US EARLY MORNING: Equity futures are rallying; heavy retail focus today with earnings due from HD, WMT, as well as US retail sales, plus even more Fedspeak

US equity futures are trading with a constructive bias (NQ +1.7%, RTY +1.5%, ES +1.2%, YM +0.9%), with investors citing developments in overnight APAC trade, where new COVID cases in Shanghai’s quarantine zone were zero for a third straight day, while there were also reports that Beijing could be about to ease its regulatory crackdown on Big Tech, supporting technology focussed listings in Hong Kong; analysts said that this dynamic could help support global growth at a time when central banks are tightening policy aggressively to manage the upside in price pressures. The US Day will have a distinct retail theme today, with earnings due from Walmart (WMT, expectations are here) and Home Depot (HD, expectations are here); analysts will be looking to the results for insights on consumer spending patterns, and to judge the post-pandemic prospects for the retail giants. The US retail sales data for April will also follow these reports, and analysts are expecting growth of +0.9% M/M, with the data showing a rebound in unit vehicle sales, gas prices unwinding after the spike higher following the start of the Ukraine-Russia war, and analysts will be looking for the shift from spending on goods and onto services to continue. Elsewhere, there is a heavy slate of Fedspeak: Fed's hawkish 2022 voter Bullard will speak, Fed’s Mester (2022), Fed’s Harker (temporary 2022 voter), Kashkari (2023); but there will be outsized attention on Fed chair Powell, who is due to speak in the afternoon. The remarks from Powell and Bullard are likely to be the highlights; the influential NY Fed President Williams Monday gave no indication that the central bank was relenting on its hawkishness in spite of the market downside seen last week, and Powell is expected to reiterate this message. Bullard, meanwhile, was a member who suggested a 75bps rate hike was in the Fed's toolkit, should it need to become even more aggressive in tightening policy. Some analysts have suggested that if the Fed wanted to inject some dovishness into its rhetoric, some areas it could begin doing so include more forcefully leaning back on the prospects of a 75bps rate hike increment (Powell is already guiding towards 50bps at the next two meetings, while in wake of the hot April CPI data, Bullard said 75bps was not needed “for now”), more explicitly suggest that they could pause once rates have risen to neutral (the latest forecasts estimated this was around 2.4%, many are retaining optionality to hike above neutral), and even talk down the eventual terminal rate of the hiking cycle (implying sharp rate rises in the near-term could be followed by stability in the medium-term and at levels slightly lower than markets are expecting). Currently money markets are discounting 50bps rate hikes at the June and July meetings, with a good chance that the September meeting will also be of that magnitude; by year end, the Federal Funds Rate target is seen at 2.50-2.75%, with some probability it could be 2.75-3.00%. Our full Day Ahead calendar can be accessed here.

KEY US EQUITY LEVELS (via Credit Suisse):

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  SPX: 3859/54, 3884, 3932/30, 3964, 3980, 4039/49, 4069, 4081, 4097, 4123/28.


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  NDX: 11768, 11878, 11945, 12069, 12222, 12470, 12535/42, 12677/94, 12805, 12889.


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  RUT: 1670, 1697, 1705/01, 1748/39, 1778, 1804, 1821, 1829, 1839/41, 1852.

Q1 13-F FILINGS HIGHLIGHTS:

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  Appaloosa Management: Added Las Vegas Sands (LVS), Wynn Resorts (WYNN) in Q1. Exited Alight (ALIT), CarMax (KMX), D.R. Horton (DHI), General Motors (GM), PulteGroup (PHM), T-Mobile (TMUS). Raised stake in Amazon.com (AMZN), Microsoft (MSFT), Uber (UBER). Lowered stakes in Energy Select Sector SPDR (XLE), Macy's (M), Meta Platforms (FB), Micron (MU), PG&E (PCG).


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  Berkshire Hathaway: Added Celanese (CE), Citi (C), HP Inc. (HPQ), Occidental (OXY), Paramount Global (PARA). Exited AbbVie (ABBV), Bristol-Myers (BMY), Wells Fargo (WFC). Raised stakes in Activision Blizzard (ATVI), Chevron (CVX), Floor & Decor (FND), General Motors (GM), RH (RH). Lowered stakes in Kroger (KR), Royalty Pharma (RPRX), Store Capital (STOR), Verizon (VZ).


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  Elliott Management: Added Diamond Offshore Drilling (DO), Suncor Energy (SU). Exited Arconic (ARNC), Dell Technologies (DELL), Duke Energy (DUK), Healthcare Trust of America (HTA). Raised stakes in Marathon Petroleum (MPC), E2open Parent Holdings (ETWO). Lowered stake in Evergy (EVRG), Noble Corp (NE), Valaris (VAL).


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  Greenlight Capital: Added Energy Select Sector SPDR Fund (XLE), International Seaways (INSW), Southwestern Energy (SWN), TD Synnex (SNX), Weatherford International (WFRD). Exited Concentrix (CNXC), Freyr Battery (FREY), Jack in the Box (JACK), Sonos (SONO), Twitter (TWTR). Raised stakes in Chemours (CC), Civitas Resources (CIVI), Kyndryl (KD), LivaNova (LIVN), SPDR Gold Shares (GLD). Lowered stakes in Brighthouse Financial (BHF), Capri Holdings (CPRI), GoPro (GPRO), Green Brick Partners (GRBK), Victoria's Secret (VSCO).


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  Jana Partners: Exited LivePerson (LPSN), Macy's (M). Raised stake in Zendesk (ZEN). Lowered stakes in Encompass Health (EHC), LabCorp (LH), Mercury Systems (MRCY),SPDR S&P 500 ETF Trust (SPY), TreeHouse (THS).


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  Lone Pine Capital: Added Atlassian (TEAM), Bill.com (BILL), Dick's Sporting Goods (DKS), Meta Platforms (FB), Thermo Fisher (TMO), TSMC (TSM). Exited Adobe (ADBE), Confluent (CFLT), KE Holdings (BEKE), NetEase (NTES), PVH Corp. (PVH), Snowflake (SNOW). Raised stakes in Block (SQ), Microsoft (MSFT), RH (RH). Lowered stakes in Bath & Body Works (BBWI), DoorDash (DASH), MasterCard (MA), Shopify (SHOP), Snap (SNAP), UnitedHealth (UNH).


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  Pershing Square: Raised stake in Canadian Pacific (CP). Lowered stakes in Domino's Pizza (DPZ), Hilton Worldwide (HLT), Lowe's (LOW), Restaurant Brands (QSR).


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  Soros Capital Management: Added Devon Energy (DVN), Mosaic (MOS), SPDR S&P Oil & Gas Exploration & Production ETF (XOP), Suncor (SU), UnitedHealth (UNH). Exited Alphabet (GOOG), Apple (AAPL), AutoZone (AZO), Coca-Cola (KO). Raised stakes in EQRx (EQRX), Fidelity National Information Services (FIS), Fiserv (FISV), TJX (TJX), Wabtec (WAB). Lowered stakes in Amkor Technology (AMKR), Booking Holdings (BKNG), Constellation Brands (STZ), Cyxtera Technologies (CYXT), GoDaddy (GDDY), Microsoft (MSFT).


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  Third Point: Added Alcoa (AA), CSX (CSX), Mosaic (MOS), Ovintiv (OVV), Suncor (SU). Exited Accenture (ACN), Alphabet (GOOGL), Burlington Stores (BURL), CoStar (CSGP), Upstart (UPST). Raised stakes in DuPont (DD), EQT (EQT), Hertz (HTZ), SentinelOne (S), Zendesk (ZEN). Lowered stakes in Amazon (AMZN), Danaher (DHR), Intuit (INTU), Microsoft (MSFT), Rivian (RIVN).

COMMUNICATIONS:

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  Take-Two Interactive Software Inc (TTWO) - Rose over 5% after hours. Q4 adj. EPS 1.09 (exp. 1.04), Q4 revenue USD 930mln (exp. 882.10mln). Sees Q1 adj. EPS between USD 0.60-0.70 (exp. 0.96), sees Q1 adj. revenue between USD 700mln-750mln (exp. 788.1mln); sees FY adj. EPS between USD 4.20-4.45 (exp 5.99), and sees FY adj. revenue between USD 3.75bln-3.85bln (exp. 4.08bln).


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  Tencent Music Entertainment Group (TME) - Gained 3.4% after hours. Q1 EPS 0.09 (exp. 0.07), Q1 revenue USD 1.05bln (exp. 1.23bln). Q1 online music paying users +31.7% Y/Y at 80.2mln million (exp. 79.97mln), and was up 4mln sequentially. Q1 paying ratio 13.3% (vs 9.9% Q/Q, and vs 12.4% Y/Y). Analysts noted that the after hours gain was likely driven by news that China's top political advisory body, Chinese People’s Political Consultative Conference, is holding a special symposium to promote the digital economy after months of crackdowns on Big Tech; other Chinese tech stocks gained on Tuesday morning amid hopes of this easing regulatory pressure on tech names, SCMP added.


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  The Walt Disney Company (DIS) - Florida Governor DeSantis wants the state to take over the government body that has overseen Disney's Orlando-area theme parks, CNN reported. Comes after Florida last month stripped Disney of its special governing powers last month.


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  Twitter, Inc. (TWTR) - Elon Musk implied that he is seeking to pay a lower price for the social media company, telling a conference that "You can't pay the same price for something that is much worse than they claimed." Musk has suggested that Twitter has four times more fake accounts than it claims: Twitter estimates around 5% of accounts are fake, but Musk suspects it could be 20%.


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  Vodafone (VOD) - Warns on inflation. FY22 revenue GBP 45.6bln (prev. 43.8bln). Adj. EBITDA (after lease) GBP 15.2bln (prev. 14.4bln). Adj. EPS 0.07 (prev. 0.04). Is looking to strengthen market position in Europe. Near term priorities remain unchanged.

TECHNOLOGY:

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  First Solar, Inc. (FSLR) - PAG Real Assets to acquire First Solar's 293 megawatts (MW)DC utility-scale solar project development platform, and a solar operations and maintenance (O&M) platform with approximately 665 MWDC under management, in Japan.


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  Logitech International (LOGI) - Board approves +10% boost to FY dividend, to approximately CHF 0.96/shr.


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  Stratasys Ltd. (SSYS) - Added 3.2% after hours. Q1 adj. EPS 0.02 (exp. -0.04), Q1 revenue USD 163.4mln (exp. 157.6mln). Exec said systems revenue was up 36.7%, strongest Q1 in five years, and +16.4% vs 2019 levels. Reiterates its FY22 EPS guidance of between 0.14-0.19 (exp. 0.16), and slightly lifted its FY22 revenue outlook to between USD 685-695mln (exp. 686mln, prev. 680-695mln).


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  Taiwan Semiconductor Manufacturing Co (TSM) - The world's largest contract chipmaker is to raise prices for the second time in less than a year after looming inflation concerns, rising costs, expansion plans to help alleviate a global supply crunch the FT reported citing sources. Prices to be raised by "single-digit percentages", and would take effect at the start of 2023.

ENERGY:

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  Equinor ASA (EQNR), Exxon Mobil Corporation (XOM) - The two have taken initial steps to expand an USD 8bln oil development off Brazil's coast, Reuters reported. The aim is to raise future production at the Bacalhau oil field, Equinor's largest outside of Norway.

INDUSTRIALS:

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  Automakers - Multiple companies including Unilever (ULVR LN), Sanofi (SAN FP) and Zurich (ZURN SW) have written to European MEPs and Ministers, calling for the EU to ban the sale of Internal Combustion Engines from 2035, FT reported.


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  Daimler Trucks (DTRUY) - Gained in European trade after it reported results, where it lifted its revenue view. Q1 revenue EUR 10.551bln (prev. 9.023bln). Q1 adj. EBIT EUR 651mln (prev. 588mln). Q1 unit sales 109,286 (prev. 101,364). Raises FY revenue forecast to EUR 48-50bln (prev. 45.5-47.5bln).


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  HNI Corporation (HNI) - Boosts quarterly dividend to 0.32/shr (prev. 0.31).


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  Rivian Automotive, Inc. (RIVN), Ford Motor Company (F) - Rivian gained 0.25% after hours, Ford fell just over 5%. Ford has been selling Rivian stock after the latter went public, which has been an overhang on the stock. Barron's claims that Ford is likely done selling for the moment. But even if it is not done, investors will not hear about the sales anymore: after the May sale of 8mln shares, and Friday's sale of 7mln shares, Ford's stake in RIVN is now under 10%, meaning it will not have to file regulatory forms as an insider. Barron's says that this should now allow more focus on issues such as rising battery costs and supply-chain issues, as well as Rivian's efforts to ramp up production.


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  Rocket Lab USA, Inc. (RKLB) - Rose 4.4% after hours. Q1 EPS -0.06 (exp. -0.04), Q1 revenue USD 40.7mln (exp. 41.0mln). Sees Q2 revenue between USD 51-54mln (exp. 59.2mln). Announced that the CAPSTONE spacecraft has arrived at Rocket Lab Launch Complex 1 in Mahia, New Zealand in preparation for launch to lunar orbit. With the spacecraft now at the launch site, Rocket Lab will begin payload integration with the Electron rocket and Photon spacecraft bus ahead of the launch window opening on May 31.


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  Thales (THLLY) - Reportedly wins a 10yr contract to deliver advanced tactical radios to the US army, with an overall volume of USD 6bln.


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  United Airlines (UAL) - Rose 3.3% after hours. Exec said the demand environment has continued to improve, resulting in a higher unit revenue outlook for Q2. Sees Q2 capacity down about 14% from 2019, TRASM up 23-25% vs 2019 (prev. view +17%), while it forecasts Q2 average fuel price per gallon at USD 4.02 (prev. 3.43), OM view unchanged at 10%.

HEALTH CARE:

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  Abbott Laboratories (ABT) - Entered into a consent decree with the FDA related to its infant formula plant in Michigan. ABT agreed on the steps necessary to resume production and maintain the facility. Could restart the site within two weeks, would take six to eight weeks before product is available on shelves. CDC concluded its investigation with no findings of a link between Abbott formulas and infant illnesses. Abbott said its FY22 guidance was unchanged, sees adj. diluted EPS from cont. ops. of at least USD 4.70/shr. Abbott will incur one-time specified charges for expenses related to the consent decree which have not yet been quantified but does not expect that these expenses will have a material impact on its consolidated financial statements.


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  AstraZeneca (AZN) - Signs licence agreement with RQ Biotechnology for monoclonal antibodies against COVID-19.


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  Gilead Sciences, Inc. (GILD) - Slipped 0.4% after hours. Announced FDA has lifted its clinical hold on GILD's investigational Lenacapavir for the treatment and prevention of HIV. GILD said all clinical studies evaluating injectable Lenacapavir are to resume based on review of vial compatibility data.


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  Ginkgo Bioworks Holdings, Inc. (DNA) - Gained 1.2% after hours. Q1 revenue +282% Y/Y at USD 168mln (exp. 106mln), Q1 net loss USD 590mln (vs 73mln Y/Y). Lifts FY22 guidance to USD 375-390mln (exp. 333mln, prev. 325M-340mln). Expects to add 60 new Cell Programs to the Foundry platform in 2022. Continues to expect FY22 Foundry revenue between USD 165-180mln and expects FY22 Biosecurity revenue of at least USD 210mln.


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  Pfizer Inc. (PFE), BioNTech SE (BNTX) - FDA expected to soon authorise Pfizer-BioNTech's COVID booster for children between the ages of 5-11, NYT reported, adding that "given that the age group has the lowest coronavirus vaccination rate of all eligible Americans, public health experts are not expecting a rush for the booster."


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  Sanofi (SNY) - New data from fast-growing innovative Oncology pipeline and portfolio to be presented at 2022 ASCO Annual Meeting. Data to be shared across multiple tumor types, including multiple myeloma, lung cancer and breast cancer.

CONSUMER STAPLES:

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  Imperial Brands (IMBBY) - HY22 update noted trading was in line with outlook. Revenue GBP 15.362bln (prev. 15.568bln Y/Y). Operating Profit GBP 1.201bln (prev. 1.637bln). Has completed the transfer of Russian assets. Says results are in line and is on track to deliver FY guidance. Will make further investments during the course of the year.


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  Nestle (NSRGY) - Nestle is flying baby formula into the US from the Netherlands and Switzerland to ease shortages, according to Reuters.


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  Reckitt Benckiser (RBGLY) - Has not raised baby formula prices since the recall.

CONSUMER CYCLICAL:

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  YUM! Brands, Inc. (YUM) - KFC announced that Kevin Hochman will step down as President to assume a senior position at another public company, effective immediately.

FINANCIALS:

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  Caixabank (CIAXY) - 2022-24 strategy will target profitability of over 12% by 2024. Board approved a share buyback of EUR 1.8bln.

UTILITIES:

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  Engie (ENGIY) - Posted higher earnings in Q1 and raised its FY22 outlook. Q1 revenue EUR 25.6bln (prev. 13.8bln Y/Y). Q1 EBITDA EUR 4.6bln (prev. 3.1bln). Raises FY guidance, now sees FY22 group share net recurring income between EUR 3.8-4.4bln (prev. 3.1-3.3bln). Said it was in talks with Russia's Gazprom on payments for Russian gas.

17 May 2022 - 09:21- Research Sheet- Source: Newsquawk