Early Look

Thursday, September 8, 2022

Futures	Up/Down	%	Last
Dow	31.00	0.10%	31,608
S&P 500	2.25	0.07%	3,982
Nasdaq	6.50	0.05%	12,269

 

 

U.S. equity futures edge slightly higher, while the euro moves make above parity vs. the dollar, gold prices edge higher, yields dip and oil is flat after a 5% drop on Wednesday all ahead of the European Central Bank monetary policy meeting results, where either a 50 or 75-bps hike is widely expected. The S&P 500 rose the most in four weeks on Wednesday while oil sold off after breaking a major technical support level, falling more than 5% a barrel. Natural gas prices tumbled in both Europe and the US. The drop in energy prices helped ease some concern over future aggressive rate hikes, which lifted the Treasury market. The 10-year yield fell about 9 basis points to around 3.26%. Fed officials continue to talk of higher rates for longer, with Vice Chair Lael Brainard easing some concerns of future rate hikes by cautioning that risks would become more two-sided in the future. Traders pushed the market-implied odds of another three-quarter-point increase in September to the highest level since the central bank’s last meeting (above 80%). However, the Fed’s Beige Book suggested the rate hike path may be slowing. The report said outlook for growth remains generally weak with 9 of 12 districts saying price growth has moderated. The British pound slid to its weakest level in close to four decades, and the Japanese yen dropped to a fresh 24-year low versus the greenback. In Asian markets, The Nikkei Index sures 635 points or 2.31% to 28,065, the Shanghai Index fell -10 points to 3,235, and the Hang Seng Index dropped -189 points to 18,854. In Europe, the German DAX is down -40 points to 12,875, while the FTSE 100 is up 10-points to 7,250. Oil prices flat around $81.88 after a near -6% dive yesterday on demand, China concerns ($81.20 overnight low, $82.98 overnight high).

 

Market Closing Prices Yesterday

·     The S&P 500 Index jumped 71.68 points, or 1.83%, to 3,979.87

·     The Dow Jones Industrial Average rose 435.98 points, or 1.40%, to 31,581.28

·     The Nasdaq Composite spiked 246.99 points, or 2.14%, to 11,791.90

·     The Russell 2000 Index advanced 39.68 points, or 2.21% to 1,832.00

 

Economic Calendar for Today

·     8:30 AM ET          Weekly Jobless Claims…est. 240K

·     8:30 AM EST        Continuing Claims…est. 1.435M

·     9:10 AM ET          Powell Speaks at Monetary Policy Conference

·     10:30 AM ET        Weekly EIA Natural Gas Inventory Data

·     11:00 AM ET       Weekly EIA Crude Oil Inventory Data

·     3:00 PM ET           Consumer Credit for July…est. $33.0B

 

Earnings Calendar:

·     Earnings Before the Open: HOFT MCFT

·     Earnings After the Close: AOUT AVO BBCP CTLP CXM DOCU EGAN LAKE LMNR SWBI ZS ZUMZ

 

Other Key Events:

·     Barclay’s CEO Energy-Power Conference, 9/6-9/8, in NY

·     Barclay’s Global Consumer Staples Conference, 9/6-9/8, in Boston, MA

·     Benchmark Consumer/Media/Entertainment Conference, 9/7-9/8, in NY

·     Cowen Annual Global Transportation & Sustainable Mobility Conference (virtual), 9/7-9/9

·     Credit Suisse Asian Technology Conference (virtual), 9/5-9/8

·     Credit Suisse Global Steel & Mining Conference, 9/7-9/8, in London, England

·     Deutsche Bank Annual Aircraft Finance & Leasing Conference, 9/6-9/8, in NY

·     KBW Inc. Insurance Conference, 9/6-9/8, in NY

·     Wells Fargo Healthcare Conference, 9/7-9/9, in MA

·     Wells Fargo Leveraged Finance Conference, 9/7-9/9, in Nashville, TN

·     Wolfe Research Tech, Media, Telecom Conference 2022, 9/6-9/8 in San Francisco, CA

·     China CPI, PPI data for August

 

 

Macro	Up/Down	Last
Nymex	-0.11	81.83
Brent	-0.15	87.85
Gold	6.00	1,733.80
EUR/USD	0.0013	1.0012
JPY/USD	-0.03	143.67
10-Year Note	-0.022	3.243%

 

 

World News

·     The bull-bear spread in the American Association of Individual Investors (AAII) weekly survey was -35.2 vs -28.5 last week. Bulls fall to 18.1% from 21.9%, Neutrals rise to 28.7% from 27.7%, and Bears rise to 53.3% from 50.4%

·     UK to limit pain to households for heating bills to 2,500 GBP per year for 2 years, heading into 2024 elections; subsidizing wholesale cost will prevent demand destruction and keep prices high

·     China tightened restrictions on domestic travel and urged people to stay at home during coming holidays as authorities struggle to contain what state media called the most extensive resurgence of the Covid-19 virus in the past two years. Anyone traveling across a provincial border must take a PCR test before and after arrival at their destination, the National Health Commission said at a briefing in Beijing on Thursday. The health authority also warned against traveling over the coming holiday weekend, when it estimated 24 million people will be on the move each day.

 

Sector News Breakdown

Consumer

·     American Eagle Outfitters (AEO) shares fall -15%; Q1 adj EPS $0.04 vs. est. $0.14; qtrly total ending inventory at cost increased 36% to $687M vs. $504M y/y; capex totaled $69M vs. $128M y/y; now expects to spend approximately $250M vs. prior view $275M; Q1 Aerie revenue +11% to $372M; Q1 comp sales declined -6% y/y; assuming current trends continue, Q3 GM’s would be in mid-30s and q4 in low-30s; pauses quarterly dividend

·     Casey General (CASY) Q1 EPS $4.09 vs. est. $3.69; Q1 revs $4.45B vs. est. $4.43B; says FY23 outlook remains unchanged; Inside same-store sales increased 6.3% compared to prior year with a margin of 39.8%

·     Cedar Fair LP (FUN) said it has seen record revenue so far this year through Labor Day weekend. For the 5-week period ended Sept. 5, Cedar Fair recorded 5.1Mm guests and generated revenue of $343Mm, or 27% above revenue booked in the comparable period in 2019 and 13% above 2021 levels. Attendance was 15% higher than last year, but the recently ended period included 463 operating days, compared with 422 operating days in the same period last year.

·     Copart Inc. (CPRT) Q4 EPS $1.13 vs. est. $1.10; Q4 revs rose 18% y/y to $883.4M vs. est. $874.72M

·     Couchbase (BASE) 2Q adj EPS ($0.19) vs est. ($0.28) on revs $39.8Mm vs est. $35.9Mm; sees 3Q revs $36.5-36.7Mm vs est. $36.7Mm and FY revs $149.5-150.5Mm vs est. $147.8Mm

·     Dave & Busters (PLAY) 2Q EPS $0.59 vs est. $1.07 on revs $468.4Mm vs est. $432.9Mm, Dave & Busters branded stores comps +9.6%; 2Q adj EBITDA $119.6Mm vs est. $117.6Mm; 3Q-to-date comps +17.6% Dave & Busters and +42.3% Main Event vs 2019

·     GameStop (GME) Q2 adj EPS loss (-$0.35) vs. est. loss (-$0.38); Q2 sales $1.136B vs. est. $1.27B; Inventory was $734.8M at the close of the quarter, compared to $596.4M y/y; Ended period with cash and cash equivalents of $908.9M w/no debt other than a low-interest, unsecured term loan; forms partnership with FTX US

·     McCormick (MKC) guides Q3 prelim EPS $0.79 vs. est. $0.83; cuts FY22 adjusted EPS view to $2.63-$2.68 from $3.03-$3.08 (below est. $3.04) and cuts FY22 revenue view to flat to up 2% from up 5%-7% to reflect moderation of consumption trends earlier than expected, slower supply chain cost normalization, and a more unfavorable impact of foreign currency rates

·     Tesla (TSLA) sold 76,965 Chinese-made vehicles in August, nearly triple its sales from a month ago; exported 42,463 Model 3s and Model Ys from China last month, the China Passenger Car Association (CPCA) said. In July, it sold 28,217 vehicles and exported 19,756.

·     Torrid Holdings (CURV) shares slide -11% after hours; Q2 EPS $0.22 vs. rest. $0.24; Q2 revs rose 2% to $340.9M vs. est. $340.7M; Q2 same-store sales rose 1%; sees Q3 revenue $290M-$305M vs. est. $306.8M; sees Q3 adjusted EBITDA $32M-$38M; cuts FY22 revenue view to $1.26B-$1.3B from $1.3B-$1.365B

·     Wayfair (W) offers to sell $600M in convertible senior notes due 2027

 

Energy, Industrials and Materials

·     The American Petroleum Institute said weekly crude oil stockpiles rose 3.64M barrels in latest week, gasoline inventories fell -836K barrels and distillates rose 1.83M barrels

·     AeroVironment (AVAV) 1Q adj EPS ($0.10) vs est. $0.11 on revs $108.5Mm vs est. $102.9Mm; guides FY revs $490-520Mm vs est. $509.4Mm and adj EPS $1.35-1.65 vs est. $1.53

·     Solar rating changes at Goldman Sachs: Canadian Solar (CSIQ) downgraded to Sell from Neutral and cut tgt to $38 from $43, Shoals Technologies (SHLS) downgraded to Sell from Buy and trim tgt to $21 from $23, Maxeon Solar (MAXN) upgraded to Buy from Sell and up tgt to $27 from $9, and First Solar (FSLR) upgraded to Buy from Sell with a price target of $172, up from $60

·     The European Union’s ban on Russian fuel imports could increase the world’s need for oil tankers

 

Financials

·     Franklin Resources (BEN) downgraded to Underperform at bank America and cut its price tgt to $25 from $28 saying the company’s net flows have deteriorated for two consecutive quarters and will decline again next quarter amid larger net redemptions in active equity and active fixed income trading.

 

Healthcare

·     Alnylam (ALNY) presents positive results from the apollo-b phase 3 study of Patisiran in patients with ATTR amyloidosis with cardiomyopathy; said Patisiran met primary endpoint, demonstrating significant clinical benefit on functional capacity compared to placebo at month 12; also met first secondary endpoint, demonstrating significant clinical benefit on health status, compared to placebo at month 12; to file sNDA in the U.S. in late 2022.

·     Amylyx Pharmaceuticals’ (AMLX) treatment for amyotrophic lateral sclerosis received the support of a panel of FDA advisers as the panel voted 7-2 to back approval of the treatment. The same committee of advisers narrowly opposed the treatment, AMX0035, earlier this year. Trading in shares of Amylyx remain halted. The FDA must decide on whether to clear the treatment by Sept. 29.

·     Phreesia (PHR) 2Q EPS ($0.89) vs est. ($0.74) on revs $67.9Mm vs est. $65.9Mm; adj EBITDA ($26Mm) vs est. ($31.7Mm); guides FY revs $273-275Mm vs est. $274Mm, adj EBITDA ($109Mm)-($106Mm) vs est. ($123Mm) and prior ($126Mm)-($122Mm)

·     Ginkgo Bioworks Holdings Inc (DNA) files for resale of 3.2 mln shares of Class A common stock by selling securityholders

·     Moderna (MRNA) was upgraded to buy from hold at Deutsche Bank citing its “solid” second quarter earnings beat and the late- July news of additional fall 2022 orders from the US

·     Third Harmonic Bio Inc., (THRD) a biotech specializing in treatment for allergic and inflammatory diseases, set terms for its initial public offering on Thursday, with plans to offer 9 million shares priced at $16 to $18 each.

 

Technology, Media & Telecom

·     Asana Inc. (ASAN) 2Q adj EPS ($0.34) vs est. ($0.39) on revs $134.9Mm vs est. $127.2Mm; sees 3Q revs $138.5-139.5Mm vs est. $137.6Mm; announces $350Mm private placement; sees 3Q adj EPS loss ($0.33)-($0.32) vs est. ($0.33)

·     Intapp Inc. (INTA) Q4 EPS loss (-$0.04) vs. est. loss (-$0.08); Q4 revs rose 23% y/y to $75.5M vs. est. $71.46M; guides Q1 revs $76M-$77M and FY revs $324.5M-$328.5M vs. est. $317.7M

·     Skillsoft Corp. (SKIL) authorizes up to $30M share buyback; Q2 EPS loss (-$0.74) vs. est. loss (-$0.18); Q2 revs rose 27% y/y to $140.6M vs. est. $1825M; cuts FY23 revenue view to $545M-$580M from $765M-$790M (est. $771.62M); lowers FY23 adj EBITDA view to $105M-$125M from roughly $167M; lowers year bookings guidance to $580M-$615M from $790M-$825M

·     Verint (VRNT) 2Q adj EPS $1.07 vs est. $0.53 on revs $223Mm vs est. $225.5Mm; guides FY revs $920Mm vs est. $941Mm and EPS $2.50 vs est. $2.51; names Grant Highlander CFO, will succeed Douglas Robinson in 4Q

·     Yext Inc. (YEXT) Q2 adj EPS loss (-$0.03) vs. est. loss (-$0.05); Q2 revs rose 3% y/y to $100.9M vs. est. $100.5M; sees Q3 revenue $99M-$100M vs. est. $100.51M; boosts year EPS view to (8c)-(6c) from (12c)-(10c) while narrows FY23 revs view to $399.4M-$401.4M from $399.3M-$403.3M

·     ChipMOS Technologies (IMOS) reported revenue of US$56.5M for August 2022, down 12% M/M and 28.5% Y/Y.

·     Taiwan Semi (TSM) said August Rev rose 595 on year to NT$218.13B Vs NT$137.43B; August Revenue rose 17% on Month; Jan-Aug Revenue Rose 44% on Year to NT$1.430T