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02/06/22 Briefing


The S&P 500 futures are up 19 points and are trading 0.5% above fair value. The Nasdaq 100 futures are up 83 points and are trading 0.7% above fair value. The Dow Jones Industrial Average futures are up 139 points and are trading 0.5% above fair value.

The positive bias in the futures market has been helped by a pullback in oil prices and some better-than-expected earnings results and reassuring guidance from tech stocks NetApp (NTAP), MongoDB (MDB), and Elastic (ESTC).

WTI crude futures are down 2.5% to $112.37/bbl following an FT report that suggests Saudi Arabia is ready to step up production to compensate for any significant drop in output from Russia due to the EU sanctions. Oil futures flirted with $120.00/bbl on Tuesday.

Today's session will feature a bevy of economic data, starting with the May ADP Employment Change Report at 8:15 a.m. ETand followed by the weekly initial claims and revised Q1 Productivity reports at 8:30 a.m. ET. The April Factory Orders Report will be released at 10:00 a.m. ET. Natural gas and oil inventory reports from the EIA will hit the wires at 10:30 a.m. ETand 11:00 a.m. ET, respectively.

The 10-yr note yield is down two basis points to 2.91% and the 2-yr note yield is unchanged at 2.65%. The U.S. Dollar Index is down 0.3% to 102.15.

In corporate news:

  • Meta Platforms (FB 189.94, +1.30, +0.7%): Mark Zuckerberg confirms Sheryl Sandberg will depart FB as COO, Javier Olivan will become new COO

  • NetApp (NTAP 75.00, +2.49, +3.4%): beats by $0.14, reports revs in-line; guides JulQ EPS in-line, revs in-line; guides FY23 EPS in-line, revs in-line

  • MongoDB, Inc. (MDB 263.20, +21.39, +8.9%): beats by $0.30, beats on revs; guides JulQ EPS below consensus, revs above consensus; guides FY23 EPS above consensus, revs in-line

  • Elastic (ESTC 65.98, +4.04, +6.5%): beats by $0.05, beats on revs; guides Q1 EPS in-line, revs above consensus; guides FY23 EPS in-line, revs above consensus

  • Hewlett Packard Enterprise (HPE 15.09, -0.69, -4.4%): misses by $0.01, misses on revs, as-a-service orders increased 107%; guides Q3 EPS in-line; guides FY22 EPS in-line, reiterates revenue growth of 3-4%, adjusted for currency

  • Chewy (CHWY 28.22, +4.73, +20.1%): beats by $0.17, reports revs in-line; guides JulQ revs in-line; reaffirms FY23 revs guidance

  • PVH Corp (PVH 74.00, +2.89, +4.1%): beats by $0.34, beats on revs; guides JulQ EPS below consensus, revs below consensus; guides FY23 EPS below consensus, revs below consensus; increases planned 2022 share repurchases to $400 mln

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region ended Thursday on a mostly lower note. Japan's Nikkei -0.2%; Hong Kong's Hang Seng -1.0%; China's Shanghai +0.4%; India's Sensex +0.8%; South Korea's Kospi -1.0%; Australia's All Ordinaries -0.8%.

  • In economic data:

  • South Korea's May Nikkei Manufacturing PMI 51.8 (last 52.1)

  • Australia's April trade surplus AUD10.495 bln (expected surplus of AUD9.300 bln; last surplus of AUD9.314 bln). April Imports -1% m/m (last -5%) and Exports 1% m/m (last 0%). April Retail Sales 0.9% m/m, as expected (last 0.9%)

  • New Zealand's Q1 Terms of Trade Index 0.5% qtr/qtr, as expected (last -0.9%)


  • In news:

  • Japan may reportedly increase the daily arrival limit on foreign tourists in July. Japan's minimum wage will be increased.

  • China's Ambassador to Australia indicated that sanctions on Australian imports to China will not be lifted.

  • The U.S. will reportedly ban imports of goods produced in China's Xinjiang region due to concerns about forced labor.

  • China Securities Journal expects car sales in China to increase 4% yr/yr this year.



  • Major European indices trade in the green while the U.K.'s FTSE is closed for a Bank Holiday and will be also closed tomorrow. STOXX Europe 600 +0.5%; Germany's DAX +0.5%; France's CAC 40 +1.1%; Italy's FTSE MIB +0.4%; Spain's IBEX 35 +0.3%.

  • In economic data:

  • Eurozone's April PPI 1.2% m/m (expected 2.3%; last 5.3%); 37.2% yr/yr (expected 38.5%; last 36.9%)

  • Spain's May Unemployment Change -99,500 (last -86,300)

  • Swiss May CPI 0.7% m/m (expected 0.3%; last 0.4%); 2.9% yr/yr (expected 2.6%; last 2.5%)


  • In news:

  • There has been continued uncertainty about the size of the European Central Bank's initial rate hike.

  • British Prime Minister Johnson will reportedly postpone a cabinet reshuffle that was expected in the summer.

  • Bank of England Deputy Governor Cunliffe said that he is seeing signs of a slowdown in the housing market.



U.S. equity futures:

  • S&P 500 Futures: +21 @ 4,122

  • DJIA Futures: +147 @ 32,960

  • Nasdaq 100 Futures: +85 @ 12,634

Overseas:

  • Europe: DAX +0.8%, FTSE CLOSED, CAC +1.1%

  • Asia: Nikkei -0.2%, Hang Seng -1.0%, Shanghai Composite +0.4%

Commodities:

  • Crude Oil -3.03 @ 112.23

  • Nat Gas +0.232 @ 8.928

  • Gold +9.70 @ 1858.40

  • Silver +0.237 @ 22.152

  • Copper +0.1400 @ 4.4685

U.S. Summary:

  • Earnings/Guidance (Full Earnings Calendar):

  • AmerisourceBergen (ABC) provides long-term goals at Investor Day: expects adjusted EPS growth of +8-12%

  • Anthem (ANTM) reaffirms FY22 EPS guidance

  • ArcBest (ARCB) reports May 2022 consolidated revenues grew approximately 38% on a per day basis compared to May 2021

  • Buckle (BKE) reports May comparable store net sales +5.3% yr/yr; Net sales +5.1% to $94.3 mln

  • C3.ai (AI) beats by $0.08, beats on revs; guides JulQ revs below consensus; guides FY23 revs below consensus

  • Cedar Fair (FUN) reports revenues through the Memorial Day weekend increased 21% compared to 2019

  • Chewy (CHWY) beats by $0.17, reports revs in-line; guides JulQ revs in-line; reaffirms FY23 revs guidance

  • Ciena (CIEN) misses by $0.04, reports revs in-line

  • Credo Technology Group (CRDO) beats by $0.02, beats on revs; guides Q1 revs above consensus

  • Descartes (DSGX) beats by $0.01, beats on revs

  • Designer Brands (DBI) beats by $0.24, beats on revs; raises FY23 EPS above consensus

  • Elastic (ESTC) beats by $0.05, beats on revs; guides Q1 EPS in-line, revs above consensus; guides FY23 EPS in-line, revs above consensus

  • GameStop (GME) misses on EPS, beats on revs

  • Hewlett Packard Enterprise (HPE) misses by $0.01, misses on revs, as-a-service orders increased 107%; guides Q3 EPS in-line; guides FY22 EPS in-line, reiterates revenue growth of 3-4%, adjusted for currency

  • Hormel Foods (HRL) beats by $0.01, reports revs in-line; guides FY22 EPS in-line, reaffirms FY22 revs guidance

  • Ingredion (INGR) provides longer term guidance in slide presentation

  • MongoDB (MDB) beats by $0.30, beats on revs; guides JulQ EPS below consensus, revs above consensus; guides FY23 EPS above consensus, revs in-line

  • nCino (NCNO) beats by $0.02, beats on revs; guides Q2 EPS in-line, revs above consensus; guides FY23 EPS above consensus, revs above consensus

  • NetApp (NTAP) beats by $0.14, reports revs in-line; guides JulQ EPS in-line, revs in-line; guides FY23 EPS in-line, revs in-line

  • Pure Storage (PSTG) beats by $0.20, beats on revs; guides Q2 revs above consensus; guides FY23 revs above consensus

  • PVH (PVH) beats by $0.34, beats on revs; guides JulQ EPS below consensus, revs below consensus; guides FY23 EPS below consensus, revs below consensus; increases planned 2022 share repurchases to $400 mln

  • SecureWorks (SCWX) beats by $0.06, reports revs in-line; guides Q2 EPS in-line, revs below consensus; guides FY23 EPS in-line, revs in-line

  • Semtech (SMTC) beats by $0.04, beats on revs; guides Q2 EPS in-line, revs in-line

  • SentinelOne (S) beats by $0.03, beats on revs; guides Q2 revs above consensus; guides FY23 revs above consensus

  • SpartanNash (SPTN) beats by $0.19, reports revs in-line; raises FY22 revs in-line

  • UiPath (PATH) beats by $0.03, beats on revs; guides JulQ revs in-line; guides FY23 revs above consensus

  • Veeva Systems (VEEV) beats by $0.07, beats on revs; guides Q2 EPS above consensus, revs in-line; guides FY23 EPS above consensus, revs in-line


  • General News:

  • Russia missed an interest payment triggering credit default swaps, according to the Wall Street Journal

  • Russia says that US decision to send rocket systems to Ukraine is "pouring gasoline on a fire", according to the New York Times

  • EU embargo on Russian oil delayed after Hungry made additional demands, according to Bloomberg

  • US aiming to send armed drones to Ukraine, according to Reuters

  • Republicans are expected to gain 20-35 House seats after the midterm elections, giving the party the majority. Districts that President Biden won by 10-15 points could be captured by Republicans, according to Axios

  • House will vote on assault weapons ban, but this has no chance of passing Senate, according to The Hill

  • Saudi Arabia ready to increase oil production if needed, according to Financial Times

  • President Biden acknowledged that he didn't understand until April the potential impact of baby formula plant shutdowns. The manufacturers told him they knew right away how bad the shortages could get, according to CNN

  • Education Department approves $5.8 billion group discharge to cancel all remaining loans for 560,000 borrowers who attended Corinthian

  • EU Commission approves EUR 10 billion Spanish scheme to support companies in context of Russia's invasion of Ukraine

  • USPS aiming to increase purchase of EVs, according to Reuters

  • ANI Pharma (ANIP) receives FDA approval for Abbreviated New Drug Application for Fludrocortisone Acetate Tablets

  • Axsome Therapeutics (AXSM) announces that treatment with AXS-05 rapidly and significantly reduced anhedonic symptoms in the GEMINI Phase 3 trial in major depressive disorder

  • Blue Apron (APRN) launches new meal kit offering on Walmart.com(WMT)

  • Boyd Gaming (BYD) authorizes $500 mln increase to share repurchase program

  • Centessa Pharmaceuticals (CNTA) to discontinue clinical development of lixivaptan for Autosomal Dominant Polycystic Kidney Disease

  • Chipotle (CMG) will accept bitcoin, according to The Block

  • CME Group (CME) reports May Monthly Market Statistics

  • Comtech Telecom (CMTL) receives 5G contract with mobile network operator in the Kingdom of Saudi Arabia

  • Delta Air Lines (DAL) still trying to reach an aircraft deal with Boeing (BA), according to Reuters

  • Earthstone Energy (ESTE) announces extension of revolving credit facility and increased borrowing base

  • Enochian Biosciences (ENOB) published on its website a letter to shareholders to clarify "several misrepresentations"

  • Ferroglobe PLC (GSM) appoints Benjamin Crespy to COO position

  • Gray Television (GTN) enters long-term agreement with NBCUniversal Media for the lease and operation of studio facilities at Gray's Assembly Atlanta development

  • Immunic (IMUX) reported top-line data from its phase 2 CALDOSE-1 trial of lead asset, vidofludimus calcium

  • Inter Parfums (IPAR) announces retirement of CFO Russell Greenberg, effective September 6

  • Intl Game Tech. PLC (IGT) signs ten year contract extension with Kansas lottery

  • Iteris Holdings (ITI) authorizes new $10 mln common stock repurchase program

  • LumiraDx (LMDX) expanded its cardiovascular offering with a CE Mark for its new NT-proBNP test to aid in the diagnosis of congestive heart failure

  • Moderna (MRNA) and EC to amend their originally agreed contractual delivery schedules for the Moderna COVID-19 vaccine booster product (Spikevax, mRNA-1273) or updated booster vaccine candidate

  • Myovant Sciences (MYOV) and Pfizer (PFE) announce FDA acceptance of supplemental new drug application for Myfembree

  • Nextdoor (KIND) approves a share repurchase program up to $100 mln through June 30, 2024

  • Ozon Holdings (OZON) enters into standstill agreement in respect of $750 mln senior unsecured convertible bonds due 2026

  • Pfizer (PFE) aiming to submit COVID-19 vaccine data for kids under 5, according to Bloomberg

  • PyroGenesis Canada (PYR) announces project to introduce plasma torches into the upstream anode baking process

  • Radius Health (RDUS) provides update on abaloparatide transdermal system development program; to cease all work on abalo-TDS

  • Raytheon Technologies (RTX): NASA has selected RTX unit Collins Aerospace & Axiom Space (AXIM) to advance spacewalking capabilities in low-Earth orbit and at the Moon

  • Renalytix (RNLX) Announces Two Data Presentations on KidneyIntelX at American Diabetes Association 82nd Scientific Sessions

  • Repare Therapeutics (RPTX) announces worldwide license and collaboration agreement with Roche (RHHBY) for camonsertib

  • Riot Blockchain (RIOT) announces that Colin Yee was selected to succeed Jeff McGonegal in CFO role

  • Saia (SAIA) provides LTL shipment and tonnage data for the first two months of the second quarter

  • Sana Biotechnology (SANA) announces agreement to develop manufacturing facility in Bothell, Washington

  • Silk Road Medical (SILK) announces that CMS has expanded coverage for TCAR to include standard surgical risk patients within the VQI's TCAR Surveillance Project

  • VAALCO Energy (EGY) Announces Successful Drilling of South Tchibala 1HB-ST Well

  • Valaris (VAL) receives contract termination notice for drillship VALARIS DS-11


  • M&A:

  • ASGN Incorporated (ASGN) acquires GlideFast Consulting for $350 mln; reaffirms Q2 outlook

  • Brown & Brown (BRO) subsidiary Brown & Brown Dealer Services acquires the assets of Dealer Specialties, an independent sales and service organization in NY; financial details not disclosed

  • Oracle (ORCL) obtains approvals for proposed acquisition of Cerner (CERN)

  • Petrobras (PBR) discloses stake in the company Ibiritermo S.A.

  • Regeneron Pharma (REGN) purchases Sanofi's (SNY) stake in the Regeneron and Sanofi Collaboration on Libtayo

  • Ryerson (RYI) acquires tool steel processor Ford Tool Steels; financial details not disclosed

  • SailPoint (SAIL) receives HSR clearance for pending merger transaction with Thoma Bravo

  • Terminix (TMX) satisfies key closing condition for Rentokil merger


  • Syndicate:

  • American Tower (AMT) files mixed securities shelf offering; also intends to offer 8,350,000 shares of its common stock in a registered public offering

  • Blue Owl Capital (OWL) prices secondary offering by NBSH Blue Investments II of 10,698,180 shares of Class A common stock at $11.50 per share

  • Concert Pharmaceuticals (CNCE) prices offering of 10 mln shares of common stock at $4.75 per share

  • Day One Biopharmaceuticals (DAWN) files for $400 mln mixed securities shelf offering

  • Magnolia Oil & Gas (MGY) announces proposed block trade of 7.5 mln Class A shares by selling shareholders; intends to purchase 2 mln Class B shares

  • Vacasa (VCSA) files for 336,074,144 share common stock offering by selling shareholders


  • IPOs:

  • Priced to Trade:

  • No IPOs expected.



Gapping Up/Down

  • Gapping up:

  • CHWY +17.2%, RPTX +17%, PSTG +12.5%, APRN+11.1%, PATH +11.1%, KIND +9.3%, MDB +9.2%, CRDO +8.5%, ESTC +7.4%, SANA +5.6%, VEEV+4.3%, PVH +4.1%, NTAP +3.4%, RIOT +2.8%, CMTL+2.7%, GSM +2.5%, ASGN +2.3%, BYD +2.1%, DHX+1.4%, VAL +1.4%, ORCL +1%, DAL +0.9%, BA +0.9%, SAIL +0.9%, DSGX +0.9%


  • Gapping down:

  • AI -23.6%, OZON -19%, HPE -6.2%, CNCE -5.4%, DAWN -4.9%, MGY -4.5%, OWL -4%, RDUS -2.3%, IGT -1.7%, FUN -1.6%, ARCB -1.3%, ANIP -1%


Analyst Research (see Upgrades/Downgradescalendarfor full list):

  • Upgrades

  • Agree Realty (ADC) upgraded to Buy from Neutral at BofA Securities; tgt raised to $78

  • Americold Realty Trust (COLD) upgraded to Neutral from Underperform at BofA Securities; tgt raised to $30

  • Dentsply Sirona (XRAY) upgraded to Buy from Neutral at UBS; tgt lowered to $47

  • Ecolab (ECL) upgraded to Buy from Neutral at UBS; tgt raised to $205

  • Reinsurance Group of America (RGA) upgraded to Neutral from Underperform at Credit Suisse; tgt raised to $122

  • SolarEdge Technologies (SEDG) upgraded to Outperform from Perform at Oppenheimer; tgt $334

  • Wolfspeed (WOLF) upgraded to Outperform from Perform at Oppenheimer; tgt $105


  • Downgrades:

  • Albemarle (ALB) downgraded to Neutral from Buy at UBS; tgt lowered to $260

  • C3.ai (AI) downgraded to Neutral from Overweight at Piper Sandler; tgt lowered to $15

  • Crown Castle (CCI) downgraded to Underweight from Equal Weight at Wells Fargo; tgt $180

  • Pinterest (PINS) downgraded to Neutral from Overweight at Piper Sandler; tgt lowered to $23

  • SJW (SJW) downgraded to Equal Weight from Overweight at Wells Fargo; tgt lowered to $66

  • Snap (SNAP) downgraded to Neutral from Overweight at Piper Sandler; tgt lowered to $18

  • Starry (STRY) downgraded to Neutral from Buy at Goldman; tgt $9

  • Twilio (TWLO) downgraded to Equal Weight from Overweight at Barclays; tgt lowered to $110


  • Others:

  • Ballard Power (BLDP) assumed with a Sector Weight at KeyBanc Capital Markets

  • Biomea Fusion (BMEA) assumed with a Buy at H.C. Wainwright; tgt $16

  • Bloom Energy (BE) assumed with an Overweight at KeyBanc Capital Markets; tgt $30

  • Digi Intl (DGII) initiated with an Overweight at Stephens; tgt $36

  • FleetCor (FLT) assumed with an Outperform at Evercore ISI; tgt $300

  • FuelCell Energy (FCEL) assumed with a Sector Weight at KeyBanc Capital Markets

  • Ocugen (OCGN) initiated with an Overweight at Cantor Fitzgerald; tgt $4.50

  • Plug Power (PLUG) assumed with an Overweight at KeyBanc Capital Markets; tgt $40

  • Proterra (PTRA) initiated with a Buy at DA Davidson; tgt $10

  • Rivian Automotive (RIVN) initiated with an Underperform at DA Davidson; tgt $24

  • Sema4 Holdings Corp (SMFR) resumed with a Buy at Goldman; tgt $3.50

  • T-Mobile US (TMUS) initiated with an Outperform at Wolfe Research; tgt $159

  • TelevisaUnivision (TV) resumed with a Neutral at Goldman; tgt $11.50


Upcoming Events:

  • Econ Data:

  • 08:15 ET: ADP Employment Change for May (Briefing.comConsensus 295K; Prior 247K)

  • 08:30 ET: Initial Claims for May 28 (Briefing.comConsensus 210K; Prior 210K)

  • 08:30 ET: Continuing Claims for May 21 (Briefing.comConsensus NA; Prior 1346K)

  • 08:30 ET: Productivity - Rev. for Q1 (Briefing.comConsensus -7.5%; Prior -7.5%)

  • 08:30 ET: Unit Labor Costs - Rev. for Q1 (Briefing.comConsensus 11.6%; Prior 11.6%)

  • 10:00 ET: Factory Orders for Apr (Briefing.comConsensus 0.7%; Prior 2.2%)

  • 10:30 ET: EIA Natural Gas Inventories for May 28 (Briefing.comConsensus NA; Prior +80 bcf)

  • 11:00 ET: EIA Crude Oil Inventories for May 28 (Briefing.comConsensus NA; Prior -1.02 M)


  • Earnings:

  • Tuesday (May 31)

  • Morning: BEKE

  • Afternoon: AMBA APPS HPQ CRM SPWH VSCO


  • Wednesday (Jun 1)

  • Morning: CPRI CONN DCI WB

  • Afternoon: AI CHWY CRDO DSGX ESTC GME HPE MDB NCNO NTAP PSTG PVH SMTC S PATH VEEV


  • Thursday (Jun 2)

  • Morning: CAE CIEN DBI HRL SCWX SPTN TTC

  • Afternoon: ASAN CVGW COO CRWD JOAN LULU OKTA PD PHR RH ZUMZ



Asia & Europe detail:

Asia: Nikkei -0.2%, Hang Seng -1.0%, Shanghai Composite +0.4%

Equity indices in the Asia-Pacific region ended Thursday on a mostly lower note. Japan may reportedly increase the daily arrival limit on foreign tourists in July. Japan's minimum wage will be increased. China's Ambassador to Australia indicated that sanctions on Australian imports to China will not be lifted. The U.S. will reportedly ban imports of goods produced in China's Xinjiang region due to concerns about forced labor. China Securities Journalexpects car sales in China to increase 4% yr/yr this year.

  • In economic data:

  • South Korea's May Nikkei Manufacturing PMI 51.8 (last 52.1)

  • Australia's April trade surplus AUD10.495 bln (expected surplus of AUD9.300 bln; last surplus of AUD9.314 bln). April Imports -1% m/m (last -5%) and Exports 1% m/m (last 0%). April Retail Sales 0.9% m/m, as expected (last 0.9%)

  • New Zealand's Q1 Terms of Trade Index 0.5% qtr/qtr, as expected (last -0.9%)


---Equity Markets---

  • Japan's Nikkei: -0.2%

  • Hong Kong's Hang Seng: -1.0%

  • China's Shanghai Composite: +0.4%

  • India's Sensex: +0.8%

  • South Korea's Kospi: -1.0%

  • Australia's ASX All Ordinaries: -0.8%

---FX---

  • USD/JPY: -0.3% to 129.74

  • USD/CNH: -0.2% to 6.6783

  • USD/INR: UNCH at 77.55

Europe: DAX +0.8%, FTSE CLOSED, CAC +1.1%

Major European indices trade in the green while the U.K.'s FTSE is closed for a Bank Holiday and will be also closed tomorrow. There has been continued uncertainty about the size of the European Central Bank's initial rate hike. British Prime Minister Johnson will reportedly postpone a cabinet reshuffle that was expected in the summer. Bank of England Deputy Governor Cunliffe said that he is seeing signs of a slowdown in the housing market.

  • In economic data:

  • Eurozone's April PPI 1.2% m/m (expected 2.3%; last 5.3%); 37.2% yr/yr (expected 38.5%; last 36.9%)

  • Spain's May Unemployment Change -99,500 (last -86,300)

  • Swiss May CPI 0.7% m/m (expected 0.3%; last 0.4%); 2.9% yr/yr (expected 2.6%; last 2.5%)


---Equity Markets---

  • STOXX Europe 600: +0.5%

  • Germany's DAX: +0.8%

  • U.K.'s FTSE 100: CLOSED

  • France's CAC 40: +1.1%

  • Italy's FTSE MIB: +0.4%

  • Spain's IBEX 35: +0.3%

---FX---

  • EUR/USD: +0.4% to 1.0690

  • GBP/USD: +0.6% to 1.2554

  • USD/CHF: -0.4% to 0.9592

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