Traders Market Weekly: Inflation Obsession in Worsening Liquidity

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    Auto sales preview:

    TrueCar forecasts total new vehicle industry sales increased 13% in September to 1,140,659 units in September 2022. That tally is up 3% from August 2022 when adjusted for the same number of selling days.

    Excluding fleet sales, TrueCar expects U.S. retail deliveries of new cars and light trucks to be 987,378 units, up 8% from a year ago and up about 3% from August 2022. “With increasing interest rates, affordability is being tested,” noted TrueCar analyst Zack Krelle, Industry Analyst at TrueCar. Honda (HMC), Nissan (OTCPK:NSANY)and General Motors (GM) were noted to have gained traction during the month. GM in particular was able to capitalize on other OEMs’ inability to deliver vehicles. Deliveries reports are also due in from electric vehicle makers. Tesla (TSLA) is expected to post a big Q3 deliveries number, with estimates ranging to as high as 370K units, which would smash the prior quarterly record of 310K units set in Q1 of 2020 before the pandemic closed down supply chains. The consensus estimate is for Tesla deliveries of about 350K deliveries. Watch for share price movements for Rivian Automotive (RIVN), Li Auto (LI), Nio (NIO), and XPeng (XPEV) as their deliveries reports are digested as well.


    A busy week of events

    October 3 with Sinclair Broadcast Group (SBGI) hosting an Investor Day event, Illumina (ILMN) conducting its 2022 Investor Day, and Legend Biotech Corporation (LEGN) holding an in-person and virtual Research & Development Day.

    October 4, Duke Energy (DUK) will host a virtual presentation to provide an update on the company’s long-term strategy and other business initiatives, American Electric Power Company (AEP) will host an investor event, and Hasbro (HAS) will host its annual investor day event with an update expected on the toy company’s Game Plan initiative to drive long-term shareholder value.

    October 5, HashiCorp (NASDAQ:HCP) will hold a financial analyst day event and Costco (NASDAQ:COST) will post its September sales report.

    October 6, Google (GOOGL) will hold a highly-anticipated Pixel hardware event, Terminix (TMX) shareholders will vote on the deal for the company to be acquired by Rentokil, and Norwegian Cruise Line Holdings Ltd. (NYSE:NCLH) will hold an investor & analyst event relating to business and financial results.

    The week will end with Box (BOX) holding its annual BoxWorks event that will feature a product briefing and talks from top execs. Mark Cuban, IBM (IBM) CEO Arvind Krishna, Zoom Video (ZM) CEO Eric Yuan, HubSpot (HUBS) CEO Yamini Ranga will also give talks. Check out Seeking Alpha’s Catalyst Watch for a more detailed breakdown on next week’s big events.


    Healthcare sector has several events worth tracking next week.

    REGENXBIO’s (NASDAQ:RGNX) will hold a conference call on October 3 to provide a new, interim update from the ongoing Phase II AAVIATE trial of RGX-314.

    On October 6, the FDA Vaccines and Related Biological Products Advisory Committee will take place and the FDA’s Pulmonary-Allergy Drugs Advisory Committee will meet to discuss the Veru’s (NASDAQ:VERU) request for Emergency Use Authorization of sabizabulin for hospitalized COVID-19 patients at high risk for ARDS. Shares of Veru have been volatile before off sabizabulin developments.


    The MetaBeat 2022 event next week will throw a spotlight on the metaverse.

    MetaBeat will bring together metaverse thought leaders to give guidance on how metaverse technology will transform the way all industries communicate and do business. Execs from Nvidia (NVDA), Walmart (WMT), Procter & Gamble (PG), Chipotle (CMG), and AI firm Solsten will be at the event.


    Barron’s mentions:

    Olaplex Holdings (OLPX) is singled out as an intriguing pick amid the stock market collapse. Of note, OLPX’s earnings and sales are expected to rise by more than 20% in 2023 Adding in the hair-care specialist’s profitability track, innovation potential, and long-term growth opportunities – OLPX makes its way to the publication’s suggested buy list.


    The rapid referendums in eastern Ukraine and Russia’s annexation of the territories, after taking Crimea in 2014, point to a new phase in the conflict. Some observers are linking Russia’s mobilization and rush for a referendum–even by its trumped-up standards, to the meeting with China’s Xi rather than the setback of Russian forces at the hands of the Ukrainians armed to the teeth with US weapons and intelligence.


    Oil prices rallied almost 60% in the first half of the year and since mid-June, WTI has tumbled by nearly more than 35%, leaving it up less than 7% for the year.

    The US retail price for gasoline has risen over the last few days but did slip a little in September, its third consecutive monthly decline. At an average of around $3.80 a gallon, it has risen by slightly more than 15% since the end of last year.

    A broader measure of commodity prices, the CRB Index, has also pulled back since the mid-June peak. It has fallen by nearly 20%


    Japan’s Tankan Survey (October 3) rarely moves the market, and this may be doubly true now as large business sentiment is better than for small businesses.

    Corporate profits are the highest in more than 50 years as the foreign earnings translate into more yen. Given the policy divergence, and the intervention to support the yen, Tokyo’s September CPI will be watched as a good indicator of the national figures.

    Headline CPI may hold below 3%. The core rate (excludes fresh food) may have edged up from 2.6% in August. This could be the near-term peak, as the supplemental budget will offer new protection from energy and wheat prices and energy prices fall faster than the yen.


    Dollar Index:

    On September 20, the Dollar Index posted an outside up day by trading on both sides of the previous day’s range and settling above its high.

    The rally that it signaled was completed in the middle of last week as DXY made new 20-year highs and then reversed lower and settled below the previous session’s low.

    This key reversal saw follow-through selling to a new five-day low ahead of the weekend slightly above 111.55. That nearly met the (62.8%) retracement of the advance from September 20 (~111.45). Initial resistance is now near 112.80 and then 113.20. The MACD and Slow Stochastic are rolling over in over-extended territory. The 20-day moving average, the middle of the Bollinger Band is near 110.80.


    Equity indices in the Asia-Pacific region were mostly lower on Monday on thinner trading conditions as markets in China and South Korea were closed for holidays.

    —Equity Markets—

    Japan’s Nikkei: +1.0%
    Hong Kong’s Hang Seng: -0.8%
    China’s Shanghai Composite: closed for holiday
    India’s Sensex: -1.1%
    South Korea’s Kospi: closed for holiday
    Australia’s All Ordinaries: -0.3%


    Japan’s Nikkei (+1.0%) was a notable outperformer as the BOJ pressed ahead, as expected, with plan to buy an unlimited amount of 10-yr JGBs at 0.25%, and its finance minister talked about intervening again to support the yen if necessary.
    Japan’s Q3 Tankan Large Manufacturers Index was weaker than expected.
    The Reserve Bank of Australia meets tonight (Tuesday in Australia) and is expected to raise its key policy rate by 50 bps to 2.85%.
    Japan’s Q3 Tankan Large Manufacturers Index 8 (expected 11; prior 9); Q3 Large Non-Manufacturers Index 14 (expected 13; prior 13); September Manufacturing PMI 50.8 (expected 51.0; prior 51.5)
    India’s September Nikkei S&P Global Manufacturing PMI 55.1 (expected 55.8; prior 56.2)
    Australia’s September Final Manufacturing PMI 53.5 (expected 53.9; prior 53.8)


    Major European indices are languishing to begin the week amid talk of a confidence crisis surrounding Credit Suisse, which has driven up prices for the bank’s credit default swaps.

    —Equity Markets—

    STOXX Europe 600: -0.1%
    Germany’s DAX: UNCH
    U.K.’s FTSE 100: -0.3%
    France’s CAC 40: -0.1%
    Italy’s FTSE MIB: +0.8%
    Spain’s IBEX 35: +0.5%


    Credit Suisse executives have downplayed the speculation and have highlighted “the strong capital base and liquidity position of the bank,” according to CNBC.
    UK Finance Minister Kwarteng said the plan to cut taxes for high earners is going to be abandoned. That news provided some support for the pound (GBP/USD +0.3% to 1.1187) and the UK government bond market, which is also contending with S&P revising its outlook to negative on rising fiscal risks.
    On the economic front, final September manufacturing PMI readings saw downward revisions from the preliminary estimates for the eurozone, Germany, the UK, and France.
    Eurozone’s September Final Manufacturing PMI 48.4 (expected 48.5; preliminary 48.5)
    Germany’s September Final Manufacturing PMI 47.8 (expected 48.3; preliminary 48.3)
    UK’s September Final Manufacturing PMI 48.4 (expected 48.5; preliminary 48.5)
    France’s September Final Manufacturing PMI 47.4 (expected 47.8; preliminary 47.8)
    Italy’s September Final Manufacturing PMI 48.3 (expected 47.5; prior 48.0)
    Spain’s September Final Manufacturing PMI 49.0 (expected 49.2; prior 49.9)


    Credit Suisse (CS 3.6800 -0.24 (-6.12%): attempts to reassure investors over its financial and liquidity condition after value of credit default swaps increased, according to FT
    Wells Fargo (WFC 40.71 +0.49 (+1.22%): upgraded to Buy from Neutral at Goldman
    Tesla (TSLA 251.80 -13.45 (-5.07%): reports it produced over 365,000 vehicles and delivered over 343,000 vehicles in Q3 versus an estimate for 364,000 deliveries
    Axsome Therapeutics (AXSM 48.00 +3.38 (+7.58%): announces Sunosi meets primary endpoint demonstrating improvement in cognitive function in the SHARP trial in cognitively impaired patients with excessive daytime sleepiness associated with obstructive sleep apnea


    Equity futures extended their gains recently. The S&P 500 futures are up 36 points and are trading 1.1% above fair value.
    Nasdaq 100 futures are up 73 points and are trading 0.7% above fair value.
    Dow Jones Industrial Average futures are up 324 points and are trading 1.2% above fair value.

    Treasury yields continue to pullback ahead of the open.

    The 10-yr note yield is down ten basis points to 3.69% and the 2-yr note yield is down nine basis points to 4.11%.

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