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22/05/23 Briefing


The S&P 500 futures are up 2 points and are trading slightly above fair value. The Nasdaq 100 futures are flat and are trading in line with fair value. The Dow Jones Industrial Average futures are up 24 points and are trading 0.1% above fair value.

Stock futures have seen mixed action this morning, yet moves are relatively modest. Uncertainty about the debt ceiling continues to loom over the market. Treasury Secretary Janet Yellen reiterated in an interview that early June is a "hard deadline" for the debt ceiling and the odds that the US can pay all its bills on June 15are "quite low" without a debt ceiling increase, according NBC News.House Speaker Kevin McCarthy, though, said he had a "productive" call with President Biden and will resume debt ceiling negotiations today, according to the NY Times. 

Minneapolis Fed President Neel Kashkari (FOMC voter) said in a CNBC interview that it's a close call between raising rates in June or skipping a meeting, adding that if the Fed skips in June, it does not mean the tightening cycle is over.

Separately, the G7 released a joint statement calling on China to "play by international rules" and criticizing the country for its activities in the South China Sea.

Treasury yields are little changed from Friday'ssettlement levels. The 2-yr note yield is down two basis points to 4.26% and the 10-yr note yield is down two basis points to 3.67%.

Energy complex futures trade in mixed fashion. WTI crude oil futures are up 0.3% to $71.87/bbl and natural gas futures are down 1.6% to $2.66/mmbtu.

In corporate news:

  • Micron (MU 65.03, -3.14, -4.6%): confirmed Cyberspace Administration of China concluded Micron products present a cybersecurity risk and notified critical information infrastructure operators in China to stop using Micron products

  • Meta Platforms (META 242.42, -3.22, -1.3%): European Data Protection Board fines Facebook EUR 1.2 billion as a result of EDPB binding decision

  • Apple (AAPL 173.40, -1.76, -1.0%): downgraded to Hold from Buy at Loop Capital

  • DraftKings (DKING 24.83, +0.72, +3.0%): upgraded to Buy from Neutral at UBS

  • PacWest Bancorp (PACW 5.96, +0.23, +4.0%): discloses it entered into a loan purchase and sale agreement with unit of Kennedy-Wilson Holdings (KW) to sell a portfolio of 74 real estate construction loans with an approximate $2.6 bln aggregate principal balance currently outstanding

  • VectivBio (VECT 16.65, +4.95, +42.4%): Ironwood (IRWD) enters into definitive agreement to acquire VECT for $17.00/share

  • Ford (F 11.68, +0.03, +0.3%): For full-year 2023, company maintains guidance of $9 billion to $11 billion in adjusted EBIT and about $6 billion in adjusted free cash flow.

  • Norfolk Southern (NSC 222.78, +5.04, +2.3%): upgraded to Buy from Neutral at Citigroup; upgraded to Overweight from Equal Weight at Wells Fargo

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region began the week on a mostly higher note. Japan's Nikkei: +0.9%, Hong Kong's Hang Seng: +1.2%, China's Shanghai Composite: +0.4%, India's Sensex: +0.4%, South Korea's Kospi: +0.8%, Australia's ASX All Ordinaries: -0.3%.

    • In economic data:

      • Japan's March Core Machinery Orders -3.9% m/m (expected 0.7%; last -4.5%); -3.5% yr/yr (expected 1.4%; last 9.8%)

      • Hong Kong's April CPI 2.1% yr/yr (expected 1.8%; last 1.7%)

    • In news:

      • Chipmakers in China rallied after the country's government banned Micron's (MU) products from being used in key infrastructure projects.

      • The G7 released a joint statement calling on China to "play by international rules" and criticizing the country for its activities in the South China Sea.

  • Major European indices trade in the red while Spain's IBEX (+0.5%) outperforms, holding a solid gain. STOXX Europe 600: -0.1%, Germany's DAX: -0.3%, U.K.'s FTSE 100: UNCH, France's CAC 40: -0.4%, Italy's FTSE MIB: -0.7%, Spain's IBEX 35: +0.5%

    • In economic data:

      • Eurozone's March Construction Output -2.4% m/m (expected 0.0%; last 1.8%)

    • In news:

      • Greek Prime Minster Mitsotakis' party won a general election by a wide margin and there is an expectation that the party will win outright majority in a second round.

      • European Central Bank President Lagarde repeated that the governing council has not finished raising rates yet.

      • Standard & Poor's raised Ireland's rating to AA from AA- with a Stable outlook.

 

U.S. equity futures:

  • S&P 500 Futures: UNCH @ 4,192

  • DJIA Futures: +6 @ 33,433

  • Nasdaq 100 Futures: -7 @ 13,797

Overseas:

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

  • Asia: Nikkei +0.9%, Hang Seng +1.2%, Shanghai Composite +0.4%

Commodities:

  • Crude Oil +0.10 @ 71.79

  • Nat Gas -0.039 @ 2.668

  • Gold -6.80 @ 1974.80

  • Silver -0.162 @ 23.898

  • Copper -0.0498 @ 3.6822


 

Earnings/Guidance:

  • Ford Motor (F): For full-year 2023, company maintains guidance of $9 billion to $11 billion in adjusted EBIT and about $6 billion in adjusted free cash flow

  • Global-E Online (GLBE) misses by $0.31, beats on revs; guides Q2 revs in-line; raises FY23 guidance

  • Immunovant Sciences (IMVT) misses by $0.05

  • Western Midstream (WES) reaffirms FY23 Adjusted EBITDA guidance

  • ZIM Integrated Shipping (ZIM) misses on top and bottom lines; reaffirms FY23 outlook

News:

  • House Speaker Kevin McCarthy says he had a "productive" call with President Biden and will resume debt ceiling negotiations today. Both sides still do not have agreement, New York Times

  • President Biden is considering using the 14th amendment to unilaterally raise the debt ceiling. He believes he has the authority, but acknowledged it will be challenged in the courts, according to The Hill

  • Treasury Secretary Janet Yellen in interview says early June is a "hard deadline" for debt ceiling and odds that US can pay all bills on June 15are "quite low" without debt ceiling increase, according to NBC News

  • A centrist group wants to recruit Senator Joe Manchin (D-WV) to run for President as a third party candidate. Democrats are trying to stop this from happening, according to the New York Times

  • Minneapolis Fed President Neel Kashkari (voting FOMC member) in interview says he could support holding rates steady at June meeting, according to the Wall Street Journal

  • White House advances Investing in America agenda and highlights multi-billion dollar semiconductor R&D investments

  • Abbott (ABT) unveils late-breaking data showing the world's first dual-chamber leadless pacemaker study met all three primary endpoints

  • Actinium Pharma (ATNM) Announces Six Abstracts Accepted for Oral and Poster Presentation at the SNMMI 2023 Annual Meeting, Demonstrating Actinium's Leadership in Targeted Radiotherapy for Hematologic and Solid Cancers

  • Albemarle (ALB) announced a definitive agreement with Ford Motor (F) to deliver battery-grade lithium hydroxide

  • Alnylam (ALNY) Presents 18-Month Results from the APOLLO-B Phase 3 Study of Patisiran in Patients with ATTR Amyloidosis with Cardiomyopathy

  • BioCryst Pharma (BCRX): Chilean Public Health Institute approves ORLADEYO (berotralstat) for the prophylaxis of hereditary angioedema (HAE) attacks in patients 12 years of age or older

  • BridgeBio Pharma (BBIO) presents promising positive data from six participants dosed in CANaspire

  • Centessa Pharmaceuticals (CNTA) receives Fast Track Designation from the FDA for SerpinPC

  • Compass Minerals (CMP) announces the signing of a binding, multiyear supply agreement to provide Ford Motor Company (F)

  • CureVac (CVAC) announces developments in patent litigation with Pfizer/BioNTech

  • Cytokinetics (CYTK) presents new data in patients with non-obstructive HCM from cohort 4 of REDWOOD-HCM in late-breaking clinical trial session at The European Society of Cardiology Heart Failure 2023 Congress

  • Dillard's (DDS) approves new $500 mln share repurchase

  • Exxon (XOM) recently purchased rights to mine lithium in Arkansas, according to the Wall Street Journal

  • Ford Motor (F) and Nemaska Lithium enter long-term lithium hydroxide supply agreement

  • Gray Television (GTN) names Sandy Breland as COO effective today

  • Hepion Pharmaceuticals' (HEPA) Phase 2 'ALTITUDE-NASH' Trial Achieves Primary and Secondary Endpoints, Including Improvement in Liver Function and Multiple NASH Biomarkers

  • IDEAYA Biosciences (IDYA) receives IND Clearance Enabling Phase 1/2 Clinical Trial for Combination of IDE397 and AMG 193

  • indie Semiconductor (INDI): COO Steven Machuga to retire on June 30

  • Intercept Pharma (ICPT): FDA panel votes 15-to-1 against the approval for obeticholic acid until more data available, according to Reuters

  • Intercept Pharma (ICPT) reports outcome of FDA Advisory Committee meeting for Obeticholic Acid as a treatment for pre-cirrhotic fibrosis due to NASH

  • Kymera Therapeutics (KYMR) announces appointment of Jeremy Chadwick as COO

  • Medtronic (MDT) Extravascular ICD global clinical trial results reinforce device safety and effectiveness

  • Meta Platforms (META): European Data Protection Board fines Facebook EUR 1.2 billion as a result of EDPB binding decision

  • Meta Platforms (META) issues response to the decision on Facebook's EU-US data transfers; says it will appeal the ruling

  • Meta Platforms (META) in discussions to create a multiyear agreement with Magic Leap, according to Financial Times

  • Micron (MU): China bans Micron products from key infrastructure operators, according to Financial Times

  • Milestone Pharmaceuticals (MIST) Announces Presentation of Data from Analysis of Etripamil Nasal Spray in Patients Experiencing Atrial Fibrillation with Rapid Ventricular Rate

  • NetEase (NTES) provides updates to existing and pipeline games announced at its 2023 Product Launch Event

  • Novo Nordisk A/S's (NVO): New study shows NVO weight loss drug will provide both weight loss and heart heart benefits, according to Reuters

  • NuScale Power (SMR): Biden Administration announces global public-private commitment up to $275 Million to advance nuscale VOYGRTM deployment in romania at G7 leaders summit

  • Oculis Holding AG (OCS) announces positive top line results from DIAMOND Stage 1 phase 3 trial in diabetic macular edema with OCS-01 eye drops

  • PacWest Bancorp (PACW) discloses it entered into a loan purchase and sale agreement with unit of Kennedy-Wilson Holdings (KW) to sell a portfolio of 74 real estate construction loans with an approximate $2.6 bln aggregate principal balance currently outstanding

  • RedHill Biopharma (RDHL) to terminate RHB-204's U.S. Phase 3 study for Non-tuberculosis Mycobacteria; provides R&D update

  • Sanofi (SNY) reports Dupixent (dupilumab) late-breaking Phase 3 COPD results presented at ATS and simultaneously published in the New England Journal of Medicine

  • Sociedad Quimica y Minera (SQM) announces long-term lithium supply agreement with Ford (F)

  • Starbox Group (STBX) secures 3-year contract valued at $2.76 million for licensing its software

M&A:

  • Alarm.com(ALRM) announces that it has acquired EBS; terms not disclosed

  • American Airlines (AAL) and JetBlue (JBLU): US judge rules in favor of DOJ that AAL must end its Northeast Alliance with JBLU, according to Reuters

  • Blackstone (BX) aiming to acquire International Gemological Institute, according to Reuters

  • Broadcom (AVGO) and VMWare (VMW) extend the outside date, as defined in their previously announced merger agreement, to August 26, 2023

  • GoHealth (GOCO) confirms that it has received an acquisition proposal from its two largest shareholders

  • JetBlue Airways (JBLU) says it is disappointed in court decision; studying the judgment in full and evaluating its next steps

  • Lightspeed (LSPD) files mixed shelf securities offering

  • NatWest Group plc (NWG) announces disposal of shares in NatWest Group plc for 1.26 bln

  • VectivBio (VECT): Ironwood (IRWD) enters into definitive agreement to acquire VECT for $17.00/share

  • Viasat (VSAT): Proposed acquisition of Inmarsat has received approval from the FCC; deal expected to close later this month

  • Volkswagen (VWAGY) aiming to sell Russian operations, according to the New York Times

Syndicate:

  • Augmedix (AUGX) files for 9,375,342 shares common stock by selling shareholders

  • CenterPoint's (CNP) Vectren Energy Services Corporation entered into an Equity Purchase Agreement with affiliate of Oaktree ESG Holdings Group

  • Hyatt Hotels (H) files for 9,202,765 share common stock offering by selling shareholders

  • Insmed (INSM) files mixed shelf securities offering

  • Stereotaxis (STXS) files for $100 mln mixed securities shelf offering; also files for 91,221,439 share common stock offering by selling shareholders, relates to convertible preferred stock

IPOs:

  • IPOs Expected to Price:

    • Atmus Filtration Technologies (NYSE: ATMU): The manufacturer of filtration products for commercial vehicles and agriculture, construction, mining and power generation vehicles is expected to price its 14.1 M share IPO between $18-$21.

Gapping Up/Down

  • Gapping up:

    • OCS +9.3%, DDS +6.7%, PACW +4.2%, JBLU +2.3%, NTES +2.3%, CVAC +2.3%, IDYA +2%, TEVA +1.8%, LSPD +1.7%, ALPN +0.8%

  • Gapping down:

    • STXS -6.2%, MU -5.5%, META -1.4%, AUGX -1.2%, INSM -0.5%, ABT -0.5%

 

Analyst Research (see Upgrades/Downgradescalendarfor full list):

  • Upgrades

    • AnaptysBio (ANAB) upgraded to Neutral from Underweight at JP Morgan; tgt lowered to $30

    • Avidity Biosciences (RNA) upgraded to Outperform from In-line at Evercore ISI; tgt $20

    • Grupo Aeroportuario Del Sureste (ASR) upgraded to Overweight from Underweight at Barclays

    • TrueBlue (TBI) upgraded to Outperform from Market Perform at BMO Capital Markets; tgt raised to $20

  • Downgrades:

    • Apple (AAPL) downgraded to Hold from Buy at Loop Capital; tgt $180

    • Catalent (CTLT) downgraded to Neutral from Overweight at JP Morgan; tgt lowered to $45

    • Foot Locker (FL) downgraded to Sell from Hold at Williams Trading; tgt lowered to $25

    • Hibbett (HIBB) downgraded to Hold from Buy at Williams Trading; tgt lowered to $54

    • NIKE (NKE) downgraded to Sell from Hold at Williams Trading; tgt lowered to $95

    • Revolve Group (RVLV) downgraded to Market Perform from Outperform at TD Cowen; tgt lowered to $19

  • Others:

    • DICE Therapeutics (DICE) initiated with a Buy at Canaccord Genuity; tgt $71

    • Progyny (PGNY) initiated with a Buy at BTIG Research; tgt $50

    • Symbotic (SYM) resumed with an Outperform at William Blair

    • Travere Therapeutics (TVTX) initiated with a Outperform at TD Cowen; tgt $30

Econ Data:

  • No economic data of note.

Earnings:

  • Monday (May 22)

    • Morning:  GLBE

    • Afternoon: CSWC HEI NDSN ZM

  • Tuesday (May 23)

    • Morning: AZO BJ DKS DAVA IHS KC LOW VIPS WSM

    • Afternoon:  A INTU NEWR PANW TOL URBN VFC

  • Wednesday (May 24)

    • Morning:  ANF CRMT ADI BMO BNS DY KSS WOOF PLAB PLCE

    • Afternoon:  AEO APPS ELF ENS GES RAMP MOD NVDA SNOW SPLK STEP PATH ZUO

  • Thursday (May 25)

    • Morning: AMWD BZUN BBY BURL CM CMCO DLTR GDS GCO HLNE MDT NTES RL RY TITN TD WB

    • Afternoon:  ME ADSK COST DECK DOMO GPS LGF.A MRVL RH ULTA WDAY

  • Friday (May 26) 

    • Morning:  BIG BAH BKE

 

Asia & Europe detail:

Asia: Nikkei +0.9%, Hang Seng +1.2%, Shanghai Composite +0.4%

Equity indices in the Asia-Pacific region began the week on a mostly higher note. Chipmakers in China rallied after the country's government banned Micron's (MU) products from being used in key infrastructure projects. The G7 released a joint statement calling on China to "play by international rules" and criticizing the country for its activities in the South China Sea.

  • In economic data:

    • Japan's March Core Machinery Orders -3.9% m/m (expected 0.7%; last -4.5%); -3.5% yr/yr (expected 1.4%; last 9.8%)

    • Hong Kong's April CPI 2.1% yr/yr (expected 1.8%; last 1.7%)

---Equity Markets---

  • Japan's Nikkei: +0.9%

  • Hong Kong's Hang Seng: +1.2%

  • China's Shanghai Composite: +0.4%

  • India's Sensex: +0.4% 

  • South Korea's Kospi: +0.8%

  • Australia's ASX All Ordinaries: -0.3%

---FX---

  • USD/JPY: +0.1% to 137.97

  • USD/CNH: +0.3% to 7.0411

  • USD/INR: UNCH at 82.83

 

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

Major European indices trade in the red while Spain's IBEX (+0.5%) outperforms, holding a solid gain. Greek Prime Minster Mitsotakis' party won a general election by a wide margin and there is an expectation that the party will win outright majority in a second round. European Central Bank President Lagarde repeated that the governing council has not finished raising rates yet. Standard & Poor's raised Ireland's rating to AA from AA- with a Stable outlook.

  • In economic data:

    • Eurozone's March Construction Output -2.4% m/m (expected 0.0%; last 1.8%)

---Equity Markets---

  • STOXX Europe 600: -0.1%

  • Germany's DAX: -0.3%

  • U.K.'s FTSE 100: UNCH

  • France's CAC 40: -0.4%

  • Italy's FTSE MIB: -0.7%

  • Spain's IBEX 35: +0.5%

---FX---

  • EUR/USD: +0.2% to 1.0819

  • GBP/USD: +0.1% to 1.2452

  • USD/CHF: -0.4% to 0.8956

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