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21/07/23 Briefing


The S&P 500 futures are up 9 points and are trading 0.2% above fair value. The Nasdaq 100 futures are up 63 points and are trading 0.4% above fair value. The Dow Jones Industrial Average futures are down 1 point and are trading in line with fair value.

Stock futures have been mixed again this morning following yesterday's big tech sell-off. There's been a continued inclination to buy on weakness in the space, which has supported the broader market and led to the outperformance of the Nasdaq 100 futures.

Treasuries are little changed from yesterday's settlement levels. The 2-yr note yield is unchanged at 4.84% and the 10-yr note yield is down one basis point to 3.84%. 

The U.S. Dollar Index is up 0.2% to 101.08 with USD/JPY +1.2% to 141.73. The weakness in the yen follows a Bloomberg report that indicates BOJ officials don't see an urgent need at this point to address the side effects of the yield curve control program.

There is no U.S. economic data of note today. 

In corporate news:

  • American Express (AXP 171.70, -5.41, -3.1%): beats by $0.08, misses on revs; reaffirms FY23 EPS guidance, revs guidance

  • Knight-Swift (KNX 54.00, -1.85, -3.3%): misses by $0.05, misses on revs; guides FY23 EPS below consensus

  • CSX (CSX 32.40, -1.31, -3.9%): reports EPS in-line, revs in-line

  • Capital One (COF 114.90, -0.09, -0.1%): beats by $0.26, misses on revs; deposits decreased 2%

  • Sunnova Energy (NOVA 22.09, -0.49, -2.2%) downgraded to Market Perform from Outperform at BMO Capital Markets

  • Carvana (CVNA 46.22, -0.51, -1.1%): downgraded to Neutral from Overweight at Piper Sandler

  • Intuitive Surgical (ISRG 332.55, -15.11, -4.4%): beats by $0.09, reports revs in-line, da Vinci procedures up 22% negatively impacted by COVID-19 cases and increased hospitalizations; increases FY23 procedure growth to +20-22 yr/yr from +18-21%

  • PPG Industries (PPG 146.48, -3.24, -2.2%): beats by $0.11, reports revs in-line; guides Q3 EPS in-line; guides FY23 EPS in-line

  • Digital World Acquisition Corp (DWAC 15.99, +2.63, +19.7%): SEC announces settled fraud charges

  • SLB (SLB 56.50, -0.76, -1.3%): beats by $0.01, misses on revs

  • Interpublic (IPG 35.15, -2.77, -7.3%): beats by $0.13, beats on revs

  • AutoNation (AN 172.90, -4.02, -2.3%): beats by $0.38; beats on revs

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region ended Friday on a mixed note to close out a mixed week. Japan's Nikkei: -0.5% (+0.3% for the week), Hong Kong's Hang Seng: +0.8% (-1.7% for the week), China's Shanghai Composite: -0.1% (-2.2% for the week), India's Sensex: -1.3% (+0.9% for the week), South Korea's Kospi: +0.4% (-0.7% for the week), Australia's ASX All Ordinaries: -0.2% (+0.1% for the week).

  • In economic data:

  • Japan's June National CPI 3.3% yr/yr (expected 3.5%; last 3.2%) and Core CPI 3.3% yr/yr (expected 3.3%; last 3.2%)

  • South Korea's June PPI -0.2% m/m (expected -0.3%; last 0.1%) and -0.2% yr/yr (expected 0.1%; last 3.3%)

  • In news:

  • Nothing mixed about the yen's performance, however. It is decidedly weak today (USD/JPY +1.3% to 141.82) following a Bloomberg report that indicates BOJ officials don't see much of an urgent need at this point to address the side effects of the yield curve control program.

  • This report comes in front of the BOJ policy meeting next week, so it has tamped down speculation about a shift in policy at that meeting.

  • Japan's June CPI was up 3.3% yr/yr, which was a little weaker than expected but still comfortably above the BOJ's 2.0% target.

  • China, meanwhile, is reportedly pushing plans to help stimulate demand for autos and electronic products.

  • A weak post-COVID recovery has been evident in Chinese data, yet it has flowed through to trade data elsewhere, such as South Korea's exports, which were down 15.2% yr/yr for the first 20 days of July. Imports were down 28.0% yr/yr.

  • Major European indices trade on a mostly mixed and flattish note. STOXX Europe 600: flat, Germany's DAX: -0.5%, U.K.'s FTSE 100: +0.1%, France's CAC 40: +0.3%, Italy's FTSE MIB: flat, Spain's IBEX 35: +0.1%.

  • In economic data:

  • UK's June Retail Sales 0.7% m/m (expected 0.2%; last 0.1%) and -1.0% yr/yr (expected -1.5%; last -2.3%); Core Retail Sales 0.8% m/m (expected 0.2%; last 0.1%) and -0.9% yr/yr (expected -1.6%; last -1.9%)

  • Spain's Consumer Confidence 92.4 (expected 79.4; last 81.5)

  • In news:

  • Germany's DAX (-0.5%) is underperforming following SAP earnings results and guidance.

  • Spain's IBEX is sitting tight in front of Sunday's national election.

  • On a related political note, French President Macron made changes to his cabinet following recent riots and UK Prime Minister Sunak is reportedly looking at November 2024 as the time for the next general election.

  • By-elections in the UK on Thursday saw the Conservative Party lose two of the three elections.

  • Leading up to next Thursday'sECB policy meeting, economists expect another 25-basis points rate hike but don't believe the ECB will stay at peak rate for a long time, thinking that a rate cut could happen in March next year, according to a Bloomberg survey.

 

U.S. equity futures:

  • S&P 500 Futures: +11 @ 4,546

  • DJIA Futures: -1 @ 35,225

  • Nasdaq 100 Futures: +74 @ 15,540

Overseas:

  • Europe: DAX -0.5%, FTSE +0.1%, CAC +0.3%

  • Asia: Nikkei -0.5%, Hang Seng +0.8%, Shanghai Composite -0.1%

Commodities:

  • Crude Oil +0.88 @ 76.53

  • Nat Gas +0.015 @ 2.772

  • Gold -2.40 @ 1968.50

  • Silver +0.041 @ 25.003

  • Copper -0.0883 @ 3.8262


 

Earnings/Guidance:

  • Alta Equipment Group (ALTG) sees Q2 revs above consensus

  • American Express (AXP) beats by $0.08, misses on revs; reaffirms FY23 EPS guidance, revs guidance

  • Assoc Banc-Corp (ASB) beats by $0.07, misses on revs

  • Autoliv (ALV) beats by $0.52, beats on revs

  • AutoNation (AN) beats by $0.38; beats on revs

  • BancFirst (BANF) beats by $0.03, net interest income increased 21.8% yr/yr

  • Banco Latinoamer (BLX) beats on top and bottom lines

  • Bank OZK (OZK) beats by $0.05, beats on revs, deposits up 20% yr/yr

  • Capital One (COF) beats by $0.26, misses on revs; deposits decreased 2%

  • Codexis (CDXS) guides Q2 revs above consensus

  • Comerica (CMA) beats by $0.15

  • CSX (CSX) reports EPS in-line, revs in-line

  • D-Wave Quantum (QBTS) sees Q2 revs below forecast; sees FY23 revs in-line

  • First Financial (FFBC) misses by $0.01, reports revs in-line

  • Glacier Bancorp (GBCI) beats by $0.01, misses on revs

  • Hilltop Holdings (HTH) misses by $0.12, beats on revs

  • Horace Mann (HMN) expects Q2 core EPS between $0.01-0.03; longer-term outlook mostly unchanged

  • Huntington Banc (HBAN) beats by $0.01

  • Independent Bank (INDB) beats by $0.06, reports revs in-line

  • Interpublic (IPG) beats by $0.13, beats on revs

  • Intuitive Surgical (ISRG) beats by $0.09, reports revs in-line, da Vinci procedures up 22% negatively impacted by COVID-19 cases and increased hospitalizations;  increases FY23 procedure growth to +20-22 yr/yr from +18-21%

  • Knight-Swift (KNX) misses by $0.05, misses on revs; guides FY23 EPS below consensus

  • Matson (MATX) guides Q2 EPS above consensus

  • Nexa Resources (NEXA) reports Q2 exploration results

  • Porch Group (PRCH) reports catastrophic weather events impact for Q2

  • PPG Industries (PPG) beats by $0.11, reports revs in-line; guides Q3 EPS in-line; guides FY23 EPS in-line

  • Regions Fincl (RF) reports EPS in-line, revs in-line

  • Renalytix (RNLX) announces opening the commercial availability of kidneyintelX.dkd testing in Saudi Arabia, Bahrain, Qatar, Oman, Kuwait, and United Arab Emirates through a distribution agreement with Vector Pharma

  • Roper (ROP) beats by $0.13, beats on revs; guides Q3 EPS in-line; raises FY23 EPS above consensus

  • Scholastic Corp (SCHL) reports Q4 results, misses on revs, approves $100 mln increase in share repurchase authorization

  • Sensient (SXT) misses by $0.07, misses on revs; guides FY23 EPS below consensus, revs in-line

  • ServisFirst Bancshares (SFBS) beats by $0.09, beats on revs

  • SLB (SLB) beats by $0.01, misses on revs

  • W.R. Berkley (WRB) beats by $0.06, beats on revs

News:

  • President Biden to create team to prevent future debt ceiling issues, according to Bloomberg

  • China aiming to increase sales of automobiles and electronics, according to Reuters

  • Chinese government linked hackers accessed email of US ambassador to China, Nicholas Burns, according to the Wall Street Journal

  • White House secures voluntary commitments from leading artificial intelligence companies to manage the risks posed by AI

  • AbbVie (ABBV) receives Positive CHMP Opinion for Epcoritamab

  • ADC Therapeutics (ADCT) announces plan to discontinue the phase 2 LOTIS-9 clinical trial of ZYNLONTA and Rituximab in unfit or frail previously untreated DLBCL patients

  • Bio-Rad Labs (BIO) announces new $500 mln share repurchase program

  • Braskem SA (BAK) discloses agreement with the Municipality of Maceio for the payment of R$1.7 billion

  • Bristol-Myers (BMY) confirms Positive CHMP Opinion recommending approval for Opdivo (nivolumab) as an adjuvant treatment for patients with completely resected stage IIB or IIC melanoma

  • Chewy (CHWY) announces that CFO Mario Marte has decided to retire from the Company, effective as of July 28

  • Digital World Acquisition Corp (DWAC): SEC announces settled fraud charges

  • Emergent BioSolutions (EBS) receives FDA approval for CYFENDUS

  • EQT Corp. (EQT) names Jeremy Knop as CFO

  • Gilead Sciences (GILD) announces that Health Canada has issued a Notice of Compliance for TRODELVY

  • Google (GOOG): Google founder Sergey Brin has been working to develop artificial intelligence products for the company, according to the Wall Street Journal

  • H.B. Fuller (FUL) implements additional strategic restructuring prompted by recent acquisition of Beardow Adams; closing three manufacturing facilities and redistributing production across the network

  • Incannex Healthcare (IXHL) submits IND application to the US FDA for IHL-42X for obstructive sleep apnoea

  • Intl Game Tech. PLC (IGT) upgrades Poland's national lottery operator's iLottery platform and deployed its components to the cloud

  • Microsoft (MSFT): Alfaview files antitrust trust complaint against Microsoft, according to Reuters

  • Mirati Therapeutics (MRTX) discloses that the Committee for Medicinal Products for Human Use of the European Medicines Agency has adopted a negative opinion on the application for conditional marketing authorization for KRAZATI

  • Paycom Software (PAYC) is continuing to evaluate the impact of the Vendor Incident

  • Pioneer Natural Resources (PXD) last night disclosed derivative contract data

  • Rayonier Adv. Materials (RYAM) strengthens capital structure; raises $250 mln of debt to refinance its 2024 notes

  • RedHill Biopharma (RDHL) announces that opaganib has been awarded a further $1.7 mln in U.S. Government funding, via a Small Business Innovation Research grant to the Company's development partner, Apogee Biotechnology Corporation

  • Rithm Capital (RITM) announces the purchase of $1.4bn of prime unsecured consumer loans from The Goldman Sachs Group (GS)

  • Rocket Lab USA (RKLB) schedules its next Electron launch during a window opening July 28; will deliver the first of Capella Space's next generation 'Acadia' Earth observation satellites to low Earth orbit

  • State Street (STT) increases quarterly cash dividend ~10% to $0.69/share from $0.63/share

  • Synchrony Financial (SYF) increases quarterly dividend 9% to $0.25/share from $0.23/share

  • Valero Energy (VLO) promotes Gary Simmons as COO of Valero, effective July 20

  • Veradigm (MDRX) signs two multi-year healthcare provider agreements during Q2

M&A:

  • Adobe (ADBE): UK CMA publishes timetable for investigation into Adobe acquisition of Figma

  • Bowlero (BOWL) acquires Mavrix and Octane Raceway in Scottsdale, Arizona; financial terms were not disclosed

  • Cadence Design (CDNS) acquires the Rambus SerDes (RMBS) and memory interface PHY IP business

  • Chase Corp (CCF): KKR (KKR) will acquire all outstanding shares of Chase common stock for $127.50/share in cash

  • EVERTEC (EVTC) acquires Sinqia; provides Q2 and FY23outlook above expectations

  • LKQ (LKQ): UK CMA has decided that it is or may be the case that this merger with Uni-Select may be expected to result in a substantial lessening of competition

  • RTX (RTX): Safran (SAFRY) to acquire Collins Aerospace's actuation and flight control business

Syndicate:

  • Alta Equipment Group (ALTG) prices upsized offering of 2.2 mln shares at $16.25/share

  • Biophytis SA (BPTS) entered into an investor subscription agreement with an institutional investor

  • Drilling Tools International (DTI) files for 26,990,264 shares of common stock by selling shareholders

  • ImmunityBio (IBRX) announces execution of $40 million equity financing with institutional investors

  • Selina Hospitality PLC (SLNA) files for 8,509,056 shares of common stock by selling shareholders, relates to warrants

  • Workhorse Group (WKHS) files $200 mln mixed shelf securities offering

IPOs:

  • Expected to Price:

  • No IPOs expected.

Gapping Up/Down

  • Gapping up: +

  • DWAC +20.4%, EBS +16.3%, RYAM +9.3%, SCHL +8.4%, SFBS +3.8%, ADCT +3.3%, CHWY +2.4%, INDB +2.1%, SSYS +1.8%, SIM+1.7%, WRB +1.4%, GBCI +1.4%, BLX +1.4%, MDRX +1.3%, BPTS +1.3%, EVTC +1.3%, IGT+1.1%, CDNS +1.1%, MATX +1.1%, RITM+0.9%, WKHS +0.8%

  • Gapping down:

  • IXHL -8.2%, SLNA -6.1%, CSX -5%, ISRG-4.8%, OZK -4.5%, KNX -4.3%, ALTG -4%, PRCH -3.5%, GP -2.4%, PPG -2.2%, HMN-2%, QBTS -1.8%, NSC -1.3%, DTI -1.1%

 

Analyst Research (see Upgrades/Downgradescalendarfor full list):

  • Upgrades

  • Abbott Labs (ABT) upgraded to Peer Perform from Underperform at Wolfe Research

  • Con Edison (ED) upgraded to Buy from Neutral at BofA Securities; tgt raised to $103

  • Forestar (FOR) upgraded to Buy from Neutral at BTIG Research; tgt $32

  • Harley-Davidson (HOG) upgraded to Buy from Neutral at DA Davidson; tgt raised to $47

  • Marsh McLennan (MMC) upgraded to Neutral from Underperform at BofA Securities; tgt raised to $210

  • SL Green Realty (SLG) upgraded to Overweight from Neutral at Piper Sandler; tgt raised to $41

  • WNS (WNS) upgraded to Outperform from Neutral at Robert W. Baird; tgt $86

  • Downgrades:

  • Activision Blizzard (ATVI) downgraded to Neutral from Buy at ROTH MKM; tgt raised to $95

  • ASML (ASML) downgraded to Hold from Buy at Societe Generale

  • Aspen Tech (AZPN) downgraded to Hold from Buy at Loop Capital; tgt lowered to $170

  • Blackstone (BX) downgraded to Neutral from Overweight at JP Morgan; tgt raised to $111

  • Carvana (CVNA) downgraded to Neutral from Overweight at Piper Sandler; tgt raised to $48

  • Discover Financial Services (DFS) downgraded to Neutral from Overweight at Piper Sandler; tgt lowered to $112

  • Enovix (ENVX) downgraded to Market Perform from Outperform at TD Cowen; tgt raised to $20

  • Floor & Decor (FND) downgraded to Hold from Buy at Jefferies; tgt lowered to $108

  • Herc Holdings (HRI) downgraded to Underperform from Buy at BofA Securities; tgt lowered to $140

  • Knight-Swift (KNX) downgraded to In-line from Outperform at Evercore ISI; tgt lowered to $52

  • Sirius XM (SIRI) downgraded to Sell from Buy at Deutsche Bank; tgt $6.25

  • Sirius XM (SIRI) downgraded to Sell from Hold at Pivotal Research Group; tgt raised to $4.50

  • Sirius XM (SIRI) downgraded to Underperform from In-line at Evercore ISI; tgt $4.50

  • Sunnova Energy (NOVA) downgraded to Market Perform from Outperform at BMO Capital Markets; tgt lowered to $25

  • XPeng (XPEV) downgraded to Underweight from Neutral at JP Morgan; tgt raised to $10

  • Others:

  • Arrowhead (ARWR) initiated with an Outperform at TD Cowen

  • Atour Lifestyle Hldgs. Ltd. (ATAT) initiated with a Buy at Daiwa Securities; tgt $24

  • Baytex Energy Trust (BTE) initiated with a Buy at Canaccord Genuity

  • Crescent Point Energy (CPG) initiated with a Buy at Canaccord Genuity

  • LifeMD (LFMD) initiated with an Overweight at Cantor Fitzgerald; tgt $7

  • Polestar Automotive Holding UK PLC (PSNY) resumed with a Neutral at Citigroup; tgt $5

  • Raymond James (RJF) assumed with an Equal-Weight at Morgan Stanley; tgt $112

  • Travere Therapeutics (TVTX) initiated with an Overweight at JP Morgan; tgt $26

  • Vermilion Energy (VET) initiated with a Buy at Canaccord Genuity

Econ Data:

  • No economic data note.

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 -0.5%, Hang Seng +0.8%, Shanghai Composite -0.1%

Equity indices in the Asia-Pacific region ended Friday on a mixed note to close out a mixed week. Nothing mixed about the yen's performance, however. It is decidedly weak today (USD/JPY +1.3% to 141.82) following a Bloomberg report that indicates BOJ officials don't see much of an urgent need at this point to address the side effects of the yield curve control program. This report comes in front of the BOJ policy meeting next week, so it has tamped down speculation about a shift in policy at that meeting. Japan's June CPI was up 3.3% yr/yr, which was a little weaker than expected but still comfortably above the BOJ's 2.0% target. China, meanwhile, is reportedly pushing plans to help stimulate demand for autos and electronic products. A weak post-COVID recovery has been evident in Chinese data, yet it has flowed through to trade data elsewhere, such as South Korea's exports, which were down 15.2% yr/yr for the first 20 days of July. Imports were down 28.0% yr/yr.

  • In economic data:

  • Japan's June National CPI 3.3% yr/yr (expected 3.5%; last 3.2%) and Core CPI 3.3% yr/yr (expected 3.3%; last 3.2%)

  • South Korea's June PPI -0.2% m/m (expected -0.3%; last 0.1%) and -0.2% yr/yr (expected 0.1%; last 3.3%) 

---Equity Markets---

  • Japan's Nikkei: -0.5% (+0.3% for the week)

  • Hong Kong's Hang Seng: +0.8% (-1.7% for the week)

  • China's Shanghai Composite: -0.1% (-2.2% for the week)

  • India's Sensex: -1.3% (+0.9% for the week)

  • South Korea's Kospi: +0.4% (-0.7% for the week)

  • Australia's ASX All Ordinaries: -0.2% (+0.1%for the week)

---FX---

  • USD/JPY: +1.3% to 141.82

  • USD/CNH: +0.1% to 7.1818

  • USD/INR: -0.2% to 81.98

 

Europe: DAX -0.5%, FTSE +0.1%, CAC +0.3%

Major European indices trade on a mostly mixed and flattish note. Germany's DAX (-0.5%) is underperforming following SAP earnings results and guidance. Spain's IBEX is sitting tight in front of Sunday's national election. On a related political note, French President Macron made changes to his cabinet following recent riots and UK Prime Minister Sunak is reportedly looking at November 2024 as the time for the next general election. By-elections in the UK on Thursday saw the Conservative Party lose two of the three elections. Leading up to next Thursday'sECB policy meeting, economists expect another 25-basis points rate hike but don't believe the ECB will stay at peak rate for a long time, thinking that a rate cut could happen in March next year, according to a Bloomberg survey.

  • In economic data:

  • UK's June Retail Sales 0.7% m/m (expected 0.2%; last 0.1%) and -1.0% yr/yr (expected -1.5%; last -2.3%); Core Retail Sales 0.8% m/m (expected 0.2%; last 0.1%) and -0.9% yr/yr (expected -1.6%; last -1.9%)

  • Spain's Consumer Confidence 92.4 (expected 79.4; last 81.5)

---Equity Markets---

  • STOXX Europe 600: flat

  • Germany's DAX: -0.5%

  • U.K.'s FTSE 100: +0.1%

  • France's CAC 40: +0.3%

  • Italy's FTSE MIB: flat

  • Spain's IBEX 35: +0.1%

---FX---

  • EUR/USD: flat at 1.1123

  • GBP/USD: -0.1% to 1.2845

  • USD/CHF: -0.1% to 0.8659

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