Mid-Morning Look: December 21, 2022

Mid-Morning Look

Wednesday, December 21, 2022






DJ Industrials




S&P 500








Russell 2000






U.S. stocks jumping early following upbeat earnings results and commentary from Dow component Nike (NKE) and Fed-Ex (FDX) mixed results in transports, both good barometers for the consumer as well as positive economic data with consumer confidence recorded at the best level of the year. While giving a boost to markets early on positive consumer data, this is not what the Fed wants to see, as they continue to raise rates (boosted another 50-bps last week) to slow inflation and get prices lower. It may raise concerns that it will only keep the Fed rate hike cycle longer and deeper than markets are anticipating. Strength is broad based early with all eleven S&P sectors moving higher, with more than 1% advances for Energy, Financials, Industrials, technology, REITs, and Consumer Discretionary. Bond yields slip after yesterday’s spike on Bank of Japan headlines while the dollar edges higher. Joe Biden is expected to unveil nearly $2 billion in assistance and announce moves to deliver a Patriot missile battery to help Ukraine bolster its defenses this winter as its leader, Volodymyr Zelenskiy, arrives in Washington to deliver an in-person address to Congress. Congress has approved tens of billions of dollars for Ukraine and is expected this week to approve more.


Economic Data

·     Consumer Confidence index for December 108.3, the highest level of the year and above consensus 101.0 vs November revised 101.4; present situation index 147.2 in Dec vs Nov revised 138.3 and expectations index 82.4 in Dec vs Nov revised 76.7. US 1-year consumer inflation rate expectations 6.7% in Dec vs 7.1% in Nov

·     Existing Home Sales for November 4.09M unit rate below consensus 4.20M and below Oct 4.43M; Nov inventory of homes for sale 1.14 mln units, 3.3 months’ worth; national median home price for existing homes $370,700, +3.5% y/y

·     U.S. Q3 current account balance -$217.1B (vs. est. -$222.B and vs. Q2 balance (-$238.7B)







WTI Crude















10-Year Note





Sector Movers Today

·     Restaurants & Casual Dining: few analysts out on sector today as SBUX downgraded to Hold at Jefferies as expect the incremental risk of a recession in 2H23/1H24 to decrease discretionary spend among SBUX customers and lower comp sales; EAT downgraded to Hold at Jefferies as expect more aggressive competitive discounting to emerge and cut RRGB to Hold, waiting for more visibility on how strategies may evolve in ’23 with the new mgmt team – says PLAY and BLMN top picks in full-service, MCD in limited service and PFGC in foodservice. Wedbush with handful of changes, said PZZA’s 2023 consensus EPS estimate seems overly optimistic as they downgrade to Neutral, QSR burger relatively well positioned as well, with both top and bottom-line expectations reasonable, see little in the way of catalysts so downgrade JACK, STKS, DENN to Neutral and remain sidelined on CAKE, BJRI and EAT

·     Financials Services & Consumer Finance: OPEN downgraded to Hold from Buy as believe that drag from remnant inventory, faster than expected correction in home values due to high mortgage rates and reduced demand create incremental risks for 1H23; RDFN downgraded to Hold at Truist as find the risk/reward balanced following a 50% rally in the stock recently; Jefferies noted Nov card trends (ALLY, COF, DFS, SYF) reflected ongoing credit normalization, as well as robust growth in receivables driven by consumer demand/inflation. Specifically, COF and DFS delivered some of the strongest loan growth comps of 21.2% and 20.1% respectively; WE announced that is has amended terms in relation to its line of credit (LC) facility as has effectively moved all its debt maturities to 2025.

·     Retailers: sector gets a boost from NKE as posted stronger than expected 2Q results amid a challenging environment with strong CC top-line growth across channels and geographies, and inventory progress positively (NA +54% y/y vs. +65% y/y in 1Q), but company raised its revenue outlook and said that its inventory challenges are abating; RAD posts better Q3 results, smaller loss and better revs but cuts FY23 EPS outlook and narrows FY23 revs view; TGT downgraded at Gordon Haskett while Stifel lowers estimates for WMT and TGT saying survey shows spending intentions continuing to worsen since early fall, with overall results below averages since May.



·     CCL +8%; after mixed results; reported Q4 adj EPS loss (-$0.85) vs. est. loss (-$0.87) on revs $3.84B vs. est. $3.91B, 4Q revenue per passenger cruise day increased 0.5% and said ended Q4 with $8.6B of liquidity (NCLH, RCL rise in sympathy)

·     FDX +2%; beat on adjusted Q2 EPS but missed on revenue and revised FY23 guidance lower as revenue was hurt by lower volumes with Domestic Express volumes -15% y/y (vs -11% in 1Q) and Ground volumes -10% (vs -3%in 1Q), offset in part by higher pricing

·     NKE +13%; posted stronger than expected 2Q results amid a challenging environment as inventory progressed positively (NA +54% y/y vs. +65% y/y in 1Q), and company raised its revenue outlook and said that its inventory challenges are abating

·     PHG +5%; announced results from independent tests for its DreamStation respiratory devices as the tests addressed potential health risks related to the polyester-based polyurethane sound abatement foam

·     SIX +10%; after activist shareholder Land & Buildings has accumulated a roughly 3.5% stake and is pushing the theme-park operator to sell or spin off its real estate



·     BB -9%; following earnings results overnight

·     CVGW -16%; Q4’22 results missed significantly on the top line on both soft avocado volume and pricing, more than offsetting a strong result from the Prepared segment for a bottom-line miss

·     CYAD -30%; to discontinue development of CYAD-211, anti-BCMA CAR T candidate for relapsed or refractory multiple myeloma

·     ENPH -1%; weakness early in solar space (FSLR) as Bank America flagged 4Q trends QTD showing a flattening of demand growth (vs +40% comps seen with this installer y/y in 2Q & 3Q)

·     PEB -5%; said both leisure and business travel demand were weaker than expected in the second half of November, in its monthly update and lowered guidance (weighing on HST, HLT early)

·     RAD -14%; posts better Q3 results, smaller loss, and better revs but cuts FY23 EPS outlook and narrows FY23 revenue view (CVS, WBA fall in sympathy) and reports of over the counter reducing products seeing constraint across the U.S.


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.