21/04/23 Briefing

The S&P 500 futures are down 7 points and are trading 0.2% below fair value. The Nasdaq 100 futures are down 56 points and are trading 0.4% below fair value. The Dow Jones Industrial Average futures are down 24 points and are trading slightly below fair value.

Futures for the equity market skew slightly negative on this options expiration day. The downward bias stems from some disappointment that the S&P 500 has had a lackluster showing during the early stages of earnings season and has been unable to make a run at the 4,200 level with any conviction. Also, there is some trepidation ahead of earnings results next week from the mega cap stocks.

The Shanghai Composite dropped 2.0% today following a Bloomberg report that the PBOC might start dialing back the stimulus it provided during depths of COVID pandemic. There is also some speculation that China is going to tighten restrictions on technology companies.

Flash Services PMI readings from Germany, France, and the U.K. improved, coming in above expectations, but Manufacturing PMI readings from all three countries slipped deeper into contraction.

U.S. economic data today is limited to the preliminary IHS Markit Manufacturing PMI (prior 49.2) and the preliminary IHS Markit Services PMI (prior 52.6) for April at 9:45 a.m. ET.

Treasury yields are moving lower. The 2-yr note yield is down five basis points to 4.12% and the 10-yr note yield is down one basis points to 3.53%.

Oil prices are making up some lost ground, up 0.3% to $77.56/bbl. Natural gas futures are down 2.7% to $2.19/mmbtu. 

In corporate news:

• Procter & Gamble (PG 153.90, +3.05, +2.0%): beats by $0.05, beats on revs; reaffirms FY23 EPS in-line, raises FY23 revs slightly above consensus

• CSX (CSX 31.61, +0.80, +2.6%): beats by $0.05, beats on revs

• SLB (SLB 51.72, -0.25, -0.5%): beats by $0.02, beats on revs

• Meta Platforms (META 210.61, -2.46, -1.2%): CEO Mark Zuckerberg doesn't rule out future job cuts, according to WSJ

• AT&T (T 17.79, +0.14, +0.8%): HSBC Securities upgraded to Buy from Hold

• Tesla (TSLA 163.53, +0.54, +0.3%): raises price on Model S and X after earlier price cuts, according to Reuters; Cathie Wood says Tesla (TSLA) could hit $2000 by 2027, according to CNBC

• Regions Fincl (RF 18.90, +0.01, +0.1%): misses by $0.02, reports revs in-line

• PPG Industries (PPG 142.56, +1.11, +0.8%): beats by $0.27, reports revs in-line; guides Q2 EPS above consensus; guides FY23 EPS in-line

• HCA (HCA 286.12, +15.34, +5.7%): beats by $0.93, beats on revs; raises FY23 EPS above consensus, revs in-line; FTC sues to stop the "potentially illegal integration of New Orleans area hospitals over failure to follow federal reporting law"

Reviewing overnight developments:

• Equity indices in the Asia-Pacific region ended the week on a lower note. Japan's Nikkei: -0.3% (+0.3% for the week), Hong Kong's Hang Seng: -1.6% (-1.8% for the week), China's Shanghai Composite: -2.0% (-1.1% week-to-date), India's Sensex: UNCH (-1.3% for the week), South Korea's Kospi: -0.7% (-1.1% week-to-date), Australia's ASX All Ordinaries: -0.4% (-0.5% for the week).

  • In economic data:

    • Japan's March CPI 0.4% m/m (expected 0.1%; last -0.6%); 3.2% yr/yr, as expected (last 3.3%). March National Core CPI 3.1% yr/yr, as expected (last 3.1%)

    • South Korea's March PPI 0.1% m/m (expected -0.1%; last 0.2%); 3.3% yr/yr (expected 4.5%; last 4.8%)

    • Australia's flash April Manufacturing PMI 48.1 (expected 48.0; last 49.1) and flash Services PMI 52.6 (expected 47.0; last 48.6)

    • Hong Kong's March CPI 1.7% yr/yr (expected 1.8%; last 1.7%)

  • In news:

    • The Bank of Japan is expected to maintain its ultra-loose policy and dovish guidance at next week's meeting, according to Reuters.

    • The Bank of Japan's semi-annual financial system report noted that Japan's financial system has been maintaining stability.

    • Nomura raised its forecast for 2023 growth in China to 5.9% from 5.3%.

    • The Tokyo Stock Exchange will extend its trading hours by 30 minutes starting on November 5, 2024.

• Major European indices trade near their flat lines while Spain's IBEX (-0.8%) underperforms with bank stocks contributing to the weakness. STOXX Europe 600: -0.2% (-0.1% week-to-date), Germany's DAX: -0.4% (-0.4% week-to-date), U.K.'s FTSE 100: +0.1% (+0.5% week-to-date), France's CAC 40: -0.1% (+0.2% week-to-date), Italy's FTSE MIB: -0.1% (-1.0% week-to-date), Spain's IBEX 35: -0.8% (+0.2% week-to-date).

  • In economic data:

    • Eurozone's flash April Manufacturing PMI 45.5 (expected 48.0; last 47.3) and flash Services PMI 56.6 (expected 54.5; last 55.0)

    • Germany's flash April Manufacturing PMI 44.0 (expected 45.7; last 44.7) and flash Services PMI 55.7 (expected 53.3; last 53.7)

    • U.K.'s March Retail Sales -0.9% m/m (expected -0.5%; last 1.1%); -3.1% yr/yr, as expected (last -3.3%). March Core Retail Sales -1.0% m/m (expected -0.7%; last 1.4%); -3.2% yr/yr (expected -3.1%; last -3.0%). Flash April Manufacturing PMI 46.6 (expected 48.5; last 47.9) and flash Services PMI 54.9 (expected 53.0; last 52.9)

    • France's flash April Manufacturing PMI 45.5 (expected 47.8; last 47.3) and flash Services PMI 56.3 (expected 53.4; last 53.9)

  • In news:

    • Flash Services PMI readings from Germany, France, and the U.K. improved, coming in above expectations, but Manufacturing PMI readings from all three countries slipped deeper into contraction.

    • European Central Bank policymaker Visco said that the full effect of rate hikes has yet to be seen while policymaker de Guindos spoke in favor of maintaining a data-dependent approach to monetary policy.

U.S. equity futures:

• S&P 500 Futures: -8 @ 4,122

• DJIA Futures: -32 @ 33,755

• Nasdaq 100 Futures: -48 @ 12,938

Overseas:

• Europe: DAX -0.4%, FTSE +0.1%, CAC -0.1%

• Asia: Nikkei -0.3%, Hang Seng -1.6%, Shanghai Composite -2.0%

Commodities:

• Crude Oil +0.17 @ 77.54

• Nat Gas -0.054 @ 2.195

• Gold -20.60 @ 1998.50

• Silver -0.126 @ 25.247

• Copper -0.0180 @ 4.0075

Earnings/Guidance:

• Alphabet (GOOG) updates specific reporting topics ahead of Q1 earnings

• Assoc Banc-Corp (ASB) beats by $0.02

• Autoliv (ALV) beats by $0.02, beats on revs; provides Fy23 guidance

• Bank OZK (OZK) beats by $0.03, beats on revs

• BHP Group (BHP) provides nine-month operations update

• Cathay Bancorp (CATY) beats by $0.07, total deposits up 0.8% from December 31, 2022

• CSX (CSX) beats by $0.05, beats on revs

• First Financial (FFBC) beats by $0.05, beats on revs

• Glacier Bancorp (GCBI) reports Q1 results

• HCA (HCA) beats by $0.93, beats on revs; raises FY23 EPS above consensus, revs in-line

• Hilltop Holdings (HTH) beats by $0.15

• Horace Mann (HMN) guides Q1 EPS below consensus as catastrophe losses were well ahead of year-earlier period

• Knight-Swift (KNX) misses by $0.08, beats on revs; lowers FY23 EPS guidance

• OceanFirst Finl (OCFC) reports Q1 results, net interest income increased 17.3%

• PC Connection (CNXN) guides Q1 earnings below two analyst estimate; revs inline (two ests); saw continuation of weak economic backdrop during the quarter

• PPG Industries (PPG) beats by $0.27, reports revs in-line; guides Q2 EPS above consensus; guides FY23 EPS in-line

• Procter & Gamble (PG) beats by $0.05, beats on revs; reaffirms FY23 EPS in-line, raises FY23 revs slightly above consensus

• Qualtrics (XM) beats by $0.01, beats on revs; not providing guidance

• Regions Fincl (RF) misses by $0.02, reports revs in-line; provides FY23 guidance in slide presentation

• SAP SE (SAP) beats by 0.15, reports revs in-line; updates outlook

• Sasol (SSL) provides quarterly update and provides outlook

• SEI Investments (SEIC) misses by $0.03, reports revs in-line

• SLB (SLB) beats by $0.02, beats on revs

• Valmont (VMI) beats by $0.28, beats on revs; raises FY23 EPS in-line, reiterates revs in-line; also $400 mln share repurchase reauthorization and a 9% dividend increase

• Woodside Energy Group (WDS) provides Q1 update; reaffirms FY23 production outlook

• W.R. Berkley (WRB) misses by $0.24, misses on revs

News:

• President Biden preparing to announce re-election campaign next week, according to the Washington Post

• UK Deputy Prime Minister Dominic Raab resigned, according to Reuters

• Fed considering closing loophole that allowed mid sized banks to mask losses, according to the Wall Street Journal

• Europe's air traffic agency was attacked by pro-Russian hackers, according to the Wall Street Journal

• US planning for 6G, according to the Wall Street Journal

• AbbVie (ABBV) reports late-breaking results from Phase 3 Trial Evaluating Atogepant (QULIPTA) for the Preventive Treatment of Episodic Migraine Among Patients with Prior Treatment Failure at the 2023 AAN Annual Meeting

• Amazon (AMZN): Whole Foods plans to cut several hundred corporate jobs as it reorganizes structure, according to the Wall Street Journal

• Apellis (APLS) announces validation of four marketing applications for Pegcetacoplan for geographic atrophy

• Aspen Aerogels (ASPN) suing Korean supplier Beerenberg Services and their Chinese aerogel manufacturer for patent infringement

• Cango (CANG) authorized $50 mln new share repurchase program

• Carlyle Group (CG) wants new backers for McDonald's (MCD) China unit, according to Bloomberg

• ClearPoint Neuro (CLPT) to Showcase Two Novel Innovations at AANS 2023: ClearPoint Maestro Brain Model and ClearPoint Prism Neuro Laser Therapy System

• Clorox (CLX) aiming to eliminate 200 jobs, according to Bloomberg

• Corning (GLW): China Ministry of Commerce to impose anti-dumping duties on imports of non-dispersion-shifted single-mode optical fibers from US

• Credit Suisse (CS) investors file lawsuit against Swiss regulators over bond losses, according to Financial Times

• Eli Lilly (LLY) expects Medicare to fully cover Alzheimer's drugs, according to Reuters

• Equifax (EFX) discloses that CFPB informed the company that its enforcement division will be investigating its previously-disclosed coding issue identified within a legacy server environment in the US

• Ford (F) CEO Jim Farley says Tesla (TSLA) could start EV price war, according to Bloomberg

• Genmab (GMAB) receives initial resolution of its second arbitration under license agreement with Janssen

• HCA (HCA): FTC sues to stop the "potentially illegal integration of New Orleans area hospitals over failure to follow federal reporting law"

• Janux Therapeutics (JANX) announces that the first patient has been dosed at City of Hope in a Phase 1 clinical trial of JANX008 in subjects with advanced or metastatic solid tumors including colorectal cancer, squamous cell carcinoma of the head and neck, non-small cell lung cancer, and renal cell carcinoma

• Lemaitre Vascular (LMAT) enters into agreement with Aziyo Biologics (AZYO) to become exclusive distributor of Aziyo's cardiovascular patches in the US

• Meta (META) CEO Mark Zuckerberg doesn't rule out future job cuts, according to the Wall Street Journal

• Petrobras (PBR) signed a contract to expand and modernize units already in operation at Abreu e Lima Refinery

• Tesla (TSLA) raises price on Model S and X after earlier price cuts, according to Reuters

• Tesla (TSLA): Cathie Wood says Tesla could hit $2000 by 2027, according to CNBC

• United Airlines (UAL) discusses Boeing (BA) delays in 10-Q filing

• Wish (WISH) announces it has approved a share repurchase program for up to $50 mln of common stock

M&A:

• Brookfield Asset Mgmt (BAM) unchanged on report it is exploring possible counterbid for Network International Holdings, according to the Wall Street Journal

• Hasbro (HAS) aiming to sell "Yellowjackets" studio, according to Bloomberg

• T-Mobile US (TMUS): Its $1.35 bln Mint Mobile acquisition faces DOJ scrutiny, according to New York Post

Syndicate:

• AMTD IDEA Group (AMTD) secured $93.6 mln of investment at 21.07% premium above prior day's closing price

• ARS Pharmaceuticals (SPRY) files 64,779,432 common stock offering by selling shareholders

• Navient (NAVI) files mixed shelf securities offering

IPOs:

• Expected to Price:

  • No IPOs expected.

Gapping Up/Down

• Gapping up:

  • WISH +22.8%, MDXH +8.6%, AMTD +8.3%, CANG+6.1%, ASB +4.6%, LMAT +3.4%, VMI +3.2%, SPRY+2%, HTH +1.7%, CSX +1.7%, ASPN +1.6%, JANX+1.6%, FFBC +1.3%, SAP +1.3%, OZK +1.2%, AXTA+0.9%, UAL +0.6%, TMUS +0.5%

• Gapping down:

  • CNXN -4%, ALV -3.8%, BHP -2.9%, OCFC -2.7%, WRB -2.4%, BAM -1.8%, PKE -1.8%, RF -1.6%, PFG-1.5%, SSL -1%, GBCI -0.9%, XM -0.9%, NAVI -0.7%, KNX -0.7%

Analyst Research (see Upgrades/Downgradescalendarfor full list):

• Upgrades

  • AT&T (T) upgraded to Buy from Hold at HSBC Securities; tgt $21

• Downgrades:

  • Big Lots (BIG) downgraded to Underweight from Neutral at Piper Sandler; tgt lowered to $7

  • Overstock.com(OSTK) downgraded to Neutral from Overweight at Piper Sandler; tgt lowered to $19

  • Tesla (TSLA) downgraded to Hold from Buy at Truist; tgt lowered to $154

• Others:

  • Acadia Healthcare (ACHC) initiated with a Neutral at Cantor Fitzgerald; tgt $83

  • Amedisys (AMED) initiated with a Neutral at Cantor Fitzgerald; tgt $87

  • Bill.com(BILL) initiated with a Buy at UBS; tgt $95

  • Camtek (CAMT) initiated with a Buy at Jefferies; tgt $35

  • Centene (CNC) initiated with an Overweight at Cantor Fitzgerald; tgt $80

  • CVS Health (CVS) initiated with an Overweight at Cantor Fitzgerald; tgt $87

  • CyberArk (CYBR) initiated with a Buy at Truist; tgt $185

  • DocGo (DCGO) initiated with an Overweight at Cantor Fitzgerald; tgt $11

  • Elevance Health (ELV) initiated with an Overweight at Cantor Fitzgerald; tgt $547

  • Fortinet (FTNT) initiated with a Buy at Truist; tgt $82

  • HCA (HCA) initiated with an Overweight at Cantor Fitzgerald; tgt $304

  • Humana (HUM) initiated with an Overweight at Cantor Fitzgerald; tgt $597

  • Molina Healthcare (MOH) initiated with an Overweight at Cantor Fitzgerald; tgt $354

  • Progyny (PGNY) initiated with an Overweight at Cantor Fitzgerald; tgt $44

  • Surgery Partners (SGRY) initiated with an Overweight at Cantor Fitzgerald; tgt $43

  • Tenet Healthcare (THC) initiated with an Overweight at Cantor Fitzgerald; tgt $73

  • The Cigna Group (CI) initiated with a Neutral at Cantor Fitzgerald; tgt $285

  • UnitedHealth (UNH) initiated with an Overweight at Cantor Fitzgerald; tgt $591

  • Universal Health (UHS) initiated with an Underweight at Cantor Fitzgerald; tgt $143

Econ Data:

• 09:45 ET: IHS Markit Manufacturing PMI - Prelim for Apr (Briefing.comConsensus NA; Prior 49.2)

• 09:45 ET: IHS Markit Services PMI - Prelim for Apr (Briefing.comConsensus NA; Prior 52.6)

Earnings:

• Monday (Apr 17)

  • Morning:  SCHW MTB STT

  • Afternoon: ELS JBHT PNFP

• Tuesday (Apr 18)

  • Morning: BAC BK CBSH ERIC GS JNJ LMT PLD

  • Afternoon:  FHN FULT HWC ISRG MRTN NFLX OMC UAL UCBI WAL

• Wednesday (Apr 19)

  • Morning:  ABT ALLY ASML BKR CFG ELV LAD MS NDAQ EDU SYF TRV USB

  • Afternoon:  AA BDN CALX CNS CCI DFS EFX FNB FFIV FR IBM KMI LRCX LVS LBRT NBHC REXR RLI SLG STLD TSLA WTFC ZION

• Thursday (Apr 20)

  • Morning: ALK AXP T AN BMI BANC BHLB BX CMA DHI EWBC FITB GPC HRI HOMB HBAN IRDM KEY MAN MMC NOK NUE PM POOL RAD SASR SNA SNV TSM TCBI TFC UNP VIRT WSO WBS

  • Afternoon:  ASB OZK CATY CSX FFBC GBCI HTH KNX PPG STX SEIC VMI WRB

• Friday (Apr 21)  

  • Morning:  ALV FCX HCA PG RF SAP SLB

Asia & Europe detail:

Asia: Nikkei -0.3%, Hang Seng -1.6%, Shanghai Composite -2.0%

Equity indices in the Asia-Pacific region ended the week on a lower note. The Bank of Japan is expected to maintain its ultra-loose policy and dovish guidance at next week's meeting, according to Reuters. The Bank of Japan's semi-annual financial system report noted that Japan's financial system has been maintaining stability. Nomura raised its forecast for 2023 growth in China to 5.9% from 5.3%. The Tokyo Stock Exchange will extend its trading hours by 30 minutes starting on November 5, 2024.

• In economic data:

  • Japan's March CPI 0.4% m/m (expected 0.1%; last -0.6%); 3.2% yr/yr, as expected (last 3.3%). March National Core CPI 3.1% yr/yr, as expected (last 3.1%)

  • South Korea's March PPI 0.1% m/m (expected -0.1%; last 0.2%); 3.3% yr/yr (expected 4.5%; last 4.8%)

  • Australia's flash April Manufacturing PMI 48.1 (expected 48.0; last 49.1) and flash Services PMI 52.6 (expected 47.0; last 48.6)

  • Hong Kong's March CPI 1.7% yr/yr (expected 1.8%; last 1.7%)

---Equity Markets---

• Japan's Nikkei: -0.3% (+0.3% for the week)

• Hong Kong's Hang Seng: -1.6% (-1.8% for the week)

• China's Shanghai Composite: -2.0% (-1.1% week-to-date)

• India's Sensex: UNCH (-1.3% for the week)

• South Korea's Kospi: -0.7% (-1.1% week-to-date)

• Australia's ASX All Ordinaries: -0.4% (-0.5% for the week)

---FX---

• USD/JPY: -0.4% to 133.71

• USD/CNH: +0.2% to 6.8953

• USD/INR: UNCH at 82.07

Europe: DAX -0.4%, FTSE +0.1%, CAC -0.1%

Major European indices trade near their flat lines while Spain's IBEX (-0.8%) underperforms with bank stocks contributing to the weakness. Flash Services PMI readings from Germany, France, and the U.K. improved, coming in above expectations, but Manufacturing PMI readings from all three countries slipped deeper into contraction. European Central Bank policymaker Visco said that the full effect of rate hikes has yet to be seen while policymaker de Guindos spoke in favor of maintaining a data-dependent approach to monetary policy.

• In economic data:

  • Eurozone's flash April Manufacturing PMI 45.5 (expected 48.0; last 47.3) and flash Services PMI 56.6 (expected 54.5; last 55.0)

  • Germany's flash April Manufacturing PMI 44.0 (expected 45.7; last 44.7) and flash Services PMI 55.7 (expected 53.3; last 53.7)

  • U.K.'s March Retail Sales -0.9% m/m (expected -0.5%; last 1.1%); -3.1% yr/yr, as expected (last -3.3%). March Core Retail Sales -1.0% m/m (expected -0.7%; last 1.4%); -3.2% yr/yr (expected -3.1%; last -3.0%). Flash April Manufacturing PMI 46.6 (expected 48.5; last 47.9) and flash Services PMI 54.9 (expected 53.0; last 52.9)

  • France's flash April Manufacturing PMI 45.5 (expected 47.8; last 47.3) and flash Services PMI 56.3 (expected 53.4; last 53.9)

---Equity Markets---

• STOXX Europe 600: -0.2% (-0.1% week-to-date)

• Germany's DAX: -0.4% (-0.4% week-to-date)

• U.K.'s FTSE 100: +0.1% (+0.5% week-to-date)

• France's CAC 40: -0.1% (+0.2% week-to-date)

• Italy's FTSE MIB: -0.1% (-1.0% week-to-date)

• Spain's IBEX 35: -0.8% (+0.2% week-to-date)

---FX---

• EUR/USD: +0.1% to 1.0979

• GBP/USD: -0.4% to 1.2385

• USD/CHF: UNCH at 0.8925