Market Outlook – ‘Oversold’ – Fear index is fairly deep – but could get deeper. Bearish formations suggest selling the bounces – but the bounces could be fierce. More puts were bought on Friday than at the low in the markets in March, 2020.
Hawkish Fed- earnings continue- European markets weaken. China markets weaken. The youth of France revolt over elections – concerned about a mandatory draft Macron is trying to implement.
Levels are the same – we are landlocked and need to look at things from a wide angle view
A look at the ES_F – buyers will begin to nibble these bottoms- 4265 resistance; 4204 support. Look for higher lows on your 30min charts or lower highs to choose direction – risk intensive so watch your size
And gold moves into important support
Here are some trends to consider also
First the groups
And the DOW
News from Refinitiv
|MONDAY, APRIL 25, 2022|
• Twitter, under shareholder pressure, begins deal talks with Musk -sources
Twitter kicked off deal negotiations with Elon Musk on Sunday after he wooed many of the social media company’s shareholders with financing details on his $43 billion acquisition offer, people familiar with the matter said.
• GM, Ford steer into the headwinds of inflation, rising rates
General Motors and Ford Motor will report first-quarter results this week in an environment that has become more hostile than executives projected when they last faced investors in January.
• ADM, Bunge expected to post strong results as Ukraine war ignites demand
A string of strong quarterly profits by global agribusinesses Archer-Daniels-Midland and Bunge likely continued in the first quarter despite surging crop costs and global supply chain disruptions triggered by Russia’s invasion of Ukraine, analysts said ahead of earnings releases this week.
• Graphic chip price drop raises questions on whether end of shortage is in sight
A sharp drop in graphic chip prices could presage an unexpectedly quick ending to a global chip crunch that has crippled manufacturing from smartphones to cars, and the issue will be a central one for companies reporting results this week.
• KKR raises $19 billion for flagship North America private equity fund
KKR & Co said it has raised $19 billion from investors for its latest flagship North America private equity fund, its biggest fund ever.
BEFORE THE BELL
Wall Street’s major index futures fell as worries about an economic slowdown in China and impact of rapid U.S. interest rate hikes weighed on sentiment. Major European stock indexes fell more than 2%, overshadowing relief from French President Emmanuel Macron’s election victory over the weekend. China stocks plunged in their biggest slump since the pandemic-led panic-selling in February 2020. The dollar strengthened, while gold prices slipped. Oil prices tumbled as lockdowns in Shanghai raised demand concerns.
STOCKS TO WATCH
• AT&T Inc: The company on Friday named Jeff McElfresh, who headed its largest business unit, as chief operating officer, part of the U.S. carrier’s efforts to refocus on its connectivity business following the merger of its WarnerMedia unit with Discovery Inc. McElfresh has been with the company for more than 20 years and was most recently the head of AT&T Communications. The COO role has been vacant since John Stankey became the chief executive officer in July 2020.
• Koninklijke Philips NV: The company’s shares dropped as the Dutch health technology company expanded a recall of ventilators and flagged multiple risks to its growth outlook for the rest of the year. The supplier of products ranging from large medical systems to toothbrushes and shavers said it still expected sales and profitability to recover in the second half of the year. But Philips also said that any deterioration of the COVID-19 situation in China, of the war in Ukraine or of the supply chain challenges and inflationary pressures could put this outlook at risk. Adjusted earnings before interest, tax and amortisation (EBITA) dropped about a third in the first quarter from a year earlier and comparable sales fell 4%, as it continued to struggle with a global shortage of parts and the fallout of its recall operation. Philips said the total number of devices that needed to be repaired or replaced had increased by 300,000 to around 5.5 million worldwide. It raised its provision for the operation by 165 million euros in the first quarter, taking the total costs so far to almost 900 million euros.
In Other News
• Activision Blizzard Inc: A regional director for the U.S. National Labor Relations Board on Friday ordered a union election for a group of workers at an Activision Blizzard-owned studio that works on the popular “Call of Duty” franchise, overruling objections from the company. In a 27-page decision, Jennifer Hadsall, a regional director in Minneapolis, ordered ballots to be mailed to employees on April 29. Workers will have until May 20 to return their ballots, and counting will begin on May 23, per the decision. The election will cover roughly 21 workers in the quality assurance department at Raven Software in Middleton, Wisconsin. The workers will vote on whether to join the Communications Workers of America, a union that has played an active role in organizing tech employees in recent months.
• Advanced Micro Devices Inc, Intel Corp, NVIDIA Corp & Qualcomm Inc: A sharp drop in graphic chip prices could presage an unexpectedly quick ending to a global chip crunch that has crippled manufacturing from smartphones to cars, and the issue will be a central one for companies reporting results this week. As Intel, Qualcomm and others report, investors will weigh how dampened consumer spending from inflation, China’s COVID lockdown and Russia’s invasion of Ukraine balance out supply chain blockages for microchips. The trigger is a drop in prices of GPUs, or graphics processing units, which are the brains of gaming machines and are spreading to other uses. GPU prices are still being sold at a premium, but a smaller one. Susquehanna analyst Christopher Rolland earlier this month said that the markup over manufacturer suggested retail price or MSRP has fallen to 41% from 77%. Graphics chips and hardware news site 3DCenter, which tracks graphic chip prices in Europe, reported that the price of AMD’s Radeon RX6000 and Nvidia’s GeForce RTX30, both used for gaming, dropped steadily to less than 20% above MSRP from 80% at the start of the year. Still, recent Reuters checks found that Nvidia’s GeForce graphics cards remained largely out of stock at retailers like BestBuy and Newegg Commerce. Baird senior analyst Tristan Gerra told Reuters that if electronic companies that buy chips expect prices to drop further, they will cut fat inventories, further cutting purchases — and pressuring prices.
• Air Lease Corp: The company said on Friday it would write off the value of the 27 jets it has remaining in sanctions-hit Russia, a move that is expected to lead to charges of about $802 million. “It is unlikely that the company will regain possession of the aircraft that have not been returned and that remain in Russia,” Air Lease said in a statement. The write-off, which includes 21 company-owned jets and six aircraft in Air Lease’s managed fleet, will be reflected in the first-quarter earnings report slated for May 5.
• Alphabet Inc & Meta Platforms Inc: Google, Meta and other large online platforms will have to do more to tackle illegal content or risk hefty fines under new internet rules agreed between European Union countries and EU lawmakers on Saturday. The agreement came after more than 16 hours of negotiations. The Digital Services Act (DSA) is the second prong of EU antitrust chief Margrethe Vestager’s strategy to rein in Google, Meta and other U.S. tech giants. EU lawmaker Dita Charanzova, who had called for such rules eight years ago, welcomed the agreement. In a statement, Google said: “As the law is finalized and implemented, the details will matter. We look forward to working with policymakers to get the remaining technical details right to ensure the law works for everyone.” Under the DSA, the companies face fines up to 6% of their global turnover for violating the rules while repeated breaches could see them banned from doing business in the EU.
• Amazon.com Inc: The company’s workers are set to vote on whether to unionize a second warehouse in the New York City borough of Staten Island as organizing efforts at the retailer gain steam. Employees at the LDJ5 sortation center are weighing whether to join the Amazon Labor Union (ALU), a group led by current and former warehouse workers. Associates at a larger facility known as JFK8 recently voted to join the ALU and create Amazon’s first organized workplace in the United States. A second election win would underscore the ALU’s potential to organize more facilities at Amazon, the second largest U.S. private employer and could help spur more organizing efforts at other companies across the country. A loss would point to the tough road ahead. Amazon is contesting the JFK8 vote before the U.S. National Labor Relations Board, and the company has told workers that unions cannot guarantee better pay or benefits.
• Archer-Daniels-Midland Co & Bunge Ltd: A string of strong quarterly profits by global agribusinesses Archer-Daniels-Midland and Bunge likely continued in the first quarter despite surging crop costs and global supply chain disruptions triggered by Russia’s invasion of Ukraine, analysts said ahead of earnings releases this week. Both companies capitalized on good oilseed and corn processing margins and heightened demand for the crops they ship around the world after the war cut off shipments from the breadbasket region cradled around the Black Sea, they said. ADM, which reports results ahead of the market open on Tuesday, is expected to post first-quarter earnings of $1.41 per share, about in line with $1.39 a share in the same quarter a year earlier. The consensus estimate for Bunge, which reports on Wednesday, is $2.86 per share, compared to a strong quarter a year earlier when robust margins and surging exports propelled earnings to $3.13 a share.
• Boeing Co: Germany will buy 60 CH-47F Chinook heavy transport helicopters from the company worth around 5 billion euros as it upgrades its military armour, Bild am Sonntag newspaper reported on Sunday, citing government sources. The helicopters will be financed from the 100 billion euros planned special fund for the military which Chancellor Olaf Scholz announced in the wake of Russia’s invasion of Ukraine, the paper said. The helicopters could be delivered in 2025/26 at the earliest and would replace the roughly 50-year-old CH-53G helicopters made by the Sikorsky unit of U.S. arms makers Lockheed Martin, it said.
• Broadcom Inc: The semiconductor maker is under scrutiny from the U.S. Federal Trade Commission following complaints it is forcing exclusive agreements with customers, The Information reported on Friday. The FTC is in the early stages of gathering information about whether Broadcom, which has become a major supplier of WiFi and Bluetooth chips to companies like Apple, illegally forced exclusivity agreements on its customers, the report added. Broadcom is blaming the supply-chain crisis to justify its demands from customers, the report said, citing people with knowledge of the situation and a document seen by The Information.
• Ford Motor Co & General Motors Co: General Motors & Ford Motor will report first-quarter results this week in an environment that has become more hostile than executives projected when they last faced investors in January. GM projected in January it could improve wholesale deliveries by 25% to 30% over 2021, and predicted commodity and logistics costs would rise by $2.5 billion. The company said it expected to earn $13 billion to $15 billion in pretax profit. As for Ford, which reports results on Wednesday, Evercore said it expects a cut to the 2022 outlook. One factor Evercore cited: Ford’s significant exposure to soaring prices for the aluminum used to build its best-selling F-150 pickup and other vehicles. In early March, Ford’s chief financial officer, John Lawler, reaffirmed the company’s forecast that it could generate $11.5 billion to $12.5 billion in pretax profit for 2022.
• KKR & Co Inc: The buyout firm said it has raised $19 billion from investors for its latest flagship North America private equity fund, its biggest fund ever. KKR said the fund includes $2 billion invested by its employees, affiliates and from the firm’s balance sheet. The fund had attracted $24 billion in commitments from investors, but KKR decided to scale it back so it can deploy the capital selectively, sources told Reuters last year. The fund, KKR North America Fund XIII, will make investments in businesses operating in sectors such as financial services, healthcare, retail, industrials, technology, media, and telecommunications, primarily in the United States and Canada.
• Marathon Petroleum Corp, Phillips 66 & Valero Energy Corp: U.S. oil refiners expect strong first-quarter earnings as margins to sell gasoline and diesel strengthened due to a steep dropoff in refining capacity and crude oil supplies tightened because of Russia’s war with Ukraine. Seven U.S. independent refining companies are projected to post earnings-per-share of 61 cents, compared with a loss of $1.32 in first quarter of 2021. U.S. independent refiners including Marathon Petroleum, Valero Energy and Phillips 66 also benefited from a surge in natural gas prices in Europe which occurred due to the risk of European sanctions on Russian energy exports. Valero kicks off refinery earnings on Tuesday; Phillips reports on Friday, with Marathon the following week.
• Mizuho Financial Group Inc: The company plans to beef up its U.S. operations for M&A advisory and equity underwriting, its chief executive said, as Japan’s No. 3 lender aims to grab a bigger share of the world’s largest investment banking fee pool. The latest U.S. drive comes after Mizuho in recent years bolstered its debt underwriting capabilities there following the 2015 acquisition of Royal Bank of Scotland’s North American corporate loan portfolio. Yet to be fully tapped by Mizuho in U.S. investment banking are M&A advisory and equity underwriting, Masahiro Kihara told Reuters in an interview.
• Pfizer Inc: The drugmaker said on Friday it was voluntarily recalling five batches of its Accupril blood pressure tablets after finding elevated levels of a potential cancer-causing agent in the medicine. The company said it was not aware of any reports of adverse events related to the recalled batches, which were distributed in the United States and Puerto Rico from December 2019 to April 2022. Pfizer Canada also recalled all lots of three doses of Accupril on Thursday after finding the same impurity to be above acceptable levels. Pfizer said there was no immediate risk to patients taking this medication, in which the agent, a nitrosamine, was found.
• Twitter Inc: The company kicked off deal negotiations with Elon Musk on Sunday after he wooed many of the social media company’s shareholders with financing details on his $43 billion acquisition offer, people familiar with the matter said. The company’s decision to engage with Musk, taken earlier on Sunday, does not mean that it will accept his $54.20 per share bid, the sources said. It signifies, however, that Twitter is now exploring whether a sale of the company to Musk is possible on attractive terms, the sources added. Musk’s insistence that his bid for Twitter is his “best and final” has emerged as a hurdle in the deal negotiations, the sources said. Nevertheless, Twitter’s board has decided to engage with Musk to gather more information on his ability to complete the deal, and potentially get better terms, the sources added. Twitter has not yet decided if it will explore a sale to put pressure on Musk to raise his bid, according to the sources.
• WPP Plc: The world’s largest advertising company has launched an end-to-end e-commerce platform to handle the logistics and delivery of products sold by its clients, after it helped them grow online sales through the pandemic. The British-based company set up direct-to-consumer sites for brands when the pandemic shut most shops, and “Everymile” will expand its offer to handle the entire process from attracting a customer to delivering the product to their door. It will pit WPP against new rivals including Shopify and THG.
U.S. trucking downturn foreshadows possible economic gloom
There has been an unexpectedly sharp downturn in demand to truck everything from food to furniture since the beginning of March and rates in the overheated segment that deals in on-demand trucking jobs – known as the spot market – are skidding. History has proven trucking to be a possible indicator for the U.S. economy. That is because when people buy less, companies ship less – and business activity slows.
• American Express Co: RBC raises target price to $200 from $195, saying the company remains well positioned to drive strong sustained revenue growth over the long term.
• Apple Inc: JPMorgan cuts target price to $205 from $210, citing lower iPhone unit outlook from preliminary smartphone data for C1Q22, which has tracked below expectations as per industry analyst estimates.
• Equinix Inc: Credit Suisse raises target price to $714 from $673, saying pricing can help the company attain margin targets.
• GoDaddy Inc: Piper Sandler raises target price to $110 from $94, anticipating the least risk for a downside revision to the company’s numbers compared with its digital peers and the highest FCF margin.
• Verizon Communications Inc: JPMorgan cuts target price to $57 from $58, to reflect competitive and economic challenges in its wireless business.
ECONOMIC EVENTS (All timings in U.S. Eastern Time)
0830 (approx.) National Activity Index for March: Prior 0.51
1030 (approx.) Dallas Fed Manufacturing Business Index for April: Prior 8.7
COMPANIES REPORTING RESULTS
Activision Blizzard Inc: Expected Q1 earnings of 71 cents per share
Alexandria Real Estate Equities Inc: Expected Q1 earnings of 75 cents per share
Ameriprise Financial Inc: Expected Q1 earnings of $5.86 per share
Brown & Brown Inc: Expected Q1 earnings of 75 cents per share
Cadence Design Systems Inc: Expected Q1 earnings of $1.02 per share
Packaging Corp of America: Expected Q1 earnings of $2.52 per share
SBA Communications Corp: Expected Q1 earnings of 100 cents per share
Universal Health Services Inc: Expected Q1 earnings of $2.46 per share
W R Berkley Corp: Expected Q1 earnings of 95 cents per share
Whirlpool Corp: Expected Q1 earnings of $5.36 per share
CORPORATE EVENTS (All timings in U.S. Eastern Time)
0800 Raytheon Technologies Corp: Annual Shareholders Meeting
0830 Coca-Cola Co: Q1 earnings conference call
0830 Otis Worldwide Corp: Q1 earnings conference call
0930 Lennox International Inc: Q1 earnings conference call
1030 Honeywell International Inc: Annual Shareholders Meeting
1100 M&T Bank Corp: Annual Shareholders Meeting
1700 Cadence Design Systems Inc: Q1 earnings conference call
1700 SBA Communications Corp: Q1 earnings conference call
1700 Simpson Manufacturing Co Inc: Q1 earnings conference call
1700 W R Berkley Corp: Q1 earnings conference call
1730 Zions Bancorporation NA: Q1 earnings conference call