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07/07/23 Briefing


The S&P 500 futures are down 5 points and are trading fractionally below fair value. The Nasdaq 100 futures are down 33 points and are trading 0.2% below fair value. The Dow Jones Industrial Average futures are down 16 points and are trading fractionally below fair value.

Stock futures have been mixed and little changed. The limited moves stem from a wait-and-see vibe ahead of the Employment Report for June, concerns about rising interest rates, and expectations that the market is due for a consolidation period after its big run in the first half of the year.

Treasury yields haven't moved much after rising sharply yesterday. The 2-yr note yield is unchanged at 5.01% and the 10-yr note yield is up two basis points to 4.06%.

Commodity futures are moving higher. WTI crude oil futures are up 0.3% to $71.98/bbl and copper futures are up 0.6% to $3.76/lb.

The Employment Situation Report for June will be released at 8:30 a.m. ET, featuring: 

  • Nonfarm Payrolls (Briefing.comconsensus 220,000; prior 339,000)

  • Nonfarm Private Payrolls (Briefing.comconsensus 210,000; prior 283,000)

  • Average Hourly Earnings (Briefing.comconsensus 0.3%; prior 0.3%)

  • Unemployment Rate (Briefing.comconsensus 3.6%; prior 3.7%)

  • Average Workweek (Briefing.comconsensus 34.3; prior 34.3)

In corporate news:

  • Levi Strauss (LEVI 13.10, -1.13, -7.9%): beats by $0.01, reports revs in-line; guides FY23 EPS and revs below consensus

  • Exxon Mobil (XOM 102.60, -0.32, -0.3%): downgraded to Peer Perform from Outperform at Wolfe Research

  • JPMorgan Chase (JPM 144.40, +1.19, +0.8%): downgraded to Peer Perform from Outperform at Wolfe Research

  • Tesla (TSLA 275.48, -1.06, -0.4%): eliminated jobs at China battery plant, according to Bloomberg; offers rebate on top models in China, according to Reuters

  • Biogen (BIIB 285.92, +0.93, +0.3%): confirms FDA granted traditional approval for LEQEMBI

  • KLA Corporation (KLAC 453.55, -7.99, -1.7%): downgraded to Sector Weight from Overweight at KeyBanc Capital Markets

  • Alibaba (BABA 86.20, +2.36, +2.8%): China will end Ant Group's regulatory issues with fine of at least $1.1 billion, according to Reuters

  • Costco (COST 534.87, -2.50, -0.5%): reports June adjusted comparable sales growth of 3.0%

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region ended the week on a mostly lower note. Japan's Nikkei: -1.2% (-2.4% for the week), Hong Kong's Hang Seng: -0.9% (-2.9% for the week), China's Shanghai Composite: -0.3% (-0.2% for the week), India's Sensex: -0.8% (+0.9% for the week), South Korea's Kospi: -1.2% (-1.5% for the week), Australia's ASX All Ordinaries: -1.6% (-2.1% for the week).

  • In economic data:

  • China's June FX Reserves $3.193 trln (last $3.177 trln)

  • Japan's May Average Cash Earnings 2.5% yr/yr (expected 0.7%; last 0.8%), May overall wage income 2.5% yr/yr (expected 0.7%; last 0.8%), and May Overtime Pay 0.4% yr/yr (expected -2.8%; last -0.7%). May Household Spending -1.1% m/m (expected 0.5%; last -1.3%); -4.0% yr/yr (expected -2.4%; last -4.4%). May Leading Index 1.4% m/m (last 0.0%) and Coincident Indicator -0.4% m/m (last 0.1%)

  • South Korea's May Current Account surplus $1.93 bln (expected deficit of $650 mln; last deficit of $790 mln)

  • In news:

  • Hong Kong-listed banks remained under pressure while sovereign debt also retreated overnight after yesterday's slide in U.S. Treasuries, with Australia's 10-yr yield rising to a level not seen since early 2014 (4.305%) while New Zealand's 10-yr yield hit a level not seen since 2011 (4.930%).

  • Samsung reported a 96% drop in profit due to continued pressure on prices of memory chips.

  • Japan's Prime Minister Kishida may reportedly reshuffle his cabinet in September.

  • Malaysia left its policy rate at 3.00%, as expected.

  • Major European indices trade on a mostly higher note while Spain's IBEX (-0.5%) lags amid weakness in select industrial and energy names. STOXX Europe 600: +0.1% (-3.1% week-to-date), Germany's DAX: +0.3% (-3.3% week-to-date), U.K.'s FTSE 100: -0.2% (-3.5% week-to-date), France's CAC 40: +0.5% (-3.8% week-to-date), Italy's FTSE MIB: +0.5% (-2.0% week-to-date), Spain's IBEX 35: -0.5% (-3.7% week-to-date).

  • In economic data:

  • Germany's May Industrial Production -0.2% m/m (expected 0.0%; last 0.3%); 0.8% yr/yr (last 1.8%)

  • U.K.'s June Halifax House Price Index -0.1% m/m (expected 0.1%; last -0.2%); -2.6% yr/yr (expected -2.3%; last -1.1%). Q1 Labor Productivity -1.4% qtr/qtr, as expected (last 0.4%)

  • France's May trade deficit EUR8.4 bln (expected deficit of EUR9.0 bln; last deficit of EUR10.6 bln) and May Current Account deficit EUR700 mln (expected surplus of EUR600 mln; last deficit of EUR1.70 bln)

  • Italy's May Retail Sales 0.7% m/m (expected 0.1%; last 0.2%); 3.0% yr/yr (expected 4.2%; last 3.2%)

  • Swiss June Unemployment Rate 2.0%, as expected (last 2.0%)

  • In news:

  • The EU is reportedly looking to withdraw from the international Energy Charter Treaty.

  • European Central Bank policymaker de Guindos repeated that the governing council is not yet done with rate hikes while President Lagarde said that there is more work to do in order to lower inflation.

 

U.S. equity futures:

  • S&P 500 Futures: -3 @ 4,409

  • DJIA Futures: +5 @ 33,927

  • Nasdaq 100 Futures: -17 @ 15,072

Overseas:

  • Europe: DAX +0.3%, FTSE -0.2%, CAC +0.5%

  • Asia: Nikkei -1.2%, Hang Seng -0.9%, Shanghai -0.3%

Commodities:

  • Crude Oil +0.18 @ 71.98

  • Nat Gas +0.018 @ 2.627

  • Gold +8.00 @ 1923.40

  • Silver +0.023 @ 23.913

  • Copper +0.0212 @ 3.7557


 

Earnings/Guidance:

  • AbbVie (ABBV) guides Q2 and FY23 adjusted EPS below consensus

  • Beacon Roofing Supply (BECN) sees Q2 EPS below consensus; sees Q2 revs slightly above consensus; reached an agreement with Clayton, Dubilier & Rice to repurchase all of the outstanding shares of its Series a cumulative convertible participating preferred stock held by CD&R's affiliate

  • Costco (COST) reports June adjusted comparable sales growth of 3.0%

  • Fisker (FSR) reports Q2 2023 production figures

  • Kura Sushi (KRUS) beats by $0.12, revenue inline; guides FY23 revenue inline

  • Levi Strauss (LEVI) beats by $0.01, reports revs in-line; guides FY23 EPS and revs below consensus

  • Riot Platforms (RIOT) announces production and operations updates for June 2023; Bitcoin produced increased 9% yr/yr

  • Samsung (SSNLF) sees Q2 revs of KRW59.0-61.0 tln

  • Sandstorm Gold (SAND) guides Q2 revs above single estimate

  • Shell plc (SHEL) provides Q2 outlook update

News:

  • Treasury Secretary Janet Yellen gives speech in China; says she is "concerned about new export controls recently announced by China on two critical minerals used in technologies like semiconductors"

  • US oil production set for a record year, according to the Wall Street Journal

  • White House announces new actions to lower health care costs

  • SIA reports global semiconductor sales increase 1.7% month-to-month in May

  • AAON (AAON) announces 3-for-2 stock split

  • Aecom Tech (ACM) among several firms to compete for each order of $200 mln US Army contract for architectural and engineering services

  • Airbus (EADSY) reports 72 deliveries in June 2023

  • Alibaba (BABA): China will fine Ant Group $1.1 billion amid regulatory issues, according to Reuters

  • Amazon (AMZN) CEO Andy Jassy in interview believes there is a lot of growth ahead for the company, CNBC

  • Apple (AAPL) plans appointment only rollout for its Vision Pro product, according to Bloomberg

  • Backblaze (BLZE): shareholders approve auto-conversion of all outstanding shares of Class B shares into shares of Class A common stock

  • Biogen (BIIB) confirms FDA granted traditional approval for LEQEMBI

  • Biogen (BIIB): CMS says broader Medicare coverage is now available for Biogen and Eisai's (ESAIY) Leqembi

  • Caesars Entertainment (CZR): Caesars Sportsbook mobile sports betting app is accepting its first mobile sports wagers in Puerto Rico, complementing the opening of Caesars Sportsbook at Casino Metro in Dec 2022

  • Cboe Global Markets (CBOE) promotes Jill Griebenow to CFO and Treasurer, effecive July 10, 2023

  • Cboe Global Markets (CBOE) reports trading volume for June 2023

  • Constellation Brands (STZ) announces that Rob Sands will retire from role of Chair of the Board of Directors following company's Annual Meeting of Stockholders on July 18, 2023

  • EverQuote (EVER) exited its health insurance vertical beginning June 30, 2023, which represented about 10% of company's revenue in FY22

  • First Commonwealth (FCF) discloses in a filing that its subsidiary First Commonwealth Bank received notice from a third-party financial institution vendor that certain customer data was likely obtained in security incident

  • Gorilla Technology Group (GRRR) signs contract worth more than $270 mln with Government of Egypt to implement a Smart Government Security Convergence solution

  • Iris Energy (IREN) publishes a monthly investor update for June 2023, containing its results from operations as well as business updates

  • LGI Homes (LGIH) closed 664 homes in June

  • LL Flooring Holdings (LL) appoints Robert Madore as CFO, replacing Interim CFO Terry Blanchard effective July 10

  • Mercury (MRCY) advances go-forward strategic plan through continued board refreshment

  • Meta Platforms (META) Instagram exec Adam Mosseri posts on Threads "To clarify, you can deactivate your Threads account without deleting your Instagram account" (Threads now has 30 mln signups)

  • PNM Resources (PNM): New Mexico Supreme Court upholds New Mexico Public Regulation Commission denial of PNM application for abandonment, securitization of Four Corners Coal Plant

  • Quanterix (QTRX) launches LucentAD, a test to help evaluate symptoms consistent with the early signs of Alzheimer's disease

  • Renalytix (RNLX) reports late-breaking KidneyIntelX evidence released at 83rd American Diabetes Association Scientific Sessions

  • Sarepta Therapeutics (SRPT) selects AcariaHealth as part of the limited distribution network for ELEVIDYS (delandistrogene moxeparvovec-rokl)

  • SPS Commerce (SPSC) CEO to retire; names Chad Collins as its new CEO; also COO to retire at end of 2024

  • SS&C Techs (SSNC) announces appointment of Brian Schell as Executive Vice President and CFO

  • Tesla (TSLA) eliminated jobs at China battery plant, according to Bloomberg

  • Tesla (TSLA) offers rebate on top models in China, according to Reuters

  • Zai Lab (ZLAB) announces promotion of Yajing Chen to Chief Financial Officer, effective July 7, 2023

M&A:

  • Cronos Group (CRON) confirms it has received unsolicited indications of interest from third parties regarding potential transaction involving company and third party

  • McGrath RentCorp (MGRC) acquires assets of Inland Leasing and Storage, adding approximately 600 assets to its portable storage operations in Colorado

  • Triton International (TRTN) set August 24, 2023as the date for shareholders to approve previously announced acquisition by Brookfield Infrastructure Partners (BIP) through its subsidiary Brookfield Infrastructure Corp (BIPC)

Syndicate:

  • No syndicate news of note.

IPOs:

  • Private equity firm L Catterton considering IPO valued at $6.0 bln or more for sandal maker Birkenstock, according to Bloomberg

  • There are no IPOs scheduled at this time

Gapping Up/Down

  • Gapping up:

  • GRRR +57.9%, QTRX +8.1%, CRON +4.3%, SAND+2.6%, MRCY +2.1%, MRNS +0.9%, BIIB +0.4%

  • Gapping down:

  • LEVI -7.4%, BLZE -5.2%, RIOT -2.3%, KTB -2%, SRPT -1.6%, PLTR -1.4%, COST -0.8%, LGIH -0.5%

 

Analyst Research (see Upgrades/Downgradescalendarfor full list):

  • Upgrades

  • Adtalem Global Education (ATGE) upgraded to Outperform from Market Perform at BMO Capital Markets; tgt $44

  • ConocoPhillips (COP) upgraded to Outperform from Peer Perform at Wolfe Research; tgt $120

  • Exelon (EXC) upgraded to Buy from Neutral at Guggenheim; tgt $44

  • Hudbay Minerals (HBM) upgraded to Overweight from Equal Weight at Barclays

  • JPMorgan Chase (JPM) upgraded to Outperform from Peer Perform at Wolfe Research; tgt $170

  • Newmont Goldcorp (NEM) upgraded to Overweight from Equal Weight at Barclays; tgt lowered to $61

  • Playtika (PLTK) upgraded to Neutral from Underperform at BofA Securities; tgt raised to $13

  • Downgrades:

  • BHP Group (BHP) downgraded to Hold from Buy at Berenberg

  • Cedar Fair (FUN) downgraded to Neutral from Buy and placed on negative catalyst watch at Citigroup; tgt lowered to $41

  • Edison (EIX) downgraded to Neutral from Buy at Guggenheim

  • Exxon Mobil (XOM) downgraded to Peer Perform from Outperform at Wolfe Research

  • Humana (HUM) downgraded to Neutral from Overweight at JP Morgan; tgt lowered to $540

  • KLA Corporation (KLAC) downgraded to Sector Weight from Overweight at KeyBanc Capital Markets

  • Paramount Global (PARA) downgraded to Underperform from Peer Perform at Wolfe Research; tgt $14

  • Warner Bros. Discovery (WBD) downgraded to Peer Perform from Outperform at Wolfe Research

  • Wells Fargo (WFC) downgraded to Peer Perform from Outperform at Wolfe Research

  • XPeng (XPEV) downgraded to Sell from Neutral at Bocom; tgt $10.50

  • Others:

  • Alamo Group (ALG) initiated with an Outperform at Raymond James; tgt $215

  • Bloom Energy (BE) initiated with an Outperform at RBC Capital Mkts; tgt $24

  • Ferguson plc (FERG) initiated with an Outperform at William Blair; tgt $194

  • FleetCor (FLT) initiated with a Buy at Deutsche Bank; tgt $310

  • GDS Holdings (GDS) resumed with a Buy at BofA Securities; tgt lowered to $15.50

  • IBM (IBM) initiated with a Neutral at JP Morgan; tgt $145

  • Kadant (KAI) resumed with an Outperform at William Blair

  • Kanzhun Limited (BZ) initiated with a Buy at Bocom; tgt $20

  • Terex (TEX) initiated with a Mkt Perform at Raymond James

  • Tidewater (TDW) resumed with an Outperform at Evercore ISI; tgt $90

  • VNET Group (VNET) resumed with a Neutral at BofA Securities; tgt $3.40

  • WEX (WEX) initiated with a Hold at Deutsche Bank; tgt $190

Econ Data:

  • 08:30 ET: Nonfarm Payrolls for June (Briefing.comConsensus 220K; Prior 339K)

  • 08:30 ET: Nonfarm Private Payrolls for June (Briefing.comConsensus 210K; Prior 283K)

  • 08:30 ET: Avg. Hourly Earnings for June (Briefing.comConsensus 0.3%; Prior 0.3%)

  • 08:30 ET: Unemployment Rate for June (Briefing.comConsensus 3.6%; Prior 3.7%)

  • 08:30 ET: Average Workweek for June (Briefing.comConsensus 34.3; Prior 34.3)

  • 10:30 ET: EIA Natural Gas Inventories for July 1 (Briefing.comConsensus NA; Prior +76 bcf+

Earnings:

  • Monday (July 3)

  • Morning: None

  • Afternoon: None

  • Tuesday (July 4)

  • Morning: Closed for holiday

  • Afternoon: Closed for holiday

  • Wednesday (July 5)

  • Morning: None

  • Afternoon: None

  • Thursday (July 6)

  • Morning: None

  • Afternoon: LEVI

  • Friday (Jul 7)  

  • Morning: None

  • Afternoon: AZZ

 

Asia & Europe detail:

Asia: Nikkei -1.2%, Hang Seng -0.9%, Shanghai -0.3%

Equity indices in the Asia-Pacific region ended the week on a mostly lower note. Hong Kong-listed banks remained under pressure while sovereign debt also retreated overnight after yesterday's slide in U.S. Treasuries, with Australia's 10-yr yield rising to a level not seen since early 2014 (4.305%) while New Zealand's 10-yr yield hit a level not seen since 2011 (4.930%). Samsung reported a 96% drop in profit due to continued pressure on prices of memory chips. Japan's Prime Minister Kishida may reportedly reshuffle his cabinet in September. Malaysia left its policy rate at 3.00%, as expected.

  • In economic data:

  • China's June FX Reserves $3.193 trln (last $3.177 trln)

  • Japan's May Average Cash Earnings 2.5% yr/yr (expected 0.7%; last 0.8%), May overall wage income 2.5% yr/yr (expected 0.7%; last 0.8%), and May Overtime Pay 0.4% yr/yr (expected -2.8%; last -0.7%). May Household Spending -1.1% m/m (expected 0.5%; last -1.3%); -4.0% yr/yr (expected -2.4%; last -4.4%). May Leading Index 1.4% m/m (last 0.0%) and Coincident Indicator -0.4% m/m (last 0.1%)

  • South Korea's May Current Account surplus $1.93 bln (expected deficit of $650 mln; last deficit of $790 mln)

---Equity Markets---

  • Japan's Nikkei: -1.2% (-2.4% for the week)

  • Hong Kong's Hang Seng: -0.9% (-2.9% for the week)

  • China's Shanghai Composite: -0.3% (-0.2% for the week) 

  • India's Sensex: -0.8% (+0.9% for the week)

  • South Korea's Kospi: -1.2% (-1.5% for the week)

  • Australia's ASX All Ordinaries: -1.6% (-2.1% for the week)

---FX---

  • USD/JPY: -0.6% to 143.16

  • USD/CNH: -0.1% to 7.2435

  • USD/INR: UNCH at 82.70

 

Europe: DAX +0.3%, FTSE -0.2%, CAC +0.5%

Major European indices trade on a mostly higher note while Spain's IBEX (-0.5%) lags amid weakness in select industrial and energy names. The EU is reportedly looking to withdraw from the international Energy Charter Treaty. European Central Bank policymaker de Guindos repeated that the governing council is not yet done with rate hikes while President Lagarde said that there is more work to do in order to lower inflation.

  • In economic data:

  • Germany's May Industrial Production -0.2% m/m (expected 0.0%; last 0.3%); 0.8% yr/yr (last 1.8%)

  • U.K.'s June Halifax House Price Index -0.1% m/m (expected 0.1%; last -0.2%); -2.6% yr/yr (expected -2.3%; last -1.1%). Q1 Labor Productivity -1.4% qtr/qtr, as expected (last 0.4%)

  • France's May trade deficit EUR8.4 bln (expected deficit of EUR9.0 bln; last deficit of EUR10.6 bln) and May Current Account deficit EUR700 mln (expected surplus of EUR600 mln; last deficit of EUR1.70 bln)

  • Italy's May Retail Sales 0.7% m/m (expected 0.1%; last 0.2%); 3.0% yr/yr (expected 4.2%; last 3.2%)

  • Swiss June Unemployment Rate 2.0%, as expected (last 2.0%)

---Equity Markets---

  • STOXX Europe 600: +0.1% (-3.1% week-to-date)

  • Germany's DAX: +0.3% (-3.3% week-to-date)

  • U.K.'s FTSE 100: -0.2% (-3.5% week-to-date)

  • France's CAC 40: +0.5% (-3.8% week-to-date)

  • Italy's FTSE MIB: +0.5% (-2.0% week-to-date)

  • Spain's IBEX 35: -0.5% (-3.7% week-to-date)

---FX---

  • EUR/USD: -0.1% to 1.0851

  • GBP/USD: +0.4% to 1.2649

  • USD/CHF: +0.2% to 0.9006

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