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25/10/21 Briefing

The S&P 500 futures trade 15 points, or 0.3%, above fair value following last week's record-setting advance. The market has been supported by better-than-expected earnings reports in the face of supply chain/inflation issues.

The earnings spotlight will shift to the mega-caps this week: Facebook (FB 320.99, -3.62, -1.1%) after today's close; Alphabet (GOOG 2773.00, +0.50, unch) and Microsoft (MSFT 309.28, +0.12, unch) after Tuesday's close; and Apple (AAPL 148.45, -0.24, -0.2%) and Amazon.com (AMZN 3340.00, +4.45, +0.1%) after Thursday's close.

In the meantime, there hasn't been a noticeable reaction to the latest infrastructure news. House Speaker Pelosi said she expects deal on the larger reconciliation bill this week. The bill could include a debt-ceiling provision, a wealth tax on unrealized capital gains for people with $1 billion in assets, and a 15% minimum tax on corporations with a tax on stock buybacks.

Separately, key movers in pre-market action are PayPal (PYPL 253.60, +13.20, +5.5%) and Tesla (TSLA 946.07, +36.39, +4.0%).

PayPal said it's not pursuing an acquisition of Pinterest (PINS 50.00, -8.06, -13.9%) at this time. Tesla is reportedly increasing the prices of Model X and S cars by $5,000, and the company is selling 100,000 Teslas to Hertz Global (HTZZ), according to Bloomberg News.

U.S. Treasury yields have edged lower after rising noticeably last week. The 2-yr yield is down two basis points to 0.45%, and the 10-yr yield is down one basis point to 1.65%. The U.S. Dollar Index is up 0.2% to 93.85. WTI crude futures are up 0.2% to $93.85/bbl.

In U.S. Corporate news:

  • Tesla (TSLA 946.07, +36.39): +4.0% after increasing the prices of Model X and S cars by $5,000, according to Reuters. In addition, Hertz Global (HTZZ) ordered 100,000 Tesla, according to Bloomberg News.

  • PayPal (PYPL 253.60, +13.20): +5.5% after stating that it's not pursuing an acquisition of Pinterest (PINS 50.00, -8.06, -13.9%) at this time.

  • Kimberly-Clark (KMB 129.50, -3.54): -2.7% after lowering its FY21 guidance. KMB beat EPS estimates.

  • Lennox Intl. (LII 304.20, -7.98): -2.6% after missing top and bottom-line estimates and narrowing its FY21 guidance with EPS towards the low end.

  • Otis Worldwide (OTIS 87.00, +1.37): +1.6% after beating top and bottom-line estimates and issuing mixed FY21 guidance.

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region began the week on a mostly higher note. Japan's Nikkei: -0.7% Hong Kong's Hang Seng: UNCH China's Shanghai Composite: +0.8% India's Sensex: +0.2% South Korea's Kospi: +0.5% Australia's ASX All Ordinaries: +0.4%.

  • In economic data:

  • Japan's August Leading Index 101.3 (expected 101.8; last 104.1) and Coincident Indicator -3.1% m/m (expected -2.9%; last -0.2%)

  • Singapore's September CPI 2.5% yr/yr (expected 2.4%; last 2.4%)


  • In news:

  • Reports from Japan suggest that the LDP may not maintain its sole majority after next weekend's election to the lower house.

  • China's National Development Reform Commission will reportedly strengthen supervision over medium and long term coal contracts.

  • South Korea's President Moon said that South Korea will have higher than expected tax revenue for 2021, which will be used to repay the national debt.



  • Major European indices trade near their flat lines while Italy's MIB (+0.7%) outperforms. STOXX Europe 600: UNCH Germany's DAX: +0.2% U.K.'s FTSE 100: +0.4% France's CAC 40: -0.2% Italy's FTSE MIB: +0.7% Spain's IBEX 35: +0.3%.

  • In economic data:

  • Germany's October ifo Business Climate Index 97.7 (expected 97.9; last 98.9). October Current Assessment 100.1 (expected 99.4; last 100.4) and October Business Expectations 95.4 (expected 96.4; last 97.4)


  • In news:

  • Standard & Poor's affirmed Italy's BBB rating and raised the outlook to Positive from Stable.

  • Economists from Germany's ifo Institute said that supply chain problems are expected to worsen in the coming months with domestic GDP growing just 0.5% in Q4.

  • Officials from France and the U.K. are still trying to solve their dispute over fishing rights.





U.S. equity futures:

  • S&P 500 Futures: +7 @ 4,552

  • DJIA Futures: +17 @ 35,694

  • Nasdaq 100 Futures: +48 @ 15,403

Overseas:

  • Europe: DAX +0.2%, FTSE +0.4%, CAC -0.2%

  • Asia: Nikkei -0.7%, Hang Seng UNCH, Shanghai Composite +0.8%

Commodities:

  • Crude Oil +1.07 @ 84.83

  • Nat Gas +0.330 @ 5.791

  • Gold +6.55 @ 1802.85

  • Silver +0.039 @ 24.448

  • Copper +0.0280 @ 4.5260

U.S. Summary:

  • Earnings/Guidance (Full Earnings Calendar):

  • APi Group (APG) sees Q3 revs being at the higher end of analyst expectations

  • Atlantic Union Bankshares (AUB) beats by $0.17

  • Bank of Hawaii (BOH) beats by $0.35

  • Community Bank (CBU) beats by $0.03, beats on revs

  • Dorman Products (DORM) misses by $0.04, beats on revs; reaffirms FY21 EPS guidance, raises FY21 revs above consensus

  • First Bancorp (FBP) beats by $0.09

  • HNI (HNI) reports EPS in-line, revs in-line; guides Q4 revs in-line

  • HSBC Holdings (HSBC) reports Q3 results; revs slightly below consensus

  • Kimberly-Clark (KMB) beats by $0.07, reports revs in-line; lowers FY21 guidance

  • Lennox Int'l (LII) misses by $0.18, misses on revs; narrows FY21 guidance with EPS towards the low end

  • MagnaChip Semi (MX) beats by $0.22, beats on revs

  • NorthWestern (NWE) beats by $0.11, beats on revs; reaffirms FY21 EPS guidance

  • Otis Worldwide (OTIS) beats by $0.04, beats on revs; guides FY21 EPS below consensus, revs above consensus

  • Restaurant Brands Int'l (QSR) beats by $0.02, misses on revs

  • SITE Centers (SITC) beats by $0.03, reports revs in-line; guides FY21 FFO above consensus

  • uniQure (QURE) beats by EUR 0.12, misses on revs


  • General News:

  • House Speaker Nancy Pelosi (D-CA) says she expects deal on larger reconciliation bill this week which would enable the bipartisan infrastructure bill to pass House. She says it's possible that Democrats will attach debt ceiling increase to reconciliation bill. Treasury Secretary Janet Yellen expects inflation will improve in H2 of 2022. Ms. Yellen said "it's up to the president" when asked if she supports renomination of Fed Chairman Jerome Powell, according to CNN

  • Democrats say wealth tax on unrealized capital gains for people with $1 billion in assets will likely be included in reconciliation bill. A new 15% minimum tax on corporations and tax on stock buybacks are also a possibility, according to the Wall Street Journal

  • Democrats are considering removing Medicare expansion and paid leave completely from reconciliation bill, according to Politico

  • US officials are watching the Delta Plus variant, but there is no evidence that the variant impacts the effectiveness of current vaccines or therapeutics, according to CNBC

  • Rise in energy prices is challenging climate focused portfolio managers, according to the Wall Street Journal

  • Senator Joe Manchin (D-WV) met with President Biden to discuss potential $1.75 trillion budget reconciliation package, according to CNN

  • Former President Trump could make billions from social media venture and associated SPAC, according to Bloomberg

  • Accuray (ARAY) CyberKnife Robotic Radiotherapy Platform Could Significantly Improve Survival in Early-Stage Breast Cancer Patients

  • Alkermes (ALKS): FDA grants Fast Track designation to nemvaleukin alfa (nemvaleukin) for the treatment of platinum-resistant ovarian cancer

  • Amazon (AMZN) has been underpaying workers that had parental leave, according to the New York Times

  • Apollo Endosurgery (APEN): MERIT-Trial meets its primary endpoints for safety and efficacy

  • Applied Therapeutics (APLT) reports biomarker data from a pilot trial of AT-007 in patients with SORD Deficiency

  • Astra Space (ASTR) says there were errors in the co's accounting for its convertible preferred stock

  • AstraZeneca (AZN) reports Imfinzi plus chemotherapy significantly improved overall survival in 1st-line advanced biliary tract cancer

  • Atento (ATTO) says it detected a cyber-security attack on its IT systems in Brazil

  • Aurinia Pharma (AUPH): Bristol-Myers Squibb (BMY) has expressed interest in acquiring AUPH, according to Bloomberg

  • Azure Power (AZRE) wins wind project deal in India

  • Bausch Health (BHC) and and Clearside Biomedical (CLSD) announce XIPERE received FDA approval

  • BJ's Wholesale (BJ) announced that Rachael Vegas will join the Company as Executive Vice President, Chief Merchandising Officer, effective October 25, 2021

  • ERYTECH Pharma (ERYP) reports TRYbeCA-1 Phase 3 Trial of Eryaspase did not meet its primary endpoint of overall survival

  • Esperion Therapeutics (ESPR) has has entered into a privately negotiated exchange agreement with two co-managed holders of its 4.00% Convertible Senior Subordinated Notes due 2025

  • Finch Therapeutics (FNCH) presents positive data from PRISM3 clinical trial of CP101 for recurrent C difficile at American College of Gastroenterology Annual Scientific Meeting

  • First Bancorp (FBP) increases quarterly cash dividend to $0.10/share from $0.07/share

  • Hut 8 Mining (HUT) provides third site status update

  • Inseego (INSG) announces appointment of Robert Barbieri as Chief Financial Officer

  • J.M. Smucker (SJM) increases share repurchase authorization by 5 mln shares for a current total of about 7.8 mln

  • Johnson & Johnson (JNJ) will not be able to halt talc baby powder lawsuits, according to Bloomberg

  • Kroger (KR) Home Chef surpasses $1 billion in annual sales

  • Lion Electric (LEV) received a conditional purchase order for 1,000 all-electric LionC school buses from Student Transportation of Canada

  • Matador Resources (MTDR) revises dividend policy; doubles quarterly dividend

  • Merck (MRK) announced positive top-line results from two pivotal Phase 3 trials for doravirine/islatravir in adults with HIV-1

  • New Found Gold Corp. (NFGC) announces doubling of drill program to 400,000m and increase to 14 drill rigs

  • Novartis AG (NVS) reports top-line results for CANOPY-1 Phase III study did not meet its primary endpoints of overall surv

  • Owlet (OWLT) suspends certain Smart Sock shipments as it relates to recent FDA Warning Letter

  • Pretium Resources (PVG) reports New High-Grade Gold Exploration Discovery at the Golden Marmot Zone Affirms the District-Scale Potential of Brucejack with 72.5 g/t Gold Over 53.5 Meters, including 6,700 g/t Gold Over 0.5 Meters

  • Phathom Pharmaceuticals (PHAT) Announces New Data at ACG 2021 Annual Scientific Meeting

  • Rio Tinto (RIO): US appeals court appears to suggest support for Rio's Resolution mine, according to Reuters

  • Second Dupixent (REGN) Phase 3 Eosinophilic Esophagitis Trial to Demonstrate Significant Disease Improvements, Underscoring Role of Type 2 Inflammation in This Complex Disease

  • Sibanye-Stillwater (SBSW) in discussions to acquire 2 Brazilian miners for approximately $1 bln, according to the Wall Street Journal

  • TCR2 Therapeutics (TCRR) announces clinical trial collaboration agreement with Bristol Myers Squibb (BMY) to evaluate gavo-cel in combination with Opdivo and Yervoy

  • Tesla (TSLA) increased prices of Model X & S cars, according to Reuters

  • United Insurance (UIHC) announces estimated catastrophe losses for Q3

  • Xeris Biopharma (XERS) enters collaboration agreement with Merck


  • M&A:

  • Clearway Energy (CWEN) announces sale of its thermal business to KKR (KKR)

  • Grubhub (GRUB): Cat Rock Capital Sends Letter to Just Eat Takeaway.com Board Urging Sale or Spin-Off of Grubhub by End of 2021

  • PAE (PAE) enters into agreement to be acquired by Amentum for $1.9 bln

  • Pinterest (PINS): In response to market rumors regarding a potential acquisition of Pinterest by PayPal (PYPL), PayPal stated that it is not pursuing an acquisition of Pinterest at this time

  • Procore Technologies (PCOR) acquires LaborChart; financial terms not disclosed


  • Syndicate:

  • Benson Hill (BHIL) files for 89,628,274 share common stock offering by selling shareholders

  • BioAtla (BCAB) files for 2,678,600 share common stock offering by selling shareholders

  • DarioHealth (DRIO) files for $200 mln common stock offering

  • Honeywell (HON) files mixed securities shelf offering

  • Nautilus (NLS) files for $100 mln mixed securities shelf offering

  • Ondas Holdings (ONDS) files for 8,315,630 share common stock offering by selling shareholders


  • IPOs:

  • Expected to Price:

  • Candela Medical (Nasdaq: CDLA): The provider of advanced medical device solutions for a broad range of aesthetic applications is expected to price its 14.7 M share IPO between $16-$18.

  • Ensemble Health Partners (NYSE: ENSB): The provider of technology-enabled revenue cycle management solutions for health systems is expected to price its 29.5 M share IPO between $19-$22.

  • Fluence Energy (Nasdaq: FLNC): The provder of energy storage products and services and digital applications for renewables and storage is expected to price its 31.0 M share IPO between $21-$24.

  • Global Foundries (Nasdaq: GFS): The leading semiconductor foundry is expected to price its 55.0 M share IPO between $42-$47.

  • HireRight (NYSE: HRT): The global provider of technology-driven workforce risk management and compliance solutions is expected to price its 22.2 M share IPO between $21-$24.

  • Informatica (NYSE: INFA): The pioneer of a new category of software, the Intelligent Data Management Cloud, an AI-powered platform that connects, manages and unifies data across any multi-cloud, hybrid system, is expected to price its 29.0 M share IPO between $29-$32.

  • LianBio (Nasdaq: LIAN): The biopharmaceutical company developing medicines for patients with unmet medical needs, with an initial focus on in-licensing assets for Greater China, is expected to price its 20.3 M share IPO between $15-$17.

  • Rent the Runway (Nasdaq: RENT): The developer of the world's first and largest shared designer closet with over 18,000 styles by over 750 designer brands is expected to price its 15.0 M share IPO between $18-$21.

  • Solo Brands (NYSE: DTC): The Direct-to-Consumer platform that operates four premium outdoor lifestyle brands-Solo Stove, Oru Kayak, ISLE Paddle Boards, and Chubbies apparel -- is expected to price its 12.9 M share IPO between $14-$17.

  • Udemy (Nasdaq: UDMY): The operator of a two-sided marketplace where instructors develop content to meet learner demand is expected to price its 14.5 M share IPO between $27-$29.



Gapping Up/Down

  • Gapping up:

  • BRPM +17.8%, PYPL +6.8%, APEN +4.3%, PHUN +3.3%, BHIL +2.8%, HUT +2.8%, AUPH +1.8%, GDX +1%, GOLD +0.9%, TELL +0.8%, FCX +0.8%, NEM +0.8%, XLE +0.8%, SLB +0.8%, HSBC +0.8%, DWAC +0.7%, RIO +0.6%, BP +0.6%, AZN +0.6%, XOM +0.5%, MTDR +0.5%


  • Gapping down:

  • ERYP -33%, PINS -11.6%, DRIO -5.4%, TPTX -2.1%, ONDS -1.9%, NVS -1.4%, HON -0.8%


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

  • Upgrades

  • Essex Property (ESS) upgraded to Outperform from In-line at Evercore ISI; tgt $381

  • Five9 (FIVN) upgraded to Overweight from Sector Weight at KeyBanc Capital Markets; tgt $200

  • Knight-Swift (KNX) upgraded to Buy from Neutral at UBS; tgt raised to $65


  • Downgrades:

  • BrightView (BV) downgraded to Underweight from Neutral at JP Morgan

  • Carnival (CCL) downgraded to Neutral from Buy at Citigroup; tgt lowered to $24.50

  • Independent Bank (INDB) downgraded to Neutral from Overweight at Piper Sandler; tgt raised to $88


  • Others:

  • Ardagh Metal Packaging S.A. (AMBP) initiated with a Market Perform at BMO Capital Markets; tgt $11

  • Benson Hill (BHIL) initiated with an Overweight at Barclays; tgt $10

  • GOL Linhas Aereas Inteligentes S.A. (GOL) initiated with an Overweight at Barclays; tgt $8

  • ImmunoPrecise Antibodies (IPA) initiated with a Buy at The Benchmark Company; tgt $12

  • Mirion Technologies (MIR) initiated with a Buy at Citigroup; tgt $14

  • Norwegian Cruise Line (NCLH) initiated with a Buy at Citigroup; tgt $39


Upcoming Events:

  • Econ Data:

  • No economic data of note.


  • Earnings

  • Monday (Oct 25)

  • Morning: AUB BOH CBU DORM FBP HNI KMB LKFN LII OTIS QSR SITC

  • Afternoon: AGNC ARE ACC AMKR AXTA BXS BDN BRO CADE CDNS CALX CATY CR CCK FB HSTM HTLF HOPE IBTX LOGI LXFR MEDP NWE OI PKG PCH RNR SSD TNET TBI UHS


  • Tuesday (Oct 26)

  • Morning: MMM ARCH ADM ARCC AWI ABG CNC CIT CVLT GLW DAN ECL LLY ENTG FELE GE GPK GBX HAS HUBB INMD IVZ JBLU LMT HZO MSCI NVS PCAR PNR PII PHM RTX SPGI ST SHW SSTK SFNC SBSI AAN TRU TRTN TPB UBS UPS WM XRX

  • Afternoon: ACCO AMD AGYS GOOG AMP APAM AGR BXP BYD CHRW COF CB CSGP DLR EGP WIRE ENPH EQR ESS FFIV FCF FIBK FBHS FCPT HA HIW HPP IEX JNPR LBRT LFUS MANH MASI MTDR MSFT NAVI NCR NOV PFG QS RRC ROIC HOOD TENB TER TXN TRMK TWTR UDR UMBF VBTX V WSBC


  • Wednesday (Oct 27)

  • Morning: AMG ALKS APH AIT ARES ADP AVY BXMT BA BSX BCO BMY BG CAMT CHEF CME KO CSTM CTS DRVN DTE DT EVR FISV GRMN GD GM ROCK HOG HES HLT IP KHC MAS MCD MNRO NYCB NSC ODFL OC PAG PB ROL RES R SLGN SLAB SIX SPOT SF TMHC TEL TECK TDY TEVA TMO TNL UMC VRT WAB

  • Afternoon: AFL AEM AGI ALGN ALGT ALSN NLY AM AR ACGL ASGN AZPN AVB AXS NTB BHE BMRN BOOT BCOV CACI CG CCS CHX CHDN CINF CNO CDE CTSH FIX CYH CNMD CLB CONE DRE EBAY EW ESI EHC EQT EQC ETD RE EVTC EXR FLEX FLS F FORM FWRD GSHD THG PI NGVT ISBC INVH IRBT JBT KRC KLAC KN LC MXL MTH MEOH MAA MKSI MC MOH MUSA MYRG NTGR NDLS ORLY OII PGRE PEGA PDM PPC PLXS PPD RJF SIGI SCI NOW SIMO SNBR SSB SRI TDOC TROX TTMI TWLO TYL UCTT URI UPWK VICI WCN WOLF WH XLNX YUMC


  • Thursday (Oct 28)

  • Morning: FLWS AOS ABMD AGCO ATI ALGM ADS AB ALNY MO AEP AMT BUD AVNT BAX BPMC BC CRS CARR CAT CBZ CBRE CHKP CLVT CMS CNX COLB CMCO CMCSA COR CFR DBD EXP EME FCN THRM GPI HSY HBAN IDA ITW IMAX INSM ITGR ICE JHG KBR KDP KEX LH TREE LECO LIN LKQ MA MDC MPW MD MRK MDP TAP MCO COOP NEM NLSN NOC NVCR NVT OSK OSIS OSTK PATK PTEN PBF BTU PRFT PRLB PACK RLGY RS RGEN RDS.A SAIA SNY SNDR SHOP SIRI SWI SAH SMP SWK STM TROW TFX TPX TXT TW TRS VLY VC WST WEX WLTW WNS XEL YUM

  • Afternoon: ACHC AMZN ABCB AAPL AJG TEAM AVTR AVT AX BIO CPT CDNA CWST CHE COHU COLM OFC CUZ DVA DECK DXCM DRQ EMN EIG ENVA EXPO FHI FE FTV FTAI FTDR GLPI GILD LOPE HIG HTGC HTH HUBG KMPR KNSL LMAT LPLA LTC MGRC MERC MMSI MSTR MHK MPWR NATI NXGN PEB POLY POWI PTCT RNST RSG RMD SGEN SPNE SKX SKYW SM SPSC SSNC STAG SBUX SYK TEX TXRH X VRSN VCRA WRE WERN WDC AUY ZEN


  • Friday (Oct 29)

  • Morning: ABBV AON ATR B BAH CCJ CBOE CERN CHTR CVX CHD CL XOM FTS GWW HUN IMGN IMO LAZ LYB NWL PSX PSXP PNM POR PFS SJR SHLX SLCA WPC WY WETF



Asia & Europe detail:

Asia: Nikkei -0.7%, Hang Seng UNCH, Shanghai Composite +0.8%

Equity indices in the Asia-Pacific region began the week on a mostly higher note. Reports from Japan suggest that the LDP may not maintain its sole majority after next weekend's election to the lower house. China's National Development Reform Commission will reportedly strengthen supervision over medium and long term coal contracts. South Korea's President Moon said that South Korea will have higher than expected tax revenue for 2021, which will be used to repay the national debt.

  • In economic data:

  • Japan's August Leading Index 101.3 (expected 101.8; last 104.1) and Coincident Indicator -3.1% m/m (expected -2.9%; last -0.2%)

  • Singapore's September CPI 2.5% yr/yr (expected 2.4%; last 2.4%)


---Equity Markets---

  • Japan's Nikkei: -0.7%

  • Hong Kong's Hang Seng: UNCH

  • China's Shanghai Composite: +0.8%

  • India's Sensex: +0.2%

  • South Korea's Kospi: +0.5%

  • Australia's ASX All Ordinaries: +0.4%

---FX---

  • USD/JPY: +0.2% to 113.69

  • USD/CNH: UNCH at 6.3803

  • USD/INR: +0.1% to 75.09

Europe: DAX +0.2%, FTSE +0.4%, CAC -0.2%

Major European indices trade near their flat lines while Italy's MIB (+0.7%) outperforms. Standard & Poor's affirmed Italy's BBB rating and raised the outlook to Positive from Stable. Economists from Germany's ifo Institute said that supply chain problems are expected to worsen in the coming months with domestic GDP growing just 0.5% in Q4. Officials from France and the U.K. are still trying to solve their dispute over fishing rights.

  • In economic data:

  • Germany's October ifo Business Climate Index 97.7 (expected 97.9; last 98.9). October Current Assessment 100.1 (expected 99.4; last 100.4) and October Business Expectations 95.4 (expected 96.4; last 97.4)


---Equity Markets---

  • STOXX Europe 600: UNCH

  • Germany's DAX: +0.2%

  • U.K.'s FTSE 100: +0.4%

  • France's CAC 40: -0.2%

  • Italy's FTSE MIB: +0.7%

  • Spain's IBEX 35: +0.3%

---FX---

  • EUR/USD: -0.2% to 1.1625

  • GBP/USD: +0.2% to 1.3771

  • USD/CHF: +0.3% to 0.9186


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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