Preliminary Q1 estimates showed a concerning decline in US productivity and an even more dramatic increase in unit labor costs which quickly sucked all the post FOMC wind out of the equity market sails. US stock markets plunged dramatically on Thursday and the move came alongside significant selling in Treasury bonds and across nearly all asset classes. The velocity and breadth of the move had many characterizing the trading as “liquidation” with perhaps signs of capitulation. Decliners topped advancers by a 10:1 margin and the VIX moved back above 35. Friday morning’s April employment report didn’t offer much in the way of relief. Nonfarm payrolls data topped forecasts once again. Wages came in a smidge below forecasts, but March data was revised higher and the participation rate unexpectedly dropped. In aggregate, the data did little to change the narrative that the Fed remains up against it to get inflation back under control, and had some asking the question why Chairman Powell would take any potential action off the table with the labor market still exceedingly tight. Stocks and bonds continued to move down in tandem and the post-Fed yield curve steepening intensified. Central banks in the UK, Poland, Czech Republic, and even India followed on the heels of the Fed decision with rate hikes of their own in the latter half of the week. The euro firmed up following ECB commentary that suggested a rate hike is most definitely in the offing and officials now want to see the main rate in positive territory by the end of the year. Rising oil price added to the general consternation with WTI finishing the week near $110 after OPEC+ producers stayed the course on their production agreement. For the week, the S&P lost 0.2%, the DJIA shed 0.2%, and the Nasdaq slumped 1.5%.
In corporate news this week, Starbucks missed profit expectations as inflation and spending on its workforce weighed on its cafe margins, and the coffee giant withdrew guidance amid COVID-19 uncertainty in its China markets. Lyft shares dropped almost 30% after its plans to spend more on drivers weighed on its adjusted EBITDA outlook, spooking investors. A day later, Uber announced its revenue more than doubled and that it expects to generate ‘meaningful positive free cash flows’ in FY22.
AMD posted big beats on its top and bottom line and raised its outlook amid better organic growth along with the integration of Xilinx. Shopify shares were hit after it notched a Q1 earnings miss and saw its slowest quarterly revenue and GMV growth on record. Facebook reportedly has put a pause on new hiring through the rest of 2022 and is said to have also cut hiring targets. On the M&A front, Intercontinental Exchange announced it plans to acquire Black Knight in a $13.1B cash-and-stock deal, as it seeks to increase its investment in the US mortgage market.
SUN 5/1
(UR) Ukraine Presidential Advisor Arestovich: During last four days, the movement of Russian troops from the territory of Russia to the territory of Ukraine is not visible, especially in the direction of the main Donbas attack - to Izyum
(RU) Russia said to have clarified the rules on how European countries are required to pay for natural gas supplies in rubles (RUB), easing the terms slightly - press
(CN) China regulators at an emergency meeting with bank representatives on Apr 22nd reportedly discussed ways to protect China's overseas assets from possible US sanctions similar to those imposed on Russia - FT
(US) Reportedly US has held high-level talks with UK for the first time to explore conflict contingency plans over China threat to Taiwan - press
New Omicron sub-variants (BA.4 and BA.5) can escape vaccine, natural immunity; Have potential to trigger new wave - Times Now
(US) Congressman Adam Kinzinger (R-IL) introduces a joint resolution to authorize the use of US Armed Forces to defend the territorial integrity of Ukraine if Russia uses chemical, biological, and/or nuclear weapons
(DE) German Economy Ministry: Germany could end its dependence on Russian oil by the end of summer 2022
(RU) Russia Foreign Min Lavrov: Russia has never interrupted efforts towards an accord that will avoid a nuclear war; Russia is not seeking to end Ukraine war by May 9th - Italian tv interview
(DE) Reportedly Austria, Hungary and Slovakia have withdrawn their objection to EU embargo on Russian oil after lengthy discussions; the open question is the transition period - German press
(HK) Macau Apr Casino Rev (MOP) 2.68B v 3.76B prior; Y/Y -68.1% v -55.8% prior (-66.5%e, 18 month low)
MON 5/2
*(IT) ITALY APR MANUFACTURING PMI: 54.5 V 55.0E (22nd month of expansion but lowest reading since Dec 2020)
(EU) EU reportedly could offer Hungary and Slovakia exemptions from Russian oil embargo which is under preparation; Likely to be phased in anyway and only taking full effect from early 2023 - financial press
VOW3.DE CEO: sees significant easing in supply-chain bottlenecks and situation with semiconductors in H2 2022; Will ramp up production afterwards
GAZP.RU Reportedly does not book gas transit via Yamal-Europe pipeline for Q3 2022 - Russian press
SAVE Board of Directors reiterates support for merger with Frontier Airlines; unanimously determining JetBlue offer does not constitute a superior proposal
ON Reports Q1 $1.22 v $1.05e, Rev $1.95B v $1.91Be; Guides Q2 strong
*(US) APR FINAL MARKIT MANUFACTURING PMI: 59.2 V 59.7E
*(US) APR ISM MANUFACTURING: 55.4 V 57.6E; PRICES PAID: 84.6 V 87.4E
(DE) Germany Chancellor Scholz: Out aim is for Russia to end war and withdraw its troops from Ukrainian territory; Will Never accept annexation of Crimea
(US) 10-year Treasury yield hits 3.0% (highest since Dec 2018)
(US) Treasury quarterly financing estimates: to pay down $26B in Apr-Jun quarter v $50Be (prior estimate to borrow $66B)
(UR) Ukraine Military Intelligence head Budanov: Russia plans to announce mobilization on May 9th
CHGG Reports Q1 $0.32 v $0.25e, Rev $202.2M v $203Me; Cuts FY Rev and adj EBITDA outlook; Students shifting their priorities towards earning over learning
NXPI Reports Q1 $2.48 v $3.19e (unclear if comp), Rev $3.14B v $3.10Be; Guides Q2 strong
EVER Reports Q1 -$0.19 v -$0.26e, Rev $110.7M v $102Me; Consumer have intensified in recent weeks
DVN Reports Q1 $1.88 v $1.74e, Rev $3.81B v $4.02Be; Affirms Capex plan "we are unwavering in our commitment to capital discipline"
NTR.CA Reports Q1 $2.70 v $2.59e, Rev $7.66B v $7.77Be
2282.HK Reports Q1 (HK$) adj EBITDA 45.7M v 84.4M y/y; Rev 2.1B v 2.3B y/y
TUES 5/3
BP.UK Reports Q1 Net -$20.4B v +$4.68B, Rev $51.2B v $53.1Be; $2.5B buyback announced; Confirms $29.3B charges in Q1 including Russia exit
(RU) Traders circulating unverified rumours press chatter that a number of former generals and FSB (former KGB) officials are preparing to oust Russia Pres Putin and end the war in Ukraine
*(DE) GERMANY APR NET UNEMPLOYMENT CHANGE: -13.0K V -15.0KE; UNEMPLOYMENT CLAIMS RATE: 5.0% V 5.0%E
*(EU) EURO ZONE MAR UNEMPLOYMENT RATE: 6.8% V 6.8%E
(RU) Russia Pres Putin signs decree on retaliatory economic measures in response to unfriendly actions of some foreign states which prohibits making transactions and fulfilling obligations to foreign individuals and legal entities that have fallen under Russian retaliatory sanctions - Russian press
HLT Reports Q1 $0.71 v $0.59e, Rev $1.72B v $1.59Be; Reinstates dividend at $0.15/shr
DD Reports Q1 $0.82 v $0.67e, Rev $3.27B v $3.22Be
LDOS Reports Q1 $1.58 v $1.49e, Rev $3.49B v $3.39Be; Book-to-bill 1.6x
J Reports Q2 $1.72 v $1.70e, Rev $3.83B v $3.77Be; Seeing accelerating demand across all end markets
PFE Reports Q1 $1.62 v $1.66e, Rev $25.7B v $26.5Be
BIIB Reports Q1 $3.62* v $4.41e, Rev $2.53B v $2.50Be; announces CEO search
EXPD Reports Q1 $2.05 v $1.67 y/y, Rev $4.66B v $3.2B y/y; Raises Semiannual dividend 15.5% to $0.67 from $0.58 (indicated yield 1.34%)
(US) Mar JOLTS Job Openings: 11.55M v 11.20Me (record high)
(NZ) Fonterra Global Dairy Trade Auction Dairy Trade price index: -8.5% v -3.6% prior
(US) Dept of Interior cuts water delivery to California in order to protect Lake Powell - press
ABNB Reports Q1 -$0.03 v -$0.28e, Rev $1.51B v $1.45Be; We are seeing substantial demand for summer travel months in EMEA and North America
SBUX Reports Q2 $0.59 v $0.60e, Rev $7.64B v $7.61Be
AMD Reports Q1 $1.13 v $0.91e, Rev $5.89B (incl Xilinx) v $5.00Be; Raises FY22 outlook citing higher AMD organic growth and the addition of Xilinx business
WEDS 5/4
(EU) EU Commission President Von der Leyen presents details on 6th sanction package against Russia; Proposes an 'orderly' ban Russian oil
*(IN) INDIA CENTRAL BANK (RBI) RAISES REPURCHASE RATE (INREPO) BY 40BPS TO 4.40%; EFFECTIVE IMMEDIATELY - (intra-policy move, not expected)
(RU) Russia Defense Min Shoigu: Russian forces will continue fulfilling all tasks set by Pres Putin; Will consider NATO transport in Ukraine delivering weapons as a target
(CN) Beijing to extend restrictions for covid beyond May day holiday - China State TV
(RU) Russia govt spokesperson Peskov: Russian oil embargo is double-edged sword for EU; Refutes speculation that Pres Putin will officially declare war to Ukraine or mobilization on Victory day, on May 9th; Zero chance of that
ABC Reports Q2 $3.22 v $2.99e, Rev $57.7B v $57.2Be
REGN Reports Q1 $11.49 v $9.37e, Rev $2.97B v $2.71Be
(EU) EU reportedly seeking ban on Russian oil shipping insurance by early June 2022; Russian oil santions are still being debated - press
EMR Reports Mar underlying orders +13% y/y (trailing 3 months) citing demand continued to be strong across both platforms
MAR Reports Q1 $1.25 v $0.94e, Rev $4.20B v $4.17Be; Resumes cash dividend at $0.30/shr (indicated yield 0.69%) (pre-COVID dividend was $0.48/shr); Expects to resume buybacks in 2022
ATI Reports Q1 $0.40 v $0.22e, Rev $834.1M v $751Me
WING Reports Q1 $0.34 v $0.36e, Rev $76.2M v $85.6Me; Seeing meaningful deflation in bone-in wings
(EU) EU reportedly plans Russian oil ban would be effective in 6 months with no gradual phase-out for both spot market and existing contracts; Oil ban would apply to Russian exports of oil worldwide - financial press
SATL Signs multiple launch agreement with SpaceX for its next 68 Sub-Meter high-resolution Earth Observation satellites; By 2025 will sample any point on earth up to 40x/day at sub-1 meter resolution
(US) Treasury quarterly refunding: To sell $45B 3-year notes, $36B 10-year notes, $22B 30-year bonds; More auction cuts may be needed
MAR Expect further meaningful RevPAR improvement through the remainder of the year which will be roughly flat to 2019 levels in US/Canada - conf call
(CN) Reportedly China Securities Regulator (CSRC) to actively support property companies bond financing; Studying expanding infrastructure REITs trial
*(US) APR ISM SERVICES INDEX: 57.1 V 58.5E
(US) April preliminary Class 8 truck orders -15.4K, -28% m/m, -55% y/y - FTRintel.com
AIR.FR Reports Q1 EPS €1.55 v €0.46 y/y, Adj EBIT €1.26B v €710Me, Rev €12.0B v €12.1Be
(US) Association of American Railroads weekly rail traffic report for week ending Apr 30th: 498K total units, -7.4% y/y
*(US) FOMC RAISES TARGET RANGE BY 50 BPS TO 0.75-1.00% (AS EXPECTED); EXPECTS 'ONGOING' INCREASES IN RATES WILL BE APPROPRIATE; BALANCE SHEET RUNOFF TO BEGIN JUNE 1ST
*(US) FED CHAIR POWELL: BROAD SENSE ON THE COMMITTEE THAT 50BPS HIKES ARE ON THE TABLE FOR THE NEXT COUPLE OF MEETINGS - POST RATE DECISION STATEMENT
(US) Fed Chair Powell: 75bps rate hike is not something we are actively considering; Expectations are that we'll start to see inflation flattening; Some evidence core PCE is peaking - post rate decision Q&A
FB Said to have paused hiring through the remainder of the year - press
BKI Intercontinental Exchange confirms has entered into definitive agreement to acquire Black Knight in $13.1B cash-and-stock deal valued at $85/shr
COST Reports Apr total SSS +8.7% (ex-gas and FX)
*(CN) CHINA APR CAIXIN PMI SERVICES: 36.2 V 40.0E (2ns straight contraction and lowest since Feb 2020)
THURS 5/5
ABI.BE Reports final Q1 adj $0.60 v $0.55 y/y, Rev $13.2B v $12.3B y/y
BMW.DE Reports Q1 Net €10.2B v €2.83B y/y, EBIT €3.39B v €3.03B y/y, Rev €31.1B** v €26.8B y/y; Notes situation in chip industry is not expected to ease until H2 2022 at the earliest
STLA.NL Reports Q1 Rev €41.5B v €37.0B y/y
SHEL.UK Reports Q1 EPS $1.20 v $1.09e, Adj CCS Net $5.03B v $4.35B y/y, Rev $84.2B v $55.7B y/y; Raises quarterly dividend 4% to $0.25/shr from $0.24/shr; Remaining $4.5B of share buybacks to be completed during Q2
*(CH) SWISS APR CPI M/M: 0.4% V 0.3%E; Y/Y: 2.5% V 2.6%E (3rd month above target)
(RU) On May 4th, Russian military rehearsed tactical strikes 'in the conditions of radiation and chemical contamination of the area' in Kaliningrad region near Baltics - press
*(NO) NORWAY CENTRAL BANK (NORGES) LEAVES DEPOSIT RATES UNCHANGED AT 0.75%; AS EXPECTED; Maintains forward guidance
(UR) Ukraine Presidential Advisor Arestovich: Western heavy weapons expected to come to Ukraine in commercial quantities by end-May, sufficient to be concentrated near occupied areas and change the war balance
(RU) Belarus President Lukashenko: Russian special military operation in Ukraine dragged on; Most likely, Putin does not want a global clash with NATO
CAH Reports Q3 $1.45 v $1.54e, Rev $44.8B v $43.0Be
CBRE Reports Q1 $1.39 v $1.10e, Rev $7.33B v $7.72Be
FAST Reports Apr net sales $570.8M +14.8% y/y
CCJ Reports Q1 C$0.04 v -C$0.07 y/y, Rev C$398M v C$290M y/y
*(UK) BANK OF ENGLAND (BOE) RAISES BANK RATE BY 25BPS TO 1.00%; AS EXPECTED
*(UK) BOE MAY MINUTES: VOTED 6-3 TO RAISE BANK RATE BY 25BPS (V 50BPS HIKE); Haskel, Mann and Saunders dissented and voted to hike by 50bps
OPEC+ JMMC recommends to stick to current gradual ~432Kbpd output increases policy for month of June - press (as expected)
(UK) BOE Gov Bailey: Global inflationary pressure intensified sharply since Ukraine war - post rate decision press conference
K Reports Q1 $1.10 v $0.91e, Rev $3.67B v $3.58Be
*(CZ) CZECH CENTRAL BANK (CNB) RAISES 2-WEEK REPURCHASE RATE BY 75BPS TO 5.75%; MORE-THAN-EXPECTED
*(US) INITIAL JOBLESS CLAIMS: 200K V 180KE; CONTINUING CLAIMS: 1.384M V 1.40ME
*(US) Q1 PRELIMINARY NONFARM PRODUCTIVITY: -7.5% V -5.3%E; UNIT LABOR COSTS: 11.6% V 10.0%E
FRI 5/7
(HU) Hungary PM Orban: Hungary would not support EU proposals in their present form as they would undermine the country's energy security; Hungary needs 5 years exemption from EU Russia oil ban - FT
ADS.DE Reports Q1 €1.60 v €2.60 y/y, Op €437M v €396Me, Rev €5.30B v €5.32Be; Expects FY22 profit towards lower end of guidance range
UMC Reports Apr (NT$) Rev 22.8B +39.2% y/y; YTD Rev 86.2B +35.8% y/y
(EU) EU said to have proposed oil ban exemption Hungary and Slovakia through 2024 and Czech Republic until June 2024 - financial press
(CN) China Apr Vehicle Sales -47.6% m/m, -48.1% y/y; YTD Vehicle Sales -12.3% y/y - prelim CAAM
(EU) EU Commission President Von der Leyen: Must reduce our reliance on Russian gas as they are no longer a reliable partner; Confident EU will agree on new 6th round of sanctions
(FR) ECB’s Villeroy (neutral, France): Policy normalization is 'fully warranted'; Reasonable to raise rates into positive territory by end-2022; Weak Euro currency does jeopardizes price stability objective
CI Reports Q1 $6.01 v $5.13e, Rev $44.0B v $43.6Be
*(US) APR CHANGE IN NONFARM PAYROLLS: +428K V +380KE
*(US) APR UNEMPLOYMENT RATE: 3.6% V 3.5%E; Labor Force Participation Rate: 62.2% v 62.5%e
*(US) APR AVERAGE HOURLY EARNINGS M/M: 0.3% V 0.4%E; Y/Y: 5.5% V 5.5%E
(CN) China tech firms reportedly have been pulling back from doing business with Russia under pressure from US sanctions – press
(US) MAR CONSUMER CREDIT: $52.4B V $25.0BE (NEW RECORD)
