Early Look

Thursday, April 7, 2022

Futures	Up/Down	%	Last
Dow	19.00	0.06%	34,418
S&P 500	10.25	0.23%	4,486
Nasdaq	61.50	0.42%	14,566

 

 

After another volatile day on Wall Street Wednesday, which saw huge swings higher and lower (finishing firmly negative a second day), U.S. futures are stabilizing slightly higher, back above the key 200-day moving average support of 4,485 for S&P futures. Oil prices advance after a more than 5% decline yesterday to settle below $97 per barrel, while Treasury yields downtick slightly, as the 10-year stands at 2.58% (below recent 3-year highs of 2.66%). Weekly Jobless claims the main economic data point at 8:30 AM today (est. 200K after 202K last week). In Europe, Ukrainian President Volodymyr Zelensky said a new package of Western sanctions against Russia was too lenient, as he accused Russian forces of seeking to destroy evidence of killings in areas under their control. The U.S. dollar advanced to a fresh two-year high as investors react to details of minutes from the Federal Reserve’s March policy meeting. Fed Governors essentially agreed to reduce the central bank’s $9 trillion balance sheet by $1 trillion a year, selling $95 billion in assets to the market each month, while moving quickly to raise interest rates (50-bps hike possibly at May meeting) to ease the fastest domestic inflation rates in forty years. In Asian markets, The Nikkei Index dropped -1.69% to 26,888, the Shanghai Index fell -1.42% to 3,236, and the Hang Seng Index fell -1.23% to 21,808. In Europe, the German DAX is up over 80 points or 0.6% to 14,235, while the FTSE 100 is little changed at 7,585.

Economic Calendar for Today

·     8:30 AM ET         Weekly Jobless Claims…est. 200K

·     8:30 AM EST       Continuing Claims

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

·     3:00 PM ET         Consumer Credit for February

 

Earnings Calendar:

·     Earnings Before the Open: ANGO, APOG, CAG, LW, STZ

·     Earnings After the Close: KRUS, PSMT, WDFC

 

Other Key Events:

·     JPMorgan 11th Annual Napa Valley Biotech Forum,4/5-4/7, in San Francisco

·     JPMorgan 8th Annual Retail Round-Up, 4/5-4/7, in NY

·     American College of Cardiology 2022 Annual Meeting, 4/2-4/7, in Seattle

 

 

Macro	Up/Down	Last
Nymex	1.71	97.94
Brent	1.83	102.90
Gold	8.10	1,931.20
EUR/USD	0.0002	1.0896
JPY/USD	-0.08	123.71
10-Year Note	-0.017	2.592%

 

 

World News

·     Fed speakers include Bullard, Bostic, and Evans. In the U.S. we will get the release of Initial Claims and Consumer Credit data.

·     The bull-bear spread in the American Association of Individual Investors (AAII) weekly survey was -16.7 vs 4.4 last week; Bulls fall to 24.7% from 31.9%; Neutrals fall to 33.9% from 40.6%; Bears rise to 41.4% from 27.5%

·     Italy PM Draghi said that a gas embargo is not yet on the table, and I don’t know if it will ever be, if there is consensus on banning gas imports, happy to comply

·     Fed members broadly agreed in FOMC Minutes that monthly caps about $60 billion for Treasury securities and about $35 billion for agency MBS would likely be appropriate. Many participants said that one or more 50 bps increases in the target range could be appropriate at forthcoming meetings if inflation pressures remained elevated or intensified.

·     U.S. House Speaker Nancy Pelosi announced she would be visiting Taiwan this weekend. Japan PM Kishida is also attending, with the plan to exchange views on Russia’s invasion of Ukraine and the human rights situation in China

 

Sector News Breakdown

Consumer

·     Costco Wholesale Corporation (COST) March sales results; Total comp sales +17.2%, vs. est. +11.2% and U.S. comp sales ex: fuel, currencies +12.7% vs. est. +9.2%; for thirty-one weeks ended April 3, 2022, company reported net sales of $130.00B, an increase of 16.7%; net sales of $21.61B for retail month of March, five weeks ended April 3, 2022, increase of 18.7% from $18.21B

·     Levi Strauss (LEVI) Q1 adjusted EPS $0.46 vs. est. $0.41; Q1 revs rose 22% to $1.59B vs. est. $1.55B; Q1 adjusted Ebit $238M; sees year revs +11% to +13% and still sees year adj EPS $1.50-$1.56 vs. est. $1.52; global digital net revenues grew about 16% in qtr compared to same period in prior year; global digital net revenues comprised about 25% of q1 fiscal 2022 net revenues

·     Wayfair (W) downgraded to underweight from equal weight and cut tgt to $100 from $110 at Wells Fargo in sector note turning more cautious on housing-impacted retailers as cut tgt on HD to $350 from $400, LOW to $260 from $295, FND to $105 from $130, WSM to $140 from $160. Said Inflation is accelerating, the Fed is hawkish, and conventional wisdom suggests a recessionary scenario could render macro-sensitive stocks increasingly difficult to own

·     Genius Sports’ (GNUS) shares rose after hours on reports the National Football League is now the largest American owner of equity in Genius Sports as it controls about 7.7% of the business after 4.25 million warrants vested last week, reported Sportico

·     Electric vehicles: watch shares of TSLA, RIVN, NKLA, LCID, CHPT, BLNK, etc. after the Biden administration says senior officials held a meeting with Tesla and General Motors bosses to discuss electric vehicles and charging

·     Ford (F) and Dana Corp (DAN) downgraded to Equal Weight from Overweight at Barclay’s. Ford tgt to $17 from $23 and DAN to $18 from $24 saying investors are still underestimating risks to the autos and auto parts sector, and particularly to suppliers, from inflation and production pressures as well as the impact of interest rate hikes

·     Resources Connection (RGP) Q3 adj EPS $0.65 on revs rose 30.6% to $204.6M vs. est. $195.1M

 

Energy, Industrials and Materials

·     Shell PLC (SHEL) said it expects to book accounting charges of up to $5 billion in Q1 related to its decision to exit its Russia operations, including joint ventures with energy giant Gazprom PJSC, in the wake of Russia’s invasion of Ukraine.

·     Murphy Oil (MUR) upgraded to Overweight from Neutral at Piper Sandler and raise tgt to $54, up from $38

 

Financials

·     Capital One Financial (COF) authorizes buyback of additional $5B of shares

·     AvalonBay (AVB) announces offering of 2M shares of common stock

·     SoFi Technologies (SOFI) cuts FY22 rev view to $1.47B from $1.57B and below est. $1.53B; lowers FY22 adj EBITDA view to $100M from $180M; says guidance result of President Biden’s directive to extend the federal student loan payment moratorium from May 1, 2022 until August 31, 2022

 

Healthcare

·     Vapotherm (VAPO) is withdrawing its previously announced annual revenue, gross margin, operating expense, and adjusted EBITDA guidance for FY22 based on what appears to be the diminishing virulence of COVID-19, as well as a reduction of seasonal hospitalization patterns related to flu and RSV in Q1

 

Technology, Media & Telecom

·     Hewlett-Packard (HPQ) shares rise 14% after disclosed that Berkshire Hathaway bought 11.1M shares of common stock on April 4th in a total transaction size of $398.5M, boosting its stake by about 10%

·     Samsung (SSNLF) reported an estimated 50% jump in quarterly operating earnings to post its highest first-quarter profit since 2018, beating expectations; put Q1 profit at 14.1 trillion won ($11.6 billion) prelim vs. estimate of 13.3 trillion won as revs likely rose 18% from the same period a year earlier to a record 77 trillion won, also above market expectations.

·     Coupa Software (COUP) upgraded to Outperform from In Line at Evercore ISI and raise price tgt to $140 from $75

·     Sprinklr, Inc. (CXM) Q4 adj EPS loss (-$0.05) vs. est. loss (-$0.09); Q4 revs $136M vs. est. $130.8M; sees Q1 sub revs between $123M-$125M and overall revs $140M-$142M vs. est. $135.9M; sees year revs $607M-$615M

·     Nine senior WarnerMedia (T) executives quit the company ahead of its takeover by Discovery (DISCA), the Financial Times reported

·     IronNet (IRNT) slips as reported Q4 revenue above Street’s estimates; however, net loss widened to 45 cents from 18c a year ago; forecast FY23 revenue of about $34M for transactional business

·     CCC Intelligent Solutions Holdings Inc. (CCCS) 20M share Spot Secondary priced at $9.70