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Writer's pictureSimon Charles Hooper

09/06/22 Briefing


The S&P 500 futures are up 11 points and are trading 0.3% above fair value. The Nasdaq 100 futures are up 27 points and are trading 0.2% above fair value. The Dow Jones Industrial Average futures are up 64 points and are trading 0.2% above fair value.

The positive bias comes on the heels of yesterday's losses, which continued a roller-coaster week of trading action. Accordingly, today is a bit more of that roller-coaster action in a range-bound market ahead of tomorrow's CPI report.

A UBS upgrade of Tesla (TSLA) has been an instrumental support factor this morning. Some better-than-expected May trade data out of China has also been comforting; however, reports today that a southwest neighborhood in Shanghai has been locked down for COVID testing, and that entertainment venues in a Beijing district have been closed, have acted as mitigating factors.

On a related note, there was a Bloomberg report that said Chinese regulators may be considering allowing the Ant Group IPO to move forward. Chinese regulators, according to CNBC, have denied that report, so a number of Chinese ADRs have seen a reversal into negative territory on the denial.

A short time ago, the ECB announced that it decided to leave its key interest rates unchanged at today's meeting, but the accompanying statement said the Governing Council intends to raise the ECB interest rates by 25 basis points at the July meeting and to end the net asset purchase program as of July 1.

The 10-yr note yield is up two basis points to 3.05%. The U.S Dollar Index is flat at 102.55. WTI crude futures are down 0.2% to $121.83/bbl.

In corporate news:

  • Tesla (TSLA 748.79, +23.29, +3.2%): UBS upgraded to Buy from Neutral; $1100 price target

  • Target (TGT 157.89, +1.19, +0.8%): raised quarterly dividend by 20% to $1.08 per share

  • Five Below (FIVE 124.55, -10.82, -8.0%): beats by $0.01, misses on revs, misses on comps; guides Q2 EPS and revs below consensus; guides FY23 EPS and revs below consensus

  • Signet Jewelers (SIG 67.09, +4.89, +7.9%): beats by $0.48, beats on revs; guides Q2 revs in-line; guides FY23 EPS above consensus, revs in-line

  • Nio (NIO 19.25, -1.13, -5.5%): beats by RMB0.24, reports revs in-line; guides Q2 revs below consensus

  • Novavax (NVAX 47.00, -3.11, -6.2%): FDA approval of COVID-19 vaccine could be delayed amid manufacturing review, according to CNBC

  • Meta Platforms (META 196.65, +0.01, +0.01%): starts trading today with new ticker symbol META

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region ended Thursday on a mostly lower note. Japan's Nikkei unchanged; Hong Kong's Hang Seng -0.7%; China's Shanghai Composite -0.8%; India's Sensex +0.8%; South Korea's Kospi unchanged; and Australia's All Ordinaries -1.5%.

    • In economic data:

      • China's May trade surplus $78.76 bln (expected surplus of $58.00 bln; last surplus of $51.12 bln). May Imports 4.1% yr/yr (expected 2.0%; last 0.0%) and Exports 16.9% yr/yr (expected 8.0%; last 3.9%)

      • Japan's May Machine Tool Orders 23.7% yr/yr (expected 27.0%; last 25.0%)


  • In news:

    • China reported better than expected trade figures for May.

    • South Korea's Finance Minister Choo said that the new government's economic policies will be announced next week and that all efforts will be made to stabilize prices.

    • The Commonwealth Bank of Australia expects the Reserve Bank of Australia to begin cutting rates in 2023.



  • Major European indices trade in the red. STOXX Europe 600 -0.5%; Germany's DAX -0.9%; UK's FTSE 100 -0.7%; France's CAC 40 -0.4%; Italy's FTSE MIB -0.9%; and Spain's IBEX 35 -0.7%.

    • In economic data:

      • France's Q1 nonfarm payrolls 0.3% qtr/qtr (last 0.3%)


  • In news:

    • The ECB decided to leave its key interest rates unchanged at today's meeting, but the accompanying statement said the Governing Council intends to raise the ECB interest rates by 25 basis points at the July meeting and to end the net asset purchase program as of July 1.

    • British Chamber of Commerce lowered the U.K.'s growth forecast for 2022 to 3.5% from 3.6%, expecting inflation to reach 10.0% in Q4.

    • Italy's Prime Minister Draghi called for a joint EU mechanism to help member states deal with energy costs.



U.S. equity futures:

  • S&P 500 Futures: +14 @ 4,130

  • DJIA Futures: +90 @ 33,001

  • Nasdaq 100 Futures: +50 @ 12,665

Overseas:

  • Europe: DAX -0.6%, FTSE -0.4%, CAC -0.3%

  • Asia: Nikkei UNCH, Hang Seng -0.7%, Shanghai Composite -0.8%

Commodities:

  • Crude Oil -0.20 @ 121.91

  • Nat Gas -0.412 @ 8.287

  • Gold -8.40 @ 1848.00

  • Silver -0.174 @ 21.920

  • Copper -0.0670 @ 4.3875

U.S. Summary:

  • Earnings:

    • ABM Industries (ABM) beats by $0.05, reports revs in-line; reaffirms FY22EPS guidance

    • ASE Technology (ASX) reports May revs increased 27.3% yr/yr to NT$53.8 bln

    • Ashland (ASH) reaffirms FY22guidance in slide presentation

    • Bilibili (BILI) misses by RMB0.03, reports revs in-line; guides Q2 revs above consensus

    • British American Tobacco (BTI) reports Q2 trading update; reaffirms FY22guidance

    • Couchbase (BASE) beats by $0.07, beats on revs; guides Q2 revs above consensus; guides FY23revs above consensus

    • CVS Health (CVS) reaffirms FY22guidance ahead of investor meeting

    • Five Below (FIVE) beats by $0.01, misses on revs, misses on comps; guides Q2 EPS and revs below consensus; guides FY23EPS and revs below consensus

    • Forward Air (FWRD) sees Q2 EPS exceeding the high end of its prior guidance range

    • FuelCell Energy (FCEL) misses by $0.03, misses on revs

    • Greif (GEF) beats by $0.70, beats on revs; guides FY22EPS above consensus

    • Mission Produce (AVO) beats by $0.04, reports revs in-line; expects Q3 volumes to increase sequentially, but remain lower by approximately 10-15% yr/yr

    • NIO (NIO) beats by RMB0.24, reports revs in-line; guides Q2 revs below consensus

    • Oxford Industries (OXM) beats by $0.74, beats on revs; guides JulQ EPS above consensus, revs above consensus; guides FY23EPS above consensus, revs above consensus

    • Rayonier Adv. Materials (RYAM) sees FY22Adjusted EBITDA guidance of approximately $160 million

    • Signet Jewelers (SIG) beats by $0.48, beats on revs; guides Q2 revs in-line; guides FY23EPS above consensus, revs in-line

    • SkillSoft (SKIL) beats by $0.01, beats on revs; guides FY23revs in-line

    • Sonder (SOND) sees Q2 revs slightly below consensus; sees FY22revs in line

    • Yext (YEXT) beats by $0.01, beats on revs; guides Q2 EPS below consensus, revs in-line; guides FY23EPS above consensus, revs below consensus


  • General News:

    • China is building testing and quarantine facilities for permanent zero coronavirus policy despite economic problems. China will conduct another lockdown in the Minhang district in Shanghai, according to Financial Times

    • A man was arrested and charged with attempted murder of Supreme Court Justice Brett Kavanaugh, according to CNN

    • Primary elections in large California cities showed that Democrats are at risk in midterm elections regarding soft on crime policies, according to the Wall Street Journal

    • House passed assault weapons ban and other gun control measures in a party line vote, but it will be dead on arrival in Senate, according to the New York Times

    • Biden administration announces operational plan for COVID-?19 vaccinations for children under 5

    • White House proposes new standards for national electric vehicle charging network

    • China Securities Regulatory Commission denies report that is trying to revive Ant Financial IPO, according to Bloomberg

    • Alnylam Pharma (ALNY) reports topline results from Phase 2 Study of investigational Cemdisiran

    • Apple (AAPL) Pay Later service will handle lending on its own, according to Bloomberg

    • Apple (AAPL) iPhone shipments are not being impacted by market slowdown, according to Digitimes

    • ArcelorMittal (MT) completes $1 billion share buyback program

    • AstraZeneca (AZN) demonstrates pipeline and portfolio strength across malignant and rare haematological diseases at EHA 2022

    • Axon (AXON) names Josh Isner as COO

    • B2Gold (BTG) Announces that Both Leading Independent Proxy Advisory Firms, ISS and Glass Lewis, Recommend B2Gold Shareholders Vote For All Proposed Items at the Upcoming Annual General & Special Meeting

    • BioCryst Pharma (BCRX) announces the company has entered into an exclusive collaboration with Pint Pharma GmbH to register and promote ORLADEYO in the pan-Latin America region

    • Bluebirdbio (BLUE) trading halted June 9 and June 10; BLAs for beti-cel for beta-thalassemia and eli-cel for cerebral adrenoleukodystrophy, to be discussed at an FDA Advisory Committee Meeting

    • Blueprint Medicines (BPMC) Reports Continued Progress Toward Goal of Transforming Treatment of Systemic Mastocytosis

    • BWX Technologies (BWXT) will build the first advanced nuclear microreactor in the United States under a contract awarded by the U.S. Department of Defense

    • Cohen & Steers (CNS) reports preliminary assets under management of $94.3 bln as of May 31, 2022, a decrease of $3.7 bln from April 30, 2022

    • Didi (DIDI) will leave NYSE tomorrow, according to Nikkei

    • EnLink Midstream (ENLC) and BKV Corporation reached a Phase I Final Investment Decision

    • Fluor (FLR) selected for Interstate 35 Capital Express South project in Texas

    • Gores Guggenheim (GGPI) merger partner Polestar begins delivering on 65,000 electric vehicle partnership with Hertz (HTZ)

    • Interactive Brokers (IBKR): OSL to Provide exclusive virtual asset services for Interactive Brokers in Hong Kong

    • International Game Tech. PLC (IGT) extends partnership with SuperBook Sports to Tennessee

    • Kennametal (KMT) names Patrick S. Watson Chief Financial Officer

    • Meta (META) suspends production of smartwatch, according to Bloomberg

    • Meta (META): FTC Chair Lina Khan indicated there is a "high bar" for settlement with Meta on antitrust matters, according to Reuters

    • NextDecade (NEXT) announces departure of COO Ivan Van der Walt, effective June 10

    • Novavax (NVAX) FDA decision on COVID-19 vaccine could be delayed amid manufacturing review, according to CNBC

    • Olema Pharmaceuticals (OLMA) and Aurigene Discovery Technologies Limited announce an exclusive global license agreement to research, develop and commercialize novel small molecule inhibitors of an undisclosed oncology target

    • Owens Corning (OC) forms joint venture with Pultron Composites for production of fiberglass rebar

    • Palantir (PLTR) wants to become operating system for UK health system, according to Financial Times

    • Par Pacific (PARR) announces plan to jointly explore sustainable aviation fuel with Hawaiian Airlines (HA)

    • Roche Hldg (RHHBY): Foundation Medicine received approval from the FDA for FoundationOne CDx to be used as a companion diagnostic for the two indications of Rozlytrek, a targeted therapy developed by Roche's Genentech

    • SeaSpine (SPNE) announces full commercial launch of 3D-printed WaveForm TO Interbody System

    • Sinovac Biotech (SVA) receives prequalification of polio vaccine by WHO

    • South State (SSB) says Fed has told SSB it has no objection to stock repurchase plan for 3.75 mln shares, or 5% os shares outstanding

    • Takeda Pharma's (TAK) dengue vaccine candidate provides continued protection against dengue fever through 4.5 years in pivotal clinical trial

    • Target (TGT) increases quarterly dividend to $1.08 per common share from $0.90 per common share

    • Tesla (TSLA) China production rebounded by over 200% in May, according to Bloomberg

    • Tesla (TSLA): Cathie Wood is adding to Tesla position, according to Bloomberg

    • Thomson Reuters (TRI) announces plans to repurchase up to $2.0 bln of shares under new normal course issuer bid

    • Tricon Residential (TCN) launches down payment assistance program

    • Twitter (TWTR): Elon Musk's financing for Twitter bid includes someone linked to Russian tycoon, according to Bloomberg

    • Upstart (UPST): Consumer Financial Protection Bureau issuing order to terminate its no-action letter

    • US Foods (USFD): The Teamsters Warehouse Division and numerous Teamster locals currently in contract negotiations with US Foods are putting the foodservice giant on notice that work stoppages are imminent

    • Walt Disney (DIS) Shanghai will reopen some areas of the parks tomorrow, according to Reuters

    • Welbilt (WBT): UK CMA has found that the anticipated tie-up between 2 major kitchen equipment suppliers Ali Holding and Welbilt raises competition concerns

    • Zendesk (ZEN): JANA Partners announces intention to sue Zendesk for failure to set 2022 annual meeting date


  • M&A:

    • Brown & Brown (BRO) Dealer Services acquires Profits Creation; terms not disclosed

    • CureVac (CVAC) announces acquisition of Frame Cancer Therapeutics for consideration valued at 32 mln

    • Devon Energy (DVN) purchases Williston Basin assets from RimRock Oil & Gas for cash consideration of $865 mln

    • ICF International (ICFI) enters into agreement to acquire SemanticBits; deal expected to be accretive to EPS upon closing


  • Syndicate:

    • DBV Technologies (DBVT) prices private placement for gross proceeds of $194 mln

    • Martin Midstream (MMLP) files for $250 mln mixed securities shelf offering; also files for 6,114,532 common unit offering by selling unitholders

    • Plug Power (PLUG) files mixed securities shelf offering

    • Rubius Therapeutics (RUBY) files for $250 mln mixed securities shelf offering

    • Travelers (TRV) files mixed securities shelf offering


  • IPOs:

    • Priced to Trade:

      • No IPOs expected.



Gapping Up/Down

  • Gapping up:

    • OXM +5.2%, GEF +4.7%, SOND +3.6%, YEXT +3.3%, BASE +3.3%, TAK +3.2%, NEXT +2.9%, FLR +2.6%, UPST +1.5%, ICFI +0.9%, CVAC +0.8%, RUBY +0.8%, TRI +0.6%, AVO +0.6%, TRV +0.5%


  • Gapping down:

    • BILI -10.5%, SKIL -9.3%, FIVE -8.8%, BKD -6.6%, DBVT -5%, ABM -3.1%, NIO -3.1%, OC -2.6%, MMLP-1.5%, MT -1.2%, HA -0.8%, DVN -0.5%


Analyst Research (see Upgrades/Downgradescalendarfor full list):

  • Upgrades

    • AGNC Investment (ANGC) upgraded to Outperform from Mkt Perform at Keefe Bruyette; tgt raised to $13.25

    • Annaly Capital Mgmt (NLY) upgraded to Outperform from Mkt Perform at Keefe Bruyette; tgt raised to $6.75

    • Dynex Capital (DX) upgraded to Outperform from Mkt Perform at Keefe Bruyette; tgt raised to $18.75

    • Freeport-McMoRan (FCX) upgraded to Neutral from Underperform at Credit Suisse; tgt raised to $38

    • IAA (IAA) upgraded to Buy from Neutral at Guggenheim; tgt $52

    • Magellan Midstream (MMP) upgraded to Buy from Neutral at Goldman; tgt raised to $59

    • Ollie's Bargain Outlet (OLLI) upgraded to Outperform from Sector Perform at RBC Capital Mkts; tgt raised to $65

    • Ollie's Bargain Outlet (OLLI) upgraded to Buy from Hold at Craig Hallum; tgt raised to $75

    • Pentair (PNR) upgraded to Equal Weight from Underweight at Barclays; tgt $50

    • Shoals Technologies (SHLS) upgraded to Buy from Hold at Truist; tgt raised to $25

    • Tesla (TSLA) upgraded to Buy from Neutral at UBS; tgt $1100


  • Downgrades:

    • Ardagh Metal Packaging S.A. (AMBP) downgraded to Equal Weight from Overweight at Wells Fargo

    • Ball Corp (BALL) downgraded to Underweight from Equal Weight at Wells Fargo; tgt $65

    • Crown (CCK) downgraded to Equal Weight from Overweight at Wells Fargo; tgt lowered to $110

    • Honest Company (HNST) downgraded to Hold from Buy at Loop Capital; tgt lowered to $3

    • iRhythm (IRTC) downgraded to Neutral from Buy at Citigroup; tgt lowered to $155

    • Precision BioSciences (DTIL) downgraded to Mkt Perform from Outperform at William Blair

    • Rigel Pharma (RIGL) downgraded to Neutral from Buy at Citigroup

    • Scotts Miracle-Gro (SMG) downgraded to Neutral from Overweight at JP Morgan; tgt lowered to $95

    • Sotera Health (SHC) downgraded to Peer Perform from Outperform at Wolfe Research; tgt $26


  • Others:

    • Amplitude (AMPL) initiated with a Sector Outperform at Scotiabank; tgt $25

    • BP (BP) initiated with a Neutral at Credit Suisse

    • Confluent (CFLT) initiated with a Sector Outperform at Scotiabank; tgt $27

    • Deere (DE) initiated with a Market Perform at Cowen; tgt $396

    • Equinor (EQNR) initiated with a Neutral at Credit Suisse

    • Freshworks (FRSH) initiated with a Sector Perform at Scotiabank

    • GitLab (GTLB) initiated with a Sector Outperform at Scotiabank; tgt $62

    • Gogoro (GGR) initiated with a Buy at Citigroup; tgt $8.60 (yesterday)

    • HubSpot (HUBS) initiated with a Sector Outperform at Scotiabank; tgt $550

    • Norwegian Cruise Line (NCLH) initiated with a Positive at Susquehanna; tgt $20

    • Offerpad Solutions (OPAD) resumed with a Mkt Outperform at JMP Securities; tgt lowered to $8.50

    • Opendoor Technologies (OPEN) initiated with a Mkt Outperform at JMP Securities; tgt $12

    • Perimeter Solutions (PRM) initiated with an Overweight at Morgan Stanley; tgt $14

    • Royal Caribbean (RCL) initiated with a Positive at Susquehanna; tgt $70

    • Silvergate Capital (SI) resumed with an Equal-Weight at Morgan Stanley; tgt $88

    • Take-Two (TTWO) resumed with an Overweight at JP Morgan; tgt lowered to $175

    • TotalEnergies SE (TTE) initiated with an Outperform at Credit Suisse

    • Twilio (TWLO) initiated with a Sector Outperform at Scotiabank; tgt $215

    • Vacasa (VCSA) resumed with a Mkt Outperform at JMP Securities; tgt lowered to $6.50

    • Zillow (ZG) resumed with a Mkt Perform at JMP Securities


Upcoming Events:

  • Econ Data:

    • 08:30 ET: Initial Claims for June 4 (Briefing.comConsensus 208K; Prior 200K)

    • 08:30 ET: Continuing Claims for May 28 (Briefing.comConsensus NA; Prior 1309K)

    • 10:30 ET: EIA Natural Gas Inventories for June 4 (Briefing.comConsensus NA; Prior +90 bcf)


  • Earnings:

    • Monday (Jun 6)

      • Morning: SAIC

      • Afternoon: COUP GTLB


  • Tuesday (Jun 7)

    • Morning: ASO CBRL PLAY GIII MOMO SJM REVG UNFI

    • Afternoon: CASY GWRE SMAR CURV VRNT


  • Wednesday (Jun 8)

    • Morning: BF.B CPB KC LOVE OLLI THO VRA

    • Afternoon: ABM BASE FIVE GEF AVO OXM YEXT


  • Thursday (Jun 9)

    • Morning: BILI FCEL NIO SIG

    • Afternoon: CMTL DOCU SFIX MTN


  • Friday (Jun 10)

    • None



Asia & Europe detail:

Asia: Nikkei UNCH, Hang Seng -0.7%, Shanghai Composite -0.8%

Equity indices in the Asia-Pacific region ended Thursday on a mostly lower note. China reported better than expected trade figures for May. South Korea's Finance Minister Choo said that the new government's economic policies will be announced next week and that all efforts will be made to stabilize prices. The Commonwealth Bank of Australia expects the Reserve Bank of Australia to begin cutting rates in 2023.

  • In economic data:

    • China's May trade surplus $78.76 bln (expected surplus of $58.00 bln; last surplus of $51.12 bln). May Imports 4.1% yr/yr (expected 2.0%; last 0.0%) and Exports 16.9% yr/yr (expected 8.0%; last 3.9%)

    • Japan's May Machine Tool Orders 23.7% yr/yr (expected 27.0%; last 25.0%)


---Equity Markets---

  • Japan's Nikkei: UNCH

  • Hong Kong's Hang Seng: -0.7%

  • China's Shanghai Composite: -0.8%

  • India's Sensex: +0.8%

  • South Korea's Kospi: UNCH

  • Australia's ASX All Ordinaries: -1.5%

---FX---

  • USD/JPY: -0.7% to 133.28

  • USD/CNH: -0.4% to 6.6735

  • USD/INR: UNCH at 77.71

Europe: DAX -0.6%, FTSE -0.4%, CAC -0.3%

Major European indices trade in the red. British Chambers of Commerce lowered the U.K.'s growth forecast for 2022 to 3.5% from 3.6%, expecting inflation to reach 10.0% in Q4. Italy's Prime Minister Draghi called for a joint EU mechanism to help member states deal with energy costs. The European Central Bank will release its latest statement in a few minutes, but the market does not expect any changes to the interest rate corridor just yet. However, ECB President Lagarde is expected to set the stage for a rate hike in July.

  • In economic data:

    • France's Q1 nonfarm payrolls 0.3% qtr/qtr (last 0.3%)


---Equity Markets---

  • STOXX Europe 600: -0.5%

  • Germany's DAX: -0.6%

  • U.K.'s FTSE 100: -0.4%

  • France's CAC 40: -0.3%

  • Italy's FTSE MIB: -0.5%

  • Spain's IBEX 35: -0.4%

---FX---

  • EUR/USD: UNCH at 1.0717

  • GBP/USD: UNCH at 1.2534

  • USD/CHF: UNCH at 0.9778

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