Mid-Morning Look: October 12, 2022

Auto PostDaily Market Report

Mid-Morning Look

Wednesday, October 12, 2022






DJ Industrials




S&P 500








Russell 2000






U.S. stocks mixed following an inflation report, as investors await the release of Fed minutes from prior meeting later today and tomorrows all important consumer price inflation (CPI) data. Major averages come into the day down 5-straight (for the S&P and Nasdaq). The U.S. Producer Price Index (PPI) rose +0.4% m/m for the headline reading, double the +0.2% estimate and on a y/y basis, rose +8.5%, above the +8.4% estimate (but down from the +8.7% last month). On a core basis (ex food & energy), prices rose +0.3%, in-line with estimates and rose +7.2% y/y, below the +7.3% est. Both the headline and core y/y PPI metrics have posted a big 6-month pull-back from all-time highs in March. In other top headlines today (though PPI dominates headlines), OPEC slashes forecasts for oil-demand growth in 2022, 2023 this morning in monthly report, Mortgage applications fall as rates rise to the highest level in 16 years and PepsiCo stock jumps after profit and revenue beats, raised outlook. A late day warning from Bank of England Governor Bailey, making clear its temporary and targeted purchases of gilts will end on October 14th – but beyond Oct 14th, while Gilt purchases will end – there will be several facilities to continue to be in place to help funds with liquidity issues. Oil prices fall a 3rd day after having risen over 16% last week (5-day win streak). The dollar moves to 24-year highs against the Yen, topping the 146 level while the euro slips and precious metals decline.







WTI Crude















10-Year Note





Sector Movers Today

·     Banks, Brokers & Exchanges: earnings kick off earnings season – starting this Friday: with JPM, WFC, C, PNC, USB, and MS; then next week on Monday 10/17: BAC, BK, on Tuesday 10/8: GS, STT, TFC, on Wednesday 10/19: ALLY, CFG, CMA, NTRS and Thursday 10/20: FITB, KEY; in research, Deutsche Bank cutting ests and tgt in group to align with market conditions and multiples while upgraded CME to Buy with a reduced PT of $200 as now see the risk/reward very favorable balancing a discounted valuation (vs history). Sees SCHW as having the best setup in to 3Q given higher leverage to rising rates, solid organic growth, and less headwinds from weaker market returns. Firm also broadly positive on the alternative managers

·     Asset Managers: sector out with monthly Assets Under Management (AUM) data: AB prelim assets under management decreased to $613 billion during September 2022 from $667 billion at the end of August; APAM preliminary assets under management as of September 30, 2022, totaled $120.6 billion; IVZ prelim month-end assets under management (AUM) of $1,323.3 billion, a decrease of 6.5% versus previous month-end; LAZ prelim AUM totaled approximately $197.8 billion which included market depreciation of $14.8B; VCTR reported AUM of $147.3 bln as of September 30, 2022, and average assets under management for q3 period of $158.9B; VRTS prelim assets under management of $145.0 billion as of September 30, 2022; TROW prelim AUM $1.23 trillion as of September 30, 2022. Preliminary net outflows for the third quarter of 2022 were $24.6 billion, bringing preliminary year-to-date net outflows to $44.6 billion.

·     Aerospace & Defense: AIN, HWM, HXL all downgraded to Hold from Buy at Truist in aerospace sector and lower ests across the board in Q3 preview of our cyclically exposed comm’l aero/diversified names amid the deteriorating global macro backdrop and ongoing supply chain challenges; Cowen noted the U.S. Army is very close to selecting either LMT or TXT to build its next-gen medium-lift assault aircraft – says an Army award decision on FLRAA is expected soon, a generational program with major implications for both winner and loser; Airbus (EADSY) CEO says airline traffic recovery unlikely before 2024

·     Housing & Building Products: mortgage data continues to weaken as weekly MBA data showed US mortgage market index falls 2.0% to 214.3 in latest week as the purchase index falls 2.1%, refinancing index decreases 1.8% (down 86% annually) as 30-year mortgage rate rises 6 bps to 6.81%, highest since 2006; Davidson lowers ests and tgt on building products MLM, VMC to reflect NT volume slowness associated with supply constraints, rail operations and weather



·     AIG +3%; was upgraded to Hold from Underperform at Jefferies to reflect underappreciated earnings momentum in P&C, where they model 30% earnings CAGR for ’22-’24 vs Street’s 10%

·     BROS +2%; upgraded to Overweight from Neutral, price target $38 from $48 at JPMorgan

·     KNBE +12%; to be acquired by Vista Equity Partners for $24.90 per share, in deal roughly valued at $4.6B, confirming a prior WSJ story https://bit.ly/3erF1Xc

·     LOCO +13%; board of directors declares special dividend of $1.50 per share and approves 20Mm share repurchase program

·     MRNA 10%; as MRK exercised an option to jointly develop and potentially sell an mRNA-based cancer vaccine (MRK will pay $250M option)

·     NCLH +6%; upgrade to Buy from Neutral at UBS given the significant improvement in bookings in its Q3 preview, showing it has caught up to the other cruise lines in occupancy while keeping price nicely ahead of 2019 levels

·     PEP +4%; Q3 core EPS $1.97 vs. est. $1.84; Q3 revs $21.97B vs. est. $20.84B; raises FY22 core EPS view to approx. $6.73 from $6.63 (est. $6.69); raises FY22 core constant currency EPS growth view to 10% from 8%



·     CCJ -14%; and BEP along with institutional partners, are planning to buy Westinghouse Electric Co. The companies said Tuesday that they are forming a strategic partnership to acquire the nuclear services business https://bit.ly/3s7CLaZ

·     HWM -2%; AIN, HXL all downgraded to Hold from Buy at Truist in aerospace sector and lower ests across the board in Q3 preview

·     KNTE -29%; KIN-2787 Phase 1 monotherapy timeline pushed out to 1H23 – provided some details regarding the ongoing Part A of its KN-8701 study of KIN-2787 in BRAF mutated solid tumors

·     OMI -24%; lowered Q3 adj EPS to $0.39-$0.41 below est. $0.53 and for the year sees adj EPS $2.50-$2.60 (vs. est. $2.99) and sees FY adj EBITDA $527M to $537M, vs. prior $570M to $610M

·     PHG -11%; after announced a large write-down stemming from the recall of its sleep apnea devices as expects to record a EU1.3b non-cash charge in Q3 – now expects a mid-single-digit comparable sales decline in Q4

·     TROW -4%; said prelim AUM $1.23 trillion as of September 30, 2022. Preliminary net outflows for the third quarter of 2022 were $24.6B, bringing preliminary year-to-date net outflows to $44.6B


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.

Live Trading

Open an Account

Paper Trading