2/10/2023 4:06:47 PM
US equity markets encountered their first significant choppiness of 2023 this week. Stocks came under modest pressure in the wake of last Friday's strong jobs report. Tuesday Fed Chairman Powell largely kept to the script from last week's FOMC press conference which was viewed by some as a win for the bulls who avoided a fresh incrementally hawkish message in the aftermath of last week’s employment report. Nevertheless, when pressed, he acknowledged the reality is that the Fed will react to the data, and if we get more job reports like January's they may indeed have to do more. Stocks then moved out to the week’s highs late in Tuesday’s session after the S&P held 4100. As the week progressed a slew of Fed officials fell in line behind Powell's tone suggesting officials still seem comfortable the economy is performing in line with their December SEP projections. Bond markets finally seemed to acquiesce to Fed officials insistence they are not done yet on inflation. As market participants assessed all of this information, futures markets saw tightening forecasts rise with the cycle ceiling topping 5.15%, and more importantly the year-end rate expectation rising aggressively to 4.9% (up ~60bp in about a week).
On Thursday, stock prices rolled over moving back below that prior 4100 support level in the S&P 500 Index. The weakness came alongside an upside break in the US 2-year yield to 4.5% for the first time since late November. A sloppy 30-year US bond auction exacerbated the upward trajectory in yields. Crude prices moved up into Friday’s session amid news Russia is planning to unilaterally cut oil production in March by 500K bpd. The news came after a week rife with speculation President Putin is preparing to launch a fresh military offensive in Ukraine soon. University of Michigan consumer sentiment moved out to a 1-year high with the 1-year inflation expectation pushing higher. The Japanese Yen exhibited a bout of volatility after it was apparently leaked PM Kishida is likely to nominate an academic with prior BOJ experience, Kazuo Ueda, as the next BOJ Governor. The US dollar index finished the week holding at roughly 1-month high. For the week, the S&P lost 1.1%, the DJIA was off 0.2%, and the Nasdaq fell 2.4%.
Some travel and leisure related names such as Hilton reported better than expected results as they continue to benefit from pent up demand for travel. Strong theme park results powered Disney to an earnings beat, but new streaming subscriptions were light, as returning CEO Iger announced a reorganization that would seek to reign in content spending and squeeze more money out of existing assets. Mobility giant Lyft missed earnings expectations by a wide margin and guided lower after the SEC reported ordered the company to include insurance reserve costs in its accounting, and as management said it was forced to implement price cuts for its service to stay competitive.
Indicative of the worldwide growth slowdown, shipping giant Maersk reported weak numbers, saying they are observing a significant inventory adjustment and that their seaborne freight business will be a lot worse in H2 of 2023 versus the first half. Adidas reported weak preliminary FY22 numbers largely on a huge writedown on inventory of Yeezy footwear it was stuck with after the company broke off its relationship with Kanye West.
SUN 2/5
2317.TW Reports Jan (NT$) Rev 660.4B +48.2% y/y, +4.9% m/m; Notes operations returning to normal and shipments increasing at iPhones' assembling plant Zhengzhou in China
(JP) Japan Fin Min Suzuki: Have not heard anything about nomination of Amamiya as BOJ Gov, have been 'out of the loop' on BOJ nomination [comments on press report]
(TR) Magnitude 7.7 earthquake strikes central Turkey and Syria; cites GFZ; Initial reports that 76 people have been killed, 440 injured - financial press
(JP) JAPAN DEPUTY CHIEF CABINET SEC ISOZAKI: REFUTES NIKKEI REPORT RELATED TO BOJ GOV POSITION
MON 2/6
TSN Reports Q1 $0.85 v $1.35e, Rev $13.3B v $13.1Be
CMI Reports Q4 $4.52 adj v $4.66e, Rev $7.78B v $7.36Be; Demand remain strong, esp in 1H-23
(US) Fed's Bostic (non-voter): January jobs data raises possibility of a higher peak rate; Could move back to a 50bps hike if needed
(AU) RESERVE BANK OF AUSTRALIA (RBA) RAISES CASH RATE TARGET BY 25BPS TO 3.35%; AS EXPECTED
TUES 2/7
BP.UK Reports Q4 Adj Net $4.81B v $5.11Be, Rev $69.3B v $59.5Be; Announces further $2.75B buyback; Increases div by 10%
(UK) JAN HALIFAX HOUSE PRICE INDEX M/M: 0.0% V -1.5% PRIOR; Y/Y: 1.9% V 2.0% PRIOR (weakest annual pace in three years)
BP.UK Strategy update: Raises FY25 EBITDA $46-49B at $70/bbl (prior $38B at $60/bbl); Targets up to $8B more into transition growth engines by 2030 and up to $8B more into oil and gas by 2030
(TW) Taiwan Jan Trade Balance: $2.3B v $3.9Be; Semiconductor exports in Jan dropped the most in 14 years
(CN) CHINA JAN FOREIGN RESERVES: $3.184T V $3.155TE; gold portion rise for the 3rd straight month
LIN.DE Reports Q4 $3.16 v $2.91e, Rev $7.90B v $8.09Be
Jan Manheim Used Vehicle Value Index: +2.5% M/M; -12.8% Y/Y; 75% of segments rose m/m
(NZ) Fonterra Global Dairy Trade Auction Dairy Trade price index: +3.2% v -0.1% prior
EOAN.DE Reports prelim FY22 adj Net €2.7B v €2.4Be, EBITDA €8.0B v €7.7Be; due to the addition effect of the segment results
(US) Fed Chair Powell: Disinflationary process has begun, but we are at the very early stages; Process going to be bumpy, reiterates will need further rate increases
(US) DEC CONSUMER CREDIT: $11.6B V $25.0BE
(US) President Biden: Reiterates US seeks competition and not conflict with China; Confirms he proposes the tax on corporate stock buybacks be quadrupled - State of the Union
(IN) INDIA CENTRAL BANK (RBI) RAISES REPURCHASE RATE BY 25BPS TO 6.50%; AS EXPECTED
WED 2/8
AKZA.NL Reports Q4 Net €8.0M v €86.2Me, Adj Op €126M v €124Me, Rev €2.61B v €2.59Be
MAERSKB.DK Reports Q4 EBIT $5.12B v $5.35Be, EBITDA $6.54B v $6.42Be, Rev $17.8B v $18.5Be
TTE.FR Reports Q4 adj Net $7.56B v $7.66Be, adj EBITDA $16.0B v $15.3Be, Rev $68.6B v $60.4B y/y
MAERSKB.DK CEO: Expect ocean business to be a lot worse in H2 2023 compared to H1; Seeing significant inventory adjustment; Shipping industry is heading into much more normal world - post earnings comments
(UR) UK extends Ukraine military training to pilots and marines [Note: UK to become first country in the world to provide fighter jet pilots training for Ukraine] – press
BG Reports Q4 $3.24 v $3.19e, Rev $16.7B v $18.2Be; Notes market environment expected to continue to be favorable in 2023
ATVI UK CMA notes Microsoft/Activision deal raising concerns; Could harm UK gamers by weakening rivalry between Xbox and PlayStation gaming consoles; Final report to be issued on Apr 26th
(US) Fed’s Williams (voter): Labor market is very strong, still have work to do on rates; Will need to maintain restrictive rates for a few years
(NL) ECB's Knot (Netherlands): ECB still has quite some ground to cover on rates, may need 50bps in May if underlying prices do not slow
(US) DOE CRUDE: +2.4M V +2ME; GASOLINE: +5.0M V +1.5ME; DISTILLATE: +2.9M V +0.5ME
(US) USDA WORLD AGRICULTURAL SUPPLY AND DEMAND ESTIMATES (WASDE) CROP REPORT; End 2022/2023 US Stocks (M bu) Soybeans: 225 v 211e; Corn: 1,267 v 1,266e; Wheat: 568 v 576e
(US) Atlanta Fed GDPNow: Raises Q1 GDP from 2.1% to 2.2%
SIE.DE Reports Q1 EPS €2.08 (pre PPA) v €2.24 y/y, Industrial business profit €2.69B v €2.50Be, Rev €18.1B v €18.3Be; Raises outlook Cites strong start to 2023
DIS Reports Q1 $0.99 v $0.69e, Rev $23.5B v $23.3Be; Saw higher loss at Disney+
(US) President Biden: See no recession in 2023 or 2024; China's economy is not functioning very well; US will fully compete with China but does not look for conflict - PBS interview
THRS 2/9
CSGN.CH Reports Q4 (CHF) Net -1.39B v -1.14Be (biggest loss since 2008), Pretax -1.32B v -1.66B y/y, Rev 3.06B v 3.35Be; Acquires M.Klein & Co for $175M
(JP) Japan LDP ruling party said to be divided if PM Kishida should seek BOJ pivot; Reportedly choosing Yamaguchi (vocal critic of Kuroda’s dovish policies) as new BOJ head would likely create party split – press
*(DE) GERMANY JAN PRELIMINARY CPI M/M: 1.0% V 1.0%E; Y/Y: 8.7% V 8.9%E (lowest annual pace in 5 months)
UNA.NL Reports FY22 EPS €2.57 v €2.62 y/y, adj Op €9.7B v €9.6Be, Rev €60.1B v €59.5Be
7201.JP Reports 9M Net ¥115.0B v ¥201.3B y/y, Op ¥289.7B v ¥191.3B, Rev ¥7.50T v ¥6.15T y/y; Cuts FY23 Global sales outlook
(SE) SWEDEN CENTRAL BANK (RIKSBANK) RAISES REPO RATE BY 50BPS TO 3.00%; AS EXPECTED; Forward guidance sees rates likely being raised in spring 2023
PEP Reports Q4 $1.67 v $1.64e, Rev $28.0B v $26.8Be; Expects $1B in buybacks during 2023; Raises annual dividend 10% to $5.06/shr
HLT Reports Q4 $1.59 adj v $1.20e, Rev $2.44B v $2.34Be
ABBV Reports Q4 $3.60 v $3.54e, Rev $15.1B v $15.4Be; Guides FY23 light
K Reports Q4 $0.94 v $0.84e, Rev $3.83B v $3.66Be
(US) INITIAL JOBLESS CLAIMS: 196K V 190KE; CONTINUING CLAIMS: 1.69M V 1.66ME
ABBV Guides Q1 $2.39-2.49 v $3.00e, Rev $11.8B v $13.3Be - earnings call
ADS.DE Reports prelim FY22 Net €254M v €1.49B y/y, Op €669M v €1.99B y/y, Rev €22.5B v €21.2B y/y; Guides initial FY23 light on adverse impact from not selling the existing stock
LYFT Reports Q4 -$0.74 v +$0.10e, Rev $1.18B v $1.16Be; Guides Q1 below consensus
(CN) CHINA JAN CPI M/M: 0.8% V 0.0% PRIOR; Y/Y: 2.1% V 2.1%E
FRI 2/10
2330.TW Reports Jan (NT$) Rev 200.1B +16.2% y/y and +3.9% m/m
7267.JP Reports 9M Net ¥583.2B v ¥582.2B y/y, Op ¥733.9B v ¥671.7B y/y Rev ¥12.5T v ¥10.7T y/y, Announces stock buyback of up to 1.5% of shares or ¥70.0B; Trims Rev outlook
(UK) Q4 PRELIMINARY GDP Q/Q: 0.0% V 0.0%E; Y/Y: 0.4% V 0.4%E
(RU) Russia Deputy PM Novak: Russia plans to voluntarily cut oil production in Mar by 500Kbpd to improve market situation (**Note: 500Kbpd is ~4.7% of Russia production)
(JP) POTENTIAL BOJ GOV NOMINEE KAZUO UEDA: BOJ MONETARY POLICY IS APPROPRIATE; NEED TO CONTINUE EASY POLICY; NOTHING HAS BEEN DECIDED ON NOMINATION - JAPAN TV
(UR) Ukraine Chief Commander: Russian missiles crossed over Romania and Moldova before landing in Ukraine [**Note: Romania is NATO member]
(EU) Moldova PM Gavrilita to step down
(CA) CANADA JAN NET CHANGE IN EMPLOYMENT +150K V +15.0KE; UNEMPLOYMENT RATE: 5.0% V 5.1%E
(US) FEB PRELIMINARY UNIVERSITY OF MICHIGAN CONFIDENCE: 66.4 V 65.0E (Highest since Jan 2022)
