MARKET WRAPS

Watch For:

University of Michigan Preliminary Consumer Survey for August; World Agricultural Supply & Demand Estimates

Opening Call:

Stock futures traded higher Friday as more signs emerged that inflation in the U.S. has been cooling.

Inflation, and the Federal Reserve's quest to conquer it by raising interest rates, have dominated the attention of markets in recent months and largely drove their direction this week.

"The data keep piling up that the corner has been turned on inflation," said Jamie Cox, managing partner at Harris Financial Group. "The Fed no longer needs to apply emergency brake monetary policy, and that's a good thing. Soft landing runway is in sight."

However, San Francisco Fed President Mary Daly said the central bank's fight against rising inflation wasn't over. She told Bloomberg Television that inflation data for July are "significant in that they are saying that we're seeing some improvement but they're not victory."

Daly added her base case calls for an interest-rate hike of 50 basis points when the Fed next meets in September, following the last two more aggressive rates boosts of 75 basis points. But the Fed president told Bloomberg she has an "open mind" if the data point to another large increase being necessary.

A consumer sentiment gauge from the University of Michigan due Friday could further clarify how consumers are feeling about prices. It also might offer investors an extra clue about how consumer demand could evolve in the coming weeks and months.

Michigan's survey is expected to report midmonth sentiment of 52.5, according to two dozen economists surveyed by The Wall Street Journal. That would mark a slight improvement from July's final reading of 51.5. The survey's consumer-confidence index has plummeted this year, nearing the lowest level in the indicator's roughly six-decade history.

"We are living through a very confusing economic moment," Ross Mayfield, an investment strategy analyst at Baird Private Wealth Management, said. "Thanks to the millions of aftershock effects of the Covid-19 pandemic and Russia-Ukraine war, it can feel like up is down and bad is good.

"Inflation still reigns supreme in the minds of investors," Mayfield added. "And whether the stock market has officially bottomed or not, the path forward will be determined by inflation and the reaction of the Fed."

John Lynch, chief investment officer at Comerica Wealth Management, said while he was encouraged by the moderation in pricing pressures, "investors must recognize the Fed's challenge in reducing inflation."

Lynch said that "simply shifting to a pattern of 50 basis points [interest rate hikes] doesn't eliminate the risk to the economy or the financial markets."

The CME FedWatch tool indicates that a majority of investors, 59.5%, are anticipating the Fed will boost rates by 0.5 a percentage point in September. The probability for a rate hike of 0.75 a percentage point was at 40.5%. The probabilities were more or less reversed earlier in the week before the inflation data were issued.

Forex:

The dollar was slightly higher in Europe against a basket of currencies but may weaken again as "Fed pivot" bets grow, analysts said.

If the Fed meets market expectations to raise rates by only 50 basis points in September, this will likely mark the peak of its aggressive rate-increase cycle, according to CMC Markets.

However, other central banks may keep pace on tightening, especially the European Central Bank which appears to have just begun its aggressive rate-increase cycle and which may cause further dollar weakness.

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Sterling is more likely to be driven by broad risk appetite than Friday's better-than-expected U.K. economic growth data, said MUFG Bank.

"In reality the better June print doesn't change the overall backdrop and won't alter at all the Bank of England's outlook and hence its policy outlook," MUFG said.

The U.K. economy contracted 0.6% on month in June, less than the 1.3% decline expected by economists in a WSJ survey. For the second quarter, the economy contracted by 0.1% on quarter against expectations for a 0.2% drop.

Bonds:

The 10-year Treasury yield has probably reached bottom, based on technical charts, according to UOB Global Economics & Markets Research.

On Thursday, the 10-year yield rose to breach resistance on a declining trendline and the 55-day exponential moving average. These developments and the yield's movements suggest the 10-year yield's downside risk has dissipated and the 2.516% level is likely a bottom which may hold for at least several weeks.

Going forward, the 10-year yield is expected to move between 2.516% and 3.103%, UOB said.

Energy:

Oil prices ticked higher in early European trade and remained on course for a weekly rise as concerns about limited supplies persist.

Recession fears have undermined the demand outlook for oil and weakened prices in recent days but investors remain concerned about extreme tightness in the market, limited spare capacity, and a lack of investment in new supplies, said Neuberger Berman.

"We know supply across the board is visibly tight due to underinvestment and supply is going to remain very tight."

Metals:

Base metals and gold were holding steady in London, with sentiment wavering over mixed macro signals.

Figures from the U.K. showed the economy contracted 0.1% in the three months to June, with a recession likely from October onward.

In Asia, "sentiment onshore is still generally positive this week, especially when domestic demand is expected to improve in the second half of 2022," according to Marex.

   
 
 
   
 
 

TODAY'S TOP HEADLINES

 
 

J&J to Stop Selling Talc-Based Baby Powder Globally Next Year

Johnson & Johnson will stop selling baby powder made with talc globally in 2023, the company said Thursday.

The decision comes after the New Brunswick, N.J.-based company stopped selling the product in the U.S. and Canada in 2020, citing a decline in customer demand amid safety concerns about one of its most famous products.

   
 
 

Meditation App Calm Lays Off 20% of Staff

Calm.com Inc., maker of popular meditation and wellness app Calm, has laid off 20% of its staff, according to a memo sent by Chief Executive David Ko to employees on Thursday.

People familiar with the matter said San Francisco-based Calm employed roughly 400 people, and that approximately 90 were laid off.

   
 
 

Rivian's Losses Nearly Triple to $1.7 Billion

Rivian Automotive Inc. reported its net loss in the second quarter nearly tripled to $1.7 billion, further pressuring the electric-vehicle startup to conserve cash and move quickly to fill customer orders.

The California-based SUV and truck maker said revenue for the quarter was about $364 million as it increased production and deliveries of its first three models. Rivian started manufacturing vehicles for the first time late last year.

   
 
 

GSK, Sanofi, Haleon Shares Recover Some Recent Losses After Zantac Drug Responses

Shares in GSK PLC, Sanofi and Haleon PLC all rose on Friday--recouping some of their losses over the past few days--after the companies issued statements responding to recent comments related to the U.S. lawsuits over discontinued heartburn drug Zantac.

Shares of GSK are currently trading 2.0% higher at 1,427.60 pence, Sanofi 0.4% higher at EUR85.18 and Haleon 0.3% higher at 266.70 pence.

   
 
 

UK Economy Contracted in 2Q As Inflation and Ukraine War Takes Toll

The U.K. economy contracted in the second quarter, as inflation and uncertainty from Russia's invasion of Ukraine took their toll on the economy.

U.K. gross domestic product fell 0.1% from April to June compared with the preceding quarter, the Office for National Statistics said Friday, easing from the 0.8% expansion registered in the first quarter. Economists polled by The Wall Street Journal expected the economy to contract by 0.2%.

   
 
 

Trump Won't Oppose Release of Search Warrant

WASHINGTON-The Justice Department on Thursday asked a Florida judge to unseal the warrant FBI agents used to search former President Donald Trump's Mar-a-Lago home this week, along with a list of items they took from the property.

The request raises the prospect that underlying reasons for the extraordinary search of the former president's home could soon become public.

   
 
 

Write to paul.larkins@dowjones.com TODAY IN CANADA

Earnings:

2Q unless stated otherwise

Anaergia

Aya Gold & Silver

dentalcorp

Fennec Pharma

Karora Resources

MDA

Neo Performance

Q4

Softchoice

Economic Indicators:

None scheduled

Stocks to Watch:

Algonquin Power 2Q Rev $624.3M; 2Q Adj EPS 16c; 2Q Loss/Shr 5c

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Avcorp 2Q Loss/Shr C$0.02; 2Q Rev C$29.3M

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Epsilon Energy 2Q EPS 44c

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Farmers Edge 2Q Loss/Shr C$0.56 Vs. Loss C$0.24; 2Q Rev C$7.7M Vs. C$6.15M

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FG Financial Group 2Q Loss/Shr 87c; 2Q Loss $5.48M

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Global Atomic 2Q EPS C$0.00; 2Q Rev C$397,862

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Hardwoods Distribution 2Q EPS $1.76; 2Q Sales $700.2M

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High Arctic 2Q Rev C$25.7M Vs. C$16.4M; Rev Rose Across Drilling, Ancillary Services, Canadian Production Services Segments; Loss/Shr C$0.42 Vs. Loss C$0.08; 6-Mos Loss/Shr C$0.47 Vs. Loss C$0.19; 6-Mos Rev C$54.4M Vs. C$34.1M; Maintained Strong Balance Sheet, With Working Cap Balance of C$27.5M; to Focus on Growth Opportunities in PNG; Might Return Surplus Cash From Canadian Well-Servicing Business Sale to Shareholders

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Intermap 2Q Loss/Shr 2c

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Mdf Commerce 1Q Rev C$32.2M Vs. C$22.6M; 1Q Loss/Shr C$0.14 Vs. Loss C$0.15

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Nexus Industrial REIT 2Q Property Rev C$34.1M Vs. C$18.7M; NAV Per Unit at C$12.41 as of End June Vs. C$12.35 End March; C$11.21 End June 2021; 2Q FFO C$15.7M Vs. C$8.9M; 2Q Distributions Per Unit C$0.160 Vs. C$0.160; 2Q Net Operating Income of C$24.0M, Up 96%; to Make Aug Cash Distribution of C$0.05333/Unit

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Northland Power 2Q Sales C$556.8M Vs. C$408.3M; Basic EPS C$1.01 Vs. Loss C$0.06; 6-Mos Sales C$1.25B Vs. C$1.02B; 6-Mos Basic EPS C$2.01 Vs. C$0.40; Sees FY Adjusted Ebitda at C$1.25B-C$1.35B Vs. C$1.15B to C$1.25B Previously; Sees FY Adjusted Free Cash Flow Per Shr at C$1.85-C$2.05 Vs. C$1.65-C$1.85; Sees FY Free Cash Flow Per Share at C$1.40-C$1.60 Vs. C$1.20-C$1.40; Financial Position Still Strong, Co Well-Placed to Fund Growth Objectives

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NXT Energy Solutions 2Q Loss/Shr C$0.03; YTD Loss/Shr C$0.06; Cash & Short-Term Investments at June 30 Were C$1.12M

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Tetra Bio-Pharma Secures $6.0M Financing From Alpha Blue Ocean; Tetra Bio-Pharma Agrees to Issue to Investor Debentures, Warrants

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VitalHub 2Q Rev C$9.5M, Up 64%; Cash on Hand as of End June at C$36.8M Vs C$16.4M as of End Dec 2021

   
 
 

Expected Major Events for Friday

05:30/FRA: 2Q ILO Unemployment and Labour Market-related indicators

06:00/UK: Jun Index of Production

06:00/UK: Jun UK trade

06:00/UK: Jun Index of services

06:00/UK: 2Q First quarterly estimate of GDP

06:00/UK: Jun Monthly GDP estimates

06:45/FRA: Jul CPI

08:00/ITA: Jun Foreign Trade EU

08:30/UK: 2Q Business investment in the UK: provisional results

11:30/UK: Jul NIESR Monthly GDP Tracker

12:30/US: Jul Import & Export Price Indexes

14:00/US: Aug University of Michigan Survey of Consumers - preliminary

16:00/US: World Agricultural Supply & Demand Estimates (WASDE)

All times in GMT. Powered by Onclusive and Dow Jones.

   
 
 

Expected Earnings for Friday

Acorn Energy (ACFN) is expected to report for 2Q.

Aimia (AIM.T) is expected to report for 2Q.

Airsculpt Technologies Inc (AIRS) is expected to report for 2Q.

Boston Omaha Corp (BOC) is expected to report for 2Q.

Broadridge Financial Solutions Inc (BR) is expected to report $2.19 for 4Q.

CASI Pharmaceuticals (CASI) is expected to report for 2Q.

Cadiz Inc (CDZI) is expected to report $-0.10 for 2Q.

Canlan Ice Sports (ICE.T) is expected to report for 2Q.

Carver Bancorp Inc (CARV) is expected to report for 1Q.

Charles Schwab (SCHW) is expected to report.

Constellation Energy Corp (CEG) is expected to report for 2Q.

ContraFect Corp (CFRX) is expected to report for 2Q.

DATATRAK International Inc (DTRK) is expected to report for 2Q.

EBET Inc (EBET) is expected to report for 3Q.

Enterprise Group (E.T) is expected to report for 2Q.

GLG Life Tech Corp (GLG.T,GLGLF) is expected to report for 2Q.

Honest Company Inc (HNST) is expected to report for 2Q.

Houston American Energy Corp (HUSA) is expected to report for 2Q.

Hugoton Royalty Trust (HGTXU) is expected to report for 2Q.

Humacyte Inc (HUMA) is expected to report for 2Q.

Inrad Optics (INRD) is expected to report for 2Q.

KLX Energy Services Holdings Inc (KLXE) is expected to report for 2Q.

Lassonde (LAS.A.T) is expected to report for 2Q.

Oconee Federal Financial Corp (OFED) is expected to report for 4Q.

Odyssey Marine Exploration Inc (OMEX) is expected to report for 2Q.

POINT Biopharma Global Inc (PNT) is expected to report for 2Q.

Power REIT (PW) is expected to report for 2Q.

PureCycle Technologies Inc (PCT) is expected to report for 2Q.

Sabina Gold & Silver Corp (SBB.T,SGSVF) is expected to report for 2Q.

Soligenix Inc (SNGX) is expected to report $-0.08 for 2Q.

Sonida Senior Living Corp (SNDA) is expected to report for 2Q.

Sonnet BioTherapeutics Holdings Inc (SONN) is expected to report for 3Q.

SouthGobi Resources Ltd (1878.HK,SGQ.T,SGQRF) is expected to report for 2Q.

Spectral Medical Inc (EDT.T) is expected to report $-0.01 for 2Q.

Spectrum Brands Holdings Inc (SPB) is expected to report $1.33 for 3Q.

Star Equity Holdings Inc (STRR) is expected to report for 2Q.

Statera Biopharma Inc (STAB) is expected to report for 1Q.

TeraWulf Inc (WULF) is expected to report for 2Q.

Twin Disc Inc (TWIN) is expected to report $0.17 for 4Q.

Venus Concept Inc (VERO) is expected to report for 2Q.

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ANALYST RATINGS ACTIONS

Barings BDC Cut to Outperform From Strong Buy by Raymond James

BBQ Holdings Cut to Hold From Buy by Craig-Hallum

Bolt Biotherapeutics Cut to Market Perform From Outperform by SVB Leerink

Boot Barn Holdings Raised to Buy From Neutral by Seaport Global

BuzzFeed Cut to Underperform From Neutral by B of A Securities

Cheniere Energy Partners Raised to Outperform From In-Line by Evercore ISI Group

Deere & Co Raised to Outperform From In-Line by Evercore ISI Group

Disney Raised to Buy From Neutral by Guggenheim

Elastic Cut to Neutral From Buy by Monness, Crespi, Hardt

Expensify Raised to Buy From Hold by Loop Capital

First Solar Raised to Overweight From Sector Weight by Keybanc

Fiserv Raised to Outperform From In-Line by Evercore ISI Group

Fisker Cut to Neutral From Outperform by Exane BNP Paribas

Gates Industrial Cut to In-Line From Outperform by Evercore ISI Group

Getty Images Holdings Cut to Hold From Buy by Benchmark

Healthcare Realty Raised to Outperform From Neutral by SMBC Nikko

Hyliion Holdings Cut to Neutral From Overweight by Cantor Fitzgerald

Hyperfine Cut to Equal-Weight From Overweight by Wells Fargo

IsoPlexis Cut to Equal-Weight From Overweight by Morgan Stanley

IsoPlexis Cut to Market Perform From Outperform by SVB Leerink

Landec Raised to Outperform From Market Perform by Barrington Research

Life Time Group Holdings Cut to Underweight From Equal-Weight by Wells Fargo

Lowe's Cut to Neutral From Buy by Citigroup

Marqeta Cut to Equal-Weight From Overweight by Wells Fargo

OppFi Cut to Neutral From Buy by DA Davidson

Paccar Cut to In-Line From Outperform by Evercore ISI Group

Professional Holding Cut to Market Perform From Outperform by Keefe, Bruyette & Woods

Rackspace Technology Cut to Market Perform From Outperform by William Blair

Rackspace Technology Cut to Sector Perform From Outperform by RBC Capital

Red Robin Cut to Hold From Buy by Benchmark

Seer Cut to Neutral From Overweight by JP Morgan

Traeger Cut to Market Perform From Outperform by William Blair

Traeger Cut to Neutral From Outperform by Baird

Trinseo Cut to Hold From Buy by Deutsche Bank

Unifi Cut to Market Perform From Market Outperform by CJS Securities

Upstart Holdings Cut to Underweight From Neutral by Atlantic Equities

Welltower Cut to Neutral From Outperform by SMBC Nikko

This article is a text version of a Wall Street Journal newsletter published earlier today.

 

(END) Dow Jones Newswires

August 12, 2022 05:10 ET (09:10 GMT)

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