>>> Fortune Brands Innovations beats by $0.10, reports revs in-line; guides Q4 E

Fortune Brands Innovations beats by $0.10, reports revs in-line; guides Q4 EPS below consensus, revs in-line (55.23 -1.86)
  • Reports Q3 (Sep) earnings of $1.19 per share, excluding non-recurring items, $0.10 better than the FactSet Consensus of $1.09; revenues rose 5.5% year/year to $1.26 bln vs the $1.25 bln FactSet Consensus.
  • Co issues guidance for Q4, sees EPS of $0.63-0.73, excluding non-recurring items, vs. $1.01 FactSet Consensus; sees Q4 revs of $1164-1211 mln vs. $1.21 bln FactSet Consensus.

>>> US Close Dow -0,32% S&P -1,43% Nasdaq -2,43% Russell -1,67%

Closing Stock Market Summary
Today's trade brought many stocks lower, leaving the major indices near their lows of the day. The S&P 500 closed above its 200-day moving average yesterday (now 4,238), but opened below that key level today before ultimately settling below 4,200. The disappointing price action itself acted as a downside catalyst, along with a jump in rates and a big loss in Alphabet (GOOG 126.67, -13.45, -9.6%) following an earnings report that contained some relatively disappointing growth for its cloud business.

Microsoft (MSFT 340.67, +10.14, +3.1%) was a winning standout after reporting some impressive growth for its Azure business, but other mega caps slid alongside Alphabet. The Vanguard Mega Cap Growth ETF (MGK) fell 2.2% versus a 1.4% decline in the S&P 500. The equal weighted S&P 500, meanwhile, fell 1.1%.

General Dynamics (GD 242.40, +9.40, +4.0%), Visa (V 236.85, +2.20, +0.9%) and Waste Management (WM 164.07, +9.44, +6.1%) also registered gains after impressing with their quarterly results while Boeing (BA 177.73, -4.63, -2.6%) and Texas Instruments (TXN 141.79, -5.13, -3.5%) saw sizable declines.

Nine of the 11 S&P 500 sectors declined. The communication services sector (-5.9%) was the worst performer by a wide margin, weighed down by Alphabet. The utilities (+0.5%) and consumer staples (+0.3%) sectors were alone in positive territory at the close.
The 10-yr note yield climbed 11 basis points to 4.95% and the 2-yr note yield rose two basis points to 5.12%. Yields were already moving up, but turned higher in response to this morning's release of the September New Home Sales report, which showed the strongest annual rate of sales (759,000) since February 2022. Another wave of selling hit the Treasury market following a $52 billion 5-yr note sale that met dismal demand.

In other news, Rep. Mike Johnson (R-LA) was elected Speaker of the House after receiving unanimous Republican support.
  • Nasdaq Composite: +22.5% YTD
  • S&P 500: +9.0% YTD
  • Dow Jones Industrial Average: -0.3% YTD
  • S&P Midcap 400: -3.5% YTD
  • Russell 2000: -6.2% YTD
Reviewing today's economic data:
  • Weekly MBA Mortgage Applications Index -1.0%; Prior -6.9%
  • September New Home Sales 759K (consensus 683K); Prior was revised to 676K from 675K
    • The key takeaway from the report is that new home sales activity in September picked up noticeably, aided by lower prices and reportedly mortgage rate concessions from builders.

Thursday's economic calendar features:
  • 8:30 ET: Advance Q3 GDP (consensus 4.0%; prior 2.1%), advance Q3 GDP Chain Deflator ( consensus 2.7%; prior 1.7%), weekly Initial Claims ( consensus 210,000; prior 198,000), Continuing Claims (prior 1.734 mln), September Durable Orders ( consensus 1.5%; prior 0.2%), Durable Orders ex-transportation ( consensus 0.3%; prior 0.4%), advance September goods trade balance (prior -$84.3 bln), advance September Retail Inventories (prior 1.1%), and advance September Wholesale Inventories (prior -0.1%)
  • 10:00 ET: September Pending Home Sales ( consensus 0.5%; prior -7.1%)
  • 10:30 ET: Weekly natural gas inventories (prior +97 bcf)

>>> IBM beats by $0.08, reports revs in-line; reaffirms FY23 outlook for CC revs

IBM beats by $0.08, reports revs in-line; reaffirms FY23 outlook for CC revs and FCF (137.17 -0.63)
  • Reports Q3 (Sep) earnings of $2.20 per share, excluding non-recurring items, $0.08 better than the FactSet Consensus of $2.12; revenues rose 4.6% year/year to $14.75 bln vs the $14.73 bln FactSet Consensus.
    • Software revenue up 8 percent, up 6 percent at constant currency.
    • Consulting revenue up 6 percent, up 5 percent at constant currency.
    • Infrastructure revenue down 2 percent, down 3 percent at constant currency.
  • FY23 Outlook: Co reaffirms CC revenue growth of 3-5%, which is not comparable to consensus, which is not CC. At current foreign exchange rates, currency is expected to be about a one-point headwind to revenue growth. Co reaffirms FY23 guidance for FCF at about $10.5 bln

>>> Whirlpool beats by $1.18, beats on revs; guides FY23 EPS below consensus, re

Whirlpool beats by $1.18, beats on revs; guides FY23 EPS below consensus, revs above consensus (125.59 -1.46)
  • Reports Q3 (Sep) earnings of $5.45 per share, excluding non-recurring items, $1.18 better than the FactSet Consensus of $4.27; revenues rose 2.8% year/year to $4.93 bln vs the $4.79 bln FactSet Consensus.
    • Cost take out actions delivered approximately $300 million of year-over-year benefit in the quarter; on track to deliver over $800 million full-year benefit
  • Co issues mixed guidance for FY23, sees EPS of ~$16.00, excluding non-recurring items, vs. $16.16 FactSet Consensus and prior guidance of $16.00-18.00; sees FY23 revs of ~$19.4 bln vs. $19.15 bln FactSet Consensus.
  • Declared fourth-quarter dividend of $1.75 per share

>>> NETGEAR beats by $0.27, beats on revs; guides Q4 revs below two analyst esti

NETGEAR beats by $0.27, beats on revs; guides Q4 revs below two analyst estimate (10.51 -0.43)
  • Reports Q3 (Sep) earnings of $0.23 per share, excluding non-recurring items, $0.27 better than the two analyst estimate of ($0.04); revenues fell 20.7% year/year to $197.85 mln vs the $183.85 mln two analyst estimate.
  • Co issues downside guidance for Q4, sees Q4 revs of $175-190 mln vs. $214.92 mln two analyst estimate.
  • "We are also encouraged that our retail channel partners are now maintaining rather than depleting their inventories. However, as interest rates remain high, we will continue to work with our SMB channel partners to optimize their inventory carrying levels during the next few quarters. Accordingly, we expect CHP to be approximately flat sequentially, in line with market seasonality, and SMB to be down sequentially which would result in overall fourth quarter net revenue in the range of $175 million to $190 million. As we continue to make meaningful progress in reducing our own inventory levels, we will be consuming older, higher cost inventory. We expect we will be back to normal inventory levels and normal inventory costs by the middle of next year."

>>> Mattel beats by $0.22, beats on revs; raises FY23 EPS outlook, reaffirms FY2

Mattel beats by $0.22, beats on revs; raises FY23 EPS outlook, reaffirms FY23 revs guidance (20.11 -0.10)
  • Reports Q3 (Sep) earnings of $1.08 per share, excluding non-recurring items, $0.22 better than the FactSet Consensus of $0.86; revenues rose 9.3% year/year to $1.92 bln vs the $1.84 bln FactSet Consensus.
    • Gross Billings in the North America segment increased 10% as reported and in constant currency, driven by growth in Dolls (including Barbie and Disney Princess and Disney Frozen) and Vehicles (Hot Wheels®), partly offset by declines in Action Figures, Building Sets, Games, and Other (primarily Action Figures), and Infant, Toddler, and Preschool (primarily Thomas & Friends).
    • Gross Billings in the International segment increased 9% as reported, or 2% in constant currency. The increase in Gross Billings as reported was driven by growth in Dolls (including Disney Princess and Disney Frozen, Monster High, and Barbie) and Vehicles (primarily Hot Wheels), partly offset by declines in Action Figures, Building Sets, Games, and Other (primarily Action Figures).
  • Co issues guidance for FY23, sees EPS of $1.15-$1.25, excluding non-recurring items, (from prior $1.10-$1.20) vs. $1.20 FactSet Consensus; sees FY23 revs of $5.425 bln vs. $5.49 bln FactSet Consensus

FT : Network Rail not consulted before plan to move £36bn to HS2 replacements

Network Rail not consulted before plan to move £36bn to HS2 replacements
Sunak cancelled northern leg of UK high-speed link in favour of list of projects that have since been questioned

UK ministers did not consult Network Rail before unveiling a £36bn set of proposed transport schemes to replace the northern leg of the HS2 high-speed line.

Prime Minister Rishi Sunak set out the “Network North” plan at the Conservative party conference this month as a replacement for building the second phase of HS2. The government billed it as the most ambitious plan ever drawn up for transport in the north of England.

But ministers did not speak to the public body responsible for rail infrastructure before Sunak’s announcement, according to several people familiar with the matter.

Network Rail owns and operates the UK rail network. It is responsible for upgrading current railway lines and the longer-term planning for shaping future investment decisions.

It is working on projects to improve connections in the north of England, including the multibillion-pound Transpennine route upgrade between Manchester and York.

In a written answer to a question posed in parliament by the opposition Labour party, rail minister Huw Merriman said that “following the announcement” of Network North on October 4, the government was talking to Network Rail “and our other delivery partners, to refine our plans”.

Sunak set out his transport plan as a replacement for the Birmingham to Manchester leg of HS2, after the project was plagued by delays and cost overruns. Questions over the future of the high-speed link dominated national political debate for several weeks prior to his announcement, which drew a backlash from business groups.

He said the decision to funnel future transport spending from HS2 into local schemes would “make a real difference across the nation” and better reflect voters’ priorities.

“This is the right way to spread growth and opportunity,” Sunak told his conference, stressing that half of the investment would be in northern England, which has historically suffered from poor transport links.

He added that HS2 was “the ultimate example” of an old consensus that no longer represented value for money.

Many of the replacement projects outlined as part of Network North were rail upgrades, including electrification schemes and the reopening of lines closed decades ago.

Parts of that plan began to unravel within hours, as it transpired a number of schemes had been published in error, some already existed and others had been promised previously but had never materialised.

Shadow transport secretary Louise Haigh called the policy a “fantasy plan”.

“The public deserve better than this shambolic wishlist of half-baked plans,” she said. “Little wonder these botched proposals took 24 hours to fall apart, when they failed to even consult industry experts.”

Since Sunak announced the policy, the government has said it will need to sign off individual business cases put forward by all of the projects listed in Network North, raising concerns that some may never be built.

The government said it was “reinvesting every penny of the £36bn saved from HS2 which . . . will deliver hundreds of projects in the Midlands, north and across the country”.

“We are working closely with Network Rail and other partners to help deliver this,” it added.

Network Rail said: “We continue to work with the Department for Transport to refine future rail investment plans.”

FT : Hedge fund co-founder Neil Phillips convicted over forex manipulation

Hedge fund co-founder Neil Phillips convicted over forex manipulation
Prosecutors alleged manager of Glen Point Capital had attempted to artificially move dollar-rand exchange rate

A New York jury has convicted Neil Phillips, the high-profile manager of a London-based hedge fund previously backed by George Soros, over an alleged scheme to manipulate the US dollar to South African rand exchange rate as part of a ploy to trigger a $20mn options payment.

The 53-year-old Briton, who co-founded the emerging markets-focused Glen Point Capital in 2015, was found guilty on Wednesday of commodities fraud after a week-long trial. He was acquitted on a related count of conspiracy to commit commodities fraud.

Prosecutors had accused Phillips of attempting to artificially move the price of the dollar below the strike price for a “one touch option” his fund bought in late 2017. That instrument paid $20mn if the rand-dollar pairing hit a particular level before January 2018.

They alleged that on Boxing Day of 2017, Phillips directed hundreds of millions of dollars of dollar-rand trades “for the express purpose of artificially driving the [dollar-rand] rate below 12.50”, and “personally directed” a Singapore-based employee of a bank to sell about $725mn in dollars in exchange for rands, which pushed down value of the dollar-rand exchange rate.

“As soon as Phillips had achieved his objective and the [dollar-rand] rate fell below 12.50 due to Phillips’s manipulative spot-trading, Phillips immediately directed that [the employee] cease trading,” prosecutors wrote in the indictment.

His lawyers had argued in court filings that the trades were all lawful, consisting of “legitimate transactions made on the open market”, and that the alleged victims were sophisticated financial institutions and investors.

In a statement, Damian Williams, the US attorney for the Southern District of New York, welcomed the verdict, saying a jury had found that Phillips had “intentionally manipulated . . . the world’s largest decentralised financial market”.

“The policing of the financial markets is critical to the health and sanctity of our economy,” he added, commending his office for “continuing to be a global law enforcement leader in ensuring fair market activity for investors at every level”.

Phillips will be sentenced at a later date. He faces a maximum of 10 years in prison.

“We are extremely disappointed by the verdict and believe strongly that Neil Phillips is innocent of the one charge on which he was found guilty,” said Sean Hecker, a lawyer for the hedge fund manager. He added: “We will continue to fight for the right result.”

Phillips previously worked at London-based BlueBay Asset Management, where he managed a $1.4bn global macro fund before leaving in 2014.

Glen Point Capital stopped trading in February last year, according to company filings.