Early Look

Thursday, June 9, 2022

Futures	Up/Down	%	Last
Dow	136.00	0.41%	33,000
S&P 500	20.25	0.50%	4,136
Nasdaq	72.00	0.57%	12,718

 

 

After sliding on Wednesday, U.S. stocks are looking at a higher open ahead of weekly jobless claims data and the European Central Bank (ECB) monetary policy meeting at 7:45 AM. U.S. listed China stocks have been rallying in recent weeks, getting another boost this morning after a Bloomberg report that China may revive Jack Ma’s Ant IPO has given a boost to risk assets (though China regulator later said they were not conducting any work on the IPO). The dollar pulled back from 20-year highs against the Japanese yen overnight, following stronger than expected Chinese export data for May and some strength in the EUR ahead of today’s ECB meeting. Volumes are thin early. In Asian markets, The Nikkei Index edged higher a few points to 28,246, the Shanghai Index fell -24 points to 3,238, and the Hang Seng Index dropped -145 points to 21,869. In Europe, markets await results from the ECB policy meeting at 7:45, and 8:30 AM press conference, where they are expected to confirm their first rate hike will come in July. Expectations are for all 3 key rates to be left unchanged, ruling out a surprise hike. Analysts expect the ECB to confirm the end of net asset purchases as of end-June (or early July) and expect the ECB to confirm the intention to hike in July and September. Views on future hike sizes diverge between 25bp vs 50bp; many think the ECB will leave this open for now. The German DAX is down -0.6% to 14,358, while the FTSE 100 is down about -30 points to 7,560.

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -44.91 points, or 1.08%, to 4,115.77

·     The Dow Jones Industrial Average fell -269.24 points, or 0.81%, to 32,910.90

·     The Nasdaq Composite slipped -88.96 points, or 0.73%, to 12,086.27

·     The Russell 2000 Index declined -28.56 points, or 1.49% to 1,891.01

 

Economic Calendar for Today

·     8:30 AM ET          Weekly Jobless Claims…est. 210K

·     8:30 AM EST        Continuing Claims…est. 1.35M

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

 

Earnings Calendar:

·     Earnings Before the Open: BILI, FCEL, HOFT, NIO, SIG, VNCE

·     Earnings After the Close: DOCU, LAKE, MTN, RENT, SFIX

 

Other Key Events:

·     Bank America Global Technology Conference, 6/7-6/9, in San Francisco

·     Citigroup Consumer Access Day, 6/8-6/9, in NY

·     Deutsche Bank 13th Annual Global Materials Conference, 6/8-6/9, in NY

·     Oppenheimer FinTech Virtual Bus Tour (virtual), 6/6-6/9

·     RBC Capital Global Mining & Materials Conference, 6/9-6/10, in NY

·     REITweek 2022 Investor Conference, 6/7-6/9, in NY

·     RSA Conference 2022, 6/6-6/9, in San Francisco

·     William Blair 42nd Annual Growth Stock Conference, 6/6-6/9, in Chicago

·     China CPI, PPI for May

 

 

Macro	Up/Down	Last
Nymex	-0.25	121.85
Brent	-0.27	123.31
Gold	-5.60	1,850.70
EUR/USD	0.0006	1.0721
JPY/USD	-1.00	133.24
10-Year Note	-0.019	3.01%

 

 

World News

·     China’s May exports rose 15.3% (YoY) in yuan terms (vs estimates of 9.2%). Imports rose 2.8% (YoY) vs estimates of 4.2%, reflecting an economy not yet back to full strength. The May trade balance came in 25% larger than expected, at 502.9b yuan

·     The bull-bear spread in the American Association of Individual Investors (AAII) weekly survey was -25.9 vs -5.1 last week. Bulls fall to 21% from 32%, Neutrals rise to 32.1% from 30.9% and Bears rise to 46.9% from 37.1%

 

Sector News Breakdown

Consumer

·     Tesla (TSLA) sold 32,165 China-made vehicles in May, up from 1,152 vehicles in April, the China Passenger Car Association; Tesla’s Shanghai factory produced 33,544 vehicles last month, a more than three-fold rise from April when a strict COVID-19 lockdown hampered production (shares upgraded to Buy from Hold at UBS with $1,100 tgt)

·     Nio (NIO) Q1 adj EPS loss (-$0.13), in-line with ests and revs $1.56B vs. est. $1.49B; Q1 deliveries were 25,768, including 4,341 ES8s, 13,620 ES6s, 7,644 EC6s and 163 ET7s, up 28.5% y/y and up 2.9% q/q; sees Q2 revenue between RMB9.34B-RMB10.09B, below the consensus of RMB11.65B, with deliveries expected to decline to between 23,000 and 25,000 vehicles

·     Five Below (FIVE) 1Q EPS $0.59 vs est. $0.58 on net sales $639.6Mm vs est. $652.7Mm; guides 2Q net sales $675-695Mm vs est. $729.5Mm with EPS $0.74-0.86 vs est. $1.20; guides FY net sales $3.04-3.12B vs est. $3.2B on comps -2% to 0%; EPS $4.85-5.24 vs est. $5.47

·     Couchbase (BASE) Q1 non-GAAP EPS loss (-$0.32) vs. est. loss (-$0.39); Q1 revs $34.9M vs. est. $32.61M; said delivered a strong Q1 exceeding the high end of our guidance on all metrics, highlighted by the third straight quarter of accelerating ARR growth; sees Q2 revenue $35.8M-$36.0M above consensus $35.37M

·     Oxford Industries (OXM) 1Q adj EPS $3.50 vs est. $2.75 on sales $353Mm vs est. $329Mm, FIFO inventory +18%; sees 2Q net sales $250-370Mm vs est. $347Mm and adj EPS $3.30-3.50 vs est. $3.29; guides FY net sales $1.285-1.325B vs est. $1.24B and adj EPS $9.60-10.00 vs est. $8.87

·     Mission Produce (AVO) 2Q adj EPS $0.04 vs est. $$0.01 on revs $278.1Mm vs est. $278.9Mm; says the industry is expecting third quarter volumes to increase sequentially but remain lower by approximately 10-15% versus the prior year period, primarily due to ongoing supply constraints in Mexico that are not expected to alleviate until the fiscal fourth quarter

·     Target Corp (TGT) raises quarterly dividend by 20% to $1.08

·     Hooker Furniture (HOFT) Q1 EPS 26c vs. 78c a year ago; Q1 revenue fell -9.5% y/y to $147.3M vs. $162.86M a year ago

·     Honest Company (HNST) downgraded from Buy to Hold at Loop Capital and cut tgt from $5 to $3, concerned with comments from mass retailers, including HNST’s largest customer – Target.

 

Energy

·     Devon Energy Corp. (DVN) announced it has entered into a definitive purchase agreement to acquire the leasehold interest and related assets of RimRock Oil and Gas, LP, a Warburg Pincus portfolio company, in the Williston Basin for total cash consideration of $865 million

·     Martin Midstream Partners LP (MMLP) said selling unitholders may offer and sell, up to an aggregate of 6.1 mln common units

 

Financials

·     Annaly Capital (NLY), AGNC Investment (AGNC) and Dynex Capital (DX) upgraded to Outperform from Market Perform with price targets of $6.75, $13.25, and $18.75, respectively at KBW Inc. in mortgage back security (MBS) REITs

·     Brookdale Senior Living Inc (BKD) increased sequential weighted average occupancy by 70 bps and month end occupancy by 90 bps in May 2022

·     Travelers (TRV) files automatic mixed securities shelf

 

Healthcare

·     CVS Corp. (CVS) reaffirms previously announced full year 2022 adjusted eps guidance range of $8.20 to $8.40 vs. est. $8.36 and reaffirm full year 2022 cash flow from operations guidance range of $12.0 bln to $13.0 bln

 

Industrials & Materials

·     ABM Industries (ABM) Q2 adj EPS $0.89 vs. est. $0.84; Q2 revs rose 26.7% y/y to $$1.9B vs. est. $1.88B; reaffirms its prior guidance for full year 2022 adjusted eps of $3.50 to $3.70 vs. est. $3.62

·     Freeport McMoRan (FCX) upgraded to Neutral from Underperform at Credit Suisse

·     Forward Air (FWRD) said it believes it will exceed top end of Q2 EPS guidance; Revenue per shipment increased 40.7%, weight per shipment increased 15.4% and pounds per day increased 0.4% over the same period last year

·     Fluor (FLR) selected for interstate 35 capital express south project in Austin, Texas; will book nearly $548M contract value in Q2 of 2022

·     Greif (GEF) Q2 adj EPS $2.41 vs. est. $1.71; Q2 sales rose 24% y/y to $1.67B vs. est. $1.51B; sees FY adj EPS $7.45-$7.75 above est. $6.61; Q2 Adjusted EBITDA of $251M was an increase of $74.4M compared to Adjusted EBITDA of $176.6M

·     Lumber futures slid to the cheapest since September as rising interest rates put a damper on the housing market. Lumber futures fell as low as $568.40 per 1,000 board feet in Chicago on Wednesday, extending a slump to about 50% this year – Bloomberg

 

Technology, Media & Telecom

·     American Software (AMWSA) 4Q EPS $0.10 vs est. $0.06, subscription fees $11.1Mm +37% y/y; sees FY23 revs $132.5-135Mm vs est. $132.4Mm and adj EBITDA $16-18Mm vs est. $19Mm

·     Alibaba (BABA) shares rise after Bloomberg report says affiliate Ant’s IPO might be revived. Chinese financial regulators have begun early-stage talks on a potential revival of an initial public offering by Ant Group Co, controlled by billionaire Jack Ma. However, shares reversed lower after headlines that China securities regulator says has not conducted any assessment or research work regarding ant’s IPO

·     Bilibili (BILI) Q1 adj EPS loss (-$0.66) vs. est. loss (-$0.62); Q1 revs $797.3M vs. est. $755.72M; said Q1 average monthly active users reached 293.6M, and mobile MAUs reached 276.4M up 31% and 33% respectively y/y; average daily active users reached 79.4M, up 32% y/y; sees Q2 revenue RMB4.85B-RMB4.95B from RMB5.05B in Q1

·     Skillsoft (SKIL) 1Q EPS ($0.15) vs est. ($0.17) on revs $164Mm vs est. $167.4Mm; guides FY adj revs $765-790Mm vs est. $773.6Mm, bookings $790-825Mm and adj EBITDA about $167Mm vs est. $175.3Mm

·     Quantum Corp. (QMCO) Q4 adj EPS loss (-$0.05) vs. est. loss (-$0.07); Q4 revs $95.2M vs. est. $91.52M; sees Q1 adj EPS loss (-$0.04) vs. est. loss (-$0.03); sees Q1 revenue $94M, plus or minus $3M vs. est. $93.56M

·     Yext Inc. (YEXT) Q1 EPS loss (-$0.06) vs. est. loss (-$0.07); Q1 revs $98.8M vs. est. $96.75M; sees FY23 EPS loss (12c)-10c) vs. est. loss (16c); sees FY23 revenue $399.3M-$403.3M vs. est. $406.12M; launched $100M share repurchase program during the qtr