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07/07/22 Briefing




The S&P 500 futures are up 11 points and are trading 0.2% above fair value. The Nasdaq 100 futures are up 48 points and are trading 0.4% above fair value. The Dow Jones Industrial Average futures are up 128 points and are trading 0.4% above fair value.

The market is poised to add to yesterday's slim gains after a good showing from Asian and European equities. 

IMF Managing Director Kristalina Georgieva told Reuters the fund would soon downgrade its 2022 forecast for global economic growth for the third time this year. She said the outlook for the global economy had "darkened significantly" and she could not rule out a possible global recession next year given the elevated risks.

Boris Johnson announced his resignation as Conservative Party leader. As recently as last night Johnson said he intended to stay and fight but said today, "It is clearly now the will of the parliamentary Conservative party that there should be a new leader..."

The 2s10s spread remains inverted. The 2-yr note yield is up four basis points to 2.98% while the 10-yr note yield is up one basis point to 2.92%.

WTI crude oil futures are up 1.2% to $99.72/bbl.

In corporate news:

  • Merck (MRK 91.70, -1.43, -1.5%): Merck is in advanced talks to buy Seagen, according to WSJ

  • Bed Bath & Beyond (BBBY 4.72, +0.25, +5.6%): Bed Bath & Beyond interim CEO Sue Gove purchased 50,000 shares on July 1

  • GameStop (GME 123.92, +6.49, +5.5%): GameStop announces 4-for-1 stock split

  • Shell (SHEL 48.35, +0.34, +0.7%): Shell plc provides Q2 update; maintains plans for drilling in the Gulf of Mexico

  • Virgin Galactic (SPCE 6.73, +0.28, +4.3%): Virgin Galactic announces agreement with Boeing unit to design and manufacture co's next generation motherships

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region ended Thursday on a mostly higher note. Japan's Nikkei: +1.5%, Hong Kong's Hang Seng: +0.3%, China's Shanghai Composite: +0.3%, India's Sensex: +0.8%, South Korea's Kospi: +1.8%, Australia's ASX All Ordinaries: +0.8%.

  • In economic data:

  • Japan's May Leading Index 101.4 (last 102.9) and Coincident Indicator -1.3% m/m (last 0.0%)

  • South Korea's May Current Account surplus $3.86 bln (last deficit of $80 mln)

  • Australia's June AIG Services Index 48.8 (last 49.2). May trade surplus AUD15.97 bln (expected surplus of AUD10.73 bln; last surplus of AUD10.50 bln). May Imports 6% m/m (last -1%) and Exports 9% m/m (last 1%)

  • In news:

  • The Bank of Japan may lower Japan's growth forecast for the year while increasing the inflation forecast.

  • Press reports speculated that coronavirus restrictions could be reimposed in Tokyo. June throughput at Shanghai's port was down 7.4% yr/yr.

  • The Chinese government will consider extending a tax break for purchasing electric vehicles.

  • Major European indices trade in the green. STOXX Europe 600: +1.3%, Germany's DAX: +1.4%, U.K.'s FTSE 100: +0.9%, France's CAC 40: +1.3%, Italy's FTSE MIB: +1.7%, Spain's IBEX 35: +1.4%.

  • In economic data:

  • Germany's May Industrial Production 0.2% m/m (expected 0.4%; last 1.3%)

  • U.K.'s June Halifax House Price Index 1.8% m/m (last 1.2%); 13.0% yr/yr (last 10.5%)

  • Swiss June Unemployment Rate 2.2%, as expected (last 2.2%)

  • In news:

  • British Prime Minister Johnson announced his resignation as Conservative party leader with a plan to vacate the prime minister post in the fall.

  • House prices in the U.K. increased for the 12th consecutive month in June, matching the highest annual pace since 2004.

  • France will nationalize electricity provider EDF.

U.S. equity futures:

  • S&P 500 Futures: +12 @ 3,857

  • DJIA Futures: +118 @ 31,155

  • Nasdaq 100 Futures: +53 @ 11,905

Overseas:

  • Europe: DAX +1.4%, FTSE +0.9%, CAC +1.3%

  • Asia: Nikkei +1.5%, Hang Seng +0.3%, Shanghai Composite +0.3%

Commodities:

  • Crude Oil +1.05 @ 99.58

  • Nat Gas +0.109 @ 5.619

  • Gold +6.65 @ 1743.15

  • Silver +0.221  @ 19.380

  • Copper +0.1350 @ 3.5430

U.S. Summary:

  • Earnings/Guidance:

  • AbbVie (ABBV) lowers its Q2 and FY22 guidance to include the impact of acquired IPR&D and milestones expense incurred during Q2

  • Buckle (BKE) reports June comparable store net sales -7.1% yr/yr

  • Cedar Fair (FUN) reports YTD revs up 20% versus comparable period of 2019

  • Helen of Troy (HELE) beats by $0.55, beats on revs

  • Meridian Bioscience (VIVO) sees Q3 revs below consensus

  • Samsung (SSNLF) sees Q2 revs of KRW76-78 tln

  • Shell plc (SHEL) provides Q2 update

  • Simulations Plus (SLP) beats by $0.03, beats on revs; reaffirms FY22 revs guidance

  • USANA (USNA) guides Q2 earnings and revs below consensus; lowers its FY22 outlook

  • General News:

  • UK Prime Minister Boris Johnson confirms resignation

  • Japan's prime minister hoping for strong showing in weekend upper house election, according to Reuters

  • Senate Dems release updated plan to lower cost of prescription drugs, according to the New York Times

  • ECB releases minutes from June meeting

  • Absci Corporation (ABSI) entered into a collaboration agreement with an undisclosed biotech partner

  • ADTRAN (ADTN): Negotiations begin for domination agreement or a domination and profit and loss transfer agreement between Acorn HoldCo, Inc. and ADVA Optical Networking SE

  • Amryt Pharma plc (AMYT) presents new positive analyses from EASE at the 2022 Society for Pediatric Dermatology annual meeting

  • Annovis Bio (ANVS) received notice from the FDA that the Phase 3 clinical study in early Parkinson's patients may proceed

  • ANSYS (ANSS): Samsung (SSNLF) engages with ANSS to develop chips, nodes, and process technologies

  • Apple (AAPL) plans to launch an extreme sports watch with a bigger screen and metal casing, according to BNN Bloomberg

  • AT&T (T) petitions judge to dismiss SEC disclosure lawsuit, according to Bloomberg

  • Atara Biotherapeutics (ATRA) to Announce Completion of ATA188 Phase 2 EMBOLD Study Interim Analysis on Tuesday, July 12, 2022

  • Bausch + Lomb (BLCO) announced the submission of a New Drug Application (NDA) at the end of June to the FDA seeking approval for NOV03(perfluorohexyloctane)

  • Bed Bath & Beyond (BBBY) interim CEO Sue Gove purchases 50,000 shares on July 1; other insiders also report buys

  • Biohaven Pharmaceutical (BHVN) announces it has commenced enrollment for its Phase 3 clinical trial in Spinal Muscle Atrophy

  • Cboe Global Markets (CBOE) reports June monthly trading volume statistics; S&P 500 Index options set new monthly ADV record of 2.3 mln contracts

  • Ceragon Networks (CRNT): Aviat Networks (AVNW) Calls Out Ceragon Networks' Failure to Respond to Acquisition Proposal and Request for Extraordinary Meeting of Shareholders

  • Charah Solutions (CHRA) awarded a multi-year contract from an Indiana regulated utility for the marketing and sustainable recycling of fly ash. The multi-year project will begin in Q3 2022

  • Clovis Oncology (CLVS): FDA says co may submit sNDA prior to receiving more mature overall survival data, but will require an advisory meeting; co intends to submit the sNDA during 3Q22

  • Crescent Point Energy (CPG) increases quarterly dividend 20% to $0.08/share; updates return of capital framework

  • CytomX Therapeutics (CTMX) Announces Phase 2 Results for Praluzatamab Ravtansine in Breast Cancer

  • Enstar Group (ESGR) President to retire in March of 2023

  • Exelixis (EXEL) and Ryvu Therapeutics establish exclusive license agreement to develop novel STING agonist-based targeted cancer therapies

  • Fisker (FSR) announces Fisker Finance; reaffirms nomination of financing question

  • GameStop (GME) announces 4-for-1 stock split

  • Gilat Satellite (GILT) was awarded follow-on orders for the expansion of a defense force satellite communication (SATCOM) network in an Asian nation

  • Global Cord Blood (CO) obtains injunction order against Blue Ocean relying on extraordinary general meeting results

  • Granite Constr (GVA) secures approximately $55 mln for improvements to a major Alaskan roadway

  • Grupo Aeroportuario Del Sureste (ASR) reports June traffic increased 16.9% compared to 2019

  • Hawaiian Electric (HE) appointed Paul K. Ito as interim CFO, effective July 2

  • HIVE Blockchain Technologies (HIVE) provides June 2022 production update

  • Intercept (ICPT) Announces Positive Data in Fibrosis due to NASH from a New Analysis of its Phase 3 REGENERATE Study of Obeticholic Acid

  • Lattice Semi (LSCC) announces collaboration with Google's Chromebook and Lenovo to equip the Lenovo IdeaPad Flex 5i Chromebook with new machine learning user experiences

  • Microsoft (MSFT) executive leaving amid abuse allegations, according to Bloomberg

  • Nova Measuring (NVMI) announces that a leading analog and mixed-signal device maker recently adopted its VERAFLEX solution

  • Reservoir Media (RSVR) commends U.S. Copyright Royalty Board's decision to uphold increased mechanical streaming royalty rates for songwriters and music publishers

  • Rocket Lab USA (RKLB) introducing a Responsive Space Program

  • Shell (SHEL) maintains plans for drilling in the Gulf of Mexico, according to the Wall Street Journal

  • Shore Bancshares (SHBI) authorizes up to $5.0 mln for share buybacks, represents approximately 1.4% of its outstanding shares

  • Tempur Sealy Int'l (TPX) extended the term of Scott Thompson's employment contract as Chairman, Chief Executive Officer and President of the Company to December 31, 2026

  • Terran Orbital (LLAP) announced the successful deployment of the CAPSTONE spacecraft from a Rocket Lab Lunar Photon into a Lunar Transfer Orbit

  • Vaalco Energy (EGY) completes South Tchibala 1HB-ST Well; provides operational update

  • Verve Therapeutics (VERV) amended license agreement with Beam Therapeutics (BEAM)

  • Virgin Galactic (SPCE) announces agreement with Boeing unit to design and manufacture co's next generation motherships

  • Volaris Aviation (VLRS) reports June preliminary traffic results

  • WD-40 (WDFC) appoints Sara Hyzer as CFO, effective November 1, 2022

  • M&A:

  • Alcoa (AA): Aloft Holdings in talks to acquire Portland Aluminum Smelter from AA, according to The Australian

  • Blackstone (BX) invests $400 mln in Xpansiv Limited, a global carbon and environmental commodities exchange platform

  • California Water's (CWT) Hawaii Water segment receives approval from commission to acquire the assets of HOH Utilities, LLC

  • Canadian Solar (CSIQ) completes sale of two flagship solar farms in Australia

  • Cisco (CSCO) eyeing Airtel-Vodafone Idea's JV FireFly, according to Economic Times

  • Endeavour Silver (EXK) completes Pitarrilla acquisition

  • First Bancshares (FBMS) receives all required regulatory approvals for its proposed acquisition of Beach Bancorp

  • High Tide (HITI) acquires nine operating retail cannabis stores from Choom Holdings

  • Meridian Bioscience (VIVO) to be acquired by SD Biosensor and SJL Partners for $34 per share (~$1.53 bln all-cash transaction)

  • Seagen (SGEN): Merck (MRK) M&A talks advancing, according to the Wall Street Journal

  • Syndicate

  • Oil States (OIS) files for 1,909,722 share common stock offering by selling shareholder

  • SilverBow Resources (SBOW) files for 4,148,472 share common stock offering by selling shareholders

  • The Duckhorn Portfolio (NAPA) files mixed securities shelf offering; also files for 5.0 mln share common stock offering by selling shareholders

  • IPOs:

  • Priced to Trade:

  • No IPOs expected.

Gapping Up/Down

  • Gapping up:

  • VERU +11.6%, GME +9.3%, BBBY +6.7%, SGEN+6.3%, CPG +5.5%, SPCE +4.5%, ATRA +4%, HITI+3.8%, SHEL +1.9%, HIVE +1.9%, CLVS +1.8%, GVA+1.3%, ADTN +1.1%, LLAP +1.1%, ALKS+1%, SLP+1%, RKLB +0.8%, EGY +0.8%, ABBV +0.6%

  • Gapping down:

  • CTMX -17.3%, USNA -9.8%, SBOW -8%, NAPA-6.3%, CWT -4.3%, OIS -3.6%, CRNT -2.3%, AVNW-1.9%

 

Analyst Research (see Upgrades/Downgradescalendarfor full list):

  • Upgrades

  • Adverum Biotech (ADVM) upgraded to Buy from Hold at Truist; tgt $4

  • Allegiance Bancshares (ABTX) upgraded to Outperform from Mkt Perform at Raymond James; tgt $43

  • Carter Bank & Trust (CARE) upgraded to Outperform from Mkt Perform at Raymond James; tgt $16

  • First Mid-Illinois Bancshares (FMBH) upgraded to Outperform from Mkt Perform at Raymond James; tgt $45

  • Downgrades:

  • Aspen Tech (AZPN) downgraded to Neutral from Outperform at Robert W. Baird; tgt lowered to $162

  • Blend Labs (BLND) downgraded to Sector Weight from Overweight at KeyBanc Capital Markets

  • Cambridge Bancorp (CATC) downgraded to Mkt Perform from Outperform at Raymond James

  • CapStar Financial (CSTR) downgraded to Mkt Perform from Outperform at Raymond James

  • First Commonwealth (FCF) downgraded to Mkt Perform from Outperform at Raymond James

  • Guaranty Bancshares (GNTY) downgraded to Mkt Perform from Outperform at Raymond James

  • Others:

  • Alector (ALEC) initiated with a Buy at Mizuho; tgt $15

  • Athira Pharma (ATHA) initiated with a Buy at Mizuho; tgt $6

  • BioXcel Therapeutics (BTAI) initiated with a Buy at Mizuho; tgt $19

  • Cerevel Therapeutics (CERE) initiated with a Neutral at Mizuho; tgt $30

Upcoming Events:

  • Econ Data:

  • 08:30 ET: Initial Claims for July 2 (Briefing.comConsensus 234K; Prior 231K)

  • 08:30 ET: Continuing Claims for June 26 (Briefing.comConsensus NA; Prior 1328K)

  • 08:30 ET: Trade Balance for May (Briefing.comConsensus -$84.9B; Prior -$87.1B)

  • 10:30 ET: EIA Natural Gas Inventories for July 2 (Briefing.comConsensus NA; Prior +82 bcf)

  • 11:00 ET: EIA Crude Oil Inventories for July 2 (Briefing.comConsensus NA; Prior -2.76M)

  • Earnings:

  • Thursday (Jul 7)

  • Morning: HELE

  • Afternoon:  LEVI WDFC

Asia & Europe detail:

Asia: Nikkei +1.5%, Hang Seng +0.3%, Shanghai Composite +0.3%

Equity indices in the Asia-Pacific region ended Thursday on a mostly higher note. The Bank of Japan may lower Japan's growth forecast for the year while increasing the inflation forecast. Press reports speculated that coronavirus restrictions could be reimposed in Tokyo. June throughput at Shanghai's port was down 7.4% yr/yr. The Chinese government will consider extending a tax break for purchasing electric vehicles.

  • In economic data:

  • Japan's May Leading Index 101.4 (last 102.9) and Coincident Indicator -1.3% m/m (last 0.0%)

  • South Korea's May Current Account surplus $3.86 bln (last deficit of $80 mln)

  • Australia's June AIG Services Index 48.8 (last 49.2). May trade surplus AUD15.97 bln (expected surplus of AUD10.73 bln; last surplus of AUD10.50 bln). May Imports 6% m/m (last -1%) and Exports 9% m/m (last 1%)

---Equity Markets---

  • Japan's Nikkei: +1.5%

  • Hong Kong's Hang Seng: +0.3%

  • China's Shanghai Composite: +0.3%

  • India's Sensex: +0.8%

  • South Korea's Kospi: +1.8%

  • Australia's ASX All Ordinaries: +0.8%

---FX---

  • USD/JPY: -0.1% to 135.85

  • USD/CNH: -0.1% to 6.7054

  • USD/INR: +0.1% to 79.12

Europe: DAX +1.4%, FTSE +0.9%, CAC +1.3%

Major European indices trade in the green. British Prime Minister Johnson is expected to announce his resignation as Conservative party leader with a plan to vacate the prime minister post in the fall. House prices in the U.K. increased for the 12th consecutive month in June, matching the highest annual pace since 2004. France will nationalize electricity provider EDF.

  • In economic data:

  • Germany's May Industrial Production 0.2% m/m (expected 0.4%; last 1.3%)

  • U.K.'s June Halifax House Price Index 1.8% m/m (last 1.2%); 13.0% yr/yr (last 10.5%)

  • Swiss June Unemployment Rate 2.2%, as expected (last 2.2%)

---Equity Markets---

  • STOXX Europe 600: +1.3%

  • Germany's DAX: +1.4%

  • U.K.'s FTSE 100: +0.9%

  • France's CAC 40: +1.3%

  • Italy's FTSE MIB: +1.7%

  • Spain's IBEX 35: +1.4%

---FX---

  • EUR/USD: +0.1% to 1.0190

  • GBP/USD: +0.5% to 1.1976

  • USD/CHF: +0.2% to 0.9718


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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