29/09/22 Briefing

The S&P 500 futures are down 26 points and are trading 0.8% below fair value. The Nasdaq 100 futures are down 117 points and are trading 1.0% below fair value. The Dow Jones Industrial Average futures are down 153 points and are trading 0.5% below fair value.

There's no follow-through from yesterday's rally for equity futures this morning. The 2-yr note yield is up ten basis points to 4.20% and the 10-yr note yield is up 11 basis points to 3.83%. 

Investor concerns were stoked by British Prime Minister Truss, who defended her economic plan, saying she is willing to make "controversial" decisions to boost growth. This led to renewed selling interest for the UK gilt and British pound. 

Geopolitical angst has been heightened, too, with Reuters reporting that Russian President Putin will annex 15% of Ukraine (four territories) tomorrow. Reuters also reported that OPEC+ will speak about output reduction at next week's meeting.

Energy complex futures are moving higher this morning. WTI crude oil futures are up 0.2% to $82.29/bbl and natural gas futures are up 0.3% to $6.98/mmbtu. 

Market participants will receive the following economic data today:

• 8:30 ET: Weekly Initial Claims (Briefing.comconsensus 213,000; prior 213,000), Continuing Claims (prior 1.379 mln), Q2 GDP -- third estimate (Briefing.comconsensus -0.6%; prior -0.6%), and Q2 GDP Deflator -- third estimate (Briefing.comconsensus 8.9%; prior 8.9%)

• 10:30 ET: Weekly natural gas inventories (prior +103 bcf)

In corporate news:

• Apple (AAPL 146.62, -3.22, -2.15%): downgraded to Neutral from Buy at BofA Securities; upgraded to Buy from Neutral at Rosenblatt

• CarMax (KMX 75.92, -10.50, -12.15%): misses by $0.61, misses on revs

• Vail Resorts (MTN 217.99, +7.70, +3.66%): beats by $0.18, beats on revs

• Jefferies (JEF 30.20, +0.47, +1.58%): beats by $0.05, beats on revs

• Amazon (AMZN 117.00, -1.01, -0.86%):  announced pay increases for its U.S. front-line employees-a nearly $1 billion investment over the next year

• PG&E (PCG 12.56, -0.16, -1.26%): files application with California Public Utilities Commission to separate its non-nuclear generation assets into stand-alone subsidiary; also reaffirms FY22 non-GAAP core earnings guidance

• Bed Bath & Beyond (BBBY 6.20, -0.26, -4.0%): misses by $2.80, reports revs in-line; Net Sales declined 28%

Reviewing overnight developments:

• Equity indices in the Asia-Pacific region ended Thursday on a mixed note. Japan's Nikkei: +1.0%, Hong Kong's Hang Seng: -0.5%, China's Shanghai Composite: -0.1%, India's Sensex: -0.3%, South Korea's Kospi: +0.1%, Australia's ASX All Ordinaries: +1.5%.

  • In economic data:

    • South Korea's October Manufacturing BSI Index 73 (last 82)

    • New Zealand's September ANZ Business Confidence -36.7 (last -47.8) and September NBNZ Own Activity -1.8% (last -4.0%)

  • In news:

    • Japan's Prime Minister Kishida has reportedly promised to take steps to reduce the cost of power to consumers.

    • South Korea's President Yoon said that his government will deal appropriately with potential shocks to the South Korean economy.

    • South Korea, Japan, and the U.S. will conduct joint military drills tomorrow.

• Major European indices trade lower across the board. STOXX Europe 600: -1.3%, Germany's DAX: -0.9%, U.K.'s FTSE 100: -0.6%, France's CAC 40: -1.0%, Italy's FTSE MIB: -1.3%, Spain's IBEX 35: -1.3%.

  • In economic data:

    • Eurozone's September Business and Consumer Survey 93.7 (expected 95.0; last 97.3)

    • Italy's August PPI 2.8% m/m (last 5.0%); 40.1% yr/yr (last 36.9%)

    • Spain's September CPI -0.6% m/m (last 0.3%); 9.0% yr/yr (expected 10.0%; last 10.5%)

  • In news:

    • British Prime Minister Truss spoke in defense of her economic plan, saying she is willing to take "controversial" decisions to boost growth, while Chancellor Kwarteng pushed back against calls for his resignation.

    • More European Central Bank policymakers have spoken in favor of a 75-bps rate hike.

    • The Italian government lowered its growth forecast for 2023 to 0.6% from 2.4%.

U.S. equity futures:

• S&P 500 Futures: -31 @ 3,688

• DJIA Futures: -176 @ 29,508

• Nasdaq 100 Futures: -128 @ 11,366

Overseas:

• Europe: DAX -0.9%, FTSE -0.6%, CAC -1.0%

• Asia: Nikkei +1.0%, Hang Seng -0.5%, Shanghai Composite -0.1%

Commodities:

• Crude Oil +0.10 @ 82.25

• Nat Gas  +0.011 @ 6.966

• Gold -11.05 @ 1658.95

• Silver -0.192  @ 18.688

• Copper +0.0605 @ 3.4190

U.S. Summary:

• Earnings/Guidance:

  • Bed Bath & Beyond (BBBY) misses by $2.80, reports revs in-line

  • CarMax (KMX) misses by $0.61, misses on revs

  • Concentrix (CNXC) misses by $0.02, reports revs in-line; expects constant currency sales growth of +7% yr/yr in Q4

  • Enerpac Tool Group (EPAC) beats on top and bottom lines

  • Jefferies (JEF) beats by $0.05, beats on revs

  • MillerKnoll (MLKN) beats by $0.11, misses slightly on revs; guides NovQ EPS below consensus, revs in-line

  • Rite Aid (RAD) misses by $0.17, reports revs in-line; guides FY23 EPS in-line, reaffirms FY23 revs guidance; lowers FY23 Adjusted EBITDA outlook

  • Sunlight Financial (SUNL): installer liquidity event and volatile interest rates will impact FY22 performance; withdraws previous FY22 outlook

  • The Duckhorn Portfolio (NAPA) reports EPS in-line, revs in-line; guides FY23 EPS below consensus, revs below consensus

  • Vail Resorts (MTN) beats by $0.18, beats on revs

  • Volta (VLTA) announces organizational realignment; to cut 10% of its current full-time employees; guides Q3 revs below consensus; withdraws FY22 revenue guidance

  • Worthington (WOR) beats by $0.03, beats on revs

• General News:

  • UK Prime Minister Liz Truss plans to keep pursuing tax cut plans, according to Financial Times

  • US officials are concerned that events in UK could spillover into broader economy, according to Bloomberg

  • Russian President Putin will annex 15% of Ukraine (four territories) tomorrow, according to Reuters

  • Over 2 million Florida residents are without power following landfall of Hurricane Ian, according to theNew York Times

  • Janet Yellen tells White House officials she will remain Treasury secretary well after the midterm elections, according to Bloomberg Tax

  • Nord Stream pipelines now have multiple leaks, according to Bloomberg

  • OPEC+ will speak about output reduction at next week's meeting, according to Reuters

  • UK Financial watchdog warns insurers to protect customers' wellbeing during cost of living squeeze

  • Texas AG Ken Paxton launches investigation into S&P Global's use of ESG Factors in credit ratings, potentially violating consumer protection laws

  • 5E Advanced Materials (FEAM) CEO Henri Tausch to step down; co also reports earnings

  • AbbVie (ABBV) highlights robust gastroenterology portfolio with new data in Crohn's disease and ulcerative colitis at the UEG Week 2022

  • Allison Transmission (ALSN) announces that Isuzu launched new medium-duty FVR truck in Taiwan featuring Allison 3000 Series 6-speed fully automatic transmission

  • Angel Oak Mortgage (AOMR) named Sreeni Prabhu as Chief Executive Officer and President effective immediately

  • Atara Biotherapeutics (ATRA) to Receive Additional Near-Term Milestone Payment Under Updated Tabelecleucel (Tab-cel) Commercialization Agreement with Pierre Fabre

  • Avita Medical (RCEL) appoints James Corbett as CEO

  • Axsome Therapeutics (AXSM) discloses plans to resubmit AXS-07 NDA based on successful FDA type a meeting

  • Bilibili (BILI) submitted with the Hong Kong Stock Exchange an announcement of voluntary conversion to dual-primary listing on The Main Board of The Stock Exchange of Hong Kong Limited - will be effective Oct 3

  • C4 Therapeutics (CCCC) received a Study May Proceed Letter from the FDA to begin a Phase 1/2 trial for CFT1946, a treatment of BRAF-V600 mutant solid tumors

  • Chevron (CVX) sells California headquarters while expanding in Texas, according to the Wall Street Journal

  • City Holding Co (CHCO) increases quarterly dividend to $0.65/sh from $0.60/sh

  • Cracker Barrel (CBRL) and Biglari Capital (BH) enter into a Nomination and Cooperation Agreement

  • Exxon (XOM) ordered temporary "stand down" in shale operations following worker injuries, according to Reuters

  • EyePoint Pharmaceuticals (EYPT) announces first patient dosed in phase 2 pavia clinical trial of EVP-1901 for the treatment of non-proliferative diabetic retinopathy

  • Fluor (FLR) has been selected by a leading biologics company to perform procurement and construction management for a large-scale biologics drug substance manufacturing facility located in Scandinavia

  • Guidewire Software (GWRE) announces $200 mln accelerated share repurchase program

  • HF Sinclair (DINO) entered into a Stock Purchase Agreement with REH Company

  • InflaRx (IFRX) submits request for emergency use authorization to FDA for Vilobelimab for treatment of critically ill COVID-19 patients

  • Intercontinental Exchange (ICE): U.K. Financial Conduct Authority Announces Cessation of One and Six Month 'synthetic' Sterling LIBOR at the end of March 2023

  • Intercontinental Hotels Group (IHG) provides regarding unauthorised access to technology systems; IHG re-activated its booking websites and mobile app together with most of its other booking channels and revenue-generating systems

  • Johnson Outdoors (JOUT) increased quarterly cash dividend; Class A shareholders will now receive a $0.31 dividend per share and Class B shareholders a $0.2818 dividend per share

  • KBR (KBR) awarded UK nuclear infrastructure contract

  • LyondellBasell (LYB): ethylene cracker at integrated olefins and polyolefins production site in Berre, France will not restart until early 2023

  • MGM (MGM): Gambler sues MGM online casino over addiction and robbery claims, according to the Wall Street Journal

  • Miniso Group (MNSO) announces $100 mln share repurchase program

  • MorphoSys (MOR) announces data from the ongoing L-MIND study

  • Newmont Goldcorp (NEM) CFO Nancy Buese to step down on November 1to pursue an opportunity outside the company; CAO Brian Tabolt to take over on an interim basis

  • Occidental Petro (OXY): Warren Buffett's Berkshire Hathaway bought another 5,985,190 shares at $57.52 - $61.595 worth ~$352.5 mln

  • Ovintiv (OVV) receives regulatory approvals for the renewal of its share buyback program of up to 10% of its public float

  • Palantir Technologies (PLTR) announced the U.S. Army Research Laboratory (ARL) will extend its work with the company; contract is worth up to $229 million over one year

  • PG&E (PCG) files application with California Public Utilities Commission to separate its non-nuclear generation assets into stand-alone subsidiary; also reaffirms FY22 non-GAAP core earnings guidance

  • Radware (RDWR) expanded its relationship with a Fortune 500 financial services provider in a multimillion-dollar deal

  • Regeneron Pharma (REGN) and Sanofi receive FDA approval for Dupixent for Prurigo Nodularis

  • Satellogic (SATL) reached a three-year agreement with the Government of Albania to develop a Dedicated Satellite Constellation

  • Silence Therapeutics (SLN) announces preliminary results from the single dose component of the GEMINI II phase 1 study of SLN124, a siRNA targeting the TMPRSS6 gene, in 24 adults with non-transfusion dependent thalassemia

  • Smith & Wesson (SWBI) sued by mass shooting victims, according to the Wall Street Journal

  • Starbucks (SBUX) approves increase in quarterly cash dividend to $0.53 from $0.49 per share; equates to new annualized yield of 2.4%

  • Tenneco (TEN) will supply the electronic suspension technology for the upcoming L9 electric luxury SUV from Li Auto (LI)

  • Tesla (TSLA) appointed Airbnb (ABNB) co-founder Joe Gebbia to its Board of Directors, effective as of September 25

  • Toyota (TM) global production increased 44% in August, according to Reuters

  • Transglobe Energy (TGA) postpones Special Meeting to Oct 7

  • Tritium DCFC (DCFC) to supply fast chargers for Australia's longest EV highway

  • Verizon (VZ) partnering with Qualcomm (QCOM) and Razer to launch a new 5G gaming handheld, according to CNET

  • Worthington's (WOR) Board approves plan to separate Steel Processing business into new public company

  • XOMA (XOMA) discloses EC approval of VABYSMO along with Roche (RHHBY) and XOMA made $3 mlm milestone payment

• M&A:

  • Atlas Corp (ATCO) confirms receipt of revised proposal from Poseidon Acquisition Corp. to acquire all outstanding shares of ATCO for $15.50/share in cash

  • Booking Holdings (BKNG): UK CMA has cleared the anticipated acquisition by Booking Holdings Inc. of certain activities of eTraveli Group AB

  • Cambridge Bancorp (CATC) announces that all regulatory approvals for merger with Northmark Bank have been received

  • Carlyle Group (CG), along with other possible investors, are interested in investing into the media business of Italy's soccer league Lega Serie A, according to Reuters

  • DT Midstream (DTM) entered into agreement to acquire additional 26.25% ownership interest in Millennium Pipeline for $552 mln in cash

  • DTRT Health Acquisition Corp (DTRT): Consumer Direct Holdings plans to become a publicly traded company via merger with DTRT Health Acquisition

  • Prologis (PLD)  shareholders and Duke Realty (DRE) shareholders approve previously proposed merger whereby DRE shareholders will receive 0.475 of a newly-issued share of Prologis common stock for each DRE share they own

  • Service Properties Trust (SVC) to sell 16 hotels for $137.3 mln

  • Workiva (WK) is drawing takeover interest from private equity firms, including Thoma Bravo and TPG, according to Bloomberg Tax

• Syndicate: 

  • Agree Realty (ADC) prices 5 mln shares of its common stock at a public offering price of $66.85 per share in connection with the forward sale agreements

  • Altus Power (AMPS) prices offering of 7.0 mln shares of common stock sold by Blackstone (BX) at $11.50 per share

  • Catalent (CTLT) files mixed securities shelf offering

  • Innoviz Technologies (INVZ) files Form F-3 Shelf Registration for up to $200 mln of common stock, debt securities, warrants and units in one or more offerings

  • Invivyd (IVVD) files for $400 mln mixed securities shelf offering

  • Momentus (MNTS) launches 3-yr, $50 mln at-the-market equity program

  • Voxeljet AG (VJET) announces pricing of $4.4 million registered direct offering

• IPOs:

  • Porsche (POAHY) launches IPO on Frankfurt Stock Exchange

  • Expected to Price:

    • No IPOs expected.

Gapping Up/Down

• Gapping up:

  • DCFC +5.4%, IVVD +4.1%, MTN +3.7%, WK +2.9%, ATRA +2.1%, MOR +2%, MNSO +1.8%, JEF +1.6%, SVC +1.1%, CBRL +1%, ATCO +0.9%, PLD +0.6%, EFX+0.5%

• Gapping down:

  • SUNL -23%, AMPS -15.7%, CTLT -4.8%, MLKN-4.3%, VJET -3.3%, VLTA -3.2%, BILI -3%, MNTS-2.7%, CNXC -2.5%, FEAM -2.2%, ALGN -1.6%, ADC-1.5%, TUR -1.3%, PCG -1.3%, SBUX -1.1%, NEM-0.8%

Analyst Research (see Upgrades/Downgradescalendarfor full list):

• Upgrades

  • Apple (AAPL) upgraded to Buy from Neutral at Rosenblatt; tgt raised to $189

  • Charter Comm (CHTR) upgraded to Peer Perform from Underperform at Wolfe Research

  • First Solar (FSLR) upgraded to Outperform from In-line at Evercore ISI; tgt raised to $150

  • Range Resources (RRC) upgraded to Buy from Hold at TD Securities; tgt raised to $33

• Downgrades:

  • Cognyte Software (CGNT) downgraded to Hold from Buy at Stifel; tgt lowered to $6

  • HUYA (HUYA) downgraded to Neutral from Buy at UBS; tgt lowered to $2.90

  • Novartis AG (NVS) downgraded to Neutral from Outperform at Oddo BHF

  • O2Micro (OIIM) downgraded to Hold from Buy at Stifel; tgt $3.50

  • Olaplex (OLPX) downgraded to Neutral from Overweight at Piper Sandler; tgt lowered to $12

  • Sunlight Financial (SUNL) downgraded to Neutral from Buy at ROTH Capital; tgt lowered to $2.50

  • Sunlight Financial (SUNL) downgraded to Sell from Buy at Citigroup; tgt lowered to $2

• Others:

  • Bakkt (BKKT) initiated with an Equal Weight at Wells Fargo; tgt $2.50

  • Cadence Design (CDNS) initiated with a Buy at Deutsche Bank; tgt $200

  • Cerevel Therapeutics (CERE) initiated with an Overweight at Cantor Fitzgerald; tgt $41

  • Coinbase Global (COIN) initiated with an Underweight at Wells Fargo; tgt $57

  • Getty Images (GETY) initiated with a Neutral at Goldman; tgt $8

  • Inari (NARI) initiated with a Buy at Berenberg; tgt $85

  • JinkoSolar (JKS) initiated with a Buy at HSBC Securities; tgt $76

  • Portillo's (PTLO) initiated with a Hold at Deutsche Bank; tgt $22

  • Proterra (PTRA) initiated with a Buy at Truist; tgt $9

  • QuantumScape Corporation (QS) initiated with a Hold at Truist; tgt $10

  • Riot Blockchain (RIOT) initiated with an Equal Weight at Wells Fargo; tgt $7

  • Rivian Automotive (RIVN) initiated with a Buy at Truist; tgt $65

  • Sprinklr (CXM) initiated with a Buy at BTIG Research; tgt $12

  • Synopsys (SNPS) initiated with a Buy at Deutsche Bank; tgt $420

  • TuSimple Holdings (TSP) initiated with a Buy at Truist; tgt $12

  • Unilever PLC (UL) initiated with an Equal-Weight at Morgan Stanley

Upcoming Events:

• Econ Data:

  • 08:30 ET: GDP - Third Estimate for Q2 (Briefing.comConsensus -0.6%; Prior -0.6%)

  • 08:30 ET: GDP Deflator - Third Estimate for Q2 (Briefing.comConsensus 8.9%; Prior 8.9%)

  • 08:30 ET: Initial Claims for Sep 24 (Briefing.comConsensus 213K; Prior 213K)

  • 08:30 ET: Continuing Claims for Sep 17 (Briefing.comConsensus NA; Prior 1379K)

  • 10:30 ET: EIA Natural Gas Inventories for Sep 24 (Briefing.comConsensus NA; Prior +103 bcf)

• Earnings

  • Tuesday (Sep 27)

    • Morning: CBRL DAVA JBL NEOG SNX UNFI

    • Afternoon:  BB CALM PRGS

  • Wednesday (Sep 28)

    • Morning:  CTAS CGNT PAYX THO

    • Afternoon:  CNXC EPAC JEF MLKN MTN

  • Thursday (Sep 29)

    • Morning: BBBY KMX RAD WOR

    • Afternoon:  CMTL MU NKE

Asia & Europe detail:

Asia: Nikkei +1.0%, Hang Seng -0.5%, Shanghai Composite -0.1%

Equity indices in the Asia-Pacific region ended Thursday on a mixed note. Japan's Prime Minister Kishida has reportedly promised to take steps to reduce the cost of power to consumers. South Korea's President Yoon said that his government will deal appropriately with potential shocks to the South Korean economy. South Korea, Japan, and the U.S. will conduct joint military drills tomorrow.

• In economic data:

  • South Korea's October Manufacturing BSI Index 73 (last 82)

  • New Zealand's September ANZ Business Confidence -36.7 (last -47.8) and September NBNZ Own Activity -1.8% (last -4.0%)

---Equity Markets---

• Japan's Nikkei: +1.0%

• Hong Kong's Hang Seng: -0.5%

• China's Shanghai Composite: -0.1%

• India's Sensex: -0.3%

• South Korea's Kospi: +0.1%

• Australia's ASX All Ordinaries: +1.5%

---FX---

• USD/JPY: +0.4% to 144.68

• USD/CNH: -0.3% to 7.1343

• USD/INR: +0.4% to 81.76

Europe: DAX -0.9%, FTSE -0.6%, CAC -1.0%

Major European indices trade lower across the board. British Prime Minister Truss spoke in defense of her economic plan, saying she is willing to take "controversial" decisions to boost growth, while Chancellor Kwarteng pushed back against calls for his resignation. More European Central Bank policymakers have spoken in favor of a 75-bps rate hike. The Italian government lowered its growth forecast for 2023 to 0.6% from 2.4%.

• In economic data:

  • Eurozone's September Business and Consumer Survey 93.7 (expected 95.0; last 97.3)

  • Italy's August PPI 2.8% m/m (last 5.0%); 40.1% yr/yr (last 36.9%)

  • Spain's September CPI -0.6% m/m (last 0.3%); 9.0% yr/yr (expected 10.0%; last 10.5%)

---Equity Markets---

• STOXX Europe 600: -1.3%

• Germany's DAX: -0.9%

• U.K.'s FTSE 100: -0.6%

• France's CAC 40: -1.0%

• Italy's FTSE MIB: -1.3%

• Spain's IBEX 35: -1.3%

---FX---

• EUR/USD: -0.1% to 0.9721

• GBP/USD: -0.2% to 1.0860

• USD/CHF: +0.4% to 0.9791