US EARLY MORNING: US banks rebound in premarket trade as Credit Suisse secures liquidity support; Ahead, the ECB will likely lift rates, weekly US jobs data, Philly Fed, housing stats are due

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  OVERNIGHT: Asia-Pac stocks were mostly lower as the region, but rose off worst levels after news that Credit Suisse (CSGN SW) had secured liquidity support from the SNB. Japanese participants also digested mixed data releases, where Machinery Orders topped expectations, though Exports growth missed. Chinese equities conformed to the downbeat mood amid frictions with the US, which has reportedly threatened to ban TikTok if its Chinese founders do not sell ownership stakes. (See here for our APAC wrap). Following the rout in banking stocks on Wednesday, stocks in Europe are seeing solid gains after the open as liquidity fears around Credit Suisse (see here). With concerns around a possible Eurozone banking crisis diminishing (for now), attention shifts onto the ECB’s rate decision today; some had argued that the banking woes would compel the central bank to fire a lower-than-guided rate hike of 25bps, although the positive mood today may tilt the calculus back towards the guided +50bps; money markets are currently split 50/50 between these outcomes (you can access our full preview here).


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  US PRE-MARKETS: In contrast to its European peers, which are rallying strongly after Wednesday’s woes, US equity futures are trading slightly better than flat, although shares in US banks are rebounding in pre-market trade following better sentiment around the sector in Europe, where Swiss bank Credit Suisse (CS) secured liquidity support from its central bank; there were also reports that US banks had been cutting exposure to the Swiss bank. That should leave US investors focussing more domestically on its own soft spots in its banking sector, namely the regional banks: First Republic Bank (FRB) is reportedly exploring its options, and is also mulling options for shoring up liquidity, which could draw interest from larger rivals, Bloomberg said. And with regards to SVB Financial Group (SIVB), reports say the government seems to be favouring a sale to another bank, The Information said, which essentially rules-out the private equity firms and venture capitalists that had been exploring making a bid; FBN reports that the chances are still low that JPMorgan (JPM), Citigroup (C), Bank of America (BAC) or Wells Fargo (WFC) will buy SVB Financial. Elsewhere, we will get an initial glimpse on how concerned key global monetary authorities are on the European banking issues, with the ECB policy decision today likely to see the central bank lift rates, but the market is split on whether it will hike by a smaller 25bps, or by the larger 50bps that officials had guided towards ahead of the meeting (you can access our full preview here). Meanwhile, weekly US jobs data is on the slate, as well as the Philly Fed monthly data, Import/Export prices, and some housing stats, which will continue to help shape expectations ahead of next week’s FOMC.

DAY AHEAD:

• Our real time events calendar can be accessed here; a PDF version can be accessed here.


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  EUROPE: The main event is the ECB's policy meeting, where a 50bps rate hike is still the consensus following sourced articles guiding us towards that decision this week, and despite some of the fears in the banking sector around financial stability; you can access our full preview here. Elsewhere, final Italian consumer prices for March will be released, though will likely be overshadowed by the ECB meeting.


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  NORTH AMERICA: A heavy US pre-markets data slate includes weekly US initial jobless claims and continuing claims data (this week's data does not coincide with the BLS jobs report survey window), Building Permits and Housing Starts for February, Import and Export prices for February, and the March Philly Fed survey.


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  SUPPLY: On the supply front, Spain will auction between EUR 5.5-6.5bln of 2028, 2033, and 2052 debt; France will sell between EUR 10.5-12bln of 2026, 2028, and 2030 debt. Stateside, the US will announce sizes for next week's 20yr bond sale, as well as a 10yr TIPS. See here for our Bond Auction previews note.


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  ENERGY: WTI April 2023 options are set to expire today. The EIA will report weekly natgas storage change data; the street expects a draw of 62 BCF.

STOCK NEWS:

FINANCIALS:

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  Credit Suisse (CS) - Credit Suisse announced action to pre-emptively strengthen liquidity, including public tender offers for debt securities. Regulators said Credit Suisse met capital and liquidity requirements, and the SNB would provide it with liquidity. CS will borrow up to CHF 50bln from the Swiss central bank under its covered loan facility and short-term liquidity facility. Credit Suisse will repurchase certain OpCo senior debt securities for cash of up to about CHF 3bln.


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  Swiss Banks - Swiss regulators said that the problems of certain banks in the USA did not pose a direct risk of contagion for Swiss financial markets.


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  Exposure to Credit Suisse - US bank giants reportedly cut direct exposure to Credit Suisse for months, according to Bloomberg. BNP Paribas (BNPQY) is reportedly reducing exposure to Credit Suisse, and has stopped taking novations on swaps involving the Swiss bank.


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  SVB Financial Group (SIVB) - The US government is likely to only sell SVB to another bank, The Information reports, essentially ruling out the private equity firms and venture capitalists that had been exploring making a bid. FBN reports that the chances are still low that JPMorgan, Citigroup, Bank of America or Wells Fargo will buy SVB Financial. Separately, SVB is exploring seeking bankruptcy protection, as one option for selling assets that include its investment bank and venture capital business, Reuters reports.


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  First Republic Bank (FRB) - The San Francisco-based lender is exploring strategic options including a sale, Bloomberg reports. The bank is also weighing options for shoring up liquidity, and is expected to draw interest from larger rivals. No decision has been reached, and the bank could still choose to remain independent, BBG added.


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  Santander (SAN) - The Spanish bank has reportedly halted its USD 942mln subprime auto ABS sale amid the banking sector turmoil, Bloomberg reports.


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  Payments - The Federal Reserve announced a July launch for its instant payments 'FedNow Service', which will settle payments in seconds, and has an ability to support consumer-to-consumer, consumer-to-merchant, merchant-to-merchant, and bank-to-bank transactions.


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  Robinhood Markets Inc (HOOD) - COO Gretchen Howard to retire at the end of this year.


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  Stripe (private) - Payments company Stripe raised more than USD 6.5bln at about half the valuation it carried two years ago, FT reports. It sold one of the largest private stock sales in US history, indicating that tech start-ups may have to accept big discounts if they want new funds, the FT added. The report adds that it provides Stripe with enough new capital to meet billions of dollars of tax liabilities associated with employees’ stock units, but also leaves it with a new valuation of USD 50bln, far below its peak of USD 95bln.


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  Asia Banks - Rating agency S&P said bank funding liquidity profiles were sound across Asia, and that Asian banks did not have similar deposit bases to SVB (SIVB).

TECH:

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  Adobe Inc (ADBE) - Q1 adj. EPS 3.80 (exp. 3.68), Q1 revenue USD 4.66bln (exp. 4.62bln); Q1 net new Digital Media ARR USD 410mln (exp. 375mln). Sees Q2 adj. EPS between 3.75-3.80 (exp. 3.76), and sees Q2 revenue between USD 4.75bln-4.78bln (exp. 4.74bln). Lifts FY adj. EPS outlook to between USD 15.30-15.60 (exp. 15.31, previous: 15.15-15.45), sees FY Digital Media net new ARR at USD 1.7bln (vs prior USD 1.65bln).. CEO said the company had completed the discovery phase of the DoJ's second request on its USD 20bln Figma deal, and adds that it is prepared for the next steps, still expects the deal to close by year-end.


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  Microsoft Corporation (MSFT) - The tech giant warned that a Russian Spring offensive in Ukraine could include cyberattacks, NYT reports. Separately, Microsoft's LinkedIn has expanded its generative AI assistant to recruitment ads and writing profiles, TechCrunch reports.


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  Alphabet Inc. (GOOG) - Google said that as of March 15th, it will no longer sell 'Glass Enterprise Edition' smart glasses; support for the Glass Enterprise Edition will continue until September 15th. CNBC notes that Google’s retreat comes as rivals, including Meta and Apple, are investing in augmented reality and virtual reality technology which could end up in devices that are much more sophisticated Google Glass.


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  Samsung Electronics (SMSN) - A chip plant that Samsung is building in Texas will cost over USD 25bln, up more than the USD 8bln it had initially forecast, Reuters reports.


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  Taiwan Semiconductor Manufacturing Company Limited (TSM) - Is in advanced talks to build a new factory in the German state of Saxony. The factory would produce less advanced chips, such as those used in the auto sector. Talks are now said to be focused on government subsidies.


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  DiDi Global Inc. (DIDIY) - The Chinese ride-hailing company plans to expand services and offer more subsidies to passengers and drivers as it seeks to shore up its business in China following the end of a regulatory probe, Reuters reports. Didi will offer more services and cover more cities, it said.


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  Foxconn Intl Hld (FXCNY), Apple Inc. (AAPL) - A Foxconn unit has won an order to assemble Apple (AAPL) AirPods and plans to invest over USD 200mln to produce AirPods in India.


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  PagerDuty, Inc. (PD) - Q4 adj. EPS 0.08 (exp. 0.02), Q4 revenue USD 101mln (exp. 98.8mln). Sees Q1 adj. EPS 0.09-0.10 (exp. 0.03), Q1 revenue between USD 102-104mln (exp. 104.8mln). For the FY, sees adj. EPS between 0.45-0.50 (exp. 0.20), and sees FY24 revenue between USD 446-452mln (exp. 451.4mln).


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  UiPath Inc. (PATH) - Q4 adj. EPS 0.15 (exp. 0.06), Q4 revenue USD 308.5mln (exp. 278.6mln). Q1 revenue seen between USD 270-272mln (exp. 269.1mln). FY24 revenue seen between USD 1.253-1.258b (exp. 1.2bln), FY ARR seen between USD 1.425-1.43bln (exp. 1.385bln).

COMMUNICATIONS:

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  ByteDance (private) - US CFIUS is demanding that TikTok owner ByteDance sell their stakes in the video-sharing app, or face a possible US ban of the app, a major policy shift on the part of the administration, WSJ reports.


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  Baidu, Inc. (BIDU) - Baidu unveiled its highly-anticipated AI-powered 'Ernie Bot' chatbot. Exec said the bot was not perfect, but it was releasing it now due to market demand.

CONSUMER:

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  Five Below, Inc. (FIVE) - Q4 EPS 3.07 (exp. 3.07), Q4 revenue USD 1.12bln (exp. 1.11bln), Q4 comparable sales +1.9%. Sees Q1 EPS between 0.59-0.65 (exp. 0.68), sees Q1 revenue between USD 723-735mln (exp. 730.6mln), and sees Q1 comparable sales +2.5-4% (exp. 3.5%). For the FY23, sees revenue between USD 3.49-3.59bln (exp. 3.58bln), FY23 EPS seen between 5.25-5.76 (exp. 5.67), and FY23 comparable sales seen +1-4% (exp. 2.7%).


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  Ball Corporation (BALL) - Ball notified employees and unions about the potential closure of its Wallkill plat in New York, which opened in 1972, and produces a number of unique can sizes where Ball is the sole supplier. Space, land and equipment limitations make expansion and upgrades to this facility difficult, and to increase production and enable growth, Ball is exploring closure of the plant.


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  British American Tobacco (BTI) - GQG Partners said it made no sense for the cigarette company to be on the UK stock market, noting that it has a US focus, and highlighted valuation gaps when compared to peers listed in the US, FT reports.

ENERGY:

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  Occidental Petroleum Corporation (OXY), Berkshire Hathaway Inc. (BRK.B) - Berkshire Hathaway again raised stake in Occidental Petroleum, with the size of its stake now 23.1%, according to a filing cited by Reuters. The filing said Berkshire paid around USD 466.7mln for 7.9mln shares between March 13-15.


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  Exxon Mobil Corporation (XOM) - Exxon's Fos-sur-Mer refinery in France remains blocked due to strikes, union said.

INDUSTRIALS:

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  Railroads, BNSF Railway (private) - A freight train carrying hazardous materials derailed in western Arizona on Wednesday evening, NYT reports. There were no reports of any spills or leaks.


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  L3Harris Technologies, Inc. (LHX), Aerojet Rocketdyne Holdings, Inc. (AJRD) - L3Harris receives FTC request for more information regarding Aerojet deal.


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  Virgin Orbit Holdings, Inc. (VORB) - Virgin Orbit is furloughing nearly all its employees and pausing operations for a week as it looks for a funding lifeline, CNBC reports.

MATERIALS:

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  Glencore (GLNCY) - The miner will not renew its USD 16bln aluminium contract with Rusal.

16 Mar 2023 - 09:01- Research Sheet- Source: Newsquawk