US EARLY MORNING: US equity futures are around flat, yields are near unchanged; Fed's Powell due later today

Overnight APAC trade was marked by jitters in the China property sector, while the theme of tighter US monetary policy continues to be cited. The tone improved in Europe after initial inflation data from German regions alludes to cooling price pressures, ahead of the national data later today. US equity futures are flat, Treasury yields are around unchanged, and the Dollar Index is also flat. Crude futures are on the front foot after weekly inventory data showed stockpiles at the Cushing hub falling to critical levels. Traders continue to monitor news flow out of Washington; minority leader McConnell is comfortable with the Senate spending bill, and the Senate will today vote on a motion to proceed the "shell" bill to avoid a shutdown at 16:30BST/11:30EDT, according to Fox. Today’s agenda sees further German regions report inflation metrics in the morning, ahead of the national data released in the afternoon; Eurozone sentiment surveys for September are also due. The US Day sees the release of final GDP stats for Q2 and weekly initial jobless claims, while the Fed speakers docket is busy, with remarks due from Chair Powell, Fed voters Goolsbee and Cook, as well as 2024 voter Barkin. Our full Day Ahead calendar is here, a pdf version is here.

EQUITY NEWS:

TECH:

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  Micron Technology (MU) - Fell 3.6% in afterhours trade following the publication of its Q4 results, where it beat on current quarter estimates, but issued mixed guidance. Q4 adj. EPS -1.07 (exp. -1.18), Q4 revenue USD 4.40bln (exp. 3.91bln). Exec said it expects calendar 2023 DRAM bit demand to grow in the mid-single-digit percentage range. While macroeconomic factors remain a risk, expects robust Y/Y bit demand growth in calendar 2024 for both DRAM and NAND. For 2024, bit demand growth is expected to exceed the long-term CAGR for DRAM, and Micron's bit supply growth in fiscal 2024 is planned to be well below demand growth for both DRAM and NAND. In China, the CAC decision continues to impact revenue opportunity, and the associated headwind is reflected in guidance.  Expects to decrease days of inventory in FY24. Sees Q1 adj. EPS at USD -1.07 (exp. -0.95), and sees Q1 revenue at USD 4.4bln (exp. 4.2bln).


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  Uber Technologies (UBER), Analog Devices (ADI) - Uber announced Analog Devices CFO Prashanth Mahendra-Rajah as its new finance chief. He's coming on board on November 13th to replace Nelson Chai, who served in the role for about five years. This move comes as Uber prepares for increased competition in the ride-hailing industry.


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  HP Inc. (HPQ), Berkshire Hathaway (BRK.B) - Berkshire sold 4.61mln shares of HP Inc. shares between September 25th-27th, now owns around 106mln shares after the sale, according to an SEC filing.


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  Workday (WDAY) - Shares slide afterhours after it cut its medium term subscription revenue growth rate view; now sees 17-19% growth rate (prev. saw 20%+).


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  Concentrix (CNXC) - Fell over 5% post-earnings. Q3 EPS 2.71 (exp. 2.84), Q3 revenue USD 1.63bln (exp. 1.64bln). Raised quarterly dividend +10% to 0.3025/shr (prev. 0.275/shr). Sees Q4 EPS between 3.03-3.15 (exp. 3.32), and sees Q4 revenue between USD 2.19-2.22bln (exp. 1.7bln).

FINANCIALS:

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  Citigroup (C), HSBC (HSBC) - HSBC is planning to acquire Citigroup's China consumer wealth management business, which oversees over USD 3bln in assets, Reuters reports. the move will strengthen HSBC's presence in China. The details of the financial transaction are not yet disclosed, but it may involve taking on several hundred of Citigroup's China-based employees, Reuters said. The deal may be announced next month.


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  Jefferies (JEF) - Fell 2.2% in afterhours trade following the publication of its results. Q3 EPS 0.22 (exp. 0.33), Q3 revenue USD 1.182bln (exp. 1.254blln). Q4 investment banking revenue and capital markets revenue were USD 1.178bln combined (exp. 1.202bln). Exec said it was increasingly optimistic that we have come off bottom of cycle, and momentum in investment banking will continue. Said it had USD 250mln authorisation for future share repurchases. On staffing levels, exec said it is adding new Managing Directors globally to its Investment Banking functions.


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  H.B. Fuller (FUL) - Shares slipped 4% afterhours following a miss on Q3 earnings, and lowering of its outlook. Q3 EPS 1.06 (exp. 1.14), Q3 revenue USD 900.6mln (exp. 954mln). FY23 EPS outlook narrowed to a range between 3.80-3.90 (exp. 3.88, prev. guided between 3.80-4.20) due to customer destocking actions and slower than anticipated underlying demand conditions. Sees FY23 revenue between USD 3.50-3.55bln (exp. 3.6bln).


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  Wall Street - SEC is finalising settlements with around 24 Wall Street firms regarding record-keeping violations, primarily related to the use of unapproved messaging apps like WhatsApp, Reuters reports. The firms will pay fines, admit wrongdoing, and commit to improving their record-keeping practices, with some potentially paying up to USD 50mln.

MATERIALS:

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  Corteva (CTVA) - Corteva is suing Inari Agriculture, alleging that Inari illegally acquired their seeds, exported them, made genetic changes, and is now trying to patent those changes.

INDUSTRIALS:

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  Johnson Controls (JCI) - Johnson Controls said it is dealing with a cybersecurity incident that has disrupted its internal IT systems. It is investigating the issue with external experts and working with insurers. While some operations are unaffected, it has caused disruptions. JCI is still assessing whether it will affect their financial results.


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  Worthington Industries (WOR) - Q1 EPS 2.06 (exp. 2.04), Named John Blystone as Executive Chairman, succeeding John McConnell, who will now retire. Declared quarterly dividend of 0.32/shr. Exec said the Consumer Products business faced headwinds due to weather, customer destocking and lower consumer spending, but believes demand and margins should improve in the coming quarters.

CONSUMER:

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  Philip Morris (PM) - At 2023 Investor Day, it reaffirmed 2023 FX-neutral adj. diluted EPS growth view of +8.0-9.5%. Sees Q3 adj. EPS between 1.60-1.65 (exp. 1.62). Revises FY GAAP diluted EPS view (for FX only) to USD 5.19-5.28 (exp. 5.42). Sees 2024-2026 CAGR of 8-10% for adj. organic operating income. Will maintain its progressive dividend policy; could consider sharebuybacks only when it is on track to meet 2x net debt-adjusted-EBITDA leverage target. Says that by 2030, it wants to be substantially smoke freeSees 2026 heated tobacco unit shipment volume target between 180-200bln units.


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  Lululemon (LULU), Peloton (PTON) - Lululemon is teaming up with Peloton, on a five year deal where both will make workout clothes together, and Peloton's fitness content will be available on Lululemon's Mirror device and app, Bloomberg reports. Lululemon will stop making its own workout videos and won't use content from others.


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  SpaceX, Tesla (TSLA), Twitter (not listed) - Elon Musk's SpaceX has won its first contract with the US Space Force to provide specialized satellite communications for the military. This deal is part of the new Starshield programme and could be worth up to USD 900mln through 2028. SpaceX is competing with 15 other companies for this work.


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  Toyota Motors (TM) - August parent-only global vehicle output +4.1% Y/Y to 798.8k units, sales +9.8% Y/Y to 853.3k units.


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  Volkswagen (VWAGY) - The automaker said that the IT infrastructure problems in its network were resolved overnight, network is now working stably again, affected applications were restarted.


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  Costco (COST) - CEO tells CNBC it had hoped sales would have been a little bit better in Q4. Added that the Christmas season has started off well, with the Kirkland brand up in both penetration and sales Y/Y. Theft was up slightly, but shrink was not on the upswing.


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  J.M. Smucker (SJM) - Smucker is selling its Sahale Snacks brand to Second Nature Brands for about USD 34mln in cash. The sale is expected to have a minor impact on Smucker's earnings and is set to close in Q3 of their current fiscal year.


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  Duckhorn Portfolio (NAPA) - Chairman and CEO Alex Ryan retires; Board appoints Deirdre Mahlan, a veteran of the alcohol and beverage industry, as interim President, CEO and Chairperson, and has initiated a search for a new leader.


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  Williams-Sonoma (WSM) - President and CEO Laura Alber sold 100k shares on September 25th for 150/shr.

COMMUNICATIONS:

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  Sony Group (SONY) - Jim Ryan, the CEO of Sony Interactive Entertainment, is retiring in March 2024 after nearly 30 years with the company. He has led Sony's PlayStation unit and found it challenging to work in North America while living in Europe.

HEALTHCARE:

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  Takeda (TAK) - FDA approved a new way to take ENTYVIO for treating ulcerative colitis. ENTYVIO is the only FDA-approved biologic for maintaining ulcerative colitis.

REAL ESTATE:

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  Weyerhaeuser Company (WY) - Weyerhaeuser lowered Q3 outlook for two business segments due to lower sales volumes. Expects a USD 35mln decline in earnings for their Timberlands segment, and a more modest increase in earnings for their Wood Products segment, citing lower-than-expected log and lumber sales volumes, as well as reduced lumber production due to Canadian wildfires.

28 Sep 2023 - 09:30- Data- Source: Newsquawk