06/04/23 Briefing

The S&P 500 futures are up 3 points and are trading slightly above fair value. The Nasdaq 100 futures are down 21 points and are trading 0.1% below fair value. The Dow Jones Industrial Average futures are up 44 points and are trading 0.1% above fair value.

Equity futures are mixed, but moves in either direction are modest. Following weak economic releases earlier in the week, there's likely some hesitation in play ahead of this morning's jobless claims report at 8:30 a.m. ETfollowed by the closely-watched March Employment Report tomorrow at 8:30 a.m. ET. 

House Speaker Kevin McCarthy (R-CA) said in an interview with Bloomberg TV that Wall Street should be concerned about the debt ceiling. 

Treasury yields are moving lower this morning. The 2-yr note yield is down five basis points to 3.71% and the 10-yr note yield is down one basis point to 3.28%.

Energy complex futures are mixed. WTI crude oil futures are up 0.4% to $80.94/bbl and natural gas futures are down 0.5% to $2.15/mmbtu. 

As a reminder, markets will be closed tomorrow for Good Friday. 

In corporate news:

• Costco (COST 485.12, -12.01, -2.4%): reports March net sales +0.5% yr/yr to $21.71 bln; total monthly comparable sales -1.1%, adj comps (ex gas fx) +2.6%

• BlackRock (BLK 656.01, -0.03, -0.0%): FDIC announces retention of BLK as financial advisor to assist with the liquidation of securities of the former Signature Bank (SBNY) and Silicon Valley Bank (SIVB)

• AbbVie (ABBV 159.70, -1.10, -0.7%): guides Q1 earnings below consensus; lowers FY23 earnings outlook due to acquired IPR&D and milestone expenses

• Walt Disney (DIS 100.02, +0.11, +0.1%): named Hulu president Joe Earley as head of streaming, replacing Michael Paull, according to Variety

• FedEx (FDX 232.28, +2.45, +1.1%): upgraded to Outperform from Market Perform at Raymond James

Reviewing overnight developments:

• Equity indices in the Asia-Pacific region ended Thursday on a mostly lower note. Japan's Nikkei: -1.2% (-2.0% week-to-date), Hong Kong's Hang Seng: +0.3% (-0.3% for the week), China's Shanghai Composite: +0.4% (+1.2% week-to-date), India's Sensex: +0.2% (+1.4% for the week), South Korea's Kospi: -1.4% (-0.7% week-to-date), Australia's ASX All Ordinaries: -0.3% (+0.5% for the week).

  • In economic data:

    • China's March Caixin Services PMI 57.8 (expected 54.8; last 55.0)

    • Hong Kong's March Manufacturing PMI 53.5 (last 53.9)

    • Australia's February trade surplus AUD13.87 bln (expected surplus of AUD11.10 bln; last surplus of AUD11.266 bln). February Imports -9.0% m/m (last 5.0%) and Exports -3.0% m/m (last 1.0%)

  • In news:

    • China's Caixin Services PMI reached its highest level in three years in the March reading. The New Orders component reached its highest level since December 2020.

    • China's government aims to cut taxes and fees on businesses by CNY1.8 trln this year.

    • Bank of Japan Governor Kuroda said that the Japanese economy is no longer deflating.

    • The Reserve Bank of India held its repurchase rate at 6.50% against expectations for a 25-bps rate hike. However, the central bank acknowledged that more rate hikes could be on the horizon.

    • Markets in Australia, Singapore, Hong Kong, India, and New Zealand will be closed for Good Friday tomorrow.

• Major European indices trade in positive territory amid light volume leading up to Good Friday. STOXX Europe 600: +0.5% (+0.3% week-to-date), Germany's DAX: +0.4% (-0.4% week-to-date), U.K.'s FTSE 100: +0.7% (+1.1% week-to-date), France's CAC 40: +0.3% (+0.2% week-to-date), Italy's FTSE MIB: +0.6% (-0.3% week-to-date), Spain's IBEX 35: +0.6% (+0.9% week-to-date).

  • In economic data:

    • Eurozone's March Construction PMI 45.0 (expected 49.1; last 47.6)

    • Germany's February Industrial Production 2.0% m/m (expected 0.1%; last 3.7%). March Construction PMI 42.9 (expected 47.9; last 48.6)

    • U.K.'s March Construction PMI 50.7 (expected 53.5; last 54.6). March Halifax House Price Index 0.8% m/m (expected -0.3%; last 1.2%); 1.6% yr/yr (expected 0.3%; last 2.1%)

    • France's March Construction PMI 45.3 (expected 46.3; last 45.2)

    • Italy's March Construction PMI 47.4 (expected 49.6; last 48.9)

  • In news:

    • European Central Bank Chief Economist Lane said that another rate hike will be appropriate at the May policy meeting if projections remain on track.

    • The Bank of England's decision maker panel survey showed that year-ahead CPI expectations dipped to 5.8% from 5.9% while the three-year outlook dipped to 3.4% from 3.5%.

    • Shell announced that its LNG output for Q1 will be larger than expected.

    • Markets in Germany, France, U.K., Italy, Spain, and Switzerland will be closed for Good Friday tomorrow.

U.S. equity futures:

• S&P 500 Futures: +4 @ 4,094

• DJIA Futures: +46 @ 33,529

• Nasdaq 100 Futures: -12 @ 12,955

Overseas:

• Europe: DAX +0.4%, FTSE +0.7%, CAC +0.3%

• Asia: Nikkei -1.2%, Hang Seng +0.3%, Shanghai Composite +0.4%

Commodities:

• Crude Oil +0.07 @ 80.68

• Nat Gas +0.011 @ 2.166

• Gold -1.60 @ 2034.00

• Silver +0.043 @ 25.08

• Copper +0.0363 @ 4.0228

Earnings/Guidance:

• Buckle (BKE) reports March comparable store net sales decreased 10.1% yr/yr

• Constellation Brands (STZ) beats by $0.14, reports revs in-line; guides FY24 EPS in-line

• Costco (COST) reports March net sales +0.5% yr/yr to $21.71 bln; total monthly comparable sales -1.1%, adj comps (ex gas fx) +2.6%

• dMY Technology Group, Inc. VI (DMYS) to liquidate after making a determination that it would not be in the best interests to proceed with combination with Rain Enhancement Technologies

• Ero Copper (ERO) updates its 5-year outlook; expects to increase copper production by ~125% from 2022 levels in 2025

• Fox Factory Holding (FOXF) reaffirms its previously issued Q1 and FY23 guidance; notes the previously announced departure of CFO Scott Humphrey was not the result of any disagreement with the company's operations

• LGI Homes (LGIH) reports it closed it closed 529 homes in March

• Lumentum (LITE) lowers Q3 revenue guidance well below consensus due to large network equipment manufacturer not taking the shipments company had originally projected; recently approved increase in share repurchase program to $1.2 bln

• RPM Inc (RPM) beats by $0.06, beats on revs; guides Q4 revs below consensus

• Ryman Hospitality (RHP) reports Q1 occupancy of 72.3%

• Shell plc (SHEL) provide Q1 update

• Simulations Plus (SLP) beats by $0.02, misses on revs; reaffirms FY23 EPS guidance, revs guidance

• Vaalco Energy (EGY) misses on top and bottom lines

News:

• House Speaker Kevin McCarthy (R-CA) says Wall Street should be concerned about the debt ceiling, according to Bloomberg

• AbbVie (ABBV) guides Q1 earnings below consensus; lowers FY23 earnings outlook due to acquired IPR&D and milestone expenses

• Acushnet (GOLF) names Sean Sullivan as CFO, effective June 1, succeeding Thomas Pacheco who is resigning

• Air Lease (AL) provides activity update for the first quarter of 2023

• Aldeyra Therapeutics (ALDX) enrolls first patient in Phase 2 clinical trial of ADX-629 in Atopic Dermatitis

• Amplitude (AMPL) approves a plan to reduce its global workforce by ~13%

• Bit Digital (BTBT) reports March bitcoin production increased 10% over February

• BlackRock (BLK): FDIC announces retention of BLK as financial advisor to assist with the liquidation of securities of the former Signature Bank (SBNY) and Silicon Valley Bank (SIVB)

• Cano Health (CANO) discloses three directors have resigned

• Cboe Global Markets (CBOE) reports trading volume for March 2023; total volume across option exchanges reached a new monthly high of 337.2 mln contracts

• CNH Industrial (CNHI) to invest EUR 21.4 mln in its New Holland Center of Excellence in the Vende region of France

• DMC Global (BOOM) announces that jury found that its DS MicroSet setting tool did not infringe on Repeat Precision's patent; no damages awarded

• Enanta Pharmaceuticals (ENTA) announces that the U.S. Food and Drug Administration has granted Fast Track designation for EDP-323

• Exelixis (EXEL) Reiterates Commitment to Shareholder Value Creation

• Global System Dynamics (GSD) announces sponsor's request for an additional one-month extension to complete its initial business combination

• Google (GOOG) aiming to add some AI features to search engine, according to the Wall Street Journal

• Grupo Aeroportuario Del Sureste (ASR) reports March 2023 traffic

• ImmunoGen (IMGN) receives non-dilutive term loan financing for up to $175 million with Pharmakon Advisors

• LCI Industries (LCII) appoints Lillian Etzkorn as EVP and CFO, effective April 17, 2023

• Liberty Media (LSXMA) determined that it will no longer condition the Atlanta Braves Split-Off on the receipt of the Ruling and intends to proceed with its plan to complete the Split-Off Transactions

• New Pacific Metals (NEWP) intersects 306 metres grading 1.2 grams per tonne gold and 26 grams per tonne silver at the Carangas Project, Bolivia

• Parsons (PSN) awarded federal aviation administration contract with $1.8 billion ceiling

• Pitney Bowes (PBI) Board of Directors issues letter to shareholders; Hestia nominee Lance Rosenzweig unqualified as a Director or as CEO

• Polestar Automotive Holding UK PLC (PSNY) reports global volumes for first quarter of 2023

• Primo Water (): Legion Partners releases presentation outlining case for change at Primo Water Corporation

• Shotspotter (SSTI) CEO Ralph Clark is still optimistic he will continue relationship with Chicago, according to Investing.com

• Tesla (TSLA) adopted amendments to its bylaws to provide proxy access to stockholders, update procedures for director nominations, and make other technical changes

• Tesla (TSLA) tripled Austin, TX workforce to 12,000 last year, according to Bloomberg

• W&T Offshore (WTI) announces that Janet Yang, Executive Vice President and Chief Financial Officer, will be leaving the Company on May 11, 2023

• Walt Disney (DIS) naming Hulu president Joe Earley as head of streaming, replacing Michael Paull, according to Variety

• Walt Disney's (DIS) largest individual shareholder, Ike Perlmutter, releases statement on why he ended working relationship with the company

• Woodward (WWD) appoints William Lacey as its new CFO, effective May 8, 2023

• XP (XP) approved the cancellation of existing treasury Class A shares held by the Company

M&A:

• Hecla Mining (HL) signs definitive agreement to acquire ATAC Resources

• iRobot (IRBT): UK CMA issues invitation to comment related to investigation of Amazon (AMZN) proposed acquisition of IRBT

• Jiayin Group (JFIN) announces sales of equity interest in Fuzhou Zhuoqun Jieneng Information Technology and Fujian Jiaxi Financial Guarantee

• KKR (KKR) close to deal to purchase large stake in FGS Global for $1.4 bln, according to Financial Times

Syndicate:

• Aerovate Therapeutics (AVTE) enters into an ATM equity offering agreement with BofA Securities to sell shares of its common stock with an aggregate offering price up to $75 mln

• Taseko Mines (TGB) files $600 mln mixed shelf securities offering

IPOs:

• Expected to Price:

  • No IPOs expected.

Gapping Up/Down

• Gapping up:

  • PL +4.1%, JFIN +3.2%, FOXF +2%, IMGN +1%, SHEL+0.9%, BOOM +0.5%

• Gapping down:

  • LITE -11%, IGT -3.7%, COST -2.2%, AMPL -1.7%, BTBT -1.4%, ABBV -1.4%, TGB -0.6%

Analyst Research (see Upgrades/Downgradescalendarfor full list):

• Upgrades

  • Canadian Nat'l Rail (CNI) upgraded to Outperform from Sector Perform at RBC Capital Mkts

  • Fifth Third (FITB) upgraded to Outperform from Mkt Perform at Keefe Bruyette; tgt lowered to $34

  • Fluence (FLNC) upgraded to Outperform from Peer Perform at Wolfe Research; tgt $25

  • Hercules Capital (HTGC) upgraded to Overweight from Neutral at Piper Sandler; tgt $16

  • Huntington Banc (HBAN) upgraded to Mkt Perform from Underperform at Keefe Bruyette; tgt lowered to $13

  • Leslie's (LESL) upgraded to Buy from Hold at Loop Capital; tgt $16

  • Popular (BPOP) upgraded to Outperform from Mkt Perform at Keefe Bruyette; tgt $74

• Downgrades:

  • Atlantic Union Bankshares (AUB) downgraded to Mkt Perform from Outperform at Keefe Bruyette; tgt lowered to $36

  • Lumentum (LITE) downgraded to Neutral from Buy at Rosenblatt; tgt lowered to $48

  • MercadoLibre (MELI) downgraded to Neutral from Buy at New Street; tgt $1350

• Others:

  • Bioceres (BIOX) initiated with an Outperform at Oppenheimer; tgt $15

  • Iris Energy (IREN) initiated with a Buy at B. Riley Securities; tgt $4

  • Janux Therapeutics (JANX) initiated with an Outperform at Wedbush; tgt $24

  • Limoneira (LMNR) initiated with a Buy at B. Riley Securities; tgt $24

Econ Data:

• 08:30 ET: Initial Claims for April 1 (Briefing.comConsensus 203K; Prior 198K)

• 08:30 ET: Continuing Claims for March 25 (Briefing.comConsensus NA; Prior 1689K)

• 10:30 ET: EIA Natural Gas Inventories for April 1 (Briefing.comConsensus NA; Prior -47 bcf)

Earnings:

• Monday (Apr 3)

  • Morning:  SAIC

• Tuesday (Apr 4)

  • Morning: AYI LNN MSM

  • Afternoon:  DLO RGP SGH

• Wednesday (Apr 5)

  • Morning:  CAG SCHN SMPL

  • Afternoon:  SLP

• Thursday (Apr 6)

  • Morning: STZ LW RPM

  • Afternoon:  LEVI WDFC

Asia & Europe detail:

Asia: Nikkei -1.2%, Hang Seng +0.3%, Shanghai Composite +0.4%

Equity indices in the Asia-Pacific region ended Thursday on a mostly lower note. China's Caixin Services PMI reached its highest level in three years in the March reading. The New Orders component reached its highest level since December 2020. China's government aims to cut taxes and fees on businesses by CNY1.8 trln this year. Bank of Japan Governor Kuroda said that the Japanese economy is no longer deflating. The Reserve Bank of India held its repurchase rate at 6.50% against expectations for a 25-bps rate hike. However, the central bank acknowledged that more rate hikes could be on the horizon. Markets in Australia, Singapore, Hong Kong, India, and New Zealand will be closed for Good Friday tomorrow.

• In economic data:

  • China's March Caixin Services PMI 57.8 (expected 54.8; last 55.0)

  • Hong Kong's March Manufacturing PMI 53.5 (last 53.9)

  • Australia's February trade surplus AUD13.87 bln (expected surplus of AUD11.10 bln; last surplus of AUD11.266 bln). February Imports -9.0% m/m (last 5.0%) and Exports -3.0% m/m (last 1.0%)

---Equity Markets---

• Japan's Nikkei: -1.2% (-2.0% week-to-date)

• Hong Kong's Hang Seng: +0.3% (-0.3% for the week)

• China's Shanghai Composite: +0.4% (+1.2% week-to-date)

• India's Sensex: +0.2% (+1.4% for the week)

• South Korea's Kospi: -1.4% (-0.7% week-to-date)

• Australia's ASX All Ordinaries: -0.3% (+0.5% for the week)

---FX---

• USD/JPY: +0.2% to 131.46

• USD/CNH: -0.1% to 6.8783

• USD/INR: UNCH at 81.91

Europe: DAX +0.4%, FTSE +0.7%, CAC +0.3%

Major European indices trade in positive territory amid light volume leading up to Good Friday. European Central Bank Chief Economist Lane said that another rate hike will be appropriate at the May policy meeting if projections remain on track. The Bank of England's decision maker panel survey showed that year-ahead CPI expectations dipped to 5.8% from 5.9% while the three-year outlook dipped to 3.4% from 3.5%. Shell announced that its LNG output for Q1 will be larger than expected. Markets in Germany, France, U.K., Italy, Spain, and Switzerland will be closed for Good Friday tomorrow.

• In economic data:

  • Eurozone's March Construction PMI 45.0 (expected 49.1; last 47.6)

  • Germany's February Industrial Production 2.0% m/m (expected 0.1%; last 3.7%). March Construction PMI 42.9 (expected 47.9; last 48.6)

  • U.K.'s March Construction PMI 50.7 (expected 53.5; last 54.6). March Halifax House Price Index 0.8% m/m (expected -0.3%; last 1.2%); 1.6% yr/yr (expected 0.3%; last 2.1%)

  • France's March Construction PMI 45.3 (expected 46.3; last 45.2)

  • Italy's March Construction PMI 47.4 (expected 49.6; last 48.9)

---Equity Markets---

• STOXX Europe 600: +0.5% (+0.3% week-to-date)

• Germany's DAX: +0.4% (-0.4% week-to-date)

• U.K.'s FTSE 100: +0.7% (+1.1% week-to-date)

• France's CAC 40: +0.3% (+0.2% week-to-date)

• Italy's FTSE MIB: +0.6% (-0.3% week-to-date)

• Spain's IBEX 35: +0.6% (+0.9% week-to-date)

---FX---

• EUR/USD: UNCH at 1.0909

• GBP/USD: +0.1% to 1.2472

• USD/CHF: -0.2% to 0.9047