Early Look

Friday, January 20, 2023

Futures	Up/Down	%	Last
Dow	-25.00	0.12%	33,098
S&P 500	3.25	0.09%	3,919
Nasdaq	52.50	0.46%	11,409

 

 

U.S. stock futures look mixed as the Nasdaq Composite rises following mixed quarterly results from Netflix (NFLX) overnight (beat on sub adds but misses Q4 EPS), sending those shares higher by over 5%, while Alphabet (GOOGL) gains early on jobs cuts and reports its founders will return to deal with the AI threat. With GOOGL’s 12K job cuts, it brings the total to roughly 40K job cuts announced just between them, AMZN and MSFT in recent days. Bonds are lower as investors continue to digest the raft of central bank rhetoric this week. Oil prices on track for a 2^nd straight week of gains on hopes that stronger Chinese demand will offset weaker outlook in other major economies, while gold prices hold near 8-month highs. Yesterday, two top Federal Reserve officials said high interest rates were needed to keep pressuring inflation that’s showing signs of slowing but is still too rapid. U.S. stocks fell for the third consecutive session on Thursday, on track for a weekly decline. In Asian markets, The Nikkei Index gained 148 points to 26,553, the Shanghai Index gains 24 points to 3,264, and the Hang Seng Index jumps 393 points to 22,044 (ahead of the Lunar Holiday week coming up). In Europe, the German DAX is up around 50 points to 14,970, while the FTSE 100 rises 16 points to 7,760.

 

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -29.94 points, or 0.76%, to 3,898.92.

·     The Dow Jones Industrial Average slid -252.79 points, or 0.76%, to 33,044.17.

·     The Nasdaq Composite slumped -104.74 points, or 0.96%, to 10,852.27.

·     The Russell 2000 Index declined -18.02 points, or 0.97% to 1,836.34.

 

Economic Calendar for Today

·     10:00 AM ET                Existing Home Sales M/M for December

·     1:00 PM ET                   Baker Hughes Weekly rig count data

·     1:00 PM ET                   Fed’s Waller Speaks at the Council on Foreign Relations

 

Earnings Calendar:

·     Earnings Before the Open: ALLY HBAN RF SLB STT

 

 

Macro	Up/Down	Last
Nymex	0.71	81.04
Brent	0.46	86.63
Gold	7.10	1,931.00
EUR/USD	0.0003	1.0829
JPY/USD	1.40	129.82
10-Year Note	+0.038	3.437%

 

 

World News

·     Federal Reserve Bank of New York President John Williams said on Thursday the U.S. central bank has more rate hikes ahead and sees signs inflationary pressures might be starting to cool off from torrid levels. Williams, who also serves as vice-chairman of the Federal Open Market Committee (FOMC), did not specify in his prepared remarks what size rate increase he would like to see at the next FOMC meeting, scheduled for Jan. 31-Feb. 1.

·     Bank of Japan Governor Haruhiko Kuroda on Friday defended the central bank’s decision to widen the trading band in its yield curve control program. Speaking during a panel session at the World Economic Forum, Kuroda said it was “not wrong” for the BOJ’s board to widen its tolerance range for the yield on its 10-year government bond from 25-bps to 50bps last month.

·     The 30-year US mortgage rate has moved from 7.08% to 6.15% over the last 10 weeks, the largest 10-week decline (-93 bps) in rates since January 2009 – as per Charlie Bilello

·     Bank America said weekly flows into bonds $14.4 billion, $7.5 billion into equities, $0.6 billion into cash, $0.4 billion out from gold

 

Sector News Breakdown

Consumer

·     Costco (COST) Board of Directors has reauthorized a common stock repurchase program of up to $4 billion; program will expire in January 2027 and replaces the current $4 billion program, under which approximately $1.4 billion had been purchased.

·     Nordstrom (JWN) cuts its FY EPS outlook to $1.50-$1.70 from prior $2.30-$2.60 and cuts FY22 EBIT margin view to 2.8%-3.1% from 4.1%-4.4% reflecting lower than expected gross margin as the company took additional markdowns to finish the year in a healthy inventory position; sees fiscal 2022 revenue growth at low-end of its previously issued outlook of 5-7%

·     Latham Group (SWIM) CFO Robert Masson to step down, Former CFO to rejoin on interim basis; reaffirmed its previously issued FY22 guidance for net sales of $685M-$700M and adjusted EBITDA of $140M-$145M.

·     Bed Bath & Beyond (BBBY) gets notice from Nasdaq on delayed quarterly report; has 60 days to submit a plan to regain compliance; no immediate effect on listing or trading of common stock.

 

Energy, Industrials and Energy

·     Delek US (DK) downgraded to Neutral from Overweight at Piper Sandler

·     Par Pacific (PARR) upgraded to Overweight from Neutral at Piper Sandler

·     PPG Industries (PPG) Q4 adj EPS $1.22 vs. est. $1.13; Q4 revs $4.19B vs. est. $4.1B; guides Q1 adjusted EPS $1.10-$1.20 below consensus $1.36 and sees Q1 sales volumes down mid-single-digit percentage y/y; expect overall demand environment to remain consistent sequentially with Q4 with soft economic activity remaining in Europe and China

 

Financials

·     Bank OZK (OZK) Q4 EPS $1.34 vs. est. $1.32

·     Banner Corp. (BANR) Q4 EPS $1.68 vs. est. $1.59; Q4 revs $172.1M vs. est. $153.53M; Q4 NIM was 4.23%, compared to 3.85% prior and 3.17% y/y

·     Independent Bank (INDB) Q4 EPS $1.69 vs. est. $1.65; generated a ROA and a ROE of 1.56% and 10.70%, respectively, for Q4, as compared to 1.43% and 9.90%, respectively q/q

·     OceanFirst Financial (OCFC) Q4 EPS $0.89 vs. est. $0.62; qtrly net interest income increased by $10.5M to $106.5M, from $96.0M in prior linked quarter.

·     Regions Financial (RF) Q4 EPS $0.70 vs. est. $0.65; Q4 revs $2B vs. est. $1.95B; Q4 net interest margin FTE 3.99% vs. 2.83% a year ago; sees Q1 NII growth of 1%-3%, FY23 NII growth 13%-15%; sees FY23 adjusted revenue up 8%-10% y/y

·     Redfin (RDFN) said the median U.S. home-sale price increased 0.9% y/y to $350,250 during the four weeks ending January 15, the biggest increase in a month. Prices remain elevated because buyer activity has started to pick up as mortgage rates decline due to slowing inflation.

·     SVB Financial Group (SIVB) Q4 EPS $4.62 vs est. $5.26; Q4 net income $275M, adj fee income $349M and provision for credit losses $141M; Q4 net interest margin 2% vs. 1.91% a year ago; sees FY23 net interest margin 1.75%-1.85%

·     Concentrix Corp (CNXC) Q4 EPS $3.01 vs. est. $3.33; Q4 revs rose 11.9% to $1.64B vs. est. $1.68B; guides Q1 revs $1.61B-$1.64B (est. $1.66B) and FY $6.71B-$6.86B

 

Healthcare

·     Eli Lilly (LLY) said that U.S. regulators had rejected its application seeking accelerated approval for donanemab, a treatment for people with early-stage Alzheimer’s disease. Lilly said that the planned readout from an ongoing, Phase 3 study of donanemab remains on track for the middle of the year, and if positive, will form the basis of an application for full approval after

·     Deciphera (DCPH) 6.94M share Secondary priced at $18.00.

·     Kala Pharmaceuticals (KALA) files to sell up to $40M in common stock.

 

Technology, Media & Telecom

·     Netflix (NFLX) Q4 EPS $0.12 misses the $0.45 estimate on in-line revs at $7.85B; Q4 global streaming paid net additions 7.66M topping the 4.5M estimate; CEO Reed Hastings to step down, Sarandos & Peters to serve as co-CEO; going forward, Netflix said will no longer give subscriber guidance; sees Q1 revs $8.17B (in-line) and EPS $2.82 vs. est. $2.99

·     Alphabet’s (GOOGL) Google said that it plans to cut around 12,000 jobs, or more than 6% of its global workforce, amid broader layoffs in the technology sector. Separately, the NYTimes reports Google calls in help from Larry Page and Sergey Brin to deal with ChatGPT threat.

·     Nintendo (NTDOY) plans to boost switch output to meet resilient demand – Bloomberg reported.

·     Texas Instruments (TXN) said that its board of directors has selected Haviv Ilan to become the company’s next president and CEO, effective April 1.

·     T-Mobile (TMUS) said it was investigating a data breach that potentially affected 37 million accounts; said it identified malicious activity on Jan. 5 and contained it within a day, adding that no sensitive data such as financial information was compromised.

·     PagerDuty (PD) upgraded to overweight from equal weight at Morgan Stanley citing resilient growth and improving profitability as well as an attractive valuation, and downgraded Domo (DOMO) to equal weight from OW citing a magnitude of recent sales execution issues.

·     Pinterest (PINS) downgraded to Neutral from Buy at MKM Partners