Early Look

Thursday, October 13, 2022

Futures	Up/Down	%	Last
Dow	155.00	0.53%	29,416
S&P 500	21.25	0.59%	3,609
Nasdaq	38.50	0.35%	10,878

 

 

U.S. futures are pointing to a higher open, as the S&P looking higher +0.5% back above the 3,600 level, but key economic data at 8:30 will share things up. The S&P 500 and Nasdaq Composite each fell for a 6^th straight day on Wednesday ahead of today’s Consumer Price Index (CPI) reading, as all eyes are watching (and hoping) for further deceleration in inflation! Consumer price index (CPI) for Sept expected on a headline basis, CPI m/m est. +0.2% (vs. +0.1% prior) and +8.1% y/y (vs. prior +8.3%). On a core basis (ex food & energy) ests for +0.5% m/m (vs. prior +0.6%) and +6.5% y/y (vs. prior +6.3%). Still, there is nothing that would likely to prevent the Fed from raising interest rates another 75-bps at their next meeting in November as members have remained steadfast on their message in recent weeks. Yesterday’s PPI report had something for everyone as the headline figures came in a little high, core was generally in-line, and in absolute terms the reading was the lowest in over a year. More bad news in the semiconductor sector as both Taiwan Semi (TSM) lowered its cap-ex spending (though qtr results were better) and AMAT lowered its guidance for the next quarter in the equipment sector. In Asian markets, The Nikkei Index fell -159 points to 26,237, the Shanghai Index dipped -9 points to 3,016, and the Hang Seng Index declined -311 points or 1.87% to settle at 16,389. In Europe, the German DAX is higher by about 100-points to 12,270, while the FTSE 100 is little changed at 6,825. Bitcoin prices fall to $18,600.

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -11.81 points, or 0.33%, to 3,577.03

·     The Dow Jones Industrial Average fell -28.34 points, or 0.10%, to 29,210.85

·     The Nasdaq Composite slipped -9.09 points, or 0.09%, to 10,417.10

·     The Russell 2000 Index declined -5.15 points, or 0.30% to 1,687.76

 

Economic Calendar for Today

·     8:30 AM ET            Consumer Price Index (CPI) m/m for September…est. +0.2%

·     8:30 AM ET            Consumer Price Index (CPI) y/y for September…est. +8.1%

·     8:30 AM ET            CPI Ex: Food & Energy (core) m/m for September…est. +0.5%

·     8:30 AM ET            CPI Ex: Food & Energy (core) y/y for September…est. +6.5%

·     8:30 AM ET            Weekly Jobless Claims…est. 225K

·     8:30 AM EST          Continuing Claims…est. 1.365M

·     10:30 AM ET          Weekly EIA Natural Gas Inventory Data

·     1:00 PM ET             US Treasury to sell $18B in 30-year notes

 

Earnings Calendar:

·     Earnings Before the Open: BLK CMC DAL DPZ FAST INFY TGL TSM WBA

·     Earnings After the Close: ODC

 

Other Key Events:

·     North American Spine Society (NASS) 2022 Annual Meeting, 10/12-10/15, in Chicago

·     China PPI and CPI data for September

·     China Exports, Imports data for Sept

 

 

Macro	Up/Down	Last
Nymex	0.01	87.28
Brent	0.03	92.48
Gold	3.60	1,681.10
EUR/USD	0.0019	0.9722
JPY/USD	-0.11	146.80
10-Year Note	-0.014	3.888%

 

 

World News

·     Japanese Producer Price Index (PPI) at 9.7% y/y vs. est. 8.9%; rose +0.7% m/m vs. est. +0.3%

·     The ECB is close to rule change on TLTRO, that will shave tens of billions of euros off in potential banking profits; decision could come at the Oct 27 policy meeting – Reuters

·     Fed’s Bowman said sees sizable rate hikes on table unless inflation falls ‘; sizable hikes should be on the table unless inflation falls; slower rate-hike pace appropriate if inflation declines; not yet clear how high rates need to go; need to keep rates at a restrictive level for some time

·     The bull-bear spread in the American Association of Individual Investors (AAII) weekly survey was -35.5 vs -30.9 last week. Bulls fall to 20.4% from 23.9%, Neutrals rise to 23.7% from 21.3%, and Bears rise to 55.9% from 54.8%

 

Sector News Breakdown

Consumer

·     Activist Investor Macellum urges Kohls (KSS) to replace board members, targets chairman, other long-serving directors at department-store chain or face another proxy fight – WSJ reported https://on.wsj.com/3eoRvyW

·     Victoria’s Secret & Co. (VSCO) said it expects Q3 operating income and eps near high end of its previously communicated guidance range of $10M-$40M and EPS to be towards the high end of the prior $0.00-$0.25 range

·     Las Vegas Sands (LVS) upgraded to Neutral from Underperform at Bank America

 

Energy, Industrials and Materials

·     Delta Airlines (DAL) Q3 adj EPS $1.51 vs. est. $1.54); Q3 revs $12.84B vs. est. $12.83B); guides Q4 adj EPS $1.00-$1.25 vs. est. $0.80; reported a profit of $695 million for the three months ended Sept. 30 — about 54% lower than the same period in 2019; sees Q4 revs to be up 5% to 9% from 2019 levels, with operating margins of 9% to 11%.

·     Commercial Metals (CMC) Q4 adj EPS $2.45 vs. est. $2.21; Q4 revs $2.41B vs. est. $2.39B; said conditions in Europe are more uncertain, given the ongoing energy crisis and slowing industrial activity

·     The American Petroleum Institute reported that crude inventories rose 7.05M barrels last week and gasoline inventories rose 2.01M barrels

·     Bespoke Investment noted the Utilities sector (XLU) is now down 20.5% over the last month. March 2020, October 2008, late 2002, and the 1930s are the only other periods that saw one-month crashes of 20%+

 

Financials

·     American Express (AXP) downgraded to Sell on recession risk at Citigroup

·     BlackRock (BLK) Q3 adj EPS $9.55 vs. est. $7.07; Q3 revs fell -15% y/y to $4.3B vs. est. $4.23B; posted a 16% drop in third-quarter profit; AUM at qtr-end $7.96 trillion vs $9.46 trillion reported at q3 2021 end; Q3 adj operating margin 35.4%

·     Equifax (EFX) is expanding its integration of The Work Number with MeridianLink (MLNK) to now deliver instant verifications of employment and income to credit unions, banks, and other lenders

·     United Insurance (UIHC) announced that it estimates catastrophe losses incurred from Hurricane Ian during the third quarter ending September 30, 2022, of approximately $36.4 million before income taxes, net of expected reinsurance recoveries

 

Healthcare

·     BioMarin Pharmaceutical Inc (BMRN) said U.S. health regulator accepted its marketing application for Valoctocogene Roxaparvovec AAV gene therapy; adds agency has set target action date as March 31, 2023

·     Biogen (BIIB) upgraded to Buy from Hold at Stifel and up tgt to $299 from $223

·     Dice Therapeutics (DICE) 8.22M share Secondary priced at $36.50

·     QuidelOrtho (QDEL) guides prelim Q3 revs $782M-$785M vs. est. $651.8M; COVID-19 product revenue is expected to be approximately $171M and non-COVID-19 product revenue is expected to be in the range of $611M-$614M

·     Pfizer (PFE) and BioNTech (BNTX) announce positive early data from clinical trial of omicron BA.4/BA.5-adapted bivalent booster in individuals 18 years and older

 

Technology, Media & Telecom

·     Applied Materials (AMAT) cuts Q4 adj EPS view to $1.54-$1.78 from $1.82-$2.18 (est. $2.01) and lowered Q4 revenue view to $6.4B +/- $250M from $6.65B +/- $400M (est. $6.67B) citing the recent US announcement of new export regulations for U.S. semiconductor technology sold in China, including wafer fabrication equipment and related parts and services

·     Taiwan Semiconductor (TSM) cut its cap-ex spending to around $36B for 2022, down from prior view of $40B-$44B; Revenue for the quarter climbed 36% to $20.23B, versus TSMC’s prior estimated range of $19.8B-$20.6B; forecast a 29% rise in Q4 revenue to between $19.9B-$20.7B, compared with $15.74B a year earlier

·     Duck Creek Technology (DCT) Q4 EPS $0.03 vs. est. $0.02; Q4 revs $80.71M vs. est. $73.36M; sees Q1 EPS loss (1c)-0c vs. est. $0.02; sees Q1 revenue $75.5M-$77.5M vs. est. $75.9M; sees Q1 adjusted EBITDA $0 to $1M

·     Digital World Acquisition Corp (DWAC) says the Truth Social Android App is available for users to download on Alphabet Inc’s (GOOGL) Google Play Store

·     Altice USA (ATUS) and Comcast (CMCSA) both upgraded to Buy from Neutral at Citi