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08/08/22 Briefing




The S&P 500 futures are up 23 points and are trading 0.5% above fair value. The Nasdaq 100 futures are up 94 point and are 0.5% above fair value. The Dow Jones Industrial Average futures are up 149 points and are trading 0.6% above fair value.

The Senate passed the Inflation Reduction Act overnight. It's headed to the House now which is expected to vote in favor on Friday.

In overseas news, China has announced additional military drills around Taiwan. Also, Chinese imports came in weaker than expected in July while exports were stronger than expected.

Separately, Fed Governor Bowman said that a 75 basis point rate hike in September is still on the table until inflation declines in a meaningful way. Additionally, San Francisco Fed President Daly (not an FOMC voter) reiterated that the number one priority is to bring down inflation. 

Energy complex futures are mostly lower. WTI crude oil futures are down 1.0% to $88.10/bbl. Natural gas futures are down 3.6% to $7.77/mmbtu. Unleaded gasoline futures are up 0.2% to $2.86/gal.

Treasury yields are also falling. The 2-yr note yield is down two basis points to 3.21% while the 10-yr note yield is down four basis points to 2.80%.

In corporate news:

  • Roku (ROKU 80.14, -2.12, -2.58%): downgraded to Sell from Hold at Pivotal

  • Carvana (CVNA 45.76, -1.22, -2.60%): downgraded to Underweight from Neutral at JP Morgan

  • Palantir Technologies (PLTR 9.75, -1.70, -14.85%): misses by $0.04, reports revs in-line; guides Q3 revs below consensus; guides FY22 revs below consensus

  • Monday.com(MNDY 147.99, +20.16, +15.77%): beats by $0.42, beats on revs; guides Q3 revs above consensus; raises FY22 revs above consensus

  • Barrick (GOLD 16.07, +0.47, +3.01%): beats by $0.02, reports revs in-line

  • Global Blood Therapeutics (GBT 66.49, +2.65, +4.15%):  Pfizer (PFE) confirms plans to acquire Global Blood Therapeutics in Transaction valued at $68.50 per share in cash, for a total enterprise value of ~ $5.4 billion; upgraded to Buy from Hold at Canaccord Genuity

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region began the week on a mixed note. Japan's Nikkei: +0.3%, Hong Kong's Hang Seng: -0.8%, China's Shanghai Composite: +0.3%, India's Sensex: +0.8%, South Korea's Kospi: +0.1%, Australia's ASX All Ordinaries: +0.1%.

  • In economic data:

  • China's July trade surplus $101.26 bln (expected surplus of $90.00 bln; last surplus of $97.94 bln. July Imports 2.3% yr/yr (expected 3.7%; last 1.0%) and July Exports 18.0% yr/yr (expected 15.0%; last 17.9%)

  • Japan's June Current Account deficit JPY132 bln (expected deficit of JPY704 bln; last surplus of JPY128 bln). July Bank Lending 1.8% yr/yr (last 1.3%). July Economy Watchers Current Index 43.8 (expected 51.6; last 52.9)

  • New Zealand's Q3 Inflation Expectations 3.1% (last 3.3%)

  • In news:

  • Japan's Prime Minister Kishida indicated that he will reshuffle his cabinet this week.

  • Hong Kong is easing coronavirus travel restrictions.

  • Fitch warned that multiple sectors in China's economy will be vulnerable if the distress persists in the property market.

  • Major European indices trade higher in an otherwise quiet session. STOXX Europe 600: +0.8%, Germany's DAX: +0.7%, U.K.'s FTSE 100: +0.4%, France's CAC 40: +0.9%, Italy's FTSE MIB: +0.4%, Spain's IBEX 35: +0.7%.

  • In economic data:

  • Eurozone's August Sentix Investor Confidence -25.2 (expected -24.7; last -26.4)

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

  • In news:

  • The eurozone's Sentix Investor confidence survey for August improved slightly but it continues pointing to expectations for a recession in the eurozone.

  • Moody's affirmed Italy's Baa3 rating but lowered the outlook to Negative from Stable.

  • Fitch affirmed France's AA rating with a Negative outlook.

U.S. equity futures:

  • S&P 500 Futures: +21 @ 4,166

  • DJIA Futures: +139 @ 32,942

  • Nasdaq 100 Futures: +91 @ 13,299

Overseas:

  • Europe: DAX +0.7%, FTSE +0.4%, CAC +0.9%

  • Asia: Nikkei +0.3%, Hang Seng -0.8%, Shanghai Composite +0.3%

Commodities:

  • Crude Oil -0.85 @ 88.16

  • Nat Gas  -0.276 @ 7.788

  • Gold +7.10 @ 1798.30

  • Silver +0.381  @ 20.223

  • Copper -0.0070 @ 3.53450

U.S. Summary:

  • Earnings/Guidance:

  • Avalara (AVLR) beats by $0.06, reports revs in-line

  • BioNTech (BNTX) misses by 0.63, misses on revs

  • Barrick (GOLD) beats by $0.02, reports revs in-line

  • Berkshire Hathaway (BRK.B) reports Q2 results

  • Dominion Energy (D) beats by $0.02, beats on revs; guides Q3 EPS below consensus; reaffirms FY22 EPS guidance

  • Elanco Animal Health (ELAN) beats by $0.11, reports revs in-line; guides Q3 EPS below consensus, revs below consensus; lowers FY22 guidance

  • Energizer (EGR) beats by $0.01, misses on revs; sees FY22 EPS and adjusted EBITDA at the low end of prior guidance ranges

  • HF Sinclair (DINO) beats by $0.88, beats on revs

  • Holly Energy Partners (HEP) misses by $0.07, beats on revs

  • Kosmos Energy (KOS) beats on top and bottom lines

  • Monday.com(MNDY) beats by $0.42, beats on revs; guides Q3 revs above consensus; raises FY22 revs above consensus

  • Palantir Technologies (PLTR) misses by $0.04, reports revs in-line; guides Q3 revs below consensus; guides FY22 revs below consensus

  • Radware (RDWR) misses by $0.02, reports revs in-line

  • Reata Pharmaceuticals (RETA) beats by $0.61, misses on revs; Provides update from FDA mid-cycle communication meeting on Omaveloxolone

  • Softbank (SFTBY) reports Q1 results

  • TreeHouse Foods (THS) beats by $0.09, beats on revs; guides FY22 revs above consensus

  • Tyson Foods (TSN) misses by $0.03, beats on revs; provides FY22 outlook

  • Viatris (VTRS) reports Q2 (Jun) results, misses on revs; guides FY22 revs below consensus

  • W&T Offshore (WTI) beats by $0.95, beats on revs; raises FY22 production guidance

  • General News:

  • Senate passes Inflation Reduction Act 51-50; House expected to vote Friday

  • House moderates will vote in favor of the Inflation Reduction Act on Friday even though it does not change the limit on state and local tax deductions, according to The Hill

  • Democrats were forced to remove provision in Inflation Reduction Act that would have capped prices of drugs in the commercial market because it violated Senate reconciliation rules. The bill will still allow Medicare drug price negotiation, according to Bloomberg

  • US and Iran getting close to reviving nuclear deal, according to the Wall Street Journal

  • San Francisco Fed President Mary Daly (not a voting member) in interview suggested that a 50 basis point rate hike in September is not the only option being considered, according to Bloomberg

  • Taiwan believes Chinese military drills are simulating an attack on the island, according to Bloomberg

  • President Biden tests negative for COVID-19 and exits isolation

  • Fed Governor (voting FOMC member) Michelle Bowman speech: She says "similarly-sized increases should be on the table until we see inflation declining in a consistent, meaningful, and lasting way"

  • Hong Kong lowers coronavirus quarantine period to three days, according to the Wall Street Journal

  • Amgen (AMGN) data at WCLC 2022 highlights potential to deliver transformative medicines for historically difficult-to-treat lung cancers

  • AstraZeneca (AZN) receives FDA approval for ENHERTU for patients with HER2 low metastatic breast cancer

  • AstraZeneca (AZN) reports Tagrisso plus savolitinib demonstrated 49% objective response rate in lung cancer patients with high levels of MET overexpression and/or amplification in SAVANNAH Phase II trial

  • AstraZeneca (AZN): Preliminary results from the SAVANNAH Phase II trial showed that TAGRISSO plus savolitinib demonstrated an objective response rate of 49% in patients with epidermal growth factor receptor-mutated non-small cell lung cancer with high levels of MET overexpression and/or amplification, defined as IHC90+ and/or FISH10+, whose disease progressed on treatment with TAGRISSO

  • Bayer AG (BAYRY) receives FDA approval for additional indication of darolutamide in combination with docetaxel for the treatment of metastatic hormone-sensitive prostate cancer

  • Carlyle Group (CG) CEO steps down; reaffirms guidance

  • CECO Environ. (CECE) announced Matthew Eckl, Chief Financial Officer, and Pamela Turay, Senior Vice President - Human Resources will be leaving the company in August to pursue other opportunities

  • CinCor Pharma (CINC) announced the topline results and successful completion of its Phase 2 BrigHtn trial

  • Dexcom (DXCM) enters into an accelerated share repurchase agreement

  • Dominion Energy (D) receives approval from Virginia commission for wind project

  • Eli Lilly (LLY) announces the availability of a new, citrate-free formulation of Taltz injection 80 mg/mL

  • EQRx (EQRX) Announces Late-Breaking Oral Presentation of Final Progression-Free Survival Results from Phase 3 Trial of Sugemalimab in Stage III Non-small Cell Lung Cancer at IASLC 2022 World Conference on Lung Cancer

  • Evolution Petroleum (EPM) announces 55% increase in proved reserves for fiscal year-end 2022 and provides operational and balance sheet update

  • Guardant Health (GH) and Blueprint Medicines present real-world data identifying EGFR C797X mutation as most common resistance mechanism to osimertinib therapy at IASLC 2022 World Conference on Lung Cancer

  • HUTCHMED (HCM) Announces that Fruquintinib Global Phase III FRESCO-2 Study Has Met Its Primary Endpoint in Metastatic Colorectal Cancer

  • Karuna Therapeutics (KRTX) announced positive topline results from its Phase 3 EMERGENT-2 trial evaluating the efficacy, safety, and tolerability of its lead investigational therapy, KarXT (xanomeline-trospium), in adults with schizophrenia

  • Kodiak Sciences (KOD) Completes Enrollment in GLOW Phase 3 Clinical Trial of Tarcocimab Tedromer (KSI-301) in Patients with Non-Proliferative Diabetic Retinopathy

  • Kodiak Sciences (KOD) reports positive topline results from BEACON Phase 3 Study of tarcocimab tedromer (KSI-301) in patients with retinal vein occlusion

  • Morgan Stanley (MS) will pay $200 mln to resolve record keeping investigation, according to Reuters

  • LSB Industries (LXU) authorized an increase in the size of the previously announced $50 mln stock repurchase program implemented in May 2022

  • Myovant Sciences (MYOV) and Pfizer (PFE) receive FDA approval of MYFEMBREE

  • New Pacific (NEWP) Intersects 514 m Grading 1.1 Gram Per Tonne Gold In Hole DCAr0044 At The Carangas Project, Bolivia

  • Norwegian Cruise Line (NCLH) announced revisions to its SailSAFE health and safety protocols which further align the Company to the broader travel, leisure and hospitality industry worldwide

  • Nutrien (NTR) appoints Ken Seitz as President and CEO

  • Tata Morors (TTM) aiming to purchase Ford (F) plant in Gujarat, according to Bloomberg

  • Tesla (TSLA) announces that its Board has approved previously announced intention to do a 3-for-1 stock split; trading on split-adjusted basis to begin on August 25

  • Tesla (TSLA): California DMV accused the company of falsely advertising its Autopilot features, according to LA Times

  • Tesla (TSLA) agrees to $5 bln deal to purchase battery materials from Indonesia, according to Reuters

  • Toyota (TM) offers to buyback EVs that have problems with wheels falling off, according to Bloomberg

  • Vaalco Energy (EGY) approves share buy-back post closing and provides update on transformational transaction

  • Zai Lab (ZLAB) announced that the company's partner, Karuna Therapeutics (KRTX), reported positive topline results from its Phase 3 EMERGENT-2 trial evaluating the efficacy, safety, and tolerability of its lead investigational therapy, KarXT, in adults with schizophrenia

  • M&A:

  • Avalara (AVLR): Vista will acquire all outstanding shares of Avalara common stock for $93.50 per share in an all-cash transaction valued at $8.4 billion

  • BHP Group (BHP) announces non-binding indicative proposal to acquire Oz Minerals Limited; OZ Minerals rejects it

  • Ceragon (CRNT) Board unanimously rejects Aviat's (AVNW) revised indication of interest

  • CVS (CVS) aiming to purchase Signify Health (SGFY), according to the Wall Street Journal

  • CyberOptics (CYBE) Board of Directors has unanimously approved agreement for Nordson (NDSN) to acquire CyberOptics for $54.00 per share in cash

  • Denison Mines (DNN) announces that its confidential offer to acquire UEX Corporation dated July 22, 2022 has expired

  • Digital Realty Trust (DLR) to sell a non-core, mixed-use data center property in a transaction valuing the asset at approximately $205 million

  • Emerson (EMR) to sell its InSinkErator business to Whirlpool Corporation (WHR) for $3.0 bln

  • Global Blood Therapeutics (GBT): Pfizer (PFE) confirms plans to acquire Global Blood Therapeutics in Transaction valued at $68.50 per share in cash, for a total enterprise value of ~ $5.4 billion

  • KKR (KKR) has sold a portfolio of distribution properties located in Chicago to a global investment manager

  • Stratasys (SSYS) to acquire Covestro's additive manufacturing materials business

  • Tailwind Acquisition Corp. (TWND) and NUBURU announced a definitive agreement that puts NUBURU on the path to becoming a publicly listed company

  • Twitter (TWTR): Elon Musk tweets "If Twitter simply provides their method of sampling 100 accounts and how they're confirmed to be real, the deal should proceed on original terms. However, if it turns out that their SEC filings are materially false, then it should not"

  • UPS acquires Bomi Group

  • Uranium Energy (UEC) confirms intention to acquire UEX Corp

  • Uranium Energy (UEC) and UEX Corporation announce amendment to the arrangement agreement; Special Meeting of UEX securityholders will remain on Tuesday, August 9, 2022

  • Walmart (WMT) is acquiring Volt Systems to fortify customer insights; financial details not disclosed

  • Syndicate

  • Altair Engineering (ALTR) files for 2,935,564 share common stock offering by selling shareholder

  • Cano Health (CANO) announces that Bob Camerlinck will be promoted to COO and Amy Charley will join co as Chief Administrative Officer, effective August 1

  • Dorian LPG (LPG) files for $500 mln mixed securities shelf offering; also files for 2,867,618 share common stock offering by selling shareholders

  • Eneti (NETI) files for 4,512,836 share common stock offering by selling shareholders

  • Intrepid Potash (IPI) files mixed securities shelf offering

  • Protagonist Therapeutics (PTGX) files for $300 mln mixed securities shelf offering

  • Via Renewables (VIA) files for $200 mln mixed securities shelf offering; also files for 20.8 mln share common stock offering by selling shareholders

  • Zoetis (ZTS) files mixed securities shelf offering

  • IPOs:

  • Expected to Price:

  • No IPOs expected.

Gapping Up/Down

  • Gapping up:

  • KOD +27.3%, KRTX +19.6%, MYOV +12.6%, DINO+8%, KOS +5%, DNN +3.4%, HEP +3.2%, TSLA+2.8%, HCM +2.7%, GH +2.3%, TWTR +1.7%, GOLD+1.3%, EGY +1.1%, CG +0.9%, D +0.6%, UPS +0.6%, BRK.B +0.5%

  • Gapping down:

  • BNTX -3.9%, VIA -2.4%, NETI -2%, PTGX -1.8%, BHP-1.1%, ELAN -0.8%, UEC -0.5%

 

Analyst Research (see Upgrades/Downgradescalendarfor full list):

  • Upgrades

  • Centrus Energy (LEU) upgraded to Buy from Neutral at ROTH Capital; tgt raised to $48

  • Corteva (CTVA) upgraded to Buy from Neutral at ROTH Capital; tgt raised to $74

  • Corteva (CTVA) upgraded to Overweight from Neutral at JP Morgan; tgt raised to $63

  • First Solar (FSLR) upgraded to Buy from Neutral at Guggenheim; tgt $135

  • First Solar (FSLR) upgraded to Overweight from Neutral at JP Morgan; tgt raised to $126

  • Grupo Aeroportuario del Pacifico (PAC) upgraded to Neutral from Underweight at JP Morgan

  • Grupo Aeroportuario Del Sureste (ASR) upgraded to Overweight from Neutral at JP Morgan

  • Henry Schein (HSIC) upgraded to Neutral from Sell at UBS; tgt $80

  • Legal & General Group (LGGNY) upgraded to Overweight from Neutral at JP Morgan

  • Newtek (NEWT) upgraded to Mkt Perform from Underperform at Raymond James

  • Playtech plc (PYTCY) upgraded to Buy from Hold at Deutsche Bank

  • Rhythm Pharmaceuticals (RYTM) upgraded to Buy from Neutral at Goldman; tgt $28

  • TPI Composites (TPIC) upgraded to Overweight from Neutral at JP Morgan; tgt $27

  • Downgrades:

  • a.k.a. Brands (AKA) downgraded to Market Perform from Outperform at Cowen; tgt lowered to $2.20

  • Americold Realty Trust (COLD) downgraded to Sector Perform from Outperform at RBC Capital Mkts; tgt $34

  • AZEK (AZEK) downgraded to Neutral from Outperform at Wedbush; tgt $21

  • Biohaven Pharmaceutical (BHVN) downgraded to Neutral from Outperform at Wedbush; tgt $148.50

  • Carvana (CVNA) downgraded to Underweight from Neutral at JP Morgan; tgt raised to $35

  • Coinbase Global (COIN) downgraded to Outperform from Buy at Daiwa Securities; tgt lowered to $100

  • Collegium Pharmaceutical (COLL) downgraded to Neutral from Buy at H.C. Wainwright

  • Global Blood Therapeutics (GBT) upgraded to Buy from Hold at Canaccord Genuity; tgt raised to $72

  • Grab (GRAB) downgraded to Neutral from Overweight at JP Morgan; tgt raised to $3.80

  • Green Brick Partners (GRBK) downgraded to Neutral from Outperform at Wedbush; tgt $26

  • Others:

  • CCC Intelligent Solutions (CCCS) initiated with a neutral at Piper Sandler; tgt $11

  • Chord Energy (CHRD) resumed with a Buy at Citigroup; tgt $150

  • Immunocore (IMCR) initiated with a Outperform at Cowen; tgt $70

  • Livent (LTHM) initiated with an Outperform at CICC; tgt $27.30

Upcoming Events:

  • Econ Data:

  • No economic data of note.

  • Earnings:

  • Monday (Aug 8)

  • Morning:  GOLD BNTX D ELAN ENR HSKA DINO MNDY PLTR RDWR RETA TGNA THS TSN VTRS

  • Afternoon: TXG ME DDD AAON ACAD ACCO ACM BIRD AEL AIG AZPN AVLR BLNK BCOR BWXT CBT CARG DM APPS DOCN EGIO EHTH ESE FGEN FRPT GBT GDRX GRPN HLIO HIMS HBM ICUI INSG IFF LMND LGND LPSN VAC DOOR MESA MRC NCMI NHI NWSA NE NVAX OKE OPRT PRDO PRAA PRI PRIM PFG PRA PUBM QLYS SWAV SDC SWCH TTWO SKT TASK TREX UPST VXRT VECO VLDR VSAT VVNT VRM WPRT YMAB

Asia & Europe detail:

Asia: Nikkei +0.3%, Hang Seng -0.8%, Shanghai Composite +0.3%

Equity indices in the Asia-Pacific region began the week on a mixed note. Japan's Prime Minister Kishida indicated that he will reshuffle his cabinet this week. Hong Kong is easing coronavirus travel restrictions. Fitch warned that multiple sectors in China's economy will be vulnerable if the distress persists in the property market.

  • In economic data:

  • China's July trade surplus $101.26 bln (expected surplus of $90.00 bln; last surplus of $97.94 bln. July Imports 2.3% yr/yr (expected 3.7%; last 1.0%); 18.0% yr/yr (expected 15.0%; last 17.9%)

  • Japan's June Current Account deficit JPY132 bln (expected deficit of JPY704 bln; last surplus of JPY128 bln). July Bank Lending 1.8% yr/yr (last 1.3%). July Economy Watchers Current Index 43.8 (expected 51.6; last 52.9)

  • New Zealand's Q3 Inflation Expectations 3.1% (last 3.3%)

---Equity Markets---

  • Japan's Nikkei: +0.3%

  • Hong Kong's Hang Seng: -0.8%

  • China's Shanghai Composite: +0.3%

  • India's Sensex: +0.8%

  • South Korea's Kospi: +0.1%

  • Australia's ASX All Ordinaries: +0.1%

---FX---

  • USD/JPY: -0.1% to 134.90

  • USD/CNH: +0.1% to 6.7665

  • USD/INR: +0.4% to 79.65

Europe: DAX +0.7%, FTSE +0.4%, CAC +0.9%

Major European indices trade higher in an otherwise quiet session. The eurozone's Sentix Investor confidence survey for August improved slightly but it continues pointing to expectations for a recession in the eurozone. Moody's affirmed Italy's Baa3 rating but lowered the outlook to Negative from Stable. Fitch affirmed France's AA rating with a Negative outlook.

  • In economic data:

  • Eurozone's August Sentix Investor Confidence -25.2 (expected -24.7; last -26.4)

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

---Equity Markets---

  • STOXX Europe 600: +0.8%

  • Germany's DAX: +0.7%

  • U.K.'s FTSE 100: +0.4%

  • France's CAC 40: +0.9%

  • Italy's FTSE MIB: +0.4%

  • Spain's IBEX 35: +0.7%

---FX---

  • EUR/USD: +0.2% to 1.0196

  • GBP/USD: +0.3% to 1.2101

  • USD/CHF: -0.5% to 0.9571


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