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23/10/23 Briefing


The S&P 500 futures are down 21 points and are trading 0.4% below fair value. The Nasdaq 100 futures are down 75 points and are trading 0.4% below fair value. The Dow Jones Industrial Average futures are down 183 points and are trading 0.4% below fair value.

Stocks futures indicate a lower open after the S&P 500 closed below its 200-day moving average on Friday. Action in the Treasury market is keeping the stock market in check after the 10-yr yield passed 5.00% again. It is currently up seven basis points from Friday'ssettlement at 4.99%. The 2-yr note yield is up three basis points to 5.11%.

Relatively weak mega caps in pre-open trading are having a disproportionate influence on the broader market. On a related note, earnings reporting season picks up this week, highlighted by Alphabet (GOOG) and Microsoft (MSFT) after Tuesday'sclose, Meta Platforms (META) after Wednesday'sclose, and Amazon.com(AMZN) after Thursday'sclose. 

Rising geopolitical tensions in the Middle East are another limiting factor this morning. Israel is stepping up its airstrikes against Hamas; meanwhile, Israel's military is contending with increasing attacks from Hezbollah, which is based in Lebanon, according to The New York Times, indicating an increased potential for a wider regional conflict.

The House of Representatives is still without a Speaker. Nine GOP candidates have declared their interest in the Speaker position. House Republicans are expected to hold a candidate forum later tonight, according to CNN.

There is no U.S. economic data of note today, but there has been a spate of M&A activity, highlighted by Chevron's (CVX) $53 billion all-stock acquisition of Hess Corp (HES). Key economic data later in the week includes Q3 GDP on Thursday and the Personal Income and Spending report on Friday, which features the Fed's preferred inflation gauge (the PCE Price Indexes).

In corporate news:

  • Chevron (CVX 162.30, -4.53, -2.7%): Hess (HES) to be acquired by Chevron for $171 per share in an all-stock transaction valued at $53 billion

  • Apple (AAPL 171.27, -1.61, -1.0%): Foxconn (HNHPF) facing tax probe in China, according to Reuters; iPhone 15 sales in China reportedly happening at deep discounts

  • Pinterest (PINS 26.53, +0.57, +2.2%): upgraded to Buy from Hold at Stifel

  • Salesforce (CRM 199.95, -3.78, -1.9%): downgraded to Neutral from Overnight at Piper Sandler

  • Alcoa (AA 23.26, -0.75, -3.1%): downgraded to Neutral from Buy at BofA Securities

  • Alphabet (GOOG 136.24, -0.50, -0.4%): Japan launched antitrust investigation into Google search, according to Reuters

  • Roivant Sciences (ROIV 10.21, +0.55, +5.7%): Roche acquires Telavant from Roivant for $7.1 bln

  • Tesla (TSLA 210.18, -1.81, -0.9%): discloses in 10Q filing that its expects its capital expenditures to exceed $9.00 billion in 2023 and be between $7.00 to $9.00 billion in each of the following two fiscal years

  • FMC Corp (FMC 58.00, -8.95, -13.4%): sees Q3 EPS and revs below expectations; guides Q4 below consensus; initiates restructuring in Brazil

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region began the week on a lower note, though overall volume was reduced due to holiday closures in Hong Kong and New Zealand. Japan's Nikkei: -0.8%, Hong Kong's Hang Seng: CLOSED, China's Shanghai Composite: -1.5%, India's Sensex: -1.3%, South Korea's Kospi: -0.8%, Australia's ASX All Ordinaries: -0.8%.

  • In economic data:

  • Singapore's September CPI 0.5% m/m (last 0.9%); 4.1% yr/yr, as expected (last 4.0%). September Core CPI 3.0% yr/yr (expected 3.1%; last 3.4%)

  • In news:

  • The Bank of Japan may review its yield curve control policy at a meeting scheduled for October 31.

  • Japan's ruling party lost one of two Lower House seats that were up for election this weekend.

  • Global Times reported that Apple supplier Foxconn was the subject of an inspection conducted by Chinese tax authorities.

  • Nikkei reported that the U.S. may block Chinese companies from accessing cloud services provided by U.S. companies.

  • China will hold its National Work Conference next week.

  • Major European indices trade in the red. STOXX Europe 600: -0.7%, Germany's DAX: -0.7%, U.K.'s FTSE 100: -0.6%, France's CAC 40: -0.2%, Italy's FTSE MIB: -0.1%, Spain's IBEX 35: -0.9%.

  • No data today

  • In news:

  • Volkswagen beat expectations for Q3 but lowered its profit guidance for the year while Phillips beat estimates, raised its guidance, but reported falling orders.

  • The EU may extend its emergency gas price cap.

  • Moody's affirmed the U.K.'s AA3 rating and revised the outlook to Stable from Negative while Standard & Poor's affirmed the U.K.'s AA rating with a Stable outlook.

  • Separately, Standard & Poor's upgraded Greece to BB+ from BBB- with a Stable Outlook and affirmed Italy's BBB rating with a Stable outlook.

 

U.S. equity futures:

  • S&P 500 Futures -18 @ 4,207

  • DJIA Futures: -139 @ 32,988

  • Nasdaq 100 Futures: -62 @ 14,499

Overseas:

  • Europe: DAX -0.7%, FTSE -0.6%, CAC -0.2%

  • Asia: Nikkei -0.8%, Hang Seng CLOSED, Shanghai Composite -1.5%

Commodities:

  • Crude Oil -0.41 @ 87.67

  • Nat Gas -0.031 @ 3.227

  • Gold -4.10 @ 1990.30

  • Silver -0.097 @ 23.407

  • Copper -0.0093 @ 3.5537

Earnings/Guidance:

  • Bank of Hawaii (BOH) beats by $0.20

  • FMC Corp (FMC) sees Q3 EPS and revs below expectations; guides Q4 below consensus; initiates restructuring in Brazil

  • Hope Bancorp (HOPE) beats by $0.01, beats on revs

  • H World Group (HTHT) reports preliminary Q3 operating results over 9,000 hotels in operation legacy-Huazhu's RevPAR recovers to 129% of the 2019 level

  • Philips (PHG) beats by 0.04, beats on revs; raises outlook

  • Sasol (SSL) reports Q3 production update

  • Tesla (TSLA) discloses in 10Q filing that its expects its capital expenditures to exceed $9.00 billion in 2023 and be between $7.00 to $9.00 billion in each of the following two fiscal years

News:

  • Israel's military is contending with increasing attacks from Hezbollah, who are based on Lebanon. These attacks are adding to fears of a wider conflict, according to the New York Times

  • US wants Israel to delay ground counteroffensive to allow for the release of more hostages, according to CNN

  • Rep. Tom Emmer is among candidates running for Speaker. House Republicans are expected to hold a candidate forum later tonight, according to CNN

  • US government spent $659 billion on debt interest payments, doubling in two years. The budget deficit unexpectedly increased this year to approximately $2 trillion, according to the Washington Post

  • Car owners are falling behind on payments at highest rate on record, according to Bloomberg

  • UAW President saying live in Facebook video that the union has received new offers from two of the Big Three automakers

  • UAW Pres Shawn Fain says in last 24 hrs there has been progress made at GM and Stellantis but not Ford; no new strikes for now, according to Detroit Free Press

  • White House confirms that US and EU continuing to cooperate to enhance the resilience of our economies and advance our economic security interests

  • US Supreme Court blocks lower court ruling curbing White House ability to communicate with social media cos about contentious content, according to NBC News

  • Airbus (EADSY) signs EUR 1.2 billion in contracts for Capability Enhancement and In-Service Support of the French A330 MRTT fleet

  • Alphabet (GOOG): Japan launched antitrust investigation into Google search, according to Reuters

  • Amgen (AMGN) presents new Lumakras (sotorasib) plus Vectibix (panitumumab) data in patients with KRAS G12C-mutated metastatic colorectal cancer

  • Arvinas (ARVN) presents potential of PROTAC AR Degraders Reinforced by 11.1 months rPFS with Bavdegalutamide and Updated Positive Interim Data from Second Generation ARV-766 in mCRPC

  • AstraZeneca (AZN) reports TAGRISSO (osimertinib) plus chemotherapy reduced the risk of disease progression in the brain by 42% in patients with EGFR-mutated advanced lung cancer and brain metastases at baseline

  • AstraZeneca (AZN) reports Datopotamab deruxtecan plus IMFINZI (durvalumab) demonstrated robust and durable tumor responses in 1st-line treatment of patients with metastatic triple-negative breast cancer in BEGONIA Phase Ib/II trial

  • AstraZeneca (AZN): Tagrisso plus chemotherapy reduced the risk of disease progression in the brain by 42% in patients with EGFR-mutated advanced lung cancer and brain metastases at baseline

  • AstraZeneca (AZN): Imfinzi plus Lynparza reduced the risk of disease progression or death by 45% vs. chemotherapy in advanced or recurrent endometrial cancer

  • AVANGRID (AGR) CFO Patricia Cosgel notifies co of her intention to resign effective November 24due to personal reasons

  • BioMarin (BMRN): U.S. Food and Drug Administration Approves BioMarin's VOXZOGO (vosoritide) for Children Under 5 Years with Achondroplasia

  • Chevron (CVX) will benefit from Venezuela sanctions reprieve, according to Bloomberg

  • Dropbox (DBX) says $28.1 mln lease termination payment not included in prior guidance

  • Eni S.p.A. (E) signs long term LNG agreement for deliveries from North Field East expansion project in Qatar

  • Exact Sciences (EXAS) Advances Early Cancer Detection and Precision Oncology Programs with Data Presentations at ESMO 2023 Annual Congress

  • Exelixis (EXEL) reports detailed results from Phase 3 CABINET Pivotal Trial Evaluating Cabozantinib in Advanced Neuroendocrine Tumors Presented at ESMO 2023

  • Farfetch (FTCH) and Richemont (CFRUY) receive antitrust clearance for partnership to advance digitalisation of the luxury industry

  • First Financial (THFF) COO Norman D. Lowery to succeed CEO Norman L. Lowery on January 1, 2024; current CEO to then serve as Executive Chairman through December 31, 2024

  • Fisker (FSR) lowers price in Canada for top-level fisker ocean extreme and provides price adjustment to existing customers. fisker opens 2024 orders for all trim levels, including ultra and sport, with new pricing

  • Foxconn (HNHPF) facing tax probe in China, according to Reuters

  • Guardant Health (GH) reports first results from PEGASUS trial reported at ESMO show promise for use of liquid biopsy to guide adjuvant treatment of colon cancer

  • Harpoon Therapeutics (HARP) Announces Updated Interim Tolerability and Response Data from Phase 1/2 Clinical Trial of T Cell Engager HPN328 at ESMO Congress 2023

  • IDEAYA (IDYA) Announces Top-Line Phase 2 Results at ESMO 2023 of Darovasertib and Crizotinib Combo in MUM, and Clinical Efficacy Updates for Neoadjuvant UM, GNAQ/11 Cutaneous Melanoma, and Synthetic Lethality Pipeline

  • Immunocore (IMCR) presents three-year overall survival data from the KIMMTRAK Phase 3 trial

  • Insulet (PODD) announces FDA 510(k) clearance of the Omnipod 5 app for iphone

  • Lilly's (LLY) Retevmo (selpercatinib) Phase 3 Results in RET Fusion-Positive Non-Small Cell Lung Cancer and RET-Mutant Medullary Thyroid Cancer Both Published in The New England Journal of Medicine and Presented in a Presidential Symposium at ESMO Congress 2023

  • Merck's (MRK) WELIREG (belzutifan) Significantly Improved Progression-Free Survival and Objective Response Rates Versus Everolimus in Certain Previously Treated Patients With Advanced Renal Cell Carcinoma

  • Natera (NTRA) reports Updated Data from CIRCULATE-Japan Presented at ESMO 2023 Reinforces Signatera's Prognostic and Predictive Value in Analysis of 2,500+ Colorectal Cancer Patients

  • Netflix (NFLX): SAG provides update on negotiations

  • ORIC Pharmaceuticals (ORIC) reports initial Phase 1 Dose Escalation Data of ORIC-114 in Patients with EGFR and HER2 Exon 20 Mutations Demonstrates Potential Best-In-Class Profile

  • P10, Inc. (PX) appoints Luke Sarsfield as CEO

  • Regeneron Pharma (REGN) and Sanofi announce that the FDA has issued a CRL for the sBLA for Dupixent for CSU; additional efficacy data are required to support an approval

  • Regeneron Pharma (REGN) reports Libtayo (cemiplimab) Neoadjuvant Treatment Demonstrates Encouraging Event-Free Survival in Patients with Resectable Cutaneous Squamous Cell Carcinoma

  • Seagen (SGEN) reports TIVDAK (tisotumab vedotin-tftv) Significantly Prolonged Overall Survival in Patients with Recurrent or Metastatic Cervical Cancer Compared with Chemotherapy in Global Phase 3 innovaTV 301 Trial

  • Toyota(TM) nearing mass production of solid state batteries, according to Financial Times

  • U.S. Silica (SLCA) CFO Donald Merril terminated; appoints Kevin Hough as interim CFO, effective today

  • Verve Therapeutics (VERV) announced the lifting of the clinical hold and clearance of its Investigational New Drug (IND) application

M&A:

  • Ellington Financial (EFC) and Great Ajax Corp agree to terminate their merger agreement; Ellington Financial agrees to pay Great Ajax $16 mln

  • Fortive (FTV) to Acquire EA Elektro-Automatik for $1.45 bln

  • Hess (HES) to be acquired by Chevron for $171 per share

  • Ooma (OOMA) acquired 2600Hz for approximately $33 million in cash

  • Ormat Tech (ORA) to acquire contracted operating geothermal and solar assets in Nevada, Utah, and Connecticut for $271 mln

  • Roivant Sciences (ROIV): Roche acquires Telavant from Roivant for $7.1 bln

  • Ryder System (R) to acquire all of the outstanding equity of IFS Holdings, LLC

  • Textainer Group (TGH) to be acquired by Stonepeak for $7.4 bln

  • VMware (VMW) spokesperson that it received South Korea approval for M&A deal with Broadcom (AVGO)

  • Walt Disney (DIS): Reliance Industries nearing deal to purchase Disney's India operations, according to Bloomberg

Syndicate:

  • Alvotech (ALVO) files $100 mln mixed shelf securities offering

  • Blink Charging (BLNK) files for $400 mln mixed securities shelf offering

  • EyePoint Pharmaceuticals (EYPT) files for $350 mln mixed securities shelf offering

  • Scilex Holding (SCLX) files for 13,474,683 shares of common stock by selling shareholders; relates to warrants

  • Soleno Therapeutics (SLNO) files for 3 mln share common stock offering by selling shareholders

IPOs:

  • No IPOs expected to price.

Gapping Up/Down

  • Gapping up:

  • TGH +42.5%, HARP +42.3%, ROIV +14.4%, ORIC +12%, PODD +2.9%, ARVN +2%, SGEN+2%, VERV +0.8%, STRO +0.6%, HES +0.6%, VMW +0.5%

  • Gapping down:

  • RVMD -7%, EPIX -5%, VTRS -3.5%, CVX-3.2%, EXAS -1.9%, OLMA -1.9%, TSLA-1.3%, TLT -1.3%, BLNK -1.1%, QQQ -0.7%, AMGN -0.6%, SPY -0.6%, EXEL -0.5%, DIA-0.5%, IWM -0.5%

 

Analyst Research (see Upgrades/Downgradescalendarfor full list):

  • Upgrades

  • Arvinas (ARVN) upgraded to Outperform from Neutral at Wedbush; tgt lowered to $24

  • Citizens Financial Group (CFG) upgraded to Peer Perform from Underperform at Wolfe Research

  • Huntington Banc (HBAN) upgraded to Peer Perform from Underperform at Wolfe Research

  • Ionis Pharma (IONS) upgraded to Neutral from Underperform at BofA Securities; tgt raised to $52

  • Lindsay Corp (LNN) upgraded to Buy from Neutral at ROTH MKM; tgt raised to $150

  • Downgrades:

  • Alcoa (AA) downgraded to Neutral from Buy at BofA Securities; tgt lowered to $25

  • Diamondback Energy (FANG) downgraded to Neutral from Buy at Citigroup; tgt raised to $170

  • Equity Lifestyle Properties (ELS) downgraded to Neutral from Buy at BofA Securities; tgt lowered to $64

  • EOG Resources (EOG) downgraded to Neutral from Buy at Citigroup; tgt lowered to $135

  • Viatris (VTRS) downgraded to Underperform from Neutral at BofA Securities; tgt lowered to $9

  • Others:

  • AtriCure (ATRC) initiated with a Mkt Outperform at JMP Securities; tgt $60

  • Lemaitre Vascular (LMAT) initiated with a Mkt Outperform at JMP Securities; tgt $60

  • Okta (OKTA) placed on 90-day Downside Catalyst Watch at Citigroup

  • Ready Capital (RC) assumed with a Buy at BTIG Research; tgt lowered to $12

  • Velocity Financial (VEL) initiated with a Buy at BTIG Research; tgt $14

Econ Data:

  • No economic data of note.

Earnings:

  • Monday (Oct 23)

  • Morning:  BOH HOPE PHG

  • Afternoon: AGYS ARE BRO CADE CDNS CALX CATY CLF CR CCK HSTM HXL IBTX MEDP PKG RLI SSD AAN TBI WRB WSFS

  • Tuesday (Oct 24)

  • Morning: MMM HOUS ADM ARCC AWI ABG BANC BCS CNC KO CBU GLW DHR DOV DOW FI FELE GATX GE GM HAL HCA HRI ITW IVZ KMB EDU NEE NEP NVS NUE ONB PCAR PPBI PACW PNR PII PHM DGX RTX SASR SHW SFNC SMPL SPOT SYF TECK TRU VZ XRX

  • Afternoon:  GOOG NTB BYD BDN CNI CHX CB CSGP EGP WIRE ENVA FFIV FCF FFBC HA HIW JBT MANH MTDR MSFT MSA NBHC RRC RNST ROIC RHI SNAP LRN TDOC TXN TRMK UMBF VBTX VICR V WM

  • Wednesday (Oct 25)

  • Morning:  ALKS APH ADP AVY BXMT BA BOKF CME CNX CSTM EVR FTV GD GBX GPI HCSG HES HESM HLT IART LKFN LTH LAD MKTX MNRO MCO COOP MSM NAVI NSC ODFL OMF OPCH OTIS OC PAG PRG PB RDUS ROP RES R SLGN SF TMUS TMHC TDY TMO TNL UMC VRT WNC WAB WFRD

  • Afternoon:  AEM ALGN ALSN AMP AM AR ATR ASGN AVB AGR BKR BHE CACI CCS CHE CHDN CYH CNMD CVBF EW ESI EIG EPR EQT EQIX ETD EG FIBK FLEX FLS FBIN FTAI GL GSHD GGG IBM ICLR IEX IMAX PI INVH KALU KRC KLAC LSTR LC LXFR MAT MXL META MAA MOH MYRG NTGR NXT ORLY OII CASH PEGA PPC PLXS QS RJF ROL SLM SEIC NOW STC SUI NOVA TER TNET TROX UCTT URI UHS VMI VLTO VICI VKTX WSBC WU WHR WH

  • Thursday (Oct 26)

  • Morning: AOS MO AMT AIT ARCH AMBP BPMC BSX BFH BMY BC BG CRS CARR CBZ CNP CMS CTS CFR EXP EME EXLS XPRO FAF FCFS ULCC FCN THRM GWW HEES HOG HAS HSY HTZ HON INSM IP ITGR KVUE KDP KIM KEX LH LAZ LEA LII LIN LKQ MAS MA MDC MPW MRK MBLY NYCB NEM NOC NVCR OSIS OSTK PATK BTU PCG BPOP RS RITM RCL STX SAH SBSI LUV STM FTI TXT SHYF TSCO TW TPH TRS UPS VLO VLY VC VMC WST WEX WTW

  • Afternoon:  ATGE AB AMZN ABCB APPF AJG AX BIO BJRI SAM CPT COF CSL CC CMG CINF COLM CDP COUR CUZ CUBI DECK DXCM DLR EMN ELME EHC ENPH ESS EVTC EXPO FHI FE F GLPI HIG HUBG INTC JNPR KNSL LHX LPLA LTC MGRC MMSI MTX MHK NRDS NOV OLN PEB PFSI PFG PFS PTCT RSG RMD SKX SKYW SSB SPSC SSNC STAG TEX TXRH X UDR VRSN WY

  • Friday (Oct 27) 

  • Morning:  ABBV AER AON ARCB AN AVTR BCPC B BAH CBRE GTLS CHTR CVX CL DAN XOM FHB GNTX IMO LECO LYB NWL NVT OIS PSX PIPR PNM POR SAIA SNY SWK STEL TROW WT XEL

  • Afternoon:  ACMR

 

Asia & Europe detail:

Asia: Nikkei -0.8%, Hang Seng CLOSED, Shanghai Composite -1.5%

Equity indices in the Asia-Pacific region began the week on a lower note, though overall volume was reduced due to holiday closures in Hong Kong and New Zealand. The Bank of Japan may review its yield curve control policy at a meeting scheduled for October 31.Japan's ruling party lost one of two Lower House seats that were up for election this weekend. Global Times reported that Apple supplier Foxconn was the subject of an inspection conducted by Chinese tax authorities. Nikkei reported that the U.S. may block Chinese companies from accessing cloud services provided by U.S. companies. China will hold its National Work Conference next week.

  • In economic data:

  • Singapore's September CPI 0.5% m/m (last 0.9%); 4.1% yr/yr, as expected (last 4.0%). September Core CPI 3.0% yr/yr (expected 3.1%; last 3.4%)

---Equity Markets--- 

  • Japan's Nikkei: -0.8%

  • Hong Kong's Hang Seng: CLOSED

  • China's Shanghai Composite: -1.5%

  • India's Sensex: -1.3%

  • South Korea's Kospi: -0.8%

  • Australia's ASX All Ordinaries: -0.8%

---FX---

  • USD/JPY: +0.1% to 149.95

  • USD/CNH: UNCH at 7.3214

  • USD/INR: UNCH at 83.13

 

Europe: DAX -0.7%, FTSE -0.6%, CAC -0.2%

Major European indices trade in the red. Volkswagen beat expectations for Q3 but lowered its profit guidance for the year while Phillips beat estimates, raised its guidance, but reported falling orders. The EU may extend its emergency gas price cap. Moody's affirmed the U.K.'s AA3 rating and revised the outlook to Stable from Negative while Standard & Poor's affirmed the U.K.'s AA rating with a Stable outlook. Separately, Standard & Poor's upgraded Greece to BB+ from BBB- with a Stable Outlook and affirmed Italy's BBB rating with a Stable outlook.

  • No data today

---Equity Markets---

  • STOXX Europe 600: -0.7%

  • Germany's DAX: -0.7%

  • U.K.'s FTSE 100: -0.6%

  • France's CAC 40: -0.2%

  • Italy's FTSE MIB: -0.1%

  • Spain's IBEX 35: -0.9%

---FX---

  • EUR/USD: +0.1% to 1.0608

  • GBP/USD: +0.1% to 1.2169

  • USD/CHF: +0.1% to 0.8921

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