Early Look

Friday, October 27, 2023

Futures	Up/Down	%	Last
Dow	44.00	0.13%	32,920
S&P 500	21.25	0.51%	4,177
Nasdaq	135.50	0.95%	14,329

 

 

U.S. futures are pointing to a higher open as last night’s earnings results in the tech/retail space from Amazon (shares +6% pre mkt) and Intel (+7% pre mkt) are helping boost sentiment to end the week. Treasury yields are also holding steady, with the 10-year around 4.85% ahead of key data at 8:30 AM with monthly Personal Income/Spending and both PCE and core PCE inflation data, followed by the University of Michigan sentiment at 10:00 AM. Oil prices are higher, with WTI crude +2.1% around $85 per barrel after US forces attacked two facilities in eastern Syria it believes were used by Iran’s Islamic Revolutionary Guard Corps and affiliated groups to strike American troops in the region. In Asian markets, The Nikkei Index jumped 389 points to 30,991, the Shanghai Index gained 29 points to move back above 3,000 (3,017 close) and the Hang Seng Index advanced 354 points to 17,398. In Europe, the German DAX is up 60 points to 14,792, while the FTSE 100 is up 10 points to 7,363. Some big movers overnight after earnings include Amazon (AMZN), Chipotle (CMG), Capital One (COF), Intel (INTC), and insulin company Dexcom (DXCM); to the downside include Enphase (ENPH) in solar, Ford (F), and PTC Therapeutics (PTCT) – with details down below. Stock markets still looking higher, but on track for another weekly decline with Dow Transports -5.5% into Friday, Nasdaq -3% and the S&P -2% WTD.

 

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -49.54 points, or 1.18%, to 4,137.23.

·     The Dow Jones Industrial Average fell -251.63 points, or 0.76%, to 32,784.30.

·     The Nasdaq Composite slumped -225.62 points, or 1.76%, to 12,595.61.

·     The Russell 2000 Index advanced 5.57 points, or 0.34% to 1,657.00.

 

Economic Calendar for Today

·     8:30 AM ET                  Personal Income M/M for September…est. 0.4%

·     8:30 AM ET                  Personal Spending M/M for September

·     8:30 AM ET                  PCE Price Index M/M for September…est. +0.3%

·     8:30 AM ET                  PCE Price Index Y/Y for September…est. +3.4%

·     8:30 AM ET                  Core PCE Price Index M/M for September…est. +0.3%

·     8:30 AM ET                  Core PCE Price Index Y/Y for September…est. +3.7%

·     10:00 AM ET                University of Michigan Confidence, Oct-Final…est. 63.0

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

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

 

 

Macro	Up/Down	Last
Nymex	1.77	84.98
Brent	1.92	89.85
Gold	-2.20	1,995.20
EUR/USD	-0.0005	1.0555
JPY/USD	-0.34	150.04
10-Year Note	+0.015	4.86%

 

 

World News

·     Iran’s foreign minister warned that the US won’t escape unaffected if the Hamas-Israel war turns into a broader conflict, responding after the Biden administration said Iran was ultimately to blame for a recent spate of drone attacks on American forces.

·     Russia’s central bank raised its key interest rate by a higher than expected 200 basis points to 15% on Friday, hiking borrowing costs for the fourth meeting running in response to a weak rouble and stubborn inflation pressure.

·     Japan’s Tokyo CPI measure for October was generally higher than expected, with all three main measures stronger than expected. Annual headline (3.3%) and core (2.7%) were up 0.5% and 0.2% from last month respectively.

·     China’s industrial profits rose at a reduced rate of 11.9% YoY in September, down from 17.2% the month before. Year-to-day, China’s industrial profits fell -9.0% compared to -11.7% previously.

·     Chile’s central bank cut interest rates 50bp to 9.0%. The cut was 25bp larger than expected. The central bank said the domestic economy has evolved as expected, and that it has suspended the program to build up FX reserves.

 

Sector News Breakdown

Consumer

·     Amazon (AMZN) Q3 EPS $0.94 vs est. $0.58 on sales $143.1B vs est. $141.406B; sees Q4 sales $160-167B and op in $7-11B; sees 4q net sales $160.0b to $167.0b, est. $166.57b; Q3 AWS net sales $23.06B vs. $20.54B last year; Q3 AWS operating income of $6.98B vs. $5.4B last year.

·     Boston Beer (SAM) Q3 revs fell -0.9% to $601.6M vs. est. $594M; Depletions fell 6%, due to decreases in the company’s Truly, Angry Orchard, Samuel Adams, and Dogfish Head brands; lowered its EPS guidance range and now expects EPS of $6.04-$8.04 compared with prior guidance of $6.00-$10.00 and expects depletions down (5%-7%) vs. prior down (-2%-8%).

·     Chipotle Mexican Grill (CMG) Q3 adj EPS $11.36 vs. est. $10.56; Q3 revs rose 11.3% y/y to $2.5B vs. est. $2.47B; sees Q4 comparable restaurant sales growth mid to high-single digits after Q3 comp sales rose 5% vs. est. 4.3%; Operating margin was 16.0%, an increase from 15.1%.

·     Columbia Sportswear (COLM) Q3 EPS $1.70 vs. est. $1.64; Q3 revs $985.7M vs. est. $994.82M; raises FY23 EPS view to $4.45-$4.70 from $4.40-$4.65 (est. $4.51) but lowers net sales view to up 0.5%-2%, down from 2%-3.5% prior.

·     Deckers Outdoors (DECK) Q2 EPS $6.82 vs est. $4.43 on sales $1.092B vs est. $960.51Mm; guides FY net sales $4.025B vs est. $4.015B, gr mgn 52.5-53%, op mgn approx 18.5%, EPS $22.90-23.25 vs es.t $22.64.

·     Ford Motor (F) Q3 adj EPS $0.39 vs est. $0.45 on revs $43.8B vs est. $41.22B; withdraws guidance with ratification of tentative labor agreement.

·     Mohawk Industries (MHK) Q3 adj EPS $3.34 vs. est. $2.66; Q3 revs $2.8B vs. est. $2.75B; sees Q4 adjusted EPS $1.80-$1.90 below consensus $2.12; says expect foreign exchange rates to continue to be an earnings headwind; says current mkt cap, challenging macro conditions and higher discount rates prompted review of goodwill and intangible asset balances, which resulted in the impairment charges.

·     Skechers (SKX) Q3 EPS $0.93 vs. $0.79; Q3 revs $2.02B vs. est. $2.03B; posted growth of 7% in the United States due to continued strength in our Direct-to-Consumer channel, and Asia Pacific with growth of 18% in China; sees FY23 EPS $3.33-$3.43 vs. est. $3.42 and sees FY23 revenue $7.95B-$8.05B vs. est. $8.13B

·     Texas Roadhouse (TXRH) Q3 EPS $0.95 vs est. $1.06 on revs $1.122B vs est. $1.119B; says company restaurant comps through first 4 weeks of Q4 are +9.2%.

 

Energy

·     Chevron (CVX) Q3 adj EPS $3.05 vs. est. $3.33; Q3 revs $54.08B vs. est. $47.79B; said it had net income of $6.526B, or $3.48 a share, down from $11.231B, or $5.81 a share y/y; said decline in earnings was due to lower upstream realizations and lower margins on refined product sales.

·     Enphase Energy (ENPH) Q3 EPS $1.02 vs. est. $1.01; Q3 revs $551.1M vs. est. $566.02M; Sees Q4 revenue $300M-$350M below consensus of $577M and sees ADJ gross margin 48% to 51%, vs. est. 45.2%; guides adj operating expenses $85M-$89M.

·     Exxon Mobil (XOM) Q3 adj EPS $2.27 vs. est. $2.24; Q3 revs $90.76B vs. est. $83.76B; raises quarterly dividend by 3.3% to $0.94; 3Q cash flow from operations $16b, free cash flow $11.7B; 3Q global refinery throughput 4.2m barrels/day.

·     First Energy (FE) Q3 adj EPS $0.88 vs. est. $0.86; narrow FY23 adjusted EPS view to $2.49-$2.59 from $2.44-$2.64 and affirmed its long-term, 6% to 8% targeted annual operating EPS rate.

 

Financials

·     Capital One Financial (COF) Q3 EPS $4.45 vs. est. $3.25; Q3 revs rose 4% y/y to $9.4B vs. est. $9.19B; Provision for credit losses decreased $206 million to $2.3 billion; Net interest margin of 6.69 percent, an increase of 21 bps; Total non-interest expense increased 1% to $4.9B.

·     Cincinnati Financial (CINF) Q3 adj EPS $1.66 vs est. $1.15 on revs $1.811B vs est. $2.24B.

·     Digital Realty Trust (DLR) Q3 FFO $1.62 vs. est. $1.61; Q3 adj Ebitda rose 11% y/y to $685.9M vs. est. $661M; sees Core FFO per share $6.58-$6.62 from prior $6.55-$6.65 but lowers year revs view to $5.48B-$5.53B from $5.50B-$5.60B (est. $5.51B).

·     Essex Realty (ESS) Q3 AFFO/shr $3.78 vs est. $3.77, same-property revs +3.2%, same-property NOI +2.7%; reaffirms FY guide ranges for core FFO/shr.

·     Hartford Financial (HIG) Q3 core EPS $2.29 vs. est. $1.98; Q3 revs $6.168B vs. est. $6.17B; said had underlying combined ratio of 87.8; personal Lines achieved sustained double-digit written pricing increases with acceleration in auto to 19.7% in Q3.

·     JPMorgan (JPM) Chairman and CEO Jamie Dimon confirmed today that he and his family plan to sell a portion of their stock for financial diversification and tax-planning purposes.

·     Old National Bancorp (ONB) agreed to acquire CapStar Financial (CSTR) for $16.64 per share in an all-stock transaction bringing $3.3 billion in total assets, $2.3 billion in total loans, and $2.8 billion in deposits as of September 30, 2023.

·     Principal Financial Group (PFG) Q3 adj EPS $1.72 vs. est. $1.64; retirement and Income Solutions (RIS) sales of $7.6 billion increased 30% from third quarter 2022; Principal Global Investors (PGI) managed AUM of $469.0 billion; positive real estate net cash flow of $0.8 billion.

 

Healthcare

·     DexCom (DXCM) Q3 EPS $0.50 vs. est. $0.34; Q3 revs rose 27% y/y to $975.0M vs. est. $939.2M; announces $500M share repurchase program; raises FY23 revenue view to $3.575B-$3.6B from $3.5B-$3.55B (est. $3.54B).

·     PTC Therapeutics (PTCT) Q3 revs fell -9.5% y/y to $196.6M vs. est. $211.1M; sees FY23 revs $940M-$1.0B vs. est. $938.3M; said Q3 revenue for the DMD franchise was $136M, supporting increasing 2023 DMD franchise revenue guidance to between $565M-$595M.

·     ResMed (RMD) Q1 adj EPS $1.64 vs est. $1.62 on revs $1.1B vs est. $1.099B, adj gr mgn 56%, expects to resume share repurchase during upcoming qtr.

·     Sanofi (SNY) said it plans to separate its consumer-healthcare business to focus more on innovative medicines; reported Q3 sales of 11.96 billion euros ($12.63 billion), down 4.1% on the same period last year but up 3.2% at constant exchange rates vs. est. EU12.06B.

 

Industrials & Materials

·     Chemours (CC) Q3 adj EPS $0.63 vs. est. $0.69; Q3 revs slid -16% y/y to $1.48B vs. est. $1.53B; said the sales decline was led by lower sales in titanium technologies and APM’s advanced materials portfolio. Price was down 1%, while volumes declined 15%.

·     Eastman Chemical (EMN) Q3 adj EPS $1.47 vs. est. $1.45; Q3 revs $2.27B vs. est. $2.3B; sees 2023 EPS $6.30-$6.50 vs. consensus $6.63; says as enters 4Q, demand remains muted as customers are cautious in the current challenging environment.

·     L3 Harris (LHX) Q3 adj EPS $3.19 vs est. $3.03 on revs $4.915B vs est. $4.76B; sees FY revs $19.2-19.4B vs est. $19.089B and adj EPS $12.25-12.45 vs est. $12.25; says full supply chain recovery remains uneven.

·     Republic Service Group (RSG) Q3 adj EPS $1.54 vs est. $1.42, adj EBITDA $1.146B vs est. $1.132B on revs $3.826B vs est. $3.808B; sees FY adj EPS $5.46-5.49 vs est. $5.35 primarily due to lower tax rate; reiterates guide for adj EBITDA and adj FCF.

·     Terex Inc. (TEX) Q3 EPS $1.75 vs. est. $1.72; Q3 revs rose 15% y/y to $1.3B vs. est. $1.26B; raises FY23 EPS view to about $7.05 from about $7.00 (est. $7.14) and boosts FY23 revenue view to about $5.15B from about $5.1B (est. $5.13B).

·     U.S. Steel (X) Q3 adj EPS $1.40 vs. est. $1.15; Q3 revs $4.43B vs. est. $4.39B; said nearly $4 bln of strategic investment in mini mill segment is progressing on-time and budget; says fully engaged in and is progressing a robust and competitive strategic alternatives review process.

·     Weyerhaeuser (WY) Q3 EPS $0.33 in line with consensus and revs $2.02B vs. est. $2.07B.

 

Technology, Media & Telecom

·     Intel (INTC) Q3 adj EPS $0.41 vs est. $0.22 on revs $14.2B vs est. $13.545B; sees Q4 revs $14.6-15.6B vs est. $14.345B and adj EPS $0.44 vs est. $0.32; sees Q4 adj gr mgn 46.5%.

·     Juniper Networks (JNPR) Q3 adj EPS $0.60 vs est. $0.55 on revs $1.398B vs est. $1.39B, adj op mgn 6.3%; sees revs approx $1.35-1.45B vs est. $1.406B, adj gr mgn 59-61%, adj op exp $575-585Mm, adj op mgn 18.6% at mid-point of revs guide, adj EPS $0.58-0.68 vs est. $0.62.

·     VeriSign (VRSN) Q3 EPS $1.83 vs est. $1.81 on revs $376.3Mm vs est. $378.3Mm; sees FY24 revenue $1.49B-$1.5B vs. est. $1.62B; sees FY24 capital expenditures $45M-$55M.