Morning Preview: July 18, 2022

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Early Look

Monday, July 18, 2022









S&P 500










S&P futures are up 1% above the 3,900 level as stocks build on last Friday’s momentum ahead of earnings season, while Nasdaq futures +1.2% to 12,151. A sharp reversal in the U.S. dollar, falling -0.5% to 107.25 (after hitting 20-year highs above 109 last week), is also buoying stock futures early. Last week, the S&P fell -0.93% (despite Friday’s 1.92% gain), the Dow lost -0.16%, and the Nasdaq dropped -1.57% (despite its 1.79% rise on Friday). The S&P 500 bank index posts largest daily pct gain since Jan 6, 2021, while its still down -32% from 2022 high. Stocks rallied on Friday in response to a new round of bank earnings and promising economic data as fears of a 100-basis point rate hike from the Fed subsided. Traders now expecting an increase of another 75bps July rate hike, after policy makers pushed back against a bigger move. Goldman Sachs and Bank of America are in the earnings spotlight for Wall Street banks as they report second quarter earnings on Monday. In Asian markets, The Nikkei Index rises 0.5% to 26,788, the Shanghai Index gains 1.55% to 3,278, and the Hang Seng Index surges 548 points or 2.7% to 20,846. In Europe, the German DAX is up 1.3% or 168 points to 13,030, while the FTSE 100 gains 1.25% to around 7,250. US listed Chinese stocks, as well as commodity related stocks get a boost after Chinese regulators stepped up efforts to encourage lenders to extend loans to qualified real estate projects as the stressed property sector faced fresh risks from a widening mortgage-payment boycott on unfinished houses. The China Banking and Insurance Regulatory Commission (CBIRC) told the official industry newspaper on Sunday that banks should meet developers’ financing needs where reasonable.

Market Closing Prices Yesterday

·     The S&P 500 Index gained 72.78 points, or 1.92%, to 3,863.16

·     The Dow Jones Industrial Average rose 658.09 points, or 2.15%, to 31,288.26

·     The Nasdaq Composite jumped 201.24 points, or 1.79%, to 11,452.42

·     The Russell 2000 Index advanced 36.87 points, or 2.16% to 1,744.37


Economic Calendar for Today

·     10:00 AM ET         NAHB Housing Market Index for July

·     4:00 PM ET            Net Long-term TIC Flows for May


Earnings Calendar:

·     Earnings Before the Open: BAC, GNTY, GS, PLD, SCHW, SYF

·     Earnings After the Close: CFB, DLPN, ELS, FBK, IBM, SFBS


Other Key Events:

·     Farnborough International Airshow, 7/18-7/22

·     Structured Finance Association Conference, 7/17-7/20, Las Vegas





















10-Year Note





Sector News Breakdown


·     Macau casinos are in focus after the city extended a lockdown as the gaming hub struggles to contain its largest-ever Covid-19 outbreak. All non-essential businesses are required to remain closed through July 22, authorities said in a statement (watch WYNN, MLCO, LVS, MGM)

·     Fresh Del monte (FDP) shares rose late Friday after Bloomberg reported Infrastructure Investor I Squared Capital is exploring an expanded partnership that could include a takeover of the bananas distributor, according to people

·     Mattel (MAT) mentioned positively in Barron’s saying expectations are high for Mattel when it reports earnings this coming week. It may just be able to beat them. Mattel should also be able to maintain its earnings guidance of $1.42 to $1.48, even if an increase is unlikely

·     Estee Lauder (EL) mentioned positively in Barron’s saying the stock is starting to look like a beautiful buy. With the stock down so much this year, worries may be already reflected in the shares, and it wouldn’t take much good news to send them higher

·     General Motors (GM) downgraded to Hold from Buy at Deutsche Bank, saying they are much more cautious about automakers, on rising concerns about the health of the consumer and recessionary fears in Europe and the US

·     Starbucks Corp. (SBUX) has asked its adviser Houlihan Lokey to assess interest for its UK operations, The Times reported Saturday, without specifying how it obtained the information. The coffee chain told the newspaper that it hadn’t initiated a formal sale process but continues to “evaluate strategic options” for its company-owned international operations.

·     Funko (FNKO) files to sell 17.32M shares of Class A common stock for holders



·     Earthstone Energy (ESTE) files for resale of up to 5.7 mln shares of Class A common stock by selling stockholders

·     Gas prices in the US have moved down to $4.53/gallon (national average), 48 cents below their all-time high in mid-June

·     China’s June gasoline exports halved from a year earlier, driving overseas sales for the first six months of 2022 down 42%; China exported 730,000 tonnes of gasoline last month, down from 840,000 tonnes in May and 1.45 million tonnes in June last year.



·     Banc America (BAC) Q2 net income of $6.2 billion; eps of $0.73; qtrly revenue, net of interest expense, increased 6% to $22.7 billion; qtrly net interest income up $2.2 billion, or 22%, to $12.4 billion; provision for credit losses of $523 million increased $2.1 billion; believe earnings generation over next 18 months will provide ample capital to support growth, pay dividends, buy back shares; qtrly noninterest expense increased 2% to $15.3 bln

·     Synchrony Financial (SYF) Q2 EPS $1.60 vs. estimate $1.44 but down from $2.12 Y/Y; Q2 Provision for credit losses $724 million, Net charge-offs $567 million, -17% y/y, Net interest margin 15.6% vs. 13.8% y/y, and average loan receivables $83.41 billion

·     SoFi Technologies (SOFI) files $1B mixed securities shelf

·     JPMorgan (JPM) upgraded to Hold from Sell at Berenberg



·     Merck’s (MRK) $40B deal for Seagen (SGEN) is unlikely to be completed ahead of the company’s earnings later this month, though the talks remain on track, The Wall Street Journal reported late Friday. The change is due partly to a need to wait for data expected soon from a study evaluating one of Seagen’s treatments

·     Hologic (HOLX) downgraded to Hold on tough macro environment at BTIG


Industrials & Materials

·     Delta Air Lines (DAL) will buy 100 Boeing (BA) MAX 10 jets worth about $13.5 billion at list prices and has options to buy another 30, it said on Monday. Reuters reported in March that Delta was edging towards an order for 100 MAX 10 planes and reported last week that Airbus AIR.PA was in talks for Delta to expand an existing order of A220 planes.

·     Boeing (BA) will announce orders officially worth over $15B from Delta Air Lines (DAL) and Lufthansa (DLAKY) this week at the Farnborough Airshow, including a deal with Delta for 100 Boeing 737 MAX 10 jets and Lufthansa firming up deal for 10 Boeing freighters, including seven of the recently launched cargo version of the 777X, according to Reuters’

·     Lilium (LILM) Partners with Bristow on Electric Air Mobility. Leading provider of helicopter transportation plans to purchase 50 Lilium all-electric jets and provide Part 145 maintenance services in Florida and other U.S. and European markets

·     Air Lease (AL) announced long-term lease placements for six new Airbus (EADSY) A220-300 aircraft with TAAG Angola Airlines.

·     Universal Avionics, an Elbit Systems (ESLT) Subsidiary, awarded $33 million contract to supply enhanced flight vision systems for Boeing 737NG

·     International Paper (IP) downgraded to Equal Weight from Overweight at Wells Fargo


Technology, Media & Telecom

·     Several U.S. semiconductor firms are deliberating whether to oppose a package of chip industry subsidies if the final language of the legislation awaiting a vote in the Senate disproportionately benefits manufacturers like Intel Corp, (INTC) sources familiar with the matter told Reuters.

·     Fox Corp. (FOXA) downgraded to Equal Weight from Overweight at Morgan Stanley; Paramount downgraded to Underweight from Equal Weight at Morgan Stanley; Paramount (PARA) downgraded to Underweight from Equal Weight with a price target of $22 as well

·     Alphabet (GOOGL) begins trading on a 10-1 split adjusted basis today


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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