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06/02/23 Briefing

The S&P 500 futures are down 24 points and are trading 0.6% below fair value. The Nasdaq 100 futures are down 97 points and are trading 0.8% below fair value. The Dow Jones Industrial Average futures are down 153 points and are trading 0.4% below fair value.

Equity futures indicate a lower open as investors continue to rethink the Fed's path forward and the possibility that the Fed keeps rates higher for longer following Friday's strong jobs report. There's likely some profit-taking activity in play after the January rally.

The 2-yr note yield is up 13 basis points to 4.41% and the 10-yr note yield is up six basis points to 3.60%. The U.S. Dollar Index is up 0.2% to 103.14.

Increased geopolitical angst is another factor behind this morning's weakness after the U.S. shot down a suspected Chinese spy balloon off the coast of South Carolina. The Chinese foreign ministry declared its "strong discontent and protest," according to NY Times.

Energy complex futures are inching higher. WTI crude oil futures are up 0.8% to $73.96/bbl and natural gas futures are up 1.4% to $2.44/mmbtu.

There is no notable U.S. economic data today.

In corporate news:

  • Newmont Goldcorp (NEM 46.88, -2.97, -6.0%): confirms proposal to combine with Newcrest

  • Tyson Foods (TSN 60.51, -3.52, -5.5%): misses by $0.52, misses on revs; reaffirms FY23 revs guidance

  • Catalent (CTLT 71.01, +14.96, +26.7%): Danaher (DHR) interested in takeover of Catalent (CTLT), according to Bloomberg

  • Tesla (TSLA 193.10, +3.12, +1.6%): Tesla (TSLA) increased price of Model Y SUV; Jury rules in favor of Tesla (TSLA) CEO Elon Musk regarding investor lawsuit over 2018 tweets, according to NY Times

  • Dell (DELL 42.20, -0.04, -0.1%): to eliminate 6500 jobs, according to Bloomberg

  • RH 7.15% (RH 327.70, -15.92, -4.6%): announces restatement for three prior quarters; co also sees full year revs coming in at the lower end of prior guidance, this is unrelated to restatement

  • Life Storage (LSI 121.94, +11.36, +10.3%): receives proposal to be acquired by Public Storage (PSA) in all-stock transaction

  • The Children's Place (PLCE 39.60, -7.06, -15.1%): sees Q4 EPS and revs below consensus

  • Energizer (ENR 35.39, -1.86, -5.0%): misses by $0.04, misses on revs; reaffirms FY23 EPS guidance

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region began the week on a mostly lower note. Japan's Nikkei: +0.7%, Hong Kong's Hang Seng: -2.0%, China's Shanghai Composite: -0.8%, India's Sensex: -0.6%, South Korea's Kospi: -1.7%, Australia's ASX All Ordinaries: -0.3%.

  • In economic data:

  • Australia's Q4 Retail Sales -3.9% m/m, as expected (last 1.7%); -0.2% qtr/qtr (expected -0.6%; last 0.3%). January MI Inflation Gauge 0.9% m/m (last 0.2%)


  • In news:

  • Reports from Japan indicate that the country's government is considering nominating Bank of Japan Deputy Governor Amamiya to succeed outgoing Governor Kuroda. However, government officials have refuted these reports.

  • Australia's Trade Minister is expected to meet his Chinese counterpart in Beijing in the near future in an attempt to improve trade relations.



  • Major European indices trade in the red. STOXX Europe 600: -0.9%, Germany's DAX: -1.0%, U.K.'s FTSE 100: -0.8%, France's CAC 40: -1.4%, Italy's FTSE MIB: -0.6%, Spain's IBEX 35: -0.7%.

  • In economic data:

  • Eurozone's December Retail Sales -2.7% m/m (expected -2.5%; last 1.2%); -2.8% yr/yr (expected -2.7%; last -2.5%). February Sentix Investor Confidence -8.0 (expected -12.8; last -17.5)

  • Germany's December Factory Orders 3.2% m/m (expected 2.0%; last -4.4%)

  • U.K.'s January Construction PMI 48.4 (expected 49.6; last 48.8)


  • In news:

  • National Health Service employees in the U.K. are on their biggest strike in 75 years.

  • Bank of Italy Governor Visco said that inflation expectations for the short term are dropping quickly. However, several other European Central Bank policymakers spoke about the need for more rate hikes.

  • Bank of England policymaker Mann said that the next move from the BoE is likely to be a hike rather than a cut or a hold.

  • A powerful earthquake in Turkey and Syria has claimed more than 1000 lives.



U.S. equity futures:

  • S&P 500 Futures: -24 @ 4,112

  • DJIA Futures: -162 @ 33,764

  • Nasdaq 100 Futures: -88 @ 12,486

Overseas:

  • Europe: DAX -1.0%, FTSE -0.8%, CAC -1.4%

  • Asia: Nikkei +0.7%, Hang Seng -2.0%, Shanghai Composite -0.8%

Commodities:

  • Crude Oil +0.56 @ 73.95

  • Nat Gas +0.034 @ 2.444

  • Gold +8.65 @ 1885.25

  • Silver +0.063 @ 22.468

  • Copper -0.0043 @ 4.0522

Earnings/Guidance:

  • Affiliated Managers ( AMG 3.39% ) beats by $0.24

  • Air Transport Services Group ( ATSG 7.49% ) reaffirms FY22 outlook

  • American Vanguard ( AVD 1.47% ) lowers outlook

  • CNA Financial ( CNA 2.13% ) beats by $0.07

  • Cummins ( CMI 1.75% ) reports EPS in-line, beats on revs; guides FY23 revs in-line

  • Energizer ( ENR 8.75% ) misses by $0.04, misses on revs; reaffirms FY23 EPS guidance

  • FIH Mobile ( FXCNY ) reports January revenue +4.9% yr/yr to NT 660.4 bln

  • IDEXX Labs ( IDXX 2.15% ) beats by $0.15, reports revs in-line; guides FY23 EPS in-line, revs in-line

  • LGI Homes ( LGIH 1.78% ) reports it closed 331 homes in January

  • Loews Corp ( L 0.78% ) reports Q4 results

  • Neurocrine Biosciences ( NBIX 3.41% ) misses by $0.20, reports revs in-line

  • RH ( RH 7.15% ) announces restatement for three prior quarters; co also sees full year revs coming in at the lower end of prior guidance, this is unrelated to restatement

  • The Children's Place ( PLCE 8.57% ) sees Q4 EPS and revs below consensus

  • Timken ( TKR 6.32% ) beats by $0.13, reports revs in-line; guides FY23 EPS in-line, revs above consensus

  • Tyson Foods ( TSN 4.25% ) misses by $0.52, misses on revs; reaffirms FY23 revs guidance

  • United Micro ( UMC 2.74% ) reports January sales declined 4.3% yr/yr to NT$19.59 bln

News:

  • Republicans have seven different ideas on where to cut federal spending, according to the Washington Post

  • US shot down a Chinese spy balloon off the coast of South Carolina. Chinese foreign ministry declared its "strong discontent and protest", according to the New York Times

  • President Biden will call for more antitrust and privacy regulation against technology companies during State of the Union. However, concerns regarding this issue among the two parties are not aligned, according to the Washington Post

  • Banks are borrowing record amount of unsecured cash to improve liquidity as deposits exit, according to the Wall Street Journal

  • USGS reports 7.8 magnitude earthquake 26 km E of Nurdagi, Turkey; hundreds of people are reported dead

  • Actinium ( ATNM 0.98% ) Signs Cooperative Research and Development Agreement with National Cancer Institute to Further Enhance Clinical and Non-clinical Development of Actimab-A for the Treatment of Acute Myeloid Leukemia and Other Hematologic Malignancies

  • Alcoa ( AA 1.35% ): majority of workers at San Ciprin facility in Spain agree to an improved plan for the restart of aluminum smelter in 2024

  • Align Tech ( ALGN 2.89% ) entered into an accelerated share repurchase agreement on Feb 3 to repurchase $250 million of Align's common stock

  • Apple ( AAPL 1.31% ) considering introduction of high end iPhone Ultra, according to Bloomberg

  • Bayer ( BAYRY ) submits aflibercept 8 mg for regulatory approval in two major retinal eye diseases in the EU

  • Broadridge Financial ( BR 1.61% ) announced a strategic partnership with analytics solution provider, Point Focal

  • Caledonia Mining Corporation Plc ( CMCL 0.67% ): Mineral Resources and Reserves Update at the Blanket Mine

  • Carlyle ( CG 2.89% ) will soon appoint Harvey Schwartz as CEO, according to the Wall Street Journal

  • Carlyle Group ( CG 2.89% ) names Harvey Schwartz CEO, appointed to Board effective Feb. 15

  • Cboe Global Markets ( CBOE 3.49% ) Reports Trading Volume for January 2023

  • CGI Group ( GIB 0.23% ) to partner with Poland on its energy sector transformation through delivery of a new Central Energy Market Information System

  • Dell ( DELL 3.89% ) discloses actions that will result in a reduction of approximately 5% of the Company's workforce

  • Descartes ( DSGX 0.43% ) has deployed Descartes' ecommerce warehouse management system to keep pace with dramatic order volume seasonal spikes

  • Franco-Nevada ( FNV 3.17% ) provides additional update on Cobre Panama

  • Ginkgo Bioworks ( DNA 2.67% ) and Bioweg partner to develop cost effective and efficacious bio-based materials to reduce the use of microplastic pollutants

  • Grupo Aeroportuario del Pacifico ( PAC 2.31% ) announces that for January, the total number of terminal passengers at GAP's 12 Mexican airports increased by 30.0%

  • KBR's ( KBR 0.08% ) green ammonia technology, K-GreeN, has been selected by Enaex, S.A. for its innovative HyEx green ammonia project in Chile

  • KVH Industries ( KVHI 0.30% ) Announces Support Agreement with Black Diamond Capital Management

  • Linde plc ( LIN 0.48% ) to invest $1.8 billion to supply clean hydrogen to OCI's world-scale blue ammonia project in the U.S. gulf coast

  • Mercury ( MRCY 1.68% ): JANA lowered active stake to 4.6% (prior 4.64%) following the sale of nearly 370K shares (transaction dates 2/1-2/3)

  • NeoGenomics ( NEO 2.27% ): RaDaR Assay demonstrates clinical potential for helping oncologists determine whether or not muscle-invasive bladder cancer patients undergo radical surgery

  • Nestle ( NSRGY ) to increase food prices this year, according to Reuters

  • Nissan Motor ( NSANY )/Mitsubishi alliance open a new chapter for their partnership

  • Norfolk Southern ( NSC 1.98% ) train derailed in Ohio, according to NBC News

  • Novartis AG ( NVS 0.61% ) reports The Lancet has published long-term data from the pivotal SUNSHINE and SUNRISE trials evaluating Cosentyx

  • Novartis AG ( NVS 0.61% ) reports Sandoz Biologics' License Application for proposed biosimilar denosumab accepted by FDA

  • PriceSmart ( PSMT 0.50% ) raises semi-annual dividend by 7%

  • Public Storage ( PSA 0.69% ) raises quarterly dividend by 50% to $3.00 per share

  • PyroGenesis ( PYR 5.01% ) Provides Update on Recent Contract to Supply SPARC Land-Based Waste Destruction System in New Zealand

  • Rogers ( ROG 4.60% ): Starboard will challenge board at Rogers, according to Reuters

  • SAGE Therapeutics ( SAGE 2.99% ) and Biogen (BIIB) announce FDA accepts filing of new drug application and grants priority review of zuranolone in the treatment of major depressive disorder and postpartum depression

  • Southwest Air ( LUV 0.18% ): The NTSB is investigating a surface event at Austin-Bergstrom International Airport Saturday, a possible runway incursion and overflight involving airplanes from Southwest Airlines and FedEx (FDX)

  • Southwest ( LUV 0.18% ) will reduce flight experience needed for new pilots by 50%, according to Bloomberg

  • Southwest Air ( LUV 0.18% ) announced its Dispatchers and Facilities Maintenance Technicians have voted in favor of their new collective bargaining agreements

  • Surmodics ( SRDX 2.10% ) announces 13% workforce reduction, organizational changes

  • Takeda Pharma ( TAK 1.38% ) receives FDA approval for TAKHZYRO to prevent HAE Attacks in Children 2 Years of Age and Older

  • Tesla ( TSLA 2.85% ) increased price of Model Y SUV, according to Bloomberg

  • Tesla ( TSLA 2.85% ): Jury rules in favor of Tesla CEO Elon Musk regarding investor lawsuit over 2018 tweets, according to the New York Times

  • UFP Industries ( UFPI 1.91% ) Chairman William G Currie to retire; CEO Matthew J Missad named Chairman, effective immediately

  • Viridian Therapeutics ( VRDN 2.11% ) announces that the Company has appointed Scott Myers as President and Chief Executive Officer, and a member of the Board of Directors, effective today February 6, 2023

  • Volaris Aviation ( VLRS 1.42% ) reports January 2023 traffic results: 23% yr/yr demand growth with an 86% load factor

M&A:

  • Danaher ( DHR 1.20% ) interested in takeover of Catalent (CTLT), according to Bloomberg

  • Fanhua ( FANH 2.24% ) signs definitive agreement to acquire Zhongji Shi'An Insurance Agency

  • Forest Road Acquisition Corp. II ( FRXB 0.10% ) mutually agrees to terminate previously announced business combination with Hyperloop Transportation

  • Life Storage ( LSI 12.30% ) receives proposal to be acquired by Public Storage (PSA) in all-stock transaction

  • Newmont Goldcorp ( NEM 3.92% ) confirms proposal to combine with Newcrest

Syndicate:

  • Faraday Future Intelligent Electric ( FFIE 5.56% ) announces $135 million in convertible secured notes financing commitments

  • Hagerty ( HGTY 2.23% ) files for 5,438,244 share common stock offering by selling shareholders

  • Lilium GmbH ( LILM 4.38% ) files for 3,101,523 Class A share offering by selling shareholder

IPOs:

  • Panera Bread considering IPO, according to the Wall Street Journal

  • Expected to Price:

  • Hesai Group (Nasdaq: HSAI): The global leader in three-dimensional light detection and ranging (LiDAR) solutions is expected to price its 9.0 M share IPO between $17-$19.

  • Mineralys Therapeutics (Nasdaq: MLYS): The clinical-stage biopharmaceutical company focused on developing medicines to target diseases driven by abnormally elevated aldosterone is expected to price its 10.0 M share IPO between $14-$16.

  • Nextracker (Nasdaq: NXT): The provider of intelligent, integrated solar tracker and software solutions used in utility-scale and ground-mounted distributed generation solar projects is expected to price its 23.3 M share IPO between $20-$23.


Gapping Up/Down

  • Gapping up:

  • FFIE +31.5%, CTLT +20.9%, LSI +12.1%, SRNE +2%, L +2%, GGB +1.8%, VXX +1.8%, ROG +1.7%, PAC +0.8%, SRDX +0.5%


  • Gapping down:

  • PLCE -9.8%, NEM -5.7%, CAN -5.3%, RH -4%, AVD -1.8%, AA -1.6%, HGTY -1.2%, PSA -1.1%, QQQ -1.1%, SPY -0.9%, IWM -0.9%, TAK -0.7%, DIA -0.7%



Analyst Research (see Upgrades/Downgrades calendar for full list):

  • Upgrades

  • Celsius (CELH) upgraded to Outperform from Neutral at Wedbush

  • Church & Dwight (CHD) upgraded to Neutral from Underweight at Atlantic Equities; tgt $80

  • Diageo plc (DEO) upgraded to Outperform from Mkt Perform at Bernstein; tgt raised to $225

  • Dow (DOW) upgraded to Outperform from Underperform at Credit Suisse; tgt $68

  • Landstar System (LSTR) upgraded to Outperform from Mkt Perform at Raymond James; tgt $200


  • Downgrades:

  • Antero Resources (AR) downgraded to Mkt Perform from Outperform at Raymond James

  • Black Stone Minerals (BSM) downgraded to Outperform from Strong Buy at Raymond James

  • Clarivate (CLVT) downgraded to Equal-Weight from Overweight at Morgan Stanley; tgt raised to $12

  • Coterra Energy (CTRA) downgraded to Mkt Perform from Outperform at Raymond James

  • Datadog (DDOG) downgraded to Sector Weight from Overweight at KeyBanc Capital Markets

  • Edwards Lifesciences (EW) downgraded to Mkt Perform from Outperform at Raymond James

  • Hayward Holdings (HAYW) downgraded to Hold from Buy at Stifel; tgt raised to $13

  • Lear (LEA) downgraded to In-line from Outperform at Evercore ISI; tgt lowered to $145

  • LINKBANCORP (LNKB) downgraded to Neutral from Overweight at Piper Sandler


  • Others:

  • Goosehead Insurance (GSHD) initiated with an Outperform at Credit Suisse; tgt $72


Upcoming Events:

  • Econ Data:

  • No economic data of note.


  • Earnings:

  • Monday (Feb 6)

  • Morning: AMG CNA CMI ENR IDXX NBIX ON TKR TSN

  • Afternoon: ATVI ACM AOSL BRBR CHGG CINF DIOD FN KMT KFRC LEG NOV PINS POWI RMBS SPG SSD SKY SWKS SAVE TTWO UDR VRNS ZI


  • Tuesday (Feb 7)

  • Morning: ADNT AGCO ARMK ARCC BP BV CG CARR CTLT CNC CTS DCPH DD FISV IT GPK HAE HAIN HLNE HTZ INCY J KKR LIN MAC MBUU MSGS NVT OMF PINC RCL SCSC SPR TDG VVV XYL

  • Afternoon: AMCR AIZ ATO BKH CSL CMG CNO CCK DEI EGP EHC ENPH ESS EEFT EXEL FMC FTNT FRSH HRB PEAK HIW HMN ICHR ILMN INSP JKHY RAMP LUMN MODN NCR NEWR OMC PAYC PRU QGEN RRR RXO SIMO SSNC TENB VFC VRTX VSAT VOYA WERN WU YUMC ZWS


  • Wednesday (Feb 8)

  • Morning: BDC BXMT BG CPRI CDW CRNC CME COHR COTY CRTO CVS D ETN EPC EMR FOXA GPRE INGR NYT PAG PFGC PERI RDWR REYN RITM SITC TRMB UBER VSH YUM

  • Afternoon: ME AEIS AFRM AB NLY APP ASGN AVB ACLS AZEK CDAY CXW DHT APPS ENS NVST EFX EQH EQC ESE RE FRT FR FLT FLNC FORM FWRD ULCC GT HI HPP PI IFF FROG LNC MAT MMS MGM MC MOH MPWR ORLY PTEN PYCR PDM PPC PAA QNST RDN RPD REXR HOOD SON SONO STE STC SLF THC TTMI TWO DIS WTS XPO


  • Thursday (Feb 9)

  • Morning: ABBV APO MT ARES AZN BAX BWA BRKR CCJ CGC CSII CIGI CYBR DBD DUK ESMT FAF GTES HLT HIMX HII NSIT NSP IPG ITT K KIM LITE MAS MDU MSGE NNN PATK PEP PM PDS RL SPGI SEE SSTK SWI TPR TTGT TU TPX TRI WMG WEX WTW

  • Afternoon: AYX BE BHF CBT CC NET ROAD OFC CRSR COUR CUZ DXCM DOCS EQR EXPE FLO G KN LGF.A LYFT MTD MHK MSI NWSA ONTO PYPL PECO PRO QLYS RBC REG SPSC STEP TEX MODG VTR VRSN YELL YELP


  • Friday (Feb 10)

  • Morning: ENB ESNT FTS GPN IQV MGA COOP NWL PRLB SXT SPB SLVM WPC



Asia & Europe detail:

Asia: Nikkei +0.7%, Hang Seng -2.0%, Shanghai Composite -0.8%

Equity indices in the Asia-Pacific region began the week on a mostly lower note. Reports from Japan indicate that the country's government is considering nominating Bank of Japan Deputy Governor Amamiya to succeed outgoing Governor Kuroda. However, government officials have refuted these reports. Australia's Trade Minister is expected to meet his Chinese counterpart in Beijing in the near future in an attempt to improve trade relations.

  • In economic data:

  • Australia's Q4 Retail Sales -3.9% m/m, as expected (last 1.7%); -0.2% qtr/qtr (expected -0.6%; last 0.3%). January MI Inflation Gauge 0.9% m/m (last 0.2%)


---Equity Markets---

  • Japan's Nikkei: +0.7%

  • Hong Kong's Hang Seng: -2.0%

  • China's Shanghai Composite: -0.8%

  • India's Sensex: -0.6%

  • South Korea's Kospi: -1.7%

  • Australia's ASX All Ordinaries: -0.3%

---FX---

  • USD/JPY: +0.8% to 132.20

  • USD/CNH: -0.1% to 6.7942

  • USD/INR: +0.3% to 82.70

Europe: DAX -1.0%, FTSE -0.8%, CAC -1.4%

Major European indices trade in the red. National Health Service employees in the U.K. are on their biggest strike in 75 years. Bank of Italy Governor Visco said that inflation expectations for the short term are dropping quickly. However, several other European Central Bank policymakers spoke about the need for more rate hikes. Bank of England policymaker Mann said that the next move from the BoE is likely to be a hike rather than a cut or a hold. A powerful earthquake in Turkey and Syria has claimed more than 1000 lives.

  • In economic data:

  • Eurozone's December Retail Sales -2.7% m/m (expected -2.5%; last 1.2%); -2.8% yr/yr (expected -2.7%; last -2.5%). February Sentix Investor Confidence -8.0 (expected -12.8; last -17.5)

  • Germany's December Factory Orders 3.2% m/m (expected 2.0%; last -4.4%)

  • U.K.'s January Construction PMI 48.4 (expected 49.6; last 48.8)


---Equity Markets---

  • STOXX Europe 600: -0.9%

  • Germany's DAX: -1.0%

  • U.K.'s FTSE 100: -0.8%

  • France's CAC 40: -1.4%

  • Italy's FTSE MIB: -0.6%

  • Spain's IBEX 35: -0.7%

---FX---

  • EUR/USD: -0.2% to 1.0769

  • GBP/USD: UNCH at 1.2054

  • USD/CHF: UNCH at 0.9257


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