Mid-Morning Look: January 12, 2022

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Mid-Morning Look

Wednesday, January 12, 2022






DJ Industrials




S&P 500








Russell 2000






Stock markets continue to amaze and astound, rebounding a third day (closed at highs Monday and Tuesday) despite inflation data coming in at the highest level (again) since 1982 for consumer prices and as rising interest rate hike projections climb heading into 2022 (fed fund futures expect three hikes – with some Wall Street banks forecasting four hikes this year). Investors ignoring any concerns and again look to buy beaten up stocks over the last few days. A broad rally early led by Info Tech, Discretionary, Industrials and Materials, while defensive Healthcare and Staples the early laggards. Energy remains strong with shares of XOM, DVN, HAL, APA, EOG at 52-week highs with oil prices surging again following bullish weekly crude inventory data. Earnings season is also right around the corner, with big banks Citi, WFC, JPM among those expected to report this Friday. So far, U.S. stocks holding up well, with the dollar falling to fresh 2-month lows and Treasury yields pulling back off recent 2-year highs. Crypto assets make it a 3rd day rebound as well, with Bitcoin recovering off Sept lows sub-$40K on Monday while gold prices edge higher early on rising inflation fears.


Economic Data

·     Hotter CPI inflation reading: Consumer Price Index (CPI) m/o/m headline reading shows prices rose +0.5% in Dec vs. est. +0.4% and on a y/o/y basis, rises +7.0% (highest since June 1982), in-line with est. +7.0%. the core CPI (ex: food & energy) rose +0.6% m/o/m vs. est. +0.5% and on a y/o/y basis rises 5.5% (highest since Feb 1991) vs. est. +5.4% – recap (inline to slightly hotter data)

·     all types of gas went up 49.6% year over year. Fuel Oil to heat homes up 41% over past 12 months. Cereal and Baking Products up 4.8%. Meats, Poultry, & eggs up 12.5%. Fruits and Vegetables up 5%. Remember average hourly wages are up 4.7% over same time







WTI Crude















10-Year Note





Sector Movers Today

·     FinTech & Payments; PYPL downgraded to Hold from Buy at Jefferies and cut tgt to $200 from $255 saying with valuation still ~5x above pre-COVID averages, there is little room for expansion, especially with a muted growth outlook, and rising competition; FISV also downgraded to Hold at Jefferies saying having outperformed over LTM, and now carrying the highest multiple of the legacy names, they see limited upside to current FY22/23 estimates; in Buy Now Pay later (BNPL) space, Piper said AFRM downloads indicate strong 4Q21 GMV; Jefferies also said see a clean setup for V and highlight SQ as a top pick in 2022

·     Software movers; SNOW upgraded to Overweight from Equal Weight at Barclays but trim tgt to $367 from $393 while also lowering their price targets on PLAN, APPN, BIGC, CDAY, BASE, COUP, DDOG, DOCN, ESTC, INTU, LSPDand PAYC; CFRA lowered its price targets on CRM and PTC but maintained their Strong Buy rating on both; PI had its price target raised by several analysts after its prelim Q4 revenues came in ahead of its guidance and estimates Monday afternoon; CRM holiday sales surpassed $1 trillion, ADBE reported US consumers spent a record $204.5B online this holiday season, an 8.6% increase from last year; TTWO was upgraded to Outperform at BMO with an unchanged $180 PT due to their pending ZNGA acquisition; Credit Suisse believes software will prove resilient again through the current rotation into value due to sustainable robust rev growth and high operating leverage and listed MSFT, CRM, SPLK as their top ideas with PATH their top high-growth idea, ZI its top idea for GARP investors, and VMW their top idea for value; Cowen said the Customer Data Platform is one of the fastest growing tech sub-sectors that is materially inflecting and sees BRZE and TWLO as the best investment vehicles to play this secular trend; Morgan Stanley’s CIO survey once again indicates growth and intact fundamental demand trends for MSFT with gaining share in Public Cloud, polling ahead of #2 AWS (AMZN) by 22% points as the most preferred hybrid cloud vendor today

·     Asset managers; BEN reported preliminary month-end assets under management of $1.5781T at December 31, 2021, compared to $1.5468T at November 30, 2021; IVZ reports preliminary AUM $1.61T as of December 31, 2021, an increase of 2.4% versus previous month-end; AB preliminary assets under management increased to $779 bln during December 2021 from $759 bln at end of November; APAM assets under management as of December 31, 2021, totaled $174.8B; TROW prelim AUM of $1.69T as of Dec.31, 2021 compared to $1.63T as of Nov.30, 2021; November marked a 2.4% drop in AUM.

·     Metals & Mining; strength in steel again; TECK is facing a looming strike at its Highland Valley copper mine in British Columbia; says the United Steelworkers, which represents more than 1,000 workers at the massive open-pit mine has received a strike notice which could begin Sunday; in lithium, Cowen upgraded LAC to Outperform and tgt to $40 from $30 and update several lithium & rare earths names (raise tgt price on LYC, MP) saying the rapid pace of EV adoption continues to underpin robust demand growth that supply is struggling to keep up with; FLMN and Desert Peak Minerals agree to merge in all-stock deal that values combined enterprise at $1.9 bln; Jefferies said while shares of AA have appreciated significantly of late, they continue to see further upside to shares



·     CROX +4%; tgt raised to $246 and calls it a top idea for 2022 and see it as one of the most impressive consumer growth stories for several years to come as raises estimates for Q4 from $1.42 to $2.01 on the strength of the Crocs brand throughout the Holiday

·     DISH +3%; and DirecTV are in fresh talks to merge after years of on-again, off-again wrangling, and multiple clampdowns from federal antitrust officials, The NY Post has learned. https://bit.ly/3ffC1Kd

·     FCX +4%; early leaders in the S&P as materials and miners rise; copper rises

·     RKLB +7%; was initiated at Overweight and $17 tgt at Morgan Stanley (Bull case $40 and Bear case $6) saying the space race is back and points to RKLB’s proven track record of launching more than 100 satellites into orbit

·     TSLA +3%; upward momentum again in EV space as stocks recover

·     TTWO +3%; was upgraded to Outperform at BMO with an unchanged $180 PT due to their pending ZNGA acquisition



·     BIIB -7%; after the U.S. government limited Medicare coverage of the company’s Aduhelm Alzheimer’s disease treatment and similar drugs to patients enrolled in clinical trials (weighs on Alzheimer drug makers such as LLY) – several analysts lower tgt on BIIB based on news

·     DGX 6%; said it expects its Q4 results to reflect higher-than-expected demand for Covid-19 testing services, while base testing volumes remained steady – guided Q4 revs $2.74B, down 9% from 2020, but above ests $2.56B

·     HYZN -3%; tumbles after saying it has received a subpoena from U.S. SEC for production of documents and info related to allegations made by short seller Blue Orca Capital in Sept 2021

·     JEF -10%; mixed results as Q4 EPS $1.36 beats est. $1.34 but Q1 revs of $1.81B misses est. $1.9B; raises quarterly dividend to 30c per share; raises share repurchase plan to $250M

·     PHG -15%; after guides Q4 revs about EU4.9B, below estimate EU5.22B and said group restructuring, acquisition-related and other charges in Q4 are expected to amount to EU420 million, which is EU315 million above the previously guided charges

·     PYPL -1%; downgraded to Hold from Buy at Jefferies and cut tgt to $200 from $255 saying with valuation still ~5x above pre-COVID averages, there is little room for expansion


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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