Mid-Morning Look: August 19, 2021

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Mid-Morning Look

Thursday, August 19, 2021






DJ Industrials




S&P 500








Russell 2000






U.S. futures open lower, extending yesterday’s late day swoon post FOMC July policy meeting minutes on concerns the Federal Reserve could begin to rein in its massive monetary stimulus, while commodity-linked stocks sank as oil and metal prices tumbled to multi-month lows. Fed tapering not the only market concern as surging variant covid cases renews worries about a slowing of the economy, while China regulatory measures in its country and recent weaker economic data also boosts the slowing growth case. At the same time, President Joe Biden hit his lowest approval rating since taking office this week following his decision to withdraw troops in Afghanistan, along with recent moves on booster shots which has drawn scrutiny. Goldman Sachs today lowered its Q3 GDP forecast to 5.5% from 8.5% previously saying the impact of the Delta variant on growth and inflation is proving to be somewhat larger than they expected. Firm has lowered their Q3 GDP forecast to +5.5%, reflecting hits to both consumer spending and production.


Retailer earnings mostly better-than-expected with Macy’s (M), Kohl’s (KSS) and Bath &Body Works (BBWI) all rising on better results and/or guidance, while tech earnings also impressed with both chip maker NVDA and networking co CSCO reporting better Q3 results. Energy stocks tumble, among leading decliners in the S&P as oil prices slide a 6th day. Smallcaps pressured again as well with the Russell 2000 index falling for a 6th straight day, dropping below its 200-day moving average support of 2,152, first break below since last September. Economic data better as U.S. weekly jobless claims hit 17-month lows while unemployment rolls shrink. Auto sector slides as Toyota and Ford announce they will halt production due to semiconductor shortages.


Economic Data

·     Weekly jobless claims fell to 348,000 in the latest week, below the est. 363,000 (prior week revised to 377K from 375K); continuing claims fell to 2.820M from 2.899M prior; the 4-week moving average fell to 377,750 from 396,750 prior week and the U.S. insured unemployment rate unchanged at 2.1%

·     Leading economic indicators for July reported at +0.9%, slightly above the +0.8% consensus and at best level since May







WTI Crude















10-Year Note





Sector Movers Today

·     Auto sector; TM said it will slash global production for September by 40% from its previous plan, becoming the last major automaker to cut output due to a global chip crunch, but reiterated its global production target of 9.3 million vehicles for the year ending in March, as well as its plan to sell 8.7 million cars in the period; Ford (F) will halt production at U.S. truck plant on Aug. 23 for 1 week over chip shortage, will temporarily shutter its Kansas City assembly plant that builds its best-selling F-150 pickup truck due to a semiconductor-related part shortage as a result of the COVID-19 pandemic in Malaysia; auto suppliers (LEA, VNE, BWA, MGA, VC) were also active after the two major auto co’s said they will halt production due to semiconductor shortages

·     Retail Apparel & Accessories: TPR Q4 EPS $0.74 vs. est. $0.68 on better revs $1.62B vs. est. $1.56B; sees FY22 EPS $3.30-$3.35 above est. $3.18 and revs also above views at $6.4B vs. est. $6.08B – announces reinstatement of dividend and share repurchase programs with a plan to return over $750 mln to shareholders in fiscal 2022; BBWI beat estimates in its first earnings report as a standalone public entity, while forecast net sales to increase up to 45% from 2019 levels in Q3, boosted by strong demand for body care and home fragrances; VSCO forecast profit below estimates for the third quarter (guides 3Q EPS $0.60-0.70 vs est. $0.93)

·     Consumer Staples; EL Q4 net sales rose 62% to $3.94B, topping the $3.75B estimate saying strong online sales, increased demand in China, and investments in its skincare products helped, while guided year net sales 13%-16% vs. est. up 14% at $18.29B; OTLY upgraded to Outperform from Sector Perform at RBC Capital with no change to $28 target saying the stock’s recent sell-off creates an attractive buying opportunity; food suppliers active after PFGC posts Q4 EPS mostly in-line with ests on better revs of $9.3B vs. est. $8.43B and said total case volume grew 55.8%; up 44.7% after adjusting for the extra week; SPTN earnings beat as continued momentum in the retail division drove gross margins higher and offset continued declines in the military segment – total sales declined 3.6% to $2.11B, but was slightly above consensus estimate of $2.07B



·     BBWI +6%; beat estimates in its first earnings report as a standalone public entity, while forecast net sales to increase up to 45% from 2019 levels in Q3, boosted by strong demand for body care and home fragrances

·     CHRS +6%; after it and Junshi Biosciences announced positive interim results from phase III trials on its non-small cell lung cancer treatment Toripalimab.

·     INOV +7%; to be acquired by equity consortium led by Nordic Capital including Insight Partners for $7.3 billion, with holders to receive $41 per share https://bit.ly/37Wg7bl

·     KSS +5%; Q2 EPS $2.48 vs. est. $1.21 as Q2 sales rise 31.4% to $4.44B vs. est. $4.02B; sees year EPS $5.80-$6.00 well above est. $4.40; now plans to repurchase $500M-$700M of shares in 2021

·     M +15%; after Q2 EPS $1.29 tops the $0.14 estimate on better revs of $5.65B vs. est. $4.98B and raises year EPS view to $3.41-$3.75 from $1.71-$2.12 and boosts FY21 revenue view to $23.55B-$23.95B from $21.73B-$22.23B; reinstates quarterly dividend and authorizes $500M buyback

·     SNPS +5%; reported a stronger than expected fiscal Q3 and provided upside guidance relative to consensus for Q4 (Q3 revs improved 3% sequentially and 10% YoY) as guidance was raised across all key financial metrics



·     BABA -5%; reports overnight (Bloomberg) of fresh round of potential regulations in China hitting Chinese tech stocks again

·     HOOD -9%; posted larger Q2 loss and record revs, but warned that the crypto-driven surge it saw in second quarter revenue may not last and said sees 3q seasonal headwinds, lower trading activity across industry, resulting in lower revenue

·     RRGB -19%; Raymond James noted store margins of 11.8% were below their 14.3% estimate and 13.8% in 2Q19 driven by higher-than-expected labor – this after co posted 2Q adj EPS loss ($0.22) vs est. $0.00 – 2Q EBITDA of $20.4m was below RAJA $26.8m estimate as well

·     VSCO -6%; forecast profit below estimates for Q3 (guides 3Q EPS $0.60-0.70 vs est. $0.93)


Market commentary provided by Hammerstone Markets, Inc, a firm separate from and not affiliated with Regal Securities. Regal Securities has not participated in the creation of the content, and does not explicitly or implicitly endorse the content.

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