Mid-Morning Look: March 15, 2022

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Mid-Morning Look

Tuesday, March 15, 2022






DJ Industrials




S&P 500








Russell 2000






U.S. stock markets open higher while global stocks fell for a fourth consecutive session as a combination of rising COVID-19 cases in China, the war in Ukraine and worries about the Federal Reserve raising interest rates this week for the first time since 2018 hit confidence. Oil prices tumbled more than 7% with Brent and WTI crude back below $100 a barrel, providing some relief for travel, discretionary stocks that have fallen in recent weeks on the energy spike. A little bit of a relief rally for U.S. stocks to start the day after falling for several days. So many factors playing a part in the volatility of global stock markets: 1) We are on day 20 of Russia’s invasion of Ukraine, while peace talks are set to resume today; 2) FOMC 2-day meeting takes place, widely expected for 25-bps hike tomorrow, but all eyes on the outlook for quantity of rates (Fed fund currently sees between 6 to 7 hikes this year); 3) China situation raising fears as capitulation continues for their global markets (Hang Seng, Shanghai) and destruction of U.S. listed stocks (BABA BIDU TCEHY) with Covid related lockdowns the latest fear to hit the region; 4) global recession fears amid higher inflation and surging commodity prices (though prices have tumbled over the last week in metals, grains and energy complex); 5) seeing secular growth trade continuing to unwind, with high multiple software and other tech names tumbling.


Economic Data

·     Producer price inflation data (PPI) for February not as “hot” as feared: Headline Feb PPI m/m rises +0.8% vs. est. +0.9% while on a y/y basis, rises +10%, in-line with estimates (vs. +9.7% last month). On a core basis, ex: food & energy, PPI rose +0.2%, below the +0.6% estimate m/m, while PPI core y/y rose +8.4% vs. est. +8.3% (and prior 8.3%)

·     NY Empire Fed manufacturing actual -11.8, below forecast +6.1 and previous +3.10; New orders: -11.2 vs. +1.4 prior and shipments -7.4 vs. +2.9 prior; delivery times index climbed eleven points to 32.7, and inventories rose at the fastest pace in years.







WTI Crude















10-Year Note





Sector Movers Today

·     Consumer Staples; HRL downgraded to Sell from Neutral at Goldman Sachs with $44 tgt saying citing the impact on the agricultural supply chain due to the Russia/Ukraine conflict and sees backdrop as negative for Hormel; COTY remains Buy rated at Citigroup but remove from focus list amid some n-t unknowns though remain firm believers in the ongoing turnaround that we believe is evident at the company; Goldman Sachs expects underperformance for sell rated KHC, GIS, SJM as continuous rise in price of inputs like grains, fertilizers and energy prices to drive a low- to mid-single-digit reduction in EBITDA

·     Retailers; CTRN mixed Q4 as EPS beats but revs miss, but guides Q1 and year EPS outlook below consensus saying FY22 is difficult to predict; The EU is set to ban sales of luxury goods (BURBY, LVMUY, etc) worth more than EUR 300 ($329.58) to Russia; Bernstein initiated ROST, TPR, PTON, NKE at Outperform, CPRI, SFIX at Market Perform, and LULU at Underperform; Piper does not expect home improvement spend to be impacted by rising gas prices as price shocks over the past 20 years have not had any impact and spend is supported by strong cash-out refinance activity recently, and they prefer LOW as a large cap and FND as a mid-cap; NKE estimates lowered for F22/23 to $3.58/$4.22 at Bank America ahead of earnings to reflect exposure to Russia/Eastern Europe, COVID-related volatility in China

·     Consumer Finance; BAC credit card delinquency rate was 0.95% at Feb end vs 0.93% at Jan end and credit card charge-off rate was 1.24% in February vs 1.19% in January; ADS reported charge-offs for February of 4.8% and delinquencies 4.4%; COF February domestic credit card net charge-offs rate 2.19% vs 2.03% in January; 30+ day performing delinquencies rate for auto 4.01% at Feb end vs 4.42% at Jan end; 30+ day performing delinquencies rate for domestic credit card 2.51% at Feb vs 2.40% at Jan end; DFS credit card delinquency rate 1.10% at February end vs 1.07% at January end

·     Positive revenue outlook for many of the airlines today: AAL said it is raising its first-quarter revenue guidance as now expects Q1 revenue to be about 17% lower than in the comp quarter in 2019, better than previously guided for revenue to come in between 20% and 22% lower than pre-pandemic levels (lowered capacity while raised CASM guidance); UAL raised rev view as well to “near the better end” of its range of 20% to 25% lower than the first quarter of 2019 levels; DAL said it now expects revenue in the March quarter to recover to 78% of 2019 levels, up from a previous guidance of between 72% and 76% issued in January and flat TRASM; LUV said it sees Q1 operating revenue down 8% to 10% vs 2019, sees Q1 available seat miles (ASMS or capacity) compared with 2019 down 9% to 10%; sees Q1 fuel hedging cash settlement gains per gallon $0.52; JBLU said strong demand has led the company’s revenue to outperform so far this quarter, boosting its quarterly forecast as now expects revenue to be down by 6% to 9% compared with pre-pandemic 2019 levels in the quarter, compared with a previous view: decline of 11% to 16%.



·     CANO +13%; following quarterly earnings results and guidance

·     CCL +4%; NCLH, TPR, EXPE – discretionary, travel names rebounding as oil prices fall

·     CTRN +4%; mixed Q4 as EPS beats but revs miss, but guides Q1 and year EPS outlook below consensus saying Fy22 is difficult to predict

·     DAL +8% as several airlines provide upbeat revenue outlooks

·     GTLB +7%; after the software company reported Q4 revenue that beat expectations and gave a full-year forecast that is stronger than expectations

·     ZM +3%; upgraded to Buy from Hold at Berenberg and installing a conservative $124 price Target still affording 30%+ upside off a five-year forecast through F2027 that implies rather stunted long-term TAM development



·     ANAB -5%; said Phase II ACORN trial of imsidolimab (anti-IL-36R) in moderate-to-severe acne failed to demonstrate improvement over placebo in the primary or secondary endpoints at either high or low doses – is planning to discontinue the program in acne

·     BABA -2%; U.S. listed Chinese stocks across the board as recent concerns include 1) Shenzhen lockdown 2) Hong Kong Covid outbreak 3) De-listing concerns for China ADRs 4) Geopolitical tensions – BILI, BIDU, JD, PDD, NTES, MLCO, NIO, DIDI

·     COUP -20%; as better Q4 results were overshadowed by a weaker EPS and rev outlook for Q1 and the year that Oppenheimer said showed significant organic growth deceleration and margin contraction

·     NTRA -14%; after a jury finds CDNA and NTRA engaged in false advertising; Natera continues to pursue its own patent enforcement action against CareDX; final monetary relief, if any, remains to be decided by the court

·     OXY -5%; as shares of energy stocks slide as crude prices extend fall, declining after last week’s rally as worries over growing coronavirus cases in top crude importer China weigh


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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