US EARLY MORNING: US equity futures are higher ahead of Eurozone inflation data, and the return of the revamped ADP National Employment report

SNAPSHOT: US index futures are trading around 0.3% higher ahead of key macro data out of Europe, where August inflation metrics are expected to show consumer prices climbing to a record 9.0% Y/Y in August; this data will influence the narrative for the ECB’s meeting next week, and could entail macro implications impacting US markets too. Treasuries are mixed, but the curve isn’t more than around 2bps from neutral, and major curve spreads are also mixed. Meanwhile, the focus for US players will be on the new ADP National Employment report, which returns from a two-month hiatus with a supposedly improved methodology (we discuss below), as well as the Chicago PMI and weekly DoE inventory data. Canada GDP metrics for June and Q2 will also be released. Today’s central bank speak comes by way of Fed’s Mester (voter) and Bostic (2024). Full Day Ahead here.

NEW JOBS DATA: Jobs data will be in focus today with the return of the ADP’s revamped National Employment Report after a two month hiatus, where the largest payrolls provider in the US changed its methodology after criticisms that its predictive power for the official nonfarm payrolls report became tenuous. The ADP's new methodology will be based on its own payrolls data rather than incorporating external models and historical NFP data, and it has said that the new series will have greater transparency, will be more real-time and higher-frequency. The new style report will also include estimates of wage growth in the US, and will report median annual pay growth by industry, business size, region, gender and age; the wonks will appreciate that the ADP will also make available historical data from the previous 12 years at both monthly and weekly points, and will be benchmarked and available at launch. The consensus expectation is for the ADP’s data to show 288k payrolls were added to the US economy (NFP consensus is currently 300k, according to Reuters), but note, the previous 128k that many calendars are carrying refers to the May report. Some reckon we should take the consensus view for the ADP with a pinch of salt; Pantheon Macroeconomics’ says the new methodology "makes it impossible to produce a forecast on any basis other than guesswork, so we are amused to see that Bloomberg has recorded 15 projections from economists willing to have a stab, based on no information whatever."

EQUITY NEWS:

ENERGY:

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  European Energy - Nord Stream 1 gas pipeline flows declined to zero as expected, according to flow data from entry points in Germany.


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  BP plc (BP) - BP's Whiting, Indiana, refinery (435k BPD) restart may happen on Wednesday, Reuters said citing sources.


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  Chevron Corporation (CVX) - Venezuelan oil minister said that progress in relaunching Chevron's operations in Venezuela depends on licenses from Washington, Reuters reports. The UST in May renewed a license that allows CVX to operate in Venezuela under restrictive terms; CVX had requested expanded privileges to relaunch JVs with state-run PDVSA, and recover billions of dollars of outstanding debt by trading Venezuelan oil, Reuters added.

CHINA:

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  JD.com, Inc. (JD), Yum China Holdings, Inc. (YUMC) - JD.com and Yum China are among US-listed Chinese companies selected for US audit inspections, according to Reuters. Follows reports on Tuesday which indicated that Alibaba (BABA) had also been selected.

INDUSTRIALS:

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  Boeing Company (BA), Northrop Grumman Corporation (NOC) - US Army grounds entire fleet of Boeing CH-47 Chinook helicopters due to risks of engine fires, WSJ reports citing US officials said. The Army is aware of a small number of engine fires in recent days, and added that the incidents did not result in any injuries or deaths.


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  Boeing Company (BA) - Awarded a USD 5.02bln Missile Defense Agency contract.


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  Raytheon Technologies Corporation (RTX) - Raytheon awarded a USD 972.3mln Air Force contract modification.


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  Delta Airlines (DAL), Air France-KLM (AF FP) - Italy picks a bid backed by Air France-KLM and Delta Airlines for the ITA Airways stake.


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  Volkswagen (VWAGY) - Skoda unit is to invest EUR 5.6bln in E-mobility over the next five years, and EUR 700mln in digitalisation.


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  Tesla (TSLA) - Shortens delivery waiting time for some Model Y cars in China.


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  AP Moller Maersk AS (AMKBY) - Maersk is to acquire LF Logistics for an enterprise value of USD 3.6bln. Maersk affirms FY22 underlying EBIT and EBITDA guidance.


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  Geely Automobile Holding (GELYY), Renault (RNLSY) - China's Geely and an oil group are in talks on a potential stake in Renault's combustion engine business, according to Reuters.


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  Bouygues (BOUYY), Engie (ENGIY) - UK CMA is ready to accept antitrust remedies proposed by Bouygues and Equans to push through the EUR 7.1bln deal for Engie's construction unit.

MATERIALS:

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  BHP Billiton (BHP), Caterpillar Inc. (CAT), Finning International (FTT) - BHP, Caterpillar, Finning announce an agreement to replace entire haul truck fleet at Escondida Mine in Chile; part of the strategic equipment renewal process developed by Escondida.


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  Anglo American plc (NGLOY) - The value of rough diamond sales for De Beers' seventh sales cycle of 2022 amounted to USD 630mln (vs USD 638mln in Cycle 6, and 522mln Y/Y). Exec said rough diamond sales continued at a steady level, in line with normal seasonal trends; anticipates that sales in the next few cycles will be affected by the temporary closure of polishing factories for the Diwali holidays.


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  BASF (BASFY) - BASF to divest its Nutrilife Baking Enzymes unit to Canada's Lallemand.


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  Mosaic Company (MOS) - July Potash revenue USD 391mln (vs 191mln Y/Y); July Phosphates revenue USD 295mln (vs 407mln Y/Y); July Fertilizantes revenue USD 848mln (vs USD 585mln Y/Y).

TECH:

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  Hewlett Packard Enterprise Co (HPE) - Q3 adj. EPS 0.48 (exp. 0.48), Revenue USD 7.0bln (exp. 6.97bln). Lowers FY adjusted EPS view to 1.96-2.04 from 1.96-2.10 (exp. 2.02). Reiterates fiscal 2022 revenue growth view of 3-4% adjusted for currency.


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  HP Inc (HPQ) - Q3 adj. EPS 1.04 (exp. 1.04), Revenue USD 14.7bln (exp. 15.69bln). FY Adj. EPS view 4.02-4.12 (exp. 4.29). Personal systems revenue USD 10.1bln (exp. 11.06bln). Printing revenue USD 4.58bln (exp.4.77bln). FY22 FCF view 3.2-3.7bln (exp. 4.55bln, prev. at least 4.5bln). Q3 adj. EPS view 0.79-0.89 (exp. 1.07). Exec told CNBC that supply chain situation was getting closer to normal.


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  CrowdStrike Holdings Inc (CRWD) - Q1 adj. EPS 0.36 (exp. 0.28), Revenue USD 535mln (exp. 515.42mln). Subscription revenue 506.2mln (exp. 488.4mln). Professional services revenue 29.0mln (exp. 28.2mln). Annual recurring revenue USD 2.14bln (exp. 2.11bln). Net new annual recurring revenue USD 218.1mln (exp. 191mln). Total subscription customers 19,686 (exp. 19,631). Net new subscription customers 1,741 (exp. 1,740). Total stock-based compensation USD 131.6mln (exp. 106.2mln). Sees Q3 revenue betwen USD 569.1-575.9mln (exp. 570mln), and sees Q3 EPS at 0.31/shr (exp. 0.28); raises FY EPS outlook, now sees EPS between 1.31-1.33 (prev. guidance 1.18-1.22).


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  Ambarella, Inc. (AMBA) - Q2 EPS 0.20 (exp. 0.19), Q2 revenue USD 80.9mln (exp. 80.2mln). Sees Q3 revenue between USD 81-85mln (exp. 85mln).

COMMUNICTIONS:

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  Netflix (NFLX), Snap Inc. (SNAP) - Snap executives Jeremi Gorman and Peter Naylor will join Netflix to lead the development of its global advertising strategy, Ad Age reports.


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  Snap Inc. (SNAP) - After its stock price tumbled by 80% this year, Snap is planning to lay off around 20% of its more than 6,400 employees, The Verge reports. The layoffs have been planned over the last several weeks, and will begin on Wednesday.


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  T-Mobile US, Inc. (TMUS) - Morgan Staley names T-Mobile a 'Catalyst Driven Idea', says it expects TMUS to announce commencement of share buybacks in its Q3 earnings report late October/early November; sees USD 12bln of buybacks in 2023.


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  Vodafone (VOD) - Vodafone is reportedly indexing Spanish prices to inflation, according to reports in Spanish press.


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  Warner Music Group Corp. (WMG) - Truist analyst told clients that WMG continued to see strength in streaming. Said it continues to see strong growth over the mid- and long-term, driven by increased penetration in developed and emerging markets; macro conditions pressuring ad-supported revenue in the short-term.

CONSUMER CYCLICALS:

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  PVH Corp (PVH) - Q2 Adj. EPS 2.08 (exp. 2.02), Revenue USD 2.13bln (exp. 2.21bln). Lowers FY adjusted EPS view to 8.00 from about 9.00 (exp. 8.91). Sees FY revenue to decline 3-4% (prev. guidance was for up 6-7%). Plans to cut people costs in global offices by about 10%, continues to experience supply chain and logistics disruptions globally, and impacts from Covid in China, and a increasingly challenging macroeconomic environment.


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  Chewy, Inc. (CHWY) - Q2 EPS 0.05 (exp. -0.11), Q2 revenue USD 2.43bln (exp. 2.5bln). Q2 active customers +2.1% Y/Y at 20.5mln (exp. 20.75mln), Q2 net sales per active customer +14.4% Y/Y at USD 462 (exp. 460). Sees FY22 adj. EBITDA margin 1.75-2% (+30-50bps Y/Y). Said some costs would catch up to price increases in Q3.


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  Sonoco Products Company (SON) - Due to continued inflationary pressures, will raise prices by EUR 70/ton (or GBP 60 /ton for the UK) on all tube and core grades sold in the Company’s EMEA regions. SON said the increase was in direct response to the continued escalation of its cost base and will be effective for all shipments made September onwards.

FINANCIALS:

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  Goldman Sachs Group, Inc. (GS) - GS will lift all Covid protocols as it pushes all employees to return to the office five days a week after Labour Day, the NY Post reports.


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  Visa Inc (V) - August US payments volume +11% Y/Y, but flat M/M.


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  UniCredit (UNCRY) - Second tranche of share buyback of EUR 1bln has been approved by the ECB.

HEALTH CARE:

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  Amgen Inc. (AMGN) - LUMAKRAS met primary endpoint of progression-free survival, demonstrating superiority over standard of care docetaxel chemotherapy, in KRAS G12C-mutated non-small cell lung cancer; detailed data to be presented at an upcoming medical congress.

UTILITIES:

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  EDF (ECIFY) - Outgoing UK PM Johnson expected to this week approve the GBP 30bln Sizewell C nuclear power station, The Telegraph reports.

31 Aug 2022 - 09:17- Research Sheet- Source: Newsquawk