Early Look

Tuesday, April 18, 2023

Futures	Up/Down	%	Last
Dow	143.00	0.42%	34,272
S&P 500	18.25	0.44%	4,195
Nasdaq	83.50	0.64%	13,279

 

 

Another day, and another move higher for U.S. stocks, with S&P futures (Spuz) +0.45% at 4,195, approaching its best levels since early February as The CBOE Volatility Index keeps dropping, with the VIX closing under 17 for the first time since January 2022 and extends losses to lowest since Nov 2021 this morning. Absolutely zero fear in stocks heading into earnings season, despite reports (from Bank America) that investors turn the most underweight stock vs. bonds since 2009. Bank earnings helped lift markets yesterday and getting a bump this morning as well with BAC, BK both posting improved quarterly results. In Asian markets, The Nikkei Index gained 144 points to 28,658, the Shanghai Index rose 7 points to 3,393, and the Hang Seng Index slumped -131 points to 20,650. In Europe, the German DAX adds to gains, rising 89 points to 15,878, while the FTSE 100 rose 20 points to 7,900. Note the 2023 stock market rally continues to be concentrated according to Jim Bianco Research, “5.81% of the 7.05% YTD gain in the S&P 500 is from the eight FAANG+MNT stocks (META, AAPL, AMZN, NFLX, GOOGL, MSFT, NVDA), while 1.24% of this gain is from the “other” 4.92% stocks in the SPX. FAANG+MNT is 25.4% of the SPX’s market cap, and 82.4% of its YTD gain.

 

Market Closing Prices Yesterday

·     The S&P 500 Index climbed 13.68 points, or 0.33%, to 4,151.32.

·     The Dow Jones Industrial Average rose 100.78 points, or 0.30%, to 33,987.18.

·     The Nasdaq Composite gained 34.26 points, or 0.28%, to 12,157.72.

·     The Russell 2000 Index advanced 21.68 points, or 1.22% to 1,802.84.

 

Economic Calendar for Today

·     7:45 AM ET            ICSC Weekly Retail Sales

·     8:30 AM ET            Housing Starts M/M for March…est. 1.4M

·     8:30 AM ET            Building Permits M/M for March…

·     8:55 AM ET            Johnson/Redbook Weekly Sales

·     4:30 PM ET            API Weekly Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: BAC BK BNI CBSH GS JNJ LMT MBWM PLD

·     Earnings After the Close: EQBK FHN FULT HWC ISRG MCB NFLX OMC PFBC UAL UCBI WAL

 

Other Key Events:

·     Fed’s Bowman Discusses Central Bank Digital Currencies at 1:00 PM ET.

·     American Association for Cancer Research (AACR), 4/14-4/19, in Orlando, FL

·     Needham 22nd Annual Healthcare Conference (virtual), 4/17-4/20

 

 

Macro	Up/Down	Last
Nymex	-0.15	80.68
Brent	-0.01	84.76
Gold	9.90	2,016.90
EUR/USD	0.0051	1.0978
JPY/USD	-0.41	134.05
10-Year Note	-0.004	3.587%

 

 

World News

·     China’s economy grew in Q1 as gross domestic product (GDP) reported at +4.5% y/y in the first three months of the year, data from the National Bureau of Statistics (NBS) showed, faster than the 2.9% in Q4 and topping forecasts for a 4.0% expansion: the strongest growth in a year.

·     China Q1 industrial output 3.9% vs 4.3% est., retail sales 10.6% vs 7.5% est., fixed-asset investments 5.1% vs 5.7% est.

·     U.S. February net overall capital flow +$28.0B vs +$183.2B in Jan (prev +183.1 bln); Feb net long-term flow (ex-swaps/other) +$71.0b vs. +$31.9B in January. China’s U.S. Treasury securities holdings %849B in Feb vs $859 bln in January.

·     House Speaker Kevin McCarthy pledged to pass legislation to raise the debt ceiling — and listed his demands. Democrats stressed that despite the speech at the New York Stock Exchange, House Republicans still haven’t proposed an actual budget plan.

·     Germany April ZEW investor expectations fall to 4.1; below est. 15.6.

·     RBA April Rate Meeting Minutes showed members first discussed the case for a further 25bps increase in the cash rate target at this meeting; agreed there is stronger case to pause and reassess need for tightening; important to be clear policy may need to be tightening again to curb inflation in a timely manner.

 

Sector News Breakdown

Consumer

·     Tesla (TSLA) absent from prestigious EV Shanghai event – WSJ reports.

·     Enovix (ENVX) announces proposed $150 million offering of convertible senior notes due 2028.

 

Energy, Industrials and Materials

·     JB Hunt (JBHT) 1Q EPS $1.89 vs est. $2.00 on revs fell -7% y/y to $3.23B vs est. $3.40B; decline in revenue was primarily driven by declines in volume of 25% in Integrated Capacity Solutions (TM) (ICS), 5% in Intermodal (JBI) and 17% in Final Mile Services(R) (FMS); and a 17% decline in revenue per load in Truckload (JBT).

·     BWX Technologies, Inc. (BWXT) announced a contract with an estimated value of up to $45 billion over a 10-year ordering period from the U.S. Department of Energy (DOE) for environmental management operations at the Hanford Site in Washington.

·     Valero (VLO) downgraded to Equal Weight from Overweight at Wells Fargo.

·     Marathon Petroleum (MPC) downgraded to Equal Weight from Overweight at Wells Fargo.

·     In solar and alternative energy, Sunrun (RUN) upgraded at Keybanc while downgraded First Solar (FSLR) and Plug Power (PLUG).

 

Financials

·     Bank America (BAC) Q1 EPS $0.94 vs. est. $0.82; Q1 Trading revenue excluding DVA $5.05 billion, vs. est. $4.46 billion; FICC trading revenue excluding DVA $3.43B vs. est. $2.62B; equities trading revenue excluding DVA $1.62B vs. est. $1.8B; Provision for credit losses $931M; return on average equity 12.5%, vs. estimate 10.9%; 1Q-End Deposit Balances Down $20B, or 1% q/q.

·     BNY Mellon (BK) Q1 EPS $1.13 vs. est. $1.12; Q1 revs rose 11% y/y to $4.4B vs. est. $4.4B; at qtr-end aum of $1.9 trillion, decreased 16%, primarily market impact; pushing forward with our strategic agenda to reinvigorate underlying growth by doing more for our clients; BK total deposits $281.29B vs. Bloomberg est. $277B.

·     Commerce Bancshares (CBSH) Q1 EPS $0.95 vs. est. $0.92; Q1 revs $389.24M vs. est. $388.83M; Q1 net interest income (NII) was $251.6M, a $3M decrease from the prior quarter; on deposit balances, co saw normal seasonal deposit outflows in January.

·     FB Financial (FBK) Q1 EPS $0.76 vs. est. $0.72; Q1 revs $127.2M vs. est. $131.3M; Q1 NII $103.7M vs. $88.2M prior and est. $110.71M; grew deposits 12.2% annualized; adj tangible BV/shr grew to $27.06; allowance for credit losses at 1.48% of loans HFI vs 1.44% at end 2022.

·     Equity Lifestyle (ELS) Q1 EPS $0.44 vs. est. $0.51; Q1 revs $370M vs. est. $368M; Normalized FFO was $0.74 per share, representing a 2.0% increase compared to the same period in 2022, outperforming the midpoint of our guidance expectation by $0.8 million.

·     Coinbase Global Inc. (COIN) may consider moving its headquarters outside the US unless the country changes its approach to regulation, Chief Executive Officer Brian Armstrong said.

·     Chubb (CB) upgraded to Buy from Neutral at Citi.

 

Healthcare

·     Johnson & Johnson (JNJ) Q1 adj EPS $2.68 tops consensus $2.51; Q1 revenue $24.7B vs. est. $23.67B; raises FY23 adj EPS to $10.60-$10.70 from $10.45-$10.65 (est. $10.51) and boosts FY23 revenue view to $97.9B-$98.9B from $96.9B-$97.9B (est. $97.71B); raises quarterly dividend 5.3% to $1.19 from $1.13.

·     GlaxoSmithKline (GSK) reached an agreement to buy the late-stage biopharmaceutical company BELLUS Health Inc. (BLU) for $14.75 a share in cash, representing a total equity value of around $2.0 billion; includes access to camlipixant, a key phase III treatment for refractory chronic cough.

·     Gamida Cell (GMDA) shares rose 48%; after the FDA approved its cell therapy Omisirge for patients with blood cancers to reduce the risk of infection following stem cell transplantation.

 

Technology, Media & Telecom

·     Alibaba (BABA): Reuters reported that Chinese regulators are expected to cut a fine on Ant Group to $700 million from an initially planned amount of more than $1 billion.

·     Comcast (CMCSA) upgraded to Overweight from Neutral at Atlantic Equities.