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06/09/22 Briefing


The S&P 500 futures are up 24 points and are trading 0.6% above fair value. The Nasdaq 100 futures are up 76 points and are trading 0.6% above fair value. The Dow Jones Industrial Average futures are up 186 points and are trading 0.6% above fair value.

Equity futures are positive after last week's selling. There's a lingering feeling the market may be due for a bounce from a short-term oversold condition. 

There's some central bank news in the mix. The Reserve Bank of Australia raised its cash target rate by 50 basis points to 2.35%, as expected, and said more rate hikes are likely but won't be on a pre-set path. A focal point this week will be the ECB meeting on Thursday and whether the central bank raises its key policy rate by 50 basis points or 75 basis points.

According to The Wall Street Journal, Russia has indicated that the shutdown of the Nord Stream 1 pipeline will be long lasting.

On a related note, OPEC+ is implementing a small production cut of 100,000 barrels per day. 

Energy complex futures are trending lower with WTI crude oil futures down 0.2% to $86.68/bbl. Natural gas futures are down 1.4% to $8.66/mmbtu.

In corporate news:

  • Tesla (TSLA 271.28, +1.07, +0.40%): upgraded to outperform from peer perform at Wolfe Research 

  • CVS Health (CVS 99.78, +0.34, +0.34%): Signify Health to be acquired by CVS Health (CVS) for $30.50 per share

  • Bed Bath & Beyond (BBBY 7.31, -1.32, -15.30%): mourns the loss of CFO; Medical examiner rules death of Bed Bath & Beyond (BBBY) CFO Gustavo Arnal a suicide, according to Reuters

  • Digital World Acquisition Corp (DWAC 19.35, -5.64, -22.57%): Truth Social did not get shareholder support from Digital World (DWAC) to extend SPAC deal (SPACS), according to Reuters.

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region were mixed on Tuesday. Japan's Nikkei: flat, Hong Kong's Hang Seng: -0.1%, China's Shanghai Composite: +1.4%, India's Sensex: -0.1%, South Korea's Kospi: +0.3%, Australia's ASX All Ordinaries: -0.3%.

  • In economic data:

  • Japan's July Household Spending -1.4% month-over-month (expected -0.6%; last +1.5%) and +3.4% year-over-year (expected +4.2%; last +3.5%)

  • Australia's Q2 Current Account AUD 18.3 bln (expected AUD 20.8 bln; last AUD 2.8 bln)

  • In news:

  • China's Shanghai Composite led the winners, jumping 1.4% after the PBOC said the foreign exchange required reserve ratio for financial institutions will be cut by 200 basis points to 6.00%, effective September 15.That move is aimed at supporting the yuan, although the PBOC on Tuesday set the yuan's midpoint at a 2-yr low of 6.9096.

  • Separately, Chinese city Guiyang, the capital of the Guizhou province, is also in a Covid-related lockdown now.

  • The Reserve Bank of Australia raised its cash target rate by 50 basis points to 2.35%, as expected, and said more rate hikes are likely but won't be on a pre-set path.

  • Japan's July household spending was weaker than expected, declining 1.4% month-over-month after increasing 1.5% in June.

  • USD/JPY at 141.78, which is a new 24-year low.

  • Major European indices are mostly higher despite worsening energy supply issues. STOXX Europe 600: +0.6%, Germany's DAX: +0.9%, U.K.'s FTSE 100: +0.2%, France's CAC 40: +0.5%, Italy's FTSE MIB: flat, Spain's IBEX 35: flat.

  • In economic data:

  • Germany's July Factory Orders -1.1% month-over-month (expected -0.5%; last -0.3%)

  • UK's August Construction PMI 49.2 (expected 48.0; last 48.9)

  • In news:

  • According to The Wall Street Journal, Russia has indicated that the shutdown of the Nord Stream 1 pipeline will be long lasting.

  • European leaders are pushing plans to conserve energy use and exploring ideas related to energy price caps.\

  • France's President Macron is urging a 10% cut in energy use, according to AP.

  • Liz Truss, who will replace Boris Johnson as UK Prime Minister, is expected to unveil a GBP130 bln fiscal plan to help households offset the rising cost of energy, according to Bloomberg.

  • A focal point this week will be the ECB meeting on Thursday and whether the central bank raises its key policy rate by 50 basis points or 75 basis points.

  • EUR/USD +0.1% to 0.9930.

U.S. equity futures:

  • S&P 500 Futures: +20 @ 3,945

  • DJIA Futures: +160 @ 31,479

  • Nasdaq 100 Futures: +57 @ 12,156

Overseas:

  • Europe: DAX +0.9%, FTSE +0.2%, CAC +0.5%

  • Asia: Nikkei Flat, Hang Seng -0.1%, Shanghai Composite +1.4%

Commodities:

  • Crude Oil -0.20 @ 86.67

  • Nat Gas  -0.097 @ 8.666

  • Gold +0.80 @ 1723.40

  • Silver +0.419  @ 18.300

  • Copper -0.0090 @ 3.4495

U.S. Summary:

  • Earnings/Guidance:

  • Kingsoft Cloud (KC) beats by CNY1.53, misses on revs; guides Q3 revs below two analyst estimate

  • United Micro (UMC) reports August revs increased 34.9% yr/yr to NT$25.35 bln

  • General News:

  • Iran nuclear deal revival is "in danger" amid new disagreements, according to Financial Times

  • Russia indicated that Nord Stream pipeline closure will last a long time. Germany will provide $65 billion in support for consumers and businesses, according to the Wall Street Journal

  • Europe might need to ration energy after Russia cut gas flows, according to Bloomberg

  • China extends lockdown of Chengdu, according to Bloomberg

  • USTR confirms that China tariffs will remain in effect

  • Biden Administration releases implementation strategy for $50 billion CHIPS for America program

  • California ISO says conditions on the grid becoming more strained as heat wave intensifies

  • Fast food wages could rise to $22/hour amid new law in California, according to the Wall Street Journal

  • UK's Conservative Party names Liz Truss as its new leader and will become Britain's Prime Minister

  • OPEC+ reverts to the production level of August 2022 noting that the upward adjustment of 0.1 mb/d to the production level was only intended for the month of September 2022

  • RBA raises rates by 50 basis points to 2.35%

  • Commerce Secretary Gina Raimondo in interview says US will accept funding applications for semiconductor firms by February, according to the New York Times

  • Germany delays phase out of nuclear plants, according to Guardian

  • ADT (ADT) receives $1.5 bln in investments from State Farm and Google (GOOG), according to the Wall Street Journal

  • Alvotech (ALVO) Reported Update on Initial AVT02 Biologics License Application

  • Amazon (AMZN) ends plans for dozens of new warehouses amid slower sales, according to Bloomberg

  • Amazon (AMZN) aiming to enter Japan's online prescription drug market, according to Nikkei

  • Apple (AAPL) aiming to double workforce of digital advertising business, according to Financial Times

  • AstraZeneca (AZN) receives approval for Forxiga in China; receives FDA approval for Imfinzi plus chemotherapy

  • Athira Pharma (ATHA) announces an update to its plans for the ongoing LIFT-AD clinical trial of fosgonimeton in patients with mild-to-moderate Alzheimer's disease

  • Bed Bath & Beyond (BBBY) mourns the loss of CFO; Medical examiner rules death of Bed Bath & Beyond CFO Gustavo Arnal a suicide, according to Reuters

  • Boeing (BA): Israel to ban Boeing 747's due to environmental concerns, according to Reuters

  • Boston Scientific (BSX) receives FDA approval for expanded labeling of WATCHMAN FLX LAAC device for dual anti-platelet therapy as post-procedural medication option

  • Cardinal Health (CAH) announces governance enhancements and shareholder value creation initiatives; Elliott has also entered into a cooperation agreement

  • Citigroup (C) eliminated a small number of mortgage related jobs, according to Reuters

  • Devon Energy (DVN) and Delfin Midstream enter LNG Export Partnership

  • Digital World (DWAC): Truth Social did not get shareholder support from Digital World to extend SPAC deal, according to Reuters

  • Exelixis (EXEL) files patent infringement lawsuit against Teva Pharmaceutical

  • Gilead Sciences (GILD) reports new TROPiCS-02 Data in HR+/HER2- Metastatic Breast Cancer Patients Demonstrates Progression-Free Survival Benefit of Trodelvy Regardless of Their HER2 Status

  • GlaxoSmithKline (GSK): WHO grants prequalification to GSK's Mosquirix - the world's first and only approved malaria vaccine

  • GOL Linhas Aereas Inteligentes S.A. (GOL) reports August metrics

  • Gores Holdings VIII (GIIX) and Footprint announces additional capital to fund business plan and strategic revision of transaction terms

  • Grupo Aeroportuario del Pacifico (PAC) reports August traffic increased 22.5% over 2019

  • Honda Motor (HMC) and Hanwa establish strategic partnership for stable procurement of essential metals

  • IDEAYA Biosciences (IDYA) reports first-patient-in for Phase I clinical trial to evaluate darovasertib monotherapy

  • Instil Bio (TIL) announced the appointment of Tim Moore to the role of Chief Operating Officer

  • Ironwood Pharma (IRWD) announces "positive" topline data from a Phase III clinical trial evaluating LINZESS 72 mcg in pediatric patients aged 6-17 with functional constipation

  • IVERIC bio (ISEE) announces positive topline data from Zimura GATHER2 phase 3 clinical trial in geographic atrophy; primary endpoint met with 14.3% reduction in mean rate of growth (slope) in ga area over 12 months using square root transformation

  • Mannkind (MNKD) successfully completes phase 1 study of inhaled clofazimine

  • MarketAxess (MKTX) announces monthly volume statistics for August 2022

  • Meta Platforms (META): Ireland Data Protection Commission announces decision in Meta (Facebook) inquiry

  • MiMedx Group (MDXG) announced that K. Todd Newton, a member of the MIMEDX Board of Directors, has been appointed interim Chief Executive Officer; updates guidance

  • Monte Rosa Therapeutics (GLUE) receives FDA clearance of Investigational New Drug Application for MRT-2359

  • Pfizer (PFE) BioNTech (BNTX) bivalent COVID-19 booster approved by UK medicines regulator

  • PNM Resources (PNM) disclosed Court granted an emergency stay of the NMPRC Order pausing any changes to customer bills that began July 31, 2022 until further action by the Court

  • Pulmonx (LUNG) reports CONVERT Clinical Trial Data Presented at ERS Demonstrates Early Success of AeriSeal System in Patients with Advanced COPD/Emphysema

  • PureTech Health plc (PRTC) presents data for LYT-100 (Deupirfenidone) supporting design of dose-ranging trial in idiopathic pulmonary fibrosis at European Respiratory Society International Congress 2022

  • Regeneron Pharma (REGN) reports Late-Breaking Dupixent (dupilumab) Data at ERS 2022 Show Consistent Efficacy and Safety Profile for Up to Two Years in Children Aged 6 to 11 Years with Moderate-to-severe Asthma

  • Ventas (VTR): Ardent Health Services to get investment from Pure Health

  • Volaris Aviation (VLRS) reports August traffic increased 20% yr/yr

  • World Wrestling (WWE) promotes Frank Riddick to President, he will also maintain his current role as CFO

  • M&A:

  • Amazon (AMZN): FTC will review Amazon acquisition of iRobot (IRBT), according to Politico

  • CatchMark Timber Trust (CTT) Announces Proxy Advisory Firms Glass Lewis and ISS Recommend Stockholders Vote "FOR" Proposed Merger of CatchMark with PotlatchDeltic Corporation

  • ChannelAdvisor (ECOM) to be acquired for $23.10 per share

  • Church & Dwight (CHD) has signed a definitive agreement to acquire the Hero Mighty Patch brand and other acne treatment products for $630 mln, consisting of cash and Church & Dwight restricted stock

  • Credit Suisse (CS) signs agreements with Butterfield and Gasser Partner to sell its global trust business

  • Enpro Industries (NPO) announces agreement to sell GGB to Timken for $305 million

  • EQT Corp (EQT). aiming to purchase THQ Appalachia I LLC for $5.2 bln, according to Bloomberg

  • Illumina (ILMN) confirms it intends to appeal European Commission's decision in GRAIL deal

  • Liberty Energy (LBRT) announces investment in Natron Energy

  • Minority Equality Opportunities Acquisition (MEOA) signed a definitive business combination agreement to merge with Digerati Technologies, Inc.

  • Phillip Morris (PM) aiming to lower acceptance threshold for Swedish Match takeover, according to Bloomberg

  • Signify Health (SGFY) to be acquired by CVS Health (CVS) for $30.50 per share

  • Sitio Royalties Corp (STR) & Brigham Minerals (MNRL) aiming to merge in $4 bln deal, according to the Wall Street Journal

  • Timken (TKR) to acquire GGB Bearing Technology, expanding its engineered bearing portfolio with complementary products

  • Turquoise Hill Resources (TRQ) and Rio Tinto (RIO) enter into definitive arrangement agreement for Rio Tinto to acquire full ownership of Turquoise Hill

  • UBS AG (UBS) and Wealthfront mutually agree to terminate their merger agreement under which Wealthfront was to be acquired by UBS Americas

  • Syndicate

  • 22nd Century Group (XXII) files for 26,032,708 share common stock offering by selling shareholders

  • Addus HomeCare (ADUS) files mixed securities shelf offering

  • Ardmore Shipping (ASC) files for $500 mln mixed securities shelf offering

  • Berkshire Grey (BGRY) files for $200 mln mixed securities shelf offering;  files for 25,250,616 share common stock offering by selling shareholders, relates to warrants

  • Boston Omaha (BOC) files for 1,018,660 share common stock offering by selling shareholders

  • Brickell Biotech (BBI) files for 1,750,000 share common stock offering by selling shareholder

  • Cano Health (CANO) files for 6,895,830 share common stock offering by selling shareholders

  • Earthstone Energy (ESTE) files for 3,857,015 share common stock offering by selling shareholders

  • FARO Techs (FARO) files for 495,562 share common stock offering by selling shareholders

  • FirstCash (FCFS) files for 8,046,252 share common stock offering by selling shareholder

  • HIVE Blockchain Technologies (HIVE) announces $100 mln At-The-Market equity offering program

  • PLBY Group (PLBY) files for $250 mln mixed securities shelf offering

  • Smith Micro Software (SMSI) files for 9,377,035 share common stock offering by selling shareholders

  • Stem (STEM) files for $600 mln mixed securities shelf offering

  • TG Therapeutics (TGTX) files mixed securities shelf offering

  • Walt Disney (DIS) files mixed securities shelf offering

  • IPOs:

  • Volkswagen AG (VWAGY) Board of Management and Supervisory Board aim for an IPO Porsche AG (POAHY) and decide on the next step with the "intention to float"

  • Expected to Price:

  • No IPOs expected.

Gapping Up/Down

  • Gapping up:

  • ISEE +42.3%, MNKD +9%, LPTX +6%, IDYA +4.9%, WING +3%, APGN +2.1%, UMC +2%, HUT +1.6%, AZN+1.3%, GOL +1%, IWM +0.9%, CS +0.8%, SPY +0.8%, QQQ +0.8%, DIA +0.7%

  • Gapping down:

  • DWAC -18.7%, BBBY -15.2%, ZYME -4.9%, VLRS-3.5%, PAC -1.3%

 

Analyst Research (see Upgrades/Downgradescalendarfor full list):

  • Upgrades

  • Anheuser-Busch InBev (ABEV) upgraded to Buy from Hold at HSBC Securities

  • Euronav (EURN) upgraded to Buy from Hold at Jefferies; tgt raised to $20

  • Frontline (FRO) upgraded to Buy from Hold at Jefferies; tgt raised to $16

  • Downgrades:

  • Alvotech (ALVO) downgraded to Sell from Buy at Citigroup; tgt lowered to $5

  • Apollo Commercial Real Estate (ARI) downgraded to Underweight from Neutral at JP Morgan; tgt lowered to $11

  • Carlyle Group (CG) downgraded to Underperform from Buy at BofA Securities; tgt lowered to $33

  • Ciena (CIEN) downgraded to Neutral from Overweight at JP Morgan; tgt lowered to $45

  • Claros Mortgage Trust (CMTG) downgraded to Underweight from Neutral at JP Morgan; tgt lowered to $17

  • Discover Financial Services (DFS) downgraded to Neutral from Overweight at JP Morgan; tgt lowered to $113

  • Enact Holdings (ACT) downgraded to Neutral from Overweight at JP Morgan; tgt $27

  • Rocket Companies (RKT) downgraded to Neutral from Overweight at JP Morgan; tgt lowered to $8.50

  • Others:

  • Akili Inc. (AKLI) initiated with an Outperform at Cowen

  • Cadre Holdings (CDRE) initiated with a Buy at BofA Securities; tgt $30

  • Dropbox (DBX) initiated with a Buy at BofA Securities; tgt $34

Upcoming Events:

  • Econ Data:

  • 09:45 ET: IHS Markit Services PMI - Final for Aug (Briefing.comConsensus NA; Prior 44.1)

  • 10:00 ET: ISM Non-Manufacturing Index for Aug (Briefing.comConsensus 55.2%; Prior 56.7%)

  • Earnings:

  • Tuesday (Sep 6)

  • Morning: KC

  • Afternoon:  COUP GTLB GWRE PATH

  • Wednesday (Sep 7)

  • Morning:  ASO GIII KFY NIO REVG

  • Afternoon:  AVAV AEO ASAN CASY CPRT BASE PLAY DSGX GME PHR CURV VRNT YEXT

  • Thursday (Sep 8)

  • Morning: BILI FCEL LOVE

  • Afternoon:  AOUT DOCU AVO RH SWBI CXM ZS ZUMZ

  • Friday (Sep 9) 

  • Morning:  ABM KR


Asia & Europe detail:

Asia: Nikkei Flat, Hang Seng -0.1%, Shanghai Composite +1.4%

Equity indices in the Asia-Pacific region were mixed on Tuesday. China's Shanghai Composite led the winners, jumping 1.4% after the PBOC said the foreign exchange required reserve ratio for financial institutions will be cut by 200 basis points to 6.00%, effective September 15.That move is aimed at supporting the yuan, although the PBOC on Tuesday set the yuan's midpoint at a 2-yr low of 6.9096. Separately, Chinese city Guiyang, the capital of the Guizhou province, is also in a Covid-related lockdown now. The Reserve Bank of Australia raised its cash target rate by 50 basis points to 2.35%, as expected, and said more rate hikes are likely but won't be on a pre-set path. Japan's July household spending was weaker than expected, declining 1.4% month-over-month after increasing 1.5% in June. USD/JPY at 141.78, which is a new 24-year low.

  • In economic data:

  • Japan's July Household Spending -1.4% month-over-month (expected -0.6%; last +1.5%) and +3.4% year-over-year (expected +4.2%; last +3.5%)

  • Australia's Q2 Current Account AUD 18.3 bln (expected AUD 20.8 bln; last AUD 2.8 bln)

---Equity Markets---

  • Japan's Nikkei: flat

  • Hong Kong's Hang Seng: -0.1%

  • China's Shanghai Composite: +1.4%

  • India's Sensex: -0.1%

  • South Korea's Kospi: +0.3%

  • Australia's ASX All Ordinaries: -0.3%

---FX---

  • USD/JPY: +0.9% to 141.78

  • USD/CNH: +0.4% to 6.9719

  • USD/INR: -0.3% to 79.778

Europe: DAX +0.9%, FTSE +0.2%, CAC +0.5%

Major European indices are mostly higher despite worsening energy supply issues. According to The Wall Street Journal, Russia has indicated that the shutdown of the Nord Stream 1 pipeline will be long lasting. European leaders are pushing plans to conserve energy use and exploring ideas related to energy price caps. France's President Macron is urging a 10% cut in energy use, according to AP. Liz Truss, who will replace Boris Johnson as UK Prime Minister, is expected to unveil a GBP130 bln fiscal plan to help households offset the rising cost of energy, according to Bloomberg. A focal point this week will be the ECB meeting on Thursday and whether the central bank raises its key policy rate by 50 basis points or 75 basis points. EUR/USD +0.1% to 0.9930.

  • In economic data:

  • Germany's July Factory Orders -1.1% month-over-month (expected -0.5%; last -0.3%)

  • UK's August Construction PMI 49.2 (expected 48.0; last 48.9)

---Equity Markets---

  • STOXX Europe 600: +0.6%

  • Germany's DAX: +0.9%

  • U.K.'s FTSE 100: +0.2%

  • France's CAC 40: +0.5%

  • Italy's FTSE MIB: flat

  • Spain's IBEX 35: flat

---FX---

  • EUR/USD: +0.1% to 0.9930

  • GBP/USD: +0.6% to 1.1575

  • USD/CHF: +0.2% to 0.9815


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The S&P 500 futures are up 3 points and are trading % above fair value. The Nasdaq 100 futures are up 9 points and are trading roughly in-line with fair value. The Dow Jones Industrial Average futures