05/04/22 Briefing

The S&P 500 futures trade roughly in-line with fair value in a relatively quiet session. Investors are waiting for key data on the services sector, speeches from several Fed officials, and any new sanctions against Russia for its alleged war crimes.

The Treasury market remains a focal point, as the 2s10s spread has un-inverted. The 2-yr yield is up four basis points to 2.46% amid rate-hike expectations, and the 10-yr yield is up five basis points to 2.46% amid inflation expectations.

Oil prices are still trading over $100 per barrel ($103.75, +0.47, +0.5%) while the U.S. Dollar Index (98.94, -0.06, -0.1%) is weaker.

On the data front, investors will receive the Trade Balance for February (Briefing.comconsensus -$88.5 billion) at 8:30 a.m. ETand the ISM Non-Manufacturing Index for March (Briefing.comconsensus 58.5%) at 10:00 a.m. ET.

Today's lineup of Fed speakers includes Minneapolis Fed President Kashkari (alternate voter) at 10:00 a.m. ET, Fed Governor Brainard (FOMC voter) at 11:05 a.m. ET, and New York Fed President Williams (FOMC voter) at 2:00 p.m. ET.

In U.S. Corporate news:

• Acuity Brands (AYI 188.88, +3.81): +2.1% after beating top and bottom-line estimates.

• Carnival (CCL 20.45, +0.71): +3.6% after reporting the busiest booking week in its history (March 28 through April 3).

• Cars.com(CARS 15.25, +0.57): +3.9% after announcing CFO Sonia Jain will resign on April 15and reaffirming its Q1 and FY22 revenue guidance. Jandy Tomy will be interim CFO.

• Cognyte Software (CGNT 8.85, -2.81): -24.1% after missing top and bottom-line estimates.

Reviewing overnight developments:

• Equity indices in the Asia-Pacific region saw modest changes on Tuesday. Japan's Nikkei: +0.2% Hong Kong's Hang Seng: closed for holiday China's Shanghai Composite: closed for holiday India's Sensex: -0.7% South Korea's Kospi: +0.1% Australia's ASX All Ordinaries: +0.2%.

  • In economic data:

    • Japan's February Household Spending -2.8% m/m (expected -1.5%; prior -1.2%) and +1.1% yr/yr (expected +2.7%; prior +6.9%); March Services PMI 49.4 (expected 48.7; prior 44.2)

    • Australia's March AIG Construction Index 56.5 (prior 53.4)

    • South Korea's March CPI +0.7% m/m (expected +0.4%; prior +0.6%) and +4.1% yr/yr (expected +3.8%; prior +3.7%)

    • Singapore's February Retail Sales -1.2% m/m (prior -2.2%) and -3.4% yr/yr (prior +12.0%)

• In news:

  • Traders seemingly lacked conviction with the Hong Kong and Chinese markets closed for the Ching Ming Festival and Shanghai staying in lockdown mode with COVID cases remaining elevated.

  • The Reserve Bank of Australia left its cash rate target unchanged at 0.10%, as expected, but its policy statement no longer contained the word "patient," suggesting the RBA may soon raise its cash rate.

  • BOJ Governor Kuroda said the weakening in the yen was "somewhat rapid" but didn't give any sense that he is intent on taking any policy action to change its course.

  • South Korea's CPI was up 4.1% yr/yr in March, sporting its first 4-handle in more than 10 years and sparking a warning from the bank that it may stay at 4.0% or above for a while.

• Major European indices are mostly lower with France's CAC 40 (-1.5%) the standout loser as investors deal with some increased uncertainty revolving around the upcoming presidential election. STOXX Europe 600: -0.2% Germany's DAX: -0.4% U.K.'s FTSE 100: -0.1% France's CAC 40: -1.5% Italy's FTSE MIB: -0.9% Spain's IBEX 35: +0.7%.

  • In economic data:

    • Eurozone's March Services PMI 55.6 (expected 54.8; prior 55.5); Markit Composite PMI 54.9 (expected 54.5; prior 55.5)

    • Germany's March Services PMI 56.1 (expected 55.0; prior 55.8); Composite PMI 55.1 (expected 54.6; prior 55.6)

    • UK's March Services PMI 62.6 (expected 61.0; prior 60.5)

    • Italy's Services PMI 52.1 (expected 51.5; prior 52.8); Composite PMI 52.1 (prior 53.6)

    • France's March Services PMI 57.4 (expected 57.4; prior 55.5); February Industrial Production -0.9% m/m (expected +0.2%; prior +1.8%)

    • Spain's March Services PMI 53.4 (expected 54.2; prior 56.6)

• In news:

  • European Services PMI readings were released and they were mixed with reports for the eurozone, Germany, Italy, and the UK exceeding expectations, France meeting expectations, and Spain coming up short.

  • The U.S. Treasury said it is not going to allow any U.S. dollar-denominated payments from Russian government accounts at U.S. financial institutions, which raises the potential for default.

  • According to CNBC, the EU is prepping more sanctions for Russia, including a possible ban on Russian coal imports.

  • ECB member Knot thinks the bank should take action to tame inflation pressures.

U.S. equity futures:

• S&P 500 Futures: -7 @ 4,567

• DJIA Futures: -70 @ 34,852

• Nasdaq 100 Futures: -24 @ 15,135

Overseas:

• Europe: DAX -0.4%, FTSE -0.1%, CAC -1.5%

• Asia: Nikkei +0.2%, Hang Seng Closed; Shanghai Composite Closed
  

Commodities:

• Crude Oil +0.70 @ 103.90

• Nat Gas +0.207 @ 5.919

• Gold -5.90 @ 1928.10

• Silver +0.220 @ 24.810

• Copper +0.0190 @ 4.8005

U.S. Summary:

• Earnings/Guidance (Full Earnings Calendar):

  • Acuity Brands (AYI) beats by $0.20, beats on revs

  • Cars.com(CARS) CFO Sonia Jain to resign, effective April 15; Jandy Tomy named interim CFO; co reaffirms Q1 and FY22revenue guidance

  • Cognyte Software (CGNT) misses by $0.06, misses on revs

  • Lindsay Corp (LNN) beats by $0.12, beats on revs

  • Supernus Pharma (SUPN) reaffirms FY22guidance

  • Thryv (THRY) announces SaaS revenue target of $1 billion in 2027

  • Welltower (WELL) expects to exceed midpoint of Q1 FFO guidance

• General News:

  • The Biden administration believes Russia's ground troops will focus on eastern Ukraine, but air and missile strikes will continue throughout the entire country, according to CNBC

  • US and allies are likely to present evidence that atrocities were committed in Bucha at today's UN meeting. European leaders are divided on idea to stop purchases of Russian natural gas, according to the New York Times

  • Shanghai extends lockdown for the entire city, according to Reuters

  • EU could ban Russian imports of coal, according to CNBC

  • Senate votes 53-47 on motion to discharge nomination of Ketanji Brown Jackson for Supreme Court out of committee; full confirmation vote expected Friday

  • SEC Chairman Gary Gensler says crypto platforms should be registered and regulated much like exchanges

  • Senate confirms $10 bln COVID-19 funding deal for vaccines, treatments, and testing; Congress is expected to vote later this week

  • Some China companies are executing delisting workarounds, according to the Wall Street Journal

  • The Biden Administration proposes rule to fix 'family glitch' and lower health care costs

  • 4D Molecular Therapeutics (FDMT) doses first patient in Phase 1/2 trial of 4D-710 in patients with cystic fibrosis

  • AirBnb (ABNB) suspending operations in Russia & Belarus, according to Reuters

  • Amazon (AMZN) announced agreements with Arianespace, Blue Origin, and United Launch Alliance to provide heavy-lift launch services for Project Kuiper, Amazon's initiative to increase global broadband access using a constellation of satellites in low Earth orbit

  • argenx (ARGX) Presents Interim Results from ADAPT+ Open-Label Extension Study Evaluating VYVGART (efgartigimod alfa-fcab) in Generalized Myasthenia Gravis at 2022 AAN Annual Meeting

  • Benefitfocus (BNFT) announced that it has entered into a cooperation agreement with Indaba Capital Management, which owns approximately 11.8% of the Company's outstanding shares, making it one of the Company's largest common stockholder

  • Biogen (BIIB): New Data at AAN 2022 Highlight Real-World Evidence from Biogen's MS Portfolio and Emerging Research on Disease Progression

  • Block (SQ) announced that it recently determined that a former employee downloaded certain reports of its subsidiary Cash App Investing on December 10, 2021 that contained some U.S. customer information

  • Bluebirdbio (BLUE) is initiating a comprehensive restructuring intended to deliver up to $160 million in cost savings over the next two years

  • Bristol-Myers (BMY) receives European commission approval for Opdivo plus yervoy (ipilimumab) as first-line treatment for patients with unresectable advanced, recurrent or metastatic esophageal squamous cell carcinoma with tumor cell PD-L1 expression

  • Bristol-Myers (BMY) receives European commission approval for Opdivo (nivolumab) with chemotherapy as first-line treatment for patients with unresectable advanced, recurrent or metastatic esophageal squamous cell carcinoma with tumor cell PD-L1

  • Burlington Stores (BURL) announces the retirement of CFO John Crimmins

  • Carnival plc (CUK): the one-week period of March 28 through April 3 was the busiest booking week in its history, showing a double-digit increase from the previous record seven-day booking total

  • ChargePoint (CHPT) announces $300 mln financing agreement with Antara Capital

  • Citigroup (C) announced the launch of its Sustainable Trade and Working Capital Loans solution in Europe, Middle East and Africa, Latin America (LATAM) and Asia Pacific regions

  • Citigroup (C) suspends new issuance of SPACs, according to Bloomberg

  • Corcept Therapeutics (CORT) completes enrollment in Phase 2 GRATITUDE study; data expected to be available in Q4

  • Farfetch (FTCH) and Neiman Marcus Group announce global strategic partnership and investment, including expanding Bergdorf Goodman's e-commerce capabilities and reach

  • Fluidigm (FLDM) completes $250 mln strategic capital infusion; changes name to "Standard BioTools"

  • General Motors (GM) and Honda (HMC) will codevelop affordable EVs targeting the world's most popular vehicle segments

  • Genius Sports (GENI) has agreed a ground-breaking new data tracking and video augmentation partnership with Liga MX franchise Club Necaxa

  • Hut 8 Mining (HUT) monthly production update for March 2022

  • Lion Electric (LEV) receives order for 50 all-electric school buses from Groupe Campeau

  • Marathon Digital Holdings (MARA) announces bitcoin production and mining operation updates for March 2022; saw a 21% increase in self-mined bitcoin from February

  • MarketAxess (MKTX) reports March trading volume $894.6 billion, consisting of $285.1 billion in credit volume and $609.5 billion in rates volume

  • MediciNova (MNOV) was notified by Genzyme Corporation, a subsidiary of Sanofi (SNY) about patent infringement claim

  • Morgan Stanley (MS): Investor accuses Morgan Stanley of leaking data related to Palantir (PLTR), according to the Wall Street Journal

  • Nio (NIO) in discussions with other companies about licensing technology, according to Financial Times

  • Parker-Hannifin (PH) discloses security breach update

  • Petrobras (PBR) provides several company updates

  • Roche's (RHHBY) Genentech announces new data for Ocvreus in primary progressive multiple sclerosis and secondary progressive MS

  • Ryman Hospitality (RHP) announces strategic investment in OEG Attractions by Atairos and NBCUniversal

  • SEI Investments (SEIC) appoints Ryan Hicke as CEO, effective June 1, 2022

  • Sphere 3D (ANY) announces Particia Trompeter as CEO, Duncan McEwan will transition to Chairman of the Board; expands Board to five members

  • Spotify (SPOT) podcast union preparing to strike, according to Bloomberg

  • Synopsys (SNPS) and Juniper Networks (SNPS) to form company that provides industry with open silicon photonics platform; terms of agreement not disclosed

  • Theravance Biopharma (TBPH) announces results from Study 0170, a second Phase 3 study of ampreloxetine; the primary endpoint was not statistically significant for the overall population of patients

  • Tiziana Life Sciences (TLSA): FDA grants permission to enroll up to 8 additional secondary progressive multiple sclerosis patients in the expanded access program with intranasal foralumab

  • Tradeweb Markets (TW) reports March ADV +14% yr/yr to $1.23 trln

  • TransAlta (TAC) and Meta Platforms (FB) announce long-term renewable energy purchase agreement

  • Trinity Capital (TRIN) commences public offering of $50 mln of common stock

  • Twist Bioscience (TWST) and Ginkgo Bioworks (DNA) announce a new supply agreement expanding the depth and breadth of the collaboration between two of the leading organizations in the synthetic biology ecosystem

  • Twitter (TWTR): Elon Musk's TWTR investment could raise regulatory issues, according to the Wall Street Journal

  • Universal Stainless/Alloy (USAP) announced that Steven V. DiTommaso has been named Vice President and Chief Financial Officer of the Company, effective April 1, 2022

• M&A:

  • Booz Allen Hamilton (BAH): Oliver Wyman to acquire Booz Allen Hamilton's management consulting business serving the Middle East and North Africa (MENA) region

  • Bruker (BRKR) announces the acquisition of Optimal Industrial Automation and Technologies; financial terms were not disclosed

  • Castle Biosciences (CSTL) agrees to acquire AltheaDx for $65 mln, half of which will be paid in cash and half in common stock of CSTL; expects to close in 2Q22

  • Change Healthcare (CHNG): Optum (UNH) and CHNG have agreed to extend their merger agreement to December 31, 2022

  • ITT (ITT) acquires privately-held Habonim for $140 in an all-cash transaction; expected to be accretive to IIT's consolidated EBITDA margin

  • Kinross Gold (KGC) divests Russian assets

  • MDH Acquisition Corp (MDH) and Olive Ventures Holdings mutually agree to terminate business combination agreement

  • Sphere 3D (ANY) and Gryphon Digital mutually agree to terminate merger agreement

  • W&T Offshore (WTI) acquires oil and gas producing properties in the Gulf of Mexico

• Syndicate:

  • Knightscope (KSCP) announces committed equity facility with B. Riley Principal Capital

  • Xponential Fitness (XPOF) announces secondary public offering of 4.5 mln shares by selling stockholders

• IPOs:

  • Expected to Price:

    • No IPOs expected to price.

Gapping Up/Down

• Gapping up:

  • RCUS +13.1%, ANY +11.5%, KSCP +5.8%, TBPH+5.3%, CSTL +4.4%, CARS +3.9%, CUK +3.8%, SUPN+3.6%, LEV +2.6%, SNPS +1.8%, MARA +1.6%, ARGX+1.5%, RHP +1.3%

• Gapping down:

  • XPOF -8.3%, TRIN -4.6%, FLDM -1.3%, BIIB -1.2%, CHPT -0.5%

Analyst Research (see Upgrades/Downgradescalendarfor full list):

• Upgrades

  • Clean Harbors (CLH) upgraded to Neutral from Sell at Goldman; tgt raised to $120

  • First Republic Bank (FRC) upgraded to Neutral from Underperform at Credit Suisse; tgt $187

• Downgrades:

  • BRC Inc. (BRCC) downgraded to Mkt Perform from Outperform at Raymond James

  • Carvana (CVNA) downgraded to Sector Perform from Outperform at RBC Capital Mkts; tgt lowered to $138

  • Citizens Financial Group (CFG) downgraded to Mkt Perform from Outperform at Keefe Bruyette; tgt lowered to $54

• Others:

  • Affirm (AFRM) initiated with a Neutral at MoffettNathanson; tgt $50

  • Armstrong World Industries (AWI) initiated with an Outperform at Credit Suisse; tgt $120

  • AZEK (AZEK) initiated with an Outperform at Credit Suisse; tgt $29

  • Bill.com(BILL) initiated with an Overweight at Wells Fargo; tgt $284

  • Carlisle Cos (CSL) initiated with a Neutral at Credit Suisse; tgt $275

  • CBRE Group (CBRE) initiated with a Buy at Goldman; tgt $111

  • ClearPoint Neuro (CLPT) resumed with a Buy at B. Riley Securities; tgt $15

  • Cushman & Wakefield (CWK) initiated with a Buy at Goldman; tgt $25

  • CyberArk (CYBR) initiated with an Overweight at KeyBanc Capital Markets; tgt $217

  • D.R. Horton (DHI) initiated with a Neutral at Credit Suisse; tgt $89

  • Fortune Brands Home & Security (FBHS) initiated with an Outperform at Credit Suisse; tgt $90

  • Hayward Holdings (HAYW) initiated with an Outperform at Credit Suisse; tgt $21

  • Installed Building Products (IBP) initiated with a Neutral at Credit Suisse; tgt $95

  • JELD-WEN (JELD) initiated with an Outperform at Credit Suisse; tgt $24

  • KB Home (KBH) initiated with an Outperform at Credit Suisse; tgt $42

  • Lennar (LEN) initiated with a Neutral at Credit Suisse; tgt $88

  • Masco (MAS) initiated with an Underperform at Credit Suisse; tgt $50

  • Meritage (MTH) initiated with an Outperform at Credit Suisse; tgt $103

  • Mohawk (MHK) initiated with a Neutral at Credit Suisse; tgt $140

  • PulteGroup (PHM) initiated with an Outperform at Credit Suisse; tgt $52

  • Stanley Black & Decker (SWK) initiated with an Outperform at Credit Suisse; tgt $165

  • Taylor Morrison Home (TMHC) initiated with a Neutral at Credit Suisse; tgt $32

  • Toll Brothers (TOL) initiated with an Outperform at Credit Suisse; tgt $63

  • TopBuild (BLD) initiated with an Outperform at Credit Suisse; tgt $235

  • Trex (TREX) initiated with an Underperform at Credit Suisse; tgt $65

  • Whirlpool (WHR) initiated with a Neutral at Credit Suisse; tgt $180

Upcoming Events:

• Econ Data:

  • 08:30 ET: Trade Balance for Feb. (Briefing.comConsensus -$88.5B; Prior -$89.7B)

  • 10:00 ET: ISM Non-Manufacturing Index for March (Briefing.comConsensus 58.5%; Prior 56.5%)

• Earnings:

  • Tuesday (Apr 5)

    • Morning: AYI CGNT LNN

    • Afternoon: ARRY SGH

• Wednesday (Apr 6)

  • Morning: GBX RPM SCHN SMPL TLRY

  • Afternoon: LEVI RGP CXM

• Thursday (Apr 7)

  • Morning: ANGO APOG CAG STZ LW

  • Afternoon: PSMT WDFC

Asia & Europe detail:

Asia: Nikkei +0.2%, Hang Seng Closed; Shanghai Composite Closed

Equity indices in the Asia-Pacific region saw modest changes on Tuesday as traders seemingly lacked conviction with the Hong Kong and Chinese markets closed for the Ching Ming Festival and Shanghai staying in lockdown mode with COVID cases remaining elevated. The Reserve Bank of Australia left its cash rate target unchanged at 0.10%, as expected, but its policy statement no longer contained the word "patient," suggesting the RBA may soon raise its cash rate. BOJ Governor Kuroda said the weakening in the yen was "somewhat rapid" but didn't give any sense that he is intent on taking any policy action to change its course. South Korea's CPI was up 4.1% yr/yr in March, sporting its first 4-handle in more than 10 years and sparking a warning from the bank that it may stay at 4.0% or above for a while.

• In economic data:

  • Japan's February Household Spending -2.8% m/m (expected -1.5%; prior -1.2%) and +1.1% yr/yr (expected +2.7%; prior +6.9%); March Services PMI 49.4 (expected 48.7; prior 44.2)

  • Australia's March AIG Construction Index 56.5 (prior 53.4)

  • South Korea's March CPI +0.7% m/m (expected +0.4%; prior +0.6%) and +4.1% yr/yr (expected +3.8%; prior +3.7%)

  • Singapore's February Retail Sales -1.2% m/m (prior -2.2%) and -3.4% yr/yr (prior +12.0%)

---Equity Markets---

• Japan's Nikkei: +0.2%

• Hong Kong's Hang Seng: closed for holiday

• China's Shanghai Composite: closed for holiday

• India's Sensex: -0.7%

• South Korea's Kospi: +0.1%

• Australia's ASX All Ordinaries: +0.2%

---FX---

• USD/JPY: +0.1% to 122.92

• USD/CNH: -0.1% to 6.3691

• USD/INR: -0.2% to 75.292

Europe: DAX -0.4%, FTSE -0.1%, CAC -1.5%

Major European indices are mostly lower with France's CAC 40 (-1.5%) the standout loser as investors deal with some increased uncertainty revolving around the upcoming presidential election. European Services PMI readings were released and they were mixed with reports for the eurozone, Germany, Italy, and the UK exceeding expectations, France meeting expectations, and Spain coming up short. The U.S. Treasury said it is not going to allow any U.S. dollar-denominated payments from Russian government accounts at U.S. financial institutions, which raises the potential for default. According to CNBC, the EU is prepping more sanctions for Russia, including a possible ban on Russian coal imports. Separately, ECB member Knot thinks the bank should take action to tame inflation pressures.

• In economic data:

  • Eurozone's March Services PMI 55.6 (expected 54.8; prior 55.5); Markit Composite PMI 54.9 (expected 54.5; prior 55.5)

  • Germany's March Services PMI 56.1 (expected 55.0; prior 55.8); Composite PMI 55.1 (expected 54.6; prior 55.6)

  • UK's March Services PMI 62.6 (expected 61.0; prior 60.5)

  • Italy's Services PMI 52.1 (expected 51.5; prior 52.8); Composite PMI 52.1 (prior 53.6)

  • France's March Services PMI 57.4 (expected 57.4; prior 55.5); February Industrial Production -0.9% m/m (expected +0.2%; prior +1.8%)

  • Spain's March Services PMI 53.4 (expected 54.2; prior 56.6)

---Equity Markets---

• STOXX Europe 600: -0.2%

• Germany's DAX: -0.4%

• U.K.'s FTSE 100: -0.1%

• France's CAC 40: -1.5%

• Italy's FTSE MIB: -0.9%

• Spain's IBEX 35: +0.7%

---FX---

• EUR/USD: +0.1% to 1.0975

• GBP/USD: +0.2% to 1.3129

• USD/CHF: -0.1% to 0.9251