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30/08/22 Briefing




The S&P 500 futures are up 26 points and are trading 0.6% above fair value. The Nasdaq 100 futures are up 108 points and are trading 0.8% above fair value. The Dow Jones Industrial Average futures are up 176 points and are trading 0.6% above fair value.

Equity futures indicate a higher open in a reflective rebound following losses in the last two sessions. 

Bloomberg is reporting that the EU is set to meet its gas storage filling goal two months ahead of target. European Commission President von der Leyen said that an emergency intervention is being planned to rein in energy prices.  

Energy complex futures are trending lower amid the aforementioned macro headlines as well as an understanding that Shenzhen is imposing COVID restrictions. WTI crude oil futures are down 3.0% to $94.03/bbl. Natural gas futures are down 1.1% to $9.23/mmbtu. Unleaded gasoline futures are down 3.6% to $2.61/gal.

Treasury yields are drifting lower. The 2-yr note yield is down one basis point to 3.42% while the 10-yr note yield is down four basis points to 3.06%.

Market participants will receive the June FHFA Housing Price Index (prior 1.4%) and June S&P Case-Shiller Home Price Index (Briefing.comconsensus 19.0%; prior 20.5%) at 9:00 a.m. ET. The August Consumer Confidence reading (Briefing.comconsensus 97.4; prior 95.7) and July JOLTS Job Openings (prior 10.698 million) at 10:00 a.m. ET.

In corporate news:

  • Twitter (TWTR 39.67, -0.37, -0.92%): Elon Musk files amended 13D disclosing letter sent Aug 29 to provide an additional notice of termination of the Agreement and Plan of Merger by and among the Musk Parties and Twitter

  • Big Lots (BIG 22.04, +0.49, +2.27%): beats by $0.19, reports revs in-line

  • First Solar (FSLR 124.10, +2.41, +1.98%): to invest up to $1.2 bln scaling production of American-made responsible solar by 4.4 GW

  • Best Buy (BBY 75.74, +2.04, +2.77%): beats by $0.25, reports revs in-line; Q2 comps -12.1%; provides Q3 and FY23 guidance for comps

  • Baidu (BIDU 152.88, +5.56, +3.77%): beats by CNY4.96, beats on revs

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region ended Tuesday on a mostly higher note with India's Sensex (+2.7%) rebounding strongly from Monday'sslide. Japan's Nikkei: +1.1%, Hong Kong's Hang Seng: -0.4%, China's Shanghai Composite: -0.4%, India's Sensex: +2.7%, South Korea's Kospi: +1.0%, Australia's ASX All Ordinaries: +0.5%.

  • In economic data:

  • Japan's July Unemployment Rate 2.6%, as expected (last 2.6%) and July jobs/applications ratio 1.29 (expected 1.27; last 1.27)

  • Australia's July Building Approvals -17.2% m/m (expected -5.0%; last -0.6%) and Private House Approvals 0.7% m/m (last -1.8%)

  • In news:

  • China reportedly tightened coronavirus restrictions in Shenzhen.

  • Japanese press reported that several hydrogen receiving terminals will be built in Japan.

  • South Korea is working on a rare earth extraction deal with Mongolia, according to Yonhap. South Korea's budget for 2023 will include the slowest spending growth in six years.

  • Major European indices trade in the green with Germany's DAX (+1.8%) showing relative strength. STOXX Europe 600: +0.7%, Germany's DAX: +1.8%, U.K.'s FTSE 100: +0.1%, France's CAC 40: +1.0%, Italy's FTSE MIB: +1.5%, Spain's IBEX 35: +1.2%.

  • In economic data:

  • Eurozone's August Business and Consumer Survey 97.6 (expected 98.0; last 98.9)

  • U.K.'s July Mortgage Lending GBP5.05 bln, as expected (last GBP5.31 bln) and net lending to individuals GBP6.50 bln (expected GBP6.60 bln; last GBP7.10 bln)

  • Italy's June Industrial Sales -0.2% m/m (last 1.2%); 18.0% yr/yr (last 23.6%)

  • Spain's July Retail Sales -0.5% yr/yr (last 0.7%). August CPI 0.1% m/m (expected 0.3%; last -0.3%); 10.4% yr/yr (expected 10.9%; last 10.8%). August Business Confidence -6.1 (last -5.2)

  • Swiss August KOF Leading Indicators 86.5 (expected 89.0; last 90.5)

  • In news:

  • Spain's CPI decelerated from its July peak but was still up 10.4% yr/yr in the preliminary August reading.

  • There is growing speculation that energy price caps will be implemented by some European countries.

  • European Commission President von der Leyen said that an emergency intervention is being planned to rein in energy prices.

U.S. equity futures:

  • S&P 500 Futures: +27 @ 4,058

  • DJIA Futures: +184 @ 32,283

  • Nasdaq 100 Futures: +118 @ 12,602

Overseas:

  • Europe: DAX +1.8%, FTSE +0.1%, CAC +1.0%

  • Asia: Nikkei +1.1%, Hang Seng -0.4%, Shanghai Composite -0.4%

Commodities:

  • Crude Oil -2.79 @ 94.22

  • Nat Gas  -0.164 @ 9.172

  • Gold -6.35 @ 1743.35

  • Silver -0.072  @ 18.485

  • Copper -0.0595 @ 3.5510

U.S. Summary:

  • Earnings/Guidance:

  • American Woodmark (AMWD) beats by $0.42, beats on revs

  • Baidu (BIDU) beats by CNY4.96, beats on revs

  • Bank of Montreal (BMO) misses by CAD 0.05, misses on revs

  • Best Buy (BBY) beats by $0.25, reports revs in-line; Q2 comps -12.1%; provides Q3 and FY23 guidance for comps

  • Big Lots (BIG) beats by $0.19, reports revs in-line

  • Conn's (CONN) misses by $0.05, misses on revs; provides strategic update

  • HEICO (HEI) misses by $0.06, beats on revs; not providing FY22 guidance due to multiple factors

  • Photronics (PLAB) beats by $0.01, beats on revs; guides Q4 EPS below consensus, revs in-line

  • PNM Resources (PNM) reaffirms 2022 and 2023 guidance ahead of analyst meetings

  • General News:

  • 23 people have died amid unrest in Iraq, according to BBC

  • California legislature passed bill that would allow government to set wages for fast food workers, according to the Wall Street Journal

  • The Biden administration aiming to sell $1.1 bln in missiles and radar to Taiwan, according to Bloomberg

  • 3M (MMM) sets final exchange ratio in split-off exchange offer in connection with Neogen (NEOG) transaction

  • Algoma Steel Group (ASTL) reports it has been notified by United Steelworkers Local 2251, the union representing Algoma's hourly employees, that their members have successfully ratified the terms of the new 5-year collective agreement

  • Boeing (BA): First Lufthansa (DLAKY) Boeing 787 arrives in Frankfurt

  • Caleres (CAL) appoints Jack Calandra as senior vice president and chief financial officer, effective September 12, 2022

  • Civeo (CVEO) announces renewal of share repurchase authorization

  • Dick's Sporting Goods (DKS) entered into partial unwind agreements with a financial institution

  • DoubleDown Interactive (DDI) and International Game Technology announce agreement in principle to settle Benson v. DoubleDown Interactive LLC, et. al. lawsuit; total of $415 million will be paid into a settlement fund

  • First Solar (FSLR) to invest up to $1.2 bln scaling production of American-made responsible solar by 4.4 GW

  • FREYR Battery (FREY) announces the execution of 38 GWh Li-Ion Battery binding cell sales agreement; enters into module & pack JV for energy storage solutions with Nidec

  • Greenbrier (GBX) elects Thomas B. Fargo as Independent Chair of its Board of Directors, effective at Greenbrier's close of business on August 31

  • Haemonetics (HAE) announces agreement with Epic, an Electronic Health Record system, to offer its SafeTrace Tx blood bank info to Epic's global network of hospitals

  • Intl Game Tech. PLC (IGT) unit signed a four-year contract extension with the New York Lottery; extends the current contract to August 2026

  • Lockheed Martin (LMT) awarded a $503 mln U.S. Navy firm-fixed-price order against a previously issued basic ordering agreement

  • Nvidia (NVDA) might use TSMC's (TSM) 3D SoIC technology, according to Digitimes

  • Peloton (PTON) files to delay form 10-K

  • Primo Water (PRMW) announced the planned retirement of Jay Wells, Chief Financial Officer, effective April 1, 2023

  • Sangamo Therapeutics (SGMO) Announces Updated Preliminary Phase 1/2 Data in Fabry Disease Clinical Study Showing Continued Tolerability and Sustained Elevated a-gal A Enzyme Activity in Five Longest Treated Patients

  • Sanofi (SNY) receives FDA priority review for efanesoctocog alfa

  • Sequans Communications (SQNS) announced the closing of a multi-year, strategic 5G licensing agreement with a new strategic partner

  • StoneX Group (SNEX) authorizes for FY23 the repurchase of up to 1.0 mln shares of its common stock commencing on Oct 1, 2022and ending on Sep 30, 2023

  • TeraWulf (WULF) and Talen Energy Corporation reach agreement to amend their existing joint venture for the Nautilus Cryptomine bitcoin mining facility

  • Tesla (TSLA) plans to challenge a Louisiana law restricting direct EV sales, according to the Wall Street Journal

  • Toyota Motor (TM) reports in July both sales and production fell below the previous year's level due to the impact from the global spread of COVID-19, as well as the parts supply shortage caused by the increased demand for semiconductors

  • Turkcell Superonline (TKC) signed a strategic cooperation agreement with Equinix (EQIX)

  • UniFirst (UNF) signed a sponsorship agreement with the Detroit Lions, naming them the Official Uniform Supplier of the Detroit Lions

  • Wabash Natl (WNC) adds two new dealers to its North American dealer network

  • Zendesk (ZEN) confirms that it received unsolicited non-binding recapitalization proposal from Light Street Capital Management

  • M&A:

  • East Resources Acquisition Company (ERES) & Abacus Life enter business combination agreement

  • Helix Energy (HLX) subsidiary acquires a joint venture controlled by Murphy Exploration & Production Company; financial details not disclosed

  • Petrobras (PBR) informs that the binding phase concerning the full sale of the Nitrogen Fertilizer Unit III (UFN-III) is underway

  • Roper (ROP) to acquire Frontline Education in an all-cash transaction valued at approximately $3.725 billion

  • Twitter (TWTR): Elon Musk files amended 13D disclosing letter sent Aug 29 to provide an additional notice of termination of the Agreement and Plan of Merger by and among the Musk Parties and Twitter

  • Syndicate

  • Civeo (CVEO) files for $300 mln mixed securities shelf offering

  • Lucid Group (LCID) files for $8 bln mixed securities shelf offering; files for 1,189,450,445 share common stock offering by selling shareholders, relates to warrants

  • Nikola Corporation (NKLA) entered into that certain Equity Distribution Agreement for up to $400 mln of common stock

  • Trimble (TRMB) to acquire privately-held Bilberry, a French technology company specializing in selective spraying systems for sustainable farming; Financial terms were not disclosed

  • IPOs:

  • Expected to Price:

  • No IPOs expected.

Gapping Up/Down

  • Gapping up:

  • FREY +11.1%, AVID +9%, GAMB +6.5%, HEI +3.5%, NMMC +2%, DOLE +2%, BIDU +1.8%, FSLR +1.6%, SNY +1.5%, MMM +1.5%, FFIE +1.4%, HAE +1.3%, PLAB +1.1%, WNC +1%

  • Gapping down:

  • SGMO -3.8%, BIG -2.2%, AX -2%, HLX -0.7%

 

Analyst Research (see Upgrades/Downgradescalendarfor full list):

  • Upgrades

  • American Outdoor Brands (AOUT) upgraded to Buy from Neutral at B. Riley Securities; tgt $11

  • Arco Platform (ARCE) upgraded to Overweight from Neutral at JP Morgan; tgt lowered to $20

  • Gap (GPS) upgraded to Equal Weight from Underweight at Barclays

  • MakeMyTrip (MMYT) upgraded to Buy from Neutral at BofA Securities; tgt raised to $40

  • Pinduoduo (PDD) upgraded to Buy from Hold at HSBC Securities; tgt $93

  • Pinduoduo (PDD) upgraded to Buy at BOCOM Int'l

  • Sealed Air (SEE) upgraded to Neutral from Underweight at JP Morgan; tgt lowered to $58

  • Downgrades:

  • Azure Power (AZRE) downgraded to Underperform from Outperform at Credit Suisse; tgt lowered to $5

  • Cabaletta Bio (CABA) downgraded to Equal-Weight from Overweight at Morgan Stanley; tgt lowered to $3

  • Genesco (GCO) downgraded to Neutral from Buy at Seaport Research Partners

  • Lument Finance Trust (LFT) downgraded to Neutral from Overweight at Piper Sandler; tgt lowered to $2.75

  • Molecular Partners AG (MOLN) downgraded to Sector Perform from Outperform at RBC Capital Mkts

  • ObsEva (OBSV) downgraded to Neutral from Buy at H.C. Wainwright

  • Others:

  • Ascendis Pharma (ASND) resumed with a Buy at Berenberg; tgt $166

  • Blue Foundry Bancorp (BLFY) initiated with a Mkt Perform at Keefe Bruyette; tgt $13.25

  • Bowlero (BOWL) initiated with an Overweight at JP Morgan; tgt $17

  • Enhabit Inc. (EHAB) initiated with a Buy at Jefferies; tgt $20

  • European Wax Center (EWCZ) initiated with a Neutral at Piper Sandler; tgt $22

  • FiscalNote Holdings (NOTE) initiated with a Buy at BTIG Research; tgt $14

  • General Dynamics (GD) initiated with an Outperform at RBC Capital Mkts; tgt $275

  • IN8bio (INAB) initiated with a Buy at H.C. Wainwright; tgt $14

  • Iris Energy (IREN) initiated with a Buy at H.C. Wainwright; tgt $7

  • L3Harris (LHX) initiated with an Outperform at RBC Capital Mkts; tgt $285

  • Leidos (LDOS) initiated with a Sector Perform at RBC Capital Mkts; tgt $106

  • Lockheed Martin (LMT) initiated with a Sector Perform at RBC Capital Mkts; tgt $460

  • Northrop Grumman (NOC) initiated with a Sector Perform at RBC Capital Mkts; tgt $550

  • Spire Global (SPIR) initiated with a Buy at Canaccord Genuity; tgt $3.50

  • Whitestone REIT (WSR) initiated with a Hold at Truist; tgt $10

Upcoming Events:

  • Econ Data:

  • 09:00 ET: FHFA Housing Price Index for Jun (Briefing.comConsensus NA; Prior 1.4%)

  • 09:00 ET: S&P Case-Shiller Home Price Index for Jun (Briefing.comConsensus 19.0%; Prior 20.5)

  • 10:00 ET: Consumer Confidence for Aug (Briefing.comConsensus 97.4; Prior 95.7)

  • 10:00 ET: JOLTS- Job Openings for Jul (Briefing.comConsensus NA; Prior 10.698M)

  • Earnings:

  • Monday (Aug 29)

  • Morning:  CTLT SLQT

  • Afternoon: HEI

  • Tuesday (Aug 30)

  • Morning: AMWD BIDU BMO BBY BIG CONN PLAB

  • Afternoon:  AMBA CHPT CHWY CRWD HPE HPQ PVH

  • Wednesday (Aug 31)

  • Morning:  BF.B DBI DCI VRA

  • Afternoon:  AI COO CRDO FIVE GEF MDB NTNX OKTA PSTG SMTC S VEEV

  • Thursday (Sep 1)

  • Morning: FLWS BRC CPB CIEN GCO GMS MOMO HRL OLLI PDCO SAIC SCWX SIG TTC WB

  • Afternoon:  AVGO CVGW JOAN LULU NCNO OXM PD SMAR SPWH

Asia & Europe detail:

Asia: Nikkei +1.1%, Hang Seng -0.4%, Shanghai Composite -0.4%

Equity indices in the Asia-Pacific region ended Tuesday on a mostly higher note with India's Sensex (+2.7%) rebounding strongly from Monday'sslide. China reportedly tightened coronavirus restrictions in Shenzhen. Japanese press reported that several hydrogen receiving terminals will be built in Japan. South Korea is working on a rare earth extraction deal with Mongolia, according to Yonhap. South Korea's budget for 2023 will include the slowest spending growth in six years.

  • In economic data:

  • Japan's July Unemployment Rate 2.6%, as expected (last 2.6%) and July jobs/applications ratio 1.29 (expected 1.27; last 1.27) 

  • Australia's July Building Approvals -17.2% m/m (expected -5.0%; last -0.6%) and Private House Approvals 0.7% m/m (last -1.8%)

---Equity Markets---

  • Japan's Nikkei: +1.1%

  • Hong Kong's Hang Seng: -0.4%

  • China's Shanghai Composite: -0.4%

  • India's Sensex: +2.7%

  • South Korea's Kospi: +1.0%

  • Australia's ASX All Ordinaries: +0.5%

---FX---

  • USD/JPY: -0.3% to 138.29

  • USD/CNH: UNCH at 6.9099

  • USD/INR: -0.6% to 79.52

Europe: DAX +1.8%, FTSE +0.1%, CAC +1.0%

Major European indices trade in the green with Germany's DAX (+1.8%) showing relative strength. Spain's CPI decelerated from its July peak but was still up 10.4% yr/yr in the preliminary August reading. There is growing speculation that energy price caps will be implemented by some European countries. European Commission President von der Leyen said that an emergency intervention is being planned to rein in energy prices.

  • In economic data:

  • Eurozone's August Business and Consumer Survey 97.6 (expected 98.0; last 98.9)

  • U.K.'s July Mortgage Lending GBP5.05 bln, as expected (last GBP5.31 bln) and net lending to individuals GBP6.50 bln (expected GBP6.60 bln; last GBP7.10 bln)

  • Italy's June Industrial Sales -0.2% m/m (last 1.2%); 18.0% yr/yr (last 23.6%)

  • Spain's July Retail Sales -0.5% yr/yr (last 0.7%). August CPI 0.1% m/m (expected 0.3%; last -0.3%); 10.4% yr/yr (expected 10.9%; last 10.8%). August Business Confidence -6.1 (last -5.2)

  • Swiss August KOF Leading Indicators 86.5 (expected 89.0; last 90.5)

---Equity Markets---

  • STOXX Europe 600: +0.7%

  • Germany's DAX: +1.8%

  • U.K.'s FTSE 100: +0.1%

  • France's CAC 40: +1.0%

  • Italy's FTSE MIB: +1.5%

  • Spain's IBEX 35: +1.2%

---FX---

  • EUR/USD: +0.4% to 1.0038

  • GBP/USD: +0.2% to 1.1727

  • USD/CHF: +0.3% to 0.9705


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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