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27/03/23 Briefing

The S&P 500 futures are down 39 point and are trading 1.1% below fair value. The Nasdaq 100 futures are down 92 points and are trading 0.7% below fair value. The Dow Jones Industrial Average futures are down 360 points and are trading 1.0% below fair value.

The stock market is poised for a lower open as investors weigh concerns over the bank industry, again. Deutsche Bank's (DB) credit default swaps shot to a four-year high, according to Reuters, driving strong selling interest. DB is down more than 10%, hitting its lowest level since early October.

Also, loans to the Fed's discount window fell to $110.2 billion while borrowing from the Fed's Bank Term Lending Program rose to $53.7 billion, according to Bloomberg, adding to the financial industry angst.

Treasury yields are down sharply in a flight to safety trade. The 2-yr note yield is down 25 basis points to 3.59% and the 10-yr note yield is down 14 basis points to 3.29%.

Market participants will receive the following economic data today:

  • 8:30 ET: February Durable Orders (Briefing.com consensus 1.6%; prior -4.5%) and Durable Orders ex-transportation (Briefing.com consensus 0.3%; prior 0.7%)

  • 9:45 ET: Preliminary March IHS Markit Manufacturing PMI (prior 47.3) and preliminary March IHS Markit Services PMI (prior 50.6)

In corporate news:

  • Deutsche Bank (DB 8.59, -1.06, -11.0%): Default insurance costs rise at Deutsche Bank, according to Reuters

  • UBS 0.47% (UBS 18.20, -0.97, -5.1%) and Credit Suisse (CS 0.8200, -0.05, -6.0%): down on reports that they are among banks facing DOJ Russia-sanctions probe, according to Bloomberg

  • Regeneron Pharmaceuticals, Inc. (REGN 804.00, +1.84, +0.2%): upgraded to Buy from Hold at Jefferies

  • Block (SQ 60.77, -1.11, -1.8%): downgraded to Neutral from Overweight at Atlantic Equities

  • Coinbase Global (COIN 64.30, -2.00, -3.0%): downgraded to Underperform from Market Perform at TD Cowen

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region ended the week on a lower note. Japan's Nikkei: -0.1% (+0.2% for the week), Hong Kong's Hang Seng: -0.7% (+2.0% for the week), China's Shanghai Composite: -0.6% (+0.5% for the week), India's Sensex: -0.7% (-0.8% for the week), South Korea's Kospi: -0.4% (+0.8% for the week), Australia's ASX All Ordinaries: -0.2% (-0.7% for the week).

  • In economic data:

  • Japan's February National CPI -0.6% m/m (last 0.4%); 3.3% yr/yr (last 4.3%). February National Core CPI 3.1% yr/yr, as expected (last 4.2%). Flash March Manufacturing PMI 48.6 (expected 48.2; last 47.7) and flash Services PMI 54.2 (last 54.0)

  • Australia's flash March Manufacturing PMI 48.7 (last 50.5) and flash Services PMI 48.2 (last 50.7)

  • Singapore's February Industrial Production -11.7% m/m (expected 0.7%; last -0.4%); -8.9% yr/yr (expected -1.9%; last -3.1%)


  • In news:

  • Chinese officials have reportedly begun stress testing securities firms.

  • Australia's Manufacturing PMI fell into contractionary territory for the first time in 35 months in the flash reading for March while Japan's Manufacturing PMI has remained below 50.0 for the fifth month in a row.

  • South Korea's Finance Minister Choo spoke about increasing the number of flights between South Korea and Japan.



  • Major European indices trade in the red. STOXX Europe 600: -2.0% (+0.3% week-to-date), Germany's DAX: -2.2% (+0.7% week-to-date), U.K.'s FTSE 100: -2.0% (+0.2% week-to-date), France's CAC 40: -2.2% (+0.8% week-to-date), Italy's FTSE MIB: -2.5% (+1.3% week-to-date), Spain's IBEX 35: -2.5% (+0.1% week-to-date).

  • In economic data:

  • Eurozone's March flash Manufacturing PMI 47.1 (expected 49.0; last 48.5) and flash Services PMI 55.6 (expected 52.5; last 52.7)

  • Germany's March flash Manufacturing PMI 44.4 (expected 47.0; last 46.3) and flash Services PMI 53.9 (expected 51.0; last 50.9)

  • U.K.'s March flash Manufacturing PMI 48.0 (expected 50.0; last 49.3) and flash Services PMI 52.8 (expected 53.0; last 53.5). February Retail Sales 1.2% m/m (expected 0.2%; last 0.9%); -3.5% yr/yr (expected -4.7%; last -5.2%). February Core Retail Sales 1.5% m/m (expected 0.1%; last 0.9%); -3.3% yr/yr (expected -4.7%; last -5.4%)

  • France's March flash Manufacturing PMI 47.7 (expected 48.0; last 47.4) and flash Services PMI 55.5 (expected 52.5; last 53.1)


  • In news:

  • Shares of Deutsche Bank have fallen nearly 15.0% to a level not seen since early October amid a jump in the bank's cost of default insurance.

  • Retail sales in the U.K. returned to pre-pandemic levels in the February reading.

  • European Central Bank policymaker Centeno said that inflation was and still is too high.

  • Large-scale protests are continuing in France after the Macron government forced through labor reforms.



U.S. equity futures:

  • S&P 500 Futures: -36 @ 3,913

  • DJIA Futures: -333 @ 31,772

  • Nasdaq 100 Futures: -66 @ 12,664

Overseas:

  • Europe: DAX -2.2%, FTSE -2.0%, CAC -2.2%

  • Asia: Nikkei -0.1%, Hang Seng -0.7%, Shanghai Composite -0.6%

Commodities:

  • Crude Oil -2.86 @ 67.10

  • Nat Gas +0.059 @ 2.213

  • Gold +1.20 @ 1997.10

  • Silver +0.074 @ 23.33

  • Copper -0.0615 @ 4.062


Earnings/Guidance:

  • ADMA Biologics ( ADMA 2.56% ) beats by $0.01, beats on revs; guides FY23 revs in-line; expects approx. $250 mln in revs in FY24 and approx. $300 mln in revs in subsequent years

  • Altria ( MO 0.41% ) reaffirms FY23 EPS guidance; also hosted investor day and introduced new 2028 enterprise goals, including goal to deliver mid-single digits adjusted diluted EPS growth on a compounded annual basis through 2028

  • Caledonia Mining ( CMCL 5.33% ) reports FY22 results; beats on revs; announces private placement

  • Harrow Health ( HROW 7.22% ) beats by $0.19, misses on revs

  • Heron Therapeutics ( HRTX 3.67% ) beats by $0.20, beats on revs

  • Oxford Industries ( OXM 1.28% ) beats by $0.16, beats on revs; guides AprQ EPS below consensus, revs above estimate; guides FY24 EPS below consensus, revs above consensus; increases quarterly dividend 18% to $0.65/share

  • Torrid ( CURV 14.14% ) beats by $0.03, beats on revs; guides Q1 revs below consensus; guides FY23 revs above consensus

News:

  • Banks continue to draw on Fed for emergency cash funds, according to Bloomberg

  • The Biden administration believes they do not have the authority to ban TikTok without congressional authorization, according to the Washington Post

  • Federal appeals court blocked President Biden's vaccine mandate for federal workers, according to ABC News

  • Utah becomes first state to pass law which prohibits social media companies from allowing users under 18 to have accounts without parental permission, according to the New York Times

  • New York nearing deal to ban gas stoves in buildings and homes statewide, according to Politico

  • ABM Industries ( ABM 0.69% ) enters into multi-year agreement to deliver housekeeping and event staffing for Tropicana Field and Al Lang Stadium in Florida

  • Albany Intl ( AIN 0.79% ) announces resignation of CFO and Treasurer Stephen Nolan, who accepted position at private company; appoints Robert D. Starr as new Chief Financial Officer and Treasurer

  • Analog Devices ( ADI 1.24% ) discloses notice of redemption of Maxim senior notes

  • Centerspace ( CSR 0.49% ) appoints current COO Anne Olson to succeed Mark Decker as President and CEO, effective March 31, 2023

  • Cimpress ( CMPR 25.80% ) announces in a filing plan to reduce costs and implement organizational changes to improve profitability and reduce leverage; plan includes net reduction of about 500 team members

  • Deutsche Bank ( DB 4.81% ): Default insurance costs rise at Deutsche Bank, according to Reuters

  • Eneti ( NETI 2.94% ) reports purchase of common shares by Scorpio Holdings

  • General Dynamics ( GD 0.35% ) awarded $1.8 bln U.S. Army contract

  • Hawaiian Holdings ( HA 0.65% ) reaches an agreement with biofuel company Gevo, Inc. to purchase 50 mln gallons of sustainable aviation fuel over five years

  • Illumina ( ILMN 0.84% ): Carl Icahn claims Illumina requested extra insurance related to Grail deal, according to Financial Times

  • Incyte ( INCY 0.75% ) receives complete response letter for ruxolitinib extended-release tablets

  • Johnson & Johnson ( JNJ 0.78% ): Janssen Pharma announces that Health Canada has issued a NOC authorizing the expanded use of IMBRUVICA

  • JP Morgan ( JPM 1.82% ) gained customers amid banking issues, according to the New York Post

  • KKR ( KKR 0.34% ) announces intra-quarter monetization activity update for Q1

  • Krispy Kreme, Inc. ( DNUT 1.30% ) announces it completes the refinancing of its existing Term Loan A and Revolver Facilities; continues to expect between $39 and $43 million of Interest Expense in 2023

  • LPL Financial ( LPL 3.12% A) reports monthly activity for February 2023; Total advisory and brokerage assets at the end of February were $1.15 trillion, down 1.5% compared to the end of January 2023

  • MiMedx Group ( MDXG 0.44% ) CFO Peter Carlson to leave to pursue other opportunities; initiating search for successor

  • Motorola Solutions ( MSI 1.05% ) awarded $340 mln U.S. Air Force contract

  • Nelnet ( NNI 0.69% ) announces reduction of staff due to contract changes impacting student loan servicing

  • Palantir Technologies ( PLTR 1.77% ): Australian Transaction Reports and Analysis Centre (AUSTRAC) renews its partnership

  • Pan Am Silver ( PAAS 0.28% ): Mexican Federal Economic Competition Commission approves Pan American Silver's arrangement with Yamana (AUY) and Agnico Eagle

  • Signature Bank ( SBNY 0.54% ): Treasury Secretary Janet Yellen says FDIC estimate of $2.5 bln loss related to Signature Bank is not the final determination, according to Reuters

  • Starbox Group ( STBX 11.38% ) announces that its Malaysian subsidiary, Starbox Rebates, has entered into a Software Licensing Agreement with Brandavision Sdn Bhd, a media and advertising firm in Malaysia

  • Stifel Financial ( SF 2.41% ) reports February 2023 operating data; says its balance sheet remains strong and liquid

  • Talos Energy ( TALO 0.54% ) and its partners submit Zama Unit Development Plan to Mexico's National Commission of Hydrocarbons for formal approval, which is expected within the next six months

  • UBS AG ( UBS 0.47% ) and Credit Suisse (CS) are among banks facing DOJ Russia-sanctions probe, according to Bloomberg

  • Walt Disney World ( DIS 0.55% ) deal with union will increase minimum wage to $18/hour from $15/hour, according to CBS News

  • Western Copper ( WRN 1.13% ) receives strategic investment by Mitsubishi Materials

  • WW ( WW 1.01% ) Chairman Raymond Debbane resigns, effective as of the midnight prior to the 2023 Annual Meeting; Board appoints Thilo Semmelbauer as Chairman

  • YETI Holdings ( YETI 1.15% ) realigning its commercial and sales organizations; eliminates Senior VP of Sales position

M&A:

  • Citizens Financial ( CFG 0.48% ) considers acquisition of Silicon Valley Bank's (SIVB) private bank, according to Reuters

  • Graf Acquisition Corp. IV ( GFOR 0.39% ) and NKGen Biotech announce letter of intent for a business combination

  • LivePerson ( LPSN 1.09% ) divests Kasamba to Ingenio, LLC; financial details not disclosed

  • Science Applications ( SAIC 0.36% ): ASRC Federal to acquire the logistics and supply chain management business of SAIC; financial details not disclosed; transaction to close in Spring 2023

Syndicate:

  • 89bio ( ETNB 1.91% ) announces the pricing of its previously announced underwritten public offering of 16,923,077 shares of its common stock at a public offering price per share of $16.25

  • Alta Equipment Group ( ALTG 0.52% ) files for $300 mln mixed securities shelf offering

  • CymaBay Therapeutics ( CBAY 2.48% ) files mixed shelf securities offering

  • DHT ( DHT 0.23% ) files mixed shelf securities offering

IPOs:

  • Expected to Price:

  • No IPOs expected.


Gapping Up/Down

  • Gapping up:

  • CURV +13.9%, HRTX +11.4%, ADMA +8.7%, LPLA +5%, NETI +4.9%, HROW +4.3%, SWX +2.9%, GFOR +1.8%, KKR +1.6%, MSI +1.4%, XAIR +1%, ABM +0.8%, WW +0.7%, GD +0.6%, YETI +0.5%


  • Gapping down:

  • SCHL -12.9%, CMCL -7.8%, CS -5.8%, UBS -5.4%, NNI -4.7%, TALO -4.6%, GSK -4.3%, OXM -4.3%, CBAY -2.9%, INCY -2.7%, C -2.3%, JPM -1.8%, DHT -1.3%, LPSN -1.3%, RTX -0.7%, PLTR -0.5%, DNUT -0.5%


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

  • Upgrades

  • Axonics Modulation (AXNX) upgraded to Buy from Hold at Needham; tgt $71

  • Cracker Barrel (CBRL) upgraded to Buy from Hold at Argus; tgt $126

  • First Horizon (FHN) upgraded to Overweight from Equal Weight at Wells Fargo; tgt $25

  • Genuine Parts (GPC) upgraded to Buy from Hold at Truist; tgt $186

  • Healthcare Services Group (HCSG) upgraded to Hold from Underperform at Jefferies; tgt raised to $14

  • KB Home (KBH) upgraded to Neutral from Underweight at JP Morgan; tgt raised to $42.50

  • Regeneron Pharma (REGN) upgraded to Buy from Hold at Jefferies; tgt raised to $925


  • Downgrades:

  • Block (SQ) downgraded to Neutral from Overweight at Atlantic Equities; tgt lowered to $70

  • Coinbase Global (COIN) downgraded to Underperform from Market Perform at TD Cowen; tgt $36

  • Crane (CR) downgraded to Neutral from Buy at UBS; tgt lowered to $120

  • UBS AG (UBS) downgraded to Hold from Buy at Jefferies


  • Others:

  • 8x8 (EGHT) initiated with a Buy at Rosenblatt; tgt $6

  • Farfetch (FTCH) initiated with a Mkt Perform at JMP Securities

  • Five9 (FIVN) initiated with a Buy at Rosenblatt; tgt $85

  • Legend Biotech (LEGN) initiated with an Outperform at RBC Capital Mkts; tgt $73

  • lululemon athletica (LULU) placed on 30-day Positive Catalyst Watch at Citigroup; tgt $350

  • RingCentral (RNG) initiated with a Buy at Rosenblatt; tgt $35

  • Zoom Video (ZM) initiated with a Neutral at Rosenblatt; tgt $75


  • Econ Data:

  • 08:30 ET: Durable Orders for Feb (Briefing.com Consensus 1.6%; Prior -4.5%)

  • 08:30 ET: Durable Orders ex-transportation for Feb (Briefing.com Consensus 0.3%; Prior 0.7%)

  • 09:45 ET: IHS Markit Manufacturing PMI - Prelim for Mar (Briefing.com Consensus NA; Prior 47.3)

  • 09:45 ET: IHS Markit Services PMI - Prelim for Mar (Briefing.com Consesnus NA; Prior 50.6)


  • Earnings:

  • Monday (Mar 20)

  • Morning: FL PDD


  • Tuesday (Mar 21)

  • Morning: CSIQ HUYA ONON TME

  • Afternoon: AIR ARRY GME NKE


  • Wednesday (Mar 22)

  • Morning: BZUN OLLI WOOF WGO

  • Afternoon: CHWY KBH MLKN PHR SCS WOR


  • Thursday (Mar 23)

  • Morning: ACN CMC DRI FDS GIS

  • Afternoon: HRTX OXM CURV



Asia & Europe detail:

Asia: Nikkei -0.1%, Hang Seng -0.7%, Shanghai Composite -0.6%

Equity indices in the Asia-Pacific region ended the week on a lower note. Chinese officials have reportedly begun stress testing securities firms. Australia's Manufacturing PMI fell into contractionary territory for the first time in 35 months in the flash reading for March while Japan's Manufacturing PMI has remained below 50.0 for the fifth month in a row. South Korea's Finance Minister Choo spoke about increasing the number of flights between South Korea and Japan.

  • In economic data:

  • Japan's February National CPI -0.6% m/m (last 0.4%); 3.3% yr/yr (last 4.3%). February National Core CPI 3.1% yr/yr, as expected (last 4.2%). Flash March Manufacturing PMI 48.6 (expected 48.2; last 47.7) and flash Services PMI 54.2 (last 54.0)

  • Australia's flash March Manufacturing PMI 48.7 (last 50.5) and flash Services PMI 48.2 (last 50.7)

  • Singapore's February Industrial Production -11.7% m/m (expected 0.7%; last -0.4%); -8.9% yr/yr (expected -1.9%; last -3.1%)


---Equity Markets---

  • Japan's Nikkei: -0.1%

  • Hong Kong's Hang Seng: -0.7%

  • China's Shanghai Composite: -0.6%

  • India's Sensex: -0.7%

  • South Korea's Kospi: -0.4%

  • Australia's ASX All Ordinaries: -0.2%

---FX---

  • USD/JPY: -0.6% to 129.98

  • USD/CNH: +0.7% to 6.8767

  • USD/INR: +0.2% to 82.41

Europe: DAX -2.2%, FTSE -2.0%, CAC -2.2%

Major European indices trade in the red. Shares of Deutsche Bank have fallen nearly 15.0% to a level not seen since early October amid a jump in the bank's cost of default insurance. Retail sales in the U.K. returned to pre-pandemic levels in the February reading. European Central Bank policymaker Centeno said that inflation was and still is too high. Large-scale protests are continuing in France after the Macron government forced through labor reforms.

  • In economic data:

  • Eurozone's March flash Manufacturing PMI 47.1 (expected 49.0; last 48.5) and flash Services PMI 55.6 (expected 52.5; last 52.7)

  • Germany's March flash Manufacturing PMI 44.4 (expected 47.0; last 46.3) and flash Services PMI 53.9 (expected 51.0; last 50.9)

  • U.K.'s March flash Manufacturing PMI 48.0 (expected 50.0; last 49.3) and flash Services PMI 52.8 (expected 53.0; last 53.5). February Retail Sales 1.2% m/m (expected 0.2%; last 0.9%); -3.5% yr/yr (expected -4.7%; last -5.2%). February Core Retail Sales 1.5% m/m (expected 0.1%; last 0.9%); -3.3% yr/yr (expected -4.7%; last -5.4%)

  • France's March flash Manufacturing PMI 47.7 (expected 48.0; last 47.4) and flash Services PMI 55.5 (expected 52.5; last 53.1)


---Equity Markets---

  • STOXX Europe 600: -2.0% (+0.3% week-to-date)

  • Germany's DAX: -2.2% (+0.7% week-to-date)

  • U.K.'s FTSE 100: -2.0% (+0.2% week-to-date)

  • France's CAC 40: -2.2% (+0.8% week-to-date)

  • Italy's FTSE MIB: -2.5% (+1.3% week-to-date)

  • Spain's IBEX 35: -2.5% (+0.1% week-to-date)

---FX---

  • EUR/USD: -0.8% to 1.0744

  • GBP/USD: -0.6% to 1.2211

  • USD/CHF: +0.4% to 0.9199



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