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23/08/23 Briefing


The S&P 500 futures are up 8 points and are trading 0.2% above fair value. The Nasdaq 100 futures are up 26 points and are trading 0.2% above fair value. The Dow Jones Industrial Average futures are up 54 points and are trading 0.2% above fair value.

The stock market is poised for a higher open, supported by a drop in Treasury yields and some modest gains in mega cap stocks ahead of NVIDIA's (NVDA) earnings report after the close. The 10-yr note yield is down six basis points to 4.27%. The 2-yr note yield is down five basis points to 4.99%.

The moves in the Treasury market are in response to some soft PMI data out of the Europe. Regional preliminary Manufacturing PMIs for August were mostly better than expected. However, the Service PMIs generally missed expectations.

Several retailers reported results, which have been met with mixed reactions. Foot Locker (FL), for example, is down more than 30% after its earnings report while Abercrombie & Fitch (ANF) is up better than 15%.

Earlier, it was reported that the weekly mortgage applications index declined 4.2% with purchase applications down 5.0%, hitting their lowest level since 1995, and refinancing applications down 3.0%.

The New Home Sales report for July (Briefing.com consensus 701,000; prior 697,000) will be released at 10:00 a.m. ET.

In corporate news:

  • Foot Locker (FL 15.75, -7.45, -32.1%): reports EPS in-line, revs in-line; guides FY24 EPS below consensus, revs below consensus; pausing dividend

  • Brown-Forman (BF.B 69.98, +3.07, +4.6%): upgraded to Overweight from Underweight at Morgan Stanley

  • Toll Brothers (TOL 76.25, +0.33, +0.4%): beats by $0.88, beats on revs, homes delivered up 5%, increases FY23 home deliveries guidance

  • Charles Schwab (SCHW 56.50, +0.04, +0.1%): Lower amid debt offering, news of streamlining operations via office reductions, layoffs.

  • Kohl's (KSS 26.41, +0.68, +2.6%): beats by $0.29, misses on revs; reaffirms FY24 EPS guidance, revs guidance

  • Peloton (PTON 5.13, -1.86, -26.6%): misses by $0.28, reports revs in-line; guides Q1 revs below consensus

  • Analog Devices (ADI 165.00, -11.66, -6.6%): misses by $0.03, reports revs in-line; guides Q4 EPS below consensus, revs below consensus

  • Urban Outfitters (URBN 35.75, +1.66, +4.9%): beats by $0.21, beats on revs, comps +4.9%

  • Bath & Body Works (BBWI 33.99, -0.95, -2.7%): beats by $0.10, reports revs in-line; guides Q3 EPS in-line, revs below consensus; guides FY24 EPS in-line, revs below consensus

  • Advance Auto (AAP 68.50, +1.16, +1.9%): misses by $0.26, reports revs in-line; guides FY23 EPS below consensus, revs above consensus; announces executive leadership changes

  • Tesla (TSLA 227.16, -6.08, -2.6%): Germany plant is lowering production targets, according to Reuters, citing Business Insider

  • Apellis (APLS 39.09, +8.33, +27.1%): Provides Updates on Injection Kits and Rare Safety Events with SYFOVRE (pegcetacoplan injection)

  • Abercrombie & Fitch (ANF 47.45, +6.28, +15.3%): beats by $0.93, beats on revs; guides Q3 revs above consensus; guides FY24 revs above consensus

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region ended the midweek session on a mixed note. Japan's Nikkei: +0.5%, Hong Kong's Hang Seng: +0.3%, China's Shanghai Composite: -1.3%, India's Sensex: +0.3%, South Korea's Kospi: -0.4%, Australia's ASX All Ordinaries: +0.3%.

  • In economic data:

  • Japan's flash August Manufacturing PMI 49.7 (expected 49.5; last 49.6) and flash Services PMI 54.3 (expected 53.9; last 53.8)

  • South Korea's September Manufacturing BSI Index 67 (expected 72; last 72)

  • Singapore's July CPI -0.2% m/m (last 0.5%); 4.1% yr/yr, as expected (last 4.5%). Core CPI 3.8% yr/yr, as expected (last 4.2%)

  • Australia's flash August Manufacturing PMI 49.4 (expected 49.6; last 49.6) and flash Services PMI 46.7 (expected 47.9; last 47.9)

  • New Zealand's Q2 Retail Sales -1.0% qtr/qtr (expected -2.6%; last -1.6%) and Core Retail Sales -1.8% qtr/qtr (expected -2.5%; last -1.6%)


  • In news:

  • Manufacturing PMI readings from Japan and Australia ticked up in their flash readings for August, but remained in contractionary territory while Japan's Services PMIs showed a slight acceleration in the pace of growth.

  • U.S. Secretary of Commerce Raimondo will visit China early next week.

  • Hong Kong banned the import of sea products from Japan after Japan's government began releasing treated radioactive water from the Fukushima plant.

  • New Zealand's borrowing needs in the four years to 2026/27 will be 35% higher than what was planned eight months ago.



  • Major European indices trade near their flat lines alongside rising sovereign debt while the U.K.'s FTSE (+0.7%) outperforms. STOXX Europe 600: +0.2%, Germany's DAX: UNCH, U.K.'s FTSE 100: +0.7%, France's CAC 40: -0.2%, Italy's FTSE MIB: UNCH, Spain's IBEX 35: +0.1%.

  • In economic data:

  • Eurozone's flash August Manufacturing PMI 43.7 (expected 42.6; last 42.7) and flash Services PMI 48.3 (expected 50.5; last 50.9)

  • Germany's flash August Manufacturing PMI 39.1 (expected 38.7; last 38.8) and flash Services PMI 47.3 (expected 51.5; last 52.3)

  • U.K.'s flash August Manufacturing PMI 42.5 (expected 45.0; last 45.3) and flash Services PMI 48.7 (expected 51.0; last 51.5)

  • France's flash August Manufacturing PMI 46.4 (expected 45.0; last 45.1) and flash Services PMI 46.7 (expected 47.5; last 47.1)


  • In news:

  • Manufacturing PMI readings from Germany and France improved in their flash readings for August, but both remained in contractionary territory.

  • Separately, Services PMI readings from Germany and the U.K. fell into contraction while France's reading showed a deepening slowdown.

  • The British government transferred a record GBP14.3 bln to the Bank of England in July to cover a shortfall from bond losses.

  • Bloomberg reported that small British retailers saw their sales drop more than 20% over the past year.



U.S. equity futures:

  • S&P 500 Futures +9 @ 4,396

  • DJIA Futures: +62 @ 34,351

  • Nasdaq 100 Futures: +22 @ 14,931

Overseas:

  • Europe: DAX UNCH, FTSE +0.7%, CAC -0.2%

  • Asia: Nikkei +0.5%, Hang Seng +0.3%, Shanghai Composite -1.3%

Commodities:

  • Crude Oil -1.18 @ 78.46

  • Nat Gas -0.027 @ 2.533

  • Gold +6.25 @ 1932.25

  • Silver +0.428 @ 23.878

  • Copper +0.270 @ 3.784


Earnings/Guidance:

  • Abercrombie & Fitch ( ANF 24.14% ) beats by $0.93, beats on revs; guides Q3 revs above consensus; guides FY24 revs above consensus

  • Advance Auto ( AAP 2.12% ) misses by $0.26, reports revs in-line; guides FY23 EPS below consensus, revs above consensus; announces executive leadership changes

  • Analog Devices ( ADI 0.44% ) misses by $0.03, reports revs in-line; guides Q4 EPS below consensus, revs below consensus

  • Bath & Body Works ( BBWI 1.65% ) beats by $0.10, reports revs in-line; guides Q3 EPS in-line, revs below consensus; guides FY24 EPS in-line, revs below consensus

  • Dycom ( DY 4.52% ) beats by $0.37, reports revs in-line

  • Foot Locker ( FL 33.23% ) reports EPS in-line, revs in-line; guides FY24 EPS below consensus, revs below consensus; pausing dividend

  • Grab ( GRAB 11.23% ) beats by $0.01, beats on revs; reaffirms FY23 revs guidance; raises adj EBITDA outlook

  • Kohl's ( KSS 2.64% ) beats by $0.29, misses on revs; reaffirms FY24 EPS guidance, revs guidance

  • Lancaster Colony ( LANC 10.25% ) misses by $0.26, misses on revs

  • La-Z-Boy ( LZB 2.32% ) beats by $0.07, beats on revs; guides Q2 revs in-line; expects consumer trends to remain soft

  • Peloton ( PTON 22.75% ) misses by $0.28, reports revs in-line; guides Q1 revs below consensus

  • Sasol ( SSL 2.86% ) beats by ZAR0.75; revs in-line

  • Toll Brothers ( TOL 4.64% ) beats by $0.88, beats on revs, homes delivered up 5%, increases FY23 home deliveries guidance

  • Urban Outfitters ( URBN 2.58% ) beats by $0.21, beats on revs, comps +4.9%

News:

  • Chinese President Xi failed to attend business forum where he was expected to defend the Chinese economy, according to Bloomberg

  • Office tenants are renewing leases for far less space, according to the Wall Street Journal

  • Hollywood studios make new offer to striking workers, according to the Wall Street Journal

  • FDIC will propose new debt rules by August 29, according to Reuters

  • Alterity Therapeutics ( ATHE 0.00% ) announced the European Patent Office has granted Alterity a new composition of matter patent

  • Apellis ( APLS 31.63% ) Provides Updates on Injection Kits and Rare Safety Events with SYFOVRE (pegcetacoplan injection)

  • Bionomics ( BNOX 0.00% ) Completes Last Patient Last Visit in the Phase 2b ATTUNE Study for Post-Traumatic Stress Disorder (PTSD) and Confirms Expected 2023 Milestones with its Lead Asset BNC210

  • Bristol Myers Squibb ( BMY 0.43% ) Receives European Commission Approval for Opdivo (nivolumab) as an Adjuvant Treatment for Patients with Completely Resected Stage IIB or IIC Melanoma

  • Celcuity ( CELC 1.92% ) Enters into a Clinical Trial Collaboration and Supply Agreement with Bayer to Provide Nubeqa (darolutamide) for Planned Phase 1b/2 Clinical Trial

  • Chveron ( CVX 0.34% ) attempting to avoid strike in Australia, according to Offshore

  • Digital World Acquisition Corp DWAC 2.50% ) urgently asks all stockholders to promptly vote for the extension

  • Driven Brands ( DRVN 2.86% ) authorizes share repurchase program for up to $50 mln of common stock

  • Duke Energy ( DUK 0.17% ) reaches partial settlements with North Carolina Public Staff; will be reviewed by regulators in a hearing on August 28

  • Dycom ( DY 4.52% ) authorized a new $150 mln repurchase program

  • Edison's ( EIX 0.12% ) Southern California Edison Company seeking recoveries from Thomas Fire, the Koenigstein Fire and the Montecito Mudslides

  • FMC Corp ( FMC 0.46% ) receives Brazilian registration for fluindapyr fungicide, marking another significant regulatory approval for the company

  • Genpact ( G 1.30% ) announces new multi-year agreement with GE HealthCare (GEHC) to transform and manage its U.S. leasing and lending operations

  • GlaxoSmithKline ( GSK 0.29% ) reports Shingrix data demonstrates 100% efficacy in China

  • Granite Constr ( GVA 1.54% ) awarded approximately $72 mln contract by California Department of Transportation

  • HF Sinclair ( DINO 1.54% ) entered into a Stock Purchase Agreement with Selling Stockholder REH Company

  • Hormel Foods ( HRL 1.40% ) receives unexpected, unfavorable arbitration ruling related to a commercial dispute; estimated pre-tax impact of $70.0 mln reflected in operating expense in 3Q23

  • Johnson & Johnson ( JNJ 1.17% ) announced the final results of its previously announced offer to its shareholders to exchange their shares of Johnson & Johnson common stock for shares of Kenvue (KVUE)

  • Nvidia ( NVDA 1.77% ) H100 AI processor production is expected to increase 200%, according to Financial Times

  • Petrobras ( PBR 6.07% ) clarifies pieces of news in the media regarding Braksem (BAK)

  • Pfizer ( PFE 0.15% ) and Astellas Pharma (ALPMY) granted priority review for XTANDI in non-metastatic castration-sensitive prostate cancer with high-risk biochemical recurrence

  • Qualcomm ( QCOM 1.36% ): FTC anticipating opening a probe of its purchase of Israeli chipmaker Autotalks, according to Politico

  • Roche Hldg's ( RHHBY ) Genentech provides update on Phase III SKYSCRAPER-01 Study in PD-L1-high metastatic non-small cell lung cancer

  • Salesforce ( CRM 1.64% ) is leading financing of AI startup Hugging Face at a valuation over $4.0 bln, according to The Information

  • Stellantis ( STLA 0.28% ) wants EV partnership to expand in China, according to Bloomberg

  • Summit Materials ( SUM 0.92% ) reaches agreement with affiliates of Blackstone Inc. that resulted in its subsidiary acquiring all rights and interests of each of the Blackstone TRA Parties

  • Tesla ( TSLA 1.30% ) Germany plant is lowering production targets, according to Reuters, citing Business Insider

  • Thermo Fisher ( TMO 2.78% ): Novo Nordisk (NVO) hires TMO as second contract manufacturer for weight loss drug, according to Reuters

  • UPS ( UPS 0.99% ): Teamsters ratify five-year national agreement, according to Teamsters.org

  • Verrica Pharmaceuticals ( VRCA 1.83% ) issues statement in support of FDA's warning letters to manufacturers and retailers for producing and selling unapproved products for the treatment of molluscum contagiosum

  • Walmart ( WMT 0.24% ) accrues liability for approximately $3.3 bln for the settlement to resolve opioids-related lawsuits

  • Western Copper ( WRN 2.10% ) announces 2023 drilling program at its wholly owned Casino Copper-Gold Project

M&A:

  • Aurora Acquisition Corp ( AURC 25.13% ) and Better Home & Finance announce closing of business combination

  • Dycom ( DY 4.52% ) announces acquisition of Bigham Cable Construction; terms not disclosed

  • Manchester United ( MANU 5.76% ) takeover could be announced by mid-October, according to Sun UK

  • Parsons ( PSN 1.16% ) announces that it has acquired Sealing Technologies in a transaction valued at up to $200 million

Syndicate:

  • EQT Corp. ( EQT 3.29% ) files for 49,599,796 shares of common stock by selling shareholders

  • First Bancshares ( FBMS 1.02% ) files $300 mln mixed shelf securities offering

  • Nikola Corp ( NKLA 2.46% ) files for 10,266,209 share common stock offering by selling shareholders

IPOs:

  • Expected to Price:

  • No IPOs expected.


Gapping Up/Down

  • Gapping up:

  • APLS +30.4%, URBN +7.1%, DWAC +4.7%, FIHL +4.6%, HRL +2.2%, TOL +2%, SSL +1.4%, GSK +1.1%, DY +0.9%, FMC +0.8%, UPS +0.7%, PBR +0.7%, QCOM +0.6%, CRM +0.6%


  • Gapping down:

  • BBWI -8.3%, LZB -1.3%, G -1.1%, FAF -0.9%, DINO -0.9%, SCU -0.8%


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

  • Upgrades

  • Avery Dennison (AVY) upgraded to Buy from Neutral at UBS; tgt raised to $220

  • Brown-Forman (BF.B) upgraded to Overweight from Underweight at Morgan Stanley; tgt raised to $75

  • Dollar General (DG) upgraded to Buy from Hold at Edward Jones

  • Fulcrum Therapeutics (FULC) upgraded to Buy from Neutral at H.C. Wainwright; tgt raised to $14


  • Downgrades:

  • Dick's Sporting Goods (DKS) downgraded to Neutral from Outperform at Wedbush; tgt lowered to $115

  • Dick's Sporting Goods (DKS) downgraded to Neutral from Buy at BofA Securities; tgt lowered to $125


  • Others:

  • AES (AES) initiated with an Overweight at Barclays; tgt $25

  • Ameren (AEE) initiated with an Equal Weight at Barclays; tgt $80

  • American Electric (AEP) initiated with an Overweight at Barclays; tgt $88

  • Atmos Energy (ATO) initiated with an Equal Weight at Barclays; tgt $122

  • CenterPoint (CNP) initiated with an Underweight at Barclays; tgt $28

  • CMS Energy (CMS) initiated with an Equal Weight at Barclays; tgt $58

  • Con Edison (ED) initiated with an Equal Weight at Barclays; tgt $88

  • Dominion Energy (D) initiated with an Equal Weight at Barclays; tgt $52

  • DTE Energy (DTE) initiated with an Overweight at Barclays; tgt $117

  • Duke Energy (DUK) initiated with an Overweight at Barclays; tgt $96

  • Ecopetrol (EC) resumed with a Neutral at BofA Securities; tgt $11.50

  • Edison (EIX) initiated with an Equal Weight at Barclays; tgt $68

  • Entergy (ETR) initiated with an Equal Weight at Barclays; tgt $98

  • Evergy (EVRG) initiated with an Equal Weight at Barclays; tgt $56

  • Eversource Energy (ES) initiated with an Equal Weight at Barclays; tgt $72

  • Exelon (EXC) initiated with an Overweight at Barclays; tgt $43

  • FirstEnergy (FE) initiated with an Equal Weight at Barclays; tgt $37


Econ Data:

  • 07:00 ET: MBA Mortgage Applications Index for Aug 19 (Briefing.com Consensus NA; Prior -0.8%)

  • 09:45 ET: S&P Global US Manufacturing PMI - Prelim for Aug (Briefing.com Consensus NA; Prior 49.0)

  • 09:45 ET: S&P Global US Services PMI - Prelim for Aug (Briefing.com Consensus NA; Prior 52.3)

  • 10:00 ET: New Home Sales for July (Briefing.com Consensus 701K; Prior 697K)

  • 10:30 ET: EIA Crude Oil Inventories for Aug 19 (Briefing.com Consensus NA; Prior -5.96M)

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 +0.5%, Hang Seng +0.3%, Shanghai Composite -1.3%

Equity indices in the Asia-Pacific region ended the midweek session on a mixed note. Manufacturing PMI readings from Japan and Australia ticked up in their flash readings for August, but remained in contractionary territory while Japan's Services PMIs showed a slight acceleration in the pace of growth. U.S. Secretary of Commerce Raimondo will visit China early next week. Hong Kong banned the import of sea products from Japan after Japan's government began releasing treated radioactive water from the Fukushima plant. New Zealand's borrowing needs in the four years to 2026/27 will be 35% higher than what was planned eight months ago.

  • In economic data:

  • Japan's flash August Manufacturing PMI 49.7 (expected 49.5; last 49.6) and flash Services PMI 54.3 (expected 53.9; last 53.8)

  • South Korea's September Manufacturing BSI Index 67 (expected 72; last 72)

  • Singapore's July CPI -0.2% m/m (last 0.5%); 4.1% yr/yr, as expected (last 4.5%). Core CPI 3.8% yr/yr, as expected (last 4.2%)

  • Australia's flash August Manufacturing PMI 49.4 (expected 49.6; last 49.6) and flash Services PMI 46.7 (expected 47.9; last 47.9)

  • New Zealand's Q2 Retail Sales -1.0% qtr/qtr (expected -2.6%; last -1.6%) and Core Retail Sales -1.8% qtr/qtr (expected -2.5%; last -1.6%)


---Equity Markets---

  • Japan's Nikkei: +0.5%

  • Hong Kong's Hang Seng: +0.3%

  • China's Shanghai Composite: -1.3%

  • India's Sensex: +0.3%

  • South Korea's Kospi: -0.4%

  • Australia's ASX All Ordinaries: +0.3%

---FX---

  • USD/JPY: -0.3% to 145.42

  • USD/CNH: UNCH at 7.3042

  • USD/INR: -0.4% to 82.71

Europe: DAX UNCH, FTSE +0.7%, CAC -0.2%

Major European indices trade near their flat lines alongside rising sovereign debt while the U.K.'s FTSE (+0.7%) outperforms. Manufacturing PMI readings from Germany and France improved in their flash readings for August, but both remained in contractionary territory. Separately, Services PMI readings from Germany and the U.K. fell into contraction while France's reading showed a deepening slowdown. The British government transferred a record GBP14.3 bln to the Bank of England in July to cover a shortfall from bond losses. Bloomberg reported that small British retailers saw their sales drop more than 20% over the past year.

  • In economic data:

  • Eurozone's flash August Manufacturing PMI 43.7 (expected 42.6; last 42.7) and flash Services PMI 48.3 (expected 50.5; last 50.9)

  • Germany's flash August Manufacturing PMI 39.1 (expected 38.7; last 38.8) and flash Services PMI 47.3 (expected 51.5; last 52.3)

  • U.K.'s flash August Manufacturing PMI 42.5 (expected 45.0; last 45.3) and flash Services PMI 48.7 (expected 51.0; last 51.5)

  • France's flash August Manufacturing PMI 46.4 (expected 45.0; last 45.1) and flash Services PMI 46.7 (expected 47.5; last 47.1)


---Equity Markets---

  • STOXX Europe 600: +0.2%

  • Germany's DAX: UNCH

  • U.K.'s FTSE 100: +0.7%

  • France's CAC 40: -0.2%

  • Italy's FTSE MIB: UNCH

  • Spain's IBEX 35: +0.1%

---FX---

  • EUR/USD: -0.3% to 1.0807

  • GBP/USD: -0.8% to 1.2630

  • USD/CHF: +0.1% to 0.8809

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