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12/07/22 Briefing




The S&P 500 futures are down 22 points and are trading 0.6% below fair value. The Nasdaq 100 futures are down 6 points and are trading roughly in line with fair value. The Dow Jones Industrial Average futures are down 216 points and are trading 0.7% below fair value.

The futures for the major indices are indicating a lower open, following through with yesterday's losses. General growth concerns are still in play with the 2s10s spread remaining inverted and the euro falling towards parity. 

Overseas news paints a picture of global growth concerns. Spain's Prime Minister Sanchez warned that economic growth in the coming months will be slower than expected. The Bank of Korea and Reserve Bank of New Zealand are expected to announce 50-bps rate hikes tomorrow. 

Pressure on earnings will be in focus as Q2 results start coming in. PepsiCo (PEP 172.14, +1.67, +1.0%) reported better-than-expected earnings and revenue as well as reaffirming EPS guidance and raising organic revenue guidance for FY22.

WTI crude oil futures have fallen below the $100.00/bbl mark, down 4.6% to $99.15/bbl. Unleaded gasoline futures are also falling this morning, down 4.8% to $3.29/gal. Natural gas futures are up 4.0% to $6.57/mmbtu. 

Another commodity making moves overnight is copper, down 2.7% to $3.34/lb. 

In corporate news:

  • Capital One (COF 104.70, -2.47, -2.3%): Capital One was downgraded to Perform from Outperform at Oppenheimer and downgraded to Equal-Weight from Overweight at Morgan Stanley

  • Expeditors International of Washington (EXPD 96.17, -1.16, -1.2%): Expeditors Intl was downgraded to Underperform from Peer Perform at Wolfe Research

  • American Express (AXP 136.97, -3.61, -2.6%): American Express was downgraded to Equal-Weight from Overweight at Morgan Stanley

  • C.H. Robinson Worldwide (CHRW 96.40, -1.50, -1.5%): C.H. Robinson was downgraded to Peer Perform from Outperform at Wolfe Research

  • PepsiCo (PEP 172.14, +1.67, +1.0%): PepsiCo beats by $0.12, beats on revs; reaffirms FY22 EPS guidance; raises FY22 organic revs guidance

  • The Gap (GPS 8.26, -0.50, -5.7%): Gap was downgraded to Equal Weight from Overweight at Wells Fargo and CEO will step down; names new CEO for Old Navy unit; reaffirms Q2 rev outlook but expects increased promotional activity

  • PriceSmart (PSMT 69.60, -2.93, -4.0%): PriceSmart reports Q3 (May) results, beats on revs

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region ended Tuesday on a lower note. Japan's Nikkei: -1.8%, Hong Kong's Hang Seng: -1.3%, China's Shanghai Composite: -1.0%, India's Sensex: -0.9%, South Korea's Kospi: -1.0%, Australia's ASX All Ordinaries: -0.1%.

  • In economic data:

  • Japan's June PPI 0.7% m/m (expected 0.5%; last 0.1%); 9.2% yr/yr (expected 8.8%; last 9.3%)

  • Australia's June Westpac Consumer Sentiment -3.0% (last -4.5%). June NAB Business Confidence 1 (last 6) and NAB Business Survey 13 (last 15)

  • New Zealand's May External Migration & Visitors 26.3% yr/yr (last 70.1%)

  • In news:

  • The Bank of Japan's quarterly economic assessment upgraded its view of seven out of nine regions.

  • Hyundai will reportedly build its first dedicated electric vehicle factory that aims to begin production in 2025.

  • China's insurance and banking regulator indicated that support for manufacturers will be increased.

  • The Bank of Korea and Reserve Bank of New Zealand are expected to announce 50-bps rate hikes tomorrow.

  • Major European indices trade in the red amid ongoing growth concerns. STOXX Europe 600: -0.6%, Germany's DAX: -0.7%, U.K.'s FTSE 100: -0.5%, France's CAC 40: -0.2%, Italy's FTSE MIB: -0.8%, Spain's IBEX 35: -1.3%.

  • In economic data:

  • Germany's July ZEW Economic Sentiment -53.8 (expected -38.3; last -28.0) and ZEW Current Conditions -45.8 (expected -34.5; last -27.6)

  • In news:

  • Spain's Prime Minister Sanchez warned that economic growth in the coming months will be slower than expected.

  • Germany's ZEW Economic sentiment survey fell past its pandemic low.

  • The U.K.'s conservative party will begin electing a new leader tomorrow.

  • The EU's energy commissioner said that energy cuts in the summer could help avoid shortages in the winter.

 


U.S. equity futures:

  • S&P 500 Futures: -15 @ 3,840

  • DJIA Futures: -176 @ 30,978

  • Nasdaq 100 Futures: +7 @ 11,868

Overseas:

  • Europe: DAX -0.7%, FTSE -0.5%, CAC -0.2%

  • Asia: Nikkei -1.8%, Hang Seng -1.3%, Shanghai Composite -1.0%

Commodities:

  • Crude Oil -4.94 @ 99.15

  • Nat Gas +0.284 @ 6.710

  • Gold +1.50 @ 1733.20

  • Silver -0.372  @ 18.760

  • Copper -0.0945 @ 3.3360

U.S. Summary:

  • Earnings/Guidance:

  • American Airlines (AAL) updates guidance for Q2, sees revenue growth of about 12% vs. 2Q19 to $13.4 bln, slightly above the consensus estimate; sees pre-tax margin of about 5.0%

  • AngioDynamics (ANGO) reports EPS in-line, beats on revs; guides FY23 EPS below consensus, revs above consensus

  • Cohu (COHU) issues upside Q2 revenue guidance

  • E2open (ETWO) misses by $0.01, reports revs in-line; guides FY23 revs below consensus due to FX impacts

  • Gran Tierra Energy (GTE) reports Q2 production increased 25% yr/yr

  • Hecla Mining (HL) reports Q2 silver production increased 10% over Q1

  • PepsiCo (PEP) beats by $0.12, beats on revs; reaffirms FY22EPS guidance; raises FY22organic revs guidance

  • PriceSmart (PSMT) reports Q3 (May) results, beats on revs

  • VOXX Intl (VOXX) reports 1Q23 net loss per share of ($0.27), which may not compare to the ($0.11) two analyst estimate; revenue decreased 6.1% yr/yr to $128.8 mln vs. the $134.0 mln two analyst estimate

  • General News:

  • IEA chief warns about further worsening of energy market, according to Bloomberg

  • Box office sales nearing pre-pandemic levels, according to CNBC

  • White House released letter to the Speaker of the House of Representatives and the President of the Senate, on the continuation of the national emergency with respect to Hong Kong

  • Heathrow Airport will be implementing a departing passenger cap of 100k from today to 11 Sept

  • AerCap (AER) reports leased, purchased and sold 184 assets in the second quarter 2022

  • Aerojet Rocketdyne (AJRD) appoints Thomas A. Corcoran independent Chairman of the Board, effective immediately

  • Air Lease (AL) provides activity update for the second quarter of 2022 - No aircraft sales occurred during the quarter

  • Aldeyra Therapeutics (ALDX) achieved primary endpoints in dry eye disease chamber crossover clinical trial

  • Alphabet's (GOOG) Google filing counter suit against Match (MTCH), according to Bloomberg

  • AssetMark (AMK) reports performance highlights for June

  • Bellus Health (BLU) Announces Positive End-of-Phase 2 Meeting with the FDA and its CALM Phase 3 Program for BLU-5937 in Refractory Chronic Cough

  • Bicycle Therapeutics (BCYC) announces that Genentech, a member of the Roche Group, has exercised its second option to initiate a new program, expanding the exclusive strategic collaboration agreement with Bicycle to discover, develop and commercialize novel Bicycle-based immuno-oncology therapies

  • Brookdale Senior Living (BKD) reports that June month end occupancy increased by 40 bps from May

  • Canoo (GOEV) receives purchase order of 4,500 Canoo Electric Delivery Vehicles from Walmart (WMT)

  • Catalyst Pharma (CPRX) settled its ongoing patent infringement litigation with Jacobus Pharmaceutical Company and PANTHERx Rare

  • Citrix Systems (CTXS) provides update on approval process for the pending acquisition by affiliates of Vista Equity Partners and Evergreen Coast Capital

  • Clarivate (CLVT) CEO and Executive Chair Jerre Stead is retiring from his CEO role effective September 1, but will continue as non-Executive Chair; Jonathan Gear selected to succeed Mr. Stead as CEO

  • CME Group (CME) reports international ADV increased 21% yr/yr

  • Cohen & Steers (CNS) reports preliminary assets under management of $87.9 bln as of June 30, 2022, a decrease of $6.4 bln from May 31, 2022

  • Crown (CCK): EC fines the metal packaging producers Crown and Silgan (SLGN) 31.5 million in cartel settlement

  • Dave & Buster's (PLAY) announces new executive leadership team following acquisition of Main Event Entertainment, names new COO

  • Dave & Buster's (PLAY) entered into an amendment and restatement of the cooperation letter agreement with Hill Path Capital and James Chambers

  • Dollar General (DG) announced Todd Vasos's decision to retire from his position as CEO effective November 1, 2022

  • Energy Vault (NRGV) announces that management and senior officers of the Company entered into new time and performance based Lock-up Agreements extending the lock-up deadlines as defined by the original lock-up agreements entered into on February 11, 2022 in connection with the closing of Energy Vault's Business Combination

  • Fluor (FLR) awarded a new reimbursable contract by New Fortress Energy Inc.

  • GameStop (GME) launches non-custodial, Ethereum Layer 2-based NFT marketplace

  • Gap (GPS) CEO Sonia Syngal will step down; hires Walmart Canada exec as new CEO for Old Navy unit; reaffirms Q2 revenue outlook but expects increased promotional activity and expects Q2 adjusted operating margin to be zero to slightly negative

  • Gatos Silver (GATO) announces production results from Cerro Los Gatos mine; Silver production increased by 9% and lead and zinc production increased by 5% and 8%, respectively, for Q2

  • GlaxoSmithKline (GSK) expects to distribute over 50 mln doses of its influenza vaccine to the US market

  • Greenwich LifeSciences (GLSI) suspends share repurchase program; announced that the FDA has removed the clinical hold permitting the Flamingo-01 Phase III clinical trial to proceed

  • Innoviz Technologies (INVZ) and Joowon Industrial announced their cooperation to drive sales for Innoviz's LiDAR in the Korean market

  • Laboratory Corp (LH) forms strategic partnership with MD Anderson Cancer Center Foundation Spain

  • Leap Therapeutics (LPTX) and BeiGene (BGNE) announce the initiation of Part C of the ongoing DisTinGuish study to evaluate DKN-01, Leap's anti-SSEDickkopf 1 (DKK1) antibody, in combination with tislelizumab, BeiGene's anti-PD-1 antibody

  • Lordstown Motors (RIDE) announces executive appointments

  • Main Street Capital (MAIN) recently invested $19.5 mln in three existing lower middle market portfolio companies

  • MBIA (MBIA) receives initial distribution from Puerto Rico Highways and Transportation Authority

  • Mesoblast (MESO) reports Rexlemestrocel-L to be highlighted at Maxim's panel on late-stage advancements in heart failure therapeutics and management

  • Meta Platforms (META) firing underperforming employees, according to The Information

  • Moderna (MRNA) is developing two potential COVID-19 booster shots targeting different Omicron subvariants, according to the Wall Street Journal

  • NASDAQ (NDAQ) reports June 2022 metrics -- U.S. equity options volume was 228 mln contracts vs 252 mln prior month and 286 mln one year ago

  • Nova Measuring (NVMI) announces that a leading logic manufacturer recently selected Nova METRION for next-generation Integrated Circuit development

  • Novavax (NVAX) details modification to vaccine candidate for the SARS-CoV-2 virus contract

  • NuScale Power (SMR) signs license agreement with Paragon

  • Peloton (PTON) exits owned-manufacturing and expands partnership with Rexon

  • Pershing Square Tontine (PSTH) to redeem all shares for this SPAC because co will not consummate an initial business combination within the time period required

  • Petrobras (PBR) completed Drill Stem Test on 1-BRSA-1383A-RJS wildcat well (Alto de Cabo Frio Central Noroeste) in the pre-salt of the southern portion of the Campos Basin

  • Playtika (PLTK) detailed stockholders agreement, dated July 11, 2022, between Playtika Holding and Joffre Palace Holdings Limited

  • Rhythm Pharmaceuticals (RYTM) Announces Positive Interim Results from Phase 2 Clinical Trial Evaluating Setmelanotide in Hypothalamic Obesity

  • RxSight (RXST) received notification from the FDA that additional information will be required for the approval of its lower-cost-to-manufacture Light Delivery Device

  • Sigma Lithium (SGML) provides an update on construction at its wholly owned Grota do Cirillo project

  • Take-Two's (TTWO) Rockstar Games shelves plans to release Red Dead Redemption 2 or PS5 and Xbox Series X/S, according to Video Games Chronicle

  • Twitter (TWTR) responds to Elon Musk's decision to terminate deal; says termination is invalid

  • U.S. Silica (SLCA) completes $100 mln voluntary term loan principal repayment; debt was retired at a discount to par using excess cash on hand

  • Vista Outdoor (VSTO): Callaway Golf (ELY) initiates a long-term plan to integrate technology from Vista's Foresight Sports throughout its network of brands

  • Warner Bros. Discovery (WBD) talking with Amazon (AMZN) about restarting a HBO Max distribution agreement for its Prime Video, according to Bloomberg

  • Westport Fuel Systems (WPRT) awarded 38 million program to develop and supply liquefied petroleum gas systems for a global original equipment manufacturer

  • XPO Logistics (XPO) unveils RXO as company name for planned spin-off

  • M&A:

  • Carlyle Group (CG): Madison Dearborn Partners to acquire majority stake in Unison from Carlyle; Financial terms were not disclosed

  • FAST Acquisition Corp. II (FZT): Falcon's Beyond to merge with FZT in SPAC deal; deal valued at $1 bln, expected to close in 2H22

  • Fortress Transportation and Infrastructure (FTAI) approves spin-off of its infrastructure business

  • Group 1 Auto (GPI) acquires five franchises in Shreveport, Louisiana; dealerships expected to generate $110 million in annual revenues

  • Petrobras (PBR) finalized the sale of 51% of Petrobras Gs S.A. (Gaspetro) to Compass Gs e Energia; transaction was concluded for R$ 2.097 billion, fully paid on this date

  • Skyline Champion (SKY) to acquire the assets and assume operations of the Factory Expo Home Centers

  • Syndicate

  • AeroClean Technologies (AERC) files for 3 mln share common stock offering by selling shareholder

  • Cano Health (CANO) files for $500 mln mixed securities shelf offering

  • IPOs:

  • Priced to Trade:

  • No IPOs expected.

Gapping Up/Down

  • Gapping up:

  • GOEV +22.8%, GLSI +10.3%, WPRT +6.9%, ALLG+4.1%, COHU +3.5%, CLVT +3%, CANO +2.9%, AJRD+2.3%, PLAY +2.2%, GTE +1.8%, GATO +1.5%, CPRX+1.2%, UNVR +1%, PEP +0.9%, VSTO +0.7%, GME+0.7%

  • Gapping down:

  • FULC -12.7%, GPS -7%, PLRX -5.7%, FLR -4.1%, PSMT -4%, VOXX -3%, BKD -2%, IIVI -1.7%, FTAI-1.5%, NVAX -1.3%, NDAQ -1%

 

Analyst Research (see Upgrades/Downgradescalendarfor full list):

  • Upgrades

  • DCP Midstream (DCP) upgraded to Outperform from Sector Perform at RBC Capital Mkts; tgt lowered to $40

  • Glaukos (GKOS) upgraded to Buy from Hold at Stifel; tgt raised to $60

  • Downgrades:

  • American Express (AXP) downgraded to Equal-Weight from Overweight at Morgan Stanley; tgt lowered to $143

  • C.H. Robinson (CHRW) downgraded to Peer Perform from Outperform at Wolfe Research

  • Capital One (COF) downgraded to Equal-Weight from Overweight at Morgan Stanley; tgt lowered to $126

  • Capital One (COF) downgraded to Perform from Outperform at Oppenheimer

  • Expeditors Intl (EXPD) downgraded to Underperform from Peer Perform at Wolfe Research

  • Gap (GPS) downgraded to Equal Weight from Overweight at Wells Fargo; tgt lowered to $10

  • Others:

  • Alpha Metallurgical Resources (AMR) initiated with an Outperform at Cowen; tgt $215

  • Aon (AON) initiated with a Neutral at Goldman; tgt $301

  • Arthur J. Gallagher (AJG) initiated with a Buy at Goldman; tgt $198

  • Avid Tech (AVID) initiated with a Neutral at Rosenblatt; tgt $30

  • Braze (BRZE) initiated with a Buy at UBS; tgt $53

  • Brown & Brown (BRO) initiated with a Neutral at Goldman; tgt $67

  • Dyne Therapeutics (DYN) initiated with a Outperform at Raymond James; tgt $15

  • Elanco Animal Health (ELAN) initiated with a Neutral at Piper Sandler; tgt $22

  • Gladstone (GLAD) initiated with a Neutral at Janney

Upcoming Events:

  • Econ Data:

  • 06:00 ET: NFIB Small Business Optimism for June (Briefing.comConsensus NA; Prior 93.1)

  • Earnings:

  • Monday (Jul 11)

  • Morning:  AZZ GBX

  • Afternoon: PEP PSMT

  • Tuesday (Jul 12)

  • Morning: ANGO

  • Wednesday (Jul 13)

  • Morning:  DAL FAST

  • Afternoon:  WAFD

  • Thursday (Jul 14)

  • Morning: CTAS CAG ERIC FRC JPM MS TSM

  • Afternoon:  AOUT

  • Friday (Jul 15) 

  • Morning:  BLK BK C PNC PGR STT USB UNH WFC

Asia & Europe detail:

Asia: Nikkei -1.8%, Hang Seng -1.3%, Shanghai Composite -1.0%

Equity indices in the Asia-Pacific region ended Tuesday on a lower note. The Bank of Japan's quarterly economic assessment upgraded its view of seven out of nine regions. Hyundai will reportedly build its first dedicated electric vehicle factory that aims to begin production in 2025. China's insurance and banking regulator indicated that support for manufacturers will be increased. The Bank of Korea and Reserve Bank of New Zealand are expected to announce 50-bps rate hikes tomorrow.

  • In economic data:

  • Japan's June PPI 0.7% m/m (expected 0.5%; last 0.1%); 9.2% yr/yr (expected 8.8%; last 9.3%)

  • Australia's June Westpac Consumer Sentiment -3.0% (last -4.5%). June NAB Business Confidence 1 (last 6) and NAB Business Survey 13 (last 15)

  • New Zealand's May External Migration & Visitors 26.3% yr/yr (last 70.1%)

---Equity Markets---

  • Japan's Nikkei: -1.8%

  • Hong Kong's Hang Seng: -1.3%

  • China's Shanghai Composite: -1.0%

  • India's Sensex: -0.9%

  • South Korea's Kospi: -1.0%

  • Australia's ASX All Ordinaries: -0.1%

---FX---

  • USD/JPY: -0.4% to 136.86

  • USD/CNH: +0.3% to 6.7403

  • USD/INR: +0.2% to 79.57

Europe: DAX -0.7%, FTSE -0.5%, CAC -0.2%

Major European indices trade in the red amid ongoing growth concerns. Spain's Prime Minister Sanchez warned that economic growth in the coming months will be slower than expected. Germany's ZEW Economic sentiment survey fell past its pandemic low. The U.K.'s conservative party will begin electing a new leader tomorrow. The EU's energy commissioner said that energy cuts in the summer could help avoid shortages in the winter.

  • In economic data:

  • Germany's July ZEW Economic Sentiment -53.8 (expected -38.3; last -28.0) and ZEW Current Conditions -45.8 (expected -34.5; last -27.6)

---Equity Markets---

  • STOXX Europe 600: -0.6%

  • Germany's DAX: -0.7%

  • U.K.'s FTSE 100: -0.5%

  • France's CAC 40: -0.2%

  • Italy's FTSE MIB: -0.8%

  • Spain's IBEX 35: -1.3%

---FX---

  • EUR/USD: +0.3% to 1.0063

  • GBP/USD: -0.1% to 1.1874

  • USD/CHF: +0.1% to 0.9831


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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