>>> US Close Dow +0.50% S&P +0.43% Nasdaq +0.74% Russell +0.41%

Closing Stock Market Summary

The S&P 500 gained 0.4% on Tuesday amid more indications of an economic recovery, while the Nasdaq Composite (+0.7%) pulled ahead to close at another record high for its eighth straight advance. The Dow Jones Industrial Average (+0.5%) and Russell 2000 (+0.4%) also posted modest gains, but the market did close near session lows.  

All 11 S&P 500 sectors started the session sharply higher after President Trump clarified that the U.S.-China trade deal was still intact and June flash Manufacturing PMIs out of Europe improved more than expected. There was brief weakness in the overnight futures market after trade advisor Navarro said the trade deal with China was over, which he later said was taken out of context. 

Shortly after the open, data showed new home sales in the U.S. rebound 16.6% m/m in May to a seasonally adjusted annual rate of 676,000 (Briefing.com consensus 635,000), which supported the market's expectations for an economic recovery. There was a lack of follow-through buying interest, though, as the market traded sideways for most of the day. 

Within the S&P 500, the consumer discretionary (+1.0%), information technology (+0.7%), and communication services (+0.6%) sectors advanced the most amid noticeable, and persistent, gains in its mega-cap components, including Apple (AAPL 366.53, +7.66, +2.1%) and Amazon (AMZN 2764.41, +50.50, +1.9%).

Conversely, the utilities (-1.1%) and real estate (-0.4%) sectors closed lower after slipping into negative territory in early action, while the consumer staples (-0.1%) and industrials (unch) sectors squandered gains amid some late selling in the broader market. 

There was no confirmed catalyst for the minor slippage, but it appeared to be rooted in part to a lack of conviction from buyers given the narrow leadership in the mega-caps. Others pointed to Treasury Secretary Mnuchin warning that decoupling from China is possible if their trading relationship remains uneven. 

Elsewhere, U.S. Treasuries finished near their flat lines in another lackluster session in the bond market, while gold futures rose 0.9% to $1782.00/ozt. The 2-yr yield was unchanged at 0.19%, and the 10-yr yield increased one basis point to 0.71%. The U.S. Dollar Index declined 0.3% to 96.72. WTI crude declined 0.5% to $40.38/bbl. 

Reviewing Tuesday's economic data:

  • New home sales increased sharply in May, rising 16.6% m/m to a seasonally adjusted annual rate of 676,000 (consensus 635,000). The increase came on the heels of a sharp downward revision for April to 580,000 from 623,000.
    • The key takeaway from the report is that sales activity bounced back smartly in May, reflecting a welcome pickup in contract signings as COVID-19 shutdown pressures lessened. This understanding should foster expectations that sales activity will continue to improve in coming months given the tight supply of existing homes for sale, low mortgage rates, and pent-up demand.

Looking ahead, investors will receive the FHFA Housing Price Index for June and the weekly MBA Mortgage Applications Index on Wednesday.

  • Nasdaq Composite +12.9% YTD
  • S&P 500 -3.1% YTD
  • Dow Jones Industrial Average -8.4% YTD
  • Russell 2000 -13.7% YTD

>>> US Gapping down

Gapping down
In reaction to disappointing earnings/guidance:

  • INFO -1.8%

Other news:

  • VXX -4.8% (trading lower with US futures up ~1%)
  • CSTL -4.5% (commenced public offering of 1.5 mln common shares)
  • LIQT -4.5% (lightly traded; filed for 1.6 mln share common stock offering by holders)
  • SPR -4.4% (Boeing [BA] directed co to reduce 2020 B737 shipset production plan)
  • BRP -3.6% (announced follow-on offering of 11.5 mln shares of Class A common stock)
  • ALLO -1.6% (lightly traded; presented preclinical findings supporting DLL3-target AlloCAR T therapy in SCLC)
  • ONEM -1.5% (announced secondary offering of 7.0 mln common shares by selling shareholders)
  • TMUS -0.7% (commenced public securities offerings in connection with Softbank's stake monetization)

Analyst comments:

  • CBOE -2.6% (downgraded to Sell from Neutral at Goldman)
  • MU -0.9% (downgraded to Market Perform from Outperform at BMO Capital Markets)
  • MHK -0.8% (downgraded to Sell from Hold at Deutsche Bank)

>>> US Gapping up

Gapping up 

Select Index ETFs trading higher:

  • IWM +1.6%, SPY +1.1%, DIA +1.1%, QQQ +0.8%

Other news:

  • TBIO +63.9% (expands collaboration to develop mRNA vaccines with Sanofi)
  • APYX +28.7% (received clearance to sell Helium Plasma Technology products in five new countries)
  • INO +14.3% (receives $71 million funding from the U.S. Department of Defense to support the large-scale manufacture of the company's proprietary CELLECTRA 3PSP smart device and the procurement of CELLECTRA 2000 devices)
  • MYOV +8.8% (announces top-line results from SPIRIT 1; receives Priority Review for oral relugolix from FDA)
  • GO +8.7% ( to join S&P MidCap 400)
  • SCVL +7.1% (provided store re-opening update; Q2 comp sales are up +28.1% yr/yr second quarter-to-date)
  • NRZ +6.3% (raised quarterly common stock dividend)
  • KRTX +3.8% (reports positive outcome of End-of-Phase 2 meeting with the FDA for KarXT)
  • TELL +3.5% (names Charif Souki as Executive Chairman)
  • SDGR +3.1% (announced a significant expansion of its work to discover novel antiviral therapeutics for COVID-19; announced a strategic collaboration with Thermo Fisher Scientific to extend the use of cryo-EM)
  • VSTM +2.2% (announced preclinical proof-of-concept for combining VS-6766 with defactinib to treat metastatic uveal melanoma)
  • ZS +1.9% (prices offering of of $1.0 bln of 0.125% convertible senior notes due 2025)
  • EAT +1.6% (to join S&P SmallCap 600)
  • PD +1.4% (prices offering of $250 mln of 1.25% Convertible Senior Notes due 2025)
  • CC +1.3% (EPA has approved Glyclean Hard Surface Cleaner for use against SARS-COV-2)

Analyst comments:

  • MT +5.3% (upgraded to Hold from Sell at Societe Generale)
  • ON +3.6% (upgraded to Overweight from Neutral at Piper Sandler)
  • PAG +2.7% (upgraded to Buy from Hold at The Benchmark Company)
  • NUVA +1.8% (upgraded to Buy from Hold at Needham)
  • FAST +1.6% (upgraded to Neutral from Underweight at JP Morgan)
  • AAPL +1.5% (target raised to $400 from $325 at UBS)
  • ABBV +1.3% (upgraded to Overweight from Neutral at Atlantic Equities)
  • AMBA +1.1% (initiated with a Buy at Rosenblatt)

>>> US Early premarket gappers

Early premarket gappers

  • Gapping up:
    • TBIO +75.6%, APYX +38.7%, SCVL +13.3%, MYOV +11.4%, GO +7.9%, NRZ +6.3%, KRTX +4.5%, ALLO +4.2%, TELL +3.5%, EAT +1.6%, ZS +1.4%, IWM +1.3%, PD +1.2%, VSTM +1.1%, SPY +1.1%, DIA +1%, QQQ +0.7%
  • Gapping down:
    • SPR -5%, CSTL -4.5%, LIQT -4.5%, BRP -3.6%, VXX -3.5%, ONEM -3.1%, INFO -1.6%, TMUS -1.5%

FT : Can renationalisation get Alitalia off the ground?

Can renationalisation get Alitalia off the ground?
The Italian government has its work cut out to revive the country’s flag carrier

How do you solve a problem like Alitalia? Italy’s perennially lossmaking national airline has been a thorn in the side of governments for decades. 

Now, with the carrier renationalised as a result of the Covid-19 crisis and injected with €3bn on top of existing state loans, Italy is working on yet another relaunch of an airline that has not posted a year of net profit since the start of the millennium. 

Prime Minister Giuseppe Conte last week described Alitalia as “a project, a newco” and that the government’s plan would be focused on preserving the connectivity of the airline’s international and domestic network.

“We must try to protect this space in the market because it is important [for Italy] to have a carrier,” he said, but offered few other details.

Founded by the government at the end of the second world war, the carrier thrived for four decades as the public purse paid for an expansion of its fleet, staff and routes until its first crisis emerged in the 1990s. Labour unions helped torpedo merger talks with Air France in 1993 and KLM in 2002. In 2008, with the airline facing bankruptcy, the government privatised it — and its problems.

But with the aviation industry tentatively resuming flights, Italy has to decide whether to appoint an insider to lead the overhaul, or try to make a clean break with the past and bring in a new face. An announcement is expected in the coming weeks, according to a person familiar with the matter.

Although no formal strategy has been unveiled, Alitalia is expected to be handed a monopoly for air transport between Sicily and mainland Italy, as well as other minor islands. More controversially, some Italian media reports have suggested the government may even seek to impose Alitalia’s employment contract framework on all other carriers operating in Italy — a move that lawyers say would be immediately challenged.

A revamped Alitalia is also expected to be smaller, with its fleet falling from 113 planes to between 92 and 105. International routes will also be a focus rather than the fiercely competitive European short-haul market.

Profitability, however, is likely to remain a distant goal.

Alitalia, which does not publish consolidated financial statements, last year reported a -14.1 per cent operating profit margin, according to Milano Finanza, an Italian business publication. 

Andrea Giuricin, a transport economist, warned that attempting to relaunch the airline during the industry’s gravest crisis in decades would be challenging.

“It will be difficult to come out of the current situation with the government’s strategy. This year the market environment is a lot more complicated due to the Covid-19 pandemic,” he said.

His verdict is blunt: Alitalia is too small to survive in the long term without being swallowed by a larger company. “The current standalone vision isn’t sustainable and the risk is increasing the losses in the future,” he added.

According to the Italian airline transport agency, ENAC, Alitalia last year flew 9.9m international passengers to and from Italy, out of a total of 127m. Ryanair flew 28.6m people, while easyJet transported 14.7m.

Alitalia’s planes transport fewer people per flight and spend less time airborne compared with its competitors. The company also has too many ground staff, according to Mr Giuricin.

Libero Milone, the former chairman and chief executive of Deloitte in Italy who has worked as a consultant for some of the world’s largest airlines, and was in charge of auditing Alitalia in the past, is more optimistic. The crisis has created a rare opening for its strategy to be overhauled, he argues.

Mr Milone said a focus on what he called “destination Italy”, or leveraging the vast global appeal of Italy to efficiently connect Alitalia into the broader value chain of tourism, including trains, hotels and promotion of the country, should be at the heart of a new strategy.

“Because of this great crisis Alitalia now has a unique opportunity, a clean slate that can be reformed to work for the benefit of the entire country,” he said. “Italians have over the years become disillusioned with Alitalia, but now there is a chance to make people proud of the company again.”

A poll conducted by SWG last December found that 55 per cent of Italians disagreed with putting more taxpayers’ money into Alitalia, which had 10,700 staff last year.

But breaking with Alitalia’s past has so far defeated all who have tried. Ministers acknowledge that some jobs will have to be lost, but the airline’s heavily unionised workforce has resisted previous restructurings. 

Others point towards the likely challenge Rome will face from Brussels and other airlines if the government is seen to be providing unfair assistance.

“The new rules are unfair and risk triggering divestments from [other airlines] in Italy,” said Matteo Castioni, the chief of AICALF, the new Italian low-cost airlines lobby.

During a video conference call with the transport minister last week, Ryanair chief executive Micheal O’Leary said the government’s plans failed to guarantee a level playing field and fair competition on the market, according to two attendees.

“We don’t want to limit healthy competition but rather guarantee equal rules and rights for everybody,” Italian transport minister Paola De Micheli said after the meeting. 

EU rules currently allow governments to inject money into airlines that are facing losses because of the Covid-19 outbreak — as Germany has done with Lufthansa.

But Alitalia’s crisis began long before the pandemic and ending it will be an unenviable challenge for the executive Rome asks to try.

“The Italian government is gripping on to an obsolete vision of air transport that no longer exists,” Mr Giuricin said. “It is an illusion that the government’s latest €3bn can turn the company around unless they also change the competition rules.”

Barron's : How Snap Could Become WeChat for the U.S.

A recovering advertising market and the continued rollout of new features and tech within Snap’s main app prompted one analyst to lift his target for the stock price to one of the highest on Wall Street on Monday.

MKM Partners analyst Rohit Kulkarni raised his target price to $26 from $18, citing impressive usage statistics and several new features that Snap (ticker: SNAP) announced at its virtual partner summit two weeks ago—especially videogame partnerships and new e-commerce features in the Snapchat app. He continues to rate the name at Buy.

“As we tie all the announcements together, we think Snap is setting itself apart from its peers on being the go-to platform to create, view, integrate, and monetize Augmented Reality experiences,” Kulkarni wrote in a research note.

Shares of Snap rose 2.4% to $23.20 on Monday.

Only two analysts surveyed by FactSet have price targets of $26, and the average target price of $19.16 is 15.5% below Friday’s closing level. Of the 41 analysts that cover Snap stock, 25 have the equivalent of a Buy rating, according to FactSet. Three analysts rate Snap a Sell and 13 have it at Hold.

Kulkarni asks two key questions in the note. The first surrounds whether Snap is transforming into something like the Tencent -owned (TCEHY) WeChat, which recorded $115 billion in transactions from around 25% of its user base, or 300 million people, in 2019.

Snap, which continues to describe itself as a camera company on its corporate website, has taken a similar approach, attempting to increase commerce within Snapchat, the company’s flagship app. Last week, executives touted add-ons that let users buy things like movie tickets and food for delivery.

He says Snap’s e-commerce play has a shot at success in the near term, but notes that Facebook (FB) is also attempting to integrate consumer experiences inside its messaging software.

Regardless, Snap has a long way to catch up to larger rivals—and whether it can is Kulkarni’s second main question. The $180 of revenue Facebook takes in for each of its millions of American members is more than 10-fold the $14 Snap collects. Twitter’s (TWTR) per-user sales hovered between $61 and $64, Kulkarni wrote in the note.

Analysts project Snap’s North American per-user revenue will rise to $15.60 in 2020 and $20 in 2021, according to FactSet.

Shares of Snap have gained 42% this year, while the S&P 500 index is down 3.5%.

Barron's ; Nikola and DraftKings Stock Started as ‘SPACs.’ What Investors Need t

Nikola and DraftKings Stock Started as ‘SPACs.’ What Investors Need to Know.

Special-purpose acquisition companies, or SPACs, are having a moment.

Led by some of 2020’s buzziest new stocks, a stampede of SPAC initial public offerings has hit the U.S. market over the past six weeks.

Also referred to as “blank check” companies, SPACs raise money from investors in an IPO, then use the proceeds to acquire a business, typically within two years.

Electric and fuel-cell startup Nikola (ticker: NKLA), online sports-betting site DraftKings (DKNG), and spaceflight company Virgin Galactic Holdings (SPCE) all went public by merging with SPACs, forgoing a traditional IPO. They have since inspired cult followings, with their stocks multiplying several times over.

Not every SPAC can boast that kind of success. But it’s clearly a model that has won acceptance from investors.

Last year, 59 SPAC IPOs raised $13.6 billion. That record is set to be smashed in 2020, even as the traditional IPO market has been slow to revive. This year, 32 SPACs have already gone public, raising $10.4 billion—nearly half of all IPO dollars generated in 2020—according to SPACInsider, a website devoted to research and data about the industry. Nine more SPACs are on deck to list soon.

As a result, at least 96 SPACs are searching for acquisition targets, with a combined $25 billion in their trusts, per SPACInsider. Because special-purpose acquisition companies tend to do transactions with a market value of three or four times their trust, as much as $100 billion worth of companies could go public in the next two years, just from existing SPACs.

There are good reasons to pay attention. A growing proportion of new SPACs are coming from experienced issuers that can attract better deals, more fundamentals-focused investors, and high-quality management teams.

Take Virgin Galactic. Although well below its frothy February high over $37, at a recent $15.30, the space-tourism venture’s stock is still more than 50% above its precombination value. (By convention, a SPAC goes public at $10 per unit—a common share and a fraction of a warrant, generally exercisable at $11.50.)

Virgin Galactic’s chairman, Chamath Palihapitiya—an early executive at Facebook (FB) who founded the Social Capital venture-capital fund—is back for more. In late April, while the traditional IPO market was shuttered, he raised two additional SPACs: Social Capital Hedosophia Holdings II (IPOB), with $414 million in IPO proceeds to seek technology investments in the U.S., and Social Capital Hedosophia Holdings III (IPOC), which raised $828 million to target tech companies abroad.

Other prominent SPAC sponsors have returned to the market this year. IPOs in 2020 from serial sponsors include those of B. Riley Principal Merger II (BMRG), CC Neuberger Principal Holdings (PCPL), Churchill Capital III (CCXX), and Chardan Healthcare Acquisition 2 (CHAQ).

The record number of SPACs looking for targets could mean more competition for deals. But there is evidence that the universe of companies willing to sell to a SPAC is greater now than ever before.

Although not as well-publicized as Nikola or DraftKings, other combinations have been successful. Barron’s recommended buying shares of the SPAC that merged with Vivint Smart Home (VVNT) before its transaction closed in January. The shares ran up to $28 before investors got a dose of reality. But at a recent $17.40, they are still up more than 60% since January.

Vertiv Holdings (VRT), a digital-infrastructure company, recently traded at $14, up about 30% since its deal was announced in December. Its sponsor, Goldman Sachs Group (GS), has filed to raise a new SPAC: GS Acquisition Holdings II.

A bet on a SPAC is a bit of a speculative leap. It’s best to stick with reputable and experienced sponsors and management teams—and not to expect every SPAC to trade like Nikola or Virgin Galactic.

The risks are limited, however. The cash raised in an IPO goes into a trust, where it earns interest until a target company is acquired. If investors don’t like the deal, they can redeem their common stock for a share of the cash in the trust.

Special-purpose acquisition companies give investors a chance to get on the ground floor of a new stock, with daily liquidity and a guaranteed redemption value.

>>> Europe : Brokers Upgrades & Downgrades - 23rd of June 2020 V2(+)

>>> Up
* ArcelorMittal Raised to Hold at SocGen; PT 10.30 euros
* ASA International Group Raised to Buy at Citi; PT 239 pence
* Bouygues Raised to Overweight at JPMorgan; PT 35 euros
* Kingfisher Raised to Reduce at AlphaValue
* LafargeHolcim Raised to Buy at SocGen
* Lonza PT Raised to 590 Swiss francs at Jefferies
* SSE Raised to Sector Perform at RBC; PT 1,400 pence (+)

>>> Down
* Ackermans Cut to Hold at Kepler Cheuvreux; PT 124 euros
* Bellway Cut to Underperform at BofA; PT 2,300 pence
* BillerudKorsnas Cut to Hold at SEB Equities; PT 133 kronor
* BillerudKorsnas Cut to Underperform at Jefferies; PT 115 kronor
* Cyan Cut to Hold at MainFirst; PT 15 euros
* Deutsche Bank Cut to Reduce at Kepler Cheuvreux; PT 6.50 euros
* Kering Cut to Neutral at Oddo BHF (+)
* Moncler Cut to Hold at Jefferies; PT 36 euros
* RBI Cut to Reduce at Kepler Cheuvreux; PT 14.50 euros
* Saint-Gobain Cut to Hold at SocGen; PT 34 euros
* Schoeller-Bleckmann Cut to Hold at Erste Group; PT 29 euros
>>> Initiation
* Admiral Rated New Hold at Berenberg; PT 2,566 pence
* Aegon Rated New Buy at Berenberg; PT 4.50 euros
* Ageas SA/NV Rated New Hold at Berenberg; PT 45.90 euros
* Aviva Rated New Hold at Berenberg; PT 477 pence
* Barratt Cut to Neutral at BofA; PT 550 pence
* Buzzi Unicem Rated New Buy at SocGen; PT 24 euros
* Capgemini Resumed Buy at Citi; PT 120 euros
* Direct Line Rated New Buy at Berenberg; PT 341 pence
* Gjensidige Rated New Hold at Berenberg; PT 200 kroner
* Hannover Re Rated New Hold at Berenberg; PT 175 euros
* Hastings Rated New Buy at Berenberg; PT 248 pence
* M&G Rated New Buy at Berenberg; PT 200 pence
* Munich Re Rated New Buy at Berenberg; PT 306 euros
* NN Rated New Hold at Berenberg; PT 38.70 euros
* Poxel Rated New Market Outperform at JMP; PT 21 euros
* Redrow Cut to Underperform at BofA; PT 400 pence
* Sabre Insurance Rated New Hold at Berenberg; PT 284 pence
* Scor Rated New Buy at Berenberg; PT 32 euros
* SSP Reinstated Buy at Shore Capital
* Swiss Re Rated New Buy at Berenberg; PT 99 Swiss francs
* Taylor Wimpey Cut to Neutral at BofA; PT 160 pence
* Topdanmark Rated New Hold at Berenberg; PT 290 kroner
* Tryg Rated New Buy at Berenberg; PT 212 kroner
* Vistry Group Cut to Underperform at BofA; PT 710 pence

>>> Call
* Aggreko Estimates Cut Amid Virus’s Impact on Oil, Events: Citi
* Bayer PT Up on ‘Compounding’ Long-Term Story: Berenberg (+)
* BillerudKorsnas Stock Rally Has Gone Too Far, Cut at Jefferies
* Capgemini Resumed at Buy at Citi on Post-Pandemic Demand (+)
* Carlsberg More Than ‘Covid-19 Trade;’ PT Raised at Jefferies
* DSV Panalpina’s 2Q Ebit ‘Phenomenal From Any Angle’: Bernstein
* LSE’s Refinitiv Purchase Still Likely to Be Approved, Citi Says
* Moncler Suffers ‘Altitude Sickness,’ Jefferies Says, Cuts Stock (+)
* NCC Trading in 2020 ‘Far Better Than Expected,’ Peel Hunt Says (+)
* Offshore Drillers Equity Negative Under Liquidation: Barclays

WWD : Dior Poised to Release Air Jordan Sneakers

EXCLUSIVE: Dior Poised to Release Air Jordan Sneakers
Customers will have an opportunity to buy the sneakers on a first-come, first-served basis by registering on a dedicated microsite.


The Air Jordan 1 High OG Dior.
Courtesy of Dior

PARIS— The Air Dior collection is finally ready to land.
Dior announced on Monday that customers will have an opportunity to buy the eagerly awaited Air Jordan 1 OG Dior limited-edition sneakers soon on a first-come, first-served basis by registering in advance on a dedicated microsite.
Interested parties will be asked to record their preferred model (either high-top or low-top), size and pickup location. Each participant may register only once for the desired style and size, said Dior, which will reveal the full details of the site at a later date.
One of the most hotly anticipated launches of 2020, Dior’s collaboration with Air Jordan was unveiled at the Dior pre-fall 2020 show in Miami in December, and was scheduled to go on sale in March. The coronavirus pandemic forced the brands to postpone the rollout.


Looks from the Air Dior collection. Photograph by Brett Lloyd/Courtesy of Dior
The sneakers will be sold exclusively in selected Dior pop-ups and pop-in stores. A limited number will be allocated to each boutique, and those who register before the inventory runs out will be invited to visit the store of their choice to buy their sneakers — although there is no obligation to purchase.
Advance bids on resale sites like StockX indicate strong demand, so Kim Jones, creative director of men’s wear at Dior, has said he wants to make sure the shoes don’t get snapped up by resellers. Those eligible to buy the sneakers will receive a unique QR code, and matching ID will be required at the time of purchase.
In addition, the Air Dior capsule collection of ready-to-wear and accessories will be available to shop at Dior pop-in stores from July, as well as in two pop-up stores: at Selfridges department store in London and at the Taikoo Li shopping mall in Chengdu, China.
The pop-ups will feature an architectural concept based on the nature of air, with a decor that blends glass, wood and natural materials. A transparent display unit will display the latest available pieces, while the Air Dior logo will appear in interactive lights.
For the Chinese market, a separate online experience will be held via a dedicated WeChat program. An address list of the pop-ups and Dior boutiques where the Air Dior capsule is available will also be posted.