US EARLY MORNING: Futures continue to the upside ahead of GDP and weekly claims data, while Friday's PCE data and Fedspeak also come into focus

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  OVERNIGHT: On Wall Street, stocks firmed Wednesday, with the Nasdaq 100 re-entering a technical bull market after rising 20% from its December low, while the SPX closed above its 50dma for the first time since March 6th (see here). The Asia-Pac session was mixed; Aussie shares rose amid a dovish re-tweaking of RBA expectations after slower Feb CPI data this week, though Japanese stocks were pressured as we enter the fiscal year-end window; China shares ultimately faltered despite another substantial liquidity effort by the PBoC, as traders digested earnings releases and as US-China frictions lingered (see here). In Europe, equities have opened higher after some regional German inflation data, as well as the Spanish inflation prints give credence to the consensus view that Friday’s aggregated Eurozone inflation data will also slow; however, analysts note that the core measures within that Friday data will probably more important for the ECB's trajectory, and both the ex-Food and Energy, as well as the Ex-Food, Energy, Alcohol and Tobacco measures are seen rising by one-tenth to 7.5% Y/Y and 5.7% Y/Y (see here).


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  US PRE-MARKETS: US equity futures are higher by 0.2-0.4%, Treasury yields are lower by 3-5bps, the Dollar Index is slightly negative, but remains above 102.50, while crude benchmarks are rallying. As fears surrounding the global banking sector ease, and as we await other key catalysts, trading conditions had a technical focus on Wednesday, where the Nasdaq 100 index re-entered a technical bull market having risen by 20% from its December lows, and as the S&P 500 closed above its 50dma for the first time since March 6th. Futures have held on to gains, and are seeing a slight extension of the upside in Thursday trading, helped along by European peers which are rising amid signs of slowing inflation across the bloc. Stateside, the next couple of days may refocus attention onto fundamental factors. We see the release of US Q4 GDP stats in the pre-market; it is the third reading, where the headline is expected to be confirmed at 2.7%, but there will be attention on the PCE measures – the core measure is expected to be confirmed at 4.3% for Q4; there is a chance that these will be ignored, given that the more timely February PCE data is set to be released on Friday. Additionally, weekly initial jobless claims data is due; any spikes here will feed into arguments of recessions ahead, while any downside may help to inject some hawkishness into market pricing of the Fed’s rate hike trajectory. Fed officials have kept their focus on battling high inflation, despite the woes in the banking sector, which appear to be subsiding; officials have also reiterated the case for monetary policy to continue to be tightened to manage high inflation, and have indicated that their decision making will be data-dependent, financial-conditions dependent, and on a meeting-by-meeting basis. Nevertheless, money markets continue to see rate cuts this year, with 50bps of easing currently priced. There will also be a number of Fed policymakers doing the rounds over the next couple of days, which will help traders frame the data in the context of the May 3rd FOMC meeting, including Barkin (non-voter), Collins (non-voter) and Kashkari (voter) today, while the influential NY Fed chief Williams (voter), the hawkish Governor Waller (voter) and Fed’s Cook (voter) are due on Friday.

DAY AHEAD:

• Our full interactive calendar can be accessed here; a pdf version can be accessed here.


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  EUROPEAN DATA/SPEAKERS: Inflation data out of Germany (its regions report through the morning, the national data is due in the European afternoon) will help to shape expectations of what the Eurozone-wide metrics will look like, when they are released on Friday; the consensus looks for the headline to ease to 7.3% Y/Y from 8.7%, while the HICP measure is seen slowing to 7.5% from 9.3%. So far, we have seen numbers from the North Rhine Westphalia region, where CPI fell to 6.9% Y/Y from 8.5%. Eurozone sentiment indicators for March will be released in the morning. ECB's economic bulletin is also out in the morning, but will likely be a reiteration of the recent press conference with President Lagarde. On the speakers front, the SNB's Maechler and Moser will speak after the European close; Norges Bank's Longva and Riksbank's Bunge are also due to speak today. Elsewhere, the SARB rate decision (hike +25bps expected) and CBRT meeting minutes are also out - primers for both can be found in our weekly central bank briefing note here.


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  NORTH AMERICAN DATA/SPEAKERS: There is a heavy US data slate, including a third look at Q4 GDP data (headline expected to be confirmed at 2.7%, while there will also be focus on the PCE components, where the core measure is expected to be confirmed at 4.3%). US weekly jobless claims data will be out at the same time; analysts look for initial jobless claims to be little changed and remain below 200k, while the continuing claims measure (this week's continuing claims syncs with the BLS' survey window for the March jobs data) is seen trivially ticking up to 1.697mln from 1.694mln. On the speakers front, Fed's Barkin (non-voter), Collins (non-voter) and Kashkari (voter) will speak, while US Treasury Secretary Yellen will also be making some remarks again. Elsewhere, the Banxico is expected to lift rates by 25bps to 11.25% (our primer can be accessed here).


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  ENERGY: The EIA will release weekly natgas storage data, which is expected to show a draw of 54BCF vs last week’s draw of 72BCF.


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  SUPPLY: Italy will sell between EUR 5.5-6.5bln of 2028 and 2033 debt, as well as between EUR 2.0-2.5bln of 2030 & 2029 CCTEUs.

STOCK NEWS:

FINANCIALS:

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  Citizens Financial Group, Inc. (CFG) - Citizens Financial Group is being investigated over its sales of a savings product offered by an insurer controlled by now-indicted financier Greg Lindberg, WSJ reports. The news follows reports which said that tens of thousands of people had a total of USD 2.2bln of their money frozen since 2019 amid the implosion of Lindberg’s insurance empire.


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  UBS (UBS), Credit Suisse (CS) - Credit Suisse withdraws proposals for 2023 AGM. Elsewhere, UBS said CEO change was the favoured option among Swiss officials; regulators were encouraged about the move to rehire Sergio Ermotti, Bloomberg reports.


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  Blackstone (BX) - CEO said its property investment is in good shape.

TECH:

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  Microsoft Corporation (MSFT), Alphabet Inc. (GOOG) - Google Cloud VP said Microsoft was selectively buying out complainants, and definitely has an anti-competitive posture in the cloud sector; urges antitrust regulators to look at the issue holistically.


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  Concentrix Corp (CNXC) - Concentrix will acquire Paris-based outsourcing and consultancy firm Webhelp in a USD 4.8bln deal, Reuters reports. Webhelp will bring about 1,000 new clients, and the combined company is expected to have USD 9.8bln in revenue for FY23 on a pro forma basis. Concentrix sees Q2 revenue between USD 1.64-1.67bln (exp. 1.64bln), and sees FY23 revenue between USD 6.705-6.83bln (exp. 6.79bln).


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  Semtech Corporation (SMTC) - Q4 EPS 0.47 (exp. 0.48), Q4 revenue USD 167.5mln (exp. 150.1mln). Exec said the challenging macroeconomic environment is likely to continue over the next few quarters. Sees Q1 EPS between -0.11 to -0.04 (exp. 0.43), and sees Q1 revenue between USD 230-240mln (might not compare vs exp. 148.8mln).


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  Stratasys (SSYS), Nano Dimension (NNDM) - Nano Dimension raised its offer for Stratasys to USD 19.55/shr after an earlier USD 18.00/shr offer was rebuffed due to 'substantially undervaluing' the company; Stratasys closed Wednesday trade at USD 16.06/shr.


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  Verint Systems Inc. (VRNT) - Q4 EPS 0.75 (exp. 0.72), Q4 revenue USD 236.2mln (exp. 233.7mln). Sees FY24 EPS midpoint at USD 2.65 (exp. 2.71), and sees FY24 revenue around USD 935Mmln +/- 2% (exp. 948.4mln).


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  Telefonaktiebolaget LM Ericsson (ERIC) - Chairman, CEO, multiple board members may face financial accountability for the scandal regarding alleged cash-for access programme in Iraq, which might have helped fund the ISIS terror group.

COMMUNICATIONS:

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  Meta Platforms, Inc. (META) - Executives are discussing a company-wide ban on political advertising in Europe, following concerns that its social networking platforms such as Facebook and Instagram will be unable to comply with forthcoming EU regulations that target online campaigning, FT reports.


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  Electronic Arts Inc. (EA) - Electronic Arts is laying off around 6% of its workforce, and reducing its office-space footprint, WSJ reports. It didn’t specify the exact number of layoffs, or from which departments; it was employing nearly 13,000 employees in the middle of last year.


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  Warner Music Group Corp. (WMG) - Warner confirmed that it will layoff 4% of its workforce (around 270 staff) and lower spending levels.

CONSUMER CYCLICAL:

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  H&M Hennes & Mauritz AB (HNNMY) - The world's second-largest fashion retailer H&M reported a surprise operating profit, despite weak demand. Q1 operating profit SEK 725mln (exp. loss of 1.03bln), Q1 net profit SEK 540mln (exp. loss -1.12bln), Q1 gross margin 47.2% (exp. 45.8%), Q1 gross profit SEK 25.89bln (exp. 24.79bln), Q1 revenue SEK 54.9bln (prev. 49.2bln).


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  Starbucks Corporation (SBUX) - Shareholders approved a proposal to carry out an independent assessment of its labour practices, by a margin of 52% vs 48%. Reuters notes that the results came on the same day ex-CEO Howard Schultz testified before a Senate committee, defending the company against claims that it illegally fired pro-union employees.


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  Macy's, Inc. (M) - CEO told CNBC that Macy's was ready to transition to a new CEO, adding that new CEO Tony Spring is set to hit the ground running, adding that he was committed to ensuring a smooth transition.


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  RH (RH) - Q4 adj. EPS 2.88 (exp. 3.34), Q4 adj. net revenue USD 772mln (exp. 779.8mln). Exec reiterated that it expects business conditions to remain challenging for the next several quarters, and possibly longer, as a result of the accelerating weakness in the housing market, the uncertainty generated by the recent banking crisis and the cycling of record Covid-driven sales and backlog reductions. Q1 revenue is seen between USD 720-735mln (exp. 833.2mln), and sees FY23 revenues between USD 2.9-3.1bln (exp. 3.5bln).


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  Faraday Future Intelligent Electric Inc. (FFIE) - Faraday is to finally start production of its first EVs after years of internal struggles and spending more than USD 3bln, Bloomberg reported. The report added that Faraday still has hurdles to clear before it ships its first FF 91 electric SUVs, as it needs to certify some key safety components, including the seat belts and airbags.

INDUSTRIALS:

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  United Continental Holdings, Inc. (UAL) - United reached tentative agreements with a union representing nearly 30,000 ground workers, CNBC reports. The two-year agreements cover 'industry-best' wage rates, as well as job protection and certain guards against outsourcing roles. United remains in negotiations with its pilots over a new contract.


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  Defense Contracts - Raytheon Technologies (RTX) awarded a USD 619.2mln Navy contract modification; Lockheed Martin (LMT) awarded a USD 179mln Navy contract modification, and a USD 120.2mln Navy contract modification; Valero (VLO) awarded a USD 905.84M Defense Logistics Agency contract.


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  Planet Labs PBC (PL) - Q4 EPS -14 (exp. -0.16), Q4 revenue USD 53mln (exp. 52.6mln). Q4 Percent of Recurring Annual Contract Value (ACV) 94%, End of Period (EoP) Customer Count +15% Y/Y to 882 customers. Planet Labs to acquire the business of Holding Sinergise, a developer platform for earth observation data. Q1 revenue seen between USD 51-54mln (exp. 57.3mln), and FY24 revenue seen between USD 248-268mln (exp. 259mln).

ENERGY:

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  Peabody (BTU) - Confirmed a fire Wednesday at its Shoal Creek Mine. Said it was not able to provide estimates of impact at this point, but will be providing further updates as more information becomes available. The mine produced approximately 800k T of coal in 2022.


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  Global Partners LP (GLP), ExxonMobil (XOM) - Global Partners and ExxonMobil sign agreement to acquire 64 Houston-area convenience and fuelling facilities from the Landmark Group. The deal is subject to regulatory clearance. Deal expected to be completed in the Q2. If approved, the assets would be purchased under joint venture 'Spring Partners Retail LLC', and Global would act as the management company and operator.


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  Chevron Corporation (CVX), Exxon Mobil Corporation (XOM), BP Plc (BP) - A government auction of oil and gas drilling rights in the Gulf of Mexico generated USD 263.8mln in high bids, the most of any sale in the region for years and the first test of demand for investment since the Russian invasion of Ukraine, Reuters reports. Chevron, ExxonMobil, BP were among the top buyers.


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  TotalEnergies (TTE) - France releases over 10mln bbls of oil stocks amid ongoing national strikes, Bloomberg reports.

MATERIALS:

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  Rio Tinto (RIO), Glencore (GLNCY), Anglo American (NGLOY) - Australia approves emissions caps on big polluters, will force coal mines, smelters and oil refineries to cut emissions each year.


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  H.B. Fuller Company (FUL) - Q1 EPS 0.55 (exp. 0.59), Q1 revenue USD 809.2mln (exp. 825.4mln). Lowers FY23 EPS outlook to between USD 4.10-4.50 (exp. 4.25) from USD 4.15-4.55, and lowers its FY23 outlook to -4% to -1% from previous view of -3% to flat.

HEALTH CARE:

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  Merck & Co., Inc. (MRK) - FDA converts to Full Approval indication for KEYTRUDA for Certain adult and pediatric patients with advanced Microsatellite Instability-High or Mismatch Repair Deficient solid tumors.


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  Philips (PHG) - CEO said it expects to reach settlements this year relating to its global recall of respiratory devices, according to an interview in the FD newspaper.


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  Evolent Health, Inc. (EVH), Centene Corporation (CNC) - Evolent and Centene agree to expanded partnership for oncology specialty care for Medicare Advantage members.


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  AstraZeneca (AZN) - Completes the license agreement with KYM Biosciences for CMG901, a Claudin-18.2 antibody drug conjugate.

30 Mar 2023 - 09:30- Research Sheet- Source: Newsquawk