Traders Market Weekly: When Logic Hits You in The Face

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    Cisco (CSCO) holds its Cisco Live IT event all week
    Splunk (SPLK) execs will be making appearances at the company’s ‘.conf22’ event.
    New York Times Company (NYT) Investor Day on June 13
    BRP Inc. (NASDAQ:DOOO) Investor Day on June 15.


    SPAC calendar,

    Shareholders with Virgin Group Acquisition Corp. II (VGII) will meet to vote on approve the business combination with Grove Collaborative.

    Shareholders with Corner Growth Acquisition Corp. 2 (TRON), Dune Acquisition Corporation (DUNE), Americas Technology Acquisition Corp. (ATA), and PMV Consumer Acquisition Corp. (PMVC) all meet to vote on extending their deadlines for a business combination.


    The Oppenheimer Consumer Conference may be the most intriguing item on the conference schedule next week.

    Companies due to present include Albertsons Companies (ACI), BJ’s Wholesale (BJ), Dollar General (DG), Ulta Beauty (ULTA), and Walmart (WMT). Analysts will be looking to see if recent data points suggesting some weakness at the lower end of the consumer spending matrix are being seen widely. There will also be a sharp focus on if inflation costs are being passed on to consumers, as well as the updates on the promotional backdrop, supply chain issues, and inventory management.

    The consumer packaged goods sector will also be represented at the conference with execs from Cal-Maine Foods (CALM), J&J Snack Foods Corp. (JJSF), SunOpta (STKL), Hostesss Brands (TWNK), and Utz Brands (UTZ). As part of its conference preview, Oppenheimer said the updates from leading retailers such as Ulta Beauty (ULTA) and Dollar General (DG) on efforts to drive alternative revenue streams will be watched closely.


    Annual meetings:

    Notable annual meetings next week include Blue Apron (NYSE:APRN) and SeaWorld Entertainment (SEAS) on June 13, Caesars Entertainment (CZR) on June 14, Dick’s Sporting Goods (DKS), Fastly (FSLY), Shake Shack (SHAK), and Etsy (ETSY) on June 15, AMC Entertainment (AMC) and Norwegian Cruise Line Holdings (NCLH) on June 16, as well as Marriott International (MAR) on June 17.


    Barron’s mentions:

    The publication makes the case that energy stocks have more room to rise, especially for investors willing to mix it up with renewables-focused companies. Energy is noted to still be the cheapest sector in the S&P 500, trading at 9.8X expected earnings over the next year. Another positive identified is that balance sheets in the sector are healthier than they’ve been in years.

    Politics are also working in favor of energy stocks, with the reality of soaring gasoline prices increasing tolerance for traditional energy sources. Energy is also seen as due for a major investment cycle. Goldman Sachs noted that capital expenditure in oil and gas production has fallen 61% since peaking in 2014, and overall primary energy investment has dropped 35%.

    That means the three years could see a major rebound as producers ramp up supply to meet demand, and companies in sectors facing severe capacity constraints could see a boost. The six energy stocks that made the cut were EOG Resource (EOG), Enel (OTCPK:ENLAY), Phillips 66 (PSX), Sunrun (RUN), Shell plc (SHEL), Liberty Energy (LBRT).


    S&P Futures vs Fair Value: -94.0

    10 yr Note: 3.243%
    USD/JPY: 134.35 -0.07
    EUR/USD: 1.0477 -0.0041
    Europe: FTSE: -1.8% DAX: -2.2% CAC: -2.2%
    Asia: Hang Seng: -3.4% Shanghai: -0.9% Nikkei: -3.0%
    Gold (1857.50 -18.00) Silver (21.46 -0.48) Crude (118.77 -1.80)


    The S&P 500 futures are 2.2% below fair value; the Nasdaq 100 futures are 2.9% below fair value; and the DJIA futures are 1.5% below fair value

    Key factors driving the futures market:

    Worries about the Fed taking an even more aggressive rate-hike path in wake of the May CPI report
    Massive selling in cryptocurrency market, fueled in part by concerns that crypto lender Celsius has paused withdrawals and transfers
    Festering growth concerns with reports noting Shanghai and Beijing are seeing renewed lockdowns due to detection of new COVID cases
    Flattening yield curve (2s10s spread briefly inverted overnight) piques recession worries
    National average gasoline prices exceed $5.00/gallon
    FOMC meeting, which will produce updated economic and interest rate projections, to be held June 14-15
    Bank of England to hold policy meeting on Thursday (25 basis point hike is expected)
    Tesla (TSLA) files for 3-for-1 stock split
    Choice Hotels (CHH) to acquire Radisson Hotel Group Americas for $675 million


    Brokerage research calls of note:

    Upgrades: FIS, EDU, PWR, TSLA
    Downgrades: DOCU, IVZ, MU, TROW, ZEN


    Equity indices in the Asia-Pacific began the week on a sharply lower note.

    South Korean truckers remained on strike for the seventh day in a row.
    South Korea’s exports through the first ten days of June were down 12.7% yr/yr while chip exports increased 0.8% yr/yr.
    Continued weakness in the yen briefly sent the Japanese currency to its lowest level since 1998 against the dollar while Bank of Japan Governor Kuroda repeated that the BoJ will continue its ultra-loose policy.

    —Equity Markets—

    Japan’s Nikkei: -3.0%
    Hong Kong’s Hang Seng: -3.4%
    China’s Shanghai Composite: -0.9%
    India’s Sensex: -2.7%
    South Korea’s Kospi: -3.5%
    Australia’s ASX All Ordinaries: -1.3%


    Major European indices trade lower across the board.

    The spread between Italy’s 10-yr yield and Germany’s 10-yr yield widened to its highest level in over two years, reflecting growing worries about the region’s economy.
    Reuters reported that the Bank of England will raise its bank rate by 25 bps on Thursday and maintain a slow hiking pace in the coming months while FT speculated that the BoE will hike by 50 bps this week.
    French President Macron’s party appears to have lost some parliamentary seats in yesterday’s election and it remains unclear if the party will maintain its absolute majority.
    Fitch affirmed the U.K.’s AA- rating with a Stable outlook.

    —Equity Markets—

    STOXX Europe 600: -1.8%
    Germany’s DAX: -2.1%
    U.K.’s FTSE 100: -1.3%
    France’s CAC 40: -2.2%
    Italy’s FTSE MIB: -2.2%
    Spain’s IBEX 35: UNCH


    U.K.’s April GDP -0.3% m/m (expected 0.1%; last -0.1%); 3.4% yr/yr (expected 3.9%; last 6.4%). April Construction Output -0.4% m/m (expected -0.5%; last 1.7%); 3.9% yr/yr (expected 3.8%; last 4.7%). April Industrial Production -0.6% m/m (expected 0.2%; last -0.2%); 0.7% yr/yr (expected 1.7%; last 0.7%). April Manufacturing Production -1.0% m/m (expected 0.2%; last -0.2%); 0.5% yr/yr (expected 1.8%; last 1.9%)


    Japan’s Q2 BSI Large Manufacturing Conditions -9.9 (last -7.6)
    New Zealand’s April Permanent/Long-Term Migration -80 (last 926)


    Tesla (TSLA 665.48, -31.21, -4.5%): Files for 3-for-1 stock split; RBC Capital Markets upgrades to Outperform from Sector Perform
    Carnival Corp (CCL 10.58, -0.47, -4.3%): Wall Street Journal says cruise companies are lowering prices to fill boats with increase capacity limits for summer cruising
    Choice Hotels (CHH 126.32, +6.01, +5.0%): to acquire Radisson Hotel Group for $675 million


    The Bear Cometh

    Dow 30672.38 -720.41 (-2.29%)
    Nasdaq 10891.87 -448.15 (-3.95%)
    SP 500 3773.60 -127.26 (-3.26%)
    10-yr Note
    NYSE Adv 114 Dec 3004 Vol 245 mln
    Nasdaq Adv 444 Dec 3948 Vol 1.5 bln


    Morning Update

    #Dow 30542.60 -850.19 (-2.71%)
    #Nasdaq 10839.69 -500.33 (-4.41%)
    #SP500 3757.68 -143.18 (-3.67%)
    10-yr Note -29/32..3.299%
    #USDJPY: 133.92 #EURUSD: 1.0434
    NYSE Adv 126 Dec 3024 Vol 313 mln
    Nasdaq Adv 444 Dec 3948 Vol 2.0 bln

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