29/06/23 Briefing

The S&P 500 futures are up 12 points and are trading 0.3% above fair value. The Nasdaq 100 futures are up 48 points and are trading 0.4% above fair value. The Dow Jones Industrial Average futures are up 95 points and are trading 0.3% above fair value.

There is a positive tone on the equity futures market, as traders react to the encouraging indication from Micron (MU) that it is confident a bottom in industry demand has already formed. That view was shared in conjunction with company's earnings report and it has helped put a bid in other semiconductor stocks.

Separately, modest gains in the mega-cap cohort has been an added support for the broader market, which is also relishing the news that all 23 banks passed the Fed's annual stress test.

Today will feature a batch of IPOs in a nice change of pace for the IPO market.

Today's economic data includes:

• 8:30 a.m. ET: Initial Claims (Briefing.com consensus 266K; Prior 264K) and Continuing Claims (Prior 1759K)

• 8:30 a.m. ET: Q1 GDP - Third Estimate (Briefing.com consensus 1.3%; Prior 1.3%) and Q1 GDP Deflator - Third Estimate (Briefing.com consensus 4.2%; Prior 4.2%)

• 10:00 a.m. ET: May Pending Home Sales (Briefing.com consensus -0.8%; Prior 0.0%)

• 10:30 a.m. ET: EIA Natural Gas Inventories (Prior +95 bcf)

The 2-yr Treasury note yield is up three basis points to 4.75% and the 10-yr note yield is up four basis points to 3.75%. The U.S. Dollar Index is down 0.1% to 102.83.

In corporate news:

• Walt Disney (DIS 88.29, -0.54, -0.6%): downgraded to Sector Weight from Overweight at KeyBanc Capital Markets

• Micron (MU 69.20, +2.13, +3.2%): beats by $0.18, beats on revs; guides Q4 EPS below consensus, revs in-line; states that the Cyberspace Administration of China decision is a significant headwind that is impacting its outlook; adds that it is confident a bottom in industry demand already formed

• Pfizer (PFE 36.10, -0.19, -0.5%): downgraded to Neutral from Outperform at Credit Suisse; tgt lowered to $40

• Occidental Petroleum (OXY 58.24, +0.78, +1.4%): 10% owner Berkshire Hathaway (BRK.A / BRK.B) bought 2,138,250 shares (6/26-6/28 transaction dates)

• Ashland (ASH 79.01, -4.83, -5.8%): guides Q3 and FY23 revs below consensus; authorizes $1.0 bln for share repurchases; downgraded to In-line from Outperform at Evercore ISI

• BlackBerry Ltd. (BB 5.70, +0.69, +13.8%): beats by $0.12, beats on revs

• SPDR S&P Bank ETF (KBE 36.25, +0.68, +1.9%): All 23 banks pass the Fed's annual bank stress test

• FREYR Battery (FREY 8.34, +0.79, +10.5%): upgraded to Overweight from Equal-Weight at Morgan Stanley; tgt $13

Reviewing overnight developments:

• Equity indices in the Asia-Pacific region ended Thursday on a mostly lower note while markets in Singapore and India were closed for holidays. Japan's Nikkei: +0.1%, Hong Kong's Hang Seng: -1.2%, China's Shanghai Composite: -0.2%, India's Sensex: CLOSED, South Korea's Kospi: -0.6%, Australia's ASX All Ordinaries: +0.1%.

  • In economic data:

    • Japan's May Retail Sales 5.7% yr/yr (expected 5.4%; last 5.1%) and Large Retailers' Sales 1.3% m/m (expected -0.2%; last -1.1%). June Household Confidence 36.2, as expected (last 36.0)

    • South Korea's July Manufacturing BSI Index 69 (expected 71; last 70)

    • Australia's May Retail Sales 0.7% m/m (expected 0.1%; last 0.0%)

    • New Zealand's June ANZ Business Confidence -18.0 (expected -28.1; last -31.1)

• In news:

  • Japan and South Korea are reportedly close to completing a bilateral currency swap deal.

  • New Zealand and China signed several agreements aimed at improving trade.

• Major European indices trade on a mostly higher note while the U.K.'s FTSE (-0.2%) lags. STOXX Europe 600: +0.3%, Germany's DAX: +0.3%, U.K.'s FTSE 100: -0.2%, France's CAC 40: +0.8%, Italy's FTSE MIB: +1.0%, Spain's IBEX 35: +0.4%.

  • In economic data:

    • Eurozone's June Business and Consumer Survey 95.3 (expected 96.0; last 96.4)

    • U.K.'s May BoE Consumer Credit GBP1.144 bln (expected GBP1.500 bln; last GBP1.513 bln). May Mortgage Approvals 50,520 (expected 48,750; last 49,020) and May Mortgage Lending -GBP90 mln (expected GBP120 mln; last -GBP1.47 bln)

    • Spain's June CPI 0.6% m/m (expected 0.2%; last 0.0%); 1.9% yr/yr (expected 1.7%; last 3.2%)

• In news:

  • European Central Bank policymaker Stournaras said that it is too early to say what the governing council will do in September despite rising expectations that the central bank will hike again that month.

  • Bank of England Governor Bailey acknowledged the persistence of inflation, adding that the domestic economy has been more resilient than expected. Renault raised its operating margin guidance for FY23.

  • Sweden's Riksbank announced a 25-bps rate hike to 3.75%, as expected.

U.S. equity futures:

• S&P 500 Futures: +12 @ 4,389

• DJIA Futures: +97 @ 33,949

• Nasdaq 100 Futures: +48 @ 15,013

Overseas:

• Europe: DAX +0.3%, FTSE -0.2%, CAC +0.8%
  

• Asia: Nikkei +0.1%, Hang Seng -1.2%, Shanghai Composite -0.2%

Commodities:

• Crude Oil +0.22 @ 69.78

• Nat Gas -0.006 @ 2.662

• Gold -4.15 @ 1918.05

• Silver -0.034 @ 22.858

• Copper -0.0478 @ 3.6947

Earnings/Guidance:

• Acuity Brands ( AYI ▾ 0.56% ) beats by $0.03, misses on revs

• Ashland ( ASH ▴ 0.56% ) guides Q3 and FY23 revs below consensus; authorizes $1.0 bln for share repurchases

• BlackBerry ( BB ▾ 0.79% ) beats by $0.12, beats on revs

• Concentrix ( CNXC 0.00% ) misses by $0.06, misses on revs; guides AugQ revs below consensus; guides FY23 revs below consensus

• Franklin Covey ( FC ▴ 1.88% ) beats by $0.15, beats on revs; reiterates FY23 adjusted EBITDA outlook

• Greenbrier ( GBX ▴ 0.62% ) beats by $0.42, beats on revs; guides FY23 revs above consensus; raises dividend

• H.B. Fuller ( FUL ▴ 0.44% ) misses by $0.11, misses on revs; guides FY23 EPS in-line, revs below consensus due to slowing global industrial activity

• Lindsay Corp ( LNN ▾ 0.68% ) misses by $0.61, misses on revs

• McCormick ( MKC ▾ 1.50% ) beats by $0.02, reports revs in-line; raises FY23 EPS in-line, reaffirms FY23 revs guidance

• Micron ( MU 0.00% ) beats by $0.18, beats on revs; guides Q4 EPS below consensus, revs in-line; states that the Cyberspace Administration of China decision is a significant headwind that is impacting its outlook

• MSC Industrial ( MSM ▾ 1.08% ) misses by $0.01, beats on revs

• National Beverage ( FIZZ 0.00% ) beats by $0.01 (two ests), misses on revs (two ests)

• Rite Aid ( RAD ▾ 4.40% ) beats by $0.77, beats on revs; guides FY24 EPS above consensus, revs above consensus

• Simply Good Foods ( SMPL 0.00% ) beats by $0.04, beats on revs; reiterates FY23 outlook

• Toyota Motor ( TM ▴ 1.86% ) provides update on sales, production, and export results for May 2023

• VEON ( VEON 0.00% ) reveals faster local currency revenue and EBITDA growth in first five months at AGM

• Worthington ( WOR ▴ 1.44% ) beats by $0.84, misses on revs (single est); increases quarterly dividend 3% to $0.32/share; on track to complete two separate companies by early 2024

News:

• Fed Chairman Jerome Powell gave speech early this morning

• Fed Stress Test: 23 large banks subject to the test this year have sufficient capital

• Violent riots are occurring in France after police shooting, according to the New York Times

• Aldeyra Therapeutics ( ALDX 0.00% ) announces improvement from baseline in retinal function in phase 2 clinical trial of ADX-2191 in Patients with Retinitis Pigmentosa

• Alvotech ( ALVO 0.00% ) receives complete response letter on second Biologics License Application for AVT02

• Amazon ( AMZN 0.00% ): FTC in coming weeks will file antitrust lawsuit against Amazon online marketplace, according to Bloomberg

• Bank of America ( BAC ▾ 0.60% ) had $100 bln paper loss after bet on bond market, according to Financial Times

• Bayer AG ( BAYRY ) reports Aflibercept 8 mg in diabetic macular edema first to achieve sustained vision gains with up to 83% of patients extended to 16-24 weeks at two years

• BioNTech ( BNTX 0.00% ) and OncoC4 initiate pivotal phase 3 trial of bnt316/onc-392 program in metastatic NSCLC

• BioXcel Therapeutics ( BTAI 0.00% ) Announces Positive Topline Results From TRANQUILITY II Phase 3 Trial of BXCL501 for Acute Treatment of Alzheimer's Disease-Related Agitation

• Bristol-Myers ( BMY ▴ 0.01% ) receives European Commission approval for Opdivowith Chemotherapy as neoadjuvant treatment of resectable non-small cell lung cancer at high risk of recurrence in patients with tumor cell PD-L1 Expression =1%

• Carriage Services ( CSV ▴ 2.60% ): Board has initiated a process to explore potential strategic alternatives

• Cboe Global Markets ( CBOE ▴ 0.32% ) to expand corporate bond index product suite with two new offerings

• Cool Company ( CLCO ▴ 1.01% ) exercises option to acquire two newbuild LNG carriers from affiliates of EPS Ventures; Initial exercise price is approximately $57 mln per vessel

• Corvus Pharmaceuticals ( CRVS 0.00% ) Presents New Ciforadenant Preclinical Data at the 2nd JCA-AACR Precision Cancer Medicine International Conference

• Costco ( COST 0.00% ) asking to see membership card with photo at self-service checkout registers because it noticed that non-member shoppers have been using membership cards that do not belong to them

• DTE Energy ( DTE ▾ 1.54% ) appointed Joi M. Harris as President and Chief Operating Officer of the Company, effective July 3, 2023

• Elme Communities ( ELME ▾ 1.44% ) appoints Tiffany Butcher as EVP and COO, effective on July 10, 2023

• Enerflex ( EFXT 0.00% ) appoints Rodney Gray as Senior VP and CFO, effective July 1

• EPR Properties ( EPR ▴ 1.03% ) enters into restructuring agreement and master lease with Regal Cinemas

• Exxon ( XOM ▴ 0.81% ) will develop 6,100 acres of lithium with Tetra Technologies (TTI), according to Reuters

• Franklin Covey ( FC ▴ 1.88% ) discloses elimination of executive chairman position

• Genelux ( GNLX 0.00% ) and TVAX Biomedical announce patent claiming methods of combining vaccine-enhanced adoptive T cell therapy with oncolytic virus adjunct therapy

• Ginkgo Bioworks ( DNA ▴ 13.75% ): Ambrosia Bio leverages Ginkgo enzyme services to develop a more scalable enzymatic process for allulose

• IHS Holding Limited ( IHS ▴ 1.98% ) issues statement in response to recent shareholder comments; will continue engaging in shareholder dialogue

• Integra LifeSciences ( IART 0.00% ) Announces Complete Enrollment in DuraSorb Monofilament Mesh U.S. IDE Study

• Intl Game Tech. PLC's ( IGT ▴ 0.10% ) Global Services unit signed a cross-licensing agreement with FDJ Gaming Solutions France

• Jefferies ( JEF ▴ 3.54% ) Announces Shareholder Approval of Charter Amendment

• Keysight ( KEYS ▴ 0.24% ) enters exclusive negotiations with ESI Group's main shareholders to acquire a controlling block followed by the launching of a mandatory cash tender offer

• Lemonade ( LMND ▾ 0.35% ) has partnered with General Catalyst to create Synthetic Agents; also entered into a customer investment agreement with GC Customer Value Arranger

• LightInTheBox Holding ( LITB 0.00% ) authorized $10 mln share repurchase program of its ordinary shares in the form of American Depositary Shares no later than December 31, 2023

• Liquidia Technologies ( LQDA 0.00% ) is evaluating the claims of United Therapeutics (UTHR) patent application

• Mayville Engineering Company ( MEC ▾ 7.97% ) announces upsized $250 million credit facility

• McCormick ( MKC ▾ 1.50% ) promotes Brendan Foley to President and CEO, effective September 1, 2023; succeeds Lawrence Kurzius, who will continue to serve as Executive Chairman

• MediciNova ( MNOV 0.00% ) announces presentation of results from the phase 2b trial of MN-166 in alcohol use disorder at the 46th Annual Research Society on Alcohol Scientific Meeting

• New York Times ( NYT ▴ 1.93% ) and News Corp (NWSA) mostly unchanged on news big publishers are teaming up to address AI impact, according to the Wall Street Journal

• Nu Holdings ( NU ▴ 1.96% ): CVM Collegiate approved, in its entirety, the New Plan for Discontinuance of the Company's Level III BDR Program

• Orange ( ORAN ▴ 0.26% ) announced last night the completion of its strategic review of Orange Bank and the opening of exclusive negotiations with BNP Paribas (BNPQY)

• Parsons ( PSN ▾ 0.23% ) will serve as lead designer to the Skanska Halmar JFK Joint Venture in support of a $1.24 bln design and reconstruction of John F. Kennedy International Airport's Central Terminal Area Roadways

• PG&E ( PCG ▾ 0.18% ) wants $7 bln federal loan to upgrade electrical grid and reduce California wildfire risk, according to the Wall Street Journal

• Rallybio ( RLYB 0.00% ) announces that Stephen Uden, M.D., Rallybio's President, Chief Operating Officer and Co-Founder has been appointed to the role of Chief Executive Officer, effective August 1, 2023

• Raytheon Technologies ( RTX ▾ 0.68% ) awarded $625 mln U.S. Air Force contract

• Salesforce ( CRM ▴ 1.60% ) to Invest $4 bln in Its UK business over 5 years

• Sanofi ( SNY 0.00% ) hosts Vaccines Investor Event; reaffirms ambition to deliver >10 bln in annual vaccines sales by 2030

• The Children's Place ( PLCE 0.00% ) implements a 17% workforce reduction

• Tidewater ( TDW ▴ 1.16% ) appoints Dick Fagerstal as non-executive Chairman of the Board; the Board reduced the size of the Board from nine to eight members

• Transocean ( RIG ▾ 2.10% ) announces $184 million award for harsh environment semisubmersible

• TuSimple Holdings ( TSP 0.00% ) exploring strategic alternatives for U.S. business, including possible sale

• Virgin Galactic ( SPCE ▴ 9.22% ) rocket plane will have first commercial flight today, according to Reuters

• WisdomTree ( WT ▴ 1.03% ) appointed Win Neuger to serve as Chair of the Board

M&A:

• Carlyle Group ( CG 0.00% ) and Stellex complete sale of Titan to an affiliate of Lone Star Funds

• Circor ( CIR ▴ 4.25% ): Arcline fully stands behind its superior proposal to acquire Circor International for $57.00 per share

• Microsoft ( MSFT 0.00% ) and Activision (ATVI) execs defend acquisition in court against the FTC, according to Financial Times

• Overstock.com ( OSTK 0.00% ) acquires the Bed Bath & Beyond brand and other intellectural property assets under a Bankruptcy Court process for $21.5 mln in cash

• Sigilon Therapeutics ( SGTX 0.00% ): Lilly (LLY) to acquire Sigilon Therapeutics for a purchase price of $14.92 per share in cash + CVR

• Visa ( V ▴ 0.27% ) acquires Pismo, a cloud-native issuer processing and core banking platform with operations in Latin America, Asia Pacific and Europe, for $1 bln in cash

Syndicate:

• Black Diamond Therapeutics ( BDTX 0.00% ) announces proposed public offering of $75.0 million of common stock

• Centrus Energy ( LEU ▴ 3.75% ) files for $200 mln mixed shelf securities offering

• Cormedix ( CRMD 0.00% ) prices $40 mln offering of common stock and pre-funded warrants

• GSI Technology ( GSIT 0.00% ) files for $100 mln mixed shelf securities offering

• Lyra Therapeutics ( LYRA 0.00% ) files for 21,967,353 shares of common stock by selling shareholders

• Navigator Holdings ( NVGS ▾ 0.23% ) files for 42,558,858 shares of common stock by selling shareholders

• Nextracker ( NXT 0.00% ) prices offering of 16.5 mln shares of common stock at $36.50 per share

• Ur-Energy ( URG ▴ 0.98% ) files $175 mln mixed shelf securities offering

IPOs:

• IPOs Expected to Price:

  • Fidelis Insurance (NYSE: FIHL): The global reinsurance company with operations in Bermuda, Irelands, and the UK is expected to price its 17.0 M share IPO between $16-$19.

• Priced to Trade:

  • Kodiak Services (NYSE: KGS): The leading operator of contract compression infrastructure in the United States priced its 16.0 M share IPO at $16, below the $19-$22 expected range.

  • Savers Value Village (NYSE: SVV): The largest for-profit thrift operator in the United States and Canada priced its 18.75 M share IPO at $18, above the $15-$17 expected range.

Gapping Up/Down

• Gapping up:

  • BB +15.2%, OSTK +10.8%, FC +6.2%, MU +3.8%, WOR +3.8%, LITB +3.2%, LYRA +2.8%, CLCO +2.1%, PLCE +2%, BK +2%, WFC +2%, IHS +2%, SCHW +1.8%, WDC +1.7%, STT +1.7%, NTRS +1.4%, USB +1.3%, GS +1.3%, MS +1.3%, JPM +1.2%, BAC +1.1%, OXY +1.1%, URG +1%, NXT +1%, STX +0.7%

• Gapping down:

  • BTAI -30.8%, CRMD -20.7%, BDTX -9.4%, CNXC -7.2%, ALVO -6.7%, LOCO -5.5%, SENEA -5.4%, ASH -4.1%, FUL -2.5%, CFG -2.2%, MNOV -2.2%, MSM -2%, GSIT -1.7%, TSP -1.7%

Analyst Research (see Upgrades/Downgrades calendar for full list):

• Upgrades

  • FREYR Battery (FREY) upgraded to Overweight from Equal-Weight at Morgan Stanley; tgt $13

  • Intercept Pharma (ICPT) upgraded to Buy from Hold at Canaccord Genuity; tgt raised to $18

  • Toyota Motor (TM) upgraded to Buy from Neutral at Citigroup

• Downgrades:

  • Ashland (ASH) downgraded to In-line from Outperform at Evercore ISI

  • Citizens Financial Serv. (CZFS) downgraded to Neutral from Buy at Janney

  • Pfizer (PFE) downgraded to Neutral from Outperform at Credit Suisse; tgt lowered to $40

  • RH (RH) downgraded to Hold from Buy at Loop Capital; tgt $300

  • Wish (WISH) downgraded to Sell from Hold at Loop Capital; tgt lowered to $6

• Others:

  • Banco Latinoamer (BLX) initiated with an Overweight at Barclays; tgt $32

  • Establishment Labs (ESTA) initiated with a Buy at Citigroup; tgt $79

  • Gold Royalty (GROY) initiated with a Sector Outperform at Scotiabank; tgt $3

  • Mister Car Wash (MCW) initiated with a Buy at Guggenheim; tgt $11

  • Tenaris (TS) initiated with a Buy at Jefferies; tgt $41.80

  • Wingstop (WING) initiated with a Neutral at Guggenheim

Econ Data:

• 08:30 ET: Initial Claims for June 24 (Briefing.com Consensus 266K; Prior 264K)

• 08:30 ET: Continuing Claims for June 17 (Briefing.com Consensus NA; Prior 1759 K)

• 08:30 ET: GDP - Third Estimate for Q1 (Briefing.com Consensus 1.3%; Prior 1.3%)

• 08:30 ET: GDP Deflator - Third Estimate for Q1 (Briefing.com Consensus 4.2%; Prior 4.2%)

• 10:00 ET: Pending Home Sales for May (Briefing.com Consensus -0.8%; Prior 0.0%)

• 10:30 ET: EIA Natural Gas Inventories for June 24 (Briefing.com Consensus NA; Prior +95 bcf)

Earnings:

• Monday (Jun 26)

  • Morning: CCL

• Tuesday (Jun 27)

  • Morning: KFY SCHN SNX WBA

  • Afternoon: AVAV JEF

• Wednesday (Jun 28)

  • Morning: GIS UNF

  • Afternoon: BB CNXC FUL MU WOR

• Thursday (Jun 29)

  • Morning: AYI GBX LNN MKC MSM PAYX RAD SMPL

  • Afternoon: ACCD NKE PRGS SGH

• Friday (Jun 30)

  • Morning: STZ

Asia & Europe detail:

Asia: Nikkei +0.1%, Hang Seng -1.2%, Shanghai Composite -0.2%

Equity indices in the Asia-Pacific region ended Thursday on a mostly lower note while markets in Singapore and India were closed for holidays. Japan and South Korea are reportedly close to completing a bilateral currency swap deal. New Zealand and China signed several agreements aimed at improving trade.

• In economic data:

  • Japan's May Retail Sales 5.7% yr/yr (expected 5.4%; last 5.1%) and Large Retailers' Sales 1.3% m/m (expected -0.2%; last -1.1%). June Household Confidence 36.2, as expected (last 36.0)

  • South Korea's July Manufacturing BSI Index 69 (expected 71; last 70)

  • Australia's May Retail Sales 0.7% m/m (expected 0.1%; last 0.0%)

  • New Zealand's June ANZ Business Confidence -18.0 (expected -28.1; last -31.1)

---Equity Markets---

• Japan's Nikkei: +0.1%

• Hong Kong's Hang Seng: -1.2%

• China's Shanghai Composite: -0.2%

• India's Sensex: CLOSED

• South Korea's Kospi: -0.6%

• Australia's ASX All Ordinaries: +0.1%

---FX---

• USD/JPY: -0.1% to 144.21

• USD/CNH: +0.1% to 7.2486

• USD/INR: UNCH at 81.98

Europe: DAX +0.3%, FTSE -0.2%, CAC +0.8%

Major European indices trade on a mostly higher note while the U.K.'s FTSE (-0.2%) lags. European Central Bank policymaker Stournaras said that it is too early to say what the governing council will do in September despite rising expectations that the central bank will hike again that month. Bank of England Governor Bailey acknowledged the persistence of inflation, adding that the domestic economy has been more resilient than expected. Renault raised its operating margin guidance for FY23.

• In economic data:

  • Eurozone's June Business and Consumer Survey 95.3 (expected 96.0; last 96.4)

  • U.K.'s May BoE Consumer Credit GBP1.144 bln (expected GBP1.500 bln; last GBP1.513 bln). May Mortgage Approvals 50,520 (expected 48,750; last 49,020) and May Mortgage Lending -GBP90 mln (expected GBP120 mln; last -GBP1.47 bln)

  • Spain's June CPI 0.6% m/m (expected 0.2%; last 0.0%); 1.9% yr/yr (expected 1.7%; last 3.2%)

---Equity Markets---

• STOXX Europe 600: +0.3%

• Germany's DAX: +0.3%

• U.K.'s FTSE 100: -0.2%

• France's CAC 40: +0.8%

• Italy's FTSE MIB: +1.0%

• Spain's IBEX 35: +0.4%

---FX---

• EUR/USD: +0.2% to 1.0933

• GBP/USD: +0.1% to 1.2656

• USD/CHF: -0.2% to 0.8948