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24/11/21 Briefing

The S&P 500 futures trade 12 points, or 0.3%, below fair value, displaying a hesitant tone after the past two days saw a rotation into value stocks from growth stocks. The market is also on standby for a huge data dump before Thanksgiving.

The economic calendar will include weekly Initial Claims (Briefing.comconsensus 265,000) at 8:30 a.m. ET, followed by Personal Income (Briefing.comconsensus 0.2%) and Spending (Briefing.comconsensus 1.0%) for October, PCE Prices for October (Briefing.comconsensus 0.6%), and New Home Sales for October (Briefing.comconsensus 800,000) at 10:00 a.m. ET.

In addition, the FOMC Minutes from the November meeting will be available at 2:00 p.m. ET, providing some insight into the Fed's thinking about interest rates, tapering, and inflation.

Like yesterday, there's been a fair share of disappointing earnings reactions, except this time the news hasn't been as good. For example, Nordstrom (JWN 23.73, -8.12, -26.4%) and Gap (GPS 18.58, -4.93, -21.0%) have plunged more than 20% after missing EPS estimates and/or issuing downside guidance due to persistent supply chain issues.

HP Inc. (HPQ 34.00, +1.81, +5.6%) and Deere (DE 362.00, +12.72, +3.6%) are two earnings standouts, even as Deere missed revenue estimates.

U.S. Treasuries trade little changed. The 2-yr yield is unchanged at 0.61%, and the 10-yr yield is unchanged at 1.67%. The U.S. Dollar Index is up 0.3% to 96.74. WTI crude futures are up 0.1% to $78.61/bbl.

In U.S. Corporate news:

  • Nordstrom (JWN 23.73, -8.12): -26.4% after missing EPS estimates amid continuing supply chain issues.

  • Gap (GPS 18.58, -4.93): -21.0% after missing top and bottom-line estimates and guiding FY22 EPS and revenue below consensus due to significant supply chain constraints.

  • Autodesk (ADSK 263.34, -40.66): -13.4% after guiding fiscal Q4 EPS below consensus, overshadowing its EPS beat.

  • HP Inc. (HPQ 34.00, +1.81): +5.6% after beating top and bottom-line estimates and guiding fiscal Q1 EPS above consensus.

  • Deere (DE 362.00, +12.72): +3.6% after beating EPS estimates on below-consensus revenue.

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region ended the midweek session on a mixed note. Japan's Nikkei: -1.6% Hong Kong's Hang Seng: +0.1% China's Shanghai Composite: +0.1% India's Sensex: -0.6% South Korea's Kospi: -0.1% Australia's ASX All Ordinaries: -0.2%.

  • In economic data:

  • Japan's flash November Manufacturing PMI 54.2 (last 53.2) and flash Services PMI 52.1 (last 50.7). October BoJ Core CPI 0.6% yr/yr (last 0.6%)

  • South Korea's December Manufacturing BSI Index 88 (last 87)

  • Singapore's Q3 GDP 5.2% qtr/qtr (last 3.4%); 7.1% yr/yr (expected 6.5%; last 15.2%)

  • Australia's Q3 Construction Work Done -0.3% qtr/qtr (expected -3.1%; last 0.8%)


  • In news:

  • Taiwan may ban senior Chinese officials from entering the island.

  • Samsung confirmed plans to construct a chip fab in Texas, which is expected to begin mass production in the second half of 2024.

  • Nikkei reported that 70 Japanese companies, including three banks, will experiment with digital currency.

  • The Reserve Bank of New Zealand raised its official cash rate by 25 bps to 0.75%, as expected.



  • Major European indices trade on a modestly lower note with Germany's DAX (-0.7%) struggling to keep pace. STOXX Europe 600: -0.1% Germany's DAX: -0.7% U.K.'s FTSE 100: UNCH France's CAC 40: -0.3% Italy's FTSE MIB: -0.1% Spain's IBEX 35: -0.1%.

  • In economic data:

  • Germany's November ifo Business Climate Index 96.5 (expected 96.6; prior 97.7). November Current Assessment 99.0, as expected (last 100.2) and Business Expectations 94.2 (expected 95.0; last 95.4)

  • U.K.'s November CBI Industrial Trends Orders 26 (expected 18; last 9)

  • France's November Business Survey 109 (expected 106; last 107)

  • Swiss November ZEW Expectations -10.8 (last 15.6)


  • In news:

  • Germany's SPD, Greens, and FDP are expected to announce their coalition agreement today.

  • Current Finance Minister Scholz is expected to be named next Chancellor.

  • Bank of England Governor Bailey said that he doesn't expect policymakers to reinstate hard guidance.

  • European Central Bank policymaker De Guindos said that inflation drivers are becoming more structural, repeating the view that the recent acceleration was driven by transitory factors.



U.S. equity futures:

  • S&P 500 Futures: -17 @ 4,674

  • DJIA Futures: -163 @ 35,651

  • Nasdaq 100 Futures: -67 @ 16,240

Overseas:

  • Europe: DAX -0.7%, FTSE UNCH, CAC -0.3%

  • Asia: Nikkei -1.6%, Hang Seng +0.1%, Shanghai Composite +0.1%

Commodities:

  • Crude Oil -0.01 @ 78.49

  • Nat Gas +0.055 @ 5.022

  • Gold +1.45 @ 1785.25

  • Silver -0.008 @ 23.427

  • Copper +0.0273 @ 4.4508

U.S. Summary:

  • Earnings/Guidance (Full Earnings Calendar):

  • Anaplan (PLAN) beats by $0.06, beats on revs; guides Q4 revs above consensus

  • Autodesk (ADSK) beats by $0.07, reports revs in-line; guides JanQ EPS below consensus, revs in-line; guides FY22 EPS in-line, revs in-line

  • Dada (DADA) reports Q3 (Sep) results, beats on revs; guides Q4 revs in-line

  • Deere (DE) beats by $0.25, misses on revs

  • Dell (DELL) beats by $0.20, beats on revs

  • Gap (GPS) misses by $0.24, misses on revs, comps +5%; guides FY22 EPS below consensus, revs below consensus; significant supply chain constraints impacted comps and sales

  • Guess? (GES) beats by $0.17, beats on revs; announces dividend increase

  • HP (HPQ) beats by $0.06, beats on revs; guides JanQ EPS above consensus; guides FY22 EPS in-line

  • Kingsoft Cloud (KC) beats by RMB1.35, misses on revs; guides Q4 revs in-line

  • Mesoblast (MESO) reports Q1 results; beats on revs

  • Nordstrom (JWN) misses by $0.17, beats on revs, reaffirms certain FY21 guidance

  • Nutanix (NTNX) beats by $0.12, beats on revs; guides Q2 revs in-line; guides FY22 revs above consensus

  • Pure Storage (PTSG) beats by $0.10, beats on revs; guides Q4 revs above consensus; guides FY22 revs above consensus

  • VMware (VMW) beats by $0.18, beats on revs; sees JanQ adjusted EPS above consensus and revs below consensus; expects FY23 revs to grow high-single-digits


  • General News:

  • United Nations atomic watchdog left Iran without deal on inspections, according to the Wall Street Journal

  • President Biden will nominate Shalanda Young for director of the Office of Management and Budget, according to the New York Times

  • The Biden administration asks appeals court to remove block on vaccination mandate for companies with 100 employees or more, according to the New York Times

  • Olaf Scholz will become chancellor of Germany with center-left government, according to the New York Times

  • Germany will decide on COVID-19 restrictions today, according to CNBC

  • Japan to introduce digital currency supported by bank deposits, according to Nikkei

  • Apple (AAPL) to use TSMC (TSM) for custom 5G modem in 2023, according to Nikkei

  • AVROBIO (AVRO) hosts a panel of investigators managing the patient experience in the Phase 2 FAB-GT clinical trial of AVR-RD-01

  • BeiGene (BGNE) announces approval of BRUKINSA in the EU for treatment of adults with Waldenstrm's macroglobulinemia

  • Castle Biosciences (CSTL) presents data reinforcing the clinical utility of its DecisionDx dermatologic portfolio

  • Eli Lilly (LLY) awarded $530 mln Army contract

  • Hewlett Packard Enterprise (HPE), DELL, IBM and others to compete for US Army contract

  • Google (GOOG): Hundreds of Google employees are against vaccination mandate, according to CNBC

  • Ionis Pharma (IONS) announces that Pfizer (PFE) reports topline results from Phase 2b clinical study of vupanorsen

  • Johnson & Johnson (JNJ): Johnson & Johnson COVID-19 vaccine fully approved by Health Canada to prevent COVID-19 in individuals 18 years and older

  • Kura Oncology (KURA) reports Phase 1b Study of KO-539 put on partial clinical hold by FDA

  • Procter & Gamble (PG) voluntarily recalls certain Old Spice and Secret spray antiperspirant products after detection of benzene

  • Puma Biotech (PBYI) announces US Patent Term Extension for NERLYNX patent

  • Raymond James (RJF) reports operating metrics for October

  • Rivian (RIVN): Third Point made $300 mln in Rivian, according to Financial Times

  • SeaSpine (SPNE) announces full commercial launch of Admiral ACP System

  • Standard Lithium (SLI) announces $100 million direct investment from koch strategic platforms

  • Takeda Pharma (TAK): FDA approves Livtencity for treatment of certain patients with post-transplant cytomegalovirus that does not respond to other drugs


  • M&A:

  • Booking Holdings (BKNG) enters into agreement to acquire Etraveli Group for approx. 1.63 bln

  • Dorchester Minerals (DMLP) enters into agreement to acquire mineral and royalty interests

  • Vinci Partners (VINP) announces divestment of Lest; terms not indicated

  • Westlake Chemical (WLK) acquires Hexion's global epoxy business for $1.2 bln


  • Syndicate:

  • AmerisourceBergen (ABC) files mixed securities shelf offering

  • Outlook Therapeutics (OTLK) announces bought deal offering of 8.0 mln common shares price at $1.25/share

  • SWK Holdings (SWKH) confirms non-binding proposal from Carlson Capital for $19.00 per share

  • Ur-Energy (URG) files for $100 mln mixed securities shelf offering


  • IPOs:

  • Expected to Price:

  • No IPOs expected.



Gapping Up/Down

  • Gapping up:

  • PSTG +14.1%, HPQ +6.4%, NTNX +5.9%, SLI +4.4%, PBYI +3.8%, GES +3.8%, PTC +2.9%, DELL +2.1%, DELL +2.1%, URG +1.8%, TAK +1.1%


  • Gapping down:

  • JWN -27.2%, OTLK -20.5%, GPS -19.7%, PLAN-19.1%, ADSK -13.7%, KC -3.1%, M -2.1%, VMW-1.6%, DADA -0.8%


Analyst Research (see Upgrades/Downgradescalendarfor full list):

  • Upgrades

  • AEGON N.V. (AEG) upgraded to Outperform from Neutral at Credit Suisse

  • Chevron (CVX) upgraded to Outperform from Sector Perform at RBC Capital Mkts; tgt raised to $145

  • Dollar Tree (DLTR) upgraded to Outperform from Market Perform at Telsey Advisory Group; tgt raised to $175

  • Just Eat Takeaway.comN.V. (GRUB) upgraded to Overweight from Neutral at JP Morgan

  • Synlogic (SYBX) upgraded to Outperform from Perform at Oppenheimer; tgt $7


  • Downgrades:

  • Anaplan (PLAN) downgraded to Neutral from Overweight at Piper Sandler; tgt lowered to $48

  • Gap (GPS) downgraded to Neutral from Overweight at JP Morgan; tgt lowered to $22

  • Healthcare Trust of America (HTA) downgraded to Hold from Buy at Berenberg; tgt $37

  • Jack In The Box (JACK) downgraded to Hold from Buy at Stifel; tgt lowered to $100

  • Nordstrom (JWN) downgraded to Hold from Buy at Jefferies; tgt lowered to $30


  • Others:

  • Avery Dennison (AVY) initiated with an Outperform at Raymond James; tgt $240

  • Berry Global (BERY) initiated with a Mkt Perform at Raymond James

  • Better Therapeutics (BTTX) initiated with a Buy at Chardan Capital Markets; tgt $17

  • Celularity (CELU) initiated with an Equal-Weight at Morgan Stanley; tgt $9

  • ChargePoint (CHPT) initiated with an Equal Weight at CapitalOne; tgt $24

  • Diversey Holdings (DSEY) resumed with a Buy at Citigroup; tgt $16

  • EVgo Inc. (EVGO) initiated with an Equal Weight at CapitalOne; tgt $18

  • Graphic Packaging (GPK) initiated with a Strong Buy at Raymond James; tgt $24.50

  • LianBio (LIAN) initiated with an Outperform at Raymond James; tgt $27

  • Marcus (MCS) initiated with a Neutral at JP Morgan; tgt $25

  • Pliant Therapeutics (PLRX) initiated with an Outperform at RBC Capital Mkts; tgt $38

  • Sealed Air (SEE) initiated with a Mkt Perform at Raymond James

  • Silgan Holdings (SLGN) initiated with an Outperform at Raymond James; tgt $47

  • Spartan Acquisition Corp. III (SPAQ) initiated with an Overweight at CapitalOne; tgt $17

  • Spotify (SPOT) initiated with a Buy at The Benchmark Company; tgt $300

  • The Metals Company (TMC) initiated with a Neutral at Wedbush; tgt $5


Upcoming Events:

  • Econ Data:

  • 07:00 ET: MBA Mortgage Applications Index for Nov 20 (Briefing.comConsensus NA; Prior -2.8%)

  • 08:30 ET: Initial Claims for Nov 20 (Briefing.comConsensus 265K; Prior 268K)

  • 08:30 ET: Continuing Claims for Nov 13 (Briefing.comConsensus NA; Prior 2.080M)

  • 08:30 ET: GDP - Second Estimate for Q3 (Briefing.comConsensus 2.2%; Prior 2.0%)

  • 08:30 ET: GDP Chain Deflator - Second Estimate for Q3 (Briefing.comConsensus 5.7%; Prior 5.7%)

  • 08:30 ET: Durable Orders for Oct (Briefing.comConsensus 0.2%; Prior -0.4%)

  • 08:30 ET: Durable Orders ex-transportation for Oct (Briefing.comConsensus 0.5%; Prior 0.4%)

  • 08:30 ET: Adv. Intl. Trade in Goods for Oct (Briefing.comConsensus NA; Prior -$96.3B)

  • 08:30 ET: Adv. Retail Inventories for Oct (Briefing.comConsensus NA; Prior -0.2%)

  • 08:30 ET: Adv. Wholesale Inventories for Oct (Briefing.comConsensus NA; Prior 1.1%)

  • 10:00 ET: Personal Income for Oct (Briefing.comConsensus 0.2%; Prior -1.0%)

  • 10:00 ET: Personal Spending for Oct (Briefing.comConsensus 1.0%; Prior 0.6%)

  • 10:00 ET: PCE Prices for Oct (Briefing.comConsensus 0.6%; Prior0.3%)

  • 10:00 ET: PCE Prices - Core for Oct (Briefing.comConsensus 0.4%; Prior 0.2%)

  • 10:00 ET: New Home Sales for Oct (Briefing.comConsensus 800K; Prior 800K)

  • 10:00 ET: Univ. of Michigan Consumer Sentiment - Final for Nov (Briefing.comConsensus 66.8; Prior 66.8)

  • 10:30 ET: EIA Crude Oil Inventories for Nov 20 (Briefing.comConsensus NA; Prior -2.10M)

  • 12:00 ET: EIA Natural Gas Inventories for Nov 20 (Briefing.comConsensus NA; Prior +26 bcf)

  • 14:00 ET: FOMC Minutes for Nov


  • Earnings:

  • Monday (Nov 22)

  • Morning: AVYA CRNC SR TWST ZH

  • Afternoon: A ARWR JACK KEYS URBN ZM


  • Tuesday (Nov 23)

  • Morning: ANF AEO AMWD ADI BBY BURL ROAD CBRL DKS DLTR DY GENI SJM MDT TITN

  • Afternoon: PLAN ADSK DELL GPS GES HPQ JWN NTNX PSTG VMW


  • Wednesday (Nov 24)

  • Morning: DE KC


  • Friday (Nov 26)

  • Morning: PDD



Asia & Europe detail:

Asia: Nikkei -1.6%, Hang Seng +0.1%, Shanghai Composite +0.1%

Equity indices in the Asia-Pacific region ended the midweek session on a mixed note. Taiwan may ban senior Chinese officials from entering the island. Samsung confirmed plans to construct a chip fab in Texas, which is expected to begin mass production in the second half of 2024. Nikkei reported that 70 Japanese companies, including three banks, will experiment with digital currency. The Reserve Bank of New Zealand raised its official cash rate by 25 bps to 0.75%, as expected.

  • In economic data:

  • Japan's flash November Manufacturing PMI 54.2 (last 53.2) and flash Services PMI 52.1 (last 50.7). October BoJ Core CPI 0.6% yr/yr (last 0.6%)

  • South Korea's December Manufacturing BSI Index 88 (last 87)

  • Singapore's Q3 GDP 5.2% qtr/qtr (last 3.4%); 7.1% yr/yr (expected 6.5%; last 15.2%)

  • Australia's Q3 Construction Work Done -0.3% qtr/qtr (expected -3.1%; last 0.8%)


---Equity Markets---

  • Japan's Nikkei: -1.6%

  • Hong Kong's Hang Seng: +0.1%

  • China's Shanghai Composite: +0.1%

  • India's Sensex: -0.6%

  • South Korea's Kospi: -0.1%

  • Australia's ASX All Ordinaries: -0.2%

---FX---

  • USD/JPY: -0.1% to 114.98

  • USD/CNH: UNCH at 6.3874

  • USD/INR: -0.1% to 74.39


Europe: DAX -0.7%, FTSE UNCH, CAC -0.3%

Major European indices trade on a modestly lower note with Germany's DAX (-0.7%) struggling to keep pace. Germany's SPD, Greens, and FDP are expected to announce their coalition agreement today. Current Finance Minister Scholz is expected to be named next Chancellor. Bank of England Governor Bailey said that he doesn't expect policymakers to reinstate hard guidance. European Central Bank policymaker De Guindos said that inflation drivers are becoming more structural, repeating the view that the recent acceleration was driven by transitory factors.

  • In economic data:

  • Germany's November ifo Business Climate Index 96.5 (expected 96.6; prior 97.7). November Current Assessment 99.0, as expected (last 100.2) and Business Expectations 94.2 (expected 95.0; last 95.4)

  • U.K.'s November CBI Industrial Trends Orders 26 (expected 18; last 9)

  • France's November Business Survey 109 (expected 106; last 107)

  • Swiss November ZEW Expectations -10.8 (last 15.6)


---Equity Markets---

  • STOXX Europe 600: -0.1%

  • Germany's DAX: -0.7%

  • U.K.'s FTSE 100: UNCH

  • France's CAC 40: -0.3%

  • Italy's FTSE MIB: -0.1%

  • Spain's IBEX 35: -0.1%

---FX---

  • EUR/USD: -0.3% to 1.1212

  • GBP/USD: -0.1% to 1.3366

  • USD/CHF: +0.3% to 0.9360

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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