Morning Bites - May 4, 2023

Bulls vs. Bears

The Fed hiked rates by 0.25% from 5.0%.

The Classic Battle ๐Ÿ‚๐Ÿ‘Š๐Ÿป

๐ŸŒ… Morning market levels โ€“ US equity futures indices are taking it easy: S&P is chilling, Dow is up by a tiny 9 points, and Nasdaq is getting a bit more active with a 32-point gain. PACW is having a rough morning, down around 39%, while WAL slides 19%. QCOM is also feeling the blues, down about 6.85%.

๐Ÿป Bear-driven morning โ€“ Bears are taking the wheel again today, stirring up concerns about regional bank issues, some disappointing corporate news (QCOM's guidance, COST's US comp miss, and more), doubts about China's economic recovery, nerves ahead of the European Central Bank's decisions, and apprehension about Apple's earnings tonight. But remember, it's not all doom and gloom: China's consumer spending is rebounding, and regional banks aren't facing the same problems as First Republic and Silicon Valley.

๐Ÿค” Overthinking Powell's press conference โ€“ People are reading too much into Fed Chair Powell's press conference, speculating about hidden economic issues and upcoming bank loan surveys. In reality, after 500bp of rate hikes in just over a year, the Fed is close to "sufficiently restrictive" policy, and the bar for more hikes is now higher. That's actually good news for stocks, so let's not over-complicate things!

๐Ÿ“ˆ Stock market outlook โ€“ Our main reasons for optimism (company earnings, changes in inflation/interest rates, and people's feelings about the market) are still going strong. Some companies had weak earnings this week, but overall, things look positive. Earnings are getting a boost from cost-cutting, supply chain improvements, and more demand from China.

๐Ÿฆ Inflation and interest rates are changing, making it easier for businesses and consumers. People are still worried about the market, but there are good reasons to be optimistic. There are some issues like high prices, problems with regional banks, and concerns about government debt, but we shouldn't panic โ€“ things are looking up!

๐Ÿด Earnings Continued!

APTV (Aptiv) ๐Ÿš—, a company that develops auto parts and electronics, reported earnings per share (EPS) of 91 cents, which is pretty close to what experts predicted (89 cents) ๐ŸŽฏ. Revenues were better than expected, and they're sticking to their previous predictions for the rest of the year. ๐Ÿ˜Œ

BWA (BorgWarner) ๐Ÿš˜, a company that creates powertrain solutions for vehicles, also had earnings per share (EPS) pretty close to what was expected (1.09 vs. 1.11) ๐ŸŽฏ. They made slightly more money than anticipated, and they're feeling optimistic, raising their predictions for the rest of the year! ๐Ÿ“ˆ๐Ÿ˜ƒ

RACE (Ferrari) ๐ŸŽ๏ธ, the luxury sports car manufacturer, had a strong start to the year with more shipments and higher revenue than expected ๐Ÿค‘. Despite the good news, they're not changing their predictions for the rest of the year. They also mentioned reopening orders for the Purosangue and launching the Roma Spider. ๐Ÿ•ท๏ธ๐Ÿš€

ARHS (Arhaus) ๐Ÿ›‹๏ธ, a furniture retailer, reported better profits than anticipated but had revenues pretty much as expected. They're keeping their yearly predictions the same. The start of the year was a bit of a rollercoaster, with ups and downs in demand. ๐ŸŽข

GOLF (Acushnet) โ›ณ, a golf products company, reported a strong start to the year with higher revenue and profits than expected ๐Ÿ’ฐ. However, they're not changing their predictions for the rest of the year, staying cautious. ๐Ÿง

PLNT (Planet Fitness) ๐Ÿ‹๏ธโ€โ™‚๏ธ, a fitness club chain, reported solid membership growth but missed the mark on revenue and earnings due to weak equipment sales ๐Ÿท๏ธ. Despite the small hiccup, they're keeping their predictions for the rest of the year unchanged. ๐Ÿ”„

COP (ConocoPhillips) ๐Ÿ›ข๏ธ, an oil and gas company, reported better earnings per share than expected ๐ŸŽ‰. Production was solid and they're raising their predictions for the rest of the year ๐Ÿš€.

NRG (NRG Energy) ๐Ÿ’ก, an energy company, reported higher profits than anticipated but faced a large unrealized loss on power/gas hedges ๐Ÿ˜ฌ. Despite this, their outlook for the year remains unchanged ๐Ÿ˜.

CG (Carlyle) ๐Ÿฆ, an investment firm, reported lower earnings per share than expected ๐Ÿ˜ž. However, their assets under management and fundraising efforts were decent ๐Ÿ‘.

FHN (First Horizon) ๐Ÿฆ, a bank, saw its shares plummet after a merger with TD was canceled due to regulatory approval issues ๐Ÿ˜ฑ. The situation raises concerns about the regulatory framework and its impact on regional banks ๐Ÿค”.

BDX (Becton) ๐Ÿ’‰, a medical equipment company, reported better-than-expected results and is raising its earnings and revenue predictions for the year ๐Ÿ“ˆ. Their base business saw solid growth ๐Ÿ’ช.

CAH (Cardinal Health) ๐Ÿฅ, a healthcare services and products company, reported strong earnings per share and raised its full-year guidance ๐Ÿ˜ƒ.

MRNA (Moderna) ๐Ÿ’‰, a biotech company, reported huge Q1 revenue and earnings upside ๐ŸŽ‰. However, this might be due to timing rather than a sustained improvement in demand ๐Ÿค”. Their expectations for 2023 sales remain the same.

OGN (Organon) ๐Ÿ’Š, a pharmaceutical company, reported slightly lower earnings per share than expected ๐Ÿ˜•, but revenues and profits were close to predictions, and their yearly guidance remains unchanged ๐Ÿ”„.

ZTS (Zoetis) ๐Ÿพ, an animal health company, reported modest earnings per share upside and kept their guidance for the year unchanged ๐Ÿ˜Œ.

BLD (TopBuild) ๐Ÿ , a building insulation company, reported solid Q1 results, with better earnings per share and revenue than expected ๐ŸŽ‰. Their guidance for the year remains unchanged ๐Ÿ”„.

ARNC (Arconic) ๐Ÿ—๏ธ, an aluminum parts maker, will be bought by Apollo for $30/share in cash ๐Ÿ’ฐ in a deal worth $5.2B. The deal is expected to close in H2 2023 ๐Ÿ“†.

BALL (Ball) ๐Ÿฅซ, a packaging company, reported solid earnings per share upside as they offset lower can volumes with price hikes, cost cutting, and aerospace strength ๐Ÿš€. They're on track to achieve their long-term earnings growth goals ๐ŸŽฏ.

HII (Huntington) ๐Ÿšข, a shipbuilding company, reported a strong beat on earnings per share, but their segment operating income fell ๐Ÿ˜Ÿ. They're keeping their full-year guidance unchanged ๐Ÿ”„.

ITT (ITT Inc.) ๐Ÿญ, an industrial company, reported solid upside on earnings per share and revenue, with both growth and margins improving ๐Ÿ’ช. They're raising their guidance for the year slightly ๐Ÿ“ˆ.

MLM (Martin Marietta) ๐Ÿงฑ, a building materials company, reported huge Q1 upside and left their EBITDA outlook unchanged ๐Ÿ”„. They expect increased demand for their products, especially in infrastructure and heavy nonresidential projects ๐Ÿ—๏ธ.

PH (Parker Hannifin) ๐Ÿญ, an industrial company, posted a beat-and-raise quarter, with better earnings per share and revenue than expected. They've updated their yearly guidance ๐Ÿ“ˆ.

SWK (Stanley Black & Decker) ๐Ÿ”ง, a tools manufacturer, reported solid earnings per share upside thanks to cost cutting and higher margins โœ‚๏ธ. They're keeping their full-year guidance range unchanged ๐Ÿ”„.

VMC (Vulcan) ๐Ÿชจ, a construction materials company, reported fantastic Q1 results and is raising their guidance for the year ๐ŸŽ‰.

WCC (Wesco) ๐Ÿ’ก, an electrical distributor, reported solid earnings upside but is keeping their full-year guidance unchanged ๐Ÿ”„.

WRK (Westrock) ๐Ÿ“ฆ, a packaging company, reported strong earnings upside, driven by cost cutting and revenue growth ๐Ÿ“ˆ.

XYL (Xylem) ๐Ÿ’ง, a water technology company, posted strong results and raised their guidance for the year, despite a challenging economic environment ๐ŸŒŠ.

BABA (Alibaba) ๐Ÿ›๏ธ is rumored to be considering a US IPO for its international online shopping unit, but the company claims there is "currently" no such plan โŒ.

COMM (CommScope) ๐Ÿ“ก, a network infrastructure provider, reported mixed results: a revenue miss, but upside on EBITDA, EPS, and free cash flow. They're maintaining their full-year EBITDA guidance ๐Ÿ”„.

PARA (Paramount) ๐ŸŽฌ, a media company, posted a large miss on EPS, EBITDA, and revenue, and cut their dividend. Streaming subscribers increased, but losses in the direct-to-consumer segment worsened ๐Ÿ“‰.

SHOP (Shopify) ๐Ÿ›’, an e-commerce platform, reported solid Q1 upside with better GMV, revenue, and a smaller operating loss than expected. They're projecting higher revenue in Q2 and positive free cash flow throughout 2023 ๐Ÿ’ฐ.

SHOP (Shopify) is also selling the majority of its logistics business to Flexport, a global logistics platform. Shopify will receive stock representing a 13% equity interest in Flexport ๐Ÿ“ฆ.

W (Wayfair) ๐Ÿ›‹๏ธ, an online furniture retailer, reported solid upside on profitability and better revenue. They're expecting positive EBITDA in Q2 thanks to cost-cutting measures โœ‚๏ธ.

XPO (XPO) ๐Ÿš›, a transportation and logistics company, reported better EPS and revenue than expected. They're reducing operating costs due to soft demand ๐Ÿ“‰.

FUN (Cedar Fair) ๐ŸŽข, an amusement park operator, posted weak Q1 results, blaming weather conditions โ˜”. They're optimistic about future booking trends and have authorized a new $250M buyback program ๐Ÿ’ต.

H (Hyatt) ๐Ÿจ, a hotel chain, reported a miss on adjusted EPS but strong EBITDA and better revenue. They're raising their full-year guidance and remain optimistic about travel and leisure trends ๐Ÿงณ.

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