Mid-Morning Look: September 21, 2022

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Mid-Morning Look

Wednesday, September 21, 2022






DJ Industrials




S&P 500








Russell 2000






U.S. stocks ticking higher following sharp selling pressure thus far in September (and after a dismal August) with all eyes fixed on the FOMC monetary policy meeting this afternoon/Chairman Powell outlook comments, where a 75-bps rate hike is widely expected. Treasury yields and the US dollar have surged in recent weeks to multi-year highs in anticipation of more aggressive rate hikes from the Fed (75 today forecast after back-to-back 75 bps hikes the prior two meetings). While markets are in “wait-and-see” mode into the 2:00 PM Fed headlines, some sectors are active following geopolitical headlines as President Vladimir Putin declared a “partial mobilization,” calling up 300,000 reservists, in a major escalation of his flagging invasion of Ukraine and renewed his warnings of a nuclear threat. Treasuries, gold, and the US dollar led gains in haven assets after Putin’s comments. Shares of energy and oil companies as well as defense companies (NOC, LMT) rose early on the comments. Oil jumped nearly 2% amid the escalating war in Ukraine as raised concerns of tighter oil and gas supply. The 30-year fixed rate mortgage jumped to 6.25% last week, according to the Mortgage Bankers Association, the highest level since October 2008. Applications for purchase loans are down 30% year over year.


Economic Data

·     Existing Home Sales for August reported -0.4% at 4.80M unit rate vs. consensus 4.70M and vs. July 4.82M; Aug inventory of homes for sale 1.28M units, 3.2 months’ worth; Aug national median home price for existing homes $389,500, +7.7% from Aug 2021







WTI Crude















10-Year Note





Sector Movers Today

·     Consumer Staples: GIS boosted its FY23 sales and profit forecast – sees organic net sales to rise between 6%-7% in fiscal 2023 above its previous expectation of 4%-5% growth and FY23 adj profit to rise 2%-5% on a c/c basis vs prior view of flat-3%, reflecting higher prices; COTY said it’s on track to double its skincare sales to $500M-$600M by FY25, while raises Q1 LFL sales growth view to 8%-9% from 6%-8%; EL upgraded to Buy from Neutral at Goldman Sachs following the recent pullback in the stock saying uncertainty around the duration of China’s zero-Covid policy and the associated impact on EL’s business remains high, but appears adequately reflected in the stock; BYND suspended its COO after allegedly biting man’s nose; NAPA tgt cut to $18 from $24 and ests lowered at Bank America ahead of earnings on lower wine sales estimates

·     Refiners: DINO was downgraded to Equal Weight at Wells Fargo and lower tgt to $55 from $62 mostly due to its lesser exposure to the Atlantic Basin distillate market this winter season while saying VLO, PSX and PBF possess the most Atlantic Basin distillate exposure (MPC and DK relatively less) which supports our OW ratings; PBF upgraded from Neutral to Overweight at JPMorgan with $43 tgt saying while PBF has been the top performer in the refining group YTD, shares have traded off ~32% since peak and believe current levels are highly attractive given improvements in the company’s balance sheet

·     Housing & Building Products; Mortgage applications in the US increased 3.8% in the week ended September 16th, the first rise in six weeks, and the biggest in three months according to weekly Mortgage bankers Assoc data (refinancing index rises 10.4% despite the average 30-year mortgage rate rising 24 bps to 6.25%, highest since oct 2008; in home improvement retail (HD, LOW, TSCO), Truist said higher interest rates are slowing housing turnover and moderating home price appreciation rates. However, the home improvement sector is driven by the existing ~128mm homes in the US, not the ~5mm that are sold every year.



·     ANET +4%; upgraded to Overweight at Barclays on a strong demand outlook while downgrading CSCO on competition and macro headwinds

·     COTY +5%; said it’s on track to double its skincare sales to $500M-$600M by FY25, commenting ahead of its investor day; raises Q1 LFL sales growth view to 8%-9% from 6%-8%

·     FREY +11%; positive mention at Morgan Stanley calling it their top IRA Beneficiary Top Pick with new $26 tgt rating and Bull case rating at $60

·     GIS +2%; boosted its FY23 sales and profit forecast – sees organic net sales to rise between 6%-7% in fiscal 2023 above its previous expectation of 4%-5% growth and FY23 adj profit to rise 2%-5% on a c/c basis vs prior view of flat-3%

·     NOC +3%; US defense stocks LMT, RTX, LHX were higher early after Russian President Vladimir Putin declared a partial mobilization with the Kremlin

·     PCRX +2%; following topline data from phase 3 study of Exparel as a single-dose sciatic nerve block in the popliteal fossa for bunionectomy



·     CC -4%; the latest in a strong of chemical related companies to issue lower guidance as sees FY adj EBITDA $1.40B-$1.45B, below its prior view of $1.48B-$1.58B saying its titanium tech segment outlook drove the outlook

·     GLT -4% as suspended the Company’s quarterly cash dividend as part of its focused efforts to optimize the operational and financial results of the business.

·     MU ; reverses losses despite several broker’s express caution: Mizuho downgraded to neutral and cut tgt to $56 from $75 saying recent checks show steepening price declines into DecQ and 1H23; Wells Fargo reduces ests and Stifel initiated at Hold rating with $56 tgt

·     RCL -5%; as cruise, online travel, gaming among biggest drags in the S&P 500 early – EXPE, LVS, DAL, HLT all lower

·     SFIX ; reverses losses despite disappointing Q4 results, coming in well below guidance as 4Q adj EBITDA ($31.8Mm) vs est. ($30Mm) on revs $481.9Mm vs est. $489Mm, while active clients -9% y/y to 3,795,000 and guides 1Q net revs $455-465Mm vs est. $522.7Mm

·     TTWO -1%; as discloses third party illegally accessed customer support vendor platform used by 2K Games, sent malicious link


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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