Early Look

Tuesday, March 22, 2022

Futures	Up/Down	%	Last
Dow	169.00	0.49%	34,605
S&P 500	16.25	0.36%	4,468
Nasdaq	47.50	0.33%	14,418

 

 

U.S. equity futures and European stocks climb as markets continues to digest yesterday’s hawkish comments from Fed Chair Powell regarding a possible 50bps hike in the upcoming meeting, which continues to push Treasury yields higher, with the benchmark yield hitting cyclical highs of 2.3565% and the shorter-term 2-yr jumping 4 bps to 2.175% (spread narrows to 18 bps while the yield on the 3, 5 and 7-yr are all inverted against the 10-year). Powell said in comments about an “obvious need to move expeditiously” rang loud for bond markets – but still not seeing any concern in equity markets, as the S&P 500 once again approaches its 200-day moving average of 4,471 after dipping only a few points yesterday following a massive 4-day rally for stocks. Oil’s rally paused as the European Union weighed a possible ban on Russian crude imports. Meanwhile, the dollar advanced to its highest level in nearly a week, with a big spike against the Japanese yen (hitting 6-year highs above 121). Bets on a 50-basis point hike at the Fed’s May meeting jumped to 63.9% following Powell’s speech, according to the CME Group’s FedWatch tool. In Asian markets, The Nikkei Index gained 1.48% to 27,224, the Shanghai Index inched higher a few points to 3,259, and the Hang Seng Index spiked 3.15% to 21,889. In Europe, the German DAX is higher by nearly 1% to 14,465, while the FTSE 100 is up 0.55% to 7,480. China markets got a boost after Alibaba (BABA) announced it boosted its share buyback plan.

Market Closing Prices Yesterday

·     The S&P 500 Index dipped -1.94 points, or 0.04%, to 4,461.18

·     The Dow Jones Industrial Average fell -201.94 points, or 0.58%, to 34,552.99

·     The Nasdaq Composite dropped -55.38 points, or 0.40%, to 13,838.46

·     The Russell 2000 Index declined -20.21 points, or 0.97% to 2,065.21

 

Economic Calendar for Today

·     7:45 AM ET         ICSC Weekly Retail Sales

·     8:55 AM ET         Johnson/Redbook Weekly Sales

·     10:00 AM ET       Richmond Fed Index, for March

·     4:30 PM ET         API Weekly Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: BZFD, CINC, IMBI, JILL, ONDS, RAIL, STRR

·     Earnings After the Close: ADBE, AIR, AVGR, CLBS, DNAY, HQY, POSH, SLDP, SUNL, WOR, XGN

 

Other Key Events:

·     Goldman Sachs Disruptive Technology Symposium, 3/22-3/23, in London

·     Piper Annual Energy Conference, 3/21-3/23, in Las Vegas

·     Oppenheimer Transportation Technology Bus Tour (virtual), 3/21-3/22

·     Society of Gynecologic Oncology, 3/18-3/22, in Phoenix

·     Truist Atlanta Summit, 3/22 in Atlanta

 

 

Macro	Up/Down	Last
Nymex	-0.62	111.50
Brent	-0.28	115.34
Gold	-0.70	1,929.00
EUR/USD	-0.0021	1.10993
JPY/USD	1.47	120.94
10-Year Note	+0.033	2.35%

 

 

World News

·     Goldman Sachs Group Inc.’s economists now expect the Federal Reserve to raise interest rates by 50 basis points at both its May and June policy meetings. Economists said the Fed will likely raise by 25 basis points in the four remaining meetings in the second half of the year, with three quarterly hikes in the first nine months of 2023 – Bloomberg

·     Ukraine Pres Zelensky said Ukraine is prepared to discuss Ukraine commitment not to seek NATO membership in exchange for a cease-fire, Russian troop withdrawal & security guarantee for Ukraine; again, called for face-to-face talks with Putin

·     President Biden late yesterday warned about Russia using possible false flags on biological weapons that could indicate Putin was considering using biological & chemical weapons in retaliation; also warned US private industry they need to build up defense against possible Russian cyber-attacks

·     Bank of Japan Gov Kuroda said consumer prices are likely to rise but cost push inflation will weigh on economy in the longer-term, nominal wages may rise significantly but recent rises in energy& food could push down real wages, too early to talk about an exit from BOJ’s easy policy include what to do with ETF purchases

 

Sector News Breakdown

Consumer

·     Nike Inc. (NKE) 3Q EPS $0.87 vs est. $0.71 on revs rose 5% to $10.87B vs est. $10.59B (North American revs up 9% to $3.88B, China revs $2.16B); gross margin 46.6% vs est. 46.4%; says marketplace demand continues to significantly exceed available inventory supply; NIKE Direct sales $4.6B +15% NIKE Brand Digital sales +19% (+33% N. Am.)

·     Fat Brands (FAT) Q4 adj EPS loss ($1.16); Q4 revenue surged 1,042% to $74.2M vs. $6.5M last year; Q4 system-wide same-store sales growth of 12.4%; Adjusted EBITDA of $10.4M compared to adjusted EBITDA of $1.7M y/y

·     TSLA (TSLA) today will hand the first Model Y cars made at its $4.4B Gigafactory in Germany’s Gruenheide to customers

·     Altria (MO) upgraded to Buy from Neutral at Goldman Sachs and raise tgt to $57 from $48 as sees a better relative risk/reward for the tobacco company relative to Philip Morris (PM) which was downgraded to Neutral

 

Energy, Industrials and Materials

·     Canadian Pacific Railway (CP) announced that it has reached agreement with the Teamsters Canada Rail Conference (TCRC) Train and Engine Negotiating Committee to enter binding arbitration. CP will immediately begin working with customers to resume normal train operations across Canada as soon as possible.

·     Mosaic (MOS) reports January-February Potash sales $604M vs. $295M y/y and reports sales volume 1.05M tons vs. 1.24M tons y/y

·     Piedmont Lithium Inc (PLL) says offering of 1.5 mln shares of its common stock

·     Posco (PKX) said it will invest $4 billion in a new lithium mining project in Argentina, as the company seeks to tap into soaring demand for the key rechargeable battery metal. Posco expects to initially produce 25,000 tonnes of lithium hydroxide

·     Rocket Lab (RKLB) to launch three demonstration satellites for E-Space – satellites are scheduled to fly as part of a rideshare mission on rocket lab’s electron launch vehicle from launch complex 1 pad a on New Zealand’s Mahia Peninsula Expected in 2Q of 2020

 

Financials

·     Dave Inc. (DAVE) announced a partnership with West Realm Shires Services and reported fourth-quarter results.

·     Paramount Group Inc (PGRE) said its board rejected proposal received from Monarch Alternative Capital LP to acquire Co for $12.00 per share in cash

 

Healthcare

·     TELA Bio (TELA) 4Q EPS ($0.59) vs est. ($0.55) on revs $8.4Mm vs est. $7.98Mm; sees FY revs $40-45Mm vs est. $43.5Mm

 

Technology, Media & Telecom

·     Alibaba Group Holding (BABA) increased its share repurchase program to $25 billion from $15 billion

·     Luminar (LAZR) files for stock shelf of up to 3 mln shares of Class A common stock

·     Okta (OKTA) shares down -8%; said it has found no evidence of continuing malicious activity after hackers circulated images they said were of the company’s internal systems; the co said a series of screenshots circulated online appear to be connected to a security event in late January, when the company detected an attempt to compromise the account of a third-party customer

·     Yext (YEXT) announces $100M share buyback program

·     Xiaomi Corp. posted a quarterly profit that beat analysts’ estimates after the Chinese smartphone giant defied component shortages to boost sales during the busy holiday season. Adjusted net income jumped 40% to 4.47 billion yuan ($702 million) in the last three months of 2021,

·     Tencent Music (TME) Q4 EPS $0.08 vs. est. $0.07; Q4 revs $1.19B vs. est. $1.23B; Q4 mobile monthly active users for online music down -1% y/y to 615M below views around 627M; Q4 mobile monthly active users for social entertainment down -22% y/y to 175M; qtrly paying users – social entertainment 9.0M vs 10.8M; to pursue secondary listing on Hong Kong Stock Exchange