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09/06/23 Briefing

Updated: Jun 10, 2023


The S&P 500 futures are flat and are trading roughly in line with fair value. The Nasdaq 100 futures are up 20 points and are trading 0.1% above fair value. The Dow Jones Industrial Average futures are down 63 points and are trading 0.2% below fair value.

Equity futures are mixed this morning. Market participants are still in wait-and-see mode ahead of the May Consumer Price Index and Fed decision next week. Some mega caps are weak in premarket action, but a nice gain in Tesla (TSLA) following news of a charging network deal with General Motors (GM) is helping to offset that.

China reported inflation data for May. CPI increased 0.2% year-over-year (expected 0.3%) following a 0.1% increase in April. China's PPI, however, fell at its fastest pace since early 2016, down 4.6% year-over-year (expected -4.3%) versus a 3.6% decline in April.

Treasury yields are moving higher. The 2-yr note yield is up three basis points to 4.56% and the 10-yr note yield is up four basis points to 3.75%. The U.S. Dollar Index is pulling back from overnight highs, flat at 103.38.

There is no U.S. economic data of note today.

In corporate news:

  • General Motors (GM 37.32, +1.47, +4.1%) and Tesla (TSLA 249.30, +14.53, +6.2%): General Motors announces collaboration with Tesla to integrate the North American Charging Standard connector design into its EVs starting in 2025

  • DocuSign (DOCU 61.73, +3.25, +5.6%): beats by $0.16, beats on revs on billings; guides Q2 revs above consensus; guides FY24 revs above consensus

  • Taiwan Semiconductor Manufacturing (TSM 100.99, +1.05, +1.1%): reports May sales increased 19.4% yr/yr to NT$176.54 bln

  • Vail Resorts (MTN 252.00, -6.04, -2.3%): misses by $0.63, misses on revs; narrows FY23 EBITDA forecast

  • Braze (BRZE 37.99, +4.05, +11.9%): beats by $0.05, beats on revs; guides Q2 EPS above consensus, revs above consensus; guides FY24 EPS in-line, revs above consensus

  • Planet Labs (PL 4.0900, -0.81, -16.5%): beats by $0.02, reports revs in-line; guides Q revs below consensus; guides FY24 revs below consensus

  • The Duckhorn Portfolio (NAPA 14.67, +0.84, +6.1%): beats by $0.04, beats on revs; guides FY23 EPS and revs in-line

  • Adobe (ADBE 455.16, +16.23, +3.7%): upgraded to Overweight from Equal Weight at Wells Fargo

  • Corning (GLW 32.70, +1.02, +3.2%): upgraded to Overweight from Equal Weight at Morgan Stanley

  • Target (TGT 129.35, -1.92, -1.4%): downgraded to Neutral from Buy at Citigroup

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region ended the week on a mostly higher note. Japan's Nikkei: +2.0% (+2.4% for the week), Hong Kong's Hang Seng: +0.5% (+2.3% for the week), China's Shanghai Composite: +0.6% (UNCH for the week), India's Sensex: -0.4% (+0.1% for the week), South Korea's Kospi: +1.2% (+1.5% for the week), Australia's ASX All Ordinaries: +0.3% (-0.3% for the week).

    • In economic data:

      • China's May CPI -0.2% m/m (expected -0.1%; last -0.1%); 0.2% yr/yr (expected 0.3%; last 0.1%). May PPI -4.6% yr/yr (expected -4.3%; last -3.6%)

      • South Korea's April Current Account deficit $790 mln (expected deficit of $1.38 bln; last deficit of $160 mln)

    • In news:

      • China's PPI fell at its fastest pace since early 2016 in the May reading.

      • China's Commerce Ministry will aim to increase vehicle sales, partly by encouraging more lending.

      • Japan's Finance Minister Suzuki confirmed that a currency swap agreement could be discussed with South Korea.

      • Chiba Bank and Musashino Bank will be penalized by Japanese regulators for improper sales of structured bonds.

      • Mining stocks outperformed in Australia.

  • Major European indices are on track for a modestly lower finish to the week. STOXX Europe 600: -0.3% (-0.6% week-to-date), Germany's DAX: -0.3% (-0.7% week-to-date), U.K.'s FTSE 100: -0.5% (-0.6% week-to-date), France's CAC 40: -0.3% (-1.0% week-to-date), Italy's FTSE MIB: -0.3% (+0.5% week-to-date), Spain's IBEX 35: -0.3% (UNCH week-to-date).

    • In economic data:

      • Italy's April Industrial Production -1.9% m/m (expected 0.1%; last -0.6%); -7.2% yr/yr (expected -4.1%; last -3.2%)

      • Spain's May Consumer Confidence 81.5 (expected 69.6; last 73.0)

    • In news:

      • The British Chambers of Commerce expect the British economy to avoid a recession while enduring anemic growth.

      • The British government will maintain its oil and gas windfall taxes for the next five years.

      • French Finance Minister Le Maire said that 75 manufacturers have agreed to lower prices of certain products starting next month.

 

U.S. equity futures:

  • S&P 500 Futures: UNCH @ 4,294

  • DJIA Futures: -48 @ 33,786

  • Nasdaq 100 Futures: +18 @ 14,503

Overseas:

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

  • Asia: Nikkei +2.0%, Hang Seng +0.5%, Shanghai Composite +0.6%

Commodities:

  • Crude Oil +0.32 @ 71.61

  • Nat Gas -0.078 @ 2.274

  • Gold +1.60 @ 1980.20

  • Silver +0.107 @ 24.455

  • Copper +0.0195 @ 3.8145


 

Earnings/Guidance:

  • ANI Pharma (ANIP) reaffirms FY23 revenue guidance in slide presentation

  • ASE Technology (ASX) reports May sales declined 14.1% yr/yr to NT$46.24 bln

  • Braze (BRZE) beats by $0.05, beats on revs; guides Q2 EPS above consensus, revs above consensus; guides FY24 EPS in-line, revs above consensus

  • Comtech Telecom (CMTL) reports Q3 (Apr) results, revs in-line; guides Q4 revs above consensus

  • Concrete Pumping (BBCP) misses by $0.01, beats on revs; reaffirms FY23 revs guidance

  • DocuSign (DOCU) beats by $0.16, beats on revs on billings; guides Q2 revs above consensus; guides FY24 revs above consensus

  • Hut 8 Mining (HUT) provides production and operations update for May 2023

  • Mission Produce (AVO) beats by $0.02, beats on revs

  • Moog (MOG.A) reaffirms guidance at Investor Day

  • NIO (NIO) beats by $0.29, misses on revs; provides Q2 guidance

  • Oil-Dri (ODC) reports AprQ results, raises dividend

  • Planet Labs (PL) beats by $0.02, reports revs in-line; guides Q revs below consensus; guides FY24 revs below consensus

  • Sight Sciences (SGHT) reaffirms FY23 revs outlook

  • Taiwan Semiconductor Manufacturing (TSM) reports May sales increased 19.4% yr/yr to NT$176.54 bln

  • The Duckhorn Portfolio (NAPA) beats by $0.04, beats on revs; guides FY23 EPS and revs in-line

  • Vail Resorts (MTN) misses by $0.63, misses on revs; narrows FY23 EBITDA forecast

News:

  • Former President Trump has been indicted in federal classified documents investigation. He will appear in court on Tuesday to face seven counts including violation of the Espionage Act and a conspiracy to obstruct justice. Mr. Trump says he is an "innocent man", according to the New York Times

  • Unhealthy air quality conditions peaked in major east coast cities, according to the New York Times

  • Democrats will introduce bill to allow Treasury to raise debt ceiling in the future, according to the Wall Street Journal

  • Louisiana passes bill that will require parental consent for anyone under 18 to use social media, according to the New York Times

  • Pentagon will soon announce $2 bln Ukraine aid package, according to Bloomberg

  • AbbVie's (ABBV) VENCLYXTO/VENCLEXTA (venetoclax) Continues to Show Sustained Progression-Free Survival (PFS) in Chronic Lymphocytic Leukemia (CLL) Patients

  • ADC Therapeutics (ADCT) announced updated results from LOTIS-2; 31% of patients who achieved a complete response remained event-free for two or more years

  • Aehr Test Systems (AEHR) receives $13.7 mln in follow-on orders for FOX WaferPak Contactors

  • AstraZeneca (AZN) reports Danicopan as add-on to Ultomiris or Soliris improved haemoglobin levels and maintained disease control in patients with PNH

  • AstraZeneca (AZN) and Sanofi (SNY) receive FDA recommendation for nirsevimab

  • AstraZeneca (AZN) enters agreement with Quell Therapeutics to develop, manufacture and commercialise engineered T-regulatory cell therapies for autoimmune diseases

  • Bristol Myers Squibb (BMY) Receives U.S. FDA Approval of New State-of-the-Art Cell Therapy Manufacturing Facility in Devens, Massachusetts

  • Charles River (CRL) and INADcure Foundation announce gene therapy manufacturing collaboration; CRL will perform HQ plasmid production in support of Phase I/II clinical trials for Infantile Neuroaxonal Dystrophy

  • Cohen & Steers (CNS) reports preliminary assets under management of $77.9 billion as of May 31, 2023, a decrease of $3.1 billion from assets under management at April 30, 2023

  • Diageo plc (DEO) Board appoints Debra Crew CEO

  • Disc Medicine (IRON) provides positive initial data from phase 2 beacon trial of Bitopertin in patients with erythropoietic protoporphyria at European Hematology Association

  • DISH Network (DISH) is desperate to raise money ahead of 5G deadline, according to NYPost

  • Editas Medicine (EDIT) Announces Positive Initial EDIT-301 Safety and Efficacy Data from the First Four Patients Treated in the RUBY Trial and the First Patient Treated in the EdiTHAL Trial

  • General Motors (GM) announces collaboration with Tesla (TSLA) to integrate the North American Charging Standard connector design into its EVs starting in 2025

  • Genmab (GMAB) Showcases Data From Comprehensive Epcoritamab Development Program in Patients Across B-Cell Lymphomas at European Hematology Association (EHA) Annual Meeting 2023

  • Hasbro (HAS) plans to revive toy business, according to the Wall Street Journal

  • ImmunoGen (IMGN) Presents Updated Findings from CADENZA Trial of Pivekimab Sunirine in Blastic Plasmacytoid Dendritic Cell Neoplasm at EHA 2023 Congress

  • Keros Therapeutics (KROS) Presents Clinical Trial and Preclinical Study Results from its KER-050 Program and Preclinical Data from its ALK2 Inhibitor Program at the 28th Annual Congress of the European Hematology Association

  • Kymera Therapeutics (KYMR) Presents Data Demonstrating Superior Efficacy of KT-253, a Potent and Selective Heterobifunctional MDM2 Degrader, Compared to Small Molecule Inhibitor in Preclinical Leukemia Models at the European Hematology Association Congress

  • Leonardo DRS (DRS) awarded a $94 million contract to produce its next-generation infrared weapon sights for U.S. Army infantry snipers

  • Liquidia Technologies (LQDA) entered into a Supply Agreement with Plastiape SpA

  • Meta (META) aiming to introduce stand alone application to compete with Twitter (TWTR), according to the Wall Street Journal

  • Platinum Group Metals (PLG) reports that the Japan Organization for Metals and Energy Security and Hanwa Co. established a special purpose company, HJ Platinum Metals

  • Raytheon Technologies' (RTX) Intelligence and Space division awarded $372 mln U.S. Navy contract

  • Roche Hldg's (RHHBY) Foundation Medicine FDA received approval for FoundationOneLiquid CDx to be used as a companion diagnostic for Pfizer's (PFE) BRAFTOVI (encorafenib) in combination with cetuximab

  • Stellantis (STLA) and Hype deploy a first fleet of 50 wheelchair-accessible hydrogen taxis in Paris

  • Teekay Corporation (TK) announces update on $30 mln share repurchase program and announces new share repurchase program

  • UBS AG (UBS): Swiss Finance Ministry announces that Confederation and UBS sign loss protection agreement

  • Vertex Pharma (VRTX) and CRISPR Therapeutics (CRSP) receive FDA acceptance of BLA for exagamglogene autotemcel

  • Vor Biopharma (VOR): Successful Primary Engraftment of Trem-cel in First Five AML Patients Demonstrates Promise of Vor Bio's Platform

M&A:

  • American Water Works' (AWK) subsidiary, Pennsylvania American Water, signs agreement with Farmington Township, Clarion County, to purchase town's water and wastewater systems for $5.545 mln

  • Credit Suisse (CS, UBS) aiming to sell China brokerage venture, according to Reuters

  • Endava (DAVA) announces the acquisition of DEK Corporation Pty Ltd, DEK Technologies Sweden AB and DEK Vietnam Company Ltd; terms not disclosed

  • Kennedy Wilson (KW) acquires first tranche of $5.7 bln loan portfolio from Pacific Western Bank

  • Kennedy Wilson (KW) is currently working on finalizing arrangements with PacWest

  • Merit Medical (MMSI) has completed acquisition of portfolio of dialysis catheter products and the BioSentry Biopsy Tract Sealant System from AngioDynamics (ANGO) for a total cash consideration of $100 mln

  • Visa (V) in discussions to acquire Pismo, according to Bloomberg

  • Waterdrop (WDH) entered into definitive transaction documents in relation to the proposed acquisition of Shenzhen Cunzhen Qiushi Technology Co., Ltd. and its subsidiaries

Syndicate:

  • BigBear.ai (BBAI) announces registered direct offering of common stock and warrants

  • Contango ORE (CTGO) entered into $40 mln Controlled Equity Offering Sales Agreement

  • First Watch Restaurant Group (FWRG) files for 3,000,000 shares of its common stock by selling shareholders

  • Option Care Health (OPCH): Walgreens Boots Alliance (WBA) sells remaining shares of Option Care Health for ~$330 mln of proceeds

  • RingCentral (RNG) files for 428,121 shares of class A common stock by selling shareholders

IPOs:

  • No IPOs expected to price.

Gapping Up/Down

  • Gapping up:

    • ODC +13.1%, BRZE +12.3%, DOCU +7.7%, NAPA+5.5%, ANGO +4.6%, TSLA +4.1%, GM +3.5%, DRS+3.1%, CRSP +3.1%, BFH +2.2%, HCM +2%, IMGN+1.6%, KYMR +1.5%, VRTX +1.1%, TSM +0.9%, CNS+0.8%, WBA +0.7%

  • Gapping down:

    • AMSWA -10.7%, FWRG -6%, BBCP -5.7%, EVGO-5.5%, CMTL -5.5%, CHPT -3.9%, NIO -3.2%, KW-2.9%, AGX -2.8%, MTN -2.1%, DISH -2%, OPCH-1.9%, BBAI -0.9%, BLNK -0.7%, BGNE -0.5%

 

Analyst Research (see Upgrades/Downgradescalendarfor full list):

  • Upgrades

    • Adobe (ADBE) upgraded to Overweight from Equal Weight at Wells Fargo; tgt raised to $525

    • Aegon N.V. (AEG) upgraded to Buy from Hold at HSBC Securities

    • Principal Fincl (PFG) upgraded to Mkt Perform from Underperform at Keefe Bruyette; tgt lowered to $75

    • Trip.comGroup (TCOM) upgraded to Buy from Hold at China Renaissance; tgt $46

  • Downgrades:

    • Mayville Engineering Company (MEC) downgraded to Neutral from Outperform at Robert W. Baird; tgt $14

    • Park Hotels & Resorts (PK) downgraded to In-line from Outperform at Evercore ISI; tgt $18.50

    • Target (TGT) downgraded to Neutral from Buy at Citigroup; tgt lowered to $130

    • UiPath (PATH) downgraded to Equal Weight from Overweight at Wells Fargo; tgt $20

  • Others:

    • Archer Aviation (ACHR) initiated with a Buy at Canaccord Genuity; tgt $9

    • Eve Holding (EVEX) initiated with a Buy at Canaccord Genuity; tgt $10

    • Joby Aviation (JOBY) initiated with a Buy at Canaccord Genuity; tgt $8

    • Knife River Corp. (KNF) initiated with a Buy at DA Davidson; tgt $48

    • Lilium GmbH (LILM) initiated with a Hold at Canaccord Genuity; tgt $1.20

    • Vertical Aerospace Group (EVTL) initiated with a Hold at Canaccord Genuity; tgt $2

Econ Data:

  • No economic data of note.

Earnings:

  • Monday (Jun 5)

    • Morning:  SAIC

    • Afternoon: GTLB CXM

  • Tuesday (Jun 6)

    • Morning: ABM ASO CIEN CNM CBRL GIII MOMO SJM THO

    • Afternoon:  CVGW CASY BASE PLAY SFIX YEXT

  • Wednesday (Jun 7)

    • Morning:  BF.B CPB LOVE OLLI UNFI

    • Afternoon:  GME GEF HCP OXM SMTC SMAR CURV TCOM VRNT

  • Thursday (Jun 8)

    • Morning: DBI FCEL REVG SIG TTC

    • Afternoon:  BRZE DOCU AVO MTN

  • Friday (Jun 9)  

    • Morning:  NIO

Asia & Europe detail:

Asia: Nikkei +2.0%, Hang Seng +0.5%, Shanghai Composite +0.6%

Equity indices in the Asia-Pacific region ended the week on a mostly higher note. China's PPI fell at its fastest pace since early 2016 in the May reading. China's Commerce Ministry will aim to increase vehicle sales, partly by encouraging more lending. Japan's Finance Minister Suzuki confirmed that a currency swap agreement could be discussed with South Korea. Chiba Bank and Musashino Bank will be penalized by Japanese regulators for improper sales of structured bonds. Mining stocks outperformed in Australia.

  • In economic data:

    • China's May CPI -0.2% m/m (expected -0.1%; last -0.1%); 0.2% yr/yr (expected 0.3%; last 0.1%). May PPI -4.6% yr/yr (expected -4.3%; last -3.6%)

    • South Korea's April Current Account deficit $790 mln (expected deficit of $1.38 bln; last deficit of $160 mln)

---Equity Markets---

  • Japan's Nikkei: +2.0% (+2.4% for the week)

  • Hong Kong's Hang Seng: +0.5% (+2.3% for the week)

  • China's Shanghai Composite: +0.6% (UNCH for the week)

  • India's Sensex: -0.4% (+0.1% for the week)

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

  • Australia's ASX All Ordinaries: +0.3% (-0.3% for the week)

---FX---

  • USD/JPY: +0.5% to 139.61

  • USD/CNH: +0.4% to 7.1440

  • USD/INR: UNCH at 82.44

 

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

Major European indices are on track for a modestly lower finish to the week. The British Chambers of Commerce expect the British economy to avoid a recession while enduring anemic growth. The British government will maintain its oil and gas windfall taxes for the next five years. French Finance Minister Le Maire said that 75 manufacturers have agreed to lower prices of certain products starting next month.

  • In economic data:

    • Italy's April Industrial Production -1.9% m/m (expected 0.1%; last -0.6%); -7.2% yr/yr (expected -4.1%; last -3.2%)

    • Spain's May Consumer Confidence 81.5 (expected 69.6; last 73.0)

---Equity Markets---

  • STOXX Europe 600: -0.3% (-0.6% week-to-date)

  • Germany's DAX: -0.3% (-0.7% week-to-date)

  • U.K.'s FTSE 100: -0.5% (-0.6% week-to-date)

  • France's CAC 40: -0.3% (-1.0% week-to-date)

  • Italy's FTSE MIB: -0.3% (+0.5% week-to-date)

  • Spain's IBEX 35: -0.3% (UNCH week-to-date)

---FX---

  • EUR/USD: -0.2% to 1.0765

  • GBP/USD: -0.1% to 1.2549

  • USD/CHF: +0.4% to 0.9019


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