Early Look

Wednesday, March 30, 2022

Futures	Up/Down	%	Last
Dow	-100.00	0.28%	35,090
S&P 500	-15.25	0.34%	4,609
Nasdaq	-78.00	0.51%	15,159

 

 

U.S. S&P futures are down slightly at 4,609, just above overnight lows of 4,604.75 (overnight hi 4,627.50) as the Kremlin says no breakthrough in Ukraine talks, much work remains – a little less commentary than what was provided to markets yesterday when talks were said to be “constructive.” Reuters reported Ukraine and its Western allies on Wednesday dismissed a Russian military pullback from near Kyiv as a ploy to refit troops after heavy losses, even as invading forces bombard cities elsewhere. U.S. investors are walking into a 4-day win streak, in a momentous run over the last 2-weeks that has significantly narrowed YTD losses and moved the S&P and Dow to within less than 5% of their respective all-time highs. The S&P 500 is now up 400 points since the FOMC rose interest rates by 25 bps 2-weeks ago and have called for more aggressive tightening to curb rising inflation. Higher inflation, an ongoing war in Ukraine, a more hawkish Fed, and higher Treasury/borrowing costs are all factors that stock markets have overcomer during this stretch as well, as markets have surged. In Asian markets, The Nikkei Index dropped -225 points or -0.8% to 28,027, the Shanghai Index rose 62 points or 1.96% to 3,266, and the Hang Seng Index gained 1.39% to 22,232. In Europe, the German DAX is down over -200 points at 14,600, while the FTSE 100 is flat at 7,540. German bonds extend decline; 10-year yield jumps 6bps to 0.69%. German Council of Economic Experts significantly lowers German 2022 growth to 1.8% vs 4.2% previous due to the Ukraine war, while 2023 growth is at 3.6%, increased 2022 inflation to 6.1% vs 2.6% previous. Big morning of economic data with Q4-Final GDP expected along with a handful of inflation reports including PCE core prices at 8:30 AM ET, as well as monthly ADP private employment data at 8:15 AM ET, which comes ahead of the nonfarm payroll report Friday.

 

Market Closing Prices Yesterday

·     The S&P 500 Index jumped 56.08 points, or 1.23%, to 4,631.60

·     The Dow Jones Industrial Average rose 338.30 points, or 0.97%, to 35,294.19

·     The Nasdaq Composite surged 264.73 points, or 1.84%, to 14,619.64

·     The Russell 2000 Index advanced 55.04 points, or 2.65% to 2,133.10

 

Economic Calendar for Today

·     7:00 AM ET         MBA Mortgage Applications Data

·     8:15 AM ET         ADP Employment Index for March…est. 450K

·     8:30 AM ET         Gross Domestic Product (GDP), Q4-Final…est. +7.1%

·     8:30 AM ET         GDP Consumer Spending, Q4-F… (prior 3.1%)

·     8:30 AM ET         GDP Price Deflator, Q4-F…est. +7.2%

·     8:30 AM ET         PCE Prices, Q4-F… (prior +6.3%)

·     8:30 AM ET         Core PCE Prices, Q4-F…est. +5.0%

·     10:30 AM ET       Weekly DOE Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: AXLA, CNM, FIVE, MSM, PAYX, PTE, UNF

·     Earnings After the Close: AFIB, AGRX, FC, IZEA, KMPH, MSGM, PATH, PHR, RKDA, SMTI

 

Other Key Events:

·     Barclay’s Crypto and Blockchain Summit 2022 (virtual), 3/29-3/30

·     Shoptalk 2022, 3/27-3/30, in Las Vegas

·     Truist Gaming Bus Tour, 3/28-3/30

·     China NBS Non-Manufacturing Index for March

·     China NBS Manufacturing PMI for March

 

 

Macro	Up/Down	Last
Nymex	1.81	106.05
Brent	1.72	111.95
Gold	7.00	1,925.00
EUR/USD	0.0041	1.1126
JPY/USD	-0.99	121.85
10-Year Note	+0.011	2.411%

 

 

World News

·     The Bank of Japan (BoJ) announced steps to increase bond purchases as curve seeing strong upward pressure, increased amount of 3-5Y JGB purchases by 150b yen, increased amount of 5-10Y JGB purchases by 300b yen, announced an emergency bond buying op & offers to buy 100b yen of 10-25Y JGBs, offered to buy 500b yen of 5-10Y JGBS/ & 50b yen of >25Y JGBS

·     Global oil prices jumped higher Wednesday, pulling U.S. crude back towards the $110 per barrel Mark, as traders reacted to data showing a decline in domestic crude stocks and reports of possible sanctions on Russian energy exports. The American Petroleum Institute said late Tuesday that U.S. crude stocks fell by a bigger-than-expected 3 million barrels last week,

 

Sector News Breakdown

Consumer

·     Chewy.com (CHWY) Q4 sales $2.39B vs est. $2.42B with a quarterly loss of ($63.8M), net margin of (2.7%), declined 370 bps y/y, and adjusted EBITDA of ($28.1M), a decline of $88.9M y/y

·     Cal-Maine Foods (CALM) 3Q EPS $0.81 vs est. $0.83 on revs $477.5Mm vs est. $468.8Mm; net average selling price for all eggs increased 29.4% to $1.612 per dozen compared with $1.246 per dozen in the prior-year period; also delivered growth in shell egg volumes

·     Lululemon (LULU) Q4 EPS $3.37 vs. est. $3.28; Q4 revs rose 23% to $2.13B, in-line with ests; Q4 comp sales rose 22%; sees FY net revs $7.49B-$7.62B above est. $7.21B; sees Q1 revs $1.53B-$1.55B vs. est. $1.4B; Q4 margins 58.1% vs. 58.6% y/y; also announced a $1B share buyback plan

·     MillerKnoll, Inc. (MLKN) 3Q adj EPS $0.28 vs est. $0.27 on sales $1.0B vs est. $1.03B; sees 4Q sales $1.075-1.115B vs est. $1.033B and EPS $0.46-0.52 vs est. $0.50

·     PVH Corp. (PVH) 4Q adj EPS $2.84 vs est. $2.00 on revs $2.43B vs est. $2.375B, gross margin 58.3% vs est. 57.1%; guides 1Q EPS $1.90-1.95 ex items vs est. $2.09 with revs +4% constant currency vs est. +3.1%; sees FY revs +6-7 constant currency vs est. +4.4%

·     Rent-A-Center (RCII) sees FY22 EPS $4.50-$5.00 vs. est. $4.69; sees FY22 revenue $4.45B- $4.6B, vs. consensus $4.51B

·     RH Corp. (RH) announces intention to execute a 3-for-1 stock split; Q4 revs $902.7M vs. est. $933M; guides year revs 5%-7% and guides QA1 revs up 7%-8%; announces Chairman & CEP Gary Friedman plans to exercise expiring IPO stock options and sell a portion of the shares to fund the exercise and satisfy resulting tax obligations

·     Sportsman Warehouse (SPWH) 4Q adj EPS $0.49 vs est. $0.46 on revs $416.3Mm vs est. $407Mm; guides 1Q sales $300-310Mm vs est. $305.5Mm and adj EPS ($0.01)-$0.01 vs est. ($0.02);

 

Energy, Industrials and Materials

·     The American Petroleum Institute (API) weekly crude inventories fell -3.0M barrels while crude inventories at Cushing fell -1.1M barrels; gasoline inventories fell -1.375M barrels and distillate inventories fell -200K barrels

·     Crane (CR) announced that its Board of Directors has unanimously approved a plan to pursue a separation into two independent, publicly-traded companies to optimize investment and capital allocation, accelerate growth, and unlock shareholder value

·     Hess Midstream LP (HESM) announces secondary public offering of Class A shares

·     S&P SmallCap 600 constituent Matador Resources Co. (MTDR) will replace Camden Property Trust in the S&P MidCap 400 effective prior to the opening of trading on Monday, April 4

·     Norfolk Southern (NSC) announces new $10 billion stock repurchase program

·     Northwest Natural Gas (NWN) 2.5M share offering priced at $50.00

 

Financials

·     UBS AG (UBS) said that it would launch a new share-buyback program of up to $6 billion; said the repurchase program would start on Thursday and last two years

·     Citi (C) has reached an agreement with Axis Bank for the sale of Citi’s consumer businesses in India for $1.6B following a competitive auction process

·     S&P MidCap 400 constituent Camden Property Trust (CPT) will replace People’s United Financial Inc. (PBCT) in the S&P 500 effective prior to the opening of trading on Monday, April 4

·     UDR (UDR) announces offering of 7M shares of common stock

 

Healthcare

·     BioNTech (BNTX) Q4 and FY’21 revenues of EU5.5B and EU19B; expects to authorize share repurchase program of up to $1.5B and will propose a special cash dividend of €2/share; reiterates FY’22 vaccine revenue guidance of EU13B to EU17B

·     Vir Biotechnology, Inc. (VIR) will replace Matador Resources in the S&P SmallCap 600 effective prior to the opening of trading on Monday, April 4

·     IGM Biosciences (IGMS) prices 8.695M share offering at $23.00 per share

·     Adagio Therapeutics (ADGI) announces ADG20 is the first monoclonal antibody to meet primary endpoints with statistical significance across pre- and post-exposure prophylaxis and treatment for covid-19 and plans to seek U.S EUA.

·     Cue Health (HLTH) 4Q EPS $0.22 vs est. $0.11 on revs $192.5Mm vs est. $185.3Mm; guides 1Q revs $170-180Mm vs est. $145.7Mm

·     Geron Corp (GERN) announces planned stock and pre-funded warrants offering; deal size not disclosed

·     Teva (TEVA) issues voluntary nationwide recall of one lot of idarubicin hydrochloride injection USP 5 mg/5 ml due to the presence of particulate matter; recall initiated based on an internal inspection that found particulate matter in one vial of product identified as silica and iron oxide

 

Technology, Media & Telecom

·     Micron (MU) shares rise 3%; 2Q adj EPS $2.14 vs est. $1.97 on revs $7.79B vs est. $7.5B; guides 3Q revs $8.5-8.9B vs est. $8.06B and adj EPS $2.36+-2.56 vs est. $2.21; says global chip supply is experiencing pressure due to impact of Russia-Ukraine war; sees pc unit shipments flat this year from 2021; sees strong growth in data center SSDS continuing

·     China’s tax regulator says will crack down on tax evasion in its booming livestreaming industry, and will start requiring online platforms to report live streamers’ identities, revenue and profit every six months – Reuters (watch KWEB, MOMO, IQ, BILI, TME, HUYA)

·     Concentrix Corporation (CNXC) 1Q adj EPS $2.85 vs est. $2.71 on revs $1.536B vs est. $1.534B; guides 2Q revs $1.57-1.6B vs est. $1.6B and FY revs $6.45-6.6B vs est. $6.52B

·     Leafly Holdings, Inc., (LFLY) 4Q adj EBITDA ($4.1Mm) vs est. ($9.8Mm) on revs $12.1Mm vs est. $11.8Mm; sees 1Q revs about $11.3Mm vs est. $14.25Mm and FY revs $53-58Mm vs est. $65.4Mm

·     Pearson (PSO) shares slide -10% after U.S. investment firm Apollo drops its bid for the company after the two sides failed to agree on price; rejects third takeover proposal from Apollo for 884.2p per share, saying it undervalued Co – Reuters

·     Progress Software (PRGS) Q1 adj EPS $0.97 vs. est. $0.85; Q1 revs rose 12% y/y to $147.5M vs. est. $139M; guides Q2 EPS 94c-96c vs. est. 88c and year EPS raised to $4.01-$4.09 from prior $3.95-$4.05; sees year revs $609M-$617M vs. prior $605M-$615M

·     Verint (VRNT) 4Q adj EPS $0.57 vs est. $0.56 on revs $236Mm vs est. $231.6Mm; sees FY revs $940Mm +/-2% vs est. $937Mm and EPS about $2.50 at mid-point vs est. $2.49