Mid-Morning Look: September 20, 2022

Auto PostDaily Market Report

Mid-Morning Look

Tuesday, September 20, 2022






DJ Industrials




S&P 500








Russell 2000






U.S. stocks giving back all of yesterday’s gains on surging yields, as markets brace for another hefty rate hike from the Fed tomorrow, while the language of future hikes/outlook will be key given the broad expectation of another big move from the central bank. Expectations are for a 75-bps hike from the Fed, the same as the prior two Fed meetings, with some calls for possible 100-bps. We already saw a surprise overseas as Sweden announced a record 100bps rate hike (ests for 75-bps) and the Riksbank also raised its policy rate path, with the rate now seen peaking at about 2.53% in 2023 Q3. The Bank of England is expected to raise rates Thursday, following a similar move by the European Central Bank in early September. Housing data mixed today with rising Housing Starts, but weaker Building Permits. The 10-year yield hits over 11-year highs, rising above 3.59% this morning (more than 10-bps spike), while the 2-year yield approaches the 4% level (3.98% – highest since 2007). Gold prices extend losses to $1,670 an ounce as surging yields, rising rate hikes and dollar strength weigh on precious metals/commodity prices. Volatility in markets continue as Bespoke Investment noted that 25% of all trading days so far this year have been declines of 1%+. The only other post-WWII years with a higher frequency were 1974 (26.6%), 2002 (28.6%), and 2008 (29.6%). Lots of concerns ahead of the Fed tomorrow, but at the same time several warnings signs of economic softening following several companies with profit warnings in the last few weeks from FDX in transports, GE in industrials, Ford overnight in autos, several chemical companies (OLN, HUN, DOW), NUE in steel space and handful of chip names (INTC, AMD).


Economic Data

·     Housing Starts for August rose +12.2% M/M to 1.575M vs. 1.440M expected and 1.404M prior (revised from 1.446M); but Building permits dropped -10.0% M/M to 1.517M vs. 1.621M expected and 1.685M prior (revised from 1.674M). August single-family starts +3.4% to 935,000-unit rate; multifamily +28.0% to 640,000-unit rate.







WTI Crude















10-Year Note





Sector Movers Today

·     Chemicals: guidance continues to disappoint in the sector as OLN the latest to guide lower, seeing Q3 adj EBITDA $530M-$550M, below consensus of $619.8M; HUN downgraded from OW to EW at Wells Fargo and cut tgt to $28 from $35 given a large cut to their EBITDA outlook for 2022E and 2023E, citing weakening demand across key segments; in lithium space, LAC said it has partnered with another North American-focused lithium company (Green technology Metals) to develop an integrated lithium chemical supply chain in the region; Yara said it will halt production of its Belgian unit “in the next days,” as part of its general European reduction strategy due to soaring energy prices, Reuters reported

·     Software movers: MSFT boosted its dividend by 10%; ZEN announced that its stockholders voted Monday to adopt the merger agreement whereby Zendesk will be acquired by a consortium led by Hellman & Friedman and Permira for $77.50/share in cash; TCEHY is looking into shedding more of its huge investment portfolio as the Chinese social-media and videogame company tries to fund a series of share buybacks/refocus its growth strategy – WSJ https://on.wsj.com/3f5MriD ; ESTC held investor day yesterday where mgmt said is confident in its $2B FY25 rev Target

·     Pharma movers: MRK said to initiate new phase 3 clinical program with lower dose of daily oral islatravir in combination with doravirine for treatment of people with hiv-1 infection; RCKT to acquire RCOR in an all-stock deal, with an implied value of $2.60/share (vs. $1.90 last), giving Rocket a pipeline of AAV based gene therapies focused on cardiac conditions. RCOR shareholders to receive 0.1676 shares of RCKT, for an implied deal value of $53M deal; AVRO said the FDA granted rare pediatric disease designation to AVR-RD-04, an investigational gene therapy for the treatment of cystinosis; Citigroup adding ASND to Focus List, replacing IONS

·     Casinos, Gaming, Lodging & Leisure sector: casinos WYNN, MLCO, LVS among early gainers after China’s government issued draft rules aimed at making it easier for some foreigners to enter China for visits to tourism sites along the Chinese border. Separately, Macau GGR tracking 30% higher in September despite post-holiday slowdown (according to Inside Asian Gaming); in cruise lines, NCLH upgraded to buy from Hold with $19 tgt while remain Hold on RCL (tgt to $58 from $65) and CCL remains Sell rated but up tgt to $10 from $8 – though notes would have liked to have seen several more months of consistent revenue improvement data before upgrading



·     APOG +5% after guidance; Q2 adj EPS $1.06 vs. est. $0.83; Q2 revs rose 14% to $372M vs. est. $344.6M; raises year EPS view to $3.75-$4.05 vs. est. $3.66 and year revs to grow 8%-10%

·     BA +1%; on headlines they held talks with China regulator on 737 Max comeback

·     CGNX +7%; as raises Q3 revs to $195M-$205M, from prior $160M-$180M

·     CHNG +6%; rises after UNH’s pending acquisition of Change Healthcare won court approval, with the Justice Department losing in its attempt to block the deal. Recall UNH originally announced its acquisition in Jan 2021

·     MLCO +9%; along with early strength in WYNN, LVS other casinos after China’s government issued draft rules aimed at making it easier for some foreigners to enter China for visits to tourism

·     OXM +6%; raises FY22 adjusted EPS view to $10.25-$10.60 from $9.60-$10.00 (est. $10.02) and raises FY22 revenue view to $1.38B-$1.41B from $1.29B-$1.33B (est. $1.31B)

·     PTON +1%; said it begins taking preorders for its $3,195 rowing machine; deliveries will begin in the US in December



·     COIN -3%; late yesterday, Co said it will implement a new fee structure on Sept. 20 at about 5 pm ET to account for changes in global crypto trading volumes and asset prices

·     F -10%; anticipates Q3 adj Ebit of between $1.4B-$1.7B below ests. $2.98B; reaffirms full-year adjusted Ebit guidance of $11.5-$12.5b; expects to have about 40,000 to 45,000 vehicles in inventory at end of Q3

·     LPX -5%; downgraded to Underperform from Neutral at Bank America (which also downgraded WY) citing reduced operating rate and pricing forecasts across key wood products

·     MSTR -5%; disclosed in a regulatory filing that it had acquired an incremental ~301 bitcoins for $6mm in cash at an average price of $19,851 per coin including fees and expenses

·     NKE -3%; downgraded to Equal Weight from Overweight at Barclays

·     OLN -6%; the latest to guide lower in the chemical sector, seeing Q3 adj EBITDA $530M-$550M, below consensus of $619.8M

·     PYPL -3%; downgraded to Neutral at Susquehanna and cut tgt to $100 owing to factors including margin pressure

·     TELL -20%; after saying due to uncertain conditions in the high-yield market, it has withdrawn its proposed public offering of units consisting of 11.25% senior secured notes due 2027 and warrants to purchase shares of Tellurian common stock.

·     WDC -2%; downgraded to Hold from Buy at Deutsche Bank as believe WDC’s F1Q revenue and EPS are tracking below the low end of guidance


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