US EARLY MORNING: Index futures follow APAC and Europe higher; central bank speak eyed ahead of Thursday CPI

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  EQUITIES: A constructive APAC session overnight and European shares opened higher. US equity futures are all rising, the VIX is easing back towards 20. The yield environment may be supporting tech proxies – in Europe the lower yields on soothing ECB commentary has seen Tech outperform and Banks underperform (ABN earnings were soft, while Deutsche Bank is lower after Cerberus stake sale). The overarching macro narrative is little changed, but key global central bank officials have been attempting to dial back the enthusiasm – ECB’s Villeroy follows the tone of ECB’s Lagarde earlier in the week, and suggests markets may have gotten ahead of themselves. In the US, Fed’s Daly (2024) was making the case on Tuesday that the central bank should not be too aggressive. Ultimately, while equities are supported, the broad S&P 500 still suggests it is consolidating ahead of key catalysts, and we remain off last week’s highs, and indeed, highs seen 5-6 weeks ago. Thursday’s CPI report is the major catalyst in the near-term, but we also have commentary from Fed voters Bowman and Mester today.


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  TREASURIES: The curve is bull-flattening, with yields lower by 2-4bps, with the long-end outperforming. Major curve spreads are narrowing by 0-3bps, with 2s10s and 2s30s flattening the most. There will be focus on the 10s sector today, with the Treasury selling USD 37bln of new 10yr notes, with yields on 10yr debt rising to within touching distance of the psychological 2.0% mark on Tuesday. A sale of 3yr notes yesterday was described as solid amid lower auction sizes, which saw record indirect participation. Thursday’s CPI report looms large, and is expected to show annual prices rising by a record +7.3% Y/Y; the tone of central bank speakers today may help to inform how the market will digest the report, with many Fed officials recently cautioning amid the aggressive implied pricing for the central bank’s normalisation trajectory this year. More immediately, there are a few central bank officials from the ECB and BoE on today’s docket, and we are minded to pay attention given these jurisdictions have influenced the tone of Treasury trading of late. 


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  DOLLAR: The Dollar Index is a little beneath neutral amid a constructive risk tone. Attention is pivoting onto Thursday's CPI release, where some desks suggest there could be two-way risks for the buck. Reuters reminds us that the December report out early January saw price pressures rise to 7.0% Y/Y, in line with the consensus, which then resulted in the Dollar Index falling to 9-week lows as traders 'sold the fact' - the upside in price pressures has been well-telegraphed ahead of the January data due Thursday, and some suggest keeping in mind the reaction to the December data. Still, most are of the view that a significant upside surprise would lead to more bets that the Federal Reserve would hike rates by a 50bps increment in March, and that could still lend the Greenback some strength. Elsewhere, activity currencies are trading higher by around 20bps, although the tone in EMFX is more mixed, with the risk-sensitive ZAR and TRY bucking the risk landscape to trade slightly lower against the dollar.


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  CRUDE: Crude benchmarks are lower by around USD 0.40/barrel, despite weekly inventories from the API which reportedly showed a surprise draw for crude stocks. The complex may be taking its cues from the apparently improving geopolitical dynamics globally: Vienna talks with Iran got underway on Tuesday, and although there is still a long way to go, analysts are now talking more realistically about the prospects of Iranian barrels returning to international markets ahead, adding more supply. Meanwhile, the French President was urging calm on the Ukraine/Russia situation after talks this week. And in the US, officials continue to examine ways to tackle high oil prices. This concoction of both supply and geopolitical developments is seeing traders book some profits after the recent solid gains which have seen benchmarks hit fresh 7yr highs.

DAY AHEAD FEBRUARY 9TH:

• 10:30GMT/05:30EST: Germany 30-Year Bund Auction


• 11:40GMT/06:40EST: CVS Health Corp (CVS) earnings (preview)


• 12:00GMT/07:00EST: Brazil Inflation (JAN), Retail Sales (DEC)


• 12:00GMT/07:00EST: Mexico Inflation (JAN)


• 12:00GMT/07:00EST: US MBA Mortgage Applications (04/FEB)


• 13:10GMT/08:10EST: BoE Chief Economist Pill


• 15:00GMT/10:00EST: ECB’s Schnabel Q&A


• 15:00GMT/10:00EST: US Wholesale Inventories (DEC)


• 15:30GMT/10:30EST: US EIA Energy Inventories (04/FEB)


• 15:30GMT/10:30EST: Fed Governor Bowman


• 17:00GMT/12:00EST: BoC Governor Macklem


• 17:00GMT/12:00EST: Fed's Mester (2022)


• 18:00GMT/13:00EST: US 10-Year Note Auction


• 21:05GMT/16:05EST: Walt Disney Co (DIS) earnings (preview)


• 21:05GMT/16:05EST: Uber Technologies Inc (UBER) earnings (preview)

EQUITY NEWS:

KEY LEVELS (via Credit Suisse):

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  SPX: 4399, 4409/17, 4430, 4446, 4452/53, 4522, 4540/44, 4568, 4589, 4591/95.


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  NDX: 13880/83, 14078, 14215, 14320, 14443/52, 14735, 14814/57, 14961, 15039, 15140/196.


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  RUT: 1946, 1960, 1969, 1988, 1996/2000, 2026/28, 2035, 2048/55, 2062, 2085. 

TECH:

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  Alibaba (BABA), Softbank (SFTBY) - Alibaba shares jumped in HK trade after SoftBank said it was not involved in BABA's filing of additional ADR shares, allaying investor fears that BABA's largest shareholder might be looking to cash out. (Bloomberg)


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  Mandiant (MNDT), Microsoft (MSFT) - Mandiant pared back after hours gains after weaker earnings for Q4 and a soft Q1 outlook; gains were supported by earlier reports that Microsoft (MSFT) was in talks to acquire the cyber security firm (Bloomberg). Mandiant Q4 adj. EPS -0.37 (exp. -0.13), Q4 revenue USD 133mln (exp. 131.5mln). Sees Q1 adj. EPS between -0.15 and -0.13 (exp. -0.10), and Q1 revenue between USD 128-131mln (exp. 134.4mln). For the FY, sees FY22 adj. EPS between -0.37 at the midpoint (exp. -0.32), and FY22 revenue seen between 555-565mln (exp. 574mln). Announced a strategic cybersecurity alliance with SentinelOne, will help organisations reduce data breaches risk and mitigate cyber threats, but said it had 'no comment' on reports of potential merger with Microsoft. (MNDT)


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  GlobalFoundries Inc. (GFS) - Q4 adj. EPS 0.18 (exp. 0.11), and Q4 revenue USD 1.847bln (exp. 1.81bln). Said 2021 was an outstanding year where it capitalised on the demand for pervasive semiconductor solutions. On track to deliver another year of strong growth in revenue and profitability in 2022. Sees sales of USD 1.88-1.92bln in the March quarter (exp. 1.84bln), and sees EPS between 21-27c (exp. 14c). (Bloomberg)


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  Lyft (LYFT) - Fell by over 5% in after hours trade on weak rider numbers and Omicron impact. Q4 adj. EBITDA 74.7mln (exp. 75.7mln), Q4 revenue USD 969.9mln (exp. 940.4mln), Q4 active riders 18.73mln (exp. 20mln), revenue per active rider was USD 51.79. CEO said rideshare demand rebound was a matter of when not if, and that Omicron had a significant impact on ride volumes in January, adding that near-term revenue growth acceleration likely affected by Omicron impact in Q1 and unknown shape of recovery; CFO anticipates Q1 rideshare to be lower Q/Q. (LYFT)


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  FleetCor (FLT) - Q4 EPS 3.72 (exp. 3.60), Q4 revenue USD 802mln (exp. 767mln). Sees Q1 EPS between 3.45-3.55 (exp. 3.52), and sees Q1 revenue between 740-760mln (exp. 746mln). Said it was strengthening its global EV capabilities with Motorq and Mina investments. (FLT)


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  NCR Corporation (NCR) - Q4 adj. EPS 0.76 (exp. 0.70), Q4 revenue USD 2.03bln (exp. 2.1bln). Will commence strategic review process with the assistance of outside advisors, will evaluate a number of strategic alternatives. Sees Q1 adj. EPS 0.60-0.65 (exp. 0.72), and sees Q1 revenue between 1.9-1.95bln (exp. 1.9bln), and sees FY22 adj. EPS between 3.25-3.55 (exp. 3.49), and FY22 revenue is seen between USD 8-8.2bln (exp. 8.2bln). (NCR)


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  New Relic (NEWR) - Tumbled in after hours trade after profit miss, guidance; Q3 EPS -0.18 (exp. -0.15), Q3 revenue USD 204mln (exp. 200.5mln). Q3 active customers 14.6K (prev. 14.3K in Q2), Q3 active customer accounts above USD 100k value was 1,064 (prev. 1,011). Sees Q4 EPS between -0.22 and -0.19 (exp. -0.02), and sees Q4 revenue between 204-206mln (exp. 204.2mln). (NEWR)


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  Digital Turbine (APPS) - Q3 adj. EPS 0.49 (exp. 0.43), Q3 revenue USD 375.5mln (exp. USD 353.3mln). Sees FY22 adj. EPS between 1.66-1.68 (exp. 1.60), and sees FY22 revenue between 1.225-1.24bln (exp. 1.2bln). (APPS)


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  Paycom Software (PAYC) - Jumped in after hours trade after results, guidance; Q4 EPS 1.11 (exp. 1.08), Q4 revenue USD 285mln (exp. 275.7mln). Sees Q1 revenue between 342-344mln (exp. 341.2mln), and sees FY22 revenue between 1.314-1.316bln (exp. 1.3bln). (PAYC)

COMMUNICATIONS:

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  Disney (DIS), Sony (SONY), ViacomCBS (VIAC) - Disney, Sony Pictures Networks India and Viacom18 (JV between ViacomCBS and Reliance) among companies planning to bid for the rights to the Indian Premier League; monthlong auction expected to conclude by late March. (WSJ)


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  Omnicom (OMC) - Revenue grew as the pandemic impact faded. Q4 EPS 1.95 (exp. 1.73), Q4 revenue USD 3.86bln (exp. 3.7bln). (Campaign Live)


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  Microsoft (MSFT), Nintendo (NTDOY) - 'Minecraft Dungeons' has reached 15mln players. (Minecraft)


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  Ubisoft (UBSFY) - Partners with The Sandbox to bring Rabbids to the Metaverse. (Sandbox)


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  Meta Platforms (FB) - Files joint suit with digital bank Chime vs two Nigerian individuals allegedly engaged in phishing attacks on the platforms. (Reuters)

CONSUMER CYCLICAL:

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  Chipotle (CMG) - Rose 7% in after hours trade after reporting Q4 results, where Q4 adj. EPS 5.58 (exp. 5.26), Q4 revenue USD 2bln (exp. 1.96bln), comp sales +15.2% (exp. +14.8%). Q4 Operating margin 8.1% (exp. 9.88%), Q4 Restaurant level operating margin 20.2% (exp. 20.7%), Q4 New restaurants 78 (exp. 72). Sees Q1 comp sales growth mid-to-high-single digits, sees 235-250 new restaurant openings in Q1. Raised long-term restaurant goal in North America to 7,000 (prev. 6,000). (CMG)


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  Yum China Holdings (YUMC) - Fell over 4% in US after hours; Q4 adj. EPS 0.03 (exp. 0.22), Q4 revenue USD 2.3bln (exp. 2.4bln). Q4 SSS -11% Y/Y, total system sales -3% Y/Y; opened 563 gross new stores/373 net. Restaurant margin 7.5% (vs 15.1% Y/Y) on sales deleveraging due to worsened COVID conditions. Sees FY22 capex between 0.8-1.0bln, and sees around 1,000-1,200 net new stores. (YUMC)


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  McDonalds (MCD) - Activist Icahn privately threatened a proxy fight for board representation. (WSJ)


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  Crown Holdings (CCK) - Q4 adj. EPS 1.66 (exp. 1.54), Q4 revenue 3.1bln (exp. 2.8bln). Global beverage can shipments for the year +9% vs 2020. Said Q4 GAAP loss of USD 7.95/shr included full impact of UK pension settlement, and now the fully settled UK pension plan significantly reduces future risks. Sees Q1 adj. between EPS 1.80-1.90 (exp. 1.78), and sees FY22 adj. EPS between 8.00-8.20 (exp. 7.97). (CCK)


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  Smurfit Kappa (SMFKY) - FY21 EBITDA EUR 1.7bln (exp. 1.67bln). Costs regarding energy recovered by fibre and other raw materials remain elevated. Trading is strong. Final dividend increased by 10%. (Newsquawk)


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  Pandora (PANDY) - Q4 revenue DKK 9.01bln (prelim 9.0bln). EBIT DKK 2.68bln (prelim 2.7bln). Launched DKK 3.3bln buyback. Sees US jewellery market contracting 10-20% this year. Performance in China was unsatisfactory, negatively impacted by COVID. Key sustainability target is to only use lab-grown diamonds going forward. (Pandora)


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  Evolution Gaming (EVVTY) - Q4 revenue EUR 300mln (exp. 305mln), net income EUR 171mln (exp. 183mln), EBITDA EUR 206mln (exp. 214mln), EPS 0.80 (exp. 0.825); proposes 1.42/shr dividend (exp. 1.40/shr). (Newsquawk)

INDUSTRIALS:

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  Boeing (BA) - Delivered 32 aircraft in January, sidelined 787 Dreamliner programme continues to weigh on its ability to capitalise on a recovery in air travel. (Reuters)


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  3M (MMM) - Raises quarterly dividend by 1c to USD 1.49/shr. (MMM)


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  Tesla (TSLA) - Notes California intends to sue the automaker over systematic racial discrimination and harassment; Tesla said suit was "misguided". (Tesla)


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  Nikola Motors (NKLA) - Has lost almost entire supply chain leadership over the last few months, situation at the company starting to look dire, sources said it is implementing a hiring freeze for now. (Electrek)


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  Southwest Airlines (LUV) - Reaches prelim deal with Transport Workers Union Local 550. (LUV)

MATERIALS:

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  Anglo American (NGLOY) - Started-up the AUD 230mln Aquila metallurgical coal mine, expected to have a total annual saleable production around 5mln tonnes. (Proactive)


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  FMC Corporation (FMC) - Q4 adj. EPS USD 2.16 (exp. 2.01), Q4 revenue USD 1.4bln (exp. 1.4bln). Q1 adj. EPS seen between 1.50-1.90 (exp. 1.75), and Q1 revenue seen between 1.22-1.34bln (exp. 1.29bln). Sees FY22 adj. EPS between 8.60-8.10 (exp. 7.68), and FY22 revenue seen between 5.25-5.55bln (exp. 5.3bln). Authorizes new USD 1bln share buyback, and sees USD 500-600mln of buybacks in 2022. (FMC)


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  Akzo Nobel (AKZOY) - Q4 revenue EUR 2.43bln (prev. 2.21bln Y/Y). Net Income EUR 187mln (prev. 167mln Y/Y). Adj. EPS 1.04 (prev. 0.87 Y/Y). Announced EUR 500mln buyback. (Reuters)


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  Compass Minerals (CMP) - Q1 adj. EPS 0.38 (exp. 0.55), revenue USD 331.5mln (exp. 370.3mln). Cuts FY22 adj. EBITDA guide to between 200-235mln (prev. 220-250mln), cut capex guide by USD 25mln to 100-110mln to offset inflationary pressures it continues to experience. Expects inflationary pressures and higher logistical costs to dampen underlying earnings potential over the fiscal year. Will offset these costs via continued pricing actions. (CMP)

HEALTH CARE:

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  GlaxoSmithKline (GSK LN) - FY21 revenue GBP 34.1bln (exp. 33.8bln), dividend 0.80 (exp. 0.785), adj. EPS 1.132 (exp. 1.091). On track to demerge consumer healthcare business in mid-2022; new GSK Biopharma Business is expected to deliver growth in FY22 sales of 5-7%. FY22 guidance excludes and contribution from COVID solutions, for FY22 based on binding agreements expect COVID solutions will contribute a similar sales level as in FY21. (Bloomberg)


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  Qiagen (QGEN) - Shares rallied in US after hours trading as results topped expectations and its outlook was decent. Q4 EPS 0.74 (exp. 0.53), and Q4 revenue USD 582mln (exp. 461.3mln). Expects a significant decline in COVID-19 product sales this year, but CEO said results showed Qiagen was not COVID dependent, has portfolio to drive future growth. Sees double-digit CER growth in its non-COVID portfolio, sees FY22 net sales of USD 2.07bln (exp. 2.05bln), and EPS of at least 2.05 (exp. 2.03). (QGEN)


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  Doximity (DOCS) - Rose 12% in extended trading after results, M&A announcement. Q3 adj. EPS 0.29 (exp. 0.13), Q3 revenue USD 97.9mln (exp. 86.3mln). Sees Q4 revenue between USD 89.0-90.0mln (exp. 89.3mln). Telehealth platform grew to 350,000 active providers. To acquire Amion for USD 83mln, which powers almost 200k physician schedules (Forbes).

ENERGY:

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  Inventories - API said weekly Crude stocks -2mln (exp. +0.4mln), Cushing -2.5mln, Gasoline -1.1mln (exp. +1.6mln), Distillate -2.2mln (exp. -1.7mln).


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  Equinor (EQNR) – Earnings beat, raises dividends and buybacks. Q4 revenue USD 32.6bln (prev. 11.7bln Y/Y). Adj. operating profit USD 13.6bln (prev. -989mln Y/Y). Adj. net USD 3.37bln (prev. -2.42bln Y/Y). Proposes boost to Q4 dividend and increase buyback programme up to USD 5bln. Will also announce an extraordinary cash dividend of USD 0.20/shr. (Reuters)


• 
  Siemens Energy (SMNEY), Siemens Gamesa (GCTAY) - Siemens Energy Q1 revenue EUR 6.0bln (prev. 6.50bln), net -240mln (prev. +99mln). Notes latest profit warning from Siemens Gamesa was a setback. Still expects a sharp improvement in net profit this year. (Reuters)


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  Enphase Energy (ENPH) - Q4 EPS 0.73 (exp. 0.58), Q4 revenue USD 412.7mln (exp. 396.5mln). Sees Q1 revenue between USD 420-440mln (exp. 409mln). (CNBC)

INDUSTRIALS:

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  Maersk (AMKBY) - Q4 revenue USD 18.51bln (exp. 17.89bln). Underlying EBITDA USD 7.99bln (exp. 8bln). Sees 2022 underlying EBITDA around USD 24bln (exp. 28bln). Sees 2022 global container trade +2-4%. CEO expects higher inflation to weigh on consumption in 2022, but expects supply chain issues to ease (FT). Acquired Pilot Freight Services for USD 1.68bln (Bloomberg).


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  Airbus (EADSY) - Revokes orders for two A350-1000 jets from Qatar Airways, deepening the USD 600mln row. (Reuters)


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  Hub Group (HUBG) - Q4 EPS 2.48 (exp. 1.43), Q4 revenue USD 1.26bln (exp. 1.18bln). Sees FY22 EPS between 5.90-6.30 (exp. 5.02), and sees FY22 revenue between USD 4.9-5.1bln (exp. 4.8bln). (HUBG)

FINANCIALS:

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  Deutsche Bank (DB) - Cerberus Capital to sell around 15mln shares. (Bloomberg)


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  ABN AMRO (AAVMY) - Q4 operating income EUR 2.28bln (vs guide 2.13bln). Profit EUR 552mln (vs guide 451mln). Proposes final dividend of EUR 0.61/shr and a EUR 500mln share buyback. (Bloomberg)

09 Feb 2022 - 09:55- Fixed IncomeResearch Sheet- Source: Newsquawk