US EARLY MORNING: US equity futures are around flat; ahead, we have PPI, Philly Fed, weekly claims as well as Fed and ECB speak

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  OVERNIGHT: On Wall Street, stocks Wednesday clawed back initial weakness in wake of retail sales data, which added further to signs of a hot economy; the Russell and the Nasdaq led the rebound, while SPX and DJIA closed with slight gains (see here). Asia-Pac stocks were positive as the region followed suit to the gains in the US (see here). The European start was constructive amid a slew of earnings in the industrials and consumer sectors, and ahead of lots of ECB speak (see here).


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  US PRE-MARKETS: US equity futures are around flat, unable to take inspiration from European peers, which are firmer after heavy (and generally decent) earnings in the continent. Treasury yields are lower by 2-4bps, with the curve moderately steepening. The Dollar Index is a little off neutral, allowing activity currencies some modest upside. Crude futures are on the front foot, despite this week's chunky inventory builds, as it likely takes clues from the risk environment. The SPX Wednesday opened on a weak footing following hot retail sales data, which was seen as another sign of an economy per forming well relative to expectations just a few weeks ago, and something that was likely to add challenges to the Fed bringing inflation back under control. However, over the course of the session, losses were pared back and the index closed around 0.3% higher. The tape action may have been a function of the market's view that the Fed can engineer a soft landing even though price pressures appear sticky. Accordingly, stocks were higher and the curve bear-steepened. Rabobank offers an alternative view, suggesting that the action on Wednesday was that the better than expected economic data saw some term premium priced into longer-dated Treasuries as the market questions how successful the Fed may be in bringing inflation under control. Today's economic agenda may offer incremental updates on these themes, with the release of US PPI and regional Fed manufacturing indices, as well as the weekly initial jobless claims data. There are also quite a few Fed officials (and ECB officials) on the wires today.

DAY AHEAD:

• Our live day ahead calendar can be accessed here; a PDF version can be accessed here.


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  EUROPEAN DATA/SPEAKERS: ECJ's provisional opinion on Poland's CHF-denominated mortgages is due; we have a primer available here. There is no major data points scheduled for release, although there are a few key speakers from European central banks: The ECB’s Chief Economist Lane will be speaking to the NIES in London, and there will be a text release. ECB Vice President de Guindos will give remarks at Colegio Mayor CEU, but there will not be a text release. Elsewhere, ECB’s Panetta, Nagel and Makhlouf will speak. From the BoE, Chief Economist Pill will be speaking at a think tank event.


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  NORTH AMERICAN DATA/SPEAKERS: There are a few notable items on the data calendar: the pre-market economic releases will see the release of PPI data for January, which follows the CPI report earlier in the week which alluded to sticky inflation conditions. January Housing Starts and Building Permits is on the docket; weekly initial jobless claims and continuing claims data are expected to be little changed; the Philly Fed business survey will be eyed after a mixed Empire Fed release on Wednesday (our analysis for the NY Fed data is here). There is also a decent amount of Fedspeak today: Fed’s Bullard (non-voter), Cook (voter), and Mester (non-voter) are due to speak; the BoC Deputy Governor Beaudry will deliver some remarks after the market close.


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  ENERGY: EIA NatGas storage change data for the week of 10/Feb is expected to show a draw of 109BCF (prev. -217BCF).


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  SUPPLY: Spain will auction between EUR 5.5-6.5bln of 2027, 2029 and 2032 Bonos; France will auction between EUR 10-11.5bln of 2026, 2028, and 2030 OATs; it will also auction between EUR 1.25-1.75bln of 2029 linker, 2032 linker, and a 2038 linker. Meanwhile, the US Treasury will sell USD 9bln in 30yr TIPS.

STOCK SPECIFIC NEWS:

TECH:

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  Apple Inc. (AAPL) - Apple has reportedly postponed a planned unveiling of its first mixed-reality headset from around April to June, Bloomberg reports, now aiming to showcase the product at its annual Worldwide Developers Conference. The decision to delay came after product testing showed that both hardware and software issues still needed to be ironed out.


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  Cisco Systems Inc (CSCO) - Q2 adj. EPS 0.88 (exp. 0.86), Revenue 13.60bln (exp. 13.43bln). Increased quarterly dividend by 3% to USD 0.39/shr. Q2 Product revenue USD 10.16bln (exp. 10.02bln), Q2 Secure, Agile Networks revenue 6.75bln (exp. 6.47bln), Q2 Internet for the Future revenue 1.31bln (exp. 1.32bln), Q2 Service revenue 3.44bln (exp. 3.43bln). Exec said full year outlook raised due to its growing recurring revenue base and RPO, along with our healthy backlog and the steps it has taken to improve supply. Sees Q3 adjusted EPS between 0.96-0.98 (exp. 0.89); raised FY adj. EPS view to 3.73-3.78 (exp. 3.55) from 3.51-3.58, and raised FY revenue growth view to 9-10.5% (exp. 5.7%) from 4.5-6.5%.


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  Robinhood Markets, Inc. (HOOD) - January assets under custody USD 74.7bln; Net Cumulative Funded Accounts +60k M/M to 23.0mln, Monthly Active Users +600k M/M to 12.0mln, Notional Trading Volumes - which are the primary driver of transaction revenues - were higher in January for equities, options, and crypto vs December.


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  RingCentral, Inc. (RNG) - Q4 adj. EPS 0.60 (exp. 0.59), Q4 revenue USD 525mln (exp. 527.4mln). Sees Q1 adj. EPS between USD 0.69-0.70 (exp. 0.63), and sees Q1 revenue between USD 526-530mln (exp. 544.7mln). FY23 adj. EPS seen between USD 3.04-3.10 (exp. 2.84), and FY23 revenue seen between USD 2.18-2.2bln (exp. 2.3bln).


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  Shopify Inc. (SHOP) - Q4 adj. EPS 0.07 (exp. -0.01), Q4 revenue USD 1.73bln (exp. 1.65bln), Q4 GMV USD 61bln (exp. 59.2bln), Q4 GPV USD 34.2bln (exp. 32.2bln). Sees Q1 gross margins slightly higher vs Q4. Expects challenges related to SFN on gross margin, a significant contributor to operating expenses in 2023. Sees Q1 revenue growth in high-teen percentages on Y/Y basis (exp. +20%), and sees Q1 CapEx in-line with FY22.


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  Synopsys, Inc. (SNPS) - Q1 adj. EPS 2.62 (exp. 2.50), Q1 revenue USD 1.361bln (exp. 1.36bln). Sees Q2 revenue between USD 1.36-1.39bln (exp. 1.43bln), and sees Q2 EPS between 2.45-2.50 (exp. 2.58). For FY23, still sees revenue between USD 5.78-5.83bln (exp. 5.8bln), and raises FY23 EPS outlook to between 10.53-10.60 (exp. 10.38) from 10.28-10.35.


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  Atlassian Corporation (TEAM) - Announced the promotion of Anutthara Bharadwaj to President. Added that despite the current macroeconomic environment, it was bullish on embracing its largest growth opportunities.

COMMUNICATIONS:

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  Roku, Inc. (ROKU) - Q4 EPS -1.70 (exp. -1.73), Q4 revenue USD 867.1mln (exp. 801.7mln). 2022 active accounts 70.0mln (vs 60.1mln Y/Y), 2022 Streaming Hours up by 14.3bln hours Y/Y to 87.4bln, ARPU grew +2% Y/Y at USD 41.6bln. Plans to continue to improve our operating expense profile to better manage through the challenging macro environment. Through a combination of operating expense control and revenue growth, sees a path that delivers positive adjusted EBITDA for FY24. Said the overall ad market was muted in Q4, but ad spend among verticals appear to be improving in Q1. Sees Q1 revenue at USD 700mln (exp. 690.6mln). Sees macro uncertainty persisting in 2023.


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  Twilio Inc. (TWLO) - Q4 adj. EPS 0.22 (exp. -0.09), Q4 revenue USD 1.02bln (exp. 1bln). Q4 active customers 290K (exp. 285K), Q4 USD-based net expansion rate 110% (exp. 119%). Board authorises a USD 1bln share repurchase programme. Sees Q1 adj. EPS between USD 0.18-0.22 (exp. 0.01), and sees Q1 revenue between USD 995-1.005bln (exp. 1.02bln).


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  Zillow Group, Inc. (Z) - Q4 adj. EBITDA USD 73mln, Q4 revenue USD 435mln (exp. 413.5mln). Exec said it was seeing some early signs of stabilisation, albeit at a meaningfully subdued level. Mortgage rates continued to decelerate from peaks last June, looming backlog of homes under construction likely to give some help on affordability. "However, we aren’t out of the woods yet when it comes to the macro economy and how it may affect the real estate industry," adding that "things continue to be foggy." Expects a modest increase in total operating expenses and cost of revenue from Q4 to Q1. Sees Q1 revenue between USD 404-437mln (exp. 421.5mln), sees Q1 residential revenue between USD 313-338mln, and Q1 adj. EBITDA of USD 48-63mln (exp. 89.3mln).


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  Vodafone (VOD) - Is reportedly exploring options for African business Vodacom.

MATERIALS:

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  Newcrest Mining Limited (NCMGY), Newmont Mining Corporation (NEM) - Newcrest Board unanimously rejects Newmont offer, says it does not represent sufficient value for Newcrest shareholders. In order to determine if Newmont can provide an improved proposal, the Board has indicated that it is prepared to provide access to limited, non-public information on a non-exclusive basis. Adds there is no certainty that any further discussions with Newmont will lead to a revised proposal or any transaction.


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  Albemarle Corp (ALB) - Q4 adj. EPS 8.62 (exp. 8.28), Q4 revenue USD 2.62bln (exp. 2.63bln); adj. EBITDA USD 1.24bln (exp. 1.22bln). Q4 Lithium net sales USD 2.07bln (exp. 2.08bln), Q4 Bromine Specialties net sales USD 319.4mln (exp. 329.5mln), Q4 Catalysts net sales 235.5mln (exp. 224.8mln). Guidance is seen in line with its January update: Sees FY23 revenue between USD 11.3-12.9bln (exp. 11.1bln), FY23 EBITDA seen between USD 4.2-5.1bln (exp. 4.5bln), FY23 EPS seen between USD 26.00-33.00 (exp. 28.10).


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  Nutrien Ltd. (NTR) - Q4 adj. EPS USD 2.02 (exp. 2.62), Q4 revenue USD 7.5bln (exp. 7.44bln). Boosts quarterly dividend +10% to 0.53/shr. FY23 adj. EPS seen between USD 8.45-10.65 (exp. 11.49), FY23 adj. EBITDA seen between USD 8.4-10.0bln, FY23 adj. net earnings seen between USD 8.45-10.65. Expects gross margins for crop nutrients and crop protection products to be lower vs 2022. Potash sales tonnes guidance seen between 13.8-14.6mln tonnes, assumes increased demand in North America and Brazil, and continued global supply constraints in 2023; maintained capability to increase sales volumes to its previous expectation of approximately 15mln tonnes if stronger demand is seen. Nitrogen sales tonnes guidance seen between 10.8-11.4mln, assumes higher operating rates at North American plants, continuation of gas curtailments in Trinidad in 2023.


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  CF Industries Holdings, Inc. (CF) - Q4 EPS 4.35 (exp. 4.30), Q4 revenue USD 2.61bln (exp. 2.8bln). Exec sees global nitrogen supply-demand balance and global energy cost structure continuing to present attractive margin opportunities, expects to drive strong cash generation in the years ahead.


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  Huntsman Corporation (HUN) - Has secured all regulatory approvals required to complete the sale of its Textile Effects division to Archroma for USD 593mln in cash, plus assumed pension liabilities; expects the net after tax cash proceeds to be approximately USD 540mln before customary post-closing adjustments.


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  Holcim (HCMLY) to acquire Fdt Flachdach Technolgie, and added that Holcim's roofing systems will exceed USD 4bln in net sales ahead of schedule.


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  Rio Tinto (RIO) - Rio and Marubeni (8002 JT) partner on creating stronger supply chains.


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  Glencore (GLNCY) - Volcan confirms Glencore is exploring a sale of its 23% stake in Volcan.

ENERGY:

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  Marathon Oil Corporation (MRO) - Q4 adj. EPS 0.88 (exp. 0.84), Q4 revenue USD 1.73bln (exp. 1.7bln). FY23 CapEx seen between USD 1.9-2bln (exp. 1.9bln), FY23 adj. FCF seen at USD 2.6bln (exp. 2.9bln) at a reinvestment rate of approximately 40%, assuming USD 80/bbl WTI prices, USD 3.00/MMBtu Henry Hub prices, and USD 20/MMBtu TTF prices. Expects to deliver maintenance-level total oil production of 190k net BOPD at the midpoint of its 2023 guidance range; Total oil-equivalent production is expected to be 395k net BOED at the midpoint of guidance. In 2023, Marathon plans to average approximately nine rigs and three to four frac crews, excluding joint venture-related activity. The company expects to run approximately four rigs and two frac crews in the Eagle Ford, including on its newly acquired acreage from Ensign.


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  Repsol (REPPY) - Profits top expectations on high O&G prices, proposes share capital reduction of 50mln shares.

INDUSTRIALS:

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  Lockheed Martin (LMT), Raytheon (RTX) - China Commerce Ministry to include Lockheed Martin and Raytheon (RTX) on its list of unreliable entities from today, banning the companies from engaging in China-related trade activities.


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  Airbus (EADSY) - Delays A320 production target, but is targeting 720 total deliveries in 2023, named former Covestro exec as new CFO.


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  Atos (AEXAY), Airbus (EADSY) - Atos is entering the next phase of discussions with Airbus to form a long-term strategic partnership.


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  Deutsche Lufthansa (DLAKY) - Said all systems were back up after Wednesday's IT fault.


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  Republic Services, Inc. (RSG) - Q4 adj. EPS USD 1.13 (exp. 1.02), Q4 revenue USD 3.5bln (exp. 3.47bln). Prices were +6% in the quarter, volumes were +1.5%. Sees FY23 adj. EPS between USD 5.15-5.23 (exp. 5.04), and sees FY23 revenue between USD 14.65-14.8bln (exp. 14.5bln), FCF between USD 1.86-1.90bln, and EPS of 5.19 (exp. 5.04).


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  Waste Connections, Inc. (WCN) - Q4 adj. EPS 0.89 (exp. 0.88), Q4 revenue USD 1.87bln (exp. 1.85bln). FY23 revenue seen around USD 8.05bln (exp. 8bln), and sees FY23 net income of approx USD 961mln, adj. EBITDA of approx USD 2.5bln.

CONSUMER DISCRETIONARY:

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  Tesla, Inc. (TSLA) - CEO Musk said Tesla was happy to support other EVs via its Supercharger network; remarks followed a tweet from President biden, who said that in building the US EV charging network, it must ensure that as many chargers work for as many drivers as possible.


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  Renault (RNLSY) - Swings back to losses after Russia exit, but FY outlook tops expectations, and it offers a dividend.


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  Stellantis (STLA) - Recalls 340k RAM trucks to replace an electrical connector after reports of six fires.


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  Cummins (CMI), Faurecia (FAURY) - Faurecia and Cummins (CMI) enter exclusive negotiations on potential sale of a designated part of Faurecia’s exhaust business in Europe and US.

CONSUMER STAPLES:

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  Nestle (NSRGY) - FY22 profits miss expectations despite price hikes; confirmed 2025 targets and sees robust growth ahead; said continued pricing action was required to repair the damage caused by inflation.


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  Heineken (HEINY) - Notes FEMSA announcement on the outcome of its strategic review; FEMSA to divest its full shareholding in Heineken and representatives will be resigning from the board with immediate effect.


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  Pernod Ricard (PRNDY) - H1 sales better than expectation, confident in FY23 recovery.


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  Nu Skin Enterprises, Inc. (NUS) - Q4 adj. EPS 0.89 (exp. 0.53), Q4 revenue USD 522.3mln (exp. 542.3mln). Raises quarterly dividend to 0.39/shr (exp. 0.38). Sees Q1 adj. EPS between 0.25-0.35 (exp. 0.70), and sees Q1 revenue between USD 450-490mln (exp. 544.2mln); for FY23, sees adj. EPS between USD 2.35-2.75 (exp. 2.92), and sees FY23 revenue between USD 2.03-2.18bln (exp. 2.24bln). Guidance assumes global macro environment remains challenging in the near-term, but improves throughout the year.


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  Boston Beer Company, Inc. (SAM) - Q4 EPS -0.93 (exp. 0.70), Q4 revenue USD 447.5mln (exp. 393.7mln). Margins were below its expectations largely due to our production mix and supply chain inefficiencies, exec said, adding that near-term trends remain challenging due to the hard seltzer category's trajectory. Sees FY23 EPS between USD 6.00-10.00 (exp. 11.02), and sees price increases of 1-3%.

FINANCIALS:

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  American International Group Inc (AIG) - Q4 adj. EPS 1.36 (exp. 1.29); Q4 Gross Premiums Written USD 7.59bln (prev. 8.01bln Y/Y). Q4 adj. ROE +7.5% (exp. +6.76%), Q4 Book value per share USD 53.83 (exp. 54.43), Q4 GI net premiums written USD 5.61bln (exp. 6.04bln), Q4 GI catastrophe loss USD 235mln (exp. 255.2mln).


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  Standard Chartered (SCBFY) - Profits rose 28%, upgraded its outlook and set a USD 1bln size for its share buybacks; exec said it has not had engaged nor solicited any takeover bids.


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  Commerzbank (CRZBY) - Net profits rise 12%, topping expectations, and it sees 2023 profits well above 2022 levels.


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  Credit Suisse (CS) - Is reportedly exiting distressed-debt trading with an asset sale.

HEALTH CARE:

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  Moderna, Inc. (MRNA) - Moderna said it will keep its COVID vaccine on the market at no cost to consumers, even after the federal government stops paying for it, ABC reports.


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  GSK (GSK) - Saw Positive Phase III results for RSV older adult vaccine candidate.

REAL ESTATE:

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  Equinix Inc (EQIX) - Q4 AFFO/shr 7.09 (exp. 6.82), Q4 revenue USD 1.87bln (exp. 1.87bln), Q4 adj. EBITDA USD 838.7mln (exp. 834.7mln), Q4 AFFO 657.8mln (exp. 632mln). See FY23 AFFO/shr between 30.79-31.64 (exp. 31.60), and FY23 EBITDA of USD 3.615-3.695bln (exp. 3.67bln).


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  Invitation Homes Inc. (INVH) - Q4 core FFO/shr 0.43 (exp. 0.42), Q4 revenue USD 579.8mln (exp. 570.1mln). Sees FY23 core FFO/shr between USD 1.73-1.81 (exp. 1.81), and sees FY23 Same Store Core Revenues growth between 5.25-6.25%. Exec said demand for leasing a single-family home remained strong in Q4, as evidenced by its 97.3% same store average occupancy and 9.1% same store blended rental rate growth. Anticipates this strong demand to continue in 2023, along with a lack of sufficient housing supply.

16 Feb 2023 - 09:31- Research Sheet- Source: Newsquawk