Morning Bites - May 10, 2023

Good morning! In today’s edition:

• 👇 Dips for everyone!

• 📈 Inflation reports coming and more macro reactions

• 💰 Earnings season continues to fire off with mixed results

🌅 Market Levels at Dawn: US equity futures are a tad bleary-eyed this morning with the S&P down 6.7 points, Dow shedding 50 points, and Nasdaq dropping 33 points. Over in the Eurozone, the major indices are feeling a pinch, dropping 20-25bp, and Asia wasn't left out of the party, suffering general losses on Wednesday. Treasuries, however, are like an owl at night - relatively quiet. The DXY is ticking up, but Brent is sliding down the banister, and US natural gas is inching lower. Gold and bitcoin decided to join the dip party too. 📉💤

🕰️ Quiet Morning, Big Concerns: It's a bit of a hush-hush morning on the macro front, not much news to get the market's motor running. The debt ceiling situation seems to be stepping out of the shadows a tiny bit, but there's still a mountain of work to do, and the clock is ticking faster than a tap dancer's feet. Despite this small progress, market sentiment seems to have caught a case of the morning blues, largely due to fears about a US CPI that might be a tad too hot for comfort.

But let's not get too worked up - the market and the Fed seem to have graduated from biting their nails over every single economic number. The Fed has shifted gears and set the bar for hikes higher than before. But there's a bit of a stumbling block - the forecasts for H2 rate cuts might be a bit too ambitious. We're thinking the year-end Funds Rate forecast should sit comfortably in the 4.5-4.6% band vs. the current 4.45%. 🌡️🎢

📊 Earnings Extravaganza: The US and EU were buzzing with a high volume of earnings reports, though none of them can really be dubbed as "macro" players. Some of the US companies didn't really steal the show, including ABNB, HRB, LNC, and TWLO, while AFRM, AKAM, EA, IAC, TOST, UPST, WYNN, and ZIP put on a decent performance. 🎭🎉

🐃🐻 Stock Standoff: The market seems to be in a bit of a stalemate, with neither the bulls nor the bears showing much conviction. Bulls are worried about the SPX continuing to fail at 4200, while bears, despite their profound distaste for fundamentals, are hesitant to sell or short aggressively, wary of potential snap-back rallies. We're still rooting for the bulls though, given the positive trajectory of the two key stock price drivers - earnings/margins and monetary tightening. The bears, although loud, seem to be singing the same old song, rehashing old news or chasing non-existent macro ghosts. The pervasive doom and gloom shrouding regional banks and office-linked REITs seem a tad out of step with reality, especially considering their recent Q1 earnings calls. 👻💰

Consumer

💰 FRG (Franchise Group), the folks behind Liberty Tax and Buddy's Home Furnishings, are cashing out with a management-led buyout at $30 per share. That's a cool $2.6B deal! 🤑

🍽️ NOMD (Nomad Foods), feeding you with brands like Birds Eye and Findus, served up Q1 revenue that was about right, but their earnings were a tasty treat with EPS of €0.46, well above the Street's €0.38. They're also raising the lower end of their full-year EPS guidance. Yummy! 🍲

📚 ODP (ODP Corp.), your office supply lifeline, had Q1 revenue in line with expectations, but earnings were a surprise with EPS/EBITDA of $1.78/$131MM, beating the Street's $1.34/$116MM. And they're still splurging on their $1 billion share repurchase! 🖇️

🍔 WEN (Wendy's), the home of the Baconator, managed a tasty Q1 EPS of 21c, slightly ahead of the Street's 20c, and comps were sizzling at +8%, about 100bp ahead of plan. Don't forget the EBITDA at $125.6MM, better than the Street's $121.9MM. Yum! 🥓

👟 WWW (Wolverine), the company behind your Hush Puppies and Keds, reported solid Q1 upside, with EPS of 9c, beating the Street's 6c, and revenue of $599.4MM, ahead of the Street's $578.5MM. Despite a "challenging" environment, they're sticking to their guidance for the year. Keep walking! 🚶‍♂️

Energy

🛢️ CVX (Chevron), the energy behemoth, is ramping up Venezuelan oil production. They're planning to hit 160K barrels per day this year and crank it up to 200K in '24. All part of their master plan to recover the debt owed to them by Venezuela by the end of '25. Chevron's not just pumping oil, they're pumping up the volume! 📈

Financials

💰 FCNCA (First Citizens), the banking trailblazers, posted an adjusted earnings per share of $20.09, just missing the street's forecast of $20.28. But they're still on the money, with a massive $850 million in net interest income, beating out the predicted $838 million. They're not just holding your money, they're making it grow! 🌳

Healthcare

💊 GDRX (GoodRx), the prescription price crusaders, reported a healthy $53.2 million in earnings, surpassing the Street's estimate of $45.6 million. They're making sure healthcare is affordable, one prescription at a time! 💪

🔬 SYNH (Syneos), the clinical research maestros, are being bought out for a hefty $43 per share in a deal worth $7.1 billion. Syneos is moving on up! 💸

🧪 TEVA (Teva), the pharmaceutical pros, reported earnings per share of 40 cents, falling short of the street's 57 cent estimate. They're working on improving those margins and remain optimistic about the future. Teva is playing the long game! 🕰️

Real Estate

�� OPEN (Opendoor), the real estate revolutionaries, are repurchasing $279 million of convertible notes at a massive 39.5% discount. They're not just opening doors, they're opening possibilities! 🚪

Industrials

🔋 LTHM (Livent), the lithium tech whizzes, are merging with Australia's Allkem in a deal worth a cool $10.6 billion. This new entity is set to dominate, with Allkem holders owning a majority 56%. Lithium is the spice of the electric life, and Livent is cooking up a storm! 🌪️

🛢️ VVV (Valvoline), the folks that keep your engines purring, reported a sweet $87.1 million in earnings for the second quarter. That's ahead of Wall Street's estimates of $83.5 million! They're not just changing oil, they're changing the game! 🏎️

Tech

💡 COHR (Coherent), the laser legends, missed the mark in their third quarter, reporting $1.24 billion in revenue compared to the estimated $1.34 billion. Looks like their laser focus might have been slightly off-target, but every underdog has its day! 🎯

📰 NYT (New York Times), the newsroom giants, pulled in $560.7 million in revenue this quarter, just shy of the estimated $567.1 million. Despite the slight miss, they added a whopping 190K new digital-only subscribers. The Times, they are a-changin'! 📰

🔌 VSH (Vishay), the electronic component wizards, crushed it in the first quarter, bringing in $871 million in revenue, well above the estimated $847 million. They're not just making components, they're making waves! 🌊

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Fin-specto Revelio!