Mid-Morning Look: July 15, 2021

Mid-Morning Look

Thursday, July 15, 2021

Index

Up/Down

%

Last

 

DJ Industrials

-9.45

0.03%

34,923

S&P 500

-16.22

0.37%

4,358

Nasdaq

-111.93

0.76%

14,533

Russell 2000

-12.50

0.57%

2,189

 

 

Volatile start to the day for major U.S. averages, with stocks pushing lower as the Nasdaq falls as much as -0.7% before rebounding to flat (100-point bounce off lows) but seeing weakness again. Treasury yields perking up a bit at 1.344% for 10-yr, while the semiconductor sector (SOX) down over -1% (after hitting record highs yesterday) as mixed qtr results from TSM weigh on the industry. Investors continue to assess a growth slowdown in China (Chinese Q2 Y/Y GDP 1.3% vs 1.2% consensus; 7.9% y/y vs 8.1% consensus) and Federal Reserve Chair Jerome Powell’s persistent dovishness despite a hawkish tilt across global central banks (note Powell testifies on the economy to Senate Banking Committee today after speaking to house on Wednesday). Also in Washington, Sen Schumer sets in motion the infrastructure debate as sets deadline of next Wednesday for democrats move forward with $3.5 trillion budget framework. Big week of earnings for large cap banks that have been mixed at best, but earnings intensify next week with several large cap tech giants expected. Economic data today plentiful with in-line jobless claims and better NY manufacturing, but Philly Fed and Industrial production miss.

 

Economic Data

·     Weekly jobless claims fell to 360K in latest week, in-line with estimates while prior week revised higher to 386K from 373K; continued claims fell to 3.241M from 3.367M; the 4-week moving average fell to 382,500 July 10 week from 397,000 prior week and U.S. insured steady at 2.4%.

·     NY Fed’s “Empire State” index on current business conditions shot up by 26 points to 43.0, well above the reading of 18 forecast; survey’s six-month outlook gauge registering at 39.5; new orders 33.2 in July vs. 16.3 in June, prices paid 76.8 vs. 79.8 in June and employment index at 20.6 in July vs. 12.3 in June.

·     Philadelphia Fed Factory index for July weaker at 21.9 vs 30.7 prior and estimate 28.0; new orders index at 17.0 vs 22.2; Fed Future index at 48.6 vs 69.2; Employment index at 29.2 vs 30.7.

·     June Import prices rose +1.0% M/M vs. +1.2% consensus and +1.1% prior while Export prices rose +1.2% M/M vs. +1.3% consensus and +2.2% prior.

·     Industrial output rose +0.4%, slightly below the 0.6% estimate vs. May up +0.7%; June industrial output ex cars/parts +0.8% vs May +0.4%; Capacity utilization rate 75.4% vs. est. 75.6%, but up from May reading of 75.1%

 

 

Macro

Up/Down

Last

 

WTI Crude

-0.80

72.33

Brent

-0.73

74.03

Gold

-3.50

1,821.50

EUR/USD

-0.0025

1.1811

JPY/USD

0.02

110.01

10-Year Note

-0.008

1.348%

 

 

Sector Movers Today

·     Bank movers; BK 2Q EPS $1.13 vs est. $1.00 on quarterly fee and other revs $3.32B vs est. $3.2B and total revs $4.0B vs est. $3.88B, quarterly provision benefit $86M, and AUM $2.3T at quarter end; USB reported Q2 EPS $1.28 on net revs $5.78B vs es.t $5.62B, NII $2.62B vs est. $2.5B, and recovery of credit losses $170M vs est. provision $108.8M; TFC posted Q2 adj EPS $1.55 vs. est. $1.18 on revs $5.65B vs. est. $5.47B, CET1 capital ratio 10.2%, net charge-offs .2%; MS Q2 adj EPS $1.89 on net revs $14.76B, including institutional investment banking revs $2.38B (est. $2.06B), wealth management revs $6.1B (est. $5.92B), equities trading revs $2.83b (est.$2.5B); UCBI to acquire RBNC in a deal for approximately $517B, or $30.58 per share of RBNC common stock whose shareholders will receive 0.9842 shares of UCBI common stock for each share of RBNC held; Odeon Capital upgraded WFC to Buy

·     Semiconductors; sector soft as TSM reports mixed Q2 results; Q2 revs rise 28% Y/Y to $13.29B vs. est. $13.31B; Q2 gross margin was 50.0% vs. guidance, 49.5%-51.5%, operating margin 39.1% vs. guidance 38.5%-40.5%; Q3 revs $14.6-14.9B vs. est. $14.71B; AMD was upgraded to Neutral from Sell at Citigroup and raise tgt to $95 (from $17) as checks indicate gains are finally accelerating in the server market, especially at hyper-scale companies such as AWS and Google; MCHP and NXPI both downgraded to Neutral at Mizuho saying while remain long the semiconductor technology sector overall, with Semis showing strong execution under tight, constrained supply conditions, they are selectively downgrading

·     Biotech movers; regarding BIIB, acting FDA Commissioner Janet Woodcock stands by the agency’s decision to approve Aduhelm, but she acknowledged regulators may have made missteps in the process; BCRX outlines designs for two BCX9930 trials as oral monotherapy for PNH patients; ADXS initiates early-stage ADXS-504 prostate cancer study; SAVA downgraded to Neutral from Overweight at Cantor while target to $100 saying while remain bullish on lead candidate, simufilam, believe the program insufficiently de-risked for SAVA; NAVB said the FDA granted its request for a meeting to discuss its ongoing clinical program for Rheumatoid Arthritis; IMUX 4.5M share Spot Secondary priced at $10.00

·     Retailers; LB announces ~20.04M shares by former CEO Leslie Wexner, and his wife Abigail, at $74.50 for aggregate purchase price of $1.49B/LB also to repurchase 10M shares from the selling stockholders at $73.01, as part of previously announced $1.5B buyback program; CSPR announces a new partnership with BBBY as its sleep offerings will be available to customers; GME slips early after Netflix hired a former Electronic Arts and Facebook effort to lead its expansion into video games (general downward momentum over the last 2-weeks as well); DG tgt raised to $270 from $225 at Oppenheimer; VRA announces collaboration with DIS; DLA said expects net sales growth of 65% Y/Y to ~$118M vs. consensus of $109.8M

 

Stock GAINERS

·     AIG +2%; after agreeing to sell a 9.9% equity stake in its life and retirement business as well as affordable-housing assets to Blackstone for $7.3 billion in cash

·     BYND +1%; said it has launched an online store in China on JD’s ecommerce platform, as the plant-based meatmaker aims to boost sales

·     CSPR +1%; announces a new partnership with BBBY as its sleep offerings will be available to customers on Bed Bath website, app and stores

·     DAL +3%; upgraded to strong buy at Raymond James as believe expectations have been reset after better earnings, albeit with some risk if the recovery stalls

·     NFLX +1%; after Bloomberg News reported that the video-streaming company is planning to expand into video games 9shares of ATVI, EA, TTWO, GME active)

·     SCPL +10%; after SGMS offered to buy the remaining 19% equity interest in the digital games developer that it doesn’t already own https://bit.ly/3xJ4rUG

·     USB +3%; reported Q2 EPS $1.28 on net revs $5.78B vs es.t $5.62B, NII $2.62B vs est. $2.5B, and recovery of credit losses $170M vs est. provision $108.8M

 

Stock LAGGARDS

·     BIIB -5%; after NYT report that the Cleveland Clinic won’t administer Aduhelm – Mizuho noted this AM that this was a point that came out yesterday during their Alzheimer’s doc panel

·     GKOS 4%; extends losses after tumbling 21% yesterday after CMS released its calendar 2022 proposed physician fee schedule that includes a “significant reduction” to the physician reimbursement code for the company’s iStent

·     GLPG -11%; falls after its rheumatoid arthritis candidate, oral SIK inhibitor GLPG3970, failed to show benefit in mid-stage trial, though showed a positive effect after six weeks, in a Phase 1b trial for psoriasis and Phase 2a trial for ulcerative colitis

·     GME -4%; after Netflix hired a former Electronic Arts and Facebook effort to lead its expansion into video games (general downward momentum over the last 2-weeks as well)

·     TSM -4%; as reports mixed Q2 results; Q2 revs rise 28% Y/Y to $13.29B vs. est. $13.31B; Q2 gross margin was 50.0% vs. guidance, 49.5%-51.5%, operating margin 39.1% vs. guidance 38.5%-40.5%; Q3 revs $14.6-14.9B vs. est. $14.71B

·     VJET -24%; announces offering of ordinary shares

 

Syndicate:

·     Acutus Medical (AFIB) 5.5M share Secondary priced at $14.00

·     ChargePoint (CHPT) 12M share Secondary priced at $23.50

·     F45 Training (FXLV) 20.313M share IPO priced at $16.00

·     Gatos Silver (GATO) 8.93M share Secondary priced at $14.00

·     Immunic (IMUX) 4.5M share Spot Secondary priced at $10.00

·     L Brands (LB) 20.042M share Secondary priced at $74.50

·     Membership Collective (MCG) 30M share IPO priced at $14.00

·     Olink (OLK) 7.5M share Secondary priced at $31.00

·     Phillips Edison (PECO) 17M share IPO priced at $28.00

·     Rapid Micro Biosystems (RPID) 7.92M share IPO priced at $20.00

·     Sera Prognostics (SERA) 4.688M share IPO priced at $16.00

·     Shoals Technologies (SHLS) 13.384M share Secondary priced at $28.00

·     Sight Sciences (SGHT) 10M share IPO priced at $24.00

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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.