Morning Briefing - With a lack of catalysts, equity futures drift lower

 


U.S. equity futures point to a lower start with futures on the S&P 500 trading 15 points below fair value.

Even with the early weakness, the Nasdaq remains on track to gain about 2.0% for the week while the S&P 500 ended yesterday's session with a 0.4% gain for the week.

The overnight session saw a positive showing from Asian markets, followed by some selling in Europe. However, participation has been limited, which is typical for late August.

Today's economic data will be limited to the 10:00 ET release of July Existing Home Sales (Briefing.com consensus 5.39 mln; prior 4.72 mln).

WTI crude is lower by $0.49, or 1.1%, at $42.33/bbl while the U.S. Dollar Index is up 0.4% at 93.19, revisiting yesterday's high.

In U.S. corporate news:

Global stocks are trekking higher after the tech rally in the U.S. continues to show legs and renewed hopes for a coronavirus vaccine. The Shanghai Composite Index rose 0.5% and Hong Kong's Hang Seng Index was up 1.3%. Japan's Nikkei tacked on 0.2% and Australia's ASX 200 slipped 0.1%. European stocks are largely higher despite sluggish PMI data, with the Stoxx 600 Index gaining 0.3%. France's CAC 40 and Germany's DAX are both in positive territory at mid-day. Meanwhile, U.S. stock futures are pointing slightly higher, two days removed from the S&P 500 Index carving out a new record high. Oil prices are down slightly amid efforts by major oil producers to hold back output. In early action, WTI crude oil futures -0.75% to $42.50/bbl and Brent crude -0.5% to $44.66/bbl. And one more thing to chew on to start the new day. Tesla (NASDAQ:TSLA), after cruising right past the $2,000 per share level, now trades with a higher market cap than Procter & Gamble (NYSE:PG), Home Depot (NYSE:HD), JPMorgan (NYSE:JPM) and Disney (NYSE:DIS).



  • Buckle (BKE 18.50, +2.13, +13.0%): reported better than expected results for Q2.
  • Deere (DE 193.15, +2.05, +1.1%): beat Q3 expectations and issued FY20 guidance.
  • Foot Locker (FL 28.69, +1.50, +5.5%): beat Q2 earnings expectations.
  • Pinduoduo (PDD 88.40, -8.73, -9.0%): beat Q2 earnings expectations.
  • Pfizer (PFE 39.16, +0.44, +1.1%): provided an update on its SARS-CoV-2 vaccine candidate.

Thursday's Key Earnings

Ross Stores (NASDAQ:ROST) flat PM after cautious tone on Q3.Keysight Technologies (NYSE:KEYS) +4.4% AH as production rebound cushions quarterly results.

Johnson & Johnson cheaply borrows $7.5B for Momenta deal

Johnson & Johnson (NYSE:JNJ) - one of the two best credit risks in the U.S. corporate world - borrowed $7.5B at historically cheap yields to fund a planned $6.5B acquisition of Momenta Pharmaceuticals (NASDAQ:MNTA). The offering priced in six parts, ranging from five-year notes with a coupon of 0.55% to a tranche of 40-year notes with a coupon of 2.45%. The AAA rated J&J got a rating for the new debt of AAA from Moody's, though with a negative outlook as the ratings agency expects slower growth from J&J's non-pharmaceutical businesses.



Facebook supports data portability

Facebook (NASDAQ:FB) is pushing for legislation to make it easier for users to transfer photos and videos to rival tech platforms in a move that could ease some antitrust concerns. A portability bill called the Access Act is already circulating around Congress with bipartisan support. A hearing on the issue in front of the Federal Trade Commission is set for September 22.

CBS charging $5.5M for 30-second Super Bowl ad spot

CBS (VIAC, VIACA) is seeking $5.5M for each 30-second TV ad spot for the 2021 Super Bowl - roughly in line with what Fox (FOX, FOXA) was drawing for ads in last February's game. That could be read as a reflection of pandemic uncertainty, or a testament to the staying power of America's biggest television event. In another reflection of the times, CBS will require advertisers on the TV broadcast to also appear in the online stream (for an extra $200K), while advertisers are seeking protection clauses in case the NFL season is a virus victim or the championship game otherwise isn't played.

What else is happening…

Early-stage mortgage delinquencies fall below pre-pandemic levels in July.Lyft (NASDAQ:LYFT), Uber (NYSE:UBER) jump after winning reprieve in California.Dover (NYSE:DOV) acquires Solaris Laser.Activist investor backs the direction of Harley-Davidson (NYSE:HOG) under new CEO.Alibaba (NYSE:BABA) affiliate Ant Financial plans to raise $30B in dual listing.

Today's Markets

In Asia, Japan +0.17%. Hong Kong +1.30%. China +0.50%. India +0.59%.In Europe, at midday, London +0.08%. Paris +0.21%. Frankfurt +0.30%.Futures at 6:00, Dow +0.08%. S&P +0.04%. Nasdaq +0.14%. Crude -0.75% to $42.50. Gold -0.27% to $1,941. Bitcoin -0.10% to $11,798.Ten-year Treasury Yield -0.3 bps to 0.643%

Major European indices are trading in rather lackluster fashion following a spate of flash manufacturing and services PMI readings for August that revealed some lost momentum versus July. Composite PMI numbers were the tell there as they were lower m/m for the eurozone, Germany, and France; the UK was an outlier with an improved reading versus July. Coronavirus worries also garnering some attribution for the lack of conviction, as case counts are rising in many countries, prompting concerns that further restrictions will be imposed in an effort to contain the spread. Separately, UK-EU talks on Brexit are said to have ended this week without any breakthrough on major points. Euro losing momentum, down 0.6% against the greenback to 1.1790.

  • In economic data:
    • Eurozone's flash August Manufacturing PMI 51.7 (expected 52.9; last 51.8) and flash Services PMI 50.1 (expected 54.5; last 54.7); flash Composite PMI 51.6 (expected 54.9; last 54.9)
    • Germany's flash August Manufacturing PMI 53.0 (expected 52.5; last 51.0) and flash Services PMI 50.8 (expected 55.1; last 55.6); flash Composite PMI 53.7 (expected 55.0; last 55.3)
    • France's flash August Manufacturing PMI 49.0 (expected 53.7; last 52.4) and flash Services PMI 51.9 (expected 56.3; last 57.3); flash Composite PMI 51.7 (expected 57.2; last 57.3)
    • UK's flash August Manufacturing 55.3 (expected 53.8; last 53.3) and flash Services PMI 60.1 (expected 57.0; last 56.5); flash Composite PMI 60.3 (expected 57.1; last 57.0); August Retail Sales +3.6% m/m (expected +2.0%; last +13.9%) and Core Retail Sales +2.0% m/m (expected +0.2%; last +13.4%); August CBI Industrial Trends Orders -44 (expected -35; last -46)
    • Spain's June Trade Balance EUR 1.48B (last EUR 0.12B)



Today's Economic Calendar

9:45 PMI Composite Flash
10:00 Existing Home Sales
1:00 PM Baker-Hughes Rig Count


Gapping up



In reaction to earnings/guidance:

  • BKE +12.8%, FL +5.7%, KEYS +3.9%, DE +2.6%, ROST +0.6%, MMYT +0.6%

Other news:

  • SCPH +9.5% (enters into a supply agreement with WST)
  • MOBL +7.2% (co will explore potential sale, according to Bloomberg)
  • BNTX +6.2% (BioNTech and Pfizer share early results on lead mRNA vaccine candidate BNT162b2 against COVID-19)
  • XSPA +3.7% (opens XpresCheck COVID-19 testing facility)
  • XERS +3.5% (names new COO)
  • TLSA +3.4% (receives patent for use of milciclib in combination with tyrosine kinase inhibitors)
  • PSTX +3.2% (provides operational update)
  • SRNE +2.5% (to acquire SmartPharm)
  • MIK +1.2% (names new CFO)
  • CYRX +1.1% (to acquire CRYOPDP, a global provider of temperature-controlled logistics solutions to the clinical research, pharmaceutical and cell and gene therapy markets)
  • PFE +1% (BioNTech and Pfizer share early results on lead mRNA vaccine candidate BNT162b2 against COVID-19)

Analyst comments:

  • CXO +2.3% (upgraded to Overweight from Equal-Weight at Morgan Stanley)
  • EL +1.7% (upgraded to Overweight from Equal-Weight at Morgan Stanley)
  • PANW +0.9% (initiated with a Buy at Loop Capital)
  • SPLK +0.9% (initiated with a Buy at Loop Capital)
  • WSM +0.7% (upgraded to Buy from Accumulate at Gordon Haskett)


Gapping down
In reaction to earnings/guidance:

  • GAN -15.7%, PDD -8.8%, UI -7.9%, BZUN -5.3%, OSIS -2.7%

Other news:

  • DKL -1.2% (files for 14 mln common unit offering by selling shareholder)
  • MIST -0.9% (stock offering)
  • EFSC -0.6% (to merge with SCBH)
  • BDX -0.5% (provides update on recall of BD Alaris System hardware)

Analyst comments:

  • AJG -1.8% (downgraded to Underperform from Buy at BofA Securities)
  • NBL -1.1% (downgraded to Equal-Weight from Overweight at Morgan Stanley)
  • DHI -1% (downgraded to Neutral from Outperform at Wedbush)
  • PLAN -0.8% (initiated with a Sell at Loop Capital)



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