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13/06/22 Briefing


The S&P 500 futures are down 94 points and are trading 2.4% below fair value. The Nasdaq 100 futures are down 370 points and are trading 3.3% below fair value. The Dow Jones Industrial Average futures are down 612 points and are trading 1.8% below fair value.

The stock market is set for a sharply lower open with follow-through selling from Friday'sCPI-induced selloff. Worries about the Fed taking an even more aggressive rate-hike path have undercut risk sentiment along with a massive selloff in cryptocurrency markets, reports of renewed lockdowns in Shanghai and Beijing, and a brief inversion of the 2s10s spread overnight.

It all centers around growth concerns, however, which feed directly into concerns about earnings estimates being subject to large downward revisions.

Foreign markets have traded lower in the wake of Wall Street's weakness, and amid their own growth concerns.

Bitcoin is currently down 13.9% to $23,642.00, feeling the added pressure of crypto lender Celsius announcing that it is pausing all customer withdrawals and transfers due to "extreme market conditions."

The 2-yr note yield is up 18 bps to 3.22%. The 10-yr note yield is up 11 bps to 3.27%. The U.S. Dollar Index is up 0.7% to 104.82. WTI crude futures are down 1.6% to $118.70/bbl.

In corporate news:

  • Tesla (TSLA 665.48, -31.21, -4.5%): Files for 3-for-1 stock split; RBC Capital Markets upgrades to Outperform from Sector Perform

  • Carnival Corp (CCL 10.58, -0.47, -4.3%): Wall Street Journal says cruise companies are lowering prices to fill boats with increase capacity limits for summer cruising

  • Choice Hotels (CHH 126.32, +6.01, +5.0%): to acquire Radisson Hotel Group for $675 million

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific began the week on a sharply lower note. Japan's Nikkei -3.0%; Hong Kong's Hang Seng -3.4%; China's Shanghai Composite -0.9%; India's Sensex -2.7%; South Korea's Kospi -3.5%; and Australia's All Ordinaries -1.3%.

  • In economic data:

  • Japan's Q2 BSI Large Manufacturing Conditions -9.9 (last -7.6)

  • New Zealand's April Permanent/Long-Term Migration -80 (last 926)


  • In news:

  • South Korean truckers remained on strike for the seventh day in a row.

  • South Korea's exports through the first ten days of June were down 12.7% yr/yr while chip exports increased 0.8% yr/yr.

  • Continued weakness in the yen briefly sent the Japanese currency to its lowest level since 1998 against the dollar while Bank of Japan Governor Kuroda repeated that the BoJ will continue its ultra-loose policy.



  • Major European indices trade lower across the board. STOXX Europe -2.2%; Germany's DAX -1.9%; UK's FTSE 100 -1.6%; France's CAC 40 -2.0%; Italy's FTSE MIB -2.1%; and Spain's IBEX 35 -1.9%.

  • In economic data:

  • U.K.'s April GDP -0.3% m/m (expected 0.1%; last -0.1%); 3.4% yr/yr (expected 3.9%; last 6.4%). April Construction Output -0.4% m/m (expected -0.5%; last 1.7%); 3.9% yr/yr (expected 3.8%; last 4.7%). April Industrial Production -0.6% m/m (expected 0.2%; last -0.2%); 0.7% yr/yr (expected 1.7%; last 0.7%). April Manufacturing Production -1.0% m/m (expected 0.2%; last -0.2%); 0.5% yr/yr (expected 1.8%; last 1.9%)


  • In news:

  • The spread between Italy's 10-yr yield and Germany's 10-yr yield widened to its highest level in over two years, reflecting growing worries about the region's economy.

  • Reuters reported that the Bank of England will raise its bank rate by 25 bps on Thursday and maintain a slow hiking pace in the coming months while FT speculated that the BoE will hike by 50 bps this week.

  • French President Macron's party appears to have lost some parliamentary seats in yesterday's election and it remains unclear if the party will maintain its absolute majority.

  • Fitch affirmed the U.K.'s AA- rating with a Stable outlook.



U.S. equity futures:

  • S&P 500 Futures: -95 @ 3,806

  • DJIA Futures: -595 @ 30,790

  • Nasdaq 100 Futures: -358 @ 11,475

Overseas:

  • Europe: DAX -1.9%, FTSE -1.6%, CAC -2.0%

  • Asia: Nikkei -3.0%, Hang Seng -3.4%, Shanghai Composite -0.9%

Commodities:

  • Crude Oil -2.03 @ 118.64

  • Nat Gas -0.175 @ 8.675

  • Gold -17.50 @ 1858.00

  • Silver -0.373 @ 21.558

  • Copper -0.0915 @ 4.2030

U.S. Summary:

  • Earnings:

  • ING Groep (ING) provides financial targets ahead of investor update


  • General News:

  • Larry Summers says US recession is likely within two years, according to Axios

  • Shanghai reimposes ban on indoor dining as coronavirus cases rise in Shanghai and Beijing, according to Bloomberg

  • Japan is concerned about falling yen and is ready to respond if needed, according to Reuters

  • US national average gas prices reach $5/gallon, according to ABC News

  • Russia is gaining momentum in Ukraine war and is making progress toward control of eastern Ukraine, according to the New York Times

  • Dozens of Democratic lawmakers and party officials are privately saying that President Biden should not run again in 2024. One DNC member wants him to announce he is not running after predicted Democratic losses in midterms, according to the New York Times

  • Bipartisan Senators reach agreement on red flag laws for gun purchases and school security. The deal will not raise age for gun purchases or ban assault weapons. The deal appears to have enough support to pass, according to the New York Times

  • CDC confirms it rescinded order requiring negative pre-departure COVID-19 test prior to international flights to the US

  • Cryptocurrency lender Celsius Network will freeze withdrawals, according to the Wall Street Journal

  • US considering rule to require less nicotine in cigarettes, according to the Wall Street Journal

  • New study shows ads are playing on streaming services when TVs are off, according to the Wall Street Journal

  • AbbVie (ABBV) Announces Late-Breaking Results from Phase 2 Trial of Investigational Epcoritamab (DuoBody-CD3xCD20) in Patients with Relapsed/Refractory Large B-cell Lymphoma (LBCL) at the European Hematology Association (EHA) Annual Congress

  • Amylyx Pharmaceuticals (AMLX) announced that Health Canada has approved ALBRIOZA (sodium phenylbutyrate and ursodoxicoltaurine), with conditions, for the treatment of amyotrophic lateral sclerosis

  • Apellis Pharmaceuticals (APLS) receives FDA orphan designation for Pegcetacoplan, treatment of immune complex-membranoproliferative glomerulonephritis

  • Astra Space (ASTR) tweets "We had a nominal first stage flight. The upper stage shut down early and we did not deliver the payloads to orbit. We have shared our regrets with NASA and the payload team. More information will be provided after we complete a full data review"

  • BeiGene (BGNE) announces that the U.S. Food and Drug Administration has extended the Prescription Drug User Fee Act goal date by three months to January 20, 2023for the supplementary new drug application for BRUKINSA as a treatment for adult patients with chronic lymphocytic leukemia or small lymphocytic lymphoma

  • Biohaven (BHVN) Presents New Migraine Data at 64th Annual Scientific Meeting of the American Headache Society, including First of Its Kind Study for Nurtec ODT (rimegepant), and Complete Phase 3 Data for Zavegepant Nasal Spray

  • BJ's Wholesale (BJ) expands with four new locations, including first in Indiana

  • BlackRock (BLK) announces that it is further expanding the opportunity for eligible clients - including public and private pension plans, insurance companies, endowments, foundations and sovereign wealth funds - to participate in proxy voting decisions

  • BWX Technologies (BWXT) Medical and TRIUMF execute agreement for manufacture of high purity Ac-225based products

  • Credit Suisse (CS): UK puts Credit Suisse (CS) on watchlist amid scandals, according to Financial Times

  • Cytokinetics (CYTK) announces additional data from REDWOOD-HCM presented at the American Society of Echocardiography 33rd Annual Scientific Sessions

  • Day One (DAWN) Announces Positive Initial Data from Pivotal FIREFLY-1 Trial of Tovorafenib (DAY101) in Relapsed Pediatric Low-Grade Glioma

  • Deckers Outdoor (DECK) COO David Lafitte to step down; promotes Angela Ogbechie to the newly created role of Chief Supply Chain Officer

  • Desktop Metal (DM) announced a strategic integration and cost optimization initiative - includes workforce reductions of approximately 12%

  • Digital World Acquisition Corp (DWAC) provides investigation updates

  • Ferroglobe PLC (GSM) and REC Silicon announce MOU to develop an integrated solar supply chain in the united States

  • Genmab (GMAB) reports late-breaking Phase 2 trial results of investigational Epcoritamab

  • Goldman Sachs (GS): SEC is investigating ESG funds, according to the Wall Street Journal

  • Google (GOOG) will pay $118 mln to settle lawsuit regarding underpaid female employees, according to Financial Times

  • Gracell Biotechnologies (GRCL) Presents Updated Clinical Data for BCMA/CD19 Dual-targeting FasTCAR GC012F in RRMM at EHA2022 Congress, Highlighting 100% MRD Negativity Rate in All Treated Patients

  • Horizon Pharma (HZNP) reports pooled data from TEPEZZA

  • Ionis Pharma (IONS) treatment for Angelman syndrome receives orphan drug and rare pediatric disease designations from U.S. FDA

  • J.M. Smucker (SJM) to resume manufacturing Jif peanut butter products at its Lexington facility immediately; also reaffirms FY23 guidance

  • Lantheus' (LNTH) PYLARIFY AI Platform Demonstrates Higher Efficiency and Consistency While Maintaining Accuracy for Assessment of PSMA Imaging in Prostate Cancer

  • McDonald's (MCD) reopened in Russia under a different ownership, according to the Wall Street Journal

  • Medpace (MEDP) approves a $50 mln increase to its share repurchase program

  • Merck (MRK) receives FDA acceptance KEYTRUDA as adjuvant therapy for Stage IB (=4 centimeters)-IIIA non-small cell lung cancer following complete surgical resection

  • New York Times (NYT) details the next phase of its digitally focused strategy and its midterm operating and financial targets at investor day; strategy to reach 15 million total subscribers by year-end 2027

  • Novartis (NVS) reports five-year Kymriah data show durable remission and long-term survival maintained in children and young adults with advanced B-cell ALL

  • Novavax (NVAX) COVID-19 vaccine Nuvaxovid provisionally registered in Australia as a booster in individuals aged 18 and over

  • Novo Nordisk (NVO) reports Investigational phase 3 data for Sogroya

  • OptiNose (OPTN) announces positive top-line results of ReOpen2, its second phase 3 clinical trial of XHANCE for treatment of chronic sinusitis

  • Pfizer (PFE)/Moderna (MRNA): FDA releases briefing documents for COVID-19 vaccine for kids under 5; FDA meeting is on Wednesday

  • ReneSola (SOL) reports award of 20-year renewable energy credit contracts for two solar projects in New York and Illinois

  • SAGE Therapeutics (SAGE) provides zuranolone New Drug Application update

  • Sanofi (SNY)-GSK next-generation COVID-19 booster delivers strong immune response against variants of concern, including Omicron

  • Syndax Pharmaceuticals (SNDX) appoints Keith Goldan as CFO

  • Tesla (TSLA) files for 3-for-1 stock split - SEC filing

  • Tesla (TSLA): Larry Ellison will not stand for re-election to the Board; co expects to reduce the number of Board seats to seven

  • Vertex Pharma (VRTX) and CRISPR Therapeutics (CRSP) present new data on more patients with longer follow-up treated with exagamglogene autotemcel (exa-cel) at the 2022 EHA Congress

  • Volta (VLTA) announces executive leadership team additions and key promotions; Vince Cubbage appointed interim CEO

  • Welbilt (WBT): UK CMA to look at Ali Group and Welbilt undertakings offer in detail


  • M&A:

  • Cenovus Energy (CVE) to purchase the remaining 50% of the Sunrise oil sands project in northern Alberta from bp (BP)

  • Choice Hotels (CHH) acquires Radisson Hotel Group Americas for $675 mln

  • HSBC (HSBC) could unlock $26.5 bln in value with spin-off, according to Bloomberg

  • Mudrick Capital Acquisition Corporation II (MUDS): Blue Nile to combine with Mudrick Capital Acquisition Corporation II

  • Orla Mining (ORLA) and Gold Standard Ventures Corp (GSV) announce that they have entered into a definitive agreement whereby Orla will acquire all of the issued and outstanding shares of Gold Standard by way of a court-approved plan of arrangement

  • SkillSoft (SKIL) to sell SumTotal to Cornerstone for $200 mln

  • Sprague Resources (SRLP) and Steel Connect (STCN) enter into definitive merger agreement

  • Uranium Energy (UEC) acquires UEX Corporation

  • Voya Financial (VOYA) announces definitive agreement with Allianz Global Investors (ALIZY)


  • Syndicate:

  • Cogent Biosciences (COGT) announced that it has commenced an underwritten public offering of $125 million of shares of its common stock

  • Crescent Energy Company (CRGY) files for 5 mln share common stock offering

  • U.S. Energy (USEG) files for 19,905,736 share common stock offering by selling shareholders


  • IPOs:

  • Priced to Trade:

  • No IPOs expected.



Gapping Up/Down

  • Gapping up:

  • DAWN +28.2%, GRCL +11.8%, VXX +6.7%, APLS+2.4%, SKIL +1.8%, MUDS +0.7%


  • Gapping down:

  • COGT -16%, DWAC -7.7%, USEG -6.3%, CRGY -4.4%, CVE -4.2%, HZNP -2.9%, QQQ -2.8%, NVO -2.4%, IWM -2.3%, SPY -2.2%, GMAB -2.2%, GS -2.1%, DIA-1.8%, PLAB -1.2%


Analyst Research (see Upgrades/Downgradescalendarfor full list):

  • Upgrades

  • Fidelity Nat'l Info (FIS) upgraded to Outperform from In-line at Evercore ISI; tgt raised to $135

  • New Oriental Education & Technology (EDU) upgraded to Overweight from Neutral at JP Morgan; tgt raised to $24

  • Quanta Services (PWR) upgraded to Buy from Neutral at UBS; tgt raised to $156

  • Tesla (TSLA) upgraded to Outperform from Sector Perform at RBC Capital Mkts; tgt lowered to $1100


  • Downgrades:

  • Covetrus (CVET) downgraded to Hold from Buy at Stifel; tgt $22

  • DocuSign (DOCU) downgraded to Underperform from Peer Perform at Wolfe Research; tgt $50

  • Invesco (IVZ) downgraded to Market Perform from Outperform at BMO Capital Markets; tgt lowered to $20

  • Kosmos Energy (KOS) downgraded to Hold from Buy at Berenberg

  • Micron (MU) downgraded to Hold from Buy at Summit Insights

  • New Residential Investment (NRZ) downgraded to Underweight from Neutral at Piper Sandler; tgt lowered to $10

  • T. Rowe Price (TROW) downgraded to Market Perform from Outperform at BMO Capital Markets; tgt lowered to $135

  • Volta (VLTA) downgraded to Neutral from Overweight at Cantor Fitzgerald; tgt lowered to $4

  • Zendesk (ZEN) downgraded to Equal-Weight from Overweight at Morgan Stanley; tgt lowered to $80


  • Others:

  • Bausch Health (BHC) resumed with an Overweight at JP Morgan; tgt $12

  • EQRx (EQRX) initiated with a Buy at Goldman; tgt $8

  • Forma Therapeutics (FMTX) resumed with an Overweight at Cantor Fitzgerald; tgt lowered to $21

  • Silvergate Capital (SI) initiated with an Overweight at Wells Fargo; tgt $120

  • Starry (STRY) initiated with a Buy at MoffettNathanson; tgt $11


Upcoming Events:

  • Econ Data:

  • No economic data of note.


  • Earnings:

  • Monday (Jun 13)

  • Afternoon: ORCL


  • Tuesday (Jun 14)

  • Morning: CNM

  • Afternoon: CXM


  • Thursday (Jun 16)

  • Morning: CMC JBL KR

  • Afternoon: ADBE



Asia & Europe detail:

Asia: Nikkei -3.0%, Hang Seng -3.4%, Shanghai Composite -0.9%

Equity indices in the Asia-Pacific began the week on a sharply lower note. South Korean truckers remained on strike for the seventh day in a row. South Korea's exports through the first ten days of June were down 12.7% yr/yr while chip exports increased 0.8% yr/yr. Continued weakness in the yen briefly sent the Japanese currency to its lowest level since 1998 against the dollar while Bank of Japan Governor Kuroda repeated that the BoJ will continue its ultra-loose policy.

  • In economic data:

  • Japan's Q2 BSI Large Manufacturing Conditions -9.9 (last -7.6)

  • New Zealand's April Permanent/Long-Term Migration -80 (last 926)


---Equity Markets---

  • Japan's Nikkei: -3.0%

  • Hong Kong's Hang Seng: -3.4%

  • China's Shanghai Composite: -0.9%

  • India's Sensex: -2.7%

  • South Korea's Kospi: -3.5%

  • Australia's ASX All Ordinaries: -1.3%

---FX---

  • USD/JPY: +0.1% to 134.50

  • USD/CNH: +0.4% to 6.7532

  • USD/INR: -0.1% to 78.00

Europe: DAX -1.9%, FTSE -1.6%, CAC -2.0%

Major European indices trade lower across the board. The spread between Italy's 10-yr yield and Germany's 10-yr yield widened to its highest level in over two years, reflecting growing worries about the region's economy. Reuters reported that the Bank of England will raise its bank rate by 25 bps on Thursday and maintain a slow hiking pace in the coming months while FT speculated that the BoE will hike by 50 bps this week. French President Macron's party appears to have lost some parliamentary seats in yesterday's election and it remains unclear if the party will maintain its absolute majority. Fitch affirmed the U.K.'s AA- rating with a Stable outlook.

  • In economic data:

  • U.K.'s April GDP -0.3% m/m (expected 0.1%; last -0.1%); 3.4% yr/yr (expected 3.9%; last 6.4%). April Construction Output -0.4% m/m (expected -0.5%; last 1.7%); 3.9% yr/yr (expected 3.8%; last 4.7%). April Industrial Production -0.6% m/m (expected 0.2%; last -0.2%); 0.7% yr/yr (expected 1.7%; last 0.7%). April Manufacturing Production -1.0% m/m (expected 0.2%; last -0.2%); 0.5% yr/yr (expected 1.8%; last 1.9%)


---Equity Markets---

  • STOXX Europe 600: -2.2%

  • Germany's DAX: -1.9%

  • U.K.'s FTSE 100: -1.6%

  • France's CAC 40: -2.0%

  • Italy's FTSE MIB: -2.1%

  • Spain's IBEX 35: -1.9%

---FX---

  • EUR/USD: -0.5% to 1.0463

  • GBP/USD: -1.0% to 1.2187

  • USD/CHF: +0.7% to 0.9937

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