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08/04/22 Briefing

The S&P 500 futures trade 22 points, or 0.5%, above fair value at the end of a volatile week. The major indices enter the session down between 0.7% (Dow Jones Industrial Average) and 3.9% (Russell 2000) this week.

The positive bias appears technical in nature after the S&P 500 closed above its 200-day moving average (now 4493) yesterday. Still, there's some trepidation associated with the Fed's hawkish mindset, the Russia-Ukraine situation, the COVID lockdowns in Shanghai, and rising interest rates.

On the latter, the 10-yr Treasury note yield is up two basis points to 2.68% while the 2-yr yield is up five basis points to 2.52%. The U.S. Dollar Index is up 0.1% to 99.86. WTI crude futures are down 0.1% to $95.91/bbl.

Separately, semiconductor stocks are seeing some relief with the broader futures market but also after Taiwan Semi (TSM 101.33, +0.81, +0.8%) reported Q1 revenue above consensus. The iShares Semiconductor ETF (SOXX 442.32, +2.62, +0.6%) is up 0.6% in pre-market action.

Today's economic data will be limited to Wholesale Inventories for February (Briefing.comconsensus 2.1%) at 10:00 a.m. ET.

In U.S. Corporate news:

  • CrowdStrike (CRWD 225.39, +8.36): +3.9% after saying it expects to achieve $5 billion in annual recurring revenue with a total addressable market of $126 billion by 2025. The company also secured a Provisional Authorization to Operate at Impact Level 4.

  • Robinhood Markets (HOOD 11.63, -0.44): -3.7% after the stock was downgraded to Sell from Neutral at Goldman.

  • WD-40 (WDFC 191.99, +17.48): +10.0% after beating top and bottom-line estimates.

  • iShares Semiconductor ETF (SOXX 442.32, +2.62): +0.6% amid better-than-expected Q1 revenue results from Taiwan Semi (TSM 101.33, +0.81, +0.8%).

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region ended modestly higher Friday, helping most cut their losses for the week. Japan's Nikkei: +0.4% (-2.4% for the week) Hong Kong's Hang Seng: +0.3% (-0.8% for the week) China's Shanghai Composite: +0.5% (-0.9% for the week) India's Sensex: +0.7% (+0.3% for the week) South Korea's Kospi: +0.2% (-1.4% for the week) Australia's ASX All Ordinaries: +0.5% (-0.2% for the week).

  • In economic data:

  • Japan's February Current Account Balance JPY1.648T (expected JPY1.437T; prior -JPY1.196T); March Household Confidence 32.8 (prior 35.2)

  • South Korea's February Current Account $6.4B (prior $1.9B)


  • In news:

  • Wall Street's positive turnaround on Thursday helped set the tone, although sentiment continued to be pressured by growth concerns linked to the Russia-Ukraine situation and China's zero-COVID policy, which has Shanghai stuck in an indefinite lockdown.

  • The China Securities Journal reportedly carried a front page article highlighting an expectation for the PBOC to cut the reserve requirement ratio in Q2.

  • India's RBI left its benchmark rate unchanged at 4.00%, as expected, and raised its full-year inflation outlook to 5.6% from 4.5% while calling attention to "tectonic shifts" in the global economy because of the Russia-Ukraine situation.

  • China's Cyberspace Administration will be scrutinizing major Internet companies, looking at their algorithms for potential violations in the way they drive ads and content, according to Bloomberg.



  • Major European indices are sporting solid gains, aiming to close out a volatile week on a positive note. STOXX Europe 600: +1.1% (+0.4% for the week) Germany's DAX: +1.4% (-1.2% for the week) U.K.'s FTSE 100: +1.0% (+1.2% for the week) France's CAC 40: +1.4% (-1.9% for the week) Italy's FTSE MIB: +1.8% (-1.7% for the week) Spain's IBEX 35: +1.5% (+1.0% for the week).

  • In economic data:

  • Italy's February Retail Sales +0.7% m/m (prior -0.6%) and +4.3% yr/yr (prior +8.3%)

  • Spain's February Industrial Production +3.0% yr/yr (expected +1.7%; prior +2.0%)


  • In news:

  • This weekend will feature the first round of voting in France's presidential election and polls denote a narrow gap in terms of Macron's lead over LePen.

  • Economists, according to a Bloomberg survey, see the first rate hike from the ECB in December, although some think the first hike could come as early as September.

  • Still no progress in Russia-Ukraine peace talks with reports this morning highlighting Russia bombing a train station in eastern Ukraine that killed more than 30 people.

  • Russia's central bank cut its key lending rate to 17.0% from 20.0%, noting some stabilization in financial stability risks for the time being.




U.S. equity futures:

  • S&P 500 Futures: +17 @ 4,518

  • DJIA Futures: +144 @ 34,728

  • Nasdaq 100 Futures: +54 @ 14,586

Overseas:

  • Europe: DAX +1.4%, FTSE +1.0%, CAC +1.4%

  • Asia: Nikkei +0.4%, Hang Seng +0.3%, Shanghai Composite +0.5%

Commodities:

  • Crude Oil +0.30 @ 96.33

  • Nat Gas +0.133 @ 6.492

  • Gold -6.00 @ 1931.80

  • Silver +0.010 @ 24.745

  • Copper +0.0447 @ 4.7442

U.S. Summary:

  • Earnings/Guidance (Full Earnings Calendar):

  • ACM Research (ACMR) says Q1 revs to be significantly below its previous internal plan due to COVID lockdowns; reaffirms full year revs

  • ChipMOS TECHNOLOGIES (IMOS) reports March revs of NT$2.36 bln; Q1 revs slightly below consensus

  • CrowdStrike (CRWD) in investor presentation says it expects to achieve $5 bln in annual recurring revenue; sees total addressable market of $126 bln by 2025

  • Designer Brands (DBI) raises FY23 EPS guidance; provides long term guidance; reinstates $0.05/share quarterly dividend

  • Innovative Industrial Properties (IIPR) Announces Q1 2022 Operating, Investment and Capital Markets Activity

  • LXP Industrial Trust (LXP) suspends previously announced evaluation of strategic alternatives; sees FY EPS below expectations

  • Nurix Therapeutics (NRIX) reports fiscal first quarter 2022 financial results and provides a corporate update

  • Paysafe (PSFE) reaffirms guidance for Q1 and FY22; also announces appointment of Bruce Lowthers as CEO and Executive Director

  • PriceSmart (PSMT) beats by $0.04, reports revs in-line

  • Quidel (QDEL) guides 1Q22 revenue well above consensus estimate

  • Taiwan Semi (TSM) reports March revs increased 33.2% yr/yr; Q1 revs above consensus

  • United Micro (UMC) reports sales for March increased 33.2% yr/yr to NT$24.14 bln

  • WD-40 (WDFC) beats two analyst estimate by $0.39, beats on revs; guides FY22 EPS in-line, revs in-line

  • Zynex (ZYXI) sees Q1 revs below consensus; reaffirms FY22 revs and Adjusted EBITDA


  • General News:

  • Manufacturers continue to see production stoppages from China lockdowns. COVID cases continue to increase despite lockdowns, according to the Wall Street Journal

  • Russia acknowledged it suffered "significant losses of troops" as Ukraine. Russia attacks train station in eastern Ukraine where civilians were trying to evacuate, leaving dozens dead, according to the New York Times

  • EU agrees fifth package of restrictive measures against Russia

  • Treasury sanctions major Russian state-owned enterprises

  • FDIC issues notification of engaging in crypto-related activities

  • Appeals Court upholds President Biden's vaccination mandate for federal government workers only, according to the New York Times

  • AC Immune (ACIU) reports changes to senior management

  • Amazon (AMZN) will appeal NYC union agreement, according to the Wall Street Journal

  • ANSYS (ANSS) wins NASA contract worth up to $39.1 mln

  • Atlassian (TEAM) provides update in investor presentation; sees addressable market opportunity of $29 bln

  • BeiGene (BGNE) announces that clinical results, as well as biomarker data, from its immuno-oncology program in solid tumors will be presented at the American Academy for Cancer Research Annual Meeting 2022

  • Biogen (BIIB): Medicare releases national policy that limits coverage for Alzheimer's drug, aducanumab

  • BioXcel Therapeutics (BTAI) enters into commercial supply agreement with ARx

  • Brookdale Senior Living (BKD) reports March consolidated occupancy - increased sequential weighted average occupancy by 30 bps and month-end occupancy by 60 bps

  • CrowdStrike (CRWD) secures Provisional Authorization to Operate at Impact Level 4

  • Cytokinetics (CYTK) Chairman to resign; John Henderson, M.B., Ch.B. named Chairman of Board

  • Doma (DOMA) announces departure of CFO Noaman Ahmad, effective May 15

  • Eni S.p.A. (E): Versalis to license technology to Shandong Eco Chemical Co. Ltd

  • EPAM Systems (EPAM) has begun the process of exiting its operations in Russia

  • Gatos Silver (GATO) announces record quarterly production, silver production up 58% yr/yr; also announces appointment of Dale Andres as CEO

  • Genetron Health (GTH) Presents 17 New Research Results at American Association for Cancer Research Annual Meeting (AACR) 2022

  • Genmab (GMAB) receives award in arbitration of two matters arising under its license agreement with Janssen Biotech

  • Groupon (GRPN): 10% owner (Pale Fire's Jan Barta) affirms increased holding and 7.8% active stake

  • Intel (INTC) wants additional capacity support from TSMC (TSM), according to Digitimes

  • JetBlue Airways (JBLU) provides comments on Spirit's announcement regarding its proposal

  • KKR (KKR) aiming to take Kokusai Electric public, according to Reuters

  • Lockheed Martin (LMT) awarded $260 mln Navy contract

  • MediciNova (MNOV) announces secondary analysis of Phase 2 Trial of MN-166 (ibudilast) in Alcohol Use Disorder Published in Alcoholism: Clinical and Experimental Research

  • Microsoft (MSFT) announces it is disrupting cyberattacks targeting Ukraine

  • NASDAQ (NDAQ) reports March 2022 metrics -- U.S. equity options volume was 284 mln contracts vs 241 mln prior month and 315 mln one year ago

  • Ocwen Fincl (OCN) comments on U.S. Court of Appeals decision in CFPB matter

  • Power REIT (PW) filed a motion for expedited hearing for its previously announced complaint against Marengo Township, Michigan

  • Shoals Technologies (SHLS) CFO Dr. Philip Garton intends to resign on May 4, 2022

  • Tencent (TCEHY) shuts down its game streaming service, according to CNN

  • Tesla (TSLA) delivers first cars made in Texas and plans Cybertruck production next year, according to the Wall Street Journal

  • Twitter (TWTR) says it is "experimenting with Unmentioning-a way to help you protect your peace and remove yourself from conversations"

  • Univar Solutions (UNVR) expands global relationship with Dow (DOW) in China

  • Walmart (WMT) raises driver pay and launches private fleet development program

  • WestRock (WRK) to permanently cease operations at mill in Panama City

  • Western Alliance Bancorp (WAL) agrees on contract extension with CEO Kenneth Vecchione that runs through at least 2024


  • M&A:

  • Bentley Systems (BSY) announces acquisition of ADINA; terms not disclosed

  • BHP Group (BHP) provides update on BHP Petroleum and Woodside merger and share distribution information

  • California Water (CWT) subsidiary agrees to acquire Stroh's Water Company; terms not disclosed

  • Littelfuse (LFUS) to acquire C&K Switches at an enterprise value of $540 million

  • Spirit Airlines (SAVE) to begin discussions with JetBlue Airways (JBLU)

  • Turquoise Hill Resources (TRQ) provides update on review of acquisition proposal from Rio Tinto (RIO)

  • WideOpenWest (WOW): Shares trade higher on report co is exploring options including a sale, according to Bloomberg


  • Syndicate:

  • Camden Property (CPT) prices offering of 2.9 mln shares of common stock for gross proceeds of $493 million

  • HF Sinclair (DINO) files mixed securities shelf offering

  • Relmada Therapeutics (RLMD) files mixed securities shelf offering


  • IPOs:

  • Expected to Price:

  • No IPOs expected to price.



Gapping Up/Down

  • Gapping up:

  • PSFE +8%, WDFC +7.2%, UMC +5.1%, CRWD +3.9%, WOW +3.7%, GATO +3.6%, IIPR +2.8%, MNOV +2.1%, WAL +1.7%, TRQ +1.7%, QDEL +1.6%, BHP +1.2%, JBLU +0.9%, BIIB +0.7%, SAVE +0.7%, PSMT +0.7%, TSM +0.5%


  • Gapping down:

  • HARP -9.7%, ULCC -2.8%, BTAI -2.4%, CWT -2.2%, CPT -2.2%, NRIX -2%, ACMR -1.8%, ANSS -1.1%


Analyst Research (see Upgrades/Downgradescalendarfor full list):

  • Upgrades

  • Afya (AFYA) upgraded to Outperform from Neutral at Credit Suisse; tgt raised to $19

  • AppFolio (APPF) upgraded to Overweight from Sector Weight at KeyBanc Capital Markets; tgt $143

  • C.H. Robinson (CHRW) upgraded to Overweight from Neutral at JP Morgan; tgt raised to $117

  • Coupang (CPNG) upgraded to Conviction Buy from Buy at Goldman; tgt lowered to 37

  • Eurofins Scientific (ERFSF) upgraded to Hold from Reduce at HSBC Securities

  • Gatos Silver (GATO) upgraded to Sector Perform from Underperform at RBC Capital Mkts; tgt $4

  • ITT (ITT) upgraded to Buy from Neutral at UBS; tgt lowered to $95

  • Kroger (KR) upgraded to Buy from Neutral at BofA Securities; tgt raised to $75

  • Sodexo (SDXAY) upgraded to Outperform from Sector Perform at RBC Capital Mkts

  • Target (TGT) upgraded to Buy from Hold at Gordon Haskett; tgt raised to $300

  • WD-40 (WDFC) upgraded to Neutral from Underperform at DA Davidson


  • Downgrades:

  • Alcoa (AA) downgraded to Neutral from Outperform at Credit Suisse; tgt raised to $82

  • ArcBest (ARCB) downgraded to Neutral from Buy at BofA Securities; tgt $76

  • Astec Industries (ASTE) downgraded to Neutral from Outperform at Robert W. Baird; tgt $40

  • AvidXchange (AVDX) downgraded to Neutral from Buy at Goldman; tgt lowered to $10

  • Canadian Pacific (CP) downgraded to Neutral from Buy at BofA Securities; tgt $81

  • Credit Agricole SA (CRARY) downgraded to Hold from Buy at Jefferies

  • Dover (DOV) downgraded to Equal Weight from Overweight at Barclays; tgt lowered to $160

  • Essential Utilities (WTRG) downgraded to Hold from Buy at HSBC Securities; tgt $53

  • FTC Solar (FTCI) downgraded to Neutral from Overweight at Piper Sandler; tgt lowered to $4

  • HP (HPQ) downgraded to Neutral from Buy at UBS; tgt $40

  • Intertek Group (IKTSY) downgraded to Hold from Buy at HSBC Securities

  • Manitowoc (MTW) downgraded to Neutral from Outperform at Robert W. Baird; tgt $16

  • Mercury (MRCY) downgraded to Hold from Buy at Jefferies; tgt raised to $65

  • Oshkosh (OSK) downgraded to Neutral from Outperform at Robert W. Baird; tgt $92

  • Rackspace Technology (RXT) downgraded to Perform from Outperform at Oppenheimer

  • REV Group (REVG) downgraded to Neutral from Outperform at Robert W. Baird; tgt $14

  • Robinhood Markets (HOOD) downgraded to Sell from Neutral at Goldman; tgt lowered to $13

  • Saia (SAIA) downgraded to Neutral from Buy at BofA Securities; tgt $222

  • Schneider National (SNDR) downgraded to Underperform from Buy at BofA Securities; tgt $23

  • SGS SA (SGSOY) downgraded to Hold from Buy at HSBC Securities

  • Shoals Technologies (SHLS) downgraded to Neutral from Overweight at Piper Sandler; tgt lowered to $16

  • Societe Generale (SCGLY) downgraded to Hold from Buy at Jefferies

  • Terex (TEX) downgraded to Neutral from Outperform at Robert W. Baird; tgt $44

  • TFI International (TFII) downgraded to Neutral from Buy at BofA Securities; tgt $95

  • Triton International (TRTN) downgraded to Underperform from Buy at BofA Securities; tgt $53

  • Union Pacific (UNP) downgraded to Neutral from Buy at BofA Securities; tgt $258

  • UPS (UPS) downgraded to Neutral from Buy at BofA Securities; tgt $204

  • Virtus Investment Partners (VRTS) downgraded to Underweight from Overweight at Morgan Stanley; tgt lowered to $240

  • Werner Enterprises (WERN) downgraded to Underperform from Neutral at BofA Securities; tgt $38


  • Others:

  • 5E Advanced Materials (FEAM) initiated with a Buy at DA Davidson; tgt $30

  • Alcon (ALC) initiated with a Buy at Needham; tgt $95

  • Alpha Tau (DRTS) initiated with an Overweight at Piper Sandler; tgt $19

  • Colgate-Palmolive (CL) initiated with a Mkt Perform at Raymond James

  • Compass Diversified (CODI) initiated with a Buy at B. Riley Securities; tgt $33

  • Cooper (COO) initiated with a Hold at Needham

  • Crescent Energy Company (CRGY) initiated with a Buy at Truist; tgt $25

  • PagSeguro Digital (PAGS) initiated with an Overweight at Cantor Fitzgerald; tgt $25

  • Procter & Gamble (PG) initiated with an Outperform at Raymond James; tgt $175

  • Raytheon Technologies (RTX) initiated with an Outperform at RBC Capital Mkts; tgt $125

  • RxSight (RXST) initiated with a Buy at Needham; tgt $18

  • STAAR Surgical (STAA) initiated with a Buy at Needham; tgt $87

  • StoneCo (STNE) initiated with an Overweight at Cantor Fitzgerald; tgt $15

  • Terran Orbital (LLAP) initiated with a Buy at Canaccord Genuity; tgt $22


Upcoming Events:

  • Econ Data:

  • 10:00 ET: Wholesale Inventories for Feb (Briefing.comConsensus 2.1%; Prior 0.8%)


  • Earnings:

  • Tuesday (Apr 5)

  • Morning: AYI CGNT LNN

  • Afternoon: ARRY SGH


  • Wednesday (Apr 6)

  • Morning: GBX RPM SCHN SMPL TLRY

  • Afternoon: LEVI RGP CXM


  • Thursday (Apr 7)

  • Morning: ANGO APOG CAG STZ LW

  • Afternoon: PSMT WDFC



Asia & Europe detail:

Asia: Nikkei +0.4%, Hang Seng +0.3%, Shanghai Composite +0.5%

Equity indices in the Asia-Pacific region ended modestly higher Friday, helping most cut their losses for the week. Wall Street's positive turnaround on Thursday helped set the tone, although sentiment continued to be pressured by growth concerns linked to the Russia-Ukraine situation and China's zero-COVID policy, which has Shanghai stuck in an indefinite lockdown. The China Securities Journalreportedly carried a front page article highlighting an expectation for the PBOC to cut the reserve requirement ratio in Q2. India's RBI left its benchmark rate unchanged at 4.00%, as expected, and raised its full-year inflation outlook to 5.6% from 4.5% while calling attention to "tectonic shifts" in the global economy because of the Russia-Ukraine situation. Separately, China's Cyberspace Administration will be scrutinizing major Internet companies, looking at their algorithms for potential violations in the way they drive ads and content, according to Bloomberg.

  • In economic data:

  • Japan's February Current Account Balance JPY1.648T (expected JPY1.437T; prior -JPY1.196T); March Household Confidence 32.8 (prior 35.2)

  • South Korea's February Current Account $6.4B (prior $1.9B)


---Equity Markets---

  • Japan's Nikkei: +0.4% (-2.4% for the week)

  • Hong Kong's Hang Seng: +0.3% (-0.8% for the week)

  • China's Shanghai Composite: +0.5% (-0.9% for the week)

  • India's Sensex: +0.7% (+0.3% for the week)

  • South Korea's Kospi: +0.2% (-1.4% for the week)

  • Australia's ASX All Ordinaries: +0.5% (-0.2% for the week)

---FX---

  • USD/JPY: +0.1% to 124.08

  • USD/CNH: +0.1% to 6.3700

  • USD/INR: -0.1% to 75.827

Europe: DAX +1.4%, FTSE +1.0%, CAC +1.4%

Major European indices are sporting solid gains, aiming to close out a volatile week on a positive note. This weekend will feature the first round of voting in France's presidential election and polls denote a narrow gap in terms of Macron's lead over LePen. Economists, according to a Bloomberg survey, see the first rate hike from the ECB in December, although some think the first hike could come as early as September. Still no progress in Russia-Ukraine peace talks with reports this morning highlighting Russia bombing a train station in eastern Ukraine that killed more than 30 people. Russia's central bank cut its key lending rate to 17.0% from 20.0%, noting some stabilization in financial stability risks for the time being.

  • In economic data:

  • Italy's February Retail Sales +0.7% m/m (prior -0.6%) and +4.3% yr/yr (prior +8.3%)

  • Spain's February Industrial Production +3.0% yr/yr (expected +1.7%; prior +2.0%)


---Equity Markets---

  • STOXX Europe 600: +1.1% (+0.4% for the week)

  • Germany's DAX: +1.4% (-1.2% for the week)

  • U.K.'s FTSE 100: +1.0% (+1.2% for the week)

  • France's CAC 40: +1.4% (-1.9% for the week)

  • Italy's FTSE MIB: +1.8% (-1.7% for the week)

  • Spain's IBEX 35: +1.5% (+1.0% for the week)

---FX---

  • EUR/USD: -0.1% to 1.0865

  • GBP/USD: -0.3% to 1.3029

  • USD/CHF: +0.1% to 0.9349


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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