US EARLY MORNING: Index futures are flat ahead of retail sales data, more Fedspeak

SNAPSHOT: Equity futures are moving sideways ahead of today's retail sales data, and as more banks report Q2 numbers. The Treasury curve is bull flattening slightly. The Dollar index is flat, while crude futures are lower. Looking ahead, highlights include US NY Fed Manufacturing, Retail Sales, IP & Uni. of Michigan (Prelim.); speeches from Fed's Bostic and ECB's Rehn; Earnings from UNH, Blackrock, Citi & Wells Fargo. Full Day Ahead here. 

ECONOMY:

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  Fed's Waller (voter) - Said markets have gotten "ahead of themselves" with a 100bps rate hike view, adding that the June CPI data was not a big surprise. Waller said that for the FOMC to go above 75bps, it needs to assess data over the next couple of weeks.


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  Fed's Bullard (2022) - Still supports a 75bps rate hike at the July meeting, adding that the CPI data did not support the case for a 100bps move for now.


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  Fed's Collins (2022) - Said inflation was too high, and addressing it was her priority.


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  US Commerce Secretary Raimondo - Said a pared-down China competition bill could be acceptable to the administration, and urged Congress to act next week.


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  US Senate Majority Leader Schumer - Reportedly told Senators to prepare for a floor bote on the USD 52bln CHIPS Act next Tuesday; however, Senator Cornyn said he and other Republicans would not vote to proceed, wants to wait until later in August when reconciliation plans are clearer. Other reports suggested that the move would not gain Republican support.

US RETAIL SALES (13:30BST/08:30EDT) :

• 
  Expectations - Retail sales are seen rising by 0.8% M/M in June, more than offsetting the 0.3% decline printed in May. The ex-autos measure is seen rising +0.6% M/M (prev. +0.5%), and the retail control group is seen rising +0.3% M/M (prev. 0.0%).


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  Retail Trends - Credit Suisse is below consensus, and looks for retail sales to rise by 0.3% again; it argues that unit auto sales and changes in energy prices suggest autos and gas spending will keep nominal headline retail sales positive in June. The bank said that high-frequency card tracking data showed weakening goods spending in June, with greater services spending acting as a headwind to goods spending; it adds that sustained high inflation continues to erode consumer purchasing power. “Nominal retail sales have been relatively strong this year, but real goods spending has weakened and we continue to expect real goods spending keeps falling through the year.”


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  Slowdown - CS notes that since January, real retail sales have already fallen by about 2.3% (including its forecast for June); “the US is on the edge of recession, and cyclical components of output – real goods spending included – are likely to contract on par with a moderate recession,” and “incremental shocks to financial conditions from here may put the US into a broader slowdown that includes labour market weakness, raising the risk that goods spending falls even further.”


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  Policy Impact - Traders will frame the data release in the context of how it will impact the immediate course of monetary policy. After the June CPI report, which surprised to the upside again, there has been a hawkish repricing of expectations for the July 27th FOMC meeting, where traders assigned a greater than 70% probability that the Fed will lift rates by 100bps. Since then, however, Fed officials like the hawkish St. Louis President Bullard (2022) and the hawkish Governor Waller have leaned back on calls for a 100bps move. Waller said markets have gotten "ahead of themselves" with a 100bps rate hike view, adding that the hot June CPI data was not a big surprise; Waller said that to go above a 75bps increment in July, the Fed would need to assess data over the next couple of weeks, implying that today's retail sales data will be a key input into that decision making. Meanwhile, Bullard said that he still supports a 75bps rate hike in July. Market pricing has subsequently pared back its hawkishness, and now, the implied probability of a 100bps rate hike has fallen to around 35%, with a 75bps now seen as most likely.

US CORPORATE EARNINGS HIGHLIGHTS:

• 10:55BST/05:55EDT: UnitedHealth Group Inc (UNH) (preview)


• 12:10BST/07:10EDT: Wells Fargo & Co (WFC) (preview)


• 13:00BST/08:00EDT: Citigroup Inc (C) (preview)


• Full Daily US Earnings Estimates for July 15th (UNH, BLK, WFC, C) here.

CONSUMER DISCRETIONARY:

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  Tesla, Inc. (TSLA) - Tesla has asked a court to dismiss a lawsuit claiming that it violated federal law by laying off hundreds of workers without advance notice, Reuters reported. Tesla said the workers who were terminated signed valid agreements to bring employment-related legal disputes in arbitration, and to refrain from participating in class-action lawsuits.


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  Amazon.com, Inc. (AMZN) - Announced it is creating more than 4,000 new permanent roles across the UK, bringing its permanent workforce to 75,000, and is set to become one of the UK’s ten largest private sector employers. It also means that Amazon will have created 40,000 new jobs in the UK in the past three years. Separately, Amazon announced it would conduct a racial equity audit to evaluate the impacts of our policies, programmes, and practices on hourly Operations employees in the US.


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  Alibaba (BABA) - Executives called in by China authorities as it investigates historic data heist, WSJ reported. Cybersecurity companies say Alibaba’s cloud platform that hosted Shanghai’s police database used outdated systems that didn’t offer ability to set a password.


• 
  Compagnie Financiere Richemont SA (CFRUY) - Sales beat expectations in Q1, rising +12% Y/Y at constant FX (exp. +10.7%). Mainland China sales -37% Y/Y lower for the quarter, but the pace of decline eased in June as lockdowns were lifted. High performance was driven by Europe, Americas, Japan, and Middle East.


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  Genting Singapore Limited (GIGNY), MGM Resorts International (MGM) - Genting Singapore is reportedly attracting takeover interest. MGM Resorts approached the controlling Lim family to express interest in the company, Bloomberg reported, adding that while those discussions didn’t lead to an agreement, other potential suitors have also been in the preliminary stages of studying Genting Singapore, which has a market cap of USD 7bln.


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  American Outdoor Brands, Inc. (AOUT) - Q4 adj. EPS 0.14 (exp. 0.10), Q4 revenue USD 45.9mln (exp. 45.5mln). Exec noted that on a two-year basis, AOUT delivered net sales growth of nearly +48% vs pre-pandemic levels.


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  Red Robin Gourmet Burgers, Inc. (RRGB) - G.J. Hart will become the Company’s new President and CEO, effective September. Hart has been a member of the Red Robin Board since August 2019.

TECH:

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  SK Hynix Inc. (HXSCL) - SK Hynix is reportedly considering reducing capex by up to 25% for next year.


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  Alphabet Inc. (GOOG), Goldman Sachs Group, Inc. (GS) - Marty Chavez will join Alphabet's board. Chavez is best known for his 20-year tenure at Goldman Sachs, Bloomberg noted.

COMMUNICATIONS:

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  Pinterest, Inc. (PINS) - Activist investor Elliott Management Corp. has in recent months built a stake of more than 9% in Pinterest, WSJ reports, amid a decline in users and other challenges. Elliott has been in talks with management over the past several weeks, though the WSJ report added that it could not be learned what they have been discussing.


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  DoorDash, Inc. (DASH), Airbnb, Inc. (ABNB) - DoorDash said Ellie Mertz, Vice President of Finance of Airbnb, has been elected to the company's board of directors. DoorDash notes Mertz has helped scale brands like Airbnb and Netflix through significant business and industry transitions.


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  Ericsson (ERIC), Vonage Holdings Corp. (VG) - Announced that it has received clearance from the CFIUS to complete its acquisition of Vonage, the final requisite approval to complete the deal. The parties now expect the merger to close no later than July 21st.

INDUSTRIALS:

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  Boeing Company (BA), Airbus SE (EADSY) - Airbus and Boeing are expected to announce flurry of new orders at the Farnborough Air Show, according to the FT, which added that cautious optimism is prevailing ahead of industry’s first big gathering at Farnborough since outset of pandemic.


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  General Dynamics Corporation (GD) - Was awarded a USD 908mln Air Force contract and a USD 273mln Navy contract.


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  Toyota (TM) - Spokesman said TM has scaled back production at its San Antonio, Texas assembly plant in move to conserve power and due to chip shortage.


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  Nissan Motor Co., Ltd. (NSANY) - Nissan is said to be phasing out its Leaf EV, according to Automotive News. The report said that Nissan bet billions that the world was ready for an electric car back in 2010, but the Leaf never lit up the market, and now as the industry rushes to EVs, Nissan is preparing to phase it out.


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  Aston Martin Lagonda Global Holdings Plc (ARGGY) - Aston Martin was reportedly closing in on a deal to raise more than GBP 500mln by bringing in Saudi Arabia’s sovereign wealth fund as a major shareholder and holding a rights issue for investors, according to the FT.


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  Autos - EU car sales -15.0% Y/Y (prev. -11.2%); worst June since 1996.


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  Virgin Galactic Holdings, Inc. (SPCE) - Virgin Galactic has signed a long-term lease for a new final assembly manufacturing facility at Mesa in Phoenix for its next-generation Delta class spaceships.


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  Mercury Systems, Inc. (MRCY) - Announced that its new electronic warfare combat training pod begins flight testing. mPod simulates realistic adversary jamming threats to better prepare pilots for combat in contested electromagnetic environments.


• 
  Ryder System, Inc. (R) - Raises quarterly dividend +4c to 0.62/shr.

ENERGY:

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  Peabody Energy Corporation (BTU) - Sees Q2 revenue between USD 1.31-1.34bln (exp. 1.4bln), net of approximately USD 25mln of unrealised mark-to-market losses related to coal hedges.

MATERIALS:

• 
  Rio Tinto plc (RIO) - Q2 Pilbara iron ore production +4% Y/Y at 78.6MT, Q2 Bauxite production +3% Y/Y at 14.1MT, Q2 aluminium production -10% at 731KT, Q2 mined copper production +9% Y/Y at 126KT. CEO said delivery of first ore at Gudai-Darri increases mine capacity and supports production of its flagship Pilbara Blend.

HEALTH CARE:

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  Codexis, Inc. (CDXS), Pfizer Inc. (PFE) - Codexis fell 25% after hours after it cut FY 2022 revenue outlook to USD 135-141mln (exp. 155.5mln, prev. guidance was 152-158mln). Product revenues are seen between USD 112-118mln, consistent with prior guidance, but product revenues from Pfizer are now expected to be at the low end of prior guidance of USD 75-80mln. Codexis has also entered into an agreement with Pfizer for the supply of a proprietary enzyme, for use in the manufacture of Pfizer's Paxlovid.


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  Clover Health Investments, Corp. (CLOV) - Intends to offer Medicare Advantage plans in 13 new counties across Georgia, South Carolina, and Tennessee.


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  Oncternal Therapeutics, Inc. (ONCT), AbbVie Inc. (ABBV) - Oncternal enters into a clinical trial collaboration with AbbVie's Pharmacyclics, that includes supply of ibrutinib for its Phase 3 clinical trial.


• 
  R1 RCM Inc. (RCM) - R1 a 10-year agreement to be the exclusive provider of enterprise revenue cycle management services for Sutter Health, a not-for-profit integrated health system in Northern California.

15 Jul 2022 - 09:37- Data- Source: Newsquawk