US EARLY MORNING: US index futures are a little lower ahead of today's key jobs data

US PRE-MARKETS: US equity futures are lower, bond yields are narrowing (short-end outperforms slightly), while the Dollar Index is flat. Today's main event is the US jobs data, where analysts expect to see a cooling in the headline rate of payroll additions, but the hot ADP and JOLTs data released Thursday suggest that there could be upside risks, according to some analysts. Currently, money markets are pricing a July rate hike, and expect the terminal rate to be at around 5.45% in November (vs the cirrent 5.00-5.25% level), one hike fewer than where the Fed's dot plot for this year sits.

PREVIEW – US JOBS REPORT (13:30BST/08:30EDT): Labour market proxies were mixed in June: initial jobless claims spiked in the comparable survey week, with the four-week moving average higher heading into the June data; within S&P Global’s flash PMI data, the employment sub-indices eased, though remain above the 50-mark, which separates expansion and contraction; the ISM manufacturing data saw employment fall into contraction, but the services gauge saw the employment index rise into expansion; ADP’s gauge of payrolls growth spiked higher in the month, while Challenger Layoff numbers tumbled lower. Currently, markets are expecting the Fed to lift rates in July, and it is assumed that only a very significant miss along with weakness in other metrics will derail that plan; meanwhile some of the strong data released this week has seen expectations of the Fed terminal rate rise, to 5.45% in November 2023. (Newsquawk) 

WEEKLY FLOWS: BofA's weekly flow report noted USD 29bln into cash, USD 13bln into equities, USD 9.8bln inflows into bonds, USD 0.6bln outflows gold fund in the latest week. The bank said money market funds experienced their first inflow in four weeks, raising total cash AUM to USD 7.8tln. Investment-grade bonds saw their largest inflow in five months at USD 9.0bln, and high-yield bonds had their first inflow in four weeks at USD 0.5bln, showing no concerns over corporate bonds. For the first time since November 2022, inflows into Developed Markets (USD 31bln in the last 8 weeks) exceeded those into Emerging Markets (USD 14bln), the report said. Japanese stocks have seen inflows over the past five weeks (USD 8.9bln), and US large-cap funds witnessed their largest inflow in nearly eight months (USD 12.9bln). BofA's Bull & Bear indicator was unchanged at 3.2. 

TODAY’S AGENDA:

• Our interactive daily calendar can be accessed here; a pdf version can be found here.


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  EUROPEAN DAY AHEAD: German Industrial Output eased in May, falling -0.2% (prev. 0.3%), and analysts say it is expected to have declined in Q2 overall. Capital Economics said the German manufacturing sector continues to struggle, and weak domestic and external demand are likely to further impact production, adding that the prospects for German industry remain poor, and it is anticipated to contribute to a continued economic recession in Germany for the rest of 2023. In the UK, data from building society Halifax reported house price growth of -0.1% in June. Halifax said the data suggested that the housing market stabilised in June, with a steady volume of mortgage applications, particularly from first-time buyers. However, rising borrowing costs and inflation concerns have led to increased mortgage rates, impacting affordability and potentially slowing demand in the future. Existing mortgage holders may also face rate increases. Ahead, on the speaker’s front, ECB VP de Guindos will speak on inflation, while President Lagarde will speak on a panel at Aix-en-Provence.


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  US DAY AHEAD: The highlight is the US jobs report for June, where analysts expect the headline rate of employment growth to cool; that said, the ADP’s data surprised to the upside on Thursday, with solid job gains in the services sector driving the upside. Our preview can be accessed above. Elsewhere, Canada’s jobs data will be released at the same time, where the consensus expects 20k jobs to be added, offsetting the decline of 17k jobs in May, while the jobless rate is expected to tick up by one-tenth to 5.3%. In afternoon trade, the Baker Hughes weekly rig count data will be released.

EQUITY NEWS:

TECH:

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  Samsung (SSNLF) - Samsung's Q2 operating profit dropped 96% to the lowest in 14 years, FT reports. The decline is due to falling memory chip prices caused by oversupply, but the price decline has slowed down, and analysts predict a recovery next year. Samsung sees Q2 operating profit at KRW 600bln (exp. KRW 531.1bln), and sees Q2 revenue of KRW 60.0tln (exp. KRW 62.0tln).


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  First Solar (FSLR) - First Solar has obtained a USD 1bln revolving credit facility, which includes up to USD 250mln for issuing letters of credit.


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  SPS Commerce (SPSC) - SPS Commerce appoints Chad Collins as new CFO, effective October. Collins will succeed Archie Black, who will retire from his position.


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  Palantir (PLTR) - Director Alexander Moore sold 37k shares for a total USD 570k.


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  SSNC (SSNC) - SS&C appoints Brian Schell new CFO. Schell, who has extensive experience in global financial institutions including Cboe Global Markets, will report to Chairman and CEO Bill Stone, and will assume his role on August 7th.


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  Zscaler (ZS) - Zscaler COO Dali Rajic sold 22K shares on July 6th for a total USD 3.1mln.

COMMUNICATIONS:

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  Social Media Companies - The Biden administration is seeking an emergency order from a federal appeals court to halt a lower court ruling that prevents government officials from discussing content moderation with social media companies, Reuters reports. It argues that the ruling is overly broad and likely to be overturned on appeal.


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  Meta Platforms (META), Twitter - According to Semafor, Twitter is angry at Meta for creating its new text-based platform, Threads, that looks like Twitter. Twitter accuses Meta of stealing its ideas, and Semafor claims Twitter may take legal action.


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  Disney (DIS) - Wells Fargo analyst said that for Disney's stock to perform well, the company's estimates need to be lowered. Wells has reduced the firm's EPS estimates for the Q3 and FY23, FY24 and FY25; analyst believes that improved visibility into future earnings growth from Disney's direct-to-consumer (DTC) business and an upcoming investor event in September could positively impact the stock.


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  Meta Platforms (META), Uber Technologies (UBER) - PwC Australia advised Uber and Facebook on restructuring to comply with tax laws in Australia, Reuters reports. However, both companies were surprised to learn that PwC's advice may have been based on leaked government plans. PwC is facing pressure to disclose all clients it advised using the leaked information.


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  DoorDash (DASH), Uber Technologies (UBER) - DoorDash and Uber Eats have filed a lawsuit against New York City to block a new law that sets minimum wages for food-delivery workers, WSJ reports. The law requires payment based on time spent on trips, which the companies argue could be higher than minimum wage and pose challenges for multi-app usage. They claim this could lead to increased fees and limit the number of workers.

CONSUMER:

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  Tesla (TSLA) - Tesla is offering a cash bonus of almost USD 500 to new buyers of its Model Y and Model 3 vehicles in China if they have a referral from an existing owner, Reuters reports. Tesla aims to boost sales in the world's largest market for EVs amid a price war. The company also announced that new buyers will have free access to its Enhanced Autopilot system for 90 days. Separately, Tesla SVP of Automotive, Xiaotong Zhu, sold 2.6K shares on July 3rd for a total USD 691k.


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  Amazon (AMZN) - The European Commission has launched an in-depth investigation into Amazon's planned acquisition of iRobot, CNBC reports. It is concerned that the deal may limit competition and strengthen Amazon's position as an online marketplace provider. The Commission is worried about potential favouritism in search results and the use of user data, which could create barriers for competitors.


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  Alibaba (BABA) - Chinese regulators are reportedly to fine the company's affiliate Ant Group as soon as today, with the fine likely to be at least CNY 8bln to end its regulatory revamp.


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  Costco (COST) - June comparable sales -1.4%, with net sales of USD 22.86bln (+0.4% Y/Y). For the forty-four weeks ended July 2, the company reported net sales +4.6% Y/Y. Total comparable sales, excluding the impacts from changes in gasoline prices and foreign exchange, rose 3%.


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  Levi Strauss (LEVI) - Q2 EPS 0.04 (exp. 0.03), Q2 revenue USD 1.34bln (exp. 1.34bln). Q2 total inventories +18% Y/Y on a dollar basis. CEO expressed confidence in the company's performance despite challenges. They saw improvement in inventory levels and positive cash flow in Q2, and is focusing on stabilising the US wholesale business and gaining market share. Levi cuts FY23 EPS outlook to USD 1.10-1.20 (exp. 1.29) from 1.30-1.40; also narrows its FY23 revenue growth outlook to 1.5-2.5% from its prior outlook for 1.5-3.0%.


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  Starbucks (SBUX) - The US NLRB has filed a lawsuit against Starbucks for not rehiring 33 workers during the reorganisation of three Seattle stores. The NLRB claims that this action was in response to unionisation efforts, which is illegal.


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  Airbnb (ABNB) - CEO Brian Chesky sold 30K shares on July 3rd for a total USD 3.97mln.


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  Constellation Brands (STZ) - Constellation announced that Rob Sands will retire from his role as Chair. Sands will continue in his capacity as a Board member for the company. Constellation's Board has engaged in a process to identify a new Board Chair.


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  Caesars (CZR) - Caesars Entertainment has launched its mobile sports betting app in Puerto Rico.


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  Camping World (CWH) - Camping World successfully defended against fraud and misconduct claims related to a CNBC show "The Profit." The court found no credible evidence supporting the allegations and awarded over USD 7mln to Camping World. The case was transferred to arbitration in May 2022.


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  First Watch Restaurant Group (FWRG) - Director Tricia Glynn sold 450K shares on July 3rd for a total USD 7.4mln.

ENERGY:

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  Shell (SHEL) - Ahead of its earnings report due July 27th, Shell said it sees significantly lower trading in its gas division Q/Q in Q2, and also announced writedowns of up to USD 3bln that will be booked in the quarter due to an increase in the discount rate used for impairment testing.


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  Suncor (SU) - Suncor Energy has provided an update on a recent cybersecurity incident. Its IT network was accessed by an unauthorised party, but it did not impact the safety and reliability of their operations. Some disruptions were seen to its Petro-Canada business,  but have mostly been resolved. The incident affected the Petro-Points programme, with the unauthorised party obtaining basic contact information of members. Suncor is taking steps to notify affected members and privacy regulators.

INDUSTRIALS:

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  Lockheed (LMT) - Lockheed Martin awarded USD 122.7mln Navy contract modification to a previously awarded contract for critical technical refresh actions in support F-35 Joint Strike Fighter pilot and maintainer training site stand-up, schedules, support capability, and overall training system sustainment.


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  Mercury Systems (MRCY) - Mercury Systems has made several board leadership changes, including appointing Bill Ballhaus as chairman and reducing the board by two seats. Scott Ostfeld has been appointed as a new director. The board will have a total of nine directors, with five appointed in the past two years.

HEALTHCARE:

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  AbbVie (ABBV) - AbbVie cuts FY23 EPS outlook to USD 10.57-10.97 (exp. 10.08) from 10.72-11.12. Lowers Q2 EPS view by 0.15/shr, now expects 2.75-2.85 per share. ABBV is scheduled to report Q2 results on July 27th. The lower guidance was a result of a USD 280mln milestone and research and development expenses.


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  Biogen (BIIB), Eisai (ESALY) - Biogen and Eisai have received full approval from the FDA for their Alzheimer's drug Leqembi. The drug, which reduces amyloid plaques in the brain, is the first of its kind to transition from accelerated approval to traditional approval.


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  Cronos Group (CRON) - Cronos Group has received unsolicited offers from third parties interested in potential transactions. The company is reviewing the offers, but no agreement or transaction has been confirmed yet. No further announcements will be made unless required.

FINANCIALS:

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  Blackstone (BX), TPG (TPG) - Private equity firms like Blackstone and TPG are considering buying a US company Standish Management, which provides services to the buyout industry, according to Reuters. The deal could be worth around USD 1.7bln. Other firms, like Thomas H. Lee Partners, are also interested.


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  Cboe Global Markets (CBOE) - Cboe announced the promotion of Jill Griebenow to Executive Vice President, CFO and Treasurer, replacing Brian Schell who will be departing the company to pursue a new professional opportunity outside of the exchange industry. Griebenow will assume the new role beginning July 10th.


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  Coinbase (COIN) - Coinbase Chairman Brian Armstrong sold 74,325 shares between July 3rd and July 5th for a total transaction USD 5.83mln.


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  Riot Platforms (RIOT) - Riot Platforms announces +9% Y/Y increase in Bitcoin production in June.

07 Jul 2023 - 09:30- EquitiesData- Source: Newsquawk