Early Look

Thursday, January 12, 2023

Futures	Up/Down	%	Last
Dow	25.00	0.07%	34,135
S&P 500	1.25	0.03%	3,991
Nasdaq	-9.50	0.08%	11,467

 

 

U.S. futures are steady, trading in a narrow 10-point range overnight as the S&P 500 closed just above its 200-day moving average late yesterday around 3,990 on futures in anticipation of a softer CPI inflation reading. Will the S&P 500 hold above its 200-day moving average, breaking out above firmly above the 4,000 level on a tamer report, or will today’s data show inflation is slowing, but not as slow as the Fed hopes? December’s CPI report is expected to show headline inflation remains unchanged from the previous month, or 6.5% year over year. The core price measure that strips out volatile food and fuel costs, is expected to rise 0.3% from November, or 5.7% year over year. The Dow Jones Industrial Average and S&P 500 closed at the highs for a second straight day on Wednesday and the Nasdaq booked its longest win streak (4-days) in four months ahead of today’s inflation data. In Asian markets, The Nikkei Index edged higher 3 points to 26,449, the Shanghai Index was up 1 point at 3,163, and the Hang Seng Index rose 78 to 21,514. In Europe, the German DAX is up 120 points to 15,070, while the FTSE 100 rises 54 points to 7,777. The yen rallies 1.2% on report that the BOJ will review side effects of it’s easing at next week’s meeting; JPY/USD last around 130.85. Bitcoin rises for ninth day, longest winning streak since 2020. Overnight Taiwan Semi reported a quarterly beat but guided sharply lower for revs and margins for the remainder of the year. Earnings season unofficially kicks off tomorrow morning with the big bank earnings (JPM, WFC, Citi).

 

Economic Calendar for Today

·     7:30 AM ET           Fed’s Harker Discusses the Economic Outlook

·     8:30 AM ET           Consumer Price Index (CPI) Headline M/M for December…est. +0.0%

·     8:30 AM ET           Consumer Price Index (CPI) Headline Y/Y for December…est. +6.5%

·     8:30 AM ET           CPI Core (ex: Food & Energy) M/M for December…est. +0.3%

·     8:30 AM ET           CPI Core (ex: food & energy) Y/Y for December…est. +5.7%

·     8:30 AM ET           Weekly Jobless Claims…est. 215K

·     8:30 AM EST         Continuing Claims…est. 1.705M

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

·     11:30 AM ET         Fed’s Bullard Discusses the US Economy and Monetary Policy

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

·     2:00 PM ET            Federal Budget for December…est. (-$70.0B)

 

Earnings Calendar:

·     Earnings Before the Open: AYR NTIC

·     Earnings After the Close: RFIL RMCF

 

Other Key Events:

·     JPMorgan 41^st annual Healthcare Conference, 1/8-1/12, in San Francisco, CA

·     ICR 2023 Retail Conference, 1/9-1/12, in Orlando, FL

 

Market Closing Prices Yesterday

·     The S&P 500 Index gained 50.26 points, or 1.28%, to 3,969.51

·     The Dow Jones Industrial Average rose 268.15 points, or 0.80%, to 33,972.25

·     The Nasdaq Composite jumped 189.04 points, or 1.76%, to 10,931.67

·     The Russell 2000 Index advanced 21.40 points, or 1.17% to 1,844.05

 

 

Macro	Up/Down	Last
Nymex	0.96	78.37
Brent	1.14	83.81
Gold	10.30	1,889.20
EUR/USD	0.0006	1.076
JPY/USD	-1.63	130.84
10-Year Note	-0.03	3.526%

 

 

World News

·     The Bank of Japan will review the side effects of its massive monetary easing at its policy meetings next week and will consider adjusting bond-buying and make further policy tweaks if determined necessary, according to reports

·     China CPI YoY in December rose 1.8% vs 1.6% prior. PPI YoY was weaker than expected at -0.7% vs -1.3% prior, and -0.1% expected

·        The bull-bear spread in the American Association of Individual Investors (AAII) weekly survey was -15.9 vs -21.5 last week; Bulls rise to 24% from 20.5%; Neutrals fall to 36% from 37.5%; Bears fall to 39.9% from 42%

·     UK construction sector stagnated at the end of 2022 as interest rates bite; industry net workload balance was at -1% in Q4 2022 vs 17% and 30% in prev 2 quarters

·     Over 750k households in the UK are at risk of defaulting on their mortgages over next 2 years due to increasing borrowing costs, >200k households had already fallen behind on payments at end of Jun 2022

 

Sector News Breakdown

Consumer

·     KB Homes (KBH) Q4 EPS $2.47 vs. est. $2.86; Q4 revs rise 16% y/y to $1.94B vs. est. $1.98B; Q4 homes delivered increased 3% to 3,786; Q4 net orders of 692 and net order value of $362.7M decreased from 3,529 and $1.77B, respectively; Q4 inventories totaled $5.54B, up 15%; said due to significant uncertainty, limited forward visibility regarding 2023 housing market, others, providing guidance of full fiscal year only

·     FREYR Battery (FREY) announced a conditional offtake agreement with Impact Clean Power Technology, a leading manufacturer of battery systems for transportation, industry, and stationary energy storage for renewable energy sources

·     Kandi Technologies Group Inc. (KNDI) announced appointment of Dr. Xueqin Dong as CEO, effective January 10, 2023, as Mr. Xiaoming Hu resigned for purpose of company’s long-term growth training of young management

·     Tesla’s (TSLA) expansion of its Shanghai plant has been delayed, according to Bloomberg sources; cites concerns in Chinese government over CEO Musk’s Starlink having such a large presence in China.

 

Energy, Industrials and Materials

·     Cleveland-Cliffs (CLF) upgraded to Overweight at Morgan Stanley

·     Crestwood Equity (CEQP) said it sees Q4 be impacted by weather, sees FY22 below prior outlook

·     DCP Midstream (DCP) downgraded on Phillips 66 buyout at Mizuho

·     GXO Logistics (GXO) sees FY23 organic revenue up 6%-8%, sees FY23 adjusted EBITDA $700M-$730M; Sees FY22 net income attributable to GXO $189M-$199M

 

Financials

·     AllianceBernstein L.P. (AB) preliminary assets under management decreased to $646 billion during December 2022 from $658 billion at the end of November. Firmwide net inflows were offset by market depreciation, driving the 2% decrease.

·     Artisan Partners Asset Management Inc. (APAM) preliminary assets under management as of December 31, 2022, totaled $127.9 billion. Artisan Funds and Artisan Global Funds accounted for $60.8 billion of total firm AUM, while separate accounts accounted for $67.1 billion.

·     Franklin Resources, Inc. (BEN) preliminary month-end assets under management (AUM) of $1,387.5 billion on December 31, 2022, compared to $1,410.6 billion at November 30, 2022. This month’s decrease in AUM reflected the impact of negative markets

·     Invesco Ltd. (IVZ) preliminary month-end assets under management (AUM) of $1,409.2 billion, a decrease of 2.0% versus previous month-end as experienced net long-term outflows of $3.4 billion in the month; said AUM was negatively impacted by unfavorable market returns

·     Lazard Ltd (LAZ) preliminary assets under management as of December 31, 2022 totaled approximately $216.1 billion. The month’s AUM included market depreciation of $5.7 billion, foreign exchange appreciation of $2.9 billion and net outflows of $2.1 billion

·     Virtus Investment Partners, Inc. (VRTS) preliminary assets under management of $149.4 billion as of December 31, 2022. The increase from September 30, 2022, primarily reflected market appreciation and net inflows in institutional accounts

·     Bitcoin levered stocks seeing strength early as Bitcoin rises a 9^th straight session to start the year – shares of COIN, MARA, MSTR, RIOT, SI higher

 

Healthcare

·     Charles River (CRL) downgraded to Hold from Buy at Jefferies

·     Oramed Pharma (ORMP) shares tumble after the company’s experimental oral insulin failed in a late-stage clinical trial of Type 2 diabetes patients.

·     Pardes Biosciences (PRDS) files $200M mixed securities shelf

·     P3 Health Partners (PIII) sees FY22 revs $1.025-1.075B vs est. $1.044B, adj EBITDA ($128)Mm-($118)mm vs est. ($123.4)Mm; guides FY23 revs $1.20-1.25B vs est. $1.30B, adj EBITDA ($60)Mm-($40)Mm vs est. ($74)Mm; sees FY24 EBITDA positive

 

Technology, Media & Telecom

·     Taiwan Semiconductor (TSM) reported a record net Q4 profit and beat analysts’ expectations but warned Q1 revs would be between $16.7B-$17.5B, 14% worse sequentially than Q4 and below est. $17.64B and said its operating margin will fall to between 41.5%-43.5%, from the fourth quarter’s 52%

·     Infosys (INFY) Q3 EPS reported in-line and raised its annual revenue outlook; sees revenue growth of 16% to 16.5%, from revenue growth of 15%-16% projected earlier; said it saw its large deal signings rising to $3.3 billion, its strongest in the last eight quarters

·     Logitech (LOGI) cuts FY23 revenue growth view to down 15% to down 13%, well below prior guidance of revenue growth down 8% to down 4%; also cut its FY23 operating income view to $550M-$600M from $650M-$750M; sees Q3 revenue at $1.26B-$1.27B vs. est. $1.39B

·     Spotify (SPOT), Roku (ROKU), Unity Software (U) all downgraded at Jefferies in US media outlook, while upgrading Netflix (NFLX) and JAKKS (JAKK)

·     Marvell Technologies (MRVL) reaffirms midpoint of 4q revenue outlook

·     Qualtrics International Inc. (XM) said it intends to cut about 270 jobs, or less than 5% of its workforce, and anticipates about $5.8M in charges, with most coming in its fiscal first quarter

·     Advanced Micro (AMD) announced that chief financial officer and treasurer Davinder Kumar will be retiring from company; will remain at Co through April 2023 to ensure a smooth transition

·     Walt Disney Co (DIS) board recommends shareholders vote for all board nominees and not support Trian candidate