US EARLY MORNING: Equity futures higher on underwhelming Russia sanctions; technicals in focus

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  EQUITIES: US equity futures are up by 0.8-1.4%, with the Nasdaq-100 leading gains, and Dow futures lagging. The focus continues to be on geopolitical developments; the US sanctions response to Russia was seen to be more benign than feared, although officials have committed to ramping up sanctions pressure if the situation deteriorates. It is a headline driven market, and that is expected to continue with more geopolitical events scheduled for today (UN General Assembly on Ukraine), and in the absence of any significant economic data releases. Technicals are gaining traders attention after the S&P 500 cash index slipped into correction (for the ES, that level is around 4,327.50, and at pixel time, the index has recaptured that level).


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  TREASURIES: The Treasury curve is bear-flattening; nominal yields are higher by 2-5bps, with much of the underperformance in the short-end/belly. The US will sell 5yr notes today, following a solid sale of 2s on Tuesday, which stopped through the screens by 0.6bps, underpinned by lower auction sizes; cover slipped by remained above recent averages, although the internals were noteworthy, with dealers taking the lowest on record, and indirect participation picking up. There is no scheduled Fedspeak for today, leaving the focus on incoming geopolitical headlines, ECB/BoE speak, as well as the overarching macro risk tone.


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  DOLLAR: The Dollar index is lower by 20bps, slipping beneath the 96.00 handle on a generally constructive risk tone (NOTE: Citi’s prelim month-end model is giving a USD buy signal for February). The NZD is outperforming in G10 after the RBNZ hiked rates by 25bps, as expected, but guided a rate trajectory that was more hawkish than traders had anticipated. Activity currencies are outperforming against the USD, although the GBP lags amid BoE officials testifying at the Treasury. The Russian RUB has not managed to sustain gains printed on Tuesday in wake of underwhelming Western sanctions, softer by around 1.0% this morning after the US announced restrictions on OFZ debt that trades after March 1st.


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  CRUDE: Oil benchmarks are lower by around a buck as hopes of an Iran deal rise. Iran is hoping to settle the remaining issues in the next few days, reiterating however that it will not concede on its red lines. Reuters reported some details of the upcoming agreement, which shows the deal could be implemented in phases. ING said that if sanctions on Iran were to be lifted, it would ease concerns over OPEC plus (lack of) spare capacity. "Iran is currently producing at around 2.5mln BPD but is estimated to have a capacity of closer to 3.8mln BPD," the bank writes, "therefore, over time there is the potential for 1.3mln BPD of additional supply to come onto the market." The underwhelming sanctions on Russia are also likely contributing to the downside in crude.

EQUITY NEWS:

KEY US EQUITY TECHNICAL LEVELS (PER CREDIT SUISSE): 

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  SPX: 4264, 4276, 4292, 4302, 4327, 4382, 4395, 4408, 4416, 4430.


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  NDX: 13470, 13530, 13615/05, 13725/21, 13880/83, 14148, 14226, 14326, 14400/15, 14497.


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  RUT: 1946, 1960, 1969, 1988, 2000/1996, 2027, 2038/40, 2051, 2060, 2087.

TECHNOLOGY:

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  Apple (AAPL) - Apple Stores are dropping mask mandates, and planning the return of in-store classes; classes set to return ahead of new iPhone, iPad, Mac launches. (Bloomberg)


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  Cadence Design Systems (CDNS) - Rose 6.5% in after hours. Q4 EPS 0.82 (exp. 0.76), Q4 revenue USD 773mln (exp. 757mln). Sees Q1 EPS between 1.00-1.04 (exp. 0.82), and sees Q1 revenue between USD 850-870mln (exp. 771mln). Sees FY22 EPS between 3.70-3.80 (exp. 3.56), and sees FY22 revenue between 3.32-3.38bln (exp. 3.24bln). (CDNS)


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  Palo Alto Networks (PANW) - Rose over 6% in after hours. Q2 adj. EPS 1.74 (exp. 1.64), Q2 revenue USD 1.3bln (exp. 1.3bln). Guided Q3 adj. EPS above expectations at 1.65-1.68 (exp. 1.63), sees Q3 revenue between USD 1.345-1.365bln (exp. 1.35bln). Sees total billings between 1.59-1.61bln (+24-25% Y/Y). Raised FY22 adjusted EPS view to 7.23-7.30 (prev. 7.15-7.25, exp. 7.23), raised FY22 revenue view to between USD 5.425-5.475bln (prev. 5.35-5.4bln, exp. 5.4bln), and raised total billings view to USD 6.80-6.85 (prev. 6.675-6.725bln). (PANW)


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  Rackspace Technology, Inc. (RXT) - Fell 16% in after hours trade on weak guidance. Q4 EPS 0.25 (exp. 0.24), revenue USD 777mln (exp. 771mln). Q4 bookings a record USD 329mln. Sees Q1 EPS between 0.20-0.22 (exp. 0.26), and sees Q1 revenue between 768-778mln (exp. 789mln). (RXT)


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  RingCentral, Inc. (RNG) - Slipped in after hours. Q4 EPS 0.39 (exp. 0.37), revenue USD 448mln (exp. 435mln). Q4 subscriptions revenue +37% Y/Y, Q4 Office ARR +41% Y/Y. Sees Q1 EPS at 0.34 (exp. 0.33), and sees Q1 revenue between USD 455-459mln (exp. 451mln). FY22 EPS seen between 1.69-1.72 (exp. 1.65), and FY22 revenue seen between USD 1.99-2.02bln (exp. 1.98bln). (RNG)

CONSUMER CYCLICAL:

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  Caesars Entertainment Inc (CZR) - Rose 4.5% in after hours. Q4 Adj. EPS -2.03 (exp. -0.92), Revenue 2.59bln (exp. 2.59bln). (CZR)


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  Ralph Lauren (RL), LVMH (LVMUY) - LVMH reportedly held exploratory discussions with Ralph Lauren over the past couple of years about a possible acquisition. Sources say Ralph Lauren is weighing a succession plan. (Axios)


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  Toll Brothers, Inc. (TOL) - Q1 EPS 1.24 (exp. 1.15), revenue USD 1.79bln (exp. 1.79bln). Backlog USD 10.8bln at end-Q1, delivered homes +9% at 1,929, home revenue +20% at USD 1.7bln, contract units +2% to 2,929 (exp. 2,850), contract values +19% at USD 3bln. Said ongoing supply chain disruptions, labour shortages and municipal delays remained a challenge, which Omicron exacerbated, resulting in fewer deliveries than expected. (TOL)

CONSUMER STAPLES:

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  Danone (DANOY) - FY21 (EUR): Revenue 24.2bln (exp. 23.9bln), EBIT 3.3bln (exp. 3.19bln), Operating Income 3.34bln (exp. 3.3bln). Propose a dividend of 1.94/shr (exp. 1.95/shr). Guidance will be provided on March 8th. (Newsquawk)


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  Henkel (HEN3) - FY21 (EUR): Revenue 20.1bln (exp. 20.04bln), EPS 4.56 (exp. 4.55), Dividend 1.85/shr (exp. 1.85/shr), Operating Profit 2.7bln (exp. 1.9bln); adj. for one-time expenses and income, and for restructuring. (Newsquawk)


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  Puma (PUMSY) - Q4 (EUR): Revenue 1.77bln (exp. 1.74bln), Net Earnings 8mln (exp. 6mln). Proposes a FY21 dividend of 0.72/shr (exp. 0.669/shr). Expects FY22 Net Earnings to improve correspondingly, remain very optimistic for the future of the sector and Co. (Newsquawk)


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  Remy Cointreau (REMYY) - Leonardo DiCaprio has acquired an equity stake in Telmont. (Reuters)

HEALTH CARE:

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  Agilent Technologies (A) - Rose in after hours. Q1 EPS 1.21 (exp. 1.03), revenue USD 1.67bln (exp. 1.46bln). Sees Q2 EPS between 1.10-1.12 (exp. 0.99), and sees Q2 revenue between 1.6-1.63bln (exp. 1.4bln). Raises FY22 EPS view to USD 4.80-4.90 (exp. 4.30, prev. 4.76-4.86), raised FY22 revenue view to between 6.67-6.73bln (exp. 5.97bln, prev. 6.65-6.73bln). (A)


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  Roche (RHHBY) - FDA has awarded Roche's Genentech Orphan Drug Designation for pralsetinib in the treatment of certain types of solid tumours. Separately, expands COVID PCR tests portfolio to the Cobas 5800 system in areas which accept the CE mark. (Newsquawk)


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  Teladoc, Inc. (TDOC) - Slipped 3.5% in after hours on soft Q1 guidance. Q4 EPS -0.07 (exp. -0.56), revenue USD 554.2mln (exp. 546.6mln). Visits 4.4mln (exp. 4.05mln). Sees Q1 EPS between at -0.55 at mid-point (exp. -0.51), sees Q1 revenue USD 565-571 (exp. 588.9mln), sees Q1 visits 4.3-4.5mln. Sees FY22 EPS at -1.50 at the mid-point (exp. -1.78, and FY22 revenue is seen between USD 2.55-2.65bln (exp. 2.57bln). (TDOC)

ENERGY:

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  Diamondback Energy (FANG) - Up 1.5% in after hours. Q4 EPS 3.63 (exp. 3.39), Q4 revenue USD 2.02bln (Exp. 1.7bln). Average production of 226.3 MBO/d (387.1 MBOE/d), Permian Basin production of 224.4 MBO/d (383.5 MBOE/d), FY average production of 223.3 MBO/d (375.3 MBOE/d). Full year 2022 oil production guidance of 218 - 222 MBO/d (369 - 376 MBOE/d); Q1 2022 oil production guidance of 218 - 222 MBO/d (369 - 376 MBOE/d). CEO Stice assumes Chair role; Daniel Wesson named COO. (FANG)

FINANCIALS:

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  Barclays (BCS) - Profits almost trebled and it boosted its dividend, though it warned about inflation. FY21 (GBP): Revenue 21.9bln (21.89bln), Profit Before Tax 8.4bln (exp. 8.1bln), CET1 15.1% (exp. 14.9%), Net Credit Impairment Releases 0.7bln, Dividend 0.06/shr (exp. 0.061/shr). Morzaria to step down as CFO, Cross to take over. Impairment charge expected to remain below pre-COVID levels in the next quarters given reduced unsecured lending balances and an improved macro outlook. (Newsquawk)


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  HSBC (HSBC) - To close Hong Kong retail branches on Saturdays from March 5th. (Newsquawk)


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  Intercontinental Exchange, Inc. (ICE) - Announced a strategic investment in tZERO, which provides blockchain technology for capital markets. (ICE)

REAL ESTATE:

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  Public Storage (PSA) - Rose 2.2% in after hours. Q4 core FFO/Shr 3.54 (exp. 2.93), Revenue 924.3mln (exp. 911.99mln). (PSA)

MATERIALS:

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  Rio Tinto (RIO) - Record annual profits, and its biggest ever dividend, underpinned by iron ore prices and Chinese demand. FY21 (USD): Net Income 21.09bln (exp. 21.7bln), EBITDA 37.7bln (exp. 37.4bln), EPS 13.21 (exp. 13.39), Total Dividend 10.40/shr (exp. 10.24/shr); a dividend which includes a 2.47/shr special dividend. Production guidance is unchanged from the Q4 update. Brining forward the 15% reduction in emissions goal to 2025 (prev. 2030). US sanctions on Russia could result in disruptions to the aluminium industry. (Newsquawk)


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  The Mosaic Company (MOS) - Fell by almost 7% in after hours despite a fairly solid Q4 report. Q4 adj. EPS 1.95 (exp. 1.98), Q4 revenue USD 3.84bln (exp. 3.9bln). Announced new USD 1bln share repurchase programme, to raise annual dividend in Q2, targets 0.60/shr (prev. 0.45). Said strong agricultural commodity pricing trends are expected to continue driving demand for fertilizers through 2022. Global demand for grain and oilseeds remain high while stock-to-use ratios are at the lowest point in more than a decade. Strong global fertilizer demand in 2022 is expected as growers seek to maximize yields. (MOS)

INDUSTRIALS:

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  Aston Martin (ARGGY) - FY21 (GBP): Revenue 1.1bln (exp. 1.1bln), adj. EBITDA 138mln (exp. 146mln). FY retai sales well ahed of wholesales. Significant growth in Americans and record sales within China, driven by strong demand for the DBX. All new car lines to have an EV option by 2026. Currently, no plans to issue additional shares to Mercedes-Benz (MBG GY) until early-2023. (Newsquawk)


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  CNH Industrial (CNHI) - Three-year outlook: Net sales of Industrial Activities projected to grow to USD 20-22bln by 2024 with CAGR of ~6%. Adjusted 2024 EBIT Margin of Industrial Activities of ~12% to 13%, more than 200bps increase from 2021. Agriculture EBIT Margin to reach 14.5% to 15.5% by 2024. Adjusted EPS of above USD 1.70 by 2024. ROIC of Industrial Activities projected to achieve ~19%, with a 3% growth during the plan period. (Newsquawk)


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  easyJet (ESYJY) - To be added into the FTSE 100, to be announced after the close on March 2nd. (City AM)


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  Stellantis (STLA) - H2 (EUR): Revenue 76.8bln (exp. 78.9bln), adj. Operating Income 9.39bln (prev. 6.6bln), Net Profit 7.4bln (exp. 4.556bln). Q3 was the worst quarter for the semiconductor situation, raw material inflation will remain a challenge for the industry. No significant direct exposure to Russia. No current plan to dividend the EV and ICE businesses. (Newsquawk)


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  Tesla (TSLA) - A former construction manager filed lawsuit against Tesla alleging he was fired for reporting widespread safety violations and race discrimination at Tesla's factories. (Reuters)


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  Verisk Analytics, Inc. (VRSK) - Jumped 7% in after hours. Q4 EPS 1.47 (exp. 1.41), revenue USD 766mln (exp. 770mln). Boosted dividend +6.9% to 0.31/shr. Board approved an additional USD 1bln buyback. (VRSK)

COMMUNICATIONS:

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  Activision (ATVI), Microsoft (MSFT) - To delay next year's planned Call of Duty game; 2023 will be first without a mainline release in two decades. (Bloomberg)


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  Telecom Italia (TIIAY) - Mulls sale of its tower unit stake, could fetch EUR 1.4bln, according to sources; said to be in negotiations with Ardian. Mulls scrapping dividends on ordinary shares, evaluating new extraordinary provisions and an adjustment to the value of assets. Expected to make decision on the KKR takeover proposal in mid-March; unions concerned potential break-up, strike action planned for Wednesday. (Newsquawk)


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  Telefonica Deutschland (TELDY) - Q4 (EUR): Revenue 2.055bln (exp. 2.06bln), OIBDA 624mln, + 2.3%; upgraded sales guidance and expectations for adj. OIBDA were fulfilled at the upper-end of the range. (Newsquawk)

23 Feb 2022 - 10:09- Fixed IncomeGeopolitical- Source: Newsquawk