US EARLY MORNING: US equity futures are flat; heavy Fedspeak ahead

US PRE-MARKETS: US equity index futures are trading around flat, while bond yields are rising, with the short-end underperforming ahead of a heavy slate of Fedspeak, which includes a panel discussion with Fed Chair Powell (Powell is due to give remarks on Thursday too), NY Fed's Williams (voter), Fed Vice Chairs Jefferson (voter) and Barr (voter), as well as Fed's Cook (2023). Thus far, there has been some limited pushback from Fed officials after the recent loosening of financial conditions and market participant's raised bets for rate cuts next year (yesterday: Gov. Bowman still sees hikes; Gov Waller did not include any policy recommendations in his remarks; 2023 voter Logan warned inflation was still too high; 2023 voter Kashkari framed his policy response around incoming inflation data; 2023 voter Goolsbee did not want to pre-judge policy meetings amid uncertainties). Powell's remarks over the next two days are likely to provide more steer, traders hope. Elsewhere, the price action in equities has been framed as consolidation after the recent upside (sponsored by the loosening financial conditions), though desks continue to warn that more accommodative monetary policy ahead will only have limited impact in driving further equity upside, given the slowdown of the economy that is expected.

TODAY’S AGENDA:

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


• The European morning will see the release of the Norges Bank Financial Stability Report and the ECB's Consumer Expectations Survey for September. September retail sales data for the bloc will also be released. The NBP is expected to cut rates by 25bps today, while the NBH will release its latest meeting minutes. The US day will see the release of the weekly MBA mortgage applications data, wholesale sales/inventory data; CAD watchers will note the BoC meeting minutes and Canadian building permits.


• The speaker's slate is heavy: ECB chief economist Lane (Dove) will speak on productivity, BoE Governor Bailey (Neutral) will deliver remarks, which will be particularly noteworthy after BoE chief economist Pill's more dovish take on rates for H2 2024. Stateside, Fed Chair Powell will take part on a panel discussion, and traders will be looking to see if the Fed chief pushes back on the recent loosening of financial conditions. NY Fed's Williams (voter), Fed Vice Chairs Jefferson (voter) and Barr (voter), as well as Fed's Cook (2023) are also due to give comments today.


• On the earnings front, UAA, TEVA, WBD, BIIB, RL, K, DIS, TTWO, LYFT, AMC, MGM, are all due to report earnings today. Our daily US corporate earnings estimates can be accessed here.

EQUITY NEWS:

CONSUMER:

• 
  eBay Inc (EBAY) - Q3 adj. EPS 1.03 (exp. 1.00), Q3 revenue USD 2.5bln (exp. 2.5bln), Q3 GMV USD 18bln (exp. 17.77bln), Q3 Active buyers 132mln (exp. 131.3mln). Exec noted macroeconomic uncertainty. Q4 EPS seen between 1.00-1.05 (exp. 1.05), and Q4 revenue between USD 2.47-2.53bln (exp. 2.6bln); FY revenue seen between USD 10.02-10.08bln (exp. 10.15bln). Exec said Q4 consumer trends had softened, and saw particular challenges in Europe, warning that it could see a more muted seasonal uptick over the holidays. It added that a strong USD during Q3 created a GMV headwind of more than USD 100mln versus rates implied in company's Q3 outlook.


• 
  Adidas (ADDYY) - Reduced inventories by more than planned. Q3 revenue EUR 6bln (exp. 5.9bln), Q3 inventory levels -23% Y/Y. Second Yeezy drop generated revenue of circa. EUR 350mln in Q3, slightly lower Q/Q. China revenue +6% (+10% incl. Yeezy), driven by double-digit growth within wholesale.


• 
  Continental (CTTAY) - Earnings rose, trimmed FY sales view, but lifted its outlook for FY tire margins. Q3 adj. EBIT EUR 637.4mln (exp. 649mln), Revenue EUR 10.2bln (exp. 10.4bln). Cuts mid-point FY23 Revenue 41-43bln (prev. guidance 41.5-44.5bln), but expects tire margins to be between 12.5-13.5% (prev. saw 12-13%).


• 
  Amazon (AMZN) - Amazon is creating an advanced AI called "Olympus" to compete with Microsoft and OpenAI in providing conversational AI to businesses, The Information reports. It might enhance Alexa, their online store, and Amazon Web Services.


• 
  Tesla (TSLA) - China CPCA said Tesla exported 43,489 Chinese-made vehicles in October (vs 30,566 in September).


• 
  Rivian Automotive (RIVN) - Q3 adj. EPS -1.19 (exp. -1.32), Q3 revenue USD 1.34bln (exp. 1.33bln). Sees FY vehicles production of 54k units (prev. 52k, exp. 53.6k); Exec said upgraded production outlook was due to progress on its production lines, ramp of in-house motor line, and the supply chain outlook. Sees reaching gross profitability in 2024. Says Amazon remain focused on bringing 100k Rivian electric delivery vehicles to the road, and RIVN can now sell commercial vans to companies other than Amazon.


• 
  Lucid Group (LCID) - Q3 EPS -0.28 (exp. -0.35), Q3 revenue USD 138mln (exp. 180mln), Q3 EBITDA -624mln (exp. -701mln). Cuts FY production guidance to between 8.0-8.5k (vs previous guidance for 10k+). Will launch Lucid Gravity SUV, will begin production in late 2024. Exec notes it ended Q3 with approximately USD 5.45bln in liquidity, which will help lead it into the Gravity production, and beyond.


• 
  Coty (COTY) - Q3 EPS 0.09 (exp. 0.17), Q3 revenue USD 1.64bln (exp. 1.58bln). EMEA revenue +18%, Americas +17%, APAC +19%. Exec said demand remains resilient in global mass beauty market. Will end partial sale of its Wella stake. Forecasts modest FY24 gross margin expansion Y/Y, with strong expansion in H2 2024. FY revenue growth now seen between +9-11% (prev. saw +8-10%), FY EBITDA now seen between USD 1.08-1.09bln (prev. guided 1.075-1.085bln).


• 
  Marks & Spencer (MAKSY) - Topped H1 profit expectations, and announced an interim dividend. H1 adj. EPS GBP 0.127 (prev. 0.78 Y/Y), adj. Pretax 325.6mln (prev. 208.5mln Y/Y), Revenue 6.1bln (exp. 6.19bln), Net Income 207mln, Net Debt -2.56bln, adj. PBT 360mln (exp. 275mln). Adjusts FY23/24 Net “growth weighted towards H1” (prev. guidance “growth"). Restoring a modest dividend, interim dividend of 0.01/shr. Said customers were responding positively to Christmas range. Trading momentum maintained through October; further work needed to embed permanent reductions in the underlying cost base.


• 
  Pandora (PANDY) - Raised sales forecasts after Q3 profits topped expectations. Q3 Net DKK 543mln (exp. 520mln), EBITDA DKK 1.45bln (exp. 1.40bln), Revenue DKK 5.57bln (exp. 5.45bln). Said current trading in Q4 was healthy. Raises FY23 organic revenue +5-6% (prev. guidance +2-5%).


• 
  Dutch Bros (BROS) - Q3 adj. EPS 0.14 (exp. 0.07), Q3 revenue USD 264.5mln (exp. 258.7mln), SSS +4.0% (exp. +1.3%). Exec said it was encouraged by the strength of the underlying business. Raises FY23 adj. EBITDA outlook to between USD 150-155mln (prev. guided 140mln).

FINANCIALS:

• 
  Goldman Sachs (GS), General Motors (GM) - Goldman Sachs is getting rid of its General Motors credit-card programme as it shifts away from consumer lending, WSJ reports. It has begun the process to find a new company to handle it, with GM overseeing the transition, the report said.


• 
  Robinhood (HOOD) - Q3 EPS -0.09 (exp. -0.08), Q3 revenue USD 467mln (exp. 478.4mln), MAUs -16% Y/Y to 10.3mln (exp. 10.8mln), Assets Under Custody +34% Y/Y to USD 87bln, ARPU +27% Y/Y to USD 80. Sees FY23 operating expenses between USD 1.44-1.46bln.


• 
  ABN AMRO (AAVMY) - Tops Q3 sales profit expectations, cuts FY cost guidance. Q3 operating income EUR 2.21bln (exp. 0.88bln), net income 759mln (exp. 583mln), impairment charges -21mln, CET1 15.0% (exp. 16.2%). NII is lower compared with Q2 due to deposit migration to higher-yielding products. The impact of the economic slowdown has thus far been limited; buffers remain in place against uncertainties in the economic outlook.


• 
  Commerzbank (CRZBY) - Saw profits more than triple in Q3. Q3 revenue EUR 2.76bln (exp. 2.68bln), Q3 net EUR 684mln (exp. 619mln). Operating profit EUR 1.12bln (exp. 1.01bln). Applied a for a EUR 600mln share buyback; raises net profit and NII forecasts.


• 
  Credit Agricole (CRARY) - Topped forecasts due to strong IB performance. Q3 net income EUR 1.75bln (exp. 1.38bln), Q3 revenue EUR 6.34bln (exp. 6.02bln). Operating expenses EUR 3.38bln (exp. 3.42bln). Revenue in capital markets +26.8% Y/Y, FICC revenue +25.6% Y/Y.

ENERGY:

• 
  Occidental Petroleum (OXY) - Q3 adj. EPS 1.18 (exp. 0.84), Q3 oil and gas pre-tax income USD 2.0bln (exp. 1.63bln). Chemical pre-tax income USD 373mln (exp. 322.2mln), Q3 FCF USD 1.7bln (exp. 1.25bln). Quarterly production 1.22mln BOEPD (exp. 1.197mln), exceeded the mid-point of guidance by 34k BOEPD; raised FY production raised by 11k BOEPD.


• 
  Devon Energy (DVN) - Q3 adj. EPS 1.65 (exp. 1.47), Q3 revenue USD 3.84bln (exp. 3.54bln), Q3 FCF USD 843mln (exp. 910mln), Q3 production 665mln BOEPD. Sees Q4 production to USD 640-660mln (exp. 652mln) due to declines in the Williston Basin, and Delaware Basin. Sees FY24 production of 650K BOEPD (exp. 663mln), and capex between USD 3.3-3.6bln (exp. 3.6bln).

INDUSTRIALS:

• 
  Airbus (EADSY) - Need to deliver 161 aircraft in November and December to meet its FY delivery target, performance slightly below that seen Y/Y. October 2023 deliveries 71 to 42 customers and 119 gross orders; YTD: Booked 1399 gross aircraft orders. Booked 1334 net aircraft orders. Delivered 44 A350 aircrafts. Delivered 186 A320NEO aircraft. Delivered 250 A321NEO aircrafts. (Newswires)


• 
  Spirit AeroSystems (SPR) - SPR stock slid 16% in afterhours trading as it announced it will sell USD 200mln in stock, and issue USD 200mln in convertible debt.

MATERIALS:

• 
  Lanxess (LNXSY) - Sales missed expectations. Q3 sales EUR 1.6bln (exp. 1.85bln), adj. EBITDA EUR 119mln (exp. 121mln), Net EUR -131mln (exp. -48mln). Further significant reduction of net financial liabilities to 2.557bln. Increasing efficiency will make structural changes to permanently reduce annual costs by circa. 150mln from 2025 onwards; changes incl. the cut of 870 jobs.


• 
  Mosaic (MOS) - Q3 adj. EPS 0.68 (exp. 0.75), Q3 revenue USD 3.5bln (exp. 3.24bln). Quarterly potash sales volume 2.2mln tonnes (prev. 2.1mln Y/Y). Exec said global grain and oilseed markets expected to remain tight into 2024. Potash supply remains uncertain. Belarusian exports in 2023 are expected to be down 3-4mln tonnes from pre-sanction levels. China's exports are expected to remain capped as domestic agriculture and industrial demand is prioritised over fertiliser exports. Global stocks-to-use ratios for grains and oilseeds are expected to remain under pressure for the foreseeable future. Demand for its products has rebounded this year, and expect robust demand through 2024. Destocking inventories in Brazil early in the year left it well positioned for H2 '23 and '24.

HEALTHCARE:

• 
  Bayer (BAYRY) - Management looking to cut jobs after Q3 earnings fall. Q3 EPS 0.38 (exp. 0.80), adj. EBITDA EUR 1.69bln (exp. 1.82bln), revenue EUR 10.3bln (exp. 10.6bln).


• 
  Gilead Sciences (GILD) - Q3 EPS 2.29 (exp. 1.92), Q3 Revenue USD 7.05bln (exp. 6.8bln). Veklury sales 636mln (exp. 350mln); Biktarvy sales 3.085bln (exp. 3bln). Sees FY EPS between 6.65-6.85 (exp. 6.62; prev. 6.45), and sees FY revenue between USD 26.7-26.9bln (exp. 26.87bln, prev. 26.3-26.7bln).


• 
  Viatris (VTRS) - Q3 revenue USD 3.93bln (exp. 4.01bln), Q3 adj. EBITDA USD 1.36bln (exp. 1.3bln). Lowers FY revenue outlook due to FX impact; FY EBITDA and FCF view reaffirmed.

TECH:

• 
  Nvidia (NVDA), Amdocs (DOX) - Nvidia it is collaborating with Amdocs to optimise large language AI models to speed adoption of generative applications.


• 
  Akamai Technologies (AKAM) - Q3 adj. EPS 1.63 (exp. 1.50), Revenue 965.5mln (exp. 944.1mln). Q3 security sales +20% to USD 456mln (exp. 442mln). Sees Q4 adj. EPS 1.57-1.62 (exp. 1.54), and Q4 revenue between USD 985mln-1.01bln (exp. 986.9mln). For the FY, sees FY23 adj. EPS between 6.08-6.13 (prev. 5.87-5.95, exp. 5.92), and FY23 revenue between USD 3.8-3.82bln (prev. 3.77-3.80bln, exp. 3.78bln).


• 
  Take-Two Interactive Software (TTWO) - Co's Rockstar Games reportedly intends to announce the next GTA game as soon as this week, via Bloomberg citing sources. TTWO reports after-hours on November 8th
  


• 
  Toast (TOST) - Q3 EPS -0.09 (exp. -0.10), Q3 revenue USD 1.03bln (exp. 1.03bln), Q3 ARR +40% Y/Y at USD 1.22bln (exp. 1.227bln), Q3 Gross Payment Volume +34% Y/Y to USD 33.7bln (exp. 33.8bln). Sees Q4 revenue between USD 1.00-1.03bln (exp. 1.03bln); narrows FY23 revenue outlook to between USD 3.83-3.86bln (exp. 3.86bln, prev. guided between 3.81-3.81bln), and lifted its FY23 adj. EBITDA outlook to between USD 38-48mln (prev. saw 15-35mln).

COMMUNICATIONS:

• 
  Bumble (BMBL) - Q3 EPS 0.12 (exp. 0.07), Q3 revenue USD 276mln (exp. 277.1mln), Q3 ARPU USD 23.42 (exp. 23.80). Q4 revenue seen between USD 272-278mln (exp. 286.6mln), and Q4 EBITDA seen between USD 72-75mln (exp. 79mln).

08 Nov 2023 - 09:30- EquitiesResearch Sheet- Source: Newsquawk