US EARLY MORNING: Equity futures continue lower amid 'higher for longer rates' theme stoking Treasury yields higher; ADP payrolls and Services ISM due later today and will add to the debate

US PRE-MARLKETS: US equity futures are continuing to the downside on Wednesday, after Tuesday's JOLTs data came in hotter than expected, and traders responded with bets that the Fed may need to keep rates higher for longer to cool the economy and bring inflation under control. Treasury yields are higher, but off wides, while the Dollar Index is lingering around 107.00 (there has been some speculation that the BoJ has entered the market in USDJPY at around 150.00, but this has not been confirmed officially). Events in Washington remain in focus too, with Kevin McCarthy ousted from the role of House Speaker, which he only took on in January, and just days after pushing through continuing resolution legislation that relied on Democrat support to avoid a government shutdown. Patrick McHenry has been appointed the interim Speaker, and has put the House in recess for a week; Steve Scalise and Tom Emmer are the names being touted as replacements for McCarthy. Today's focus will be on data, with the release of the ADP gauge of private payrolls, which will help guide expectations for Friday's NFP report; the services ISM is also on tap; both of these data sets will be framed in the context of the 'higher for longer' debate, and thus carry the potential to shape market action into the jobs report on Friday.

TODAY'S AGENDA:

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  DAY AHEAD: Final Composite and Services PMI data will be released, where the Eurozone-wide, German and French data is expected to be unrevised. Eurozone producer prices are expected to continue to show deceleration in August. ECB President Lagarde, Vice President de Guindos, as well as ECB's Panetta are on today's speaker's docket. US traders will note the ADP's gauge of private payrolls, released ahead of Friday's official jobs data, is expected to show a sequential cooling in payrolls growth. ISM Services data is seen ticking down in September. Revisions to durable goods data are due, while factory orders for August are also due. On the speaker's side, Fed's Schmid (2025), Governor Bowman (voter) and Fed's Goolsbee (2023) will deliver remarks. On the supply side, the UK will sell GBP 4.25bln of 2025 debt, while Germany will sell EUR 3bln of 2030 debt. Our interactive calendar can be accessed here; a pdf version can be downloaded here.

EQUITY NEWS:

TECH:

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  Alphabet (GOOG) - Anthropic, a rival to the Microsoft-backed OpenAI, in talks to raise USD 2bln from Alphabet's Google and others, The Information reports.


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  Intel (INTC) - Announces plan to operate Programmable Solutions Group as a standalone business, led by Sandra Rivera which is expected to begin from January 1st 2024. CEO says Intel had a strong quarter, reiterates that revenue was above the mid-point of guidance.


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  SoftBank (SFTBY) - CEO said Artificial General Intelligence is AI that surpasses human intelligence in almost all areas, believes SoftBank can realise AGI in 10yrs, and nobody but him believes in AGI becoming a reality in 10 years. Elsewhere, SoftBank will expand its global IOT business in Asia-Pac region.


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  Palantir (PLTR) - Palantir is closing in on a GBP 480mln contract to help the UK's National Health Service improve its medical data analysis. The deal is pending final approvals.

COMMUNICATIONS:

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  Meta Platforms (META) - Meta is reportedly planning layoffs in its Reality Labs division, particularly in the unit focused on creating custom silicon for the metaverse, Reuters reports. Employees were informed through an internal post and will receive their notifications by Wednesday morning.


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  Spotify (SPOT) - Spotify is adding over 150,000 audiobooks to its Premium subscriptions in the US, Canada, UK, Ireland, Australia, and New Zealand. Premium users can listen to 15 hours of audiobooks per month, in addition to music and podcasts.


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  WPP Plc (WPP) - The world's biggest advertising agency globally plans to grow its Japanese team by 40% by 2028, increasing staff from 1,000 to 1,500, as businesses invest in branding amid the post-pandemic economic recovery, Nikkei reports.

CONSUMER:

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  Amazon (AMZN) - Amazon's "Project Nessie" used an algorithm to set prices, which competitors then copied, potentially raising prices for customers, WSJ reports. The practice ended in 2019, but the FTC cites this as evidence of Amazon's influence on prices.


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  Ford (F) - Ford has made a new labour offer to the UAW union until April 2028, including better wages, benefits, product commitments, and job security. The union is firm on battery plant issues, but Ford said no jobs will be lost due to battery plants during this contract.


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  General Motors (GM) - US auto safety agency said it is gathering more information about crash involving pedestrian struck by GM cruise self-driving car.


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  General Motors (GM), Lithium Americas (LAC), Lithium Argentina (LAAC) - Lithium Americas completes reorganisation into two separate companies: Lithium Argentina and Lithium Americas. General Motors agreed to buy USD 329.85mln worth of Lithium Americas shares, assigned its offtake agreement to the company. GM is now the biggest shareholder in both firms, holding about 9.4% of each. Trading under new ticker symbols begins on October 4th.


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  Nike (NKE) - Director Robert Holmes Swan purchased 13,072 Class B shares on October 2nd.


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  Airbnb (ABNB) - Director Joseph Gebbia sold 166.7K shares on September 29th for a total USD 23.0mln.


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  Macy's (M) - CEO told CNBC that in all of retail, we have customers that are under duress, but feels good about the company's Christmas strategies. M's short term focus is delivering profitable sales growth.


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  Cal-Maine Foods (CALM) - Slid over 10% after earnings miss. Q1 EPS 0.02 (exp. 0.33), Q1 revenue USD 459.3mln (exp. 479.5mln). Exec said it faces ongoing challenges related to the threat of HPAI and inflationary headwinds.

HEALTHCARE:

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  Kaiser Permanente (not listed) - Workers union said there was an overwhelming liklihood that a strike will begin 6am local time; adds that KALU is sticking to unacceptable raise proposal, and outsourcing the revenue cycle. Follows reporting earlier in the week which said over 75,000 Kaiser Permanente healthcare workers may strike soon due to labour disputes, potentially be the largest strike in US healthcare history, and could affect patients across California, Oregon, Colorado, Virginia, Washington state, and the District of Columbia.


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  CareDx (CDNA), Natera (NTRA) - CareDx accepted the Supreme Court's decision not to review patent eligibility. It won't affect their AlloSure service. They disagree with the decision but plan to challenge similar patents, including those of Natera.


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  Insulet (PODD), 3M (MMM) - Insulet's CFO Wayde McMillan will resign on October 20th, will become CFO of 3M's Health Care business, which 3M intends to spin off as a separate company.


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  Takeda (TAK) - Takeda's QDENGA vaccine received recommendations from the WHO for use in areas with high dengue risk, for children aged 6-16, given in two doses, and introduced before the peak dengue risk age.


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  Vertex Pharmaceuticals (VRTX) - Vertex shared positive results from its study on VX-880, a treatment for type 1 diabetes. Patients showed improved glucose control and some achieved insulin independence, even after long-standing diabetes. The treatment was generally well-tolerated.

ENERGY:

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  BP (BP) - BP is reportedly mulling selling a 49% stake in its US Gulf of Mexico oil and gas pipeline network to raise up to USD 1bln, Reuters reports, a move that would help BP reduce its debt and keep its dividend.

MATERIALS:

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  Compania de Minas Buenaventura (BVN) - Buenaventura is temporarily suspending mining at the Colquijirca's Tajo Norte mine for up to three years due to delays in environmental approval, caused partly by the COVID-19 pandemic and regulatory changes. Regular mining continues at the Marcapunta underground mine, with plans to increase production there.

INDUSTRIALS:

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  United Airlines (UAL), Boeing (BA), Airbus (EADSY) - UAL confirms that it ordered 110 aircraft from Airbus and for delivery beginning in 2028; order comprises 50 Boeing 787-9s and 60 Airbus A321neo aircraft. Also secures new options for up to 50 more 787s and purchase rights for an additional 40 A321neo aircrafts. Will continue to plan for a full retirement of the Boeing 757 and 767 fleets this decade.


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  General Dynamics (GD) - Awarded a USD 967.2mln Navy contract modification for lead yard support and development studies and design efforts related to Virginia Class submarines.


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  Paychex (PAYX) - CEO told CNBC that the labour market was still tight, and there was a labour supply problem in finding high quality employees; SMEs continue to be resilient, wage growth and inflation continues to cool, jobs growth is stable.

04 Oct 2023 - 09:30- Data- Source: Newsquawk