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07/02/22 Briefing

Updated: Feb 15

The S&P 500 futures trade 15 points, or 0.3%, above fair value in a tentative start to the week. The market continues to assess the implications of tighter monetary policy, higher interest rates and business costs, and a potential Russian invasion of Ukraine.

Corporate news has also been a focal point this morning. Notably, Spirit Airlines (SAVE 24.35, +2.62, +12.1%) and Frontier Airlines (ULCC 12.08, -0.31, -2.5%) have agreed to merge in a $6.6 billion cash-and-stock deal, which would create the 5th largest airline in the U.S., according to CNBC.

In addition, Peloton (PTON 31.98, +7.38, +30.0%) has jumped 30% after reportedly drawing acquisition interest from Amazon.com(AMZN 3158.00, +5.21, +0.2%) and Nike (NKE 146.00, +0.61, +0.4%). Tyson Foods (TSN 93.35, +5.06, +5.7%) and Hasbro (HAS 96.00, +2.08, +2.2%) both beat top and bottom-line estimates.

U.S. Treasury yields have edged lower after rising noticeably last week. The 2-yr yield is down two basis points to 1.30%, and the 10-yr yield is down one basis point to at 1.92%. The U.S. Dollar Index is down 0.1% to 95.36. WTI crude futures are down 0.8%, or $0.76, to $91.55/bbl.

Separately, today's data will be limited to the Consumer Credit report for December (Briefing.comconsensus $25.0 billion) at 3:00 p.m. ET. The key report this week will be the Consumer Price Index for January on Thursday.

In U.S. Corporate news:

  • Spirit Airlines (SAVE 24.35, +2.62): +12.1% after agreeing to merge with Frontier Airlines (ULCC 12.08, -0.31, -2.5%) in a $6.6 billion cash-and-stock deal. On a related note, both companies beat EPS estimates.

  • Peloton (PTON 31.98, +7.38): +30.0% amid reports indicating that the company is drawing acquisition interest from companies including Amazon.com(AMZN 3158.00, +5.21, +0.2%) and Nike (NKE 146.00, +0.61, +0.4%).

  • Tyson Foods (TSN 93.35, +5.06): +5.7% after beating top and bottom-line estimates.

  • Hasbro (HAS 96.00, +2.08): +2.2% after beating top and bottom-line estimates and raising its dividend by 3%.

  • Cerence (CRNC 48.50, -15.08): -23.7% after guiding Q2 revenue below consensus and lowering its FY22 revenue below consensus. The company's CFO will retire on March 11.

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region began the week on a mixed note while markets in New Zealand were closed for a holiday. Japan's Nikkei: -0.7% Hong Kong's Hang Seng: UNCH China's Shanghai Composite: +2.0% India's Sensex: -1.8% South Korea's Kospi: -0.2% Australia's ASX All Ordinaries: -0.1%.

  • In economic data:

  • China's January Caixin Services PMI 51.4 (last 53.1)

  • Japan's December Leading Index 0.4% m/m (last 1.7%) and Coincident Indicator -0.2% m/m (last 3.0%)

  • Australia's January Retail Sales -4.4% m/m (expected -4.4%; last 7.3%); 8.2% qtr/qtr (expected 8.1%; last -4.4%). December AIG Services Index 56.2 (last 49.6) and MI Inflation Gauge 0.4% m/m (last 0.2%)


  • In news:

  • Domestic tourism was down 2% during the Lunar New Year holiday in China while box office sales were down 23%.

  • Press reports indicated that China has not meaningfully complied with the Phase 1 trade deal.

  • China's Caixin Services PMI fell to its lowest level since August in the January reading.



  • Major European indies trade near their flat lines. STOXX Europe 600: +0.2% Germany's DAX: +0.3% U.K.'s FTSE 100: +0.5% France's CAC 40: +0.1% Italy's FTSE MIB: -1.2% Spain's IBEX 35: -0.5%.

  • In economic data:

  • Eurozone's February Sentix Investor Confidence 16.6 (expected 15.2; last 14.9)

  • Germany's December Industrial Production -0.3% m/m (expected 0.4%; last 0.3%)

  • U.K.'s January Halifax House Price Index 0.3% m/m (last 1.1%); 9.7% yr/yr (last 9.8%)

  • Swiss January Unemployment Rate 2.3% (expected 2.4%; last 2.4%)


  • In news:

  • The spread between Italy's 10-yr yield and Germany's 10-yr yield has increased to a level not seen since August.

  • European Central Bank policymaker Knot said that he expects that the first ECB rate hike will be made in Q4.



U.S. equity futures:

  • S&P 500 Futures: +10 @ 4,510

  • DJIA Futures: +50 @ 35,140

  • Nasdaq 100 Futures: +51 @ 14,746

Overseas:

  • Europe: DAX +0.3%, FTSE +0.5%, CAC +0.1%

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

Commodities:

  • Crude Oil -0.78 @ 91.52

  • Nat Gas -0.133 @ 4.439

  • Gold +7.15 @ 1814.95

  • Silver +0.420 @ 22.895

  • Copper -0.1235 @ 4.4640

U.S. Summary:

  • Earnings/Guidance (Full Earnings Calendar):

  • Affiliated Managers (AMG) beats by $0.29, beats on revs

  • Butterfly Network (BFLY) guides Q4 revs being within or slightly above prior guidance

  • Cerence (CRNC) beats by $0.08, reports revs in-line; guides Q2 revs below consensus; lowers FY22 revs below consensus; CFO Mark Gallenberger will retire effective March 11

  • Energizer (ENR) beats by $0.09, beats on revs; reaffirms FY22 EPS guidance, revs guidance

  • Frontier Group Holdings (ULCC) beats by $0.08, misses on revs

  • Hasbro (HAS) beats by $0.33, beats on revs; guides FY22 revs in-line; raises dividend

  • Loews Corp (L) reports Q4 results

  • Solo Brands (DTC) CFO Sam Simmons will begin transitioning from Solo Brands this year; reaffirms the previous guidance for the fourth quarter and the full year 2021

  • Spirit Airlines (SAVE) beats by $0.23, beats on revs

  • Wheaton Precious Metals (WPM) says it met its production guidance

  • Zimmer Biomet (ZBH) misses by $0.03, misses on revs; guides FY22 EPS below consensus, revs below consensus; announces expected completion date of March 1, 2022for spinoff of ZimVie


  • General News:

  • Russia is close to finalizing preparations for large Ukraine invasion which intelligence says will result in 50,000 civilian deaths and Kyiv falling within two days from the start of any invasion, according to the Washington Post

  • National security adviser Jake Sullivan says that Russia could invade Ukraine "any day now," but diplomatic options are still open, according to The Hill

  • President Biden will meet with German Chancellor Olaf Scholz today at 13:30 ETto discuss Ukraine

  • House will likely pass short term continuing resolution this week to fund government ahead of February 18deadline, according to The Hill

  • US wants to work more closely with Asian nations on trade, but Trans Pacific Partnership will likely not be renewed, according to the Wall Street Journal

  • Ottawa declares state of emergency due to ongoing demonstration related to COVID-19 mandates

  • New CDC study shows that booster doses are most beneficial for older people and did not add much benefit for younger Americans, according to the New York Times

  • Some China companies are trying to go public in US again, according to Financial Times

  • USPS could purchase more EVs if Congress passes funding, according to Bloomberg

  • New Jersey will end school mask mandate for teachers and students, according to the New York Times

  • Akouos (AKUS) presents nonclinical data at the Association for Research in Otolaryngology 45th Annual Mid-Winter Meeting that support future development of gene therapies targeting inner ear conditions

  • Allegion (ALLE) increases its quarterly dividend by 14% to $0.41/sh, new yield is 1.4%

  • Amazon (AMZN) workers are making another attempt to unionize in Alabama, according to the New York Post

  • Bruker (BRKR) announces the launch of its timsTOF MALDI PharmaPulse system and a multiplexed assay taking high-throughput screening with SPR to the next level

  • Butterfly Network (BFLY) CFO Stephanie Fielding, CFA to step down effective April 30to pursue opportunities outside of the co

  • Century Aluminum's (CENX) CFO Craig Conti to step down, effective March 1

  • Clarivate (CLVT): Board of Directors has approved the purchase of up to $1.0 billion

  • CVS (CVS) and Walgreens (WBA) remove purchase limits on coronavirus tests, according to the New York Times

  • Descartes (DSGX) announced that Atlantic Tire Distributors will use Descartes' cloud-based route planning solution to improve the efficiency of its delivery operations to wholesale customers across North Carolina, South Carolina and Virginia

  • Endo Intl (ENDP) announced that its Par Sterile Products business has begun shipping VASOSTRICT in ready-to-use 100 mL pre-mix bottles

  • Evelo Biosciences (EVLO) announces highly significant reductions in clinically validated inflammatory cytokines in EDP1815 phase 2 psoriasis trial

  • Genesco (GCO) authorized a $100 mln increase to its existing $100 mln share repurchase authorization

  • GOL Linhas Aereas (GOL) reports January traffic; company and American Airlines (AAL) sign definitive investment agreement

  • Grupo Aeroportuario del Pacifico (PAC) reports January traffic increased 0.1% compared to Jan 2019; +56.6 yr/yr

  • Harley-Davidson (HOG) increases quarterly dividend to $0.1575/share from $0.15/share

  • Kenon Holdings' (KEN) OPC Energy Ltd announces a potential transaction to reorganize the holdings of its operations in Israel

  • LGI Homes (LGIH) reports it closed 442 homes in January

  • Lightspeed (LSPD) announced that Lightspeed eCommerce merchants using the recently acquired Ecwid integration can sell to consumers directly through TikTok

  • Meta (FB) is reconsidering ban on election advertising in days ahead of midterm elections, according to Bloomberg

  • ObsEva (OBSV) provides update on EU marketing authorization process for linzagolix

  • PriceSmart (PSMT) raised annual dividend by 22.9% to $0.86 per share

  • Qiagen's (QGEN) QuantiFERON TB Test receives Chinese approval and renewed WHO Recommendation

  • RenaissanceRe (RNR) increases quarterly dividend 2.8% to $0.37/share; renews share repurchase program of up to $500 mln

  • Sinclair (SBGI) in discussions with Chicago Cubs about streaming service, according to the New York Post

  • Spotify (SPOT) has no plans to remove Joe Rogan from service, according to the Wall Street Journal

  • Tesla (TSLA) updates certain investigations in its annual filing disclosures

  • Tyson Foods (TSN) beats by $0.94, beats on revs; reaffirms FY22 revs guidance

  • Unilever (UL): Shareholders want Unilever to split up the company, according to Financial Times

  • VAALCO Energy (EGY) announces successful Etame 8H-ST Well has been placed on production and provides operational and financial update


  • M&A:

  • Everi (EVRI) to acquire ecash Holdings Pty Ltd

  • Fiserv (FISV) to acquire Finxact remaining ownership interest for approximately $650 mln

  • Jacobs Engineering (J) has acquired mobility analytics company StreetLight Data; no financial terms disclosed

  • Peloton (PTON) drawing interest from suitors, including Amazon (AMZN), according to the Wall Street Journal

  • Peloton (PTON): Potential Amazon (AMZN) purchase of Peloton could run into regulatory roadblocks, according to Bloomberg

  • Peloton (PTON): Nike (NKE) also interested in Peloton acquisition, according to Financial Times

  • Pilgrim's Pride (PPC): JBS S.A. expects to provide an answer to PPC regarding JBS S.A.'s takeover offer by the end of February

  • Spirit Airlines (SAVE) and Frontier Airlines (ULCC) to merge

  • Walker & Dunlop (WD) to acquire GeoPhy, a leading commercial real estate technology company


  • Syndicate:

  • Adobe (ADBE) files mixed securities shelf offering

  • Akoustis Technologies (AKTS) files for $150 mln mixed securities shelf offering

  • BioAtla (BCAB) files mixed securities shelf offering

  • FTC Solar (FTCI) files for 37,277,987 share common stock offering by selling shareholders

  • Whole Earth Brands (FREE) files for 2,829,200 share common stock offering by selling shareholders


  • IPOs:

  • Expected to Price:

  • No IPOs expected to price.



Gapping Up/Down

  • Gapping up:

  • PTON +24.4%, SAVE +11.6%, FTCI +3.7%, PPC+2.5%, COIN +2.5%, HAS +2.2%, L +2%, ULCC +0.9%, UL +0.9%


  • Gapping down:

  • AKTS -3.9%, OBSV -2.8%, ZBH -1.5%, BCAB -1%, CENX -0.8%, LGV -0.6%, ADBE -0.4%


Analyst Research (see Upgrades/Downgradescalendarfor full list):

  • Upgrades

  • American Water Works (AWK) upgraded to Neutral from Sell at UBS; tgt lowered to $161

  • Apollo Investment (AINV) upgraded to Neutral from Sell at Citigroup; tgt raised to $13.50

  • Black Hills Corp (BKH) upgraded to Buy from Neutral at Mizuho; tgt $71

  • Continental Resources (CLR) upgraded to Outperform from Sector Perform at RBC Capital Mkts; tgt $70

  • Intellia Therapeutics (NTLA) upgraded to Outperform from Perform at Oppenheimer; tgt raised to $150

  • Minerals Tech (MTX) upgraded to Overweight from Neutral at JP Morgan; tgt lowered to $75


  • Downgrades:

  • Air Products (APD) downgraded to Neutral from Buy at BofA Securities; tgt lowered to $285

  • Ballard Power (BLDP) downgraded to Market Perform from Outperform at BMO Capital Markets; tgt lowered to $10

  • Cigna (CI) downgraded to Sector Perform from Outperform at RBC Capital Mkts; tgt lowered to $235

  • Diversey Holdings (DSEY) downgraded to Neutral from Buy at Goldman; tgt lowered to $12

  • FIGS, Inc. (FIGS) downgraded to Market Perform from Outperform at Cowen

  • NOV Inc. (NOV) downgraded to Neutral from Overweight at JP Morgan; tgt $17

  • NuStar Energy (NS) downgraded to Equal Weight from Overweight at Wells Fargo; tgt $17


  • Others:

  • BeiGene (BGNE) initiated with a Buy at Deutsche Bank

  • Exelon (EXC) initiated with an Equal Weight at Barclays; tgt $46

  • Frontier Communications Parent (FYBR) initiated with an Overweight at JP Morgan; tgt $40

  • Inozyme Pharma (INZY) initiated with a Buy at H.C. Wainwright; tgt $33

  • IVERIC bio (ISEE) initiated with an Overweight at Morgan Stanley; tgt $25

  • New Mountain Finance (NMFC) initiated with a Buy at Janney


Upcoming Events:

  • Econ Data:

  • 15:00 ET: Consumer Credit for Dec. (Briefing.comConsensus $25.0B; Prior $39.9B)


  • Earnings:

  • Monday (Feb 7)

  • Morning: AMG CRNC CNA ENR GTES HAS ON TSN ZBH

  • Afternoon: ACM AOSL AMGN ACLS BRX CHGG DHT KMT KFRC LEG NUAN PDM PFG RMBS SLQT SPG SSD SNCY TTWO THC TDC VRNS


  • Tuesday (Feb 8)

  • Morning: AGCO ARMK AVNT BP CARR CVE CNC CNHI COTY CTS DD EPC FISV IT HAE HOG INCY KKR LEA MBUU MAS NRZ NVT PFE POLY SPGI SYY TMHC TRI TDG VIRT VSH WMG

  • Afternoon: ATGE AIZ ATO AZTA CMG CNO CMP CRSR CCK DCPH APPS DEI DOCS EGP ENPH ESE FLT FMC GFS PEAK HIW HUBG ICHR INSP JKHY LBRT LYFT MNDT MODN NCR NEWR OMC ONTO PAYC PTON QGEN QNST SCSC SAVE STEP STE TRMB TSE UDR VVV VREX VOYA XPO YUMC


  • Wednesday (Feb 9)

  • Morning: ARCC AVYA BDC BXMT BG CCJ CGC CDW CHEF CME CRTO CVS FOXA HMC IIVI LAD MSGE NNN PAG PFGC RDWR REYN SITC TEVA TGI YUM

  • Afternoon: TWOU AEIS AFG NLY ACGL ASGN BKH CDAY CHX CPA CXW DCP DIOD ENS NVST EQT EFX EQC EEFT RE FR FLNC FWRD ULCC GFL PI IFF IRBT ITT KN RAMP LUMN MFC MAT MDU MESA MGM MC MOH MSI ORLY PEP PPC PAA RPD REXR SGEN SONO SPSC SLF TTMI TWLO TWO UBER UDMY VMEO DIS WTS ZNGA


  • Thursday (Feb 10)

  • Morning: ALNY MT AZN CAMT GOOS ECOM KO CIGI CYBR DDOG DBD DTE DUK FAF GPN GPI HRI HII INMD NSIT IPG K KIM LH LCII LECO LIN MAC MLM MCO PATK PTEN PBF BTU PCG PM PIPR PDS ROLL SSTK SON TPR TTGT TU TUFN TWTR WSO WEX ZBRA

  • Afternoon: ME AFRM AVLR BIO BL BE BHF ELY CSL CC NET COHU CFLT OFC COUR DVA DXCM EQH EXPE FRT FE FLO FRSH GDDY HUBS ILMN NSP FROG MTD MHK MNTV MPWR NWE PRO QLYS REG RSG SSNC TEX RARE UPWK VRSN VCRA WU YELP ZEN ZG


  • Friday (Feb 11)

  • Morning: AB AXL APO ARES BRKR CAE CLF D ENB ESNT FTS G GT GPRE IAA MGA COOP NBIX NWL NMRK PRLB SXT UAA WPC




Asia & Europe detail:

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

Equity indices in the Asia-Pacific region began the week on a mixed note while markets in New Zealand were closed for a holiday. Domestic tourism was down 2% during the Lunar New Year holiday in China while box office sales were down 23%. Press reports indicated that China has not meaningfully complied with the Phase 1 trade deal. China's Caixin Services PMI fell to its lowest level since August in the January reading.

  • In economic data:

  • China's January Caixin Services PMI 51.4 (last 53.1)

  • Japan's December Leading Index 0.4% m/m (last 1.7%) and Coincident Indicator -0.2% m/m (last 3.0%)

  • Australia's January Retail Sales -4.4% m/m (expected -4.4%; last 7.3%); 8.2% qtr/qtr (expected 8.1%; last -4.4%). December AIG Services Index 56.2 (last 49.6) and MI Inflation Gauge 0.4% m/m (last 0.2%)


---Equity Markets---

  • Japan's Nikkei: -0.7%

  • Hong Kong's Hang Seng: UNCH

  • China's Shanghai Composite: +2.0%

  • India's Sensex: -1.8%

  • South Korea's Kospi: -0.2%

  • Australia's ASX All Ordinaries: -0.1%

---FX---

  • USD/JPY: -0.3% to 114.95

  • USD/CNH: +0.1% to 6.3643

  • USD/INR: UNCH at 74.65

Europe: DAX +0.3%, FTSE +0.5%, CAC +0.1%

Major European indies trade near their flat lines while Italy's MIB (-1.2%) underperforms, retreating alongside Italian debt, which has lifted the spread between Italy's 10-yr yield and Germany's 10-yr yield to a level not seen since August. European Central Bank policymaker Knot said that he expects that the first ECB rate hike will be made in Q4.

  • In economic data:

  • Eurozone's February Sentix Investor Confidence 16.6 (expected 15.2; last 14.9)

  • Germany's December Industrial Production -0.3% m/m (expected 0.4%; last 0.3%)

  • U.K.'s January Halifax House Price Index 0.3% m/m (last 1.1%); 9.7% yr/yr (last 9.8%)

  • Swiss January Unemployment Rate 2.3% (expected 2.4%; last 2.4%)


---Equity Markets---

  • STOXX Europe 600: +0.2%

  • Germany's DAX: +0.3%

  • U.K.'s FTSE 100: +0.5%

  • France's CAC 40: +0.1%

  • Italy's FTSE MIB: -1.2%

  • Spain's IBEX 35: -0.5%

---FX---

  • EUR/USD: UNCH at 1.1445

  • GBP/USD: -0.1% to 1.3509

  • USD/CHF: -0.2% to 0.9231


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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