US EARLY MORNING: Nasdaq-100 dragged lower after FB earnings; US indicies have been paring back losses, but are still red

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  EQUITIES: Asia shares fell after the after hours lead from Wall Street, while European stocks opened generally lower amid the sour equity market sentiment. US equity futures have been paring back losses – but are still broadly beneath neutral – in wake of Meta Platforms’ (FB) weak earnings report and guidance, which has dragged the stock down by over 20% in after hours trading. FB has a 4.7% weight in the NDX, and the futures of the index are currently softer by around 2%; FB has a weight of just over 2% in the SPX, with futures in the index lower by around 0.8%. The Russell and Dow futures are faring better, lower by 0.5% and 0.1% respectively. The FB report was surprising given the tone of the recent Google (GOOG), Microsoft (MSFT) and Apple (AAPL) reports, with the latter three all putting in decent numbers for the quarter. Instead the release can be filed under the disappointing results, as also seen by fellow NDX index stars Tesla (TSLA) and Netflix (NFLX). The FB downside has also dragged others lower – Qualcomm (QCOM) for instance released decent numbers after market on Wednesday, but is also in the red. There are further heavyweights on the slate to report today, with retail giant Amazon (AMZN) due to report after the US close; given the size and importance of the retailer, its earnings may be crucial in setting the tone for equity trade into the end of the week, given it is perhaps a more cleaner indication of the health of the US consumer.


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  TREASURIES: Treasury yields are mixed; the short-end is rallying by around 2bps, while the long-end of the curve is selling off by the same magnitude, leaving the shape of the curve modestly biased towards steepening by around 1bps or so; the bull-steepening came as equity sentiment soured. A huge miss in yesterday’s ADP report was not that surprising since the Omicron impact has hit January economic data metrics, and many think the effects will be temporary. It does, however, guide us towards a weaker outing at Friday’s official jobs report (our NFP preview is here). The jobs data is unlikely to dissuade the Fed from raising rates in March, but could influence the debate about the magnitude that the central bank will lift its Federal Funds Target by – a miss would all but kill the 50bps increment calls; a significant beat and upside earnings pressure would embolden the hawks. Friday’s report will also be influential in determining the course of Fed rate hikes this year, with money markets pricing the equivalent of four 25bps rate hikes by the end of this year (pricing for a fifth has diminished over the last day); it could also influence the aggression by which the central bank begins reducing its balance sheet. Fed nominees Raskin, Cook, Jefferson will appear before the Senate today, giving us a glimpse into where their policy sit on the hawk-dove scale (expecting mostly dovish on monetary policy, but hawkish on regulation; however, the nominees may need to sound hawkish in this environment to get the nod). There are more mega-cap earnings too, a services ISM (the manufacturing gauge on Tuesday saw a surge in price pressures, but it was for the Omicron tainted month of January). We’ll also be paying attention to EGBs, with the ECB and BoE rate decisions today, where Treasuries could see moves in sympathy.


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  DOLLAR: After falling on Tuesday against the background of more constructive risk sentiment, the Dollar Index has reclaimed the 96.00 handle amid soft risk sentiment following the equity slide courtesy of Meta Platforms (FB). The central bank slate in Europe is packed, with the ECB and BoE announcing rate decisions in the US morning; the ECB will have to manage hawkish expectations after higher-than-expected inflation, with President Lagarde likely to push back on pricing that calls for rate hikes this year; the BoE will likely raise rates 25bps and end QE reinvestments, leaving scope for monetary policy divergence plays in major FX; however, some desks do not think the EUR has much scope to respond, with the ECB unlikely to reveal any real new information. For GBP, guidance will be key, with some expecting hawkish regarding the near-term.


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  CRUDE: Major oil benchmarks are lower, with some booking some after the recent crude price tally after softer economic data (ADP is the latest). OPEC+ gave us no surprises, sticking to its plan to ease supply curbs by 400k BPD in March, although analysts continue to note tight spare capacity in the group, and that is likely to keep oil supported in the weeks ahead. ING said “the concern for the market is that whilst the group may announce sizeable production increases, in reality what the market will see is smaller. This has been evident for several months now, including for January”. Additionally, geopolitical tensions continue to linger, and despite the known risks about how positive Iran talks might see the return of Iranian barrels to international markets, it doesn’t appear to be imminent. Winter weather conditions are also likely to prevent prices falling too much, others have said.

DAY AHEAD FEBRUARY 3RD:

• 10:00GMT/05:00EST: EZ PPI (DEC)


• 10:00GMT/05:00EST: France 10-Year OAT Auction


• 10:40GMT/05:40EST: Spain 10-Year Obligacion Auction


• 11:25GMT/06:25EST: Eli Lilly and Co (LLY) earnings (preview)


• 11:30GMT/06:30EST: Turkey FX Reserves (28/JAN)


• 11:30GMT/06:30EST: Merck & Co Inc (MRK) earnings (preview)


• 11:30GMT/06:30EST: Honeywell International Inc (HON) earnings (preview)


• 11:45GMT/06:45EST: Estee Lauder Companies Inc (EL) earnings (preview)


• 12:00GMT/07:00EST: Conocophillips (COP) earnings (preview)


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


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  12:00GMT/07:00EST: BoE Rate Decision, MPR (preview)
  


• 12:30GMT/07:30EST: US Challenger Job Cuts (JAN)


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  12:45GMT/07:45EST: EZ ECB Rate Decision (preview)
  


• 13:00GMT/08:00EST: Brazil Markit Services, Composite PMI (JAN)


• 13:30GMT/08:30EST: ECB Press Conference


• 13:30GMT/08:30EST: US Unit Labour Costs Prel, Nonfarm Productivity Prel (Q4)


• 13:30GMT/08:30EST: US Initial Jobless Claims (29/JAN), Continuing Claims (22/JAN)


• 14:45GMT/09:45EST: US Markit Services PMI, Composite PMI (JAN, Final)


• 15:00GMT/10:00EST: Fed nominees Raskin, Cook, Jefferson appear before the Senate


• 15:00GMT/10:00EST: US Services ISM (JAN)


• 15:00GMT/10:00EST: US Factory Orders (DEC)


• 15:30GMT/10:30EST: US EIA NatGas Stocks Change (28/JAN)


• 16:30GMT/11:30EST: US 4-Week, 8-Week Bills Auction


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  21:00GMT/16:00EST: Amazon.com Inc (AMZN) earnings (preview)
  

EQUITY NEWS:

KEY LEVELS (per Credit Suisse):

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  SPX: 4471, 4484, 4494, 4504, 4526/24, 4553, 4591, 4602/12, 4632, 4639.


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  NDX: 14078, 14215, 1443, 14648, 14749/34, 15245/66, 15348/82, 15446, 15608/17, 15816.


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  RUT: 1982, 2003/1998, 2016, 2032, 2048/43, 2062, 2085, 2095, 2105/15, 2123/33.

COMMUNICATIONS:

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  Meta Platforms Inc (FB) - Dropped by over 20% in extended trade after Q4 profits, DAUs, MAUs were on the soft side, while its guidance disappointed. Q4 EPS 3.67 (exp. 3.84), Revenue 33.67bln (exp. 33.40bln), DAUs 1.93bln (exp. 1.95bln), MAUs 2.91bln (2.95bln). Sees Q1 rev. USD 27bln-29bln (exp. 30.25bln), with Y/Y growth in Q1 to be impacted by headwinds to both impressions and price growth. Expects continued headwinds from increased competition for people's time and a shift of engagement within apps towards video surfaces which monetise at lower rates than Feed and Stories. On the pricing side, expects growth to be negatively impacted by a few factors: anticipates modestly increasing ad targeting and measurement headwinds from platform and regulatory changes including Apple's (AAPL) iOS changes (exec said iOS headwind was "in the order of USD 10bln" for 2022); macroeconomic challenges like cost inflation and supply chain disruptions are impacting advertiser budgets; expects foreign currency to be a headwind to Y/Y growth. NOTE: FB had a 4.7% NDX weight and a 2.3% SPX weight at yesterday's close. (Newsquawk)


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  T-Mobile US Inc (TMUS) - Jumped in extended trade after earnings beat. Q4 EPS 0.34 (exp. 0.18), Revenue 20.8bln (exp. 21.08bln), Postpaid net customer additions +1.75mln (exp. 1.6mln), Postpaid phone net adds +844k (exp. +838k). (Newsquawk)


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  Spotify (SPOT) - Fell by over 10% in after hours as Q1 guidance suggests a slowdown in subscriber growth. Q4 -0.21 (exp. -0.40), revenue EUR 2.7bln (exp. 2.71bln). Premium revenue 2.30bln (exp. 2.28bln), MAUs 406mln (exp. 406.1mln), total premium subscribers 180mln (exp. 180.2mln), ad-supported MAUs 236mln (exp. 233.6mln), ARPU EUR 4.40 (exp. 4.31). Sees Q1 MAUs around 418mln, and premium subscribers at 183mln. No longer plans to issue annual guidance. (Newsquawk)


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  Spotify (SPOT) - David Crosby, Stephen Stills join former Bandmate Neil Young’s protest of Spotify and Joe Rogan. (WSJ)


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  Nintendo (NTDOY) - Switch has now outsold the Wii; sold a cumulative 103.5mln Switch units, sees FY Switch sales at 23mln (prev. 24mln). (The Verge)


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  Nokia (NOK) - Resumes dividends and buybacks. (Reuters)


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  Publicis (PUBGY) - Raises M&A budget after record results. FY revenue EUR 10.49bln (exp. 10.66bln), EBITDA 2.31bln (exp. 2.38bln), Net Income 1.03bln (exp. 1.21bln), EPS 4.13 (exp. 4.90). Expects Q1 organic growth to be slightly above guided range. (AdWeek)


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  Discovery (DISCA), BT (BT) - To create a sports JV which would see BT Sport and Eurosport brought together. (Bloomberg)


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  BT (BT) - 9-month (GBP) - Revenue 15.7bln (prev. 16.1bln), EBITDA 5.71bln (prev. 5.6bln). (Newsquawk)

TECH:

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  Qualcomm (QCOM) - Lower in after hours trade despite reporting decent Q1 metrics; shares may have slipped in sympathy with index heavyweight FB after its disappointing earnings. Qualcomm's Q1 Adj. EPS 3.23 (exp. 3.00), revenue 10.70bln (exp. 10.44bln). QCT revenue USD 8.85bln (exp. 8.64bln), QTL revenue USD 1.82bln (exp. 1.71bln). Sees Q2 Adj. EPS between 2.80-3.00 (exp. 2.48), and sees Q2 revenue between 10.2-11bln (exp. 9.59bln). (Newsquawk)


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  Amazon (AMZN) - Amazon Labor Union filed a petition for election at a second warehouse in Staten Island. (Union)


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  Infineon (IFNNY) - Q1 revenue EUR 3.16bln (exp. 3.05bln), EPS 0.35 (exp. 0.37). Raises forecasts: guides Q2 revenue at EUR 3.2bln (exp. 3.15bln), guides FY22 revenue 13bln +/- 500mln (exp. 14.08bln). (FT)


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  Cognizant Technology Solutions Corporation (CTSH) - Almost 2% lower after the bell. Q4 Adj. EPS USD 1.10 (exp. 1.04), revenue USD 4.8bln (Exp. 4.8bln). Sees Q1 revenue between 4.8-4.84bln (exp. 4.8bln). Sees FY22 adjusted EPS between 4.46-4.60 (exp. 4.54), sees FY22 revenue between 20-20.5bln (exp. 20.1bln). Boosts quarterly dividend +12% to 0.27/shr. (CTSH)


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  Qorvo (QRVO) - Drops by over 6% in extended trade. Q3 EPS 2.98 (exp. 2.76), revenue 1.1bln (exp. 1.1bln). Sees Q4 EPS at 2.94 (exp. 2.87), sees Q4 revenue between 1.135-1.165bln (exp. 1.15bln). (Qorvo)


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  Flex Ltd. (FLEX) - To sell USD 500mln of convertible preferred equity in Nextracker to TPG Rise. (Flex)


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  DXC Technology Company (DXC) - Up over 2.5% on buyback. Q3 EPS 0.92 (exp. 0.91), Q3 revenue USD 4.09bln (exp. 4.1bln). Sees Q4 revenue between 4.1-4.15bln (exp. 4.2bln), sees Q4 EPS 0.98-1,03 (exp. 1.01). Now sees FY22 adj. EPS between 3.64-3.69 (prev. 3.52-3.72, exp. 3.67), now sees FY22 revenue approximately USD 16.4bln (prev. 16.4-16.6bln, exp. 16.5bln). Plans USD 1bln buybacks in next year. (DXC)

CONSUMER STAPLES:

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  Costco (COST) - Lower by 0.9% in after hours; may have taken cues from sour macro trading conditions. January total comparable sales rose +14.2% (exp. +9.3%), US comparable sales (ex-fuel, currencies) +9.5% (exp. 6.4%). (Costco)


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  Nestle (NSRGY) - To acquire a majority stake in Orgain, includes option to purchase the entire stake in 2024. (Butterfly)

CONSUMER CYCLICAL:

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  Fortune Brands Home & Security, Inc. (FBHS) - Q4 adj. EPS 1.32 (exp. 1.29), Q4 revenue USD 2bln (exp. 1.9bln). Sees FY22 EPS between 6.35-6.55 (exp. 6.31), FY22 seen growing by 5.5-7.5% (implies USD 8.12-8.28bln vs exp. 8.1bln). Said demographic forces continue to support housing formation and growth, which will drive both single-family new construction and repair and remodel investment for a number of years. Existing housing stock is low and aged, and homeowner equity is trillions of dollars higher compared to a year ago. (FBHS)


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  Playtech (PYTCY) - TT Bond Partners, which previously advised on a bid by Gopher Investments, asked board to release it from restrictions which prevent it from tabling an additional offer. (Sky)

FINANCIALS:

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  MetLife Inc (MET) - Down 1.5% after hours. Q4 earnings rose, but COVID capped upside. Q4 adj. EPS 2.17 (exp. 1.47), revenue 20.21bln (exp. 17.67bln). (Newsquawk)


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  Lincoln National (LNC) - Q4 adj. EPS 1.56 (exp. 1.90), revenue 4.6bln (exp. 4.7bln). Pandemic continues to impact results, but management says it is still poised to continue growing EPS. (LNC)


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  Allstate Corporation (ALL) - Q4 EPS 2.75 (exp. 2.75), Q4 revenue USD 13bln (exp. 10bln). Q4 premiums written USD 10.3bln (vs 8.6bln Y/Y). Said it was adapting to higher auto claim costs by raising premiums, implemented rate increases in the quarter at 2.9% of countrywide premiums, reducing expenses and managing loss costs. (ALL)


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  Aflac Incorporated (AFL) - Q4 EPS 1.57 (exp. 1.27), Q4 revenue USD 5.4bln (exp. 5.2bln); reiterates boosting dividend in Q1 by +21.2%, declares Q1 dividend USD 0.40/shr. US net earned premiums -1.3% Y/Y to USD 1.4bln due to constrained sales over the past year. (AFL)


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  Generali (ARZGY) - Seeks Italian regulatory review over compliance after Caltagirone, Del Vecchio build stake. (Boomberg)


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  ING (ING) - Pretax rose, lending fees also higher. Q4 total income EUR 4.62bln (exp. 4.51bln), Net 945mln (exp. 1.04bln), CET1 15.9% (exp. 15.8%). Operating expenses include 141mln of restructuring costs and impairments related to the announcement to exit the retail banking market in France. Propose final dividend of 0.41/shr for FY21. (Reuters)


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  Standard Chartered (SCFBY) - Starts Zimbabwe probe after reports CEO suspended. (Bloomberg)


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  Danske Bank (DNKEY) - FY total Income DKK 42.6bln (exp. 42.1bln), Net Profit 12.9bln (exp. 12.1bln), Total Dividend 7.5 (exp. 7.4). FY22 guidance: net profit 13-15bln (exp. 12.6bln). (Newsquawk)


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  Nordea (NRDBY) - Operating Profit 1.28bln (exp. 1.23bln), NII 1.26bln (exp. 1.24bln), EPS 0.26 (exp. 0.24), Net Profit 1.02bln (exp. 0.95bln). (Newsquawk)


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  BBVA (BBVA) - Q4 net profit EUR 1.34bln (exp. 1.01bln), NII 3.98bln (exp. 3.83bln). FY: Net Profit 4.65bln (4.36bln), NII 14.69bln (exp. 14.4bln). (Newsquawk)

CRYPTO:

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  Riot Blockchain, Inc. (RIOT) - Down nearly 4% in after hours; to shut down Texas crypto mining ahead of the cold blast. (Bloomberg)

ENERGY:

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  Shell (RDS.A) - Profits rise, raises dividend, buybacks. Q4 adj. Net USD 6.39bln (exp. 5.35bln), adj. EBITDA 16.3bln (exp. 17.8bln), dividend 0.24/shr (prev. 0.24/shr). 8.5bln of share buybacks for H122, includes 55bln of Permian divestment proceeds. Expects Q1 interim dividend will be +4% at 0.25/shr. (CNBC)

MATERIALS:

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  Corteva, Inc. (CTVA) - Down 4% in after hours following profits miss, soft guide; Q4 EPS 0.08 (exp. 0.09), revenue 3.49bln (exp. 3.44bln). Sees FY22 adj. EPS 2.30-2.50 (exp. 2.59), FY22 revenue seen between 16.7-17bln (exp. 16.6bln). (CTVA)

INDUSTRIALS:

• German new passenger car registrations around 184k in January, +8-9% YY, sources said (Rtrs)


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  Volkswagen (VWAGY) - Intends to construct as many as 1mln EVs within China during 2023. (Nikkei)


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  Skanska (SKBSY) - Q4 revenue SEK 41.bln (exp. 41.8bln), Operating Income 9.8bln (prev. 11.9bln). Propose a dividend of 10.00 (prev. 9.50). (Newsquawk)


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  Dassault Systemes (DASTY) - Lowers op. margin view. Q4 revenue EUR 1.37bln (exp. 1.34bln), Net income 237mln (exp. 375mln), Operating income 318mln (prev. 283mln), adj. EPS 0.29 (exp. 0.28). Expects Q1 EPS 0.23-0.24 (exp. 0.24). (Reuters)


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  Hillenbrand, Inc. (HI) - Down slightly in after hours. Q1 ADJ. EPS 0.94 (exp. 0.88), revenue USD 728mln (exp. 700mln). Raised FY22 adj. EPS guide to between 3.80-4.00 (prev. 3.70-4.00, exp. 3.61), FY22 revenue seen between 2.875-2.955bln (exp. 2.87bln).  (HI)


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  ABB (ABB) - Q4 revenue USD 7.56bln (exp. 7.15bln), adj. EPS 1.34, Net Income 2.64bln (exp. 2.4bln), adj. EPS 1.34. (Newsquawk)

HEALTH CARE:

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  McKesson (MCK) - Rose over 3% in after hours following Q3 report. EPS 6.15 (exp. 5.42), revenue USD 68.6bln (Exp. 66.5bln). Raised FY22 EPS outlook to between 23.55-23.95 (prev. 22.35-22.95, exp. 22.78); notes strong operating performance, increased contribution from US government's COVID-19 vaccine distribution, kitting, and storage programmes. (MCK)


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  Align Technology (ALGN) - Lower by 2.5% in after hours, despite higher Q4 profits as sales, clear aligner volumes rise. (MarketWatch)


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  Hologic, Inc. (HOLX) - Fell 0.75% in after hours. Q1 2022 EPS 1.95 (exp. 1.28), Q1 revenue 1.47bln (exp. 1.2bln). Raises guidance; sees Q2 EPS 1.50-1.60 (exp. 0.95), sees Q2 revenue between 1.25-1.3bln (exp. 0.99bln); sees FY22 EPS between 4.90-5.20 (exp. 3.83), and sees FY22 revenue between 4.4-4.55bln (exp. 4.0bln). (HOLX)


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  Siemens Healthineers (SMMNY) - Raises guidance after Q1 beat. Q1 revenue EUR 5.07bln (exp. 4.87bln), adj. EBIT 898mln (exp. 774mln), net profit 472mln (exp. 456mln). Expects FY22 comparable revenue growth 3-5% (prev. 0-2%). (Reuters)


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  Roche (RHHBY) - FY21 sales CHF 62.8bln (exp. 62.5bln), operating profit 21.9bln (exp. 21.2bln). Proposes a dividend increase to 9.30. Sees lower sales growth; FY22 sales expected to be stable or grow in the low-single digits; Core EPS targeted to grow low- to mid-single digits; group sales to be in high-single digits ex anticipated decrease to 5bln (prev. 7bln) for sales of COVID diagnostics/medicines. (Reuters)

03 Feb 2022 - 09:42- Fixed IncomeResearch Sheet- Source: Newsquawk