Early Look

Monday, April 10, 2023

Futures	Up/Down	%	Last
Dow	30.00	0.09%	33,689
S&P 500	1.25	0.04%	4,133
Nasdaq	-13.50	0.10%	13,157

 

 

U.S. stock futures are pointing to a flattish open at 4,133 (4,143 high and 4,126.75 low) following the 3-day holiday weekend and ahead of several potential market moving catalysts this week including March CPI Wednesday, March PPI Thursday, retail sales and the start of bank earnings on Friday. While markets were closed on Friday in observance of Good Friday, the March payroll data was released showing nonfarm payrolls rising +236K vs. est. +239K, while February was upwardly revised to +326K from +311K. Private payrolls for +189K vs. est. +215K and manufacturing payrolls fell -1K vs. est. +5K. The unemployment rate dropped to 3.5% vs. 3.6% prior/estimate (labor participation rate rose to 62.6% from 62.5%). Average Hourly earnings rose +0.3% M/M, in-line with consensus. U.S. markets closed the 4-day week: S&P fell 0.11%, the Dow added 0.64%, the Nasdaq shed 1.10%. Despite this week being a Spring break week for many schools, and a big vacation week, no rest for financial markets with key inflation reports Wednesday (CPI) and Thursday (PPI) Thursday as well as Retail Sales data for March and financial Service earnings on watch Friday including BlackRock (BLK), Citigroup (C), JPMorgan (JPM), PNC Financial (PNC), and Wells Fargo (WFC), all reporting in the premarket. Stocks remain well bid for 2023 but the market rally has been deceiving, with the biggest gains comprised of some of the biggest tech companies in the world (NVDA +85% YTD, MSFT 21%, META 79%, CRM 45%, TSLA 50%, AAPL 26%, AMZN 21% and AMD 42% and YTD). In Asian markets, The Nikkei Index rose 115 points to 27,633, the Shanghai Index fell -12 points to 3,315, and the Hang Seng Index gained 56 points to 20,331. In Europe, most major markets were closed. The dollar is flat and Bitcoin prices +1.5% at $28,300.

 

Market Closing Prices Yesterday

·     The S&P 500 Index gained 14.61 points, or 0.36%, to 4,104.99.

·     The Dow Jones Industrial Average rose 2.63 points, or 0.01%, to 33,483.35.

·     The Nasdaq Composite jumped 91.10 points, or 0.76%, to 12,087.96.

·     The Russell 2000 Index edged higher 2.33 points, or 0.13% to 1,754.46.

 

Economic Calendar for Today

·     10:00 AM ET           Employment Trends for March

·     10:00 AM ET           Wholesale Inventories M/M for February

·     4:15 PM ET              Fed’s Williams Takes Part in a Moderated Discussion

 

Earnings Calendar:

·     Earnings Before the Open: GBX IMBI

·     Earnings After the Close: PSMT

 

Other Key Events:

·     China CPI, PPI for March

 

 

Macro	Up/Down	Last
Nymex	0.12	80.82
Brent	0.05	85.17
Gold	-9.80	2,016.60
EUR/USD	0.001	1.0907
JPY/USD	0.10	132.23
10-Year Note	-0.002	3.381%

 

 

World News

·     China announced it will conduct military drills “around” Taiwan island for three days from Saturday, after Taiwan President Tsai Ing-wen returned from visits to the US – Bloomberg.

·     The US said it deployed a cruise-missile submarine in the Middle East, boosting its naval fleet in the region amid rising tensions with Iran – Bloomberg.

·     Russia has formally charged detained Wall Street Journal correspondent Evan Gershkovich with espionage, an accusation the White House and the newspaper denied again on Saturday.

·     Jon Rahm overtook Brooks Koepka to win the Masters, taking the green jacket, while Phil Mickelson surged up the leaderboard on Sunday to finish tied for second.

 

Sector News Breakdown

Consumer

·     Tesla (TSLA) cut prices in the U.S. between 2% and nearly 6%, its website showed; Tesla cut prices on both versions of its Model 3 sedan by $1,000 and on its Model Y crossover by $2,000 and cut prices on both versions of its more expensive Model S and Model X by $5,000.

·     Tesla (TSLA) will build a factory in Shanghai to make the Megapack energy storage product, Chinese state media outlet Xinhua reported on Sunday, Reuters reported.

·     Wholesale used-vehicle prices increased 1.5% in March from February. The Manheim Used Vehicle Value Index rose to 238.1, down 2.4% y/y. March’s increase was moderated by the seasonal adjustment. The non-adj price change in March increased by 3.5% compared to February, moving the unadjusted average price down 2.9% y/y (watch KMX, CVNA on the data).

·     Tupperware Brands Corp. (TUP) said it sees “substantial” going-concern doubt and is taking action to improve its capital structure and liquidity position.

·     A California Tesla (TSLA) owner sued the company in a prospective class action lawsuit accusing it of violating the privacy of customers. The lawsuit came after Reuters reported on Thursday that groups of Tesla employees privately shared via an internal messaging system sometimes highly invasive videos and images recorded by customers’ car cameras between 2019 and 2022.

 

Energy, Industrials and Materials

·     Exxon Mobil (XOM) eyes potential megadeal with Shale driller Pioneer Natural Resources (PXD) the WSJ reported. Oil-and-gas giant has held informal, early-stage talks to buy the $49 billion-market cap Pioneer Natural Resources https://on.wsj.com/3KNfTHT

·     GasLog (GLOG) will acquire the outstanding common units of the Partnership (GLOP) not beneficially owned by GasLog for overall consideration of $8.65 per common unit in cash, consisting in part of a special distribution by the Partnership of $3.28 per common unit in cash.

·     Greenbrier (GBX) Q2 adj EPS $0.99 vs. est. $0.61; Q2 revs $1.1B vs. est. $895.5M; new railcar orders for 4,500 units valued at $580M and deliveries of 7,600 units; boosts FY23 revenue view to $3.4B-$3.7B from $3.2B-$3.6B (est. $3.41B) and sees FY23 deliveries of 23,000-25,000 units.

·     H.B. Fuller (FUL) raises the quarterly dividend 8% to 20.5c per share.

·     WD-40 (WDFC) Q2 EPS $1.21 vs. est. $1.15 and vs. $1.41 last year; Q2 revenue rose +0.2% y/y to $130.2M; sees FY EPS $4.80-$5.00, down from prior $5.09-$5.24 (est. $5.19) and lowers FY net sales view to $535M-$560M, from prior $545M to $570M.

·     Teck (TECK) said its steelmaking coal sales were 6.2m tonnes in the first quarter, within its previously disclosed guidance range of 6.0m – 6.4m tonnes.

 

Financials

·     First Republic Bank (FRC) said in a regulatory filing on Friday that it will suspend payments of quarterly cash dividends on its preferred stock “as a measure of prudent oversight.”

·     Capital One Financial Corp. (COF) said Walmart Inc. (WMT) filed a lawsuit seeking to end the companies’ credit card partnership.

·     Jack Henry & Associates Inc. (JKHY) mentioned positively in Barron’s saying the financial software provider is trading at its cheapest valuation in years, but the article argues that the long-term trend in its business remains intact.

·     Banks once again reduced their borrowings from two Federal Reserve backstop lending facilities in the most recent week, a sign the financial stresses that emerged following a string of bank collapses last month may be stabilizing. US institutions had a combined $148.7B in outstanding borrowings in the week through April 5, compared with $152.6B – Bloomberg.

 

Healthcare

·     Merck (MRK), Eisai (ESLAY) discontinuing Phase 3 melanoma combination study; provide update on phase 3 trials of KEYTRUDA® (pembrolizumab) Plus LENVIMA® (Lenvatinib) in certain patients with advanced melanoma (LEAP-003) and metastatic colorectal cancer (LEAP-017).

·     Federal judge suspends FDA approval of abortion pill. In a case that could reshape pregnancy in America, a federal judge on Friday sided with anti-abortion groups seeking a nationwide ban on abortion pills, ruling that the Food and Drug Administration acted improperly in approving mifepristone in 2000. The ruling will go into effect in seven days if a stay is not granted by an appeals court or by the Supreme Court – STAT News.

·     Incyte (INCY) downgraded to Sector Perform from Outperform at RBC Capital.

 

Technology, Media & Telecom

·     Taiwan Semiconductor (TSM) said March revenue fell 15% y/y to 145.41B Taiwan dollars ($$4.78B U.S.), from NT$171.97M marking the first drop in nearly four years; Q1 revs rose 3.6% from a year earlier to NT$508.63 billion (US$16.73 billion).

·     Samsung (SSNLF) to cut chip output to ride out downturn; Samsung Electronics Co Ltd reported a likely 96% plunge in first-quarter operating profit on Friday, worse than analysts had forecast, as a chip glut worsened, and buyers slowed purchases amid a global economic slowdown.

·     TikTok owner ByteDance Ltd.’s profit last year soared to a record, surpassing that of China technology giants Tencent Holdings Ltd. and Alibaba Group Holding Ltd. for the first time, the Financial Times reported. Earnings before interest, tax, depreciation, and amortization, or Ebitda, jumped 79% to about $25 billion in 2022, the report said.

·     Shipments by all PC makers combined slumped 29% to 56.9 million units — and fell below the levels of early 2019 — as the demand surge driven by pandemic-era remote work evaporated, according to IDC’s latest report. Among the market leaders, Lenovo Group Ltd., and Dell Technologies Inc. registered drops of more than 30%, while HP Inc. was down 24.2%

·     The Super Mario Bros. Movie won the global weekend box office with an estimated $368 million and has officially had the biggest worldwide opening ever for an animated film, passing Frozen 2’s $358 million and broke the $225.3 million record this year held by Ant-Man and the Wasp: Quantumania.