Traders Market Weekly: Neutralizing Contagion

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  • #55246
    Truman
    Participant

    All about the Fed now –futures trading implies a 74.5% probability of a 25 basis point rate hike by the Fed and a 25.5% chance of no hike at all.

    Bank of America forecasts the target range will be raised appropriately by the Fed by 25 points to 4.75% to 5.00% with the short-term loans offered through the Bank Term Funding Program seen as an effective backstop to more banking fallout.

    Moody’s analyst Mark Zandi is firm that the Fed should not tighten policy due to higher recession risks. “If they raise rates, that qualifies as a mistake, and I would call it an egregious mistake,” he warned.

    #55247
    Truman
    Participant

    IPO watch: Chinese park operator Golden Heaven Group (GDHG), Singapore-based real estate brokerage firm Ohmyhome Ltd (NASDAQ:OMH), and contract logistics services Shengfeng Development (SFWL) are all expected to price their IPOs and start trading next week.

    #55248
    Truman
    Participant

    Nvidia:

    Santa Clara-based Nvidia (NVDA) will host its highly-anticipated GTC event from May 20-23. CEO Jensen Huang will deliver the opening keynote. The four-day event is expected to cover Nvidia’s latest advancements in generative AI, the metaverse, large language models, robotics, cloud computing and more.

    Just in front of GTC, Morgan Stanley upgraded the GPU maker to Overweight, with the investment firm noting the artificial intelligence megatrend has become too much to ignore. Analyst Joseph Moore noted that the challenges in gaming and the data center have largely played out, but the development of generative or generational AI will overshadow any other trends. “The stock will continue to be hard to ignore in an otherwise challenging semiconductor environment,” he previewed.

    #55249
    Truman
    Participant

    Nike earnings preview:

    Nike (NKE) is expected to report revenue of $11.44B and EPS of $0.54 with its FQ3 earnings release on March 21. Wall Street analysts have been incrementally more bullish on Nike (NKE) ahead of the earnings release, including both UBS and Morgan Stanley.

    UBS thinks Nike can clear the market’s bar, even with sentiment positive. Nike is said to have strong brand momentum with consumers globally and an improved inventory position. The firm forecasts a $0.05 EPS beat and modestly raise its FY23 outlook. Shares are expected to get an extra boost from a positive initial FY24 outlook from the Oregon-based athletic apparel giant. Morgan Stanley also predicted a narrow EPS beat for Nike on strong performance from the EMEA segment.

    Potential North American softness and a highly promotional channel are called out as downside risks. On Seeking Alpha, contributor Colin Tedards said the first thing investors should look at with the Nike numbers is the margin line to see how the company offset the impact of inventory, shipping, logistics and currency headwinds.

    Shares of Nike are up 1.38% on a year-to-date basis.

    #55250
    Truman
    Participant

    Barron’s mentions:

    The cover story makes the case that major bank stocks could be attractive after the U.S. banking system averted a full-blown crisis due to the actions by the Federal Reserve and FDIC. While small and mid-sized banks are expected to face more challenges, the nation’s largest banks feature product breadth, technology advantages, capital, and size to ride out a period of macroeconomic disruption.

    Bigger banks are also expected to benefit from a flood of new deposits and accounts from bank customers looking for stability.

    For investors, the stocks of Bank of America (NYSE:BAC), Citigroup (NYSE:C), JPMorgan (JPM), Wells Fargo (NYSE:WFC), Goldman Sachs (GS), and Morgan Stanley (MS) are said to now trade at reasonable forward earnings multiples and the dividend yields for the group range from 3.0% to 4.5%.

    #55251
    Truman
    Participant

    Monday – March 20

    Earnings watch – Notable companies due to report include Foot Locker (FL). The retailer will also hold an Investor Day event to discuss long-term strategic priorities, growth initiatives, and financial objectives. Options trading implies a 12% move for shares of Foot Locker following the festivities.

    Healthcare watch – The FDA action date arrives for both Cidara Therapeutics’s (CDTX) Rezafungin CD101 and Incyte’s (INCY) Ruxolitinib extended release. Both stocks have been jolted in the past with developments with those specific drug candidates. Bank of America has pointed to the Muscular Dystrophy Association conference in Dallas next week as potentially significant, with FDA Director Peter Marks expected to speak. The presentations from Fulcrum Therapeutics (FULC), PepGen (PEPG), PTC Therapeutics (PTCT), and Sarepta Therapeutics (SRPT) have been circled as possible share price movers.

    Nvidia (NVDA) will host the highly-anticipated GTC event. The four-day event is expected to cover Nvidia’s latest advancements in generative AI, the metaverse, large language models, robotics, cloud computing and more. CEO Jensen Huang will deliver the opening keynote. Shares of Nvidia have rallied in the week following its GTC event in four of the last five years.

    All day – Nano Dimension (NNDM) has a highly-contested shareholder meeting scheduled over a proposal to replace four directors, including chairman Yoav Stern.

    All day – Norfolk Southern (NSC) will be back on the hot seat again at a State Senate committee hearing in Pennsylvania. Shares of NSC have underperformed rails peers since the derailment in Ohio with a 19% decline.

    All day – The Game Developers Conference will take place. The event has generated buzz in the past with announcement on new tech, launch dates, and industry trends.

    #55252
    Truman
    Participant

    Tuesday – March 21

    Earnings watch – Notable companies due to report include Tencent Music (TME), On Holdings (ONON), Nike (NKE), and GameStop (GME). Companies that have a very high trading correlation with Nike include Under Armour (UAA), Foot Locker (FL), Skechers (SKX), Lululemon (LULU), as well as Starbucks (SBUX) due to the China connection. Options trading implies a 15% swing for GameStop (GME) after the retailer’s report drops. Of note, shares of GameStop rallied 11% following the last earnings report.

    All day – Roper Technologies (ROP) will hold its Investor Day event.

    9:00 a.m. 2U (TWOU) will host an Investor Day event at the Nasdaq MarketSite in New York City. The 2U executive leadership team will discuss the company’s platform strategy, edtech sector trends, and plans to create shareholder value.

    11:30 a.m. Adobe (ADBE) will host a Q&A meeting with financial analysts and investors at the Adobe Summit in Las Vegas.

    #55253
    Truman
    Participant

    Wednesday – March 22

    Earnings watch – Notable companies due to report include Baozun (BZUN), Winnebago (WGO), Petco (WOOF), Ollie’s Bargain Outlet Holdings (OLLI), EVgo (EVGO), Hyzon Motors (HYZN), Cassava Sciences (SAVA), KB Home (KBH) and Chewy (CHWY).

    All day – Hershey Company (HSY) will host an Investor Day event. The food giant plans to provide an update on the company’s strategic plans and financial outlook.

    All day – AvePoint (AVPT) will host its inaugural Investor Day event. The executive management team will provide insights into current market trends, showcase the AvePoint Confidence Platform, discuss the company’s financial outlook and strategy and hold a question-and-answer session.

    11:00 a.m. Autodesk (ADSK) will host a Digital Investor Day event.

    2:00 p.m. The Federal Reserve will release its statement on interest rates. Read a preview of the meeting from Seeking Alpha contributor John Mason.
    2:30 p.m. Federal Reserve Chairman Jerome Powell will hold a press conference.

    #55254
    Truman
    Participant

    Thursday – March 23

    Earnings watch – Notable companies due to report include Accenture (ACN), Darden Restaurants (DRI), and General Mills (GIS). Options trading implies a double-digit swing up or down for Ayro (AYRO) and Ouster (OUST) after they report.

    All day – Bombadier (OTCQX:BDRBF) will hold its annual Investor Day event.

    All day – Shareholders with Magnet Forensics (OTCPK:MAGTF) will vote on the acquisition offer from Thoma Bravo.

    9:00 a.m. Altria (MO) will hold its Investor Day event. The tobacco company will look to recharge shareholders unhappy over the results of Altria investments with JUUL, cannabis, and the recently terminated commercialization agreement with Philip Morris International’s (PM) heat-not-burn IQOS product. Look for an update from Altria (MO) management on capital allocations plans during the event.

    11:00 a.m. Chevron Corporation (CVX) will hold a virtual fireside chat with President of Chevron New Energies, Jeff Gustavson. The company said it is offering a platform to receive and answer questions from verified retail shareholders for the event.

    #55255
    Truman
    Participant

    Friday – March 24

    Earnings watch – Notable companies due to report include Hibbett (HIBB).

    All day – Nevro (NVRO) execs will participate in the Wells Fargo Medtech Innovation Spotlight Call Series.

    #55258
    Truman
    Participant

    Equity indices in the Asia-Pacific region ended Monday on a lower note.

    —Equity Markets—

    Japan’s Nikkei: -1.4%
    Hong Kong’s Hang Seng: -2.7%
    China’s Shanghai Composite: -0.5%
    India’s Sensex: -0.6%
    South Korea’s Kospi: -0.7%
    Australia’s ASX All Ordinaries: -1.4%

    #55259
    Truman
    Participant

    The Bank of Japan is taking part in a coordinated central bank action to improve dollar liquidity through swap lines.

    China’s President Xi said that a peaceful resolution to the conflict in Ukraine needs to comply with the UN charter during his visit to Moscow.

    The People’s Bank of China made no changes to its one-year and five-year loan prime rates.

    #55260
    Truman
    Participant

    Major European indices trade on a higher note.

    —Equity Markets—

    STOXX Europe 600: +0.5%
    Germany’s DAX: +1.0%
    U.K.’s FTSE 100: +0.6%
    France’s CAC 40: +1.2%
    Italy’s FTSE MIB: +1.2%
    Spain’s IBEX 35: +0.8%

    #55261
    Truman
    Participant

    UBS agreed to acquire Credit Suisse for $3.23 bln in a deal brokered by Swiss authorities and regulators.
    Credit Suisse will write down CHF16 bln worth of its Additional Tier 1 debt.
    Swiss National Bank doubled the credit line to Credit Suisse to CHF100 bln.
    The Swiss National Bank is also taking part in coordinated action to improve dollar liquidity through swap lines along with the Fed, Bank of England, Bank of Canada, and Bank of Japan.

    #55262
    Truman
    Participant

    French President Macron’s government will face a confidence vote after forcing through pension reform.

    Bank of France lowered its domestic inflation forecast for 2023 to 5.4% from 6.0% and boosted the growth forecast to 0.6% from 0.3%.

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