Search

28/06/22 Briefing




The S&P 500 futures are up 22 points and are trading 0.4% above fair value. The Nasdaq 100 futures are up 55 points and are trading 0.2% above fair value. The Dow Jones Industrial Average futures are up 197 points and are trading 0.7% above fair value.

A positive bias has taken root in the futures market, aided by reports that China has shortened its quarantine period for inbound visitors and that Shanghai and Beijing reported zero COVID cases for the first time since February.

Another support factor includes several banks, Morgan Stanley (MS) and Goldman Sachs (GS) among them, announcing dividend increases and/or share buyback programs following the Fed's stress test. JPMorgan Chase (JPM) and Citigroup (C) left their dividend plans unchanged.

The reopening optimism surrounding China has helped underpin oil prices ($111.27, +1.70, +1.5%), which have also been bolstered by a Reuters report indicating Saudi Arabia and the UAE have limited spare capacity to boost output.

Rising oil prices aren't helping to assuage headline inflation pressures any more than Nike's (NKE) inventory surge and fiscal Q1 revenue warning, and ECB President Lagarde suggesting the ECB could move faster on rate hikes if needed, are helping to assuage concerns about a broader earnings slowdown. Nonetheless, market participants seem to be favoring a quarter-end rebound bias based on rebalancing activity following a rough second quarter performance for the stock market.

The 2-yr note yield is up one basis point to 3.13%. The 10-yr note yield is up five basis points to 3.24%.

In corporate news:

  • Nike (NKE 108.19, -2.31, -2.1%): beats by $0.08, reports revs in-line, gross margin decreased by 80 bps; Guides AugQ revenue below consensus; Authorizes new, four-year $18 bln share repurchase program for Class B common stock

  • Spirit Airlines (SAVE 23.49, +0.92, +4.1%): JetBlue Airways (JBLU 8.74, -0.02, -0.2%) increases offer to acquire SAVE; adds ticking fee; increases reverse breakup fee and accelerated prepayment to $2.50/sh

  • Robinhood Markets (HOOD 8.81, -0.31, -3.4%): FTX CEO said the company is not having any active M&A conversations with Robinhood, according to MarketWatch

  • Morgan Stanley (MS 79.94, +2.50, +3.2%): increases quarterly dividend by 11% to $0.775/share; authorizes multi-year repurchase program for up to $20 bln in common stock

Reviewing overnight developments:

Equity indices in the Asia-Pacific region ended Tuesday on a higher note after overcoming a weak start. Japan's Nikkei +0.7%; Hong Kong's Hang Seng +0.9%; China's Shanghai Composite +0.9%; India's SENSEX unchanged; South Korea's Kospi +0.8%; and Australia's All Ordinaries +0.9%.

  • In economic data:

  • Japan's May BoJ Core CPI 1.5% yr/yr, as expected (last 1.4%)

  • In news:

  • China's National Development and Reform Commission acknowledged challenges associated with stabilizing prices and the job market.

  • China lowers quarantine period for inbound visitors to 10 days from three weeks, according to Bloomberg

  • There was growing speculation that the Bank of Japan will struggle to maintain its ultra-loose policy in the face of global inflation.

  • South Korea's Prime Minister called on his government to come up with a plan to stabilize inflation.

  • Major European indices trade on a firmly higher note. STOXX Europe 600 +0.7%; Germany's DAX +1.0%; UK's FTSE 100 +1.4%; France's CAC 40 +1.4%; Italy's FTSE MIB +1.4%; and Spain's IBEX 35 +1.6%.

  • In economic data:

  • Germany's July GfK Consumer Climate -27.4 (expected -27.6; last -26.2)

  • France's June Consumer Confidence 82 (expected 84; last 85)

  • Italy's April Industrial Sales 2.7% m/m (last 2.5%); 22.0% yr/yr (last 21.6%)

  • In news:

  • European Central Bank President Lagarde repeated that the ECB is planning a 25-bps rate hike in July, followed by another hike in September.

  • The ECB is reportedly working on a scheme to cap the borrowing costs of highly indebted countries.

  • The U.K.'s House of Commons voted in favor of overriding elements of the Northern Ireland protocol.

 

U.S. equity futures:

  • S&P 500 Futures: +24 @ 3,924

  • DJIA Futures: +202 @ 31,641

  • Nasdaq 100 Futures: +60 @ 12,060

Overseas:

  • Europe: DAX +1.0%, FTSE +1.4%, CAC +1.4%

  • Asia: Nikkei +0.7%, Hang Seng +0.9%, Shanghai +0.9%

Commodities:

  • Crude Oil +1.65 @ 111.22

  • Nat Gas +0.033 @ 6.579

  • Gold -1.20 @ 1823.60

  • Silver +0.020  @ 21.207

  • Copper +0.0595 @ 3.8255

U.S. Summary:

  • Earnings:

  • Cognyte Software (CGNT) misses by $0.89, misses on revs

  • Concentrix (CNXC) beats by $0.11, reports revs in-line; guides Q3 revs below two analyst estimate; guides FY22 revs below two analyst estimate

  • Jefferies (JEF) reports Q2 (May) results, beats on revs; Authorizes repurchase of an additional $250 mln of common stock

  • NIKE (NKE) beats by $0.08, reports revs in-line, gross margin decreased by 80 bps; Authorizes new, four-year $18 bln share repurchase program for Class B common stock; Guides AugQ revenue below consensus

  • R1 RCM (RCM) updates guidance to include Cloudmed acquisition

  • Roivant Sciences (ROIV) misses by $0.09; misses on revs

  • TD Synnex (SNX) beats by $0.07, reports revs in-line; guides Q3 EPS in-line, revs in-line; reaffirms FY22 EPS guidance

  • Trip.comGroup (TCOM) beats by RMB0.49, beats on revs

  • General News:

  • China lowers quarantine requirements for COVID-19, according to Financial Times

  • G7 has agreed to consider cap on Russian oil imports, according to Reuters

  • Russian missiles struck a shopping mall in central Ukraine with hundreds of people inside, according to the New York Times

  • White House says the US continues to strengthen cooperation with G7 on 21st century challenges, including those posed by the People's Republic of China

  • Apyx Medical (APYX) announced the receipt of 510(k) clearance for the use of the Renuvion Dermal handpiece for specific dermatological procedures for the treatment of moderate to severe wrinkles and rhytides, limited to patients with Fitzpatrick skin types I, II or III

  • Bank of America (BAC) comments on stress test results, plans to increase dividend by 5% in Q3

  • BNY Mellon (BK) to increase its quarterly dividend by 9% to $0.37/share as early as Q3, subject to the Board's approval

  • Charles Schwab (SCHW) comments on CCAR; SCB was well below the 2.5% minimum; no changes to its dividend or other capital actions to report today

  • Citigroup (C) discusses stress test results; plans to maintain dividend at current level

  • Citizens Financial Group (CFG) discusses stress test results, SCB 3.4%; increases share repurchase authorization to $1 bln; will consider dividend increase

  • Disney (DIS): Shanghai Disney will reopen on Thursday, according to Reuters

  • Eiger BioPharmaceuticals (EIGR) Announces Results from Multiple Presentations at the European Association for the Study of the Liver (EASL) International Liver Congress 2022

  • Exxon (XOM) CEO Darren Woods is predicting increased investment in fossil fuel production, according to Financial Times

  • Fifth Third (FITB) to increase its quarterly dividend up to $0.03/share, or 10%, to $0.33/share; stress capital buffer remains at the minimum level of 2.5%, effective October 1, 2022

  • Ford Motor (F) recalls about 2,900 F-150 Lightning trucks due to a software issue, according to Reuters

  • Gilead Sciences (GILD) resubmits NDA to U.S. Food and Drug Administration for lenacapavir

  • Gilead Sciences (GILD) unit Kite reports Yescarta granted European Marketing Authorization for the treatment of relapsed or refractory follicular lymphoma

  • GlaxoSmithKline (GSK): Japan's Ministry of Health, Labour and Welfare accepts Shingrix regulatory submission to prevent shingles in at-risk adults aged 18 years and older

  • Goldman Sachs (GS) to increase quarterly dividend to $2.50/share; SCB of 6.3% resulting in a CET1 ratio requirement of 13.3%, effective October 1

  • Griffon (GFF) declares special cash dividend of $2/share; also prepaid $300 mln in debt

  • Guess? (GES) completes previously disclosed $175 mln accelerated share repurchase program

  • Hewlett Packard Enterprise (HPE) announces a new partner program: HPE Partner Ready Vantage

  • Huntington Banc (HBAN) says it exceeded all minimum capital levels under the Fed's CCAR stress test

  • IDEAYA Biosciences (IDYA) reports development candidate nomination of a potential first-in-class Pol Theta Helicase inhibitor in collaboration with GSK

  • Invesco Mortgage Capital (IVR) reduces leverage and rotates Agency RMBS portfolio into higher coupons

  • Jazz Pharmaceuticals (JAZZ) Announces Top-line Results from Phase 3 Trial Evaluating Nabiximols Oromucosal Spray in Adult Participants with Multiple Sclerosis Spasticity

  • JPMorgan Chase (JPM) comments on CCAR; intends to maintain the current quarterly common stock dividend of $1.00 per share for 3Q22

  • Kezar Life Sciences (KZR) Announces Positive Topline Results from the MISSION Phase 2 Trial Evaluating Zetomipzomib for the Treatment of Patients with Lupus Nephritis

  • Lands' End (LE) announces $50 million share repurchase authorization

  • Lockheed Martin (LMT) reduces gross pension obligation by $4.3 bln with purchase of group annuity contracts

  • Lockheed Martin's (LMT) Sikorsky Aircraft awarded $2.28 bln Army contract for procurement of Black Hawk helicopters and related support for FY22-FY26

  • Lovesac (LOVE) and Joybird resolve patent litigation; terms of agreement are confidential

  • MeiraGTx (MGTX) Announces Positive Top-Line Data from the MGT009 Phase 1/2 Clinical Study Demonstrating Safety and Improvement in Multiple Domains of Vision in X-Linked Retinitis Pigmentosa Patients treated with Botaretigene Sparoparvovec (AAV-RPGR) compared to Untreated Randomized Control

  • Morgan Stanley (MS) increases quarterly dividend by 11% to $0.775/share; authorizes multi-year repurchase program for up to $20 bln in common stock

  • Netflix (NFLX) to continue to invest in Asia, according to Bloomberg

  • Northern Trust (NTRS) to increase its quarterly dividend to $0.75/share, beginning in Q3

  • Parker-Hannifin (PH) awarded a maximum $444.4 mln DLA contract for performance-based support of A-10, E-3, F-15, F-16, and KC-135 actuators

  • Philips (PHG) provides update on Philips Respironics' PE-PUR sound abatement foam test and research program

  • Piedmont Lithium (PLL) and Sayona Mining formalize restart plans for North American Lithium in Quebec

  • PNC (PNC) reports stress test results; SCB is 2.9%

  • Regions Fincl (RF) will consider an increase in its quarterly dividend, effective for Q3, at the Board's scheduled meeting in July 2022

  • Roivant Sciences (ROIV) and Pfizer (PFE) unveil Priovant Therapeutics and ongoing registrational studies for oral brepocitinib

  • Sanofi (SNY) receives EC approval for Nexviadyme; also receives EC approval for Xenpozyme

  • Schrodinger (SDGR) announces that the U.S. Food and Drug Administration cleared its investigational new drug application for its MALT1 inhibitor, SGR-1505

  • Stantec (STN): Boston Water and Sewer Commission selects Stantec for next phase of $150 Million East Boston Sewer Separation project

  • State Street (STT) intends to increase its quarterly dividend by 10% to $0.63/share in Q3; begin its existing share repurchase program in Q4; announces its preliminary stress capital buffer requirement of 2.5%, effective October 1

  • Sutro Biopharma (STRO) and Astellas to collaborate to advance novel immunostimulatory antibody-drug conjugates

  • Truist (TFC) plans to increase its quarterly dividend 8% to $0.52/share following the completion of the 2022 Comprehensive Capital Analysis and Review process

  • Twitter (TWTR): It might be harder than expected for Elon Musk to get answers on Twitter spam accounts, according to the Wall Street Journal

  • U.S. Bancorp (USB) releases 2022 Dodd-Frank Act Stress Test results; receives preliminary stress capital buffer of 2.5%

  • Velodyne Lidar (VLDR) announced a multi-year agreement for its lidar sensors with Boston Dynamics

  • Wells Fargo (WFC) to increase its quarterly dividend to $0.30/share in Q3; expects its SCB to be 3.2%

  • M&A:

  • Agora (API) to acquire land use rights in Shanghai, China

  • Aviat Networks (AVNW) to acquire all the outstanding shares of Ceragon Networks (CRNT) that it does not already own for $2.80/share in cash

  • Earthstone Energy (ESTE) announces northern Delaware basin asset acquisition for ~$627 million

  • JetBlue Airways (JBLU) increases offer to acquire SAVE; adds ticking fee; increases reverse breakup fee and accelerated prepayment to $2.50/sh

  • Lithia Motors (LAD) expanded their south Florida footprint with the purchase of nine Lehman Auto World stores and two Esserman International stores in Miami-Dade County; these stores are projected to generate $850 mln in annualized revenue

  • Northern Lights Acquisition Corp. (NLIT) reschedules Special Meeting to approve acquisition

  • Playtika (PLTK): Joffre Capital aiming to purchase majority stake in PLTK, according to Axios

  • Robinhood Markets (HOOD): FTX CEO said the company is not having any active M&A conversations with Robinhood, according to MarketWatch

  • Spirit Airlines (SAVE): TIG Advisors sends letter to SAVE Board regarding its intention to vote 'against' proposed merger with Frontier Group Holdings (ULCC)

  • Stanley Black & Decker (SWK) to divest Its Oil & Gas Business

  • UFP Industries (UFPI) acquires 50% equity stake in Dempsey Wood Products, which had sales of $68.9 mln in 2021

  • UMB Financial Corporation (UMBF) subsidiary UMB Bank to acquire the health savings account business of Old National Bank, a subsidiary of Old National Bancorp (ONB)

  • Volkswagen AG (VWAGY) close to selling a minority stake in its US electric vehicle recharging business to a division of Siemens AG (SIEGY), according to the Wall Street Journal

  • Vonage (VG): Ericsson (ERIC) provides update on its acquisition of Vonage

  • Whirlpool (WHR) to sell Russian business to Arcelik for deferred payments

  • Syndicate

  • No syndicate news of note.

  • IPOs:

  • Priced to Trade:

  • Ivanhoe Electric (NYSE: IE): The U.S.-based minerals exploration and development company priced its 14.4 M share IPO at $11.75, the low end of the $11.75-$12.50 expected range

Gapping Up/Down

  • Gapping up:

  • KZR +73.5%, STRO +30.5%, CRNT +17.7%, TCOM+16.6%, ROIV +10%, VG +6.7%, EIGR +5%, IDYA +5%, SAVE +4.1%, GFF +4%, MS +3.6%, RCM +3.3%, OXY+3.1%, ULCC +3%, EPIX +3%, BLNK +3%, LOVE+2.6%, NLIT +2.6%, TFC +2.5%, GES +2.4%, COF+2.3%, AVNW +1.9%, USB +1.4%, GS +1.3%, IVR+1.2%, BAC +1.1%, F +1%, JPM +1%, FITB +1%

  • Gapping down:

  • HOOD -3.2%, LZB -3.1%, JEF -2.8%, NKE -2.4%, TAL-1.2%, PHG -0.5%, CNXC -0.5%

 

Analyst Research (see Upgrades/Downgradescalendarfor full list):

  • Upgrades

  • Fortinet (FTNT) upgraded to Outperform from Market Perform at BMO Capital Markets; tgt $70

  • Downgrades:

  • eBay (EBAY) downgraded to Neutral from Buy at UBS; tgt lowered to $48

  • Epizyme (EPZM) downgraded to Market Perform from Outperform at Cowen; tgt $1.50

  • Farfetch (FTCH) downgraded to Neutral from Buy at UBS; tgt lowered to $10

  • Smart Share Global (EM) downgraded to Neutral from Buy at Goldman; tgt lowered to $1.40

  • Others:

  • American Equity Investment Life (AEL) assumed with an Outperform at Credit Suisse; tgt $43

  • ArcBest (ARCB) initiated with an Outperform at Credit Suisse; tgt $102

  • argenx (ARGX) resumed with a Buy at Stifel; tgt $460

  • Bally's Corporation (BALY) initiated with a Mkt Perform at JMP Securities

  • C.H. Robinson (CHRW) initiated with an Underperform at Credit Suisse; tgt $102

  • Canadian Nat'l Rail (CNI) initiated with a Neutral at Credit Suisse; tgt $122

  • Canadian Pacific (CP) initiated with a Neutral at Credit Suisse; tgt $74

  • CSX (CSX) initiated with an Outperform at Credit Suisse; tgt $35

  • DraftKings (DKNG) initiated with a Mkt Outperform at JMP Securities; tgt $25

  • Golden Entertainment (GDEN) initiated with a Mkt Outperform at JMP Securities; tgt $63

  • GXO Logistics (GXO) initiated with an Outperform at Credit Suisse; tgt $65

Upcoming Events:

  • Econ Data:

  • 08:30 ET: Adv. Intl. Trade in Goods for May (Briefing.comConsensus NA; Prior -$105.9B)

  • 08:30 ET: Adv. Retail Inventories for May (Briefing.comConsensus NA; Prior 0.7%)

  • 08:30 ET: Adv. Wholesale Inventories for May (Briefing.comConsensus NA; Prior 2.1%)

  • 09:00 ET: FHFA Housing Price Index for Apr (Briefing.comConsensus NA; Prior 1.5%)

  • 09:00 ET: S&P Case-Shiller Home Price Index for Apr (Briefing.comConsensus 21.1%; Prior 21.2%)

  • 10:00 ET: Consumer Confidence for June (Briefing.comConsensus 101.0; Prior 106.4)

  • Earnings:

  • Monday (Jun 27)

  • Afternoon: CNXC JEF NKE TCOM

  • Tuesday (Jun 28)

  • Morning: CGNT EPAC SNX

  • Afternoon:  AVAV PRGS

  • Wednesday (Jun 29)

  • Morning:  BBBY GIS MKC MSM PDCO PAYX SCHN UNF

  • Afternoon:  DCT MLKN SGH

  • Thursday (Jun 30)

  • Morning: AYI STZ LNN SMPL WBA

  • Afternoon:  ACCD MU

Asia & Europe detail:

Asia: Nikkei +0.7%, Hang Seng +0.9%, Shanghai +0.9%

Equity indices in the Asia-Pacific region ended Tuesday on a higher note after overcoming a weak start. China's National Development and Reform Commission acknowledged challenges associated with stabilizing prices and the job market. There was growing speculation that the Bank of Japan will struggle to maintain its ultra-loose policy in the face of global inflation. South Korea's Prime Minister called on his government to come up with a plan to stabilize inflation.

  • In economic data:

  • Japan's May BoJ Core CPI 1.5% yr/yr, as expected (last 1.4%)

---Equity Markets---

  • Japan's Nikkei: +0.7%

  • Hong Kong's Hang Seng: +0.9%

  • China's Shanghai Composite: +0.9%

  • India's Sensex: UNCH

  • South Korea's Kospi: +0.8%

  • Australia's ASX All Ordinaries: +0.9%

---FX---

  • USD/JPY: +0.5% to 136.17

  • USD/CNH: UNCH at 6.6890

  • USD/INR: +0.5% to 78.84

 

Europe: DAX +1.0%, FTSE +1.4%, CAC +1.4%

Major European indices trade on a firmly higher note. European Central Bank President Lagarde repeated that the ECB is planning a 25-bps rate hike in July, followed by another hike in September. The ECB is reportedly working on a scheme to cap the borrowing costs of highly indebted countries. The U.K.'s House of Commons voted in favor of overriding elements of the Northern Ireland protocol.

  • In economic data:

  • Germany's July GfK Consumer Climate -27.4 (expected -27.6; last -26.2)

  • France's June Consumer Confidence 82 (expected 84; last 85)

  • Italy's April Industrial Sales 2.7% m/m (last 2.5%); 22.0% yr/yr (last 21.6%)

---Equity Markets---

  • STOXX Europe 600: +0.7%

  • Germany's DAX: +1.0%

  • U.K.'s FTSE 100: +1.4%

  • France's CAC 40: +1.4%

  • Italy's FTSE MIB: +1.4%

  • Spain's IBEX 35: +1.6%

---FX---

  • EUR/USD: UNCH at 1.0580

  • GBP/USD: -0.2% to 1.2243

  • USD/CHF: -0.2% to 0.9546


0 views0 comments

Recent Posts

See All

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