Morning Bites - May 18, 2023

🔮 Welcome back to Finsights, fellow financial wizard. Let’s get you up to speed on the market with a flick of your finger! 🪄

• 🕺Markets are up slightly

• 🤝 Looks like the debt ceiling drama was just a short fling

• 🛒 Walmart and Alibaba release!

💹 Morning Market Levels: The US equity futures are doing the 'catwalk strut' today: the S&P is up a breezy 3.75 points (0.09%), the Dow is playing coy at flat, and the Nasdaq is mildly up by 17.5 points (0.13%). 🌍 Over in Europe, the indices are 'busting some moves' with a 0.5%-1% uplift, and auto, tech, industrial, and banking stocks are stealing the show. The DAX, with star turns from Infineon, VW, ASML, Siemens, Munich Re, Mercedes, and Adidas, is playing the lead. However, utilities, telecoms, real estate, and basic resources are playing the wallflowers. Future PLC, BT Group, and Burberry are feeling the earnings blues.

🌏 Over in Asia, markets saw some green on Thursday: TPX +1.14%, NKY +1.6%, Hang Seng +0.85%, HSCEI +1.19%, SHCOMP +0.4%, Shenzhen +0.13%, Taiwan TAIEX +1.11%, Korea KOSPI +0.83%, Australia ASX 200 +0.52%. India, however, decided to sit this one out, remaining flat. 💰 Treasuries were on the selling floor, yields flat to up 2bp across the curve. We’re pricing in a year-end Funds Rate of 4.55%, a tiny 0.01% boost from Wednesday, as a 4.5-4.6% range seems appropriate. 📉 US 5-year CDS costs are down about 4bp to 68.7bp as debt ceiling worries chill out. The DXY is up 0.22%, hitting a mid-March high. Oil and gold are playing see-saw: Brent is off by 0.57%, US natural gas flatlines, Bitcoin hovers around $27.38K, and gold slips 0.3%.

📰 What’s Happening: This morning, we've got less action than a snail race. Cisco’s orders vs. revenue dynamic is stirring the pot but seems more about supply chain normalization than any demand collapse. Same song for discretionary hard goods. Debt ceiling anxiety is slipping away, with a deal expected next week, though Biden might find some choppy waters with potential Democrat backlash. 🗓️ Today, we'll be all eyes on jobless claims and the Philadelphia Fed Report (8:30AM ET).

🔮 Our Market Outlook: Earnings season has been like a lukewarm cup of coffee — not exciting, but not bad either. Despite pressures, consumer behavior is normalizing and supply chains are reverting back to pre-COVID times. Our earnings optimism is sticking around, and we're starting to shift our gaze to 2024 estimates (SPX PE drops to 17.3x based on $240 EPS for 2024). Debt ceiling concerns are becoming yesterday's news, the Fed overhang is lifting, and technical factors are bullish. 🐂 We're still feeling quite sunny and foresee the recent range-bound action breaking free and heading north of 4200. 💪

Consumers

🛀 BBWI (Bath & Body Works), your favorite spot for scented soaps and fragrant candles, whipped up a sweet FQ1, with EPS at $0.33. This came from strength in merchandise margins and cost optimization efforts, and their revenue of $1.396B was pretty much in line with the Street. 🕯️

🍍 DOLE (Dole PLC), the globally recognized food company, peeled back some solid FQ1 earnings, including EPS of $0.34, almost doubling the Street's $0.18 forecast. However, their revenue of $1.989B fell a smidge short of the Street's $2.15B expectation. 🥦

❄️ GOOS (Canada Goose), known for their fancy down jackets, had a warm FQ4. Revenue shot up by 31.4% to CAD 293.2M, a cozy sum compared to the Street's CAD 192M estimate. Though the US lagged a bit, Asia and Canada posted strong revenues. Their F24 guidance is quite toasty as well. 🧥

🚗 MNRO (Monro), your pit-stop for auto repair services, hit a pothole with FQ4 EPS at just $0.08, compared to the Street's $0.32. They also shared a corporate simplification plan to streamline operations, including eliminating the Class C preferred stock and declassifying the board. 🛠️

🛒 WMT (Walmart) nailed its FQ1 performance, shopping for success with EPS at a whopping $1.47. The revenue cart overflowed with a 7.7% increase to a staggering $152.3B. If that doesn't get your discount-shopping heart racing, I don't know what will! 💸 US comps jumped 7.4%, driven by health/wellness and grocery - we're all trying to be fit and well-stocked, right?

But general merchandise was the black sheep, feeling a little left out. Meanwhile, the China business was the party animal, raising its glass to a 28.3% sales increase! 🥂 The full-year guidance has been hiked up, like jeans in the 80s, now foreseeing EPS of $6.10-$6.20 and a 3.5% increase in consolidated revenue. FQ2 EPS outlook falls a bit short, like that one item you forget on your shopping list, coming in at $1.63-$1.68. But hey, all round, we're giving Walmart a clean-up on aisle 'impressive'! 🎉🛍️

Energy

☀️ CSIQ (Canadian Solar), the shining light in the solar industry, reported strong EPS at $1.19, almost doubling the Street's $0.61 forecast. They also anticipate increased revenue for 2023, hoping for a sunny outlook. 🌞

Industrial

🏷️ BRC (Brady), the provider of safety and identification solutions, posted a modest EPS upside for FQ3 at $0.95, slightly outperforming the Street's $0.92 forecast. However, their quarterly revenue of $337.1M was a tad shy of the Street's $343M. 📈

🦅 EXP (Eagle Materials), the building materials company, soared in FQ4 with revenue up 14% to $470.1M, EPS up 47% to $2.79, and EBITDA up 30% to $171.7M. They're looking forward to continued attractive market fundamentals, despite potential headwinds. 🚧

🌊 WMS (Advanced Drainage Systems), your go-to for water management solutions, made a splash in FQ4. Revenue hit $617.6M and EBITDA reached $172M. However, their F24 guidance falls a bit short of Street expectations. 🚰

Real Estate

🏘️ REG (Regency) is set to acquire UBA (Urstadt Biddle) in an all-stock deal valued at $1.4B. UBA's Class A and Common stockholders will receive newly-issued REG shares, a deal worth approximately $20.40 per share. 🏢

🏢 SLG (SL Green) and VNO (Vornado), both New York City-focused REITs, are eyeing property sales to cut down debt and repurchase stock. They believe their stock prices are currently undervalued. 🗽

Tech

🎮🛍️ BABA (Alibaba), the “Amazon of the East”, had a FQ4/Mar report that was like a dodgy WiFi connection, kind of a hit and miss. Revenue took a "meh" jump of +2% Y/Y to CNY208.2B, missing the Street's CNY209.2B forecast. But the EPS was on fire, busting the Street's estimate with a solid +35% to CNY10.71. 💪💰

China Commerce was the lazy student, with its GMV dipping ~5% but pulled an all-nighter and turned positive in March. 📚😴 On the flip side, International Commerce was the nerd we all secretly envy, beating expectations. 🎓🏆

In a plot twist, Alibaba's board decided to spin-off the Cloud Intelligence Group and explore IPO options for others. High stakes poker, anyone? 🎲🚀

🌯 Wrap for earnings. Have a fantastic day! 🌯

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