In today’s briefing:
- SPX and RTY to Reverse, Euro Wedge and Asia Short/Long Update
- S&P 500 Testing 4165-4200, DJIA Testing 34,280, Nasdaq Composite Testing 12,300; Stay Defensive
- Crypto Lending Series #4: The Waste Land of Lending
- AT&T Inc.: Low Churn & Rising ARPU Saving The Day? – Key Drivers
- Philip Morris International Inc.: IQOS & ILUMA Are Changing The Game – Key Drivers
- Recession fears scare commodities again & World Banks forecasts major drop
- SAP SE: Cloud Backlog Shoots Up But Is It Enough? – Key Drivers
- Nucor Corporation: Upside From Steel Recycling & Other Drivers
- PPG Industries Inc.: A Decent Performer Despite Weak Demand – Key Drivers
- The Procter & Gamble Company: Pricing Power Continues To Be Its Biggest Weapon – Key Drivers
SPX and RTY to Reverse, Euro Wedge and Asia Short/Long Update
- Cycle: May/June a more negative cycle. Late April negative/ turn phase is unfolding with a squeeze surprise (2-3 session swing turns). Sell SPX 4,200 top zone. 4,100 break will open up selling pressure.
- RTY bear reversal at 1,790 resistance on track and the underperform favored US short.
- Euro wedge break would pick up slack as the USD/JPY rise stalls at resistance. Asian equity short, long updated levels.
S&P 500 Testing 4165-4200, DJIA Testing 34,280, Nasdaq Composite Testing 12,300; Stay Defensive
- We still recommend a tactical overweight to defensives (Staples, Utilities, Healthcare, and gold miners) as the SPX tests our 4165-4200 resistance range, and also resistance from the prior 1.5-month uptrend.
- As we await Wednesdays FOMC announcement, the DJIA and Nasdaq Composite are testing 1-year resistances at 34,280 and 12,300, the DXY appears to be inflecting higher, and breadth remains weak.
- While we still see a reach to 4300-4325 as possible, we believe playing for more upside is akin to picking up pennies in front of a steamroller.
Crypto Lending Series #4: The Waste Land of Lending
- In the latest inning of the crypto credit crisis, real world banks like Silvergate was shuttered making the on-and-off ramp of crypto to fiat more challenging.
- Crypto lenders have already been decimated in the centralised lending space while DeFi lenders seem to trudge along – but are they the bastions of success?
- We analyse what the current landscape means for the crypto lending industry and have a regrettable conclusion.
AT&T Inc.: Low Churn & Rising ARPU Saving The Day? – Key Drivers
- AT&T delivered mixed results in the quarter with below-par revenues but profitability above expectations.
- As a result, wireless service revenues and EBITDA may increase, and margins may improve.
- Despite a slowdown in industry growth, their Business Solutions wireless service revenues increased by almost 7%.
Philip Morris International Inc.: IQOS & ILUMA Are Changing The Game – Key Drivers
- Philip Morris International’s Q1 results exceeded analyst expectations on the earnings front but were below par in terms of revenues despite some decent underlying momentum from IQOS, ZYN, and its combustible business.
- The company’s Q1 organic net revenues had solid growth.
- This highlights the ongoing strength of IQOS as a step-up in pricing but was somewhat mitigated by anticipated HTU inventory movement.
Recession fears scare commodities again & World Banks forecasts major drop
- In its latest Commodity Markets Outlook report the World Bank said last week that global commodity prices are expected to decline this year at the fastest pace
- The agency expects prices to fall 21% compared to last year during 2023.
- For 2024 the World Bank expects prices to remain stable.
SAP SE: Cloud Backlog Shoots Up But Is It Enough? – Key Drivers
- SAP delivered a highly disappointing set of results failing to meet the revenue expectations as well as the earnings expectations of Wall Street.
- The current cloud backlog and cloud revenue for S/4HANA increased by 79% which is why Q1 revenue increased by 9% overall.
- Their SaaS and PaaS portfolios continued to expand by 25%, with SaaS cloud revenue increasing by 22% and PaaS cloud revenue increasing by 45%.
Nucor Corporation: Upside From Steel Recycling & Other Drivers
- Nucor Corporation delivered a mixed set of results in the quarter, failing to meet revenue expectations of Wall Street but managing an earnings beat.
- Its result was largely attributed to Nucor’s steel products segments’ continued profitability as well as higher volumes and margins at its steel mills segment.
- Shipments from Nucor’s steel mills increased by 18%, increasing their utilization to almost 80% in Q1 from 70% in Q1 of last year.
PPG Industries Inc.: A Decent Performer Despite Weak Demand – Key Drivers
- Despite macro-challenges like weak global industrial activity, high cost inflation, ongoing geopolitical issues, and waning demand in U.S. construction-related end-use markets, PPG Industries delivered an all-around beat in its recent result.
- During the quarter, PPG gained several new clients, including Walmart’s 3,800 paint-related retail locations.
- Besides, with more global rollouts planned, the company expects the automotive refinish industry to have 1,400 MOONWALK machines installed.
The Procter & Gamble Company: Pricing Power Continues To Be Its Biggest Weapon – Key Drivers
- Procter & Gamble delivered strong results and managed an all-around beat in the recent result.
- Pricing increased sales growth by 10 points, while mix had a marginally favorable impact on the quarter.
- Growth remained widespread across business divisions, with organic sales increasing in the company’s ten product categories.
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