Mkt Outperform at JMP Securities; tgt $50

  • Revance Therapeutics (RVNC) initiated with a Buy at Goldman; tgt $33

  • Sangoma Technologies (SANG) initiated with an Outperform at William Blair

  • Smartsheet (SMAR) initiated with an Outperform at MoffettNathanson; tgt $50

  • Stem (STEM) initiated with an Outperform at Cowen; tgt $22

  • Unum Group (UNM) initiated with a Mkt Perform at Raymond James

  • Voya Financial (VOYA) initiated with a Strong Buy at Raymond James; tgt $84

  • Westrock Coffee Company (WEST) initiated with an Overweight at Stephens; tgt $13

Upcoming Events:

  • Econ Data:

  • 08:30 ET: Current Account Balance for Q2 (Briefing.comConsensus -$260.0B; Prior -$291.4B)

  • 08:30 ET: Initial Claims for Sept. 17 (Briefing.comConsensus 220K; Prior 213K)

  • 08:30 ET: Continuing Claims for Sept. 10 (Briefing.comConsensus NA; Prior 1403K)

  • 10:00 ET: Leading Economic Index for Aug (Briefing.comConsensus -0.1%; Prior -0.4%)

  • 10:30 ET: EIA Natural Gas Inventories for Sept. 17 (Briefing.comConsensus NA; Prior +73 bcf)

  • 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 -0.6%, Hang Seng -1.6%, Shanghai Composite -0.3%

Equity indices in the Asia-Pacific region ended Thursday on a lower note while markets in Australia were closed for a holiday. The Bank of Japan made no changes to its ultra-loose policy stance and the country's finance ministry intervened in the currency market to strengthen the yen. Japan's Prime Minister Kishida said that border controls will be eased as soon as next month. The Hong Kong Monetary Authority raised its base rate by 75 bps to 3.50% in the wake of the Fed rate hike. Goldman Sachs lowered its forecast for 2023 growth in China to 4.5% from 5.3%.

  • In economic data:

  • Japan's August BoJ Core CPI 1.9% yr/yr, as expected (last 1.8%)

  • Hong Kong's August CPI 1.9% yr/yr (expected 2.0%; last 1.9%)

  • New Zealand's August trade deficit NZD2.447 bln (expected deficit of NZD500 mln; last deficit of NZD1.406 bln). Q3 Westpac Consumer Sentiment 87.6 (last 78.7)

---Equity Markets---

  • Japan's Nikkei: -0.6%

  • Hong Kong's Hang Seng: -1.6%

  • China's Shanghai Composite: -0.3%

  • India's Sensex: -0.6%

  • South Korea's Kospi: -0.6%

  • Australia's ASX All Ordinaries: CLOSED

---FX---

  • USD/JPY: -1.0% to 142.59

  • USD/CNH: +0.2% to 7.0807

  • USD/INR: +1.2% to 80.88

Europe: DAX -0.9%, FTSE -0.4%, CAC -1.0%

Major European indices trade on a lower note with Italy's MIB (-0.2%) outperforming thanks to relative strength in bank stocks. EU Foreign Minister Borrell said that new sanctions against Russia will be prepared as soon as possible. Germany's Finance Ministry noted that tax revenue was down yr/yr in August, representing the first decrease this year. The Swiss National Bank announced a 75-bps rate hike to 50 bps, and not long ago, the Bank of England raised its bank rate by 50 bps to 2.25% with three policymakers voting for a 75-bps increase.

  • In economic data:

  • France's September Business Survey 102 (expected 102; last 103)

---Equity Markets---

  • STOXX Europe 600: -0.8%

  • Germany's DAX: -0.9%

  • U.K.'s FTSE 100: -0.4%

  • France's CAC 40: -1.0%

  • Italy's FTSE MIB: -0.2%

  • Spain's IBEX 35: -0.5%

---FX---

  • EUR/USD: +0.4% to 0.9882

  • GBP/USD: +0.6% to 1.1339

  • USD/CHF: +1.4% to 0.9794



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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