30/05/23 Briefing

The S&P 500 futures are up 24 points and are trading 0.6% above fair value. The Nasdaq 100 futures are up 195 points and are trading 1.4% above fair value. The Dow Jones Industrial Average futures are down 14 points and are trading slightly below fair value.

Stock futures have been mixed this morning following news over the weekend that President Biden and House Speaker McCarthy reached a debt ceiling deal; however, market participants are now waiting to see if the debt ceiling agreement will pass in both chambers of Congress.

Strength in the mega cap stocks, which are getting an added boost from falling market rates, has been supportive of the S&P 500 and Nasdaq 100 futures. The S&P 500 closing above 4,200 last Friday has been another supportive factor.

The 2-yr Treasury note yield is down five basis points to 4.51% and the 10-yr note yield is down nine basis points to 3.72%. 

Market participants will receive the following economic data today:

• March FHFA Housing Price Index (prior 0.5%) and March S&P Case-Shiller Home Price Index (prior 0.4%) at 9:00 ET

• May Consumer Confidence (prior 101.3) at 10:00 ET

In corporate news:

• Ford (F 12.46, +0.37, +3.1%): upgraded to Buy from Hold at Jefferies

• Iovance Biotherapeutics (IOVA 9.13, +1.58, +20.9%): received FDA Acceptance of BLA for Lifileucel

• Boston Beer (SAM 322.35, +4.50, +1.4%): upgraded to Buy from Neutral at Roth

• Kenvue (KVUE 26.59, +0.29, +1.1%): JPMorgan initiated coverage with an Overweight rating

• NVIDIA (NVDA 404.20, +14.74, +3.8%): announces DGX GH200 AI Supercomputer and several other product updates

• Disney (DIS 88.58, +0.29, +0.3%):  "The Little Mermaid" brought in $117.5 million at US box office over Memorial Day weekend, according to CNN

• Coinbase Global (COIN 59.30, +2.42, +4.3%): upgraded to Overweight from Neutral at Atlantic Equities

Reviewing overnight developments:

• Equity indices in the Asia-Pacific region ended Tuesday on a modestly higher note. Japan's Nikkei: +0.3%, Hong Kong's Hang Seng: +0.2%, China's Shanghai Composite: +0.1%, India's Sensex: +0.2%, South Korea's Kospi: +1.0%, Australia's ASX All Ordinaries: -0.1%.

  • In economic data:

    • Japan's April jobs/applications ratio 1.32, as expected (last 1.32). April Unemployment Rate 2.6% (expected 2.7%; last 2.8%)

    • Australia's April Building Approvals -8.1% m/m (expected 2.0%; last -1.0%) and Private House Approvals -3.8% m/m (last -3.7%)

    • New Zealand's April Building Consents -2.6% m/m (expected 1.6%; last 6.6%)

  • In news:

    • Bank of Japan Governor Ueda said that the Japan has not yet reached sustainable 2.0% inflation.

    • Softbank will build AI data centers in Japan with equipment from NVIDIA.

    • China rejected an invitation from the U.S. for a meeting of defense chiefs in Singapore.

    • Mitsubishi will reportedly keep its plant in China closed past May due to weak demand.

• Major European indices trade in mixed fashion. STOXX Europe 600: UNCH, Germany's DAX: +0.5%, U.K.'s FTSE 100: -0.7%, France's CAC 40: -0.5%, Italy's FTSE MIB: +0.4%, Spain's IBEX 35: +0.3%.

  • In economic data:

    • Eurozone's May Business and Consumer Survey 96.5 (expected 99.9; last 99.0). April Private Sector Loans 2.5% yr/yr (expected 2.7%; last 2.9%) and loans to nonfinancial corporations 4.6% yr/yr (expected 4.7%; last 5.2%)

    • Italy's April PPI -4.8% m/m (expected 0.5%; last -1.5%); -1.5% yr/yr (expected -4.0%; last 3.7%). March Industrial Sales -0.3% m/m (expected 0.1%; last 1.3%); 4.3% yr/yr (expected 13.0%; last 7.2%)

    • Spain's April Retail Sales 5.5% m/m (expected 0.7%; last 9.9%). May CPI -0.1% m/m (expected 0.9%; last 0.6%); 3.2% yr/yr (expected 4.4%; last 4.1%)

    • Swiss Q1 GDP 0.3% qtr/qtr (expected 0.1%; last 0.0%); 0.6% yr/yr, as expected (last 0.7%). May KOF Leading Indicators 90.2 (expected 95.0; last 96.1)

  • In news:

    • European Central Bank policymaker Wunsch said that more rate hikes may be needed since real rates are still low while policymaker de Cos said that while there is more tightening to do, the ECB is getting close to the end of the hiking cycle.

U.S. equity futures:

• S&P 500 Futures: +22 @ 4,228

• DJIA Futures: -22 @ 33,071

• Nasdaq 100 Futures: +183 @ 14,481

Overseas:

• Europe: DAX +0.5%, FTSE -0.7%, CAC -0.5%

• Asia: Nikkei +0.3%, Hang Seng +0.2%, Shanghai Composite +0.1%

Commodities:

• Crude Oil -0.75 @ 71.92

• Nat Gas -0.063 @ 2.354

• Gold +14.15 @ 1977.25

• Silver -0.12 @ 23.348

• Copper -0.0008 @ 3.6812

Earnings/Guidance:

• Crescent Point Energy (CPG) provides update on Alberta wildfires; reaffirms FY23 guidance

• Golar LNG (GLNG) reports Q1 results; beats on revs

• Skyline Champion (SKY) beats by $0.07, misses on revs

• Toyota Motor (TM) reports April worldwide sales -4.8% yr/yr to 875,363 units

News:

• President Biden and House Republicans reach two-year debt ceiling/spending cap deal; House to vote on Wednesday night; Senate will vote over the weekend; leaders confident bill will pass

• Russia launches missile attack on Kyiv. Moscow was targeted with 8 drone strikes, according to the New York Times

• Janet Yellen estimates that Treasury will have insufficient resources to satisfy obligations if Congress has not raised or suspended the debt limit by June 5

• Memorial Day weekend travel hits pre-pandemic levels, according to NBC News

• Chinese President Xi will give more education system more global influence, according to Bloomberg

• Casinos are adjusting rules and limits on table games to make additional profit, according to the Wall Street Journal

• President Recep Tayyip Erdogan wins election in Turkey, according to the New York Times

• Akebia Therapeutics (AKBA): FDA provides Akebia Therapeutics a path forward for Vadadustat

• Apple (AAPL), Fox (FOXA), and Netflix (NFLX) could bid for NBA rights, according to Bloomberg

• Baytex Energy Trust (BTE) brought back onstream the full 24,000 boe/d of production that was shut-in as a result of the Alberta wildfires

• BeiGene (BGNE) announces that BRUKINSA has been approved by Health Canada for the treatment of adult patients with chronic lymphocytic leukemia

• Boeing (BA): A Chinese made airplane hoping to complete with Boeing and Airbus (EADSY) made its first flight, according to Bloomberg

• Boeing (BA) attempting to secure Saudi 737 deal, according to Bloomberg

• Boeing (BA): Cathay Pacific Airways could soon purchase Boeing 777-8F freighters for $2 bln, according to Reuters

• Bristol-Myers (BMY) announced FDA has accepted the New Drug Application (NDA) for repotrectinib

• C4 Therapeutics (CCCC) and Betta Pharmaceuticals announced an exclusive licensing agreement for the development and commercialization of CFT8919 in Greater China

• Coherent (COHR) details May 2023 Restructuring Plan

• Constellation Energy (CEG) puts "pink hydrogen" plan on hold, according to Bloomberg

• Disney's (DIS) "The Little Mermaid" brought in $117.5 million at US box office over Memorial Day weekend, according to CNN

• Emergent BioSolutions (EBS) received a contract modification from the Office of the Assistant Secretary for Preparedness and Response

• Gap (GPS): Old Navy store to close in San Francisco due to crime problems, according to the New York Post

• General Motors (GM) and POSCO (PKX) Future M Welcome Qubec and Canada Government support for Bcancour CAM project to develop the EV Battery Supply Chain in North America

• Iovance Biotherapeutics (IOVA) received FDA Acceptance of BLA for Lifileucel

• Lexicon (LXRX) announces FDA approval of INPEFA (sotagliflozin) for treatment of heart failure

• MagnaChip Semi (MX) announces plan to separate display and power businesses

• Micron (MU): Commerce Secretary Gina Raimondo says US "won't tolerate" Micron chip ban, according to Bloomberg

• Newell Brands (NWL) announces restructuring and savings initiative that is intended to simplify and streamline its North American distribution network

• New Pacific (NEWP) Intersects 205 Meters Grading 123 Grams Per Tonne Silver in Step-out Drilling at the Carangas Project, Bolivia

• NVIDIA (NVDA) announces DGX GH200 AI Supercomputer and several other product updates

• Petrobras (PBR) clarifies it is not participating in any coordinated action with Previ

• Pfizer (PFE) announces positive Marstacimab results from pivotal phase 3 hemophilia A and B trial

• Shopify (SHOP) nominates former Salesforce co-CEO Bret Taylor to join its board of directors

• Sonos (SONO) wins $32.5 mln patent case against Google (GOOG), according to Verge

• SpringWorks Therapeutics (SWTX) achieved full enrollment in its Phase 2 trial evaluating nirogacestat; expects to report initial data from the trial in 2024

• StoneCo (STNE) promotes Mateus Scherer as new CFO

• Super Micro Computer (SMCI) COMPUTEX keynote unveils company's Accelerate Everything Strategy for product innovation, manufacturing scale, and green technology

• Tesla (TSLA) CEO Elon Musk will visit China this week, according to Reuters

• Toyota Motor (TM) and Daimler Truck sign MOU on intention to combine businesses of Mitsubishi Fuso & Hino Motors and accelerating development of advanced technologies

• TransAlta (TAC) announces acceptance of normal course issuer bid in which company may purchase up to 14.0 mln shares of common stock

• Transdigm Group (TDG) COO to retire; promotes Mike Lisman and Joel Reiss as Co-COOs, names Sarah Wynne as CFO

• Unilever PLC (UL) CFO informs Board of retirement in May 2024

M&A:

• Activision Blizzard (ATVI): China approves Microsoft (MSFT) acquisition of ATVI

• Arlington Asset Investment (AAIC) to be acquired by Ellington Financial (EFC) for $4.77 per share

• Atea Pharmaceuticals (AVIR) Board of Directors unanimously rejects unsolicited proposal from Tang Capital Partners' affiliate, Concentra Biosciences

• JBT Corp (JBT) announced that it has entered into a definitive agreement to sell its AeroTech business to Oshkosh (OSK) in an all-cash transaction valued at $800 mln

• Stratasys (SSYS) Board of Directors unanimously rejects Nano Dimension's (NNDM) partial tender offer

• TotalEnergies SE (TTE) to divest its 50% stake in Surmont Oil Sands Asset to ConocoPhillips (COP) following exercise of its preemption right

Syndicate:

• Bicycle Therapeutics (BCYC) files mixed securities shelf offering

• Sempra Energy (SRE) files mixed shelf securities offering

• Stellar Bank (STEL) files mixed securities shelf offering

IPOs:

• Expected to Price: No IPOs expected.

Gapping Up/Down

• Gapping up:

  • LXRX +15.7%, IOVA +15%, COHR +8.3%, SMCI +4.4%, NVDA +3.4%, SHOP +2.1%, STNE +2%, JBLU +2%, NWL +1.6%, NFLX +1.5%, SONO +1.4%, BTE +1.2%, MU +1.1%, TDG +0.9%, UAL +0.8%, LUV +0.8%, SWTX +0.8%, GM +0.7%, AAL +0.7%, DAL +0.7%

• Gapping down:

  • NNDM -1.3%, UL -1.3%, ELP -0.9%, CPG -0.5%

Analyst Research (see Upgrades/Downgradescalendarfor full list):

• Upgrades

  • Alliant Energy (LNT) upgraded to Outperform from Market Perform at BMO Capital Markets; tgt lowered to $56

  • Boston Beer Co (SAM) upgraded to Buy from Neutral at ROTH MKM; tgt raised to $386

  • ChargePoint (CHPT) upgraded to Buy from Neutral at BofA Securities; tgt lowered to $14

  • Coinbase Global (COIN) upgraded to Overweight from Neutral at Atlantic Equities; tgt $70

  • Constellation Brands (STZ) upgraded to Buy from Neutral at ROTH MKM; tgt raised to $270

  • Equitrans Midstream (ETRN) upgraded to Outperform from Sector Perform at RBC Capital Mkts; tgt raised to $10

  • Ford Motor (F) upgraded to Buy from Hold at Jefferies; tgt raised to $16

  • HEICO (HEI) upgraded to Buy from Hold at Vertical Research; tgt $191

• Downgrades:

  • Millicom International Cellular (TIGO) downgraded to Equal Weight from Overweight at Barclays

• Others:

  • Confluent (CFLT) initiated with a Buy at Needham; tgt $35

  • CRISPR Therapeutics (CRSP) initiated with an Outperform at William Blair; tgt $75

  • Vertex Pharma (VRTX) initiated with an Outperform at William Blair; tgt $382

  • Viridian Therapeutics (VRDN) initiated with an Outperform at RBC Capital Mkts; tgt $44

Econ Data:

• 09:00 ET: FHFA Housing Price Index for Mar (Briefing.comConsensus NA; Prior 05%)

• 09:00 ET: S&P Case-Shiller Home Price Index for Mar (Briefing.comConsensus -2.3%; Prior 0.4%)

• 10:00 ET: Consumer Confidence for May (Briefing.comConsensus 99.5; Prior 101.3)

Earnings:

• Tuesday (May 30)

  • Morning: SKY

  • Afternoon:  AMBA BOX HPE HPQ SPWH

• Wednesday (May 31)

  • Morning:  AAP CAE CPRI DCI FRO

  • Afternoon:  AI CHWY CRDO CRWD DSGX NCNO NTAP JWN OKTA PHR PSTG PVH CRM VEEV VSCO

• Thursday (Jun 1)

  • Morning: BILI CAL CONN DG HRL M SPTN

  • Afternoon:  ASAN AVGO CHPT COO DELL ESTC FIVE GWRE LULU MDB PD S VMW ZS ZUMZ

Asia & Europe detail:

Asia: Nikkei +0.3%, Hang Seng +0.2%, Shanghai Composite +0.1%

Equity indices in the Asia-Pacific region ended Tuesday on a modestly higher note. Bank of Japan Governor Ueda said that the Japan has not yet reached sustainable 2.0% inflation. Softbank will build AI data centers in Japan with equipment from NVIDIA. China rejected an invitation from the U.S. for a meeting of defense chiefs in Singapore. Mitsubishi will reportedly keep its plant in China closed past May due to weak demand.

• In economic data:

  • Japan's April jobs/applications ratio 1.32, as expected (last 1.32). April Unemployment Rate 2.6% (expected 2.7%; last 2.8%)

  • Australia's April Building Approvals -8.1% m/m (expected 2.0%; last -1.0%) and Private House Approvals -3.8% m/m (last -3.7%)

  • New Zealand's April Building Consents -2.6% m/m (expected 1.6%; last 6.6%)

---Equity Markets---

• Japan's Nikkei: +0.3%

• Hong Kong's Hang Seng: +0.2%

• China's Shanghai Composite: +0.1%

• India's Sensex: +0.2%

• South Korea's Kospi: +1.0%

• Australia's ASX All Ordinaries: -0.1%

---FX---

• USD/JPY: -0.1% to 140.21

• USD/CNH: +0.1% to 7.0865

• USD/INR: +0.1% to 82.64

Europe: DAX +0.5%, FTSE -0.7%, CAC -0.5%

Major European indices trade in mixed fashion. European Central Bank policymaker Wunsch said that more rate hikes may be needed since real rates are still low while policymaker de Cos said that while there is more tightening to do, the ECB is getting close to the end of the hiking cycle.

• In economic data:

  • Eurozone's May Business and Consumer Survey 96.5 (expected 99.9; last 99.0). April Private Sector Loans 2.5% yr/yr (expected 2.7%; last 2.9%) and loans to nonfinancial corporations 4.6% yr/yr (expected 4.7%; last 5.2%)

  • Italy's April PPI -4.8% m/m (expected 0.5%; last -1.5%); -1.5% yr/yr (expected -4.0%; last 3.7%). March Industrial Sales -0.3% m/m (expected 0.1%; last 1.3%); 4.3% yr/yr (expected 13.0%; last 7.2%)

  • Spain's April Retail Sales 5.5% m/m (expected 0.7%; last 9.9%). May CPI -0.1% m/m (expected 0.9%; last 0.6%); 3.2% yr/yr (expected 4.4%; last 4.1%)

  • Swiss Q1 GDP 0.3% qtr/qtr (expected 0.1%; last 0.0%); 0.6% yr/yr, as expected (last 0.7%). May KOF Leading Indicators 90.2 (expected 95.0; last 96.1)

---Equity Markets---

• STOXX Europe 600: UNCH

• Germany's DAX: +0.5%

• U.K.'s FTSE 100: -0.7%

• France's CAC 40: -0.5%

• Italy's FTSE MIB: +0.4%

• Spain's IBEX 35: +0.3%

---FX---

• EUR/USD: +0.3% to 1.0735

• GBP/USD: +0.6% to 1.2425

• USD/CHF: -0.1% to 0.9023