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13/06/23 Briefing


The S&P 500 futures are up 2 points and are trading fractionally above fair value. The Nasdaq 100 futures are up 23 points and are trading 0.1% above fair value. The Dow Jones Industrial Average futures are up 2 points and are trading roughly in line with fair value.

The Nasdaq 100 futures are outperforming, helped out by a nice move in Oracle (ORCL) following its earnings report and continued strength in mega cap stocks except Apple (AAPL), which was downgraded to Neutral from Buy at UBS. The rest of the market remains in wait-and-see mode ahead the May Consumer Price Index at 8:30 a.m. ET.

The People's Bank of China lowered its seven-day reverse repurchase rate by ten basis points to 1.90% and there was continued speculation about a potential medium-term lending facility rate cut.

Oil prices are rebounding, up 1.4% to $68.06/bbl. Other commodity prices are moving higher this morning, too. Natural gas futures are up 2.0% to $2.31/mmbtu. Copper futures are up 2.0% to $3.83/lb.

Treasury yields are somewhat lower compared to yesterday's settlement levels. The 2-yr note yield is down two basis points to 4.56% and the 10-yr note yield is down three basis points to 3.72%.

In corporate news:

  • Oracle (ORCL 122.68, +6.25, +5.3%): beats by $0.09, reports revs in-line, guides Q1 EPS in-line, guides Q1 revs above consensus, sees Cloud revenue, excluding Cerner, growing at rates at least similar to what co experienced in FY23

  • Bunge (BG 92.00, -1.79, -1.9%): and Viterra to combine to create a premier diversified global agribusiness solutions company; plans to repurchase $2.0 billion of Bunge's stock to enhance accretion

  • Intel (INTC 33.80, +0.73, +2.2%): Arm (SFTBY) in discussions with strategic investors including Intel (INTC) regarding anchor for IPO, according to Bloomberg

  • Apple (AAPL 182.37, -1.37, -0.8%): downgraded to Neutral from Buy at UBS

  • Urban Outfitters (URBN 33.42, +1.02, +3.2%): upgraded to Overweight from Equal Weight at Morgan Stanley

  • Toyota Motor (TM 155.52, +5.93, +4.0%): introduces new technology that will change the future of cars

  • Home Depot (HD 302.95, +2.09, +0.7%): reaffirms FY23 outlook at Investor Conference

  • Manchester United (MANU 23.06, +2.88, +14.3%): Qatari might have succeeded in bid for Manchester United, according to UTD District

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region ended Tuesday on a higher note. Japan's Nikkei: +1.8%, Hong Kong's Hang Seng: +0.6%, China's Shanghai Composite: +0.2%, India's Sensex: +0.7%, South Korea's Kospi: +0.3%, Australia's ASX All Ordinaries: +0.2%.

  • In economic data:

  • China's May New Loans CNY1.36 trln (expected CNY1.60 trln; last CNY718.8 bln), May outstanding loan growth 11.4% yr/yr (expected 11.6%; last 11.8%), and May total social financing CNY1.56 trln (expected CNY2.00 trln; last CNY1.22 trln)

  • Japan's Q2 BSI Large Manufacturing Conditions -0.4 (expected -4.2; last -10.5)

  • Australia's June Westpac Consumer Sentiment 0.2% (expected 0.0%; last -7.9%). May NAB Business Confidence -4 (expected 0; last 0) and NAB Business Survey 8 (expected 10; last 15)

  • New Zealand's April Visitor Arrivals -16.9% m/m (expected 84.9%; last -1.0%)


  • In news:

  • The People's Bank of China lowered its seven-day reverse repurchase rate by ten basis points to 1.90% and there was continued speculation about a potential medium-term lending facility rate cut.

  • Property names in Hong Kong continued displaying relative strength.

  • The Japanese government will reportedly delay its plan to hike taxes to fund higher defense spending until 2025.

  • National Australia Bank increased its Reserve Bank of Australia terminal rate forecast to 4.60% from 4.35%.



  • Major European indices trade in mixed fashion with Spain's IBEX (-0.8%) showing relative weakness amid pressure on banks. STOXX Europe 600: UNCH, Germany's DAX: +0.2%, U.K.'s FTSE 100: -0.1%, France's CAC 40: UNCH, Italy's FTSE MIB: -0.1%, Spain's IBEX 35: -0.8%.

  • In economic data:

  • Eurozone's June ZEW Economic Sentiment -10.0 (expected -11.9; last -9.4)

  • Germany's May CPI -0.1% m/m, as expected (last 0.4%); 6.1% yr/yr (expected 6.1%; last 7.2%). June ZEW Economic Sentiment -8.5 (expected -13.1; last -10.7) and ZEW Current Conditions -56.5 (expected -40.0; last -34.8)

  • U.K.'s April Average Earnings Index + Bonus 6.5% yr/yr (expected 6.1%; last 6.1%), April three-month employment change 250,000 (expected 150,000; last 182,000), April Unemployment Rate 3.8% (expected 4.0%; last 3.9%). May Claimant Count change -13,600 (expected 21,400; last 23,400)

  • Italy's Q1 Unemployment Rate 8.0% (expected 7.8%; last 7.9%)

  • Spain's May CPI 0.0% m/m (expected -0.1%; last 0.6%); 3.2% yr/yr, as expected (last 4.1%). May Core CPI 6.1% yr/yr (last 6.6%)


  • In news:

  • Economists from Germany's ZEW Institute noted that the current recession is "not particularly alarming."

  • There is speculation that the Bank of England will announce another rate hike at next week's meeting after above-consensus wage growth in April.



U.S. equity futures:

  • S&P 500 Futures: +3 @ 4,342

  • DJIA Futures: +5 @ 34,071

  • Nasdaq 100 Futures: +30 @ 14,814

Overseas:

  • Europe: DAX +0.2%, FTSE -0.1%, CAC UNCH

  • Asia: Nikkei +1.8%, Hang Seng +0.6%, Shanghai Composite +0.2%

Commodities:

  • Crude Oil +1.08 @ 68.20

  • Nat Gas +0.046 @ 2.312

  • Gold +8.65 @ 1978.35

  • Silver +0.203 @ 24.262

  • Copper +0.0752 @ 3.8272


Earnings/Guidance:

  • Bread Financial ( BFH 1.29% ) provides May performance update

  • Burford Capital ( BUR 0.91% ) reports Q1 results

  • Elevance Health ( ELV 0.58% ) reaffirms FY23 earnings guidance ahead of investor meetings

  • Home Depot ( HD 1.18% ) reaffirms FY23 outlook at Investor Conference

  • Integral Ad Science ( IAS 0.00% ) will reaffirm its revenue and Adjusted EBITDA guidance for the second quarter and the full year 2023 at conference

  • Methode Electronics ( MEI 0.07% ) issues FY23 (Apr) guidance, sees EPS in-line with consensus, revs slightly ahead; provides FY24 and FY25 outlook

  • Ovintiv ( OVV 0.29% ) updates Q2 and FY23 guidance to reflect the early close of the Midland Basin and Bakken transactions; also provides FY24 outlook

  • Oracle ( ORCL 5.99% ) beats by $0.09, reports revs in-line, guides Q1 EPS in-line, guides Q1 revs above consensus

  • TreeHouse Foods ( THS 2.73% ) reaffirms Q2 guidance; Raises and narrows FY23 Adjusted EBITDA guidance ahead of Investor Day

News:

  • China considers broad stimulus measures, according to Bloomberg

  • House conservatives will end blockade of legislation, according to The Hill

  • UK borrowing costs have exceeded "mini-budget" crisis levels, CNBC

  • NYC offices reach 50% occupancy for first time since pandemic, according to Bloomberg

  • Activision Blizzard's ( ATVI 0.00% ) Diablo IV crosses $666 mln in global sell-through in the first five days of its launch, setting all-time record for the publisher

  • Acumen Pharmaceuticals ( ABOS 0.00% ) to present topline results from first-in-human phase 1 study of ACU193 for early Alzheimer's disease during featured research session at the Alzheimer's Association International Conference

  • Akebia Therapeutics ( AKBA 0.00% ) announces that Ellen Snow is joining Akebia as its new Senior Vice President, Chief Financial Officer and Treasurer, beginning on July 17, 2023

  • AllianceBernstein ( AB 1.89% ) announces that preliminary assets under management decreased to $670 billion during May 2023 from $676 billion at the end of April

  • AssetMark ( AMK 2.20% ) issues its May AMK Report; platform assets increased 10.9% yr/yr to $96.4 bln, net flows up 5.3% to $637 mln

  • AstraZeneca ( AZN 0.00% ) reports Soliris was approved in China for the treatment of adults with refractory generalised myasthenia gravis

  • Banco Santander ( BSBR 3.62% ) Brasil confirms Supreme Court of Brazil ruled in a manner unfavorable to taxpayers

  • Camping World ( CWH 0.07% ) launches new dealership format, opens first wave of manufacturer exclusive locations

  • Chegg ( CHGG 4.10% ) reduces workforce by approximately 4% to better execute against its AI strategy

  • Chico's FAS ( CHS 0.18% ) announces CFO transition as current CFO accepts position at another company; David Oliver, SVP - Finance, Controller, and Chief Accounting Officer appointed CFO, effective June 24, 2023

  • Chubb ( CB 0.31% ) authorizes a new $5.0 bln share repurchase program, effective July 1

  • FedEx ( FDX 0.35% ): Pilots' Union approves tentative agreement, according to Air Line Pilots Association

  • Garrett Motion ( GTX 0.00% ) converts Series A Preferred Stock to Common Stock

  • Harley-Davidson ( HOG 1.30% ) issues statement regarding production suspension

  • Haynes Intl ( HAYN 0.00% ) updates network outage

  • Infineon ( IFNNY ) considers moving production to US, according to Financial Times

  • Interactive Brokers ( IBKR 0.00% ) announced that clients of Interactive Brokers worldwide can trade shares on Nasdaq Copenhagen (CPH) and the Prague Stock Exchange

  • Invesco ( IVZ 1.12% ) reports preliminary month-end assets under management of $1,487.6 billion, an increase of 0.2% versus previous month-end

  • Ironwood Pharmaceuticals ( IRWD 0.00% ) Announces FDA Approval of New Indication for LINZESS (linaclotide) for the Treatment of Functional Constipation in Pediatric Patients Ages 6-17 Years-Old

  • KB Financial ( KB 1.71% ) provides update on Kookmin Bank's decision on capital injection in PT Bank KB Bukopin Tbk

  • Laboratory Corp ( LH 3.21% ) provides additional information in connection with its spin-off of Fortrea

  • Mallinckrodt ( MNK 3.05% ) Presents Clinical Data for TERLIVAZ (terlipressin) for Injection in Adults with Hepatorenal Syndrome (HRS) at the American Transplant Congress 2023

  • Netflix ( NFLX 0.00% ) planning its first live-streamed sporting event with celebrity golf tourney, according to the Wall Street Journal

  • Raytheon Technologies ( RTX 0.08% ) and Whitney Military Engines awarded $888 mln U.S. Navy contract modification

  • Redwood Trust ( RWT 2.20% ) launches joint venture with Oaktree Capital Management to invest in business purpose bridge loans originated by CoreVest American Finance Lender, a division of Redwood

  • Roche Hldg ( RHHBY ) receives WHO prequalification for the cobas HPV test

  • Seagen ( SGEN 0.00% ) Announces ADCETRIS (brentuximab vedotin) Plus Novel Immunotherapy Combination Delivers 98% Overall Response Rate and 93% Complete Response Rate in Patients with Early-Stage Classical Hodgkin Lymphoma

  • Tesla ( TSLA 0.00% ): CharIN stands behind CCS and MCS, but also supports the standardization of Tesla NACS

  • Teva Pharma ( TEVA 0.27% ) reaches agreement with Attorney General of Kentucky to settle state's price-fixing claim; company will pay state $1.407 mln

  • Toyota Motor ( TM 0.64% ) aims to roll out solid-state-battery EVs by 2027, according to Nikkei

  • Universal Insurance ( UVE 1.07% ) announces new $20 million common stock authorization through June 10, 2025

  • Valneva SE ( VALN 0.00% ) reports data from Phase 3 Chikungunya vaccine candidate published in the Lancet

M&A:

  • Bowman Consulting Group ( BWMN 0.00% ) acquires Advanced Applied Engineering; expected to be immediately accretive, financial terms not disclosed

  • Bunge ( BG 0.18% ) and Viterra to combine to create a premier diversified global agribusiness solutions company; plans to repurchase $2.0 billion of Bunge's stock to enhance accretion

  • Casella Waste ( CWST 0.00% ) acquiring assets of Consolidated Waste Services for $219 mln in cash; to generate $70 mln in annualized revenue; expected close by 4Q23

  • Core & Main ( CNM 0.86% ) acquires J.W. D'Angelo Co, a full-service provider of fire protection and waterworks products with three locations in Southern California; financial terms were not disclosed

  • Dentsply Sirona ( XRAY 0.00% ) Wellspect sale is stalling, according to Bloomberg

  • Duke Energy ( DUK 0.14% ) reaches agreement to sell its unregulated utility scale Commercial Renewables business to Brookfield Renewable for approximately $2.8 bln

  • Kroger ( KR 0.45% ): Teamsters oppose Kroger-Albertsons merger

  • Manchester United ( MANU 3.98% ): Qatari might have succeeded in bid for Manchester United, according to UTD District

  • Microsoft ( MSFT 0.00% ) President Brad Smith responds to FTC regarding Activision (ATVI) acquisition

  • NexTier Oilfield Solutions ( NEX 3.41% ) and Patterson-UTI Energy (PTEN) discussing merger, according to the Wall Street Journal

  • Prospector Capital Corp. ( PRSR 0.00% ): Software firm LeddarTech and PRSR announce combination agreement; company plans to list on Nasdaq under ticker "LDTC"

  • SMART Global ( SGH 0.00% ) to divest majority stake of SMART modular Brazil

  • Stratasys ( SSYS 0.00% ): Nano Dimension (NNDM) reaffirms $18 per share all-cash tender offer for Stratasys shareholders to receive near-term value by tendering their shares

  • Whitestone REIT ( WSR 0.94% ) announces the acquisition of Arcadia Towne Center in Phoenix, Arizona for $25.3 mln

Syndicate:

  • Brookfield Renewable Partners ( BEP 1.03% ) announced concurrent equity offerings for aggregate gross proceeds of $500 million on a bought deal basis by a syndicate of underwriters

  • Casella Waste ( CWST 0.00% ) commences public offering of $400 mln of its Class A common stock

  • Disc Medicine ( IRON 0.00% ) commences public offering of $100 million of shares of its common stock

  • Landsea Homes ( LSEA 0.00% ) announces pricing of upsized secondary common stock offering and concurrent stock repurchase

IPOs:

  • Arm ( SFTBY ) in discussions with strategic investors including Intel (INTC) regarding anchor for IPO, according to Bloomberg

  • IPOs Expected to Price:

  • CAVA Group (NYSE: CAVA): The Mediterranean fast-casual restaurant chain is expected to price its 14.4 M share IPO between $17-$19.


Gapping Up/Down

  • Gapping up:

  • SAND +7.7%, TM +4.5%, ORCL +4.3%, IRWD +2.5%, CNM +2%, UVE +1.9%, EPRT +1.7%, BSBR +1.6%, HD +0.9%, TEVA +0.8%, AB +0.7%, APPN +0.7%, OVV +0.6%, NFLX +0.6%


  • Gapping down:

  • MEI -11.2%, LSEA -7.6%, BG -3.2%, VALN -3%, IVZ -2.3%, AMK -2%, IRON -1.9%, CHS -1.9%, CWST -1.8%, ACI -0.8%, HOG -0.5%


Analyst Research (see Upgrades/Downgrades calendar for full list):

  • Upgrades

  • Assurant (AIZ) upgraded to Overweight from Neutral at Piper Sandler; tgt $144

  • BRP Inc. (DOOO) upgraded to Buy from Neutral at DA Davidson; tgt raised to $126

  • Devon Energy (DVN) upgraded to Buy from Neutral at Goldman; tgt lowered to $58

  • EastGroup (EGP) upgraded to Buy from Neutral at Citigroup; tgt raised to $195

  • PagSeguro Digital (PAGS) upgraded to Buy from Hold at HSBC Securities; tgt raised to $13

  • StoneCo (STNE) upgraded to Buy from Hold at HSBC Securities; tgt raised to $15

  • Ulta Beauty (ULTA) upgraded to Buy from Hold at Loop Capital; tgt raised to $520

  • Urban Outfitters (URBN) upgraded to Overweight from Equal-Weight at Morgan Stanley; tgt raised to $41


  • Downgrades:

  • Apple (AAPL) downgraded to Neutral from Buy at UBS; tgt raised to $190

  • Capri Holdings (CPRI) downgraded to Equal-Weight from Overweight at Morgan Stanley; tgt lowered to $40

  • EOG Resources (EOG) downgraded to Neutral from Buy at Goldman; tgt lowered to $130

  • Essent Group (ESNT) downgraded to Mkt Perform from Outperform at Keefe Bruyette; tgt $50

  • First Horizon (FHN) downgraded to Neutral from Overweight at JP Morgan; tgt lowered to $13

  • Global Payments (GPN) downgraded to Hold from Buy at Jefferies; tgt lowered to $105

  • GOL Linhas Aereas Inteligentes S.A. (GOL) downgraded to Hold from Buy at HSBC Securities

  • PayPal (PYPL) downgraded to Neutral from Overweight at Atlantic Equities; tgt $72

  • Radian Group (RDN) downgraded to Mkt Perform from Outperform at Keefe Bruyette; tgt $27.50

  • Rexford Industrial Realty (REXR) downgraded to Neutral from Buy at Citigroup; tgt lowered to $53

  • Weibo (WB) downgraded to Neutral from Buy at UBS; tgt lowered to $15.50


  • Others:

  • 89bio (ETNB) initiated with an Outperform at Evercore ISI; tgt $49

  • Agilon Health (AGL) initiated with an In-line at Evercore ISI; tgt $22.50

  • Alight (ALIT) initiated with a Buy at Citigroup; tgt $12

  • Applied Materials (AMAT) initiated with a Neutral at Redburn

  • Capital Bancorp (CBNK) assumed with an Overweight at Piper Sandler; tgt $22

  • Clarivate (CLVT) initiated with an Outperform at Oppenheimer; tgt $11

  • CompoSecure (CMPO) initiated with a Buy at Berenberg; tgt $13

  • Core & Main (CNM) initiated with a Buy at Northcoast; tgt $40

  • Crane NXT (CXT) initiated with an Outperform at Oppenheimer; tgt $70

  • Ferguson plc (FERG) initiated with a Buy at Northcoast; tgt $178

  • Marqeta (MQ) initiated with a Hold at Berenberg; tgt $5

  • Peakstone Realty Trust (PKST) initiated with an Underperform at BofA Securities; tgt $27

  • Privia Health (PRVA) initiated with an Outperform at Evercore ISI; tgt $34

  • Roblox (RBLX) initiated with a Buy at Canaccord Genuity; tgt $48

  • Xperi (XPER) initiated with a Buy at Rosenblatt; tgt $15


Econ Data:

  • 06:00 ET: NFIB Small Business Optimism for May (Briefing.com Consensus NA; Prior 89.0)

  • 08:30 ET: CPI for May (Briefing.com Consensus 0.2%; Prior 0.4%)

  • 08:30 ET: Core CPI for May (Briefing.com Consensus 0.4%; Prior 0.4%)

Earnings:

  • Monday (Jun 12)

  • Afternoon: ORCL


  • Tuesday (Jun 13)

  • None


  • Wednesday (Jun 14)

  • Afternoon: LEN


  • Thursday (Jun 15)

  • Morning: JBL KR

  • Afternoon: ADBE


  • Friday (Jun 16)

  • None


Asia & Europe detail:

Asia: Nikkei +1.8%, Hang Seng +0.6%, Shanghai Composite +0.2%

Equity indices in the Asia-Pacific region ended Tuesday on a higher note. The People's Bank of China lowered its seven-day reverse repurchase rate by ten basis points to 1.90% and there was continued speculation about a potential medium-term lending facility rate cut. Property names in Hong Kong continued displaying relative strength. The Japanese government will reportedly delay its plan to hike taxes to fund higher defense spending until 2025. National Australia Bank increased its Reserve Bank of Australia terminal rate forecast to 4.60% from 4.35%.

  • In economic data:

  • China's May New Loans CNY1.36 trln (expected CNY1.60 trln; last CNY718.8 bln), May outstanding loan growth 11.4% yr/yr (expected 11.6%; last 11.8%), and May total social financing CNY1.56 trln (expected CNY2.00 trln; last CNY1.22 trln)

  • Japan's Q2 BSI Large Manufacturing Conditions -0.4 (expected -4.2; last -10.5)

  • Australia's June Westpac Consumer Sentiment 0.2% (expected 0.0%; last -7.9%). May NAB Business Confidence -4 (expected 0; last 0) and NAB Business Survey 8 (expected 10; last 15)

  • New Zealand's April Visitor Arrivals -16.9% m/m (expected 84.9%; last -1.0%)


---Equity Markets---

  • Japan's Nikkei: +1.8%

  • Hong Kong's Hang Seng: +0.6%

  • China's Shanghai Composite: +0.2%

  • India's Sensex: +0.7%

  • South Korea's Kospi: +0.3%

  • Australia's ASX All Ordinaries: +0.2%

---FX---

  • USD/JPY: UNCH at 139.54

  • USD/CNH: +0.1% to 7.1620

  • USD/INR: UNCH at 82.33

Europe: DAX +0.2%, FTSE -0.1%, CAC UNCH

Major European indices trade in mixed fashion with Spain's IBEX (-0.8%) showing relative weakness amid pressure on banks. Economists from Germany's ZEW Institute noted that the current recession is "not particularly alarming." There is speculation that the Bank of England will announce another rate hike at next week's meeting after above-consensus wage growth in April.

  • In economic data:

  • Eurozone's June ZEW Economic Sentiment -10.0 (expected -11.9; last -9.4)

  • Germany's May CPI -0.1% m/m, as expected (last 0.4%); 6.1% yr/yr (expected 6.1%; last 7.2%). June ZEW Economic Sentiment -8.5 (expected -13.1; last -10.7) and ZEW Current Conditions -56.5 (expected -40.0; last -34.8)

  • U.K.'s April Average Earnings Index + Bonus 6.5% yr/yr (expected 6.1%; last 6.1%), April three-month employment change 250,000 (expected 150,000; last 182,000), April Unemployment Rate 3.8% (expected 4.0%; last 3.9%). May Claimant Count change -13,600 (expected 21,400; last 23,400)

  • Italy's Q1 Unemployment Rate 8.0% (expected 7.8%; last 7.9%)

  • Spain's May CPI 0.0% m/m (expected -0.1%; last 0.6%); 3.2% yr/yr, as expected (last 4.1%). May Core CPI 6.1% yr/yr (last 6.6%)


---Equity Markets---

  • STOXX Europe 600: UNCH

  • Germany's DAX: +0.2%

  • U.K.'s FTSE 100: -0.1%

  • France's CAC 40: UNCH

  • Italy's FTSE MIB: -0.1%

  • Spain's IBEX 35: -0.8%

---FX---

  • EUR/USD: +0.4% to 1.0796

  • GBP/USD: +0.4% to 1.2566

  • USD/CHF: -0.2% to 0.9062


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