Early Look

Wednesday, January 19, 2022

Futures	Up/Down	%	Last
Dow	39.00	0.11%	35,298
S&P 500	8.25	0.19%	4,579
Nasdaq	50.00	0.33%	15,256

 

 

U.S. futures are edging slightly higher despite Treasury yields also pushing higher as the benchmark 10-year yield topped 1.9% overnight for the first time in nearly 2-years as rising interest rate expectations and inflation rise. Geopolitical headlines helping futures after Reuters reported, citing Russian Deputy Foreign minister, that they do not believe there will be a military conflict in Europe (helping boost Russian markets as well). Stocks are looking to recover following a sharp decline Tuesday that took the S&P 500 index below its 100-day Moving average support of 4,575 late day. Technology was the biggest drag on markets yesterday while energy extended its recent outperformance on rising oil prices (moving to 7-year highs). The Nasdaq Composite ended down about 9.7% from its Nov. 19 record close and finished below its 200-day moving average for the first time since April 21, 2020. Shares of Goldman Sachs Group Inc. (GS) fell 7% Tuesday, leading Dow decliners after the investment bank delivered results that missed Wall Street expectations on earnings, with several banks reporting today (BAC, USB). In Asian markets, The Nikkei Index tumbled -790 points or 2.8% to settle at 27,467, the Shanghai Index dipped -0.33% to 3,558, and the Hang Seng Index inched higher about 15 points to 24,127. In Europe, the German DAX is up around 0.25% at 15,815, while the FTSE 100 also rises roughly 0.25% to 7,580.

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -85.50 points, or 1.83%, to 4,577.35

·     The Dow Jones Industrial Average fell -542.42 points, or 1.51%, to 35,369.39

·     The Nasdaq Composite tumbled -386.86 points, or 2.60%, to 14,506.90

·     The Russell 2000 Index declined -66.23 points, or 3.06% to 2,096.23

 

Events Calendar for Today

·     7:00 AM ET         MBA Mortgage Applications Data

·     8:30 AM ET         Housing Starts MoM for December…est. 1.65M

·     8:30 AM ET         Building Permits MoM for December…est. 1.70M

·     10:30 AM ET       Weekly DOE Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: BAC, BOKF, CBSH, CFG, CMA, FAST, MS, PG, PLD, STT, UNH, UBS

·     Earnings After the Close: AA, COLB, DFS, EGBN, FNB, FUL, INBK, KMI, NVEC, PACW, PFBC, STL, UAL, UMPQ, WTFC

 

Other Key Events:

·     Needham 1Q’22 Best Healthcare Ideas Webinar, 1/19

·     Sidoti SmallCap Conference (virtual), 1/19-1/22

 

 

Macro	Up/Down	Last
Nymex	1.20	86.63
Brent	0.91	88.42
Gold	5.55	1,819.30
EUR/USD	0.0019	1.1343
JPY/USD	-0.17	114.44
10-Year Note	+0.015	1.883%

 

 

World News

·     U.S. Nov Net Overall capital flow +$223.9B vs. +$139.3B in Oct (previous +143.0B); Nov net foreign holdings of U.S. Treasury bonds, notes +$66.4B vs. -$43.5B in Oct; China’s U.S. Treasury securities holdings 1.081 trln in Nov vs 1.065 trln in Oct and Japan’s U.S. Treasury holdings 1.341 trln vs 1.320 trln in Oct

·     China will extend preferential taxes for companies in the technology, venture capital, medical and education sectors to the end of 2023, state media quoted the cabinet as saying on Wednesday. https://bit.ly/3AbjcS0

·     Benchmark German debt yields turned positive for the first time since early 2019, with the rate on the 10-year bund climbing four basis points to 0.02%

 

Sector News Breakdown

Consumer

·     Ford Motor (F) said on a preliminary basis, special items are expected to include a Q4 gain of $8.2B on Ford’s equity investment in Rivian (RIVN); will reclassify its about $900 mln first-quarter 2021 non-cash gain on Rivian investment as a special item

·     Kroger (KR) upgraded to Neutral from Underperform at Bank America

·     Wendy’s Company (WEN) announces it is evaluating a potential debt raise transaction

 

Energy, Industrials and Materials

·     BHP Group (BHP) said Q2 iron ore production rose 4% Y/Y to 66.1M metric tons, but production of metallurgical coal, copper and nickel fell; met coal production fell 7% to 8.8M metric tons in the December quarter, and as a result BHP lowers its annual forecast for met coal to 38M-41M

·     JB Hunt (JBHT) 4Q EPS $2.28 vs est. $2.02 on revs $3.5B vs est. $3.23B; Operating revenue $3.50B, +28% y/y, Intermodal revenue $1.57B, +26% y/y, Dedicated Contract Services revenue $712.4M, +25% y/y and Integrated Capacity Solutions revenue $738.9M

·     General Electric (GE) said as part of its continued actions to strengthen its financial position, it is freezing the accrual of pension benefits for approximately 800 employees in its non-union defined benefit pension plans in Canada, effective December 31, 2023

·     Honeywell (HON) and Freyr Battery (FREY) have signed an agreement pursuant to which Freyr will, subject to viability, leverage Honeywell’s technology offerings

·     One Gas (OGS) guides FY21 EPS $3.83-3.87 vs est. $3.84 and sees FY22 EPS $3.96-4.20 vs est. $4.09; says estimates total net financing fees for period 2022-2026 about $1.6B (of which about 25% expected to be equity)

·     Orion Energy Systems, Inc. (OESX) said due to customer delays on several larger LED lighting and controls projects, primarily caused by the response of customers to supply chain disruptions and COVID-19 related impacts to their businesses, now anticipates FY 2022 revenue of approximately $130M, as compared to its prior expectation of at least $150M

 

Financials

·     Alliance Data Systems (ADS) is losing one of its biggest credit-card accounts, BJ’s Wholesale (BJ), as it is moving its co-branded credit cards to Capital One Financial Corp. (COF), according to the WSJ, citing people familiar with the matter. https://on.wsj.com/3FDswiL BJ’s is among ADS most prized credit-card partnerships, accounting for roughly $1.5B in balances, according to the report

·     Bank of America (BAC) Q4 EPS $0.82 vs. est. $0.76; Q4 revs $22.1B vs. est. $22.23B; Trading revenue excluding DVA $2.93B, FICC trading revenue excluding DVA $1.57B (light) and Equities trading revenue excluding DVA $1.37B

·     BIT Mining (BTCM) said it has achieved approximately 50 megawatts of power capacity at the Ohio mining site; also reported 491.5 PH/s total bitcoin computing power, with estimated daily production of about 2.56 BTC. It also reported 4,747.2 GH/s total Ethereum computing power, with estimated daily production of roughly 72.29 ETH.

·     Citizens Financial (CFG) Q4 EPS $1.26 vs. est. $1.13; Q4 revs $1.72B vs. est. $1.66B; qtrly NII of $1.1 bln was stable reflecting 3% growth in interest-earning assets, largely offset by lower net interest margin

·     Commerce Bancshares (CBSH) Q4 EPS $0.94 was in-line w ests; Q4 revs $355.4M vs. est. $353.46M; Q4 net interest margin 2.43%, down 15 bps from Q3; Q4 net interest income in q4 amounted to $207.7 mln, a 3.0% decrease compared to Q3

·     Concentrix Corporation (CNXC) Q4 EPS $2.99 vs. est. $2.71; Q4 revs rose 12.7% to $1.46B vs. est. $1.46B; sees Q1 revs $1.51B-$1.54B vs. est. $1.5B; sees year revs $6.45B-$6.6B vs. est. $6.16B

·     Fulton Financial (FULT) Q4 EPS $0.37 vs. est. $0.37; net interest income for Q4 of 2021 was $165.6 mln, $5.7 mln lower than Q3

·     Hancock Whitney (HWC) Q4 PS $1.55 vs. est. $1.36; Core loan growth of $652.5 million, more than offset the impact of $404.3 million in PPP loan forgiveness; Deposits increased $1.3 billion as noninterest-bearing demand deposits increased $739.4 million

·     Interactive Brokers (IBKR) 4Q adj EPS $0.83 vs est. $0.82 on revs $683Mm vs est. $672Mm; proposes qtrly cash dividend $0.10/share

·     SoFi (SOFI) has received conditional approval from the OCC to create a full-service national bank, provided the new entity does “not engage in any crypto-asset activities or services.”

·     Signature Bank (SBNY) 2.1M share Secondary priced at $352.00

 

Healthcare

·     United Healthcare (UNH) Q4 adj EPS $4.48 vs. est. $4.31; Q4 revs $73.7B vs. est. $72.75B; quarterly profit rose 84%, helped partly by growth in its Optum unit that includes its drug benefits management business; affirmed 2022 growth and performance objectives; full year 2021 medical care ratio of 82.6% compared to 79.1% in the previous year

·     UCB SA has agreed to buy biopharmaceutical company Zogenix Inc. (ZGNX) in a deal worth up to about $1.9 billion; UCB will launch a tender offer on all outstanding Zogenix shares for $26 a share in cash at closing, above Tuesday’s closing price of $15.64 https://bit.ly/3rsH4gd

·     Kinnate Biopharma Inc. (KNTE) announces FDA clearance of investigational drug application for kin-3248; planned initiation of phase 1 clinical trial for KIN-3248 in 1H2022

·     Revance Therapeutics (RVNC) said it has received the official Type A meeting minutes from the U.S. FDA regarding the Complete Response Letter (CRL) received for DaxibotulinumtoxinA for Injection for glabellar lines. The Type A meeting was held on December 15, 2021.

·     Sanofi (SNY) says second Phase 3 trial of Dupixent (dupilumab) in adults with uncontrolled prurigo nodularis, a chronic inflammatory skin disease, met its primary and key secondary endpoints.

·     DexCom (DXCM), Tandem Diabetes (TNDM) both upgraded to Overweight from Equal Weight at Wells Fargo, while upgraded Glaukos (GKOS) to Equal Weight from Underweight and downgraded NeuroPace (NPCE) to Equal Weight and Zimmer Biomet (ZBH) to Underweight

 

Technology, Media & Telecom

·     ASML Holding NV (ASML) posted increased sales and net profit for Q4 but warned that sales for Q1 of 2022 will be lower due to the delayed recognition of shipments; said the recognition of around 2 billion euros ($2.27 billion) of first-quarter shipments will be delayed into later quarters as it is introducing a fast-shipment process amid high demand; expects Q1 sales between EUR3.3 billion and EUR3.5 billion with a gross margin of around 49%.

·     Akamai (AKAM) upgraded to Overweight from Sector Weight at KeyBanc

·     Progress Software (PRGS) 4Q adj EPS $0.92 vs est. $0.74 on revs $143.73Mm vs est. $136.25Mm; guides 1Q adj EPS $0.83-0.85 vs est. $0.98 and FY adj EPS $3.95-4.05 vs est. $4.13; sees 1Q adj revs $139-142Mm vs est. $145.2Mm and FY adj revs $605-615Mm vs est. $611.6Mm

·     TikTok’s leaders have pushed out Nick Tran, the company’s head of global marketing, two people familiar with the situation told The Information. https://bit.ly/3I7U0ie

·     Disney (DIS) slammed for price hikes at theme parks, longer wait times https://bit.ly/3Iy2oIb