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20/07/22 Briefing




The S&P 500 futures are down 8 points and are trading 0.3% below fair value. The Nasdaq 100 futures are down 15 points and are trading 0.3% below fair value. The Dow Jones Industrial Average futures are down 66 points and are trading 0.1% below fair value.

Yesterday's sentiment-driven gains have been stymied by an early inclination to sell into strength. 

The European Commission officially asked member states to cut their gas commission by 15% between August 1st and March 31st 2023. The 27 EU governments are asked to update their emergency plans and report to the Commission every two months on how they're progressing to comply. Commission President Ursula von der Leyen said, "whether a partial major cut-off of Russian gas or a total cut-off of Russian gas, Europe needs to be ready."

In other European news, bond markets got some relief ahead of a key ECB meeting Thursday when Italy's Prime Minister Draghi said he will stay in power provided parliamentarians back his coalition government.

Inflation hit a 40-yr high of 9.4% in the UK, fueling fears that the Bank of England will have to be more aggressive. Bank of England Governor Bailey said policymakers will consider a 50 basis point rate hike at their meeting next month.

In other news, the mortgage demand dropped to a 22-yr low with the MBA Mortgage Application Index showing a contraction of more than 6% week-over-week.

In corporate news:

  • Netflix (NFLX 214.00, +13.37, +6.1%): beats by $0.25, reports revs in-line; guides Q3 EPS below consensus, revs below consensus; global streaming paid net adds -0.97 mln vs -2.00 mln prior guidance; guides to Q3 at +1.00 mln

  • Nasdaq (NDAQ 161.00, +1.68, +1.1%):  beats by $0.15, beats on revs; announces 3-for-1 stock split and quarterly dividend of $0.20/share

  • Baker Hughes (BKR 27.00, -1.22, -4.3%):  misses by $0.11, misses on revs 

  • ASML (ASML 493.35, -5.01, -1.0%): beats by 0.01, beats on revs; guides Q3 revs below consensus; guides FY22 revs below consensus

  • Biogen (BIIB 219.74, -0.52, -0.2%): beats by $1.16, beats on revs; raises FY22 guidance

  • Merck (MRK 91.53, -0.83, -0.9%): reports Phase 3 KEYNOTE-412 Trial did not meet its primary endpoint

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region ended the midweek session on a higher note. Japan's Nikkei: +2.7%, Hong Kong's Hang Seng: +1.1%, China's Shanghai Composite: +0.8%, India's Sensex: +1.2%, South Korea's Kospi: +0.7%, Australia's ASX All Ordinaries: +1.8%.

  • Economic data was limited:

  • Australia's June MI Leading Index -0.2% m/m (last -0.1%)

  • In news:

  • The People's Bank of China made no changes to its one-year and five-year loan prime rates.

  • Press reports from China indicate that the mortgage boycott has spread to over 300 construction projects in 91 cities.

  • Caixin reported that suppliers to Chinese developers are struggling to pay bills due to money owed from developers.

  • Japan Airlines will reassign about 3,000 workers, according to Nikkei.

  • Reserve Bank of Australia Governor Lowe said that Australia's neutral nominal rate is at least 2.5% and could be higher if medium-term inflation expectations increase.

  • Major European indices trade on a lower note. STOXX Europe 600: -0.1%, Germany's DAX: -0.4%, U.K.'s FTSE 100: -0.3%, France's CAC 40: -0.4%, Italy's FTSE MIB: -1.0%, Spain's IBEX 35: -1.1%.

  • In economic data:

  • Eurozone's May Current Account deficit EUR4.50 bln (last deficit of EUR5.80 bln)

  • Germany's June PPI 0.6% m/m (expected 1.3%; last 1.6%); 32.7% yr/yr (expected 33.9%; last 33.6%)

  • U.K.'s June CPI 0.8% m/m (expected 0.7%; last 0.7%); 9.4% yr/yr (expected 9.3%; last 9.1%). June Core CPI 0.4% m/m (expected 0.5%; last 0.5%); 5.8% yr/yr, as expected (last 5.9%). June Input PPI 1.8% m/m (expected 1.4%; last 2.4%) and Output PPI 1.4% m/m (expected 1.1%; last 1.6%). May House Price Index 12.8% yr/yr (last 12.4%)

  • In news:

  • The U.K.'s conservative party leadership race will continue today with three candidates left.

  • Bank of England Governor Bailey said that a 50-bps rate hike is on the table for the next policy meeting, but it isn't locked in.

  • Italy's Prime Minister Draghi is expected to address the Italian Senate, where he is expected to comment on rebuilding the governing coalition. Germany's June PPI was a bit cooler than expected, pressuring the yr/yr rate from a record high.


U.S. equity futures:

  • S&P 500 Futures: -11 @ 3,926

  • DJIA Futures: -81 @ 31,747

  • Nasdaq 100 Futures: -19 @ 12,230

Overseas:

  • Europe: DAX -0.4%, FTSE -0.3%, CAC -0.4%

  • Asia: Nikkei +2.7%, Hang Seng +1.1%, Shanghai Composite +0.8%

Commodities:

  • Crude Oil -1.49 @ 99.25

  • Nat Gas  +0.148 @ 7.412

  • Gold -6.00 @ 1704.70

  • Silver -0.073  @ 18.640

  • Copper +0.0558 @ 3.3468

U.S. Summary:

  • Earnings/Guidance:

  • Abbott Labs (ABT) beats by $0.29, beats on revs; raises FY22 EPS above consensus

  • ASML (ASML) beats by 0.01, beats on revs; guides Q3 revs below consensus; guides FY22 revs below consensus

  • Baker Hughes (BKR) misses by $0.11, misses on revs

  • Bath & Body Works (BBWI) lowers Q2 EPS guidance and FY22 sales guidance

  • Berkshire Hills Bancorp (BHLB) beats by $0.04

  • Biogen (BIIB) beats by $1.16, beats on revs; raises FY22 guidance

  • Cal-Maine Foods (CALM) beats by $0.29, beats on revs; approves dividend of $0.75/share for 4Q22

  • Comerica (CMA) beats by $0.15

  • Elevance Health (ELV) beats by $0.30, beats on revs; guides FY22 EPS above consensus

  • Forestar (FOR) misses by $0.01 (3 estimates), misses on revenue; lowers FY22 revenue guidance below consensus

  • Fulton Fincl (FULT) beats by $0.06, net interest income increased by 10.1% yr/yr

  • Hancock Whitney (HWC) beats by $0.03, net interest income increased 7% qtr/qtr; guidance for 6-8% loan growth for year is unchanged, with bias towards upper end of range

  • Healthcare Services Group (HCSG) misses by $0.04, reports revs in-line

  • HIVE Blockchain Technologies Ltd (HIVE) reports Q4 results; beats on revs

  • Hope Bancorp (HOPE) beats by $0.02, beats on revs

  • Huazhu Group (HTHT) provides Q2 hotel ops updates

  • Interactive Brokers (IBKR) misses by $0.06, grew customer accounts 36% yr/yr to 1.92 mln

  • J.B. Hunt Transport (JBHT) beats by $0.07, beats on revs

  • M&T Bank (MTB) reports Q2 (Jun) results

  • MarketAxess (MKTX) beats by $0.05, misses on revs

  • Matson (MATX) guides Q2 earnings above two analyst estimate driven by China service strength

  • NASDAQ (NDAQ) beats by $0.15, beats on revs

  • National Bank (NBHC) beats by $0.03, net interest income margin expanded by 48 bps

  • Netflix (NFLX) beats by $0.25, reports revs in-line; guides Q3 EPS below consensus, revs below consensus; global streaming paid net adds -0.97 mln vs -2.00 mln prior guidance; guides to Q3 at +1.00 mln

  • Northern Trust (NTRS) misses by $0.07, reports revs in-line

  • Omnicom (OMC) beats by $0.12, beats on revs

  • Pinnacle Finl (PNFP) beats by $0.19, beats on revs

  • United Comm Banks (UCBI) misses by $0.02, reports revs in-line

  • Vale S.A. (VALE) provides Q2 production and sales data

  • Xos (XOS) delivered a total of 73 units to customers in Q2 including several FedEx Ground Operators

  • General News:

  • EU Commission confirms gas demand reduction plan to prepare EU for supply cuts

  • Russian President Putin puts conditions on restart of gas supplies to Europe, according to Bloomberg

  • Russia planning to annex additional Ukrainian territory, according to CNBC

  • President Biden will not declare climate emergency, but will issue executive orders on climate change today, according to Politico

  • Senate passes procedural vote to begin debate on bill that will provide $52 bln in funding for semiconductor industry; final votes coming later this week

  • Democrats do not have enough votes in House or Senate to pass assault weapons ban, according to Politico

  • Macau to reopen casinos on Saturday following COVID-19 closures, according to Reuters

  • NYC Mayor Eric Adams says his city "may not have central business districts anymore" due to remote work, according to the New York Post

  • FDA commissions external agency experts to conduct a comprehensive evaluation of agency activities, including tobacco products

  • AAR Corp (AIR) awarded a Captains of Industry contract with the Defense Logistics Agency

  • Aehr Test Systems (AEHR) receives $12.8 mln in orders from its lead silicon carbide test and burn-in customer for multiple FOX-XP systems amongst other products to meet increased production capacity needs for the electric vehicle market

  • Airbus (EADSY) expects supply chain issues to last until next year, according to Financial Times

  • AMC Entertainment (AMC) repurchases $72.5 mln of its second lien debt at a 31% discount

  • ARK Innovation (ARKK) ETF closes ARK Transparency ETF as July 29

  • Arrowhead (ARWR) appointed Patrick O'Brien as Chief Operating Officer and General Counsel effective as of July 15, 2022

  • Bausch + Lomb (BLCO): Company announces Joseph Papa has stepped down as chair of the Board, begins search for new CEO; Thomas Ross Sr. will serve as new chair of the Board

  • Belite Bio (BLTE) Submits Investigational New Drug (IND) Application to FDA for Approval to Proceed with LBS-008 Phase 3 Clinical Trial for the Treatment of Stargardt Disease

  • Biodesix (BDSX) to present data at IASLC 2022 World Conference demonstrating that the VeriStrat Test is predictive of progression free survival and overall survival in patients with low or negative PD-L1 treated with immune checkpoint inhibitors

  • Boeing (BA): VietJet places order for 200 737 MAX jets, according to Bloomberg

  • Chipotle (CMG) to close Maine store where workers were training to form a union, according to Market Watch

  • Copart (CPRT): CFO John North to step down on Aug 31to assume role as CEO of Lazydays Holdings; co has started search for his replacement

  • Didi (DIDIY): China will fine Didi $1 bln for alleged data breach issues, according to Reuters

  • Electronic Arts (EA) CTO Ken Moss to depart; company moves to a structure with two pillars - Create & Development and Enterprise, naming two separate CTOs for each division

  • Exelixis (EXEL) provides patent updates in litigation against MSN Pharmaceuticals

  • General Electric (GE): GE Digital announces at the Farnborough Air Show that it had signed a Memorandum of Understanding with Microsoft (MSFT) and Teradata (TDC) to develop a solution designed to reduce carbon emissions

  • Inozyme Pharma (INZY) Announces Positive Preliminary Data from Phase 1/2 Clinical Trial of INZ-701 in Subjects with ABCC6 Deficiency (pseudoxanthoma elasticum or PXE)

  • Karyopharm Therapeutics (KPTI) announces new regulatory designations for eltanexor for the treatment of myelodysplastic syndromes

  • Leidos (LDOS) receives $291 mln follow-on contract

  • Linde plc (LIN) signs agreement to supply high-purity industrial gases to PT Freeport Indonesia

  • Liquidia Technologies (LQDA) announces that the U.S. Patent Trial and Appeal Board ruled in its favor in the Inter Partes Review proceeding against United Therapeutics Corporation

  • Merck (MRK) reports Phase 3 KEYNOTE-412 Trial did not meet its primary endpoint

  • Mercury (MRCY) has been selected by Leonardo UK to provide multiple radar test and simulation systems to factory-test Leonardo's innovative E-scan radar

  • NASDAQ (NDAQ) announces 3-for-1 stock split and quarterly dividend of $0.20/share

  • Northern Trust (NTRS) raises quarterly dividend to $0.75 per share, up from $0.70 per share prior

  • Novavax (NVAX): US CDC Advisory Committee voted unanimously to recommend the use of the Novavax COVID-19 vaccine, adjuvanted as a two-dose primary series in individuals aged 18 and older

  • Novavax (NVAX): President Biden issues statement on FDA and CDC authorizing Novavax's COVID-?19 vaccine for adults

  • Nuvalent (NUVL) announces leadership promotions; Darlene Noci, A.L.M. promoted to Chief Development Officer

  • Origin Materials (ORGN) and Revlon (REV) announce initiative to develop next-generation sustainable packaging for cosmetics

  • QIAGEN's (QGEN) Clinical Decision Support Platform QCI Surpasses Three Million NGS Patient Test Cases

  • Rio Tinto (RIO) settles all tax disputes with Australian Tax Office

  • TELA Bio (TELA) has been awarded a group purchasing agreement for Synthetic Bioabsorbable Mesh Products with Premier (PINC)

  • TotalEnergies SE (TTE) has definitively withdrawn from Myanmar

  • VBL Therapeutics (VBLT) Announces Top-Line Data from Phase 3 OVAL Trial of Ofra-Vec in Patients with Platinum-Resistant Ovarian Cancer

  • Warner Bros. Discovery (WBD) plans to add massive collection of A24 films to HBO Max, according to ScreenRant

  • M&A:

  • BrightView (BV) announces acquisition of SGS Hawaii, a commercial landscaping company headquartered in Wailuku, Hawaii; terms of transaction not disclosed

  • Hillenbrand (HI) to acquire LINXIS Group from IBERIS INTERNATIONAL S. R.L, an affiliate of IK Partners, and additional sellers for an enterprise value of ~ 572 mln

  • Hillenbrand (HI) Announces Intention to Explore Strategic Alternatives for its Batesville Business

  • KKR (KKR) acquires Atlantic Yards from Hines and its institutional joint venture partner advised by Invesco Real Estate

  • Netflix (NFLX) plans to acquire animation studio Animal Logic; financial details not disclosed

  • SPS Commerce (SPSC) acquires EDI provider GCommerce for $45 mln in cash

  • Syndicate

  • Golden Ocean (GOGL) files mixed securities shelf offering

  • Revolution Medicines (RVMD) prices offering of 11.5 mln shares of common stock at $20.00 per share

  • Singular Genomics Systems (OMIC) files for $250 mln mixed securities shelf offering

  • IPOs:

  • Expected to Price:

  • No IPOs expected.

Gapping Up/Down

  • Gapping up:

  • AEHR +7.4%, NFLX +7.1%, OMC +6.9%, BDSX +4.5%, FULT +4.3%, HIVE +4%, NBHC +3.4%, ROKU +3.2%, XOS +2.1%, DIS +2.1%, PARA +2%, WBD +1.8%, MATX +1.8%, LSCC +1.5%, FUBO +1.5%, NVAX+1.3%, TSLA +1.3%, BA +1.2%, VALE +1.1%, QGEN+1%, CNM +1%, CALM +1%, DCP +0.9%, RIO +0.9%, HOPE +0.8%, EA +0.6%

  • Gapping down:

  • VBLT -79%, FOR -16.3%, RVMD -10.5%, INZY -4.8%, OMIC -3.4%, IBKR -3.1%, LQDA -2%, GOGL -1.4%, AIR -1%, BLTE -0.8%, JBHT -0.6%, ELV -0.5%

 

Analyst Research (see Upgrades/Downgradescalendarfor full list):

  • Upgrades

  • Albemarle (ALB) upgraded to Sector Weight from Underweight at KeyBanc Capital Markets

  • Alibaba (BABA) upgraded to Outperform from Mkt Perform at Bernstein; tgt raised to $130

  • Axalta Coating Systems (AXTA) upgraded to Overweight from Sector Weight at KeyBanc Capital Markets; tgt $30

  • Berry Global (BERY) upgraded to Outperform from Neutral at Credit Suisse; tgt $78

  • Check Point Software (CHKP) upgraded to Buy from Underperform at BofA Securities; tgt raised to $140

  • Chevron (CVX) upgraded to Buy from Hold at HSBC Securities; tgt lowered to $167

  • DT Midstream (DTM) upgraded to Overweight from Equal Weight at Barclays; tgt raised to $59

  • FMC Corp (FMC) upgraded to Overweight from Sector Weight at KeyBanc Capital Markets; tgt $122

  • Downgrades:

  • Ally Financial (ALLY) downgraded to In-line from Outperform at Evercore ISI; tgt $36

  • Arista Networks (ANET) downgraded to Underperform from Buy at BofA Securities; tgt lowered to $105

  • Atara Biotherapeutics (ATRA) downgraded to Sell from Neutral at Citigroup; tgt lowered to $3

  • Cummins (CMI) downgraded to Mkt Perform from Outperform at Bernstein; tgt lowered to $190

  • Eagle Materials (EXP) downgraded to Neutral from Overweight at JP Morgan; tgt lowered to $130

  • Equity Residential (EQR) downgraded to Underweight from Neutral at Piper Sandler; tgt lowered to $70

  • ExlService (EXLS) downgraded to Sell from Neutral at Citigroup; tgt lowered to $134

  • F5 Networks (FFIV) downgraded to Neutral from Buy at BofA Securities; tgt lowered to $170

  • Forestar (FOR) downgraded to Neutral from Buy at BTIG Research

  • Others:

  • Agilent (A) initiated with a Buy at UBS; tgt $139

  • Arcellx (ACLX) initiated with a Buy at Canaccord Genuity; tgt $32

  • Caesars Entertainment (CZR) initiated with a Neutral at Susquehanna; tgt $32

  • Danaher (DHR) initiated with a Buy at UBS; tgt $297

  • Datadog (DDOG) initiated with an Outperform at Bernstein; tgt $172

  • Dyne Therapeutics (DYN) initiated with a Buy at Chardan Capital Markets; tgt $17

  • Forward Air (FWRD) initiated with a Hold at The Benchmark Company

Upcoming Events:

  • Econ Data:

  • 07:00 ET: MBA Mortgage Applications Index for July 16 (Briefing.comConsensus NA; Prior -1.7%)

  • 10:00 ET: Existing Home Sales for June (Briefing.comConsensus 5.40M; Prior 5.41M)

  • 10:30 ET: EIA Crude Oil Inventories for July 16 (Briefing.comConsensus NA; Prior +3.25M)

  • 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 +2.7%, Hang Seng +1.1%, Shanghai Composite +0.8%

Equity indices in the Asia-Pacific region ended the midweek session on a higher note. The People's Bank of China made no changes to its one-year and five-year loan prime rates. Press reports from China indicate that the mortgage boycott has spread to over 300 construction projects in 91 cities. Caixin reported that suppliers to Chinese developers are struggling to pay bills due to money owed from developers. Japan Airlines will reassign about 3,000 workers, according to Nikkei. Reserve Bank of Australia Governor Lowe said that Australia's neutral nominal rate is at least 2.5% and could be higher if medium-term inflation expectations increase.

  • Economic data was limited:

  • Australia's June MI Leading Index -0.2% m/m (last -0.1%)

---Equity Markets---

  • Japan's Nikkei: +2.7%

  • Hong Kong's Hang Seng: +1.1%

  • China's Shanghai Composite: +0.8%

  • India's Sensex: +1.2%

  • South Korea's Kospi: +0.7%

  • Australia's ASX All Ordinaries: +1.8%

---FX---

  • USD/JPY: UNCH at 138.21

  • USD/CNH: +0.3% to 6.7582

  • USD/INR: +0.2% to 80.01

Europe: DAX -0.4%, FTSE -0.3%, CAC -0.4%

Major European indices trade on a lower note. The U.K.'s conservative party leadership race will continue today with three candidates left. Bank of England Governor Bailey said that a 50-bps rate hike is on the table for the next policy meeting, but it isn't locked in. Italy's Prime Minister Draghi is expected to address the Italian Senate, where he is expected to comment on rebuilding the governing coalition. Germany's June PPI was a bit cooler than expected, pressuring the yr/yr rate from a record high.

  • In economic data:

  • Eurozone's May Current Account deficit EUR4.50 bln (last deficit of EUR5.80 bln)

  • Germany's June PPI 0.6% m/m (expected 1.3%; last 1.6%); 32.7% yr/yr (expected 33.9%; last 33.6%)

  • U.K.'s June CPI 0.8% m/m (expected 0.7%; last 0.7%); 9.4% yr/yr (expected 9.3%; last 9.1%). June Core CPI 0.4% m/m (expected 0.5%; last 0.5%); 5.8% yr/yr, as expected (last 5.9%). June Input PPI 1.8% m/m (expected 1.4%; last 2.4%) and Output PPI 1.4% m/m (expected 1.1%; last 1.6%). May House Price Index 12.8% yr/yr (last 12.4%)

---Equity Markets---

  • STOXX Europe 600: -0.1%

  • Germany's DAX: -0.4%

  • U.K.'s FTSE 100: -0.3%

  • France's CAC 40: -0.4%

  • Italy's FTSE MIB: -1.0%

  • Spain's IBEX 35: -1.1%

---FX---

  • EUR/USD: -0.2% to 1.0206

  • GBP/USD: -0.1% to 1.1987

  • USD/CHF: +0.1% to 0.9699


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