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25/05/22 Briefing

The S&P 500 futures are down 14 points and are trading 0.3% below fair value. The Nasdaq 100 futures are down 65points and are trading 0.6% below fair value. The Dow Jones Industrial Average futures are down 126 points and are trading 0.3% below fair value.

Buyers continue to lack much conviction as growth concerns persist.

Fresh reminders today include reports that Russia is stepping up its military effort in eastern Ukraine, that Beijing continues to wrestle with curbs on activity to try to stop the spread of Covid, ECB member Knot touting the possibility of a 50 basis point rate hike in July, the weekly mortgage applications report showing no growth in purchase applications, and Dick's Sporting Goods issuing an FY23 EPS outlook that is well below expectations to account for the impact of "evolving macroeconomic conditions."

We'll hear more about those evolving conditions and how the Fed was considering them at the May 3-4 FOMC meeting when the minutes from that meeting are released today at 2:00 p.m. ET.

The 10-yr note is down three basis points to 2.73%. The 2-yr note yield is unchanged at 2.50%. The U.S. Dollar Index is up 0.5% to 102.33. WTI crude futures are up 1.1% to $110.95/bbl.

In U.S. Corporate news:

  • Dick's Sporting Goods (DKS 58.64, -12.60, -17.7%): beats by $0.32, beats on revs; guides FY23 EPS well below consensus to reflect impact of "evolving macroeconomic conditions"

  • Toll Brothers (TOL 46.24, +1.70, +3.8%): beats by $0.23, beats on revs; expects JulQ deliveries of 2,750 units; expects FY22 deliveries of 11,000-11,500 units; authorized approximately $900 mln for share buybacks

  • Wendy's (WEN 17.72, +1.45, +8.9%): Trian Fund filing saying it intends to explore and evaluate potential transactions with company to enhance shareholder value

  • Nordstrom (JWN 21.35, +0.67, +3.2%): misses by $0.02, beats on revs; guides FY23 EPS above consensus, revs above consensus; authorizes a new $500 mln share repurchase program

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region ended Wednesday on a mostly higher note. Japan's Nikkei -0.3%; Hong Kong's Hang Seng +0.3%; China's Shanghai Composite +1.2%; India's Sensex -0.6%; South Korea's Kospi +0.4%; Australia's All Ordinaries +0.3%.

  • In economic data:

  • Japan's March Leading Index 0.7% m/m (last 0.9%) and Coincident Indicator 0.7% m/m (last 0.2%)

  • South Korea's June Manufacturing BSI Index 85 (last 85)

  • Singapore's Q1 GDP 1.4% qtr/qtr (expected 0.8%; last 1.4%); 3.7% yr/yr, as expected (last 3.4%)

  • Australia's Q1 Construction Work Done -0.9% qtr/qtr (expected 1.0%; last -0.4%)


  • In news:

  • Japan's Cabinet office maintained its overall economic assessment but raised its view of employment and housing.

  • Shanghai Security News reported that small and medium banks have been instructed to limit their asset management units this year.

  • North Korea conducted more missile tests.

  • The Reserve Bank of New Zealand raised its official cash rate by 50 bps to 2.00%, as expected.



  • Major European indices trade near their flat lines. STOXX Europe 600 +0.3%; Germany's DAX -0.2%; UK's FTSE 100 +0.3%; France's CAC 40 -0.2%; Italy's FTSE MIB +0.1%; and Spain's IBEX 35 +0.4%.

  • In economic data:

  • Germany's Q1 GDP 0.2% qtr/qtr, as expected (last -0.3%); 4.0% yr/yr, as expected (last 1.8%). June GfK Consumer Climate -26.0, as expected (last -26.6)

  • France's May Consumer Confidence 86 (expected 89; last 87). April jobseeker total 2.955 mln (last 2.940 mln)

  • Spain's April PPI 45.0% yr/yr (last 47.0%)

  • Swiss May ZEW Expectations -52.6 (last -51.6)


  • In news:

  • British employers have reportedly increased pay by about 4% over the past three months, representing the biggest increase in 30 years, though raises were still below the pace of inflation.

  • European Central Bank policymaker Panetta said that the current outlook justifies a gradual exit from negative rates but does not mean that stimulus should be removed outright.



U.S. equity futures:

  • S&P 500 Futures: -17 @ 3,925

  • DJIA Futures: -139 @ 31,790

  • Nasdaq 100 Futures: -69 @ 11,701

Overseas:

  • Europe: DAX -0.2%, FTSE +0.3%, CAC -0.2%

  • Asia: Nikkei -0.3%, Hang Seng +0.3%, Shanghai Composite +1.2%

Commodities:

  • Crude Oil +1.25 @ 111.02

  • Nat Gas +0.106 @ 8.942

  • Gold -11.02 @ 1854.38

  • Silver -0.305 @ 21.758

  • Copper -0.0733 @ 4.2317

U.S. Summary:

  • Earnings/Guidance (Full Earnings Calendar):

  • Agilent (A) beats by $0.01, reports revs in-line; guides Q3 EPS in-line, revs below consensus; guides FY22 EPS above consensus, reaffirms FY22 revs guidance

  • Bank of Montreal (BMO) beats by CAD 0.01, beats on revs

  • Bank of Nova Scotia (BNS) beats by CAD 0.22, reports revs in-line

  • Beam Global (BEEM) misses by $0.07; beats on revs

  • Caleres (CAL) beats by $0.49, beats on revs; guides FY23 EPS above consensus, revs in-line

  • Columbus McKinnon (CMCO) reports EPS in-line, beats on revs; guides Q1 revs below consensus

  • Dick's Sporting Goods (DKS) beats by $0.32, beats on revs; guides FY23 EPS below consensus

  • Dycom (DY) beats by $0.35, beats on revs

  • Excelerate Energy (EE) reports Q1 results; beats on revs

  • Intuit (INTU) beats by $0.07, beats on revs; guides JulQ EPS in-line, revs above consensus

  • LiveRamp (RAMP) misses by $0.03, beats on revs; guides Q1 revs below consensus; guides FY23 revs below consensus; intends to repurchase approximately $150 mln of common stock by end of 3Q23

  • Nordstrom (JWN) misses by $0.02, beats on revs; guides FY23 EPS above consensus, revs above consensus; authorizes a new $500 mln share repurchase program

  • Ooma (OOMA) beats by $0.02, slightly beats on revs; guides Q2 EPS above consensus, revenue slightly above consensus, guides FY23 EPS inline, revenue slightly above consensus

  • Photronics (PLAB) beats by $0.14, beats on revs; guides Q3 EPS above consensus, revs above consensus

  • Super Group (SGHC) reports Q1 (Mar) results, revs in-line

  • Toll Brothers (TOL) beats by $0.23, beats on revs; expects JulQ deliveries of 2,750 units; expects FY22 deliveries of 11,000-11,500 units; authorized approximately $900 mln for share buybacks

  • Urban Outfitters (URBN) misses by $0.09, misses on revs, +11% retail segment comp

  • VNET Group (VNET) beats by RMB 0.03, misses on revs; guides FY22 revs in-line


  • General News:

  • Beijing continues to report coronavirus cases as Tianjin locked down a district at its city center, according to Bloomberg

  • Georgia Governor Brian Kemp and Secretary of State Brad Raffensperger easily defeated candidates backed by former President Trump in the Republican primary. The races were seen as a test of Mr. Trump's influence, according to the Washington Post

  • President Biden gives remarks on Texas school shooting; calls for more gun control laws

  • President Biden to sign executive order to advance effective, accountable policing and strengthen public safety

  • Senator Joe Manchin (D-WV) will not support filibuster changes to pass gun laws. He says Senate should focus on mental health laws because gun control will not get 60 votes needed to pass, according to The Hill

  • Senate will vote this week on expanded background checks for gun purchases, but there is no indication that prior opposition that prevented bill from passing has changed, according to the New York Times

  • California wants federal funding to keep last nuclear plant open amid potential electricity shortfalls, according to Bloomberg

  • US and China still committed to audit deal, according to Reuters

  • Abbott Labs (ABT) to release limited quantities of EleCare branded specialty formulas to meet patient needs; plans to restart production at Sturgis facility on June 4

  • Abbott Labs (ABT): FDA flexibilities to yield millions of cans of additional infant formula in coming months to increase supply available to U.S. consumers

  • Apple (AAPL) iPhone development in China is behind schedule amid coronavirus lockdowns, according to Nikkei

  • Clearway Energy (CWEN): Global Infrastructure Partners and TotalEnergies (TTE) announce a strategic partnership in U.S. renewables including their controlling stakes in Clearway Energy Group and SunPower (SPWR)

  • Crinetics Pharmaceuticals (CRNX) Reports Positive Top-line Results Including Strong Adrenal Suppression from CRN04894 Phase 1 Study Multiple-Ascending Dose Cohorts

  • CVS (CVS) aiming to end prescription filling for Cerebral controlled substances, according to the Wall Street Journal

  • Enovix (ENVX) added multiple distributors to support its growth and demand from OEMs in Asia

  • Enthusiast Gaming (EGLX) Issues Statement Addressing Misleading, Baseless Letter from Activist Greywood Investments

  • Hudbay Minerals (HBM) receives favourable U.S. District Court ruling on Copper World

  • Intl Game Tech. PLC (IGT) signed a multi-product systems technology agreement with Harrington Raceway and Casino

  • Ironwood Pharma (IRWD) presented new findings during the 2022 Digestive Disease Week demonstrating potential of IW-3300 for visceral pain

  • Johnson & Johnson's (JNJ) Janssen presents study results showing clinical efficacy for TREMFYA

  • Johnson & Johnson (JNJ) receives FDA orphan drug approval for treatment of primary failure of platelet recovery

  • Karyopharm Therapeutics (KPTI): The European Myeloma Network and Karyopharm Announce Dosing of First Patient in Collaborative EMN29/XPORT-MM-031 Study

  • Lyft (LYFT) will slow hiring and reduce budgets for some departments, according to the Wall Street Journal

  • McDonald's (MCD) is expected to win proxy battle with Carl Icahn, according to the Wall Street Journal

  • Microsoft (MSFT) XBox Cloud Gaming has 10 million players, according to 9to5Google

  • Nike (NKE) will not renew Russian franchise agreements, according to Reuters

  • ObsEva (OBSV) Presents Clinical Data on Oral GnRH Antagonist Linzagolix at Multiple Congresses

  • Oppenheimer Holdings (OPY) approves share repurchase program up to 550,000 shares, or 4.6% of Class A non-voting common stock

  • Palantir Technologies (PLTR) announces global enterprise deal with Stellantis (STLA)

  • Petrobras (PBR) clarifies the pieces of news in the media about the natural gas purchase agreement signed between Petrobras and Yacimientos Petrolferos Fiscales Bolivianos

  • Prudential Plc (PUK) names Anil Wadhwani as CEO

  • Quotient (QUOT) appoints Matt Krepsik to CEO position, effective immediately

  • Raymond James Financial (RJF) reports April 2022 operating data

  • RCI Hospitality (RICK) increases share buyback authorization by $25 mln

  • Reckitt (RBGLY) will work with FDA to increase baby formula supply, according to Reuters

  • Rocket Lab USA (RKLB) announces that Varda will procure a fourth Photon spacecraft, following a previous bulk-order in August 2021 for three Photon spacecraft from RKLB

  • Sempra Energy (SRE) unit entered into a heads of agreement with RWE (RWEOY) Supply & Trading

  • Target Hospitality (TH) announced that Brad Archer has agreed to remain in his positions as President and Chief Executive Officer and continue serving as member of the Company's Board of Directors through June 30, 2025

  • Telos Corporation (TLS) authorizes $50 mln common stock repurchase program

  • Toyota Motor (TM) aiming to introduce bZ4X EV to compete with Tesla (TSLA), according to the Wall Street Journal

  • Tritium DCFC (DCFC) has partnered with Transaction Network Services to bolster the point-of-charge payment options that Tritium provides to customers

  • Verrica Pharmaceuticals (VRCA) receives Complete Response Letter from the FDA for its NDA for VP-102

  • Wendy's (WEN): Trian Fund filing saying they intend to explore and evaluate potential transactions

  • Wendy's (WEN) Comments on Amended 13D Filing from Trian Partners


  • M&A:

  • Amdocs (DOX) announces agreement to acquire MYCOM OSI for approx. $188 mln in cash

  • CVS Health (CVS): UK The CMA is investigating the completed acquisition by CVS Group plc of Quality Pet Care Ltd (trading as The Vet)

  • General Mills (GIS) announces agreement to sell helper and suddenly salad businesses to Eagle Family Foods Group

  • Valvoline (VVV) purchases partner's interest in VCA Solutions JV


  • Syndicate:

  • BrightView (BV) files for $500 mln mixed securities shelf offering; also files for 50,633,123 share common stock offering by selling shareholders

  • Chinook Therapeutics (KDNY) prices offering of 6,428,572 shares of its common stock at $14.00 per share

  • Chinook Therapeutics (KDNY) files mixed securities shelf offering

  • Innoviz Technologies (INVZ) files for 16,231,141 ordinary share offering related to warrants; also files for 12,614,863 ordinary share offering by selling shareholders

  • InterDigital (IDCC) announces private offering of $350 mln aggregate principal amount of Senior Convertible Notes due 2027


  • IPOs:

  • Priced to Trade:

  • No IPOs expected.



Gapping Up/Down

  • Gapping up:

  • WEN +10.6%, PLAB +10%, JWN +8.9%, CWEN+6.5%, CAL +6.3%, VNET +5.6%, SPWR +5%, URBN+4.1%, RICK +3.7%, TOL +3.6%, OPY +3.2%, DCFC+3.1%, VVV +3%, INTU +2.8%, RKLB +2.5%, BEEM+2.4%, M +1.9%, DOX +1.6%, A +1.3%, OOMA +0.9%


  • Gapping down:

  • VRCA -55.2%, KDNY -7.3%, IDCC -6.2%, INVZ -4.9%, EGLX -4.6%, ARCE -2.5%, DDS -2.4%, PUK -2%, LYFT -0.8%, ABT -0.7%


Analyst Research (see Upgrades/Downgradescalendarfor full list):

  • Upgrades

  • Air Products (APD) upgraded to Overweight from Neutral at Atlantic Equities; tgt raised to $290

  • CME Group (CME) upgraded to Outperform from Perform at Oppenheimer; tgt $223

  • Diamondback Energy (FANG) upgraded to Overweight from Equal Weight at Barclays; tgt lowered to $160

  • Equitable Holdings (EQH) upgraded to Overweight from Neutral at JP Morgan; tgt $36

  • Kilroy Realty (KRC) upgraded to Buy from Neutral at Goldman; tgt lowered to $84

  • Magellan Midstream (MMP) upgraded to Overweight from Neutral at JP Morgan; tgt raised to $57

  • Molecular Partners AG (MOLN) upgraded to Neutral from Underperform at Credit Suisse


  • Downgrades:

  • ASGN Incorporated (ASGN) downgraded to Underperform from Neutral at Credit Suisse; tgt lowered to $90

  • Devon Energy (DVN) downgraded to Equal Weight from Overweight at Barclays; tgt $73

  • Essential Properties Realty Trust (EPRT) downgraded to Neutral from Buy at Goldman; tgt lowered to $26


  • Others:

  • Allete (ALE) initiated with a Neutral at BofA Securities; tgt $63

  • Amylyx Pharmaceuticals (AMLX) initiated with a Buy at Citigroup; tgt $21

  • Amyris (AMRS) initiated with a Neutral at Piper Sandler; tgt $2.50

  • ARKO Corp. (ARKO) initiated with an Equal Weight at Wells Fargo; tgt $7.75

  • Blend Labs (BLND) initiated with a Neutral at Compass Point; tgt $4.20

  • Casey's General (CASY) initiated with an Overweight at Wells Fargo; tgt $240

  • Cazoo (CZOO) initiated with a Neutral at Goldman; tgt $2

  • Doma (DOMA) initiated with a Neutral at Compass Point; tgt $2

  • Murphy USA (MUSA) initiated with an Equal Weight at Wells Fargo; tgt $230


Upcoming Events:

  • Econ Data:

  • 07:00 ET: MBA Mortgage Applications Index for May 21 (Briefing.comConsensus NA; Prior -11.0%)

  • 08:30 ET: Durable Orders for Apr (Briefing.comConsensus 0.6%; Prior 0.8%)

  • 08:30 ET: Durable Orders, ex-transportation for Apr (Briefing.comConsensus 0.6%; Prior 1.1%)

  • 10:30 ET: EIA Crude Oil Inventories for May 21 (Briefing.comConsensus NA; Prior -3.39M)

  • 14:00 ET: FOMC Minutes for May


  • 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 -0.3%, Hang Seng +0.3%, Shanghai Composite +1.2%

Equity indices in the Asia-Pacific region ended Wednesday on a mostly higher note. Japan's Cabinet office maintained its overall economic assessment but raised its view of employment and housing. Shanghai Security Newsreported that small and medium banks have been instructed to limit their asset management units this year. North Korea conducted more missile tests. The Reserve Bank of New Zealand raised its official cash rate by 50 bps to 2.00%, as expected.

  • In economic data:

  • Japan's March Leading Index 0.7% m/m (last 0.9%) and Coincident Indicator 0.7% m/m (last 0.2%)

  • South Korea's June Manufacturing BSI Index 85 (last 85)

  • Singapore's Q1 GDP 1.4% qtr/qtr (expected 0.8%; last 1.4%); 3.7% yr/yr, as expected (last 3.4%)

  • Australia's Q1 Construction Work Done -0.9% qtr/qtr (expected 1.0%; last -0.4%)


---Equity Markets---

  • Japan's Nikkei: -0.3%

  • Hong Kong's Hang Seng: +0.3%

  • China's Shanghai Composite: +1.2%

  • India's Sensex: -0.6%

  • South Korea's Kospi: +0.4%

  • Australia's ASX All Ordinaries: +0.3%

---FX---

  • USD/JPY: +0.2% to 127.12

  • USD/CNH: +0.4% to 6.6856

  • USD/INR: +0.2% to 77.57

Europe: DAX -0.2%, FTSE +0.3%, CAC -0.2%

Major European indices trade near their flat lines. British employers have reportedly increased pay by about 4% over the past three months, representing the biggest increase in 30 years, though raises were still below the pace of inflation. European Central Bank policymaker Panetta said that the current outlook justifies a gradual exit from negative rates but does not mean that stimulus should be removed outright.

  • In economic data:

  • Germany's Q1 GDP 0.2% qtr/qtr, as expected (last -0.3%); 4.0% yr/yr, as expected (last 1.8%). June GfK Consumer Climate -26.0, as expected (last -26.6)

  • France's May Consumer Confidence 86 (expected 89; last 87). April jobseeker total 2.955 mln (last 2.940 mln)

  • Spain's April PPI 45.0% yr/yr (last 47.0%)

  • Swiss May ZEW Expectations -52.6 (last -51.6)


---Equity Markets---

  • STOXX Europe 600: +0.3%

  • Germany's DAX: -0.2%

  • U.K.'s FTSE 100: +0.3%

  • France's CAC 40: -0.2%

  • Italy's FTSE MIB: +0.1%

  • Spain's IBEX 35: +0.4%

---FX---

  • EUR/USD: -0.6% to 1.0666

  • GBP/USD: -0.3% to 1.2494

  • USD/CHF: +0.4% to 0.9635


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