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24/05/22 Briefing

The S&P 500 futures are down 44 points and are trading 1.1% below fair value. The Nasdaq 100 futures are down 209 points and are trading 1.7% below fair value. The Dow Jones Industrial Average futures are down 219 points and are trading 0.6% below fair value.

The negative disposition has been driven primarily by a warning from Snap (SNAP) that it expects its Q2 revenue and adjusted EBITDA to be below the low end of its prior guidance range as macro conditions have deteriorated faster and further than anticipated. The context behind that warning has weighed on investor sentiment from a broader standpoint and it has undercut a number of other social media stocks more directly that derive a large chunk of revenue from online advertising services. That includes names like Alphabet (GOOG), Meta Platforms (FB), Twitter (TWTR), and Pinterest (PINS).

Separately, a batch of mostly weaker than expected preliminary PMI readings for May out of the eurozone have added to concerns about slowing growth along with reports that Beijing is stepping up quarantine efforts to stop the spread of COVID.

The 10-yr note yield is down four basis points to 2.82%. The U.S. Dollar Index is down 0.1% to 101.94. WTI crude futures are up 0.3% to $110.58/bbl.

In U.S. Corporate news:

  • Snap (SNAP 15.71, -6.76, -30.0%): says it expects Q2 revenues and adjusted EBITDA to be below low end of prior guidance range as macro conditions deteriorated faster and further than anticipated

  • Best Buy (BBY 73.80, +1.21, +1.7%): tops fiscal Q1 estimates, but lowers FY23 EPS guidance range and indicates revenues expected to be below consensus

  • Abercrombie & Fitch (ANF 21.13, -5.60, -21.0%): drops sharply following large fiscal Q1 earnings miss and disappointing revenue guidance

  • Roblox (RBLX 28.49, -1.57, -5.2%): drops after Atlantic Equities cuts rating to Neutral from Overweight

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region ended Tuesday on a lower note. Japan's Nikkei -0.9%; Hong Kong's Hang Seng -1.8%; China's Shanghai Composite -2.4%; India's Sensex -0.4%; South Korea's KOSPI -1.6%; and Australia's All Ordinaries -0.4%. In economic data:

  • Japan's May flash Manufacturing PMI 53.2 (last 53.5) and flash Services PMI 51.7 (last 50.7). April BoJ Core CPI 1.4% yr/yr (expected 1.1%; last 1.1%)

  • South Korea's May Consumer Confidence 102.6 (last 103.8)

  • Australia's May flash Manufacturing PMI 55.3 (last 58.8) and flash Services PMI 53.0 (last 56.1)

  • New Zealand's Q1 Retail Sales -0.5% qtr/qtr (last 8.6%) and Core Retail Sales 0.0% qtr/qtr (last 6.8%)

  • In news:

  • China Securities Journal speculated that special sovereign bonds may be issued to help the economy.

  • Former Japanese Prime Minister Abe said that Japan needs to spend at least JPY6.5 trln on defense.

  • Toyota expects to produce 850,000 units in June and 9.7 mln units in FY23.



  • Major European indices trade in the red. STOXX Europe 600 -0.5%; Germany's DAX Index -0.6%; UK's FTSE 100 -0.1%; France's CAC 40 -0.7%; Italy's FTSE MIB -0.4%; Spain's IBEX 35 -0.1%.

  • In economic data:Eurozone's May flash Manufacturing PMI 54.4 (expected 54.9; last 55.5) and flash Services PMI 56.3 (expected 57.5; last 57.7) Germany's May flash Manufacturing PMI 54.7 (expected 54.0; last 54.6) and flash Services PMI 56.3 (expected 57.2; last 57.6) U.K.'s May flash Manufacturing PMI 54.6 (expected 54.9; last 55.8) and flash Services PMI 51.8 (expected 56.9; last 58.9). May CBI Distributive Trades Survey -1 (expected -30; last -35). April Public Sector Net Borrowing GBP17.80 bln (expected GBP17.85 bln; last GBP13.91 bln) France's May flash Manufacturing PMI 54.5 (expected 55.0; last 55.7) and flash Services PMI 58.4 (expected 58.6; last 58.9). May Business Survey 106 (expected 107; last 108)

  • In news:European Central Bank President Lagarde repeated that she expects rates to be positive by the end of Q3. However, some policymakers would reportedly prefer a quicker path to positive rates. British Chancellor of the Exchequer Sunak is planning a windfall tax on over GBP10 bln in profits by electricity companies. Spain's Prime Minister Sanchez indicated that a cap on the price of gas will be implemented.

U.S. equity futures:

  • S&P 500 Futures: -41 @ 3,933

  • DJIA Futures: -198 @ 31,682

  • Nasdaq 100 Futures: -192 @ 11,843

Overseas:

  • Europe: DAX -0.6%, FTSE -0.1%, CAC -0.7%

  • Asia: Nikkei -0.9%, Hang Seng -1.8%, Shanghai Composite -2.4%

Commodities:

  • Crude Oil +0.26 @ 110.55

  • Nat Gas -0.065 @ 8.762

  • Gold +9.50 @ 1857.30

  • Silver +0.199 @ 21.922

  • Copper -0.0540 @ 4.2915

U.S. Summary:

  • Earnings/Guidance (Full Earnings Calendar):Abercrombie & Fitch (ANF) misses by $0.36, beats on revs; guides Q2 revs below consensus; lowers FY23 revs below consensusAdvance Auto (AAP) misses by $0.02, reports revs in-line, comparable store sales increased 0.6%; guides FY22 EPS in-line, revs in-lineAgora (API) reports Q1 results; beats on revs; reaffirms FY22 revsAlbemarle (ALB) improves its FY22 guidance after completion of additional lithium contract renegotiationsAmerica's Car-Mart (CRMT) beats on top and bottom linesAutohome (ATHM) beats by $0.09, beats on revsAutoZone (AZO) beats by $2.96, beats on revs; Q3 domestic comps +2.6%

  • Best Buy ( BBY 0.00% ) beats by $0.01, beats on revs; lowers FY23 EPS in-line, revs below consensus

  • Canadian Solar ( CSIQ 1.20% ) beats by $0.23, misses on revs; guides Q2 revs above consensus; reaffirms FY22 revs guidance

  • Dole plc ( DOLE 10.55% ) reports EPS in-line, beats on revs; guides FY22 revs above consensus

  • Frontline ( FRO 3.67% ) reports EPS in-line

  • GFL Environmental ( GFL 1.31% ) reaffirms FY22 revs guidance

  • Honeywell ( HON 2.37% ) in slide presentation sees Q2 EPS and revs in line; reaffirms FY22 guidance

  • Navigator Holdings ( NVGS 4.88% ) guides Q1 EPS below consensus estimate (3 estimates), revenue above two analyst estimate

  • NetEase ( NTES 1.70% ) beats by RMB0.69, beats on revs

  • Nordson ( NDSN 1.76% ) beats by $0.14, misses on revs; guides JulQ EPS in-line, revs below consensus; guides FY22 EPS above consensus, narrows FY22 revenue guidance

  • Petco Health and Wellness ( WOOF 2.47% ) beats by $0.02, beats on revs; reaffirms FY23 EPS guidance, revs guidance; Q1 comps +5.1%

  • Skyline Champion ( SKY 14.32% ) reports Q4 (Mar) results, beats on revs

  • Snap ( SNAP 40.70% ) notes it is likely to report revs and adjusted EBITDA below the low-end of its 2Q22 guidance range due to a further deterioration of the macroeconomic environment; CEO also plans to slow hiring through end of year

  • WalkMe Ltd. ( WKME 26.64% ) beats by $0.02, beats on revs; guides Q2 revs below consensus; reaffirms FY22 revs guidance

  • Zoom Video ( ZM 1.98% ) beats by $0.15, reports revs in-line; guides JulQ EPS above consensus, revs above consensus; guides FY23 EPS above consensus, reaffirms FY23 revs guidance


  • General News:President Biden says US will maintain existing policy on Taiwan after he said yesterday that US would respond militarily if China invades Taiwan, according to the Wall Street JournalSome of President Biden's advisors want him to remove some Chinese tariffs, but others advisors are against removing the tariffs because it will make the administration appear "weak on China", according to the New York TimesSecretary of State Antony Blinken will give speech Thursday outlining White House China strategy, according to PoliticoThe Biden administration is mulling release of diesel fuel from reserves, according to the Wall Street JournalSmallpox vaccine is entering further production to prevent monkeypox, according to the Wall Street JournalWhite House issues readout of meeting between Australia Prime Minister Albanese and President BidenWhite House issues readout of meeting between President Biden and India Prime Minister Modi Activision (ATVI) studio workers aiming to unionize, according to the New York TimesAlnylam Pharma (ALNY) presents new results from the ILLUMINATE-C phase 3 study of lumasiran in patients with advanced primary hyperoxaluria type 1 Arcellx (ACLX) announces appointment of Michelle Gilson as CFOAT&T (T) provides updates at J.P. Morgan Conference; reiterated AT&T's disciplined growth and investment strategyBausch + Lomb (BLCO) receives Health Canada approval of LUMIFY redness reliever eye dropsBellRing Brands (BRBR) approves new $50 mln share repurchase authorization Chevron (CVX), Talos (TALO), and Carbonvert announce closing of previously announced joint venture expansion of the Bayou Bend CCS project offshore Jefferson County, TexasComfort Systems (FIX) increases stock repurchase authorization up to 1.0 mln sharesDocGo (DCGO) authorizes a share repurchase program for up to $40 million of its common stockEli Lilly (LLY) reports Fifty Percent of Patients with Ulcerative Colitis Treated with Mirikizumab Achieved Clinical Remission at One Year in Lilly's Pivotal Phase 3 StudyEuroseas (

ESEA 7.89%

) reinstates quarterly dividend at $0.50/sh, first dividend since 2013; new yield at 7.2%; also approves $20 mln share repurchase authorization; also reports earnings

  • FormFactor ( FORM 0.80% ) approves a $75 mln stock repurchase program

  • INmune Bio ( INMB 22.70% ) to provide additional manufacturing information to FDA for IND application for XPro1595 in Alzheimer's disease; IND placed on clinical hold

  • Mannkind ( MNKD 3.12% ) inhalation platform utilized in FDA-Approved Tyvaso DPI

  • Merck ( MRK 0.13% ) receives EC approval for KEYTRUDA plus chemotherapy as neoadjuvant treatment, then continued as adjuvant monotherapy after surgery for locally advanced or early-stage triple-negative breast cancer at high risk of recurrence

  • NuScale Power ( SMR 6.93% ) signs MOU for first small modular reactor site in Romania

  • Oaktree Acquisition Corp. II ( OACB 0.00% ): Alvotech clinical study results demonstrate therapeutic equivalence between biosimilar candidate AVT04 and reference product Stelara

  • Ocugen ( OCGN 5.02% ) announces that it is diversifying its innovative pipeline by introducing a Phase 3, cell therapy platform technology called NeoCart

  • OraSure ( OSUR 10.95% ) appoints Carrie Eglinton Manner as CEO, effective June 4

  • Petrobras ( PBR 10.84% ) confirms letter from the Ministry of Mines and Energy requesting measures in order to call an Extraordinary General Meeting

  • Pfizer ( PFE 0.02% ) presents elevate pivotal findings demonstrating etrasimod's potentially best-in-class profile in ulcerative colitis

  • Pfizer ( PFE 0.02% ) and Everest Medicines presente two pivotal studies that make up the ELEVATE UC Phase 3 registrational program evaluating etrasimod; both studies achieved all primary and key secondary endpoints

  • Piedmont Lithium ( PLL 3.70% ) Partner Sayona Mining Announces Positive Study Results for North American Lithium Mine Restart

  • Raytheon Technologies ( RTX 1.39% ) awarded $420 mln Navy contract

  • Rigel Pharma ( RIGL 3.79% ): Knight Therapeutics enters into exclusive license and supply agreements with Rigel Pharmaceuticals to commercialize fostamatinib in Latin America

  • Roivant Sciences ( ROIV 6.30% ): Dermavant Sciences announced that the FDA has approved VTAMA (tapinarof) cream

  • Samsung ( SSNLF ) aiming to spend $360 bln on chips and biotechnology over next five years, according to Bloomberg

  • Seabridge Gold ( SA 1.05% ) and Liard First Nation reached agreement on the terms of a 'Contribution Agreement' for Seabridge's 3 Aces Project located in Yukon, Canada

  • SpringWorks Therapeutics ( SWTX 8.84% ) Announces Nirogacestat Achieved Primary and All Key Secondary Endpoints in Phase 3 DeFi Trial in Adult Patients with Progressing Desmoid Tumors

  • Stellantis ( STLA 2.76% ) aiming to build battery plant in Indiana, according to Detroit News

  • Take-Two Interactive Software ( TTWO 0.49% ) Announces Offers to Purchase by Zynga Inc. of Any and All of Zynga's Outstanding 0.25% Convertible Senior Notes due 2024 and 0% Convertible Senior Notes due 2026

  • Telus ( TU 0.94% ) is investing $11 billion in network infrastructure, operations, and spectrum across Quebec over the next four years and has committed to investing $70 billion overall across Canada by 2026

  • Toyota ( TM 0.88% ) aiming to lower global production amid chip shortages, according to Reuters

  • TransAlta ( TAC 0.52% ) announces TSX acceptance of normal course issuer bid

  • Uber ( UBER 9.08% ) has frozen hiring, but not having layoffs, according to Business Insider

  • United Therapeutics ( UTHR 3.40% ) announces FDA approval of Tyvaso DPI

  • WalkMe Ltd. ( WKME 26.64% ) announces strategic partnership with Celonis to offer WKME's Digital Adoption Platform combined with Celonis's Execution Management System

  • Walmart ( WMT 0.24% ) announced drone delivery to 4 million U.S. households in partnership with DroneUp

  • Workhorse Group ( WKHS 8.70% ) granted patent for land vehicles incorporating removable powertrain units, powertrain units, and methods therefor


  • M&A:Afya (AFYA) acquires Glic, a free diabetes care and management appCosan (CSAN) subsidiary acquires PetroChoice Lubrication Solutions for $479 mln

  • Dexcom ( DXCM 10.16% ) in discussions to acquire Insulet ( PODD 6.56% ), according to Bloomberg

  • Installed Building Products ( IBP 3.49% ) acquires Tri-County Insulation and Acoustical Contractors; financial details not disclosed

  • Welbilt ( WBT 0.11% ): UK CMA investigating anticipated acquisition by Ali Holding of Welbilt


  • Syndicate: Holly Energy Partners (HEP) files for $2 bln mixed securities shelf offering

  • Holly Energy Partners ( HEP 1.50% ) files for 59,630,030 common unit offering by selling shareholders

  • ProAssurance ( PRA 3.47% ) files mixed securities shelf offering


  • IPOs:Priced to Trade:

  • No IPOs expected.


Gapping Up/Down

  • Gapping up:

ZM 1.98%

+6.6%,

ROIV 6.30%

+5.2%,

ESEA 7.89%

+3.4%,

SMR 6.93%

+3%,

NVGS 4.88%

+2.5%,

NTES 1.70%

+2.2%,

CSIQ 1.20%

+2%,

ALB 2.20%

+1.3%,

BRBR 0.42%

+1.1%,

HEI 0.06%

+1.1%,

CRMT 22.68%

+1.1%,

MNKD 3.12%

+0.5%

  • Gapping down:

SNAP 40.70%

-29.4%,

INMB 22.70%

-21%,

PINS 26.38%

-11.8%,

TTD 19.41%

-7.9%,

MGNI 13.24%

-7%,

FB 9.26%

-6.8%, API -5.8%,

ROKU 16.79%

-4.7%,

AAP 3.32%

-3.7%,

TWTR 4.75%

-3.6%,

GOOG 6.67%

-3.5%,

PUBM 13.15%

-3.2%,

HEP 1.50%

-3.1%,

DOLE 10.55%

-2.6%,

ARKK 6.72%

-2.3%,

WKME 26.64%

-1.9%,

GFL 1.31%

-1.2%,

ATHM 4.83%

-1.1%,

PRA 3.47%

-0.7%,

RTX 1.39%

-0.5%

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

  • Upgrades

  • Marqeta ( MQ 4.37% ) upgraded to Overweight from Equal-Weight at Morgan Stanley; tgt $15

  • Northwest Natural ( NWN 1.81% ) upgraded to Neutral from Underperform at BofA Securities; tgt $53

  • Snowflake ( SNOW 6.22% ) upgraded to Buy from Neutral at Rosenblatt; tgt lowered to $255

Downgrades:

  • Roblox ( RBLX 9.08% ) downgraded to Neutral from Overweight at Atlantic Equities; tgt $30

  • WalkMe Ltd. ( WKME 26.64% ) downgraded to Sector Weight from Overweight at KeyBanc Capital Markets

  • Others:

  • Aflac ( AFL 1.40% ) initiated with a Neutral at Citigroup; tgt $60

  • Allstate ( ALL 0.14% ) initiated with a Buy at Citigroup; tgt $159

  • Chubb ( CB 1.94% ) initiated with a Neutral at Citigroup; tgt $209

  • Equitable Holdings ( EQH 3.33% ) initiated with a Buy at Citigroup; tgt $41

  • Hartford Financial ( HIG 1.55% ) initiated with a Buy at Citigroup; tgt $81

  • Lincoln National ( LNC 4.57% ) initiated with a Neutral at Citigroup; tgt $56

  • MetLife ( MET 2.35% ) initiated with a Buy at Citigroup; tgt $77

  • Principal Fincl ( PFG 3.29% ) initiated with a Sell at Citigroup; tgt $63

  • Progressive ( PGR 0.97% ) initiated with a Sell at Citigroup; tgt $93

  • Prudential ( PRU 0.27% ) initiated with a Neutral at Citigroup; tgt $100

  • Reinsurance Group of America ( RGA 2.94% ) initiated with a Sell at Citigroup; tgt $110

  • Travelers ( TRV 1.54% ) initiated with a Neutral at Citigroup; tgt $179

  • Unum Group ( UNM 3.89% ) initiated with a Neutral at Citigroup; tgt $36

  • Voya Financial ( VOYA 2.16% ) initiated with a Buy at Citigroup; tgt $82


Upcoming Events:

  • Econ Data:

  • 09:45 ET: IHS Markit Manufacturing PMI - Prelim for May (Briefing.com Consensus NA; Prior 59.2)

  • 09:45 ET: IHS Markit Services PMI - Prelim for May (Briefing.com Consensus NA; Prior 55.6)

  • 10:00 ET: New Home Sales for Apr (Briefing.com Consensus 750K; Prior 763K)

Earnings:

  • Monday (May 23)

  • Afternoon: AAP HEI NDSN SKY WKME ZM


  • Tuesday (May 24)

  • Morning: ANF ATHM AZO BBY CSIQ DOLE FRO NTES WOOF RL

  • Afternoon: A CAL INTU RAMP JWM TOL URBN


  • Wednesday (May 25)

  • Morning: BMO BNS CMCO DKS DY PLAB

  • Afternoon: BOX CHNG DXC ELF ENS GES NTNX NVDA SNOW SPLK VSAT WSM ZUO


  • Thursday (May 26)

  • Morning: BABA AMWD BIDU BZUN BRC BURL CM DG DLTR GCO HLNE JACK M MANU MDT ROLL RY SAFM TITN TD

  • Afternoon: ME AEO ADSK COST DELL DOMO FTCH GPS LGF.A MRVL RRGB STEP SUMO ULTA VMW WDAY ZS


  • Friday (May 27)

  • Morning: BIG CGC HIBB


Asia & Europe detail:

Asia: Nikkei -0.9%, Hang Seng -1.8%, Shanghai Composite -2.4%

Equity indices in the Asia-Pacific region ended Tuesday on a lower note. China Securities Journal speculated that special sovereign bonds may be issued to help the economy. Former Japanese Prime Minister Abe said that Japan needs to spend at least JPY6.5 trln on defense. Toyota expects to produce 850,000 units in June and 9.7 mln units in FY23.

  • In economic data:

  • Japan's May flash Manufacturing PMI 53.2 (last 53.5) and flash Services PMI 51.7 (last 50.7). April BoJ Core CPI 1.4% yr/yr (expected 1.1%; last 1.1%)

  • South Korea's May Consumer Confidence 102.6 (last 103.8)

  • Australia's May flash Manufacturing PMI 55.3 (last 58.8) and flash Services PMI 53.0 (last 56.1)

  • New Zealand's Q1 Retail Sales -0.5% qtr/qtr (last 8.6%) and Core Retail Sales 0.0% qtr/qtr (last 6.8%)

---Equity Markets---

  • Japan's Nikkei: -0.9%

Hong Kong's Hang Seng: -1.8% China's Shanghai Composite: -2.4%

  • India's Sensex: -0.4%

  • South Korea's Kospi: -1.6%

  • Australia's ASX All Ordinaries: -0.4%

---FX---

  • USD/JPY: -0.3% to 127.45

USD/CNH: +0.4% to 6.6779 USD/INR: UNCH at 77.56

Europe: DAX -0.6%, FTSE -0.1%, CAC -0.7%

Major European indices trade in the red. European Central Bank President Lagarde repeated that she expects rates to be positive by the end of Q3. However, some policymakers would reportedly prefer a quicker path to positive rates. British Chancellor of the Exchequer Sunak is planning a windfall tax on over GBP10 bln in profits by electricity companies. Spain's Prime Minister Sanchez indicated that a cap on the price of gas will be implemented.

  • In economic data:

  • Eurozone's May flash Manufacturing PMI 54.4 (expected 54.9; last 55.5) and flash Services PMI 56.3 (expected 57.5; last 57.7)

  • Germany's May flash Manufacturing PMI 54.7 (expected 54.0; last 54.6) and flash Services PMI 56.3 (expected 57.2; last 57.6)

  • U.K.'s May flash Manufacturing PMI 54.6 (expected 54.9; last 55.8) and flash Services PMI 51.8 (expected 56.9; last 58.9). May CBI Distributive Trades Survey -1 (expected -30; last -35). April Public Sector Net Borrowing GBP17.80 bln (expected GBP17.85 bln; last GBP13.91 bln)

  • France's May flash Manufacturing PMI 54.5 (expected 55.0; last 55.7) and flash Services PMI 58.4 (expected 58.6; last 58.9). May Business Survey 106 (expected 107; last 108)

---Equity Markets---

  • STOXX Europe 600: -0.5%

Germany's DAX: -0.6% U.K.'s FTSE 100: -0.1%

  • France's CAC 40: -0.7%

  • Italy's FTSE MIB: -0.4%

  • Spain's IBEX 35: -0.1%

---FX---

  • EUR/USD: +0.2% to 1.0706

GBP/USD: -0.7% to 1.2502 USD/CHF: UNCH at 0.9655


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