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06/07/22 Briefing




The S&P 500 futures are down 17 points and are trading 0.4% below fair value. The Nasdaq 100 futures are down 58 points and are trading 0.5% below fair value. The Dow Jones Industrial Average futures are down 99 points and are trading 0.3% below fair value.

The 2s10s spread remains inverted. The 2-yr note yield is flat at 2.82% while the 10-yr note yield is down one basis point to 2.80%.

Shanghai reported the highest number of new COVID cases in three weeks, raising the potential for renewed lockdown measures. 

In other overseas news, Norwegian oil and gas workers will return to work after an imposition of forced settlements by the government.

The energy futures are rising this morning after being hit hard yesterday. WTI crude oil futures are up 0.7% to $100.16/bbl. Natural gas futures are up 2.3% to $5.62/mmbtu. Unleaded gasoline futures are up 0.8% to $3.35/gal.

On a related note, the OPEC Secretary-General, Mohammad Barkindo, unexpectedly passed away last night just three weeks shy of the end of his second term.

Separately, cryptocurrency lender Voyager Digital has filed for bankruptcy after Three Arrows Capital failed to pay back a $650 million loan. 

Looking ahead, market participants will receive the ISM Non-Manufacturing Index for June (Briefing.comconsensus 54.2%; prior 55.9%) at 10:00 a.m. ETand the FOMC Minutes from the last meeting at 2:00 p.m. ET.

In corporate news:

  • Kornit Digital (KRNT 23.90, -7.66, -24.3%): Kornit Digital issues downside Q2 revenue guidance, citing macro-related headwinds that meaningfully accelerated in the last few weeks of the quarter.

  • Microsoft (MSFT 262.47, -0.38, -0.1%): The UK CMA is investigating the anticipated acquisition by Microsoft Corporation of Activision Blizzard.

  • Altria (MO 42.71, +0.99, +2.4%): The Juul ban was suspended by FDA.

  • Walmart (WMT 123.78, -0.47, -0.4%): Some Walmart suppliers will face fuel surcharges, according to the Wall Street Journal.

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region ended the midweek session on a mostly lower note. Japan's Nikkei: -1.2%, Hong Kong's Hang Seng: -1.2%, China's Shanghai Composite: -1.4%, India's Sensex: +1.2%, South Korea's Kospi: -2.1%, Australia's ASX All Ordinaries: -0.5%.

  • In economic data:

  • Hong Kong's June Manufacturing PMI 52.4 (last 54.9)

  • New Zealand's GlobalDairyTrade Price Index -4.1% (last -1.3%)

  • In news:

  • Travel-related names struggled in Japan amid reports that the Japanese government's travel support program will be delayed.

  • Some entertainment venues in Shanghai will remain closed while others have been allowed to open.

  • South Korea's prime minister called on the Bank of Korea to normalize policy to bring down inflation.

  • Major European indices trade on a higher note. STOXX Europe 600: +1.6%, Germany's DAX: +1.4%, U.K.'s FTSE 100: +1.8%, France's CAC 40: +1.6%, Italy's FTSE MIB: +0.8%, Spain's IBEX 35: +0.4%.

  • In economic data:

  • Eurozone's May Retail Sales 0.2% m/m (expected 0.4%; last -1.4%); 0.2% yr/yr (expected -0.4%; last 4.0%)

  • Germany's May Factory Orders 0.1% m/m (expected -0.6%; last -1.8%)

  • U.K.'s June Construction PMI 52.6 (expected 55.0; last 56.4)

  • Spain's May Industrial Production 3.8% yr/yr (expected 3.4%; last 2.3%)

  • In news:

  • The U.K.'s Economic Secretary to the Treasury resigned after Chancellor Sunak and Health Secretary Javid did the same yesterday, fueling speculation that Prime Minister Johnson will be forced out soon.

  • The European Parliament will classify nuclear power and gas as "green energy."

  • Norwegian oil and gas workers will return to work after an imposition of forced settlements by the government.

 

U.S. equity futures:

  • S&P 500 Futures: -15 @ 3,817

  • DJIA Futures: -104 @ 30,864

  • Nasdaq 100 Futures: -60 @ 11,720

Overseas:

  • Europe: DAX +1.4%, FTSE +1.8%, CAC +1.6%

  • Asia: Nikkei -1.2%, Hang Seng -1.2%, Shanghai Composite -1.4%

Commodities:

  • Crude Oil +0.58 @ 100.08

  • Nat Gas +0.105 @ 5.628

  • Gold -3.80 @ 1760.10

  • Silver +0.009  @ 19.130

  • Copper -0.0150 @ 3.4000

U.S. Summary:

  • Earnings/Guidance:

  • Aviat Networks (AVNW) reaffirms FY22guidance following completion of Redline acquisition

  • Kornit Digital (KRNT) issues downside Q2 revenue guidance, citing macro-related headwinds that meaningfully accelerated in the last few weeks of the quarter

  • RADA Electronic Industries (RADA) sees Q2 revs below consensus; withdraws FY22guidance due to pending merger with Leonardo DRS

  • United Micro (UMC) reports June sales increased 43.2% yr/yr to NT$24.83 bln

  • General News:

  • Ministers are quitting Boris Johnson's government, according to Reuters

  • OPEC secretary general dies in final weeks of tenure, Bloomberg

  • Boris Johnson to stay on as Prime Minister; to name new Cabinet members, according to Bloomberg

  • UK plans to bolster UK energy security set to become law

  • EC proposes rules to simplify procedures for State aid to green transport

  • Air Products (APD) announces signing of joint development agreement with VPI for large-scale, low-carbon hydrogen production in Humber

  • Altria (MO): FDA administratively stayed the marketing denial order; determined that there are scientific issues unique to the JUUL application that warrant additional review

  • Amazon (AMZN) and Just Eat Takeaway.comenter into commercial agreement in the US

  • Amazon (AMZN): UK CMA is investigating Amazon over concerns that practices affecting sellers on its UK Marketplace may be anti-competitive and could result in a worse deal for customers

  • Amazon (AMZN) to increase data sharing with competitors, according to Financial Times

  • AmerisourceBergen (ABC), Cardinal Health (CAH), and McKesson (MCK) won't face opioid crisis liabilities in W. Virginia, according to the Wall Street Journal

  • Bausch + Lomb (BLCO) Announces Scientific Data on XIPERE (Triamcinolone Acetonide Injectable Suspension) to be Presented During the American Society of Retina Specialists Annual Scientific Meeting

  • BeiGene (BGNE) entered into a worldwide strategic collaboration with InnoRNA

  • Biogen (BIIB) and Eisai receives BLA acceptance and Priority Review from FDA for Lecanemab

  • Bio-Techne (TECH) announces European launch of CE-IVD marked RNAscope ISH Probe High Risk HPV

  • BioXcel Therapeutics' (BTAI) IGALMI, a sublingual film for the acute treatment of agitation associated with schizophrenia or bipolar I or II disorder in adults, is now available in doses of 120 and 180 mcg through third party logistics provider and is available for order through wholesalers

  • BNY Mellon (BK) names Dermot McDonogh as next Chief Financial Officer

  • Cambium Networks (CMBM) delivers initial order of Microwave Line-of-Sight radios to Advanced Technology Systems Company

  • ComScore (SCOR) appoints Jon Carpenter as CEO; Mary Margaret Curry as CFO

  • Danimer Scientific (DNMR) invited to submit Part II application for loan guarantee under U.S. Department of Energy Title XVII Loan Guarantee Program

  • Evolution Petroleum (EPM) CEO Jason Brown to step down to pursue other opportunities

  • Franklin Street Properties (FSP) adopts a variable quarterly dividend policy

  • Grupo Aeroportuario del Pacifico (PAC) reports that June passenger traffic increased by 15.4% compared to June 2019

  • Guardant Health (GH) and Adicon announce strategic partnership to offer comprehensive genomic profiling tests to accelerate development of new cancer therapies in China

  • IAMGOLD (IAG) announces assay results from its 2022 delineation diamond drilling program on its wholly-owned Karita Gold project in north-eastern Guinea

  • IVERIC bio (ISEE) and DelSiTech enter exclusive agreement for development of sustained release Zimura

  • JinkoSolar (JKS) authorizes the Company to repurchase up to US$200 million of its ordinary shares represented by ADSs during an 18-month period

  • Kirklands (KIRK) partners with Ryder System to launch an in-home delivery service

  • Life Storage (LSI) increases quarterly dividend by 8% to $1.08/sh from $1/00/sh; new annual yield is 3.8%

  • Lockheed Martin (LMT) awarded a $185.9 mln US Navy contract modification to exercise an option for engineering design and development

  • MarketAxess (MKTX) announces June trading volume and preliminary variable transaction fees per million for the quarter ended June 30, 2022

  • Meta (META) digital collectible plans unchanged by crypto volatility, according to Financial Times

  • Nexa Resources (NEXA) announces that ramp-up activities at Aripuana polymetallic mine have started

  • NMG (NMG) Issues Results of Feasibility Study for its Integrated Ore-to-Anode-Material Model Projected to be North America's Largest Natural Graphite Operation with Attractive Economics

  • Oil States (OIS) promotes Philip Moses to COO

  • Patterson-UTI (PTEN) reported that for the month of June 2022, the Company had an average of 124 drilling rigs operating in the United States

  • Primoris Services (PRIM) awarded a heavy civil project valued at more than $170 mln by the Texas Department of Transportation

  • Roche Hldg (RHHBY) unit Genentech receives Priority Review for Mosunetuzumab

  • Rocket Lab USA (RKLB) announces it next two launches will be responsive space missions for the U.S. government's National Reconnaissance Office

  • Spirit Airlines (SAVE): US DOT reassigns 16 peak-hour runway timings at Newark-Liberty to SAVE

  • springbig (SBIG) announced an exclusive partnership with Kind+, the first scalable platform to power subscriptions and recurring orders for cannabis end consumers

  • STAG Industrial (STAG) appoints William Crooker as CEO and to the Board of Directors

  • Stantec (STN) has been selected as the Program Management Consultant for the Iona Island Wastewater Treatment Plant (IIWWTP) Projects in Vancouver, British Columbia

  • TechnipFMC (FTI) to conduct iFEED study for Equinor relating to its BM-C-33 project offshore Brazil

  • Tradeweb Markets (TW) reports June 2022 trading volume of $26.1 trln, ADV +18% to $1.24 trln

  • Vertical Aerospace Group (EVTL) announces a strategic partnership with E-One Moli Energy Corp (Molicel), a manufacturer of lithium-ion cells, to supply high power cylindrical cells for Vertical's VX4 eVTOL aircraft

  • Veru (VERU) Announces New England Journal of Medicine Evidence Publication of Phase 3 Clinical Trial Results Demonstrating that Sabizabulin Treatment Significantly Reduced Deaths in High-Risk Hospitalized COVID-19 Patients

  • Viemed Healthcare (VMD) announces publication of study demonstrating the benefits of NIVH

  • Walmart (WMT): Some Walmart suppliers facing fuel surcharges, according to the Wall Street Journal

  • M&A:

  • Activision Blizzard (ATVI): UK CMA is investigating the anticipated acquisition by Microsoft Corporation (MSFT) of Activision Blizzard

  • Alta Equipment Group (ALTG) has entered into a definitive agreement to acquire Yale Industrial Trucks

  • Boston Omaha's (BOC) majority owned subsidiary, Utah Broadband, acquires the internet service assets of Strawberry Communications

  • Cardinal Health (CAH) acquires Bendcare group purchasing organization entity and makes a minority investment in the Bendcare management services organization

  • Ensign Group (ENSG) acquires real estate assets in California

  • Healthcare Realty (HR): Independent Proxy Advisory Firm Glass Lewis Recommends Healthcare Realty Trust Shareholders Vote for Proposed Transaction With Healthcare Trust of America

  • Hut 8 Mining (HUT) reports 328 Bitcoin mined in June

  • N-able (NABL) has acquired trusted Microsoft Cloud management and automation platform Spinpanel

  • Petrobras (PBR) finalized the sale of its entire interest (27.88%) in Deten Qumica S.A

  • Resolute Forest Products (RFP) entered into an agreement under which Domtar will acquire all of the outstanding common shares of Resolute stock for $20.50 per share and one Contingent Value Right

  • Schweitzer-Mauduit (SWM) and Neenah (NP) complete merger to become Mativ (MATV)

  • TherapeuticsMD (TXMD): EW Healthcare Partners extended the expiration date of its tender offer to purchase all issued and outstanding shares of TherapeuticsMD at a price of $10.00 per share through 12, 2022

  • Tyson Foods (TSN) acquires strategic stake in Tanmiah poultry subsidiaries; deal to accelerate growth

  • Unilever PLC (UL): Ben & Jerry's files lawsuit to block the sale of its Israeli business to a local licensee, according to Reuters

  • Vista Outdoor (VSTO) to acquire Irvine, Calif.-based Fox Racing, a global icon in performance motocross, mountain bike and lifestyle gear for $540 mln + potential earnout

  • VMware (VMW): Broadcom's deal to acquire VMware will move forward after a rival bidder failed to emerge during go-shop period, according to Bloomberg

  • Syndicate

  • Earthstone Energy (ESTE) files for 19,417,476 share common stock offering by selling shareholders

  • Virgin Orbit Holdings (VORB) entered into a securities purchase agreement pursuant to which the Company sold and issued convertible debenture on June 29, 2022 in the principal amount of $50.0 mln

  • IPOs:

  • Priced to Trade:

  • No IPOs expected.

Gapping Up/Down

  • Gapping up:

  • AMTI +7.1%, RKLB +3%, MO +2.6%, PRIM +2.1%, BOC +1.8%, HIVE +1.8%, BIIB +1.8%, FTI +1.6%, LSI+1.6%, ISEE +1%, SRPT +0.7%, EPM +0.6%, ESTE+0.5%

  • Gapping down:

  • KRNT -23.9%, RADA -10.5%, FSP -5.5%, VORB-3.2%, OIS -2.4%, UMC -2.3%, STAG -2%, VMW-1.8%, DNMR -1%, AVGO -0.6%

 

Analyst Research (see Upgrades/Downgradescalendarfor full list):

  • Upgrades

  • A.O. Smith (AOS) upgraded to Buy from Neutral at Longbow; tgt $71

  • Centennial Resource Development (CDEV) upgraded to Outperform from Sector Perform at RBC Capital Mkts; tgt $11

  • Downgrades:

  • Azul S.A. (AZUL) downgraded to Underweight from Equal Weight at Barclays; tgt lowered to $7

  • Continental Resources (CLR) downgraded to Sector Perform from Outperform at RBC Capital Mkts; tgt raised to $80

  • Others:

  • Abbott Labs (ABT) initiated with an Underperform at Wolfe Research; tgt $95

  • BHP Group (BHP) assumed with a Neutral at Credit Suisse

  • Boston Scientific (BSX) initiated with an Outperform at Wolfe Research; tgt $43

Upcoming Events:

  • Econ Data:

  • 07:00 ET: MBA Mortgage Applications Index for July 2 (Briefing.comConsensus 234K; Prior 231K)

  • 08:30 ET: IHS Markit Services PMI - Final for June (Briefing.comConsensus NA; Prior 51.6)

  • 10:00 ET: ISM Non-Manufacturing Index for June (Briefing.comConsensus 54.2%; Prior 55.9%)

  • 10:00 ET: JOLTS - Job Openings for May (Briefing.comConsensus NA; Prior 11.400 M)

  • 14:00 ET: FOMC Minutes from June 14-15

  • Earnings:

  • Thursday (Jul 7)

  • Morning: HELE

  • Afternoon:  LEVI WDFC

Asia & Europe detail:

Asia: Nikkei -1.2%, Hang Seng -1.2%, Shanghai Composite -1.4%

Equity indices in the Asia-Pacific region ended the midweek session on a mostly lower note. Travel-related names struggled in Japan amid reports that the Japanese government's travel support program will be delayed. Some entertainment venues in Shanghai will remain closed while others have been allowed to open. South Korae's prime minister called on the Bank of Korea to normalize policy to bring down inflation.

  • In economic data:

  • Hong Kong's June Manufacturing PMI 52.4 (last 54.9)

  • New Zealand's GlobalDairyTrade Price Index -4.1% (last -1.3%)

---Equity Markets---

  • Japan's Nikkei: -1.2%

  • Hong Kong's Hang Seng: -1.2%

  • China's Shanghai Composite: -1.4%

  • India's Sensex: +1.2%

  • South Korea's Kospi: -2.1%

  • Australia's ASX All Ordinaries: -0.5%

---FX---

  • USD/JPY: -0.3% to 135.39

  • USD/CNH: UNCH at 6.7120

  • USD/INR: -0.4% to 78.96

Europe: DAX +1.4%, FTSE +1.8%, CAC +1.6%

Major European indices trade on a higher note. The U.K.'s Economic Secretary to the Treasury resigned after Chancellor Sunak and Health Secretary Javid did the same yesterday, fueling speculation that Prime Minister Johnson will be forced out soon. The European Parliament will classify nuclear power and gas as "green energy." Norwegian oil and gas workers will return to work after an imposition of forced settlements by the government.

  • In economic data:

  • Eurozone's May Retail Sales 0.2% m/m (expected 0.4%; last -1.4%); 0.2% yr/yr (expected -0.4%; last 4.0%)

  • Germany's May Factory Orders 0.1% m/m (expected -0.6%; last -1.8%)

  • U.K.'s June Construction PMI 52.6 (expected 55.0; last 56.4)

  • Spain's May Industrial Production 3.8% yr/yr (expected 3.4%; last 2.3%)

---Equity Markets---

  • STOXX Europe 600: +1.6%

  • Germany's DAX: +1.4%

  • U.K.'s FTSE 100: +1.8%

  • France's CAC 40: +1.6%

  • Italy's FTSE MIB: +0.8%

  • Spain's IBEX 35: +0.4%

---FX---

  • EUR/USD: -0.7% to 1.0193

  • GBP/USD: -0.3% to 1.1911

  • USD/CHF: +0.3% to 0.9715


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