Early Look

Thursday, January 13, 2022

Futures	Up/Down	%	Last
Dow	44.00	0.12%	36,204
S&P 500	2.00	0.04%	4,718
Nasdaq	4.00	0.03%	15,891

 

 

U.S. futures are looking flat along with European markets as Wall Street awaits round two of inflation reports later this morning. Inflation data not out of the way yet after yesterday’s CPI (which was the highest reading in 40-years) with December PPI coming up at 8:30 AM ET. Producer Price Index (PPI) MoM for December est. to rise +0.4% and YoY expected to rise +9.8%, while on a core level (ex: food & energy), PPI MoM est. to rise +0.5% and YoY to rise +8.0%. Yesterday, U.S. stocks edged higher after a key inflation report (CPI) showed a historic gain but largely matched expectations, as large caps boosted the Dow, S&P and Nasdaq, while the Smallcap Russell 2000 finished the day lower. The headline consumer price index rose 7% from last year, marking the fastest rate of inflation since June of 1982. In Asian markets, The Nikkei Index declined -0.96% to 28,489, the Shanghai Index slipped -1.17% to 3,555, and the Hang Seng Index rose 27 points to 24,429. In Europe, the German DAX is flat just above the 16,000 level, while the FTSE 100 is down a few points to 7,545. One day away from the unofficial start to earnings season, with several big banks expected to report tomorrow morning.

Market Closing Prices Yesterday

·     The S&P 500 Index jumped 13.28 points, or 0.28%, to 4,726.35

·     The Dow Jones Industrial Average rose 38.30 points, or 0.11%, to 36,290.32

·     The Nasdaq Composite gained 34.94 points, or 0.23%, to 15,188.39

·     The Russell 2000 Index declined -17.95 points, or 0.82% to 2,176.06

 

Events Calendar for Today

·     8:30 AM ET        Weekly Jobless Claims…est. 200K

·     8:30 AM EST      Continuing Claims…est. 1.733M

·     8:30 AM ET        Producer Price Index (PPI) MoM for December…est. +0.4%

·     8:30 AM ET        Producer Price Index (PPI) YoY for December…est. +9.8%

·     8:30 AM ET        PPI Ex: Food & Energy (core) MoM for Dec…est. +0.5%

·     8:30 AM ET        PPI Ex: Food & Energy (core) YoY for Dec…est. +8.0%

·     10:30 AM ET      Weekly EIA Natural Gas Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: DAL

·     Earnings After the Close: AYR

 

Other Key Events:

·     Jefferies 2022 Software Bus Tour (virtual), 1/10-1/14

·     JPMorgan 40^th Annual Healthcare Conference (virtual), 1/10-1/13

·     Needham 24^th Annual Growth Conference (virtual), 1/10-1/14

·     UBS Greater China Conference (virtual), 1/11-1/14

 

 

Macro	Up/Down	Last
Nymex	-0.02	82.62
Brent	0.08	84.75
Gold	-2.15	1,824.00
EUR/USD	0.0025	1.1467
JPY/USD	-0.16	114.48
10-Year Note	+0.027	1.752%

 

 

World News

·     Wells Fargo sees Federal Reserve raising interest rates four times this year, up from previously forecast two rate hikes; sees the Fed hike rates by 25 bps at March 16 policy meeting, to raise rates by 25 bps per quarter through q3 2023; expects the Fed to start shrinking balance sheet as additional means of removing monetary accommodation in q3 2023

·     Fed’s Brainard says inflation is too high in prepared remarks for U.S. Senate banking committee nomination hearing; our monetary policy is focused on getting inflation back down while sustaining recovery that includes everyone; getting inflation back down to 2% while sustaining recovery that includes everyone is ‘our most important task’

·     The bull-bear spread in the American Association of Individual Investors (AAII) weekly survey was -13.4 vs -0.5 last week; Bulls fall to 24.9% from 32.8%; Neutrals rise to 36.8% from 33.9%; Bears rise to 38.3% from 33.3%

·     Switzerland’s central bank has successfully used digital currency to settle transactions involving five commercial banks, the Swiss National Bank said on Thursday

 

Sector News Breakdown

Consumer

·     KB Homes (KBH) Q4 EPS $1.92 vs. est. $1.77; Q4 revs rose 40% YoY to $1.68B vs. est. $1.71B; operating income margin improved 310 basis points to 12.8%; gross margin increased to 22.3%; net order value up 12% to $1.77 billion; ending backlog value grew 67% to $4.95 billion; Average selling price increased 9% to $451,100; Homes delivered increased 26% to 13,472

·     Daimler AG (DDAIF) said it would bundle its German car- and van-rental businesses into a single entity; said it would combine Mercedes-Benz Rent and Mercedes-Benz Van Rental to create an integrated rental specialist called Mercedes-Benz Automotive Mobility GmbH.

·     Mattel (MAT) upgraded to Buy with $30 tgt at MKM Partners

·     Volt Information (VOLT) 4Q adj EPS $0.11 vs est. $0.07 on revs $227.8Mm vs est. $223.5Mm

 

Energy, Industrials and Materials

·     Boeing (BA) shares up 2% following headline Boeing 737 max to resume service in China as soon as this month, as per Bloomberg

·     Delta Airlines (DAL) Q4 adj EPS $0.22 vs. est. $0.14; Q4 revs $9.47B vs. est. $9.21B; see’s losses in January, February but a return to healthy profit in June, sept, dec quarters; see’s meaningful profit this year; said expects revenue to recover to between 72% and 76% of 2019 levels, compared with 74% in the fourth quarter.

·     Indonesian investigators may need another year to determine the cause of last year’s crash of a Sriwijaya Air jet that killed all 62 people on board, according to an interim report released on Thursday. The 26-year-old Boeing Co 737-500 had an imbalance in engine thrust that eventually led the plane into a sharp roll and then a final dive into the sea, the interim report said.

·     Concrete Pumping Holdings, Inc. (BBCP) 4Q EPS $0.05 vs est. $0.10 on revs $87.8Mm vs est. $82.9Mm; guides FY22 revs $360-370Mm vs est. $334Mm

 

Financials

·     Coinbase (COIN) said it is buying FairX, a CFTC-regulated derivatives exchange; plans to bring regulated crypto derivatives to the market, initially through FairX’s existing partner ecosystem

·     TPG Inc. (TPG) priced its 33.9M share IPO at $29.50 a share, the mid­point of its projected range of $28-$31 apiece

·     Marqeta (MQ) upgraded to Buy from Neutral saying following a disappointing start ‘out-of-the-gate’ with decelerating volumes from MQ’s top customers ex-SQ, our analysis shows growth for this cohort likely inflected positively in 3Q despite several customers’ decelerating growth, potentially reflecting wallet-share gains

·     Ares Capital (ARCC) announces offering of 10M shares of common stock

·     Victory Capital (VCTR) reports total AUM $183.7B on December 31, 2021

 

Healthcare

·     Adagio Therapeutics (ADGI) said ADG20 has neutralization activity against omicron and cites recent findings from three publications on ADG20

·     Integra Lifesciences Holdings (IART) entered an accelerated share repurchase agreement to repurchase $125 mln of co’s shares

·     Puma Biotechnology’s (PBYI) Nerlynx® included in two important NCCN clinical practice guideline updates for the treatment of breast cancer

 

Technology, Media & Telecom

·     Taiwan Semiconductor Manufacturing (TSM) said earnings for the three months ending in December rose 16.4% from last year to just of $6 billion, with revenues surging 24.1% to $15.75 billion; said it would boost capital spending to between $40B-$44B this year, a 33% increase

·     IAC (IAC) reports December Angi (ANGI) revenue up 16% from last year; as part of its December monthly metrics disclosure, IAC also reports Dotdash revenue up 5%, and its Search business revenue up 47% from last year; Emerging & Other revenue was up 69% from last year

·     Mimecast (MIME) said to draw higher bid from security rival Proofpoint (PFPT) – Bloomberg. Mimecast had until Jan. 7 to solicit other bids under the agreement it reached on Dec. 7 with Permira for about $5.8B

·     E2open (ETWO) raises FY22 revenue view to $474M-$476M from $470M-$474M (est. $472.73M), while backs FY22 adjusted EBITDA view $161M-$163M after Q3 results miss

·     Elastic (ESTC) announced the promotion of Ashutosh Kulkarni to CEO and his nomination to the board; will succeed Founder and CEO Shay Banon, who reassumes the role of CTO; said it now expects to exceed its guidance for revenue, non-GAAP operating margin and EPS

·     Bumble (BMBL) upgraded to Buy from Neutral at Goldman Sachs but trim tgt to $54 from $57

·     Match Group (MTCH) upgraded to Buy from Neutral at Goldman Sachs and trim tgt to $157 from $162