Weekly Market Update: Mega-tech earnings drive the market as central bank chatter fades behind a nonchalant BOJ
Ahead of the BoJ meeting and US PCE data the corporate calendar took center stage this week with 1/3 of S&P reporting. A host of consumer, industrial, and technology companies offered up commentary that investors welcomed by signaling strong underlying demand. On the other hand, weakness in a subset of firms tilted more towards discretionary spending illustrated that the consumer is feeling pinched and maybe starting to pull back where they can. Meta shares sold off hard on Thursday after raising FY24 expense expectations towards $100B. A significant dip in the NASDAQ was short-lived though. Google and Microsoft received much ballyhoo after posting standout results, energized by AI and the cloud. Google CEO Pichai revealed he expects YouTube and Cloud to exit 2024 at a combined annual run rate of over $100B.
US Treasury yields moved up this week into the PCE data as markets continued to reprice Fed rate cut expectations. Thursday’s Q1 GDP release spooked markets initially. The lower-than-expected print and hotter-than-expected accompanying inflation readings led to whispers of potential stagflation. The US 2-year rate retook 5% while futures markets continued to push back expectations for Fed rate cuts towards after the election. March US PCE came largely in line with what the markets expected, and with no revisions to the hotter numbers earlier in Q1. The sticky, supercore services index at 0.4% m/m, remained above what the Fed likely wants to see to pull the trigger on a rate cut. Nevertheless, the March data were no worse than originally estimated on the basis of the CPI and PPI figures, offering some sense of relief for investors coming into Friday’s trading session.
The Japanese Yen plummeted to fresh three-decade lows on Friday and remained on intervention watch. The BOJ left policy settings unchanged as expected. Governor Ueda declined to comment on short term FX moves a day after US Treasury Secretary Yellen emphasized intervention in currency markets should only occur on rare occasions. USD/JPY surged above 157 as traders applied pressure, potentially looking to force policy-makers’ hands amid the growing intervention speculation.
Aside from aforementioned Meta, Microsoft and Google earnings reports, other big tech names were in the news this week as well. Tesla shares finally rebounded as it reported a slight miss of earnings expectations, but promised to accelerate the launch of new vehicle models, and dropped more hints about more affordable cars and robotaxi functionality in the future. Apple shares lingered near 52-week lows on reports that China iPhone sales are down sharply in Q1, ahead of its earnings report next week. Amazon introduced a $9.99/month unlimited grocery delivery subscription benefit for Prime members, putting renewed pressure on grocery competitors. Meanwhile, Walmart’s CEO said they continue to take down prices in areas like meat and fresh food, taking prices in line with where they were 12 months ago. Boeing stock fell further after reporting depressed earnings and made the understated admission that the company is in a “tough moment.” Another long time blue chip, GM, had a great quarter, touting consistent strong expectations for the rest of 2024 as well as making strides in its cost control efforts. On the M&A front, IBM snapped up Hashicorp for $6.4B to bolster its cloud business, while Hibbett agreed to be bought by JD Sports for an enterprise value of $1.1B. Stocks had a strong rebound this week, with the S&P gaining 2.7%, the DJIA rising 0.7%, and the Nasdaq surging 4.2%.
MON
4/22
(CN) US SAID TO BE DRAFTING SANCTIONS THAT THREATEN TO 'CUT SOME CHINA BANKS OFF FROM THE GLOBAL FINANCIAL SYSTEM' FOR HELPING RUSSIA'S WAR EFFORT – WSJ
(US) US said to be considering sending additional military advisers to the embassy in Kyiv; The advisers would not be in a combat role, but rather would advise and support the Ukrainian govt and military - Politico
(TW) Taiwan Mar Export Orders Y/Y: +1.2% v +4.0%e (**Note: Feb YoY was -10.4%); Sees April orders +1.2-5.9% y/y
ACI Reports Q4 $0.54 v $0.54e, Rev $18.3B v $18.4Be
CAH Announces nonrenewal of UnitedHealth's OptumRx customer contracts, which expire at the end-June 2024 [sales to OptumRx generated 16% of CAH's FY23 Rev]; Affirms FY24 $7.20-7.35 v $6.28e; Affirms long-term targets
ENSU.NO Completes its first shipment of the world’s first fully functional multi-layer solid-state lithium microbatteries
GALP.PT Recent notable strength being attributed to the Galp's statement that Mopane field, off the coast of Namibia, could contain at least 10B barrels of oil
PKG Reports Q1 $1.72 v $1.64e, Rev $1.98B v $1.91Be
TROX Reports prelim Q1 Rev $774M +9% y/y v $727Me (3 est); Sees continued strengthening of the market recovery; Notes demand outpaced expectations for both TiO2 and zircon
SAP.DE Reports Q1 €0.81 v €1.28e, Rev €8.04B v €8.19Be; Affirms FY guidance
UNH *Updates on Change Healthcare cyberattack: Found files containing protected health information (PHI) or personally identifiable information (PII), which 'could cover a substantial proportion of people in America'; Pharmacy services are now back to near-normal levels
TUES 4/23
(FR) FRANCE APR PRELIMINARY MANUFACTURING PMI: 44.9 V 46.8E (16th month of contraction); Services PMI records first expansion in 11 months; Notes intensifying price pressures across France
(JP) Bank of Japan (BOJ) will discuss the impact of the Yen's rapid slide at this week's policy meeting - Nikkei
(UK) APR PRELIMINARY MANUFACTURING PMI: 48.7 V 50.4E (moves back into contraction); Notes rate of inflation up sharply from March and the highest since May 2023
(US) APR RICHMOND FED MANUFACTURING INDEX: -7 V -8E
(US) APR PRELIMINARY S&P MANUFACTURING PMI: 49.9 V 52.0E (first read in contraction territory this year)
(US) MAR NEW HOME SALES: 693K V 669KE
AAPL Reportedly Q1 iPhone sales in China -19% y/y (v down 24% y/y during first six weeks of 2024); Q1 Huawei phone sales +69.1% y/y - press citing Counterpoint Research data
AKZA.NL Reports Q1 Adj EBITDA €363M v €305M y/y, Rev €2.64B v €2.61Be
AMZN Introduces new $9.99/month grocery delivery subscription benefit now available to Prime members and customers using EBT in more than 3,500 cities and towns across the U.S.
GE Reports Q1 $0.82 v $0.67e, Rev $15.2B** v $15.7Be; Raises outlook
GE CEO: Experiencing a tremendous demand cycle for services - post earnings comments
GM Reports Q1 $2.62 v $2.06e, Rev $43.0B v $40.6Be; Raises outlook
FNMA Exec: Recently seen evidence that some potential home sellers are becoming more acclimated to the higher mortgage rate environment and putting their homes on the market
FI Reports Q1 $1.88 v $1.77e, Rev $4.54B v $4.56Be; Organic revenue +20% y/y
HIBB To be acquired by JD Sports for $87.50/shr in cash at EV of $1.11B; Expected to be earnings accretive from year one
LMT Reports Q1 $6.33 v $5.80e, Rev $17.2B v $16.2Be; Encouraged by the progress towards delivery of the first TR-3 configured aircraft
MSFT Introduces three smaller AI models that are part of a technology family named Phi-3, which do not need high-end Nvidia chips, can fit on a smartphone and used even not connected to the internet; Notes even the smallest of the three performed almost as well as GPT-3.5 – NYT
NOVN.CH Reports Q1 Core EPS $1.80 v $1.73e, Rev $11.8B v $11.5Be; Raises outlook; Proposes Dr. Giovanni Caforio as Chair of the Board of Directors at AGM 2025
HCP Reportedly IBM near a deal to acquire HashiCorp; Deal could be announced in the coming days and could be at a premium to current price – press
KER.FR Reports Q1 Rev €4.5B v €4.5Be; Confirms FY24 decline in recurring operating income of 40 to 45% in H1
PHM Reports Q1 $3.10 v $2.36e, Rev $3.95B v $3.59Be
UPS Reports Q1 $1.43 v $1.33e, Rev $21.7B v $22.0Be; Notes average daily volume in the U.S. showed improvement through the quarter
RTX Reports Q1 $1.34 v $1.23e, Rev $19.3B v $18.4Be
- Affirms FY24 $5.25-5.40 v $5.39e, Rev $78.0-79.0B v $78.6Be (prior: $5.25-5.40, Rev $78.0-79.0B)
TSLA Reports Q1 $0.45 v $0.46e, Rev $21.3B v $22.2Be; To accelerate launch of new models; Hints again of more affordable models; Currently working on ride-hailing functionality that will be available in the future
TXN Reports Q1 $1.20 v $1.06e, Rev $3.66B v $3.61Be
- Guides Q2 $1.05-1.25 v $1.17e, Rev $3.65-3.95B v $3.77Be
V Reports Q2 $2.51 v $2.43e, Rev $8.80B v $8.60Be; Notes 'stable consumer spending'
V See relatively stable volumes in the U.S. across credit and debit; Consumer spend across all segments from low to high spend has remained relatively stable; Our data does not indicate any meaningful behavior change across consumer segments - conference call
V Recent Apr 1-21st U.S. Payments Volume Growth was around +4% y/y vs +6% y/y during Mar - earnings supplement
WED 4/24
(DE) GERMANY APR IFO BUSINESS CLIMATE: 89.4 V 88.8E (highest since May 2023)
(US) DOE CRUDE: -6.4M V +0.5ME; GASOLINE: -0.6M V -1.5ME; DISTILLATE: +1.6M V -1ME
(US) TREASURY $70B 5-YEAR NOTE AUCTION DRAWS 4.659% V 4.235% PRIOR, BTC 2.39 V 2.41 PRIOR AND 2.48 OVER THE LAST 12
(US) MAR PRELIMINARY DURABLE GOODS ORDERS: 2.6% V 2.5%E; DURABLES (EX-TRANSPORTATION): 0.2% V 0.2%E
USD/JPY *TESTS ABOVE 155.00 (highest since 1990)
**Note: Analysts denote 155.00 level as key potential intervention level. For the record, the FX pair’s 1990 intraday high was 160.20 on April 17th.
2330.TW Confirms debuted its next technology on its roadmap, A16 (1.6nm chips) to combine TSMC’s Super Power Rail architecture with its nanosheet transistors for planned production in 2026; N2 on track for production in the H2 2025
ASSAB.SE CEO: US residential market appears to be bottoming out
BA Reports Q1 -$1.13 v -$1.43e, Rev $16.6B v $16.3Be; Notes in the near term it is 'in a tough moment'; To largely deliver 737, 787 inventory by year-end
BA CEO: Still strongly believe our free cash flow targets will hold; Current efforts will cost us 6 months in achieving FCF goals - CNBC interview
BG Reports Q1 $3.04 v $2.55e, Rev $13.4B v $13.8Be
CA.FR Reports Q1 Rev €22.2M v €22.9Me; Affirms FY outlook
F Reports Q1 $0.49 v $0.42e, Rev $42.8B v $40.6Be
HEIA.NL Issues Q1 Trading Update: Rev €8.18B +7.2% y/y, Organic Rev +9.4% v +6.0%e; Organic beer volume 55.4Mhl +4.7% y/y v +2.1%e
HLT Reports Q1 $1.53 v $1.41e, Rev $2.57B v $2.56Be; Notes great momentum across signings, starts and openings
LRCX Reports Q3 $7.79 v $7.26e, Rev $3.79B v $3.70Be
HUM Reports Q1 $7.23 v $6.02e, Rev $29.6B v $28.6Be; Raises Individual Medicare Advantage membership outlook
HUM No longer believe $6 to $10 of adj EPS growth is the appropriate target range for 2025; We expect benefit levels, plan stability and choice for seniors to be negatively impacted by the 2025 final MA rate notice, which is not sufficient to address the current medical cost trend environment; We are excited about our momentum in Medicaid - prepared remarks
META Reports Q1 $4.71 v $4.32e, Rev $36.5B v $36.3Be; Raises midpoint of FY expense guidance; Expect Capex to continue to increase next year
NOD.NO Reports Q1 EBITDA -$22.8M v +$14.6M y/y, Rev $74.5M v $145.4M y/y
ROG.CH Reports Q1 (CHF) Rev 14.4B v 14.6Be
SYF Reports Q1 $1.18** adj v $1.42e, Rev $4.80B v $4.45Be; Approves additional $1.0B share buyback
UMC Reports Q1 (NT$) 0.84 v 1.31 y/y, Rev 54.6B v 55.0B y/y
VRT Reports Q1 $0.43 v $0.37e, Rev $1.64B v $1.64Be; Seeing order patterns with longer lead times based on customer build schedules, largely in 2025 and beyond, suggesting AI is starting to scale
THRS 4/25
*(JP) BANK OF JAPAN (BOJ) LEAVES TARGET RANGE UNCHANGED BETWEEN 0.0-0.10%; AS EXPECTED
(US) Q1 ADVANCE GDP ANNUALIZED Q/Q: 1.6% V 2.5%E; PERSONAL CONSUMPTION: 2.5% V 3.0%E
(US) Nevada reports Mar casino gaming Rev $1.29B, -1.7% y/y, Las Vegas strip Rev $715.9M, -1.2% y/y
(US) MAR PENDING HOME SALES M/M: 3.4% V 0.4%E; Y/Y: -4.5% V -3.0%E
(US) MAR PRELIMINARY WHOLESALE INVENTORIES M/M: -0.4% V 0.3%E
(US) TREASURY $44B 7-YEAR NOTE AUCTION RESULTS: DRAWS 4.716% V 4.185% PRIOR, BID-TO-COVER RATIO: 2.48 V 2.61 PRIOR AND 2.56 OVER LAST 12 AUCTIONS
(US) Former Pres Trump allies reportedly draft up plans to 'blunt' the Fed's independence; Some Trump advisers argue that the president should be consulted on interest-rate decisions – WSJ
(US) BOFA INSTITUTE: WEEK-TO-APR 20TH TOTAL CARD SPENDING -0.5% Y/Y V +2.6% PRIOR WEEK AND +0.3% AVERAGE IN MAR
(US) INITIAL JOBLESS CLAIMS: 207K V 215KE; CONTINUING CLAIMS: 1.781M V 1.82ME
(US) INITIAL JOBLESS CLAIMS: 207K V 215KE; CONTINUING CLAIMS: 1.781M V 1.82ME
300750.CN Unveils Shenxing Plus battery, the world's first lithium iron phosphate (LFP) battery enabling a driving range of more than 1,000km; The new battery gets 600km range from 10 minutes charge - Beijing Auto Show
AAL.UK BHP confirms to offer 0.7097 shares for each share in Anglo American (implies £25.08/shr offer) in all-stock deal valued at £31.1B [*Note: The deal would create the world's biggest copper miner with ~10% of global output]
AIR.FR Reports Q1 €0.75 v €0.59 y/y, Rev €12.8B v €12.9Be; Affirms FY24 deliveries outlook
BAS.DE Reports Q1 €1.68B v €1.39e, Adj EBIT €1.75B v €1.5Be; Rev €17.6B v €18.4Be; Affirms outlook
CAT Reports Q1 $5.60 v $5.12e, Rev $15.8B v $16.1Be
CAT Reports Q1 dealer statistics: Total machines -5% v +8% prior (1st negative print since Q2 2022); North America Machines -1% v +11% prior
CAT Guides Q2 Rev lower y/y [implies <$17.3B v $17.3Be], adj Op margin similar y/y; Affirms FY24 Rev 'broadly similar' y/y [implies $67.1B v $67.7Be] (prior Rev to be broadly similar y/y) - earnings slides
COF Reports Mar net charge-offs 6.15% v 5.95% prior
GOOGL Reports Q1 $1.89 v $1.49e, Rev $67.6B v $66.0Be; Initiates first-ever $0.20/shr quarterly dividend; Additional up to $70B buyback (3.6% of market cap)
GOOGL CEO: We expect YouTube overall and Cloud to exit 2024 at a combined annual run rate of over $100B - earnings call comments
INTC Reports Q1 $0.18 v $0.13e, Rev $12.7B v $12.8Be; Guides Q2 below estimates
KEX Reports Q1 $1.19 v $0.97e, Rev $808M v $784Me; Sees favorable markets continuing; Data center demand and the need for backup power is very strong; Appoints Christian O’Neil as President and COO; effective April 26, 2024
MSFT Guides Q4 Rev $63.5-64.5B (calculated) v $64.5Be; Guides FY24 Op margins +2 ppt y/y (prior: Op margins+1-2ppt) - earnings call
NESN.CH Reports Q1 (CHF) Rev 22.1B v 23.5B y/y
NOC Reports Q1 $6.32 v $5.83e, Rev $10.1B v $9.78Be
RCL Reports Q1 $1.77 v $1.30e, Rev $3.73B v $3.64Be; Notes demand continues to be very robust; Still in a record booked position
SBRY.UK CEO: Some evidence UK consumers have started to trade up again - post earnings comments
TRU Reports Q1 $0.92 v $0.81e, Rev $1.02B v $978Me; Guides Q2 higher and raises FY24
UNA.NL Reports Q1 Rev €15.0B v €14.7Be; Notes increasing confidence in its ability to deliver sustained volume growth and positive mix as accelerate gross margin expansion
WDC Reports Q3 $0.63 v $0.21e, Rev $3.46B v $3.33Be; Guides Q2 strong
FRI 4/26
(JP) BOJ Gov Ueda: Must pay due attention to financial and FX market moves and their impact on inflation; To adjust the degree of monetary easing if price trend rises - post rate decision comments
(US) Atlanta Fed GDPNow: Set initial Q2 GDP forecast at 3.9%
(US) APR FINAL UNIVERSITY OF MICHIGAN CONFIDENCE: 77.2 V 77.9 PRELIM
(US) MAR PCE DEFLATOR M/M: 0.3% V 0.3%E; Y/Y: 2.7% V 2.6%E (1st back-to-back reacceleration since Aug 2023 and highest annual pace since Oct 2023)
(US) MAR PERSONAL INCOME: 0.5% V 0.5%E; PERSONAL SPENDING: 0.8% V 0.6%E
AAL.UK Unanimously rejects bid from BHP Group; Notes it significantly undervalues Anglo American and all-share offer required Anglo to complete two separate demergers
ABBV Reports Q1 $2.31 v $2.26e, Rev $12.3B v $12.0Be
AMS.CH Reports Q1 adj EBIT €44M v €41.1M y/y, Rev €847M v €842Me; Expects to exit certain non-core semiconductor businesses; Notes robust demand from Automotive, while the demand from industrial and medical markets remains muted
CVX Reports Q1 $2.93 v $2.84e, Rev $48.7B v $49.9Be; U.S. production +35% y/y
CVX Production is trending better than our previous guidance; Share repurchases are restricted under SEC regulations through the Hess shareholder vote, after which we intend to resume buybacks at the $17.5B annual rate - earnings slides
DARK.UK To be acquired by Thoma Bravo for £6.20/shr in cash (~$7.75/shr) based on EV of $5.0B
ELUXB.SE Reports Q1 (SEK) Adj Op -720M v -810Me, Rev 31.1B v 30.8Be; President & CEO Jonas Samuelson to step down; 2024 has started on a similar note as 2023 ended; Consumer confidence indicators seem to have bottomed out, but not yet visible in demand on its main markets
SAIA Reports Q2 $3.38 v $3.43e, Rev $755M v $768Me; March trends improved a bit from Feb, but we did not experience the expected seasonal step-up
SLCA To be acquired by Apollo Funds at $15.50/shr in all-cash in $1.85B deal; Includes a 45-day "go-shop" period that will expire on June 10, 2024
TTE.FR Reports Q1 Net $5.11B v $5.00Be, adj EBITDA $11.5B v $11.1Be, Rev $56.3B v $55.9Be; Plans $2B share buyback in Q2
WMT US CEO: The last few weeks, we've taken even more prices down in areas like produce and meat and fresh food; At Walmart, we are now seeing prices that are in line with where they were 12 months ago - ABC News interview summary
XOM Affirms FY24 Capex $23-25B v $26.3B y/y (prior $23-25B); On track to deliver ~$15B in structural cost savings by 2027 - earnings slides