US EARLY MORNING: Index futures are flat; US retail sales and Fedspeak ahead

SNAPSHOT: US equity futures are around the unchanged mark, continuing the lacklustre action seen this week. The E-Mini S&P 500 future is still trading above the 4,000 mark, with traders noting that the index is not deviating too far from its 200dma around 4,016 (note: that 200dma is for the front month future, not the rolling contract, which is currently around 3,980). Treasury yields are lower by 1-5bps, with much of the outperformance in the 10yr part of the curve; the Treasury will auction 20s later today. The Dollar Index is lower but above the 102.00 mark, although the Buck is strengthening solidly vs the Japanese yen, with USDJPY rising above 131.50 at one point overnight as the BoJ kept policy settings unchanged (our recap can be accessed here). There is a chunk of Fedspeak due today by way of 2023 voters Harker and Logan, and non-voters Bostic and the influential Bullard. Fed officials will go into the pre-meeting blackout window at the end of this week ahead of the February 1st confab, but implied money market pricing is ultimately little changed after last week’s data, assigning a greater probability of a 25bps rate hike rather than a larger 50bps move. Traders’ focus continues to be on the slowing growth dynamics, given the peak inflation narrative has been largely discounted, and rates are seen peaking at between 4.75-5.00%, which is more dovish than the Fed would like. Today’s retail December sales data will give a glimpse of how Americans spent over the holiday season, but many analysts have said they are more interested in how trends play out from January, where many expect consumers to retrench in the face of economic uncertainties and possible recession later this year. Elsewhere, traders continue to focus on incoming US corporate earnings updates; Fundstrat notes that, of the 6% of S&P 500 companies that have reported thus far, overall earnings results were beating analyst estimates by a median 6%, with 74% of those reporting topping estimates. For the top-line, Fundstrat noted that overall results were beating analyst estimates by a median 2%, while 68% of those who have reported are topping estimates. Our full day ahead calendar can be accessed here.

TECH:

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  Microsoft Corporation (MSFT) - The tech giant is said to be contemplating cutting roughly 5% of its workforce (approximately 11,000 jobs), Sky News reports, the latest move by one of the world's biggest tech companies to reduce its workforce in the face of a slowing global economy.


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  Apple Inc. (AAPL) - The iPhone maker is reportedly working on a cheaper, mixed-reality headset to reach more consumers, The Information reports. It had originally internally discussed pricing its headset at around USD 3,000, although engineers are said to be working on a cheaper version.


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  Uber Technologies, Inc. (UBER) - Reached an agreement with drivers in France, including a EUR 7.65 minimum net revenue per trip pament, as part of a sector-wide deal. Deal will increase minimum fares for passengers to EUR 10.20 from EUR 8.00 as of February 1st.


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  Coinbase Global Inc. (COIN) - The crypto exchange is halting operations in Japan, less than a month after another major digital asset exchange Kraken announced its withdrawal from the country, bloomberg reported.


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  Progress Software Corporation (PRGS) - Q4 EPS 1.12 (exp. 1.09), Q4 revenue USD 157.1mln (exp. 162.6mln). Q1 EPS seen between USD 1.04-1.08 (exp. 1.05), and Q1 revenue seen between USD 157-161mln (exp. 151.7mln); for the FY23, sees EPS between USD 4.09-4.17 (exp. 4.35), while revenue is seen between USD 675-685mln (exp. 630.2mln).

CONSUMER CYCLICALS:

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  Burberry (BURBY) - The luxury goods maker's Christmas sales were impacted by COVID disruptions in China. Q3 comparable store sales +1%; ex-mainland China, comparable store sales +11%; EMEIA +19%, Americas -1%, APAC -7%, mainland China -23%. New store concept on track to complete 65 stores in FY23. Near/medium-term targets remain unchanged. Continues to target high-single digit revenue growth. Expects a FX tailwind of GBP 160mln and 70mln on revenue and adj. Operating Profit in FY23.


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  Compagnie Financiere Richemont SA (CFRUY) - The luxury goods maker's Christmas sales were impacted by COVID disruptions in China, which hit demand. Q3 sales EUR 5.4bln (exp. 5.73bln), at constant FX +5% (exp. +8%); saw double digit sales growth in jewellery maisons and other areas. Sales growth across all regions ex-APAC were significantly impacted by mainland China underperformance, it said. Growth seen across all distribution channels, led by retail and online retail channels.


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  Continental AG (CTTAY) - Earnings margin for FY22 was at the lower end of its outlook range, according to its Q4 prelim update. Q4 revenue EUR 10.3bln (exp. 9.7bln), EBIT margin 4.8%, FXF EUR 1.6bln (exp. 1.8bln).


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  Stellantis (STLA) - The automaker and Terrafame agree on low-carbon nickel sulphate supply for EV batteries.


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  Toyota Motors (TM) - Sees February global production at 750k units (vs estimates for 700k production in January).

CONSUMER STAPLES:

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  Albertsons Companies, Inc. (ACI), Kroger Co (KR) - Washington state's highest court will allow Albertsons to pay a USD 4bln dividend ahead of its proposed USD 25bln deal with Kroger after declining to take up a claim that the pay-out would be uncompetitive, Reuters reports. Decision followed that of a lower court judge last month, who refused to issue a preliminary injunction against the dividend.

INDUSTRIALS:

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  United Continental Holdings, Inc. (UAL) - Rose in afterhours trading after Q4 results, and FY guidance was above expectations. Q4 adj. EPS 2.46 (exp. 2.12), Q4 revenue USD 12.40bln (exp. 12.23bln), Q4 PRASM 17.42 cents (exp. 17.13), Q4 available seat miles 64.29bln (exp.  64.17bln). Sees Q1 EPS adj. EPS 0.50-1.00 (exp. 0.10), and sees Q1 revenue +50% Y/Y (exp. 11.32bln). Q1 capacity seen up +20% Y/Y, Q1 TRASM seen +25% Y/Y, Q1 average aircraft fuel price per gallon estimated at USD 3.19. For FY23, sees capacity up by 'high teens' Y/Y, TRASM around flat, and average aircraft fuel price per gallon of between USD 2.85-2.90. Ended 2022 with USD 18.2bln of liquidity.

MATERIALS:

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  Antofagasta (ANFGF) - Copper output was down 10% in 2022, but it maintained 2023 guidance. FY22 copper 646k/T within guidance, cash cost of USD 1.61/lb; forecasts 2023 annual copper production of 670-710k/T, net cash costs of USD 1.65/lb. CEO says "the recent strength in the copper market is a positive start to the year, reflecting not just the relaxation of Covid restrictions in China and its expected stronger growth, but also the fundamental long-term importance of copper and the need for increased supply. FY Gold 176.8k/oz within guidance -29.9% YY.


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  Glencore Plc (GLNCY) - Antapaccay copper mine in Peru (produced 135,987 tonnes of copper between Jan-Nov last year) is operating at "restricted" capacity due to anti-government protests that saw an attack on the facility last week, Reuters reports.


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  BASF SE (BASFY) - Wintershall Dea to leave Russia, driving net loss at parent BASF. The materials company reported prelim FY22 revenue of EUR 87.33bln (exp. 87.96bln), adj. EBIT EUR 6.88bln (exp. 6.90bln), net loss of EUR 1.38bln due to the non-cash-effective impairments on its shareholding in Wintershall Dea.

ENERGY:

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  Repsol S.A. (REPYY) - The energy company said its Q4 refining margin indicator in Spain was USD 18.90/bbl (prev. 12.70/bbl in Q3); Q4 production at 551k BPD (prev. 549k BPD in Q3).


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  Core Laboratories N.V. (CLB) - Board approves plan to reorganise the company's corporate structure, will include redomestication of the parent company from the Netherlands to the US, which the Board believes will enhance shareholder value over the long-term through simplifying the corporate structure, improving operational efficiencies and reducing administrative costs.

HEALTH CARE:

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  Moderna, Inc. (MRNA) - Phase 3 study of RSV vaccine candidate met primary endpoints; plans to submit regulatory approval in H1 2023.


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  Fulcrum Therapeutics, Inc. (FULC) - Fulcrum announces USD 100mln stock offering (vs market cap of USD 728.199mln at Tuesday's close).

FINANCIALS:

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  Fulton Financial Corporation (FULT) - Q4 operating EPS 0.48 (exp. 0.50), Q4 NII +36.4% Y/Y at USD 225.9mln, Q4 net interest margin 3.69% (prev. 3.54% in Q3). In Q4, a provision for credit losses of USD 14.5mln was recorded (vs USD 19.0mln in Q3), and a negative provision for credit losses of USD 5.0mln.

FINANCIALS:

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  Interactive Brokers (IBKR) - Q4 adj. EPS 1.30 (exp. 1.17), Q4 revenue USD 976mln (exp. 913.8mln), Q4 total equity USD 11.6bln (prev. 10.9bln in Q3), Q4 customer accounts +25% Y/Y at 2.09mln, Q4 customer equity -18% to USD 306.7bln, Q4 DARTs -22% to 1.89mln, Q4 cleared DARTs -22% to 1.69mln, Q4 customer credits +9% to USD 95.2bln, Q4 customer margin loans -29% to USD 38.9bln.


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  United Community Banks, Inc. (UCBI) - Q4 EPS 0.75 (0.83), Q4 revenue USD 223.4mln (exp. 239.5mln).


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  Nicolet Bankshares, Inc. (NIC) - For the FY 2023, said deposits reprice higher and loan volume softer.

18 Jan 2023 - 09:20- Research Sheet- Source: Newsquawk