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24/08/22 Briefing

The S&P 500 futures are up 7 points



and are trading slightly above fair value. The Nasdaq 100 futures are up 26 points and are slightly above fair value. The Dow Jones Industrial Average futures are up 25 points and are trading 0.1% above fair value.

The market is still in wait-and-see mode ahead of Fed Chair Powell's speech on Friday at the Jackson Hole symposium. Notably, the PCE Price Index for July will be released shortly before that speech.

Minneapolis Fed President Neel Kashkari (2023 FOMC voter) said it's not the time to back off the inflation fight, according to The Wall Street Journal

There are reports suggesting President Biden will announce today a move to forgive up to $10,000 in federal student loan debt for barrowers earning less than $125,000 a year. 

Earlier, the weekly MBA Mortgage Applications Index was down 1.2% with purchases down 1.0% while refinancing application were down 3.0%.

Oil prices are rising this morning with WTI crude oil futures up 1.1% to $94.71/bbl. Natural gas futures are up 0.2% to $9.37/mmbtu.

Treasury yields are inching higher, too. The 10-yr note yield is up one basis point to 3.05% while the 2-yr note yield is up four basis points to 3.32%.

In corporate news:

  • Nordstrom (JWN 20.23, -2.97, -12.80%): beats by $0.01, beats on revs; lowers FY23 EPS below consensus, revs mostly below consensus; Plans to take aggressive action to clear through inventory in 2H22

  • Advance Auto (AAP 187.00, -12.05, -6.05%): misses by $0.01, misses on revs, comparable store sales down 0.6%; lowers FY22 EPS and revenue guidance below consensus

  • Toll Brothers (TOL 44.20, -1.43, -3.13%): beats by $0.06, reports revs in-line, Q3 deliveries were below guidance, lowers FY22 deliveries guidance; saw significant decline in demand as Q3 progressed

  • Brinker (EAT 27.70, -2.64, -8.70%): misses by $0.02, reports revs in-line; guides FY23 EPS below consensus, revs in-line 

  • Bed Bath & Beyond (BBBY 11.06, +2.28, +25.97%): secured financing source, according to WSJ

  •  La-Z-Boy (LZB 30.24, +1.91, +6.74%): beats by $0.24, beats on rev; expects 2Q23 delivered sales to increase by 2-5% yr/yr

  • Urban Outfitters (URBN 21.35, -0.49, -2.24%): misses by $0.06, reports revs in-line; comparable retail segment net sales up 1%, gross margin down 595 bps yr/yr

  • Intuit (INTU 474.12, +24.56, +5.46%):  beats by $0.12, beats on revs; guides OctQ EPS below consensus, revs below consensus; guides FY23 EPS in-line, revs in-line

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: -1.2%, China's Shanghai Composite: -1.9%, India's Sensex: +0.1%, South Korea's Kospi: +0.5%, Australia's ASX All Ordinaries: +0.6%.

  • Economic data was limited:

  • South Korea's September Manufacturing BSI Index 82 (last 80)

  • In news:

  • Hong Kong-listed shares of developer Logan Group fell 51% after returning from a three-month halt.

  • Chinese banks are reportedly lowering their mortgage rates.

  • Japan will reportedly consider extending the lifespan of its nuclear plants and will support the development of new reactors.

  • South Korea's budget for 2023 will be presented to parliament on September 2.

  • Major European indices trade near their flat lines. STOXX Europe 600: UNCH, Germany's DAX: +0.1%, U.K.'s FTSE 100: -0.3%, France's CAC 40: +0.1%, Italy's FTSE MIB: -0.1%, Spain's IBEX 35: -0.2%.

  • No economic data today

  • In news:

  • Italy's Prime Minister Draghi said that a plan to cap the price of gas will be presented at the next EU Council meeting while the U.K. is planning an energy price cap of its own.

  • Belgium's Prime Minister De Croo warned that the next five to ten winters will be "difficult" due to the ongoing energy crisis.

U.S. equity futures:

  • S&P 500 Futures: +7 @ 4,136

  • DJIA Futures: +25 @ 32,934

  • Nasdaq 100 Futures: +27 @ 12,509

Overseas:

  • Europe: DAX +0.1%, FTSE -0.3%, CAC +0.1%

  • Asia: Nikkei -0.5%, Hang Seng -1.2%, Shanghai Composite -1.9%

Commodities:

  • Crude Oil +0.54 @ 94.28

  • Nat Gas  +0.169 @ 9.362

  • Gold -3.55 @ 1757.65

  • Silver -0.163  @ 18.863

  • Copper -0.0695 @ 3.6250

U.S. Summary:

  • Earnings/Guidance:

  • Advance Auto (AAP) misses by $0.01, misses on revs, comparable store sales down 0.6%; lowers FY22 EPS and revenue guidance below consensus

  • Brinker (EAT) misses by $0.02, reports revs in-line; guides FY23 EPS below consensus, revs in-line

  • Caleres (CAL) beats by $0.06, reports revs in-line; reaffirms FY23 EPS guidance, raises FY23 revenue growth outlook

  • Dycom (DY) beats by $0.48, beats on revs; guides Q3 revs in-line

  • II-VI (IIVI) beats by $0.04, beats on revs; guides Q1 EPS in-line, revs above consensus

  • Intuit (INTU) beats by $0.12, beats on revs; guides OctQ EPS below consensus, revs below consensus; guides FY23 EPS in-line, revs in-line

  • La-Z-Boy (LZB) beats by $0.24, beats on rev; expects 2Q23 delivered sales to increase by 2-5% yr/yr

  • Nordstrom (JWN) beats by $0.01, beats on revs; lowers FY23 EPS below consensus, revs mostly below consensus

  • Paycor (PYCR) beats by $0.02, beats on revs; guides Q1 (Sep) revs above consensus; guides FY23 revs above consensus

  • Petco Health and Wellness (WOOF) misses by $0.03, misses on revs; lowers FY23 guidance; Q2 comps +3.8%

  • Royal Bank of Canada (RY) misses by CAD 0.17

  • ScanSource (SCSC) misses by $0.06, beats on revs; guides FY23 revs above two analyst estimate

  • Toll Brothers (TOL) beats by $0.06, reports revs in-line, Q3 deliveries were below guidance, lowers FY22 deliveries guidance; saw significant decline in demand as Q3 progressed

  • Urban Outfitters (URBN) misses by $0.06, reports revs in-line; comparable retail segment net sales up 1%, gross margin down 595 bps yr/yr

  • General News:

  • Minneapolis Fed President Neel Kashkari (2023 voter) says this is not the time to back off inflation fight, according to the Wall Street Journal

  • President Biden ordered airstrikes against Iranian-backed groups in Syria, according to CNN

  • Democrat Pat Ryan defeated Republican Marc Molinaro with 51% of the vote in New York House special election which was seen as a bellwether. President Biden won this district by 2 points in 2020, according to Politico

  • President Biden expected to announce decision today that could cancel $10K in student debt, according to the New York Times

  • President Biden's plan to cancel $10,000 in student debt would cost the US government $300 billion, according to CBS News

  • The Biden administration is expected to offer coronavirus booster vaccines aimed at the Omicron variant to Americans 12 and older next month, according to the New York Times

  • Japan aiming to return to nuclear power, according to NBC News

  • Akoustis Technologies (AKTS) receives development order for two new diplexers from Fortune 100 internet company

  • Algoma Steel Group (ASTL) and United Steelworkers Union 2251 reach a tentative collective agreement

  • AstraZeneca (AZN) aims to transform cancer outcomes with new data across industry-leading portfolio at ESMO 2022

  • Bed Bath and Beyond (BBBY) secures financing, according to the Wall Street Journal

  • CBRE Group (CBRE) approves an incremental $2.0 bln increase to its stock repurchase authorization

  • Ceragon (CRNT) shareholders reject all proposals set forth by Aviat Networks (AVNW) at the company's 2022 Extraordinary General Meeting

  • ComScore (SCOR) names Greg Dale as COO

  • Datadog (DDOG) announces it achieves Amazon Web Services (AWS) security, networking and retail competencies

  • Ecolab (ECL): Bill Gates discloses purchase of nearly 59K shares

  • Farfetch (FTCH), Richemont and Alabbar to partner in YOOX NET-A-PORTER

  • Getty Images (GETY) boosts debt repayment

  • Group 1 Auto (GPI) announces CEO transition plans

  • Honda (HMC) considering decoupling China supply chains, according to Reuters

  • II-VI (IIVI) announces that its Board of Directors unanimously agrees to extend CEO contract with Dr. Chuck Mattera until August 1, 2030

  • Johnson & Johnson (JNJ) names Larry Merlo as Non-Executive Chair Designate of planned new consumer health company

  • Lyft (LYFT) aiming to sublease large part of unused office space, according to the Wall Street Journal

  • Matson (MATX) adds 3 mln shares, or approximately 8% of shares outstanding, to its existing 6 mln share repurchase program

  • Meta Platforms (META): Competitor TikTok is testing a new 'Nearby' feed to display local content; currently being tested with select users in Southeast Asia, according to TechCrunch

  • Meta Platforms (META): FTC aiming to stop Meta CEO Mark Zuckerberg from antitrust lawsuit, according to the Wall Street Journal

  • Moderna (MRNA) confirms it has completed its application to the FDA for emergency use authorization for its BA.4/BA.5 Omicron-targeting bivalent COVID-19 booster vaccine

  • Pangea Logistics Solutions (PANL) purchases a vessel to add to its operating fleet for $17.1 mln, bringing the total to 25 ships; the new ship is expected to be delivered in September or October 2022

  • Roche Hldg's (RHHBY) VENTANA PD-L1 (SP263) test gains CE label expansion

  • Shell (RDS.A) unions reach deal to end strike off Australia, according to Reuters

  • Snap (SNAP) reaches $35 mln class-action privacy settlement in IL, according to Chicago Tribune

  • Tattooed Chef (TTCF) expands distribution agreement with Walmart (WMT) that will increase availability of its products at Walmart stores across the U.S.

  • Trevi Therapeutics (TRVI) Announces Multiple Late-Breaking Abstracts Accepted for Presentation at Upcoming Medical Conferences on Analysis of Oral Nalbuphine Extended Release

  • Twitter (TWTR) combines teams that help reduce spam, according to Reuters

  • Twitter (TWTR) could face new political and legal challenges following whistleblower complaint, according to the Wall Street Journal

  • Wendy's (WEN): More than 100 people have reportedly become ill after eating lettuce on sandwiches, far more than CDC reported last week, according to the New York Post

  • WEX (WEX) authorizes a new share repurchase program under which up to $150 mln worth common stock may be repurchased

  • M&A:

  • eBay (EBAY) acquires myFitment group of companies, a platform provider that helps sellers drive sales and avoid expensive returns; financial details not disclosed

  • Laboratory Corp (LH) acquires RWJBarnabas Health's outreach lab business and select related assets; financial details not disclosed

  • Yandex (YNDX) aiming sell media assets to state backed firm, according to the Wall Street Journal

  • Syndicate

  • A

  • IPOs:

  • Expected to Price:

  • No IPOs expected.

Gapping Up/Down

  • Gapping up:

  • GETY +16.2%, FTCH +13.6%, TTCF +11%, LZB +7.1%, INTU +5.7%, SCOR +4.6%, DY +4.2%, PYCR +3.3%, ASTL +1.9%, IIVI +1.7%, CRNT +1.7%, FAF +1.6%, MATX +0.5%

  • Gapping down:

  • JWN -13.8%, SCSC -6.3%, AAP -4.5%, AVNW -2.7%, CAL -2.7%, WEN -2.4%, URBN -2%, FLR -1.7%, TOL-1.5%, PANL -1.2%, MRNA -0.5%

 

Analyst Research (see Upgrades/Downgradescalendarfor full list):

  • Upgrades

  • AvalonBay (AVB) upgraded to Outperform from Peer Perform at Wolfe Research

  • Centennial Resource Development (CDEV) upgraded to Buy from Hold at Truist

  • Intercorp Financial (IFS) upgraded to Outperform from Neutral at Grupo Santander; tgt $29

  • Prologis (PLD) upgraded to Outperform from Peer Perform at Wolfe Research

  • Vallourec SA (VLOWY) upgraded to Overweight from Equal Weight at Barclays

  • Downgrades:

  • Bank of Nova Scotia (BNS) downgraded to Market Perform from Outperform at BMO Capital Markets; tgt $95

  • Bank of Nova Scotia (BNS) downgraded to Sector Perform from Outperform at RBC Capital Mkts

  • Bank of Nova Scotia (BNS) downgraded to Mkt Perform from Outperform at Keefe Bruyette

  • Catalyst Pharma (CPRX) downgraded to Neutral from Buy at ROTH Capital; tgt raised to $15.50

  • Medtronic (MDT) downgraded to Mkt Perform from Outperform at Raymond James

  • Rio Tinto (RIO) downgraded to Neutral from Outperform at Macquarie

  • Suzano S.A. (SUZ) downgraded to Underperform from Outperform at Bradesco BBI; tgt $11

  • XPeng (XPEV) downgraded to Equal Weight from Overweight at Barclays; tgt lowered to $22

  • Others:

  • Arista Networks (ANET) initiated with a Hold at Deutsche Bank; tgt $135

  • Arkema S.A. (ARKAY) assumed with an Outperform at Credit Suisse

  • Establishment Labs (ESTA) initiated with a Buy at B. Riley Securities; tgt $107

  • Frontier Group Holdings (ULCC) resumed with an Overweight at Morgan Stanley; tgt $20

  • Illinois Tool (ITW) resumed with a Neutral at BofA Securities; tgt $220

  • Tricon Residential (TCN) placed on Analyst Current Favorites list at Raymond James

  • VICI Properties (VICI) initiated with a Mkt Outperform at JMP Securities; tgt $38

Upcoming Events:

  • Econ Data:

  • 07:00 ET: MBA Mortgage Applications Index for Aug 20 (Briefing.comConsensus NA; Prior -2.3%)

  • 08:30 ET: Durable Orders for Jul (Briefing.comConsensus 0.6%; Prior 1.9%)

  • 08:30 ET: Durable Orders, ex-transportation, for Jun (Briefing.comConsensus 0.1%; Prior 0.3%)

  • 10:00 ET: Pending Homes Sales for Jul (Briefing.comConsensus -3.0%; Prior -8.6%)

  • 10:30 ET: EIA Crude Oil Inventories for Aug 20 (Briefing.comConsensus NA; Prior -7.056M)

  • Earnings:

  • Monday (Aug 22)

  • Afternoon: DLO NDSN PANW ZM

  • Tuesday (Aug 23)

  • Morning: BNS BZUN DKS DOLE GDS SJM JD BEKE M MDT

  • Afternoon:  AAP CAL INTU LZB JWN PYCR SCSC TOL URBN

  • Wednesday (Aug 24)

  • Morning:  EAT DY IIVI WOOF RY

  • Afternoon:  ADSK BOX GES NTAP NVDA CRM SNOW SPLK VSCO WSM ZUO

  • Thursday (Aug 25)

  • Morning: ANF BURL CM COTY DG DLTR FRO HAIN HIBB LANC MBUU PTON TITN TD

  • Afternoon:  AFRM DELL DOMO ESTC FTCH GPS MRVL SUMO ULTA VMW WDAY

  • Friday (Aug 26) 

  • Morning:  JKS

Asia & Europe detail:

Asia: Nikkei -0.5%, Hang Seng -1.2%, Shanghai Composite -1.9%

Equity indices in the Asia-Pacific region ended the midweek session on a mostly lower note. Hong Kong-listed shares of developer Logan Group fell 51% after returning from a three-month halt. Chinese banks are reportedly lowering their mortgage rates. Japan will reportedly consider extending the lifespan of its nuclear plants and will support the development of new reactors. South Korea's budget for 2023 will be presented to parliament on September 2.

  • Economic data was limited:

  • South Korea's September Manufacturing BSI Index 82 (last 80)

---Equity Markets---

  • Japan's Nikkei: -0.5%

  • Hong Kong's Hang Seng: -1.2%

  • China's Shanghai Composite: -1.9%

  • India's Sensex: +0.1% 

  • South Korea's Kospi: +0.5%

  • Australia's ASX All Ordinaries: +0.6%

---FX---

  • USD/JPY: UNCH at 136.68

  • USD/CNH: +0.4% to 6.8803

  • USD/INR: -0.1% to 79.81

Europe: DAX +0.1%, FTSE -0.3%, CAC +0.1%

Major European indices trade near their flat lines. Italy's Prime Minister Draghi said that a plan to cap the price of gas will be presented at the next EU Council meeting while the U.K. is planning an energy price cap of its own. Belgium's Prime Minister De Croo warned that the next five to ten winters will be "difficult" due to the ongoing energy crisis.

  • No data today

---Equity Markets---

  • STOXX Europe 600: UNCH

  • Germany's DAX: +0.1%

  • U.K.'s FTSE 100: -0.3%

  • France's CAC 40: +0.1%

  • Italy's FTSE MIB: -0.1%

  • Spain's IBEX 35: -0.2%

---FX---

  • EUR/USD: -0.4% to 0.9933

  • GBP/USD: -0.4% to 1.1781

  • USD/CHF: -0.1% to 0.9633


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