Early Look

Thursday, July 21, 2022

Futures	Up/Down	%	Last
Dow	-81.00	0.25%	31,772
S&P 500	-5.25	0.13%	3,957
Nasdaq	8.50	0.07%	12,474

 

 

U.S. futures take a breather, with the S&P looking flattish overnight and the Nasdaq slightly higher after a strong run in recent days pushed major averages to their best levels in over a month. The S&P 500 closed at its highest level since June 9, and it remains down 17% in 2022. The move comes ahead of the ECB meeting later this morning and the FOMC meeting next week, where both banks are expected to announce aggressive rate hikes in hopes to stem inflation. The European Central Bank is set to join other central banks in hiking rates later this morning, with a hike of 50-bps expected, focusing on fighting runaway inflation rather than the economic downturn. Tech has had a big run over the last week as up six days straight, AMZN is up almost 16% in July — on pace for the best month since April 2020. The Philadelphia Semiconductor index (SOX) jumped 2.5%, and it has now rebounded about 17% from its recent low on July 1. In Asian markets, The Nikkei Index rose 122 points to 27,803, the Shanghai Index fell -32 points to 3,272, and the Hang Seng Index falls -315 points or 1.5% to 20,574. In Europe, the German DAX is down -30 points to 13,250, while the FTSE 100 slips -0.3% to 7,240. Italian Prime Minister Mario Draghi resigned on Thursday after his national unity government fell apart. Bitcoin prices slip, taking a breather after a recent run took it near $24K yesterday, but slide to $23K this morning after electric-car maker Tesla Inc was shown to have sold about 75% of its holdings of the virtual token. Oil prices tumble with crude and Brent both down over $5 per barrel as Russia resumed pumping gas via its biggest pipeline Nord Stream 1 to Europe on Thursday after a 10-day outage, the operator said, allaying Europe’s immediate winter supply fears. Also, Libya’s National Oil Corp crude production had resumed at several oilfields, after lifting force majeure on oil exports last week. Another busy day of earnings with TSLA rising over 3% last night post its results.

Market Closing Prices Yesterday

·     The S&P 500 Index climbed 23.21 points, or 0.59%, to 3,959.90

·     The Dow Jones Industrial Average rose 47.79 points, or 0.15%, to 31,874.84

·     The Nasdaq Composite jumped 184.50 points, or 1.58%, to 11,897.65

·     The Russell 2000 Index advanced 28.62 points, or 1.59% to 1,827.95

 

Economic Calendar for Today

·     8:30 AM ET          Weekly Jobless Claims…est. 240K

·     8:30 AM EST         Continuing Claims…est. 1.34M

·     8:30 AM ET           Philly Fed Business Index for July…est. 0.0

·     10:00 AM ET         Leading Index M/M for June…est. (-0.5%)

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

 

Earnings Calendar:

·     Earnings Before the Open: AAL, AIR, AN, AUB, BANC, BKU, BX, CBSH, COLB, DGX, DHI, DHR, DOV, DOW, DPZ, EWBC, FCX, FITB, GATX, HBAN, HOMB, HRI, IIIN, IPG, IQV, KEY, MMC, NUE, PM, POOL, SASR, SFNC, SNA, SNV, SON, STBA, T, TCBI, TPH, TRV, TSCO, UNP, WBS

·     Earnings After the Close: ASB, BJRI, COF, CSTR, FFBC, GBCI, INDB, ISRG, MAT, OZK, PBCT, PINE, PPG, SAM, SIVB, SNAP, STX, THC, UFPI, VICR, WAL, WRB

 

 

Macro	Up/Down	Last
Nymex	-5.09	94.82
Brent	-4.90	102.03
Gold	-19.80	1,680.50
EUR/USD	0.0007	1.0186
JPY/USD	0.46	138.66
10-Year Note	+0.013	3.049%

 

 

World News

·     The Bank of Japan kept its short-term rate unchanged at -0.1% (as expected) and said the Japanese economy will likely recover as the impact of C-19 and supply chain issues ease; need to be vigilant to financial & FX mkt moves and their impact on the economy & prices; risks to price o/l are skewed to the upside currently & roughly balanced thereafter

·     President Biden announced a series of executive actions aimed at fighting climate change on Wednesday but fell short of issuing a climate emergency declaration. For now, the president directed the Interior Department to propose new offshore wind areas in the Gulf of Mexico and advance wind energy development in the waters off the mid and southern Atlantic Coast and Florida’s Gulf Coast

·     The bull-bear spread in the American Association of Individual Investors (AAII) weekly survey was -12.6 vs -19.6 last week; Bulls rise to 29.6% from 26.9%; Neutrals rise to 28.2% from 26.6%; Bears fall to 42.2% from 46.5%

 

Sector News Breakdown

Consumer

·     Tesla Inc. (TSLA) 2Q adj EPS $2.27 vs est. $1.81 on revs $16.9B vs est. $17.1B; qtrly auto gr margin 27.9%; says over multi-year horizon expect to achieve 50% annual growth in vehicle deliveries; have converted approx 75% of bitcoin purchases into fiat currency as of 2Q end (roughly $936M worth); new factories in Berlin-Brandenburg and Austin continue to ramp; 2q automotive gross margin +27.9%, est. +26.8% and down from 30% in Q1; kept its long-term target of increasing deliveries by an average of 50% over the coming years.

·     Las Vegas Sands (LVS) Q2 adj EPS loss (-$0.34) vs. est. loss (-$0.29); Q2 revs fell to $1.05B vs. est. $976.1M; capital expenditures during the second quarter totaled $198 million; Q2 Operating loss was $147 million, compared to $139 million in the prior year quarter

·     Homebuilders report earnings: TPH Q2 EPS $1.33/$1B vs. est. $1.20/$997.3M; DHI Q3 EPS $4.69/ $8.8B vs. est. 44.49/$8.99B and cuts FY22 revenue view to $33.8B-$34.6B from prior view $35.3B-$36.1B and sees homes closed between 83,000 and 85,000 homes

·     Monarch Casino (MCRI) 2Q EPS $0.99 vs est. $1.06 on revs $115.3Mm vs est. $115.4Mm; reaffirmed prior authorizations for previously disclosed stock repurchase plan

·     Carnival (CCL) 102.1M share Spot Secondary priced at $9.95

 

Energy

·     Kinder Morgan (KMI) Q2 adj EPS $0.27, in-line with consensus; Q2 revs $5.1B vs. est. $3.89B; qtrly total refined products volumes were down 2%, while crude and condensate pipeline volumes were down 6% y/y; qtrly gasoline volumes were below comparable period last year by 3% and diesel volumes were down 11%; approves cash dividend of 27.75c per share for Q2

 

Financials

·     Allstate (ALL) reported estimated catastrophe losses for June at $356M or $281M, after-tax which was lower than estimated catastrophe losses of $436M or $344M (after-tax) reported for May; Q2 catastrophe losses totaled $1.11B, pre-tax

·     Discover Financial (DFS) Q2 EPS $3.96 vs. est. $3.78; Q2 revs $3.22B vs. est. $3.18B; qtrly payment services volume was $82.9 billion, up 6% y/y; total loans ended the quarter at $99.3 billion, up 13% y/y, and up 6% sequentially; credit card loans ended the quarter at $79.2 billion, up 15% y/y; qtrly provision for credit losses of $549 million increased $414 million y/y

·     Equifax (EFX) cuts FY22 adjusted EPS view to $7.55-$7.80 from $8.00-$8.30 (est. $8.03) and cuts FY22 revenue view to $5.07B-$5.13B from $5.15B-$5.25B (est. $5.16B); CEO said reflects the expectation that the U.S. mortgage market will decline by over 46% in the second half of the year

·     FNB Corp. (FNB) Q2 adj EPS $0.31 vs. est. $0.30; Total average deposits grew $3.2 billion, or 10.5%; Net interest income increased $25.8 million, or 11.3%; non-interest income was $82.2 million, an increase of $2.4 million

·     PacWest Bancorp (PACW) Q2 EPS $1.02 vs. est. $1.06; Q2 tangible book value per share $16.93; Provision for Credit Losses of $11.5M in 2Q22; Noninterest Income of $34.3M in 2Q22 vs. $20.8M y/y; Noninterest Expense of $183.6M in 2Q22 vs $167.4M in 1Q22; Driven by Loan Growth

·     Rexford Industrial (REXR) 2Q core FFO/shr $0.49 vs est. $0.48 on revs $149.1Mm vs est. $150.4Mm; guides core FFO/shr $1.87-1.90 vs prior $1.84-1.88 and est. $1.95

·     SL Green Realty (SLG) 2Q FFO/shr $1.87 vs est. $1.72; same-store cash net operating income +6.7%

·     Umpqua Holdings (UMPQ) 2Q EPS $0.37 vs est. $0.39, NII $248.2Mm vs est. $237Mm; NIM 2.41% +27bps sequential

 

Healthcare

·     Arbutus Biopharma (ABUS) announced that while its partner, Assembly Biosciences (ASMB), has decided to discontinue development of its investigational hepatitis B virus core inhibitor candidate vebicorvir

·     Danaher (DHR) Q2 adj EPS $2.76 vs. est. $2.35; Q2 revs $7.75B vs. est. $7.3B; for q3 2022, company anticipates that non-Gaap base business core revenue growth will be in high-single digit percent range; fir FY, company continues to expect non-Gaap base business core revenue growth will be in high-single digit percent range

·     Roche (RHHBY) CEO Severin Schwan to step down, to be succeeded by Thomas Schinecker

·     Verve Therapeutics Inc’s (VERV) launches $200 mln stock offering; says established four-year collaboration with VRTX focused on gene editing program for undisclosed liver disease. Under agreement’s terms, VERV to receive $60M upfront payment from VRTX, including $35M equity investment in VERV and eligible to receive up to $66M million in success payments

·     Verve Therapeutics (VERV) 8.33M share Spot Secondary priced at $27.00

 

Industrials & Materials

·     Alcoa Inc. (AA) Q2 adj EPS $2.67 vs. est. $2.31; Q2 revs $3.6B vs. est. $3.51B; expects total aluminum segment shipments to remain unchanged from the prior forecast, ranging between 2.5 and 2.6 million metric tons in 2022; in alumina and aluminum, shipments are expected to increase but will not fully offset higher costs for energy and raw materials for Q3; authorizes additional $500M in share repurchases

·     Crown Holdings (CCK) Q2 EPS $2.43 vs. est. $2.02; Q2 revs $3.51B vs. est. $3.21B; guides Q3 EPS $1.75-$1.85 vs. est. $2.08 and sees FY22 EPS $7.65-$7.85 assuming $0.50 FX headwind due to dollar strength, below consensus $8.12

·     Dow Inc. (DOW) Q2 operating EPS $2.31 vs. est. $2.14; Q2 revs $15.66B vs. est. $15.54B; qtrly packaging & specialty plastics segment net sales in the quarter were $8.2 billion, up 16% versus the year-ago period; qtrly industrial intermediates & infrastructure segment net sales were $4.4 billion, up 4% versus the year-ago period

·     Steel Dynamics (STLD) Q2 adj EPS $6.73 vs. est. $6.05; Q2 sales $6.2B vs. est. $5.78B; Record steel shipments of 3.1 million tons, record operating income of $1.6 billion and net income of $1.2 billion; record steel fabrication operating income of $599 million and record shipments of 218,000 tons; record cash flow from operations of $1.0 billion

·     Valmont Industries (VMI) 2Q adj EPS $3.70 vs est. $3.34 on sales $1.1B vs est. $998.8Mm; sees FY net sales +20-21% vs est. +14.3% and adj EPS $12.90-13.30 vs est. $13.06

 

Transports

·     CSX Corp. (CSX) 2Q EPS $0.54 vs est. $0.47 on revs $3.82B vs est. $3.65B

·     United Airlines (UAL) 2Q EPS $1.43 vs est. $1.95 on revs $12.1B vs est. $12.2B; CASM +32%, CASM-EX +17%; qtrly load factor 86.7% vs 72% year ago; continues to expect profit for FY22 and affirms long-term adj pre-tax margin targets of approx 9% in 2023 and 14% in 2026; reports Q2 capacity down 15% vs. Q2 of 2019

·     Knight-Swift (KNX) Q2 adj EPS $1.41 vs. est. $1.35; Q2 revs $1.96B vs. est. $1.86B; raises FY22 adjusted EPS view to $5.30-$5.45 from $5.20-$5.40; says net cash capital expenditures expected range of $550 – $600 million for the full year 2022

·     Landstar (LSTR) Q2 EPS $3.05 vs. est. $3.23; Q2 revs $1.975B vs. est. $2.0B; truck revenue per load decreased about 4% sequentially from April to May, which was not anticipated in the 2022 q2 guidance; number of loads hauled via truck in 2022 q2 increased 10% over 2021 q2

 

Technology, Media & Telecom

·     SAP AG (SAP) trimmed its profit outlook for the year citing charges related to the war in Ukraine as lowered its 2022 adjusted profit outlook to between 7.6B-7.9B euros, from a range of 7.8B-8.25B euros; affirmed its revenue outlook.

·     AT&T (T) Q2 adjusted EPS $0.65 vs. est. $0.61; Q2 revs $29.64B vs. est. $29.55B; cuts FY22 free cash flow view to ‘$14B range from $16B range; As a result of higher-than-forecasted customer growth, increasing Mobility service revenue guidance to 4.5-5% growth for the full year

·     Crown Castle (CCI) Q2 AFFO $1.80 vs. on revs $1.73B; Site rental revenues grew 10%, or $142M y/y; Income from continuing operations for the second quarter 2022 was $421 million compared to $333M y/y; Q2 Adjusted EBITDA was $1.1 billion vs. $958M y/y

·     Qualtrics International Inc. (XM) 2Q EPS ($0.04) vs est. $0.00 on revs $356.4Mm vs est. $345Mm; sees 3Q revs $358-360Mm vs est. $359.8Mm and adj EPS ($0.04)-($0.02) vs est. $0.00; guides FY revs $1.422-1.426B vs est. $1.427B and adj EPS ($0.09)-($0.07) vs est. $0.00

·     Super Micro Computer (SMCI) raises Q4 EPS view to $2.30-$2.40 from $1.51-$1.69 (est. $1.57); raises Q4 revenue view to $1.58B-$1.63B from $1.40B-$1.48B (est. $1.36B)