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18/07/23 Briefing


The S&P 500 futures are down 3 points and are trading 0.1% below fair value. The Nasdaq 100 futures are down 20 points and are trading 0.1% below fair value. The Dow Jones Industrial Average futures are down 20 points and are trading 0.1% below fair value.

Stock futures are flattish relative to fair value. Market participants are waiting to see if there will be any follow through on yesterday's gains. Also, several financial companies, including Bank of America and Morgan Stanley, have reported better than expected results, yet the early response has been lackluster.

The Q2 earnings reporting season is picking up steam and market participants are wondering if the good news has been priced in already.

Separately, the Retail Sales report for June will be released at 8:30 a.m. ET today, which is contributing to a wait-and-see mentality.

Goldman Sachs lowered the probability of a recession in the U.S. over the next 12 months to 20% from 25%.

The 2-yr Treasury note yield is down three basis points to 4.69% and the 10-yr note yield is down four basis points to 3.76%.

In corporate news:

  • Bank of America (BAC 29.56, +0.16, +0.5%): beats by $0.04, reports revs in-line

  • Morgan Stanley (MS 86.23, -0.14, -0.2%): beats by $0.04, beats on revs

  • PNC 1.09% (PNC 123.64, -3.52, -2.8%): beats by $0.07, misses on revs; guides Q3 revs below consensus; lowers FY23 revs below consensus; raises dividend 5% to $1.55/share

  • BNY Mellon (BK 43.18, -0.36, -0.8%): beats by $0.08, beats on revs

  • Masimo (MASI 104.25, -42.92, -29.2%): issues downside Q2 revenue guidance due to lower-than-expected healthcare revenue

  • American Express (AXP 175.50, +0.11, +0.1%): named a top pick at Morgan Stanley and has an Overweight rating in front of its earnings report later this week

  • Pinterest (PINS 30.12, +0.97, +3.3%): upgraded to Outperform from In Line at Evercore ISI

  • UnitedHealth (UNH 486.81, +2.73, +0.6%): upgraded to Outperform from Market Perform at Bernstein

  • Norwegian Cruise Line (NCLH 20.40, -0.36, -1.7%): downgraded to Hold from Buy at Truist

  • Chipotle Mexican Grill (CMG 2154.98, +27.47, +1.3%): confirms first restaurant in the Middle East in partnership with Alshaya Group

  • Lockheed Martin (LMT 474.59, +4.64, +1.0%): beats by $0.18, beats on revs; raises FY23 EPS in-line, revs above consensus

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region ended Tuesday on a mostly lower note. Japan's Nikkei: +0.3%, Hong Kong's Hang Seng: -2.1%, China's Shanghai Composite: -0.4%, India's Sensex: +0.3%, South Korea's Kospi: -0.4%, Australia's ASX All Ordinaries: -0.2%.

  • In economic data:

  • Japan's May Tertiary Industry Activity Index 1.2% m/m (expected 0.4%; last 0.9%)

  • Hong Kong's June Unemployment Rate 2.9% (expected 3.1%; last 3.0%)


  • In news:

  • China's National Development and Reform Commission announced a series of measures to boost the economy and support households.

  • China Securities Journal speculated that the reserve requirement ratio will be cut in Q3.

  • Shares of developer Evergrande remain halted after the company reported its results for the first half of FY22, which showed a worsening equity position.

  • Australia's Treasurer Chalmers said that the next CPI report should show that inflation is moderating.



  • Major European indices trade near their flat lines amid a dearth of economic data. STOXX Europe 600: +0.2%, Germany's DAX: -0.1%, U.K.'s FTSE 100: +0.1%, France's CAC 40: UNCH, Italy's FTSE MIB: UNCH, Spain's IBEX 35: -0.5%.

  • No Data Today

  • In news:

  • European Central Bank policymaker Knot echoed the view that the likelihood for rate hikes after the July meeting will depend on data while policymaker Visco said that while overall inflation is coming down, underlying inflation remains stubborn.

  • British food retailer Ocado reaffirmed its guidance for FY23 and said that peak food inflation is in the rear-view mirror.



U.S. equity futures:

  • S&P 500 Futures: -4 @ 4,519

  • DJIA Futures: -14 @ 34,572

  • Nasdaq 100 Futures: -25 @ 15,669

Overseas:

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

  • Asia: Nikkei +0.3%, Hang Seng -2.1%, Shanghai Composite -0.4%

Commodities:

  • Crude Oil +0.30 @ 74.38

  • Nat Gas +0.086 @ 2.598

  • Gold +10.55 @ 1966.95

  • Silver +0.095 @ 25.113

  • Copper -0.0315 @ 3.8125


Earnings/Guidance:

  • Astronics ( ATRO 0.00% ) guides Q2 revenue above two analyst estimate

  • Bank of America ( BAC 1.00% ) beats by $0.04, reports revs in-line

  • BNY Mellon ( BK 2.37% ) beats by $0.08, beats on revs; affirms increased quarterly common stock dividend to $0.42 per share from $0.37 per share (as previously announced)

  • Equity Lifestyle Properties ( ELS 0.27% ) reports FFO in-line, beats on revs; guides Q3 FFO in-line; guides FY23 FFO in-line

  • FB Financial ( FBK 4.64% ) reports Q2 adjusted EPS of $0.77 vs $0.65 FactSet consensus

  • Lockheed Martin ( LMT 1.22% ) beats by $0.18, beats on revs; raises FY23 EPS in-line, revs above consensus

  • Main Street Capital ( MAIN 0.88% ) sees Q2 EPS above consensus

  • Masimo ( MASI 0.00% ) issues downside Q2 revenue guidance due to lower-than-expected healthcare revenue

  • Morgan Stanley (MS) beats by $0.04, beats on revs

  • Novartis AG ( NVS 0.11% ) beats by $2.03, beats on revs; guides FY23 revs above consensus; initiates $15 bln buyback

  • PNC ( PNC 1.09% ) beats by $0.07, misses on revs; guides Q3 revs below consensus; lowers FY23 revs below consensus; raises dividend 5% to $1.55/share

  • POSCO ( PKX 8.15% ) sees Q2 revs of KRW 20.1 trln vs. KRW 19.4 trln last year; sees operating profit of KRW 1.3 trln versus 0.7 trln last year (no comparable ests)

  • Synchrony Financial ( SYF 1.75% ) beats by $0.07

  • TotalEnergies SE ( TTE 0.47% ) provides Q2 trading statement

News:

  • US plans to narrow China technology investment limits by next year, according to Bloomberg

  • US regulators will release banking capital rule plan next week

  • Senator Joe Manchin said he will decide on third party presidential run next year. Democrats fear that Mr. Manchin's run wound only help Donald Trump win the presidency, according to NBC News

  • White House announces cybersecurity labeling program for smart devices to protect consumers

  • 4DMT ( FDMT 0.00% ) Completes Enrollment of Phase 2 PRISM Clinical Trial for Intravitreal 4D-150 in Patients with Wet AMD and Reports Interim Safety and Tolerability Data

  • AAR Corp ( AIR 0.10% ) extends existing airframe MRO services relationship with United Airlines

  • American Lithium Corp. ( AMLI 0.00% ) defers spin out of Macusani Uranium Project; to advance the next phase of work at Macusani within American Lithium

  • Anheuser-Busch InBev ( BUD 1.01% ): Sales of Bud Light fell 23.6% over July 4th period, according to the New York Post

  • Apellis Pharmaceuticals ( APLS 0.00% ) provides details on SYFOVRE in SEC filing

  • CareDx ( CDNA 0.00% ) applauds District Court decision to uphold jury verdict that Natera (NTRA) falsely advertised its Prospera Transplant Test

  • Chipotle Mexican Grill ( CMG 3.48% ) confirms first restaurant in the Middle East in partnership with Alshaya Group

  • Colliers ( CIGI 0.00% ) announces normal course issuer bid; company may purchase up to 4.0 mln Subordinate Voting Shares during twelve month period commencing July 20, 2023 and ending no later than July 19, 2024

  • Comcast ( CMCSA 0.00% ): Peacock will increase prices of streaming service, according to the Wall Street Journal

  • Corporacin Amrica Airports ( CAAP 1.66% ) reports a 32.4% yr/yr increase in passenger traffic in June 2023, surpassing pre-pandemic levels of June 2019 by 2.6% for first time

  • Corcept's ( CORT 0.00% ) Miricorilant Shows Great Promise in Treatment of Non-Alcoholic Steatohepatitis

  • Corteva ( CTVA 0.63% ) and Bioceres (BIOX) entered into an exclusive agreement to advance the availability of biological solutions in Europe

  • CSX ( CSX 0.00% ): Officials say there is no known hazard to the public following CSX train derailment yesterday and evacuation orders were lifted, according to CBS News

  • Dollar General ( DG 1.24% ) accused of labor violations, according to Bloomberg

  • Electronic Systems Tech ( ELST ) receives $150 mln contract to supply PULS Rocket Artillery Systems to an international customer

  • First Majestic Silver ( AG 1.68% ) announced positive drilling results from its ongoing exploration programs at San Dimas, Santa Elena, and Jerritt Canyon

  • Incannex Healthcare ( IXHL 0.00% ) engages Fortrea to manage its FDA IND Opening Phase 2/3 clinical trial investigating IHL-42X for treatment of obstructive sleep apnoea

  • Karyopharm ( KPTI 0.00% ) Receives FDA Fast Track Designation for Selinexor for the Treatment of Myelofibrosis

  • Liberty Media ( LSXMA 0.00% ) split-off of Atlanta Braves Holdings and reclassification of tracking stock approved

  • Lithium Americas ( LAC 1.40% ) receives favorable appeals court ruling regarding Thacker Pass lithium mine

  • Meta Platforms ( META 0.00% ) CEO Mark Zuckerberg says "I'm very optimistic about how the Threads community is coming together. Early growth was off the charts, but more importantly 10s of millions of people now come back daily"

  • Mineralys Therapeutics ( MLYS 0.00% ) Announces Expansion of Planned Phase 2 Trial of Lorundrostat Alone and in Combination with SGLT2 Inhibitor to Treat Patients with Chronic Kidney Disease

  • Natera ( NTRA 0.00% ) announces favorable decision from U.S. District Court for the District of Delaware in false advertising case brought by CareDx (CDNA)

  • Pfizer ( PFE 1.27% ) and Flagship Pioneering to create a new pipeline of innovative medicines

  • Premier ( PINC 0.00% ) to collaborate with Endo Intl to address Pitocin shortage

  • PTC Therapeutics ( PTCT 0.00% ) appoints Pierre Gravier as CFO

  • Ross Stores ( ROST 0.00% ) opens 27 locations; plans to open 100 new stores in FY23

  • RTX ( RTX 0.16% ) and Northrop Grumman (NOC) awarded follow-on contract from DARPA for hypersonic weapon advancements

  • Silvercorp Metals ( SVM 1.63% ) report high-grade silver-lead intercepts from its ongoing diamond drilling program at the TLP mine at the Ying Mining District, China

  • Telephone & Data ( TDS 8.38% ) provides update on the amount of lead-covered cables

  • Transocean ( RIG 1.54% ) announces $518 million ultra-deepwater drillship contract

  • Uber ( UBER 1.70% ): California Supreme Court ruled that Uber workers can sue the company, according to the L.A Times

  • Vodafone PLC ( VOD 0.00% ) provides update on co-control partnership for Vantage Towers

  • Wolfspeed ( WOLF 3.55% ) reports that its supply chain will not be impacted by proposed China export restrictions on gallium and germanium

  • Woodside Energy Group ( WDS 0.49% ) provides Sangomar project update

M&A:

  • Activision Blizzard ( ATVI 0.00% ): Microsoft (MSFT) deal will close later than expected, according to Bloomberg

  • Ares Management ( ARES 0.09% ) acquires Crescent Point Capital

  • Berry Petroleum ( BRY 0.00% ) to acquire Macpherson Energy for $70 mln

  • Coty ( COTY 1.23% ) agrees to sell $150 mln of its retained Wella Stake

  • Digital Realty Trust ( DLR 0.06% ): GI Partners acquires majority interest in a hyperscale data center portfolio from Digital Realty Trust

  • Etsy ( ETSY 0.00% ) entered into a quota purchase agreement to sell the parent holding company of Elo7 Servios de Informtica S.A. to Enjoei S.A., a corporation in Brazil

  • Freedom Acquisition I Corp ( FACT 24.02% ): Complete Solaria completes business combination with Freedom Acquisition I Corp; will commence trading on Nasdaq under ticker symbol 'CSLR'

  • Microsoft ( MSFT 0.00% ) in discussions to extend deal contract with Activision (ATVI), according to Reuters

  • Newmont Goldcorp ( NEM 0.80% ) announces Canadian Competition Bureau Clearance for acquisition of Newcrest (NCMGY); transaction close expected in the fourth quarter

  • Stratasys ( SSYS 0.00% ) to engage in discussions with DDD; SSYS must first conduct proper due diligence

  • Stratasys ( SSYS 0.00% ): Nano Dimension (NNDM) increases its proposed price to $25.00 per share in cash in its special tender offer price for Stratasys shares

Syndicate:

  • Acumen Pharmaceuticals ( ABOS 0.00% ) announces $100 million proposed public offering of common stock

  • argenx ( ARGX 0.00% ) commences global offering of $750 mln of ordinary shares, which may include ADSs

  • CEL-SCI Corp ( CVM 11.72% ) prices offering of 2.5 mln shares of common stock at $2.00 per share

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:

  • KPTI +23.9%, FBK +15.1%, PTCT +4.4%, TDS +3.7%, NVS +3.4%, DM +3.2%, SSYS +3.2%, BRY +3%, ATRO +3%, DDD +2.8%, CLBR +1.5%, AMLI +1.4%, CDNA +1.2%, CIGI +0.9%, SVM +0.6%, NOC +0.6%


  • Gapping down:

  • MASI -27.4%, CVM -22.7%, ABOS -9.8%, COTY -2.1%, SYF -2%, FDMT -1%, DLR -0.9%, ARGX -0.7%, MDT -0.5%


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

  • Upgrades

  • Apartment Income REIT Corp. (AIRC) upgraded to Outperform from Market Perform at BMO Capital Markets; tgt raised to $42

  • Casey's General (CASY) upgraded to Outperform from Neutral at Credit Suisse; tgt raised to $285


  • Downgrades:

  • BridgeBio Pharma (BBIO) downgraded to Hold from Buy at Jefferies; tgt raised to $33

  • Celanese (CE) downgraded to Hold from Buy at Deutsche Bank; tgt raised to $125

  • Commscope (COMM) downgraded to Hold from Buy at Deutsche Bank; tgt lowered to $6

  • Norwegian Cruise Line (NCLH) downgraded to Hold from Buy at Truist; tgt raised to $23


  • Others:

  • Anywhere Real Estate (HOUS) initiated with a Neutral at BTIG Research

  • AvidXchange (AVDX) initiated with a Positive at Susquehanna; tgt $15.50

  • Cabaletta Bio (CABA) initiated with a Buy at Guggenheim; tgt $34

  • Compass (COMP) initiated with a Buy at BTIG Research; tgt $5

  • Douglas Elliman (DOUG) initiated with a Neutral at BTIG Research

  • Fidelity National (FNF) assumed with a Buy at BTIG Research; tgt $47

  • First American Financial (FAF) assumed with a Neutral at BTIG Research

  • RE/MAX Holdings (RMAX) initiated with a Neutral at BTIG Research

  • Standex International (SXI) resumed with an Outperform at William Blair

  • Stewart Info (STC) assumed with a Neutral at BTIG Research

  • Tarsus Pharmaceuticals (TARS) initiated with an Outperform at William Blair; tgt $44


Econ Data:

  • 08:30 ET: Retail Sales for June (Briefing.com Consensus 0.5%; Prior 0.3%)

  • 08:30 ET: Retail Sales ex-auto for June (Briefing.com Consensus 0.3%; Prior 0.1%)

  • 09:15 ET: Industrial Production for June (Briefing.com Consensus 0.0%; Prior -0.2%)

  • 09:15 ET: Capacity Utilization for June (Briefing.com Consensus 79.5%; Prior 79.6%)

  • 10:00 ET: Business Inventories for May (Briefing.com Consensus 0.2%; Prior 0.2%)

  • 10:00 ET: NAHB Housing Market Index for July (Briefing.com Consensus 56.0; Prior 55.0)

  • 16:00 ET: Net Long-Term TIC Flows for May (Briefing.com Consensus NA; Prior $127.8B)

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 +0.3%, Hang Seng -2.1%, Shanghai Composite -0.4%

Equity indices in the Asia-Pacific region ended Tuesday on a mostly lower note. China's National Development and Reform Commission announced a series of measures to boost the economy and support households. China Securities Journal speculated that the reserve requirement ratio will be cut in Q3. Shares of developer Evergrande remain halted after the company reported its results for the first half of FY22, which showed a worsening equity position. Australia's Treasurer Chalmers said that the next CPI report should show that inflation is moderating.

  • In economic data:

  • Japan's May Tertiary Industry Activity Index 1.2% m/m (expected 0.4%; last 0.9%)

  • Hong Kong's June Unemployment Rate 2.9% (expected 3.1%; last 3.0%)


---Equity Markets---

  • Japan's Nikkei: +0.3%

  • Hong Kong's Hang Seng: -2.1%

  • China's Shanghai Composite: -0.4%

  • India's Sensex: +0.3%

  • South Korea's Kospi: -0.4%

  • Australia's ASX All Ordinaries: -0.2%

---FX---

  • USD/JPY: -0.3% to 138.23

  • USD/CNH: +0.1% to 7.1793

  • USD/INR: UNCH at 81.99

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

Major European indices trade near their flat lines amid a dearth of economic data. European Central Bank policymaker Knot echoed the view that the likelihood for rate hikes after the July meeting will depend on data while policymaker Visco said that while overall inflation is coming down, underlying inflation remains stubborn. British food retailer Ocado reaffirmed its guidance for FY23 and said that peak food inflation is in the rear-view mirror.

  • No Data Today

---Equity Markets---

  • STOXX Europe 600: +0.2%

  • Germany's DAX: -0.1%

  • U.K.'s FTSE 100: +0.1%

  • France's CAC 40: UNCH

  • Italy's FTSE MIB: UNCH

  • Spain's IBEX 35: -0.5%

---FX---

  • EUR/USD: +0.1% to 1.1249

  • GBP/USD: +0.2% to 1.3098

  • USD/CHF: -0.2% to 0.8583

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