Morning Preview: September 19, 2022

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Early Look

Monday, September 19, 2022









S&P 500










U.S. futures are under significant pressure, down about 1% for the S&P to 3,850, while crypto assets tumble, as Bitcoin falls over 6% or $1,250 to $18.500, all ahead of the FOMC expected rate hike this Thursday. It was a week to forget for U.S. stocks as the S&P 500 posted its worst weekly performance since mid-June, slumping -4.78% for the five-day session. The losses came on the back of a solid 3.65% gain last week. The Dow fell -4.15% and the Nasdaq 100 fell -5.8% for worst week since January. The majority of selling pressure came Tuesday following a hotter than anticipated consumer price index inflation (CPI) report, with the headline print for Aug. rising 8.3% Y/Y, more than expected. U.S. stocks ended sharply lower on Friday, tumbling to two-month lows as a warning of impending global slowdown from FedEx (FDX) hastened investors’ flight to safety. On a technical basis, the S&P decisively broke through the 3,900 level which had held a few times over the last week. In Asian markets, The Nikkei Index was closed for Holiday, the Shanghai Index dipped -10 points to 3,115, and the Hang Seng Index dropped -195 points to 18,565. In Europe, the German DAX is down about -100 points to 12,642, while the FTSE 100 was closed for Holiday.


The 2-year yield rose 29-bps to 3.859% this week (highs above 3.9%) and the 7th straight week of gains and up over 300-bps from 2022 closing low 0.764% in January. The 10-yr yield rose 12.6-bps to 3.447% this week, also up for seven consecutive weeks and up 182-bps from 2022 closing low 1.628% In January. The 30-year yield rose 6-bps to 3.518% this week, up 3-straight weeks. The S&P 500 closed below its 200-day moving average for 111 straight sessions, according to FactSet, the 2nd longest such streak since a 358-session stretch ending in May 2009. The third longest streak was 61-sessions that ended in October 2011. In August, the S&P 500 came within striking distance of its 200-day moving average but failed to top it.

A massive week ahead for central banks and stocks markets overall, with at least six monetary policy meetings taking this place alone, with most expected to boost interest rates. The FOMC is expected to raise rates by at least 75-bps this Wednesday at the conclusion of its meeting (following unprecedented back-to-back 75 bps hikes the prior two meetings), while the Swiss (SNB), Norway (Norges Bank), and Sweden (Riksbank) are also expected to hike rates along with the Bank of England (BoE) later in the week. On Thursday the BOJ meet and markets strongly expect that policy settings will be left unchanged, despite downward pressure on the yen.


Market Closing Prices Yesterday

·     The S&P 500 Index dropped -28.02 points, or 0.72%, to 3,873.33

·     The Dow Jones Industrial Average fell -139.40 points, or 0.45%, to 30,822.42

·     The Nasdaq Composite slumped -103.95 points, or 0.90%, to 11,448.40

·     The Russell 2000 Index declined -27.05 points, or 1.48% to 1,798.19


Economic Calendar for Today

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


Earnings Calendar:

·     Earnings Before the Open: AZO

·     Earnings After the Close: none


Other Key Events:

·     BTIG 2nd Annual Digital Assets Conference (virtual), 9/19-9/20

·     Deutsche Bank Annual Leveraged Finance Conference, 9/19-9/21, in Arizona





















10-Year Note





World News

·     The southwestern Chinese city of Chengdu will resume production and life “in an orderly manner” from Monday following more than two weeks of COVID-19 lockdowns and other strict curbs, local authorities said on Sunday – Reuters

·     U.S. July net overall capital flow +153.5B vs +22.3B in June; U.S. July net foreign holdings of U.S. Treasury bonds, notes +23.1B vs +58.9B in June; China’s U.S. Treasury securities holdings 970B in July vs 968B in June and Japan’s U.S. Treasury holdings 1.234T in July vs 1.236T in June

·     Goldman Sachs cuts US GDP to 1.1% in 2023 from 1.5% previously. Raises its federal funds rate forecast by 75 basis points over the last two weeks for a terminal rate forecast of 4% to 4.25% by the end of 2022


Sector News Breakdown


·     Amazon (AMZN) has suspended the construction of new logistic centers in Spain until 2024, news, citing unidentified people with knowledge of the matter, per Bloomberg

·     Hersha Hospitality Trust (HT) said it is reinstating its dividend, 2 1/2 years; said it will pay a quarterly dividend of 5 cents a share on Oct. 17 to shareholders of record on Sept. 30

·     Nikola (NKLA) will start series production of its Tre FCEV hydrogen truck in the US in the second half of next year, with the European version to follow in early 2024, President Michael Lohscheller says during the IAA Transportation commercial-vehicle show, per Bloomberg

·     Volkswagen AG (VWAPY) said it would seek a $75 billion valuation for its planned IPO of luxury division Porsche


Energy, Industrials and Materials

·     Array Technologies (ARRY) upgraded to Overweight from Neutral at Piper Sandler saying the company’s strong order book creates the potential for an attractive 2023 revenue and EBITDA outlook

·     Jacobs Engineering (J) reaffirmed guidance for its fourth quarter and fiscal year 2022, according to a filing; still sees 4Q adj. EBITDA $340m-$360m and still sees 4Q adj. EPS $1.75-$1.85

·     U-Haul parent Amerco (UHAL) runs a dominant rental truck business, but the company has refused to cater to Wall Street by paying a “minuscule” dividend and providing limited financial disclosure according to Barron’s says. The CIO at Kindred Capital Advisors, says the shares are worth 50% more than their current price, and other analysts are even more bullish.

·     Newmont Mining (NEM) mentioned positively in Barron’s saying it may be time to buy the gold producer whose shares have dropped more than 50% from an April high alongside the decline in gold prices. With the dollar unlikely to rise forever, owning gold would provide a hedge and Newmont may be one of the safest ways to bet on a revival.

·     Sen. Elizabeth Warren (D-MA) is requesting that the U.S. Department of Justice heavily scrutinize JetBlue’s (JBLU) planned purchase of Spirit Airlines (SAVE) and ultimately block the combination. Warren wrote a letter to Transportation Dept. Secretary Pete Buttigieg asking that the agency to consider blocking the $3.8 billion purchase

·     Venator Materials (VNTR) downgraded to Underperform from Market Perform at BMO Capital and the firm also downgraded Tronox (TROX) to Market Perform



·     CoStar Group (CSGP) priced its offering of ~10.66M shares at a price of $70.38 per share

·     Crypto assets tumble, as Bitcoin falls over 6% or $1,250 to $18.500, and Ethereum is down over -9% to $1,300, all ahead of the FOMC expected rate hike this Thursday (MARA, RIOT, COIN, MSTR, SI among names lower on Bitcoin roll)

·     FIS (FIS) downgraded to Market Perform from Outperform at Keefe Bruyette

·     A group of President Biden-appointed bank regulators are considering new rules to require large regional banks to add to financial cushions that could be called on in times of crisis. a group that includes firms such as U.S. Bancorp (USB), Truist Financial Corp. (TFC), and PNC Financial (PNC) has introduced new risks to the financial system – WSJ reported



·     BlueBird Bio Inc. (BLUE) shares rise 14%; gene therapy for a brain-wasting disease received accelerated approval from U.S. regulators, making it the first treatment of its kind for children living with cerebral adrenoleukodystrophy


Technology, Media & Telecom

·     Activist hedge fund Starboard Value LP has amassed an approximately 9% stake in Ltd (WIX) and has spoken to the web development platform about how it can improve its operations, people familiar with the matter said on Friday, Reuters reported

·     Sea Ltd (SE) is preparing to lay off 3% of employees at its e-commerce arm Shopee in Indonesia, part of a broader wave of regional job cuts intended to curb ballooning losses, according to a Bloomberg report

·     Take-Two (TTWO): a hacker released gameplay from TTWO’s Grand Theft Auto VI in one of the biggest leaks in gaming history, Bloomberg News reported on Sunday

·     Trade Desk Inc. (TTD), a competitor of Google parent Alphabet Inc. (GOOG) and a partner of Disney’s (DIS) mentioned positively in Barron’s saying it is poised to benefit as more ad dollars flow to streaming. Microsoft Corp. (MSFT) is a rising player in advertising; Roku Inc. (ROKU), Disney (DIS) and Warner Bros. Discovery Inc. (WBD), could be other potential beneficiaries. Netflix (NFLX), on the other hand, faces plenty of risk, Barron’s argues


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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