Early Look

Tuesday, June 7, 2022

Futures	Up/Down	%	Last
Dow	-146.00	0.44%	32,766
S&P 500	-20.25	0.50%	4,099
Nasdaq	-89.50	0.71%	12,515

 

 

U.S. futures are lower as markets remain on edge amid inflation fears and rising rates ahead of several potential market moving catalysts this week and next. This Friday, we get the May consumer price index (CPI), which has slowly dipped off 40-year highs, while several central banks are out with policy meetings this week, expected to raise rates. Overnight, the Reserve Bank of Australia (RBA) raised its cash rate by 50 bps to 0.85% (more than the 25bps expected), saying inflation has increased significantly & is expected to increase further. A strong CPI report on Friday could solidify expectations that the Fed will keep aggressively hiking rates as it tries to bring down price pressures. The Bloomberg commodity spot index rises to a record late yesterday rising 1.9% Monday driven by a jump in natural gas and wheat. Bloomberg reported overnight that semiconductor prices, spot rate for shipping containers, and fertilizer prices have come off their peaks showing signs that inflation may have peaked. In currency markets, the Yen has returned to the path of depreciation as the USD/JPY made it to exactly 133.00, a level not seen for twenty years. Stocks finished Monday higher, though well-off their best levels and are now trading below yesterday lows. Of the 11 S&P 500 sector indexes yesterday, eight rose, led by consumer discretionary and communication services both up around 1%. As for crypto overnight, easy come easy go as Bitcoin prices tumbled over 6% to lows around $29,000 after holding above $31,000 most of Monday trading and Ethereum (ETH) dropped to lows just above $1,700, down over 6%. Tech still failing to rebound as its rough year continues: Note according to Charlie Bilello, Nasdaq 100 Total Returns by year since 2009: +55%, 2010: +20%, 2011: +4%, 2012: +18%. 2013: +37%, 2014: +19%, 2015: +10%, 2016: +7%, 2017: +33%. 2018: +0.04%, 2019: +39%, 2020: +49%, 2021: +27%, 2022 YTD: -23%. In Asian markets, The Nikkei Index rose 28 points to 27,943, the Shanghai Index edged higher 5 points to 3,241, and the Hang Seng Index slipped -122 points to 21,531. In Europe, the German DAX is down -135 points to 14,518, while the FTSE 100 is little changed at 7,608. There are no scheduled U.S. Fed speakers today with the blackout period ongoing until next Wednesday.

Market Closing Prices Yesterday

·     The S&P 500 Index gained 12.89 points, or 0.31%, to 4,121.43

·     The Dow Jones Industrial Average rose 16.08 points, or 0.05%, to 32,915.78

·     The Nasdaq Composite climbed 48.64 points, or 0.40%, to 12,061.37

·     The Russell 2000 Index advanced 6.83 points, or 0.36% to 1,889.89

 

Economic Calendar for Today

·     7:45 AM ET         ICSC Weekly Retail Sales

·     8:30 AM ET         International Trade for April

·     8:55 AM ET         Johnson/Redbook Weekly Sales

·     3:00 PM ET         Consumer Credit for April

·     4:30 PM ET         API Weekly Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: ASO, CBRL, CHS, GIII, OESX, PLAY, REVG, SJM, UNFI

·     Earnings After the Close: BBCP, CASY, CURV, GWRE, LMNR, ODC, SMAR, SOL, VRNT

 

Other Key Events:

·     American Society of Clinical Oncology (ASCO) 2022 meeting, 6/3-6/7, in Chicago

·     Bank America Global Technology Conference, 6/7-6/9, in San Francisco

·     Baird Global Consumer, Technology & Services Conference, 6/6-6/8, in NY

·     Cowen Sustainability & Energy Transition Summit (virtual), 6/7-6/8

·     Goldman Sachs Travel & Leisure Conference, 6/6-6/7, in NY

·     Oppenheimer FinTech Virtual Bus Tour (virtual), 6/6-6/9

·     RBC Capital Global Energy, Power & Infrastructure Conference, 6/7-6/8, in NY

·     REITweek 2022 Investor Conference, 6/7-6/9, in NY

·     RSA Conference 2022, 6/6-6/9, in San Francisco

·     UBS Global Industrials & Transportation Conference, 6/7-6/8, in NY

·     William Blair 42nd Annual Growth Stock Conference, 6/6-6/9, in Chicago

 

 

Macro	Up/Down	Last
Nymex	-0.04	118.46
Brent	-0.35	119.16
Gold	8.70	1,852.40
EUR/USD	-0.0013	1.0681
JPY/USD	0.78	132.66
10-Year Note	-0.02	3.018%

 

 

World News

·     The Reserve Bank of Australia (RBA) raised cash rate by 50 bps to 0.85% (more than the 25bps expected), saying inflation has increased significantly & is expected to increase further before declining back to 2-3% range next year; the rate hike was a further step in withdrawing extraordinary monetary support during pandemic

·     UK retail spending was 1.1% lower than a year earlier, the biggest fall since January last year according to the latest BRC figures

·     UK PM Johnson survived a confidence vote in his leadership but lost the support of a large portion of his parliamentary party

·     U.K. May services PMI 53.4; prelim 51.8 and UK May composite PMI 53.1; prelim 51.8

·     Senators to propose industry-friendly cryptocurrency bill – WSJ reports. A pair of U.S. senators were set to propose legislation that would create special exemptions to federal law for some cryptocurrencies, amid an intensifying lobbying push by the industry to avoid existing regulations https://on.wsj.com/3Ntcehg

·     A highly anticipated Senate proposal to bring the freewheeling cryptocurrency industry under federal oversight would deliver a win for the sector by empowering its preferred regulator, the Commodity Futures Trading Commission (CFTC), over the SEC. – Washington Post

 

Sector News Breakdown

Consumer

·     Kohl’s (KSS) is in exclusive advanced talks with Franchise Group (FRG) to be sold to the retail holding company in a deal that could value the department store chain at about $8B https://on.wsj.com/3GTnmS4

·     Tractor Supply (TSCO) said on track to deliver record Q2 financial results as currently forecasts Q2 net sales growth of 8% and comparable store sales growth of 5% Y/Y and EPS to be $3.48 or greater saying they have experienced strong sales of our seasonal products (est. $3.46)

·     United Natural Foods (UNFI) Q3 adj EPS $1.10 vs. est. $0.97; Q3 sales rise 9.4% y/y to $7.24B vs. est. $7.08B; raises adjusted FY EPS to $4.65-$4.90, from $3.90-$4.20 (estimate $4.17)

·     Peloton Interactive Inc (PTON) said it named Liz Coddington as its Chief Financial Officer, replacing Jill Woodworth, who decided to step down.

 

Energy, Industrials and Materials

·     Repsol (REPYY) rises after Reuters reported the company was in early talks to sell 25% of its oil and gas unit to EIG Global Energy Partners, citing three sources with knowledge of the matter. Report says the upstream business is worth between 14B-18B euros including debt

·     Transocean Ltd. (RIG) announces $181M contract extension for harsh environment semisubmersible Transocean Spitsbergen; is expected to begin in Oct 2023, conclude in April 2025

·     Leidos (LDOS) and Booz Allen (BAH) both downgraded to Equal Weight from Overweight at Barclays with $105 tgt and $95 tgt respectively

·     PNM Resources (PNM) management will meet with analysts and investors this week in New York. During the meetings, management is expected to affirm the company’s 2022 and 2023 consolidated earnings guidance according to release

 

Financials

·     The SEC is preparing to propose major changes to the stock market’s plumbing as soon as this fall, the WSJ reported late Monday. One idea that has gained traction is to require brokerages to send most individual investors’ orders to be routed into auctions where trading firms compete to execute them, people familiar with the matter said (HOOD and VIRT shares fell overnight)

·     Commercial real estate is showing the first signs of cooling in more than a year, disrupted by rising interest rates. Property sales were $39.4 billion in April, which was down 16% compared with the same month a year ago, according to MSCI Real Assets. The decline followed 13 consecutive months of increases. https://on.wsj.com/3NXEFUl

 

Healthcare

·     Novavax (NVAX) date with the FDA has finally arrived. Later today, the faces of the FDA’s vaccine advisory group will gather to debate the evidence supporting Nuvaxovid, which uses an older vaccine technology to confer protection comparable to mRNA vaccines. Analysts expect Novavax’s vaccine to eventually win an emergency use authorization and become available later this summer. But that hardly guarantees demand – STAT News

·     AmerisourceBergen (ABC) and McKesson (MCK) both upgraded to Buy from Hold at Deutsche Bank with $178 tgt and $378 tgt respectively

·     Healthy Equity (HQY) 1Q adj EPS $0.27 vs est. $0.26 on revs $205.7Mm vs est. $204Mm; guides FY revs $827-837Mm vs est. $826.2Mm and adj EPS $1.23-1.32 from prior view $1.21-$1.30 and vs est. $1.27; raises FY23 revenue view to $827M-$837M from $820M-$830M

·     Gitlab (GTLB) Q1 EPS loss (-$0.18) vs. est. loss (-$0.27) as revs rose 75% to $87.4M vs. est. $77.7M; sees Q2 revs $93.5M-$94.5M and FY revs $398M-$402M vs. est. $389.3M

·     AIkido Pharma Inc. (AIKI) slumped after its 1-for-17 reverse stock split took effect.

 

Technology, Media & Telecom

·     Coupa Software (COUP) 1Q adj EPS $0.08 vs est. $0.05 on revs $196Mm vs est. $190.6Mm; sees 2Q revs $202-205Mm vs est. $105.3Mm and adj EPS $0.07-0.10 vs est. $0.05; guides FY revs $838-843Mm vs est. $840.3Mm and adj EPS $0.21-0.27 vs est. $0.20

·     The Universal Beijing Resort said on Tuesday it will reopen on June 15 after being closed more than a month to comply with China’s COVID-19 prevention measures, but it will cap the number of visitors at no more than 75% of capacity.

·     BuzzFeed Inc’s (BZFD) shares rise after having plunged ~41% to $2.23, days after the share lockup period for executives and big investors expired