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10/06/22 Briefing


The S&P 500 futures are down one point and are trading roughly in-line with fair value. The Nasdaq 100 futures are up 34 points and are trading 0.1% above fair value. The Dow Jones Industrial Average futures are down 52 points and are trading in-line with fair value.

Mixed action, and little conviction, in front of this morning's release of the May Consumer Price Index. It is due out at 8:30 a.m. ETand it promises to change the lackluster trading dynamic as it will provide fresh insight on inflation trends and what they could mean for monetary policy.

Although the action here is mixed, the action overseas has been predominately negative following yesterday's large losses on Wall Street. China's Shanghai Composite (+1.4%) was a notable exception in the wake of some cooler-than-expected inflation data. Still, reports of more renewed lockdowns in Shanghai have cast a pall on growth sentiment elsewhere.

Bank of Japan officials called attention to concerns about the rapid weakening in the yen and pointed to possible intervention in the foreign exchange markets to stem that weakness. USD/JPY is down 0.3% to 133.91 this morning. Separately, Italy's 10-yr government bond yield hit its highest level since 2014, sparking concerns about funding costs and widening credit spreads that have hit the FTSE MIB (-3.7%) hard.

Concerns about "fragmentation" in European bond markets are not going away as the EU faces the specter of high inflation, persistently high energy costs, rising interest rates, and a possible recession.

The inflation-sensitive 10-yr note yield is unchanged at 3.04% as it, too, is in a wait-and-see mode before the CPI report. The 2-yr note yield, though, is up another five basis points to 2.87%. WTI crude futures are up 0.6% to $122.25 and national average gasoline prices have reportedly hit a record $4.99/gallon.

In corporate news:

  • Netflix (NFLX 184.01, -8.76, -4.5%): Goldman Sachs downgrades to Sell from Neutral, citing concerns about recession risk and increased competition

  • DocuSign (DOCU 65.70, -21.66, -24.8%): misses by $0.08, beats on revs; guides Q2 revs in-line; lowers FY23 billings guidance to $2.521-2.541 bln from $2.706-2.726 bln prior guidance

  • Stitch Fix (SFIX 6.65, -1.13, -14.5%): misses by $0.14, reports revs in-line; guides Q4 revs in-line

  • Vail Resorts (MTN 260.32, +14.82, +6.0%): beats by $0.15, beats on revs

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region ended the week on a mostly lower note. Japan's Nikkei -1.5%; Hong Kong's Hang Seng -0.3%; China's Shanghai Composite +1.4%; India's Sensex -1.8%; South Korea's Kospi -1.1%: and Australia's All Ordinaries -1.3%.

  • In economic data:

  • China's May CPI -0.2% m/m (expected -0.3%; last 0.4%); 2.1% yr/yr (expected 2.2%; last 2.1%). May PPI 6.4% yr/yr, as expected (last 8.0%). May New Loans CNY1.89 trln (expected CNY1.30 trln; last CNY645.40 bln) and May total social financing CNY2.79 trln (expected CNY2.015 trln; last CNY910.20 bln)

  • Japan's May PPI 0.0% m/m (expected 0.5%; last 1.3%); 9.1% yr/yr (expected 9.8%; last 9.8%)

  • South Korea's April Current Account deficit $80 mln (last surplus of $7.06 bln)

  • New Zealand's May Electronic Card Retail Sales 1.9% m/m (last 7.1%); 0.7% yr/yr (last 2.1%). Q1 Manufacturing Sales Volume -3.5% qtr/qtr (last 8.2%)


  • In news:

  • Some coronavirus restrictions will be reimposed in Shanghai, according to reports.

  • China reported cooler than expected inflation figures for May.

  • Movement of shipping containers at South Korea's Ulsan port has been halted due to a strike by truckers. Representatives from South Korea's government met with the truckers, but the meeting did not produce a solution. The two sides will meet again tomorrow.



  • Major European indices trade sharply lower with Italy's MIB (-3.7%) pacing the retreat after Italy's 10-yr yield hit its highest level since early 2014 in the wake of yesterday's ECB decision, fueling concerns about funding costs. STOXX Europe 600 -1.5%; Germany's DAX -1.5%; UK's FTSE 100 - 1.3%; France's CAC 40 -1.8%; Italy's FTSE MIB -3.7%; Spain's IBEX 35 -2.4%.

  • In economic data:

  • U.K.'s Inflation Expectations 4.6% (last 4.3%)

  • Italy's April Industrial Production 1.6% m/m (expected -1.1%; prior 0.0%); 4.2% yr/yr (expected -0.2%; last 3.2%)

  • Spain's May CPI 0.8% m/m, as expected (last -0.2%); 8.7% yr/yr, as expected (last 8.3%)


  • In news:

  • Bank of England's Resolvability Assessment concluded that major British banks have overcome "Too Big to Fail" and that they shouldn't require a public bailout if a crisis hits.

  • The Bundesbank raised Germany's 2022 inflation forecast to 7.1% from 3.6% while cutting the growth forecast to 1.9% from 4.2%.



U.S. equity futures:

  • S&P 500 Futures: -1 @ 4,016

  • DJIA Futures: -51 @ 32,222

  • Nasdaq 100 Futures: +30 @ 12,300

Overseas:

  • Europe: DAX -1.5%, FTSE -1.3%, CAC -1.8%

  • Asia: Nikkei -1.5%, Hang Seng -0.3%, Shanghai Composite +1.4%

Commodities:

  • Crude Oil +0.83 @ 122.34

  • Nat Gas -0.050 @ 8.913

  • Gold -16.20 @ 1836.60

  • Silver -0.445 @ 21.372

  • Copper -0.0495 @ 4.3315

U.S. Summary:

  • Earnings:

  • ChipMOS TECHNOLOGIES (IMOS) reports May revs increased 2.5% yr/yr to $82.7 mln

  • Comtech Telecom (CMTL) beats by $0.06, reports revs in-line; guides Q4 (Jul) revs below consensus due to market conditions and near-term uncertainties

  • DocuSign (DOCU) misses by $0.08, beats on revs; guides Q2 revs in-line; reaffirms FY23 revs but lowers FY23 billings guidance

  • Stitch Fix (SFIX) misses by $0.14, reports revs in-line; guides Q4 revs in-line

  • Taiwan Semi (TSM) reports May revs increased 65.3% yr/yr to NT$185.71 bln

  • Vail Resorts (MTN) beats by $0.15, beats on revs

  • Yellow Corporation (YELL) provides quarter-to-date operating data for second quarter 2022


  • General News:

  • Half of Shanghai's financial hub will return to lockdown after 11 new COVID-19 cases were discovered. New lockdowns occurred days after celebration of reopening, according to Financial Times

  • US Treasury Sec Yellen does not think we will see a recession, but gas prices unlikely to fall anytime soon, according to Reuters

  • President Biden will give remarks on inflation today at 13:45 ET, per White House schedule

  • Lawmakers will end week without deal on gun control bills, but they are still working toward legislation on red flag laws and school security, according to the Wall Street Journal

  • UK CMA plans market investigation into mobile browsers and cloud gaming

  • 3M (MMM) discloses that its Belgium unit has received approval to begin the process toward restarting its manufacturing operations at the Zwijndrecht facility

  • AbbVie (ABBV) Presents Investigational Navitoclax Preliminary Data in JAK Inhibitor Nave Myelofibrosis Patients

  • AbbVie (ABBV) reports New Data Demonstrating VENCLYXTO/VENCLEXTA Combination Sustained Progression-Free Survival in Chronic Lymphocytic Leukemia Patients After Four Years Off Treatment

  • ADC Therapeutics (ADCT) reports results from pivotal Phase 2 clinical trial of Camidanlumab Tesirine

  • Advanced Micro (AMD) unveils next-generation hardware and software roadmaps, expanded product portfolio addressing new markets, and strategies to accelerate data center growth

  • AllianceBernstein (AB) reports that preliminary assets under management (AUM) increased to $687 bln during May 2022 from $685 bln at the end of April

  • Alphabet (GOOG): UK CMA is investigating Google's conduct in relation to Google's distribution of apps on Android devices in the UK

  • Amarin (AMRN) receives positive recommendation from UK's National Institute for Health and Care Excellence for Reimbursement of VAZKEPA

  • Amazon (AMZN) aiming to end bid to stream Indian Premier League cricket matches, according to Bloomberg

  • Angi Inc. (ANGI) appoints Andrew Russakoff to succeed Jeff Pedersen as CFO, effective immediately

  • Apellis (APLS) and Sobi Report New Data Reinforcing the Robust Efficacy and Safety Profile of EMPAVELI (pegcetacoplan) for PNH at EHA 2022 Congress

  • Arvinas (ARVN) enters into Master In Vitro Diagnostics Agreement with Foundation Medicine

  • Artisan Partners Asset Mgmt (APAM) reports preliminary assets under management (AUM) of $144 bln as of May 31, 2022; Artisan Funds and Artisan Global Funds accounted for $69.2 billion of total firm AUM

  • AssetMark (AMK) reports performance highlights for May

  • BeiGene (BGNE) highlights growing portfolio and pipeline targeting hematologic malignancies at European Hematology Association 2022 Congress

  • Bluebirdbio (BLUE): FDA Advisory Committee unanimously endorses eli-cel gene therapy for cerebral adrenoleukodystrophy

  • BridgeBio Pharma (BBIO) affiliate Venthera presents preliminary results from clinical trial of VT30 (BBP-681) for venous, lymphatic, and venolymphatic malformations

  • Calavo Growers (CVGW) appoints Shawn Munsell as CFO

  • Caribou Biosciences (CRBU) Reports Additional Data from CB-010 Allogeneic CAR-T Cell Therapy Phase 1 ANTLER Trial at the European Hematology Association (EHA) 2022 Hybrid Congres

  • Cogent Biosciences (COGT) announces positive initial clinical data from ongoing phase 2 APEX trial evaluating bezuclastinib in patients with advanced systemic mastocytosis

  • Copa Holdings (CPA) reports consolidated capacity (ASMs) came in 3.7% lower than May 2019, while passenger traffic (RPMs) decreased 4.2%, which resulted in an 85.7% load factor

  • Coty (COTY) intends to gradually recommence shareholder returns alongside expected capital structure improvement

  • CTI BioPharma (CTIC) Presents Pivotal Data from Pacritinib Program at the European Hematology Association (EHA) 2022 Congress

  • Fulcrum Therapeutics (FULC) Announces Proof-of-Concept for FTX-6058 in Sickle Cell Disease Based on Initial Data from the Ongoing Phase 1b Trial

  • GBT (GBT) Presents Positive New Real-World Evidence Data at EHA2022 Congress Further Supporting Clinical Use of Oxbryta (voxelotor) in Sickle Cell Disease

  • Genmab (GMAB) commences new arbitration under license agreement with Janssen Biotech

  • GlaxoSmithKline (GSK) reports pivotal phase III data for its respiratory syncytial virus (RSV) vaccine candidate for older adults

  • HSBC Holdings (HSBC) released a public disclosure document regarding its preparedness for resolution, as required under the Bank of England's Resolvability Assessment Framework

  • Illumina (ILMN) announces departure of CFO Sam Samad, effective July 8

  • Imago BioSciences (IMGO) Presents Positive Data from Ongoing Phase 2 Study of Bomedemstat in Advanced Myelofibrosis at EHA 2022

  • Invesco (IVZ) reports preliminary month-end assets under management of $1,451.6 bln as of May 31

  • IVERIC bio (ISEE) announces presentation of post-hoc analysis at macula society from GATHER1 clinical trial of Zimura in Patients with Geographic Atrophy

  • JetBlue Airways (JBLU) expands to its first destination in Canada with flight to Vancouver

  • 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 27th Annual Congress of the European Hematology Association

  • Marathon Digital Holdings (MARA) announces bitcoin production and mining operation updates for May 2022; production was lower than expected due to ongoing maintenance and downtime at power plant in MT

  • Matador Resources (MTDR) amends quarterly cash dividend policy to double quarterly cash dividend

  • McDonalds (MCD): A rebranded McDonalds will open in Russia, according to Reuters

  • Mercury (MRCY) receives three year basic ordering agreement worth up to $50 mln from Naval Air Systems Command

  • Meta (META) reconsidering news deals, according to the Wall Street Journal

  • Nio (NIO) aiming to develop battery packs in 2024, according to Reuters

  • Nutex Health (NUTX) appoints Jon Bates as Chief Financial Officer effective on or about June 30, 2022

  • Oceaneering International (OII) partners with Collins Aerospace for NASA spacesuit program

  • Quest Diagnostics (DGX) appoints Sam Samad as Executive Vice President and CFO; will join company on July 11, 2022

  • Renren (RENN) settles shareholder derivative litigation

  • Roche Hldg (RHHBY) unit Genentech reports Data from Broad Blood Cancer Portfolio at EHA

  • Shopify (SHOP) announces receipt of final order and implementation of updated governance structure

  • SpringWorks Therapeutics (SWTX) to present progress across the company's targeted oncology portfolio at virtual R&D Day

  • Tesla (TSLA) has cancelled 3 online hiring events in China, according to Reuters

  • Teva Pharma (TEVA) reaches agreement with Aurobindo resolving AUSTEDO patent dispute

  • Turtle Beach (HEAR) announces its ROCCAT PC gaming peripherals brand has extended its partnership with Gen.G Esports

  • Univar Solutions (UNVR) expands distribution partnership with BASF

  • Zai Lab (ZLAB) receives Breakthrough Therapy Designations for Repotrectinib in China


  • M&A:

  • FleetCor (FLT) announces acquisition of Global Reach Group; terms not disclosed

  • Just Eat Takeaway (TKAYF): Apollo (APO) is a possible buyer for Just Eat Takeaway Grubhub unit, according to Bloomberg

  • Kohl's (KSS): Apollo (APO) aiming to provide $2 billion in financing for Kohl's deal, according to Reuters

  • MGM Resorts (MGM) reaches agreement to sell the operations of Gold Strike Tunica to Cherokee Nation Entertainment Gaming Holdings for $450 mln

  • Silver Spike Acquisition Corp II (SPKB) and Eleusis mutually agree to terminate business combination agreement

  • Summit Midstream Partners (SMLP) divests its Lane Gathering and Processing System in the Delaware Basin to a subsidiary of Matador Resources (MTDR); reiterates its 2022 Adjusted EBITDA guidance


  • Syndicate:

  • Cadre Holdings (CDRE) prices primary and secondary offering of common stock at $23.50 per share

  • Consensus Cloud Solutions (CCSI) prices offering of 2 mln shares of its common stock at $41.00 per share


  • IPOs:

  • Priced to Trade:

  • No IPOs expected.



Gapping Up/Down

  • Gapping up:

  • APLS +5%, ANGI +4.9%, MTN +4.8%, BLUE +3.5%, YELL +3.2%, SMLP +2.8%, HEAR +2.3%, OII +1.9%, AUTL +1.8%, KRON +1.6%, TEVA +1.2%, AMRN+1.1%, AMD +1%, TSM +0.7%, GMAB +0.6%, GSK+0.6%


  • Gapping down:

  • DOCU -26.3%, SFIX -14.3%, CRBU -13.1%, CMTL-11.5%, ILMN -4%, IAC -2.2%, ADCT -2.1%, MARA-1.4%, MGM -1%, CDRE -0.9%


Analyst Research (see Upgrades/Downgradescalendarfor full list):

  • Upgrades

  • CME Group (CME) upgraded to Overweight from Neutral at Atlantic Equities; tgt $235

  • SciPlay (SCPL) upgraded to Outperform from Neutral at Wedbush; tgt raised to $17

  • Spirit Airlines (SAVE) upgraded to Overweight from Neutral at JP Morgan; tgt raised to $30


  • Downgrades:

  • Blueprint Medicines (BPMC) downgraded to Sell from Neutral at Citigroup; tgt lowered to $41

  • CEMEX S.A. (CX) downgraded to Hold from Buy at Berenberg

  • DocuSign (DOCU) downgraded to Mkt Perform from Outperform at William Blair

  • DocuSign (DOCU) downgraded to Neutral from Buy at BofA Securities; tgt lowered to $72

  • DocuSign (DOCU) downgraded to In-line from Outperform at Evercore ISI; tgt lowered to $75

  • eBay (EBAY) downgraded to Sell from Neutral at Goldman; tgt lowered to $42

  • Electronic Arts (EA) downgraded to Neutral from Buy at MoffettNathanson; tgt raised to $147

  • Frontdoor (FTDR) downgraded to Sell from Neutral at Goldman; tgt lowered to $21

  • GoodRx (GDRX) downgraded to Neutral from Buy at Goldman; tgt lowered to $9

  • iHeartMedia (IHRT) downgraded to Underweight from Equal-Weight at Morgan Stanley; tgt lowered to $11

  • Kontoor Brands (KTB) downgraded to Neutral from Buy at Goldman; tgt lowered to $41

  • Lamar Advertising (LAMR) downgraded to Equal-Weight from Overweight at Morgan Stanley; tgt lowered to $103

  • Lulu's Fashion Lounge (LVLU) downgraded to Neutral from Buy at BofA Securities; tgt raised to $21

  • Netflix (NFLX) downgraded to Sell from Neutral at Goldman; tgt lowered to $186

  • Roblox (RBLX) downgraded to Sell from Neutral at Goldman; tgt lowered to $28


  • Others:

  • 5E Advanced Materials (FEAM) initiated with an Outperform at Robert W. Baird; tgt $36

  • Clearway Energy (CWEN) initiated with a Neutral at CIBC; tgt $36

  • Flywire (FLYW) initiated with an Overweight at Stephens; tgt $24

  • NextEra Energy Partners (NEP) initiated with a Neutral at CIBC; tgt $79

  • ProFrac Holding (PFHC) initiated with a Buy at BofA Securities; tgt $26

  • Prometheus Biosciences (RXDX) initiated with an Overweight at Piper Sandler; tgt $53

  • Snap-On (SNA) initiated with a Neutral at MKM Partners; tgt $238

  • Standard Motor (SMP) initiated with a Buy at MKM Partners; tgt $62

  • Take-Two (TTWO) resumed with a Neutral at Goldman; tgt $136


Upcoming Events:

  • Econ Data:

  • 08:30 ET: CPI for May (Briefing.comConsensus 0.7%; Prior 0.3%)

  • 08:30 ET: Core CPI for May (Briefing.comConsensus 0.5%; Prior 0.6%)

  • 10:00 ET: Univ. of Michigan Consumer Sentiment - Prelim for June (Briefing.comConsensus 59.0; Prior 58.4)

  • 14:00 ET: Treasury Budget for May (Briefing.comConsensus NA; Prior $308.0B)


  • Earnings:

  • Monday (Jun 6)

  • Morning: SAIC

  • Afternoon: COUP GTLB


  • Tuesday (Jun 7)

  • Morning: ASO CBRL PLAY GIII MOMO SJM REVG UNFI

  • Afternoon: CASY GWRE SMAR CURV VRNT


  • Wednesday (Jun 8)

  • Morning: BF.B CPB KC LOVE OLLI THO VRA

  • Afternoon: ABM BASE FIVE GEF AVO OXM YEXT


  • Thursday (Jun 9)

  • Morning: BILI FCEL NIO SIG

  • Afternoon: CMTL DOCU SFIX MTN


  • Friday (Jun 10)

  • None



Asia & Europe detail:

Asia: Nikkei -1.5%, Hang Seng -0.3%, Shanghai Composite +1.4%

Equity indices in the Asia-Pacific region ended the week on a mostly lower note. Some coronavirus restrictions will be reimposed in Shanghai, according to reports. China reported cooler than expected inflation figures for May. Movement of shipping containers at South Korea's Ulsan port has been halted due to a truckers' strike. Representatives from South Korea's government met with the truckers, but the meeting did not produce a solution. The two sides will meet again tomorrow.

  • In economic data:

  • China's May CPI -0.2% m/m (expected -0.3%; last 0.4%); 2.1% yr/yr (expected 2.2%; last 2.1%). May PPI 6.4% yr/yr, as expected (last 8.0%). May New Loans CNY1.89 trln (expected CNY1.30 trln; last CNY645.40 bln) and May total social financing CNY2.79 trln (expected CNY2.015 trln; last CNY910.20 bln)

  • Japan's May PPI 0.0% m/m (expected 0.5%; last 1.3%); 9.1% yr/yr (expected 9.8%; last 9.8%)

  • South Korea's April Current Account deficit $80 mln (last surplus of $7.06 bln)

  • New Zealand's May Electronic Card Retail Sales 1.9% m/m (last 7.1%); 0.7% yr/yr (last 2.1%). Q1 Manufacturing Sales Volume -3.5% qtr/qtr (last 8.2%)


---Equity Markets---

  • Japan's Nikkei: -1.5% (+0.2% for the week)

  • Hong Kong's Hang Seng: -0.3% (+3.4% for the week)

  • China's Shanghai Composite: +1.4% (+2.8% for the week)

  • India's Sensex: -1.8% (-2.6% for the week)

  • South Korea's Kospi: -1.1% (-2.8% for the week)

  • Australia's ASX All Ordinaries: -1.3% (-4.4% for the week)

---FX---

  • USD/JPY: +0.2% to 130.17

  • USD/CNH: -0.3% to 6.6342

  • USD/INR: +0.3% to 77.61

Europe: DAX -1.5%, FTSE -1.3%, CAC -1.8%

Major European indices trade sharply lower with Italy's MIB (-3.7%) pacing the retreat after Italy's 10-yr yield hit its highest level since early 2014 in the wake of yesterday's ECB decision, fueling concerns about funding costs. Bank of England's Resolvability Assessment concluded that major British banks have overcome "Too Big to Fail" and that they shouldn't require a public bailout if a crisis hits. The Bundesbank raised Germany's 2022 inflation forecast to 7.1% from 3.6% while cutting the growth forecast to 1.9% from 4.2%.

  • In economic data:

  • U.K.'s Inflation Expectations 4.6% (last 4.3%)

  • Italy's April Industrial Production 1.6% m/m (expected -1.1%; prior 0.0%); 4.2% yr/yr (expected -0.2%; last 3.2%)

  • Spain's May CPI 0.8% m/m, as expected (last -0.2%); 8.7% yr/yr, as expected (last 8.3%)


---Equity Markets---

  • STOXX Europe 600: -1.5% (-2.8% week-to-date)

  • Germany's DAX: -1.5% (-3.2% week-to-date)

  • U.K.'s FTSE 100: -1.3% (-2.0% week-to-date)

  • France's CAC 40: -1.8% (-3.7% week-to-date)

  • Italy's FTSE MIB: -3.7% (-5.3% week-to-date)

  • Spain's IBEX 35: -2.4% (-2.5% week-to-date)

---FX---

  • EUR/USD: -0.3% to 1.0592

  • GBP/USD: -0.4% to 1.2442

  • USD/CHF: +0.3% to 0.9825

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