US EARLY MORNING: Index futures are trading firmly; ECB minutes, Jackson Hole ahead

US index futures are higher, picking up in pre-market traded in sympathy with European counterparts. There aren’t any compelling explanations as to why we are seeing this constructive tone of equity trading, and there weren’t any specific headline catalysts explaining the European action. There has been an extension of the gains in Europe after better-than-feared Ifo survey data out of Germany, while a second look at German growth in Q2 saw upward revisions. Treasury yields are narrowing by 2-3bps, though major curve spreads are mixed. The Dollar Index continues to give back some of the recent gains, and the EUR currency has risen to levels just under parity; some desks have been framing the weakness in the Chinese currency as potentially supportive for global inflation dynamics (makes imports from China cheaper). Nevertheless, the narrative is indistinct at this stage, and is certainly subject to headwinds from Jackson Hole (where policymakers are expected to reiterate hawkish views). Crude benchmarks are higher amid news that the US rejected all the additional conditions requested by Iran and urged Iran to lift any restrictions on international inspections, according to Al Arabiya, but this story has come under scrutiny after the WSJ suggested that the claim was false and that Iran has just started studying the response. For today, the day ahead includes UK CBI Distributive Trades for August, CBRT meeting minutes, ECB meeting minutes (primer here), a second look at US GDP in Q2, weekly initial jobless claims out of the US, NatGas inventories, and the KC regional manufacturing report. Supply comes by way of a 2024 BTP from Italy, a 2025 Gilt out of the UK, and a 7yr note out of the US. Full Day Ahead here.

TECH:

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  NVIDIA Corp (NVDA) - Q2 adj. EPS 0.51 (exp. 0.50), Q2 revenue USD 6.70bln (exp. 8.10bln). Said revenue lower than outlook issued in May due to weaker gaming revenue, Data centre revenue was somewhat short of expectations due to impacts on supply chain disruptions. Q2 data centre revenue +61% Y/Y at USD 3.81bln, Q2 Gaming revenue -33% Y/Y at USD 2.04bln, Q2 Professional Visualization revenue -4.4% Y/Y at USD 496mln, Q2 Automotive revenue +45% Y/Y at USD 220mln. Q2 adj. gross margin 45.9% (prev. 66.7% Y/Y), Q2 FCF 824mln (exp. 2.46bln). Sees Q3 revenue view 5.9bln (exp. 6.92bln). CEO said China hyperscalers really slowed down infrastructure investment in Q2, but he expected China investment in cloud to return.


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  Salesforce Inc (CRM) - Q2 Adj. EPS 1.19 (exp. 1.02), Q2 revenue USD 7.72bln (exp. 7.69bln); Board approves its first-ever share repurchase programme of USD 10bln share buyback. Sees Q3 adj. EPS between 1.20-1.21 (exp. 1.29), and sees Q3 revenue between USD 7.82bln-7.83bln (exp. 8.07bln). Cuts FY adj. EPS view 4.71-4.73 (exp. 4.75), and cuts FY Revenue view 30.9bln-31.0bln (exp. 31.73bln). CEO told CNBC that customers were being more measured in the current environment.


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  NetApp Inc (NTAP) - Q1 adj. EPS 1.20 (exp. 1.10), Q1 revenue USD 1.59bln (exp. 1.55bln). Exec said performance was fuelled by broad-based demand across its portfolio and geographies, setting all-time Q1 company highs for billings, revenue, gross profit dollars, operating income and EPS. Sees Q2 Adj. EPS 1.28-1.38 (exp. 1.32). Maintains FY Adj EPS forecast at 5.40-5.60 (exp. 5.47).


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  Snowflake Inc. (SNOW) - Q2 EPS -0.70 (exp. -0.01), Q2 revenue USD 497.2mln (exp. 467.3mln). Exec said product revenue +83% Y/Y in Q2, adj. product gross margin above 75%. Sees Q3 product revenues between USD 500-505mln, and lifts outlook for FY23 product revenue to between USD 1.905-1.915bln (prev. guidance 1.885-1.9bln).


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  Splunk Inc. (SPLK) - Q2 EPS -1.30 (vs 2.34 Y/Y), Q2 revenue USD 799mln (exp. 748mln). Sees Q3 revenue between USD 835-855mln (exp. 834.8mln), and lifts FY23 revenue outlook to USD 3.35-3.4bln (exp. 3.3bln, prev. guidance 3.3-3.35bln).


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  Autodesk, Inc. (ADSK) - Q2 adj. EPS 1.65 (exp. 1.57), Q2 revenue 1.237bln (exp. 1.22bln). Exec said demand remained robust, the subscription business was resilient in Q2, and underlying momentum of the business offsetting incremental FX headwinds. Sees Q3 adj. EPS between 1.66-1.72 (exp. 1.68), and Q3 revenue between USD 1.28-1.29bln (exp. 1.27bln). FY23 adj. EPS seen between 6.52-6.71 (exp. 6.52, prev. 6.43-6.66), and Q3 revenue seen between USD 4.99-5.04bln (exp. 5.01bln, prev. 4.96-5.06bln).


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  Box, Inc. (BOX) - Q2 EPS 0.28 (exp. 0.28), Q2 revenue USD 246mln (exp. 245mln). Q2 remaining performance obligations +14% Y/Y at USD 1.05bln; RPO growth includes a negative impact of 7ppts from FX. Q2 billings +10% Y/Y at USD 235mln, and includes a negative impact of 6ppts from FX. Sees Q3 EPS around 0.29-0.30 (exp. 0.30), and sees Q3 revenue between USD 250-252mln (exp. 251mln). FY23 EPS outlook lifted to 1.13-1.16 (exp. 1.14, prev. guidance 1.11-1.15), and backs its FY23 revenue outlook of USD 992-996mln (exp. 1.2bln); revenue guidance includes a view for a negative FX impact of 4ppts.

COMMUNICATIONS:

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  Twitter (TWTR) - Whistleblower is reportedly to testify publicly before the Senate Judiciary Committee on September 13th to discuss allegations that the social media company misled regulators, Reuters reported. Peiter Zatko has accused Twitter of falsely claiming it had a solid security plan and making misleading statements about its defences against hackers and spam accounts, and has already discussed his complaint with staffs of the chair and ranking member on the Senate Judiciary Committee, the House Energy and Commerce Committee, and the staff of the Senate Intelligence Committee, Reuters added.


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  Sony (SONY) - To hike PS5 prices in Europe, Britain, and Japan, but not in the US.

CONSUMER CYCLICALS:

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  Bed Bath & Beyond (BBBY) - In exclusive talks with Sixth Street for a loan deal of USD 370mln, according to Reuters.


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  GameStop (GME) - Raises compensation for some store employees with shares and raises, according to WSJ, as the retailer refocuses on bricks-and-mortar business, and as it looks to become profitable under new leadership.


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  Victoria's Secret & Co. (VSCO) - Q2 adj. EPS 1.09 (vs 1.71 Y/Y), Q2 revenue USD 1.52bln (exp. 1.56bln). Q2 comparable sales -8% Y/Y. Q3 EPS seen between 0-0.25 (exp. 0.79), and Q3 revenue seen down high single digits (exp. 1.4bln). Cuts FY22 revenue outlook, now sees down mid to high single digits to USD 6.785bln (exp. 6.7bln, prev. guidance was for flat to up low single digits).


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  Guess', Inc. (GES) - Q2 adj. EPS 0.39 (exp. 0.45), Q2 revenue USD 643mln (exp. 629.5mln). Sees Q3 revenue -4.5% Y/Y in constant currency. Lowers FY23 revenue growth outlook +1.5% Y/Y (prev. +4%).              


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  Williams-Sonoma, Inc. (WSM) - Q2 EPS 3.87 (exp. 3.54), Q2 revenue 2.14bln (exp. 2.02bln). Q2 comparable brand revenue growth +11.3%, +41.1% on 2yr basis. Reiterates FY22 and long-term guidance.

HEALTH CARE:

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  Amazon (AMZN) - Will shut Amazon Care virtual health service that it initially created for its employees by year-end, according to Washington Post. WaPo added that it was a surprising move given the company’s recent investment in the health-care space.


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  Novartis AG (NVS) - Announced its intention to separate the Sandoz business to create a standalone company by way of a 100% spin-off; Richard Saynor will remain Sandoz CEO.


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  AstraZeneca (AZN) - Tagrisso approved in Japan for the adjuvant treatment of patients with early-stage EGFR-mutated lung cancer.

INDUSTRIALS:

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  Rolls-Royce (RYCEY), Boeing (BA) - Rolls-Royce and Boeing-backed Reaction Engines is preparing a path to a GBP 1-2bln public listing as early as 2024, according to Sky News.


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  Honda Motor (HMC) - To run the Saitama Plant at 60% production early next month and Suzuka at 70%

ENERGY:

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  Shell (SHEL) - The energy giant could lose its LNG purchase contract with Sakhalin, according to unconfirmed reports citing Russian press.


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  Energy Transfer (ET) Shell (SHEL) - Energy Transfer LNG Export entered into a 20-year LNG Sale and Purchase Agreement with Shell NA LNG related to its Lake Charles LNG project. Energy Transfer will supply Shell 2.1mln tonnes of LNG per annum on a free-on-board basis, with purchase prices indexed to the Henry Hub benchmark, plus a fixed liquefaction charge.

UTILITIES:

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  Uniper (UNPPY) - German state lender KfW prepared to extend a credit line to Uniper to help offset losses from even greater than expected price rises in gas. Uniper bailout expected to be signed in mid-September, according to Reuters.

25 Aug 2022 - 09:23- Research Sheet- Source: Newsquawk