US EARLY MORNING: US index futures see slight upside bias ahead of pivotal jobs report

Analysis details (09:30)

US PRE-MARKETS: US equity futures are seeing slight upside bias, firmer between +0.2-0.4%, with mild outperformance in the e-mini Russell 2000 as it attempts to recoup Thursday’s losses. Europe saw a contained open, albeit with a modest negative bias emerging, as market participants await the key risk events (NFP, ISM Manufacturing) later in the session. Overnight, APAC trade was mixed which was in-fitting with the Wall St. handover, although action was thinner than usual due to the closure of Hong Kong given Typhoon Saola. Nonetheless, the Shanghai Composite was supported after the PBoC cut the FX RRR and lowered the payments for first & second-time home buyers. On the morning so far, Final EZ PMIs have been the highlight while ECB’s Villeroy echoed recent fellow speakers noting options are open at the upcoming meetings. Elsewhere, the Dollar has been within narrow parameters and is seeing marginal losses, with G10 peers largely flat. Meanwhile, Treasuries are slightly lower across the curve while WTI and Brent have been horizontal through the European morning. Finishing with the docket ahead, as mentioned NFP and ISM Manufacturing (previews below) are waiting in the wings, with all attention on whether the jobs market will once again cool, which could give a more decisive direction to the November meeting with September widely seen as holding steady. Following jobs, Mester (non-voter hawk) is speaking on inflation, though we remain attentive to any unscheduled speakers.

TODAY’S AGENDA

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


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  PREVIEW – NFP: NFP: Headline NFP is expected to cool once again with job growth for August seen at 170k, down from July's 187k rise, although expectations vary between 40k and 230k. The unemployment rate is seen at 3.5%, while M/M wages are seen easing to 0.3% with Y/Y wages seen at 4.4% again. Labour market proxies for August saw the Initial Jobless Claims data (for the week that coincides with the BLS survey) fall from the August high of 250k. However, analysts are cognizant of the impact of not only Yellow Corp's bankruptcy on the NFP report, given Yellow had in excess of 30k employees, but also the impact of ongoing strikes. The latest JOLTS data, albeit for July, added to signs of a cooling labour market while the quits rate also fell. The ADP report was cooler than expected and was consistent with the pace of job creation before the pandemic. The CB Consumer Confidence respondents saw a deterioration in job market appraisal, with the percentage of those finding jobs plentiful declining M/M, and those finding jobs hard to get increasing. With markets torn between expecting another Fed hike, or deeming that rates are already at terminal, as well as a range of views on the FOMC, the NFP data will be key in gauging expectations for future policy decisions. Markets largely expect the Fed to keep rates unchanged in September, but November is seen as a coin toss for leaving rates unchanged or hiking by 25bps, where a dovish release could see pricing tilt more decisively towards the peak has passed, but a hot report may factor in one further tightening move with more confidence. With September largely seen as unchanged, barring any drastic releases, it is likely participants will focus more on November with the Fed in a patient stance, before then looking to the timing of rate cuts in 2024 - currently nearly fully priced for a 25bp cut in May after the JOLTS report and soft 2nd estimate of GDP. To download the full Newsquawk preview, please click here.


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  PREVIEW- ISM MANUFACTURING: The consensus looks for a little change, at 47.0 in August (prev. 46.9). Although there are some differences in the ISM data vs the S&P Global PMI data, the flash release of the latter showed the manufacturing PMI falling to a two-month low of 47.0 (from 49.0 in July), while the output index dropped below 50.0, to 47.5 (from 50.2). The report from S&P said that it was a signal of a "solid deterioration" in operating conditions midway through Q3; "the decline was the second-sharpest since January, as a renewed drop in output and steeper decrease in new orders weighed on the overall performance of the sector," it added, with the lower new sales leading to a retrenchment among manufacturers as input buying fell at a quicker pace. S&P said the fall in purchasing activity reflected a reduced need to store materials and finished items, and subsequently, manufacturing inventories declined further. "Despite lower demand, vendor performance improved to the smallest extent since February," S&P wrote, "some companies stated that a shortage of drivers at suppliers frustrated efforts to reduce delivery times."

EQUITY NEWS

TECHNOLOGY:

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  VMware (VMW) - Q2 2023 (USD): Adj. EPS 1.83 (exp. 1.71), Revenue 3.41bln (exp. 3.46bln).


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  Dell Technologies (DELL) – Seeing strong gains pre-market following strong results and lifting FY outlook. Q2 2023 (USD): Adj. EPS 1.74 (exp. 1.14), Revenue 22.9bln (exp. 20.85bln). Re. revenue breakdown, Infrastructure Solutions Group 8.46bln (exp. 7.35bln), -11% Y/Y, Client Solutions Group 12.94bln (exp. 12.06bln). Adj. operating income 1.98bln (exp. 1.5bln). Looking ahead, Q3 guidance topped expected alongside raising FY24 view. Q3 revenue 22.5-23.5bln (exp. 21.67bln), EPS 1.35-1.55 (exp. 1.38). For the FY, revenue 89.5-91.5bln (exp. 86.9bln) and EPS view 6.10-6.50 (exp. 5.56).


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  Broadcom (AVGO) - Q3 2023 (USD): Adj. EPS 10.54 (exp. 10.43), Revenue 8.88bln (exp. 8.87bln). Adj. EBITDA 5.80bln (exp. 5.71bln). Regarding revenue breakdown, semiconductor solutions 6.94bln (exp. 6.87bln) and infrastructure software 1.94bln (exp. 1.91bln). Q4 guidance was more-or-less in line, with revenue seen at 9.27bln (exp. 9.28bln). AVGO said Q4 outlook projects Y/Y growth, reflecting continued leadership in networking for generative AI. Added if they exclude Generative AI, semiconductor revenue growth will be flat in Q4. Added results were driven by demand for next generation networking technologies as hyperscale customers scale out and network their AI clusters within data centers.


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  Elastic (ESTC) – Smashed current quarter expectations in addition to stellar guidance. Q1 2024 (USD): EPS 0.25 (exp. 0.11), Revenue 294mln (exp. 285mln), although subscription count was a bit light. Guidance was strong, as it sees Q2 EPS at 0.24 (exp. 0.20), and revenue at 304mln (exp. 302mln). FY outlook raised with profit now seen at 1.01-1.11 (prev. 0.94-1.06).


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  HashiCorp (HCP) – Q2 2023 (USD): EPS -0.10 (exp. -0.15), Revenue 143.2mln (exp. 138.1mln). Raises FY24 revenue view to 571-575mln (prev. 564-570mln, exp. 567.6mln) and lowers adj. operating loss outlook to 105-108mln (prev. loss 108-113mln, exp. loss 110.8mln).


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  Samsara (IOT) – Q2 2023 (USD): EPS 0.01 (exp. -0.02), Revenue 219mln (exp. 208mln). ARR 930mln (exp. 910mln). Tweaks revenue guidance for both the next quarter and FY higher.


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  MongoDB (MDB) – EPS and revenue beat as management drives top line growth while also posting impressive margin expansion. Q2 2023 (USD): EPS 0.93 (exp. 0.46), Revenue 424mln (exp. 391mln). Lifts FY outlook, EPS seen at 2.27-2.35 (prev. 1.43-1.56), with revenue at 1.596-1.608bln (prev. 1.522-1.542bln). Q3 adj. EPS view 0.47-0.50 (exp. 0.27), Revenue 400-404mln (exp. 389.12mln).


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  Nutanix (NTNX) – Noticing strong gains post-earnings, as top and bottom line beat alongside Q1 guide stronger than forecasted. Q4 2023 (USD): Adj. 0.24 (exp. 0.16), Revenue 494.2mln (exp. 475.16mln). Q1 revenue guide 495-505mln (exp. 487.22mln), with FY seen at 2.085-2.115bln (exp. 2.08bln). Declares 350mln share buyback programme.


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  Fortinet (FTNT) – Announced it has been notified of an unsolicited "mini-tender" offer by TRC Capital Investment Corporation TRC to purchase up to 2mln shares of Fortinet's common stock at a price of USD 55.55/shr. Note, FTNT closed at 60.21. Fortinet recommends that stockholders do not tender their shares in response to TRC's offer because the offer price is below the current market price of Fortinet's common stock and is subject to numerous conditions.


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  SentinelOne (S) – Q2 2023 (USD): EPS -0.08 (exp. -0.14), Revenue 149.4mln (exp. 141mln). Both Q3 and FY24 slightly surpassed expectations.


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  Workday (WDAY) – Co-CEO Carl Eschenbach bought 8,676 shares of common stock on August 29th for USD 2.09mln.


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  Salesforce (CRM) – CEO Marc Benioff sold 15k shares of common stock on August 30th for USD 3.2mln.


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  Datadog (DDOG) - Director Jacobson sold 22,391 shares of company stock on August 29th at USD 93.80/shr on August 29 for a total of USD 2.1mln.


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  Autodesk (ADSK) - Director Mary McDowell sold 4,656 common shares on August 31st for USD 222.04/shr.


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  Unity (U) - Director Shlomo Dovrat sold 68.5k shares of common stock on August 30th for USD 2.58mln.

DISCRETIONARY:

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  Lululemon Athletica (LULU) – EPS and revenue both topped Wall St. consensus, with FY guidance lifted. Q2 2023 (USD): Adj. EPS 2.68 (exp. 2.54), Revenue 2.21bln (exp. 2.17bln), Comps. +13% (exp. +12.15%), Gross margin 58.8% (exp. 58.6%). For the next quarter, EPS seen at 2.23-2.28 (exp. 2.23), with revenue between 2.17-2.19bln (exp. 2.15bln). FY EPS view 12.02-12.17 (prev. 11.74-11.94), Revenue 9.51-9.57bln (prev. 9.44-9.51bln).


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  Tesla (TSLA) - Releases a new Model 3 in China priced at CNY 259,900. Moreover, it cut US and China prices for Model S and X.


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  Big 3 Detroit Automakers (GM, STLA, F) - UAW said it filed for unfair labour practices against GM (GM) and Stellantis (STLAP FP/STLAM IM), suggesting they refuse to bargain in good faith, according to the union. Ford (F) makes a substantial UAW offer including a significant pay increase, tiers eliminated, 25% faster growth to top wages.


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  Oxford Industries (OXM) – Q2 2023 (USD): Adj. EPS 3.45 (exp. 3.40), Revenue 420.32mln (exp. 424.27mln). Cuts FY24 adj. EPS view to 10.30-10.60 (prev. 10.80-11.20, exp. 10.78), and revenue guide to 1.57-1.6bln (prev. 1.59-1.63bln). OXM tweaked its guidance lower citing a couple of factors: Has recently seen consumers become a bit more cautious with their discretionary spending due to challenging macroeconomic conditions and also the impacts of wildfires on Maui.


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  Restaurant Brands (QSR) - Approved a share repurchase programme of up USD 1bln.


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  Ford (F) - Files to recall ~178k US vehicles over camera issue, according to NHTSA.

CRYPTO:

• US SEC defers decision on Fidelity's spot Bitcoin ETF proposal.

COMMUNICATION:

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  Softbank (SFTBY) – Cos. Arm Holdings is expected to set a price range for its IPO next week, with plans to price its shares on September 13th and trading to start the following day, according to Reuters sources.


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  Globalstar (GSAT) - Director James Monroe bought 4.2mln shares of common stock on August 29th for USD 4.76mln.

INDUSTRIALS:

BAE Systems (BAESY) - Awarded two US Army contracts for total value of USD 706.7mln from DoD.

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  Quanex (NX) – Q3 2023 (USD): EPS 0.97 (exp. 0.65), Revenue 300mln (exp. 289mln), EBITDA 48.5mln (exp. 40mln).


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  Leidos (LDOS) – Awarded USD 7.9bln Army contract.


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  Raytheon (RTX) - Awarded USD 192mln Air Force contract for indefinite-delivery/indefinite-quantity contract for purchase of Advanced Medium Range Air-to-Air Missiles.


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  Boeing (BA) – Awarded USD 173.61mln Navy delivery order.

HEALTHCARE:

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  GSK (GSK) - GSK’s regulatory submission accepted for review by Japanese regulator for use of Nucala (mepolizumab) in adults with chronic rhinosinusitis with nasal polyps.


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  Roche (RHHBY) - Genentech’s Alecensa delivers unprecedented phase III results for people with ALK-positive early-stage lung cancer.


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  23andMe (ME) – Received an FDA 510(k) clearance to expand its existing BRCA1/BRCA2 Genetic Health Risk Report; clearance allows ME to report an additional 41 variants in the BRCA1 and BRCA2 genes known to be associated with higher risk for breast, ovarian, prostate and pancreatic cancer.

ENERGY:

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  SM Energy (SM) – Director Ramiro Peru sold 15,670 common shares on August 29th for USD 41.14/shr.


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  Chevron (CVX) - Chevron Australia and unions to meet for mediation talks next week in LNG facilities dispute, according to Reuters citing sources. Follows earlier reports that Chevron has applied to the industrial umpire to mediate the dispute with unions at Australian LNG facilities, via the union; no meetings currently scheduled on the dispute. Overnight, Chevron's Australia LNG workers reject the cos. bargaining offer; less than 1% of the Wheatstone and Gorgon downstream workforce voted in support of the offer. Current industrial action plan could see tools downed for up to 11 hours and the halt for certain tasks from September 7th until at least the 14th.

CONSUMER STAPLES

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  Campbell Soup (CPB) – Guides initial FY24 EPS of USD 3.09-3.15 (exp. 3.09), and revenue guided between -0.5% to +1.5% implying a 9.31-9.50bln range (exp. 9.43bln).

01 Sep 2023 - 09:30- Research Sheet- Source: Newsquawk