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06/12/22 Briefing


The S&P 500 futures are up 3 points and are trading roughly in line with above fair value. The Nasdaq 100 futures are up 24 points and are trading 0.3% above fair value. The Dow Jones Industrial Average futures are up 19 points and are trading somewhat above fair value.

The equity futures market indicates a modestly higher open as stocks try to bounce from yesterday's weakness.

The Reserve Bank of Australia raised its cash rate by 25 bps to 3.10%, as expected, while pointing to the likelihood of further tightening. European Central Bank Chief Economist Lane said that he has confidence about being near the inflationary peak, but also acknowledged that more rate hikes are needed while policymaker Herodotou said that more rate hikes will take place, but neutral rates are "very close."

Treasury yields are moving lower and the dollar is weakening. The U.S. Dollar Index is down 0.3% to 105.00. The 2-yr note yield is down two basis points to 4.36% and the 10-yr note yield is down four basis points to 3.56%.

WTI crude oil futures are down 1.5% to $75.78/bbl and natural gas futures are down 1.6% to $5.49/mmbtu.

Economic data today is limited to the October Trade Balance (Briefing.com consensus -$77.2 billion; prior -$73.3 billion) at 8:30 a.m. ET.

In corporate news:

  • JP Morgan (JPM 133.28, +1.91, +1.5%): upgraded to Overweight from Underweight at Morgan Stanley

  • Alcoa (AA 47.41, +0.89, +1.9%): moving higher on reports that the US and EU are weighing new tariffs on Chinese steel and aluminum, according to Bloomberg

  • Royal Caribbean (RCL 58.19, -1.23, -2.1%): downgraded to Underweight from Overweight at JP Morgan

  • GameStop (GME 25.75, +0.19, +0.7%): has started layoffs, according to Axios

  • GitLab (GTLB 45.13, +6.80, +17.7%): beats by $0.05, beats on revs; guides Q4 EPS above consensus, revs in-line

  • PepsiCo (PEP 183.44, +0.32, +0.2%): moving higher as company plans to lay off hundreds of workers at its North American snacks and beverage division headquarters, according to The Wall Street Journal

  • Vivint Smart Home (VVNT 11.86, +2.87, +31.9%): NRG Energy (NRG) to acquire Vivint for $12 per share or $2.8 bln in an all-cash transaction

  • Signet Jewelers (SIG 62.00, +4.17, +7.2%): beats by $0.42, beats on revs; guides Q4 revs below consensus; guides FY23 EPS above consensus, revs in-line

  • AutoZone (AZO 2520.00, -6.92, -0.3%): beats by $2.17, beats on revs; Q1 domestic comps +5.6%

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region ended Tuesday on a mostly lower note. Japan's Nikkei: +0.2%, Hong Kong's Hang Seng: -0.4%, China's Shanghai Composite: UNCH, India's Sensex: -0.3%, South Korea's Kospi: -1.1%, Australia's ASX All Ordinaries: -0.5%.

  • In economic data:

  • Japan's October Household Spending 1.1% m/m (expected 1.5%; last 1.8%); 1.2% yr/yr (expected 1.0%; last 2.3%). October overall wage income 1.8% yr/yr (last 2.2%)

  • Australia's Q3 Current Account deficit AUD2.30 bln (expected surplus of AUD10.50 bln; last surplus of AUD14.70 bln)


  • In news:

  • There was continued focus on reopening efforts in China.

  • Japan's household spending increased for the second consecutive month in October.

  • Japan's Finance Minister Suzuki said that ruling parties are consulting on the appropriate level of defense funding after it was reported that the country plans to increase its defense spending by 50% over the next five years.

  • The Reserve Bank of Australia raised its cash rate by 25 bps to 3.10%, as expected.



  • Major European indices trade in the red. STOXX Europe 600: -0.3%, Germany's DAX: -0.1%, U.K.'s FTSE 100: -0.3%, France's CAC 40: -0.2%, Italy's FTSE MIB: -0.3%, Spain's IBEX 35: -0.4%.

  • In economic data:

  • Germany's October Factory Orders 0.8% m/m (expected 0.1%; last -2.9%)

  • U.K.'s November Construction PMI 50.4 (expected 52.0; last 53.2)


  • In news:

  • European Central Bank Chief Economist Lane said that he has confidence about being near the inflationary peak, but also acknowledged that more rate hikes are needed while policymaker Herodotou said that more rate hikes will take place, but neutral rates are "very close."

  • Grocery prices in Britain decreased for the first time in almost two years in November.



U.S. equity futures:

  • S&P 500 Futures: +4 @ 4,003

  • DJIA Futures: +22 @ 33,969

  • Nasdaq 100 Futures: +27 @ 11,814

Overseas:

  • Europe: DAX -0.1%, FTSE -0.3%, CAC -0.2%

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

Commodities:

  • Crude Oil -1.23 @ 75.70

  • Nat Gas -0.104 @ 5.473

  • Gold +10.65 @ 1792

  • Silver +0.286 @ 22.703

  • Copper +0.0150 @ 3.81

Earnings/Guidance:

  • AutoZone ( AZO 1.36% ) beats by $2.17, beats on revs; Q1 domestic comps +5.6%

  • Braemar Hotels & Resorts ( BHR 0.57% ) reports preliminary November 2022 RevPAR of $253, up 5% yr/yr and up 15% compared to 2Q19

  • Conn's ( CONN 11.47% ) beats by $0.05, beats on revs

  • Couchbase ( BASE 0.11% ) beats by $0.11, beats on revs; guides Q4 revs below consensus

  • GitLab ( GTLB 10.25% ) beats by $0.05, beats on revs; guides Q4 EPS above consensus, revs in-line

  • Keurig Dr Pepper ( KDP 0.28% ) reiterates its FY22 outlook

  • Kforce ( KFRC 0.81% ) reaffirms Q4 revenue guidance; to pursue an immediate divestiture or exit of its equity stake in WorkLLama

  • LGI Homes ( LGIH 1.06% ) reports it closed 412 homes in November

  • Lilium ( LILM 2.08% ) releases Q3 Business Update

  • Signet Jewelers ( SIG 14.94% ) beats by $0.42, beats on revs; guides Q4 revs below consensus; guides FY23 EPS above consensus, revs in-line

  • Sumo Logic ( SUMO 15.40% ) beats by $0.11, beats on revs; guides Q4 EPS above consensus, revs above consensus

  • Sunoco LP ( SUN 1.22% ) announces 2023 business outlook and guidance in Investor Presentation slides

  • United Micro ( UMC 0.95% ) reports November sales increased 14.7% yr/yr to ~NT$22.55 bln

News:

  • China is reporting fewer coronavirus cases amid relaxation in testing requirements, according to Bloomberg

  • White House Chief of Staff Ron Klain expects President Biden to announce his reelection campaign after the new year, according to Bloomberg

  • White House announces U.S.-EU Trade and Technology Council advances concrete action on transatlantic cooperation

  • The U.S. FTC probes several crypto firms over allegations of deceptive or misleading advertisements, according to Bloomberg

  • A traffic jam of oil tankers has occurred near Turkey after Russian oil price cap went into effect, according to Financial Times

  • Alcoa ( AA 4.36% ) and Century Aluminum (CENX): US and EU are weighing new tariffs on Chinese steel and aluminum, according to Bloomberg

  • AMC Networks ( AMCX 0.08% ) appoints current Chairman James L. Dolan as Interim Executive Chairman following the departure of Christina Spade last week

  • BellRing Brands ( BRBR 2.73% ) approves a new $50 mln share repurchase authorization

  • BioVie ( BIVI 7.87% ) Announces Positive Results for NE3107 in Parkinson's and Alzheimer's Phase 2 Trials

  • Blink Charging ( BLNK 0.72% ) appoints Mark Pastrone, current COO of subsidiary SemaConnect, to COO of the company

  • Buckle ( BKE 2.04% ) authorizes $2.65 per share special cash dividend

  • Cboe Global Markets ( CBOE 1.05% ) reports monthly trading volume statistics for November; total U.S. options volume reached all-time high for fourth consecutive month

  • Celldex Therapeutics ( CLDX 1.31% ) Presents Positive Data from Barzolvolimab Phase 1b Study in Chronic Inducible Urticaria at Global Urticaria Forum 2022

  • CURO Group ( CURO 2.55% ) has appointed Ismail Dawood as Chief Financial Officer, effective January 3, 2023

  • Deutsche Bank ( DB 0.33% ): EU Commission sends statement of objections to Deutsche Bank and Rabobank over Euro-denominated bonds trading cartel case

  • Editas Medicine ( EDIT 2.64% ) announces positive safety and efficacy data from the first two patients treated in the RUBY Trial of EDIT-301 for the treatment of severe sickle cell disease

  • Eldorado Gold ( EGO 1.55% ) Released Updated Mineral Reserve and Mineral Resource Statement; 2022 Gold Reserves of 12.3 million ounces and M&I Gold Resources of 19.2 million ounces

  • Emergent BioSolutions ( EBS 2.21% ) receives FDA acceptance and Priority Review of Supplemental NDA for over-the-counter NARCAN

  • Exscientia plc ( EXAI 1.27% ) presents novel immuno-oncology biomarker for EXS-21546 at the ESMO I-O Annual Congress

  • F-star Therapeutics ( FSTX 0.09% ) presents clinical data on FS222, a CD137/PD-L1 tetravalent bispecific antibody, at ESMO-IO 2022 Congress

  • Funko ( FNKO 4.72% ) announces a series of leadership changes, including appointment of Brian Mariotti as CEO and the resignation of CFO Jennifer Fall Jung

  • GameStop ( GME 1.60% ) beginning a round of layoffs, according to Axios

  • Gibraltar Industries ( ROCK 0.42% ) COO to depart, effective December 30; responsibilities of the position will be reallocated among members of existing management team

  • Goldman Sachs ( GS 0.47% ) wants to purchase or invest in cryptocurrency companies, according to Reuters

  • GOL Linhas Aereas Inteligentes S.A. ( GOL 5.52% ) reports November traffic figures

  • Gossamer Bio ( GOSS 67.12% ) announces seralutinib meets primary endpoint in Phase 2 TORREY study in pulmonary arterial hypertension

  • Great Lakes Dredge & Dock ( GLDD 0.14% ) provides update on fleet renewal program; the Galveston Island, the first of two newbuild hopper dredges, is scheduled to be in operation in 1H23 as planned

  • Grupo Aeroportuario Del Sureste ( ASR 0.70% ) reports November traffic

  • Hanover Insurance ( THG 0.47% ) increases quarterly dividend to $0.81/share from $0.75/share, new yield is 2.3%

  • Karuna Therapeutics ( KRTX 11.90% ) appoints Bill Meury as President and CEO

  • Lattice Semi ( LSCC 0.18% ) unveils Lattice Avant, a new FPGA platform, expanding its portfolio and doubling its addressable market

  • Leonardo DRS ( DRS 2.69% ) receives contract from U.S. Army worth $39.5 mln

  • Liquidia Technologies ( LQDA 2.51% ) enters into collaboration with Sandoz and Mainbridge Health Partners to develop new infusion pump for infusion of Treprostinil Injection

  • Matador Resources ( MTDR 1.64% ) amends its quarterly cash dividend policy to $0.15/share

  • MediciNova ( MNOV 2.83% ) Announces Positive Results from Secondary Analysis of Phase 2 Trial of MN-166 (ibudilast) Published in The American Journal of Drug and Alcohol Abuse

  • Meta Platforms ( META 3.24% ) says it would remove news from its platforms if Congress passes the Journalism Competition and Preservation Act, according to Reuters

  • Microsoft ( MSFT 0.47% ) is offering Sony (SONY) a 10-year contract for Call of Duty releases on PlayStation, according to Reuters

  • Microsoft ( MSFT 0.47% ): Workers at Microsoft gaming studio could form a union, according to Axios

  • NASDAQ ( NDAQ 0.04% ) reports November monthly volume data, Nov US equity options volume 271 mln, down slightly from 273 mln in Oct

  • Natera ( NTRA 0.73% ) Announces Publication of Clinical Experience Study with 18,984 Twin Pregnancies Supporting Excellent Performance of Panorama NIPT

  • NeoGenomics ( NEO 3.56% ) names Jeffrey Sherman as CFO

  • News Corp. ( NWSA 0.43% ) Special Committee provides update on exploration of combination with Fox (FOX)

  • NY Times ( NYT 0.07% ) union could strike, according to the New York Post

  • Northrop Grumman ( NOC 0.23% ) awarded a $406 mln US Air Force task order for engineering services

  • PepsiCo ( PEP 0.02% ) plans to lay off hundreds of workers at its North American snacks and beverage division headquarters, according to the Wall Street Journal

  • Pfizer ( PFE 0.30% ) and Clear Creek Bio to collaborate on a research program targeting SARS-CoV-2 papain-like protease

  • Quanterix's ( QTRX 0.69% ) Simoa Technology Drives Advances in Alzheimer's Disease Research Presented at 2022 Clinical Trials on Alzheimer's Disease Conference

  • SAGE Therapeutics ( SAGE 0.94% ) and Biogen (BIIB) complete rolling submission of NDA for Zuranolone

  • Samsung ( SSNLF ) planning to invest billions in Vietnam, according to Reuters

  • Sempra Energy ( SRE 0.11% ) unit entered into a long-term sale and purchase agreement with ENGIE S.A. (ENGIY)

  • Silvergate Capital ( SI 0.12% ) issues letter relating to FTX and SI's role in the digital asset ecosystem

  • Summit Materials ( SUM 1.57% ) declares special stock dividend of 0.017 shares of company's Class A common stock for each outstanding share of common stock

  • TSMC ( TSM 0.87% ) will invest $40 bln in Arizona chip plant, according to the Wall Street Journal

  • WM Technology ( MAPS 0.00% ) approved plans to reduce the current workforce by up to 175 employees, representing ~25% of the total global workforce

  • Zai Lab ( ZLAB 0.98% ) Partner Mirati Therapeutics (MRTX) Presents Late-Breaking Results Evaluating Concurrent Adagrasib and Pembrolizumab in First-Line Advanced/Metastatic Non-Small Cell Lung Cancer

M&A:

  • Ares Acquisition Corp. ( AAC 0.40% ): X-Energy to go public via business combination with AAC

  • Installed Building Products ( IBP 1.27% ) announces acquisition of Orr Industries, which had annual revenue of approximately $10 mln

  • Orthofix ( OFIX 1.59% ) receives $24.00/share unsolicited non-binding indication of interest letter from the same two private equity fund sponsors from the prior indication of interest letter

  • SS&C Techs ( SSNC 0.28% ) acquires Complete Financial Ops; financial terms were not disclosed

  • Vivint Smart Home ( VVNT 32.48% ): NRG Energy (NRG) to acquire Vivint for $12 per share or $2.8 bln in an all-cash transaction

Syndicate:

  • Axon ( AXON 5.93% ) to offer $500 mln convertible notes in a private offering

  • BioVie Inc. ( BIVI 7.87% ) filed prospectus supplement to increase shares of Class A common stock to $17.5 mln from $8.1 mln that may be sold pursuant to the previously disclosed Controlled Equity Offering Sales Agreement, dated August 31, 2022

  • Herbalife Nutrition ( HLF 16.85% ) announces $250 mln proposed offering of convertible notes

  • Scorpio Tankers ( STNG 0.49% ) announces that all holders of its convertible bond due 2025 have converted their bonds into an aggregate of 5,757,698 shares

IPOs:

  • Expect to Price:

  • No IPOs expected.


Gapping Up/Down

  • Gapping up:

  • VVNT +31.6%, GTLB +18.1%, BIVI +14.6%, EBS +8.9%, SUMO +8.6%, ZLAB +3.6%, LQDA +3.3%, MNOV +2.8%, CENX +2.1%, NWSA +1.5%, BHR +1.4%, GME +1.3%, AMCX +1.3%, STNG +1.2%, FOX +1.2%, HOOD +0.8%, AA +0.8%, QTRX +0.8%, DRS +0.6%, CBOE +0.6%


  • Gapping down:

  • MRTX -10.5%, HLF -9.8%, PSTX -4.1%, LSCC -3.9%, CONN -3.7%, AXON -2.2%, FNKO -0.9%, SI -0.7%, META -0.5%



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

  • Upgrades

  • Activision Blizzard (ATVI) upgraded to Buy from Hold at Edward Jones

  • PennyMac (PFSI) upgraded to Overweight from Equal Weight at Wells Fargo; tgt raised to $75


  • Downgrades:

  • Conagra (CAG) downgraded to Sell from Hold at Deutsche Bank; tgt raised to $34

  • General Mills (GIS) downgraded to Hold from Buy at Deutsche Bank; tgt $88

  • Royal Caribbean (RCL) downgraded to Underweight from Overweight at JP Morgan; tgt lowered to $47


  • Others:

  • Albertsons (ACI) initiated with a Outperform at Bernstein; tgt $26

  • Home Depot (HD) initiated with a Mkt Perform at Bernstein; tgt $337

  • Kroger (KR) initiated with an Outperform at Bernstein; tgt $58

  • Lowe's (LOW) initiated with a Mkt Perform at Bernstein; tgt $237

  • Norwegian Cruise Line (NCLH) assumed with an Overweight at JP Morgan; tgt lowered to $30

  • Target (TGT) initiated with an Outperform at Bernstein; tgt $190

  • United Therapeutics (UTHR) initiated with a Buy at UBS; tgt $320

  • Valvoline (VVV) initiated with an Outperform at RBC Capital Mkts; tgt $39

  • Walmart (WMT) initiated with a Mkt Perform at Bernstein; tgt $159

  • Xponential Fitness (XPOF) initiated with a Buy at Citigroup; tgt $29


Upcoming Events:

  • Econ Data:

  • 08:30 ET: Trade Balance for Oct (Briefing.com Consensus -$77.2 B; Prior -$73.3 B)


  • Earnings:

  • Monday (Dec 5)

  • Morning: SAIC

  • Afternoon: GTLB SUMO


  • Tuesday (Dec 6)

  • Morning: AZO CONN BASE SIG

  • Afternoon: AVAV CASY PLAY GWRE MDB S SWBI CXM SFIX TOL ZUO


  • Wednesday (Dec 7)

  • Morning: ASO BF.B CPB LOVE OLLI THO UNFI

  • Afternoon: AI DSGX GME GEF HCP OXM SPWH VRNT


  • Thursday (Dec 8)

  • Morning: CIEN GMS MOMO KFY MANU

  • Afternoon: AVGO CHWY COO COST DOCU DOMO LULU PHR RH CURV MTN


  • Friday (Dec 9)

  • Morning: LI



Asia & Europe detail:

Asia: Nikkei +0.2%, Hang Seng UNCH, Shanghai Composite UNCH

Equity indices in the Asia-Pacific region ended Tuesday on a mostly lower note. There was continued focus on reopening efforts in China. Japan's household spending increased for the second consecutive month in October. Japan's Finance Minister Suzuki said that ruling parties are consulting on the appropriate level of defense funding after it was reported that the country plans to increase its defense spending by 50% over the next five years. The Reserve Bank of Australia raised its cash rate by 25 bps to 3.10%, as expected.

  • In economic data:

  • Japan's October Household Spending 1.1% m/m (expected 1.5%; last 1.8%); 1.2% yr/yr (expected 1.0%; last 2.3%). October overall wage income 1.8% yr/yr (last 2.2%)

  • Australia's Q3 Current Account deficit AUD2.30 bln (expected surplus of AUD10.50 bln; last surplus of AUD14.70 bln)


---Equity Markets---

  • Japan's Nikkei: +0.2%

  • Hong Kong's Hang Seng: -0.4%

  • China's Shanghai Composite: UNCH

  • India's Sensex: -0.3%

  • South Korea's Kospi: -1.1%

  • Australia's ASX All Ordinaries: -0.5%

---FX---

  • USD/JPY: -0.3% to 136.30

  • USD/CNH: +0.2% to 6.9869

  • USD/INR: +0.5% to 82.33

Europe: DAX -0.1%, FTSE -0.3%, CAC -0.2%

Major European indices trade in the red. European Central Bank Chief Economist Lane said that he has confidence about being near the inflationary peak, but also acknowledged that more rate hikes are needed while policymaker Herodotou said that more rate hikes will take place, but neutral rates are "very close." Grocery prices in Britain decreased for the first time in almost two years in November.

  • In economic data:

  • Germany's October Factory Orders 0.8% m/m (expected 0.1%; last -2.9%)

  • U.K.'s November Construction PMI 50.4 (expected 52.0; last 53.2)


---Equity Markets---

  • STOXX Europe 600: -0.3%

  • Germany's DAX: -0.1%

  • U.K.'s FTSE 100: -0.3%

  • France's CAC 40: -0.2%

  • Italy's FTSE MIB: -0.3%

  • Spain's IBEX 35: -0.4%

---FX---

  • EUR/USD: +0.3% to 1.0521

  • GBP/USD: +0.3% to 1.2228

  • USD/CHF: -0.3% to 0.9397

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