Early Look

Wednesday, January 18, 2023

Futures	Up/Down	%	Last
Dow	19.00	0.06%	34,039
S&P 500	6.25	0.16%	4,015
Nasdaq	18.50	0.16%	11,643

 

 

U.S. futures holding gains overnight, with S&P futures remaining above the 4,000 level after snapping its 4-day win streak on Tuesday as all eyes remain on the Fed and PPI inflation data for a read on the pace of further tightening. The Fed’s Bostic, Logan, and Harker will be speaking today while Collins, Williams and Brainard are on Thursday. Fed Fund futures are still pricing in 25bps rate hikes for Feb and March and a peak rate ~4.9% by summer. Later this morning the December Producer price index (PPI) will be released (8:30 AM), with ests for a -0.1% decline in headline m/m and rise +6.8% y/y. On a core basis, excluding food & energy, PPI expected to rise +0.1% m/m and +5.7% y/y. Stocks have been very strong to start the year, with the Nasdaq Composite coming into today with a 7-day win streak, and up 6% to start the year along with a 7% rise in Dow Transports and 10% jump in the semiconductor index (SOX). In Asian markets, The Nikkei Index jumped 652 points to 26,791, the Shanghai Index was little changed holding at 3,224, and the Hang Seng Index rose 100 points to 21,678. In Europe, the German DAX is up 10 points to 15,197, while the FTSE 100 is up about 10 points to 7,860. The U.S. dollar/Yen rose as high as 130.50 last night; the biggest one-day pct jump since June 17 after the Bank of Japan keeps rates unchanged (yen slipped on no changes to policy) – but last at 129.30, up +0.9%. Oil advanced to trade at its highest since early December on hopes of a recovery in Chinese demand even as US futures stalled over the direction of monetary policy and corporate earnings.

 

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -8.14 points, or 0.20%, to 3,990.95

·     The Dow Jones Industrial Average slid -391.39 points, or 1.14%, to 33,911.22

·     The Nasdaq Composite gained 15.96 points, or 0.14%, to 11,095.11

·     The Russell 2000 Index declined -2.75 points, or 0.15% to 1,884.28

 

Economic Calendar for Today

·     7:00 AM ET            MBA Mortgage Applications Data

·     8:30 AM ET            Producer Price Index (PPI) Headline m/m for December…est. (-0.1%)

·     8:30 AM ET            Producer Price Index (PPI) Headline y/y for December…est. +6.8%

·     8:30 AM ET            PPI Ex: Food & Energy (core) m/m for December…est. +0.1%

·     8:30 AM ET            PPI Ex: Food & Energy (core) y/y for December…est. +5.7%

·     8:30 AM ET            Retail Sales M/M for December…est. (-0.8%)

·     8:30 AM ET            Retail Sales – Ex: Autos for December…est. (-0.4%)

·     8:55 AM ET            Johnson/Redbook Weekly Sales

·     9:00 AM ET            Fed’s Bostic Makes Welcoming Remarks at Academic Conference

·     9:15 AM ET            Industrial Production M/M for December…est. (-0.1%)

·     9:15 AM ET            Capacity Utilization for December…est. 79.6%

·     10:00 AM ET          Business Inventories M/M for November…est. +0.4%

·     10:00 AM ET          NAHB Housing Market Index for January…est. 31 (same as prior month)

·     2:00 PM ET             Federal Reserve Releases Beige Book

·     5:00 PM ET             Fed’s Logan Gives Speech in Austin

·     4:00 PM ET             Net Long-term TIC Flows for Nov

·     4:30 PM ET             API Weekly Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: JBHT PLD PNC SCHW

·     Earnings After the Close: AA DFS EGBN FHN FUL KMI PFBC TCBI WTFC

 

Other Key Events:

·     B Riley Oncology Conference (virtual), 1/18-1/19

·     Sidoti Micro-Cap Conference (virtual), 1/18-1/19

 

 

Macro	Up/Down	Last
Nymex	1.62	81.79
Brent	1.48	87.40
Gold	7.30	1,917.20
EUR/USD	0.0039	1.0829
JPY/USD	1.22	129.35
10-Year Note	-0.054	3.481%

 

 

World News

·     The Bank of Japan (BoJ) left its yield curve control policy unchanged; maintains short-term interest rate target at -0.1%; maintains 10-Year JGB yield target around 0%

 

Sector News Breakdown

Consumer

·     Albertsons Cos. (ACI) can pay a $4 billion dividend announced in conjunction with its plans to merge with Kroger (KR) after a Washington state Supreme Court denied a request to review a ruling that allowed payment of the dividend.

·     Big 5 Sporting Goods (BGFV) 4Q comps -13.2%, net sales $238.3Mm vs est. $244.7Mm; now sees 4Q EPS $0.07-0.08 vs est. $0.13; total merch inventories +9.6% y/y

·     Skechers (SKX) downgraded it to equal weight at Morgan Stanley on valuation, risk of FY23 guidance missing expectations and as the market shifts to early-cycle names

·     Gap (GPS) upgraded to equal weight at Morgan Stanley and anticipates a 2023 of two halves for US specialty retail and department stores.

·     Levi Strauss (LEVI) downgraded to Neutral from Buy

 

Energy, Industrials and Materials

·     United Airlines (UAL) 4Q adj EPS $2.46 vs est. $2.10 on revs $12.4B vs est. $12.23B, adj EBIT mgn 11.2%, achieved 9.1% pre-tax mgn ahead of schedule in 4Q; Q4 capacity down 9% vs. 4Q19; sees Q1 adj EPS $0.50-$1.00 above consensus $0.25 and revs up ~50% y/y vs. est. $11.32B.

·     Bombardier (BDRBF) shares surged as the company’s preliminary FY 2022 results for key financial metrics including earnings, revenues and free cash flow routed its own full-year guidance.

 

Financials

·     Coinbase (COIN) officially announced that it will stop its business in Japan. The deposit function will be closed on January 20, 2023. Users must withdraw crypto assets or legal tender from Coinbase Japan before February 16.

·     Fulton Financial (FULT) Q4 operating EPS $0.48 vs. est. $0.50; Q4 NII $225.9M, up 36.4% y/y; Q4 net interest margin 3.69% vs. 3.54% in Q3; Q4 provision for credit losses of $14.5M

·     Hancock Whitney (HWC) 4Q EPS $1.65 vs est. $1.65 on NII $298.1Mm vs est. $303.1Mm; 4Q credit loss allowance -341.1Mm

·     Interactive Brokers (IBKR) 4Q adj EPS $1.30 vs est. $1.17 on adj net revs $958Mm, NII $565Mm vs est. $473Mm; customer accounts +25% y/y; Cleared DARTs decreased 22% to 1.69M; customer credits increased 9% to $95.2B; customer margin loans decreased 29% to $38.9B

·     Pinnacle Financial Partners (PNFP) Q4 EPS $1.76 vs. est. $2.04; authorizes repurchase of up to $125M of common stock

·     Marqeta (MQ) upgraded to Neutral from Underperform at SMBC Nikko

·     PayPal (PYPL) downgraded to Underperform from Neutral at SMBC Nikko

 

Healthcare

·     Moderna’s (MRNA) vaccine against the respiratory syncytial virus, or RSV, reduced the rate of lower respiratory disease in people over 60 in a Phase 3 trial; said vaccine was 83.7% effective in a late-stage trial at preventing at least two symptoms in adults aged 60 and older.

·     SmileDirectClub Inc (SDC) said it expects to introduce an additional $120M-$140M in savings in 2023 excluding transition costs; sees Q4 prelim 4q adj EBITDA loss $135M-$137M; says FY23 expected costs and capital outlook for core business include one-time costs range of $12M-$15M

·     Fulcrum Therapeutics (FULC) 9.615M share Spot Secondary priced at $13.00

 

Technology, Media & Telecom

·     Progress Software (PRGS) Q4 adj EPS $1.12 vs. est. $1.09; Q4 revs rose 11% y/y to $159.2M vs. est. $161.8M; Annualized Recurring Revenue of $497M rose 3.5% y/y on a constant currency basis; Q4 operating margin was 19% and non-GAAP operating margin was 39%; sees Q1 EPS $1.04-$1.08 vs. est. $1.05 and revs $157M-$161M vs. est. $151.71M

·     International Business Machines (IBM) downgraded to equal weight from overweight at Morgan Stanley, saying that it is transitioning out of more defensive IT hardware names