Early Look

Friday, October 11, 2024

U.S. futures are slipping slightly overnight but remain on track for another weekly gain heading into another inflation report (PPI) at 8:30 AM ET, after a “hotter’ CPI reading on Thursday failed to dent investor momentum. U.S. large cap banks also out with earnings this morning from JPM, WFC, BK (see details below). BlackRock (BLK) reported that assets under management hit a record high for the third straight quarter. Tesla (TSLA) shares tumble as its Robotaxi event failed to live up to the high expectations on Wall Street (lifting shares of UBER), while Managed Care stocks (CNC, HUM) are sliding after the US Medicare program released final quality ratings for private Medicare Advantage health plans. In Asian markets, The Nikkei Index jumped 224 points to 39,605, the Shanghai Index fell -84 points to 3,217, and the Hang Seng Index spiked 614 points to 21,251. In Europe, the German DAX is up 12 points to 19,223, while the FTSE 100 is down -18 points to 8,219. The drop in China shares come ahead of a weekend press briefing from the country’s finance minister, with hopes for additional stimulus from the country. Gold prices are higher along with oil and some industrial metals, while Bitcoin rebounds over 2% topping $61,000. A busy day of economic data with producer Prices and University of Michigan sentiment as well as some Fed speakers.

• The Dow Jones Industrial Average fell -57.98 points, or 0.14%, to 42,454.02.
• The Nasdaq Composite edged lower -9.57 points, or 0.05%, to 18,282.05.
• The Russell 2000 Index declined -12.17 points, or 0.55% to 2,188.42.

• 8:30 AM ET                  Producer Price Index (PPI) headline Y/Y for Sept…est. +1.6% (prior +1.7%)
• 8:30 AM ET                  Core PPI (Ex: Food & Energy) M/M for Sept…est. +0.2% (prior +0.3%)
• 8:30 AM ET                  Core PPI (Ex: Food & Energy) Y/Y for Sept…est. +2.7% (prior +2.4%)
• 9:45 AM ET                  Fed’s Goolsbee Gives Opening Remarks
• 10:00 AM ET                University of Michigan Sentiment, Oct-P…est. 70.8
• 10:00 AM ET                University of Michigan 1-yr and 5-yr inflation expectation…prior 2.7%, and 3.1%
• 10:45 AM ET                Fed’s Logan Participates in Panel Discussion
• 12:00 PM ET WASDE Crop report for October
• 1:00 PM ET                   Baker Hughes Weekly rig count data

• Tesla (TSLA) shares tumbled after the company unveiled its Robotaxi Thursday night at an event with two gull-wing doors and no steering wheel or pedals but lacked concrete details that some investors and experts hoped for sending shares lower. Musk says the co will start building the fully autonomous Cybercab by 2026 at a price of less than $30,000 but did not specify how quickly Tesla could ramp up the production of robotaxi.

• Also impacting independent power producers (CEG, VST, NRG, etc.) after yesterday PJM indicated it would propose a 6mo delay in the auction currently planned for December.  Morgan Stanley said they think this could be net negative for near-term auction results but positive medium term and could increase demand for behind-the-meter nuclear deals.
• Aluminum prices jumped more than 2% in London after a key supplier of the mined ore needed to make the metal said exports from its operations in Guinea had been suspended (watch AA, CENX). Emirates Global Aluminum is seeking clarity from customs authorities in Guinea after exports of bauxite were halted, the company said in a statement
• Fastenal (FAST) Q3 EPS $0.52 was in-line with estimates; Q3 sales rose 3.5% y/y to $1.91B vs. est. $1.9B; Daily sales $29.8M, +1.7% y/y, vs. est. $29.7M; Operating income $388.1M, +0.4% y/y.
• General Dynamics (GD) downgraded to Neutral from Buy at Seaport Research.

• BlackRock (BLK) Q3 adj EPS $11.46 tops consensus $10.33 and Q3 revenue $5.2B vs. est. $5.01B; Assets managed by BlackRock shot up to $11.48 trillion in the third quarter, up from $9.10 trillion a year earlier and $10.65 trillion in the second quarter; Total net flows hit a quarterly record of $221.18 billion, up from $2.57 billion a year ago.
• JPMorgan (JPM) Q3 EPS $4.37 vs. consensus $4.01; Q3 revenue $42.7B and managed revenue $43.3B vs. consensus $41.63B; sees FY24 net interest income of ~$92.5B, market dependent (prior view was ~$91B, market dependent).
• Wells Fargo (WFC) Q3 revs $20.37B vs. est. $20.42B; Q3 net interest income $11.69B, vs. est. $11.88B; Total avg. deposits $1.34 trillion, Return on equity 11.7%, vs. est. 10.8%, Non-interest expenses $13.07B vs. est. $13.19B and provision for credit losses $1.07B, vs. est. $1.34B.

• Humana (HUM) shares dropped overnight after the US Medicare program released final quality ratings for private Medicare Advantage health plans. One of Humana’s largest contracts that covers almost half its Medicare Advantage membership dropped to a lower rating on the government’s star system, jeopardizing bonus payments from the US health program for the elderly and disabled due in 2026.
• Teva (TEVA) has agreed to pay $450 million to resolve allegations that it violated an anti-kickback statute and the False Claims Act, the U.S. Justice department said in a statement.

• Qorvo (QRVO) downgraded to Equal Weight from Overweight at Morgan Stanley saying they see limited upside near term around a weaker Android supply chain and weak broad market conditions, which is limiting the gross margin recovery that it has been looking for.
• The European Commission said it had sent a request for information to PDD Holdings (PDD) shopping website Temu under the Digital Services Act (DSA), asking Temu for information on steps it was taking to stop illegal products being sold on its platform. Temu must provide the requested information by 21 October 2024.