Early Look

Friday, October 14, 2022

Futures	Up/Down	%	Last
Dow	165.00	0.55%	30,256
S&P 500	16.25	0.44%	3,698
Nasdaq	31.50	0.28%	11,114

 

 

U.S. equity futures are higher following some key earnings reports from Wall Street’s biggest banks, while over in Europe bonds advanced as UK gilts tumbled on reports the controversial tax-cutting plans would be revised and that the finance minister was “sacked”. US stocks are coming off one of their biggest upside daily turnarounds in history as the Dow closed 2.8% higher after 1,300-point intraday turnaround. Today was the 5th-largest intraday reversal from a low in the history of the S&P 500 (1962, 1987, 2008, 2022 were bigger) and it was the 4th-largest in the history of the Nasdaq Composite (2008 twice and 2001 were the other ones). The moves came despite another disappointing inflation report as core CPI data rose to a fresh all-time 40-year high. Markets had fallen 6-straught days into the report and tumbled 2% following, leading to a large “short-squeeze” on oversold conditions. The question now is, can it hold? In Asian markets, The Nikkei Index surged 853 points or 3.25% to 27,090, the Shanghai Index jumped 55 points to 3,071, and the Hang Seng Index climbed 198 points to 16,587. In Europe, the German DAX is up 150 points to above 12,500, while the FTSE 100 rises 1.25% to 6,935.

Market Closing Prices Yesterday

·     The S&P 500 Index surged 92.88 points, or 2.60%, to 3,669.91

·     The Dow Jones Industrial Average jumped 827.87 points, or 2.83%, to 30,038.72

·     The Nasdaq Composite spiked 232.05 points, or 2.23%, to 10,649.15

·     The Russell 2000 Index advanced 40.65 points, or 2.41% to 1,728.41

 

Economic Calendar for Today

·     8:30 AM ET          Retail Sales M/M for September…est. +0.2%

·     8:30 AM ET          Retail Sales – Less Autos M/M for September…est. (-0.1%)

·     8:30 AM ET          Import Prices M/M for September…est. +1.0%

·     8:30 AM ET          Export Prices M/M for September…est. +4/1%

·     10:00 AM ET        University of Michigan Sentiment, Oct-P…est. 59.0

·     10:00 AM ET        UoM Inflation Expectations (1-yr), Oct-P…prior 4.7%

·     10:00 AM ET        Business inventories M/M for Aug…est. +0.9%

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

 

Earnings Calendar:

·     Earnings Before the Open: C FRC JPM MS PNC UNH USB WFC

 

 

Macro	Up/Down	Last
Nymex	-1.11	88.00
Brent	-0.78	93.79
Gold	-15.40	1,661.70
EUR/USD	-0.0040	0.9734
JPY/USD	0.43	147.65
10-Year Note	-0.059	3.895%

 

 

World News

·     China September annual CPI +2.8% vs. est. +2.8% (prior +2.5%) and monthly CPI +0.3% vs. est. +0.4% (prior -0.1%); China annual PPI +0.9% vs. est. +1.0% (prior +2.3%); food prices rose by 8.8% y/y, which is 2.7 PPS higher than in August, pushing CPI up by 1.56 PPS

·     Kwasi Kwarteng is being sacked as UK Chancellor and Finance Minister as Liz Truss prepares to reverse the mini-Budget according to reports; UK Corporation tax will rise to 25% from 19% this April according to the Telegraph

 

Sector News Breakdown

Consumer

·     Beyond Meat (BYND) shares slide -10%; cuts FY22 revenue view to $400M-$425M from $470M-$520M (est. $494.55M) and guides Q3 revenue $82M below consensus $117.11M; sees $27M in cash operating expense savings in next 12 months; to reduce workforce by approximately 200 employees

·     Azek (AZEK) downgraded to Neutral from Outperform at Credit Suisse

·     Fortune Brands (FBHS) downgraded to Neutral from Outperform at Credit Suisse

·     Jeld-Wen (JELD) downgraded to Neutral from Outperform at Credit Suisse

·     Stanley Black & Decker (SWK) downgraded to Neutral from Outperform at Credit Suisse

·     Trex Company (TREX) downgraded to Underperform from Neutral at Credit Suisse

·     Manheim Used Vehicle Value Index was down 0.1% YoY in September (Final), and declined -3.0% on a MoM basis; NADA Used Vehicle Price Index was up 12.9% YoY in August, but declined -3.2% on a mom basis

 

Energy, Industrials and Materials

·     Avangrid (AGR) downgraded to Neutral from Underperform following a near-term shift in focus to its networks business. Avangrid expects its networks business to provide 80% or more of its 2025 EPS

·     Delta Air Lines (DAL) upgraded to Outperform from Market Perform at Cowen

·     Northrop Grumman (NOC) downgraded to Neutral from Overweight at JPMorgan

 

Financials

·     JPMorgan (JPM) Q3 adj EPS $3.12 vs. est. $2.88; Q3 revs $33.49B vs. est. $32.35B; Provision for credit losses $1.54 billion, estimate $1.22 billion; return on equity 15%, estimate 13.5%; return on tangible common equity 18%, estimate 16.5%; Q3 investment banking rev. $1.71b, est. $1.59b

·     Wells Fargo (WFC) Q3 revs $19.51B vs. est. $18.81B; Net interest margin 2.83%, estimate 2.69%; Net interest income $12.10 billion, estimate $11.64 billion; ROA 0.74%; ROE 8%

·     U.S. Bancorp (USB) Q3 adj EPS $1.18 vs. est. $1.17; Q3 revs $6.3B vs. est. $6.24B; Provision for credit losses $362 million, estimate $350.8 million; return on average assets 1.22% vs. 1.45% y/y, estimate 1.21%; return on average equity 15.8% vs. 15.9% y/y, estimate 15.9%

·     PNC Bank (PNC) Q3 adj EPS $3.78 vs. $3.70 est.; loans $315.40 billion, +1.5% q/q, estimate $313.88 billion; deposits at end-period $438.2 billion, Provision for credit losses $241 million vs. recovery $203 million y/y; Net interest margin 2.82% vs. 2.27% y/y

·     Nasdaq (NDAQ) downgraded to Underperform from Buy at Bank America

·     Figs (FIGS) downgraded to Equal Weight from Overweight at Barclays

·     The Federal Trade Commission, FTC, has open investigations into many major industries and, at the same time, its senior officials disclosed more trades of socks, bonds, and funds than officials at any other major agency https://on.wsj.com/3Tj5UeL

 

Healthcare

·     United Healthcare (UNH) Q3 adj EPS $5.79 tops consensus $5.42; Q3 revs $80.89B vs. est. $80.5B; said the total people served domestically by UnitedHealthcare has grown by approximately 850,000 in 2022, including 185,000 in Q3; Medical care ratio 81.6% vs. 83% y/y, estimate 82.5%; sees FY adj EPS $21.85-$22.05, up from prior $21.40-$21.90, estimate $21.88

·     BeiGene Ltd. (BGNE) said that the Committee for Medicinal Products for Human Use of the European Medicines Agency has issued a positive opinion recommending approval of Brukinsa for the treatment of adult patients with chronic lymphocytic leukemia

·     Reata pharmaceuticals (RETA) announces that the FDA does not plan to hold an advisory committee meeting to discuss the NDA for omaveloxolone for Friedreich’s ataxia

·     Travere Therapeutics, Inc. (TVTX) said expects the previously assigned Prescription Drug User Fee Act (PDUFA) Target action date of November 17, 2022, for its New Drug Application (NDA) under Subpart H for accelerated approval of sparsentan for the treatment of IgA nephropathy to be extended by three months

 

Technology, Media & Telecom

·     Nutanix (NTNX) is exploring a sale after receiving takeover interest, the WSJ reported, citing people familiar with the matter. The company is expected to target private-equity and industry players, sources told the Journal. https://on.wsj.com/3CsNS2O

·     Britain’s competition regulator said on Friday Motorola Solutions’ (MSI) monopoly for its emergency mobile radio communications services in the country led to high charges, boosting its profits, a claim the U.S-based company rejected.