Early Look

Tuesday, November 29, 2022

Futures	Up/Down	%	Last
Dow	0.00	0.00%	33,871
S&P 500	8.25	0.20%	3,978
Nasdaq	46.25	0.40%	11,662

 

 

S&P futures are edging higher +0.2% to 3,978, remaining in a tight 20-point trading range overnight (3,990.25 hi and 3,969.25) ahead of a few big days of economic data and software earnings results. Nationwide unrest in China over coronavirus restrictions eased overnight, boosting sentiment for riskier assets, while Beijing promised to increase vaccination among its senior citizens, a move regarded as crucial to ending the harsh pandemic measures. The move is boosting Chinese stocks early. In Asian markets, The Nikkei Index fell -134 points to 28,027, the Shanghai Index jumped 71 points to 3,149, and the Hang Seng Index surged 906 points or 5.24% to 18,204. In Europe, the German DAX is up 20 points to 14,403, while the FTSE 100 gains 50-points to 7.524. Oil prices extend Monday’s bounce on reports OPEC and its allies are expected to consider deeper supply curbs when they meet this weekend against the backdrop of a weaker global oil market. Stocks fell and Treasury yields rose on Monday as Fed officials ramped up their hawkish views on rate hikes (Bullard and Williams). Oil rallied as OPEC+ is seen considering deeper output cuts amid a faltering market. The S&P 500 pared its monthly gain after Federal Reserve Bank of St. Louis President James Bullard said markets may be underestimating the chances of higher rates, and his New York counterpart John Williams noted policy makers have more work to do to curb inflation. Big week of economic data – today just a few housing data points, but things pick up on Wednesday with GDP (including PCE data), Chicago PMI, as well as employment data with ADP private payrolls and JOLTS job openings (which has been a mkt mover of late). On Thursday, personal income, spending and inflation data points PCE and Core PCE for October – then followed by the Nov Jobs report on Friday. Also add to the mix a heavy dose of earnings in the software space.

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -62.18 points, or 1.54%, to 3,963.94

·     The Dow Jones Industrial Average fell -497.57 points, or 1.45%, to 33,849.96

·     The Nasdaq Composite slumped -176.86 points, or 1.58%, to 11,049.50

·     The Russell 2000 Index declined -38.23 points, or 2.05% to 1,830.96

 

Economic Calendar for Today

·     7:45 AM ET            ICSC Weekly Retail Sales

·     8:55 AM ET            Johnson/Redbook Weekly Sales

·     9:00 AM ET            Monthly Home Prices M/M for September

·     9:00 AM ET            CaseShiller 20 City Index for September

·     10:00 AM ET          Consumer Confidence for November

·     4:30 PM ET             API Weekly Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: CRNC CTRN HIBB

·     Earnings After the Close: CMP CRWD HPE INTU NTAP WDAY

 

Other Key Events:

·     Credit Suisse 26^th Annual Technology Conference, 11/28-12/1, in Arizona

·     Jefferies Aerospace & Defense Tour, 11/28-11/30, in Phoenix, AZ

·     Piper Annual Healthcare Conference, 11/29-12/1, in NY

·     Truist Atlanta Bank Virtual Summit, 11/28-11/29, in Atlanta, GA

·     China NBS Manufacturing PMI for November

 

 

Macro	Up/Down	Last
Nymex	2.18	79.42
Brent	2.55	85.74
Gold	13.00	1,753.30
EUR/USD	0.0035	1.0372
JPY/USD	-0.89	138.05
10-Year Note	-0.041	3.661%

 

 

World News

·     Fed’s Barkin Sees Slower Rate Hikes, for Longer, Maybe Higher ‘; I’m supportive of a path that is slower, longer, and potentially higher for rates; It’s helpful to be somewhat more cautious; Don’t want to do damage you don’t have to do; Don’t want to do damage you don’t have to do

·     Euro zone economic sentiment rebounded in November slightly more than expected, as its indicator rose to 93.7 in November from 92.7 in October. Sentiment in industry deteriorated to -2.0 from -1.2 in October, far worse than the -0.5 expected by markets

·     Japan Oct Retail Sales: -0.2% m/m vs -0.3% consensus; 4.3% y/y vs 5% consensus; Japan Oct Unemployment Rate: 2.6% vs 2.5% consensus

·     A U.S. recession induced by central-bank efforts to curb inflation is likely to arrive by mid-2023 and trigger a sharp and “temporarily painful” decline in equities, according to Deutsche Bank researchers. “We see major stock markets plunging 25% from levels somewhat above today’s when the U.S. recession hits, but then recovering fully by year-end 2023, assuming the recession lasts only several quarters – Marketwatch.com

 

Sector News Breakdown

Consumer

·     Nestle (NSRGY) forecast organic revenue for the full year of +8% to +8.5%, saw about +8%; sees year organic revenue +8% to +8.5%, saw about +8%, estimate +8.63%; still sees underlying trading operating profit margin about 17%, estimate 16.9%

·     Azek (AZEK) Q4 adj EPS $0.16 vs. est. $0.17; Q4 revs $304.6M vs. est. $288.41M; sees Q1 revenue $200M-$215M vs. est. $238.31M and sees Q1 adjusted EBITDA $8M-$12M; expect Adjusted EBITDA to be in a range between $250M-$265M in fiscal 2023

·     Hibbett (HIBB) Q3 EPS $1.94 vs. est. $2.47; Q3 revs $433.2M vs. est. $445.73M; still sees FY23 EPS $9.75-$10.50 vs. est. $9.76; FY23 revenue is still expected to increase in the low-single digit range vs. FY022 results, consensus $1.72B; net new store growth is expected to be 30 to 40 stores

·     Toyota Motor (TM) said its consolidated global production rose nearly 26% year over year in October to 924,132 vehicles, marking the third straight month of increases; said total domestic production grew 38.6% to 301,041 vehicles, while total overseas output climbed 20.3% to 623,091; total global sales rose 24.8% to 918,756 vehicles in October

 

Energy, Industrials and Materials

·     PBF Energy (PBF) will replace Nu Skin Enterprises (NUS) in the S&P MidCap 400, and Nu Skin Enterprises will replace PBF Energy in the S&P SmallCap 600

·     UPS Inc. (UPS) upgraded to Buy from Hold at Deutsche Bank and raised tgt to $220 from $197

·     CSX Corp. (CSX), Union Pacific (UNP), Norfolk Southern (NSC): More than 400 groups on Monday called on Congress to intervene in an ongoing railroad labor standoff that threatens to idle shipments of food and fuel. Reuters noted a rail traffic stoppage could freeze almost 30% of U.S. cargo shipments by weight, stoke inflation and cost the American economy as much as $2 billion per day by unleashing a cascade of transport woes affecting U.S. energy, agriculture, manufacturing, healthcare, and retail sectors

 

Financials

·     HSBC Holdings Plc (HSBC) said its wholly owned subsidiary, HSBC Overseas Holdings (UK) Limited, has today entered into an agreement to sell its banking business in Canada to Royal Bank of Canada, subject to regulatory and governmental approvals. RBC will acquire 100% of the issued common equity of HSBC Canada for a base cash consideration of CA$13.5bn (US$10.1B)

·     Bank of Nova Scotia (BNS) Q4 revenue fell slightly in the period, missing analyst expectations of growth; Q4 net earnings of 2.06 billion Canadian dollars ($1.53 billion) or C$1.63, compared with C$2.49 billion, or C$1.97 a share in the prior year period; Q4 total revenue fell to C$7.63 billion from C$7.69 billion, missing analyst consensus expectations of a rise to C$8.05 billion; Return on equity for the quarter fell to 11.9% from 14.8% a year ago.

·     Carlyle (CG) plans to raise $8.5 billion for new illiquid credit fund – Bloomberg News (late Mon)

 

Healthcare

·     UnitedHealth Group (UNH) updates business outlook ahead of investor conference saying 2022 revs are now expected to be approximately $324B vs. est. $323.3B; sees adj EPS $21.85-$22.05 vs. est. $22.03; will also introduce its 2023 outlook which includes revenues of $357B-$360B and 2023 cash flows from operations are expected to range from $27B-$28B

·     Kala Pharmaceuticals (KALA) announces submission of investigational new drug application for kpi-012 for the treatment of persistent corneal epithelial defect; announces up to $31 million private placement financing

·     Novocure (NVCR) upgraded to Overweight from Equal Weight at Wells Fargo and raise tgt to $89 from $74 sees a positive risk/reward into the LUNAR non-small cell lung cancer trial, which is expected in early 2023

 

Technology, Media & Telecom

·     Nexstar Media Group (NXST) will replace Sabre Corp. (SABR) in the S&P MidCap 400, and Sabre will replace Flagstar Bancorp (FBC) in the S&P SmallCap 600.

·     Roku (ROKU) downgraded to Sector Weight from Overweight at KeyBanc saying elements of their positive thesis, namely outsized growth in connected TV advertising and the company becoming a critical platform for media partners, have not manifested

·     BigCommerce (BIGC) Black Friday merchant gross merchandise value (GMV) increased 31%, bolstered by a 25% increase in total orders and a 4.5% increase in AOV, compared to Black Friday 2021. Overall U.S. sales on Black Friday were up 1.4% over 2021, according to Adobe Analytics.

·     Bilibili (BILI) shares rise 7%; Q3 revenue rose 11% at 5.8B yuan ($809.66M) topping est. of 5.72B yuan; says added more paying users and raked in higher advertising sales during the quarter; net loss narrows to 1.7 bln yuan vs 2.7 bln yuan in the same period last year; sees Q4 revs 6B-6.2B yuan vs expectation of 6.23B yuan

·     Microchip Technology (MCHP) reaffirms fiscal Q4 2023 guidance