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PREMIUM

This Morning

S&P 500 futures are up 29 points and are trading 0.7% above fair value. The Nasdaq 100 futures are up 120 points and are trading 0.9% above fair value. The Dow Jones Industrial Average futures are up 197 points and are trading 0.6% above fair value.

The equity futures market has a decidedly positive bias with carryover momentum from recent gains driving the upside. 

Other support factors include softer-than-expected CPI and PPI readings out of China, a weakening dollar, better-than-expected results and guidance from DocuSign (DOCU), and bearish investor sentiment readings that are acting as a contrarian catalyst. 

The US Dollar Index is down 0.7% to 108.94. EUR/USD is up 0.6% to 1.0054. USD/JPY is down 1.1% to 142.55 after BOJ Governor Kuroda said rapid moves in the yen are not desirable. At the same time, cryptocurrencies are in rally mode with the risk-on sentiment.

The 2-yr Treasury note yield is flat at 3.49% while the 10-yr note yield is down two basis points to 3.27%. 

In corporate news:

  • RH (RH 265.00 +3.29 +1.26%): beats by $1.38, beats on revs; guides Q3 revs below consensus; guides FY23 revs in-line
  • DocuSign (DOCU 67.51 +9.56 +16.50%): beats by $0.02, beats on revs; guides Q3 revs in-line; reaffirms FY23 revs guidance
  • Zscaler (ZS 176.67 +22.42 ): beats by $0.04, beats on revs; guides Q1 EPS above consensus, revs above consensus; guides FY23 EPS above consensus, revs above consensus
  • T-Mobile US (TMUS 147.77 +2.40 +1.65%): authorizes a stock repurchase program for up to $14.0 bln of common stock through September 30, 2023 - SEC Filing
  • Zumiez (ZUMZ 22.66 -3.88 -14.62%):  misses by $0.31, misses on revs; guides Q3 EPS below consensus, revs below consensus
  • Caterpillar (CAT 186.00 +2.85 +1.56%): reaches a settlement with the IRS that resolves all issues for tax years 2007-2016, without any penalties 

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region ended the week on a higher note while South Korea's KOSPI was closed for a holiday. Japan's Nikkei: +0.5% (+2.0% for the week), Hong Kong's Hang Seng: +2.7% (-0.5% for the week), China's Shanghai Composite: +0.8% (+2.4% for the week), India's Sensex: +0.2% (+1.7% for the week), South Korea's Kospi: CLOSED (-1.0% for the week), Australia's ASX All Ordinaries: +0.8% (+1.2% for the week).
    • In economic data:
      • China's August CPI -0.1% m/m (expected 0.2%; last 0.5%); 2.5% yr/yr (expected 2.8%; last 2.7%). August PPI 2.3% yr/yr (expected 3.1%; last 4.2%). August new loans CNY1.25 trln (expected CNY1.48 trln; last CNY679.00 bln) and total social financing CNY2.43 trln (expected CNY2.08 trln; last CNY756.10 bln)
      • New Zealand's August Electronic Card Sales 0.9% m/m (last -0.2%); 26.9% yr/yr (last -0.5%)
    • In news:
      • Japan's Prime Minister Kishida met with Bank of Japan Governor Kuroda, but reports indicate that the prime minister had no specific demands.
      • Separately, Prime Minister Kishida said that the government will support restarting nuclear reactors. Komatsu reported a 29% yr/yr drop in August excavator demand from China.
  • Major European indices are looking to end the week on a firmly higher note.STOXX Europe 600: +1.5% (+1.0% week-to-date), Germany's DAX: +1.4% (+0.3% week-to-date), U.K.'s FTSE 100: +1.5% (+1.3% week-to-date), France's CAC 40: +1.6% (+0.9% week-to-date), Italy's FTSE MIB: +2.0% (+0.8% week-to-date), Spain's IBEX 35: +1.5% (+1.3% week-to-date) .
    • Economic data was limited:
      • France's June Industrial Production -1.6% m/m (expected -0.5%; last 1.2%)
      • Spain's July Industrial Production 5.3% yr/yr (last 7.0%)
    • In news:
      • Several European Central Bank policymakers echoed yesterday's comments from President Lagarde, who said that uncertainty presented by high inflation means that the central bank will be dependent on incoming data when deciding policy.
      • The EU suspended its visa agreement with Russia, effective September 12.

U.S. equity futures:

  • S&P 500 Futures: +31 @ 4,037
  • DJIA Futures: +212 @ 31,986
  • Nasdaq 100 Futures: +124 @ 12,445

Overseas:

  • Europe: DAX +1.4%, FTSE +1.5%, CAC +1.5%
  • Asia: Nikkei +0.5%, Hang Seng +2.7%, Shanghai Composite +0.8%

Commodities:

  • Crude Oil +1.55 @ 85.09
  • Nat Gas  -0.007 @ 7.835
  • Gold +16.55 @ 1736.80
  • Silver +0.158  @ 18.600
  • Copper +0.0607 @ 3.5878


U.S. Summary
:

  • Earnings/Guidance:
    • ABM Industries (ABM) beats by $0.04, beats on revs; guides FY22 EPS in-line
    • American Outdoor Brands (AOUT) misses by $0.07, misses on revs
    • DHI Group (DHX) reaffirms its Q3 sales outlook, raises FY22 sales forecast; expects bookings and revenue growth in FY23 near +20% yr/yr
    • Diamondrock Hospitality (DRH) provides investor update in presentation; August occupancy was 74.7% vs 74.9% in July and Q3 QTD revs growth is exceeding Q2 pace
    • DocuSign (DOCU) beats by $0.02, beats on revs; guides Q3 revs in-line; reaffirms FY23 revs guidance
    • Mission Produce (AVO) misses by $0.04, beats on revs; expects Q4 volumes to increase sequentially consistent with the prior year period
    • National Beverage (FIZZ) reports Q3 (Jul) earnings of $0.38 compared to the two analyst estimate of $0.55; revs grew to $318.1 mln compared to the two analyst estimate of $327.29 mln
    • RH (RH) beats by $1.38, beats on revs; guides Q3 revs below consensus; guides FY23 revs in-line
    • Smith & Wesson Brands (SWBI) misses by $0.10, misses on revs
    • Sprinklr (CXM) beats by $0.03, beats on revs; guides Q3 EPS above consensus, revs in-line; guides FY23 EPS above consensus, revs above consensus
    • Zscaler (ZS) beats by $0.04, beats on revs; guides Q1 EPS above consensus, revs above consensus; guides FY23 EPS above consensus, revs above consensus
    • Zumiez (ZUMZ) misses by $0.31, misses on revs; guides Q3 EPS below consensus, revs below consensus
  • General News:
    • Europe having emergency talks on energy situation, according to the Wall Street Journal
    • White House considering executive order to screen or restrict US investment in Chinese technology, according to the Wall Street Journal
    • 3D Systems (DDD) announces formation of new, wholly-owned biotech company called Systemic Bio; company will provide initial $15 mln seed investment
    • Adaptimmune Therapeutics (ADAP) reports positive data in its SURPASS Trial; outlines plans for advanced clinical development in multiple MAGE-A4 positive solid tumors
    • Allakos (ALLK) Announces Topline Phase 3 Data from the EoDyssey Study in Patients with Eosinophilic Duodenitis
    • Amplify Energy (AMPY) reaches agreement with California to resolve all criminal matters from the October 2021 Southern California Pipelines Incident
    • Annaly Capital Mgmt (NLY) approves 1-for-4 reverse stock split, expected to take effect following the close of business on September 23
    • Apple (AAPL): Lawmakers warned Apple against using Yangtze chips in new iPhone, according to Financial Times
    • Bausch Health (BHC) comments on FDA's approval of Norwich Pharmaceuticals rifaximin 200 mg product
    • Cantaloupe (CTLP) appoints Ravi Venkatesan CEO, effective October 1; will succeed Sean Feeney, who will retire on September 30
    • Caterpillar (CAT) reaches a settlement with the IRS that resolves all issues for tax years 2007-2016, without any penalties
    • Chevron (CVX) granted an interest in three greenhouse gas assessment permits offshore Australia
    • Cyxtera Technologies (CYTX) announced it has closed an accounts receivable securitization facility of $37.5 million with PNC Bank (PNC)
    • DHT (DHT) announces new dividend policy with 100% of net income being returned to shareholders in the form of quarterly cash dividends; to be implemented from Q3
    • Equity Commonwealth (EQC) declares a special, one-time cash distribution of $1.00 per share, paid on October 18 to shareholders of record on September 29
    • Google (GOOG): DOJ attorney says Google is paying billions to maintain dominance, according to Bloomberg
    • KBR (KBR) awarded study to develop a carbon-neutral, green ammonia-based power system for a semi-submersible drilling unit owned by Odfjell
    • NextEra Energy (NEE): EC clears creation of joint venture between Daimler Truck (DTRUY), NextEra Energy (NEE) and BlackRock (BLK)
    • Novartis AG (NVS) reports Kisqali adds one more year of survival benefit for broadest set of patients, including those with aggressive HR+/HER2- advanced breast cancer
    • Pfizer (PFE) and EMA accept regulatory submission for Pfizer’s ritlecitinib for individuals 12 years and older with alopecia areata
    • PowerSchool (PWSC) COO Maulik Datanwala resigns, effective September 30
    • Quanterix (QTRX) appoints Daniel Pikora COO
    • Simpson Manufacturing's (SSD) CEO to step down as part of succession plan, effective December 31, 2022; current President and COO named as next CEO
    • Sonoco Products (SON) and American Airlines Cargo (AAL) sign a global partnership lease agreement for the Pegasus ULD passive temperature-controlled bulk shipping container
    • Southwest Air (LUV) and the Aircraft Mechanics Fraternal Association (AMFA) reach a Tentative Agreement; details not disclosed
    • Teledyne Tech (TDY) subsidiary Teledyne Brown Engineering awarded $596.5 mln ISS support contract
    • Tesla (TSLA) sets new goals at Nevada Gigafactory, according to CNBC
    • Tesla (TSLA) considering building a lithium refinery in Texas, according to CNBC
    • The Children's Place (PLCE) terminates CFO Robert Helm following a transition period of up to 30 days
    • T-Mobile US (TMUS) authorizes a stock repurchase program for up to $14.0 bln of common stock through September 30, 2023
    • Valaris (VAL) authorizes up to $100 mln for share repurchases
    • VICI Properties (VICI) increases quarterly dividend by 8.3% to $0.39/share
    • Wish (WISH) appoints Joe Yan as interim CEO as current CEO departs the company; also reaffirms Q3 adjusted EBITDA guidance
  • M&A:
    • 111, Inc. (YI) receives unsolicited preliminary non-binding proposal to be acquired for $3.66 per ADS
    • CleanSpark (CLSK) announces agreement with Mawson Infrastructure Group to acquire Turnkey Bitcoin mining facility
    • Digital World Acquisition Corp (DWAC): Trump Media & Technology Group Issues Statement on Proposed Merger with Digital World Acquisition Corp.
    • Driven Brands (DRVN) acquires Auto Glass Fitters; financial details not disclosed
    • Halliburton (HAL) completes sale of its Russia operations to a Russia-based management team made up of former Halliburton employees; HAL no longer conducts operations in Russia
    • Petrobras (PBR) provides update on the sale of exploration assets in the Potiguar Basin
    • Petrobras (PBR) Executive Board approved the end of the competitive process for the sale of the Albacora concession, which will be maintained in its entirety in Petrobras' portfolio
    • United Health (UNH): Judge was skeptical of DOJ's antitrust claim related to United Health acquisition of Change Healthcare (CHNG), according to the Wall Street Journal
  • Syndicate
    • AST SpaceMobile (ASTS) entered into $150 mln equity distribution agreement through an “at the market offering” program
    • Crescent Energy Company (CRGY) prices offering of 5 mln shares of common stock at $15.00 per share
    • R1 RCM (RCM) files for 179,754,055 share common stock offering by selling shareholder; announces commencement of 15 mln share offering by selling stockholder
    • Xos (XOS) files for 33,199,327 share common stock offering by selling shareholder, relates to convertible debentures
  • IPOs:
    •  Expected to Price:
      • No IPOs expected.


Gapping Up/Down

  • Gapping up:
    • DOCU +17.7%, ZS +14.1%, YI +13.1%, DWAC +6.2%, DHX +6.2%, DHT +5.1%, TDY +5%, CTLP +3.1%, KR +2.5%, DDD +1.9%, ASTS +1.9%, NVS +1.8%, CXM +1.8%, TMUS +1.7%, LUV +1.4%, CAT +1.4%, VICI +1.3%, VAL +1.2%, CVX +1%, AMPY +1%, EQC +1%, RH +0.9%
  • Gapping down:
    • ZUMZ -16%, AOUT -8.6%, SWBI -8.6%, HMTV -7.7%, RCM -5.1%, SON -1.6%, FIZZ -1.5%, PLCE -1.4%, CRGY -0.9%, AVO -0.6%

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

  • Upgrades
    • American Water Works (AWK) upgraded to Neutral from Underweight at JP Morgan; tgt raised to $165
    • DocuSign (DOCU) upgraded to Neutral from Underweight at JP Morgan; tgt $65
    • Elevance Health (ELV) upgraded to Buy from Neutral at BofA Securities; tgt raised to $575
  • Downgrades:
    • ADC Therapeutics (ADCT) downgraded to Equal-Weight from Overweight at Morgan Stanley; tgt lowered to $11
    • Alector (ALEC) downgraded to Equal-Weight from Overweight at Morgan Stanley; tgt lowered to $13
    • American Axle (AXL) downgraded to Neutral from Buy at BofA Securities; tgt lowered to $13
    • Enphase Energy (ENPH) downgraded to Neutral from Buy at Guggenheim
    • Galapagos NV (GLPG) downgraded to Equal-Weight from Overweight at Morgan Stanley; tgt lowered to $61
  • Others:
    • Academy Sports + Outdoors (ASO) initiated with a Buy at Loop Capital; tgt $60
    • Alnylam Pharma (ALNY) assumed with an Equal-Weight at Morgan Stanley; tgt $222
    • Arrowhead (ARWR) initiated with an Equal-Weight at Morgan Stanley; tgt $41
    • Arvinas (ARVN) initiated with an Overweight at Barclays; tgt $90
    • Brightcove (BCOV) initiated with a Neutral at Rosenblatt; tgt $8
    • CF Acquisition Corp. VI (CFVI) initiated with a Buy at DA Davidson; tgt $12
    • ImmunoGen (IMGN) initiated with an Overweight at Barclays; tgt $8
    • Inter Parfums (IPAR) initiated with an Overweight at Piper Sandler; tgt $102

Upcoming Events:

  • Econ Data:
    • 10:00 ET: Wholesale Inventories for Jul (Briefing.com Consensus 0.8%; Prior 1.8%)
  • Earnings:
    • Tuesday (Sep 6)
      • Morning: KC
      • Afternoon:  COUP GTLB GWRE PATH
    • Wednesday (Sep 7)
      • Morning:  ASO GIII KFY NIO REVG
      • Afternoon:  AVAV AEO ASAN CASY CPRT BASE PLAY DSGX GME PHR CURV VRNT YEXT
    • Thursday (Sep 8)
      • Morning: BILI FCEL LOVE
      • Afternoon:  AOUT DOCU AVO RH SWBI CXM ZS ZUMZ
    • Friday (Sep 9)  
      • Morning:  ABM KR

Known to most as Uranium Pinto Beans, Jason has more than 15 years under his belt of trading stocks, options and currencies. His expertise primarily lies in chart analysis, and he has a strong eye for undervalued stock. Because he’s got the ability to identify great risk/reward trades he usually enjoys taking the path less traveled and reaping the benefits from the adventure.

He is a co-founder of Option Millionaires, and he is best known for his weekly webinars with Scott, as well as his high level training webinars and charts found in the forums.

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