Early Look

Friday, July 15, 2022

Futures	Up/Down	%	Last
Dow	108.00	0.35%	30,712
S&P 500	10.25	0.28%	3,803
Nasdaq	29.50	0.25%	11,826

 

 

U.S. and European markets looking higher early, shaking off weak banking earnings and data that showed China’s economy expanded slowest pace since the initial 2020 Wuhan outbreak as the S&P looks to snap its 5-day losing streak as futures move back above the 3,800 level. The S&P and Dow each extended losing streaks to five days, while the Nasdaq snapped its 3-day losing streak after investors digested disappointing quarterly results from two large U.S. banks (JPM and MS) and hotter-than-expected inflation data for a second day. Ahead of a big day for bank earnings today (C, WFC, PNC, USB) both JPM and MS reported slumping profits and warned of an economic slowdown. Thinks looked glum until comments by two Fed speakers (Waller and Bullard) said they supported another 75-bps interest rate increase in July, easing jitters over an even bigger, 100 basis point hike, though both said will be determined by data. Speaking of a busy morning coming up with Retail Sales, Industrial Production, Empire Manufacturing, University of Michigan Confidence, and Import/Exports. In Asian markets, The Nikkei Index gained 145 points to 26,788, the Shanghai Index fell -1.6% to 3,228 after weaker GDP data and the Hang Seng Index fell -2.19% or 453 points to 20,297. In Europe, the German DAX is up 1.5% or about 190 points to 12,709, while the FTSE 100 rises 50 points to 7,091. China’s economy grew at the slowest pace since the pandemic started two years ago. The U.S. dollar looking lower for the first time in days, while Bitcoin extends yesterday gains to $20,800.

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -11.40 points, or 0.30%, to 3,790.38

·     The Dow Jones Industrial Average fell -142.62 points, or 0.46%, to 30,630.17

·     The Nasdaq Composite edged higher 3.60 points, or 0.03%, to 11,251.19

·     The Russell 2000 Index declined -18.53 points, or 1.07% to 1,707.51

 

Economic Calendar for Today

·     8:30 AM ET           Empire Manufacturing for July…est. -2.0

·     8:30 AM ET           Import/Export Prices for June…est. +0.7% imports

·     8:30 AM ET           Advance Retail Sales data for June…est. +0.8%

·     8:30 AM ET           Retail Sales – Less Autos for June…est. +0.6%

·     9:15 AM ET           Industrial Production M/M for June…est. +0.1%

·     9:15 AM ET           Capacity Utilization for June…est. 80.6%

·     10:00 AM ET         University of Michigan Confidence, July-P…est. 49.9

·     10:00 AM ET         Business Inventories M/M for May…est. 1.3%

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

 

Earnings Calendar:

·     Earnings Before the Open: BK, BLK, C, PGR, PNC, STT, UNH, USB, WFC

 

Other Key Events:

·     8:45 AM ET           Fed’s Bostic Discusses Monetary Policy and Global Outlook

 

 

Macro	Up/Down	Last
Nymex	2.19	97.92
Brent	1.63	100.73
Gold	-3.00	1,702.80
EUR/USD	0.0039	1.0054
JPY/USD	-0.21	138.70
10-Year Note	-0.022	2.937%

 

 

World News

·     China’s Q2 GDP growth slows sharply to 0.4% y/y vs 1% estimate. Q1 was 4.8%; Q2 GDP was down -2.6% q/q vs -1.5% consensus

·     China Stats Bureau: Downward economic pressure increased substantially in Q2, impact of Covid outbreak not yet completely gone; economic base for L/T recovery is not stable; global stagflation risks are increasing; Chinese economy is facing structural/cyclical issues & confronting falling demand & a supply shock

·     The United Arab Emirates wants a more stable oil market and will abide by decisions made by OPEC+, the diplomatic adviser to UAE president Sheikh Mohammed bin Zayed al-Nahyan said – Reuters

 

Sector News Breakdown

Consumer

·     Nautilus (NLS) said as of June 30, members of JRNY(R), Nautilus’ personalized connected fitness platform, exceeded 360,000, representing approximately 13% sequential growth in the seasonally slower quarter ending June 30; remains on track to surpass 500,000 JRNY(R) FY end

·     Toyota Motor Corp (TM) unveiled four new models of its Crown range on Friday, including a sport-utility vehicle (SUV) for the first time, seeking to reboot the 67-year-old brand as Japan branches out from its long love affair with sedans.

 

Energy

·     BTU Energy (BTU) guides prelim 2q adj EBITDA $570M to $590M below est. $651.3M; said sees prelim revenue $1.31B-$1.34B vs. est. $1.4B; said continued to reduce its outstanding debt during the quarter and has retired senior secured debt of nearly $90M YTD

·     Solar stocks fall early (FSLR SPWR SEDG ENPH) after Senator Joe Manchin told Democratic leaders he wouldn’t support new spending on climate measures or tax increases per Bloomberg

·     President Joe Biden will leave the Middle East this week with no public announcements on increasing oil supply

 

Financials

·     Discover Financial Services (DFS) said credit card delinquency rate 1.03% at June end vs 1.04% at May end; credit card charge-off rate 1.19% at June end vs 1.32% at May end

·     BlackRock (BLK) Q2 adj EPS $7.36 vs. est. $7.90; Q2 revs $4.53B vs. est. $4.65B; assets under management at qtr-end were $8.5 trillion vs $9.5 trillion reported at q2 2021 end

·     Bank of New York (BK) Q2 EPS $1.03 vs. est. $1.12; Q2 revs $4.25B vs. est. $4.18B; Q2 provision for credit losses $47M, vs. est. $3.9M; qtr end aum of $1.9 trillion, decreased 17% primarily driven by market values; qtrly total noninterest expense of $3.1 billion, increased 12%

·     PNC Financial (PNC) Q2 EPS $3.42 vs. est. $3.14 and $3.29 last year; Q2 revenue rose 9% to $5.12B vs. est. $5.13B; Q2 tangible book value per share $74.39; Q2 CET1 capital ratio 9.6% and Q2 net charge-offs .11%; Provision for credit losses $36M, -88% y/y, Bloomberg estimate $151.3M; qtrly net interest income of $3.1 billion increased $247 million, or 9%

·     US Bank (USB) Q2 EPS $0.99 vs. est. $1.08; Q2 revs $6.01B vs. est. $5.89B; Q2 net interest margin 2.59% vs. 2.53% a year ago; return on average assets of 1.16% and return on average common equity of 15.3%, excluding merger and integration charges

·     Wells Fargo (WFC) Q2 revenue $17.03B vs. est. $17.54B; Q2 net interest income $916M vs. est. $10.15B; Q2 provision for credit losses $580 mln vs benefit of $1,260 mln last year; Q2 provision for credit losses included a $235 million increase in the allowance for credit losses due to loan growth; qtrly net interest margin on a taxable-equivalent basis was 2.39% vs 2.02%

 

Healthcare

·     UnitedHealth (UNH) Q2 adj EPS $5.57 vs. est. $51.9; Q2 revenue $80.33B vs. est. $79.68B; raises FY22 adjusted EPS view to $21.40-$21.90 from $21.20-$21.70; Optum Q2 revenues of $45.1 billion grew $6.8 billion or 18% year-over-year; Q2 2022 medical care ratio was 81.5% compared to 82.8% last year, due to covid effects and business mix

·     Codexis (CDXS) guides FY22 revs $135M-$1441M below prior $152M-$158M and est. $155.5M; sees Q2 revs about $38M vs. est. $40.2M; announces agreement with Pfizer (PFE) to supply enzyme for the manufacture of Paxlovid (nirmatrelvir tablets; ritonavir tablets)

·     10x Genomics (TXG) said it sees prelim Q2 revs to be approximately $114.5M, an approximate 1% decrease from $115.8M for the prior year and below est. $127.7M

·     Clover Health (CLOV) announces planned Medicare advantage expansion for 2023; announced intent to offer Medicare Advantage plans in 13 new counties across Georgia, South Carolina & Tennessee

 

Industrials & Materials

·     Rio Tinto (RIO) shares slip 6% as warns that COVID-related labor shortages led to a 2% drop in iron ore shipments in H1; misses across the board in its second-quarter update on output, but it maintained guidance on its full-year iron ore shipments; Q2 shipments rose 4.7% to 79.9 Mt

·     CSX (CSX) upgraded to Buy from Hold at Stifel

·     Norfolk Southern (NSC) upgraded to Buy from Hold at Stifel

·     Ryder (R) boosts quarterly dividend to $0.62 from $0.58

·     Virgin Galactic (SPCE) announces new spaceship manufacturing facility in Mesa, Arizona; capacity to produce up to six spaceships per year, significantly increasing flight frequency; said first of these ships is expected to commence revenue-generating payload flights in late 2025

 

Technology, Media & Telecom

·     Pinterest (PINS) shares rise 14% overnight after the WSJ reported activist investor Elliott Management Corp. has built a stake of more than 9% in recent months — partly in common stock, and has been in discussions with Pinterest the past several weeks https://on.wsj.com/3AYu8EW

·     Amazon (AMZN) will create more than 4,000 permanent jobs to become one of the UK’s top employers, despite fears that rising inflation will hit consumer demand

·     Software AG cut guidance yesterday, marking the third negative software data point of the week (after NOW CEO was cautious on CNBC Mad Money and Unity cut its forecast)