Mid-Morning Look: January 19, 2023

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Mid-Morning Look

Thursday, January 19, 2023






DJ Industrials




S&P 500








Russell 2000






U.S. stocks opened lower on Thursday, falling for a second straight session following mixed economic data showing the U.S. labor market is still resilient (jobless claims fall to 4-month lows) amid a slowing economy, suggesting the labor market remains tight despite higher interest rates. Meanwhile, U.S. housing starts declined in December for a fourth-consecutive month, hitting its lowest level since July, driven by lower multi-family units. The data of late has most certainly shown a deceleration in inflation (CPI, PPI, UoM) but housing remains weak, and the manufacturing sector has weakened dramatically, raising fears of a recession, Also, Fed speakers appear steadfast in their calls for rates above 5%-5.5% range, despite current target rate by fed fund futures around 4.9% highs. JPMorgan CEO Jamie Dimon said today he expects interest rates to go beyond 5% as inflation remains high, in an interview with CNBC. Markets refuse to believe the Fed will take rates as high as 5.5%, with many calling for 25-bps hikes in next meetings and holding with a potential pivot to lower rates late 2023. The Fed has yet to give any signs of such a move. Seeing weakness in financials today with guidance from ALL, DFS and a handful of banks weighing, while tech turns attention to NFLX earnings tonight. Strength early in defensive spaces (REITS, Healthcare, Energy). Market fears also growing ahead of debt limit measures with U.S. Treasury’s Yellen saying Treasury began using extraordinary debt limit measures on Thursday.


Economic Data

·     Weekly Jobless Claims fell to 190K (4-month lows) from 205K prior and below consensus 214K; the 4-week moving average fell to 206K from 212,500 in prior week; continued claims rose to 1.647M from 1.630 mln prior week; US Insured Unemployment Rate unchanged at 1.1$

·     Housing Starts for December fell (-1.4%) m/m to 1.382M vs. 1.359M consensus and 1.401M in November (revised from 1.427M); Dec Building permits fell (-1.6%) m/m to 1.330M vs. 1.370M expected and 1.351M prior (unchanged)

·     January Philadelphia Fed factory index weak at -8.9 (negative for 7th time in 8-months) vs. est. -11.0; prices-received at 29.9 vs 28.1 and prices-paid index 24.5 vs 36.3; employment index +10.9 vs. -0.9 and New Orders -10.9 vs. prior -22.3







WTI Crude















10-Year Note





Sector Movers Today

·     In regional banks: CMA Q4 beat $2.58 vs $2.53 and raise driven by Fees +$0.06 and taxes +$0.04 were only partly offset by NII -$0.01, expenses -$0.02, and provision -$0.02; FITB Q4 EPS $1.01 vs. est. $1.00; Q4 net interest margin 3.35% vs. 2.55% y/y; compared to year-ago quarter, reported revenue increased 16% while expenses increased only 1% in Q4; Provision for credit losses $180 million vs. recovery $47 million y/y; KEY earnings fall from year ago period as Q4 net income $356M down from $601M y/y, as profit hit by provision for credit losses of $265M vs. only $4M y/y; FHN Q4 adj EPS $0.51 vs. est. $0.48; Pre-provision net revenue down 7% from the prior quarter and up 5% on an adjusted basis; ROTCE of 19.1% and adjusted ROTCE of 21.7% with tangible book value per share of $10.23; MTB Q4 adj EPS $4.57 vs. est. $4.30; total assets of $200.7B at December 31, 2022, compared with $155.1B and $198B at December 31, 2021 and September 30, 2022, respectively; provision for credit losses was $90 mln in Q4; net loan charge-offs were $40 million; SNV Q4 adj EPS $1.35 vs. est. $1.36; Q4 revenue rose 18.5% y/y to $603.8M vs. est. $601.48M; Net interest income increased 27.8% to $501.3M, while net interest margin rose 11 bps sequentially to 3.60%.

·     Consumer Staples: PG Q2 core EPS $1.59 and revs $20.8B, both mostly in-line with consensus as organic growth grew +5% vs consensus +5.6% with Beauty +3%, Healthcare +8%, Home Care +8%; reaffirms FY EPS growth 0%-4% (towards the lower-end) vs est. +0.3% and Y revenue growth (1%)-0% vs prior (3%)-(1%) and consensus +0.2% and organic sales growth +4%-5% vs prior +3%-5%; In tobacco, PM upgraded from Hold to Buy at Jefferies and raise tgt to $118 from $86 which captures the contribution from the SM deal. CELH to pay South Florida rapper Flo Rida $82.6M in damages after winning his lawsuit against the energy drink maker, Broward County jury decided.



·     CMA +6%; Q4 beat $2.58 vs $2.53 and raise driven by Fees +$0.06 and taxes +$0.04 were only partly offset by NII -$0.01, expenses -$0.02, and provision -$0.02

·     CNCE +21%; to be acquired by India’s Sun Pharmaceutical Industries Ltd. for an initial $576M in cash, with holders to receive an initial $8 a share and also receive non-tradeable contingent value rights worth up to an additional $3.50 per share https://on.mktw.net/3XD4TjO

·     CVAC +3%; upgraded to Buy at UBS and more than doubles its price target, calling the Jan. 6 announcement on messenger RNA vaccines for flu and Covid-19 a “major de-risking” event.

·     IDCC +5%; raises Q4 total revenue to be ~$114M vs. prior view $98M-$102M (est. $102.55M)

·     PM +2%; upgraded from Hold to Buy at Jefferies and raise tgt to $118 from $86 which captures the contribution from the SM deal.

·     TFC +2%; Q4 adj EPS $1.30 vs. est. $1.28; Q4 revs $6.21B vs. est. $6.16B; Q4 net interest margin was 3.25%, up 13 bps y/y and core net interest margin was 3.17%

·     ZYME +4%; and JAZZ said their experimental cancer drug had an overall survival rate of 84% in patients being treated for a type of metastatic gastroesophageal adenocarcinoma after 18-months.



·     AA -4%; reported lower-than-expected 4Q’22 results with adj EBITDA $29Mm vs est. $105Mm and warned total alumina shipments in 2023 to range between 12.7M-12.9M metric tons, a decrease of 0.5M metric tons from a year earlier.

·     ALL -6%; announced estimated adjusted operating loss of $335-$385 million for 4Q, driven by elevated catastrophe loss activity of $779 million, with $593 million of losses incurred in December as the result of winter storms.

·     DFS -3%; Q4 EPS of $3.77 topped consensus, but said it expects full-year average net charge-off rate to be in the range of $3.5%-3.9%, above JPMorgan’s estimate of 3%

·     MATX -7%; said it sees Q4 EPS $1.88-$2.01, below the consensus est. of $3.42 as all four of the company’s primary services saw volumes down Y/Y

·     NTRS -7%; Q4 EPS of $0.71 misses the $1.80 estimate and well below prior year period of $1.91 and Q4 revs fell 9% to $1.5B, below the $1.8B est. as expenses were elevated.

·     RBLX -6%; downgraded to underweight at Morgan Stanley, which expects slower bookings growth in the second half of the year, and little upside from advertising in the near term.

·     SCHW -5%; downgraded to Underperform at Bank America and cut tgt to $75 from $92 driven by view that client cash sorting will continue at an elevated pace in 1H23 and Fed will stop hiking.

·     SRDX -23%; as the FDA rejected its application seeking approval of its SurVeil drug-coated balloon for the treatment of peripheral artery disease.

·     TEVA -4%; downgraded to Hold from Buy at Jefferies while raise tgt to $12 from $10 noting shares are up 35% since October and see the risk/reward as balanced.

·     VNO -2%; slashed its quarterly dividend by 29% to 37.5c a share, as the dividend cut lowers the implied dividend yield to 6.50% from 9.19%


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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