Early Look

Friday, July 1, 2022

U.S. futures are looking modestly lower as investors put a rough 1H of the year behind them and look to start the 2H fresh, though the outlook remains murky with several more interest rate hikes on the horizon from the Fed. Heading into H2, many are worried that central bank actions could push the global economy into a downward spiral. Also weighing on sentiment remains cautious outlooks from several companies talking about slowing demand and orders in upcoming quarters. Micron (MU) said last night industry demand environment has weakened and TSM said they have seen its major clients adjust downward their chip orders for the rest of 2022. That followed cautious outlooks from BBBY and RH in the consumer space this week. Stocks come into the day putting a brutal month, quarter and 1H in the books. For the month, the S&P 500 fell -8.4%, the Dow fell -6.7% and the Nasdaq fell -8.7%. For the quarter, the S&P 500 fell -16.4%, the Dow fell -11.2% and the Nasdaq fell -22.4%. For the first half of 2022, the S&P 500 fell -20.6%, the Dow fell -15.3% and the Nasdaq fell -29.5%. In Asian markets, The Nikkei Index tumbled -1.73% to 25,835, the Shanghai Index fell about -11 points to 3,387, and the Hang Seng Index fell -0.6% or 137 points to 21,859. In Europe, the German DAX is up 40 points to 12,824, while the FTSE 100 rises 15 points to 7,184. Reminder markets are closed Monday for 4^th of July holiday.

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -33.45 points, or 0.88%, to 3,785.38

·     The Dow Jones Industrial Average fell -253.88 points, or 0.82%, to 30,775.43

·     The Nasdaq Composite slumped -149.16 points, or 1.33%, to 11,028.74

·     The Russell 2000 Index declined -11.38 points, or 0.66% to 1,707.99

Economic Calendar for Today

·     9:45 AM ET          S&P Global Manufacturing PMI, June-F

·     10:00 AM ET        ISM Manufacturing PMI for June…est. 54.9

·     10:00 AM ET        Construction Spending for May…est. +0.4%

·     1:00 PM EST         Baker Hughes Weekly rig count data

World News

·     China June Manufacturing PMI: 51.7 vs 50.1 consensus

·     Japan’s June Manufacturing PMI was 52.7 vs 53.3 in May

·     Euro-area inflation surged to a fresh record, surpassing expectations, and bolstering calls for the kind of aggressive interest-rate increases being deployed by central banks across the world. Driven once more by soaring food and energy costs, consumer prices jumped 8.6% from a year earlier in June — up from 8.1% in May

·     Final June UK Manufacturing PMI was revised down to 52.8 from the prior 53.4. This showed new business contacting for the first time since January 2021.

·     Senior US Official: The probability of reviving the Iranian nuclear deal is getting worse day by day after the Doha talks; Iran made vague demands, asked for unrelated things & reopened settled issues in negotiations; would describe the talks as trending water at best & going backwards at worst; the talks that need to happen are internally in the Iranian nuclear deal on if they want to revive the deal

Sector News Breakdown

Consumer

·     Kohl’s (KSS) is terminating talks to sell its business to The Vitamin Shoppe owner Franchise Group, two people familiar with the matter told CNBC on Thursday. https://cnb.cx/3AiUul4

·     Li Auto Inc. (LI) reported a more than 63% jump in Q2 deliveries as delivered 13,024 Li ONEs in June, up 68.9% from a year ago, after delivering 11,496 Li ONEs in May; said had unveiled its Li L9 six-seat smart utility vehicle on June 21 which boosted Q2 deliveries to 28,687, up 63.2% Y/Y

·     NIO (NIO) delivered 12,961 vehicles in June 2022, representing a strong increase of 60.3% Y/Y; deliveries consisted of 8,612 premium smart electric SUVs; Q2 deliveries grew 14.4% Y/Y to 25,059 vehicles.

·     XPeng (XPEV) announces Vehicle Delivery Results; said 15,295 vehicles delivered in June 2022, a 133% increase Y/Y, 34,422 vehicles delivered in 2Q 2022, a 98% increase Y/Y, and 68,983 total vehicles delivered in the first six months of 2022, a 124%

·     Lululemon Athletica (LULU) files for mixed shelf, size not disclosed

·     JetBlue (JBLU) extends tender offer for Spirit Airlines, Inc. (SAVE) to July 29, 2022

Financials

·     BGC Partners (BGCP) said it now expects Q2 revenue to be slightly below the midpoint of the range of its previously stated outlook vs. consensus of $446.46M (prior outlook of $420M – $470M), while pre-tax adj earnings is expected to be around the midpoint (prior outlook of $81M- $101M).

·     Citigroup (C) is in talks with several local buyers over a potential sale of its operations in Russia, making it the latest major foreign bank to exit the country following Vladimir Putin’s invasion of Ukraine – Financial Times

Healthcare

·     Accolade Inc. (ACCD) 1Q adj EBITDA ($15.4Mm) vs est. ($19.1Mm) on revs $85.5Mm vs est. $82Mm; sees 2Q revs $82-83.5Mm vs est. $84.1Mm; sees FY revs $355-365Mm vs est. $357.5Mm

·     Akebia Therapeutics (AKBA) regaining rights to vadadustat in the United States, Europe, China, and access consortium countries upon termination of collaboration and license agreements with Otsuka

·     Oxford BioMedica PLC said it signed an extended agreement with AstraZeneca UK Ltd. (AZN) for the use of its facility to produce AstraZeneca’s Covid-19 vaccine; the new three-year agreement makes the vaccines manufacturing facility Oxbox available to AstraZeneca beyond 2022.

Technology, Media & Telecom

·     Micron Technology (MU) shares slide -5%; 3Q adj EPS $2.59 vs est. $2.43 on revs $8.64Mm vs est. $8.64Mm; sees 4Q adj EPS $1.43-1.83 vs est. $2.57, adj revs $6.8-7.6B vs est. $9B, gross margin 41.5%; recently says industry demand environment has weakened but taking action to moderate supply growth in FY23; says confident about long-term secular demand for memory and storage; forecast for calendar 2022 pc unit sales now expected to decline by nearly 10% Y/Y from the very strong unit sales in calendar 2021

·     Taiwan Semi (TSM) has seen its major clients adjust downward their chip orders for the rest of 2022, which may prompt the pure-play foundry to cut its revenue outlook for 2022, according to industry sources, Digitimes reported. https://bit.ly/3yuKkfD

·     Skillz (SKLZ) appoints Jason Roswig as finance chief in place of Ian Lee, who is stepping down to pursue other opportunities