Early Look

Thursday, January 19, 2023

Futures	Up/Down	%	Last
Dow	-220.00	0.66%	33,166
S&P 500	-29.25	0.74%	3,916
Nasdaq	-99.50	0.86%	11,376

 

 

Stocks are looking lower as Bears look to regain control after a week of gains by the Bulls, with S&P futures down by -0.7% to 3,917, down at the overnight low (off overnight high 3,948.75) in a continuation of yesterday’s pullback, falling back below both its 200-day MA (3,977) and 50-day MA (3,939). European stocks track US markets lower and on course to snap a six-day winning streak as evidence mounts of a slowdown in global growth. Data on Wednesday showed retail sales, producer prices and production at U.S. factories fell more than expected in December, while November output was also weaker. Rate hike concerns remain after St. Louis Fed President James Bullard and Cleveland Fed President Loretta Mester stressed on the need to raise rates beyond 5% to bring inflation to heel, while money markets see the rate peaking at 4.85% by June. Earnings slowly starting to pick up steam, with large cap banks mostly behind us and regional banks in focus today, followed by our first look on the Internet/media space with Netflix (NFLX) results later tonight. Treasury yields remain depressed and the dollar weak, down -1.25% to start the year, while oil falls. In Asian markets, The Nikkei Index slides -385 points to 26,405, the Shanghai Index rises 15 points to 3,240, and the Hang Seng Index slips -27 points to 21,650. In Europe, the German DAX drops -220 points or 1.45% to 14,960, while the FTSE 100 slides -80 points to 7,748. Bitcoin prices slip slightly after snapping its 11-day win streak on Thursday.

 

Economic Calendar for Today

·     8:30 AM ET            Weekly Jobless Claims…est. 214K

·     8:30 AM ET            Continuing Claims…est. 1.66M

·     8:30 AM ET            Housing Starts M/M for December…est. 1.359M

·     8:30 AM ET            Building Permits M/M for December…est. 1.37M

·     8:30 AM ET            Philly Fed Survey for January…est. (-11.0)

·     9:00 AM ET            Fed’s Collins Speaks at Housing Conference

·     9:00 AM ET            St. Louis Fed President James Bullard in WSJ interview                                            

·     10:30 AM ET          Weekly EIA Natural Gas Inventory Data

·     11:00 AM ET          Weekly DOE Inventory Data

·     6:35 PM ET             Fed’s Williams Speaks at Event in New York

 

Earnings Calendar:

·     Earnings Before the Open: BANC BKU CBSH CMA FAST FITB HOMB IIIN KEY MTB NTRS PG SNV TFC

·     Earnings After the Close: AMTB BANC CNXC CSTR FPH INDB MCB NFLX OCFC OZK PPG SIVB

 

Other Key Events:

·     B Riley Oncology Conference (virtual), 1/18-1/19

·     Sidoti Micro-Cap Conference (virtual), 1/18-1/19

·     St. Louis Fed President James Bullard on the 2023 outlook for the economy, inflation, and interest rate

 

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -62.11 points, or 1.56%, to 3,928.8

·     The Dow Jones Industrial Average fell -613.89 points, or 1.81%, to 33,296.96

·     The Nasdaq Composite tumbled -138.10 points, or 1.24%, to 10,957.01

·     The Russell 2000 Index declined -29.92 points, or 1.59% to 1,854.36

 

 

Macro	Up/Down	Last
Nymex	-0.54	78.94
Brent	-0.40	84.58
Gold	2.50	1,909.50
EUR/USD	0.0025	1.0818
JPY/USD	-0.22	128.66
10-Year Note	+0.011	3.386%

 

 

World News

·     The bull-bear spread in the American Association of Individual Investors (AAII) weekly survey was -2.1 vs -15.9 last week. Bulls rise to 31% from 24%, Neutrals remain unchanged at 36%, Bears fall to 33.1% from 39.9%

·     U.S. Nov net overall capital flow +$213.1B vs +$179.3B in Oct; U.S. Nov net long-term flow (ex-swaps/other) +$171.5B vs +$67.8B in Oct; China’s U.S. Treasury securities holdings $870B in Nov vs $878B in Oct (prev $910B)

 

Sector News Breakdown

Consumer

·     Olink (OLK) 5.83M share Spot Secondary priced at $20.00

·     Vroom Inc (VRM) said it executed a reduction in force as part of company’s continued focus on reducing variable and fixed costs; reduced headcount by approximately 275 employees, or approximately 20%

 

Energy

·     Chesapeake Energy Corp (CHK) said it had agreed to sell the Brazos Valley region of its Eagle Ford asset to WildFire Energy I LLC for $1.425 billion.

·     Kinder Morgan (KMI) 4Q adj EPS $0.31 vs est. $0.30 on revs $4.58B vs est. $4.58B; auth $1B increase in share repurchase program; Kim Dang to become CEO 8/1/23

·     The American Petroleum Institute shows a build of 7.6M barrels of oil for the week ending January 13; Gasoline inventories show a build of 2.8M barrels, distillate inventories show a draw of 1.8M barrels, and stockpiles at the Cushing, Oklahoma, storage hub rose 3.7M barrels.

 

Financials

·     Allstate Corp. (ALL) said it sees Q4 loss between $285M-$335M and estimated adjusted net loss between $335M-$385M. Property-Liability Premiums; net investment income in Q4 is estimated at $557M, including performance-based investment income estimated at $147M

·     Discover Financial Services (DFS) 4Q adj EPS $3.77 vs est. $3.66 on NII $3.07B vs est. $3.02B, loss provision $883Mm; digital banking NII $584Mm +24%; qtrly payment services volume was $86.4 bln, up 4% year-over-year

·     Eagle Bancorp (EGBN) 4Q EPS $1.32 vs est. $1.16, NIM 3.14%, ROAA 1.49%, ROAE 13.57%, allowance 0.97%

·     Fifth Third (FITB) Q4 EPS $1.01 vs. est. $1.00; Q4 net interest margin 3.35% vs. 2.55% y/y; compared to year-ago quarter, reported revenue increased 16% while expenses increased only 1% in Q4; Provision for credit losses $180 million vs. recovery $47 million y/y

·     First Horizon (FHN) Q4 adj EPS $0.51 vs. est. $0.48; Pre-provision net revenue down 7% from the prior quarter and up 5% on an adjusted basis; ROTCE of 19.1% and adjusted ROTCE of 21.7% with tangible book value per share of $10.23

·     KeyCorp (KEY) Q4 EPS $0.38 vs. est. $0.54; Q4 revs $1.9B vs. est. $1.93B; reports book value per share $11.79; reports CET1 ratio 9.1%; Provision for credit losses $265 million vs. $4 million y/y

·     M&T Bank (MTB) Q4 adj EPS $4.57 vs. est. $4.30; total assets of $200.7B at December 31, 2022, compared with $155.1B and $198B at December 31, 2021 and September 30, 2022, respectively; provision for credit losses was $90 mln in Q4; net loan charge-offs were $40 million

·     Charles Schwab (SCHW) downgraded to Underperform from Buy at Bank America

·     Synovus (SNV) Q4 adj EPS $1.35 vs. est. $1.36; Q4 revenue rose 18.5% y/y to $603.8M vs. est. $601.48M; Net interest income increased 27.8% to $501.3M, while net interest margin rose 11 bps sequentially to 3.60%.

·     Texas Capital Bancshares (TCBI) Q4 EPS $4.23 vs. est. $0.94; qtrly net interest income $247.6M vs $239.1M for Q3; Record level regulatory capital ratios, including 13.0% CET 1 and 17.7% Total Capital; Q4 Provision for credit losses was $34M vs. $12M in Q3

·     Truist Financial (TFC) Q4 adj EPS $1.30 vs. est. $1.28; Q4 revs $6.21B vs. est. $6.16B; Q4 net interest margin was 3.25%, up 13 bps y/y and core net interest margin was 3.17%

·     Vornado realty (VNO) cuts quarterly dividend by 29% to 37.5c per share

·     Crypto lender Genesis Global Trading is preparing to file for bankruptcy within days, according to people familiar with the matter – the WSJ reported.

 

Healthcare

·     Bellerophon Therapeutics (BLPH) completed enrollment in a phase 3 study of INOpulse, a pulsatile nitric oxide delivery system, for fibrotic interstitial lung disease.

·     Bluebird Bio (BLUE) 20M share Secondary priced at $6.00

·     CureVac (CVAC) upgrades to buy at UBS and more than doubles its price target, calling the Jan. 6 announcement on messenger RNA vaccines for flu and Covid-19 a “major de-risking” event.

·     Personalis Inc (PSNL) said its board approved a reduction in company’s workforce by up to approximately 30%, expected to be completed on March 20, 2023

 

Industrials & Materials

·     Alcoa Inc. (AA) 4Q adj EPS ($0.70) vs est. ($0.92) on revs $2.66B vs est. $2.65B; adj EBITDA $29Mm vs est. $105Mm; sees 2023 aluminum segment to ship 2.5-2.6Mm metric tons; warned total alumina shipments in 2023 to range between 12.7M-12.9M metric tons, a decrease of 0.5M metric tons from a year earlier

·     H.B. Fuller (FUL) Q4 adj EPS $1.04 vs. est. $1.24; Q4 revs $958M vs. est. $1.01B; sees adjusted ebitda for FY23 is expected to be in range of $580M-$610M; says forex currency translation is expected to unfavorably impact net revenue growth by between 3% to 4% in FY23

·     Matson (MATX) said it sees Q4 EPS $1.88-$2.01 vs. est. $3.42; says y/y decrease in consolidated operating income driven primarily by lower contribution from China service

 

Technology, Media & Telecom

·     nCino (NCNO) reaffirms 4Q and FY guide; announced appointment of Greg Orenstein as CFO

·     Roblox (RBLX) downgraded to underweight from equal weight at Morgan Stanley, which expects slower bookings growth in the second half of the year, and little upside from advertising in the near term

·     Super Micro Computer (SMCI) raises Q2 adjusted EPS view to $3.07-$3.22 from prior view $2.64-$2.90 (est. $2.73) and narrows Q2 revenue view to $1.77B-$1.8B from $1.7B-$1.8B

·     Vimeo (VMEO) posted its monthly metrics for December as subscribers fell year-over-year for the fourth straight month – by 5% in December.