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30/03/22 Briefing


The S&P 500 futures trade five points, or 0.1%, below fair value as the market takes a breather amid tempered hopes for a ceasefire.

Russia has refuted a breakthrough in talks with Ukraine, reportedly continuing its attacks near Kyiv despite promising to reduce military operations, according to Bloomberg. Foreign policy analysts have said that Russia is employing a tactical shift to focus on two eastern provinces.

The market, though, doesn't seem too concerned about that situation right now based on the slightly negative bias in the futures market. It appears more likely that the futures market is taking a pause after the S&P 500 rallied 11.0% since March 14.

At the individual stock level, Micron (MU 85.35, +3.30, +4.0%) and lululemon athletica (LULU 369.34, +25.37, +7.4%) are standing out with 4% and 7% gains, respectively, after beating EPS estimates and providing upside guidance.

On the data front, investors will receive the ADP Employment Change report for March (Briefing.comconsensus 440,000) at 8:15 a.m. ETand the third estimate for Q4 GDP (Briefing.comconsensus 7.1%) at 8:30 a.m. ET. The weekly MBA Mortgage Applications Index fell 6.8% following an 8.1% decline in the prior week.

The Treasury yield curve is widening a bit after a brief inversion of the 2s10s spread yesterday. The 2-yr yield is down two basis points to 2.33% while the 10-yr yield is up one basis point to 2.41%. The U.S. Dollar Index is down 0.5% to 97.88. WTI crude is up 2.4% to $106.69/bbl amid expectations for OPEC+ to maintain current output for May.

In U.S. Corporate news:

  • Micron (MU 85.35, +3.30): +4.0% after beating top and bottom-line estimates and guiding Q3 EPS and revenue above consensus.

  • lululemon athletica (LULU 369.34, +25.37): +7.4% after beating EPS estimates, issuing upside EPS/revenue guidance for fiscal Q1 and FY22, and authorizing a $1 billion stock repurchase program.

  • Five Below (FIVE 166.00, -5.39): -3.1% after guiding EPS and revenue for Q1 and FY23 below consensus.

  • Chewy (CHWY 43.85, -7.15): -14.0% after missing top and bottom-line estimates and guiding revenue for Q1 and FY23 below consensus.

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region ended the midweek session on a mostly higher note. Japan's Nikkei: -0.8% Hong Kong's Hang Seng: +1.4% China's Shanghai Composite: +2.0% India's Sensex: +1.3% South Korea's Kospi: +0.2% Australia's ASX All Ordinaries: +0.7%.

  • In economic data:

  • Japan's February Retail Sales -0.8% yr/yr (expected -0.3%; last 1.1%)

  • New Zealand's February Building Consents 10.5% m/m (last -8.7%). March ANZ Business Confidence -41.9 (last -51.8)


  • In news:

  • The Bank of Japan continued buying JGBs ahead of tomorrow's end of the fiscal year.

  • China Securities Journal reported that Chinese companies have forecast an improvement in profits for Q1.

  • Developer Evergrande is reportedly planning another asset sale.

  • Australia is reportedly nearing a free trade agreement with India.

  • Australia is planning to sell AUD125 bln in debt during FY22/23, up from AUD100 bln sold a year ago.



  • Major European indices trade on a mostly lower note with Germany's DAX (-1.4%) showing relative weakness. STOXX Europe 600: -0.6% Germany's DAX: -1.4% U.K.'s FTSE 100: UNCH France's CAC 40: -0.9% Italy's FTSE MIB: -0.3% Spain's IBEX 35: -0.7%.

  • In economic data:

  • Eurozone's March Business and Consumer Survey 108.5 (expected 109.0; last 113.9)

  • Italy's January Industrial Sales 2.3% m/m (last -2.0%); 16.9% yr/yr (last 14.5%). February PPI 0.4% m/m (last 9.7%); 32.8% yr/yr (last 32.9%)

  • Spain's March CPI 3.0% m/m (expected 1.3%; last 0.8%); 9.8% yr/yr (expected 8.0%; last 7.6%). March Business Confidence 5.3 (last 10.0)

  • Swiss March KOF Leading Indicators 99.7 (expected 100.8; last 105.3). March ZEW Expectations -27.8 (last 9.0)


  • In news:

  • European Central Bank President Lagarde said that inflation is expected to accelerate in the short term and that households have become more pessimistic. She also claimed that the economic consequences could be mitigated with the right response.

  • European Central Bank policymaker Kazimir said that the first rate hike could take place by the end of the year.

  • Germany has activated the early warning phase of its gas emergency law as the potential for shortages grows due to Germany's refusal to pay for deliveries from Russia in rubles.




U.S. equity futures:

  • S&P 500 Futures: -11 @ 4,620

  • DJIA Futures: -81 @ 35,213

  • Nasdaq 100 Futures: -53 @ 15,186

Overseas:

  • Europe: DAX -1.4%, FTSE UNCH, CAC -0.9%

  • Asia: Nikkei -0.8%, Hang Seng +1.4%, Shanghai Composite +2.0%

Commodities:

  • Crude Oil +2.45 @ 106.69

  • Nat Gas +0.015 @ 5.345

  • Gold +11.40 @ 1923.60

  • Silver +0.324 @ 25.060

  • Copper +0.0375 @ 4.7685

U.S. Summary:

  • Earnings/Guidance (Full Earnings Calendar):

  • AerCap (AER) misses by $0.57, beats on revs

  • BioNTech (BNTX) beats by $5.03, beats on revs; reaffirms FY22 COVID-19 vaccine revenues

  • Cal-Maine Foods (CALM) misses by $0.02, beats on revs

  • Chewy (CHWY) misses by $0.07, misses on revs, auto-ship sales increased 21.2%; guides Q1 revs below consensus; guides FY23 revs below consensus

  • Concentrix (CNXC) beats by $0.14, revs in-line; guides MayQ revs in-line; guides FY22 revs in-line

  • Five Below (FIVE) beats by $0.01, reports revs in-line; guides Q1 EPS below consensus, revs below consensus; guides FY23 EPS below consensus, revs below consensus

  • lululemon athletica (LULU) beats by $0.10, reports revs in-line; guides AprQ EPS and revs above consensus; guides FY22 EPS and revs above consensus; authorizes $1 bln stock repurchase program

  • Lyell Immunopharma (LYEL) reports Q4 revenue growth of 22% yr/yr to $2.8 mln; cash and cash equivalents totals $898 mln supporting the advancement of its multi-modality cell therapy pipeline

  • Micron (MU) beats by $0.16, beats on revs; guides Q3 EPS above consensus, revs above consensus

  • Microvast (MVST) reports Q4 results; grew revs 38.9% yr/yr to $66.8 mln; expects FY22 revenue growth of +35-45% yr/yr

  • MillerKnoll (MLKN) beats by $0.01, reports revs in-line; guides MayQ EPS above consensus, revs above consensus

  • MSC Industrial (MSM) beats by $0.06, reports revs in-line

  • Progress Software (PRGS) beats by $0.12, beats on revs; guides MayQ EPS above estimate, revs above estimate; guides FY22 EPS above estimate, revs in-line

  • PVH (PVH) beats by $0.84, beats on revs; guides Q1 EPS below consensus, revs below consensus; guides FY23 EPS below consensus, revs below consensus

  • Rent-A-Center (RCII) reaffirms guidance for 1Q22 and FY22, announces management change

  • RH (RH) beats by $0.07, misses on revs; guides AprQ revs above consensus; guides FY23 revs below consensus

  • SomaLogic (SLGC) reports Q4 revenue growth of 46% yr/yr to $23.0 mln; reiterates FY22 revenue guidance of $105-110 mln, representing +29-35% growth yr/yr

  • Sportsman's Warehouse (SPWH) beats by $0.03, beats on revs, comps -10.8%; guides Q1 EPS above consensus, revs above consensus

  • Verint Systems (VRNT) beats by $0.02, beats on revs; guides FY23 EPS in-line, revs in-line; expects +10% rev growth in FY24


  • General News:

  • Western leaders were skeptical of Russia's promise to scale back military offensive on Kyiv, while other foreign policy analysts called the promises a "tactical ploy", according to the New York Times

  • Department of Defense says "The Russians have said they are withdrawing forces from around Ukraine's capital city of Kyiv, and so far, reports show that some - but not many - Russian forces have indeed moved away"

  • Russia says there has "no breakthrough" in talks with Ukraine as attacks continued near Kyiv despite Russian promises, according to Bloomberg

  • Germany might have to ration natural gas amid Russian dispute, CNBC

  • China critical of western sanctions against Russia for Ukraine war, according to Reuters

  • Chinese foreign minister Wang Yi says country is more willing to increase cooperation with Russia, according to Reuters

  • EU Commission announces new proposals to make sustainable products the norm and boost Europe's resource independence

  • OPEC+ is expected to keep with May output levels, according to Bloomberg

  • Senator Joe Manchin (D-WV) says he will not support President Biden's proposal for 20% minimum tax on billionaires that was part of his budget, according to The Hill

  • 21 states file lawsuit to end mask mandate on airplanes and public transportation, according to the Wall Street Journal

  • CDC recommends additional boosters for certain individuals

  • Australia will introduce new cyber security law, according to Financial Times

  • 3D Systems (DDD) signs agreement to create joint venture with Dussur for expansion of additive manufacturing in Saudi Arabia

  • Adagio Therapeutics (ADGI) announces ADG20 (adintrevimab) is the first monoclonal antibody to meet primary endpoints with statistical significance across pre- and post-exposure prophylaxis and treatment for COVID-19 and plans to seek US emergency use authorization

  • Ampco-Pittsburgh Corp. (AP) is exploring possibility of obtaining incremental capital

  • Apple (AAPL): UK CMA announces timetable for App Store investigation; says "Further investigation including information gathering, CMA analysis and review" will take place between March and October 2022

  • Array Tech (ARRY) concludes that certain periods should not relied upon due to error

  • Biogen (BIIB) submits final protocol for ADUHELM phase 4 envision trial to FDA

  • Cal-Maine Foods (CALM) announces that its Board of Directors has approved new capital projects to further expand the Company's cage-free egg production capabilities

  • Castle Biosciences (CSTL) granted Advanced Diagnostic Laboratory Test status by Centers for Medicare & Medicaid Services for the TissueCypher Barrett's Esophagus test, effective March 24

  • Crane (CR) announces intention to separate into two independent, publicly traded companies

  • CureVac (CVAC) and GlaxoSmithKline (GSK) to develop second-gen COVID-19 vaccine candidate, CV2CoV

  • Eldorado Gold (EGO) Announces High-Grade Extensions to Mineralized Zones at Ormaque, Olympias and Efemcukuru; Provides Details on Global Exploration Programs for 2022

  • Gold Royalty (GROY) Enters into Additional Royalty Financing Agreement with Monarch Mining Corporation

  • Greenbrier (GBX) announces that President and CEO, Lorie Tekorius, has been elected to its Board of Directors

  • Meta Financial (CASH) plans name change to "Pathward Financial"

  • Norfolk Southern (NSC) authorizes new $10 bln stock repurchase program

  • Nurix Therapeutics (NRIX) awarded Innovation Passport designation for NX-1607 by the UK MHRA

  • Quanterix (QTRX) partners with Alzheimer's Drug Discovery Foundation to accelerate development of multi-analyte plasma test for early detection of Alzheimer's disease

  • Replimune (REPL) provides new clinical data, broad program update and future development strategy for its tumor-directed oncolytic immunotherapies

  • RH (RH) announces intention to execute 3-for-1 stock split; Chairman & CEO announces intention to exercise expiring IPO stock options

  • Romeo Power (RMO) announces shipment of first pedigree packs to key customer

  • Sunlight Financial (SUNL) appoints Rodney Yoder to CFO position, effective April 1

  • Taiwan Semi (TSM) believes demand for smartphones and PCs is starting to slowdown, according to Digitimes

  • UBS AG (UBS) announces launch of new share repurchase program of up to USD 6 bln

  • WeWork (WE) appoints CEO Sandeep Mathrani to role of Chairman


  • M&A:

  • Abcam (ABCM) files mixed securities shelf offering

  • HealthStream (HSTM) files for $200 mln common stock offering; also files for $50 mln common stock offering by selling shareholders

  • High Tide (HITI) to acquire Bud Heaven, adding two established retail cannabis stores in Ontario

  • Kinross Gold (KGC) to divest Russian assets

  • Newmont Goldcorp (NEM) to acquire properties to support land use planning in Tahltan territory

  • Seacoast Banking (SBCF) acquires Apollo Bancshares

  • Titan Intl (TWI) divests its Australian Wheel Business


  • Syndicate:

  • Geron (GERN) announces public offering of common stock and warrants; amount not indicated

  • Hess Midstream Partners (HESM) commences secondary public offering of 7.9 mln Class A shares by selling shareholders; signs accretive $400 mln sponsor unit repurchase agreement

  • IGM Biosciences (IGMS) prices offering of 8,695,653 shares of its non-voting common stock at $23.00 per share

  • Northwest Natural (NWN) prices offering of 2.5 mln shares of common stock at $50.00 per share

  • Quantum (QMCO) commences previously announced rights offering to raise proceeds of up to $67.5 mln

  • The Valens Company (VLNS) files for $150 mln mixed securities shelf offering

  • UDR (UDR) announces public offering of 7.0 mln shares of common stock with forward sale agreements


  • IPOs:

  • Expected to Price:

  • No IPOs expected to price.



Gapping Up/Down

  • Gapping up:

  • HLTH +11.8%, VIR +11.2%, MLKN +9.6%, LULU+7.2%, RMO +6.4%, MU +3.5%, CSTL +3%, QTRX+3%, SUNL +2.9%, WE +2.7%, BNTX +2.7%, NSC+2.6%, PRGS +2.1%, VRNT +1.8%, TWI +1.7%, CR+1.7%, FSR +1.1%, SLGC +1%, RCII +0.5%


  • Gapping down:

  • GERN -19.5%, VLNS -14.2%, CHWY -13.9%, IGMS-11.8%, MVST -10.1%, NWN -6.2%, MTDR -3.9%, LYEL -3.1%, HESM -3%, RH -1.9%, CALM -1.8%, PVH -1.6%, ARRY -1.5%, UDR -1.2%, SPWH -1.2%, KGC -0.7%


Analyst Research (see Upgrades/Downgradescalendarfor full list):

  • Upgrades

  • Beacon Roofing Supply (BECN) upgraded to Neutral from Underweight at JP Morgan; tgt $68

  • Freshpet (FRPT) upgraded to Buy from Neutral at Goldman; tgt raised to $136

  • HF Sinclair (DINO) upgraded to Neutral from Sell at Goldman; tgt raised to $43


  • Downgrades:

  • Banco Santander Mexico (BSMX) downgraded to Neutral from Overweight at JP Morgan; tgt $6

  • BNY Mellon (BK) downgraded to Neutral from Buy at Goldman; tgt lowered to $60


  • Others:

  • ABM Industries (ABM) initiated with a Buy at Deutsche Bank; tgt $62

  • Advantage Solutions (ADV) initiated with a Hold at Deutsche Bank; tgt $7

  • Agilon Health (AGL) initiated with a Buy at Guggenheim; tgt $32

  • Aramark (ARMK) initiated with a Hold at Deutsche Bank; tgt $38

  • Beyond Meat (BYND) initiated with a Neutral at UBS; tgt $48

  • Campbell Soup (CPB) initiated with a Sell at UBS; tgt $42

  • Carnival (CCL) initiated with an Underweight at Wells Fargo; tgt $21

  • Cintas (CTAS) initiated with a Buy at Deutsche Bank; tgt $517

  • Clean Harbors (CLH) initiated with a Buy at DA Davidson; tgt $130

  • Conagra (CAG) initiated with a Neutral at UBS; tgt $34

  • Coursera (COUR) initiated with an Overweight at Cantor Fitzgerald; tgt $30

  • Dun & Bradstreet (DNB) initiated with a Hold at Deutsche Bank; tgt $20

  • Equifax (EFX) initiated with a Hold at Deutsche Bank; tgt $265

  • Evolent Health (EVH) initiated with a Buy at Guggenheim; tgt $43

  • FactSet (FDS) initiated with a Hold at Deutsche Bank; tgt $453

  • FirstService (FSV) initiated with a Hold at Deutsche Bank; tgt $143

  • General Mills (GIS) initiated with a Neutral at UBS; tgt $69

  • Hershey Foods (HSY) initiated with a Neutral at UBS; tgt $226

  • J.M. Smucker (SJM) initiated with a Sell at UBS; tgt $123

  • Kellogg (K) initiated with a Buy at UBS; tgt $73

  • Kraft Heinz (KHC) initiated with a Neutral at UBS; tgt $40

  • Mondelez Int'l (MDLZ) initiated with a Buy at UBS; tgt $73

  • Moody's (MCO) initiated with a Buy at Deutsche Bank; tgt $408

  • MSCI (MSCI) initiated with a Hold at Deutsche Bank; tgt $533

  • Nomad Foods (NOMD) initiated with a Buy at UBS; tgt $26

  • Open Lending (LPRO) initiated with a Hold at Deutsche Bank; tgt $25

  • S&P Global (SPGI) initiated with a Buy at Deutsche Bank; tgt $515

  • Simply Good Foods (SMPL) initiated with a Buy at UBS; tgt $44

  • Sovos Brands (SOVO) initiated with a Buy at UBS; tgt $16

  • TransUnion (TRU) initiated with a Buy at Deutsche Bank; tgt $124

  • Verisk Analytics (VRSK) initiated with a Buy at Deutsche Bank; tgt $255

  • Verra Mobility (VRRM) initiated with a Hold at Deutsche Bank; tgt $17

  • WillScot Mobile Mini (WSC) initiated with a Buy at Deutsche Bank; tgt $49


Upcoming Events:

  • Econ Data:

  • 07:00 ET: MBA Mortgage Applications Index for Mar. 26 (Briefing.comConsensus NA; Prior -8.1%)

  • 08:15 ET: ADP Employment Change for Mar. (Briefing.comConsensus 440K; Prior 475K)

  • 08:30 ET: GDP - Third Estimate for Q4 (Briefing.comConsensus 7.1%; Prior 7.0%)

  • 08:30 ET: GDP Deflator - Third Estimate for Q4 (Briefing.comConsensus 7.1%; Prior 7.1%)

  • 10:30 ET: EIA Crude Oil Inventories for Mar. 26 (Briefing.comConsensus NA; Prior +2.51M)


  • 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 -0.8%, Hang Seng +1.4%, Shanghai Composite +2.0%

Equity indices in the Asia-Pacific region ended the midweek session on a mostly higher note. The Bank of Japan continued buying JGBs ahead of tomorrow's end of the fiscal year. China Securities Journal reported that Chinese companies have forecast an improvement in profits for Q1. Developer Evergrande is reportedly planning another asset sale. Australia is reportedly nearing a free trade agreement with India. Australia is planning to sell AUD125 bln in debt during FY22/23, up from AUD100 bln sold a year ago.

  • In economic data:

  • Japan's February Retail Sales -0.8% yr/yr (expected -0.3%; last 1.1%)

  • New Zealand's February Building Consents 10.5% m/m (last -8.7%). March ANZ Business Confidence -41.9 (last -51.8)


---Equity Markets---

  • Japan's Nikkei: -0.8%

  • Hong Kong's Hang Seng: +1.4%

  • China's Shanghai Composite: +2.0%

  • India's Sensex: +1.3%

  • South Korea's Kospi: +0.2%

  • Australia's ASX All Ordinaries: +0.7%

---FX---

  • USD/JPY: -0.9% to 121.79

  • USD/CNH: -0.2% to 6.3605

  • USD/INR: +0.4% to 75.92

Europe: DAX -1.4%, FTSE UNCH, CAC -0.9%

Major European indices trade on a mostly lower note with Germany's DAX (-1.4%) showing relative weakness. European Central Bank President Lagarde said that inflation is expected to accelerate in the short term and that households have become more pessimistic. She also claimed that the economic consequences could be mitigated with the right response. European Central Bank policymaker Kazimir said that the first rate hike could take place by the end of the year. Germany has activated the early warning phase of its gas emergency law as the potential for shortages grows due to Germany's refusal to pay for deliveries from Russia in rubles.

  • In economic data:

  • Eurozone's March Business and Consumer Survey 108.5 (expected 109.0; last 113.9)

  • Italy's January Industrial Sales 2.3% m/m (last -2.0%); 16.9% yr/yr (last 14.5%). February PPI 0.4% m/m (last 9.7%); 32.8% yr/yr (last 32.9%)

  • Spain's March CPI 3.0% m/m (expected 1.3%; last 0.8%); 9.8% yr/yr (expected 8.0%; last 7.6%). March Business Confidence 5.3 (last 10.0)

  • Swiss March KOF Leading Indicators 99.7 (expected 100.8; last 105.3). March ZEW Expectations -27.8 (last 9.0)


---Equity Markets---

  • STOXX Europe 600: -0.6%

  • Germany's DAX: -1.4%

  • U.K.'s FTSE 100: UNCH

  • France's CAC 40: -0.9%

  • Italy's FTSE MIB: -0.3%

  • Spain's IBEX 35: -0.7%

---FX---

  • EUR/USD: +0.5% to 1.1135

  • GBP/USD: +0.4% to 1.3153

  • USD/CHF: -0.5% to 0.9263

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