US FINANCIAL MARKET

Wall Street Roiled by ‘Still Sticky’ CPI Signals: Markets Wrap – Bloomberg, 2/13/2024

• Wall Street got a reality check, with hotter-than-estimated inflation data triggering a slide in both stocks and bonds.
• Equities moved away from their all-time highs after the core consumer price index topped estimates and climbed the most in eight months.
• Treasuries sold off across the curve, with two-year yields hitting the highest since before the December Fed “pivot.”
• Fed swaps shifted the total pricing of a rate cut to July from June. And a measure of perceived risk in the US investment-grade corporate bond market soared.
• The CPI data disappointed after a recent downdraft in price pressures that helped build expectations for rate cuts this year.
• Though the numbers give credence to the wait-and-see approach highlighted by Fed Chair Jerome Powell and a drumbeat of central bank speakers.
• The S&P 500 fell below 5,000, while the tech-heavy Nasdaq 100 dropped as much as 2%.
• Microsoft and Apple led losses in megacaps.
• US 10-year yields climbed nine basis points to 4.27%, the highest since November.
• The dollar rose against all of its developed-market peers.
• The surprise jump in the January consumer price index will probably be less pronounced in the Fed’s preferred inflation gauge and potentially less alarming to central bank officials as they weigh when to cut interest rates.
• Coca-Cola gave a 2024 organic revenue outlook that beat expectations, with a diverse group of products expected to boost results.
• Marriott International reported fourth-quarter earnings that topped estimates as the company benefited from demand growth outside the US.
• Biogen reported fourth-quarter revenue that missed analysts’ expectations as the company’s multiple sclerosis drugs continued to decline.
• Shopify reported sales and profit for the fourth quarter that narrowly beat analysts’ estimates, suggesting the Canadian e-commerce giant fended off competition from Asian shopping platforms like Temu, Shein, and TikTok.
• Activist investor Carl Icahn disclosed a 9.91% stake in JetBlue Airways, calling the stock undervalued, and said he’s had talks with management about the possibility of representation on the board.

Coca-Cola sales beat estimates, helped by higher prices – CNBC, 2/13/2024

• On Tuesday, Coca-Cola posted quarterly earnings that met expectations and sales that topped estimates, as higher prices helped the beverage maker overcome a volume decline in North America.
• Revenue: $10.85 billion vs. $10.68 billion expected.
• Coke’s organic revenue, which strips out acquisitions and divestitures, climbed 12% in the quarter.
• Coke reported unit case volume growth of 2% for the quarter.
• Executives estimated that the conflict in the Middle East hurt volume growth by 1% in the fourth quarter.
• North American volume shrank 1%, as demand for Coke’s water, sports drinks, coffee, and tea fell.
• Earnings per share: 49 cents adjusted vs. 49 cents expected.
• Looking to the first quarter, Coke is anticipating a 4% headwind from currency exchange rates on its comparable revenue.
• The company expects foreign exchange to slow its earnings per share growth and anticipates an 8% hit from currency changes.
• For 2024, Coke forecasts 6% to 7% organic revenue growth and an increase in comparable earnings per share of 4% to 5%.
• The company expects foreign exchange rates to weigh on its earnings and revenue for the entire year.

Shopify shares down after company reports light guidance – CNBC, 2/13/2024

• Shopify shares slid on Tuesday morning after the Canadian e-commerce company reported better-than-expected earnings for the fourth quarter but gave mixed guidance for the current period.
• Revenue: $2.14 billion vs. $2.08 billion.
• Gross merchandise volume, or the total volume of merchandise sold on the platform, increased 23% to $75.1 billion — above the $72.1 billion expected by analysts, according to StreetAccount.
• Shopify’s light first-quarter guidance overshadowed the earnings and revenue beat.
• The company expects the free cash flow margin to be in the high single digits, below Wall Street’s projected 13.6%.
• Earnings per share: 34 cents adjusted vs. 31 cents expected.
• Shopify called for first-quarter revenue to grow at a “low-twenties percentage rate,” which it said would translate into a year-over-year growth rate in the mid-to-high20s when adjusting for the sale of its logistics business.

Marriott’s stock drops as fourth-quarter revenue falls short – Market Watch, 2/13/2024

• Marriott International’s stock fell on Tuesday after the hotel operator’s fourth-quarter revenue fell short of analysts’ estimates, although its profit in the latest quarter rose.
• Fourth-quarter revenue increased to $6.1 billion from $5.9 billion but missed the consensus analyst estimate of $6.2 billion.
• Marriott said its hotel leisure revenue has recovered to exceed levels in 2019, the year before travel was affected by the COVID-19 pandemic.
• Marriott’s adjusted fourth-quarter profit of $3.57 per share beat the FactSet consensus estimate of $2.12.
• Looking ahead, Marriott expects an adjusted first-quarter profit of $2.12 to $2.19, below the FactSet consensus estimate of $2.30 a share.
• For 2024, Marriott is projecting adjusted earnings of $9.18 to $9.52 a share, below the analyst estimate of $9.68.

Biogen revenue and profit shrink on Aduhelm costs, slumping sales of multiple sclerosis therapies – CNBC, 2/13/2024

• Biogen on Tuesday reported fourth-quarter revenue and profit that shrank from a year ago, as it recorded charges related to dropping its controversial Alzheimer’s drug Aduhelm and sales slumped in its multiple sclerosis therapies, the company’s most significant drug category.
• Biogen booked sales of $2.39 billion for the quarter, down 6% from a year ago.
• Biogen’s fourth-quarter revenue from multiple sclerosis products fell 8% to $1.17 billion as some therapies face competition from cheaper generics.
• The company’s once-blockbuster drug, Tecfidera, facing competition from a generic rival, posted revenue that fell 17.8% to $244.3 million in the fourth quarter.
• Analysts had expected that drug to book sales of $233.1 million, according to FactSet.
• Vumerity, an oral medication for relapsing forms of multiple sclerosis, generated $156.4 million in sales.
• That came in below analysts’ estimates of $174.4 million, FactSet estimates said.
• Meanwhile, Biogen’s rare disease drugs recorded $471.8 million in sales, up 3% from a year ago.
• Spinraza, a medication used to treat a rare neuromuscular disorder called spinal muscular atrophy, recorded $412.6 million in sales.
• That came under analysts’ estimate of $443.4 million in revenue, according to FactSet.
• Biogen’s biosimilar drugs booked $188.2 million in sales, up 8% from the year-earlier period.
• Analysts had expected sales of $196.7 million from those medicines.
• Adjusting for one-time items, the company reported $2.95 per share.
• The drugmaker’s fourth-quarter earnings per share, both unadjusted and adjusted, saw a negative impact of 35 cents associated with previously disclosed costs of pulling Aduhelm, which had a polarizing approval and rollout in the US.
• The drugmaker expects 2024 sales to decline by a low to mid-single-digit percentage compared with last year.
• But the company anticipates its pharmaceutical revenue, which includes product revenue and its 50% share of Leqembi sales, to be flat this year compared with 2023.
• Also on Tuesday, Biogen issued full-year 2024 guidance that calls for adjusted earnings of $15 to $16 per share.
• Analysts surveyed by LSEG had expected full-year earnings guidance of $15.65 per share.

ZoomInfo Technologies Shares Rise 24% After 4Q Revenue, Adjusted Profit Beat – Market Watch, 2/13/2024

• Shares of ZoomInfo Technologies jumped after the company’s revenue and adjusted earnings topped estimates in the fourth quarter.
• The Vancouver, Wash.-based company, which provides contact and business information for clients, said revenue rose 5% to $316.4 million, ahead of the $310.6 million forecast by analysts.
• Stripping out certain one-time items, the company posted a profit of 26 cents a share, ahead of its guidance and more than the 25 cents a share expected by analysts.
• ZoomInfo expects revenue of $1.26 billion to $1.28 billion in 2024.
• Analysts polled by FactSet expect $1.275 billion.
• The company forecasts an adjusted per-share profit of 99 cents to $1.01, in line with analysts’ estimates.

Burger King Owner’s Fourth-Quarter Sales Outpace Expectations – Bloomberg, 2/13/2024

• Restaurant Brands International reported sales and profit that surpassed analyst estimates, defying a pullback in spending that has hurt rivals’ results.
• The owner of the Burger King and Tim Hortons chains said revenue was $1.82 billion in the fourth quarter, exceeding the average estimate of analysts surveyed by Bloomberg.
• Same-store sales, a gauge of how restaurants open for longer than a year are performing, rose 5.8%, beating the 5.7% average estimate of six analysts polled by Bloomberg.
• Digital sales jumped 20% from a year ago and now makeup over a third of system-wide sales, the company said Tuesday.
• Comparable sales at Burger King’s US and Canada businesses rose 6.4%.
• Earnings per share of 75 cents were higher than the 73-cent expectation.

Arista’s stock falls as investors don’t get the ‘near perfect’ earnings desired – Market Watch, 2/13/2024

• Arista Networks perhaps needed a “near perfect” earnings report to meet Wall Street’s standards given its “near peak valuation,” according to a Piper Sandler analyst.
• Revenue reached $1.54 billion, up about 2% from a year earlier.
• Analysts had been looking for $1.53 billion.
• On an adjusted basis, Arista posted earnings per share of $2.08, up from $1.41 a year before and above the $2.08 FactSet consensus.
• The networking giant projects $1.52 billion to $1.56 billion in revenue for the ongoing quarter, while analysts tracked by FactSet were modeling $1.53 billion on the top line.
• Arista executives also foresee a 62% gross margin, while the consensus view implied expectations for a 63% gross margin.
• For the full year, management reiterated a 10% to 12% revenue growth target.

Cadence Design expects lower first-quarter revenue as hardware sales normalize – Reuters, 2/13/2024

• Cadence Design Systems forecast a decline in revenue for the first quarter as its hardware sales were up against tough comparisons from a year earlier, during which it ramped up shipments to clear order backlog.
• Revenue in the last three months of the year stood at $1.07 billion, beating analysts’ expectations of $1.06 billion.
• Excluding items, the company reported a profit of $1.38 per share in the fourth quarter, above estimates of $1.33 per share.
• The company expects first-quarter revenue to fall about 2% to between $990 million and $1.01 billion.
• Analysts were expecting $1.08 billion, according to LSEG data.
• The San Jose, California-based company expects adjusted per-share profit for the current quarter of between $1.10 and $1.14, well below analysts’ expectations of $1.37.

Datadog’s stock drops as the outlook for the first quarter implies minimal growth – Market Watch, 2/13/2024

• Datadog topped expectations with its latest quarterly results. Still, its revenue forecast for the current quarter implied minimal sequential growth, which seemed to be pressuring the stock in Tuesday’s premarket action.
• Revenue at Datadog increased to $589.6 million from $469.4 million and came in ahead of the FactSet consensus, which was for $568.7 million.
• On an adjusted basis, Datadog earned 44 cents a share, ahead of the 43 cents a share analysts tracked by FactSet were projecting.
• The company said that as of the end of December, it had 396 customers doing at least $1 million in annual recurring revenue, up from a count of 317 a year before.
• For the first quarter, Datadog models $587 million to $591 million in revenue, along with 33 cents to 35 cents in adjusted earnings per share.
• Analysts were modeling $587 million in revenue and 39 cents in adjusted EPS.
• Datadog’s full-year forecast calls for $2.555 billion to $2.575 billion in revenue and $1.38 to $1.44 in adjusted earnings per share.
• Analysts were looking for $2.586 billion on the top line and $1.77 in adjusted EPS.

Lattice Semiconductor’s stock drops 8% on revenue decline, weak sales guidance – Market Watch, 2/13/2024

• Lattice Semiconductor’s stock declined in after-hours trading Monday after the company posted a decline in quarterly revenue and offered weak sales guidance.
• Revenue slid 3% to $170.6 million from $176 million in the year-ago quarter.
• Analysts surveyed by FactSet had expected an average net income of 45 cents a share on revenue of $176.2 million.
• Lattice Semiconductor provided first-quarter sales guidance of $130 million to $150 million, while FactSet analysts forecast $174.4 million.

Hasbro Falls On Quarterly Sales Miss, Toy Industry Headwinds – Bloomberg, 2/13/2024

• Hasbro shares fell after reporting fourth-quarter sales and earnings that missed Wall Street expectations as the toy industry continues to suffer from weak consumer demand after a boom in the early days of the pandemic.
• Revenue slid 23% to $1.29 billion, the company said Tuesday.
• Wall Street analysts were forecasting $1.36 billion, on average.
• Earnings slumped to 38 cents a share, excluding some items, below consensus estimates of 64 cents.
• The company’s full-year outlook included earnings before interest, taxes, depreciation, and amortization, which also fell short of Wall Street’s expectations.

Boeing’s Monthly Jet Deliveries Slow – Wall Street Journal, 2/13/2024

• Boeing delivered 27 jets–almost all of them 737 MAXs–in January, a sharp decrease from prior months as the company deals with the aftermath of the Alaska Airlines door-plug blowout.
• Analysts and airlines are sizing up Boeing’s ability to churn out planes amid heightened regulatory scrutiny after the incident involving a MAX 9.
• The jet maker said Tuesday it delivered 25 of the 737 MAXs, down from 45 and 46 in December and November, respectively.
• It also delivered one 787-9 and one 767.
• Boeing had a backlog of 5,599 planes, most of them 737s, at the end of January.
• Boeing said it received orders for three planes and three order cancellations.

Activist Carl Icahn Takes JetBlue Stake, Eyeing Board Seat – Bloomberg, 2/13/2024

• Activist investor Carl Icahn took a 9.91% stake in JetBlue Airways with plans to seek at least one spot on the board, aiming to boost shareholder value in the wake of the near-collapse of the carrier’s deal to buy Spirit Airlines.
• Late Monday, affiliates of the billionaire disclosed a position in JetBlue valued at $204 million based on the day’s closing prices, making Icahn the third-largest shareholder in the carrier.
• According to a filing, the investor has already held talks with company leaders “regarding the possibility of board representation.”
• “We are always open to constructive dialogue with our investors as we continue to execute our plan to enhance value for all of our shareholders and stakeholders,” JetBlue said after Icahn’s stake was disclosed.

Paramount Global Cuts 800 Jobs Days After Record Super Bowl – Bloomberg, 2/13/2024

• Paramount Global is letting go of hundreds of employees days after the company’s coverage of the Super Bowl set a record for the most-watched program in US television history.
• The company is eliminating roughly 800 jobs, according to someone familiar with the situation, who asked not to be identified because the information isn’t public.
• The owner of CBS, Nickelodeon, and other channels is trying to boost profits when viewers cancel cable and satellite TV packages in favor of streaming services like Netflix.
• Paramount+, the company’s online TV service, is not profitable.
• In an internal memo to employees on Tuesday, Chief Executive Officer Bob Bakish said the company will inform impacted employees in the US by the end of the day. At the same time, notifications to staff members outside the US will “occur over time.”

US ECONOMY & POLITICS

US Inflation Tops Forecasts in Blow to Fed Rate-Cut Hopes – Bloomberg, 2/13/2024

• US consumer prices jumped at the start of the year, tempering hopes for a continued drop in inflation and likely delaying any Federal Reserve interest-rate cuts.
• The so-called core consumer price index, which excludes food and energy costs, increased 0.4% from December, more than expected and the most in eight months, according to government figures out Tuesday.
• From a year ago, it advanced 3.9%, the same as the prior month.
• Economists favor the core gauge as a better indicator of underlying inflation than the overall CPI.
• That measure advanced 0.3% from December and 3.1% from a year ago.

• The figures reflected increases in the price of food, car insurance, and medical care and shelter costs contributed to over two-thirds of the overall growth.
• Outpatient hospital and pet services rose by the most in the month.
• Used cars dropped every month by the most since 1969, after the methodology was updated.
• Broader goods prices and energy also continued to fall, underscoring policymakers’ concerns that the recent disinflation has been concentrated in a few categories.
• Shelter prices, the largest category within services, advanced 0.6%, matching the most in nearly a year.
• Economists see a sustained moderation in this area as key to bringing core inflation down to the Fed’s target.

Mapping the US Regions With the Highest Inflation – Bloomberg, 2/13/2024

• Consumer price growth slowed in many US regions in January — although inflation isn’t coming down as fast as economists expected.
• Southern and Pacific states once again saw higher-than-average annual rates.
• East South Central — which includes Alabama, Kentucky, Mississippi, and Tennessee — had the highest inflation among regions, with a rate of 3.6%, according to Labor Department data released Tuesday.
• In East North Central, which includes two states, Michigan and Wisconsin, that are considered swing states in the Presidential election, the pace of inflation dropped sharply month-over-month to 2.5% annually.

Senate Passes $95.3 Billion Ukraine, Israel Aid Package – Wall Street Journal, 2/13/2024

• The Democratic-controlled Senate passed a $95.3 billion package backed by President Biden on Tuesday that also includes funds for allies Israel and Taiwan, overcoming the objections of many Republicans who opposed spending so much money abroad.
• The deal marked a victory for proponents of a muscular role for America in foreign affairs. But the bill now faces an uphill fight in the GOP-run House, where House Speaker Mike Johnson (R., La.) has indicated it will need changes, potentially including another run at a border crackdown, to stand any chance of becoming law.
• The Senate’s 70-29 approval of the measure comes at a critical moment for Ukraine, which has been running short of supplies and workforce after a failed counteroffensive against Russia last year.
• Twenty-two Republicans joined almost all Democrats in supporting the bill.
• Three members of the Democratic caucus who have expressed concerns about Israel’s military operations in Gaza voted no.
• The bill’s chances are uncertain in the House because of the greater power of Ukraine skeptics and the influence of Republican presidential front-runner Donald Trump, who has opposed more aid and recently suggested turning the aid package into a loan.

Vital Nor’easter Snarls Travel, With Up to a Foot of Snow Expected – Wall Street Journal, 2/13/2024

• Major airports in the Northeast canceled more than 1,000 flights early Tuesday as New York City and other large metropolitan areas faced a winter storm that was set to dump up to a foot of snow.
• A strong Nor’easter making its way across Mid-Atlantic and New England states is expected to seriously affect travel, damage trees, and bring down power lines, the National Weather Service said.
• By 8 a.m. ET more than 1,100 flights within, into, or out of the US had already been canceled, with LaGuardia, Boston Logan, Newark Liberty, and John F. Kennedy airports particularly affected, according to FlightAware.com.
• Parts of the Northeast are expected to see snowfall rates exceeding 2 inches an hour across Pennsylvania and southern New York, David Roth, a forecaster at the weather service, said Tuesday.
• New York City and parts of Long Island are forecast to receive up to 8 inches of snow, New York Gov. Kathy Hochul said.

EUROPE & WORLD

Michelin to Buy Back Shares After Flat 2023 Earnings – Wall Street Journal, 2/13/2024

• Michelin said it would buy back shares after it reported flat primary earnings for 2023.
• The French tire maker said it made 1.98 billion euros ($2.14 billion) in net profit for 2023, compared with EUR2 billion a year prior, on sales, which declined by nearly 1% year-to-year to EUR28.34 billion.
• According to Visible Alpha consensus, • The result compares with expectations of EUR1.98 billion in net profit and EUR28.51 billion in sales.
• Michelin’s 2023 operating income came to EUR2.65 billion, a 12% decrease compared with a year ago.
• The company said that its mix and prices offset unfavorable market conditions and that non-tire sales grew by 10%.
• For 2024, Michelin said it targeted more than EUR3.5 billion in segment operating income at constant exchange rates and more than EUR1.5 billion in reported cash flow before acquisitions.
• It added that it would initiate a share buyback that it said could be worth up to EUR1 billion over 2024-2026.

OPEC Report Shows Uneven Delivery of New Oil Production Cuts – Bloomberg, 2/13/2024

• OPEC only partially delivered new oil production cuts in the first month of its latest supply pact, according to a report from the group.
• The Organization of Petroleum Exporting Countries and its allies pledged significant output curbs this quarter to avert a surplus and shore up global prices.
• While Kuwait and Algeria promptly implemented their share, Iraq’s reduction fell far short of the agreed amount.
• Baghdad, which has a patchy record of adhering to OPEC quotas and faces financial solid pressures to maintain revenue, cut by 98,000 barrels a day in January — about a third of the reduction needed to meet its target, according to the report published on Tuesday.
• The uneven compliance adds to the challenge of balancing world oil markets faced by OPEC, which also nudged up its estimates for rival oil supplies by 150,000 barrels a day this year.
• OPEC — led by Saudi Arabia — continues to predict that global oil demand will increase by a “healthy” 2.2 million barrels a day, driven by China, to a record of just over 104 million barrels a day this year.
• Saudi Aramco anticipates considerably slower, though still “robust,” demand growth of 1.5 million barrels a day this year, Chief Executive Officer Amin Nasser said in Dhahran on Monday.
• Output from OPEC’s 12 members declined by 350,000 barrels daily in January, according to the group’s report.
• Almost half of this reduction stemmed from a pipeline disruption in Libya, which is exempt from the agreement to constrain supplies voluntarily.

Talks on Gaza Cease-Fire, Hostage Deal Restart – Wall Street Journal, 2/13/2024

• Central Intelligence Agency Director William Burns met with top officials from the Middle East in Cairo on Tuesday to push negotiations between Israel and Hamas toward a deal that would free hostages and pause fighting in the Gaza Strip.
• Burns held talks with David Barnea, the head of Israel’s Mossad intelligence agency, Egyptian intelligence chief Abbas Kamel, and Qatari Prime Minister Sheikh Mohammed bin Abdulrahman al-Thani, according to officials familiar with the talks.
• The talks in the Egyptian capital are part of an intensifying effort by the Biden administration to achieve a cease-fire in Gaza and bring to a halt a conflict that has reduced much of the coastal enclave to ruins and pushed the Middle East to the brink of an all-consuming regional war.
• Tuesday’s talks come as Israel is preparing to expand its military operations into the city of Rafah on Gaza’s border with Egypt, where more than a million Palestinian civilians are sheltering.

Factmonster – TODAY in HISTORY

• Catherine Howard, the fifth wife of King Henry VIII of England, was beheaded for adultery. – 1542
• France exploded its first atomic bomb. – 1960
• The French judge was accused of throwing the pairs skating decision to the Russians at the Olympics. – 2002

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