Hammerstone Markets Early Look

By admin | 04/20/2022

Early Look

Wednesday, April 20, 2022

S&P futures are flat to slightly lower, while Nasdaq futures drop more after shares of Netflix (NFLX) lost over 25% after posting an unexpected decline in quarterly subscribers and a mixed quarter. Nasdaq futures still looking much better than overnight, down -0.2% vs. being down as much as down 1%. U.S. Treasuries extend gains; 10-year yield drops 5-bps to 2.88% which is helping sentiment (down from overnight highs of around 2.98%). The U.S. dollar is also pulling back after a recent run to 3-year highs (and more than decade highs vs. the haven Japanese yen). In Asian markets, The Nikkei Index rose 232 points to 27,217, the Shanghai Index fell -1.35% or 43 points to 3,151, and the Hang Seng Index dipped -0.4% to 20,944. In Europe, the German DAX is up over 150 points to 14,310, while the FTSE 100 gains about 30-points to 7,630. U.S. data today includes the Fed’s Beige Book, was well as existing home sales for March. Today’s Fed speakers should be the final round of Fed comments before the media blackout period ahead of the 3-4 May FOMC meeting. Another big day of earnings with PG this morning and Tesla (TSLA) after the close tonight.

Market Closing Prices Yesterday

• The S&P 500 Index jumped 70.52 points, or 1.61%, to 4,462.21
• The Dow Jones Industrial Average rose 499.51 points, or 1.45%, to 34,911.20
• The Nasdaq Composite surged 287.30 points, or 2.15%, to 13,619.66
• The Russell 2000 Index advanced 40.63 points, or 2.04% to 2,030.77

Economic Calendar for Today

• 7:00 AM ET         MBA Mortgage Applications Data
• 10:00 AM ET       Existing Home Sales m/m for March
• 10:30 AM ET       Weekly DOE Inventory Data

Earnings Calendar:

• Earnings Before the Open: ABT, ANTM, BHLB, BKR, CMA, GATX, HCSG, LAD, MKTX, MTB, NDAQ, PG, USAP, TCBI
• Earnings After the Close: AA, BANR, BDN, CCI, CNS, CSX, EFX, EGBN, GL, GSBC, INBK, KALU, KMI, KNX, LRCX, LSTR, MIND, MMLP, RLI, SEIC, SLG, SNBR, STLD, TBK, TCBI, THC, TSLA, UAL, UMPQ, VMI

World News

• IMF Chief Economist Gourinchas said if inflation is elevated for another couple more months in advanced economies & wages pressures continue to rise, we’ll likely see more aggressive monetary policy tightening; the Russia/Ukraine war is piling onto an already elevated inflation environment
• Fed’s Bostic said yesterday the Fed shouldn’t move so fast that it chokes off growth; Neutral rate could be as low as 1.75%, inflation could be topping; he noted that real incomes adjusted for the cost of living have been falling.
• Fed’s Evans said yesterday the key U.S. interest rate to go to 2.5% — and likely higher ‘; if we get to 2.25% to 2.5% rates by December, we will be able to look at where inflation is; could raise rates by half-point increments a few times this year, with the potential that rates could eventually top 3%.
• Japan March Trade Balance larger deficit: JPY -412.4b vs JPY -100.8b consensus; Japan March Imports higher: +31.2% y/y vs +28.9% consensus; Exports lower: +14.7% y/y vs +17.5% consensus

Sector News Breakdown

Consumer

• Lululemon (LULU) outlines fresh 5-year financial targets, sees revenue doubling from 2021 levels by 2026, reaching $12.5 billion. Lululemon also expects to double it men’s business — having already doubled men’s sales from 2018 to 2021.
• Lithia & Driveway (LAD) Q1 adjusted EPS $11.55 vs. est. $10.09; Q1 revs $6.71B vs. est. $6.28B; qtrly used vehicle retail revenues increased 65.2%; qtrly new vehicle retail revenues increased 39.6%; announced $0.42 dividend
• Stride Inc. (LRN) Q3 EPS $1.02 vs. est. $0.84; Q3 revs $421.7M vs. est. $411.1M; Q3 adjusted EBITDA $90.3M vs. $75.0M y/y; raises FY22 revenue view to $1.645B-$1.66B from prior $1.62B-$1.64B and vs. consensus $1.63B
• Tesla (TSLA) CEO Elon Musk revealed that the automaker has now over 100,000 people in its Full Self-Driving (FSD) Beta program – note TSLA to report earnings after the close tonight

Energy, Industrials and Materials

• The American Petroleum Institute (API) reported weekly crude draw of -4.496M barrels, Cushing build of +0.093M barrels, gasoline build of +2.933M barrels and distillates draw of -1.652M
• Marten Transports (MRTN) Q1 EPS $0.33 vs. est. $0.26; Q1 revs rose 28.8% to $287.28M vs. est. $261.77M; Operating income improved 49.4% to $35.9 million for the first quarter of 2022 from $24.0 million for the first quarter of 2021

Financials

• Credit Suisse Group AG (CS) warned it will make a loss in Q1 from rising litigation costs and loan losses related to Russia; said litigation provisions will be around $740M citing developments in legal cases, and said results will be hit by around $212M in negative revenues and loan-loss provisions stemming from Russia’s invasion of Ukraine
• First Horizon Corp. (FHN) Q1 adj EPS $0.38 vs. est. $0.35; Q1 revs $707M; ROTCE of 13.0% and Adjusted ROTCE of 14.7% with tangible book value per share of $10.46
• Fulton Financial (FULT) Q1 EPS $0.38 vs. est. $0.32; Q1 net interest income was $161.3 million, $4.3 million lower than Q4; net interest margin for the q1 of 2022 increased 1 basis point, to 2.78%, from 2.77% in the fourth quarter of 2021
• Hancock Whitney (HWC) 1Q EPS $1.40 vs est. $1.31, NII $231Mm vs est. $230Mm
• Interactive Brokers (IBKR) Q1 EPS $0.82 in-line w ests; Q1 revs $692M vs. est. $696.1M; said Q1 customer accounts increased 36% to 1.81M, customer equity grew 8% to $355.9B; total DARTs decreased 24% to 2.52M; customer margin loans increased 14% to $48.2 billion; net interest income fell -8% to $282M
• M&T Bank (MTB) Q1 Non-GAAP EPS of $2.73 beats by $0.39, revenue of $1.45B beats by $20M
• PacWest Bancorp (PACW) Q1 EPS $1.01 vs. est. $1.04; tangible book value per share of $18.42 at 1q22; NIM on taxable-equivalent basis 3.43% vs. 3.69% y/y; No Provision for Credit Losses in 1Q22 vs. Benefit of $6M; core Deposits down $1.1B or 3.2%
• Rexford Industrial Realty (REXR) 1Q core FFO/share $0.48 vs est. $0.45; Consolidated Portfolio Net Operating Income (NOI) of $107.2 million, an increase of 40.9% as compared to the prior year quarter; Same Property Portfolio NOI increased 8.0% and Same Property Portfolio Cash NOI increased 11.7% as compared to the prior year quarter; guides year $1.84-$1.88 vs. est. $1.91
• United Community Banks (UCBI) Q1 EPS $0.43 vs. est. $0.54; Q1 revs $179.7M vs. est. $203.18M; Q1 net interest margin up 16-bps to 2.97% mainly due to the impact of the Reliant acquisition and the deployment of cash into securities

Healthcare

• Anthem (ANTM) Q1 adj EPS $8.25 vs. est. $7.81; Q1 revs $37.9B vs. est. $37.35B; raises FY22 adjusted EPS view to greater than $28.40 from prior view greater than $28.25 (est. $28.48); Q1 operating gain grew by 13.2% over the prior year quarter to $2.4 billion; Q1 Medical enrollment increased by 3.3M members y/y and 1.4M members sequentially to 46.8M members.
• Teva Pharmaceuticals (TEVA) said the FDA issued a Complete Response Letter (CRL) regarding the New Drug Application (NDA) for TV-46000/mdc-IRM (risperidone extended-release injectable suspension for subcutaneous use) for the treatment of schizophrenia

Technology, Media & Telecom

• Netflix (NFLX) shares down -27% after 1^st sub decline; 1Q EPS $3.53 vs est. $2.89 on revs $7.87B vs est. $7.93B; guides 2Q EPS $3.00 vs est. $3.02 and revs $8.05B vs est. $8.2B; says relatively high household penetration (including large number of households sharing accounts) and competition creating rev growth headwinds; said net lost -20K subs in quarter vs est. +2.5Mm; says in near term not growing revs as fast as would like; NFLX also lost subs in EMEA (-300K) and LATAM (-350K), lost 640K subscribers in US/Canada
• IBM Corp. (IBM) 1Q EPS $1.40 vs est. $1.38 on revs $14.2B vs est. $13.85B, op gr margin 52.9%; now sees constant currency revs growth at high end of +mid-single-digit range vs est. +5.8%; continues to expect $10-10.5B consolidated free cash flow for FY22
• Omnicom (OMC) 1Q adj EPS $1.39 vs est. $1.31 on revs $3.41B vs est. $3.29B, op margin 10.4%; says have sold or committed to dispose of all biz in Russia; raises FY22 organic growth view to 6.0%-6.5% from 5%-6%
• ASML (ASML) posted Q1 sales of 3.5 billion euros ($3.80 billion) vs. est. of 3.45 billion euros, while Q1 net income also came in above estimates; Bookings remain strong at 226 billion euros; forecast Q2 sales of 5.1-5.3 billion euros and left a forecast for full year sales growth of 20% unchanged. Net bookings in the quarter were 7 billion euros.

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