- ‘The Worst Is Yet to Come’
- Bailey Pressed to Extend Gilt Purchases Amid Deadline Confusion
- US Core Inflation Seen Returning to 40-Year High as Rents Rise
- U.S. Mortgage Interest Rates Rise to Highest Level Since 2006
- Hedge Fund Managers Paid for Stockpicking Genius
- Wall Street Braces for an Earnings Season of Mixed Signals
- Credit Suisse Shares Drop on US Tax Probe Over Accounts
- Biden Proposal Could Lead to Employee Status for Gig Workers
- Companies Hoarding Workers
- Amazon Labor Union
- Twitter Faces Only Bad Outcomes
- Philips to Take $1.3 Billion Write-Down on Sleep-Apnea Business
- PepsiCo Raises Guidance Again as Higher Prices Lift Sales
- Nissan Sells Russian Business
- Toyota Starts Plant in Junta-Led Myanmar Making 1 to 2 Cars a Day
- Federal Officials Trade Stock in Companies
- A Nobel Prize for the Economics of Panic
- Gordon Haskett upgraded Lyft (LYFT) to Buy from Hold with a $24 price target. While the firm continues to see Lyft as disadvantaged relative to Uber (UBER), the firm believes the combination of Lyft's material share price underperformance year-to-date and relative valuation discount to Uber, overly negative investor sentiment and multiple catalysts create a favorable risk/reward dynamic. The firm notes the stock's catalysts include improving national driver supply, improving conversion rates and continued shared ride adoption. The firm believes Lyft's new upfront pay capability should be instrumental in attracting and retaining drivers. In addition, the firm believes the company is increasingly looking like a prime activist target.
- JP Morgan upgraded Dutch Bros (BROS) to Overweight from Neutral with a $38 price target. The firm notes the recent pullback in the shares once again makes a re-entry worth considering. The firm says employment and stable gas prices are key to more predictable sales for Dutch Bros. Faster store growth, more expensive site build outs, and store EBITDA pressure have elevated capital needs for the business, but the company's net debt should max out at $650M in fiscal 2026, requiring 15% additional equity raised at current prices to take peak debt back to zero.
- Wedbush upgraded DocuSign (DOCU) to Neutral from Underperform with a $55 price target. Since early May the stock has been down roughly 50% as all the negative catalysts the firm was expecting have now played out. While the market for high growth tech has been brutal, the firm notes DocuSign's shares have been under considerable pressure as the WFH growth hangover coupled by a softer macro/execution issues have been the perfect storm for the stock. That said, the firm believes execution on the CLM deal front have generally stabilized with numbers now attainable for 2023/2024.
- Jefferies downgraded Cooper Companies (COO) to Hold from Buy with a price target of $295, down from $400, citing concerns about slower contact lens growth. Cooper, which has a larger percentage of its revenue driven by contacts, will likely be impacted more severely than peers by a slowdown in contacts, the firm contends.
- Morgan Stanley downgraded Stanley Black & Decker (SWK) to Equal Weight from Overweight with a price target of $82, down from $110. The pull-forward in consumer demand during the 2021 peak, coupled with general consumer deceleration, will lead to further market softening and margin compression in 2023, the firm contends. The company's s Tools & Outdoor segment utilized pricing during the DIY peak to sustain margins amid cost inflation, but he now sees this trend reversing, the firm added.
- Atlantic Equities downgraded FIS (FIS) to Neutral from Overweight with a price target of $90, down from $125. The firm says that given the increasing likelihood that the U.S. and global economies will enter recession, the firm is now assuming a modest economic downturn in 2023 forecasts. Payments stocks are starting to discount this scenario, but in the near-term the firm prefers high quality stocks with attractive valuations and limited downside to consensus earnings forecasts, such as Visa (V). FIS has the most medium-term downside risk to earnings, says the firm, who believes the company is proving less defensive than hoped with 10% downside risk to consensus 2023 earnings estimates and less rebound than cyclical peers in a recovery.
- Citi initiated coverage of seven exchange/market structure companies and five brokers. Within the exchange space, the firm favors players with leverage to structural growth opportunities and/or asset classes with cyclical tailwinds. In the brokerage space, the firm favors names with less exposure to client cash sorting and capital markets. The firm's top picks include Buy-rated CME Group (CME), MarketAxess (MKTX) and Interactive Brokers (IBKR). The firm recommends pair trades of CME over Neutral-rated IntercontinentalExchange (ICE), and Buy-rated LPL Financial (LPLA) over Neutral-rated Stifel Financial (SF). Overall, the firm is positive on the exchange sector given an outlook for continued volatility, which the firm says should provide support for trading activity.
- Credit Suisse initiated coverage of Raytheon Technologies (RTX) with a Neutral rating and $85 price target. The firm sees downside risk to 2023 consensus estimates, saying Raytheon's aerospace businesses could come in light owing to mix headwinds as well as potential delays in inflation passthroughs on long-term contracts. The firm also sees a difficult operating environment for defense.
- S&P 500 futures are 0.7% above fair value; the Nasdaq 100 futures are 1.0% above fair value; and the DJIA futures are 0.5% above fair value
- Key factors driving the futures market:
- Better-than-expected earnings and guidance from PepsiCo (PEP)
- Speculation that the BoE won't be able to end gilt purchase plan on Friday (or will eventually step back in with liquidity support soon thereafter); 10-yr UK gilt +8 bps to 4.52%
- A show of technical support with an aim of getting the S&P 500 back above 3,600
- FOMC Minutes for Sept. 20-21 meeting will be released at 2:00 p.m. ET
- President Biden says there is a "slight chance" of recession, but he doesn't think it will happen; points to consequences for Saudi Arabia after recent oil production cut
- Treasury Secretary Yellen says U.S. economy is doing very well amid the global uncertainty and that dollar strength is natural consequence of that uncertainty
- MBA Mortgage Applications -2.0% wk/wk, with purchase applications down 2.0% (-39.0% yr/yr) and refinancing applications down 2.0% (-86.0% yr/yr)
- China reports much stronger than expected new yuan loan activity for September
- Press reports suggest UK Prime Minster Truss could potentially "tweak" fiscal plan so as not to rattle markets further
- The Bank of Korea raised its policy rate by 50 basis points, as expected, to 3.00%; two members wanted a less aggressive move
- Intel (INTC) planning thousands of jobs because of PC market weakness, according to Bloomberg
- Brokerage research calls of note:
- Upgrades: AIG, LYFT, NOV, NCLH, CME, DOCU, BROS, FTV
- Downgrades: COO, PXD, PLTK, CNK, FIS, FISV, SWK
- WTI crude futures +0.1% to $89.47/bbl; nat gas futures +1.8% to $6.71/mmbtu; copper futures -0.8% to $3.43/lb
- 2-yr note yield +1 bp to 4.31% and 10-yr note yield +2 bps to 3.96%
- Today's economic data: September Producer Price Index at 8:30 a.m. ET