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17/06/22 Briefing


The S&P 500 futures are up 32 points and are trading 0.8% above fair value. The Nasdaq 100 futures are up 114 points and are trading 0.7% above fair value. The Dow Jones Industrial Average futures are up 181 points and are trading 0.7% above fair value.

There is a bid in the futures market this morning on this quadruple-witching options expiration day. That bid has much to do with the lack of bidding throughout the week in the cash market, which has been broadsided by growth concerns, central bank rate hikes, and price action that just won't cooperate with buy-the-dip interests.

Another buy-the-dip attempt is being made now. It has been a big dip, too. Entering today, the Dow, Nasdaq, and S&P 500 are down 4.7%, 6.1%, and 6.0%, respectively, for the week. The Russell 2000 and S&P 400 are both down 8.4%.

The Bank of Japan bucked the central bank trend, announcing today that it is leaving its key policy rate unchanged at -0.1% and maintaining its commitment to yield curve control. Not surprisingly, this decision has weighed further on the yen (USD/JPY +1.9% to 134.67 and EUR/JPY +1.5% to 141.44).

WTI crude futures are down 0.3% to $117.20 and unleaded gasoline futures are down 1.7% to $3.89/gallon. Reports have indicated that the White House is discussing the possibility of imposing fuel export limits.

The 2-yr note yield is down 3 bps to 3.13% and the 10-yr note yield is down 9 bps to 3.22% in a curve-flattening trade.

In corporate news:

  • Adobe, Inc. (ADBE 351.52, -13.56, -3.7%): beats by $0.04, reports revs in-line; guides Q3 EPS and revs below consensus; lowers FY22 EPS and revenue guidance

  • U.S. Steel (X 20.81, +1.23, +6.3%): issues upside adjusted EPS guidance for JunQ and expects record adjusted EBITDA of $1.6 bln

  • Roku (ROKU 81.57, +2.99, +3.8%): Company and Walmart (WMT) announce partnership where WMT will be the exclusive retailer to enable streamers to purchase products on Roku platform

  • Alibaba (BABA 111.70, +10.25, +10.1%): China accepts Ant Group's application to become a financial holding company

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region ended the week on a mixed note. Japan's Nikkei -1.8%; Hong Kong's Hang Seng +1.1%; China's Shanghai Composite +1.4%; India's Sensex -0.3%; South Korea's Kospi -0.4%; and Australia's All Ordinaries -1.8%.

  • In economic data:

  • Hong Kong's May Unemployment Rate 5.1% (last 5.4%)

  • Singapore's May trade surplus SGD3.24 bln (last surplus of SGD4.21 bln). May non-oil exports 3.2% m/m (expected 1.4%; last -3.3%); 12.4% yr/yr (expected 7.6%; last 6.4%)

  • New Zealand's May Business PMI 52.9 (last 51.2)


  • In news:

  • The Bank of Japan reaffirmed its ultra-loose policy, contrasting with the tightening trend among other major central banks.

  • South Korea's President Yoon called for a united response from the UN Security Council to North Korean missile tests.

  • China will host a summit of BRICS leaders on June 23.



  • Major European indices are looking for a higher finish to a volatile week while sovereign debt is also on the rise. STOXX Europe 600 +1.2%; Germany's DAX +1.3%; UK's FTSE 100 +0.9%; France's CAC 40 +1.2%; Italy's FTSE MIB +1.8%; and Spain's IBEX 35 +1.4%.

  • In economic data:

  • Eurozone's May CPI 0.8% m/m, as expected (last 0.6%); 8.1% yr/yr, as expected (last 7.4%). May Core CPI 0.5% m/m, as expected (last 0.5%); 3.8% yr/yr, as expected (last 3.5%)

  • Italy's April trade deficit EUR3.67 bln (last deficit of EUR229 mln)


  • In news:

  • EU finance ministers are trying to complete an agreement on a global minimum tax but Hungary has voiced opposition to the current proposal.

  • European Central Bank policymaker Knot said that several 50-bps rate hikes could be made if inflation worsens.

  • Rail workers in the U.K. are expected to go on strike next week, seeking higher wages.



U.S. equity futures:

  • S&P 500 Futures: +30 @ 3,697

  • DJIA Futures: +178 @ 30,106

  • Nasdaq 100 Futures: +122 @ 11,249

Overseas:

  • Europe: DAX +1.3%, FTSE +0.9%, CAC +1.2%

  • Asia: Nikkei -1.8%, Hang Seng +1.1%, Shanghai Composite +1.4%

Commodities:

  • Crude Oil -0.15 @ 117.44

  • Nat Gas -0.209 @ 7.255

  • Gold +0.10 @ 1850.00

  • Silver +0.007 @ 21.892

  • Copper -0.0190 @ 4.0890

U.S. Summary:

  • Earnings:

  • Adobe (ADBE) beats by $0.04, reports revs in-line; guides Q3 EPS and revs below consensus; lowers FY22 EPS and revenue guidance

  • Centene (CNC) raises FY22 outlook ahead of Investor Day; authorizes $3.0 bln increase to existing stock repurchase program

  • U.S. Steel (X) issues upside adjusted EPS guidance for JunQ and expects record adjusted EBITDA of $1.6 bln


  • General News:

  • EU will not provide Ukraine with more weapons, according to the New York Times

  • President Biden in interview says recession is "not inevitable", according to AP

  • The Biden administration is considering limiting fuel exports, according to Bloomberg

  • BOJ keeps rates unchanged

  • Australia aiming to block coal exports, according to Financial Times

  • The European Commission recommends to Council confirming Ukraine, Moldova and Georgia's perspective to become members of the EU and provides its opinion on granting them candidate status

  • President Biden to galvanize global action to strengthen energy-security and tackle the climate crisis through the major economies forum on energy and climate

  • White House request for $10 bln in coronavirus funding appears dead on arrival in Congress, according to the Washington Post

  • Lead Republican negotiator on gun safety package (red flag laws, school security) warns talks could soon collapse unless remaining issues are resolved, according to CNN

  • Electric vehicles average over $60,000 as automakers raise prices, according to Bloomberg

  • ACADIA Pharmaceuticals (ACAD) halted for FDA Advisory Committee meeting to review NUPLAZID (pimavanserin) supplemental New Drug Application for the treatment of Alzheimer's disease psychosis

  • Aerojet Rocketdyne (AJRD): CEO Eileen Drake and Committee for Aerojet Rocketdyne Shareholders and Value Maximization Extremely Pleased with Delaware Court's Opinion

  • Alpha Tau (DRTS): Israeli Ministry of Environmental Protection grants an active radioactive license for use of Thorium-228 and Radium-224

  • Altimmune (ALT) Announces Oral Presentation of Pemvidutide Clinical Data at Upcoming EASL International Liver Congress on June 25, 2022

  • atai Life Sciences N.V. (ATAI) announced that Stephen Bardin, currently SVP Finance and Operations at BridgeBio Pharma (BBIO), will be appointed Chief Financial Officer during the third quarter of 2022

  • Aurora Mobile (JG) receives RMB15 mln in special support funding from the Shenzhen Development and Reform Commission

  • B&G Foods (BGS) forms four business units: Spices & Seasonings, Meals, Frozen & Vegetables, Specialty

  • BAE Systems (BAESY) awarded $700 mln Army contract

  • Ball Corp (BALL) recommends rejection of amended below-market mini-tender offer by TRC Capital Corporation

  • Banco Santander (SAN): Hector Grisi nominated to succeed Jose Antonio Alvarez as CEO of Banco Santander

  • Bausch Health (BHC) provides update on Solta Medical business; IPO process suspended in light of market conditions

  • Bitfarms (BITF) entered into an equipment financing agreement with initial funding of US$37 million

  • Citigroup (C) owns $500 mln of Revlon (REV) debt following error, according to Bloomberg

  • Citi Trends (CTRN) appoints Heather Plutino to CFO role, effective June 27

  • Cytokinetics (CYTK) Provides Regulatory Update for Omecamtiv Mecarbil

  • Dana Inc (DAN) awarded a $2.7 million (2 million) grant to develop an e-Powertrain for OX Delivers

  • Eagle Bancorp (EGBN) increases quarterly cash dividend to $0.45/share from $0.40/share

  • Expro Group (XPRO) authorizes $50 mln stock repurchase plan

  • FirstEnergy (FE) established the Special Review Committee of the Board commencing the process to review the current c-suite executives

  • Ford (F) aiming to recall 2.9 million vehicles over gear shift issue, according to the New York Times

  • Global Cord Blood (CO) announces that the FDA recently cleared Cellenkos' IND application for CK0804 as add on therapy to Ruxolitinib for the treatment of Myelofibrosis

  • Granite Constr (GVA) awarded two contracts worth a combined $38 mln for work on Interstate 5 in CA

  • Huntington Ingalls (HII) receives advance procurement contract worth $240 mln

  • JD.com(JD) mulling entry into food delivery space, according to Bloomberg

  • KBR's (KBR) commercial cloud and mission service platform arrives on the Federal Risk and Authorization Management Program (FedRAMP) Marketplace as FedRAMP Ready

  • MeridianLink (MLNK) names Sean Blitchok as its new CFO

  • Methode Electronics (MEI) authorizes $100 mln increase to its existing share buyback program, bringing total authorization to $200 mln

  • Myovant Sciences (MYOV) and Pfizer (PFE) Announce Publication in The Lancet of Phase 3 SPIRIT 1 and SPIRIT 2 Studies of Once-Daily Relugolix Combination Therapy in Women With Endometriosis-Associated Pain

  • Novartis (NVS) unit Sandoz receives EMA acceptance for proposed biosimilar adalimumab's high concentration formulation

  • Oasis Petroleum (OAS) declares a special dividend of $15.00/share in connection with the closing of its previously announced merger with Whiting Petroleum (WLL)

  • ObsEva (OBSV) receives EC Marketing Authorization for Yselty

  • Orion Engineered Carbons (OEC) to raise prices for rubber carbon black products made in Europe and the Americas

  • Pebblebrook Hotel Trust (PEB) provides operational updates; anticipates continued business demand growth in addition to healthy levels of leisure travel in June and into Q3

  • Roku (ROKU) and Walmart (WMT) announce partnership where WMT will be the exclusive retailer to enable streamers to purchase products on Roku platform

  • Rhythm Pharmaceuticals (RYTM) announces that FDA approves its sNDA for IMCIVREE; FDA issues complete response letter for the sNDA for setmelanotide in Alstrm syndrome

  • Rhythm Pharmaceuticals (RYTM) enters into revenue interest financing agreement with HealthCare Royalty Partners for total investment amount of up to $100 mln

  • Scholar Rock (SRRK) reports Phase 2 Topaz trial extension data

  • SciPlay (SCPL): Engine Capital sends letter to the Board of Directors of SciPlay regarding ongoing IP agreement negotiations with Light & Wonder

  • Sierra Oncology (SRRA) announces submission of new drug application for Momelotinib to FDA

  • SnapChat (SNAP) working on paid subscription service, according to Verge

  • TechnipFMC (FTI) awarded a significant contract by TotalEnergies EP Angola to supply subsea production systems for the CLOV3 development in Block 17

  • TE Connectivity (TEL) authorizes additional $1.5 bln share repurchase

  • Tesla (TSLA) reduces job openings by 14%, according to Reuters

  • Titan Intl (TWI) entered into a global long-term agreement with Deere (DE) on June 13 to supply wheels and tires

  • Twitter (TWTR) ticks higher as Elon Musk says he wants Twitter to be more like WeChat and TikTok, according to TheVerge

  • Twitter (TWTR): Elon Musk wants to increase Twitter users and could announce layoffs following acquisition, according to the Wall Street Journal

  • Unifi (UFI) makers of REPREVE, provides share repurchase program, leadership, and Board updates

  • UWM Holdings (UWMC) CFO Timothy Forrester will commence a leave of absence for health reasons

  • World Wrestling (WWE) and its Board of Directors jointly released the following statement today: Independent directors continue review of alleged executive misconduct

  • Zevia PBC's (ZVIA) current President, Amy Taylor, will succeed CEO Paddy Spence, effective August 1, 2022; Spence will remain as Chair of the Board of Directors

  • ZipRecruiter (ZIP) authorizes $150 mln increase to share repurchase program

  • ZoomInfo (ZI) and Bombora enter a confidential agreement settling a lawsuit pending in the Supreme Court of NY; terms of the settlement were not disclosed


  • M&A:

  • AstraZeneca (AZN) mulling bid for Mereo BioPharma (MREO), according to Sunday Times UK

  • JATT Acquisition Corp (JATT) and Zura Bio Limited announce definitive business combination agreement to create NYSE listed biotechnology company

  • MultiPlan (MPLN) invests $15 mln in Abacus Insights

  • Polaris Industries (PII): Wheel Pros agrees to acquire Transamerican Auto Parts from Polaris

  • Revlon (REV): Reliance mulling buyout of REV, according to Economic Times

  • Targa Resources (TRGP) enters definitive agreement to acquire Lucid Energy from Riverstone Holdings and Goldman Sachs Asset Management for $3.55 bln; also updates 2022 standalone outlook


  • Syndicate:

  • Blue Owl Capital (OWL) files $1 bln mixed securities shelf offering

  • Scholar Rock (SRRK) announces $205 million registered direct offering


  • IPOs:

  • Priced to Trade:

  • No IPOs expected.



Gapping Up/Down

  • Gapping up:

  • X +7.3%, JG +6.9%, UWMC +6.6%, MEI +5%, ROKU+4.8%, AJRD +4.6%, CTRN +4.4%, ZIP +3.8%, BALL+3.2%, BHC +3%, REAX +2.5%, BGS +2.4%, WPC+2.3%, CO +1.7%, GVA +1.3%, OAS +1.2%, TGT+1.1%, OEC +1%


  • Gapping down:

  • RYTM -10.3%, ADBE -3.4%, DRTS -3.2%, EFC -3%, ZI -3%, FTI -2.2%, OWL -1.5%, TRGP -0.8%


Analyst Research (see Upgrades/Downgradescalendarfor full list):

  • Upgrades

  • American Express (AXP) upgraded to Outperform from Neutral at Robert W. Baird; tgt $175

  • AZEK (AZEK) upgraded to Buy from Neutral at BofA Securities; tgt lowered to $22

  • Capital One (COF) upgraded to Outperform from Neutral at Robert W. Baird; tgt $145


  • Downgrades:

  • American Eagle (AEO) downgraded to Neutral from Buy at B. Riley Securities; tgt lowered to $13

  • CF Industries (CF) downgraded to Neutral from Buy at Citigroup; tgt lowered to $99

  • Dow (DOW) downgraded to Neutral from Buy at Citigroup; tgt lowered to $60

  • Dream Finders Homes (DFH) downgraded to Underperform from Neutral at BofA Securities; tgt lowered to $10.50


  • Others:

  • Acadia Healthcare (ACHC) initiated with a Hold at Loop Capital; tgt $72

  • Anthem (ANTM) initiated with a Buy at Loop Capital; tgt $550

  • Apellis Pharmaceuticals (APLS) resumed with a Buy at Stifel; tgt $60

  • APi Group (APG) initiated with a Neutral at JP Morgan; tgt $17

  • Beam Global (BEEM) initiated with a Buy at B. Riley Securities; tgt $23

  • Beam Therapeutics (BEAM) initiated with a Market Perform at BMO Capital Markets; tgt $41

  • BeiGene (BGNE) initiated with a Buy at CMB Int'l

  • Blink Charging (BLNK) initiated with a Neutral at B. Riley Securities; tgt $15

  • Broadmark Realty (BRMK) initiated with a Neutral at Piper Sandler; tgt $7

  • Centene (CNC) initiated with a Buy at Loop Capital; tgt $100

  • Centessa Pharmaceuticals (CNTA) initiated with an Outperform at BMO Capital Markets; tgt $19

  • Cigna (CI) initiated with a Hold at Loop Capital; tgt $270

  • Community Health (CYH) initiated with a Hold at Loop Capital; tgt $5

  • CRH Plc. (CRH) resumed with a Buy at Citigroup

  • CRISPR Therapeutics (CRSP) initiated with an Outperform at BMO Capital Markets; tgt $98

  • CVS Health (CVS) initiated with a Buy at Loop Capital; tgt $120

  • Precision BioSciences (DTIL) initiated with an Outperform at BMO Capital Markets; tgt $7

  • Tritium DCFC (DCFC) initiated with a Buy at B. Riley Securities; tgt $12


Upcoming Events:

  • Econ Data:

  • 09:15 ET: Industrial Production for May (Briefing.comConsensus 0.5%; Prior 1.1%)

  • 09:15 ET: Capacity Utilization for May (Briefing.comConsensus 79.3%; Prior 79.0%)


  • 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 -1.8%, Hang Seng +1.1%, Shanghai Composite +1.4%

Equity indices in the Asia-Pacific region ended the week on a mixed note. The Bank of Japan reaffirmed its ultra-loose policy, contrasting with the tightening trend among other major central banks. South Korea's President Yoon called for a united response from the UN Security Council to North Korean missile tests. China will host a summit of BRICS leaders on June 23.

  • In economic data:

  • Hong Kong's May Unemployment Rate 5.1% (last 5.4%)

  • Singapore's May trade surplus SGD3.24 bln (last surplus of SGD4.21 bln). May non-oil exports 3.2% m/m (expected 1.4%; last -3.3%); 12.4% yr/yr (expected 7.6%; last 6.4%)

  • New Zealand's May Business PMI 52.9 (last 51.2)


---Equity Markets---

  • Japan's Nikkei: -1.8% (-6.7% for the week)

  • Hong Kong's Hang Seng: +1.1% (-3.4% for the week)

  • China's Shanghai Composite: +1.4% (+1.0% for the week)

  • India's Sensex: -0.3% (-5.4% for the week)

  • South Korea's Kospi: -0.4% (-6.0% for the week)

  • Australia's ASX All Ordinaries: -1.8% (-6.7% for the week)

---FX---

  • USD/JPY: +1.8% to 134.65

  • USD/CNH: +0.3% to 6.7043

  • USD/INR: +0.2% to 78.05

Europe: DAX +1.3%, FTSE +0.9%, CAC +1.2%

Major European indices are looking for a higher finish to a volatile week while sovereign debt is also on the rise. EU finance ministers are trying to complete an agreement on a global minimum tax but Hungary has voiced opposition to the current proposal. European Central Bank policymaker Knot said that several 50-bps rate hikes could be made if inflation worsens. Rail workers in the U.K. are expected to go on strike next week, seeking higher wages.

  • In economic data:

  • Eurozone's May CPI 0.8% m/m, as expected (last 0.6%); 8.1% yr/yr, as expected (last 7.4%). May Core CPI 0.5% m/m, as expected (last 0.5%); 3.8% yr/yr, as expected (last 3.5%)

  • Italy's April trade deficit EUR3.67 bln (last deficit of EUR229 mln)


---Equity Markets---

  • STOXX Europe 600: +1.2% (-3.6% week-to-date)

  • Germany's DAX: +1.3% (-4.1% week-to-date)

  • U.K.'s FTSE 100: +0.9% (-2.9% week-to-date)

  • France's CAC 40: +1.2% (-3.7% week-to-date)

  • Italy's FTSE MIB: +1.8% (-1.9% week-to-date)

  • Spain's IBEX 35: +1.4% (-2.4% week-to-date)

---FX---

  • EUR/USD: -0.4% to 1.0516

  • GBP/USD: -0.4% to 1.2306

  • USD/CHF: -0.3% to 0.9638

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