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25/07/22 Briefing




The S&P 500 futures are up 17 points and are trading 0.4% above fair value. The Nasdaq 100 futures are up 50 points and are trading 0.2% above fair value. The Dow Jones Industrial Average futures are up 152 points and are trading 0.6% above fair value.

There's not a lot of big corporate headlines in play this morning ahead of a busy week for market-moving catalysts. Futures for the major indices are trading up on a general feeling that the Fed is getting closer to becoming less aggressive with rate hikes. Also, a feeling that inflation is at its peak and due to moderate remains in play. 

Some weekend developments included Treasury Secretary Yellen downplaying the idea of the U.S. being in recession, Russia bombing the Odessa port that facilitates grain shipments, and Reuters reporting that China is aiming to put together a property developer bailout fund of up to $44 billion.

This week is full of market-moving catalysts, namely earnings reports from approximately 175 S&P 500 companies which make up nearly 50% of the index's market cap, the FOMC decision on Wednesday, the advanced Q2 GDP reading, and the June Personal Income and Spending report on Friday. Separately, the Senate is expected to hold a final vote on the CHIPS act semiconductor manufacturing bill on Tuesday. 

Energy complex futures are on the rise. WTI crude oil futures are up 1.1% to $95.76.bbl. Unleaded gasoline futures are up 1.2% to $3.06/gal. Natural gas futures are up 1.0% to $8.27/mmbtu.

Treasury yields have risen some, too. The 2-yr note yield is up two basis points to 3.01% while the 10-yr note yield is up three basis points to 2.81%.

In corporate news:

  • Lam Research (LRCX 458.51, -5.48, -1.2%): downgraded to Equal Weight from Overweight at Barclays 

  • T-Mobile (TMUS 132.00, -0.48m -0.4%):  aiming to pay $350 million for hacking settlement

  • Newmont Goldcorp (NEM 49.54, -1.85, -3.6%): misses by $0.15, reports revs in-line

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region began the week on a mostly lower note. Japan's Nikkei: -0.8%, Hong Kong's Hang Seng: -0.2%, China's Shanghai Composite: -0.6%, India's Sensex: -0.6%, South Korea's Kospi: +0.4%, Australia's ASX All Ordinaries: -0.1%.

  • In economic data:

  • Hong Kong's June trade deficit HKD68.50 bln (last deficit of HKD36.70 bln). June Imports 0.5% m/m (last 1.3%) and Exports -6.4% m/m (last -1.4%)

  • Singapore's June CPI 6.7% yr/yr (expected 6.2%; last 5.6%)

  • In news:

  • China has reportedly strengthened its warning regarding House Speaker Pelosi's planned visit to Taiwan.

  • The Chinese government is reportedly planning a CNY300 bln real estate fund.

  • South Korean steelmaker POSCO Holdings reportedly put itself in emergency management mode due to an expected slowdown in the global economy and expectations for lower profits.

  • South Korea's leading index declined for the 13th consecutive month in June.

  • Major European indices trade in the green. STOXX Europe 600: +0.2%, Germany's DAX: +0.4%, U.K.'s FTSE 100: +0.1%, France's CAC 40: +0.6%, Italy's FTSE MIB: +0.6%, Spain's IBEX 35: +0.4%.

  • In economic data:

  • Germany's July ifo Business Climate Index 88.6 (expected 90.2; last 92.2). July Current Assessment 97.7 (expected 98.0; last 99.4) and Business Expectations 80.3 (expected 83.0; last 85.5)

  • U.K.'s July CBI Industrial Trends Orders 8 (expected 13; last 18)

  • In news:

  • Germany's ifo Business Climate Index weakened to its lowest level in two years. The survey noted that German companies expect significant deterioration in the coming months and that the country is on the brink of recession.

  • European Central Bank President Lagarde said that the ECB will keep raising rates as long as needed to bring inflation down to target.

  • Volkswagen chairman Diess will step down at the end of August. He will be replaced by Oliver Blume.


U.S. equity futures:

  • S&P 500 Futures: +19 @ 3,980

  • DJIA Futures: +152 @ 32,051

  • Nasdaq 100 Futures: +56 @ 12,453

Overseas:

  • Europe: DAX +0.4%, FTSE +0.1%, CAC +0.6%

  • Asia: Nikkei -0.8%, Hang Seng -0.6%, Shanghai Composite -0.6%

Commodities:

  • Crude Oil +1.15 @ 95.85

  • Nat Gas  +0.032 @ 8.227

  • Gold +0.05 @ 1727.45

  • Silver -0.085  @ 18.532

  • Copper +0.0225 @ 3.3720

U.S. Summary:

  • Earnings/Guidance:

  • Bank of Hawaii (BOH) beats by $0.03

  • Community Bank (CBU) beats by $0.01, beats on revs

  • Dorman Products (DORM) misses by $0.02, beats on revs; lowers FY22 EPS below consensus, reaffirms FY22 revs guidance

  • Infosys (INFY) misses by $0.02; beats on revs; sees FY23 revs below consensus

  • MasTec (MTZ) reaffirms FY22 revenue guidance; provides updates to other guidance following acquisition of Infrastructure and Energy Alternatives (IEA)

  • Newmont Goldcorp (NEM) misses by $0.15, reports revs in-line

  • Philips (PHG) reports Q2 (Jun) results, beats on revs

  • RPM Inc (RPM) misses by $0.04, beats on revs; guides Q1 revs above consensus

  • Southside Banc (SBSI) beats by $0.03

  • Squarespace (SQSP) beats by $0.24, reports revs in-line; guides Q3 revs below consensus; guides FY22 revs below consensus

  • Vodafone PLC (VOD) reports Q1 revs below consensus; on track to meet FY23 guidance

  • General News:

  • Treasury Secretary Janet Yellen says she doesn't think it should be considered a recession if two quarters of GDP are negative. She said economy is slowing, but labor market is still strong, and she doesn't see signs of recession. She is "concerned" that oil prices could spike after EU puts sanctions on Russian oil in December, according to NBC News

  • President Biden's COVID-19 symptoms continue to improve 'significantly"; blood pressure, pulse, and temperature are normal

  • Russia strikes Odessa, Ukraine which is a critical port for grain supplies. The strike could undermine recent deal for grain exports, according to the New York Times

  • Russia says Nord Stream 1 turbine and volumes will adjust, according to Reuters

  • EU nations want exemptions to plan to lower gas demand, according to Financial Times

  • World Health Organization decided that the global monkeypox outbreak represents a public health emergency of international concern; outbreak is concentrated among men who have sex with men, which means outbreak can be stopped with the right strategies in the right groups

  • Senate will hold final vote on Tuesday for $54 billion semiconductor manufacturing bill, but there are questions if enough votes exist to pass House of Representatives, according to the Wall Street Journal

  • Commerce Secretary Gina Raimondo says President Biden is considering labor implications before deciding to remove some China tariffs, according to The Hill

  • Senator Chuck Grassley (R-IA) wants vote on technology antitrust bill, according to the New York Post

  • Macau casinos reopen, Bloomberg

  • Barclays (BCS) aiming to purchase stake in cryptocurrency firm Copper, according to Sky News

  • Credit Suisse (CS) mulling job cuts, Sonntagszeitung

  • Apple (AAPL): Apple TV+ considered front runner for NFL Sunday Ticket, according to New York Times

  • AstraZeneca (AZN) receives Priority Review from FDA for ENHERTU in HER2 low metastatic breast cancer

  • AstraZeneca (AZN) reports Ultomiris recommended for approval in the EU by CHMP for the treatment of adults with generalised myasthenia gravis

  • AstraZeneca (AZN) reports Tezspire recommended for approval in the EU by CHMP for the treatment of severe asthma

  • AstraZeneca (AZN) and Daiichi Sankyo have received notification of acceptance of the supplemental Biologics License Application of ENHERTU for the treatment of adult patients in the US with unresectable or metastatic HER2-low breast cancer who have received a prior therapy in the metastatic setting

  • Babcock & Wilcox Enterprises (BW) renewable awarded $12 million in contracts for 144-megawatts of utility-scale solar installation projects

  • Boeing (BA) workers in St. Louis to strike over pay, according to Reuters

  • BridgeBio Pharma (BBIO) and Sentynl Therapeutics Receive Positive CHMP Opinion for NULIBRY (fosdenopterin) for the Treatment of MoCD Type A

  • Ceragon (CRNT) sends letter to Aviat (AVNW) Board responding to Aviat's "misleading communications"

  • Embraer SA (ERJ) delivered 32 jets in the second quarter of 2022, of which 11 were commercial and 21 were executive jets; Firm order backlog reached US$ 17.8 bln at the 2Q22 end

  • Gilat Satellite (GILT) is further expanding its strategic in-flight connectivity partnership in Japan with Intelsat

  • Ginkgo Bioworks (DNA) signs agreement with Bayer AG (BAYRY) to build agricultural biologicals R&D platform capabilities

  • GlaxoSmithKline (GSK): ViiV Healthcare to present new data from innovative HIV treatment and prevention portfolio at AIDS 2022 Issued: London, UK

  • Gorilla Technology Group (GRRR) announces the appointment of Daphne Huang as its Chief Financial Officer

  • Huntington Ingalls' (HII) ship building unit receives DDG(X) design engineering contract

  • Novartis AG (NVS) reports applications for proposed first-of-a-kind multiple sclerosis biosimilar natalizumab accepted by US FDA and EMA

  • Parsons (PSN) promotes Matt Ofilos to CFO

  • Pfizer (PFE): Patient usage of Pfizer COVID-19 antiviral are slower than expected, according to Financial Times

  • Pfizer (PFE): White House will soon launch plan to develop next generation COVID-19 vaccines, according to Stat News

  • Public Storage (PSA) declares one-time special dividend of $13.15/share related to previously announced acquisition of PS Business Parks

  • Rogers Comms (RCI) will invest $10 bln in reliability over next three years following outage

  • Starbucks (SBUX) is losing out of competitive market in UK, according to Sunday Times UK

  • Tesla (TSLA) aiming to allow other manufacturers to use chargers, according to the Wall Street Journal

  • Tesla (TSLA) discloses that it recorded impairment loss of $170 million as well as realized gains of $64 million in connection with converting its holdings of digital assets into fiat currency

  • T-Mobile US (TMUS) settles litigation related to class action lawsuit relating to cyberattack

  • Toyota (TM) cancelled some Harrier SUV orders due to production issues, according to Reuters

  • Veru (VERU): UK's Medicines and Healthcare Products Regulatory Agency supports expedited review of marketing authorization application for sabizabulin treatment in hospitalized COVID-19 patients

  • World Wrestling (WWE) Chariman and CEO Vince McMahon retires

  • Zymergen (ZY) announces reduction in force as part of its efforts to continue to execute on its previously announced strategic plan

  • M&A:

  • Centene (CNC) to sell its Spanish and Central European businesses to Vivalto Sant

  • Infrastructure and Energy Alternatives (IEA): MasTec (MTZ) will acquire outstanding shares of IEA in a cash-and-stock transaction valued at $14.00 per IEA share

  • Zymergen (ZY): Ginkgo (DNA) will acquire Zymergen in an all-stock transaction that values Zymergen at an ~$300 mln market capitalization

  • Syndicate

  • Alvotech (ALVO) files for 15,306,122 share common stock offering by selling shareholders

  • Bally's Corporation (BALY) announced the preliminary results of its modified "Dutch Auction" tender offer

  • Corsair Gaming (CRSR) files for $300 mln mixed securities shelf offering; also files for 54,179,559 share common stock offering by selling shareholders

  • Equifax (EFX) files mixed securities shelf offering

  • Mister Car Wash (MCW) files mixed securities shelf offering; also files for common stock offering by selling shareholders

  • IPOs:

  • Expected to Price:

  • No IPOs expected.

Gapping Up/Down

  • Gapping up:

  • SIGA +15.4%, GRRR +11.4%, BW +5%, PSA +1.5%, AZN +1.5%, SBSI +1%, VOD +0.4%

  • Gapping down:

  • ALVO -14.9%, PHG -10.3%, MCW -4.7%, SQSP -2.2%, CRSR -2.1%, CRNT -1.2%, INFY -0.7%

 

Analyst Research (see Upgrades/Downgradescalendarfor full list):

  • Upgrades

  • Activision Blizzard upgraded to Outperform from Market Perform at MoffettNathanson; tgt $95

  • AutoNation (AN) upgraded to Buy from Neutral at Seaport Research Partners; tgt $180

  • CION Investment (CION) upgraded to Overweight from Equal Weight at Wells Fargo; tgt lowered to $9.50

  • Ferrexpo plc (FEEXF) upgraded to Outperform from Neutral at Credit Suisse

  • SVB Financial Group (SIVB) upgraded to Outperform from In-line at Evercore ISI; tgt $430

  • Travelers (TRV) upgraded to Strong Buy from Mkt Perform at Raymond James; tgt $185

  • Verbund AG (OEZVY) upgraded to Overweight from Equal Weight at Barclays

  • Downgrades:

  • Ally Financial (ALLY) downgraded to Underweight from Neutral at Piper Sandler; tgt lowered to $34

  • Bain Capital Specialty Finance (BCSF) downgraded to Underweight from Equal Weight at Wells Fargo; tgt lowered to $13

  • Blackstone (BX) downgraded to Mkt Perform from Outperform at Keefe Bruyette; tgt lowered to $115

  • Blend Labs (BLND) downgraded to Underperform from Mkt Perform at Keefe Bruyette; tgt lowered to $2.75

  • Camtek (CAMT) downgraded to Equal Weight from Overweight at Barclays; tgt lowered to $32

  • Colliers (CIGI) downgraded to Peer Perform from Outperform at Wolfe Research

  • Hanger (HNGR) downgraded to Hold from Buy at Jefferies; tgt lowered to $18.75

  • Huntsman (HUN) downgraded to Neutral from Buy at UBS; tgt $40

  • IDEXX Labs (IDXX) downgraded to Hold from Buy at Stifel; tgt $415

  • Kontoor Brands (KTB) downgraded to Hold from Buy at Williams Trading; tgt $43

  • Lam Research (LRCX) downgraded to Equal Weight from Overweight at Barclays; tgt lowered to $450

  • Latch (LTCH) downgraded to Underperform from Mkt Perform at Keefe Bruyette; tgt lowered to $1.15

  • Open Lending (LPRO) downgraded to Underweight from Equal-Weight at Morgan Stanley; tgt lowered to $8

  • Ouster (OUST) downgraded to Equal Weight from Overweight at Barclays; tgt lowered to $2

  • Owl Rock Capital (ORCC) downgraded to Underweight from Equal Weight at Wells Fargo; tgt lowered to $12

  • Paycom Software (PAYC) downgraded to Neutral from Buy at DA Davidson

  • Phibro Animal Health (PAHC) downgraded to Underweight from Equal Weight at Barclays; tgt $22

  • Philips (PHG) downgraded to Hold from Buy at Societe Generale

  • Porch Group (PRCH) downgraded to Mkt Perform from Outperform at Keefe Bruyette; tgt lowered to $3.25

  • Regeneron Pharma (REGN) downgraded to Mkt Perform from Outperform at SVB Leerink; tgt $630

  • Republic Bancorp (RBCAA) downgraded to Neutral from Overweight at Piper Sandler

  • SLR Capital Partners (SLRC) downgraded to Underweight from Equal Weight at Wells Fargo; tgt lowered to $12.50

  • Snap (SNAP) downgraded to Peer Perform from Outperform at Wolfe Research

  • Snap (SNAP) downgraded to Underweight from Overweight at Morgan Stanley; tgt lowered to $8

  • Trinity Capital (TRIN) downgraded to Equal Weight from Overweight at Wells Fargo; tgt lowered to $14.50

  • United Airlines (UAL) downgraded to Neutral from Positive at Susquehanna; tgt $35

  • Varonis Systems (VRNS) downgraded to Peer Perform from Outperform at Wolfe Research

  • Wolverine (WWW) downgraded to Hold from Buy at Williams Trading; tgt $24

  • Others:

  • 10x Genomics (TXG) initiated with a Buy at Canaccord Genuity; tgt $55

  • BlueLinx (BXC) initiated with a Buy at Seaport Research Partners; tgt $100

  • Genenta S.p.A. (GNTA) initiated with a Buy at H.C. Wainwright; tgt $25

  • Integra (IART) initiated with an Equal-Weight at Morgan Stanley; tgt $59

  • InterDigital (IDCC) initiated with an Underperform at BofA Securities; tgt $60

  • Ivanhoe Electric (IE) initiated with a Buy at Jefferies; tgt $13.50

  • Ivanhoe Electric (IE) initiated with an Outperform at BMO Capital Markets; tgt $15

  • Symbotic (SYM) initiated with a Neutral at Goldman; tgt $19

Upcoming Events:

  • Econ Data:

  • No economic data of note.

  • Earnings:

  • Monday (Jul 25)

  • Morning:  BOH CBU DORM LKFN NEM PHG RPM SBSI SQSP

  • Afternoon: AGNC ARE ACC NTB BDN BRO CADE CDNS CALX CATY CLS CR WIRE FFIV HSTM HTLF HXL IBTX KALU LBRT LOGI MEDP NXPI PKG PCH RRC RNR SSD TBI UHS WHR WSFS

  • Tuesday (Jul 26)

  • Morning: MMM ACI ADM ARCC AWI AVNT CNC KO CVLT GLW CTS ECL FISV FELE GE GM GPK HUBB IRDM KMB MCD MCO MSCI NEOG NVR ONB PCAR PNR PGTI PII PHM RTX ST SSTK TRU UBS UPS WSO XRX

  • Afternoon:  AGYS GOOG AMP ABCB ASH AGR AXTA AXS BXP BYD CNI CHX CMG CB CSGP EGP ENPH EQR ESS FCF FIBK FE FCPT HA HIW HPP IEX JNPR LXFR MANH MTDR MSFT MDLZ NAVI NXGN NEX PGRE PEB RNST ROIC SILK SKX SYK TENB TER TXN AAN TNET TRMK UDR UMBF V WSBC WH ZION

Asia & Europe detail:

Asia: Nikkei -0.8%, Hang Seng -0.6%, Shanghai Composite -0.6%

Equity indices in the Asia-Pacific region began the week on a mostly lower note. China has reportedly strengthened its warning regarding House Speaker Pelosi's planned visit to Taiwan. The Chinese government is reportedly planning a CNY300 bln real estate fund. South Korean steelmaker POSCO Holdings reportedly put itself in emergency management mode due to an expected slowdown in the global economy and expectations for lower profits. South Korea's leading index declined for the 13th consecutive month in June.

  • In economic data:

  • Hong Kong's June trade deficit HKD68.50 bln (last deficit of HKD36.70 bln). June Imports 0.5% m/m (last 1.3%) and Exports -6.4% m/m (last -1.4%)

  • Singapore's June CPI 6.7% yr/yr (expected 6.2%; last 5.6%)

---Equity Markets---

  • Japan's Nikkei: -0.8%

  • Hong Kong's Hang Seng: -0.2%

  • China's Shanghai Composite: -0.6%

  • India's Sensex: -0.6%

  • South Korea's Kospi: +0.4%

  • Australia's ASX All Ordinaries: -0.1%

---FX---

  • USD/JPY: +0.3% to 136.42

  • USD/CNH: -0.2% to 6.7453

  • USD/INR: -0.1% to 79.74

 

Europe: DAX +0.4%, FTSE +0.1%, CAC +0.6%

Major European indices trade in the green. Germany's ifo Business Climate Index weakened to its lowest level in two years. The survey noted that German companies expect significant deterioration in the coming months and that the country is on the brink of recession. European Central Bank President Lagarde said that the ECB will keep raising rates as long as needed to bring inflation down to target. Volkswagen chairman Diess will step down at the end of August. He will be replaced by Oliver Blume.

  • In economic data:

  • Germany's July ifo Business Climate Index 88.6 (expected 90.2; last 92.2). July Current Assessment 97.7 (expected 98.0; last 99.4) and Business Expectations 80.3 (expected 83.0; last 85.5)

  • U.K.'s July CBI Industrial Trends Orders 8 (expected 13; last 18)

---Equity Markets---

  • STOXX Europe 600: +0.2%

  • Germany's DAX: +0.4%

  • U.K.'s FTSE 100: +0.1%

  • France's CAC 40: +0.6%

  • Italy's FTSE MIB: +0.6%

  • Spain's IBEX 35: +0.4%

---FX---

  • EUR/USD: +0.3% to 1.0241

  • GBP/USD: +0.6% to 1.2074

  • USD/CHF: +0.3% to 0.9631


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