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17/07/23 Briefing

The S&P 500 futures are down five points and are trading 0.1% below fair value. The Nasdaq 100 futures are up three points and are trading fractionally above fair value. The Dow Jones Industrial Average futures are down 78 points and are trading 0.2% below fair value.

The equity futures market is mixed, as price action cools off a bit following last week's rally and ahead of a big week of Q2 earnings reporting and economic data. That said, there isn't much in the way of key earnings and economic news out of the U.S. this morning, yet both will crank up starting Tuesdaywith Bank of America (BAC), Morgan Stanley (MS), and Lockheed Martin (LMT) leading the earnings reporting and the June Retail Sales and Industrial Production reports headlining the economic calendar.

In the meantime, some added attention is being paid to some mixed data out of China overnight. That data included a weaker-than-expected 6.3% year-over-year increase in Q2 GDP and a weaker-than-expected 3.1% year-over-year increase in June retail sales that was pitted against a stronger-than-expected 3.8% year-over-year increase in Fixed Asset Investment and an acceleration in industrial production versus the prior month.

The mixed economic news out of China has contributed to the lackluster action in the equity futures market and the early weakness in oil ($74.48, -0.94, -1.3%) and copper ($3.84, -0.096, -2.4%) futures.

Separately, wheat futures are up 3.2% on reports that Russia has suspended its Ukraine grain deal.

The lone economic release on the U.S. economic calendar today is the July Empire State Manufacturing Survey (Briefng.comconsensus -8.0; Prior 6.6) at 8:30 a.m. ET.

In corporate news:

  • Microsoft (MSFT 345.79, +0.55, +0.2%): Microsoft and PlayStation (SONY) have signed a binding agreement to keep Call of Duty on PlayStation following the acquisition of Activision Blizzard; Microsoft (MSFT) will face EU competition investigation, according to FT

  • Activision Blizzard (ATVI 93.65, +3.58, +4.0%): US 9th Circuit Court of Appeals rejects FTC appeal to uphold block on Microsoft (MSFT) acquisition of Activision (ATVI)

  • Tesla (TSLA 287.07, +5.69, +2.0%): announces that first Cybertruck has been built in Texas

  • PepsiCo (PEP 186.20, -2.01, -1.1%): Morgan Stanley downgraded to Equal Weight from Overweight

  • United Airlines (UAL 53.27, -0.07, -0.1%): strikes four-year labor deal with pilots union that includes raises up to 40% over four years

  • AT&T (T 14.29, -0.21, -1.5%): Citigroup downgrades to Neutral from Buy

  • Chewy (CHWY 39.75, +1.76, +4.6%): Goldman Sachs upgrades to Buy from Neutral

  • Paramount Global (PARA 15.55, -0.41, -2.6%): parent company in talks with creditors, according to The Wall Street Journal

  • State Street Corp. (STT 66.77, -1.33, -2.0%): JPMorgan downgrades to Underweight from Neutral

  • Apellis Pharmaceuticals (APLS 56.00, -28.50, -33.7%): adverse event report with Syfovre

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region began the week on a mostly lower note while markets in Japan were closed for a holiday and Hong Kong's exchange was shuttered due to a typhoon risk. Japan's Nikkei: CLOSED, Hong Kong's Hang Seng: CLOSED, China's Shanghai Composite: -0.9%, India's Sensex: +0.8%, South Korea's Kospi: -0.4%, Australia's ASX All Ordinaries: -0.1%.

  • In economic data:

  • China's Q2 GDP 0.8% qtr/qtr (expected 0.5%; last 2.2%); 6.3% yr/yr (expected 7.3%; last 4.5%). June Industrial Production 4.4% yr/yr (expected 2.7%; last 3.5%), June Retail Sales 3.1% yr/yr (expected 3.2%; last 12.7%), June Fixed Asset Investment 3.8% yr/yr (expected 3.5%; last 4.0%), and June Unemployment Rate 5.2%, as expected (last 5.2%). June House Prices 0.0% yr/yr (last 0.1%)

  • Singapore's June trade surplus $5.788 bln (expected surplus of $5.55 bln; last surplus of $5.486 bln). June non-oil exports 5.4% m/m (expected 5.9%; last -14.6%); -15.5% yr/yr (expected -15.8%; last -14.8%)

  • In news:

  • China's Q2 GDP beat expectations on qtr/qtr basis, but retail sales underwhelmed, reminding about sluggish consumption. However, China's National Bureau of Statistics said it remains confident about reaching this year's targets.

  • The People's Bank of China made no changes to its one-year medium-term lending facility, but expectations remain in place for more rate adjustments in the coming months.

  • New Zealand's Prime Minister Hipkins said that his country is looking to increase engagement with India.

  • Major European indices trade in the red with France's CAC (-1.3%) leading the retreat amid relative weakness in consumer names after the release of underwhelming data from China. STOXX Europe 600: -0.5%, Germany's DAX: -0.5%, U.K.'s FTSE 100: -0.3%, France's CAC 40: -1.3%, Italy's FTSE MIB: -0.3%, Spain's IBEX 35: -0.1%.

  • In economic data:

  • Italy's June CPI 0.0% m/m, as expected (last 0.3%); 6.4% yr/yr, as expected (last 7.6%)

  • In news:

  • British Prime Minister Sunak will name a new defense minister after the resignation of Ben Wallace.

  • A British consumer watchdog is calling for government action to lower grocery prices.

  • The U.K. will join the Trans-Pacific Partnership, but does not expect to sign a free trade agreement with the U.S.

 

U.S. equity futures:

  • S&P 500 Futures: -8 @ 4,498

  • DJIA Futures: -99 @ 34,410

  • Nasdaq 100 Futures: -12 @ 15,554

Overseas:

  • Europe: DAX -0.5%, FTSE -0.3%, CAC -1.3%

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

Commodities:

  • Crude Oil -0.91 @ 74.41

  • Nat Gas +0.023 @ 2.562

  • Gold -3.95 @ 1960.45

  • Silver -0.147 @ 25.047

  • Copper -0.0998 @ 3.8332


 

Earnings/Guidance:

  • Caledonia Mining (CMCL) reports Q2 production update

  • Wash. Federal (WAFD) reports JunQ results

News:

  • A vital bridge between Russia and Crimea was damaged, according to CNN

  • Treasury Secretary Janet Yellen says it is still "premature" to remove Trump-era Chinese tariffs, according to Bloomberg

  • Appeals Court paused order that blocked White House from communicating with social media companies, according to CNN

  • Russia will not extend Ukraine grain deal, CNBC

  • Cannabis banking legislation has run into bipartisan resistance because of proposed changes, according to Politico

  • Investors are leaving Cathie Wood's fund, according to the Wall Street Journal

  • Acumen Pharmaceuticals (ABOS) Presents Positive Topline Results from First-in-Human Phase 1 Study of ACU193 for Early Alzheimer's Disease at the Alzheimer's Association International Conference

  • Alnylam (ALNY) reports updated interim Phase 1 results for ALN-APP, in development for Alzheimer's Disease and Cerebral Amyloid Angiopathy

  • argenx (ARGX) reports topline data from ADHERE Study of VYVGART Hytrulo; meets primary endpoint

  • Athira Pharma (ATHA) presents phase 2 clinical data correlating improvements in biomarkers of neurodegeneration and neuroinflammation with improvements in measures of cognition and function in alzheimer's disease; New preclinical data demonstrate neuroprotective effects of fosgonimeton in models of amyloid--mediated toxicity

  • BioLineRx (BLRX) announces initiation of randomized Phase 2 Clinical Trial in First Line Metastatic Pancreatic Cancer Based on Preliminary Data from Single-Arm Pilot Phase; Combination Trial Includes Investigational Candidate Motixafortide

  • BioVie (BIVI) Presents Data Showing How NE3107 May Potentially Regulate DNA Methylation of Specific Genes in a Manner Highly Correlated to Observed Improvements in Cognition and Biomarkers of Disease

  • BridgeBio (BBIO) announces consistently positive results from Phase 3 ATTRibute-CM study of acoramidis for patients with transthyretin amyloid cardiomyopathy

  • Butterfly Network detailed (BFLY) strategic realignment plans

  • COMPASS Pathways (CMPS) announces publication of positive data from treatment-resistant depression phase 2 clinical trial of COMP360 psilocybin alongside antidepressants in Nature journal, Neuropsychopharmacology

  • Compugen (CGEN) wins on PVRIG European patent opposition pursued by GSK and a third party

  • Concentrix (CNXC) amends share purchase and contribution agreement

  • Corteva (CTVA): Evogene's (EVGN) Lavie Bio Ltd. announced a licensing agreement with CTVA

  • Danone (DANOY): Moscow takes control of Danone Russia unit, according to Reuters

  • Ebix (EBIX) issues clarifications and updates to the previously issued strategic update

  • Eneti (NETI) signed two new contracts in the offshore wind sector in NW Europe that will generate between ~$5.2-6.7 mln of revenue in 2023

  • ForgeRock (FORG) and Thomas Bravo met with DOJ regarding antitrust issues, according to Bloomberg

  • General Electric (GE) to work with Toshiba (TOSYY) to build offshore wind turbine supply chain, according to Nikkei

  • Global Blue (GB) announces the closure of a European Commission Preliminary Investigation

  • Howard Hughes (HHC) to create a newly incorporated holding company structure-will become the new parent company and replace it as the company that is traded on the NYSE

  • Invivyd (IVVD) announces additional positive initial data from ongoing phase 1 clinical trial of VYD222, a monoclonal antibody candidate in development for the prevention of symptomatic COVID-19 in immunocompromised people

  • JPMorgan Chase (JPM) reports June card metrics

  • Lennar (LEN) co-CEO Rick Beckwitt to retire; Stuart Miller to become Co-CEO

  • Lion Electric (LEV) announces financing transactions for ~$142 mln

  • MAC Limited (MTAL) names Dan Vujcic as Interim CFO

  • Methode Electronics (MEI) COO Joseph Khoury placed on leave

  • Microsoft (MSFT) will face EU competition investigation, according to Financial Times

  • NextGen Healthcare (NXGN) confirmed DOJ settlement

  • Opera (OPRA) provides certain clarifications in connection with its Form F-3 filing

  • Paramount Global (PARA) parent company in talks with creditors, according to the Wall Street Journal

  • Tesla (TSLA) announces that first Cybertruck has been built in Texas

  • United Airlines (UAL) will raise pilot pay, according to the New York Post

  • UPS (UPS): Teamsters are still open for deal with UPS, according to Reuters

M&A:

  • Activision Blizzard (ATVI): US 9th Circuit Court of Appeals rejects FTC appeal to uphold block on Microsoft (MSFT) acquisition of ATVI; MSFT says Call of Duty will be kept on Playstation (SONY)

  • Clear Channel Outdoor (CCO) has entered into exclusive discussions to sell its France business

  • Commercial Metals (CMC): MiddleGround Capital announces the sale of its portfolio company EDSCO Fasteners to Commercial Metals Company; financial terms were not disclosed

  • Four Corners Property Trust (FCPT) acquires four newly built properties for $17.9 mln

  • Hut 8 Mining (HUT) provides update on business combination with USBTC

  • Pardes Biosciences (PRDS) to be acquired by MediPacific for between $2.02-$2.19/share in cash plus contingent value rights

  • Phreesia (PHR) acquires MediFind; financial terms not disclosed

  • Seagen (SGEN) and Pfizer (PFE) receive second request from FTC for additional information and documentary materials related to merger

  • Stratasys (SSYS): Donerail Group, which owns 2.3% of SSYS, issues letter to board to move past Desktop Metal deal and swiftly engage with interested parties

  • Stratasys (SSYS) Board rejects Nano Dimension's (NNDM) revised partial tender offer; to engage in discussions with 3D Systems (DDD)

Syndicate:

  • Alvotech (ALVO) files for 3,664,580 ordinary share offering by selling shareholders

  • Brookline Bancorp (BRKL) files for $200 mln mixed securities shelf offering

  • First Bancorp (FBNC) files mixed securities shelf offering

IPOs:

  • Priced to Trade:

  • ODDITY Tech (Nasdaq: ODD): The consumer tech platform that is built to transform the global beauty and wellness market is expected to price its 10.5 M share IPO between $27-$30

Gapping Up/Down

  • Gapping up:

  • ABOS +41.1%, ARGX +25.4%, CMPS +5%, ATVI+4.3%, OPRA +3.5%, ALNY +3.1%, SSYS +2.1%, TOST+2%, TSLA +1.7%, LEN +0.7%, HUT +0.5%

  • Gapping down:

  • EBIX -19.2%, ALVO -3.1%, PARA -2.9%, CMCL -2%, CNXC -1.2%, FBNC -1%

 

Analyst Research (see Upgrades/Downgradescalendarfor full list):

  • Upgrades

  • Adecoagro S.A. (AGRO) upgraded to Equal-Weight from Underweight at Morgan Stanley; tgt raised to $13

  • America's Car-Mart (CRMT) upgraded to Overweight from Equal-Weight at Stephens; tgt raised to $135

  • Aramark (ARMK) upgraded to Outperform from Mkt Perform at Bernstein; tgt $49

  • Baidu (BIDU) upgraded to Conviction Buy from Buy at Goldman; tgt raised to $197

  • Chewy (CHWY) upgraded to Buy from Neutral at Goldman; tgt raised to $50

  • MorphoSys (MOR) upgraded to Hold from Sell at Deutsche Bank

  • PACCAR (PCAR) upgraded to Buy from Hold at Jefferies; tgt raised to $115

  • Progressive (PGR) upgraded to Overweight from Neutral at JP Morgan; tgt $146

  • Yelp (YELP) upgraded to Buy from Neutral at Goldman; tgt raised to $47

  • Downgrades:

  • AT&T (T) downgraded to Neutral from Buy at Citigroup; tgt lowered to $16

  • Berry Petroleum (BRY) downgraded to Hold from Buy at Jefferies; tgt lowered to $8

  • BioXcel Therapeutics (BTAI) downgraded to Neutral from Buy at Guggenheim

  • Bright Horizons (BFAM) downgraded to Market Perform from Outperform at BMO Capital Markets; tgt $99

  • Brunswick (BC) downgraded to Sector Weight from Overweight at KeyBanc Capital Markets

  • Conagra (CAG) downgraded to Equal-Weight from Overweight at Morgan Stanley; tgt lowered to $37

  • Cryoport (CYRX) downgraded to Sector Weight from Overweight at KeyBanc Capital Markets

  • FIGS, Inc. (FIGS) downgraded to Mkt Perform from Outperform at Raymond James

  • FormFactor (FORM) downgraded to Market Perform from Outperform at Northland Capital; tgt $32

  • Frontier Communications Parent (FYBR) downgraded to Neutral from Buy at Citigroup; tgt lowered to $17

  • Leslie's (LESL) downgraded to Hold from Buy at Jefferies; tgt lowered to $7

  • MSCI (MSCI) downgraded to Underperform from Neutral at Exane BNP Paribas; tgt $450

  • PepsiCo (PEP) downgraded to Equal-Weight from Overweight at Morgan Stanley; tgt $210

  • State Street (STT) downgraded to Mkt Perform from Outperform at Keefe Bruyette; tgt lowered to $73

  • State Street (STT) downgraded to Neutral from Buy at UBS; tgt lowered to $72

  • State Street (STT) downgraded to Underweight from Neutral at JP Morgan; tgt lowered to $71

  • Telephone & Data (TDS) downgraded to Neutral from Buy at Citigroup; tgt lowered to $8

  • Twilio (TWLO) downgraded to Neutral from Overweight at Piper Sandler; tgt raised to $71

  • Yelp (YELP) downgraded to Underweight from Sector Weight at KeyBanc Capital Markets; tgt $34

  • YETI Holdings (YETI) downgraded to Underweight from Sector Weight at KeyBanc Capital Markets; tgt $34

  • Others:

  • argenx (ARGX) resumed with an Outperform at Evercore ISI; tgt $436

  • BeiGene (BGNE) initiated with a Buy at Citigroup; tgt $275

  • Blade Air Mobility (BLDE) initiated with a Buy at Ladenburg Thalmann; tgt $13

  • BNY Mellon (BK) placed on positive catalyst watch at Citigroup

  • Compass Minerals (CMP) initiated with a Buy at Loop Capital; tgt $58

  • Endava (DAVA) initiated with a Buy at HSBC Securities; tgt $74

  • EPAM Systems (EPAM) initiated with a Hold at HSBC Securities; tgt $255

  • Immunocore (IMCR) initiated with a Hold at Canaccord Genuity; tgt $67

  • On (ONON) initiated with an Outperform at TD Cowen; tgt $39

  • PennyMac (PFSI) initiated with a Buy at Jefferies; tgt $85

  • Saia (SAIA) initiated with an Overweight at Barclays; tgt $420

  • Stagwell (STGW) initiated with a Buy at Goldman; tgt $12

  • Valvoline (VVV) placed on 30-day positive catalyst watch at Citigroup

Econ Data:

  • 08:30 ET: Empire State Manufacturing for July (Briefing.comConsensus -8.0; Prior 6.6)

 Earnings:

  • Monday (Jul 17)

  • Afternoon: ELS

  • Tuesday (Jul 18)

  • Morning: BAC BK SCHW LMT MS NVS PNC PLD SYF

  • Afternoon:  AIR FULT HWC IBKR JBHT OMC PNFP UCBI WAL

  • Wednesday (Jul 19)

  • Morning:  ALLY ASML BKR CFG CBSH ELV FHN GS HAL MTB NDAQ NTRS USB

  • Afternoon:  AA CALX CNS COLB CCI DFS EFX FNB FR IBM KMI LVS LBRT MRTN NBHC NFLX REXR SLG STLD TSLA UAL WTFC ZION

  • Thursday (Jul 20)

  • Morning: ABT AAL BMI BHLB BX DHI EWBC FITB FCX GPC HOMB JNJ KEY MAN MKTX MMC NEM NOK PM POOL SAP SNA TSM TCBI TRV TFC WBS WNS

  • Afternoon:  ASB BANF OZK COF CSX FFBC GBCI HTH ISRG KNX PPG WRB

  • Friday (Jul 21) 

  • Morning:  AXP ALV AN CMA HBAN IPG RF ROP SXT SLB

 

Asia & Europe detail:

Asia: Nikkei CLOSED, Hang Seng CLOSED, Shanghai Composite -0.9%

Equity indices in the Asia-Pacific region began the week on a mostly lower note while markets in Japan were closed for a holiday and Hong Kong's exchange was shuttered due to a typhoon risk. China's Q2 GDP beat expectations on qtr/qtr basis, but retail sales underwhelmed, reminding about sluggish consumption. However, China's National Bureau of Statistics said it remains confident about reaching this year's targets. The People's Bank of China made no changes to its one-year medium-term lending facility, but expectations remain in place for more rate adjustments in the coming months. New Zealand's Prime Minister Hipkins said that his country is looking to increase engagement with India.

  • In economic data:

  • China's Q2 GDP 0.8% qtr/qtr (expected 0.5%; last 2.2%); 6.3% yr/yr (expected 7.3%; last 4.5%). June Industrial Production 4.4% yr/yr (expected 2.7%; last 3.5%), June Retail Sales 3.1% yr/yr (expected 3.2%; last 12.7%), June Fixed Asset Investment 3.8% yr/yr (expected 3.5%; last 4.0%), and June Unemployment Rate 5.2%, as expected (last 5.2%). June House Prices 0.0% yr/yr (last 0.1%)

  • Singapore's June trade surplus $5.788 bln (expected surplus of $5.55 bln; last surplus of $5.486 bln). June non-oil exports 5.4% m/m (expected 5.9%; last -14.6%); -15.5% yr/yr (expected -15.8%; last -14.8%)

---Equity Markets---

  • Japan's Nikkei: CLOSED

  • Hong Kong's Hang Seng: CLOSED

  • China's Shanghai Composite: -0.9%

  • India's Sensex: +0.8%

  • South Korea's Kospi: -0.4%

  • Australia's ASX All Ordinaries: -0.1%

---FX---

  • USD/JPY: -0.5% to 138.09

  • USD/CNH: +0.3% to 7.1729

  • USD/INR: UNCH at 82.02

 

Europe: DAX -0.5%, FTSE -0.3%, CAC -1.3%

Major European indices trade in the red with France's CAC (-1.3%) leading the retreat amid relative weakness in consumer names after the release of underwhelming data from China. British Prime Minister Sunak will name a new defense minister after the resignation of Ben Wallace. A British consumer watchdog is calling for government action to lower grocery prices. The U.K. will join the Trans-Pacific Partnership, but does not expect to sign a free trade agreement with the U.S.

  • In economic data:

  • Italy's June CPI 0.0% m/m, as expected (last 0.3%); 6.4% yr/yr, as expected (last 7.6%)

---Equity Markets---

  • STOXX Europe 600: -0.5%

  • Germany's DAX: -0.5%

  • U.K.'s FTSE 100: -0.3%

  • France's CAC 40: -1.3%

  • Italy's FTSE MIB: -0.3%

  • Spain's IBEX 35: -0.1%

---FX---

  • EUR/USD: +0.1% to 1.1236

  • GBP/USD: -0.1% to 1.3082

  • USD/CHF: -0.3% to 0.8591


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