US EARLY MORNING: Risk sours amid lack of breakthrough in peace talks

EQUITIES: ES -0.6%, NQ -0.8%, YM -0.5%, RTY -0.6%. US equity futures have been tilting lower in pre-market trade, in line with European counterparts (which shrugged-off constructive leads from Asia and Wall Street). The theme remains geopolitics (the latest: Monday’s peace talks have not achieved any breakthrough, and the Russians said they remain committed to continuing operations until its goals have been met). The NDX is underperforming with technicians noting that its 50dma (15,081) has crossed beneath the 200dma (15,084), setting up a technically bearish outlook for those who believe in such things. Some strategists, however, are beginning to see buying opportunities: JPMorgan’s Kolanovic, for instance, has once again advised buying the dip in a note released Monday, arguing that the Ukraine fallout has only a small impact on US corporate earnings; Kolanavic still sees European equities as underweight, given their vulnerabilities to Russian escalation. But for US names, he says that “indirect risks are more substantial, given effects of higher commodity prices on inflation, growth, and consumers; however, one silver lining is that the crisis forced a dovish reassessment of the Fed by the market.” The market has now priced-out the prospects of a 50bps hike at the March 16th FOMC, with the base case now 25bps.

TREASURIES: Major fixed income markets are bid on the cautious geopolitical tone. Treasury yields have narrowed by 2-4bps, leaving the curve with a slight bull-steepening bias. There may be some influence from the EGBs complex: ECB officials this week have been urging caution, with some even warning about stagflation risks; today, Bund yields narrow by over 10bps (still above zero for now), while Italian BTPs have rallied by almost 20bps – the prospect of a 2022 rate hike appears to be diminishing, and with that, it may imply a more gradual course of balance sheet normalisation. For Treasuries, the narrative may again shift towards more domestic matters, with the release of the key ISM manufacturing report at 10:00EST/15:00GMT; a handful of Fedspeak from the ubiquitous Bostic and Mester; President Biden’s State of the Union will likely have a distinct geopolitical tone later today.

DOLLAR: Despite punchy geopolitical rhetoric, moves in FX have been contained: the Dollar Index is up by around 10bps, and havens JPY and CHF are a touch higher vs the Greenback. Activity currencies are mixed, with the antipodes maintaining a mild bid, but others aren’t too far off neutral. There isn’t much to cheer about on the EMFX screen. SocGen has argued that FX (and equity) markets have so far concluded that the fallout for most parts of the world ex-Russia should be manageable. “The world of exchange rates can currently be split in three segments, from good to bad: the oil/commodity currencies (AUD, NOK, CAD, Latam), those geographically far from the crisis epicentre and safe havens (Asia, Latam, CHF, JPY), and those on the eastern European flank bordering Russia and Ukraine (RUB, CEE3).” SocGen has been impressed by the AUD’s resilience, which seems to have been cheered by China PMI data (RBA overnight was mostly in line). And also notes that the PBoC has recently avoided leaning back on the haven Yuan’s strength, as it moved towards 6.30; “the appreciation suggests foreign trade remains brisk (exporters selling USD), but investor rotation out of eastern Europe into Chinese securities may flatter the recent gains,” SocGen wrote.

COMMODITIES: Crude contracts are adding 3-4 bucks; Brent nears USD 102/bbl, while WTI is flirting with USD 100/bbl. Geopolitical tensions continue to underpin amid uncertainty about Russian supply. ING said it believes that the market has priced in some limited supply disruptions, but certainly not a scenario of sanctions on energy exports, and accordingly, this leaves further upside risks if the situation was to deteriorate. In reaction to the higher prices, the IEA is likely to announce an internationally coordinated release of strategic reserves (sources guide between 60-70mln bbls), though ING thinks this will only provide short-term reprieve. OPEC’s technical meetings get under way today ahead of the ministerial meeting on Wednesday, and so far, analysts think the group will remain steady in its policy of easing supply curbs by 400k BPD per month. Elsewhere, Iran nuclear deal is edging closer, but this morning’s commentary reminds us that there are still some outstanding issues that could hold things up.

EQUITY NEWS:

ENERGY:

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  BP (BP) - Reportedly considering sale of Rosneft stake back to state-controlled Russian explorer at a significant discount, according to Bloomberg. (Newsquawk)


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  Shell (SHEL) - Intends to exit its equity partnership with Gazprom entities, including its 27.5% stake in Sakhalin-ii liquefied natgas facility. Intends to end involvement in the Nord Stream 2 project. Will also exit its 50% stake in Salym Petroleum Development and Gydan Energy Venture. Expects the decision to impact the book value of its Russian assets and lead to an impairment. Still expects to increase dividend +4% in Q11 2022 (Newsquawk). Separately, Sinead Gorman has been appointed as CFO from April 1st, current CFO Uhl will be available until June 30th to assist with the transition (Newsquawk)


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  TotalEnergies (TTE) - Will no longer provide capital for new projects in Russia. (Newsquawk)


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  NatGas - Yamal-Europe pipeline resumed eastbound gas flows from Germany to Poland having stopped overnight after shipping gas westwards to Germany, according to Reuters. (Newsquawk)


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  ONEOK (OKE) - Fell 3.5% in after hours. Q4 EPS 0.85 (exp. 0.89); sees FY22 EPS between 3.45-4.07 (3.76 at the midpoint vs exp. 3.78). In 2022 it expects volume growth across operations from increased producer activity and strengthening demand for natural gas and NGLs. (OKE)


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  Phillips 66 (PSX) - Intends to reduce the greenhouse gas emissions intensity from its operations companywide 50% by 2050. (PSX)


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  Ryazan Oil Refinery in Russia (processing capacity of 17.1Mt per annum of oil) caught fire, according to the Emergencies Ministry. (Newsquawk)

TECH:

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  Meta Platforms (FB) - Received requests from a number of Governments and the EU to take further steps in relation to Russian state controlled media, and will accordingly restrict access to Russia's RT and Sputnik news agencies across the EU. (FB)


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  Alphabet (GOOG) - YouTube will block channels related to Russia's RT and Sputnik news agencies across Europe, with immediate effect. (Newsquawk)


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  HP (HPQ) - Down 2.5% after hours on soft FY22 guide; Q1 EPS USD 1.10 (exp. 1.02), Q1 revenue USD 17.03bln (exp. 16.52bln). Q1 PC revenue +15% to USD 12.2bln (consumer -1%, commercial +26%). Raised FY22 EPS view to between 4.18-4.38 (exp. 4.39, prev. 4.07-4.27). (HPQ)


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  Zoom Video Communications (ZM) - Slipped around 2% in after hours following Q4 results on soft guidance. Adj. EPS 1.29 (exp. 1.06), Revenue USD 1.07bln (exp. 1.05bln). Announces USD 1bln share buyback. Sees Q1 adjusted EPS 0.86-0.88 (exp. 1.03), sees Q1 revenue USD 1.07bln-1.08bln (exp. 1.1bln), sees FY23 adjusted EPS USD 3.45-3.51 (exp. 4.40), and sees FY23 revenue USD 4.53bln-4.55bln (exp. 4.75). (ZM)


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  Workday Inc (WDAY) - Bounced almost 6% in after hours trade as earnings beat and subscriber revenue guidance was above expectations. Q4 adj. EPS 0.82 (exp. 0.71), Q4 Revenue 1.38bln (exp. 1.36bln), Q4 Subscription revenue USD 1.23bln (exp. 1.22bln), Professional services revenue USD 147.0mln (exp. 145.6mln). Raises FY23 subscriber revenue view to USD 5.54bln (exp. 5.44bln). (WDAY)


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  Velodyne Lidar (VLDR), Amazon (AMZN) - Velodyne Lidar, which Amazon owns a 39mln share stake in, reported Q4 EPS -0.19 (exp. -0.17), Q4 revenue USD 17.5mln (exp. 16.7mln). Said it achieved record quarterly sensor shipments in Q4, bringing its lifetime shipments to more than 67k. Due to an increasingly dynamic supply and demand environment, is shifting to a quarterly guidance; sees Q1 revenue between USD 10-12mln (exp. 19mln) which excludes an estimate of the non-cash contra revenue charges of USD 5-7.5mln in Q1 from the issuance to Amazon. (VLDR)


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  AppLovin (APP) - Announces USD 750mln share repurchase programme (APP). Has reached a definitive agreement to acquire Wurl; transaction valued at approximately USD 430mln (APP).


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  LivePerson (LPSN) - Rose 1.5% in after hours after activist Starboard disclosed an 8.5% stake, nominates two to the Board. (MarketWatch)


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  Software AG (STWRY) - To acquire StreamSets for around EUR 520mln. (Newsquawk)

COMMUNICATIONS:

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  Baidu (BIDU) - Up by over 3.0% in pre-market US trade after reporting earnings as profit top estimates; notes AI and cloud strength. Q4 revenue CNY 33.09bln (exp. 32.22bln), Q4 adj. EPS 11.60 (exp. 8.71). Quarterly online marketing revenue +12% Y/Y, non-online marketing revenue +63% Y/Y. iQiyi subscribers 99mln in December 2021 (vs 106.2mln in June 2021), according to Refinitiv data. (Newsquawk)


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  Disney (DIS) - Disney will pause the release of theatrical films in Russia. (Variety)


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  AMC Entertainment Holdings (AMC) - Promotes Dan Ellis to EVP, Chief Operations & Development Officer; Selects Eliot Hamlisch as EVP, Chief Marketing Officer. Follows retirement of two execs in a long-planned succession. (AMC)

CONSUMER CYCLICAL:

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  Amazon (AMZN) - FTC preparing to challenge Amazon's USD 8.5bln MGM Studios purchase; FTC exploring actions including hiring expert witnesses to appear in an eventual trial; expects to decide whether to bring the case in the next few weeks. (Information)


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  Lucid Group (LCID) - Slipped by 14% in after hours. Q4 EPS -0.64 (exp. -0.35), Q4 revenue USD 26.4mln (exp. 36.7mln). Delivered 125 cars in Q4, total production has exceeded 400 vehicles to date, with over 300 deliveries to customers. Cuts 2022 production outlook for Lucid Air to a range of 12k-14k vehicles (prev. 20k). Cited supply chain constraints and a continued focus on quality alongside an updated outlook. Is preparing for first international plant in Saudi Arabia after signing agreements with multiple agencies. (LCID)


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  LVMH (LVMUY) - Cartier sues Tiffany for "stealing trade secret". (Bloomberg)


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  Adidas (ADDYY) - Divestiture of Reebok has been completed, has now received the majority of the total EUR 2.1bln cash consideration. Launches additional share buyback program of up to EUR 1.5bln. (Newsquawk)


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  Vroom (VRM) - Fell 7.4% in extended trade after results. Q4 EPS -0.95 (exp. -0.77), Q4 revenue USD 934mln (exp. 902mln). Ecommerce units sold +93% Y/Y at 21,243. Sees Q1 revenue at USD 875mln (exp. 1.04bln), and sees Q1 ecommerce unit sales of 18-19k, sees ecommerce gross profit/unit around USD 1,500. (VRM)


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  YETI Holdings (YETI) - Announced USD 100mln buyback "to take advantage of the current [stock] valuation". (YETI)


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  Flutter (PDYPY) - FY21 revenue EUR 6.04bln (prev. 5.26bln Y/Y). Adj. pretax 620mln (prev. 813mln). Notes the first seven trading weeks have been in-line with expectations. CEO said market conditions are not correct for IPO of FanDuel. (Newsquawk)

CONSUMER STAPLES:

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  Albertsons (ACI) - Board has started a strategic review to consider potential transactions and other moves, less than two years after the supermarket chain's IPO. (WSJ)


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  British American Tobacco (BTI) - Temporarily suspends all manufacturing at Pryluky factory in Ukraine. (Newsquawk)

HEALTH CARE:

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  Bayer (BAYRY) - Q4 sales EUR 11.12bln (exp. 10.57bln), adj. EBITDA 2.40bln (exp. 2.32bln). Core EPS 1.26 (exp. 0.99). Dividend 2.00/shr (exp. 2.02/shr). Guides 2022 revenue around 46bln (exp. 45.4bln), sees adj. EBITDA around 12bln (exp. 12bln). (Newsquawk)


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  Novavax (NVAX) - Tumbled by over 7% in extended trade. Q4 EPS -11.18 (exp. -4.33), Revenue USD 222.2mln (exp. 129mln); FY22 revenue view 4-5bln (exp. 4.74bln). Phase 3 clinical trial analysis in the UK showed a high-level efficacy for its COVID-19 vaccine over a 6-month period, with vaccine efficacy of 82.5%. (NVAX)


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  AbbVie (ABBV) - FDA extended review period for SKYRIZI(R) for the treatment of moderate to severe Crohn's disease in patients 16 years and older. (ABBV)


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  AstraZeneca (AZN) - Closed exclusive deal with Nuerimmune for NI006. (Newsquawk)


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  GlaxoSmithKline (GSK) - EMA has accepted the marketing authorisation for Daprodustat. (Newsquawk)

MATERIALS:

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  Steel Dynamics (STLD) - Boosts Q1 cash dividend by +31% to USD 0.34/shr, adds additional USD 1.25bln to share repurchase authorisation. (STLD)


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  Covestro (COVTY) - FY21 (EUR): Revenue 15.9bln (prev. 10.7bln Y/Y). Adj. EBITDA 3.09bln (prev. 1.47bln). Net 1.62bln (prev. 459mln). (Newsquawk)

INDUSTRIALS:

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  Leidos (LDOS) - Awarded USD 11.5bln Defense Information Systems contract. (DoD)


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  L3Harris Technologies (LHX) - Awarded USD 3.7bln Navy contract. (DoD)


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  Deere (DE) - Acquires full ownership of three Deere-Hitachi JV factories. Ends JV manufacturing and marketing agreements with Hitachi Construction Machinery; has begun new license and supply deal. (DE)


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  Airbus (EADSY) - Strike action in the UK paused as workers are offered an improved pay package. (Newsquawk)


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  CNH Industrial (CNHI) - Board approved share buyback of up to EUR 100mln. (Newsquawk)


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  Maersk (AMKBY) - Will halt all freight in Russia in response to Western economic sanctions on Moscow following its invasion of Ukraine. (Newsquawk)

REAL ESTATE:

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  SBA Communications Corporation (SBAC) - Fell in after hours trade; Q4 AFFO/shr 2.81 (exp. 2.79), Q4 revenue USD 595mln (exp. 591mln). Boosts dividend +22%. Said the US market remains particularly strong, and all of its largest US customers are disclosing robust capital expenditure plans for 2022. (SBAC)

FINANCIALS:

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  Deutsche Bank (DB) - CEO sees few risks for the industry, noting that German banks have greatly reduced their exposure to Russia since 2014. (Newsquawk)


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  Julius Baer (JBAXY) - Launched a new CHF 400mln buyback programme. (Newsquawk)


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  Allianz (ALIZY) - Multiple investors have come to a settlement to resolve lawsuits against the Co. in the structured alpha case. (Newsquawk)


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  Abrdn (SLFPY) - FY21 adj. operating profit GBP 323mln (prev. 219mln). adj. diluted EPS +56% Y/Y. AUM +1%. Operating profit +47%. (Newsquawk)


• 
  UniCredit (UNCRY) - Concluded its second buyback programme. FY21 final dividend of 0.538/shr. (Newsquawk)

01 Mar 2022 - 10:08- EquitiesGeopolitical- Source: Newsquawk