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20/04/22


The S&P 500 futures trade 11 points, or 0.3%, above fair value as the market holds onto yesterday's rally while investors digest some key earnings news.

Netflix (NFLX 255.19, -93.42, -26.8%) is the main draw, as shares plunge 27% in pre-market action after the company lost 200,000 global paid subscribers in the first quarter and estimated it will lose another 2 million in the second quarter.

Weakness in NFLX is spreading to other stocks of companies with streaming exposure, but the broader futures market is holding up relatively well in the face of this disappointment. That could be because of a modest pullback in Treasury yields.

In addition, IBM (IBM 132.18, +3.03, +2.4%), Proctor Gamble (PG 161.50, +2.09, +1.3%), and Abbott Labs (ABT 121.00, +1.02, +0.9%) are picking up the slack following their better-than-expected earnings reports, as is lululemon athletica (LULU 413.20, +8.54, +2.1%) after announcing plans to double revenue by 2026 to $12.5 billion.

Currently, the 2-yr yield down two basis points 2.56%, and the 10-yr yield down four basis points to 2.87% after hitting 2.97% last evening. The U.S. Dollar Index is down 0.6% to 100.38. WTI crude futures are up 1.5%, or $1.58, to $103.63/bbl.

Separately, the People's Bank of China made no changes to its one-year and five-year loan prime rates despite expectations for rate cuts. China's Shanghai Composite fell 1.4% on Wednesday.

On the data front, investors will receive Existing Home Sales for March (Briefing.comconsensus 5.80 million) at 10:00 a.m. ET, followed by the April Beige Book at 2:00 p.m. ET. Earlier, the weekly MBA Mortgage Applications Index decreased 5.0% following a 1.3% decline in the prior week.

In U.S. Corporate news:

  • Netflix (NFLX 255.19, -93.42): -26.8% after losing 200,000 global paid subscribers in Q1 and estimating it will lose 2 million more subscribers in Q2. Netflix beat EPS estimates but missed revenue estimates and issued downside Q2 guidance. The company is open to offering a lower priced service with advertising.

  • IBM (IBM 132.18, +3.03): +2.4% after beating top and bottom-line estimates and expecting FY22 revenue growth (constant currency) at the high end of the mid-single digit range.

  • Procter & Gamble (PG 161.50, +2.09): +1.3% after beating top and bottom-line estimates.

  • Abbott Labs (ABT 121.00, +1.02): +0.9% after beating top and bottom-line estimates.

  • Lululemon athletica (LULU 413.20, +8.54): +2.1% after announcing a five-year growth plan to double revenue by 2026 to $12.5 billion.

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region ended the midweek session on a mixed note. Japan's Nikkei: +0.9% Hong Kong's Hang Seng: -0.4% China's Shanghai Composite: -1.4% India's Sensex: +1.0% South Korea's Kospi: UNCH Australia's ASX All Ordinaries: UNCH.

  • In economic data:

  • Japan's March trade deficit JPY412.40 bln (expected deficit of JPY100.80 bln; last deficit of JPY669.70 bln). March Imports 31.2% yr/yr (expected 28.9%; last 34.1%) and March Exports 14.7% yr/yr (expected 17.5%; last 19.1%)

  • Australia's March MI Leading Index 0.3% m/m (last 0.4%)


  • In news:

  • The People's Bank of China made no changes to its one-year and five-year loan prime rates despite expectations for cuts.

  • A former PBoC official called for a temporary easing of curbs on property debt.

  • The Bank of Japan offered to buy unlimited amounts of 5- and 10-yr JGBs after the country's 10-yr yield climbed above 0.25% to a level not seen since early 2016.

  • Australia's Finance Ministry now expects that 2022 deficit will be about 3.0% of GDP, up from October's projection of 2.3% of GDP.



  • Major European indices trade in the green. STOXX Europe 600: +0.9% Germany's DAX: +1.1% U.K.'s FTSE 100: +0.1% France's CAC 40: +1.2% Italy's FTSE MIB: +0.8% Spain's IBEX 35: +1.2%.

  • In economic data:

  • Eurozone's February Industrial Production 0.7% m/m (expected 0.2%; last -0.7%); 2.0% yr/yr (expected 0.8%; last -1.5%). February trade deficit EUR7.6 bln (last deficit of EUR27.30 bln)

  • Germany's March PPI 4.9% m/m (expected 2.6%; last 1.4%); 30.9% yr/yr (expected 28.2%; last 25.9%)

  • Italy's February trade deficit EUR1.662 bln (last deficit of EUR5.128 bln)


  • In news:

  • Credit Suisse warned that it will report a loss for Q1 due to higher provisions for legal matters.

  • Danone refuted speculation that it is looking to sell parts of its business.

  • The governor of Sweden's central bank said that he is not worried about a recession at this time while the Czech central bank governor said that more rate hikes are in the cards.



U.S. equity futures:

  • S&P 500 Futures: +11 @ 4,473

  • DJIA Futures: +119 @ 35,030

  • Nasdaq 100 Futures: +30 @ 14,240

Overseas:

  • Europe: DAX +1.1%, FTSE +0.1%, CAC +1.2%

  • Asia: Nikkei +0.9%, Hang Seng -0.4%, Shanghai Composite -1.4%

Commodities:

  • Crude Oil +1.54 @ 103.59

  • Nat Gas +0.071 @ 7.247

  • Gold -3.50 @ 1955.50

  • Silver -0.031 @ 25.360

  • Copper -0.0537 @ 4.6643

U.S. Summary:

  • Earnings/Guidance (Full Earnings Calendar):

  • Abbott Labs (ABT) beats by $0.27, beats on revs; reaffirms FY22 EPS guidance

  • Anthem (ANTM) beats by $0.42, beats on revs

  • ASML (ASML) beats by 0.05, beats on revs; guides Q2 revs below consensus; reaffirms FY22 revs guidance

  • Avient (AVNT) beats by $0.04, beats on revs; guides Q2 EPS in-line; guides FY22 EPS in-line

  • Baker Hughes (BKR) misses by $0.05, misses on revs

  • Comerica (CMA) reports EPS in-line

  • Danone (DANOY) reports Q1 net sales increased 7% yr/yr; reaffirms FY22 outlook

  • First Horizon (FHN) beats by $0.03

  • Fulton Fincl (FULT) beats by $0.06, net interest income decreased by 1.9% yr/yr

  • Hancock Whitney (HWC) beats by $0.08, net interest income down less than 1% yr/yr to $231 mln

  • Healthcare Services Group (HCSG) beats by $0.09, reports revs in-line

  • Holley Inc. (HLLY) guides Q1 net revs above consensus

  • IBM (IBM) beats by $0.01, beats on revs; expects FY22 revenue growth (constant currency) at the high end of the mid-single digit range

  • Interactive Brokers (IBKR) reports EPS in-line, misses on revs

  • Lithia Motors (LAD) beats by $1.62, beats on revs; raises dividend

  • lululemon athletica (LULU) announces five-year growth plan to double revenue by 2026 to $12.5 billion

  • MarketAxess (MKTX) beats by $0.01, reports revs in-line

  • Marten Transport (MRTN) beats by $0.07, beats on revs

  • Matson (MATX) guides Q1 earnings nicely above consensus (two analyst estimate)

  • NASDAQ (NDAQ) beats by $0.02, reports revs in-line; provides non-GAAP operating expense guidance

  • Netflix (NFLX) beats on EPS, reports slight downside on revs; guides Q2 EPS below consensus, revs slightly below consensus; Net adds in Q1 were -0.20 mln vs +2.50 mln prior guidance

  • Omnicom (OMC) beats by $0.06, beats on revs

  • PacWest Bancorp (PACW) misses by $0.03

  • Procter & Gamble (PG) beats by $0.04, beats on revs; reaffirms FY22 EPS guidance, guides FY22 revs in-line

  • Rexford Industrial Realty (REXR) beats by $0.03, reports revs in-line; guides FY22 FFO below consensus

  • Rio Tinto (RIO) reports Q1 Production; Pilbara iron ore production down 6% yr/yr

  • Rogers Comms (RCI) beats by CAD0.08, reports revs in-line; raised outlook

  • Stride (LRN) beats by $0.14, beats on revs; guides FY22revs above consensus

  • United Comm Banks (UCBI) reports Q1 (Mar) results, revs in-line

  • Vale S.A. (VALE) reports Q1 production results

  • Wintrust Fin (WTFC) beats by $0.55, beats on revs


  • General News:

  • Russia's offensive in the eastern part of Ukraine continues as EU prepares details on possible oil import embargo, according to the New York Times

  • DOJ says "if CDC concludes that a mandatory order remains necessary for the public's health after that assessment, the DOJ will appeal the district court's decision" on federal transportation mask mandate

  • Dr. Scott Gottlieb on CNBC says he doesn't think Biden administration will actually appeal ruling against transportation mask mandate because statement clearly says CDC has to extend it before they would appeal; says this mandate should have been lifted on April 18 anyway

  • Alaska Air (ALK) Dispatchers ratify new five-year contract

  • AlloVir (ALVR) announced that the U.S. Food and Drug Administration has granted Regenerative Medicine Advanced Therapy designation to its lead investigational multi-virus-specific T cell therapy, posoleucel

  • Arcturus Therapeutics (ARCT) announces self-amplifying COVID-19 mRNA vaccine candidate ARCT-154 meets primary efficacy endpoint in Phase 3 study

  • Beachbody (BODY) CFO Sue Collyns to depart, effective May 10

  • Berkshire (BRK.B): California Public Employees plans to vote to replace Warren Buffett as Chairman of Berkshire, according to Bloomberg

  • Credit Suisse (CS) will increase legal provisions and expects a loss in reported earnings for the first quarter 2022

  • Eaton (ETN) eMobility business received a contract to supply its Breaktor circuit protection technology to a European vehicle manufacturer for use in multiple models of 800-volt battery electric vehicles

  • Fiserv (FISV) and Equifax (EFX) announce data partnership

  • Humanigen (HGEN) Announces Peer-Reviewed Publication Demonstrating the Potential Clinical and Economic Benefits of Lenzilumab from the Perspective of the NHS

  • Huntsman (HUN) issues statement regarding Los Angeles discrimination lawsuit

  • KBR (KBR) wins general maintenance services contract from SATORP

  • Kohl's (KSS): Macellum Releases Presentation Detailing the Urgent Need for Meaningful Change in Kohl's' Boardroom

  • Laboratory Corp (LH) announces collaboration with Xcell Biosciences

  • Linde plc (LIN) announced it has signed another long-term agreement with a major space launch company in Florida for the supply of bulk industrial gases

  • Lockheed Martin (LMT) awarded $400 mln Navy contract

  • M&T Bank (MTB) beats by $0.39

  • Meta (FB) running into issues with WhatsApp payment partners in Brazil, according to Financial Times

  • NASDAQ (NDAQ) raises quarterly dividend to $0.60 from $0.54/share; also, says it will seek execution of 3:1 stock split

  • Netflix (NFLX) on conference call says it is "quite open" to offering lower priced service with advertising

  • News Corp (NWSA) will assist in introducing sports betting company in Australia, according to the Wall Street Journal

  • Okta (OKTA) provides update on January compromise of its third-party vendor

  • Opko Health (OPK) entitled to receive an aggregate of $85 mln in milestone payments

  • Otonomy (OTIC) announced positive top-line results from the Phase 2a clinical trial of OTO-413 in subjects with hearing loss

  • Rigetti Computing (RGTI) announces departure of COO Taryn Naidu

  • Rocket Lab USA (RKLB) selected by HawkEye 360 to launch three Electron missions

  • Seacoast Banking (SBFC) raises quarterly dividend by $0.17 per share from $0.13 per share

  • Sutro Biopharma (STRO) amended licensing agreement with Tasly Biopharmaceuticals regarding Tasly's exclusive license to develop and commercialize STRO-002 in Greater China

  • TechnipFMC (FTI) awarded significant integrated EPCI contract by Wintershall Dea

  • Teva Pharma (TEVA) and MedinCell receive Complete Response Letter for NDA for TV-46000/mdc-IRM

  • TransMedics (TMDX) Announces the Presentation of New OCS Heart and OCS Lung Clinical Data at the International Society of Heart and Lung Transplantation 2022 Annual Meeting

  • Triumph Bancorp (TBK) announces executive management reorganization

  • Turquoise Hill (TRQ) announces first quarter 2022 production and Oyu Tolgoi mine and corporate update

  • Uranium Energy (UEC) has now secured an additional 400,000 pounds of U.S. warehoused uranium

  • U.S. Silica (SLCA): part of the Industrial and Specialty Products business will increase prices

  • Victoria's Secret (VSCO) launches Happy Nation brand for tweens

  • West Fraser (WFG) announces $1.25 bln substantial issuer bid


  • M&A:

  • Accenture (ACN) announced its intent to acquire Greenfish; Financial terms of the transaction are not being disclosed

  • Akanda Corp. (AKAN) has entered into a definitive agreement to acquire 100% of the issued and outstanding shares of Holigen Limited from The Flowr Corporation

  • Avient (AVNT) acquires DSM Protective Materials for $1.485 bln

  • KKR (KKR) in talks to acquire Australian hospital operator for more than $20 bln, according to Financial Review

  • TaskUs (TASK) announces acquisition of heloo; terms not disclosed

  • Twitter (TWTR): Elon Musk is trying to secure financing for Twitter bid including the possibility he could take out a loan against Tesla (TSLA) shares, according to the New York Times

  • Wabtec (WAB) has signed a definitive agreement to acquire Trimble's (TRMB) Beena Vision business; financial terms were not disclosed


  • Syndicate:

  • Holley (HLLY) announces secondary offering of 6.5 mln common shares by selling stockholder


  • IPOs:

  • Expected to Price:

  • No IPOs expected to price.



Gapping Up/Down

  • Gapping up:

  • ASML +6%, LAD +5.2%, WTFC +3.7%, VSCO +3%, BODY +2.2%, IBM +1.9%, OMC +1.5%, GTE +1.2%, LRN +1.1%, SLCA +0.7%, RKLB +0.6%, TASK +0.6%


  • Gapping down:

  • NFLX -27.1%, ROKU -6.8%, PARA -5.2%, DIS -5.2%, TEVA -4.8%, FUBO -4.7%, WBD -4.4%, CS -2.2%, RIO-2.1%, HLLY -1.9%, PACW -1.7%, IBKR -1.5%, VALE-1.3%, AMZN -0.6%, LH -0.6%


Analyst Research (see Upgrades/Downgradescalendarfor full list):

  • Upgrades

  • Airbnb (ABNB) upgraded to Buy from Neutral at Citigroup; tgt lowered to $200

  • Alphabet A (GOOGL) upgraded to Buy from Neutral at Citigroup; tgt raised to $3500

  • Avis Budget (CAR) upgraded to Equal Weight from Underweight at Barclays; tgt raised to $245

  • Booking Holdings (BKNG) upgraded to Buy from Neutral at Citigroup; tgt raised to $2600

  • Exelon (EXC) upgraded to Overweight from Neutral at JP Morgan; tgt raised to $55

  • LegalZoom.com(LZ) upgraded to Buy from Neutral at Citigroup; tgt raised to $20

  • Meta Platforms (FB) upgraded to Buy from Neutral at Citigroup; tgt raised to $300

  • Peloton (PTON) upgraded to Buy from Neutral at Citigroup; tgt raised to $36

  • Snap (SNAP) upgraded to Buy from Neutral at Citigroup; tgt raised to $50


  • Downgrades:

  • IAMGOLD (IAG) downgraded to Underperform from Sector Perform at RBC Capital Mkts; tgt $2

  • InnovAge (INNV) downgraded to Underweight from Neutral at Piper Sandler; tgt raised to $5

  • Kinross Gold (KGC) downgraded to Sector Perform from Outperform at RBC Capital Mkts; tgt $6

  • TripAdvisor (TRIP) downgraded to Neutral from Buy at Citigroup; tgt lowered to $30


  • Others:

  • ACV Auctions (ACVA) assumed with a Buy at Citigroup; tgt $20

  • Alarm.com(ALRM) initiated with a Buy at BofA Securities; tgt $75

  • Alkermes (ALKS) initiated with a Buy at Goldman; tgt $35

  • Amazon (AMZN) assumed with a Buy and added to Focus List at Citigroup; tgt lowered to $4100

  • AvidXchange (AVDX) initiated with an Outperform at Robert W. Baird; tgt $16

  • Belden (BDC) upgraded to Neutral from Sell at Goldman; tgt lowered to $55

  • Boxed (BOXD) initiated with a Buy at Citigroup; tgt $13

  • Cano Health (CANO) initiated with a Buy at UBS; tgt $15

  • DoorDash (DASH) initiated with a Buy at Citigroup; tgt $155

  • Pinterest (PINS) assumed with a Neutral at Citigroup; tgt lowered to $27

  • Sonder (SOND) initiated with a Buy at Citigroup; tgt $7

  • Squarespace (SQSP) initiated with a Neutral at Citigroup; tgt $25

  • trivago (TRVG) assumed with a Neutral at Citigroup; tgt lowered to $2.50

  • Twitter (TWTR) assumed with a Neutral at Citigroup; tgt raised to $50

  • Uber (UBER) assumed with a Buy at Citigroup; tgt lowered to $50

  • Wix.com(WIX) initiated with a Buy at Citigroup; tgt $120


Upcoming Events:

  • Econ Data:

  • 07:00 ET: MBA Mortgage Applications Index for Apr 16 (Briefing.comConsensus NA; Prior -1.3%)

  • 10:00 ET: Existing Home Sales for Mar (Briefing.comConsensus 5.80M; Prior 6.02M)

  • 10:30 ET: EIA Crude Oil Inventories for Apr 16 (Briefing.comConsensus NA; Prior +9.38M)

  • 14:00 ET: Beige Book for Apr


  • Earnings:

  • Monday (Apr 18)

  • Morning: BAC BK SCHW SYF

  • Afternoon: ELS FNB HOPE JBHT NBHC PNFP


  • Tuesday (Apr 19)

  • Morning: BMI CFG CBSH FITB HAL HAS IRDM JNJ LMT MAN PLD SBNY SI TRV TFC

  • Afternoon: FHN FULT HWC IBM IBKR MRTN NFLX OMC PACW REXR LRN UCBI WTFC


  • Wednesday (Apr 20)

  • Morning: ABT ANTM ASML BKR CMA GATX HCSG LAD MTB MKTX NDAQ PG RCI

  • Afternoon: AA BDN CNS CCI CSX CVBF EFX FR GL KALU KMI KNX LRCX LSTR LBRT RLI SEIC SLG SNBR STLD THC TSLA TCBI UMPQ UAL VMI


  • Thursday (Apr 21)

  • Morning: ABB ALK AAL T AUB AN BANC BKU BX COLB DHR DOW EWBC FCX GPC HRI HOMB HBAN KEY MMC NEE NEP NUE PNR PM POOL DGX SASR SNA SON SNV TSCO TPH UNP WSO WNS

  • During Market Hours: WABC

  • Afternoon: ASB OZK BJRI SAM FFBC FE GBCI HTH ISRG PPG XM SNAP SIVB UFPI VICR WAL WSFS


  • Friday (Apr 22)

  • Morning: AXP ALV AZZ CLF FHB GNTX HCA KMB NEM RF SAP SLB VZ



Asia & Europe detail:

Asia: Nikkei +0.9%, Hang Seng -0.4%, Shanghai Composite -1.4%

Equity indices in the Asia-Pacific region ended the midweek session on a mixed note. The People's Bank of China made no changes to its one-year and five-year loan prime rates despite expectations for cuts. A former PBoC official called for a temporary easing of curbs on property debt. The Bank of Japan offered to buy unlimited amounts of 5- and 10-yr JGBs after the country's 10-yr yield climbed above 0.25% to a level not seen since early 2016. Australia's Finance Ministry now expects that 2022 deficit will be about 3.0% of GDP, up from October's projection of 2.3% of GDP.

  • In economic data:

  • Japan's March trade deficit JPY412.40 bln (expected deficit of JPY100.80 bln; last deficit of JPY669.70 bln). March Imports 31.2% yr/yr (expected 28.9%; last 34.1%) and March Exports 14.7% yr/yr (expected 17.5%; last 19.1%)

  • Australia's March MI Leading Index 0.3% m/m (last 0.4%)


---Equity Markets---

  • Japan's Nikkei: +0.9%

  • Hong Kong's Hang Seng: -0.4%

  • China's Shanghai Composite: -1.4%

  • India's Sensex: +1.0%

  • South Korea's Kospi: UNCH

  • Australia's ASX All Ordinaries: UNCH

---FX---

  • USD/JPY: -0.9% to 127.83

  • USD/CNH: +0.3% to 6.4369

  • USD/INR: -0.4% to 76.14

Europe: DAX +1.1%, FTSE +0.1%, CAC +1.2%

Major European indices trade in the green. Credit Suisse warned that it will report a loss for Q1 due to higher provisions for legal matters. Danone refuted speculation that it is looking to sell parts of its business. The governor of Sweden's central bank said that he is not worried about a recession at this time while the Czech central bank governor said that more rate hikes are in the cards.

  • In economic data:

  • Eurozone's February Industrial Production 0.7% m/m (expected 0.2%; last -0.7%); 2.0% yr/yr (expected 0.8%; last -1.5%). February trade deficit EUR7.6 bln (last deficit of EUR27.30 bln)

  • Germany's March PPI 4.9% m/m (expected 2.6%; last 1.4%); 30.9% yr/yr (expected 28.2%; last 25.9%)

  • Italy's February trade deficit EUR1.662 bln (last deficit of EUR5.128 bln)


---Equity Markets---

  • STOXX Europe 600: +0.9%

  • Germany's DAX: +1.1%

  • U.K.'s FTSE 100: +0.1%

  • France's CAC 40: +1.2%

  • Italy's FTSE MIB: +0.8%

  • Spain's IBEX 35: +1.2%

---FX---

  • EUR/USD: +0.5% to 1.0840

  • GBP/USD: +0.4% to 1.3053

  • USD/CHF: -0.5% to 0.9469

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The S&P 500 futures are up 3 points and are trading % above fair value. The Nasdaq 100 futures are up 9 points and are trading roughly in-line with fair value. The Dow Jones Industrial Average futures