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Morning Update 19/10/21

Morning Briefing - Positive earnings reports has market poised to extend winning streak

The S&P 500 futures trade 30 points, or 0.7%, above fair value as investors review a batch of earnings news that was mostly better than expected. The benchmark index enters the session on a four-session winning streak. Dow components Johnson & Johnson (JNJ 159.70, -0.42, -0.3%), Procter & Gamble (PG 139.92, -2.42, -1.7%), and Travelers (TRV 157.98, +5.10, +3.3%) each beat EPS estimates, with JNJ also guiding FY21 EPS/revenue above consensus. Note, P&G is forecasting higher costs in the fourth quarter. Dover (DOV 168.00, +1.21, +0.7%) also guided FY21 EPS above consensus while Steel Dynamics (STLD 64.20, +1.78, +2.9%) provided an upbeat outlook for the domestic steel market. Reactions have been mixed, though, with J&J and P&G shares trading lower. In other developments, Walmart (WMT 144.80, +3.12, +2.2%) was reportedly added to the Conviction Buy List at Goldman Sachs, and the FDA will soon approve mixing and matching of COVID-19 vaccines, according to The New York Times. WMT shares are indicated higher by 2.2% in pre-market action. On the data front, investors will receive Housing Starts (Briefing.com consensus 1.620 million) and Building Permits (Briefing.com consensus 1.670 million) for September at 8:30 a.m. ET. U.S. Treasuries trade mixed. The 2-yr yield is down two basis points to 0.40%, and the 10-yr yield is up two basis points to 1.60%. The U.S. Dollar Index is down 0.4% to 93.56. WTI crude futures are up 1.2%, or $0.97, to $82.67/bbl. In U.S. Corporate news:

  • Johnson & Johnson (JNJ 159.70, -0.42): -0.3% despite beating EPS on below-consensus revenue and guiding FY21 EPS/revenue above consensus.

  • Procter & Gamble (PG 139.92, -2.42): -1.7% despite beating top and bottom-line estimates and reaffirming its FY22 EPS/revenue guidance. The company is forecasting higher costs in the fourth quarter.

  • Walmart (WMT 144.80, +3.12): +2.2% after the stock was added to the Conviction Buy List at Goldman Sachs, according to CNBC.

  • Travelers (TRV 157.98, +5.10): +3.3% after beating top and bottom-line estimates.

  • Dover (DOV 168.00, +1.21): +0.7% after beating top and bottom-line estimates and guiding FY21 EPS above consensus.

  • Steel Dynamics (STLD ..): +x% after beating EPS estimates and observing that order entry activity continues to be robust.

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region ended Tuesday on a mostly higher note. Japan's Nikkei: +0.7% Hong Kong's Hang Seng: +1.5% China's Shanghai Composite: +0.7% India's Sensex: -0.1% South Korea's Kospi: +0.7% Australia's ASX All Ordinaries: UNCH.

  • In economic data:

  • Evergrande reportedly made a payment on an onshore coupon today but there is still a concern that the company will default on its offshore obligations.

  • The Reserve Bank of Australia's latest policy minutes blamed an interruption in recovery on the Delta variant of the coronavirus, but policymakers expect a return to growth in Q4 and a return to a "pre-Delta" path in the second half of 2022.

  • North Korea launched two missiles into the Sea of Japan.



  • Major European indices trade near their flat lines while Spain's IBEX (+0.8%) outperforms. STOXX Europe 600: +0.2% Germany's DAX: +0.1% U.K.'s FTSE 100: +0.1% France's CAC 40: +0.1% Italy's FTSE MIB: +0.3% Spain's IBEX 35: +0.8%.

  • In economic data:

  • Eurozone's August Construction Output -1.28% m/m (last 0.09%)

  • Spain's September trade deficit EUR3.90 bln (last deficit of EUR1.60 bln)

  • Swiss September trade surplus CHF5.052 bln (last surplus of CHF5.128 bln)


  • In news:

  • European Central Bank policymaker Villeroy de Galhau said that there is no reason to raise rates in 2022 and that he is convinced that inflation will be back below 2.0% by the end of 2022.

  • The European Commission plans to maintain relaxed state aid rules until at least June 2022 to slowly wean corporations off government aid.



U.S. equity futures:

  • S&P 500 Futures: +22 @ 4,509

  • DJIA Futures: +164 @ 35,423

  • Nasdaq 100 Futures: +66 @ 15,367

Overseas:

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

  • Asia: Nikkei +0.7%, Hang Seng +1.5%, Shanghai +0.7%

Commodities:

  • Crude Oil +0.84 @ 82.53

  • Nat Gas -0.042 @ 4.947

  • Gold +14.95 @ 1780.65

  • Silver +0.548 @ 23.812

  • Copper +0.0440 @ 4.7695

U.S. Summary:

  • Earnings/Guidance (Full Earnings Calendar):

  • B2Gold (BTG) reports Q3 production

  • BHP Group (BHP) reports Q3 operational results; all production and unit cost guidanc remains unchanged for the 2022 financial year

  • BNY Mellon (BNY) beats by $0.04, beats on revs

  • Commerce Bancshares (CBSH) beats by $0.07

  • Danone (DANOY) reports net sales increased 5.8% yr/yr; reaffirms outlook

  • Dover (DOV) beats by $0.13, beats on revs; guides FY21 EPS above consensus

  • Equity Lifestyle Properties (ELS) beats by $0.02, beats on revs; guides Q4 FFO in-line

  • Ericsson (ERIC) beats by SEK0.21, misses on revs

  • EverQuote (EVER) issues downside guidance for Q3 due to challenges in the auto insurance market

  • dLocal Limited (DLO) guides Q3 revs above consensus, guides EBITDA in-line

  • Fifth Third (FITB) beats by $0.07

  • F.N.B. Corp (FNB) beats by $0.05, beats on revs

  • Halliburton (HAL) reports EPS in-line, misses on revs

  • Hexcel (HXL) beats by $0.05, misses on revs

  • Iridium Communications (IRDM) beats by $0.01, beats on revs; raises outlook

  • Johnson & Johnson (JNJ) beats by $0.25, misses on revs; guides FY21 EPS above consensus, revs above consensus

  • Manpower (MAN) beats by $0.04, misses on revs; guides Q4 EPS in-line

  • Mueller Industries (MLI) reports Q3 (Sep) results

  • PacWest Bancorp (PACW) beats by $0.14, beats on revs

  • Philip Morris International (PM) beats by $0.02, beats on revs

  • Procter & Gamble (PG) beats by $0.02, beats on revs; reaffirms FY22 EPS guidance, revs guidance

  • Signature Bank (SBNY) beats by $0.22

  • Silvergate Capital (SI) beats by $0.17

  • Steel Dynamics (STLD) beats by $0.07, reports revs in-line; order entry activity continues to be robust

  • Synchrony Financial (SYF) beats by $0.21

  • Synovus (SNV) beats by $0.15

  • Travelers (TRV) beats by $0.62, beats on revs

  • W&T Offshore (WTI) provides operational update for Q3, estimates net production to average between 34,200-35,100 Boe/d

  • Zions Bancorp (ZION) beats by $0.09, beats on revs


  • General News:

  • Treasury Secretary Janet Yellen verified that recently passed debt ceiling extension will keep government running through December 3, according to the Wall Street Journal

  • Senator Joe Manchin (D-WV) does not believe Congress will pass infrastructure and larger reconciliation bill by October 31, according to The Hill

  • FDA will soon approve mixing and matching of vaccines, according to the New York Times

  • Bitcoin ETF will debut today

  • AAR Corp (AIR) signs agreement with flydubai to renew Boeing 737NG component support

  • ACM Research (ACMR) secures orders for ECP demo tool and SAPS evaluation tool

  • Adagio Therapeutics (ADGI) announces new in vitro data highlighting broad and potent neutralization of ADG20 against all known SARS-CoV-2 variants

  • Aviat Networks (AVNW) names David M. Gray as CFO, effective today

  • Atea Pharmaceuticals (AVIR) Provides update and topline results for phase 2 moonsong trial evaluating AT-527 in the outpatient setting

  • Beam Therapeutics (BEAM) announces preclinical data highlighting base editing approach to correct a glycogen storage disease type Ia disease-causing mutation

  • Berkshire Hills Bancorp (BHLB) announces partnership with Upstart (UPST)

  • Biomerica (BMRA) announces that Walmart (WMT) has begun in-store sales and rollout of the Company's EZ Detect colorectal disease screening test within the nationwide Walmart retail system

  • Crinetics Pharmaceuticals (CRNX), with 5AM Ventures and Frazier Healthcare Partners, announces formation of Radionetics Oncology

  • Dicerna Pharmaceuticals (DRNA) announces results for PHYOX4, single-dose study of nedosiran in primary hyperoxaluria type 3

  • Dr. Reddy's (RDY) receives FDA approval for Lenalidomide

  • Eli Lilly (LLY): Tirzepatide results published in The Lancet show superior A1C and body weight reductions compared to insulin glargine in adults with type 2 diabetes with increased cardiovascular risk

  • Enanta Pharmaceuticals (ENTA) reports new preclinical data for EDP-235, its recently announced lead oral protease inhibitor specifically designed for the treatment of COVID-19

  • Entasis Therapeutics (ETTX) announces positive topline results for sulbactam-durlobactam (SUL-DUR) from Phase 3 ATTACK trial

  • Facebook (FB): Judge orders details of alleged advertising collusion between Facebook and Google (GOOG) should be released, according to the New York Post

  • Galera (GRTX) announces results from the Phase 3 ROMAN trial of avasopasem manganese for severe oral mucositis in patients with locally advanced head and neck cancer undergoing standard-of-care radiotherapy

  • Humanigen (HGEN) announces a late-breaking presentation of results from the Company's randomized, double-blind, placebo-controlled LIVE-AIR Phase 3 study at the CHEST Annual Meeting 2021

  • Invesco (IVZ) ends plans to introduce Bitcoin futures ETF, according to Bloomberg

  • NeoGames (NGMS) launches its premium online games with Lottomatica through a multi-year agreement

  • Newport (NEWP) announce the results from the 2020-2021 metallurgical test program at its flagship Silver Sand deposit, Bolivia

  • Niu Technologies (NIU) appoints Fion Zhou as CFO

  • Paratek Pharma (PRTK): first patient has been enrolled in its Phase 2b study of NUZYRA

  • Pfizer (PFE): Health Canada announces it received a submission from Pfizer-BioNTech seeking an authorization for the use of its Comirnaty COVID-19 vaccine in children 5 to 11 years of age

  • Privia Health (PRVA) to enter CA and expand its footprint in TX; will provide expected impact of these decisions in its FY21 guidance

  • Puma Biotech. (PBYI), Celcuity (CELC), and University of Rochester Wilmot Cancer Center announce trial collaboration to study patients with breast cancer brain metastases

  • Robinhood (HOOD): Regulators could consider new rules for "game-like" brokerage applications, according to the Wall Street Journal

  • SAGE Therapeutics (SAGE) and Biogen (BIIB) announce plans to submit a new drug application for Zuranolone to the FDA in the second half of 2022 with rolling submission expected to start in early 2022

  • TechnipFMC (FTI) announces strategic alliance with Talos Energy (TALO) to provide carbon capture and storage

  • Venus Concept (VERO) has received 510(k) clearance from the U.S. Food and Drug Administration to market the Venus Freedom device in the United States

  • WAVE Life Sciences (WVE) amends ongoing collaboration with Takeda Pharmaceutical (TAK)


  • M&A:

  • AgEagle Aerial Systems (UAVS) acquires Parrot for $23 mln

  • Apogee Enterprises (APOG) agrees to sell Architectural Glass facility in Statesboro to Cardinal Glass Industries

  • AutoNation (AN) to sell 17 collision centers to Caliber Holdings; AN stores will continue to sell parts and refer business to those collision centers

  • Avalara (AVLR) acquires CrowdReason Limited Liability Company; financial terms not disclosed

  • Calithera Biosciences (CALA) agrees to acquire two clinical-stage compounds from Takeda Pharmaceutical (TAK)

  • Castle Biosciences (CSTL) has signed a definitive agreement to acquire Cernostics, an Illumina Ventures company

  • S&P Global (SPGI) and IHS Markit (INFO) update on pending merger following CMA's phase 1 findings

  • Tupperware (TUP) enters into definitive agreement to sell its House of Fuller beauty business in Mexico; terms of transaction not disclosed


  • Syndicate:

  • dLocal Limited (DLO) files for 16 mln share common stock offering by selling shareholders

  • TaskUs (TASK) files for 10 mln share common stock offering by selling shareholders

  • Viper Energy Partners (VNOM) files for 15.25 mln common unit offering by selling shareholders


  • IPOs:

  • Expected to Price:

  • Aris Water Solutions (NYSE: ARIS): The environmental infrastructure and solutions company that helps customers reduce their water and carbon footprints is expected to price its 17.7 M share IPO between $16-18.

  • Enfusion (NYSE: ENFN): The SaaS provider focused on transforming the investment management industry is expected to price its 18.8 M share IPO between $15-$17.

  • P10, Inc. (NYSE: PX): The multi-asset class private market solutions provider in the alternative asset management industry is expected to price its 20.0 M share IPO between $14-$16.

  • Portillo's (Nasdaq: PTLO): The restaurant chain serving iconic Chicago street food through multichannel restaurants is expected to price its 20.3 M share IPO between $17-$20.

  • Runway Growth Finance (Nasdaq: RWAY): The specialty finance company focused on providing senior secured loans to high growth-potential companies is expected to price its 6.9 M share IPO between $14.60-$15.60.

  • Stronghold Digital Mining (Nasdaq: SDIG): The vertically integrated crypto asset mining company currently focused on mining Bitcoin is expected to price its 5.9 M share IPO between $16-$18.

  • The Vita Coco Company (Nasdaq: COCO): The creator of plant-based functional hydration platform, which pioneered packaged coconut water in 2004, is expected to price its 11.5 M share IPO between $18-$21.

  • Ventyx (Nasdaq: VYTX): The clinical-stage biopharmaceutical advancing new therapies for millions of patients living with inflammatory diseases and autoimmune disorders is expected to price its 7.8 M share IPO between $15-$17.



Gapping Up/Down

  • Gapping up:

  • ETTX +21.9%, HRMY +11.6%, UAVS +11.6%, WVE +8%, BTG +3.8%, ACMR +3.4%, FNB +3.1%, TREE +2.7%, CALA +2.5%, FTI +1.7%, PRTK +1.7%, STLD +1.7%, CELC +1.2%, TAK +0.9%, UPST +0.8%, BHP +0.8%, BHLB +0.6%


  • Gapping down:

  • PACW -6.5%, DLO -6%, TASK -5.8%, EVER -4.6%, KRG -3.7%, ZION -2.7%, HXL -1.5%, SYF -1%, WTI -0.5%


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

  • Upgrades

  • Albemarle (ALB) upgraded to Outperform from Sector Perform at RBC Capital Mkts; tgt raised to $280

  • Crown Castle (CCI) upgraded to Outperform from Neutral at Credit Suisse; tgt raised to $195


  • Downgrades:

  • Akero Therapeutics (AKRO) downgraded to Equal-Weight from Overweight at Morgan Stanley; tgt $27

  • Albertsons (ACI) downgraded to Neutral from Buy at Citigroup; tgt raised to $32


  • Others:

  • Academy Sports + Outdoors (ASO) initiated with an Outperform at Oppenheimer; tgt $50

  • Amwell (AMWL) initiated with an Equal Weight at Wells Fargo; tgt $8

  • Arbe Robotics (ARBE) initiated with an Outperform at Cowen; tgt $12

  • Beam Therapeutics (BEAM) initiated with an Outperform at SVB Leerink; tgt $117

  • Bill.com (BILL) initiated with a Buy at Deutsche Bank; tgt $360

  • Blink Charging (BLNK) initiated with a Hold at Stifel; tgt $29

  • Cano Health (CANO) initiated with a Neutral at Piper Sandler; tgt $11


Upcoming Events:

  • Econ Data:

  • 08:30 ET: Housing Starts for Sep (Briefing.com Consensus 1620K; Prior 1615K)

  • 08:30 ET: Building Permits for Sep (Briefing.com Consensus 1670K; Prior 1728K)


  • Earnings

  • Monday (Oct 18)

  • Morning: ACI PHG STT

  • Afternoon: ELS FNB HXL STLD ZION


  • Tuesday (Oct 19)

  • Morning: BK CBSH DOV ERIC FITB FMBI HAL IRDM JNJ KSU MAN ONB PM PG SBNY SI SYF SNV TRV

  • Afternoon: CNI FULT HWC IBKR ISRG MRTN NBHC NFLX OMC LRN UAL UCBI WDFC WTFC


  • Wednesday (Oct 20)

  • Morning: ABT ANTM ASML BKR BIIB BOKF CP CFG CMA FHN FCFS KNX LAD MTB MKTX MSM NDAQ NEE NEP NTRS BPOP VZ WSO WGO

  • Afternoon: CNS CCI CSX CVBF DFS EFX EEFT FR GL GGG IBM KALU KMI LRCX LSTR LVS OMF PPG XM REXR RLI SLM SEIC SLG STL FTI THC TSLA TCBI UFPI UMPQ VMI


  • Thursday (Oct 21)

  • Morning: ABB ALK ALLE ALLY AAL T AN BANC BKU BX GTLS CROX DHR DOW EWBC FAF FCX GATX GPC HRI HOMB IPG IQV KEY LNN MMC NUE NVR PPBI POOL PDS DGX RCI SASR SNA SON LUV TSCO TPH TRN UNP VLO WBS

  • During Market Hours: WABC

  • Afternoon: ASB OZK BJRI SAM CSL CE CMG BOOM FFBC GBCI INTC MAT OLN PBCT PSMT RHI SNAP SIVB VICR WRB WAL WHR WSFS


  • Friday (Oct 22)

  • Morning: AIMC AXP ALV CLF FHB GNTX HCA HON RF ROP SLB STX SMPL VFC



Asia & Europe detail: Asia: Nikkei +0.7%, Hang Seng +1.5%, Shanghai +0.7% Equity indices in the Asia-Pacific region ended Tuesday on a mostly higher note. Evergrande reportedly made a payment on an onshore coupon today but there is still a concern that the company will default on its offshore obligations. The Reserve Bank of Australia's latest policy minutes blamed an interruption in recovery on the Delta variant of the coronavirus, but policymakers expect a return to growth in Q4 and a return to a "pre-Delta" path in the second half of 2022. North Korea launched two missiles into the Sea of Japan.

  • There was no economic data of note

---Equity Markets---

  • Japan's Nikkei: +0.7%

  • Hong Kong's Hang Seng: +1.5%

  • China's Shanghai Composite: +0.7%

  • India's Sensex: -0.1%

  • South Korea's Kospi: +0.7%

  • Australia's ASX All Ordinaries: UNCH

---FX---

  • USD/JPY: -0.1% to 114.14

  • USD/CNH: -0.7% to 6.3806

  • USD/INR: -0.2% to 75.03

Europe: DAX +0.1%, FTSE +0.1%, CAC +0.1% Major European indices trade near their flat lines while Spain's IBEX (+0.8%) outperforms. European Central Bank policymaker Villeroy de Galhau said that there is no reason to raise rates in 2022 and that he is convinced that inflation will be back below 2.0% by the end of 2022. The European Commission plans to maintain relaxed state aid rules until at least June 2022 to slowly wean corporations off government aid.

  • In economic data:

  • Eurozone's August Construction Output -1.28% m/m (last 0.09%)

  • Spain's September trade deficit EUR3.90 bln (last deficit of EUR1.60 bln)

  • Swiss September trade surplus CHF5.052 bln (last surplus of CHF5.128 bln)


---Equity Markets---

  • STOXX Europe 600: +0.2%

  • Germany's DAX: +0.1%

  • U.K.'s FTSE 100: +0.1%

  • France's CAC 40: +0.1%

  • Italy's FTSE MIB: +0.3%

  • Spain's IBEX 35: +0.8%

---FX---

  • EUR/USD: +0.4% to 1.1658

  • GBP/USD: +0.7% to 1.3822

  • USD/CHF: -0.5% to 0.9191



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