US EARLY MORNING: US equity futures are flat; Treasury yields stay higher after hawkish BoC, but economists still expect the Fed to hold rates next week

US PRE-MARKETS: US equity futures are around neutral, Treasury yields are continuing higher, the Dollar Index is flat, while crude benchmarks are up a little. Surprise rate hikes in G10 central banks, courtesy of the BoC and RBA this week, raised some fears on Wednesday that the Fed could similarly follow at its policy meeting on June 14th. But a poll released by Reuters revealed that economists generally expect the FOMC to hold rates at 5.00-5.25% next week, with only 8 of the 86 surveyed forecasting a +25bps rate rise. Ahead, 32 of the 86 economists surveyed still foresee at least one more rate hike from the Fed this year. The economist poll is in keeping with current money market pricing in the near-term, where the chance of a hike is being judged at around 30% probability, with little prospects of a rate cut seen later this year. Miller Tabak's economists write that despite some hawkish statements from FOMC members, it still expects the Fed to start a longer pause next week. It says that recent data supports this view, showing a flatlining of non-residential investment and stalled commercial bank lending. Miller Tabak argues that the Fed's plan to slow growth and avoid a downturn means further rate hikes would be unnecessary and risky at this stage, noting that a small decline in non-residential investment is not necessarily a negative signal for the economy, as it has recovered from deeper declines in past recessions, and that suggests the Fed has already reached an appropriately high terminal rate, with additional hikes only increasing the risk of a downturn ahead. (NOTE: on June 13th, a day before the Fed announcement, the US will see the release of the May CPI data, that will likely help shape final expectations going into the June confab).

TODAY'S AGENDA:

• Our interactive online calendar is here; a PDF version can be found here.


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  US RECAP: US stocks were lower on Wednesday, with some notable losses in big tech, though there was an absence of obvious catalysts other than the BoC's surprise 25bp BoC hike, which pushed DM yields higher. Analysts also noted the divergent performance between Tech names (NDX -1.75%) and small caps (RUT +1.8%) in what appeared to be a position unwinds in wake of the RUT's technical breakout earlier this week. Our US wrap is here.


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  APAC RECAP: Asia-Pac stocks were subdued as global yields rose in wake of the BoC's surprise rate hike on Wednesday, resulting in mixed performance across the region, with tech underperforming. ASX 200 was rangebound; Australia's trade surplus narrowed in April, but remains elevated; export earnings were down 5.0%, slightly less than anticipated. Nikkei 225 retreats; the Japan economy watchers survey rose to 55.0 in May (exp. 55.0, prev. 54.6), while the outlook pared to 54.4 (exp. 56.1, prev. 55.7); and revised data shows Japan's economy grew more than expected in Q1, with domestic spending and company restocking offsetting the decline in exports. Hang Seng and Shanghai Comp. were lacklustre; China's Big 4 banks reduced deposit rates to support economy, in line with official commentary this week. In South Korea, a senior BoK official warned that an early shift in monetary policy may pressure the local currency due to increased volatility, and BoK said the degree of policy tightening has significantly lessened this year, emphasising that tightening was not over. In India, the RBI kept its Repo Rate unchanged at 6.50%, as expected, via unanimous vote; it also maintained its policy stance of remaining focused on withdrawal of accommodation via a 5-1 vote. Our APAC wrap is here.


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  EUROPE OPEN:  Following the downside on Wall Street and a mixed performance overnight in Asia, European stocks open on the back foot. The KPMG/REC monthly report on the UK labour market showed a cooling as starting salaries for permanent staff rise at weakest pace in over two years, while the number of permanent staff placements dropped sharply, indicating loosening job market; the survey also highlighted dampened hiring activity, and ongoing economic concerns. On the UK housing front, data from the RICS said the net balance of new home buyer enquiries was the highest since May 2022 at -18, and although national house prices are still declining, the downward momentum was gradually easing. Additionally, RICS said that its new instructions indicator entered positive territory for the first time since early 2022. Our European cash open note is here.


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  EUROPE DAY AHEAD: Eurozone GDP revisions for Q1 are expected to be revised down 0.1ppts to 0.6% Q/Q and 1.2% Y/Y; the final employment stat for Q1 is expected to be confirmed at +0.6%. On the speaker's slate, SNB Chair Jordan is due to make remarks.


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  NORTH AMERICA DAY AHEAD: Weekly US Initial Jobless Claims are seen a touch higher at 235k vs a prior 232k, while Continuing Claims are seen rising a touch to 1.8mln from 1.795mln. Wholesale Sales and Wholesale Inventory revisions will be released after the open. On the supply front, the Treasury will announce sizes for next week's 3yr, 10yr, 30yr auctions. Following the BoC's surprise rate hike on Wednesday, BoC's Beaudry will deliver the Economic Progress Report.


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  ENERGY: The weekly EIA NatGas storage change data is due, and is expected to show a build of 113BCF (vs last week's build of 110BCF).

EQUITY NEWS:

TECH:

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  Alphabet (GOOG) - Google instructs East Coast employees to work from home due to poor air quality caused by wildfire smoke in New York and other cities, CNBC reports.


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  Alphabet (GOOG) - Google Cloud partners with Mayo Clinic to enhance healthcare through generative AI. The collaboration aims to improve clinical workflows, facilitate information retrieval, and enhance patient outcomes.


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  Smartsheet (SMAR) - Q1 EPS 0.18 (exp. 0.08), Q1 revenue USD 219.9mln (exp. 214.1mln). Exec said fiscal year was off to a solid start. Q1 billings +20% Y/Y at USD 215.5mln, dollar-based net retention rate was 123%; Number of all customers with annualized contract values of USD 100k grew 42% Y/Y to 1,569. Sees Q2 EPS between USD 0.07-0.08 (exp. 0.07), Q2 revenue USD 228-231mln (exp. 230.1mln). Lifts FY24 EPS outlook between 0.37-0.44 (exp. 0.35) from 0.31-0.38, reiterates FY24 revenue outlook of between USD 943-948mln (exp. 945.9mln).


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  HashiCorp (HCP) - Q1 EPS -0.07 (exp. -0.14), Q1 revenue USD 137.98mln (exp. 133.1mln). Announced targeted cuts in discretionary spending, and a workforce reduction of around 8%. Sees Q2 EPS at -0.15 at the midpoint (exp. -0.12), and sees Q2 revenue between USD 137-139mln (exp. 141.4mln).


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  Verint (VRNT) - Q1 adj. EPS 0.53 (exp. 0.47), Q1 revenue USD 216.6mln (exp. 216.2mln). Exec said results were driven by strong SaaS momentum; SaaS revenue +24% Y/Y. Reiterates FY24 EPS outlook at USD 2.65 midpoint (exp. 2.65), and FY24 revenue view of 2% around USD 935mln (exp. 935mln).


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  Semtech (SMTC) - Q1 EPS 0.02 (exp. -0.08), Q1 revenue USD 236.5mln (exp. 235mln). Sees Q2 EPS between -0.02 and +0.06 (exp. -0.02), and sees Q2 revenue between USD 233-243mln (exp. 242.7mln).


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  Advanced Micro Devices (AMD) - AMD EVP and CSO Paul Darren Grasby sold 15k shares on June 5th at USD 118.77/shr.


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  Robinhood (HOOD) - CEO Vladimir Tenev sold 83.3K shares on June 5th for a total USD 759k.


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  First Solar (FSLR) - CEO Mark Widmar sold 39.9K shares on June 6th for a total USD 8.0mln.


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  DocuSign (DOCU) - Jefferies maintains Buy rating on DocuSign, sees demand stable, but faces tough comps.


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  Toast (TOST) - Co-President Stephen Fredette sold 57.8K shares on June 6th for a total USD 1.29mln.

COMMUNICATIONS:

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  Meta Platforms (META) - Germany's cartel office announces Meta's plan to introduce an account centre, addressing anti-trust concerns by offering users the choice to combine or separate Facebook and Instagram accounts.


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  Meta Platforms (META), Alphabet (GOOG), Twitter, ByteDance - Instagram, YouTube, TikTok and Twitter are the target of an EU crypto advertising complaint, alleging they have facilitated misleading promotions.

CONSUMER STAPLES:

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  Campbell Soup (CPB) - CEO appears CNBC's Mad Money, expresses satisfaction with the quarter's performance, highlighting resilient businesses, strong supply chain, pressure on meals and beverage, successful soup business, and anticipation of persistent inflation.


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  e.l.f. Beauty (ELF) - Director Richard Wolford sold 36.8K shares on June 6th for a total USD 3.94mln.

CONSUMER CYCLICAL:

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  Consumer Cyclical (XLY) - Wells Fargo starts Airbnb (ABNB) at Underweight, starts Booking (BKNG) at Underweight, starts Expedia (EXPE) at Underweight, starts Etsy (ETSY) at Underweight, starts Pinterest (PINS) at Equal Weight, starts DoorDash (DASH) at Equal Weight, starts Snap (SNAP) at Equal Weight, starts eBay (EBAY) at Equal Weight, starts Alphabet (GOOGL) at Equal Weight, starts Lyft (LYFT) at Equal Weight, starts Meta Platforms (META) with an Equal Weight, starts Uber (UBER) with an Overweight, starts Amazon (AMZN) at Overweight.


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  GameStop (GME) - GameStop fires CEO Matthew Furlong, appoints Ryan Cohen as executive chairman. No reason given for termination. Stock plummets 20% afterhours as revenue drops and loss narrows in Q1; Q1 EPS -0.17 (exp. -0.12),  Q1 revenue USD 1.237bln (exp. 1.36bln). Said its transition costs related to European restructuring efforts were USD 14.5mln in Q1, and for Q2, will continue to incur transition charges.


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  Tesla (TSLA) - The EV maker is asking several Chinese supply chain companies to build factories in Mexico to replicate a Giga Shanghai and its supply chain system there, 36kr reports.


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  Lucid (LCID) - Luxury EV maker Lucid Group plans to enter China's auto market, starting with imported cars and potentially considering local production, Reuters reports.


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  Oxford Industries (OXM) - Q1 EPS 3.78 (exp. 3.74), Q1 revenue USD 420mln (exp. 419.1mln). As the quarter progressed, saw macroeconomic pressures drive the consumer to become more cautious in discretionary spending, and noted a high level of promotional activity. Is moderating its growth forecast. Sees Q2 EPS between 3.30-3.50 (exp. 4.11), and sees Q2 revenue between USD 415-435mln (exp. 440.6mln). Sees FY24 EPS between 10.80-11.20 (exp. 11.76), and sees FY24 revenue between USD 1.59-1.63bln (exp. 1.64bln).


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  Rent The Runway (RENT) - Q1 EPS -0.46 (exp. -0.49), Q1 revenue USD 74.2mln (exp. 73.2mln). Reiterates FY23 goals of 25%+ ending active subscriber growth, 50% reduction in cash consumption. Q2 revenue expected between USD 77-79mln (exp. 81mln), Q2 adj. EBITDA Margin seen between 7-8%. Sees FY23 revenue between USD 320-330mln (exp. 325.7mln).


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  Trip.com (TCOM) - Q1 adj. EPS 0.45 (exp. 0.25), Q1 revenue USD 1.3bln (exp. 1.1bln). Exec notes upsurge in both domestic and outbound travel activities in China, remain positive for the outlook of the global travel industry.


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  Deckers Outdoor (DECK) - CFO sold 3K shares on June 6th for a total USD 1.48mln.


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  Greif (GEF) - Q2 EPS 1.77 (exp. 1.32), Q2 revenue USD 1.3bln (exp. 1.42bln). Raises FY outlook, now sees EBITDA between USD 780-830mln (vs prior guidance of USD 740mln).


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  Vista Outdoor (VSTO), American Outdoor Brands (AOUT) - American Outdoor Brands files complaint against Vista Outdoor, alleging patent infringement of electronic powder measure. Seeks injunctive relief, damages, withdrawal of infringing products, and legal fees.

HEALTHCARE:

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  Eisai (ESALY), Biogen (BIIB) - FDA staff supports Eisai and Biogen's Alzheimer's drug, saying it shows meaningful patient benefits and minimal safety concerns, boosting its chances of traditional approval.


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  McKesson (MCK) - CEO Brian Tyler sold 3.9K shares on June 5th for a total USD 1.54mln.


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  Iqvia (IQV) - President of Corporate Strategy, Enterprise Networks Kevin Knightly sold 5,820 shares on June 5th at USD 201.89/shr.

FINANCIALS:

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  Coinbase (COIN) - CEO Brian Armstrong criticizes SEC Chair Gary Gensler over the agency's lawsuit against the crypto exchange, which accused it of trading unregistered securities, Reuters reports. Armstrong assured customers that their funds were safe.


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  JPMorgan (JPM) - Former JPMorgan executive Jes Staley denies involvement in Jeffrey Epstein's crimes, blames bank for keeping Epstein as a client. Claims no responsibility for potential damages faced by JPMorgan.

MATERIALS:

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  Kaiser Aluminum (KALU) - Appoints Vijai Narayan as new Chief Accounting Officer.

UTILITIES:

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  Utilities (XLU) - Goldman Sachs initiates Exelon (EXC) with a Sell, Consolidated Edison (ED) with a Sell, Exelon (EXC) with a Sell, Duke Energy (DUK) with a Neutral, Dominion (D) with a Neutral, PSEG (PEG) with a Neutral, Southern Company (SO) with a Buy, Xcel Energy (XEL) with a Buy, NextEra Energy (NEE) with a Buy, American Electric (AEP) with a Buy.

08 Jun 2023 - 09:01- Data- Source: Newsquawk