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19/07/22 Briefing




The S&P 500 futures are up 32 points and are trading 0.8% above fair value. The Nasdaq 100 futures are up 109 points and are trading 0.7% above fair value. The Dow Jones Industrial Average futures are up 191 points and are trading 0.7% above fair value.

The futures for the major indices are indicating a modestly higher open. The BofA global fund manager survey reportedly indicated exposure to risk assets has been reduced to levels that weren't seen even during the global financial crisis and exposure to cash is at highest level since 2001, according to Bloomberg.

Also in play is the average U.S. gasoline prices falling below $4.50/gallon for the first time in nine weeks. The energy complex futures have pulled back this morning. WTI crude oil futures are down 2.4% to $100.12/bbl. Unleaded gasoline futures are down 1.5% to $3.21/gal. Natural gas futures are down 2.0% to $7.23/mmbtu.

In addition, the U.S. dollar is weakening with the EUR/USD up 1.2% to 1.0261. Also, the U.S. Dollar Index is down 0.9% to 106.42.

Separately, the ECB may be considering a 50 basis point rate hike this week instead of the expected 25 basis points, according to Bloomberg. 

In corporate news:

  • Johnson & Johnson (JNJ 175.35, +1.12, +0.6%): beats by $0.04, reports revs in-line; lowers outlook

  • IBM (IBM 129.58, 8.55, -6.2%): beats by $0.02, beats on revs; reaffirms FY22 revenue guidance; cut free cash flow guidance

  • Halliburton (HAL 29.15, +0.30, +1.0%): beats by $0.04, beats on revs

  • Hasbro (HAS 74.80, +0.38, +0.5%):  beats by $0.21, misses on revs; provides FY22 outlook

  • Netflix (NLFX 193.55, +2.63, +1.4%): up ahead of earnings report after today's close

  • Lockheed Martin (LMT 371.79, -15.49, -4.0%): misses by $0.07, misses on revs; lowers outlook, guides FY22 EPS below consensus, revs below consensus

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region ended Tuesday on a mixed note. Japan's Nikkei: +0.7%, Hong Kong's Hang Seng: -0.9%, China's Shanghai Composite: UNCH, India's Sensex: +0.5%, South Korea's Kospi: -0.2%, Australia's ASX All Ordinaries: -0.5%.

  • Economic data was limited:

  • Hong Kong's June Unemployment Rate 4.7% (last 5.1%)

  • In news:

  • China reportedly extended lockdown measures in some parts of Shanghai.

  • The Reserve Bank of Australia's latest policy minutes showed a debate about increasing rates by 25 or 50 bps, noting that the current cash rate is well below the estimated neutral range.

  • The People's Bank of China is not expected to change its loan prime rates tomorrow.

  • Major European indices trade in mixed fashion. STOXX Europe 600: +0.1%, Germany's DAX: UNCH, U.K.'s FTSE 100: +0.2%, France's CAC 40: -0.1%, Italy's FTSE MIB: +0.3%, Spain's IBEX 35: +1.2%.

  • In economic data:

  • Eurozone's June CPI 0.8% m/m, as expected (last 0.8%); 8.6% yr/yr, as expected (last 8.1%). June Core CPI 0.2% m/m, as expected (last 0.5%); 3.7% yr/yr, as expected (last 3.8%). May Construction Output 0.36% m/m (last -0.97%)

  • U.K.'s May Average Earnings Index + Bonus 6.2% yr/yr (expected 6.7%; last 6.8%), May three-month employment change 296,000 (expected 170,000; last 177,000), and May Unemployment Rate 3.8% (expected 3.9%; last 3.8%). June Claimant Count -20,000 (expected -41,200; last -34,700)

  • Swiss June trade surplus CHF3.80 bln (last surplus of CHF3.00 bln)

  • In news:

  • European Central Bank policymakers are reportedly debating whether to increase rates by 25 bps or 50 bps this week.

  • British public sector workers are expected to get a 5.0% raise, on average.

  • The French government announced conditions for renationalizing EDF.

  • The U.K.'s conservative party leadership race is down to four candidates with Rishi Sunak and Penny Mordaunt remaining in the lead.


U.S. equity futures:

  • S&P 500 Futures: +28 @ 3,859

  • DJIA Futures: +169 @ 31,242

  • Nasdaq 100 Futures: +95 @ 11,973

Overseas:

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

  • Asia: Nikkei +0.7%, Hang Seng -0.9%, Shanghai Composite UNCH

Commodities:

  • Crude Oil -1.95 @ 97.44

  • Nat Gas  -0.218 @ 7.261

  • Gold +3.80 @ 1714.00

  • Silver -0.065  @ 18.775

  • Copper -0.0310 @ 3.3150

U.S. Summary:

  • Earnings/Guidance:

  • Ally Financial (ALLY) misses by $0.11

  • APA Corp. (APA) provides Q2 production guidance update

  • AxoGen (AXGN) guides Q2 revs above consensus; reaffirms FY22revs guidance; announces changes to its commercial organization

  • BHP Group (BHP) reports FY22operational results

  • Citizens Financial Group (CFG) beats by $0.12; raises dividend

  • Equity Lifestyle Properties (ELS) misses by $0.01, beats on revs

  • Forward Air (FWRD) guides Q2 EPS and revenue above consensus

  • Genmab (GMAB) announces net sales of DARZALEX for Q2

  • Halliburton (HAL) beats by $0.04, beats on revs

  • Hasbro (HAS) beats by $0.21, misses on revs; provides FY22outlook

  • IBM (IBM) beats by $0.02, beats on revs; reaffirms FY22revenue guidance

  • Invitae (NVTA) introduces a realignment of its operations; expects to deliver approximately $326 mln in non-GAAP annualized cost savings in 2023; guides Q2 revs below consensus; FY22revenue growth in the low double-digits yr/yr; revenue growth of +15-25% after FY23

  • iRhythm (IRTC) reaffirms FY22revenue guidance; expects prelim unit volumes for Q2 to be slightly ahead of expectations

  • Johnson & Johnson (JNJ) beats by $0.04, reports revs in-line; lowers outlook

  • Lockheed Martin (LMT) misses by $0.07, misses on revs; lowers outlook, guides FY22EPS below consensus, revs below consensus

  • Manpower (Manpower misses by $0.03, misses on revs; guides Q3 EPS in-line ) misses by $0.03, misses on revs; guides Q3 EPS in-line

  • Marten Transport (MRTN) beats by $0.07, beats on revs; increases its driver numbers by 15% yr/yr

  • Novartis AG (NVS) beats by $0.06, reports revs in-line; provides FY22guidance

  • Signature Bank (SBNY) beats by $0.21

  • Silvergate Capital (SI) beats by $0.28

  • Truist (TFC) beats by $0.05, reports revs in-line

  • General News:

  • ECB considering 50 basis point rate hike this week, according to Bloomberg

  • China has warned US of "forceful measures" if House Speaker Nancy Pelosi (D-CA) decides to visit Taiwan, according to Reuters

  • Ukraine warning of large reductions to wheat harvest, according to Financial Times

  • EU aiming to reschedule coronavirus vaccine deliveries to 2024 due to surplus of shots, according to Financial Times

  • Acadia Pharmaceuticals (ACAD) Submits New Drug Application to the U.S. FDA for Trofinetide for the Treatment of Rett Syndrome

  • Amazon (AMZN): US investigating Amazon warehouses, according to ABC News

  • Amneal Pharmaceuticals (AMRX) provides Opana ER litigation updates against Endo Pharmaceuticals and Impax

  • Apellis Pharmaceuticals (APLS) receives FDA Acceptance and Priority Review of the New Drug Application for Pegcetacoplan

  • AstraZeneca (AZN): Enhertu approved in the EU for patients with HER2-positive metastatic breast cancer treated with one or more prior anti-HER2-based regimens

  • Avadel Pharmaceuticals (AVDL) receives tentative approval of LUMRYZ

  • Boeing (BA): 777 partners expands 737 MAX fleet, ordering up to 66 more fuel-efficient jets

  • Boeing (BA) near deal to sell 787 jets to AerCap Holdings (AER), according to the Wall Street Journal

  • Clene (CLNN) receives positive EMA opinion on Orphan Drug Designation for CNM-Au8

  • Codexis (CDXS) CEO John Nicols to retire, names Dr. Stephen Dilly as next CEO

  • Corporacin Amrica Airports (CAAP) reports June 2022 passenger traffic reaching 77.5% of June 2019 levels, a 147.8% jump yr/yr; Italy and Ecuador at 90% of pre-pandemic levels, while Armenia is at 111%

  • Eni S.p.A. (E) signs a new contract on blocks 404-208 in Algeria

  • Excelerate Energy (EE) signs MOU with Bulgaria's Overgas relating to regasified LNG downstream sales

  • Grove Collaborative Holdings (GROV) entered into a Standby Equity Purchase Agreement with YA II PN, LTD

  • GXO Logistics (GXO) reaches multi-year agreement with 6 River Systems for robots

  • Illumina (ILMN): EU Commission alleges Illumina and GRAIL breached EU merger rules by early implementation of their acquisition

  • Incyte (INCY) announces U.S. FDA Approval of Opzelura cream for the treatment of vitiligo

  • Invitae (NVTA) names current COO Kenneth D. Knight as CEO, succeeding Sean George, who will continue as a member of the Board of Directors; Co-Founder Randy Scott returns as Chairman

  • Laboratory Corp (LH) expands its automated clinical trial kit production line in Belgium

  • La-Z-Boy (LZB) finalizes plans for previously announced closure of its Newton, MS facility

  • Lion Electric (LEV) announced that its customers in Canada can now receive up to $150,000 in funding under Transport Canada's newly launched Incentives for Medium and Heavy-duty Zero-Emission Vehicles Program

  • Lockheed Martin (LMT) awarded a $225 mln US Navy contract modification related to 15 F-35A aircraft and nine Lot 16 F-35 aircraft for the Netherlands

  • M&T Bank (MTB) authorizes $3.0 bln share repurchase program

  • Matrix Service's (MTRX) subsidiary selected by Northrop Grumman for two thermal vacuum chamber projects

  • Merck (MRK): LYNK-003 trial evaluating LYNPARZA with or without bevacizumab in patients with unresectable or metastatic colorectal cancer to stop for futility

  • Moog (MOG.A) and Triumph (TGI) enter into MRO agreement

  • Netflix (NFLX) asking customers in five Latin America countries to pay a fee to use shared passwords, according to Bloomberg

  • O-I Glass's (OI) subsidiary Paddock Enterprises emerges from Chapter 11 protection

  • Starbucks (SBUX) CEO talks of more store closures caused by issues relating to homeless, mental illness, crime etc., according to video tweet posted by Ari Hoffman

  • Ultragenyx (RARE) and GeneTx Provide Program Update on GTX-102 for Angelman Syndrome Including Promising Interim Data from Phase 1/2 Study

  • Verra Mobility (VRRM) expands its European operations with new contract wins, partnerships and strategic memberships

  • Viking Therapeutics (VKTX) announces FDA has lifted clinical hold on Phase 1b trial of VK0214 in patients with X-ALD

  • M&A:

  • Chase Corp (CCF) acquires NuCera Solutions

  • Jefferies (JEF) announces strategic transactions; to spin off to its shareholders its holdings in Vitesse Energy prior to the end of 2022

  • Mandiant (MNDT): DOJ grants early termination of the waiting period regarding merger with Google (GOOG)

  • NCR Corp (NCR) in discussions to private equity firm Veritas Capital to be acquired, according to the Wall Street Journal

  • Suncor (SU): Quebec's Alimentation Couche-Tard possible bidder for Suncor retail unit, according to Bloomberg

  • Turning Point Therapeutics (TPTX): Bristol Myers Squibb (BMY) announces extension of Turning Point tender offer

  • Twitter (TWTR) accuses Elon Musk of trying to delay M&A deal, according to the Wall Street Journal

  • West Fraser (WFG): CVC Capital and Kronospan aiming to bid for WFG, according to Reuters

  • Syndicate

  • No syndicate news of note.

  • IPOs:

  • Softbank (SFTBY) puts plans for a London IPO of Arm on hold due to political turmoil in the UK government, according to Financial Times

  • Expected to Price:

  • No IPOs expected.

Gapping Up/Down

  • Gapping up:

  • SI +10.1%, SHO +7.6%, MARA +5.2%, EE +4%, AXGN+3.3%, APA +3%, NVS +3%, MTRX +2.2%, VRRM+2.2%, ILMN +2.2%, BA +2.1%, FWRD +2%, CDXS+1.9%, NFLX +1.6%, LEV +1.6%, MNDT +1.4%, AZN+1.4%, INCY +1.1%

  • Gapping down:

  • NVTA -8.2%, RARE -6.6%, IBM -4.9%, HAS -1.2%, SFTBY -0.7%

 

Analyst Research (see Upgrades/Downgradescalendarfor full list):

  • Upgrades

  • Arista Networks (ANET) upgraded to Buy from Hold at Needham; tgt $128

  • Canadian Natrl Res (CNQ) upgraded to Buy from Neutral at BofA Securities; tgt $100

  • Cboe Global Markets (CBOE) upgraded to Overweight from Underweight at Morgan Stanley; tgt raised to $140

  • Cinemark (CNK) upgraded to Overweight from Equal-Weight at Morgan Stanley; tgt $22

  • ConocoPhillips (COP) upgraded to Buy from Neutral at BofA Securities; tgt lowered to $134

  • Credicorp LTD (BAP) upgraded to Outperform from Neutral at Credit Suisse; tgt $142

  • Danone (DANOY) upgraded to Hold from Sell at Berenberg

  • EOG Resources (EOG) upgraded to Buy from Neutral at BofA Securities; tgt lowered to $119

  • Exxon Mobil (XOM) upgraded to Overweight from Neutral at Piper Sandler; tgt raised to $109

  • First Quantum Minerals (FQVLF) upgraded to Equal Weight from Underweight at Barclays

  • FTC Solar (FTCI) upgraded to Neutral from Underweight at Piper Sandler; tgt raised to $3.50

  • Ovintiv (OVV) upgraded to Buy from Neutral at BofA Securities; tgt lowered to $60

  • Southwestern Energy (SWN) upgraded to Buy from Neutral at BofA Securities; tgt raised to $13

  • Takeda Pharma (TAK) upgraded to Outperform from Market Perform at Cowen; tgt raised to $24

  • Downgrades:

  • Apollo Global Management (APO) downgraded to Equal-Weight from Overweight at Morgan Stanley; tgt lowered to $60

  • Asana (ASAN) downgraded to Underperform from Sector Perform at RBC Capital Mkts; tgt lowered to $13

  • Beacon Roofing Supply (BECN) downgraded to Mkt Perform from Outperform at William Blair

  • California Resources Corp (CRC) downgraded to Underperform from Buy at BofA Securities; tgt lowered to $49

  • Denbury (DEN) downgraded to Underperform from Neutral at BofA Securities; tgt lowered to $71

  • Duck Creek Technologies (DCT) downgraded to Sector Perform from Outperform at RBC Capital Mkts; tgt lowered to $14

  • Fastly (FSLY) downgraded to Underperform from Sector Perform at RBC Capital Mkts; tgt lowered to $9

  • Franco-Nevada (FNV) downgraded to Underweight from Equal Weight at Barclays; tgt lowered to $112

  • Henkel AG (HENKY) downgraded to Sell from Hold at Berenberg

  • Hudbay Minerals (HBM) downgraded to Sector Perform from Outperform at National Bank Financial

  • IBEX Ltd. (IBEX) downgraded to Neutral from Buy at Citigroup; tgt $20

  • Invitae (NVTA) downgraded to Hold from Buy at The Benchmark Company

  • Invitae (NVTA) downgraded to Mkt Perform from Outperform at SVB Leerink

  • Pioneer Natural Resources (PXD) downgraded to Underperform from Neutral at BofA Securities; tgt lowered to $244

  • StepStone Group (STEP) downgraded to Equal-Weight from Overweight at Morgan Stanley; tgt lowered to $30

  • Sunnova Energy (NOVA) downgraded to Neutral from Overweight at Piper Sandler; tgt lowered to $23

  • Sunrun (RUN) downgraded to Neutral from Overweight at Piper Sandler; tgt lowered to $29

  • Viavi (VIAV) downgraded to Hold from Buy at Needham

  • Others:

  • Amcor (AMCR) initiated with a Buy at CLSA

  • American Homes 4 Rent (AMH) initiated with a Perform at Oppenheimer; tgt $35

  • Apellis Pharmaceuticals (APLS) initiated with a Buy at H.C. Wainwright; tgt $75

  • Casey's General (CASY) initiated with a Buy at The Benchmark Company; tgt $230

  • Fathom Holdings (FTHM) initiated with an Overweight at Stephens; tgt $14

  • Invitation Homes (INVH) initiated with a Perform at Oppenheimer; tgt $39

  • Shake Shack (SHAK) initiated with a Hold at Gordon Haskett; tgt $50

  • TaskUs (TASK) initiated with a Buy at Citigroup; tgt $28

  • TELUS International (TIXT) assumed with a Buy at Citigroup; tgt $33

  • Tesla (TSLA) assumed with an Outperform at Credit Suisse; tgt $1000

  • Waldencast Acquisition Corp. (WALD) initiated with an Outperform at Telsey Advisory Group; tgt $13

Upcoming Events:

  • Econ Data:

  • 08:30 ET: Housing Starts for June (Briefing.comConsensus 1598K; Prior 1549K)

  • 08:30 ET: Building Permits for June (Briefing.comConsensus 1680K; Prior 1695K)

  • Earnings:

  • Monday (Jul 18)

  • Morning:  BAC SCHW GS PLD SYF

  • Afternoon: ELS IBM MRTN

  • Tuesday (Jul 19)

  • Morning: ALLY CFG HAL HAS JNJ LMT MAN NVS SBNY SI TFC

  • Afternoon: CALM FULT HWC HOPE IBKR JBHT NBHC NFLX OMC PNFP UCBI

  • Wednesday (Jul 20)

  • Morning:  ABT ASML BMI BKR BIIB CMA ELV FHN HCSG LAD MTB MKTX NDAQ NTRS

  • Afternoon:  AA CNS CCK CCI CSX CVBF DFS EFX FNB FR KMI KNX LSTR LVS PACW XM REXR RLI SEIC SLG STLD TSLA UMPQ UAL VMI WTFC

  • Thursday (Jul 21)

  • Morning: AIR ABB ALK AAL T AUB AN BANC BKU BX COLB DHI DHR DPZ DOV DOW EWBC FITB FCX GATX HRI HOMB HBAN IPG IQV KEY MMC NOK NUE PPBI PM POOL DGX SASR SAP SFNC SNA SON SNV TCBI TSCO TRV TPH UNP WBS WNS

  • Afternoon:  ASB OZK BJRI SAM COF FFBC GBCI HTH ISRG MAT PPG RHI STX SNAP SIVB THC UFPI VICR WRB WAL

  • Friday (Jul 22) 

  • Morning:  AXP ALV CLF FBP GNTX HCA NEE NEP RF ROP SLB SXT TWTR VZ

  • Afternoon: None

Asia & Europe detail:

Asia: Nikkei +0.7%, Hang Seng -0.9%, Shanghai Composite UNCH

Equity indices in the Asia-Pacific region ended Tuesday on a mixed note. China reportedly extended lockdown measures in some parts of Shanghai. The Reserve Bank of Australia's latest policy minutes showed a debate about increasing rates by 25 or 50 bps, noting that the current cash rate is well below the estimated neutral range. The People's Bank of China is not expected to change its loan prime rates tomorrow.

  • Economic data was limited:

  • Hong Kong's June Unemployment Rate 4.7% (last 5.1%)

---Equity Markets---

  • Japan's Nikkei: +0.7%

  • Hong Kong's Hang Seng: -0.9%

  • China's Shanghai Composite: UNCH

  • India's Sensex: +0.5%

  • South Korea's Kospi: -0.2%

  • Australia's ASX All Ordinaries: -0.5%

---FX---

  • USD/JPY: -0.4% to 137.54

  • USD/CNH: -0.3% to 6.7408

  • USD/INR: -0.1% to 79.92

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

Major European indices trade in mixed fashion. European Central Bank policymakers are reportedly debating whether to increase rates by 25 bps or 50 bps this week. British public sector workers are expected to get a 5.0% raise, on average. The French government announced conditions for renationalizing EDF. The U.K.'s conservative party leadership race is down to four candidates with Rishi Sunak and Penny Mordaunt remaining in the lead.

  • In economic data:

  • Eurozone's June CPI 0.8% m/m, as expected (last 0.8%); 8.6% yr/yr, as expected (last 8.1%). June Core CPI 0.2% m/m, as expected (last 0.5%); 3.7% yr/yr, as expected (last 3.8%). May Construction Output 0.36% m/m (last -0.97%)

  • U.K.'s May Average Earnings Index + Bonus 6.2% yr/yr (expected 6.7%; last 6.8%), May three-month employment change 296,000 (expected 170,000; last 177,000), and May Unemployment Rate 3.8% (expected 3.9%; last 3.8%). June Claimant Count -20,000 (expected -41,200; last -34,700)

  • Swiss June trade surplus CHF3.80 bln (last surplus of CHF3.00 bln)

---Equity Markets---

  • STOXX Europe 600: +0.1%

  • Germany's DAX: UNCH

  • U.K.'s FTSE 100: +0.2%

  • France's CAC 40: -0.1%

  • Italy's FTSE MIB: +0.3%

  • Spain's IBEX 35: +1.2%

---FX---

  • EUR/USD: +1.2% to 1.0264

  • GBP/USD: +0.6% to 1.2025

  • USD/CHF: -1.0% to 0.9678


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