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22/06/23 Briefing


The S&P 500 futures are down 10 points and are trading 0.3% below fair value. The Nasdaq 100 futures are down 45 points and are trading 0.3% below fair value. The Dow Jones Industrial Average futures are down 89 points and are trading 0.2% below fair value.

Market participants remain in consolidation mode, driving stock futures lower. Mega caps are a notable pocket of weakness this morning, reflecting a continued inclination to sell into strength after their big run of late. Also, Fed Chair Powell will continue his semiannual monetary policy testimony before the Senate Banking Committee at 10:00 a.m. ET.

Several central banks announced policy rate increases, which has acted as a reminder that global inflation remains too high and that the lag effects of rate hikes may adversely impact global economic prospects. That understanding has contributed to the weakness this morning.

The Bank of England surprised with a 50 basis points increase in its bank rate to 5.00%; the Swiss National Bank raised its policy rate by 25 bps to 1.75%, as expected; and the Norges Bank announced a 50-bps increase to 3.75% against expectations for a smaller increase.

Market participants will receive a slate of economic data today, including:

  • 8:30 ET: Weekly Initial Claims (Briefing.com consensus 259,000; prior 262,000), Continuing Claims (prior 1.775 mln), and Q1 Current Account balance (prior -$206.80 bln)

  • 10:00 ET: May Existing Home Sales (Briefing.com consensus 4.28 mln; prior 4.28 mln) and May Leading Indicators (Briefing.com consensus -0.8%; prior -0.6%)

  • 10:30 ET: Weekly natural gas inventories (prior +84 bcf)

  • 11:00 ET: Weekly crude oil inventories (prior +7.92 mln)

In corporate news:

  • KB Home (KBH 50.78, -0.85, -1.6%): beats by $0.61, beats on revs, home deliveries increased 6%, raises full year housing revenue guidance

  • Darden Restaurants (DRI 159.00, -7.41, -4.5%): beats by $0.04, reports revs in-line; guides FY24 EPS in-line, revs in-line

  • Accenture (ACN 296.00, -17.20, -5.5%): beats by $0.18, reports revs in-line; guides Q4 revs in-line; guides FY23 EPS in-line

  • Tesla (TSLA 250.90, -8.54, -3.3%): downgraded to Equal Weight from Overweight at Morgan Stanley

  • Alcoa (AA 33.69, -1.22, -3.5%): downgraded to Underweight from Equal Weight at Morgan Stanley

  • Anheuser-Busch InBev (BUD 57.77, +1.04, +1.8%): upgraded to Buy from Hold at Deutsche Bank

  • FactSet (FDS 427.00, +3.66, +0.9%): beats by $0.18, reports revs in-line; raises FY23 EPS guidance; reaffirms FY23 revenue guidance

  • Boeing (BA 205.00, -7.08, -3.3%): Spirit Aerosystems (SPR 27.17, -2.51, -8.5%) to suspend factory operations

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region ended Thursday on a mostly lower note while markets in China and Hong Kong were closed for Dragon Boat Festival. Japan's Nikkei: -0.9%, Hong Kong's Hang Seng: CLOSED, China's Shanghai Composite: CLOSED, India's Sensex: -0.5%, South Korea's Kospi: +0.4%, Australia's ASX All Ordinaries: -1.7%.

  • In economic data:

  • New Zealand's May trade surplus NZD46 mln (expected deficit of NZD350 mln; last surplus of NZD236 mln). May credit card spending 3.3% yr/yr (expected 13.9%; last 11.0%)


  • In news:

  • China's foreign ministry spokesperson criticized President Biden for calling Xi Jinping a dictator.

  • Australia's treasurer indicated that the appointment of the next Reserve Bank of Australia governor will be finalized in the coming weeks.



  • Major European indices trade in the red. STOXX Europe 600: -1.1%, Germany's DAX: -0.7%, U.K.'s FTSE 100: -1.0%, France's CAC 40: -1.2%, Italy's FTSE MIB: -1.1%, Spain's IBEX 35: -1.0%.

  • In economic data:

  • France's June Business Survey 101 (expected 98; last 99)


  • In news:

  • The Bank of England raised its bank rate by 50 bps to 5.00%, which was more than the consensus expected, but it was in-line with the minority view.

  • The Swiss National Bank raised its policy rate by 25 bps to 1.75%, as expected, while Norges Bank announced a 50-bps increase to 3.75% against expectations for a smaller increase. The Swiss National Bank also lowered its 2023 CPI forecast for Switzerland to 2.2% from 2.6% while the outlook for 2024 was increased to 2.2% from 2.0%.

  • The Central Bank of Turkey raised its benchmark rate by 650 bps to 15.0%, representing the first increase in two years.



U.S. equity futures:

  • S&P 500 Futures: -10 @ 4,398

  • DJIA Futures: -89 @ 34,146

  • Nasdaq 100 Futures: -45 @ 14,999

Overseas:

  • Europe: DAX -0.7%, FTSE -1.0%, CAC -1.2%

  • Asia: Nikkei -0.9%, Hang Seng closed for holiday, Shanghai Composite closed for holiday

Commodities:

  • Crude Oil -1.42 @ 71.11

  • Nat Gas -0.027 @ 2.570

  • Gold -8.50 @ 1936.40

  • Silver -0.185 @ 22.625

  • Copper +0.0335 @ 3.9475


Earnings/Guidance:

  • Accenture ( ACN 1.32% ) beats by $0.18, reports revs in-line; guides Q4 revs in-line; guides FY23 EPS in-line

  • Avid Bioservices ( CDMO 0.00% ) misses by $0.01 (two ests), beats on revs; guides FY24 revs below consensus

  • Commercial Metals ( CMC 0.85% ) beats by $0.18, beats on revs

  • Darden Restaurants ( DRI 0.36% ) beats by $0.04, reports revs in-line; guides FY24 EPS in-line, revs in-line

  • FactSet ( FDS 0.42% ) beats by $0.18, reports revs in-line; raises FY23 EPS guidance; reaffirms FY23 revenue guidance

  • GMS ( GMS 0.28% ) beats by $0.21, beats on revs

  • KB Home ( KBH 1.88% ) beats by $0.61, beats on revs, home deliveries increased 6%, raises full year housing revenue guidance

  • Methode Electronics ( MEI 0.00% ) misses by $0.23; beats on revs; provides mixed outlook

  • Mosaic ( MOS 2.10% ) provides April and May sales volumes and revenue by business unit; expects potash sales toward high-end of previous forecast, phosphates sales near low-end

  • Murphy Oil ( MUR 0.50% ) maintains Q2 and FY23 guidance; expects Q2 production of 173-181 Mboed, FY23 production of 175.5-183.5 Mboed; FY23 CapEx of $0.875-1.025 bln

  • Steelcase ( SCS 1.90% ) beats by $0.08, beats on revs; guides AugQ EPS in-line, revs in-line; expects 1H24 being ahead of pace against FY24 targets

  • Xcel Energy ( XEL 0.00% ) provides update on Colorado electric rate request; reaffirms FY23 EPS guidance

News:

  • Bank of England voted by a majority of 7-2 to increase Bank Rate by 0.5 percentage points to 5.00%

  • The Central Bank of Turkey raised its benchmark rate by 650 bps to 15.0%, representing the first increase in two years

  • The Swiss National Bank raised its policy rate by 25 bps to 1.75%, as expected

  • Norges Bank announced a 50-bps increase to 3.75% against expectations for a smaller increase

  • Russian gas flows through Ukraine could stop in 2024, according to FT

  • The Biden administration is considering stronger rules against Chinese companies like Alibaba (BABA), according to New York Times

  • Berkshire Hathaway (BRK.B): Warren E. Buffett has converted 9,129 A shares into 13,693,500 B shares in order to donate 13,693,432 shares of Berkshire Hathaway "B" stock to five foundations: 10,453,008 to the Bill & Melinda Gates Foundation Trust, 1,045,300 shares to the Susan Thompson Buffett Foundation and 731,708 shares to each of the Sherwood Foundation, Howard G. Buffett Foundation and NoVo Foundation.

  • Bristol-Myers ( BMY 0.01% ): FDA issues orphan drug designation for treatment of multiple myeloma for the company's Juno Therapeutics unit

  • Criteo ( CRTO 0.00% ) discloses that it received notice that the CNIL issued a final decision with a financial sanction against Criteo of 40.0 million ($44 million)

  • GlaxoSmithKline ( GSK 1.53% ): US Centers for Disease Control and Prevention's Advisory Committee on Immunization Practices votes to recommend AREXVY for the prevention of RSV disease in adults aged 60 and older

  • Honeywell ( HON 0.00% ) and Fokker Services B.V. signed memorandum of agreement whereby Fokker has been authorized as a Service Center & Channel Partner for Honeywell pre-cooler control valve (PCCV) repair and overhaul services

  • Kymera Therapeutics ( KYMR 0.00% ): FDA issues orphan drug designation for treatment of acute myeloid leukemia

  • Legend Biotech ( LEGN 0.00% ): FDA issues orphan drug designation for treatment of small cell lung cancer

  • Lockheed Martin ( LMT 1.67% ) ready to continue working with the U.S. government on the capability and performance upgrades supporting requirements for the F-35 for decades, including an engine upgrade

  • Micron ( MU 0.00% ) announces plans to build new assembly facility in Gujarat, India

  • Netflix ( NFLX 0.00% ) aiming to invest $2.5 billion on Korea content, according to Bloomberg

  • Novo Nordisk A/S ( NVO 0.70% ): European regulators raised safety concerns about NVO drug, according to Reuters

  • NRG Energy ( NRG 1.07% ): Elliott wants CEO removed, according to The Wall Street Journal

  • NVIDIA ( NVDA 0.00% ): Director sold 118602 shares at $430.08-433.93 worth ~$51.1 mln

  • Scorpio Tankers ( STNG 0.38% ) announces a new credit facility of up to $94 million

  • Spirit AeroSystems ( SPR 0.37% ) to suspend factory operations

  • Turtle Beach HEAR 0.00% appoints Cris Kerin as interim CEO, effective July 1, 2023

  • Virgin Galactic ( SPCE 4.99% ) Board Chair Evan Lovell died unexpectedly on June 20; Lead Independent Director Raymond Mabus, Jr. will serve as Interim Chair

M&A:

  • China's Midea ending its pursuit of Electrolux ( ELUXY ) after it was unreceptive to a deal, according to Bloomberg

  • Rivian Automotive ( RIVN 0.00% ) announces acquisition of mapping company Iternio; terms of deal not disclosed

  • Southwest Gas ( SWX 1.92% ) provides update on progress towards Centuri separation; Separation Remains on Track for Fourth Quarter of 2023 or First Quarter of 2024

Syndicate:

  • AlloVir ( ALVR 0.00% ) prices offering of 20.0 mln shares of common stock at $3.75 per share

  • Cerence ( CRNC 0.00% ) prices $190.0 million aggregate principal amount of 1.50% convertible senior notes due 2028

  • Gulfport Energy ( GPOR 3.27% ) prices offering of 1.3 mln shares of common stock by selling stockholders at $95.00 per share

  • IGM Biosciences ( IGMS 0.00% ) announces proposed public offering of $100 million common shares and concurrent private placement

  • Karuna Therapeutics ( KRTX 0.00% ) files mixed shelf securities offering

  • World Kinect Corporation ( WKC 4.86% ) prices offering of $300 mln of 3.250% Convertible Senior Notes due 2028

IPOs:

  • No IPOs expected.

Gapping Up/Down

  • Gapping up:

  • ERAS +6.9%, ROIV +5.2%, AAOI +4.4%, IVVD +4.4%, MRNS +4.3%, EPAC +2.8%, GMS +2.5%, NRG +1.9%


  • Gapping down:

  • ALVR -23.1%, CDMO -17.4%, GPOR -9.4%, IGMS -9.3%, ASTL -8.9%, SPR -8.5%, DOCN -5.7%, XOMA -5.2%, AA -3.2%, BA -3.3%, TSLA -3.1%


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

  • Upgrades

  • Agree Realty (ADC) upgraded to Buy from Neutral at Mizuho; tgt $70

  • Grab (GRAB) upgraded to Neutral from Underweight at JP Morgan; tgt raised to $3.10

  • SAP SE (SAP) upgraded to Hold from Underperform at Jefferies

  • Shell plc (SHEL) upgraded to Equal-Weight from Underweight at Morgan Stanley

  • Anheuser-Busch InBev (BUD) upgraded to Buy from Hold at Deutsche Bank

  • DiaMedica Therapeutics (DMAC) upgraded to Outperform from Perform at Oppenheimer; tgt $7

  • Kellogg (K) upgraded to Mkt Perform from Underperform at Bernstein; tgt $62

  • XP (XP) upgraded to Buy from Neutral at BofA Securities


  • Downgrades:

  • Alcoa (AA) downgraded to Underweight from Equal-Weight at Morgan Stanley; tgt lowered to $33

  • DigitalOcean (DOCN) downgraded to Underweight from Neutral at Piper Sandler; tgt $35

  • Equinor (EQNR) downgraded to Underweight from Equal-Weight at Morgan Stanley

  • Mercury (MRCY) downgraded to Neutral from Outperform at Robert W. Baird; tgt lowered to $40

  • PagSeguro Digital (PAGS) downgraded to Neutral from Buy at New Street; tgt lowered to $14

  • Tesla (TSLA) downgraded to Equal-Weight from Overweight at Morgan Stanley; tgt raised to $250

  • AES (AES) downgraded to Neutral from Buy at BofA Securities; tgt lowered to $23

  • Celanese (CE) downgraded to Neutral from Buy at BofA Securities; tgt lowered to $116

  • Chemours (CC) downgraded to Neutral from Buy at BofA Securities; tgt lowered to $37

  • Dow (DOW) downgraded to Underperform from Neutral at BofA Securities; tgt lowered to $55

  • Eneti (NETI) downgraded to Neutral from Buy at Citigroup; tgt $14

  • Equinix (EQIX) downgraded to Perform from Outperform at Oppenheimer


  • Others:

  • Andersons (ANDE) initiated with a Buy at ROTH MKM; tgt $55

  • Archer-Daniels (ADM) initiated with a Buy at ROTH MKM; tgt $92

  • Bunge (BG) initiated with a Buy at ROTH MKM; tgt $138

  • Humacyte (HUMA) initiated with an Overweight at Cantor Fitzgerald; tgt $6

  • Pembina Pipeline (PBA) initiated with a Buy at Stifel

  • Terns Pharmaceuticals (TERN) initiated with a Buy at Mizuho; tgt $16

  • Boston Scientific (BSX) placed on 90-day Positive Catalyst Watch; tgt raised to $63

  • Burford Capital (BUR) resumed with a Buy at Berenberg

  • Caterpillar (CAT) initiated with a Neutral at DA Davidson; tgt $263

  • Despegar.com (DESP) initiated with a Buy at B. Riley Securities; tgt $10

  • Expedia Group (EXPE) initiated with a Buy at B. Riley Securities; tgt $160

  • Outbrain Inc. (OB) initiated with a Neutral at B. Riley Securities; tgt $5

  • Sea Limited (SE) resumed with a Buy at DZ Bank; tgt $75

  • Taboola (TBLA) initiated with a Buy at B. Riley Securities; tgt $5

  • Toro (TTC) initiated with a Buy at DA Davidson; tgt $117

  • TripAdvisor (TRIP) initiated with a Buy at B. Riley Securities; tgt $25

  • trivago (TRVG) initiated with a Neutral at B. Riley Securities; tgt $2

  • TScan Therapeutics (TCRX) initiated with an Outperform at Wedbush; tgt $8

  • Zura Bio Limited (ZURA) initiated with a Buy at Guggenheim; tgt $20


Econ Data:

  • 08:30 ET: Weekly Initial Claims (Briefing.com consensus 259,000; prior 262,000), Continuing Claims (prior 1.775 mln), and Q1 Current Account balance (prior -$206.80 bln)

  • 10:00 ET: May Existing Home Sales (Briefing.com consensus 4.28 mln; prior 4.28 mln) and May Leading Indicators (Briefing.com consensus -0.8%; prior -0.6%)

  • 10:30 ET: Weekly natural gas inventories (prior +84 bcf)

  • 11:00 ET: Weekly crude oil inventories (prior +7.92 mln)

Earnings:

  • Tuesday (Jun 20)

  • Afternoon: FDX LZB


  • Wednesday (Jun 21)

  • Morning: PDCO WGO

  • Afternoon: KBH SCS


  • Thursday (Jun 22)

  • Morning: ACN CMC DRI FDS GMS

  • Afternoon: SWBI


  • Friday (Jun 23)

  • Morning: APOG KMX


Asia & Europe detail:

Asia: Nikkei -0.9%, Hang Seng CLOSED, Shanghai Composite CLOSED

Equity indices in the Asia-Pacific region ended Thursday on a mostly lower note while markets in China and Hong Kong were closed for Dragon Boat Festival. China's foreign ministry spokesperson criticized President Biden for calling Xi Jinping a dictator. Australia's treasurer indicated that the appointment of the next Reserve Bank of Australia governor will be finalized in the coming weeks.

  • In economic data:

  • New Zealand's May trade surplus NZD46 mln (expected deficit of NZD350 mln; last surplus of NZD236 mln). May credit card spending 3.3% yr/yr (expected 13.9%; last 11.0%)


---Equity Markets---

  • Japan's Nikkei: -0.9%

  • Hong Kong's Hang Seng: CLOSED

  • China's Shanghai Composite: CLOSED

  • India's Sensex: -0.5%

  • South Korea's Kospi: +0.4%

  • Australia's ASX All Ordinaries: -1.7%

---FX---

  • USD/JPY: +0.2% to 142.08

  • USD/CNH: +0.1% to 7.1831

  • USD/INR: UNCH at 81.95

Europe: DAX -0.7%, FTSE -1.0%, CAC -1.2%

Major European indices trade in the red. The Bank of England raised its bank rate by 50 bps to 5.00%, which was more than the consensus expected, but it was in-line with the minority view. Elsewhere, the Swiss National Bank raised its policy rate by 25 bps to 1.75%, as expected, while Norges Bank announced a 50-bps increase to 3.75% against expectations for a smaller increase. The Swiss National Bank also lowered its 2023 CPI forecast for Switzerland to 2.2% from 2.6% while the outlook for 2024 was increased to 2.2% from 2.0%. The Central Bank of Turkey raised its benchmark rate by 650 bps to 15.0%, representing the first increase in two years.

  • In economic data:

  • France's June Business Survey 101 (expected 98; last 99)


---Equity Markets---

  • STOXX Europe 600: -1.1%

  • Germany's DAX: -0.7%

  • U.K.'s FTSE 100: -1.0%

  • France's CAC 40: -1.2%

  • Italy's FTSE MIB: -1.1%

  • Spain's IBEX 35: -1.0%

---FX---

  • EUR/USD: +0.2% to 1.1004

  • GBP/USD: +0.2% to 1.2796

  • USD/CHF: UNCH at 0.8925

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