Big Retailers Report

Good Morning Everyone!

Customers are setting banks on fire in Lebanon because they can’t get their money out.

Inflation is at +170%.

This is what a currency collapse looks like:

Prices as of 4 pm EST, 2/17/23; % YTD

MARKET UPDATE

Today:

• 9:45: S&P Global Flash PMIs (Composite, Manufacturing, Services)

• 10:00: Existing home sales

This week:

• Tuesday: FOMC minutes

• Thursday: Q4 GDP estimate, initial jobless claims

• Friday: Personal income/spending, PCE, New home sales, Consumer sentiment

Leading Economic Indicator (LEI)

• Conference Board's LEI fell 0.3% in January

• -6% YoY…outside of Covid, close to biggest drop since Lehman (2008)

High-grade corporate bonds

• IG corporate bonds have seen $19 billion inflows YTD

• Investors seeking low risk…higher yields now attractive

• Avg yields ~5.45% up from 3.1% a year ago

Q4 earnings update

• 82% of S&P 500 has reported

• 68% beat EPS estimates (below 5- and 10-year averages)

• 65% beat sales estimates (below 5-year avg, above 10-year avg)

• Blended earnings growth: -4.7%

• Blended sales growth: 5.1%

Earnings outlook

• Consensus forward EPS estimates have come down

• But…still suggest growth ahead:

John Deere DE

• Expects demand to stay strong

• More than doubled quarterly income

• Raised profit forecast

• Farmers expected to plant more this year

• CFO: "The supply chain is showing early signs of improvement but remains fragile"

Meta META

• Taking a page out of Elon's playbook

• Launching paid verification subscriptions for Facebook, Instagram

  • $11.99 (web) vs. $14.99 (iOS) per month

• Zuck: "This new feature is about increasing authenticity and security across our services"

HomeDepot HD

• Beat EPS, missed revenue

• Attributes miss to drop in lumber prices

• Muted outlook for 2023

  • Flat sales expected

  • Mid-single digit decline in EPS

Walmart WMT

• Double beat

• Strong holiday quarter but cautious for 2023, beyond

• Margins to compress on: lower prices, discounts, weak consumer sentiment, increase to employee wages

• Outlook disappointed, below estimates

Earnings

• Walmart

• Home Depot

• Medtronic MDT

• Teck Resources TECK

• Fluor FLR

• Crestwood Equity CEQP

• Harmoy Biosciences HRMY

• Hunstman HUN

• Dana Incoporated DAN

• Dillard's DDS

• Lincoln Electric LECO

• Middleby MIDD

• Walker & Dunlop WD 

• Donnelly Financial DFIN

• Ingersoll-Rand IR

CRYPTO UPDATE

Blur overtakes OpenSea

• Blur: upstart marketplace

• Incentivizes traders to treat NFTs like DeFi tokens

• +$460 worth of Ethereum NFT trades over past 7 days

  • Vs OpenSea $107 million

Digital asset fund flows

• Despite crypto rally, outflows of $32 million last week

  • Largest since December

  • Bitcoin BTC/USD ~$25 million outflows

• Short-Bitcoin $3.7 million inflows

• Ethereum ETH/USD outflows of $7.2 million

• Blockchain equities $9.6 million inflows

  • 6 straight weeks of inflows