Early Look

Thursday, May 12, 2022

Futures	Up/Down	%	Last
Dow	-149.00	0.44%	31,603
S&P 500	-22.25	0.58%	3,907
Nasdaq	-117.50	0.98%	11,852

 

 

Unrelenting selling pressure continues overnight, with U.S. futures extending declines which has left the Nasdaq Composite and Russell 2000 down roughly 30% from all-time highs and the S&P 500 down 18%, hovering around bear market territory. Statistically, this is the 2nd worst start to a year for the S&P 500 in history: -17.4% in the first 90 trading days (only one worse in 1932 down -26.1%) amid an obliteration of technology and comm services that paced market gains for the last 2-years, as Apple (AAPL) closes -5.2% Thursday to the lowest since Oct. 15. The Dow falls for fifth straight session, posting its longest losing streak since mid-February. The slide on Wednesday came after another “hot” inflation reading as Consumer price (CPI) inflation surged a higher-than-expected 8.3% in April, holding near 40-year highs of 8.5% in March, as the Federal Reserve scrambles to cool the economy. Next up today, April producer price index (PPI) data with estimates to show another spike in prices (see below). Dow component Disney (DIS) slides below the $100 level after earnings, tempered outlook.

 

In Asian markets, The Nikkei Index dropped -464 points or 1.77% to 25,748, the Shanghai Index slipped a few points to 3,054, and the Hang Seng Index declines -444 points to 19,380. In Europe, the picture looks just as bleak as the German DAX falls -320 points or 2.3% to 13,500, while the FTSE 100 is down over -2.5% or 185 points to 7,160. Crypto assets are again in freefall, with Bitcoin (BTC) down -3.5% to $27,355 (fell as low as $25,402), while Ethereum (ETH) falls over 8% to 1,865 and Litecoin (LTC) down -11% to $58. Tether, the third largest cryptocurrency after Bitcoin and Ether, traded as low as 95 cents on the dollar early Thursday, settling around 98 cents, according to data. https://bit.ly/3NaJ1ao . The U.S. dollar jumps +0.5% above 104.40 as the euro slides -0.7%. A further rotation into safe-haven bonds has pushed the 10-year yield lower by 8 bps to 2.82%, roughly 40 bps off this week highs above 3.2% as investors flee to safety; the 30-yr is down 7 bps to 2.973%.

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -65.87 points, or 1.65%, to 3,935.18

·     The Dow Jones Industrial Average fell -326.63 points, or 1.02%, to 31,834.11

·     The Nasdaq Composite tumbled -373.44 points, or 3.18%, to 11,364.24

·     The Russell 2000 Index declined -43.65 points, or 2.48% to 1,718.14

 

Economic Calendar for Today

·     8:30 AM ET          Weekly Jobless Claims…est. 195K

·     8:30 AM EST        Continuing Claims…est. 1.28M

·     8:30 AM ET          Producer Price Index (PPI) M/M for April…est. +0.5%

·     8:30 AM ET          Producer Price Index (PPI) Y/Y for April…est. +10.7%

·     8:30 AM ET          PPI Ex: Food & Energy M/M for April…est. +0.6%

·     8:30 AM ET          PPI Ex: Food & Energy Y/Y for April…est. +8.9%

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

·     1:00 PM ET           U.S. Treasury to sell $22B in 30-year notes

 

Earnings Calendar:

·     Earnings Before the Open: APYX, BKKT, BTTR, CASI, DTC, EMAN, KELYA, LQDA, ML, OB, PCT, SIX, SOHO, SQSP, STIM, TAST, TPR, UPH, UTZ, VERU, WE, WVE, XFOR, ZVIA

·     Earnings After the Close: AFRM, APTX, BIOL, CDXC, CRMD, CURI, DUOL, EDR, EXFY, HHS, HLI, INTZ, KINS, LAW, LHDX, LZ, MLNK, MOTS, MRNS, MSI, NEWR, NN, NVTS, PAYO, PDFS, POSH, PX, RYAN, TOST, UP, VERO, VIVE, VZIO, XPOF, ZY

 

Other Key Events:

·     BMO Capital Real Estate Summit, 5/11-5/12 in NY

·     Goldman Sachs Industrials & Materials Conference, 5/10-5/12, in NY

·     UBS Pan European Small & Mid-Cap Conference, 5/10-5/12, in London

 

 

Macro	Up/Down	Last
Nymex	-1.75	103.96
Brent	-1.65	105.87
Gold	-5.20	1,848.50
EUR/USD	-0.0077	1.0436
JPY/USD	-1.24	128.73
10-Year Note	-0.081	2.832%

 

 

World News

·     Fed’s Bullard says 50bp interest rate rises at coming meetings a good benchmark for now ‘; inflation is more persistent than many have thought, 50bps hikes at coming meetings a good benchmark for now, the goal should be about 3.5% on fed funds rate by end of year

·     UK PM Johnson pledges military support, signs a mutual defense pact with Sweden and Finland. Johnson said that the security agreements would “fortify Europe’s defenses for generations to come” and denied that they were a “stop-gap” until Finland and Sweden were covered by Nato’s Article 5

 

Sector News Breakdown

Consumer

·     Beyond Meat (BYND) Q1 EPS loss (-$1.58) vs. est. loss (-$1.01); Q1 revs rose 1.2% to $109.5M vs. est. $112.3M; sees FY revs $560M-$620M; says operating environment continues to be affected by near-term uncertainty related to macroeconomic issues

·     Coupang (CPNG) Q1 EPS loss (-$0.12) vs. est. loss (-$0.17); Q1 revs $5.1B vs. est. $5.25B; Net loss improved $196 million QoQ to $209 million, while adjusted EBITDA loss improved $194 million QoQ to $91 million

·     Dutch Bros (BROS) Q1 adj EPS loss (-$0.02) vs. est. $0.01; Q1 revs rose 54% to $152.2M, above consensus $145.63M; Q1 comp store sales rose 6%; shop openings are now expected to increase to at least 130, of which at least 110 shops will be company-operated; sees year revs $700M-$715M vs. est. $717.22M

·     Ford (F) downgraded to Underweight from Overweight at Wells Fargo and cut-price target to $12 from $24 saying battery electric vehicle costs have “massively risen” and raw material supply is tight, yet tough U.S. regulations likely require more BEV sales

·     Fossil Inc. (FOSL) 1Q adj EPS ($0.37), sales $375.9Mm; says now sees FY worldwide net sales growth +0-3% vs prior +2-6%

·     Rivian (RIVN) 1Q EPS ($1.77) vs est. ($1.44) on revs $95Mm vs est. $130.5Mm; delivered 1,227 vehicles in 1Q; says about 5,000 vehicles produced since start of production; more than 90,000 R1 net preorders in US and Canada; reaffirms annual guidance and says believes supply chain constraints will continue to be the limiting factor in production

·     Six Flags (SIX) Q1 EPS loss (-$0.76) vs. est. loss ($1.04); Q1 revs $138M vs. est. $122.26M; The $19.30 increase in guest spending per capita compared to first quarter 2021 was driven by a $10.33 increase in Admissions spending per capita and a $8.97 increase in In-park spending per capita

·     Traeger Inc. (COOK) Q1 adj EPS $0.17 vs. est. $0.09; Q1 revs fell -5% to $223.7M vs. est. $210.1M; sees year revs $800M-$850M vs. est. $823.9M

·     Vita Coco Company (COCO) 1Q EPS $0.04 vs est. $0.02 on revs $96Mm vs est. $95Mm; continues to expect FY net sales $440-455Mm vs est. $447.5Mm

 

Financials

·     Marqueta (MQ) Q1 EPS loss (-$0.11) vs. est. loss (-$0.08); Q1 revs rose 54% Y/Y to $166.1M vs. est. $161.2M; qtrly total processing volume increased by 53% year-over-year, rising to $37 bln from $24 bln in q1 of 2021; sees Q2 revenue growth 46%-48% vs. est. $167.6M

·     ZipRecruiter (ZIP) Q1 EPS $0.07 vs. est. 0c; Q1 revs $227M vs. est. $220.95M; sees Q2 revs $231M-$237M and raises year rev view to $908M-$922M vs. est. $892.9M

·     Victory Capital Holdings, Inc. (VCTR) reported assets under management (AUM) of $166.0 billion as of April 30, 2022.

 

Healthcare

·     OnTrack (OTRK) 1Q ($0.67) vs est. ($0.72) on revs $5.3Mm vs est. $4.76Mm; guides FY revs $25-30Mm vs est. $37.5Mm

·     STERIS Plc (STE) 4Q adj EPS $2.04 vs est. $2.02 on revs $1.2B vs est. $1.2B; guides FY adj EPS $8.55-8.75 vs est. $8.19 and revs about +12% reported vs est. +8% (sees FY constant currency organic revs about +11%)

·     Walgreens Boots Alliance (WBA) sells 6M shares of AmerisourceBergen (ABC) for $900M

 

Internet, Media & Telecom

·     Disney (DIS) 2Q adj EPS $1.08 vs est. $1.19 on revs $19.25B vs est. $20.03B; qtr-end Disney+ paid subs $137.7Mm (est. 134.4Mm), qtr-end ESPN+ paid subs 22.3Mm

·     Bumble (BMBL) 1Q EPS ($0.13) vs est. ($0.03) on revs $211Mm vs est. $208.3Mm; avg revs per paying user $22.76 vs $19.99; total paying users increased 3.0Mm; guides 2Q revs $218-221Mm vs est. $224.2Mm and adj EBITDA $51-53Mm vs est. $59.2Mm; sees FY revs $934-944Mm vs est. $939.4Mm

·     Sierra Wireless (SWIR) 1Q adj EPS $0.23 vs est. $0.02 on revs $173Mm vs est. $143Mm; sees 2Q $160-175Mm vs est. $144.6Mm

·     1stdibs.com (DIBS) 1Q EPS ($0.17) vs est. ($0.18) on revs $26.6Mm vs est. $26.7Mm, GMV 117Mm +3% yr/yr; sees 2Q revs $24.4-25.5Mm vs est. $27.6Mm

 

Technology

·     Apple (AAPL) supplier Foxconn warns of slowing demand and supply chain challenges, partly due to COVID lockdowns in China; warned that current-quarter revenue for its electronics business including smartphones could slip as growth slowed amid rising inflation, cooling demand and escalating supply chain issues

·     Amdocs (DOX) 2Q adj EPS $1.54 vs est. $1.25 on revs $1.15B vs est. $1.13B; guides 3Q revs about $1.0B vs est. $1.14B; sees 3Q adj EPS $1.23-1.29 vs est. $1.37

·     AppLovin (APP) Q1 EPS loss (-$0.31) vs. est. loss (-$0.08); Q1 revs $625.4M vs. est. $815M; guides year revs $3.14B-$3.44B, below prior $3.55B-$3.85B and vs. est. $3.69B; says increasing FY adjusted ebitda target to a mid-point of $1.2 billion

·     ForgeRock (FORG) 1Q adj EPS ($0.12) vs est. ($0.16) on revs $48.1Mm vs est. $46.6Mm; sees 2Q adj EPS ($0.23)-($0.21) vs est. ($0.12) and revs $46.5-47.5Mm vs est. $48.7Mm; sees FY adj EPS ($0.45)-($0.41) vs est. ($0.36) and revs $212-215Mm vs est. $213.9Mm

·     Sonos (SONO) 2Q adj EPS $0.26 vs est. $0.07, adj EBITDA $46.9Mm vs est. $35.1Mm on revs $399.8Mm vs est. $350.3Mm; guides FY revs $1.95-2.0B vs est.$1.97B, gross margin 45.5-46% and adj EBITDA $290-310Mm vs est. $307.7Mm

·     International Business Machines (IBM) signed a strategic collaboration agreement with Amazon Web Services (AWS) for offering a broad array of its software catalog as Software-as-a-Service on AWS.