Hammerstone Markets Early Look

Early Look

Tuesday, April 12, 2022

S&P futures are edging slightly higher at the 4,413 level, bouncing off overnight lows of 4,382.25 after dropping and settling below its 200-day MA (4,487) and 50-day MA (4408) yesterday amid surging Treasury yields and ahead of key inflation data later this morning. The U.S. 10-Year Treasury yield hit 2.7930%, which was a fresh high back to January 2019, before pushing above 2.83% overnight (highest since 2018). The U.S. dollar meanwhile enters its 9th straight day of gains ahead of the CPI report amid hawkish rate comments from Fed members over the last 2-weeks expecting more aggressive action. Ahead of today’s consumer price index (CPI) inflation report, a reminder that there's only been one time since the start of 2021 that headline CPI came in weaker than expected (August 2021 report on 9/14/21), as per Bespoke. Today’s estimate is for March CPI m/m headline to rise +1.2% and y/y to rise +8.4%, while core CPI prices (ex food & energy) expected to rise +0.5% M/M AND +6.6% y/y. U.S. stocks closed sharply lower on Monday as investors started the holiday-shortened week in a risk-off mood, as rising bond yields weighed on growth stocks. WTI crude futures fell to their lowest level since late-February, dragging energy stocks down with it, along with defensive utilities, both big winners last week. Oil prices rise 3% overnight amid ahead of an anticipated Russian offensive, while Kyiv said it was checking reports that Russian forces had used chemical weapons in the besieged port city of Mariupol. In Asian markets, The Nikkei Index tumbled over 480 points or 1.81% to 26,334, the Shanghai Index rose 1.46% to 3,213, and the Hang Seng Index gained 110 points or 0.52% to 21,319. In Europe, the German DAX is down just over 1% to 14,045, while the FTSE 100 is down -0.5% to 7,580.

Economic Calendar for Today

·????6:00 AM ET????????NFIB Small Business Optimism for March

·????7:45 AM ET????????ICSC Weekly Retail Sales

·????8:30 AM ET?????????Consumer Price Index (CPI) m/m for March…est. +1.2%

·????8:30 AM ET?????????Consumer Price index (CPI) y/y for March…est. 8.4%

·????8:30 AM ET?????????CPI Ex: Food & Energy (core) m/m for March…est. +0.5%

·????8:30 AM ET?????????CPI Ex: Food & Energy (core) y/y for March…est. +6.6%

·????8:55 AM ET?????????Johnson/Redbook Weekly Sales

·????2:00 PM ET?????????Federal Budget for March…est. (-$191B)

·????4:30 PM ET?????????API Weekly Inventory Data

Earnings Calendar:

·????Earnings Before the Open: ACI, KMX

·????Earnings After the Close: None

Other Key Events:

·????American Association for Cancer Research (AACR) Annual meeting 4/8-4/13

·????Cowen Bitcoin Mining Summit (virtual), 4/12-4/13

·????Needham Annual Healthcare Conference (virtual), 4/11-4/14

·????Wells Fargo Biotech Forum, 4/12-4/13, in Florida

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Market Closing Prices Yesterday

·????The S&P 500 Index dropped -75.75 points, or 1.69%, to 4,412.53

·????The Dow Jones Industrial Average fell -413.04 points, or 1.19%, to 34,308.08

·????The Nasdaq Composite plunged -299.04 points, or 2.18%, to 13,411.96

·????The Russell 2000 Index declined -14.24 points, or 0.71% to 1,980.32

World News

·????U.S. NFIB March Small Business Index 93.2 vs. 95.7 in Feb

·????The ZEW survey of financial analyst sentiment pointed to further declines in eurozone's current and future conditions in April, taking the average of both components to its lowest level since March 2020. Sentiment concerning the economic development of the eurozone decreased 4.3 points in April and currently stands at minus 43.0 points.

·????OPEC’s Barkindo says that current crisis in oil markets is beyond the group’s control, Russia losses could exceed 7 million b/d due to current and future sanctions or a boycott by customers.

·????The U.S. State Department ordered non-emergency U.S. government workers to leave the consulate in Shanghai due to a surge in COVID-19 cases and China's measures to control the virus

·????Japanese March PPI mixed: 0.8% m/m vs 0.9% consensus and rose 9.5% y/y vs 9.3% consensus; Japanese Fin Min Suzuki said no comment on FX levels; sudden FX moves would be undesirable; would respond to FX moves as appropriate

·????Philadelphia is bringing back its indoor mask mandate for schools, day cares, businesses, restaurants, and government buildings. Under the new rules, there will be no vaccine or testing requirements for places that serve food or drink, so all will be subject to the new order.

Sector News Breakdown

Consumer

·????Tesla’s (TSLA) world’s largest battery has been shut down for months due to investigation, but it is still moving ahead with expansion – Electrek

·????Restaurants: DPZ upgraded to Buy from Neutral, but QSR downgraded to Neutral from Buy with $64 tgt, DNUT downgraded to Neutral from Buy with $16 tgt and SBUX downgraded to Neutral from Buy with $91 tgt all at Citigroup

·????Lumber futures fell as much as 8.4% to $870 per 1,000 board feet in Chicago on Monday, hovering near four-month lows and extending a slump to 30% since early March

Energy, Industrials and Materials

·????The Biden administration plans to temporarily allow high-ethanol content gasoline to be sold in the hot summer months in a bid to tame high fuel prices at the pump - WSJ

·????Rocket Lab USA (RKLB) breaks ground on Neutron production complex in Virginia

Financials

·????Deutsche Bank (DB) and Commerzbank (CRZBY) shares dropped after an unnamed investor sold stakes worth a total of 1.75 euros billion ($1.90 billion) in Germany's two biggest lenders. The investor sold 116 million Deutsche Bank shares at 10.98 euros-a-share and 72.5 million Commerzbank shares at 6.55 euros-a-share - WSJ

·????AllianceBernstein L.P. (AB) announced that preliminary assets under management decreased to $735 billion during March 2022 from $740 billion at the end of February. The 0.7% decrease was due to market depreciation and firm-wide net outflows.

·????Artisan Partners Asset Management Inc. (APAM) preliminary assets under management as of March 31, 2022 totaled $159.6 billion. Artisan Funds and Artisan Global Funds accounted for $76.8 billion of total firm AUM, while separate accounts and other AUM accounted for $82.8B

·????Cohen & Steers, Inc. (CNS) reported preliminary assets under management of $102.1 billion as of March 31, 2022, an increase of $3.2 billion from assets under management at February 28, 2022. due to market appreciation of $4.1 billion, partially offset by net outflows

·????Franklin Resources, Inc. (BEN) preliminary month-end assets under management (AUM) of $1,477.5 billion at March 31, 2022, compared to $1,486.9 billion at February 28, 2022. This month's decrease in AUM primarily reflected long-term and cash management net outflows

·????Invesco Ltd. (IVZ) reported preliminary month-end assets under management (AUM) of $1,555.9B, +1.6% MoM. The firm achieved net long-term inflows of $5.3B this month. Non-management fee earning net inflows were $5.5B and money market net inflows were $8.3B

Healthcare

·????Aeglea BioTherapeutics (AGLE) shares rose 28% as reported additional data from late-stage trial of its lead drug candidate, pegzilarginase, that supports it as a treatment for Arginase 1 deficiency

·????Gilead Sciences (GILD) announced that the U.S. FDA lifted the partial clinical hold placed on studies evaluating its investigational agent magrolimab in combination with azacitidine

·????Hoth Therapeutics (HOTH) 8.2M share offering priced at $0.85

·????Repare Therapeutics (RPTX) posts updated data from early-to-mid-stage trial of cancer drug candidate RP-3500, with "promising results observed particularly in patients with advanced ovarian cancer"

·????While Biogen (BIIB) hasn’t disclosed plans to sue the government, the company has said it doesn’t believe Medicare’s restrictions on reimbursement for Aduhelm would stand up in court. And several legal experts said Biogen might have a shot at challenging the decision – STAT News

Technology, Media & Telecom

·????Vimeo (VMEO) revenue growth for March 18% YoY; reports March subscribers up 6% and March Avg revenue per User or ARPU up 10% YoY

·????Cisco (CSCO) downgraded to sell from neutral at Citigroup citing competition and more difficult year-over-year comparisons for quarters ahead, while upgraded Juniper Networks (JNPR) to Neutral from Sell and raise tgt to $26 from $25

·????Hewlett Packard Enterprise (HPE) downgraded to underweight at Morgan Stanley and lowered its industry view for telecom and networking equipment to cautious from in-line, citing demand data; also downgraded shares of FFIV and NTAP to equal-weight from overweight

·????Lower Chromebook sales drove a 7.3% decrease in 1Q PC shipments from 1Q 2021, according to preliminary data from Gartner. "After an unprecedented Chromebook surge in 2020 and early 2021, driven by demand from the U.S. educational market, Chromebook growth has tempered." Excluding Chromebooks, the worldwide PC market grew by a modest 3.3% year-over-year

·????Digital ad revenue rose 35% in the U.S. in 2021, Interactive Advertising Bureau report says as Digital ad growth in 2021 was the highest since 2006, IAB – WSJ