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US equity futures are trading higher ahead of the FOMC’s June meeting, where it could easily raise rates by 75bps. RTY +0.9%, NQ +0.8%, ES +0.7%, YM +0.6%. Gains were erased as European traders began arriving, but futures moved back into the green on news that the ECB was holding an emergency meeting to discuss market conditions, which has supported risk sentiment, as peripheral debt spreads in the bloc narrowed on the assumption the central bank would take action to mitigate surging yields, which apparently threatens the transmission of monetary policy. Subsequent reports have suggested that it will discuss reinvesting the proceeds from maturing PEPP holdings, though analysts note that this would not necessarily mark a shift from current policy, given that its policy statement already states that in the event of renewed market fragmentation related to the pandemic, PEPP reinvestments can be adjusted flexibly across time, asset classes and jurisdictions. Sources have said the ECB’s meeting will begin at 10am London time (05:00EDT/11:00CEST), though it is unclear if a statement will be released after the meeting has concluded. The potential ECB headline risk is likely to steal the central banking limelight ahead of the FOMC meeting later today. Focussing on the latter, reports this week have strongly guided market participants towards a 75bps rate rise, rather than the 50bps that officials were flagging going into the quiet period. There will also be a lot of attention on updated projections: in addition to the number of hikes (and increments) seen in the months ahead, traders will note the central bank’s perception of the terminal and neutral rates; the market will then assess the GDP growth and inflation forecasts for signs of how soon the central bank sees inflation peaking, and the impact that this is likely to have on growth, and whether the Fed’s course of aggressive monetary tightening will drag the US economy into a recession. As a proxy, recent institutional forecasts have been revising down the growth profile and revising up expectations of inflation. Our full Fed preview can be accessed here. Full Day Ahead calendar can be accessed here.
- Big Tech - Chair of the US House antitrust subcommittee said he is very confident that when anti-Big Tech bills come to the floor, they will pass “convincingly,” Reuters reported, suggesting that the measures had the votes to pass both the House and Senate in the coming weeks.
- Apple Inc. (AAPL) - Apple and MLS agreed to a broadcasting rights package worth USD 2.5bln over 10 years, a big investment in live sports by the tech group that will put the North American football league’s matches on its streaming service, according to the FT.
- Smartphones - Counterpoint Research showed European smartphone market -12% in Q1, with the lowest shipments in the period for nearly a decade, Reuters reported. The decline was attributed to ongoing component shortages, China lockdowns, deteriorating economic conditions, Russia-Ukraine war.
- SoftBank Group Corp. (SFTBY) - SoftBank plans partial listing of its Arm Ltd. stake on the London Stock Exchange, according to Bloomberg. It will likely still list the majority of what it offers for trading on US exchanges, the report added. Size and timing of the sale has not been finalised.
- MicroStrategy Incorporated (MSTR) - CEO told investors not to be concerned about a potential margin call on a Bitcoin-backed loan, adding that MicroStrategy had ample collateral that it could pledge if needed, Bloomberg reported.
- Zendesk, Inc. (ZEN) - Zendesk discussing truce with activist Jana Partners that could involve CEO Mikkel Svane stepping down, and other changes to the board, according to the WSJ.
- Sprinklr, Inc. (CXM) - Q1 EPS -0.05 (exp. -0.06), Q1 revenue USD 145mln (exp. 141.1mln). Sees Q2 EPS at -0.06 to -0.05 (exp. -0.06), and sees Q2 revenue between USD 129.5-131.5mln (exp. 147.3mln). Sees FY23 EPS between -0.20 to -0.18 (exp. -0.21), and sees FY23 revenue between USD 540.5-546.5mln (exp. 611mln)
- Twitter, Inc. (TWTR) - Staff expect Elon Musk to use ‘firehose’ of user data to force renegotiation of USD 44bln acquisition deal, Business Insider reported. The report adds that Twitter is sending a huge amount of user data to Musk, and is expected to prove his theory with it.
- Warner Bros. Discovery, Inc. (WBD) - Seeks to cut nearly 1,000 jobs, or around 30%, in its global advertising sales team, according to Reuters. Has already started offering some US advertising staff voluntary layoffs.
- Baidu, Inc. (BIDU) - Is in talks with potential suitors to offload a 53% stake in video-streaming name Iqiyi, Reuters said. Stake could be valued at USD 7bln compared to current market value of USD 4bln.
- Boeing Company (BA) - US FAA and Europe’s EASA will conduct a meeting next week with Boeing regarding the 777X that is awaiting certification, Reuters reported.
- Raytheon Technologies Corporation (RTX) - Awarded a not-to-exceed USD 4.39bln undefinitised modification to a previously awarded cost-plus-incentive-fee, fixed-price incentive Navy contract. Also awarded a USD 866.6mln Missile Defense Agency contract.
- Lockheed Martin Corporation (LMT) - Awarded a USD 450mln Air Force contract.
- Caterpillar Inc. (CAT) - Will move its global HQ to Texas from Illinois, WSJ reported, as it assesses hiring and costs, and seeks to be closer to customers.
- United Parcel Service, Inc. (UPS) - The Independent Pilots Association and UPS Airlines announced a tentative agreement on a new two-year contract extension. The agreement improves compensation and retirement terms.
- Stellantis (STLA) - The automaker will from next week start an indefinite layoff at its Sterling Heights plant in Michigan. The exact number of layoffs was not specified.
- Planet Labs PBC (PL) - Q1 EPS -0.17 (exp. -0.15), Q1 revenue USD 40.1mln (exp. 39.5mln). Sees Q2 revenue seen between USD 41-43mln (exp. 42.3mln), Q2 adj. EBITDA seen between USD -18mln to -16mln. FY23 revenue outlook USD 177-187mln (exp. 181.3mln), and sees FY23 adjusted EBITDA between USD -70mln to -60mln.
- Montrose Environmental Group, Inc. (MEG) - Montrose determined that it was the target of an organised ransomware attack, believes the incident primarily affected computers and servers within its Enthalpy Analytical laboratory network. Suggests attack was carried out by “highly sophisticated bad actors.” Does not believe its backup data and cloud-based enterprise systems have been affected, actively working to restore impacted systems.
- Carnival Corporation (CCL) - Announced that Costa Luminosa will join the Carnival fleet in September, will start guest operations as Carnival Luminosa in November 2022 from Brisbane, Australia.
- Five Below, Inc. (FIVE), Match Group, Inc. (MTCH) - Five Below announced the election of Match Group CEO Bernard Kim as a new independent director to its Board. Board also approved a stock repurchase programme for up to USD 100mln of its common shares through June 2025.
- H&M (HNNMY) - Q2 Net Sales SEK 54.5bln (exp. 52.8bln). Local currency net sales +12%.
- Playtech (PYTCY) - Received regulatory approval for the disposal of Finalto.
- Monster Beverage Corporation (MNST) - Board authorised a new share repurchase programme of up to an additional USD 500mln of its common stock.
- Rio Tinto plc (RIO) - Rio Tinto has delivered first ore from the Gudai-Darri iron ore mine as the company brings online its first greenfield mine in the Pilbara, Western Australia, in more than a decade.
- Antofagasta (ANFGY) - Updated on the Los Pelambres concentrate pipeline incident: during the shutdown, the plant has been operating at lower throughput. Expected pipeline operation will resume end-June. FY copper production is now expected at the bottom-end of the original 660-690k/T range. Repair expenditure for the pipeline is not expected to be material.
- Olin Corporation (OLN) - Operations update: half of its Plaquemine, Louisiana chlor alkali facility has returned to operation, which has been down since April 2022, with the remainder expected to return to operations in early August 2022. Olin’s Freeport, Texas facility continues to operate at a reduced level of power generation with the expectation that a portion of the power generation will be restored in Q4. In May, Olin resumed integrated epoxy resin production at its Stade, Germany facility, which had been temporarily idled in March 2022.
- Clariant (CLZNY) - Q1 update noted markedly stronger sales growth and EBITDA expansion. Continuing operations EBITDA +27% at CHF 220mln; Sales +26% at CHF 1.26bln. Said that the Q1 performance underlined its ability to attain mid-term targets.
- PPG (PPG) - Announced the completion of the divestiture of Eberle Design to Vance Street Capital; terms not disclosed.
- Turquoise Hill Resources Ltd. (TRQ) - Announced that the first drawbell of the Hugo North underground mine at Oyu Tolgoi is scheduled to be fired on June 17th, ahead of expectations.
- Inventories - The US API's weekly energy inventory data reportedly showed crude stocks posting a surprise build of +0.7mln (exp. -1.3mln), Cushing -1.1mln, gasoline stocks posting a surprise draw of around -2.2mln (exp. +1.1mln), while the build in distillate inventories was more-or-less in-line with expectations at +0.2mln (exp. +0.3mln). The DoE will report the more widely followed official data at 10:30EDT/15:30BST.
- Oil Names - White House is reportedly weighing an oil profit tax, but is wary of the supply impact. Senate Finance Chair Wyden, a Democrat, is floating the idea of a 21% surtax on oil profits to blunt inflation, Bloomberg reported.
- BP (BP) - To lead and operate the Asian Renewable Energy Hub after purchasing a 40.5% stake, a purchase that remains subject to approval. Site will cost over USD 30bln to develop, according to FT.
- Moderna, Inc. (MRNA) - FDA vaccine advisory panel unanimously recommended granting EUA for Moderna’s COVID-19 vaccine for children aged 6-17yrs.
- Pfizer Inc. (PFE) - Reports additional Data on PAXLOVID supporting upcoming new drug application submission to US FDA.
- MorphoSys AG (MOR) - MorphoSys, HIBio enter into License Agreements for Felzartamab and MOR210.