Mid-Morning Look: April 10, 2023

Mid-Morning Look

Monday, April 10, 2023






DJ Industrials




S&P 500








Russell 2000






U.S. stocks mixed to start the week, with weakness in Technology and Consumer Discretionary offsetting strength in Energy, Industrials, Materials, and Small Caps heading into a rich catalyst driven week. Investors return from the 3-day holiday weekend, following jobs data from Friday where March nonfarm payrolls +236k vs. +230k est. & +326k in prior month (rev up from +311k) as March’s gain in nonfarm payrolls means U.S. economy has now added slightly more than 1 million jobs in first quarter of 2023. The data shows strength in the jobs market after mixed messages last week (weaker JOLTs, ADP). The dollar gained after the report, adding to expectations that the Federal Reserve will hike rates again in May, while the Japanese yen weakened as Japan’s new central bank governor Kazuo Ueda indicated that he was in no hurry to dial back its massive stimulus. The 10-yr yield morning highs, up 4-bps to 3.424%; 2-yr back up at 4%. Consumer price data (CPI) is due Wednesday and Producer prices (PPI) on Thursday. CPI is expected to show that headline inflation rose by 0.3% in March, while core inflation increased by 0.4%. Retail Sales data on Friday coupled with the start of earnings season with big banks closes out the week. A handful of weak data points in tech space (PC data), keeps Nasdaq lower.


Economic Data

·     Feb wholesale inventories revised to +0.1% (consensus +0.2%) from +0.2%; U.S. Feb wholesale sales +0.4% vs Jan +0.4% (prev +0.9%); stock/sales ratio 1.37 months’ worth vs Jan 1.38 months.







WTI Crude















10-Year Note





Sector Movers Today

·     Heading into large cap bank earnings this Friday (JPM, WFC, C, PNC and more next week), JPMorgan noted a litany of concerns is impacting the banking sector: outlook for the economy (recession), impact of sustained high inflation, some slowdown in consumer spending, deposit trends, impact on credit creation and loan growth, outlook for credit quality, and impact of likely increased regulatory requirements and oversight – this is in addition to geopolitical uncertainty which has not changed. Banks once again reduced their borrowings from two Federal Reserve backstop lending facilities in the most recent week, a sign the financial stresses that emerged following a string of bank collapses last month may be stabilizing. US institutions had a combined $148.7B in outstanding borrowings in the week through April 5, compared with $152.6B.

·     In Autos: TSLA cut prices in the U.S. between 2% and nearly 6%, its website showed; Tesla cut prices on both versions of its Model 3 sedan by $1,000 and on its Model Y crossover by $2,000 and cut prices on both versions of its more expensive Model S and Model X by $5,000. Separately, Reuters reported tesla will build a factory in Shanghai to make the Megapack energy storage product, Chinese state media outlet Xinhua reported on Sunday. In used car sales: wholesale used-vehicle prices increased 1.5% in March from February. The Manheim Used Vehicle Value Index rose to 238.1, down 2.4% y/y. March’s increase was moderated by the seasonal adjustment. The non-adj price change in March increased by 3.5% compared to February, moving the unadjusted average price down 2.9% y/y (KMX, CVNA).

·     Samsung reported during its preliminary 1Q23 earnings guidance on April 7, with 1Q rev of 63T KRW below cons of 65.1T KRW and EBIT of 0.6T KRW below cons of 1.41T KRW; company also indicated it would cut memory chip production to a “meaningful level” and has reduced ST production plans, while continuing to invest in LT infrastructure. Shares of MU, WDC moved higher on production headlines, w/ increasing confidence of down-cycle bottom. Equipment stocks (AMAT, KLAC, MTSI, ASML, LRCX) slip on Samsung’s decision to cut memory production. Monthly chip sales data: TSM said March revenue fell 15% y/y to 145.41B Taiwan dollars ($$4.78B U.S.), from NT$171.97M marking the first drop in nearly four years; Q1 revs rose 3.6% from a year earlier to NT$508.63 billion (US$16.73 billion).



·     CAT +2%; rebound in Materials and Industrials (STLD, CF, MOS) to start the week after sharp underperformance in the last two weeks.

·     GBX +11%; Q2 adj EPS $0.99 vs. est. $0.61; Q2 revs $1.1B vs. est. $895.5M; boosts FY23 revenue view to $3.4B-$3.7B from $3.2B-$3.6B (est. $3.41B).

·     MU +7%, WDC +8%; after Samsung Electronics said Friday it would make a “meaningful” cut to chip production, seen as positive by analysts as they boost chip prices and their earnings.

·     PXD +8%; Monday after the Wall Street Journal reported that XOM has held preliminary talks over a possible acquisition of the fracking company. https://on.wsj.com/3KNfTHT

·     SCHW +3%; rallies ahead of earnings next week after the company said it saw an influx of core net new client assets of over $53 bln in March.

·     WY +1%; upgraded from Neutral to Buy at DA Davidson saying the pullback in the stock over the past two months creating an attractive entry-point, in their view.



·     AUDC -15%; said it expects Q1 revenue to be lower than previously estimated internally when it issued an outlook for the full year 2023 in February; guides Q1 revs $58.5M-$60M, or a decline of about 10% to 12% from a year ago vs. est. $66.8M on lower EPS.

·     ASML -1%; weakness in as semi equipment makers slip on Samsung production cuts.

·     COF ; said it received from WMT a notice of termination of its credit card partnership agreement that allows COF to be the exclusive issuer of Walmart’s private label and Co-brand credit cards.

·     FRC -1%; said in a regulatory filing on Friday that it suspends dividend payments on all its outstanding preferred stock and announced it plans to release its Q1 results after the market closes on April 24th.

·     TECK -3%; after reinforced its rejection of an unsolicited $22.5 billion bid from GLNCY and telling shareholders that its proposed restructuring is the only option on the table.

·     TSLA -4%; further reduced prices on all its US vehicles by up to 5%. The company also began offering a shorter-range AWD Model Y for $49,900, which is $5K (or ~$10%) below the previous lowest priced Model Y.

·     TUP -36%; said it sees “substantial” going-concern doubt and is taking action to improve its capital structure and liquidity position.


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.