US EARLY MORNING: Markets tread water ahead of the Fed and ECB heads' Jackson Hole commentary

US PRE-MARKETS:

PRIMER - POWELL AT JACKSON HOLE (15:05BST/10:05EDT): Traders will be looking for clues from Chair Powell as to whether the Fed is near the end of its hiking cycle; Powell is likely to endorse a data-dependent approach, while emphasising the resilience of the US economy. Traders will also be looking to his remarks for any commentary on the r-star rate, to see if Fed officials think this has moved upwards, and whether that implies a higher-for-longer monetary policy outcome. Powell may skirt any near-term guidance on rates, choosing not to pre-judge the outcome of the September FOMC; analysts also think that he may highlight that even when the Fed is done with hikes, policy rates will remain in restrictive territory for some time. Our full Jackson Hole primer, previewing speeches from ECB President Lagarde as well as Fed Chair Powell can be accessed here; a full schedule of events can be accessed here.

PRIMER - LAGARDE AT JACKSON HOLE (20:00BST/15:00EDT): With several weeks until the ECB announcement, and ahead of next week’s key August flash HICP data, President Lagarde has very little to gain by pre-empting the September 14th confab, or the October 26th meeting, reiterating data-dependence. Referring back to the July meeting, and awaiting the September macroeconomic projections will likely underpin her speeches. Our full Jackson Hole primer, previewing speeches from ECB President Lagarde as well as Fed Chair Powell can be accessed here; a full schedule of events can be accessed here.

TODAY’S AGENDA:

• Our interactive calendar can be accessed here; a pdf version can be downloaded here.


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  EUROPEAN DAY: The German Ifo survey for August is likely to show declines in the business climate and current conditions, though future expectations are seen improving a little. ECB's Lagarde will make an appearance at Jackson Hole, speaking well after the European close (around 8pm London time). On the CRA front, Moody's Ratings may update on Sweden's credit rating (currently Aaa).


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  US DAY AHEAD: Fed Chair Powell's opening remarks from Jackson Hole are the highlight (see below). Before then, the University of Michigan's Final August sentiment data will be released. Baker Hughes Weekly Rig Count data will be released in the afternoon.


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  POWELL AT JACKSON HOLE (15:05BST/10:05EDT): Traders will be looking for clues from Chair Powell as to whether the Fed is near the end of its hiking cycle; Powell is likely to endorse a data-dependent approach, while emphasising the resilience of the US economy. Traders will also be looking to his remarks for any commentary on the r-star rate, to see if Fed officials think this has moved upwards, and whether that implies a higher-for-longer monetary policy outcome. Powell may skirt any near-term guidance on rates, choosing not to pre-judge the outcome of the September FOMC; analysts also think that he may highlight that even when the Fed is done with hikes, policy rates will remain in restrictive territory for some time. Our full Jackson Hole primer, previewing speeches from ECB President Lagarde as well as Fed Chair Powell can be accessed here; a full schedule of events can be accessed here.


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  LAGARDE AT JACKSON HOLE (20:00BST/15:00EDT): With several weeks until the ECB announcement, and ahead of next week’s key August flash HICP data, President Lagarde has very little to gain by pre-empting the September 14th confab, or the October 26th meeting, reiterating data-dependence. Referring back to the July meeting, and awaiting the September macroeconomic projections will likely underpin her speeches. Our full Jackson Hole primer, previewing speeches from ECB President Lagarde as well as Fed Chair Powell can be accessed here; a full schedule of events can be accessed here.

EQUITY NEWS:

TECH:

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  Alphabet (GOOG) - A judge ruled that the RNC couldn't prove Google acted in bad faith by filtering emails and that Section 230 protects Google, WaPo reports. Republicans claimed bias against conservatives in Google's spam filters.


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  Marvell Technology (MRVL) - Q2 adj. EPS 0.33 (exp. 0.32), Q2 revenue USD 1.34bln (exp. 1.33bln), Q2 comp sales +8% (exp. +6.56%). Exec said it was forecasting sequential revenue growth to accelerate in Q3, driven primarily by AI and cloud infrastructure. Demand from AI applications continues to strengthen, driving overall revenue outlook from AI for this FY even higher than previously outlined. Added that its strategy to focus on data infrastructure was serving it well despite the backdrop of a softening macroenvironment. Sees Q3 adj. EPS between 0.35-0.45 (exp. 0.40).


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  Workday (WDAY) - Gained 3.1% afterhours following results. Q1 Adj. EPS 1.43 (exp. 1.26), Q1 revenue USD 1.79bln (exp. 1.77bln). Sees Q3 subscription revenue between USD 1.68bln (exp. 1.84bln), and for the FY, raises FY24 subscription revenue view to USD 6.57-6.59bln (prev. 6.53-6.58bln).


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  Intuit (INTU) - Fell 4% afterhours following publication of results. Q4 adj. EPS 1.65 (exp. 1.44), Q4 revenue USD 2.71bln (exp. 2.64bln). Sees Q1 Adj. EPS USD 1.94-2.00 (exp. 1.97). For the FY, sees EPS between USD 16.17-16.47 (exp. 14.22), and sales between USD 15.89bln-16.11bln (exp. 15.96bln).


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  Affirm Holdings (AFRM) - Gained 8.6% afterhours following results. Q4 EPS -0.69 (exp. -0.85), Q4 revenue USD 445.8mln (exp. 406mln), Q4 GMV +25% Y/Y, and +49% on a two year basis. Q4 active consumer count +18% Y/Y to 16.5mln; excluding Returnly, active consumer count +20% to 15.6mln; Q4 transactions per active consumer +30% Y/Y (+29% ex-Returnly), Q4 active merchant count +8% Y/Y, merchants with greater than USD 1k in TTM GMV +16% Y/Y. Expects to achieve Operating Income profitability in FY24. Exec said it continued to see good traction onboarding long-tail merchants. Expects increased consumer demand for financing products in Q4, resulting in a quarterly high point for GMV. Sees FY24 GMV of over USD 24bln, and sees FY24 revenue as a percentage of GMV similar to FY23 levels. Sees Q1 revenue between USD 430-455mln (exp. 429.9mln), and sees Q1 GMV USD 5.30-5.50bln.


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  Akamai Technology (AKAM) - Akamai acquires select enterprise customer contracts from Stackpath, sees deal adding USD 0.03-0.05/shr in FY24 and USD 20mln in revenue; does not expect material impact in Q3 or FY23.

COMMUNICATIONS:

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  Disney (DIS), Amazon (AMZN) - Amazon is in talks with Disney over ESPN streaming partnership, The Information reports. The report said AMZN giant could offer the service through one of its streaming platforms, helping to expand its distribution, while potentially also acquiring a minority interest in ESPN. Elsewhere, ESPN is considering charging between USD 20-35/month for its new streaming service.


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  Warner Bros Discovery (WBD) - WBD delays Dune sequel release from November this year to March 2024 due to Hollywood actors strike; delays animated Lord Of The Rings movie to December 2024.


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  Zillow Group (ZG), Zillow Group (Z) - Zillow Home Loans introduced a 1% Down Payment program for home buyers in Arizona, planning to expand. Buyers contribute 1%, Zillow adds 2%.

CONSUMER:

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  Tesla (TSLA) - The NHTSA is close to concluding a 2-year investigation into Tesla's Autopilot, Reuters reports. The agency emphasised driver attention, warned against over-reliance on technology.


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  Ulta Beauty (ULTA) - Q2 EPS 6.02 (exp. 5.85), Q2 revenue USD 2.53bln (exp. 2.51bln), Q2 comp sales +8% (exp. +6.6%). Lifts its FY23 EPS outlook to between 25.10-25.60 (prev. guided 24.70-25.40, exp. 25.26), and raised its FY23 revenue outlook to between USD 11.05-11.15bln (exp. 11.13bln, prev. guided 11.0-11.1bln); also lifts its FY23 SSS outlook to between 4.5-5.5% from 4-5%.


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  Estee Lauder (EL) - Chairman Emeritus Leonard Lauder will not seek Board re-election in November. Lauder has the right to designate two directors of the company. In addition to his son William Lauder, who serves as Executive Chairman, Leonard Lauder has designated his son Gary Lauder to serve on the Board.


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  Gap (GPS) - Q2 adj. EPS 0.34 (exp. -0.47), may not compare; Q2 revenue USD 3.55bln (exp. 3.58bln), Q2 comp. sales -6% (exp. -4.5%), Q2 online sales -11% Y/Y (represented 33% of total net sales), Q2 gross margin 37.6% (+310bps). Sees FY23 revenue down mid-single digits (exp. 14.9bln). Plans adj. operating expenses of approximately USD 1.3bln in Q3, and USD 5.15bln for FY23.


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  Nordstrom (JWN) - Slipped a little further afterhours following publication of results. Q2 EPS 0.84 (exp. 0.44), Q2 revenue USD 3.66bln (exp. 3.65bln), Q2 GMV -8.5% Y/Y; Q2 net sales include a 275bps negative impact from the wind-down of Canadian operations. Reiterates FY23 adj. EPS outlook between 1.80-2.20 (exp. 1.99).


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  General Motors (GM) - GM's battery JV in Ohio agrees to hike workers wages by an average of 25%.


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  Home Depot (HD) - VP Kimberly Scardino sold 1,600 shares on August 23rd for a total USD 522,704.

ENERGY:

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  Woodside Energy (WDS) - Offshore Alliance members at Woodside Energy endorsed an in-principle labour agreement. Members approved moving forward with the in-principle agreement at a meeting. The final draft of the Enterprise Agreement is currently being drafted, Offshore Alliance will be provided a copy of this document on Monday for the union to consider its drafting. Unions will not engage in any strike action while process to finalise the deal takes place. Further Newsquawk analysis available here.


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  Equinor (EQNR) - Production starts six months ahead of schedule for Statfjord Ost project, Co. expects to increase production by 26mln barrels of oil.

INDUSTRIALS:

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  Lockheed Martin (LMT) - LMT was awarded a USD 2.77bln Navy contract modification, which adds scope for Lots 7 and 8 block buy contract for a combined quantity of 35 CH-53K full-rate production aircraft, 27 for the Marine Corps and eight for the government of Israel, as well as provides associated aircraft and programmatic support, logistical support and spares.


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  Triton International (TRTN), Brookfield Infrastructure (BIP) - Triton shareholders approved acquisition by Brookfield Infrastructure, pending clearance; common shares delisted, preference shares remain.


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  Hertz (HTZ) - Hertz is in a pact with electric ride-sharing firm Revel to bring electric cars to NYC, NY Post reports. Hertz aims to make 25% of its fleet electric by 2024, but faces charging challenges in space-limited cities like New York.

HEALTHCARE:

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  Align Technology (ALGN), SmileDirectClub (SDC) - SmileDirectClub plans to appeal a court decision to pay Align USD 63mln in a dispute over a supply agreement. The disagreement stems from Align's violation of the agreement after partnering with SmileDirectClub.

REAL ESTATE:

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  WeWork (WE) - Tumbled 7.8% afterhours on news that its lenders, including BlackRock (BLK) and King Street Capital, are considering bankruptcy to help the company exit costly leases and restructure debts, possibly giving creditors control, WSJ reports.

25 Aug 2023 - 09:30- Research Sheet- Source: Newsquawk