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28/03/22 Briefing


The S&P 500 futures trade 18 points, or 0.4%, above fair value to start the week amid a carryover of positive momentum.

Ostensibly, weaker oil prices ($108.09, -5.81, -5.1%) are helping risk sentiment, although they're down on growth concerns after Shanghai imposed lockdowns to curb an outbreak of COVID-19. China's Shanghai Composite eked out a 0.1% gain on Monday.

The Treasury market is also reflecting growth concerns by way of curve-flattening activity. The 2-yr yield is up two basis points to 2.31%, while the 10-yr yield is down two basis points to 2.47%.

The U.S. Dollar Index is up 0.5% to 99.25 amid relative weakness in the Japanese yen, which is down 1.6% against the dollar after the Bank of Japan offered to buy an unlimited amount of JGBs at 0.25%. That move was consistent with the central bank's policy of yield curve control.

In key corporate news, Apple (AAPL 172.84, -1.88, -1.1%) is planning to cut production for the iPhone SE by roughly 20% and AirPods by more than 10 million units this year amid the geopolitical uncertainty, according to The Nikkei. Tesla (TSLA 1067.50, +56.86, +5.6%) will ask shareholders to authorize additional shares to enable another stock split.

Separately, investors will receive the Advance International Trade in Goods, Retail Inventories, and Wholesale Inventories reports for February at 8:30 a.m. ET.

In U.S. Corporate news:

  • Apple (AAPL 172.84, -1.88): -1.1% after The Nikkei reported that the company is planning to cut production for the iPhone SE and AirPods amid the geopolitical uncertainty. The report said the company will reduce SE production by about 20% and reduce AirPod production by more than 10 million this year.

  • Tesla (TSLA 1067.50, +56.86): +5.6% after the company tweeted it will ask shareholders to vote at this year's annual meeting to authorize additional shares in order to enable a stock split.

  • Beyond Meat (BYND 45.90, -2.73): -5.6% after the stock was downgraded to Underweight from Neutral at Piper Sandler.

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region began the week on a mixed note. Japan's Nikkei: -0.7% Hong Kong's Hang Seng: +1.3% China's Shanghai Composite: +0.1% India's Sensex: +0.4% South Korea's Kospi: UNCH Australia's ASX All Ordinaries: UNCH.

  • In economic data:

  • China's February Industrial Profit 5.0% YTD (last 34.3%) o Hong Kong's February trade deficit HKD32.10 bln (last surplus of HKD6.60 bln). February Imports 6.2% m/m (last 9.6%) and Exports 0.9% m/m (last 18.4%)


  • In news:

  • The Bank of Japan conducted a second bond buying operation at a fixed rate after the first operation failed to entice buyers.

  • The yen plunged in response, falling toward its low from 2015. The central bank plans to continue buying bonds through Thursday.

  • China auctioned over 500 kilotons of wheat from state reserves.

  • Westpac noted that financial markets are overstating the likelihood of tighter policy over the next couple years.



  • Major European indices trade on a firmly higher note. STOXX Europe 600: +0.9% Germany's DAX: +1.9% U.K.'s FTSE 100: +0.7% France's CAC 40: +1.7% Italy's FTSE MIB: +2.1% Spain's IBEX 35: +1.8%.

  • There was no economic data today

  • In news:

  • Spain's Prime Minister Sanchez announced that EUR6 bln will be spent to offset higher energy prices.

  • Negotiators from Russia and Ukraine are reportedly meeting in Turkey today.

  • Germany's ruling SPD won a regional election in Saarland.

  • A referendum to join Russia may be held in Luhansk, Ukraine, but Ukraine's officials already indicated that the vote would have no legal basis in their eyes.



U.S. equity futures:

  • S&P 500 Futures: +10 @ 4,553

  • DJIA Futures: +57 @ 34,918

  • Nasdaq 100 Futures: +38 @ 14,792

Overseas:

  • Europe: DAX +1.9%, FTSE +0.7%, CAC +1.7%

  • Asia: Nikkei -0.7%, Hang Seng +1.3%, Shanghai Composite +0.1%

Commodities:

  • Crude Oil -6.97 @ 106.93

  • Nat Gas -0.055 @ 5.556

  • Gold -26.60 @ 1927.60

  • Silver -0.493 @ 25.122

  • Copper -0.0265 @ 4.6720

U.S. Summary:

  • Earnings/Guidance (Full Earnings Calendar):

  • Science Applications (SAIC) beats by $0.28, reports revs in-line; guides FY23 EPS in-line, revs below consensus

  • Tuya (TUYA) updates Q1 revenue guidance


  • General News:

  • White House officials say President Biden was not calling for regime change in Russia on Saturday when he said Russian President Putin "cannot remain in power." The remark was not in the pre-prepared speech, according to Politico

  • Kremlin calls President Biden's remark "alarming", according to Bloomberg

  • Ukrainian President Volodymyr Zelenskyy says his country is prepared to discuss neutrality with Russia, according to Reuters

  • Russia claimed to focusing invasion on eastern Ukraine, but attacks continue throughout the country. Mariupol could soon fall, according to the New York Times

  • President Biden will soon propose 20% minimum tax on individuals with $100 million in income or unrealized capital gains, but previous efforts to do this did not gain support of moderate Democrats such as Senator Kyrsten Sinema (D-AZ), according to the Washington Post

  • USTR Katherine Tai says US will increase pressure on China's trade practices. This could include new trade investigations that could result in additional tariffs, according to Reuters

  • Shanghai enters staggered coronavirus lockdown, according to the New York Times

  • Nuclear deal with Iran is not imminent, according to Financial Times

  • China and US regulators working to solve audit dispute, according to Reuters

  • US will increase fines for automakers not meeting fuel economy standards, according to Reuters

  • President Biden will propose $32 bln in funding to fight crime in today's budget (which will be released this afternoon), according to Axios

  • President Biden will propose blackout period for executive stock sales following buybacks in today's budget, CNBC

  • Amarin (AMRN) received its first national reimbursement in a European country for VAZKEPA in Sweden

  • AMC (AMC) CEO Adam Aron expects more meme stock deals, according to Reuters

  • Amryt (AMYT) Announces Positive Interim Analysis Data From Open Label Phase of EASE Phase 3 Trial in EB

  • Apple (AAPL) aiming to lower production of iPhone SEs, according to Nikkei

  • AstraZeneca (AZN) reports Evusheld long-acting antibody combination approved in the EU

  • AT&T (T) provides details on WarnerMedia transaction, expects to close deal in April

  • Bayer AG (BAYRY) receives approval in Japan for Kerendia

  • Bayer (BAYRY): Key investor is trying to remove Bayer CEO Werner Baumann, according to Bloomberg

  • Biogen (BIIB) and Ionis Announce Topline Phase 1 Study Results of Investigational Drug in C9orf72 Amyotrophic Lateral Sclerosis

  • Brady (BRC) enters into license agreement with Honeywell for barcode scanning devices

  • Cara Therapeutics (CARA) Announces Oral KORSUVA (difelikefalin) Improves Itch and Inflammatory Biomarkers in Atopic Dermatitis Patients with Moderate-To-Severe Pruritus

  • CenterPoint (CNP) announces full exit from midstream interest and receives improved credit thresholds from Moody's

  • Centerra Gold (CGAU) provides update on negotiations with the Kyrgyz Government

  • Colfax (CFX) announces board of directors for post-spinoff ESAB

  • Eli Lilly (LLY) and Innovent expand strategic partnership in oncology

  • Eli Lilly (LLY): Nearly 40% of Adults with Alopecia Areata Taking OLUMIANT 4-mg Saw at Least 80% Scalp Hair Coverage at 52 Weeks in Lilly's Pivotal Phase 3 Studies

  • Evelo Biosciences (EVLO) Presents Late-Breaking Oral Abstract on Data from Phase 2 Trial of EDP1815 in Psoriasis at 2022 American Academy of Dermatology Annual Meeting

  • Express (EXPR) appoints Jason Judd as CFO, effective April 4

  • Fluidigm (FLDM) provides stockholders additional time to consider previously announced $250 mln strategic capital infusion from Casdin Capital and Viking Global Investors

  • Hasbro (HAS) rejects settlement offer from Alta Fox Capital Management, according to Reuters

  • Heineken (HEINY) concluded that its ownership of the business in Russia is no longer sustainable nor viable in the current environment; co has decided to leave Russia

  • Huntsman (HUN) doubles size of share repurchase authorization to $2 billion, targets $1 billion of repurchases in 2022

  • Incyte (INCY) announces 52-Week Data From the Phase 3 TRuE-V Program Evaluating Ruxolitinib Cream (Opzelura) in Patients With Vitiligo

  • Industrias Bachoco SA (IBA) to initiate the process to launch a voluntary tender offer for up to all of the outstanding shares of Bachoco

  • Krystal Biotech (KRYS) reports new GEM-3 Phase 3 Results for B-VEC Presented at 2022 American Academy of Dermatology Annual Meeting

  • L3Harris (LHX) and Thales Defense to compete for each order of $6.11 bln contract to modernize SINCGARS radios for US Army

  • MAG Silver (MAG) appoints Fausto Di Trapani as Chief Financial Officer effective May 20, 2022

  • MindMed (MNMD) CFO David Guebert will be retiring from his position on March 31

  • Mizuho Financial (MFG) updates businesses in connection with the Russia-Ukraine situation

  • New Gold (NGD) appoints Patrick Godin as COO

  • Okta (OKTA) says it does not consider recent cybersecurity incident to be material

  • Oxford Industries (OXM) announces that CFO Scott Grassmyer has been promoted to the additional role of COO

  • Protagonist Therapeutics (PTGX) announces the appointment of Asif Ali as Executive Vice President and Chief Financial Officer

  • Provention Bio (PRVB) positive results from the final analysis of its first-in-human PROVENT study of PRV-101

  • Regeneron Pharma (REGN): Late-breaking Phase 3 Data at AAD 2022 Show Dupixent (dupilumab) Significantly Improved Signs and Symptoms of Prurigo Nodularis

  • Sanofi (SNY) reports Xenpozyme (olipudase alfa) approved in Japan

  • Scorpio Tankers (STNG) to sell three vessels

  • Sea Limited (SE) unit Shopee to close its operations in India, according to Reuters

  • STAAR Surgical (STAA) receives FDA approval of EVO Visian Implantable Collamer Lenses

  • Tesla (TSLA) will suspend production at Shanghai plant due to coronavirus restrictions, according to Bloomberg

  • Tesla (TSLA) tweets "Tesla will ask shareholders to vote at this year's annual meeting to authorize additional shares in order to enable a stock split"

  • Vertex Pharma (VRTX) announces reimbursement agreement in Australia for TRIKAFTA

  • Vir Biotechnology (VIR): FDA amended the EUA fact sheet for sotrovimab, an investigational monoclonal antibody

  • Volta (VLTA) announces that Founder Scott Mercer has resigned as Chief Executive Officer

  • Walmart (WMT) aiming to end cigarette sales in some stores, according to the Wall Street Journal

  • Wheaton Precious Metals (WPM) Chairman to retire


  • M&A:

  • Eagle Pharma (EGRX) acquires Acacia Pharma Group

  • Highland Transcend Partners I Corp. (HTPA) terminates merger agreement with Packable

  • Jazz Pharma (JAZZ) divests Sunosi to Axsome Therapeutics (AXSM)

  • KKR (KKR) close to deal to purchase Ivirma, according to Bloomberg

  • National Grid (NGG) announces that it has agreed to sell a 60% equity interest in its UK gas transmission and metering business to a consortium of long-term infrastructure investors

  • Poly (POLY) to be acquired by HP Inc (HPQ) for $40.00 per share

  • Sarcos Technology (STRC) announces that the Company has reached a definitive merger agreement to acquire Pittsburgh-based RE2, Inc.

  • Schweitzer-Mauduit (SWM) and Neenah (NP) to combine in all-stock transaction to create a ~$3 billion global leader in specialty materials

  • Southwest Gas (SWX) unanimously rejects Carl Icahn's revised unsolicited tender offer

  • USD Partners (USDP) entered into an agreement to acquire entities owning the Hardisty South terminal assets

  • Vermilion Energy (VET) acquires Leucrotta Exploration for $477 mln


  • Syndicate:

  • ALX Oncology (ALXO) files for $450 mln mixed securities shelf offering

  • Benson Hill (BHIL) entered into definitive subscription agreements for the private placement of 26,150,000 units at a price of $3.25 per Unit

  • Cyxtera Technologies (CYXT) files for 7.5 mln share common stock offering by selling shareholders

  • Eiger BioPharmaceuticals (EIGR) enters into an Open Market Sale Agreement for up to $50 mln in shares through Jefferies

  • Greenwich LifeSciences (GLSI) files mixed securities shelf offering

  • PerkinElmer (PKI) files mixed securities shelf offering


  • IPOs:

  • Expected to Price:

  • No IPOs expected to price.



Gapping Up/Down

  • Gapping up:

  • STAA +18%, AXSM +7.2%, TSLA +4.4%, EXPR+2.3%, SNY +1.2%, AMYT +1.2%, JAZZ +0.9%, EVLO +0.7%, T +0.4%


  • Gapping down:

  • VIR -3.9%, OIIM -3.8%, FLDM -2%, VET -1.5%, ALXO -1.1%, GLSI -0.5%


Analyst Research (see Upgrades/Downgradescalendarfor full list):

  • Upgrades

  • BASF AG (BASFY) upgraded to Buy from Hold at HSBC Securities

  • BNY Mellon (BK) upgraded to Equal-Weight from Underweight at Morgan Stanley; tgt lowered to $58

  • Deere (DE) upgraded to Neutral from Underweight at JP Morgan; tgt raised to $440

  • Illinois Tool (ITW) upgraded to Overweight from Neutral at JP Morgan; tgt lowered to $255

  • KLA Corporation (KLAC) upgraded to Buy from Neutral at Goldman; tgt $430

  • The Duckhorn Portfolio (NAPA) upgraded to Outperform from Sector Perform at RBC Capital Mkts; tgt $23


  • Downgrades:

  • Adecco S.A. (AHEXY) downgraded to Underweight from Neutral at JP Morgan

  • Advanced Micro (AMD) downgraded to Buy from Conviction Buy at Goldman; tgt $127

  • Alliance Data (ADS) downgraded to Equal-Weight from Overweight at Morgan Stanley; tgt lowered to $67

  • Altria (MO) downgraded to Sector Perform from Outperform at RBC Capital Mkts; tgt $53

  • Beyond Meat (BYND) downgraded to Underweight from Neutral at Piper Sandler; tgt lowered to $29

  • Buzzi Unicem SpA (BZZUY) downgraded to Hold from Buy at HSBC Securities

  • Campbell Soup (CPB) downgraded to Sector Perform from Outperform at RBC Capital Mkts; tgt lowered to $46

  • Citigroup (C) downgraded to Underweight from Equal-Weight at Morgan Stanley; tgt lowered to $60

  • Fifth Third (FITB) downgraded to Equal-Weight from Overweight at Morgan Stanley; tgt lowered to $50

  • Foot Locker (FL) downgraded to Market Perform from Outperform at Cowen; tgt $34

  • Guild Holdings (GHLD) downgraded to Equal Weight from Overweight at Wells Fargo; tgt $11

  • Heineken (HEINY) downgraded to Underweight from Equal Weight at Barclays

  • Honest Company (HNST) downgraded to Underperform from Neutral at BofA Securities; tgt lowered to $6.50

  • ITT (ITT) downgraded to Perform from Outperform at Oppenheimer

  • KB Home (KBH) downgraded to Peer Perform from Outperform at Wolfe Research

  • Kennametal (KMT) downgraded to Underweight from Neutral at JP Morgan; tgt lowered to $31

  • M&T Bank (MTB) downgraded to Underweight from Equal-Weight at Morgan Stanley; tgt lowered to $179

  • Microchip (MCHP) downgraded to Neutral from Buy at Goldman; tgt $79

  • Qorvo (QRVO) downgraded to Neutral from Buy at Goldman; tgt $138

  • SEI Investments (SEIC) downgraded to Neutral from Buy at Goldman; tgt lowered to $65

  • Synchrony Financial (SYF) downgraded to Equal-Weight from Overweight at Morgan Stanley; tgt lowered to $40

  • Teradyne (TER) downgraded to Neutral from Buy at Goldman; tgt $127

  • Trex (TREX) downgraded to Underperform from Neutral at Exane BNP Paribas; tgt $81


  • Others:

  • BigBear.ai (BBAI) initiated with an Outperform at Oppenheimer; tgt $10

  • Brookfield Renewable Partners (BEP) initiated with a Buy at UBS; tgt $46

  • Globus Medical (GMED) initiated with an Overweight at Wells Fargo; tgt $80

  • NuVasive (NUVA) initiated with an Overweight at Wells Fargo; tgt $58

  • Roblox (RBLX) initiated with an Outperform at Daiwa Securities; tgt $56

  • Toast (TOST) initiated with a Neutral at Credit Suisse; tgt $22

  • Unity Software (U) initiated with an Outperform at Daiwa Securities; tgt $110


Upcoming Events:

  • Econ Data:

  • 08:30 ET: Adv. Intl. Trade in Goods for Feb (Briefing.comConsensus NA; Prior -$107.6B)

  • 08:30 ET: Adv. Retail Investors for Feb (Briefing.comConsensus NA; Prior 1.9%)

  • 08:30 ET: Adv. Wholesale Inventories for Feb (Briefing.comConsensus NA; Prior 0.8%)


  • Earnings:

  • Monday (Mar 28)

  • Morning: SAIC

  • Afternoon: PLAY


  • Tuesday (Mar 29)

  • Morning: ASO CONN LOVE MKC DTC

  • Afternoon: CALM CHWY LULU MU MLKN PRGS PVH RH SPWH VRNT


  • Wednesday (Mar 30)

  • Morning: AER BNTX CNM FIVE MSM PAYX

  • Afternoon: PHR PATH


  • Thursday (Mar 31)

  • Morning: SHCR WBA

  • Afternoon: BB BLND DCT NCNO




Asia & Europe detail:

Asia: Nikkei -0.7%, Hang Seng +1.3%, Shanghai Composite +0.1%

Equity indices in the Asia-Pacific region began the week on a mixed note. The Bank of Japan conducted a second bond buying operation at a fixed rate after the first operation failed to entice buyers. The yen plunged in response, falling toward its low from 2015. The central bank plans to continue buying bonds through Thursday. China auctioned over 500 kilotons of wheat from state reserves. Westpac noted that financial markets are overstating the likelihood of tighter policy over the next couple years.

  • In economic data:

  • China's February Industrial Profit 5.0% YTD (last 34.3%) o Hong Kong's February trade deficit HKD32.10 bln (last surplus of HKD6.60 bln). February Imports 6.2% m/m (last 9.6%) and Exports 0.9% m/m (last 18.4%)


---Equity Markets---

  • Japan's Nikkei: -0.7%

  • Hong Kong's Hang Seng: +1.3%

  • China's Shanghai Composite: +0.1%

  • India's Sensex: +0.4%

  • South Korea's Kospi: UNCH

  • Australia's ASX All Ordinaries: UNCH

---FX---

  • USD/JPY: +1.8% to 124.26

  • USD/CNH: +0.1% to 6.3811

  • USD/INR: -0.2% to 76.12

Europe: DAX +1.9%, FTSE +0.7%, CAC +1.7%

Major European indices trade on a firmly higher note. Spain's Prime Minister Sanchez announced that EUR6 bln will be spent to offset higher energy prices. Negotiators from Russia and Ukraine are reportedly meeting in Turkey today. Germany's ruling SPD won a regional election in Saarland. A referendum to join Russia may be held in Luhansk, Ukraine, but Ukraine's officials already indicated that the vote would have no legal basis in their eyes.

  • There was no economic data today

---Equity Markets---

  • STOXX Europe 600: +0.9%

  • Germany's DAX: +1.9%

  • U.K.'s FTSE 100: +0.7%

  • France's CAC 40: +1.7%

  • Italy's FTSE MIB: +2.1%

  • Spain's IBEX 35: +1.8%

---FX---

  • EUR/USD: UNCH at 1.0985

  • GBP/USD: -0.4% to 1.3134

  • USD/CHF: +0.5% to 0.9348

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The S&P 500 futures are up 3 points and are trading % above fair value. The Nasdaq 100 futures are up 9 points and are trading roughly in-line with fair value. The Dow Jones Industrial Average futures