Early Look

Friday, March 25, 2022

Stocks have been on a record setting move higher, as the S&P 500 has surged 1% or more 6 of the last 8 trading days, with the only dates that match since 1970 being: 3/24/2022, 11/9/2020, 10/21/1974, and 10/18/1974 according to reports. A truly remarkable feat in the face of great obstacles including a rising interest rate environment and uncertainty in Europe amid the Russia invasion of Ukraine and hundreds of sanctions set on the country by the U.S. and allies. It’s been about 100bps higher for the 10-year Treasury yield in 6-weeks to 2.37%, as economic data has been leading to the belief of more aggressive interest rate hike action by the Fed into the May meeting (50 bps now more than 70% chance according to Fed Fund futures). The euro rose to fresh 6-year highs above 122.40 vs. the Japanese yen before pulling back after 5-days of gains back below 1.22 following BoJ Governor Kuroda comments this week that was effectively supporting a weaker JPY. This morning, the U.S. and the European Union reached a deal to slash dependence on Russian fuel imports by boosting the supply of LNG to Europe. The move could create sanctions by the EU now and help ease energy price fears (oil lower this morning). As for yesterday, U.S. stocks and Treasury yields gained as investors weighed economic resilience against the threats of rising rates and the impact of prolonged war in Ukraine. In Asian markets, The Nikkei Index rose 39 points to 28,149, the Shanghai Index fell -1.17% to 3,212, and the Hang Seng Index tumbled -2.47% to 21,404. In Europe, the German DAX is up about 50 points to 14,325, while the FTSE 100 is flat at 7,465.

Market Closing Prices Yesterday

·     The S&P 500 Index jumped 63.95 points, or 1.44%, to 4,520.19

·     The Dow Jones Industrial Average rose 348.65 points, or 1.01%, to 34,707.15

·     The Nasdaq Composite surged 269.24 points, or 1.93%, to 14,191.84

·     The Russell 2000 Index advanced 23.34 points, or 1.13% to 2,075.44

Economic Calendar for Today

·     10:00 AM ET       Pending Home Sales m/m for February…est. 1.0%

·     10:00 AM ET       University of Michigan Confidence, March-F…est. 67.8

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

World News

·     The U.S. and the European Union announced an agreement to try and boost the supply of liquefied natural gas to European countries by the end of 2022 with at least 15 billion cubic meters. The aim is to work with international partners to help the continent wean itself off Russian fuel imports. Under the agreement, EU member states will work to ensure demand for 50 billion cubic meters of U.S. liquefied natural gas until at least 2030.

·     Japan’s CPI for March showed another modest lift in annual headline (to 1.3%) and core CPI measures (0.8%, and -0.4%).

Sector News Breakdown

Consumer

·     Bed Bath & Beyond (BBBY) is close to a settlement with activist investor Ryan Cohen in which three new directors would be added to the board of the retailer – Bloomberg

·     Honest Company (HNST) 4Q EPS ($0.10) vs est. ($0.06) on revs $80.4Mm vs est. $84.6Mm; sees 1Q revs -15% y/y vs est. +11%

·     Mister Car Wash (MCW) Q4 EPS $0.11 vs. est. $0.08; Q4 revs $191.5M vs. est. $188.7M; Q4 comparable stores sales up 14.6% y/y; sees FY revs $875-895Mm vs est. $853.9Mm, sees FY comps +5-7% and adj net Inc $144-153Mm vs est. $154.5Mm

·     NIO Inc. (NIO) reported better-than-expected quarterly sales Thursday, but its deliveries forecast fell short of estimates; posted Q4 EPS loss (-$0.16) on $1.6B in sales; gross profit margins came in at 17.2%

·     SmartRent (SMRT) 4Q EPS ($0.13) vs est. ($0.09) on revs $34.7Mm vs est. $31.4Mm; sees 1Q revs $35-37Mm vs est. $47.2Mm and FY revs $220-250Mm vs est. $301.1Mm

Energy, Industrials and Materials

·     Boeing (BA) shares slip amid reports that the U.S. FAA may not certify a lengthened version of the 737 MAX before a deadline set by Congress earlier this year. If a revised schedule for improvements isn’t met, certification would need to follow an extended Congressional deadline

·     Air Lease Corporation (AL) announced long-term lease agreements for nine new Boeing 737 aircraft with Aeromexico. Consisting of two new 737-8s and seven new 737-9s, the aircraft are scheduled to deliver between July 2022 and August 2023 from ALC’s orderbook with Boeing.

·     Gates Industrial (GTES) announces offering of 5M ordinary shares for holders

·     Maxeon Solar (MAXN) reported Q4 revenue that was slightly below expectations and gave a first- quarter revenue forecast that is below the average analyst estimate

Healthcare

·     Cannabis stocks surge in U.S. premarket trading after a House panel said late yesterday that it would consider a bill to decriminalize marijuana; shares of TLRY, CGC, SNDL, ACB among movers

·     MEI Pharma (MEIP) tumbles after the company and Kyowa Kirin said the FDA discouraged an accelerated approval filing for zandelisib based on Phase 2 Tidal study data

·     Sight Sciences (SGHT) 4Q EPS ($0.34) vs est. ($0.39) on revs $14.7Mm vs est. $14.2Mm; sees FY revs $67-75Mm vs est. $75Mm; announces first patient treated in TRIDENT trial

Technology, Media & Telecom

·     Baidu (BIDU), Alibaba (BABA) and other U.S. listed China stocks slide on delisting fear as the U.S. public company accounting regulator said on Thursday it continued to engage with Chinese regulators about getting access to their auditors’ records, but it remained unclear if the Chinese government would grant the access required by a new U.S. listing law

·     CuriosityStream Inc., (CURI) 4Q EPS ($0.22) vs est. ($0.31) on revs $27.3Mm vs est. $27Mm; guides 1H revs $36-40Mm vs est. $50.3Mm; says plans to increase subscription pricing in 2022