Early Look

Friday, December 9, 2022

Futures	Up/Down	%	Last
Dow	60.00	0.18%	33,863
S&P 500	12.25	0.32%	3,978
Nasdaq	50.50	0.43%	11,695

 

 

S&P futures rising +0.35% to 3,980, near the top end of trading range overnight (high 3,982.75 and low 3,960.25) ahead of key inflation data this morning. November Producer Price Index (PPI) are expected at 8:30 AM with estimate for +0.2% rise in headline reading m/m and +7.2% y/y (from +8% prior month). On a core basis (ex food & energy), PPI m/m expected to rise +0.2% and on a y/y basis rise +5.9% (from +6.7% prior month). Also, University of Michigan Sentiment (est. 56.9) and inflation expectations data at 10:00 AM with prior reading at 4.9% for 1-yr expectations and +3.0% for 5-yr. In Asian markets, The Nikkei Index rose 326 points to 27,901, the Shanghai Index gains 9 points to 3,206, and the Hang Seng Index jumped 450 points to 19,900. In Europe, the German DAX is higher by 80 points to 14,347, while the FTSE 100 is up a few points to 7,475. The US dollar is down slightly and yields steady ahead of the economic data today. Still no Fed speakers ahead of the FOMC meeting next Wednesday.

 

Market Closing Prices Yesterday

·     The S&P 500 Index gained 29.59 points, or 0.75%, to 3,963.51

·     The Dow Jones Industrial Average rose 183.56 points, or 0.55%, to 33,781.48

·     The Nasdaq Composite jumped 123.45 points, or 1.13%, to 11,082.00

·     The Russell 2000 Index advanced 11.39 points, or 0.63% to 1,818.29

 

Economic Calendar for Today

·     8:30 AM ET          Producer Price Index (PPI) Final Demand M/M for November…est. +0.2%

·     8:30 AM ET           Producer Price Index (PPI) Final Y/Y for November…est. +7.2%

·     8:30 AM ET           PPI Core Ex: Food & Energy M/M for November…est. +0.2%

·     8:30 AM ET           PPI Core Ex: Food & Energy Y/Y for November…est. +5.9%

·     10:00 AM ET         University of Michigan Sentiment, Dec P…est. 56.9

·     10:00 AM ET         Wholesale Inventories M/M for October…est. +0.8%

·     1:00 PM ET            Baker Hughes Weekly rig count data

 

Earnings Calendar:

·     Earnings Before the Open: JOUT, LI

 

Other Key Events:

·     American Society of Hematology (ASH) Annual Meeting & Expo, 12/10-12/12, in New Orleans

·     Goldman Sachs 14th Annual Industrials Week, 12/5-12/9, in London

 

 

Macro	Up/Down	Last
Nymex	0.38	71.84
Brent	0.08	76.23
Gold	9.70	1,811.30
EUR/USD	0.0001	1.0558
JPY/USD	-0.81	135.84
10-Year Note	-0.002	3.491%

 

 

World News

·     Arizona Sen. Kyrsten Sinema is changing her party affiliation to independent, delivering a jolt to Democrats’ narrow majority and Washington along with it – Politico https://politi.co/3iDk2ST 

·     China’s consumer price index (CPI) rose 1.6% from a year earlier in November, moderating from October’s 2.1% increase, higher than the 1.5% increase expected by economists. Food prices rose 3.7% on year in November, down from October’s 7.0% increase. Pork prices rose 34.4%, easing from 51.8% in October, and non-food prices increased 1.1% on year, steady with October

·     China producer price index (PPI) fell 1.3% from a year earlier in November, in-line with the decline recorded in October and a slower decline than the 1.5% expected; monthly, China’s PPI rose 0.1% in November

·     An organizational loophole used by the Federal Reserve’s 12 regional banks to avoid complying with transparency requests is under fire from two US senators seeking to toughen congressional oversight. Massachusetts Democrat Elizabeth Warren and Pennsylvania Republican Patrick Toomey plan on Friday to propose legislation to subject the regional branches to congressional information requests under the Freedom of Information Act – Bloomberg

 

Sector News Breakdown

Consumer

·     Chewy Inc. (CHWY) Q3 sales rise 14.5% y/y to $2.53B vs. est. $2.47B; Adjusted EBITDA of $70.4M, an increase of $64.4M y/y and adjusted EBITDA margin of 2.8% expanded 250 bps y/y; raises FY22 revenue view to $10.02B-$10.04B from $9.9B-$10B

·     Costco (COST) Q1 EPS $3.07 vs. est. $3.11; Q1 sales $54.44B vs. est. $54.64B; Q1 comparable sales up 6.6% and Q1 comparable e-commerce sales down (-3.7%)

·     Li Auto (LI) reports wider Q3 loss of (-$0.18) vs. est. loss (-$0.15) on revs $1.31B and reports Q3 deliveries 26,524 vehicles while sees Q4 deliveries 45,000-48,000 vehicles and Q4 revs $2.32B-$2.47B vs. est. $2.55B

·     Lululemon (LULU) Q3 EPS $2.00 vs. est. $1.97; Q3 revs rose 28% y/y to $1.86B vs. est. $1.81B; inventories at end of Q3 increased 85% to $1.7B compared to $900M end of Q3’21; Q4 comparable sales increased 22%, or 25% on a constant dollar basis; sees FY22 EPS $9.87-$9.97 vs. est. $9.92 and sees FY22 revenue $7.94B-$7.99B vs. est. $7.96B

·     RH Corp. (RH) Q3 EPS $5.67 vs. est. $4.70; Q3 revs $869M vs. est. $838.1M; acquired Dmitriy & Co, a To-the-Trade Custom Upholstery Atelier and the Creation of RH Couture Upholstery and acquired Jeup, Inc., a To-the-Trade Custom Furniture Atelier; arrow FY22 revenue growth view to down 4.5% to down 3.5%

·     Tesla Inc (TSLA) will suspend Model Y assembly at its Shanghai plant between Dec. 25 and Jan. 1, according to an internal memo detailing the automaker’s latest production plan, reviewed by Reuters, and two people with knowledge of the matter – Reuters

·     Torrid (CURV) Q3 EPS $0.07 vs. est. $0.12; Q3 revs fell -5.3% y/y to $290M vs. est. $299.2M; Q3 comp store sales fell (-8.0%); sees Q4 revenue $285M-$300M vs. est. $311.99M and sees Q4 adjusted EBITDA $9M-$14M

·     Penn Entertainment Inc (PENN) board authorized a new $750 million share repurchase program

 

Energy, Industrials and Materials

·     Alcoa (AA) downgraded to Equal Weight from Overweight at Morgan Stanley and cut tgt to $56

·     Crescent Point (CPG) has entered into a purchase and sale agreement to acquire certain Kaybob Duvernay assets from Paramount Resources for cash consideration of $375M

 

Financials

·     Coinbase (COIN) downgraded to underperform from neutral at Mizuho saying that consensus expectations are too optimistic for the company’s 2023 revenue

·     Cohen & Steers (CNS) announces preliminary assets under management and net flows for November 2022 at $84.2B

·     Nerdy (NRDY) announced the completion of workforce reductions of approximately 17 % of the Company’s total workforce

·     Euro-area banks are returning another €447.5 billion in cheap loans to the European Central Bank after officials toughened the terms of the program to help fight double-digit inflation. The repayment will shrink the outstanding amount of so-called TLTRO loans – Bloomberg

 

Healthcare

·     Autolus Therapeutics (AUTL) announced that Blackstone Life Sciences has committed to make two pre-agreed milestone payments of $35M each to Autolus, totaling $70M

·     Cooper Companies (COO) Q4 EPS $2.75 vs. est. $3.11; Q4 revs rose 12% y/y to $848.1M vs. est. $838.78M; sees FY23 EPS $12.30-$12.60 vs. est. $13.05 and FY23 revs $3.455B-$3.515B vs. est. $3.45B; sees FY23 organic rev growth 6%-8%

·     Exelixis (EXEL) announced that the CONTACT-01 study did not meet its primary endpoint of overall survival at the final analysis

·     ImmunoGen (IMGN) announced a clinical collaboration with Gilead Sciences (GILD) to evaluate the safety and anti-leukemia activity of pivekimab sunirine in combination with magrolimab

·     Jazz Pharmaceuticals (JAZZ) upgraded to Buy from Neutral at Goldman Sachs

·     Medtronic (MDT) raises quarterly dividend by 8% to $0.68

·     Prometheus (RXDX) 4.55M share Secondary priced at $110.00

·     Phreesia Inc. (PHR) Q3 EPS loss (-$0.76) vs. est. loss (-$0.61); Q3 revs rose 31% y/y to $73.1M vs. est. $70.9M; boosts FY23 revenue to at least $278M from prior view $273M-$275M (est. $274.3M)

·     Medicare will consider expanding its coverage of Alzheimer’s drugs, thanks to the promise of Eisai and Biogen’s (BIIB) experimental drug lecanemab. “I can’t speak to any specifics, but just to say that our door is really open,” CMS administrator Chiquita Brooks-LaSure said Thursday at the Milken Institute Future of Health Summit. “We will look at it as new data comes.” – STAT News

 

Technology, Media & Telecom

·     Broadcom (AVGO) Q4 EPS $10.45 vs. est. $10.28; Q4 revs rose 21% y/y to $8.93B vs. est. $8.9B; sees Q1 revs $8.9B vs. est. $8.79B and adj Ebitda about 63% of projected revs; raises quarterly dividend 12% to $4.60 per share

·     DocuSign (DOCU) Q3 adjusted EPS $0.57 vs. est. $0.42; Q3 revs rose 18% y/y to $645.5M vs. est. $626.88M; Q3 billings were $659.4M, an increase of 17% y/y; sees Q4 revenue $637M-$641M vs. est. $640.51M and sees Q4 subscription revenue $624M-$628M with billings $705M-$715M

·     Comtech Telecommunications (CMTL) Q1 EPS loss (-$0.46) vs. est. loss (-$0.10); Q1 sales $131.4M vs. est. $128.6M; sees Q2 sales growth between 1% and 3%

·     Domo (DOMO) Q3 adj EPS loss (-$0.13) vs. est. loss (-$0.26); Q3 revs rose 21% y/y to $79M vs. est. $76.38M; Subscription revenue rose 22% y/y to $69.0M which represented 87% of total revenue and Q3 billings were $74.0 million or 5% y/y growth; raises year EPS view

·     Netflix (NFLX) upgraded to overweight from equal weight at Wells Fargo as sees a path of positive catalysts in 2023 driven by lower churn and stable subscribers