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Writer's pictureSimon Charles Hooper
Jul 1, 202211 min read

29/06/22 Briefing

The S&P 500 futures are down 57 points and are trading 1.6% below fair value. The Nasdaq 100 futures are down 199 points and are trading 2.0% below fair value. The Dow Jones Industrial Average futures are down 399 points and are trading 1.2% below fair value.

Growth concerns are leading the way this



. China had weaker-than-expected PMI data released overnight. Japan's May industrial production fell to a level not seen since the start of the pandemic. Luxury furnishing retailer RH Inc. (RH) issued its second fiscal year net revenue growth warning in less than a month, citing a "deteriorating macro economic environment".

The cryptocurrencies have taken a hit recently with bitcoin falling below the $20,000 to $19,030.41 while Ethereum fell to $1,018.00. This is on the heels of the SEC's decision to reject Grayscale's application to turn its GBTC vehicle into an ETF and Grayscale's subsequent lawsuit.

The economic data released before the open today will include the closely watched PCE Price Index (Briefing.comconsensus 0.7%) at 8:30 ET. That will be part of the Personal Income and Spending report for May. 

The 2-yr note yield is currently down seven basis points to 3.00%. The 10-yr note yield is down five to 3.04%.

In corporate news:

  • RH (RH 213.51, -23.81, -10.0%): RH lowered FY22 net revenue and adjusted operating margin guidance due to "deteriorating macroeconomic environment"; maintains Q2 guidance

  • SMART Global Holdings (SGH 17.75, -2.53, -12.5%): SMART Global beats by $0.12, beats on revs; guides Q4 EPS below consensus, revs below consensus; also to acquire Stratus Technologies

  • Walgreens Boots Alliance (WBA 39.90, -0.97, -2.4%): Walgreens Boots Alliance beats by $0.03, beats on revs; reaffirms FY22 EPS guidance

  • Constellation Brands (STZ 244.50, +0.87, +0.4%): Constellation Brands beats by $0.39, beats on revs; reaffirms FY23 EPS guidance

  • MicroStrategy Inc. (MSTR 165.00, -14.59, -8.2%): MicroStrategy Inc. is down sharply as bitcoin falls below $20,000

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region ended Thursday on a mostly lower note. Japan's Nikkei: -1.5%, Hong Kong's Hang Seng: -0.6%, China's Shanghai Composite: +1.1%, India's Sensex: UNCH, South Korea's Kospi: -1.9%, Australia's ASX All Ordinaries: -1.9%

    • In economic data:

      • China's June Manufacturing PMI 50.2 (expected 50.5; last 49.6) and June Non-Manufacturing PMI 54.7 (last 47.8)

      • Japan's May Industrial Production -7.2% m/m (expected -0.3%; last -1.5%). May Housing Starts -4.3% yr/yr (expected 1.7%; last 2.4%) and Construction Orders 19.5% yr/yr (last 30.5%)

      • South Korea's May Industrial Production 0.1% m/m (expected 0.5%; last -3.3%); 7.3% yr/yr (expected 3.1%; last 3.5%). May Retail Sales -0.1% m/m (last -0.2%) and July Manufacturing BSI Index 82 (last 85)

      • Hong Kong's May Retail Sales -1.7% yr/yr (last 11.7%)

      • Australia's May Private Sector Credit 0.8% m/m (last 0.8%) and May Housing Credit 0.6% m/m (last 0.6%)

      • New Zealand's June ANZ Business Confidence -62.6 (last -55.6)

    • In news:

      • Tokyo reportedly raised its coronavirus alert level to the second highest tier.

      • China's Manufacturing PMI dipped toward contractionary territory in the June reading while Non-Manufacturing PMI returned to expansion after pointing to contracting activity for three months in a row.

      • Reserve Bank of New Zealand chief economist warned that the tide may have turned against housing being a one-way bet.

      • South Korea increased its minimum wage by 5.0% yr/yr.

  • Major European indices trade on a sharply lower note amid continued concerns about slowing growth. STOXX Europe 600: -2.1%, Germany's DAX: -2.8%, U.K.'s FTSE 100: -2.0%, France's CAC 40: -2.9%, Italy's FTSE MIB: -2.7%, Spain's IBEX 35: -2.2%

    • In economic data:

      • Eurozone's May Unemployment Rate 6.6% (expected 6.8%; last 6.7%)

      • Germany's May Retail Sales 0.6% m/m (expected 0.5%; last -5.4%); -3.6% yr/yr (expected -2.0%; last -0.4%). May Import Price Index 0.9% m/m (expected 1.6%; last 1.8%); 30.6% yr/yr (expected 31.5%; last 31.7%). June Unemployment Change 133,000 (expected -6,000; last -4,000) and Unemployment Rate 5.3% (expected 5.0%; last 5.0%)

      • U.K.'s Q1 GDP 0.8% qtr/qtr, as expected (last 1.3%); 8.7% yr/yr, as expected (last 6.6%). Q1 Current Account deficit GBP51.70 bln (expected deficit of GBP39.80 bln; last deficit of GBP7.30 bln). Q1 Business Investment -0.6% qtr/qtr (last -0.5%); 8.3% yr/yr (last 8.5%). June Nationwide HPI 0.3% m/m (expected 0.5%; last 0.9%); 10.7% yr/yr (expected 10.8%; last 11.2%)\

      • France's May PPI -0.1% m/m (last 0.0%). May Consumer Spending 0.7% m/m (expected 0.2%; last -0.7%). Flash June CPI 0.7% m/m, as expected (last 0.7%); 5.8% yr/yr (expected 5.7%; last 5.2%)

      • Italy's May Unemployment Rate 8.1% (expected 8.4%; last 8.3%). May PPI 0.6% m/m (last 0.2%); 34.6% yr/yr (last 35.3%)

      • Spain's April Current Account deficit EUR480 mln (last surplus of EUR1.20 bln)

      • Swiss May Retail Sales -1.6% yr/yr (last -5.5%) and June KOF Leading Indicators 96.9 (expected 96.3; last 97.7)

    • In news:

      • French Finance Minister Le Maire said that the EU could implement the global minimum tax without Hungary's participation.

      • Italy is reportedly planning to spend another EUR8 bln to offset high energy costs.

      • Russia warned that it will respond in kind if NATO infrastructure is established in Finland and Sweden.

 

U.S. equity futures:

  • S&P 500 Futures: -61 @ 3,758

  • DJIA Futures: -422 @ 30,607

  • Nasdaq 100 Futures: -210 @ 11,448

Overseas:

  • Europe: DAX -2.8%, FTSE -2.0%, CAC -2.9%

  • Asia: Nikkei -1.5%, Hang Seng -0.6%, Shanghai Composite +1.1%

Commodities:

  • Crude Oil -1.16 @ 108.62

  • Nat Gas -0.139 @ 6.359

  • Gold -11.70 @ 1805.80

  • Silver -0.410  @ 20.328

  • Copper -0.0800 @ 3.7005

U.S. Summary:

  • Earnings:

    • Acuity Brands (AYI) beats by $0.61, beats on revs

    • AMMO (POWW) grows adjusted EPS 651% yr/yr in FY22, sees 285% sales growth; expects FY23 revs of $300-310 mln vs $280.49 S&P Capital IQ Consensus

    • Avid Bioservices (CDMO) misses by $0.02, beats on revenue; guides FY23 revenue slightly below consensus; remains on track to bring CGMP manufacturing suites online in mid-calendar 2023

    • Constellation Brands (STZ) beats by $0.39, beats on revs; reaffirms FY23 EPS guidance

    • Duck Creek Technologies (DCT) beats by $0.01, reports revs in-line; guides AugQ EPS in-line, revs below consensus

    • Lindsay Corp (LNN) beats by $0.68, beats on revs

    • MillerKnoll (MLKN) beats by $0.10, reports revs in-line; guides AugQ EPS in-line, revs above consensus

    • National Beverage (FIZZ) announces FY22 results: net sales grew 6.1% yr/yr to $1.14 bln vs $1.14 bln Capital IQ Consensus, EPS of $1.70 vs $1.76 two analyst estimate

    • RH (RH) lowers FY22 net revenue and adjusted operating margin guidance due to "deteriorating macroeconomic environment"; maintains Q2 guidance

    • Simply Good Foods (SMPL) beats by $0.09, beats on revs; raises bottom end of FY22 sales guidance

    • SMART Global (SGH) beats by $0.12, beats on revs; guides Q4 EPS below consensus, revs below consensus; also to acquire Stratus Technologies

    • Universal Health (UHS) sees Q2 EPS below consensus; lowers FY22 outlook

    • Walgreens Boots Alliance (WBA) beats by $0.03, beats on revs; reaffirms FY22 EPS guidance

  • General News:

    • Chinese President Xi visits Hong Kong, CNBC

    • Russian President Putin says Russia will respond "in kind" to NATO expansion as Russian troops withdraw from Snake Island, according to the Wall Street Journal

    • Ketanji Brown Jackson will be sworn in at the Supreme Court today, replacing Justice Stephen Breyer. The court will release final decisions today on climate change and immigration, according to the L.A. Times

    • California lithium tax could delay EV shipments, according to Reuters

    • EU says provisional agreement reached on transparency of crypto asset transfers

    • Aadi Bioscience (AADI) receives notice from EOC Pharma of termination of License Agreement

    • Aerojet Rocketdyne (AJRD) expected to win proxy battle, according to the Wall Street Journal

    • Alphabet (GOOG): European consumer groups take action against Google for pushing users towards its surveillance system

    • AstraZeneca (AZN) reports Imfinzi plus chemotherapy significantly improved pathologic complete response in AEGEAN Phase III trial

    • Aura Biosciences (AURA) announced that the FDA has granted Fast Track designation for belzupacap sarotalocan (AU-011), Aura's first VDC product candidate, for the treatment of Non-Muscle Invasive Bladder Cancer

    • Avadel Pharmaceuticals (AVDL) provides corporate update

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

    • BeiGene (BGNE) Announces Late-Breaking Data at ESMO GI Showing Overall Survival Benefit for Tislelizumab Plus Chemotherapy in First-Line Advanced or Metastatic Esophageal Squamous Cell Carcinoma

    • Blueprint Medicines (BPMC) announces $1.25 bln strategic financing collaborations with Sixth Street and Royalty Pharma (RPRX); Blueprint Medicines will receive $575 mln in total cash funded at close

    • Boeing (BA): Inspector General sends letter to FAA regarding oversight of 737 Max issues

    • Canadian Pacific (CP): three collective bargaining agreements have been ratified by employees of CP's Dakota, Minnesota & Eastern South; Central Maine & Quebec U.S. and Central Maine & Quebec Canada subsidiaries

    • Cara Therapeutics (CARA) Announces Positive Topline Results from KOMFORT Phase 2 Trial of Oral Difelikefalin for the Treatment of Pruritus in Patients with Notalgia Paresthetica

    • Cellectis (CLLS) Publishes Article in Nature Communications Unveiling Novel Immune-Evasive Universal Allogeneic CAR T-cells with Potential for Improved Persistence

    • Constellation Brands (STZ) strikes agreement with Sands family to eliminate Class B common stock

    • Corcept Therapeutics (CORT) initiates ROSELLA, a pivotal Phase 3 trial of relacorilant plus nab-paclitaxel in patients with platinum-resistant ovarian cancer

    • Disney (DIS): Disneyland Shanghai has reopened with testing and masking requirements, according to Bloomberg

    • Dover (DOV) to serve as the master distributor for all Barbieri electronic solutions worldwide

    • General Dynamics (GD) awarded a $320 mln US Army contract modification for Mobile Protected Firepower

    • General Motors (GM) subsidiary employees at various Michigan plants are expected to go on strike today, according to Detroit Free Press

    • Hyperfine (HYPR) CEO Dave Scott will step down for personal reasons, effective July 29; Executive Chairperson Scott Huennekens to serve as interim CEO

    • IMAX (IMAX) extends current share repurchase to up to $200 mln

    • Information Services Group (III) has been awarded a three-year US $10 mln agreement by the Italian government to help manage and oversee the government's digital transformation program

    • Innovative Industrial Properties (IIPR) entered into amendment for lease with Green Thumb (GTBIF)

    • Lexicon (LXRX) Announces Positive Top-Line Results From Phase 2 Proof-Of-Concept Study Of LX9211In Painful Diabetic Neuropathy

    • Lockheed Martin (LMT): Sikorsky Aircraft unit wins $429 mln US Army contract for maintenance and overhaul of UH-60 Black Hawk helicopters

    • Oil States (OIS) enters into settlement agreement with HCperf Holdings related to disputes existing between the parties in connection with co's acquisition of GEODynamics

    • Omega Therapeutics (OMGA) Presents New Preclinical Data Supporting the First Epigenomic Controller, OTX-2002, as a Potential Therapeutic Approach in Hepatocellular Carcinoma at the ESMO 2022 World Congress on Gastrointestinal Cancer

    • PDC Energy (PDCE) receives approval of Broe Oil and Gas development plan permit

    • Pearson Plc (PSO) announces that an application has been made to Financial Conduct Authority and the London Stock Exchange for the block listing of 2.4 mln ordinary shares of 25 pence each in the capital

    • Pfizer (PFE) and BioNTech (BNTX) announce new vaccine supply agreement with the U.S. government; to supply 105 mln doses for $3.2 bln upon receipt

    • Pfizer (PFE) announces submission of new drug application to the FDA for PAXLOVID

    • Poseida Therapeutics (PSTX) Announces Publication Highlighting Potential of Cas-CLOVER as an Efficient and Robust Gene Editing System for Developing Allogeneic CAR-T Products

    • Redwire Corporation (RDW) successfully delivers second pair of iROSA solar arrays to augment international space station power supply

    • Rocket Lab USA's (RKLB) Lunar Photon spacecraft successfully completes the third of seven planned orbit raising maneuvers, bringing the CAPSTONE spacecraft closer to the Moon

    • Roper (ROP) announces updated segment structure

    • Stride (LRN) appoints Donna Blackman as new CFO, effective July 1, 2022

    • Talaris Therapeutics (TALS) provides FREEDOM-1 phase 3 clinical update

    • Trinseo (TSE) and GMP to establish a recycling plant in Europe; anticipated startup in 2024

    • Tritium DCFC (DCFC) expected to supply more than 100 rapid chargers to Motor Fuel Group in the UK

    • UBS AG (UBS) ordered to pay $25 mln to settle SEC fraud charges relating to an options trading strategy, according to Reuters

    • Unity (U) aiming to eliminate hundreds of jobs, according to Kotaku

    • Xerox (XRX) CEO and Vice Chairman John Visentin unexpectedly passed away yesterday due to complications from an ongoing illness; current COO Steve Bandrowczak appointed Interim CEO

  • M&A:

    • Diversified Healthcare Trust (DHC) sells an additional 10% equity interest in life science property located in Boston Seaport District

    • FMC Corp (FMC) to acquire BioPhero for approximately $200 mln; expected to be completed by Q3

    • Nexstar (NXST) is nearing a deal to acquire majority control of the CW Network from Warner Bros Discovery (WBD) and Paramount Global (PARA), according to the Wall Street Journal

    • Royalty Pharma (RPRX) confirms it has acquired an ex-U.S. royalty interest in Gavreto (pralsetinib) from Blueprint Medicines (BPMC)

    • Spirit Airlines (SAVE) to adjourn Special Meeting of stockholders; intends to continue discussions with Frontier (ULCC) and JetBlue (JBLU)

    • Spirit Airlines (SAVE): JetBlue (JBLU) Comments on Spirit's Adjournment of Special Meeting

    • WPP plc (WPP) to acquire marketing technology agency Bower House Digital

  • Syndicate: 

    • Aspen Aerogels (ASPN) decides not to proceed with concurrent public offerings of common stock and green convertible senior notes due 2027

    • Cytokinetics (CYTK) announces proposed $450 mln convertible notes in private offering

    • HighPeak Energy (HPK) files for 7,331,517 share common stock offering by selling shareholder

    • Symbotic (SYM) files for 554,976,653 share common stock offering by selling shareholders

    • Transphorm (TGAN) files for 3,866,667 share common stock offering by selling shareholders

  • IPOs:

    • Priced to Trade:

      • No IPOs expected.

Gapping Up/Down

  • Gapping up:

    • ASPN +51.4%, AVDL +13.2%, POWW +6.9%, CDMO+5.5%, MLKN +5.3%, OSCR +5.2%, TGAN+4.8%, SYM+4.3%, NXST +3.4%, AYI +2.6%, SAVE +1.9%, BNTX+1.5%, CORT +1.1%, HPK +0.8%

  • Gapping down:

    • HYPR -27%, DCT -19.1%, CYTK -14.9%, SGH -14.9%, MSTR -9.4%, RH -6.5%, W -6.4%, BITO-5.3%, COIN-5%, FIZZ -4.3%, WSM -3.7%, LXRX -3.1%, UBS-2.9%, RKLB -1.9%, OIS -1.8%, HOOD-1.7%, STNG-1.6%, BA -1.6%, WBD -0.9%

 

Analyst Research (see Upgrades/Downgradescalendarfor full list):

  • Upgrades

    • Advanced Micro (AMD) upgraded to Outperform from Market Perform at Northland Capital; tgt lowered to $95

    • Banco Bilbao Vizcaya Argentaria (BBVA) upgraded to Buy from Neutral at UBS

    • Banco Santander Chile (BSAC) upgraded to Neutral from Sell at UBS

  • Downgrades:

    • Ameren (AEE) downgraded to Neutral from Buy at UBS; tgt raised to $96

    • Axos Financial (AX) downgraded to Neutral from Outperform at Wedbush

    • Duke Energy (DUK) downgraded to Neutral from Buy at UBS; tgt lowered to $112

  • Others:

    • ABB Ltd (ABB) initiated with a Buy at Stifel

    • Acumen Pharmaceuticals (ABOS) initiated with a Buy at H.C. Wainwright; tgt $15

    • Amkor (AMKR) initiated with a Buy at DA Davidson; tgt $30

    • AppLovin (APP) initiated with an Overweight at KeyBanc Capital Markets; tgt $55

    • Bath & Body Works (BBWI) initiated with an Overweight at Piper Sandler; tgt $58

    • CarGurus (CARG) resumed with a Mkt Perform at JMP Securities

    • Carvana (CVNA) resumed with a Mkt Outperform at JMP Securities; tgt $35

    • Coty (COTY) initiated with a Neutral at Piper Sandler; tgt $8

Upcoming Events:

  • Econ Data:

    • 08:30 ET: Initial Claims for June 25 (Briefing.comConsensus 234K; Prior 229K)

    • 08:30 ET: Continuing Claims for June 18 (Briefing.comConsensus NA; Prior 1315K)

    • 08:30 ET: Personal Income for May (Briefing.comConsensus 0.5%; Prior 0.4%)

    • 08:30 ET: Personal Spending for May (Briefing.comConsensus 0.5%; Prior0.9%)

    • 08:30 ET: PCE Prices for May (Briefing.comConsensus 0.7%; Prior 0.2%)

    • 08:30 ET: PCE Prices - Core for May (Briefing.comConsensus 0.4%; Prior 0.3%)

    • 09:45 ET: Chicago PMI for June (Briefing.comConsensus 58.8; Prior 60.3)

    • 10:30 ET: EIA Natural Gas Inventories for June 25 (Briefing.comConsensus NA; Prior +74 bcf)

  • 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 -1.5%, Hang Seng -0.6%, Shanghai Composite +1.1%

Equity indices in the Asia-Pacific region ended Thursday on a mostly lower note. Tokyo reportedly raised its coronavirus alert level to the second highest tier. China's Manufacturing PMI dipped toward contractionary territory in the June reading while Non-Manufacturing PMI returned to expansion after pointing to contracting activity for three months in a row. Reserve Bank of New Zealand chief economist warned that the tide may have turned against housing being a one-way bet. South Korea increased its minimum wage by 5.0% yr/yr.

  • In economic data:

    • China's June Manufacturing PMI 50.2 (expected 50.5; last 49.6) and June Non-Manufacturing PMI 54.7 (last 47.8)

    • Japan's May Industrial Production -7.2% m/m (expected -0.3%; last -1.5%). May Housing Starts -4.3% yr/yr (expected 1.7%; last 2.4%) and Construction Orders 19.5% yr/yr (last 30.5%)

    • South Korea's May Industrial Production 0.1% m/m (expected 0.5%; last -3.3%); 7.3% yr/yr (expected 3.1%; last 3.5%). May Retail Sales -0.1% m/m (last -0.2%) and July Manufacturing BSI Index 82 (last 85)

    • Hong Kong's May Retail Sales -1.7% yr/yr (last 11.7%)

    • Australia's May Private Sector Credit 0.8% m/m (last 0.8%) and May Housing Credit 0.6% m/m (last 0.6%)

    • New Zealand's June ANZ Business Confidence -62.6 (last -55.6)

---Equity Markets---

  • Japan's Nikkei: -1.5%

  • Hong Kong's Hang Seng: -0.6%

  • China's Shanghai Composite: +1.1%

  • India's Sensex: UNCH

  • South Korea's Kospi: -1.9%

  • Australia's ASX All Ordinaries: -1.9%

---FX---

  • USD/JPY: -0.1% to 136.35

  • USD/CNH: UNCH at 6.7022

  • USD/INR: +0.1% to 78.96

Europe: DAX -2.8%, FTSE -2.0%, CAC -2.9%

Major European indices trade on a sharply lower note amid continued concerns about slowing growth. French Finance Minister Le Maire said that the EU could implement the global minimum tax without Hungary's participation. Italy is reportedly planning to spend another EUR8 bln to offset high energy costs. Russia warned that it will respond in kind if NATO infrastructure is established in Finland and Sweden.

  • In economic data:

    • Eurozone's May Unemployment Rate 6.6% (expected 6.8%; last 6.7%)

    • Germany's May Retail Sales 0.6% m/m (expected 0.5%; last -5.4%); -3.6% yr/yr (expected -2.0%; last -0.4%). May Import Price Index 0.9% m/m (expected 1.6%; last 1.8%); 30.6% yr/yr (expected 31.5%; last 31.7%). June Unemployment Change 133,000 (expected -6,000; last -4,000) and Unemployment Rate 5.3% (expected 5.0%; last 5.0%)

    • U.K.'s Q1 GDP 0.8% qtr/qtr, as expected (last 1.3%); 8.7% yr/yr, as expected (last 6.6%). Q1 Current Account deficit GBP51.70 bln (expected deficit of GBP39.80 bln; last deficit of GBP7.30 bln). Q1 Business Investment -0.6% qtr/qtr (last -0.5%); 8.3% yr/yr (last 8.5%). June Nationwide HPI 0.3% m/m (expected 0.5%; last 0.9%); 10.7% yr/yr (expected 10.8%; last 11.2%)

    • France's May PPI -0.1% m/m (last 0.0%). May Consumer Spending 0.7% m/m (expected 0.2%; last -0.7%). Flash June CPI 0.7% m/m, as expected (last 0.7%); 5.8% yr/yr (expected 5.7%; last 5.2%)

    • Italy's May Unemployment Rate 8.1% (expected 8.4%; last 8.3%). May PPI 0.6% m/m (last 0.2%); 34.6% yr/yr (last 35.3%)

    • Spain's April Current Account deficit EUR480 mln (last surplus of EUR1.20 bln)

    • Swiss May Retail Sales -1.6% yr/yr (last -5.5%) and June KOF Leading Indicators 96.9 (expected 96.3; last 97.7)

---Equity Markets---

  • STOXX Europe 600: -2.1%

  • Germany's DAX: -2.8%

  • U.K.'s FTSE 100: -2.0%

  • France's CAC 40: -2.9%

  • Italy's FTSE MIB: -2.7%

  • Spain's IBEX 35: -2.2%

---FX---

  • EUR/USD: -0.4% to 1.0400

  • GBP/USD: -0.1% to 1.2110

  • USD/CHF: +0.4% to 0.9579


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