US EARLY MORNING: Index futures are mixed. PCE, Employment Costs, Michigan data ahead

• 
  EQUITIES: Asia stocks mostly rebounded, while Europe had a subdued start. US equity futures are mixed. The Nasdaq-100 Emini +0.8%, S&P 500 Emini +0.3%, Dow and Russell futures are around flat/lower. The Nasdaq-100 Emini is on course for its second straight week of losses, S&P 500 Emini is on course for its fifth straight week of losses. Analysts continue to note the uncertainty surrounding the Fed’s policy reaction. While the trajectory is known (tighter), the degree and timing, as well as whether the so-called ‘Fed put’ remains still have questions over them. The data slate in the next week or so could help inform these themes; today PCE, the Fed’s preferred gauge of inflation, Q4 Employment costs and the final Michigan consumer sentiment data (we’ll be watching inflation expectations closely) will be released, next week’s ISM surveys and then the jobs report next Friday. Geopolitics continues to be a theme, with the constructive tone of Russian commentary on Thursday being attributed for some of the paring back of losses seen in the session early doors; this theme will continue, with Russian policymakers set to speak with global powers later today.


• 
  TREASURIES: The tone of trading has felt much calmer than other periods seen this week. Yields along the Treasury curve are mixed; the long-end is underperforming, with yields higher by around 4bps; shorter-dated yields are higher by around 2bps; the belly is about unchanged. There is a slight steeper bias to the shape of the curve. A 7yr auction on Thursday was fairly good, stopping through by 0.1bps, with indirects and directs upping participation, leaving dealers with the lowest takedown since January 2018. Incoming data is key (PCE today, ISM next week, jobs report next week); the Fed has left itself optionality on many facets of monetary policy, and many desks have said this places more importance on incoming data to help shape market expectations. That might not necessarily imply the pricing of more hikes; indeed, the optionality the Fed has retained implies that weaker data –­ particularly that which relates to prices – could even see bets on Fed tightening pared back slightly. This thesis will be put to the test over the coming days.


• 
  DOLLAR: The broad Dollar Index is trading a little higher. As mentioned above, the data slate could begin to play a more influential role once again, with PCE prices data, employment costs data, as well as the inflation expectations metrics within the Michigan survey data all due for release today, giving us insight on how price pressures are evolving.


• 
  CRUDE: Oil benchmarks are higher by around 40c or so ahead of next week’s OPEC+ meetings, where the group will likely continue easing output by 400k BPD in the month. Oil is set for the sixth straight week of gains amid geopolitical tensions and questions over OPEC+ spare capacity, while some note fuel demand is rising. Nomura said “where Brent crosses USD 90/bbl level, we see some selling from a sense of accomplishment, but investors start buying again when the prices fall a little as they remain cautious about possible supply disruptions due to rising geopolitical tensions,” adding that “the market expects upply will stay tight as OPEC+ is seen to keep the existing policy of gradual increases in production.”

DAY AHEAD 28TH JAN:

• 08:00GMT/03:00EST: Spain GDP Growth Rate Flash (Q4)


• 09:00GMT/04:00EST: EZ M3 Money Supply (DEC)


• 09:00GMT/04:00EST: Germany GDP Growth Rate Flash (Q4)


• 09:00GMT/04:00EST: Italy Business Confidence, Consumer Confidence (JAN)


• 09:00GMT/04:00EST: Italy PPI (DEC)


• 10:00GMT/05:00EST: EZ Sentiment Indicators (JAN)


• 10:10GMT/05:10EST: Italy 5-Year, 10-Year BTP Auction


• 11:00GMT/06:00EST: Chevron Corp (CVX) earnings (preview)


• 11:30GMT/06:30EST: Caterpillar Inc (CAT) earnings (preview)


• 11:30GMT/06:30EST: India Foreign Exchange Reserves (21/JAN)


• 11:30GMT/06:30EST: Spain Business Confidence (JAN)


• 13:30GMT/08:30EST: US Personal Income, Spending (DEC)


• 13:30GMT/08:30EST: US PCE Price Index (DEC)


• 13:30GMT/08:30EST: US Employment Cost Index (Q4)


• 15:00GMT/10:00EST: US Michigan Consumer Sentiment Final (JAN)


• 18:00GMT/13:00EST: US Baker Hughes Rig Count (28/JAN)


• 19:00GMT/14:00EST: US President Biden remarks on supply chains

EQUITY NEWS:

KEY TECHNICAL LEVELS (PER CREDIT SUISSE):

• 
  SPX: 4245, 4248, 4276, 4344, 4361, 4417, 4431, 4450, 4477, 4495.


• 
  NDX: 13609/14, 13721/25, 13822, 13995, 14257, 14784, 14826/68, 15006, 15166, 15266.


• 
  RUT: 1927/31, 1952, 1964/62, 1981, 2009, 2044, 2053, 2062/68, 2085, 2105/10.

TECH:

• 
  Apple Inc (AAPL) - Rose in afterhours trading after publishing earnings and revenues above expectations. EPS 2.10/shr (exp. 1.89), Revenue USD 123.95bln (exp. 118.66bln). iPad sales were a little light at USD 7.25bln (exp. 8.18bln), as significant supply chain constraints led to shortages;  but iPhone sales topped the analyst view at USD 71.63bln (exp. 68.34bln). Services revenues USD 19.52bln (exp. 18.61bln). Supply chain issues cost more than USD 6bln in quarter, but it noted an easing of these issues, and expects less issues in the current quarter; it’s not providing guidance beyond current quarter due to supply chain issues; Added that it expects solid Y/Y growth in revenue in Q2, but to decelerate from December quarter. Said chip shortages were primarily for older product models. (Newsquawk)


• 
  Alphabet (GOOG) - Google will invest USD 1bln in India mobile phone operator Bharti Airtel (Bloomberg). Google adds 'Offers' tab to Google Play app (The Verge).


• 
  Uber (UBER) - Reaches agreement with Canada union to offer employee-like benefits to contractors. (Reuters)


• 
  SK Hynix (HXSCL) - Q4 net KRW 3.3tln (exp. 3.0tln), operating profit KRW 4.2tln (exp. 4.0tln), revenue KRW 12.4tln (exp. 12.5tln). Q1 DRAM shipments are expected to fall by mid-high single digit percentage Q/Q. (Reuters)


• 
  KLA Corp (KLAC) - Q2 earnings, revenues above the street's view, but guidance for Q3 missed expectations (Newsquawk).


• 
  Western Digital Corp (WDC) – Earnings, revenues beat expectations for the quarter, but guidance was weak (Newsquawk). Announced CFO transition (WDC).


• 
  Juniper Networks (JNPR) - Earnings, revenues top estimates. Said it broadly saw better than expected demand during the quarter. Noted a record backlog. Guided Q1 revenue a little above the street estimate. (Juniper)


• 
  Atlassian Corporation (TEAM) - Earnings, revenue, subscriber sales all above expectations in Q2. (Newsquawk)

COMMUNICATIONS:

• 
  Tencent Holdings (TCEHY) - Plans to take DouYu private amid disagreements over strategy, sources said. (Reuters)

CHINA NAMES:

• Chinese regulators held meetings with foreign financial firms on Tuesday, told firms to prioritise growth in 2022. China and US are making progress in coordinating regulations for US-listed Chinese companies. (Reuters)


• China state media steps-up call for confidence in stocks following recent slump. (Newsquawk)

FINANCIALS:

• 
  Visa (V) - Earnings, revenues above expectations in Q1; payments volume, cross-border volumes also topped estimates. (Newsquawk)


• 
  Robinhood (HOOD) - Shares declined afterhours as its Q4 report showed revenues short of expectations, and Q1 revenue was guided below estimates; sees FY 2022 operating expenses higher by 15-20% (Newsquawk). Separately, Court dismissed claims HOOD wrongly restricted 'meme stock' trades (Reuters).


• 
  Citigroup (C) - Singapore's DBS Group to Citi's Taiwan consumer banking assets for assets + USD 700mln premium. (Bloomberg)


• 
  Crypto Names - US preparing to release an executive action that will task federal agencies with regulating digital assets and cryptocurrencies as a matter of national security. (Barron's)


• 
  Crypto Names - Senator Warren pressing cryptomining companies on high energy use. (Bloomberg)


• 
  UniCredit (UNCRY) - Q4 net EUR -1.44bln (exp. -1.15bln), Net Interest 2.41bln (exp. 2.23bln), Net Fees 1.68bln (exp. 1.65bln), CET1 14.1%. Proposed cash dividend of 1.17bln and buybacks of 2.58bln.

CONSUMER STAPLES:

• 
  Mondelez International (MDLZ) - Q4 EPS miss, revenue small beat; expects to face a larger impact from supply chains in the current quarter. Expects muted profitability for Q1 in Europe, but improvement to start in Q2 as price increases in a number of countries take effect; expects to face larger supply headwinds for North America in Q1. (Reuters)

CONSUMER CYCLICAL:

• 
  Home Depot (HD) - Named company veteran Ted Decker as CEO. (CNBC)


• 
  Penn National (PENN) - Approved to offer mobile, online Barstool sportsbook in Louisiana. (Penn National)


• 
  Toll Brothers (TOL) - Co-founder Robert Toll to transition to Chairman Emeritus role. (Toll Brothers)


• 
  LVMH (LVMUY) - Solid earnings. FY 2021 sales EUR 64.22bln (exp. 62.26bln), net 12bln (prev. 4.70bln). Wines & Spirits +18% Y/Y (exp. 20%); Fashion and Leather Goods +28% Y/Y (exp. +16%); Perfumes and Cosmetics +20% Y/Y (exp. +20%); Watches and Jewellery +21% Y/Y (exp. 8%). Tiffany had a record year for profitability and sales despite closure for renovation of its New York flagship store, which will reopen this year. Group has the advantage of pricing flexibility in a phase of inflation, if inflation hits, it can react. Expects demand for the group's products to remain strong. (Newsquawk)


• 
  Salvatore Ferragamo (SFRGY) - FY21 revenue EUR 1.14bln (exp. 1.14bln). (Newsquawk)


• 
  H&M (HNNMY) - Q4 net sales +11%, gross profit SEK +14% at 31.3bln. Increased shipping/materials prices were offset by a more advantageous USD FX rate. (Newsquawk)


• 
  Carnival (CCL) - Seeing more cancellations due to COVID; bookings dampening for H2 2022 vs 2019. (Newsquawk)

HEALTH CARE:

• 
  Biogen (BIIB) - Selling stake in a pharmaceutical JV with Samsung Biologics for USD 2.3bln. (STAT)


• 
  Stryker Corp (SYK) - Earnings in Q4 were slightly short of expectations, though revenue was firmer. (Newsquawk)

INDUSTRIALS:

• 
  3M (MMM) - US jury awards USD 100mln to two veterans suing over combat earplugs. (Newsquawk)


• 
  Toyota (TM) - Dec 2021 global sales were lower Y/Y, outlook for 2022 uncertain due to COVID, supply chains. (Toyota)


• 
  Canadian Pacific (CP) - Grain revenues take hit in aftermath of 2021 drought. (Coast Reporter)


• 
  Boeing (BA) - Awarded USD 106mln Navy order. (DoD)


• 
  Northrop Grumman (NOC) - Awarded USD 150mln Air Force contract. (DoD)


• 
  Stellantis (STLA) - FY21 business performance improved markedly. Dongfend Peugeot Citroen selling over 100k vehicles. Has significant growth potential ahead. Additional plans for the Chinese market are to be announced on March 1st. (Newsquawk)


• 
  Volvo (VLVLY) - Q4 revenue SEK 102bln (exp. 92.8bln), EBIT 10.2bln (exp. 10.1bln). Proposes dividend of 6.50/shr, and additional dividend of equal amount. Expect inflationary pressures to continue. Truck demand remains high. (Newsquawk)


• 
  Leonardo (LDO) - Raises FY21 guidance midpoint to the high-end of prior ranges. (Newsquawk)

MATERIALS:

• 
  Celanese Corporation (CE) - Earnings and revenues were a little light, but guided Q1 above street estimates, although the 2022 EPS view was unchanged. (Celanese)


• 
  United States Steel Corporation (X) - Q4 EPS 3.64 (exp. 4.41), revenue 5.62bln (exp. 5.44bln). Authorised new USD 500mln buyback. (US Steel)


• 
  Eastman Chemical (EMN) - EPS missed expectations, revenue slightly above. Guided FY22 EPS above the street's view. Expects market to remain strong. Pricing actions expected to deliver a strong spread tailwind in the specialty businesses. (MarketWatch)

ENERGY:

• 
  Solar names - White House mulls extension of Trump-admin solar import tariffs. (Reuters)


• 
  Sempra Infrastructure (SRE), Entergy Louisiana (ETR) - Sempra enters MOU with Entergy on renewable energy. (PR Newswire)

UTILITIES:

• 
  PG&E (PCG) - Expands scope of Wildfire Safety Center to encompass, ensure readiness for natural disasters and emergencies. (PG&E)

28 Jan 2022 - 09:48- EnergyData- Source: Newsquawk