US EARLY MORNING: US equities futures are rebounding after four days of losses; yields continue higher

EQUITIES: US equity futures have been rebounding on Wednesday following a run of four days of losses (NQ +1.4%, ES +1.2%, RTY +1.2%, YM +1.1%). APAC equity performance overnight was mixed, but the European morning has been far more constructive, with stocks that have been hammered in recent days seeing a reprieve (Banks rallying as exposure to Russia limited, while the pro-cyclical Travel & Leisure and Autos sectors are also seeing upside). Traders said that gains were underpinned by Tuesday’s announcement of ‘massive’ EU joint debt issuance to finance energy and defence spending, news that Europe was not participating in the US ban on the import of Russian energy, as well as a suggestion on Monday (which got wider circulation on Tuesday) that Ukraine appeared to be scaling-down its immediate NATO ambitions, perhaps offering a route to peace with Russia.

TREASURIES: Treasuries continue to ease for the third straight day, and yields are higher across the curve by 2-4bps; spreads are mixed, but 2s30s is narrowing. Inflation concerns – as evidenced in the recent widening of breakevens – as well as the announced ‘massive’ EU issuance to finance energy and defence spending has left a bearish impulse in the complex. The Treasury will auction 10yr notes later this afternoon, following a weak 3s sale on Tuesday, which saw the highest yield since 2019, a chunky tail, and cover below recent averages; internals saw indirects take a smaller share. Analysts will be watching to see how the TPLEX trades into today’s 10s auction, tomorrow’s 30s auction, tomorrow’s US CPI report (expecting further upside for headline and core annual rates of inflation) ahead of next week’s FOMC meeting (25bps hike is the base case), and Thursday’s ECB with its potentially global macro implications (our preview here – analysts expect the monpol normalisation to be slowed amid uncertainties), where Treasuries could move in sympathy.

CRUDE: Oil benchmarks have tilted into negative territory; the constructive risk mood and some hopes that Ukraine scaling down NATO ambitions offers some hope regarding the talks between the Russian and Ukrainian Foreign Ministers, due to take place in Turkey on Thursday. The US announced a ban on imports of Russian oil but doesn’t import all that much; Europe is far more dependent, and will not participate in the latest US moves, but aims to reduce reliance on Russian energy over the medium-term. Analysts said the US moves will still tighten oil markets in the coming weeks and months. We continue to be cognizant regarding the possibility of a Iran nuclear deal; the country’s chief negotiator is back in Vienna. Meanwhile, Venezuela released imprisoned Americans following recent talks with the US; the latter’s officials said that the release was not part of any deal with Venezuela to restart oil sales to the US, but analysts noted the more friendlier tone could imply Venezuela might eventually help offset some of the global shortfall caused by the ban on Russian oil, even though it might not have a short-term impact given that raising Venezuelan output could still take some time. Elsewhere, there does not appear to be a lack of barrels in the US: API’s gauge of energy inventories for the week reportedly showed a surprise build in crude stocks of +2.8mln (exp. -0.7mln), although the products drew down more than expected: Gasoline -2.0mln (exp. -2.1mln), Distillate -5.5mln (exp. -1.9mln).

DOLLAR: The decent risk tone is seeing the USD sold in the European morning, with the Dollar Index now trading back below the 99.00 handle. Analysts have been suggesting that some of the geopolitical risk premium is being unwound across many macro assets amid some hope that Ukraine’s scaled-back NATO ambitions may offer a pathway to peace in talks with Russia this week. Risk-sensitive FX is rallying, with the SEK outperforming in the high-beta G10 FX complex; GBP lags with gains of just +0.3% against the USD. Oil importers like INR are rallying, but TRY continues to suffer. There is a lot of green on the EMFX screen, while haven FX are flat vs the USD, though gold is lower by around 1.5%.

EQUITY NEWS:

TECH:

• 
  Apple (AAPL) - Upgrades low-end iPhone SE with 5G, and high-end Mac Studio computer with faster chip. (Reuters)


• 
  Microchip (MCHP) - Expects long-term revenue growth rate to be 2-times the industry growth rate. This assumed a historical backward-looking semiconductor growth rate of 3-4% per year. Sees five year growth rate (vs FY21 baseline) to be +10-15%. (MCHP)


• 
  Siltronic (SSLLF) - FY21 revenue EUR 1.41bln (vs 1.21bln Y/Y). EBITDA EUR 466.4mln (prev. 322mln). EBIT EUR 316.9mln (prev. 192.2mln). Proposes EUR 3.00/shr dividend. (Newsquawk)


• 
  Bumble (BMBL) - Rose +19.5% in after hours trade following results. Q4 EPS -0.08 (exp. 0.00), Q4 revenue USD 208.2mln (exp. 209.6mln). Q4 total paying users +10.6% to 3.0mln (vs 2.7mln Y/Y), ARPPU USD 22.83 (prev. 20.02 Y/Y). Announced it was discontinuing operations in Russia (approx. 2.8% of total Bumble annual revenue in 2021). Sees Q1 revenue between USD 207-210mln (exp. 211.6mln), and sees Q1 adj. EBITDA between 47-49mln. Sees FY22 revenue between USD 934-944mln (exp. 939.1mln), sees FY22 adj. EBITDA margin 26.5-27%. (BMBL)


• 
  MongoDB (MDB) - Rose nearly 10% in after hours after results. Q4 adj. EPS -0.09 (exp. -0.23), Q4 revenue USD 266.5mln (exp. 242mln). Q4 subscription revenue +58% Y/Y to USD 258.2mln, Q4 services revenue was +17% Y/Y to USD 8.3mln. Sees Q1 adj. EPS at 0.10 at the midpoint (exp. -0.17), and sees Q1 revenue between USD 263-267mln (exp. 253.4mln). For FY23, sees adj. EPS between -51c and -29c (exp. -0.60), and sees FY23 revenue between USD 1.15-1.18bln (exp. 1.15bln). (MDB)


• 
  Cricut (CRCT) - Fell 30% in after hours after profit and revenue misses. Q4 EPS 0.05 (exp. 0.22), Q4 revenue USD 387.8mln (exp. 407.5mln). (CRCT)


• 
  DoubleVerify Holdings (DV) - Rose +5% in after hours; Q4 EPS 0.18 (exp. 0.14), Q4 revenue USD 105.5mln (exp. 102.6mln). Sees Q1 revenue between USD 89-91mln (exp. 89mln). Sees FY22 revenue between USD 429-437mln (exp. 431.7mln). (DV)


• 
  Guidewire Software (GWRE) - Up nearly 4% in after hours. Q2 adj. EPS -0.06 (exp. -0.12), Q2 revenue USD 204.6mln (exp. 197.5mln). Sees Q3 revenue between USD 186-190mln (exp. 180mln); raises FY22 revenue guide to between USD 784-792mln (exp. 786mln, prev. 780-790mln). (GWRE)

COMMUNICATIONS:

• 
  Microsoft (MSFT), Activision (ATVI) - US regulators probing options trade that gained on Microsoft-Activision deal; entertainment-industry titans Barry Diller and David Geffen made purchases just days before the merger was announced. (WSJ)


• 
  Netflix (NFLX) - Executive said company had no current plans to offer a streaming option that included advertising but declined to rule it out in the future. (Reuters)


• 
  Twitter (TWTR) - Launches Tor Onion service making it easier to access the Twitter website in Russia. (Motherboard)


• 
  Vodafone (VOD) - To sell its 21% stake in Indus Towers. (Economic Times)


• 
  Telecom Italia (TIIAY) - Moody's cut rating to Baa3 from Baa2 (one notch); outlook Negative. (Moody’s)

INDUSTRIALS:

• 
  General Electric (GE) - Announced USD 3bln share buyback programme. (MarketWatch)


• 
  Boeing (BA) - Airplane deliveries slipped in February. Dreamliner problem lingers; deliveries have been paused for most of the last 16 months. Delivered 22 planes in February, the fewest since August. Booked 37 gross orders. (CNBC)


• 
  Boeing (BA) - DHL Express placed order for six additional 777 Freighters, takes DHL Express' order book total to 28 777 Freighters. (BA)


• 
  Airbus (EADSY) - Jan-Feb Deliveries: 79 craft; 10 A350, 27 A320Neo, 31 A321Neo. Books 149 gross orders, 55 net. (Newsquawk)


• 
  Tesla (TSLA) - CEO Musk asked a judge to end SEC oversight of his Twitter posts under a 2018 agreement, claims it is being used to "trample" his free speech rights. Also asked the judge to block an SEC subpoena for documents relating to the review of his tweets and his sale of stock and options. (Bloomberg)


• 
  XPO Logistics (XPO) - Rose 10% in after hours as it announced it would spin-off its freight brokerage and plans to create two standalone, public companies. Reiterates Q1 and FY22 guidance. (XPO)


• 
  ABM Industries (ABM) - Was up +4.4% after results. Raises guidance; now sees FY EPS between 3.50-3.70 (prev. 3.30-3.55). (ABM)


• 
  Deutsche Post (DPSGY) - Q4 revenue EUR 23.4bln (exp. 21.6bln). EBIT EUR 2.21bln (exp. 2.27bln). Raises dividend, announces EUR 2bln share buyback. (Newsquawk)


• 
  Porsche Automobil (POAHY) - Suspended production of the Taycan model amid a lack of parts. (Newsquawk)


• 
  Dassault Systemes (DASTY) - Suspended operations in Russia. (Newsquawk)


• 
  Leonardo (FINMY) - Planning to postpone plans to offload OTO Melara and Wass units. (Newsquawk)

CONSUMER CYCLICAL:

• 
  McDonalds (MCD) - Halts Russia operations. (BBC)


• 
  Starbucks (SBUX) - Halts Russia operations. (BBC)


• 
  Yum! Brands (YUM) - Pausing investment and development in Russia. (YUM)


• 
  Stitch Fix (SFIX) - Fell by almost 20% in after hours after lowering FY guidance, noting challenges. Q2 EPS -0.28 (exp. -0.28), Q2 revenue USD 516.7mln (exp. 514.8mln), Q2 active clients +4% Y/Y at 4.02mln, Q2 net revenue per active client of +18% Y/Y to USD 549. Said it continues to experience challenges with onboarding and conversion of clients. Sees Q3 revenue between USD 485-500lmn (exp. 560mln). Said that given softness in the number of active clients in H1 2022 and uncertainty in the timing of improvements in conversion, it is lowering its FY22 revenue view to flat to slightly down (prev. up high single digits). (SFX)


• 
  Toll Brothers (TOL) - Raised quarterly dividend +18% to 0.20/shr. (TOL)


• 
  FIGS (FIGS) - Rose over 10% in extended trading. Q4 adj. EPS 0.09 (exp. 0.03), Q4 revenue USD 128.7mln (exp. 126.6mln). Sees FY22 revenue at 555mln (midpoint) (exp. 547mln), and sees FY22 adj. EBITDA margin of at least 20%. (FIGS)


• 
  Casey's General Stores (CASY) - Rose in after hours trade. Q3 EPS 1.71 (exp. 1.45), Q3 revenue USD 3.05bln (exp. 3.0bln). Q3 Inside SSS +7.6%, margin 39.4%. Reiterates FY22 outlook. (CASY)


• 
  Adidas (ADDYY) - Q4 EPS 1.05 (prev. 0.77 Y/Y), Q4 revenue EUR 5.14bln (exp. 5.2bln), operating profit EUR 66mln (exp. 105mln). Raises FY21 dividend +10%. Sees FY22 sales growth of between +11-13% (exp. 9.45%). (Newsquawk)


• 
  Continental (CTTAY) - FY21 revenue EUR 33.8bln (exp. 33.4bln), adj. EBIT 1.90bln (exp. 1.94bln). Sees adj. EBIT margin around 5.5-6.5% (ex-geopolitics), proposes a dividend of 2.20/shr. (Newsquawk)


• 
  Salvatore Ferragamo (SFRGY) - FY21 revenue EUR 1.14bln (prelim. 1.14bln). EBITDA EUR 305mln (exp. 289mln). Net EUR 81mln (exp. 55mln). CEO continues to see the same trend as Q4. (Newsquawk)

CONSUMER STAPLES:

• 
  Coca-Cola (KO) - Halts Russia operations. (BBC)


• 
  PepsiCo (PEP) - Halts Russia operations. (PEP)


• 
  Walmart (WMT) - To offer its Walmart Plus service to its workers for free. (Reuters)


• 
  Unilever (UL) - Suspended all Russian imports and exports. (WSJ)


• 
  Heineken (HEINY) - Suspends production and sales in Russia. (Newsquawk)

ENERGY:

• 
  Schlumberger (SLB) - CEO said results are likely to be hurt by the ongoing Russia-Ukraine conflict, Russia makes up around 5% of its global revenue. (Reuters)


• 
  ConocoPhillips (COP) - A NatGas leak detected on Friday at ConocoPhillips Alaska oilfield is still ongoing, company evacuated staff at the drill site on Monday. (KTUU)


• 
  TotalEnergies (TTE) - Libya's NOC and Total discussed raising production at the Waha Oil Company and return Mabrouk oilfield to production in early 2023. (Newsquawk)


• 
  Tullow Oil (TUWOY) - FY21 revenue USD 1.27bln (prev. 1.40bln Y/Y). Affirms FY22 output and capex. (Newsquawk)

MATERIALS:

• 
  Polymetal (AUCOY) - All operations in Russia and Kazakhstan continue undisrupted, intends to pay the final dividend as proposed on March 2nd. Reviewing non-essential capital projects to preserve liquidity and minimise risk. Has circa USD 0.4bln in cash and equivalents with non-sanctions financial institutions. Contingency plans initiated proactively. Believes targeted sanctions against the company are unlikely, but not impossible. (Newsquawk)

HEALTH CARE:

• 
  AbbVie (ABBV) - Resolved all US Humira litigation with Alvotech. (ABV)


• 
  Oscar Health (OSCR) - COO and Meghan Joyce resigns. (Seeking Alpha)


• 
  Sanofi (SNY) - Efanesoctocog alfa met primary and key secondary endpoints in pivotal study. (Newsquawk)


• 
  Bayer (BAYRY) - Submits applications in the US and EU for additional indication of Nubeqa. (Newsquawk)

FINANCIALS:

• 
  UniCredit (UNCRY) - Current mark-to-market derivative exposure to Russian banks of EUR 300mln. The maximum potential loss in the event that the RUB would tend to zero is around EUR 1bln. (Newsquawk)


• 
  BNP Paribas (BNPQY) - Gross exposure off and on-balance sheet to Ukraine/Russia is limited at EUR 3.0bln. (Newsquawk)

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