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13/07/22 Briefing




The futures for the major indices indicate a modestly higher open despite factors fueling growth concerns. The S&P 500 futures are up 12 points and are trading 0.3% above fair value. The Nasdaq 100 futures are up 51 points and are trading 0.4% above fair value. The Dow Jones Industrial Average futures are up 95 points and are trading 0.3% above fair value.

The market slid into the close yesterday after traders passed around a purported leak of a June CPI report, which turned out to be fake. The actual report will be released at 8:30 ETand it is likely to invite a volatile response.

Fitting with the growth concern narrative, the International Monetary Fund has cut its U.S. growth projections from 2.9% to 2.3% and warned avoiding a recession is "increasingly challenging".

In addition, the Bank of Korea and the Reserve Bank of New Zealand raised their respective rates by 50 bps, as expected.

The energy complex is mostly trending higher before the open. WTI crude oil futures are up 1.1% to $96.87/bbl. Natural gas futures are up 5.6% to $6.35/mmbtu. Going against the grain, unleaded gasoline futures are down 0.8% to $3.23/gal.

The 2-yr Treasury note yield is up two basis points to 3.05% while the 10-yr note yield is unchanged at 2.96%.

Separately, the weekly MBA Mortgage Applications Index showed a decrease of 1.7% versus the prior decrease of 5.4% released this morning at 6:00 a.m. ET.

In corporate news:

  • Delta Airlines (DAL 30.20, -0.89, -2.9%): Delta Air Lines misses by $0.28, beats on revs; guides Q3 revs in-line

  • Fastenal (FAST 46.97, -3.02, -6.0%): Fastenal beats by $0.01, reports revs in-line

  • Twitter (TWTR 34.74, +0.68, +2.0%): Twitter sues Elon Musk over deal termination 

  • ironSource (IS 3.67, +1.44, +64.6%): ironSource is up big after Unity (U) confirms merger agreement

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region ended the midweek session on a mostly higher note. Japan's Nikkei: +0.5%, Hong Kong's Hang Seng: -0.2%, China's Shanghai Composite: +0.1%, India's Sensex: -0.7%, South Korea's Kospi: +0.5%, Australia's ASX All Ordinaries: +0.3%.

  • In economic data:

  • China's June trade surplus $97.94 bln (expected $75.70 bln; last $78.76 bln). June Imports 1.0% yr/yr (expected 3.9%; last 4.1%) and Exports 17.9% yr/yr (expected 12.0%; last 16.9%)

  • Japan's July Reuters Tankan Index 9 (last 9)

  • South Korea's June Unemployment Rate 2.9% (last 2.8%)

  • New Zealand's June FPI 1.2% m/m (last 0.7%)

  • In news:

  • The approval rating of Japan's cabinet office has increased to 65%, the highest level since Prime Minister Kishida took office.

  • Press reports from China noted that buyers of multiple housing projects have stopped paying mortgages, potentially resulting in up to $83 bln of bad debt.

  • The Bank of Korea and the Reserve Bank of New Zealand raised their respective rates by 50 bps, as expected.

  • Major European indices trade in the red. STOXX Europe 600: -0.7%, Germany's DAX: -1.0%, U.K.'s FTSE 100: -0.8%, France's CAC 40: -0.9%, Italy's FTSE MIB: -0.9%, Spain's IBEX 35: -0.7%.

  • In economic data:

  • Eurozone's May Industrial Production 0.8% m/m (expected 0.3%; last 0.5%); 1.6% yr/yr (expected 0.3%; last -2.5%)

  • Germany's June CPI 0.1% m/m, as expected (last 0.9%); 7.6% yr/yr, as expected (last 7.9%)

  • U.K.'s May GDP 0.5% m/m (expected 0.1%; last -0.2%). May Industrial Production 0.9% m/m (expected 0.2%; last -0.1%); 1.4% yr/yr (expected -0.3%; last 1.6%). May Manufacturing Production 1.4% m/m (expected 0.1%; last -0.6%); 2.3% yr/yr (expected 0.2%; last 1.3%). May Construction Output 1.5% m/m (expected 0.2%; last 0.3%); 4.7% yr/yr (expected 4.4%; last 3.1%). May trade deficit GBP21.45 bln (expected deficit of GBP21.20 bln; last deficit of GBP21.52 bln)

  • France's June CPI 0.7% m/m, as expected (last 0.7%); 5.8% yr/yr (expected 6.5%; last 5.2%)

  • Spain's June CPI 1.9% m/m (expected 1.8%; last 0.8%); 10.2% yr/yr, as expected (last 8.7%)

  • In news:

  • The U.K. reported better than expected growth figures for May.

  • Bank of England Governor Bailey said that he is still seeing signs of robust cost and price pressures.

  • There are eight candidates to replace Boris Johnson as party leader.

  • Germany's CPI dipped from last month's peak in the June reading while yr/yr inflation rates in France and Spain overtook this year's peaks.

 


U.S. equity futures:

  • S&P 500 Futures: +13 @ 3,832

  • DJIA Futures: +89 @ 31,071

  • Nasdaq 100 Futures: +45 @ 11,790

Overseas:

  • Europe: DAX -1.0%, FTSE -0.8%, CAC -0.9%

  • Asia: Nikkei +0.5%, Hang Seng -0.2%, Shanghai Composite +0.1%

Commodities:

  • Crude Oil +0.71 @ 96.55

  • Nat Gas +0.361 @ 6.524

  • Gold +2.05 @ 1726.85

  • Silver -0.023  @ 18.935

  • Copper +0.0008 @ 3.2888

U.S. Summary:

  • Earnings/Guidance:

  • Caledonia Mining (CMCL) reports Q2 gold production of 20,091 ounces; reaffirms production guidance

  • Delta Air Lines (DAL) misses by $0.28, beats on revs; guides Q3 revs in-line

  • Fastenal (FAST) beats by $0.01, reports revs in-line

  • Osisko Gold Royalties (OR) provides preliminary Q2 numbers; earned approximately 22,240 attributable gold equivalent ounces in Q2

  • Starry (STRY) releases Q2 operational results; homes serviceable increased 19.6% yr/yr to 5.7 mln

  • General News:

  • High oil prices expected to persist, according to Bloomberg

  • IMF cuts its growth forecast for US to 2.3% from 2.9% in late June, according to Reuters

  • Sri Lanka's president leaves country amid unrest, according to Reuters

  • Aeva (AEVA) announces that the first Aeries II 4D LIDAR sensors have been produced and shipped to strategic customers

  • Agios Pharma (AGIO) announces that Jackie Fouse, Ph.D., will transition to role of chair of the board of directors and Brian Goff will assume role of chief executive officer

  • AllianceBernstein (AB) reports 6% AUM decline in June

  • Alphabet (GOOG) CEO Sundar Pichai shared message with Google employees - confirms will be slowing the pace of hiring

  • Apollo Endosurgery (APEN): FDA grants De Novo Marketing Authorization to Apollo Endosurgery for Apollo ESG and Apollo REVISE, new endoscopic systems for patients with obesity

  • Apple (AAPL) terminates consulting agreement with former design leader, according to the New York Times

  • Arrival (ARVL) proposes a reorganization which includes a 30% reduction in spend

  • Atara Biotherapeutics (ATRA) Announces Completion of the ATA188 Phase 2 EMBOLD Study Interim Analysis in Patients with Progressive MS

  • Artisan Partners Asset Mgmt (APAM) reports preliminary assets under management of $130.5 bln as of June 30, 2022

  • Bicycle Therapeutics (BCYC) Announces Publication of Article Highlighting Preclinical Data from BT7480Program in the Journal of Medicinal Chemistry

  • Bit Digital (BTBT) announces monthly production update for June 2022

  • BRC Inc. (BRCC) appoints Roland Smith as Executive Chairman, effective immediately

  • Canoo (GOEV) provides additional details in regard to Walmart (WMT) contract

  • Desktop Metal's (DM) CFO resigning to pursue other interests

  • Fastenal (FAST) authorizes new 8 mln share repurchase program

  • Fidelity National (FNF) COO Roger Jewkes transitions from his role to the role of Executive VP

  • Franklin Resources (BEN) reports preliminary assets under management of $1.38 bln as of June 30, 2022, down 4.6% from May 31, 2022

  • Gevo (GEVO) announces a new fuel sales agreement with Aer Lingus, which is owned by International Airlines Group

  • Golub Capital (GBDC) originated $449.6 mln in new middle-market investment commitments during Q3 (Jun)

  • Humanigen (HGEN) receives preliminary topline data from NIH/NIAID study of Lenzilumab in ACTIV-5/BET-B ; study did not meet primary endpoint

  • HUTCHMED (HCM) Highlights First Presentation of Results of the SAVANNAH Global Phase II Trial of Savolitinib plus TAGRISSO at the 2022 WCLC Annual Meeting

  • Illumina (ILMN) loses Grail antitrust probe challenge against EU, according to Reuters

  • Invesco (IVZ) reports preliminary month-end assets under management of $1,390.4 bln as of June 30, a decrease of 4.2% versus previous month-end

  • Laboratory Corp (LH) launches Neurofilament Light Chain blood test that allows doctors to identify and verify signs of neurodegenerative disease

  • Lazard (LAZ) reports June AUM of ~$216.6 bln, down from ~$236.0 mln in May

  • Merck (MRK) announced a global development and commercialization agreement for Orion's investigational candidate ODM-208

  • Mercury (MRCY) received a $56 mln contract award from a leading defense prime contractor

  • Meta's (META) Facebook terminates contract with ABM Industries (ABM), according to CNBC

  • New Pacific Metals (NEWP) announces assay results of first five drill holes of the 2022 drill program at the Carangas Silver-Gold Project

  • Nuvalent (NUVL) will present two posters for its parallel lead programs, NVL-655, an ALK-selective inhibitor and NVL-520, a ROS1-selective inhibitor

  • Oil-Dri (ODC) to implement price increases for its sports field products, effective August 1

  • OptiNose (OPTN) announces results from the ReOpen trial program evaluating XHANCE for treatment of patients with chronic sinusitis

  • Petrobras (PBR) provides update on sale of stake in electric power sector company; clarifies price news

  • Polestar Automotive Holding UK PLC (PSNY) announces a robust performance for the first half of 2022 with record deliveries and a very strong order book

  • Radware (RDWR) announced that ESDS Software Solution Limited selected Radware's Cloud DDoS Protection Service to support its data centers in India

  • Rocket Lab USA (RKLB) announces that its on track to launch national security mission for the United States Government's National Reconnaissance Office

  • SIGA Technologies (SIGA) announces approximately $28 mln of procurement orders for oral TPOXX

  • Spirit Airlines (SAVE) to adjourn special meeting of stockholders

  • Standard Lithium (SLI) provides updates on project developments

  • Stitch Fix (SFIX): Director discloses 1 mln share purchase in filing

  • Swvl's Founders (SWVL), SPAC Sponsor and Certain Pre-Business Combination Investors Voluntarily Extend Lock-Up Reinforcing Long-Term Commitment

  • Terran Orbital (LLAP) announces the successful completion of CAPSTONE's second TCM burn

  • Twitter (TWTR) files suit against Elon Musk to hold him to original merger agreement, according to CNBC

  • Vale S.A. (VALE) starts construction for the Zhongzhai Pre-blending Project, a partnership between Vale, Jiangsu Shagang Group

  • Vaxcyte (PCVX) Completes Enrollment of Phase 2 Portion of Phase 1/2 Clinical Proof-of-Concept Study Evaluating Safety, Tolerability and Immunogenicity of VAX-24 in Adults

  • Victoria's Secret (VSCO) announces new corporate leadership structure uniting its three lines of businesses as a single, collaborative organization resulting in an estimated $40 mln cost reduction in the run rate on an annualized basis starting in Q3

  • Village Farms (VFF): CBDistillery announces groundbreaking research finding CBG + CBD can significantly reduce temporary anxiety

  • Virtus Investment Partners (VRTS) reports preliminary assets under management of of $155.4 billion as of June 30, 2022, a decrease of 7% from May 31, 2022

  • Wallbox (WBX) and Svea Solar announce a new partnership to integrate solar and EV charging

  • Zai Lab (ZLAB) announces China's NMPA has accepted the BLA for efgartigimod alfa injection

  • M&A:

  • Deep Medicine Acquisition Corp. (DMAQ): Chijet Motor Company entered into a business combination agreement with Deep Medicine Acquisition Corp. to become a public company

  • ironSource (IS): Unity (U) confirms merger agreement with ironSource

  • Kaleyra (KLR) rejected an unsolicited offer from TCR Acquisition to acquire subsidiary Campaign Registry

  • Syndicate

  • FuelCell Energy (FCEL) entered into $75 mln Open Market Sale Agreement

  • Kinetik (KNTK) files for $400 mln mixed securities shelf offering

  • Pliant Therapeutics (PLRX) prices offering of 10,810,811 shares of its common stock at $18.50 per share

  • IPOs:

  • Priced to Trade:

  • No IPOs expected.

Gapping Up/Down

  • Gapping up:

  • SFIX +7.8%, SWVL +7.3%, GEVO +6%, MYGN +5.2%, GBDC +5%, GOEV +4.4%, ARVL +2.7%, RKLB +2.3%, BTBT +2%, NUTX +1.9%, TWTR +1.8%, PSNL +1.8%, BEN +1.7%, FCEL +1.5%, VSCO +1.1%, SIGA +1%, PCVX +0.5%

  • Gapping down:

  • HGEN -55.5%, ATRA -43.9%, CRNT -3.7%, DM -3.3%, KNTK -1.3%, OR -0.8%, PLRX -0.7%, APAM -0.6%

 

Analyst Research (see Upgrades/Downgradescalendarfor full list):

  • Upgrades

  • AmBev (ABEV) upgraded to Overweight from Neutral at JP Morgan

  • Armstrong World Industries (AWI) upgraded to Buy from Neutral at Goldman; tgt $93

  • CCC Intelligent Solutions (CCCS) upgraded to Buy from Neutral at Goldman; tgt raised to $12

  • Downgrades:

  • American Equity Investment Life (AEL) downgraded to Mkt Perform from Outperform at Keefe Bruyette; tgt lowered to $41

  • Audacy (AUD) downgraded to Neutral from Buy at B. Riley Securities; tgt $1

  • AZEK (AZEK) downgraded to Buy from Conviction Buy at Goldman; tgt $23

  • Caesars Entertainment (CZR) downgraded to Sector Weight from Overweight at KeyBanc Capital Markets

  • Celanese (CE) downgraded to Sector Perform from Outperform at RBC Capital Mkts; tgt lowered to $116

  • Clearwater Analytics (CWAN) downgraded to Sell from Neutral at Goldman; tgt lowered to $12

  • Commvault Systems (CVLT) downgraded to Neutral from Overweight at Piper Sandler; tgt lowered to $69

  • Others:

  • Alnylam Pharma (ALNY) initiated with a Neutral at Cantor Fitzgerald; tgt $175

  • Arista Networks (ANET) initiated with a Buy at Rosenblatt; tgt $140

  • Bath & Body Works (BBWI) initiated with a Strong Buy at Raymond James; tgt $45

  • BioMarin Pharmaceutical (BMRN) initiated with an Overweight at Cantor Fitzgerald; tgt $110

  • Boxed (BOXD) initiated with an Overweight at Wells Fargo; tgt $8

  • Cintas (CTAS) initiated with an Equal Weight at Wells Fargo; tgt $393

  • Cisco (CSCO) initiated with a Neutral at Rosenblatt; tgt $48

  • Clarivate (CLVT) initiated with an Overweight at Wells Fargo; tgt $20

  • Clorox (CLX) initiated with an Outperform at Raymond James; tgt $160

Upcoming Events:

  • Econ Data:

  • 07:00 ET: MBA Mortgage Applications Index for July 9 (Briefing.comConsensus NA; Prior -5.4%)

  • 08:30 ET: CPI for June (Briefing.comConsensus 1.1%; Prior 1.0%)

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

  • 10:30 ET: EIA Crude Oil Inventories for July 9 (Briefing.comConsensus NA; Prior +8.24M)

  • 14:00 ET: Treasury Budget for June (Briefing.comConsensus NA; Prior -$66.2B)

  • 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 +0.5%, Hang Seng -0.2%, Shanghai Composite +0.1%

Equity indices in the Asia-Pacific region ended the midweek session on a mostly higher note. The approval rating of Japan's cabinet office has increased to 65%, the highest level since Prime Minister Kishida took office. Press reports from China noted that buyers of multiple housing projects have stopped paying mortgages, potentially resulting in up to $83 bln of bad debt. The Bank of Korea and the Reserve Bank of New Zealand raised their respective rates by 50 bps, as expected.

  • In economic data:

  • China's June trade surplus $97.94 bln (expected $75.70 bln; last $78.76 bln). June Imports 1.0% yr/yr (expected 3.9%; last 4.1%) and Exports 17.9% yr/yr (expected 12.0%; last 16.9%)

  • Japan's July Reuters Tankan Index 9 (last 9)

  • South Korea's June Unemployment Rate 2.9% (last 2.8%)

  • New Zealand's June FPI 1.2% m/m (last 0.7%)

---Equity Markets---

  • Japan's Nikkei: +0.5%

  • Hong Kong's Hang Seng: -0.2%

  • China's Shanghai Composite: +0.1%

  • India's Sensex: -0.7%

  • South Korea's Kospi: +0.5%

  • Australia's ASX All Ordinaries: +0.3%

---FX---

  • USD/JPY: +0.2% to 137.06

  • USD/CNH: -0.1% to 6.7281

  • USD/INR: +0.2% to 79.58

Europe: DAX -1.0%, FTSE -0.8%, CAC -0.9%

Major European indices trade in the red. The U.K. reported better than expected growth figures for May. Bank of England Governor Bailey said that he is still seeing signs of robust cost and price pressures. There are eight candidates to replace Boris Johnson as party leader. Germany's CPI dipped from last month's peak in the June reading while yr/yr inflation rates in France and Spain overtook this year's peaks.

  • In economic data:

  • Eurozone's May Industrial Production 0.8% m/m (expected 0.3%; last 0.5%); 1.6% yr/yr (expected 0.3%; last -2.5%)

  • Germany's June CPI 0.1% m/m, as expected (last 0.9%); 7.6% yr/yr, as expected (last 7.9%)

  • U.K.'s May GDP 0.5% m/m (expected 0.1%; last -0.2%). May Industrial Production 0.9% m/m (expected 0.2%; last -0.1%); 1.4% yr/yr (expected -0.3%; last 1.6%). May Manufacturing Production 1.4% m/m (expected 0.1%; last -0.6%); 2.3% yr/yr (expected 0.2%; last 1.3%). May Construction Output 1.5% m/m (expected 0.2%; last 0.3%); 4.7% yr/yr (expected 4.4%; last 3.1%). May trade deficit GBP21.45 bln (expected deficit of GBP21.20 bln; last deficit of GBP21.52 bln)

  • France's June CPI 0.7% m/m, as expected (last 0.7%); 5.8% yr/yr (expected 6.5%; last 5.2%)

  • Spain's June CPI 1.9% m/m (expected 1.8%; last 0.8%); 10.2% yr/yr, as expected (last 8.7%)

---Equity Markets---

  • STOXX Europe 600: -0.7%

  • Germany's DAX: -1.0%

  • U.K.'s FTSE 100: -0.8%

  • France's CAC 40: -0.9%

  • Italy's FTSE MIB: -0.9%

  • Spain's IBEX 35: -0.7%

---FX---

  • EUR/USD: +0.2% to 1.0053

  • GBP/USD: +0.3% to 1.1916

  • USD/CHF: -0.5% to 0.9769


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