US EARLY MORNING: US equity futures are around flat ahead of Powell, weekly claims

US PRE-MARKETS: US equity futures are up slightly, bond yields are a little wider, but not too far off neutral; the Dollar Index is seeing slight gains, while oil is seeing some stability after Wednesday’s slide, with Brent prices back above USD 80/BBL. Today’s focus will be on a heavy slate of central bank speak. Fed Chair Powell will take part in a panel discussion (19:00GMT/14:00EST), while 2024 voters Bostic and Barkin will also speak. Traders will also be watching out for comments from the ECB President Lagarde, who is due to speak after the European close. Data-wise, weekly initial jobless claims data is due before the open, while EMFX traders expect Banxico to keep rates unchanged at 11.25% today. Our full interactive calendar can be accessed here, a pdf version can be downloaded here.

EQUITY POSITIONING: Strategists at UBS said that last week's rally challenged the downward momentum in equities which started at the end of July. "What stands out this week is that tech has been able to extend the rally and is even eyeing the summer highs while small caps/cyclicals have given back some of their gains already." The bank notes that it is not just mega-cap tech rallying, but also profitless tech/high growth Software as a service names, which have benefited from strong earnings from Datadog (DDOG). "This price action implies that investors are not willing to simply buy everything," UBS says, and "as for most of the year, they would rather stick with higher quality stocks and reward positive earnings stories." UBS argues, therefore, that for small caps and cyclicals to catch up, earnings and economic data would need to accelerate rather than slow down, and the 54% of retail and 35% of consumer discretionary companies reporting between now and December 8th will set the tone. "For now, it seems too early to play for a sustained low quality squeeze, especially as the positioning setup favours SPX/NDX over RTY in the near-term,"; the bank cites eight CTA buy triggers across SPX/NDX within 2% of spot versus zero in RTY, lower realised volatility means risk control buying, which is skewed towards buying SPX, while corporate buybacks are also more heavily concentrated in SPX/NDX. "All in all, SPX/NDX appear to be at the cusp of a positive shift in momentum, but RTY, on the other hand, has a long way to go."

EQUITY NEWS:

COMMUNICATIONS:

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  Walt Disney (DIS) - Disney posted better-than-expected profits in Q4, and boosted the size of its cost-cutting programme. Q4 adj. EPS 0.82 (exp. 0.70), Q4 revenue USD 21.24bln (exp. 21.35bln). Entertainment segment revenues USD 9.52bln (exp. 9.77bln); Sports USD 3.91bln (exp. 3.89bln); Experiences 8.16bln (exp. 8.2bln). Streaming operating income USD -420mln (exp. -450mln); continues to target streaming businesses profitability in Q4 FY24. ESPN+ subscribers 26mln (exp. 26.3mln), Hulu & Live TV subscribers 4.6mln (exp. 4.57mln), total Hulu subscribers 48.5mln (exp. 49.21mln), and Disney+ added 7mln core subscribers (exp. +2.8mln), taking total Disney+ subscribers to 150.2mln (exp. 147.07mln). Said it was on track to achieve USD 7.5bln in cost savings (prev. saw 5.5bln). CEO said more than 50% of new US Disney+ sign-ups in Q4 were ad-based. Has eliminated over 8,000 roles, more than initially forecast Forecasts a slight decline in Disney+ subscribers in fiscal Q1 vs Q4 because of price increases, end of promotion. Forecasts CAPEX spending of USD 6bln in 2024, an increase by USD 1bln from 2023. Will recommend the board declare a dividend; will recommend the board declare a dividend by end of calendar year. Says studio will make less, "focus more on quality".


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  Twilio (TWLO) - Q3 EPS 0.58 (exp. 0.35), Q3 revenue USD 1.03bln (exp. 988.2mln); Q3 active customers 306k+ (vs 280k+ Y/Y); Q3 dollar-based net expansion rate 101% (vs 122% Y/Y). Sees Q4 EPS between 0.53-0.57 (exp. 0.36), and sees Q4 revenue between USD 1.03-1.04bln (exp. 1.03bln). Sees FY23 net income between USD 475-485mln.


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  AMC Entertainment (AMC) - Q3 EPS 0.08 (exp. -0.27), Q3 revenue USD 1.40bln (exp. 1.23bln). Attendance -16% vs 2019, but contribution per patron +30% vs 2019. Exec said strikes would cause additional and needless challenges for AMC in 2024.


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  Deutsche Telekom (DTEGY) - Q3 Revenue EUR 27.6bln (exp. 27.56bln), adj. EBITDA-AL EUR 10.5bln (exp. 10.37bln). Sees FY23 adj. EBITDA-AL at EUR 41.1bln (prev. guided 41bln), and sees FCF at EUR 16.1bln (prev. guided 16bln).

TECH:

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  Nvidia (NVDA) - The chipmaker is reportedly planning to unveil three new chips for China, according to the Star Market Daily, citing sources. Announce could come as soon as November 16th. The release would come amid reports that some China-based companies are pivotting away from NVDA's chips out of fears of US actions; Baidu (9888 HK) reportedly placed an AI chip order with Huawei, in a move away from Nvidia (NVDA), it was reported.


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  Arm Holdings (ARM) - Q2 adj. EPS 0.36 (exp. 0.26), Q2 revenue USD 806mln (exp. 744.3mln); Q2 chips shipped 7.1bln, -6% Y/Y. Said it has good visibility of licensing pipeline for H2, although there is uncertainty regarding exact timings of deals. Semiconductor industry remains vulnerable to changes in external macroeconomic context. Sees Q3 adj. EPS between USD 0.21-0.28 (exp. 0.27), and Q3 revenue between USD 720-800mln (exp. 767.8mln). For FY24, sees adj. EPS between 1.00-1.10 (exp. 0.98), and FY24 revenue between USD 2.96-3.08bln (exp. 2.95bln).


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  Softbank Group (SFTBY) - SoftBank's Vision Fund posted an investment gain in Q2, but SoftBank itself saw another quarterly loss. Vision Fund gains were due to the sale of shares in chipmaker Arm (ARM) to a subsidiary of SoftBank, offseting declines in the value of companies SoftBank is invested in, CNBC reported. In Q2, it reported net sales of JPY 1.67tln (exp. 1.6tln), and a net loss of JPY 931.1bln (exp. net loss of JPY 114.1bln). For the six-month period, it reported pre-tax of JPY -907bln (prev. 292bln), and net of JPY 1.41tln (prev. -129bln).


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  Sony (SONY) - Sony posted a 29% fall in operating profits amid weakness in its imaging sensor business. Sees FY net JPY 880bln (exp. JPY 896.6bln, prev. JPY 860bln).


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  Take-Two Interactive (TTWO) - Q2 revenue 1.3bln (exp. 1.43bln); Q2 Net bookings USD 1.44bln (exp. 1.33bln). Expects continued macroeconomic uncertainty, believes that it is well positioned for the holiday season; reiterates FY24 Net Bookings guidance. Sees Q3 net bookings between 1.3-1.35bln (exp. 1.39bln), and sees FY net bookings between USD 5.45-5.55bln (exp. 5.51bln).


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  Bill Holdings (BILL) - Bill Holdings is close to acquiring digital payment provider Melio Payments in a cash-and-stock deal worth USD 1.95bln, Bloomberg reports. The deal may be announced soon, though it's not finalised, and details might change.


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  Affirm (AFRM) - Q1 EPS -0.57 (exp. -0.71), Q1 revenue USD 497mln (exp. 444.3mln), Q1 GMV USD 5.6bln. Exec said it was gaining market share. Said it was seeing increased demand for some of last year’s laggard categories, such as consumer electronics. Homewares and lifestyle still declined year-over-year, but the rate of decline slowed sequentially. Sees Q2 GMV of USD 6.8bln (inline), Q2 revenue between USD 495-520mln (exp. 505mln).


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  AppLovin (APP) - Q3 EPS 0.30 (0.27), Q3 revenue USD 864.3mln (exp. 798mln). CFO Herald Chen to depart company, will remain on the Board as an advisor. Matt Stumpf, current Vice President of Finance and FP&A, appointed CFO. Sees Q4 revenue at USD 920mln (exp. 831mln).


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  FICO (FICO) - Q4 adj. EPS 5.01 (exp. 5.21), Q4 revenue USD 390mln (exp. 389.4mln). Sees FY24 adj. EPS at 22.45 (exp. 23.58), and sees FY24 revenue at USD 1.675bln (exp. 1.68bln).


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  Fleetcor (FLT) - Q3 adj. EPS 4.49 (exp. 4.51), Q3 revenue USD 970.9mln (exp. 979.2mln). Sees Q4 adj. EPS between USD 4.34-4.64 (exp. 4.53), and sees Q4 revenue between USD 953-983mln (exp. 976.7mln). Sees FY23 adj. EPS between 16.82-17.12 (exp. 17.02), and sees revenue between USD 3.774-3.804bln (exp. 3.81bln).


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  HubSpot (HUBS) - Q3 adj. EPS 1.59 (exp. 1.23), Q3 revenue USD 557.6mln (exp. 533.9mln). Q4 EPS 1.53-1.55 (exp. 1.50), Q4 revenue USD 556-558mln (exp. 556.2mln). Sees FY23 EPS between 5.66-5.68 (exp. 5.28), FY23 revenue USD 2.144-2.146bln (exp. 2.1bln).


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  Lyft (LYFT) - Q3 EPS 0.24 (exp. 0.13), Q3 revenue USD 1.16bln (exp. 1.14bln), Q3 adj. EBITDA USD 92mln (exp. 82.61mln. Sees Q4 EBITDA view 50-60mln (exp. 48.75mln).

CONSUMER:

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  Tesla (TSLA) - Tesla China raises Model 3 Long-range price by CNY 1,500, raises Model Y Long-range price by CNY 2,500.


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  Instacart (CART) - Q3 EPS -20.86 (exp. -12.97), Q3 revenue USD 764mln (exp. 736.9mln), Q3 GTV +6% to USD 7.494bln (exp. 7.419bln), Q3 adj. EBITDA 163mln (exp. 119.5mln). Announced new USD 500mln share buyback. Exec said it is confident in its position, even as several macroeconomic factors work against the online grocery industry; added that COVID was no longer a tailwind, consumers were receiving less government aid, interest rates remain high, and inflation persists. Sees Q4 adj. EBITDA between USD 165-175mln (exp. 153.1mln), and sees GTV growth staying in a 5-6% range (exp. 5%).


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  888 Holdings (EIHDF), DraftKings (DKNG) - DraftKings reportedly discussed a bid for 888 Holdings during the summer, FT reports. DraftKings reportedly walked away when the UK gambling regulator placed 888 under review.


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  Flutter Entertainment (PDYPY) - Q3 revenue GBP 2.04bln (prev. 1.89bln Y/Y).


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  MGM Resorts (MGM) - Q3 adj. EPS 0.64 (exp. 0.49), Q3 revenue USD 4bln (exp. 3.87bln); announces a new USD 2bln share buyback programme. Exec said it has recovered from the recent cyberattack, China business performing exceptionally well (China revenue +828% Y/Y, +10% vs 2019).

INDUSTRIALS:

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  Airbus (EADSY) - Q3 adj. EBIT 1.01bln (exp. 1.17bln), Q3 revenue EUR 14.9bln (exp. 15.0bln). Reaffirms guidance; expects supply chain to remain challenging as it progresses on production ramp-up. Demand for commercial aircraft is very strong, with a continuing recovery in the widebody market. To raise the production rate for A2350 to ten aircraft per month in 2026. Continues to target four A330 per month in 2024. The ramp-up of the A220 programme is continuing towards a monthly production rate of 14 aircraft in 2024. Production of the A320 family programme is progressing well toward the previously announced rate of 75 aircraft per month in 2026. A321XLR progressing towards certification, with entry into service expected to occur in Q2. CEO says the operating environment remains complex and expected to remain challenging for a while.


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  Hapag-Llyod (HLAG GY) - CEO said it was not considering any concrete job cut plans; expects transport volumes in Q4 to be reasonably good; does not expect short-term improvement of freight rates.

MATERIALS:

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  Steel Names - China is to re-investigate anti-dumping duties case on stainless steel billets and stainless steel hot-rolled sheets and coils imported from the EU, Japan, South Korea, and Indonesia.


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  ArcelorMittal (MT) - Q3 net USD 929mln (prev. 1.86bln Y/Y), EBITDA USD 1.87bln (exp. 1.82bln), Revenue USD 16.6bln (exp. 17.3bln). Remains positive on medium/long-term steel outlook. Expects Q4 FCF to remain healthy.


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  Corteva (CTVA) - Q3 operating EPS -0.23 (exp. -0.22), Q3 revenue USD 2.59bln (exp. 2.76bln). Seed net sales +7%, organic sales +9%. Reaffirmed FY23 operating EPS outlook between 2.50-2.70 (exp. 2.81), and revenue between 17-17.3bln (exp. 17.98bln).

FINANCIALS:

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  Morgan Stanley (MS) - Morgan Stanley's wealth-management arm is reportedly being probed by the Fed, WSJ reports, which is looking into whether the bank has sufficient controls in place to prevent rich foreign customers from laundering money.

HEALTHCARE:

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  AstraZeneca (AZN) - Q3 revenue USD 11.49bln (exp. 11.52bln), Core EPS 1.72 (exp. 1.72). Agreement with Eccogene for clinical stage GLP-1RA, upfront of 185mln with milestones of up to 1.83bln. FY23 Guidance raised; sees total revenue (excluding COVID-19 medicines) growing low-teens percentage at CER, Core EPS now expected to increase by a low double-digits to low-teens percentage at CER.


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  Roche (RHHBY) - Roche’s Elecsys NfL test, an important aid for those living with Multiple Sclerosis, is granted FDA Breakthrough Device Designation.


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  Eli Lilly (LLY) - UK MHRA authorizes Eli Lilly's diabetes drug Mounjaro (Tirzepatide) for obese adult patients to aid with weight loss and weight management.


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  Merck (MKKGY) - Q3 EPS EUR 1.70 (prev. 2.12 Y/Y), Q3 adj. EBITDA EUR 1.42bln (prev. 1.70bln Y/Y), Q3 revenue EUR 5.17bln (exp. 5.21bln).

09 Nov 2023 - 09:30- Research Sheet- Source: Newsquawk