20/01/23 Briefing

The S&P 500 futures are up 13 points and are trading 0.3% above fair value. The Nasdaq 100 futures are up 86 points and are trading 0.7% above fair value. The Dow Jones Industrial Average futures are up 18 points and are trading 0.1% above fair value.

Equity futures are somewhat positive, but little changed from their flat lines as investors digest the latest slate of earnings news. There's likely some hesitation in play after several downbeat sessions had the main indices give back some of their 2023 gains. 

Treasury yields and the U.S. Dollar Index are moving higher this morning. The 2-yr note yield is up four basis points to 4.16% and the 10-yr note yield is up three basis points to 3.43%. The U.S. Dollar Index is up 0.3% to 102.35 with USD/JPY +1.3% to 130.10.

Energy complex futures are mixed. WTI crude oil futures are up 0.6% to $81.09/bbl and natural gas futures are down 0.7% to $3.10/mmbtu.

Economic data today is limited to the December Existing Home Sales (Briefing.comconsensus 3.96 million; prior 4.09 million) at 10:00 a.m. ET.

In corporate news:

• Netflix (NFLX 336.80, +21.02, +6.7%): misses by $0.39 due to FX remeasurement, reports revs in-line, paid net adds of 7.66 mln tops prior guidance; guides Q1 EPS below consensus, revs above consensus, expects positive paid net adds yr/yr; appoints new co-CEOs

• Nordstrom (JWN 16.19, -1.26, -7.2%) significantly lowers FY22 EPS guidance, company took additional markdowns to finish year with healthy inventory position

• Alphabet (GOOG 97.18, +3.27, +3.5%): decided to reduce its workforce by approximately 12,000 roles; India Supreme Court will not block Google antitrust ruling, according to Reuters

• Wayfair (W 41.49, +2.58, +6.6%): details update to cost efficiency plan - to reduce workforce by ~10%; expected to accelerate the timeline for adj EBITDA breakeven to earlier in 2023

• PPG Industries (PPG 126.86, +3.26, +2.6%):  beats by $0.09, beats on revs; guides Q1 EPS below consensus

• Ally Financial (ALLY 27.41, +1.22, +4.7%):  beats by $0.08

• Regions Financial (RF 22.10, +0.41, +1.9%): beats by $0.06, beats on revs; sees total FY23 adjusted revenue growth of +8-10% to $7.73-7.88 bln vs. $7.805 bln Capital IQ consensus

• SLB (SLB 58.23, +0.85, +1.5%): beats by $0.03, beats on revs; raises dividend

Reviewing overnight developments:

• Equity indices in the Asia-Pacific region ended the week on a mostly higher note. Japan's Nikkei: +0.6% (+1.7% for the week), Hong Kong's Hang Seng: +1.8% (+1.4% for the week), China's Shanghai Composite: +0.8% (+2.2% for the week), India's Sensex: -0.4% (+0.6% for the week), South Korea's Kospi: +0.6% (+0.4% for the week), Australia's ASX All Ordinaries: +0.2% (+1.7% for the week).

  • In economic data:

    • Japan's December CPI 0.2% m/m (last 0.2%); 4.0% yr/yr (last 3.8%). December National Core CPI 4.0% yr/yr, as expected (last 3.7%)

    • South Korea's December PPI -0.3% m/m (last -0.3%); 6.0% yr/yr (last 6.2%)

    • Hong Kong's December CPI 2.0% yr/yr (expected 1.9%; last 1.8%)

    • New Zealand's December Business NZ PMI 47.2 (last 47.4)

  • In news:

    • Japan's core CPI was up 4.0% yr/yr in December, representing the sharpest rate of increase since 1982.

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

    • Markets in China, Hong Kong, South Korea, and Singapore will be closed on Monday for Lunar New Year celebrations.

• Major European indices are looking for a higher finish to the week. STOXX Europe 600: +0.1% (-0.3% week-to-date), Germany's DAX: +0.3% (-0.7% week-to-date), U.K.'s FTSE 100: +0.2% (-1.1% week-to-date), France's CAC 40: +0.6% (-0.4% week-to-date), Italy's FTSE MIB: +0.7% (-0.1% week-to-date), Spain's IBEX 35: +1.1% (+0.1% week-to-date).

  • In economic data:

    • Germany's December PPI -0.4% m/m (expected -1.2%; last -3.9%); 21.6% yr/yr (expected 20.8%; last 28.2%)

    • U.K.'s December Retail Sales -1.0% m/m (expected 0.5%; last -0.5%); -5.8% yr/yr (expected -4.1%; last -5.7%). December Core Retail Sales -1.1% m/m (expected 0.4%; last -0.3%); -6.1% yr/yr (expected -4.4%; last -5.6%)

  • In news:

    • December retail sales in the U.K. fell at their fastest pace for the month since the start of the series in 1989.

    • British Chancellor of the Exchequer Hunt cautioned against expecting a tax cut in the March budget.

    • European Commissioner for trade Dombrovskis said that growth in the region has been above expectations and that a recession will probably be avoided.

    • French Finance Minister Le Maire said that his government will continue pursuing planned pension reforms.

U.S. equity futures:

• S&P 500 Futures: +11 @ 3,910

• DJIA Futures: +9 @ 33,053

• Nasdaq 100 Futures: +81 @ 11,377

Overseas:

• Europe: DAX +0.3%, FTSE +0.2%, CAC +0.6%

• Asia: Nikkei +0.6%, Hang Seng +1.8%, Shanghai Composite +0.8%

Commodities:

• Crude Oil +0.41 @ 81.02

• Nat Gas -0.056 @ 3.219

• Gold +6.80 @ 1930.70

• Silver +0.217 @ 24.087

• Copper -0.0052 @ 4.2263

Earnings/Guidance:

• Ally Financial (ALLY) beats by $0.08

• Astronics (ATRO) raises Q4 revenue guidance above two analyst estimate

• Bank OZK (OZK) beats by $0.04, net interest income increased 24.8%

• Concentrix (CNXC) misses by $0.32, misses on revs; guides Q1 revs below estimate; guides FY23 revs in-line

• Ericsson (ERIC) misses by SEK0.70, beats on revs

• Evercore (EVR) announces that it has named Tim LaLonde as its Chief Financial Officer, effective March 6, 2023

• First Financial (FFIN) reports EPS in-line, misses on revs

• Huntington Banc (HBAN) beats by $0.03

• JinkoSolar (JKS) subsidiary Jinko Solar Co., Ltd. announces certain preliminary unaudited financial results for FY22

• Latham Group (SWIM) CFO Cobert Masson to step down for family reasons, effective March 17; reaffirms FY22 sales and adjusted EBITDA outlook

• Netflix (NFLX) misses by $0.39 due to FX remeasurement, reports revs in-line, paid net adds of 7.66 mln tops prior guidance; guides Q1 EPS below consensus, revs above consensus, expects positive paid net adds yr/yr; appoints new co-CEOs

• Nordstrom (JWN) significantly lowers FY22 EPS guidance, company took additional markdowns to finish year with healthy inventory position

• PPG Industries (PPG) beats by $0.09, beats on revs; guides Q1 EPS below consensus

• Regions Fincl (RF) beats by $0.06, beats on revs

• SLB (SLB) beats by $0.03, beats on revs; raises dividend

• State Street (STT) beats by $0.11, beats on revs; provides FY23guidance

• SVB Financial Group (SIVB) misses by $0.64, beats on revs

• Two Harbors Investment (TWO) provides Q4 financial update

News:

• enate Minority Leader Mitch McConnell (R-KY) believes debt ceiling will be increased, according to Bloomberg

• White House confirms $2.5 bln defense package for Ukraine

• FAA outage on January 11 was caused by an accidental deletion of critical files, according to the Wall Street Journal

• Genesis filed for bankruptcy, according to Financial Times

• AbCellera Biologics (ABCL) announces that the U.S. Patent Trial and Appeal Board upholds microfluidic cell culture patent

• Airbus (EADSY): Uzbekistan Airways orders 12 A320neo Family aircraft

• Alphabet (GOOG) decided to reduce its workforce by approximately 12,000 roles

• Alphabet (GOOG): India Supreme Court will not block Google antitrust ruling, according to Reuters

• Ares Management (ARES) appoints Jana Markowicz as COO

• Avita Medical (RCEL) COO Kathy McGee to leave the organization; no plans to replace the role

• Bed Bath & Beyond (BBBY) receives notice from NASDAQ regarding delayed quarterly report

• Coinbase Global (COIN): Moody's downgrades Coinbase (corporate family B2, senior debt B1); outlook stable

• Compass Therapeutics (CMPX) Announces that the Phase 2 Data of CTX-009 in Combination with Paclitaxel in Patients with Biliary Tract Cancers (BTC) will be Presented at the ASCO GI Cancers Symposium on January 20, 2023

• Costco (COST) reauthorizes common stock repurchase program of up to $4.0 bln

• DMC Global (BOOM) appoints Eric Walter as CFO

• Dr. Reddy's (RDY) successfully completes full set of clinical studies of its rituximab biosimilar for filing in the U.S., Europe

• Eli Lilly (LLY) receives Complete Response Letter for accelerated approval of Donanemab

• Exelixis (EXEL) provides update on patent litigation with MSN Laboratories

• Flotek Industries (FTK) Director Harsha V Agadi to become interim CEO, effective immediately; succeeds John W Gibson, Jr., who stepped down as role of Chairman and CEO; COO Ryan Ezell appointed Chairman

• Gulfport Energy (GPOR) names John Reinhart President, Chief Executive Officer and Director, effective January 24, 2023

• Hawaiian Holdings (HA) Pilots reach tentative agreement on new contract

• LSB Industries (LXU) provides update on its Cherokee, AL facility

• Magnite (MGNI) to reduce its global workforce by approximately 6%

• Mirati (MRTX) Announces IND Clearance by U.S. FDA Enabling Phase 1 Initiation for First-in-Class Oral KRASG12D Selective Inhibitor, MRTX1133

• Netflix (NFLX): Reed Hastings is giving up CEO title, while Peters is named co-CEO, according to Bloomberg

• Nintendo (NTDOY) aiming to increase Switch production, according to Bloomberg

• Opiant Pharmaceuticals (OPNT) Announces FDA Acceptance and Priority Review of NDA for OPNT003, Nasal Nalmefene, for Opioid Overdose

• Proterra (PTRA) to concentrate electric bus and battery manufacturing at its larger SC production facilities following an exit from its CA plant by the end of 2023

• PulteGroup (PHM) announces the results of an investigation into alleged violations of the Company's Code of Ethical Business Conduct relating to the improper use of social media by a former employee

• Sigma Lithium (SGML) files NI 43-101 Technical Report for production expansion supporting the previously announced 60% increase in mineral reserves and $ 15.3 billion NPV

• Sony (SONY) announces more than 30 games on track for release starting February 22

• Spirit Airlines (SAVE) to sell 29 unencumbered A319ceo aircraft to Gryphon Trading Company for an aggregate price ranging between $152-201 mln; deliveries expected to occur in 1Q23 through end of 3Q24

• State Street (STT) announces new authorization to repurchase up to $4.5 billion of common stock during 2023

• Texas Instruments (TXN) selects Haviv Ilan to become its next president and CEO, effective April 1; succeeds current CEO and president Rich Templeton who will remain chairman

• T-Mobile US (TMUS) continuing investigation relating to a bad actor obtaining data without authorization first identified on January 5; notes malicious activity appears to be fully contained and no evidence pointing to a breach of systems or network

• Wayfair (W) details update to cost efficiency plan - to reduce workforce by ~10%; expected to accelerate the timeline for adj EBITDA breakeven to earlier in 2023

M&A:

• ABB Ltd (ABB) sells Power Conversion division to AcBel Polytech for $505 mln

• Sprout Social (SPT) acquires Repustate, an innovative sentiment analysis and natural language processing company; financial terms were not disclosed

• UnitedHealth (UNH): UK CMA launches inquiry into UNH acquisition of EMIS Group Plc.

Syndicate:

• Akoustis Technologies (AKTS) prices offering of 10,909,091 shares of common stock at $2.75 per share

• Deciphera Pharmaceuticals (DCPH) prices offering of 6,944,445 shares of its common stock at $18.00 per share

• Kohl's (KSS) entered into a $1.5 bln credit agreement

IPOs:

• Expected to Price:

  • No IPOs expected.

Gapping Up/Down

• Gapping up:

  • ATRO +6.4%, NFLX +5.8%, PPG +5.1%, SGML +4.5%, ABCL +3.4%, EXEL +3.3%, EOSE +2.9%, GOOG+2.7%, MGNI +2.3%, FTK +2.2%, BGNE +2%, CMPX+1.3%, ARCC +1.3%, COST +1%, ABB +0.9%, SAVE+0.8%, TXN +0.6%

• Gapping down:

  • BBBY -8.4%, JWN -5.7%, CNXC -4.9%, ERIC -4.6%, TWO -3.7%, SWIM -3.1%, KSS -2.9%, LLY -1.8%, AKTS -1.7%, FFIN -1.6%, TMUS -1.3%, SPT -1.1%

Analyst Research (see Upgrades/Downgradescalendarfor full list):

• Upgrades

  • PVH (PVH) upgraded to Overweight from Equal Weight at Barclays; tgt raised to $106

  • Restaurant Brands Int'l (QSR) upgraded to Outperform from Market Perform at BMO Capital Markets; tgt raised to $72

• Downgrades:

  • BigCommerce (BIGC) downgraded to Sector Weight from Overweight at KeyBanc Capital Markets

  • Domo (DOMO) downgraded to Equal-Weight from Overweight at Morgan Stanley; tgt lowered to $16

  • Pinterest (PINS) downgraded to Neutral from Buy at MKM Partners; tgt $27

  • Salesforce (CRM) downgraded to Market Perform from Outperform at Cowen

• Others:

  • American Fincl (AFG) initiated with a Market Perform at BMO Capital Markets; tgt $155

  • American Intl (AIG) initiated with a Market Perform at BMO Capital Markets; tgt $64

  • Arch Capital (ACGL) initiated with a Market Perform at BMO Capital Markets; tgt $65

  • Arthur J. Gallagher (AJG) initiated with an Outperform at BMO Capital Markets; tgt $211

  • Brown & Brown (BRO) initiated with an Outperform at BMO Capital Markets; tgt $67

  • Goosehead Insurance (GSHD) initiated with a Market Perform at BMO Capital Markets; tgt $39

  • Progressive (PGR) initiated with an Outperform at BMO Capital Markets; tgt $155

  • Ryan Specialty Group (RYAN) initiated with an Outperform at BMO Capital Markets; tgt $51

  • Travelers (TRV) initiated with an Outperform at BMO Capital Markets; tgt $212

Upcoming Events:

• Econ Data:

  • 10:00 ET: Existing Home Sales for Dec (Briefing.comConsensus 3.96M; Prior 4.09M)

• Earnings:

  • Monday (Jan 16)

    • Morning:  UMC

  • Tuesday (Jan 17)

    • Morning: CFG GS MS EDU SBNY SI

    • Afternoon:  FULT HWC IBKR PNFP PRGS UAL UCBI

  • Wednesday (Jan 18)

    • Morning:  SCHW PNC PLD

    • Afternoon:  AA DFS FHN FUL KMI TCBI WTFC

  • Thursday (Jan 19)

    • Morning: BANC BKU CMA CBSH FAST FITB HOMB KEY MTB NTRS PG SNV TFC WNS

    • Afternoon:  OZK CNXC FFIN NFLX PPG SIVB

  • Friday (Jan 20)  

    • Morning:  ALLY ERIC HBAN RF SLB STT

Asia & Europe detail:

Asia: Nikkei +0.6%, Hang Seng +1.8%, Shanghai Composite +0.8%

Equity indices in the Asia-Pacific region ended the week on a mostly higher note. Japan's core CPI was up 4.0% yr/yr in December, representing the sharpest rate of increase since 1982. The People's Bank of China made no changes to its one-year and five-year loan prime rates. Markets in China, Hong Kong, South Korea, and Singapore will be closed on Monday for Lunar New Year celebrations.

• In economic data:

  • Japan's December CPI 0.2% m/m (last 0.2%); 4.0% yr/yr (last 3.8%). December National Core CPI 4.0% yr/yr, as expected (last 3.7%)

  • South Korea's December PPI -0.3% m/m (last -0.3%); 6.0% yr/yr (last 6.2%)

  • Hong Kong's December CPI 2.0% yr/yr (expected 1.9%; last 1.8%)

  • New Zealand's December Business NZ PMI 47.2 (last 47.4)

---Equity Markets---

• Japan's Nikkei: +0.6% (+1.7% for the week)

• Hong Kong's Hang Seng: +1.8% (+1.4% for the week)

• China's Shanghai Composite: +0.8% (+2.2% for the week)

• India's Sensex: -0.4% (+0.6% for the week)

• South Korea's Kospi: +0.6% (+0.4% for the week)

• Australia's ASX All Ordinaries: +0.2% (+1.7% for the week)

---FX---

• USD/JPY: +1.2% to 129.92

• USD/CNH: +0.2% to 6.7838

• USD/INR: -0.2% to 81.12

Europe: DAX +0.3%, FTSE +0.2%, CAC +0.6%

Major European indices are looking for a higher finish to the week. December retail sales in the U.K. fell at their fastest pace for the month since the start of the series in 1989. British Chancellor of the Exchequer Hunt cautioned against expecting a tax cut in the March budget. European Commissioner for trade Dombrovskis said that growth in the region has been above expectations and that a recession will probably be avoided. French Finance Minister Le Maire said that his government will continue pursuing planned pension reforms.

• In economic data:

  • Germany's December PPI -0.4% m/m (expected -1.2%; last -3.9%); 21.6% yr/yr (expected 20.8%; last 28.2%)

  • U.K.'s December Retail Sales -1.0% m/m (expected 0.5%; last -0.5%); -5.8% yr/yr (expected -4.1%; last -5.7%). December Core Retail Sales -1.1% m/m (expected 0.4%; last -0.3%); -6.1% yr/yr (expected -4.4%; last -5.6%)

---Equity Markets---

• STOXX Europe 600: +0.1% (-0.3% week-to-date)

• Germany's DAX: +0.3% (-0.7% week-to-date)

• U.K.'s FTSE 100: +0.2% (-1.1% week-to-date)

• France's CAC 40: +0.6% (-0.4% week-to-date)

• Italy's FTSE MIB: +0.7% (-0.1% week-to-date)

• Spain's IBEX 35: +1.1% (+0.1% week-to-date)

---FX---

• EUR/USD: -0.2% to 1.0814

• GBP/USD: -0.4% to 1.2342

• USD/CHF: +0.5% to 0.9205