Sunday, May 22, 2022

S&P Officially Falls into Bear Market and Fed Remains Undeterred Weekly Market Update: S&P Officially Falls into Bear Market and Fed Remains Undeterred

5/20/2022 4:09:33 PM

US indices opened for trade this week with a modicum of momentum coming out of last Fridays rally. Hopes for further improvement in the China zero Covid situation and valuation compression finally seemed to have offset some of the relentless selling pressure allowing risk assets to hold onto very modest, marginal gains. The US 10-year yield appeared to find resistance around 3% amid weaker than expected manufacturing data which also may have convinced some to wade back into equity markets. Investors’ moods soured quickly, though, after Walmart and Target reported quarterly results. Both high profile managements were caught off guard by the staggering surge in freight costs and supply chain issues which along with changing consumer behavior resulted in a significant hit to their profitability. Shares of each company tumbled an eye popping 20+% on Tuesday and Wednesday respectively, the biggest one day declines for those shares since 1987’s Black Monday. By Friday the S&P futures traded below the May 12th intraday low and the Dow was staring at its 8th straight weekly decline which was the longest losing streak since 1932. For the week the Dow and S&P lost 3% and the NASDAQ shed nearly 4%.

Federal Reserve officials remained unnerved in their most recent commentary, and even admitted they welcomed the recent repricing seen in markets. A cadre of officials underscored a unified message that the central bank will do what is necessary to get inflation down. 50 basis point rates hikes at the next two meetings appear to be a given, but Fed officials remain realistic that rates will likely have to go significantly higher than that, but just how much higher remains to be seen. Oil prices continued to work against the Fed as well. Despite the clear slowdown in China, increasing global growth concerns crude oil prices moved up 2% this week. The US dollar finally downshifted, helped in part by lower US Treasury yields. The Euro rose to a two week high after ECB members continued to note concerns around the greenbacks recent strength. The ECB’s Knot like many others threw his support behind a 25 basis point hike in July, but also opined that a 50 basis point move could be warranted if inflation data were to worsen. Bitcoin remained heavy dipping back below the 30K mark.

In corporate news this week, major retailer earnings drew most of the market’s attention. While Walmart revenue grew during the quarter, higher supply chain and employee costs ate into profits. Target’s quarter told largely the same story, with management noting fuel and freight costs could be $1B higher in 2022 than it had expected. Home Depot blew away estimates, while BJ’s Wholesale kept margins largely intact as it posted beats on its top and bottom line and saw gains in member traffic. Kohl’s cut its FY forecast, as did Ross Stores, which subsequently saw its shares drop the most since 1986. On the manufacturing side, Deere boosted its FY guidance despite seeing continued rising costs that have pressured margins and affected their consumer base buying power. Colgate told investors they are seeing supply chain pressures abate, though some costs are still rising. Renault confirmed it would divest its Russia unit and controlling interest in AVTOVAZ, becoming the latest automaker to leave the country over its invasion of Ukraine. McDonald’s also agreed to sell its Russian assets to a current Siberian licensee, who will operate the stores under a new brand.

US government officials reportedly have found that the black box from the China Eastern plane crash in March points to an 'intentional nosedive' as the cause and there are no indications of problems with the Boeing aircraft. Harley Davidson disclosed that it would suspend all vehicle assembly and shipments (excluding LiveWire) for a two-week period due to a parts issue from a Tier 1 supplier, though they promise to recoup lost production later in the year.

Sunday, May 15, 2022

Markets grope for a bottom on hopes inflation may soon peak Weekly Market Update: Markets grope for a bottom on hopes inflation may soon peak

5/13/2022 4:14:37 PM

Investors endured another painful week as what felt like forced selling across an array of assets fueled a further drawdown in stocks. Tech was the primary driver yet again and even the darlings of the US stock market finally came under significant pressure. The S&P 500 dropped below 3900 briefly, flirting with official bear market territory down 20%. The Fed’s precarious predicament regarding inflation, rates, and growth appeared to remain the driving force sending investors for the exits. China’s zero Covid policies and to a lesser extent ongoing inflationary externalities from the Ukraine war fed into the uncertainty which was only supercharged by a hotter than expected print for US April CPI. Chairman Powell’s comments on Thursday may have summed it up best when he acknowledged that the process of getting inflation under control will be painful and ultimately whether or not a soft landing can be achieved is likely out of the Federal Reserve’s control.

The week opened with reports circulating that Shanghai officials have once again tightened Covid restrictions and that they could remain in effect until the end of May. Focus remained on Wednesday’s CPI print in the US which was expected to show declines from the recent cycle highs. Unfortunately the CPI readings were hotter than expected, and the core m/m exceeded all analyst estimates. There were upside disappointments in historically volatile categories like airfares and auto prices, but there was also a bigger-than-expected jump in shelter costs that included primary residences. Treasury yields initially popped towards new cycle highs only to roll over as a global flight from risk resulted in safe haven buying of bonds. The US dollar jumped to fresh multi-year highs. Cryptos plunged, exacerbated by worries that a run on the Luna token and the resulting de-pegging of the underlying Terra stable coin could have broader implications for the space. Risk sentiment appeared to find a nadir in Thursday’s session. Long duration, smaller cap tech started to rally as large cap darlings finally started to see significant indiscriminant selling. Friday’s trade saw the S&P 500 retake 4000 alongside a 4% pop in the NASDAQ. The US dollar reversed course and head lower while Treasury yields moved higher. Bitcoin jump back above $30K after trading below $25K midweek. For the week, the S&P lost 2.4%, the DJIA gained 1.5%, and the Nasdaq fell 2.8%.

In corporate news this week, Disney reported a miss on its top and bottom line for its second quarter, but notched better-than-expected subscription numbers at its Disney+ service and beat analyst expectations for theme park revenue as well. Tyson Foods posted a big jump in revenue and profits after hiking prices over 15% across its segments, and executives noted they still see strong demand for beef and chicken. Toyota said some production lines in Japan would have to pause output for up to six days in May due to COVID lockdowns in Shanghai, cutting its May global production to around 700K units from 800K seen earlier. Tesla halted output at its Shanghai plant, citing parts supply issues, following delays back in April sparked by China’s lockdowns.

Twitter shares tumbled after Elon Musk said his deal to acquire the social media giant was ‘on hold’ until he sees ‘details supporting the calculation that spam/fake accounts do indeed represent less than 5% of users.’ Coinbase shares plummeted after reporting weak earnings and amid the general crypto rout, despite the CEO’s reassurances that the company has ‘no risk of bankruptcy.’ Data center developer Switch confirmed it would be taken private by DigitalBridge in an $11B all-cash deal, as the take-private trend in the public data center REIT space continues.

SUN 5/8
(CN) Shanghai, China again tightens covid restrictions; movement curbs may generally remain until the end of May; cites people familiar with the matter - press
(HK) Hong Kong elects China backed John Lee its new leader (replaces Carrier Lam)
(EU) ECB's Holzmann (Austria, hawk) said it would be appropriate to take at least 2 or even 3 steps on interest rates in 2022 - press
(EU) ECB publishes interview with President Lagarde: Reiterates stagflation is not currently our baseline
(US) Scientists at the Department of Energy’s Pacific Northwest National Laboratory (PNNL) in the lab were able to extract rare earth elements from various water sources - press
MON 5/9
2382.TW 'Chaos' said to have been seen at the co's operations in Shanghai amid COVID lockdown; videos posted online showed workers physically overwhelming security guards - financial pres
(EU) Reportedly EU envoys meeting on May 8th still resulted in no agreement on 6th package of sanctions against Russia; Hungary continues to block proposals, while Greece, Cyprus and Malta have raised concerns - press
(RU) Russia Pres Putin: Russian troops are fighting for security of Russia and Donbas now; West was preparing for invasion of our land - WWII Victory parade speech in Moscow
(IN) India Central Bank (RBI) said to be intervening into FX spot and NDF markets to defend INR currency (rupee) - press
TSN Reports Q2 $2.29 v $1.83e, Rev $13.1B v $12.4Be
(US) Fed's Bostic (non-voter, hawk): Currently does not see the need to hike in more than 50bp steps
(US) NY Fed Apr Consumer Expectation Survey: Inflation expectations fell at the one-year horizon and rose at the three-year horizon
Luna Foundation Guard (LFG) will lend $1.5B in bitcoin (BTC) and terraUSD (UST) to defend the peg of its algorithmic stablecoin to the U.S. dollar - press
(US) Fed’s Brainard (vice chair): Large price spikes and margin calls from Russia's invasion highlight potential for contagion to large financing institutions - Semi-annual financial stability report
BHF Reports Q1 $4.07 v $4.86 y/y, Rev $2.74B v $0.94B y/y; Life sales -43 % sequentially q/q, citing econ headwinds
TSLA Stops output at Shanghai plant citing parts supply issues; Unclear when issues will be resolved and production to continue - financial press
TUES 5/10
TSM Reports Apr (NT$) Rev 172.6B +55% y/y
6758.JP Reports FY21/22 Net ¥882B v ¥1.03T y/y, Op ¥1.20T v ¥955B, Rev ¥9.92T v ¥9.00T y/y; Announces ¥200B share buyback
7974.JP President: Do not yet see end to chip shortage; Russia impact on overall business ops is small - post earnings comments
(US) US average gasoline price rises to $4.374/gallon (record high)
(CN) China Apr Passenger Vehicle sales 1.06M units, -35.7% y/y, -34.0% m/m (biggest drop in 2 years); Tesla exported 0 (zero) China-made car during April - PCA
TSM Said to be planning second 5-8% price increase for its products in less than a year amid inflation concerns and to fund its expansion plans; Planned price hike will take effect by early 2023 - Nikkei
TM Reportedly to suspend some domestic operations citing Shanghai lockdown; Cuts May global production to ~700K units (previous guided May-July 800K v 750K in Apr) - press
AVYA Reports Q2 $0.53 v $0.42 y/y, Rev $716M v $713M y/y
LCII Reports Q1 $7.71 v $4.48e, Rev $1.6B v $1.30Be
MBUU Reports Q3 $2.61 v $1.94e, Rev $344.3M v $302Me
DRE Prologis proposes to acquire Co for $61.68/shr in all stock deal
IAC Q1 shareholder letter: This time there’s no “shot-in-the-arm” (literally or figuratively) on the horizon to snap things back – we expect the stepped-down valuations to last for a while
(UR) Ukraine gas company GTSOU reports the occurrence of force majeure led to the interruption of gas transit through the GMS Sokhranivka in Luhansk region transiting almost a third of gas from Russia to Europe (up to 32.6Mcm/day)
(FR) ECB’s Villeroy (neutral, France): There is no doubt that the ECB will act to ensure price stability
Luna Foundation Guard (LFG) reportedly seeks additional $1B to shore up UST stablecoin
WEDS 5/11
7203.JP Reports FY21/22 Net ¥2.85T v ¥2.25T y/y, Op ¥3.00T v ¥2.20T y/y, Rev ¥31.38T v ¥27.21T y/y; Announces ¥200B share buyback (1.02% of shares); Mats costs to reduce profits by ~20%
TKA.DE Reports Q2 Net €579M v -€175M y/y, adj EBIT €802M v €577Me, Rev €10.6B v €9.44Be; Raises Rev and adj EBIT outlook
ALO.FR Reports FY21/22 adj EBIT €767M v €645M y/y, Rev €15.5B v €8.8B y/y
SWMA.SE Confirms to be acquired by Philip Morris for SEK106/shr in ~SEK161.2B ($16.0B) deal
(UR) US House of Representatives votes 368-57 to pass $40B aid package to Ukraine
(FR) ECB’s Villeroy (neutral, France): Reiterates view that ECB to raise rates gradually from summer 2022; French inflation should begin to ease at the beginning of 2023
(CN) Shanghai port container throughput said to be stable at 100KTEUs/day, over 80% of pre-pandemic levels - press
(EU) EU said to have drafted €195B plan to bolster renewables and energy savings as plan to end its dependency on Russian fossil fuels by 2027; Plan includes infrastructure funds for most dependent nations as part of RePowerEu package - press
(CZ) Czech President Zeman: selects Ales Michl as new Czech Central Bank governor (as expected)
(RU) Pro-Russian authorities of Ukrainian occupied region Kherson plans to ask Pres Putin to admit region to Russia - Russian press
(RU) Russia Foreign Min Lavrov: UN Secretariat missed the opportunity to reach a political settlement in Ukraine
IBM Signs strategic collaboration agreement with Amazon Web Services to deliver IBM Software as-a-Service on AWS
(EU) EU reportedly ready and 'likely to move quickly' to suspend trade deal if UK revokes Northern Ireland protocol and may also halt talks over Gibraltar if UK acts on Brexit deal - press
SWCH Confirms to be taken private by DigitalBridge Investment Management and IFM for $34.25/shr in $11B all-cash deal
*(US) APR CPI M/M: 0.3% V 0.2%E; Y/Y: 8.3% V 8.1%E (annual pace moves off four decade highs)
(US) Association of American Railroads weekly rail traffic report for week ending May 7th: 504.9K total units, -3.5% y/y
(US) Fed's Bostic (non-voter, hawk): Backs 50bps moves until rate raised to neutral level; Sees about $2T in excess liquidity on the Fed balance sheet
(US) Fed’s Bullard (voter, hawkish dissenter): Inflation is broader and more persistent; Raising rates at that pace a good benchmark for now; 75bps hike is not my base case
(HK) Hong Kong Monetary Authority (HKMA) purchases ~HK$1.59B on the market as the HKD reaches the weaker end of the peg against the USD [first purchase of HKD to defend peg since 2019]
DIS Reports Q2 $1.08 v $1.20e, Rev $19.2B v $20.3Be
THURS 5/12
SIE.DE Reports Q2 Net €1.21B v €2.39B y/y, Industrial Business EBITA €1.78B v €2.1B y/y, Rev €17.0B v €14.7B y/y
STM.FR Targets FY25-27 Rev $20B+/yr, gross margin ~50%, EBITDA margin >40% - Capital Markets Day
*(UK) Q1 PRELIMINARY GDP Q/Q: 0.8% V 1.0%E; Y/Y: 8.7% V 8.9%E
2317.TW Reports Q1 (NT$) Net 29.5B v 28.5Be, Op 36.7B v 30.9Be; Rev 1.41T v 1.37Te; Plans to commence EV mass production in Thailand in 2024
7201.JP Reports FY Net +¥215.5B v -¥448.7B y/y, Op +¥247.3B v -¥150.65B y/y, Rev ¥8.42T v ¥7.86T y/y; Resumes dividend payments at ¥5/shr
(FI) Finland President and PM Marin both agree that country should submit application to join NATO, as expected
9984.JP CEO Son: Getting ready for ARM unit IPO as early as possible; Careful with new investments in Chinese companies; The global market is in confusion - post earnings comments
GAZP.RU Exec: Transit request via Sokhranivka declined by Ukraine; Continue shipping gas to Europe at 50.6Mcm v 72Mcm d/d v 96Mcm on May 10th
(UK) Foreign Sec Truss (Brexit negotiator): No choice but to act if EU does not show flexibility; need to fix Northern Ireland Protocol
(RU) Russia govt spokesperson Peskov: Everyone wants to avoud a direct clash between NATO and Russia; Finland joining NATO would definitely be a threat to Russia and a reason on for a symmetrical response
Tether Loses $1 Peg, Bitcoin Drops to 2020 Levels of Near $24K - Coindesk
(CN) Beijing refutes rumor of whole city lockdown; To launch new mass COVID testing in 12 districts starting May 13th (prior 3 districts May 10-12th) - press
(UR) Ukraine gas company GTSOU: Will not reopen suspended Sokhranivka gas route from Russia to Europe until Ukraine obtains full control over its gas transit system
7201.JP COO: Chip shortages are the 'new normal'; Chip shortage may last into 2023 - FT conf comments
*(US) APR PPI FINAL DEMAND M/M: 0.5% V 0.5%E; Y/Y: 11.0% V 10.7%E
(US) Senate confirms Fed Chair Powell for a second term (as expected)
(US) Fed Chair Powell: Soft landing may depend on factors that we do not control; Process of getting inflation down to Fed's 2% goal will include some pain
(CN) Shanghai Vice Mayor: Aiming to have no community spread of coronavirus by mid-May; >70% of companies on white lists have resumed production
FRI 5/13
7267.JP Reports FY21/22 Net ¥707.1B v ¥657.4B y/y, Op ¥871.2B v ¥660.2B y/y, Rev ¥14.6T v ¥13.2T y/y; Raises annual dividend to ¥120/shr from ¥110/shr
005930.KR Reportedly discusses to raise chipmaking prices by up to 20% - press
TWTR Elon Musk tweets: Twitter deal temporarily on hold pending details supporting calculation that spam/fake accounts do indeed represent less than 5% of users
R HG Vora Capital Management, LLC discloses 9.9% stake in Ryder; Offers to acquire company at $86.00 a share - 13D filing
PRGO CEO: Expects baby formula shortage to last the rest of 2022; Plants that make store-brand baby formula are running at 115% of full capacity - press

Saturday, May 7, 2022

Weekly Market Update: Markets reel as they absorb a fresh round of monetary policy tightening Weekly Market Update: Markets reel as they absorb a fresh round of monetary policy tightening

US stock markets entered the week reeling as investors remained caught between competing hopes: that Federal Reserve rates increases will be significant enough to tame rapidly rising inflation, but not so large that they will derail economic growth. Ahead of Wednesday’s FOMC announcement the US 10-year yield moved above 3% for the first time since late 2018. JOLTS job openings surged to yet another record high fueling expectations Chairman Powell might even try to surpass already exceedingly hawkish market forecasts when he announces an expected 50 basis point hike and formally unveiled the quantitative tightening protocols. Those fears were somewhat allayed when the Chairman in his post rate decision press conference essentially greenlit another 50 basis point hike at each of the next two FOMC meetings, but also took the notion of a 75 basis point hike off the table. The US yield curve steepened as the long end underperformed post Fed while 2-year yields ticked lower. Stock markets and Treasury markets initially responded favorably to the Fed announcements only to reverse course dramatically on Thursday as fresh data contributed to a reassessment.

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
(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
(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
(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) April preliminary Class 8 truck orders -15.4K, -28% m/m, -55% y/y -
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) 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)
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
(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) 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 $3.58Be
FRI 5/7
(HU) Hungary PM Orban: Hungary would not support EU proposals in their present form as they would undermine the country's energy security; Hungary needs 5 years exemption from EU Russia oil ban - FT
ADS.DE Reports Q1 €1.60 v €2.60 y/y, Op €437M v €396Me, Rev €5.30B v €5.32Be; Expects FY22 profit towards lower end of guidance range
UMC Reports Apr (NT$) 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 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

Saturday, April 30, 2022

Market pressures intensify on fears of stagflation and ahead of pivotal Fed meeting next week 

Weekly Market Update: Market pressures intensify on fears of stagflation and ahead of pivotal Fed meeting next week


Investors can only hope that April showers will bring May flowers after enduring another exceedingly difficult week. The NASDAQ finished off its worst month since late 2008, and the S&P saw its worst monthly performance since March 2020. Bond funds offered little solace as rates rose significantly as the Federal Reserve and other central banks embarked on increasingly aggressive designs to tame inflation. The VIX surged back above 30 as the S&P tested below 4200 on several occasions. After a dip in US Treasury yields early in the week amid sharp risk-off trading, rates steadily rose into Friday. The US Dollar Index notched a new 2 decade high after briefly surpassing 2020 and 2017 highs. WTI crude prices rose for the final 4 trading sessions to finish up around 9% on the week following a report Germany has dropped opposition to a full EU embargo of Russian oil. For the week, the S&P lost 3.3%, the DJIA was off 2.5%, and the Nasdaq tumbled 3.9%.

Coming into the week, Russian President Putin’s rhetoric that any country trying to intervene Ukraine could be on the receiving end of a nuclear strike seemed to cast a general pall over risk appetite. China’s zero-Covid policies also continued to weigh on sentiment. Reports that manufacturing activity was slowly returning to Shanghai were offset by an opposing report the government has no intention on backtracking from its zero tolerance policies. Economic data did little to provide much in way of relief. April Richmond Fed data saw both the backlog and volume of new orders drop while wages continued to rise. The US Q1 advanced GDP print was negative, but that softness was mostly attributed to trade, inventories, and government spending. EU inflation readings offered little hope that prices were likely to backtrack anytime soon. The US March PCE data did offer some glimmers that could support the narrative that "inflation may have peaked". Nevertheless, Friday also saw a record jump in the Q1 Employment Cost Index which may have helped push rates higher into week’s end. Inflation remained the key underlying theme across nearly all quarterly earnings reports which saw many firms report solid organic revenue growth, but struggle to hold the line on gross margins.

In corporate news this week, Apple reported beats on its top and bottom line, alongside its annual share buyback and dividend increase announcements, but those results were sandbagged by executives noting that June quarter results will be negatively impacted by $4-8B due to supply constraints. Amazon missed expectations amid a massive writedown on its stake in EV maker Rivian and said it would no longer be ‘chasing physical or staffing capacity,’ and also offered lighter-than-expected revenue guidance for next quarter. Alphabet notched an EPS miss, though its revenue was inline, as its YouTube business saw some negative effects following its exit from Russia. Facebook Q2 revenue guidance came in short of expectations, but DAU numbers and tempering of expense growth expectations sparked a relief rally. Microsoft was a bright spot among the largecap tech firms reporting this week, announcing a further rise in its earnings and revenue amid continued demand in cloud services and software sectors.

In M&A news, Twitter accepted Elon Musk’s $44B takeover offer after no white knight offers materialized, though there are already reports the deal will face close scrutiny from regulators and Congress. The owners of JCPenney reportedly offered $68/share for Kohl’s valuing the chain at $8.6B.

SUN 4/24
(EU) ECB chief Lagarde: "high probability" asset purchases end early Q3; "Strong chance" rates will rise this year; Not seeing any stagflation
(UR) Ukraine President Zelenskiy: Announces visit by US Sec State Blinken and Sec Def Austin; Peace talks would be over if soldiers in Mariupol were killed or pseudo-referendum is announced as part of the creation of new pro-Russian pseudo-republics
(RU) Russia Pres Putin said to have lost interest in peace agreement with Ukraine and moving to strategy which implies occupying as many Ukrainian land as possible - FT
(RU) Russia Defense Ministry official: Accusing US of "staging provocations" to accuse Russia of using biological, chemical or nuclear weapons in Ukraine in response to successes of Russian military operation
(EU) Reportedly EU's 6th sanctions package against Russia may be presented as soon as Monday, Apr 25th and could be adopted by Friday, Apr 29th; Set to include some form of ban on Russian oil imports - press
(EU) ECB members reportedly keen to end APP (conventional QE) program at the earliest possible moment and raise interest rates as soon as July but certainly no later than Sept 2022 - financial press
(US) Pres Biden tweets: We will continue to support Ukrainians in their fight to defend their homeland
(AU) Australia PM Morrison: China naval base in Solomon Islands a 'red line' - press
MON 4/25
005380.KR Reports Q1 (KRW) Net 1.58T v 1.52T y/y, Op 1.93T v 1.66T y/y, Rev 30.3T v 27.4T y/y; Expects global chip shortage to ease gradually
ROG.CH Reports Q1 (CHF) Rev 16.4B v 14.9B y/y
(UR) US Sec of State Blinken: Russia is failing in its war aims, Ukraine is succeeding - comments after visiting Kyiv
6502.JP Reportedly CVC and KKR to consider bids for Toshiba - press
CVNA To sell $2.28B in Sr unsecured notes due 2030, to finance ADESA US Auction acquisition
BAYN.DE CEO: Affirms FY22 Core EPS €7.00 , adj Rev ~€46B v €45.4Be, EBITDA €12B, EBITDA Margin 26% - AGM speech
KSS Reportedly JCPenney owners said to have offered $68/shr valued at $8.6B - press
(RU) Russia Foreign Min Lavrov: Russia will continue contacts with Ukraine Pres Zelenskiy's team; The danger of nuclear war is serious, it is real, it should not be underestimated, but Russia's strong position is that nuclear war is unacceptable
PKG Reports Q1 $2.72 v $2.53e, Rev $2.14B v $2.07Be; Expect demand in our Packaging segment to remain very strong
(HK) Hong Kong Chief Exec Lam: No new plans to relax border controls and flights
TUES 4/26
5.HK Reports Q1 Net $2.8B v $3.9B y/y, adj Pretax $4.71B v $6.4B y/y, Rev $12.6B v $13.3B y/y; to initiate further $1.0B share buyback
UBSG.CH Reports Q1 Net $2.1B v $1.8B y/y, Adj Pretax $2.7B v $2.3B y/y, Rev $9.4B v $8.7B y/y
NOVN.CH Reports Q1 Core EPS $1.46 v $1.44e, Rev $12.5B v $12.8Be
MAERSKB.DK Reports prelim Q1 EBITDA $9.2B v $8.11Be, Rev $19.3B v $18.6Be; Raises FY22 guidance
(DE) Germany said to approve delivery of Gepard* self-propelled anti-aircraft cannons (tanks) to Ukraine - German press
(RU) Donbas separatists leader Pushilin: It is necessary to commence next stage of military operation after reaching borders of Donetsk region
EUR/USD Trades below 1.07 level per US dollar (1st time since Mar 2020) amid overall dollar strength
(DE) German Defense Min Lambrecht: To increase support for Ukraine to €2B; Confirms to send 50 Gepard tanks to Ukraine
(RU) Russia and Belarus forces to hold joint drills of air forces and anti-missile forces in Belarus - Russian press
(RU) Reportedly pro-Russian Transnistrian leadership will soon take decisions for defense of Moldova's breakaway region of Transnistria interests - Russian press
ROSN.UK Received no offers for its 5.1Mt of Urals crude oil tender - press
UPS Reports Q1 $3.05 v $2.87e, Rev $24.4B v $23.9Be; Doubles FY22 buyback target by $1B to $2B
GE Reports Q1 $0.24 v $0.20e, Rev $17.0B v $17.5Be; Recognized $230M in Russia/Ukraine was charges in Q1; Currently trending toward the low end of its guidance range
DHI Reports Q2 $4.03 v $3.37e, Rev $8.00B v $7.66Be; Homebuyer demand that exceeds our pace of supply
MMM Reports Q1 $2.65 v $2.33e, Rev $8.83B v $8.74Be; Raises FY22 outlook
VLO Reports Q1 $2.31 v $1.61e, Rev $38.5B v $32.1Be
GPK Reports Q1 $0.48 adj v $0.39e, Rev $2.25B v $2.10Be
RTX Reports Q1 $1.15 v $1.01e, Rev $15.7B v $15.8Be; Cuts FY22 Rev outlook citing sanctions on Russia
ADM Reports Q1 $1.90 v $1.35e, Rev $23.7B v $19.1Be; Expect reduced crop supplies "for the next few years"
GLW Reports Q1 $0.54 v $0.49e, Rev $3.68B v $3.56Be; Demand for Corning content has never been greater
PCAR Reports Q1 $1.72 v $1.51e, Rev $6.47B v $5.79Be
(DE) Germany Econ Min Habeck: Germany is very close to independence from Russian oil; Sees Germany prepared for a halt to Russian oil supplies
DHI Guides Q3 Rev $8.6-9.0B v $10Be, homes closed 21.5-22.5K, gross margin 29-29.5% - conf call comments
(PL) Reportedly Russia suspended gas supplies to Poland under the Yamal contract - Polish press
ML.FR Reports Q1 Rev €6.48B v €6.3Be
(US) Atlanta Fed GDPNow: Cuts Q1 GDP forecast to 0.4% from 1.3%
(US) Vice President Kamala Harris tests positive for COVID; Has not been in contact with Pres Biden due to recent travel schedules
(PL) Polish gas firm PGNIG: Russia to halt gas deliveries beginning Apr 27th; Halt is a breach of Yamal contract
TXN Reports Q1 $2.35 v $2.17e, Rev $4.91B v $4.71Be; Guides Q2 well below ests
MSFT Reports Q3 $2.22 adj v $2.18e, Rev $49.4B v $49.0Be
GOOGL Reports Q1 $24.62 v $25.69e, Rev $56.0B v $56.0Be; Announces additional up to $70B Class A and Class C share buyback
GM Reports Q1 $2.09 v $1.56e, Rev $36.0B v $36.3Be
V Reports Q2 $1.79 adj v $1.65e, Rev $7.19B v $6.84Be
*(AU) AUSTRALIA Q1 CPI Q/Q: 2.1% V 1.7%E; Y/Y: 5.1% V 4.6%E; Trimmed mean annual pace rises above target
WED 4/27
CSGN.CH Reports Q1 (CHF) Net -273M v -252M y/y, Pretax -428M v -757M y/y, Rev 4.41B v 7.57B y/y
DBK.DE Reports Q1 Net €1.06B v €0.91B y/y, Rev €7.33B v €7.23B y/y; CEO sees Ukraine crisis impacting FY results
MBG.DE Reports Q1 adj EBIT €5.3B v €4.8Be, Rev €34.9B v €33.6Be; Booked €709M in charges related to Russia in Q1
GSK.UK Reports Q1 Adj EPS £0.33 v £0.61e, Rev £9.78B v £9.43Be; Affirms guidance
(PL) Polish gas firm PGNIG: Reiterates Russian gas supply halt is a breach of Yamal contract
(RU) Russia's speaker of the State Duma Volodin: Russia should make other unfriendly countries pay for gas in RUB currency (ruble) and cut supplies if they refuse to do so
BG Reports Q1 $4.26 v $3.24e, Rev $15.9B v $15.9Be; Raises guidance
ADP Reports Q3 $2.21 v $2.07e, Rev $4.51B v $4.46Be; Raises FY22 outlook
GD Reports Q1 $2.61 v $2.49e, Rev $9.39B v $8.98Be
FISV Reports Q1 $1.40 v $1.35e, Rev $4.14B v $3.84Be
BA Reports Q1 -$2.75 v -$0.26e, Rev $14.0B v $16.0Be; Remains on track to generate positive cash flow for 2022; Confirms to delay of 777X production; Submitted 787 Dreamliner certification plan to FAA
(IN) Indonesia confirms ban on palm oil exports to begin April 28th
*(US) MAR PENDING HOME SALES M/M: -1.2% V -1.0%E; Y/Y: -8.9% V -8.1%E
(RU) Russia reportedly planning referendums on the official accession of the self-proclaimed republics in Eastern Ukraine to Russian Federation in mid-May - Meduza
(US) Atlanta Fed GDPNow: Maintains Q1 GDP forecast at 0.4%
(US) Association of American Railroads weekly rail traffic report for week ending Apr 23rd: 498K total units, -7.4% y/y
FB Reports Q1 $2.72 v $2.54e, Rev $27.9B v $28.2Be
F Reports Q1 $0.38 v $0.39e, Rev $34.5B v $28.9Be
URI Reports Q1 $5.73 v $5.28e, Rev $2.52B v $2.47Be
005930.KR Reports final Q1 (KRW) Net 11.3T v 7.09T y/y; Op 14.1T v 14.1T prelim (v 9.4T y/y); Rev 77.8T v 77.0T prelim (v 65.4T y/y)
THURS 4/28
NOKIA.FI Reports Q1 non- IFRS EPS €0.07 v €0.07 y/y, Rev €5.35B v €5.27Be; Demand in end markets remains high
066570.KR Reports final Q1 (KRW) Net 1.23T v 998B y/y; Op1.88T v 1.88T prelim; Rev 21.1T v 21.1T prelim
SAN.FR Reports Q4 Business EPS €1.94 v €1.80e, Business Net €3.07B v €2.28Be, Rev €9.67B v €9.60Be
UNA.NL Reports Q1 Rev €13.8B v €12.33B y/y; Affirms FY22 guidance
TTE.FR Reports Q1 adj Net $9.0B v $6.8B y/y, Rev $68.6B v $43.8B y/y
(CN) China govt cuts coal import tariffs to zero; effective from May 1st 2022 to end-Mar 2023 - press
(EU) Germany’s Uniper and Austria’s OMV reportedly plan to use Russian rouble (RUB) accounts for gas payments; Italy's Eni weighs options - FT
NOKIA.FI CEO: Supply chains are tight, but reason to hope there is an improvement in situation H2. Don't expect it to hit FY performance - post earnings comments
(UR) Ukraine adviser and negotiator Podolyak: Reiterates Ukraine will defend itself in any way, including strikes on the warehouses and bases of the killers in Russia; The world recognizes this right
TMO Reports Q1 $7.25 v $6.17e, Rev $11.8B v $10.6Be
LIN.DE Reports Q1 $2.93 v $2.78e, Rev $8.2B v $8.06Be; May incur impairment or other charges over Russia/Ukraine
MRK Reports Q1 $2.14 v $1.81e, Rev $15.9B v $15.0Be
CAT Reports Q1 $2.88 v $2.66e, Rev $13.6B v $13.5Be
PHM Reports Q1 $1.83 v $1.70e, Rev $3.19B v $3.05Be
CAT Guides Q2 Rev higher q/q, citing strong end user demand and pricing - earnings slides
LUV Reports Q1 -$0.32 v -$0.34e, Rev $4.7B v $4.66Be; Expects to be solidly profitable during remainder of 2022
IRM Reports FFO Q1 $0.91 v $0.70e, Rev $1.25B v $1.23Be
MCD Reports Q1 $2.28 v $2.18e, Rev $5.67B v $5.55Be
CMCSA Reports Q1 $0.86 v $0.80e, Rev $31.0B v $30.5Be
DPZ Reports Q1 $2.50 v $3.07e, Rev $1.01B v $1.02Be
*(DE) GERMANY APR PRELIMINARY CPI M/M: 0.8% V 0.5%E; Y/Y: 7.4% V 7.2%E
GWW Reports Q1 $7.07 v $6.17e, Rev $3.6B v $3.52Be; Raises FY guidance
TWTR Reports Q1 $0.90* v $0.04e, Rev $1.20B v $1.21Be; Will not provide outlook
*(US) Q1 ADVANCE GDP ANNUALIZED Q/Q: -1.4% V +1.0%E (below all analysts estimates); PERSONAL CONSUMPTION: 2.7% V 3.5%E
*(US) Q1 ADVANCE GDP PRICE INDEX: 8.0% V 7.2%E; CORE PCE Q/Q: 5.2% V 5.5%E (Highest since 1981)
(US) Nevada reports Mar casino gaming Rev $1.36B, +26.8% y/y; Las Vegas strip Rev $746.2M, +48.8% y/y
HLAG.DE Reports prelim Q1 EBIT €4.3B, EBITDA €4.7B; Avg freight rate increased by ~80%; Raises FY22 outlook
(RU) Reportedly Germany has dropped opposition to EU embargo of Russian oil; Embargo now seen as imminent but no target date has been set - press
(UR) White House requests further $33B in additional aid for Ukraine through Sept
(US) Apr Kansas City Fed Manufacturing Activity Index: 25 v 35e
INTC Reports Q1 $0.87 v $0.80e, Rev $18.4B v $18.3Be; Affirms FY22 guidance
AMZN Reports Q1 -$7.56** (incl Rivian loss) v +$8.73e, Rev $116.4B v $117.0Be; Notes this year Prime Day to take place in July 2022
AAPL Reports Q2 $1.52 v $1.43e, Rev $97.3B v $94.5Be; Authorizes $90B increase to its share buyback program; Raises Quarterly dividend 4.5% to $0.23 from $0.22
AAPL CEO Cook: Supply constraints significantly lower in Q2 than in Q1 - press interview
FRI 4/29
(CN) China Politburo: Will prevent 'black swan' and 'grey rhino' events; Reiterates that domestic economy is facing increasing uncertainties and complexities; Striving to attain full year social and economic targets - China Press
BAS.DE Reports final Q1 Net €1.22B v €1.72B y/y, adj EBIT €2.82B v €2.32B y/y, Rev €23.1B v €19.4B y/y
*(FR) FRANCE Q1 PRELIMINARY GDP Q/Q: 0.0% V 0.3%E; Y/Y: 5.3% V 5.5%E
ENI.IT Reports Q1 adj Net €3.27B v €270M y/y, adj Op €5.19B v €1.32B y/y, Rev €32.1B v €14.5B y/y
*(FR) FRANCE APR PRELIMINARY CPI M/M: 0.4% V 0.2%E; Y/Y: 4.8% V 4.6%E
*(ES) SPAIN Q1 PRELIMINARY GDP Q/Q: 0.3% V 0.6%E; Y/Y: 6.4% V 6.7%E
(CN) China said to end regulatory scrutiny over Big Tech and give sector bigger role in boosting slowing economy - SCMP
*(DE) GERMANY Q1 PRELIMINARY GDP Q/Q: 0.2% V 0.2%E; Y/Y: 3.7% V 3.6%E (avoids a technical recession)
*(IT) ITALY Q1 PRELIMINARY GDP Q/Q: -0.2% V -0.2%E; Y/Y: 5.8% V 5.8%E
3328.HK Reports Q1 (CNY) Net 23.3B v 22.0B y/y, Rev 73.7B v 68.4B y/y
*(EU) EURO ZONE APR ADVANCE CPI ESTIMATE Y/Y: 7.5% V 7.5%E; CPI CORE Y/Y: 3.5% V 3.2%E (annual pace matches the record high since Euro's launch)
CVX Reports Q1 $3.36 v $3.44e, Rev $54.4B v $47.0Be; To increase FY22 Capex by 50% or ~$1.5B
HON Reports Q1 $1.91 v $1.86e, Rev $8.38B v $8.35Be
(RU) Russia govt spokesperson Peskov: Considering idea of pegging the rouble (RUB) rate to gold prices
(RU) Russian govt spokesperson: Have considered pegging RUB currency (Ruble) to gold (**Note: response to question)
BMY Reports Q1 $1.96 v $1.92e, Rev $11.6B v $11.3Be; Cuts guidance
PSX Reports Q1 $1.32 v $1.14e; Saw substantially improved financial results from our operations in March and expect continued strong performance in Q2
(CN) China regulators reportedly plan to hold off rules limiting users' activity on mobile platforms - US financial press
*(US) MAR PCE DEFLATOR M/M: 0.9% V 0.9%E; Y/Y: 6.6% V 6.7%E
(RU) Russia Finance Min Siluanov: Channeled $564.8M in US dollars to pay coupons on 2022 and 2042 eurobonds via London branch of Citibank
(US) Atlanta Fed GDPNow: Initial Q2 GDP forecast at 1.9%
(EU) EU countries reportedly likely to approve phased embargo on Russia oil as soon as next week - NY Times
(US) Mar Dallas Fed Trimmed Mean PCE +3.1% v +4.0% m/m

Sunday, April 24, 2022

Amid Central Bank Jawboning Stocks Falter Badly, Led By the NASDAQ 

Weekly Market Update: Amid Central Bank Jawboning Stocks Falter Badly, Led By the NASDAQ


US stock markets came out of the Easter holiday break on fairly solid footing, perhaps boosted by the end of tax season selling. Also, early season earnings reports provided some optimism, particularly among the industrials and other sectors closely attuned to the economic environment. Many firms posted surprisingly strong revenue beats, spurred by price increases, but remained cautious in terms of EPS, margins, and their near-term outlooks, despite highlighting a very robust demand environment. Sentiment was also potentially helped by a federal court ruling that cleared the way for the CDC to take down mask mandates, serving as major sign post that the US, at least, continues to move past the pandemic stage of Covid-19. Momentum reversed though, quite abruptly, following a debacle of an earnings report from Netflix which, along with another surge in global interest rates, brought about a significant sell-off in the NASDAQ that was never really able to regain any stability.

Another leg higher for global bond yields weighed on risk appetite heavily through the latter half of the week. The US 10-year yield approached 3% on a few occasions but was unsuccessful in breaching that mark for the first time since 2018. Nevertheless, rising inflation expectations spurred another bout of hawkish central bank speak on both sides of the Atlantic. Some ECB officials suggested a rate hike could be in the cards as early as July, signaling a hawkish shift, while the BOE opened the door to debating a 50 bps move at their next meeting. Fed officials, most notably Chairman Powell, remained vociferous ahead of their quiet period to take effect next week. By Friday, futures markets were pricing in three 50 basis point hikes at the next three consecutive FOMC meetings, while pundits begun to talk up the possibility of a 75bps move in May. Inflation expectations remained on the rise, signified by the US 10-year breakeven rate hitting another record high above 3%. The S&P fell back into correction territory and Dow dropped more than 1000 points on Friday as the VIX jumped more than 20% back above 25. The surge in volatility came after a particularly wild US trading session on Thursday, which saw S&P futures trade both above and below each of the 50-, 100-, and 200-day moving averages. The last time this occurred was in late 2007 in the lead-up to the Great Recession. For the week, the S&P fell 2.75%, the Dow lost 1.9%, and the NASDAQ slumped 3.8%.

In corporate news this week, Bank of America saw a Q1 profit drop but an increase in loan demand across all segments and a boost in card customer travel spend. American Express saw a similar boost to T&E spending in the quarter after the Omicron variant faded away, as the credit card provider posted a beat on its Q1 top and bottom line. Netflix shares were crushed after the streaming giant projected losing customers in the Q2, with executives pointing to account-sharing and the departure from Russia as headwinds. Tesla once again posted record profits as the EV maker was able to outflank supply chain issues that have hampered the auto sector overall.

United Airlines shares lifted after the company said it’s seeing the strongest demand environment in decades. Snap reported weaker than expected profit as its leadership warned forward visibility is ‘as difficult today, or perhaps more difficult, than at any point in recent memory.’ Gap weighed on the retail sector after cutting its Q1 sales growth outlook and announcing changes at its Old Navy unit.

SUN 4/17
(EU) EU Commission President Von der Leyen: 6th package of sanctions against Russia to include oil sanctions and additional measures against Russian banking sector, in particular Sberbank - German press interview
(RU) Traders circulating video fragments from Russian state TV political shows that included some criticism of Russian Defense Ministry actions (including flagship Moskva sinking) and voiced calls not to prolong the war for the first time since invasion began on Feb 24th
(UR) Ukraine President Zelenskiy: Any Ukraine-Russia peace talks will end if Moscow eliminates Mariupol city fighters; Ukraine can fight Russia even for 10 years
(US) US and European countries working on new long-term strategy on relationship with Russia actively seeking its isolation and weakening - US press
(US) Interior Department Announces Significantly Reformed Onshore Oil and Gas Lease Sales; Raises royalty rate to 19% for first time in decades
(JP) Bank of Japan (BOJ) Gov Kuroda: Recent drop in JPY currency (Yen) has been 'very rapid'; Weak Yen is positive for the economy as a whole, rapid weakness drives negative effects

MON 4/18
(RU) Russia Central Bank (CBR) Gov Nabiullina: We should be able to lower the key rate faster; Gradually easing capital controls, may ease rules for mandatory FX sales by exporters** by softening timing and volume of mandatory FX revenue sales
(RU) Austria Chancellor Nehammer: Pres Putin believes he is winning the war; Putin said it would be better the war ended earlier than later - interview
BAC Reports Q1 $0.80 v $0.76e, Rev $23.2B v $23.2Be
(LY) Libya official: 535Kbpd of domestic oil production is currently shut down
(US) Fed’s Bullard (voter, hawkish dissenter): Won't rule out 75 bps hike but not my base case; Hopeful balance sheet runoff can start at the coming meeting; Inflation is far too high for comfort
JBHT Reports Q1 $2.29 v $1.91e, Rev $3.49B v $3.26Be
(UR) Ukraine President Zelenskiy: Confirms active phase of the Russian offensive in Donbas began
CDC mask mandate overturned by federal court ruling, DHS will no longer require masks for air travel; Various companies have stopped mask mandate on domestic flights
(KR) Bank of Korea (BOK) Gov Nominee Rhee: Rate hikes should continue unless an issue for growth

TUES 4/19
(PL) Poland Central Bank (NBP) member Wnorowski: See no end to rate hikes in coming months; Base Rate may rise to 7.50%
(FR) France Fin Min Le Maire: Embargo on Russian oil in the works; Hope to convince EU partners to stop importing Russian oil
(RU) Russia Foreign Min Lavrov: Confirms another stage of special military operation is beginning; Russia will only use conventional arms in Ukraine during this stage - Indian tv interview
(RU) Russian Defense Min Shoigu: Events in recent months show how important it is for Russia to continue to perfect its army
TRV Reports Q1 $4.22 v $3.70e, Rev $8.81B v $8.93Be; Raises Quarterly dividend 5.7% to $0.93 from $0.88 (indicated yield 2.01%)
MAN Reports Q1 $1.88 v $1.56e, Rev $5.14B v $5.11Be
ACC Confirms to be acquired by Blackstone for $65.47/shr in ~$12.8B deal; Suspends payment of its quarterly dividend, effective immediately
PLD Reports FFO Q1 $1.09 v $1.08e, Rev $1.22B v $1.09Be
(NZ) Fonterra Global Dairy Trade Auction Dairy Trade price index: -3.6% v -1.0% prior
(US) Atlanta Fed GDPNow: Raises Q1 GDP forecast to 1.3% from 1.1%
NFLX Reports Q1 $3.53 v $2.92e, Rev $7.87B v $7.94Be; Plans to accelerate viewing and Rev growth; To present proposal to declassify board in June meeting for Netflix to evolve to a more standard large cap company governance structure
RIO.AU Reports Q1 Pilbara iron ore shipments 71.5Mt v 73.1Mte (v 77.8Mt y/y); Pilbara iron production 71.7Mt v 76.4Mt y/y

WEDS 4/20
ASML.NL Reports Q1 Net €1.73 v €1.60e, Rev €3.53B v €3.48Be; Guides Q2 below consensus
BN.FR Reports Q1 Rev €6.24B v €5.66B y/y
BN.FR CEO: supply chain issues in North America are stabilizing - post earnings commnets
(RU) Reportedly some Kremlin elites realize the Ukraine war is a catastrophic mistake and worry Pres Putin could order a tactical nuclear strike - press
(JP) BOJ reportedly set to look past the weakening Japanese yen (JPY) and leave its forward guidance unchanged at the Apr 27-28 policy meeting - MNI News
(RU) Russia Foreign Ministry spokesperson Zakharova: Russia has lost confidence in Ukrainian negotiators
ANTM Reports Q1 $8.25 v $7.81e, Rev $38.1B v $37.4Be
PG Reports Q3 $1.33 v $1.29e, Rev $19.4B v $18.7Be; Sees repurchasing of $10B of shares during FY22
(RU) Reportedly EU preparing impact assessment on Russia oil embargo, talking to suppliers; Germany remains the key opponent to oil ban, suggesting nuclear fuel embargo instead for 6th EU sanction package against Russia - financial press
ABT Reports Q1 $1.73 v $1.47e, Rev $11.9B v $11.1Be
(DE) ECB's Nagel (Germany, hawk): ECB could raise rates early in Q3; Stagflation scenario must be avoided
TATA.IN European unit to stop doing business with Russia; Says they have sourced alternative supplies of raw materials - press
(US) Association of American Railroads weekly rail traffic report for week ending Apr 16th: 490K total units, -8.1% y/y
RAD Reportedly rejected a $14.60/shr takeover bid this month from Spear Point Capital; Spear Point now mulling launching hostile tender offer directly to shareholders - NY Post
AA Reports Q1 $3.06 v $2.99e, Rev $3.29B v $3.50Be
UAL Reports Q1 -$4.24 v -$4.19e, Rev $7.57B v $7.68Be; Sees strongest demand environment in decades
(CN) China President Xi: China to push for free trade agreements with more countries; Global Economic recovery is weak; Calls for coordinated macroeconomic and coronavirus policies among countries - Boao forum comments

THURS 4/21
ABBN.CH Reports Q1 $0.31 v $0.29e, Rev $6.97B v $7.09Be
NESN.CH Reports Q1 (CHF) Rev 22.2B v 21.7Be
(RU) Russia Defense Min Shoigu: Russian forces have captured Mariupol but there are still more than 2,000 Ukrainian fighters in Azovstal steel plant in Mariupol; Agree with Pres Putin to cancel plans to storm the Azovstal plant - meeting with Putin
(RU) Austria and its main oil firm OMV stopped importing and refining oil from Russia in Mar - Russian press
CON.DE Reports Q1 Rev €9.3B v €8.7Be y/y; Cuts FY22 adj EBIT outlook citing cost inflation
*(EU) EURO ZONE MAR FINAL CPI Y/Y: 7.4% V 7.5%E; CPI CORE Y/Y: 2.9% V 3.0%E
DOW Reports Q1 $2.32 v $2.02e, Rev $15.3B v $14.4Be
(DE) German Foreign Min Baerbock: There are no taboos for Germany with regard to weapons and heavy weaponry which Ukraine needs
T Reports Q1 (Ex WarnerMedia) $0.63 v $0.61e, Rev $29.7B v $29.0Be
WSO Reports Q1 $2.90 v $1.82e, Rev $1.52B v $1.38Be
(UK) BOE's Mann (hawkish): Looking at whether a larger than 25bps move is necessary; Key for May meeting is assessing drag on economy
TWTR Elon Musk (9.1% holder) discloses has received commitment letters committing to provide an aggregate of ~$46.5B for takeover; Has not commenced or determined to commence any tender offer for shares of Twitter; May take additional steps as appropriate - 13D/A filing
(US) Pres Biden: New $800M aid package to Ukraine includes dozens of Howitzers, ammunition, drones, and heavy artillery; Putin will never succeed in occupying Ukraine
(US) Fed Chair Powell: Volcker understood role played by price expectations, understood importance of Fed independence
(US) Fed's Daly (non-voter, dove): Reiterates rates expeditiously marching towards neutral; Sees likely hiking by 50bps at "couple of meetings"
KER.FR Reports Q1 Rev €4.96B v €4.6Be
(RU) Russia Central Bank (CBR): Extends measures to soften FX currency controls to all export-focused companies
(US) Fed Chair Powell: 50bps hike will be on the table for May meeting; It is appropriate to be moving quickly - IMF panel comments
(CA) Canada PM Trudeau to implement two-year ban on foreign home-buying; Also to raise taxes for people who sell their home within a year
(UK) Apr GfK Consumer Confidence: -38 v -33e (lowest since July 2008)
(CN) Shanghai reports 403 [out of 666] key businesses have resumed production; lockdown will be lifted in batches once zero-COVID is reached at the community level
(CN) Reportedly China Securities Regulator (CSRC) has encouraged larger investors in China to purchase more equities in an effort to prop up the market during the sell off; Comments came during a meeting held on Apr 21st - Press

FRI 4/22
(JP) Japan Fin Min Suzuki and US Treasury Sec Yellen said to have likely to have discussed coordinated currency intervention during talks; Sounded as if the US side would consider idea positively - Japanese press
RNO.FR Reports Q1 Rev €9.75B v €9.20Be; To provide update to strategy at CMD in fall 2022
SAP.DE Reports prelim Q1 (Non-IFRS) EPS €1.00 v €1.13e, Op profit €1.68B v €1.74B y/y, Cloud Rev +31%, Rev €7.08B v €6.92Be
*(UK) MAR RETAIL SALES (EX-AUTO/FUEL) M/M: -1.1% V -0.4%E; Y/Y: -0.6% V +0.8%E
*(FR) FRANCE APR PRELIMINARY PMI MANUFACTURING: 55.4 V 53.7E (17th month of expansion)
*(DE) GERMANY APR PRELIMINARY PMI MANUFACTURING: 54.1 V 54.5E (22nd month of expansion but lowest since Aug 2020)
*(EU) EURO ZONE APR PRELIMINARY PMI MANUFACTURING: 55.3 V 54.9E (22nd month of expansion)
(RU) Russia Defense Min Deputy Head Minnekayev: Plan to take full control of Donbas and Southern Ukraine** as part of second phase of military operation; Planning to secure land passage to Crimea
*(UK) APR PRELIMINARY PMI MANUFACTURING: 55.3 V 54.0E (23rd month of expansion)
(EU) ECB chief Lagarde said to have told Council members to hold back on 'personal dissenting' views on decisions until the Monday after the decisions are published - financial press
(CN) China Apr gasoline, diesel and aviation fuel consumption said to have dropped 20% y/y (biggest decline since pandemic) - press
SLB Reports Q1 $0.34 v $0.32e, Rev $5.96B v $5.89Be; Sees positive outlook extends further into 2023; Raises Quarterly dividend 40% to $0.175 from $0.125 (indicated yield 1.72%)
AXP Reports Q1 $2.73 v $2.44e, Rev $11.74B v $11.7Be