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28/09/22 Briefing

The S&P 500 futures are down 24 points and are trading 0.7% below fair value. The Nasdaq 100 futures are down 132 points and are trading 1.2% below fair value. The Dow Jones Industrial Average futures are down 104 points and are trading 0.7% below fair value.

Equity futures indicate a lower open, but came off their worst levels of the morning following a pullback in Treasury yields from overnight highs. The 10-yr note yield, which reached 4.01% earlier, fell to 3.89% immediately following the Bank of England announcing a plan to conduct temporary purchases of longer-dated gilts "to restore orderly market conditions."

The 10-yr note yield has been inching back towards overnight highs, sitting at 3.95% currently, keeping pressure on investor sentiment. Notwithstanding the BoE announcement, GBP/USD is down 1.4% to 1.0575.

On a related note, the IMF came out against the policy moves in the UK, urging them to re-think tax cuts indicating the policy risks increasing inflation. 

San Francisco Fed President Mary Daly (not an FOMC voter) said the Fed wants to bring inflation down "as gently as possible" to avoid a downturn, according to Reuters.

Hurricane Ian is expected to hit Florida as a category four storm today. 

In corporate news:

  • Apple (AAPL 145.93, -5.83, -3.84%): ends plans for iPhone 14 production increase as demand declines, according to Bloomberg

  • Netflix (NFLX 225.39, +1.03, +0.46%): upgraded to Overweight from Neutral at Atlantic Equities

  • Biogen (BIIB 290.00, +92.21, +46.62%): reports Lecanemab confirmatory Phase 3 Clarity AD study met primary endpoint, showing highly statistically significant reduction of clinical decline in large global clinical study of 1,795 participants with early Alzheimer's disease

  • Lyft (LYFT 13.75, -0.41, -2.90%): slides on reports it is freezing all U.S. hiring through the end of 2022, according to NY Post

  • Progress Software (PRGS 41.05, -0.52, -1.25%): beats by $0.03, beats on revs; guides NovQ EPS in-line, revs in-line, but mid-points are below consensus

  • Thor Industries (THO 74.34, +2.59, +3.61%): beats by $1.26, beats on revs

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region ended the midweek session on a lower note. Japan's Nikkei: -1.5%, Hong Kong's Hang Seng: -3.4%, China's Shanghai Composite: -1.6%, India's Sensex: -0.9%, South Korea's Kospi: -2.5%, Australia's ASX All Ordinaries: -0.6%.

  • In economic data:

  • Japan's August Leading Index 98.9 (last 100.3)

  • Australia's August Retail Sales 0.6% m/m (expected 0.4%; last 1.3%)

  • In news:

  • The Minutes from the Bank of Japan's July meeting showed that policymakers are ready to step up easing efforts if needed.

  • South Korea's finance ministry and central bank will conduct direct bond purchases in an effort to stabilize markets.

  • Caixin speculated that weaker demand for goods from China indicates the end of a shipping boom.

  • Chinese regulators have told banks to resume their use of a counter-cyclical factor in daily yuan fixings. North Korea conducted two missile launches off its east coast.

  • Major European indices trade in the red. STOXX Europe 600: -1.2%, Germany's DAX: -1.2%, U.K.'s FTSE 100: -0.5%, France's CAC 40: -1.1%, Italy's FTSE MIB: -1.7%, Spain's IBEX 35: -1.5%.

  • In economic data:

  • Germany's October GfK Consumer Climate -42.5 (expected -39.0; last -36.8)

  • France's September Consumer Confidence 79 (expected 80; last 82)

  • Italy's July Industrial Sales -0.1% m/m (last -0.4%); 16.3% yr/yr (last 17.9%). September Consumer Confidence 94.8 (expected 95.1; last 98.3) and Business Confidence 101.3 (expected 102.1; last 104.0)

  • Swiss September ZEW Expectations -69.2 (last -56.3

  • In news:

  • The Bank of England announced a plan to conduct temporary purchases of longer-dated gilts "to restore orderly market conditions." The announcement gave a brief boost to the pound, but the move was retraced entirely.

  • Germany is extending the operating life of two nuclear plants to reduce the risk of a winter energy shortage.

  • European Central Bank policymaker Kazimir said that a 75-bps hike would be a good option for the October meeting while policymakers Rehn and Holzmann also spoke positively about a 75-bps hike.

 

U.S. equity futures:

  • S&P 500 Futures: -20 @ 3,627

  • DJIA Futures: -95 @ 29,040

  • Nasdaq 100 Futures: -115 @ 11,157

Overseas:

  • Europe: DAX -1.2%, FTSE -0.5%, CAC -1.1%

  • Asia: Nikkei -1.5%, Hang Seng -3.4%, Shanghai Composite -1.6%

Commodities:

  • Crude Oil +0.28 @ 78.78

  • Nat Gas  -0.069 @ 6.691

  • Gold -4.90 @ 1631.30

  • Silver -0.262  @ 18.075

  • Copper -0.0020 @ 3.2815

U.S. Summary:

  • Earnings/Guidance:

  • Algoma Steel Group (ASTL) provided Q2 (Sep) adjusted EBITDA guidance; expects the figure to be in the range of $75-80 mln

  • BlackBerry (BB) beats by $0.02, beats on revs

  • Cal-Maine Foods (CALM) beats by $0.02, beats on revs, also increases dividend

  • Cognyte Software (CGNT) beats by $0.13, misses on revs

  • Geo Group (GEO) sees FY22 FFO and revs in line in slide presentation

  • Progress Software (PRGS) beats by $0.03, beats on revs; guides NovQ EPS in-line, revs in-line, but mid-points are below consensus

  • Thor Industries (THO) beats by $1.26, beats on revs

  • General News:

  • Bank of England announces gilt market operation; will carry out temporary purchases of long-dated UK government bonds

  • Treasury Secretary Janet Yellen considering leaving the Biden administration after the midterm elections. National Economic Council director Brian Deese will also likely leave early next year. Ms. Yellen disagreed with faulting corporations for increasing inflation and forgiving student debt, according to Axios

  • San Francisco Fed President Mary Daly (not a voting FOMC member) says Fed wants to bring inflation down "as gently as possible" to avoid a downturn, according to Reuters

  • Former Treasury Secretary Larry Summers says hard landing is now "substantially more likely", according to the Wall Street Journal

  • Russia preparing to annex portions of Ukraine after staged vote, according to the Wall Street Journal

  • EU believes sabotage a likely cause of leaking pipelines, according to Reuters

  • EU considering ban on shipping Russian oil, according to Bloomberg

  • Senate Minority Leader Mitch McConnell (R-KY) will support election reform bill which will make it more difficult for members of Congress to object to election results. The bill is now expected to pass after the midterms, according to CNN

  • 10 Year Treasury Yield trades above 4.0% for the first time since 2008

  • Senate passes procedural measure to fund government through December 16.Bill contains $12 billion for Ukraine, but energy permitting provisions were removed. Final Senate vote expected later this week ahead of Friday deadline

  • Hurricane Ian upgraded to category four storm as it approaches the Florida coast; expected to make landfall later today between Naples and Sarasota, FL

  • Lawsuit was filed to prevent student loan cancellation from going into effect, according to the Wall Street Journal

  • SEC charges 16 Wall Streetfirms with widespread recordkeeping failures, firms agree to pay combined penalties of more than $1.1 bln, according to SEC

  • Aegon N.V. (AEG) announced yesterday afternoon that it will repurchase common shares for an amount of EUR 133 million to neutralize the dilutive effect of the 2022 interim dividend paid in shares

  • Apple (AAPL) ends plans for iPhone 14 production increase as demand declines, according to Bloomberg

  • Biogen (BIIB) reports Lecanemab confirmatory Phase 3 Clarity AD study met primary endpoint, showing highly statistically significant reduction of clinical decline in large global clinical study of 1,795 participants with early Alzheimer's disease

  • Broadstone Net Lease (BNL) reports the co has collected 100% of base rents due for the third quarter for all properties under lease

  • Consolidated Water's (CWCO) property and equipment didn't sustain any damage after Hurricane Ian passed within 95 miles of Grand Cayman

  • Disney (DIS) & Universal (CMCSA) will close Florida parks today and tomorrow due to Hurricane Ian, according to CNBC

  • General Motors (GM) will not mandate workers return to offices before 2023, according to Reuters

  • JP Morgan (JPM) wants to double workforce at British retail bank, according to Reuters

  • KemPharm (KMPH) announces topline data from its exploratory Phase 1 clinical trial confirming the relative cardiovascular effects and pharmacokinetics of serdexmethylphenidate compared to immediate-release and long-acting formulations of Ritalin

  • Lyft (LYFT) is freezing all U.S. hiring through the end of 2022, according to the New York Post

  • Mallinckrodt plc (MNKPF) announced the submission of a 510(k) premarket notification application to the FDA for an investigational inhaled nitric oxide delivery system for INOmax (nitric oxide) gas, for inhalation

  • Nano-X Imaging (NNOX) submitted a 510(k) premarket notification to the FDA on Sept 26 for its multi-source 3D digital tomosynthesis system

  • Ocugen (OCGN) entered into an exclusive license agreement with Washington University for the rights to develop, manufacture and commercialize its proprietary, intranasally delivered COVID-19 vaccine in the United States, Europe, and Japan

  • OraSure (OSUR) receives $8.6 mln BARDA contract to develop 2nd generation Ebola test

  • PepGen (PEPG) Reports Positive Data from Phase 1 Trial of PGN-EDO51 for the Treatment of Duchenne Muscular Dystrophy

  • Pharming (PHAR) Announces US FDA Acceptance for Priority Review of its New Drug Application for Leniolisib

  • Roche Hldg (RHHBY): Celltrion USA receives U.S. FDA approval for its oncology biosimilar Vegzelma (bevacizumab-adcd) for the treatment of six types of cancer

  • Sunnova Energy (NOVA) to deploy energy from aggregated Adaptive Homes to alleviate peak capacity needs within Pacific Gas and Electric Company's Northern California service area

  • Synchronoss Tech (SNCR) signs three-year extension with telecommunications operator Fastweb

  • Theravance Biopharma (TBPH) announced a "modified Dutch auction" tender offer to purchase up to $95 mln of its ordinary shares

  • Thermo Fisher (TMO): FDA grants approval to company's Oncomine Dx Target Test as a companion diagnostic to assist in therapy selection for patients with RET mutations or fusions in thryoid cancers

  • Transglobe Energy (TGA) notes VAALCO Energy's (EGY) successful drilling of the North Tchibala 2H-ST well and operational update on FSO and field reconfiguration at Etame

  • TrueBlue (TBI) names Taryn Owen as COO

  • Twitter (TWTR): Elon Musk and Twitter debated requests for information as legal battle continues, according to the Wall Street Journal

  • Tyson Foods (TSN) names John R. Tyson CFO, effective October 2; former CFO Stewart Glendinning to transition from CFO role to Group President, Prepared Foods

  • Warner Bros. Discovery (WBD): UK CMA investigated and cleared the anticipated joint venture between Warner Bros. Discovery, Inc. and BT Group plc (BTGOF)

  • M&A:

  • Canopy Growth (CGC) enters into agreements to divest its retail business across Canada

  • Sierra Wireless (SWIR) shareholders approve acquisition by Semtech Corporation (SMTC)

  • Syndicate

  • Gamida Cell (GMDA) prices offering of 12,905,000 of its ordinary shares at $1.55 per share

  • Gold Royalty (GROY) files 9,393,681 common stock offering by selling stockholder

  • MFA Financial (MFA) files mixed securities shelf offering

  • MindMed (MNMD) prices offering of common shares and warrants

  • Nabisco Holdings (NA) prices offering of 2,083,334 ADSs at $2.40 per ADS

  • Sandstorm Gold (SAND) announces $80 million bought deal financing

  • IPOs:

  • Expected to Price:

  • No IPOs expected.

Gapping Up/Down

  • Gapping up:

  • BIIB +42.3%, ABOS +39.1%, SNCR +7.9%, LLY +7.1%, FYBR +6.8%, CWCO +6%, HAIN +5.1%, NOVA +3.5%, GROY +3.1%, TSN +0.6%

  • Gapping down:

  • MNMD -35.1%, GMDA -18.9%, NA -13.5%, MFA-9.1%, SAND -6.6%, DB -4.9%, BB -4.5%, CS -3.5%, FDMT -3%, CGC -2.1%, PRGS -0.9%, ASTL -0.8%, JEF -0.7%, C -0.7%, QQQ -0.7%

 

Analyst Research (see Upgrades/Downgradescalendarfor full list):

  • Upgrades

  • Biogen (BIIB) upgraded to Buy from Neutral at Mizuho; tgt raised to $270

  • Biogen (BIIB) upgraded to Outperform from Market Perform at BMO Capital Markets; tgt raised to $360

  • Biogen (BIIB) upgraded to Outperform from Neutral at Robert W. Baird; tgt raised to $340

  • Compania Cervecerias Unidas (CCU) upgraded to Neutral from Underweight at JP Morgan; tgt raised to $13

  • Healthpeak (PEAK) upgraded to Outperform from Peer Perform at Wolfe Research; tgt $27

  • Illumina (ILMN) upgraded to Outperform from In-line at Evercore ISI; tgt raised to $250

  • Imerys SA (IMYSF) upgraded to Outperform from Neutral at Exane BNP Paribas

  • Netflix (NFLX) upgraded to Overweight from Neutral at Atlantic Equities; tgt raised to $283

  • South State (SSB) upgraded to Overweight from Neutral at Piper Sandler; tgt raised to $96

  • Steven Madden (SHOO) upgraded to Buy from Neutral at CL King

  • Truist (TFC) upgraded to Overweight from Neutral at Piper Sandler; tgt raised to $55

  • Downgrades:

  • CSX (CSX) downgraded to Neutral from Positive at Susquehanna; tgt lowered to $29

  • Iris Energy (IREN) downgraded to Neutral from Overweight at JP Morgan

  • L3Harris (LHX) downgraded to Equal Weight from Overweight at Wells Fargo; tgt $238

  • Lockheed Martin (LMT) downgraded to Underweight from Equal Weight at Wells Fargo; tgt $415

  • Norfolk Southern (NSC) downgraded to Neutral from Positive at Susquehanna; tgt lowered to $218

  • Others:

  • ADS-TEC Energy GmbH (ADSE) assumed with a Buy at Berenberg; tgt $11

  • AGCO Corp (AGCO) initiated with an Outperform at Robert W. Baird; tgt $156

  • Agenus (AGEN) initiated with an Outperform at SMBC Nikko; tgt $5

  • Almirall SA (LBTSF) initiated with an Outperform at RBC Capital Mkts

  • Aptiv (APTV) assumed with a Buy at Berenberg; tgt $150

  • Brown-Forman (BF.B) initiated with a Buy at Truist; tgt $80

  • CNH Industrial (CNHI) initiated with an Outperform at Robert W. Baird; tgt $17

  • Enovix (ENVX) initiated with an Overweight at Cantor Fitzgerald; tgt $25

  • Generac (GNRC) initiated with a Hold at Jefferies; tgt $190

  • Imperial Brands (IMBBY) assumed with an Outperform at Credit Suisse

  • Ipsen S.A. (IPSEY) initiated with a Sector Perform at RBC Capital Mkts

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

  • Sunrun (RUN) initiated with an Outperform at Northland Capital; tgt $60

  • Teck Resources (TECK) initiated with a Buy at Jefferies

  • ThyssenKrupp AG (TYEKF) resumed with an Underweight at JP Morgan

  • Visteon (VC) assumed with a Buy at Berenberg; tgt $152

  • Vizsla Silver Corp. (VZLA) initiated with a Buy at Stifel

  • ZoomInfo (ZI) initiated with a Buy at Daiwa Securities; tgt $66

Upcoming Events:

  • Econ Data:

  • 07:00 ET: MBA Mortgage Applications Index for Sept 24 (Briefing.comConsensus NA; Prior 3.8%)

  • 08:30 ET: Adv. Intl Trade in Goods for Aug (Briefing.comConsensus NA; Prior -$89.1B)

  • 08:30 ET: Adv. Retail Inventories for Aug (Briefing.comConsensus NA; Prior 1.1%)

  • 08:30 ET: Adv. Wholesale Inventories for Aug (Briefing.comConsensus NA; Prior 0.8%)

  • 10:00 ET: Pending Home Sales for Aug (Briefing.comConsensus -0.5%; Prior -1.0%)

  • 10:30 ET: EIA Crude Oil Inventories for Sept 24 (Briefing.comConsensus NA; Prior +1.14M)

  • 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 -1.5%, Hang Seng -3.4%, Shanghai Composite -1.6%

Equity indices in the Asia-Pacific region ended the midweek session on a lower note. The Minutes from the Bank of Japan's July meeting showed that policymakers are ready to step up easing efforts if needed. South Korea's finance ministry and central bank will conduct direct bond purchases in an effort to stabilize markets. Caixin speculated that weaker demand for goods from China indicates the end of a shipping boom. Chinese regulators have told banks to resume their use of a counter-cyclical factor in daily yuan fixings. North Korea conducted two missile launches off its east coast.

  • In economic data:

  • Japan's August Leading Index 98.9 (last 100.3)

  • Australia's August Retail Sales 0.6% m/m (expected 0.4%; last 1.3%)

---Equity Markets---

  • Japan's Nikkei: -1.5%

  • Hong Kong's Hang Seng: -3.4%

  • China's Shanghai Composite: -1.6%

  • India's Sensex: -0.9%

  • South Korea's Kospi: -2.5%

  • Australia's ASX All Ordinaries: -0.6%

---FX---

  • USD/JPY: -0.1% to 144.64

  • USD/CNH: +0.9% to 7.2361

  • USD/INR: +0.2% to 81.90

Europe: DAX -1.2%, FTSE -0.5%, CAC -1.1%

Major European indices trade in the red. The Bank of England announced a plan to conduct temporary purchases of longer-dated gilts "to restore orderly market conditions." The announcement gave a brief boost to the pound, but the move was retraced entirely. Germany is extending the operating life of two nuclear plants to reduce the risk of a winter energy shortage. European Central Bank policymaker Kazimir said that a 75-bps hike would be a good option for the October meeting while policymakers Rehn and Holzmann also spoke positively about a 75-bps hike.

  • In economic data:

  • Germany's October GfK Consumer Climate -42.5 (expected -39.0; last -36.8)

  • France's September Consumer Confidence 79 (expected 80; last 82)

  • Italy's July Industrial Sales -0.1% m/m (last -0.4%); 16.3% yr/yr (last 17.9%). September Consumer Confidence 94.8 (expected 95.1; last 98.3) and Business Confidence 101.3 (expected 102.1; last 104.0)

  • Swiss September ZEW Expectations -69.2 (last -56.3)

---Equity Markets---

  • STOXX Europe 600: -1.2%

  • Germany's DAX: -1.2%

  • U.K.'s FTSE 100: -0.5%

  • France's CAC 40: -1.1%

  • Italy's FTSE MIB: -1.7%

  • Spain's IBEX 35: -1.5%

---FX---

  • EUR/USD: -0.5% to 0.9553

  • GBP/USD: -1.7% to 1.0555

  • USD/CHF: -0.3% to 0.9886


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