Traders Market Weekly: Jobs, Inflation and PMI Pressures

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  • #42336
    TradersCom
    Keymaster

    Eyes on Jackson Hole:

    The Federal Reserve’s Jackson Hole Symposium annual retreat by central bankers to the Tetons is getting more attention than normal with U.S. equities appearing to be factoring in a tamer fight against inflation than FOMC speakers have tipped off in their speeches and dot plots.

    Fed Chairman Jerome Powell is expected to dig in a bit and establish his hawkish credentials. The tone from Powell could shift investor sentiment if he reiterates that the risks of inflation are more significant than the risk of a hard landing for the U.S. economy. The Fed is still anticipated to raise the target range for the federal funds rate by 50 or 75 points in September and follow with 25 or 50 points hikes in November and December. Fed watchers are also looking for more details on the Fed’s balance sheet reduction strategy.

    nvestors will be keeping their ears perked for any clues on the trajectory of the Fed’s interest-rate increases.
    Traders are currently pricing in a 54.5% probability of a half-percentage-point increase at the Fed’s September policy meeting and 45.5% odds of a 0.75-percentage-point raise, according to CME Group’s FedWatch Tool.

    #42337
    Truman
    Participant

    Corporate events:

    Shareholders Software Acquisition Group III (NASDAQ:SWAG) will vote on August 22 on the deal to take commerce-as-a-service technology provider Nogin public as part of a SPAC merger. The combined firm will have an estimated post-transaction enterprise value of $646M, assuming no redemptions by SWAG stockholders.

    Rite Aid (RAD) will host a virtual shareholder investor event on August 22 with CEO Heyward Donigan and CFO Matt Schroeder scheduled to answer questions from interest parties. Heading into the event, stock has been the subject of activist speculation and has a high level of short interest outstanding on it.

    Also on August 22, Cisco (CSCO) and Loop Capital Host a Tech Talk on Cisco’s Optical Business.

    #42338
    Truman
    Participant

    Notable conferences:

    The conference schedule is headlined by Rosenblatt technology summit on the age of AI Scaling. The firm is hoping to support its thesis that the setup of the current semiconductor cycle is a rare planetary alignment of market forces, which include Artificial Intelligence and AI at the Edge.

    Companies making an appearance include AMD (AMD), Cadence Design Systems (NASDAQ:CDNS), Micron (MU), Calix (NYSE:CALX), QuickLogic (QUIK), and Altair Engineering (ALTR).

    The conference schedule next week also includes the Raymond James Diversified Industrials Conference, D.A. Davidson Big Sky Tech Conference, Seaport Global Annual Virtual Summer Investor Conference, Midwest IDEAS Conference, and Needham Virtual Semiconductor and SemiCap 1×1 Conference.

    #42339
    Truman
    Participant

    Barron’s mentions:

    Haleon (NYSE:HLN) catches the attention of the publication this week about a month after the company’s spinoff from GlaxoSmithKline (GSK). A buy recommendation is issued on the large-cap, pure-play consumer healthcare stock on the expectation for steady growth and income for investors.

    Haleon is known for selling oral health products like Sensodyne and Aquafresh; over-the-counter drugs, including Advil and Theraflu, as well as vitamins and supplements like Centrum. Haleon plans a dividend payout starting in the first half of next year at the lower end of a 30% to 50% range of earning.

    On the valuation front, Haleon is valued at 13.5X the consensus 2023 EPS mark, which is noted to be a lower multiple than other consumer healthcare products such as Unilever (UL) and and Procter & Gamble (PG).

    Barrons also ran through all the hedge fund filings to find five stocks picked up broadly during Q2. Disney (DIS), Salesforce (CRM), Fiserv (NASDAQ:FISV), LPL Financial (NASDAQ:LPLA), and Perimeter Solutions (PRM) stood out as intriguing picks.

    #42340
    Truman
    Participant

    Monday – August 22

    Volatility watch – Options trading volume has moved higher on Mind Medicine (MNMD) and Clene (CLNN). Vuzix Corp. (VUZI) and Carvana (CVNA) could see extra volatility with short interest as a percentage of total float still elevated. Social media interest has picked up on bluebird bio (BLUE) and Cisco (CSCO).

    All day – Shareholders Software Acquisition Group III (SWAG) will vote on the deal to take commerce-as-a-service technology provider Nogin public as part of a SPAC merger. The combined firm will have an estimated post-transaction enterprise value of $646M, assuming no redemptions by SWAG stockholders. Nogin shareholders will roll 96% of their existing equity holdings into the combined firm and are expected to own ~67% of the company on a non-fully diluted basis following the closing of the business combination. The combined company will be named Nogin and will remain listed on the Nasdaq under the new ticker symbol NOGN.

    #42341
    Truman
    Participant

    Tuesday – August 23

    All day – Starbox Group Holdings Ltd. (STBX) is expected to start trading after pricing its IPO. The Malaysia-based firm provides advertising services and a mobile platform for retailers to better connect with customers.

    All day – A Ceragon Networks (CRNT) shareholder meeting will take place with a vote scheduled to determine if Aviat Networks (AVNW) is successful in replacing three board members with its own nominees.

    Premarket – Xpeng (XPEV), Macy’s (M), and Dick’s Sporting Goods (DKS) will all post earnings reports with options trading implying a share price swings of at least 8% following the releases. Macy’s and Dick’s both soared after their last earnings reports, while XPeng slid almost 6%.

    4:30 p.m. Analysts have circled Cue Biopharma’s (CUE) earnings call and business update as a potential share price catalyst.

    Postmarket – Stocks due to report earnings with double-digit share price moves implied by options trading include Lulus Fashion Lounge (LVLU) and Accelerate Diagnostics (AXDX).

    #42342
    Truman
    Participant

    Wednesday – August 24

    8:30 a.m. The report on durable goods orders for July is expected to show a 0.6% gain, although Bank of America has come in late with a prediction for a large beat of +1.2%. Aircraft orders and motor vehicle orders are noted to have likely been strong given that Boeing (BA) reported 130 orders in July and motor vehicle assemblies improved in July.

    12:00 p.m. Rite Aid (RAD) will host a virtual shareholder investor event with CEO Heyward Donigan and CFO Matt Schroeder scheduled to answer questions from interest parties. Heading into the event, stock has been the subject of activist speculation and has a high level of short interest outstanding on it.

    1:00 p.m. Cisco (CSCO) and Loop Capital Host a Tech Talk on Cisco’s Optical Business.

    Postmarket – Nvidia’s (NVDA) earnings report and guidance update could create ripples across the tech sector. Some of the stocks that correlate the tightest with NVDA are AMD (AMD), Analog Devices (ADI), Applied Materials (AMAT), and Agilent (A).

    #42343
    Truman
    Participant

    Thursday – August 25

    All day – The Tesla (TSLA) 3-for-1 stock split becomes effective. The electric vehicle’s first stock split was a 5-for-1 split in 2020.

    All day – The Federal Reserve’s Jackson Hole Symposium could make headlines with traders looking for more clues on the expected pace and size of rate hikes.

    All day – S&P Global Ratings will hold its quarterly interactive, live webinar on the U.S. Life and P&C insurance markets.

    11:00 a.m. Bluejay Diagnostics (BJDX) will hold a virtual Key Opinion Leader event on IL-6 Testing in critical care settings. Shares of BJDX have rallied in the past off IL-6 developments.

    1:30 p.m. The Toronto-Dominion Bank (TD) earnings call will take place amid heightened interest over the First Horizon Corporation (FHN).

    Postmarket – Stocks due to report earnings with double-digit share price moves implied by options trading include Farfetch (FTCH), Affirm Holdings (AFRM), and Domo (DOMO). All three stocks soared the last time they reported earnings.

    #42344
    Truman
    Participant

    Friday – August 26

    All day – It is the last trading day before the FDA action date on Amicus Therapeutics’ (FOLD) for the Biologics License Application for cipaglucosidase alfa and the New Drug Application for miglustat, which are the two components of AT-GAA. Shares of Amicus Therapeutics have rallied in the past off AT-GAA developments.

    10:00 a.m. Federal Reserve Chairman Jerome Powell will give a highly anticipated speech at the Fed’s Jackson Hole Forum.

    #42359
    Truman
    Participant

    Equity indices in the Asia-Pacific region began the week on a mostly lower note.

    —Equity Markets—

    Japan’s Nikkei: -0.5%
    Hong Kong’s Hang Seng: -0.6%
    China’s Shanghai Composite: +0.6%
    India’s Sensex: -1.5%
    South Korea’s Kospi: -1.2%
    Australia’s ASX All Ordinaries: -1.0%

    #42360
    Truman
    Participant

    Several Chinese developers issued profit warnings while the People’s Bank of China lowered its one-year loan prime rate by five basis points to 3.65%.
    The five-year loan prime rate was lowered by 15 bps to 4.30%. The approval rating of Japan’s cabinet office fell to a record low of 36%. South Korea’s exports through the first 20 days of August were up 3.9% yr/yr while chip exports were down 7.5% yr/yr.
    Economic data was limited:
    Hong Kong’s July CPI 1.9% yr/yr (expected 2.0%; last 1.8%)

    #42361
    Truman
    Participant

    Major European indices trade lower across the board with Germany’s DAX (-1.6%) showing relative weakness while the euro has revisited parity against the dollar.

    —Equity Markets—

    STOXX Europe 600: -0.9%
    Germany’s DAX: -2.2%
    U.K.’s FTSE 100: -0.5%
    France’s CAC 40: -1.7%
    Italy’s FTSE MIB: -1.7%
    Spain’s IBEX 35: -1.1%

    #42362
    Truman
    Participant

    Germany’s economy minister warned that Russia is expected to reduce the supply of gas to Europe this winter.
    European Central Bank policymaker Nagel said that the ECB must keep raising rates regardless of a risk of recession.
    Dockworkers at the U.K.’s busiest terminal will strike for eight days.

    #42363
    Truman
    Participant

    DocuSign (DOCU 63.01, -2.91, -4.41%): downgraded to Sector Perform from Outperform at RBC Capital Mkts
    Netflix (NFLX 234.10, -7.06, -2.93%): downgraded to Sell from Hold at CFRA; price target cut to $238 from $245.
    AMC Entertainment (AMC 12.45, -5.57, -30.91%): new APE shares supposed to start trading at NYSE today.
    Signify Health (SGFY 29.51, +8.31, +39.20%): press reports suggest Amazon (AMZN), UnitedHealth (UNH), and CVS (CVS) all aiming to acquire SGFY.
    Tesla (TSLA 871.00, -19.00, -2.13%): CEO Elon Musk tweets “After wide release of FSD Beta 10.69.2, price of FSD will rise to $15k in North America on September 5th. Current price will be honored for orders made before Sept 5th, but delivered later”

    #42364
    Truman
    Participant

    The S&P 500 futures are down 49 points and are trading 1.2% below fair value.
    The Nasdaq 100 futures are down 183 points and are 1.5% below fair value.
    The Dow Jones Industrial Average futures are down 339 points and are trading 1.0% below fair value.

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