Mid-Morning Look: January 15, 2021

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Mid-Morning Look

Friday, January 15, 2021






DJ Industrials




S&P 500








Russell 2000






Major U.S. averages open the trading day weaker, falling over 1% across the board and on track for its worst weekly returns since October (as per CNBC) following mixed earnings results in the banking sector today (Citi, Wells, JPM solid quarters but revs missing estimates), along with weakness in the retailing group, slipping after economic data showing that December retail sales fell for a third-straight month and by much more than expected (fell -0.7% vs. est. 0%). The roll comes after incoming President Joe Biden revealed his new $1.9 trillion stimulus relief plan overnight (next up is to see what aspects of bill will be agreed upon), but also sparked fears of an increase in taxes. Banks have had a phenomenal run over the last few weeks into results, helped by surging Treasury yields (best levels since last March), so a pullback not totally surprising. Also seeing a pullback in shares of energy and industrials, two of the best sector performers this week as the Russell 2000 SmallCap index pulls back from its all-time best levels the day prior. Transports also seeing profit taking, down over 200 points from its record best level yesterday. U.S. dollar currency index rises to a near 4-week high; last up 0.5% at 90.75, while oil and gold prices decline. Stocks showing some weakness heading into the 3-day holiday weekend and Biden inauguration next week.


Economic Data

·     Retail sales fell (-0.7%) for Dec vs. estimate of an unchanged reading (Nov was downwardly revised to -1.4% from -1.1%); Dec retail sales ex-autos fell -1.4% vs. est. -0.1% and Dec retail sales ex-autos/gasoline dropped -2.1% vs. Nov -1.3% (worse than prior -0.8%)

·     New York Empire state current business conditions index rises +3.5 in January, missing the estimate for a reading of up 6.0 (index at lowest since June), as new orders index +6.6 in January vs +3.4 in December, prices paid index +45.5 vs +37.1 in December, employment index at +11.2 vs. +14.2 in December and six-month business conditions index +31.9 vs +36.3 in December

·     Producer Price Index (PPI) rises 0.3% MoM in Dec, below the 0.4% estimate (vs. Nov +0.1% reading), while core PPI prices (ex food & energy) rise 0.1% vs. est. 0.2%. PPI headline YoY for December rises 0.8% (in-line with ests) while core prices YoY rose 1.2% vs. est. 1.3%

·     Industrial output for December rose +1.6% vs. est. +0.5% vs. Nov +0.5 pct while capacity utilization rate at 74.5% vs. est. 73.6% and vs. Nov 73.4%; Dec manufacturing output +0.9%

·     University of Michigan consumers sentiment prelim Jan 79.2 (vs. est. 80.0) and vs. Final Dec reading of 80.7; the expectations index prelim Jan 73.8 vs final dec 74.6 and current conditions index prelim Jan 87.7 vs final dec 90.0







WTI Crude















10-Year Note





Sector Movers Today

·     Bank movers; big bank earnings get underway with mixed results: 1) JPM falls from record highs the day prior as qtrly investment banking revenue was $2.5 billion, up 37%, FICC sales & trading rev $3.95b, est. $3.92b; Q4 revs $29.2Bn vs. est. $30.2B; Q4 net income of $9.9B excluding credit reserve releases of $2.9B ($3.07 per share net interest income was $13.4B, down 7% and provision for credit losses was a net benefit of $1.9B, compared to an expense of $1.4B prior, 2) WFC shares fall on mixed results as missed on the top line, with Q4 revenue of $17.93B vs. consensus of $18.0B and $18.9B in Q3 with slightly better EPS of 64c beating by a penny while stabilizing credit costs helped offset the hit from low-interest rates; bank’s efficiency ratio for Q4 stood at 83%, higher than the 81% and 79% in Q3 20 and Q4 of 2019; authorizes $500Mm repurchase program, 3) Citigroup (C) Q4 EPS $2.08 vs. est. $1.34; revs miss at $16.5B vs. est. $16.71B; drew down $1.5 billion of the reserves the bank had put aside for future loan losses, a big reason the bank’s profit was better than expected; said plans to resume stock buybacks during Q1; profit in the inst’l clients group (trading and investment banking), rose 27% to $3.65B, while revenue fell slightly to $9.28B; trading revenue rose 14%, while IB revenue fell 5%

·     Retailers; RL upgraded to Outperform from Sector Perform at RBC Capital and raises price target to $138 from $77 saying with shares among biggest laggards in 2020 (PE expanding 4 turns since January 2020 vs group expanding 13 turns), sees RL as poised for outperformance into 2021; YETI downgraded to Neutral from Buy at Citigroup but raise tgt to $85 from $69 noting since its March 23, 2020 low of $15.58, the stock is up >400%, and for all of 2020, YETI was up nearly 100%; gun related stocks/sporting goods (AOBC, RGR, SWBI, VSTO) active after the FBI said it processed a record 39.7 million firearm background checks in 2020, beating previous highs by more than 10 million/roughly 8.5 million people across the US purchased their first firearm in 2020

·     Auto sector; JPMorgan downgrade AN to Neutral with a $75 pt from Overweight and upgraded SAH to OW, while remaining OW on GPI, LAD and neutral on ABG, PAG; Truist raised their pt on PAG to $75 from $65 as it remains their favorite stock in the group, and also raised their pt on Neutral-rated ABG to $180 from $130 and AN to $73 from $66 as these two are currently trading in-line with their historical ranges; Wedbush raised its TSLA price target to a street-high $950 with a $1,250 bull case (from $715, $1,000) on robust demand in China, which can add at least $100 per share in a bull case and may account for 40% of sales by 2022, in addition to overall EV market share growth of which Tesla is the undisputed leader despite increasing competition; SOLO announced it has expanded with 2 new DTC locations in CA and 1 in AZ

·     Utilities & Solar; Goldman downgraded AEP to Sell with an $83 pt as their estimates on lower than consensus and DUK to Sell with a $93 pt given they expect the stock to continue trading at a discount versus other large cap regulated utilities as it has historically done, and they upgraded CNP to Buy with a $27 pt after its recent underperformance means the stock is currently trading at a discount versus peers and PEG to Buy with a $66 pt on its upside driven by favorable gas prices, higher regulated rate base growth, and its current discount; JPMorgan views NEE and AES as the utilities best positioned to capitalize under the incoming Biden administration; Heikkinen Energy cut SEDG to bottom tier

·     Managed care sector, ANTM was upgraded to Buy on Commercial exposure at Jefferies, and downgraded CNC and MGLN to Hold following a strong rally. Firm shifts preference toward MCOs with more Commercial exposure and highlight CI, ANTM and HUM in managed care as see Commercial Group enrollment pressure reversing over the course of ’21. Additional stimulus under the Biden Administration and COVID vaccinations support a broader economic recovery, business re-openings, a stronger labor market and more Commercial insured lives. Meanwhile, Democratic control pulls forward and de-risks SCOTUS’ decision on the ACA and increases the possibility of coverage expansion.



·     ACCD +10%; announced that it has signed a deal to acquire Innovation Specialists (2nd MD) for $460M, which consists of $230M in cash, $130M in stock and $100M in stock payable upon the achievement of certain milestones

·     CNP +2%; defensive utilities rebounding after recent selling pressure

·     DBVT +37%; shares jumped after receiving written responses from the FDA to questions provided in the Type A meeting request the company submitted in October

·     FB +2%; rebounds after starting the year under pressure (still down over 7% YTD)

·     TLRY +7%; cannabis sector extend gains (ACB, CGC, CRON), led by TLRY after Cantor raised tgt to $24 from $11 (group up this week after better APHA results)



·     AMRX -3%; TEVA announced the U.S. launch of its generic of NuvaRing (Piper noted viewed competition for AMRX’s generic, known as EluRyng, as an inevitability)

·     GME -5%; Director Wolf sold 810,000 shares @ $21.22 between 1/12-1/13 as per a filing

·     HAL -4%; energy stocks paring recent gains – profit taking across the board

·     LMND -6%; down a second day ahead of Citron short Twitter livestream call later

·     SPOT -4%; downgraded to Sell from Neutral at Citigroup saying among four subscription based stocks (SPOT, ROKU, NFLX, SIRI), Spotify is the only firm where the Street’s long-terms forecasts (through 2023) do not comport to the prevailing valuation

·     WFC -7%; shares fall on mixed results as missed on the top line, with Q4 revenue of $17.93B vs. consensus of $18.0B and $18.9B in Q3 with slightly better EPS of 64c beating by a penny

·     XOM -2%; following a WSJ report that the SEC has launched an investigation after an employee filed a whistleblower complaint last fall alleging the company overvalued its Permian Basin properties.



·     Amwell (AMWL) 11.281M share Secondary priced at $27.50

·     Driven Brands (DRVN) 31.8M share IPO priced at $22.00

·     Playtika (PLTK) 69.5M share IPO priced at $27.00


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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