Early Look

Friday, July 28, 2023

Futures	Up/Down	%	Last
Dow	50.00	0.14%	35,481
S&P 500	16.25	0.36%	4,580
Nasdaq	118.50	0.76%	15,689

 

 

U.S. futures are looking at overnight gains, led higher by technology earnings, bouncing back after bonds around the world fell as the Bank of Japan, the only major central bank not to have begun reversing ultra-easy monetary policy, surprised investors by loosening its control of market rates at its policy meeting overnight. The Dow Jones Industrial Average snapped its historic winning streak of 13-days Thursday, as stocks tumbled mid-afternoon amid several factors with major averages ending just off the session lows and well off their earlier 52-week highs earlier in the day for the S&P 500. Treasury yields jumped around 1:00 PM Thursday after a news report said the Bank of Japan will discuss tweaking its yield-curve control policy at a policy board meeting Friday. Note Japan is the largest foreign holder of US Treasurys, so higher rates in Japan could lead to less demand for US debt. The yield on the benchmark 10-year yield topped 4%, while the dollar gained, hitting gold prices. A weaker 7-year bond auction also hurt prices, which had slipped earlier after a round of stronger economic data. The 10-year has its biggest one-day gain since September, rising 16-bps to 4.011%, while the two-year rises 11.4 bps to 4.939%. Next up this morning, another round of key inflation data at 8:30 AM: ET PCE Price Index M/M for June est. +0.2%, PCE Price Index Y/Y for June est. +3.0%; Core PCE Price Index M/M for June est. +0.2% (prior 0.3%) and Core PCE Price Index Y/Y for June est. +4.2% (prior 4.6%) – PCE is the preferred inflation gauge of the Fed (also personal income and spending and ECI for Q2 is expected). In Asian markets, The Nikkei Index fell -131 points to 32,759, the Shanghai Index jumped 59 points to 3,275, and the Hang Seng Index rose 277 points to 19,916. In Europe, the German DAX is down -20 points to 16,385, while the FTSE 100 is up a few points just under 7,700.

 

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -29.34 points, or 0.64%, to 4,537.41.

·     The Dow Jones Industrial Average fell -237.40 points, or 0.67%, to 35,282.72.

·     The Nasdaq Composite slipped -77.18 points, or 0.55%, to 14,050.11.

·     The Russell 2000 Index declined -25.46 points, or 1.29% to 1,954.90.

 

Economic Calendar for Today

·     8:30 AM ET            Personal Income M/M for June…est. +0.5%

·     8:30 AM ET            Personal Spending M/M for June…est. +0.4%

·     8:30 AM ET            PCE Price Index M/M for June…est. +0.2%

·     8:30 AM ET            PCE Price Index Y/Y for June…est. +3.0%

·     8:30 AM ET            Core PCE Price Index M/M for June…est. +0.2% (prior 0.3%)

·     8:30 AM ET            Core PCE Price Index Y/Y for June…est. +4.2% (prior 4.6%)

·     8:30 AM ET            Employment Cost Index for Q2…est. +1.1%

·     10:00 AM ET          University of Michigan Confidence, July-F…est. 72.6

·     10:00 AM ET          University of Michigan 1 and 5-yr inflation expectations

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

 

Earnings Calendar:

·     Earnings Before the Open: AON B BAH CNC CVX PG SAIA WPC WT XOM

 

 

Macro	Up/Down	Last
Nymex	-0.23	79.86
Brent	-0.46	83.78
Gold	6.80	1,952.50
EUR/USD	0.0011	1.0982
JPY/USD	0.00	139.44
10-Year Note	-0.037	3.975%

 

 

World News

·     The Bank of Japan said Friday it would consider its 0.5% cap on the 10-year government bond yield as a suggestion, not a rigid limit if inflation picked up. More specifically, the BoJ, while continuing to allow 10y JGB to fluctuate within +/-0.5%, it will purchase 10y JGB at 1% through fixed-rate purchase operation daily.

 

Sector News Breakdown

Consumer

·     Boston Beer (SAM) Q2 EPS $4.72 vs. est. $3.43; Q2 revs $603.3M vs. est. $592.97M; Q2 depletions decreased 3% and shipments decreased 4.5%; maintaining the full year volume and earnings guidance; Q2 Gross margin increased 230 basis points to 45.4%.

·     Boyd Gaming (BYD) Q2 EPS $1.58 vs. est. $1.65; Q2 revs $917.0M vs. est. $912.5M; Total Adjusted EBITDAR was $351.4M in Q2 vs. $353.9M y/y.

·     Deckers Outdoors (DECK) Q1 EPS $2.41 vs. est. $2.22; Q1 revs rose 10% y/y to $675.8M vs. est. $666.92M; Gross margin was 51.3% compared to 48.0%; Q1 HOKA brand net sales increased 27.4% to $420.5M, UGG brand net sales decreased 6.0% to $195.5M and Teva brand net sales decreased 18.8% to $48.4M; raises FY24 EPS view to $21.75-$22.25 from $21.10-$21.60.

·     Ford Motor (F) Q2 adj EPS $0.72 vs. est. $0.55; Q2 revs $45B vs. est. $40.38B; now expects to reach a 600,000-unit EV production run rate during 2024; raises FY23 consolidated adjusted EBIT view to $11B-$12B, ups full-year adjusted free cash flow to $6.5B-$7B; says slowdown in EV demand for the industry is because the vehicles are too expensive, not because of demand.

·     Fortune Brands Innovations (FBIN) Q2 EPS $1.07 vs. est. $1.02; Q2 revs $1.16B vs. est. $1.17B; increasing full-year EPS before charges / gains guidance to a range of $3.75 to $3.90, reflecting the impact of the Acquisition and improved market conditions.

·     Mohawk Industries (MHK) Q2 adj EPS $2.76 vs est. $2.65 on revs $3.0B vs est. $2.944B; says initiated restructuring and integration actions that should save $35Mm annually; says housing market remains under pressure due to limited supply, high interest rates and inflation.

·     Mondelez (MDLZ) Q2 adj EPS $0.76 vs est. $0.69 on revs $8.51B vs es.t $8.21B, gr mgn 39.4%; guides FY organic net revs 12+% vs est. +12.3%, sees FY adj EPS growth 12+% constant currency vs est. +8%; says currency translation hit estimated at about 2% to net revs growth and ($0.11).

·     Skechers (SKX) Q2 EPS $0.98 vs est. $0.54 on revs $2.013B vs est. $1.927B; guides Q3 sales $1.95-2.0B vs est. $2.069B, EPS $0.70-0.75 vs est. $0.93.

·     Sleep Number (SNBR) Q2 EPS $0.03 vs est. ($0.01) on revs $459Mm vs est. $471.39Mm, gr mgn 57.6%; guides FY EPS $1.25-1.75 vs est. $1.55.

·     Texas Roadhouse (TXRH) Q2 EPS $1.22 vs est. $1.21 on revs $1.17B vs est. $1.17B; comps +9.1% at company units and +9.2% at domestic franchised; says comps for first four weeks of Q3 +10.7% at company units; guides FY positive comps including benefit of menu pricing actions, commodity cost inflation +5-6%, store week growth approx +6%, wage and other labor inflation +6-7%.

·     WingStop (WING) downgraded to Neutral from Outperform at Wedbush.

 

Energy

·     Chevron (CVX) Q2 adj EPS $3.08 vs. est. $2.93; Q2 revs $48.9B vs. est. $48.52B; said FY23 production outlook is trending near the low-end annual guidance; Plans to resume buybacks at the $17.5B annual rate in Aug; FY affiliate dividends are expected to be near the low end of its guidance.

·     Exxon (XOM) Q2 adj EPS $1.94 vs. est. $2.00; Q2 revs $82.91B vs. est. $82.31B; qtrly worldwide GAAP upstream second-quarter earnings were $4.6 bln, a decrease of $1.9 bln from Q1.

·     Enphase (ENPH) Q2 EPS $1.47 vs. est. $1.25; Q2 revs $711.12M vs. est. $722.12M; guides Q3 revenue $550M-$600M below consensus $748.08M; approved a new share repurchase program with authorization to purchase up to $1.0 bln of shares of its common stock.

·     First Solar (FSLR) Q2 EPS $1.59 vs. est. $0.96; Q2 revs $810.67M vs. est. $720.55M; to invest up to $1.1 billion in fifth us manufacturing facility, adding 3.5 GW of nameplate capacity in 2026; affirms year EPS and sales outlook.

 

Financials

·     Digital Realty (DLR) Q2 AFFO/shr $1.68 vs est. $1.65, total bookings $114Mm, adj EBITDA $697Mm vs est. $670.55Mm; sees FY core FFO/shr $6.55-6.65 vs est. $6.66.

·     Essex Property (ESS) Q2 core FFO/shr $3.77 vs est. $3.73, same-property revs +4.0%; sees FY core FFO/shr $14.88-15.12 vs est. $14.86; raised FY same-property revs guide by 0.4% at the midpoint.

·     Hartford Financial (HIG) Q2 core EPS $1.88 vs. est. $1.85; Q2 revs $6.05B vs. est. $6.05B; Q2 adjusted net income $588M vs. estimate $586.2M; Property & Casualty (P&C) written premiums rose 11% in Q2, P&C current accident year (CAY) catastrophe (CAT) losses of $226M.

·     Principal Financial (PFG) Q2 adjusted EPS $1.53 vs. est. $1.65; Assets under management (AUM) of $674 billion, which is included in assets under administration (AUA) of $1.5 trillion.

 

Healthcare

·     Dexcom (DXCM) Q2 EPS $0.28 vs. est. $0.23; Q2 revs $871.3M vs. est. $841.62M; sees FY23 revenue $3.5B-$3.55B vs. est. $3.5B; sees 2023 non-Gaap profit margin of 63%.

·     Homology Medicines (FIXX) said it will evaluate strategic alternatives and cut 87% of its workforce, citing the current financing environment and Homology’s anticipated clinical development timelines.

·     Mettler Toledo (MTD) Q2 adj EPS $10.19 vs est. $9.97 on revs $982.117Mm vs est. $1.0B; says forecasting remains challenging, market conditions are dynamic, increased uncertainty in economic environment; sees Q3 sales -3% to -4% vs est. +6% reported and adj EPS $9.55-9.85 vs est$11.42; sees FY local currency sales +0-1% vs est. +5% and adj EPS $40.30-41.20 vs est. $43.39.

 

Industrials & Materials

·     Eastman Chemical (EMN) Q2 adj EPS $1.99 vs. est. $1.93; Q2 revs $2.32B vs. est. $2.59B; sees 2H adj EPS below 1H; sees FY EPS $6.50 to $7.00, below est. $7.20.

·     Olin Corp. (OLN) Q2 EPS $1.13 vs. est. $1.01; Q2 revs $1.70B vs. est. $1.86B; sees Q3 adjusted EBITDA to be approximately 10% lower than Q2 2023 levels and expects full year adjusted EBITDA to be in the range of $1.4B.

·     US Steel (X) Q2 EPS $1.92 vs. est. $1.80; Q2 revs $5.01B vs. est. $5.11B; said Q2 generated $713M of cash from operations in the quarter and free cash flow of $101M.

·     Weyerhaeuser (WY) Q2 adj EPS $0.32 vs. est. $0.21; Q2 revenue $2.0B, in-line with ests; sees Q3 earnings and Adjusted EBITDA $25M lower than Q2.

 

Technology, Media & Telecom

·     Intel Inc. (INTC) Q2 adj EPS $0.13 vs est. ($0.03) on revs $12.9B vs est. $12.132B, gr mgn 35.8%; guides Q3 adj EPS $0.20 vs est. $0.16, adj gr mgn about 43%, revs approx $12.9-13.9B vs est. $13.231B.

·     Juniper Networks (JNPR) Q2 adj EPS $0.58 vs est. $0.55 on revs $1.43B vs est. $1.416B, adj op mgn 16.9%; says expect to see continued weakness in bookings for Q3, guides Q3 revs $1.335-1.435B vs est. $1.476B, adj EPS $0.49-0.59 vs est. $0.62; says expect macro environment to remain challenged which may continue to impact customer spending.

·     KLA-Tencor (KLAC) Q4 EPS $4.97 vs est. $4.85 on revs $2.355B vs est. $2.258B; guides Q1 revs $2.35B vs est. $2.23B, gr mgn 59%, adj EPS $5.35 vs est. $4.75.

·     Live Nation (LYV) Q2 EPS $1.02 vs. est. $0.63; Q2 revs rose 27% y/y to $5.6B vs. est. $4.95B; over 117M tickets sold year-to-date for live nation shows this year, up 20% y/y; Operating Income Up 21% to $386M.

·     Madison Square Garden Sports (MSGS) will be added to the SmallCap 600 index August 1^st, replacing Aerojet Rocketdyne Holdings (AJRD), which is being acquired by L3Harris (LHX).

·     Roku Inc. (ROKU) Q2 EPS ($0.76) vs est. ($1.26) on revs $847Mm vs est. $774.47Mm, qtrly active accounts 73.5Mm, qtrly ARPU $40.67 -7% y/y; guides Q3 revs $815Mm vs est. $809.58Mm, adj EBITDA $(50)Mm vs est. $(57.7)Mm.

·     SS&C Technologies (SSNC) Q2 adj EPS $1.08 vs est. $1.12 on adj revs $1.363B vs est. $1.359B; guides Q3 adj revs $1.355-1.395B vs est. $1.393B and adj EPS $1.13-1.21 vs est. $1.24; guides FY adj revs $5.469-5.575B vs est. $5.534B and adj EPS $4.57-4.77 vs est. $4.78.

·     T-Mobile (TMUS) Q2 EPS $1.86 vs. est. $1.69; Q2 revs $19.2B vs. est. $19.31B; qtrly postpaid phone net customer additions of 760,000 were up 37,000 y/y; qtrly postpaid net customer additions of 1.6 mln, down 95,000 y/y; postpaid phone churn of 0.77% improved 3 bps y/y; raises FY23 adjusted EBITDA view to $28.9B-$29.2B from $28.8B-$29.2B.

·     Verisign (VRSN) Q2 EPS $1.79 vs est. $1.75 on revs $372Mm vs est. $373Mm; backs FY23 revenue view $1.49B-$1.5B.