Early Look

Monday, February 13, 2023

U.S. futures are flattish for the S&P and Dow while the Nasdaq points to a higher open with investors clearly focused on tomorrow’s January consumer price index (CPI) and its potential impact on the future interest rate move by the FOMC. Talk over the weekend was the US has shot down three unidentified objects over the past three consecutive days, thought to be surveillance balloons. There is no US economic data today. Fed speakers today- Bowman speaks at banking conference at 1:00 PM ET. The Senate Banking Committee announced Fed Chair Jay Powell will deliver his semi-annual monetary policy testimony on March 7 at 10 am. The appearance comes before the next set of job and inflation data diminishing some potential shock factor. US stocks are ripe for a selloff after prematurely pricing in a pause in Federal Reserve rate hikes, according to Morgan Stanley strategists Mike Wilson. “While the recent move higher in front-end rates is supportive of the notion that the Fed may remain restrictive for longer than appreciated, the equity market is refusing to accept this reality,” the report said. Stocks slid last week as the S&P fell 1.11%, the Dow lost 0.17%, the Nasdaq shed 2.41%, but the YTD Performance so far: S&P: +6.54%, Nasdaq: +11.96%, Dow: +2.18% and the Russell 2000 +12.98%. Other asset classes YTD totals include Gold +2.86%, US dollar -0.16%, Oil -2.74% and Bitcoin +36.69%. In Asian markets, The Nikkei Index fell -243 points to 27,427, the Shanghai Index rose 23 points to 3,284, and the Hang Seng Index slipped -26 points to 21,164. In Europe, the German DAX is up about 40 points to 15,347, while the FTSE 100 is up 25 points to 7,907. Chiefs beat Eagles 38-35 to win their third Super Bowl.

Market Closing Prices Yesterday

·     The S&P 500 Index gained 8.96 points, or 0.22%, to 4,090.46.

·     The Dow Jones Industrial Average rose 169.39 points, or 0.50%, to 33,869.27.

·     The Nasdaq Composite dropped -71.46 points, or 0.61%, to 11,718.12.

·     The Russell 2000 Index advanced 3.47 points, or 0.18% to 1,918.81.

Earnings Calendar:

·     Earnings Before the Open: JRSH OWL ROIV SANW TDC THS VNO

·     Earnings After the Close: AEMD AIN AMKR ANET ANGI BLKB CAR CDNS DENN ES FE IAC INST IRBT KRG LSCC MEDP MKSI MRC NOTV OM OTTR PLTR SEVN SKYT VTS

World News

·     The U.S. shot down a fourth flying object above Michigan’s Lake Huron; Mr. Biden and Mr. Trudeau ordered Saturday’s shoot down of an object flying at about 40,000 feet above the Yukon territory on grounds it had violated Canadian airspace; On Friday, the U.S. shot down an object flying over Alaska.

·     Canada’s leader, Justin Trudeau, said Saturday that an unidentified object being tracked over Canadian airspace was shot down by the United States. The prime minister said he consulted with President Joe Biden and, after U.S. and Canadian military aircraft were scrambled, a U.S. F-22 successfully shot the object down.

·     The EU Commission lifts its growth forecast for the euro-area in 2023 while lowering estimates for inflation.

Sector News Breakdown

Consumer

·     Hertz Global Holdings Inc. (HTZ) mentioned positively in Barron’s saying the car rental company is highly profitable and has bought back over 30% of its stock since its emergence from bankruptcy in mid—2021 and notes the big differentiator between Hertz and its rivals is its early adoption of electric vehicles, which are more profitable, and less costly.

·     JetBlue Airways Corp. (JBLU), the US Department of Justice is likely to sue to block the pending $3.8 billion merger between JetBlue and Spirit Airlines Inc. (SAVE), Politico reported.

·     Blue Apron Holdings Inc. (APRN) filed an “at-the-market” equity offering program for up to $70M.

·     Advance Auto Parts (AAP) downgraded to Neutral from Buy at Roth MKM.

·     Capri Holdings (CPRI) downgraded to Market Perform from Outperform at Cowen.

·     Five Below (FIVE) upgraded to Buy from Neutral at Roth MKM.

·     Masco (MAS) upgraded to Hold from Sell at Deutsche Bank.

Energy, Industrials and Materials

·     OPEC remains committed to stabilizing global oil prices; latest f/c’s show oil demand is set to exceed pre-pandemic levels this year, reaching nearly 102m bpd; oil demand is projected to rise further to reach 110m bpd by 2025.

·     Russia is seeking to gradually narrow the discount on its key export crude to the Brent benchmark as the government tries to boost revenue amid sanctions. Moscow is trying to minimize the impact of lower Urals prices on the nation’s coffers amid the rising cost of financing the war in Ukraine – Bloomberg

Financials

·     Fidelity National Information Services Inc. (FIS) is plotting a breakup, the financial-services technology bumps up its 4Q earnings release. Reuters on Friday reported that Fidelity plans to pursue a spinoff of its merchant business, which processes payments for companies, a move that would undo the $43B acquisition of Worldpay it completed four years ago.

·     AllianceBernstein (AB) upgraded to Outperform from Neutral at Credit Suisse.

·     Hut 8 Mining (HUT) mined 188 Bitcoin in the period ending January 31. In total,188 Bitcoin were generated, resulting in an average production rate of approximately 6.1 Bitcoin per day.

Healthcare

·     G1 Therapeutics Inc (GTHX) said it would terminate its cancer therapy trial as the placebo outperformed the drug in the late-stage trial.

·     Henry Schein Inc. (HSIC) has authorized a new $400 million share repurchase program.

·     Sorrento Therapeutics Inc (SRNE) said unit Scintilla Pharmaceuticals, commenced voluntary proceedings under chapter 11 of U.S. bankruptcy code; debtors have requested chapter 11 proceedings be jointly administered under caption in re Sorrento therapeutics, inc., et al.

·     Ocular Therapeutix, Inc. (OCUL) announced interim 10-month data from its U.S. Phase 1 clinical trial evaluating OTX-TKI, the Company’s axitinib intravitreal hydrogel implant being developed for the treatment of wet age-related macular degeneration (wet AMD), diabetic retinopathy and other retinal diseases.

·     Syneos Health (SYNH) downgraded to Underweight from Neutral at JPMorgan.

Technology, Media & Telecom

·     Meta (META) is delaying final budgets for several teams’ budgets ahead of a new round of job cuts, the Financial Times reported. The amount of money available for teams and head count has been unclear for weeks and staff are complaining about no work getting done, the FT reported.

·     Microsoft Corp. (MSFT), which has invested in ChatGPT owner OpenAI, now has an opportunity to become relevant in search, Barron’s said. Search advertising counts for about 40% of the $500 billion digital ad market, Microsoft has estimated, most of which currently goes to Alphabet Inc. (GOOGL).

·     Check Point (CHKP) Q4 EPS $2.45 vs. est. $2.19; Q4 revs $638.5M vs. est. $593.86M; announces $2B expansion of share repurchase program.

·     Fastly (FSLY) double upgraded to Buy at Bank America and tgt upped to $16 from $10.50.