Mid-Morning Look: June 15, 2022

Mid-Morning Look

Wednesday, June 15, 2022






DJ Industrials




S&P 500








Russell 2000






U.S. stocks rising early, with the S&P 500 up 1.3% approaching 3,800, trying to snap the 5-day losing streak that has pushed it into “bear market” territory ahead of the widely anticipated FOMC interest rate meeting later today. Global stock and bond markets have been dominated by macro developments as the Federal Open market Committee (FOMC) is now expected to boost interest rates by 75 basis points when it meets later Wednesday (up from view of 50-bps just a few days ago), while European Central Bank officials are holding an emergency meeting today to tackle volatile market conditions (European bond yields slide after recent spike higher on the news). Italy’s 10-year bond yields slid 22 bps to 4%, below Wednesday’s eight-year highs (after having risen 100 bps this month already) while the Euro also benefited, rising off a one-month low hit earlier this week. Crypto currency markets have been the other big story, with Bitcoin and the like falling to late 2020 lows (held just above 20K overnight and down nearly 70% from all-time highs) as panic selling set in on dramatic pullback. U.S. Treasury yields dip from more than 10-year highs after a massive surge this week. Another round of weaker economic data today as June NY Empire manufacturing misses’ estimates, retail sales for May post first decline of the year/below estimates and import prices rise less than forecast – all into an expected 75-bps hike from the Fed later and Powell is expected to maintain hawkish tone! Most sectors higher after a rout in global stocks – note coming into today, 7 of 11 sectors are down 10%+ over the last week, with Utilities (XLU) and Real Estate (XLRE) down the most. Housing industry hurting as total mortgage application volume was 52.7% lower last week than the same week one year ago, according to MBA.


Economic Data

·     NY Fed Empire Manufacturing for June showed current business conditions index -1.2 in June vs -11.6 in May but below the estimate +3 as new orders index +5.3 in June vs -8.8 in May, prices paid index +78.6 in June vs +73.7 in May, employment index at +19.0 in June vs +14.0 in May and six-month business conditions index +14.0 in June vs +18.0 in May

·     Retail Sales for May fell (-0.3%), its first decline of the year, below estimate +0.2% and April’s +0.7% while core retail sales (ex-autos) +0.5% vs. est. +0.8% and April +0.4%; May gasoline sales +4.0% vs April -1.9% and Retail Sales Ex-autos/gasoline +0.1% vs April +0.8%

·     Import Prices MoM for May rose +0.6%, below the forecast +1.1% and above prior 0.0%, while export prices MoM rose +2.8% vs. estimate +1.3% and prior +0.6%; increase was driven by higher prices for both nonagricultural and agricultural exports.

·     April inventory/sales ratio 1.29 months’ worth vs March 1.28 months; U.S. April Business Inventories +1.2%, in-line with estimates and business sales +0.4% vs March +1.6%

·     June NAHB Housing market index 67 versus 69 in May; June index of home sales over next six months 61 versus 63 in May; June index of prospective buyers 48 versus revised 53 in May; June housing market index at lowest since June 2020







WTI Crude















10-Year Note





Sector Movers Today

·     Retailers; FIVE announces $100M stock repurchase plan; SKX upgraded from Hold to Buy with $44 tgt at Argus saying supply-chain initiatives and strong brand are likely to boost revenue and earnings over the next two years; for NKE, Morgan Stanley with Q4 EPS preview saying the mkt expects a 4Q EPS miss & ’23e guide below consensus – firm doesn’t expect any resolution on the China debate N-T, which means investors likely continue to wonder when NKE will return to delivering its L-T targets; in denim, Bank America said they maintain Buy on LEVI as ANF Investor Day reaffirms bullish view on denim category; TPR assumed coverage/upgraded to Buy at Jefferies with $45 tgt from $30 citing improved margin and sales growth outlook

·     Consumer Finance; COF May domestic credit card net charge-offs rate 2.40% versus 2.19% in April; May auto net charge-offs rate 0.63% versus 0.40% in April; 30+ day performing delinquencies rate for domestic credit card 2.22% at May end versus 2.18% at April end; DFS credit card delinquency rate edged down again to 1.71% in May from 1.73% in April, but up from 1.50% in the year-ago period; net charge-off rate of 2.03% in May increased from 2.02% in April and 1.50% in May 2021; JPM credit card charge-off rate 1.27% in May vs 1.24% in April and credit card delinquency rate 0.67% at May end vs 0.70% at April end; SYF credit card net charge-offs 2.53% in May vs. 2.19% in April and credit card delinquency rate 1.38% vs. 1.45% in April; AXP loans net write-off rate-principal only 0.9% at may end vs 0.9% at April end and 30 days past due loans as a % of total 0.7% at may end vs 0.7% at April end

·     Housing & Building Products; more negative signs for the housing industry (LEN ) as Total mortgage application volume were 52.7% lower last week than the same week one year ago, according to the Mortgage Bankers Association’s seasonally adjusted index. Refinance demand rose 4% for the week but was 76% lower y/y. Mortgage applications from homebuyers rose 8% for the week but were 16% lower y/y; in building products (TILE ), Truist said commentary from a commercial flooring industry trade show points to continued excellent growth in most all end-user markets, with no slowing of momentum

·     Semiconductors; QCOM won its fight against a 997 million euro ($1.05 billion) fine imposed by EU antitrust regulators four years ago, for allegedly pressuring Apple to only buy its 4G chips; in research, B Riley downgraded wight names in the sector AOSL, INDI, MRVL, SMTC, TGAN, LRCX, CAMT and ICHR and lower tgts across the sector to reflect increased 2H22 and 2023 estimate concerns from slowing demand, rising input costs and are despite numerous positive secular Semi and Semi Cap force



·     ACAD +9%; shares jumped after the FDA published briefing documents on antipsychotic therapy pimavanserin targeted at patients with Alzheimer’s disease

·     BIDU +1%; on China data and Reuters report is in talks to sell its controlling stake in IQ in a deal that could value all iQIYI at about $7 billion

·     BK +3%; strength across the board in financials ahead of expected rate hike (GS, DFS, MS)

·     HTZ +8%; announces new $2.0B share repurchase program

·     QCOM +2%; won its fight against a 997 million euro ($1.05 billion) fine imposed by EU antitrust regulators four years ago, for allegedly pressuring Apple to only buy its 4G chips

·     SPOT +5%; upgraded from Underweight to Equal weight at Wells Fargo and raise tgt to $124 saying its recent investor day laid out a more profitable company than they have modeled historically

·     ZEN +3%; is in talks to settle with activist investor Jana Partners LLC, days after the software company ended an unsuccessful bid to sell itself, the WSJ reported https://on.wsj.com/3mQkRqy



·     IQ -4%; Reuters reported BIDU is in talks to sell its controlling stake in IQ in a deal that could value all iQIYI at about $7 billion (BIDU owns 53% of iQIYI and holds more than 90% of its shareholder voting rights)

·     IRNT -13%; reported lower than expected top line and bottom-line results but maintained revenue and ARR guidance for FY23

·     MEI -8%; lowers FY22 EPS view to $2.68-$2.72 from $3.05-$3.15 and narrows FY22 revenue view to $1.164B from $1.160B-$1.170B (est. $1.17B)

·     PL -8%; after posts wider-than-expected EPS loss, tightened its annual revenue guidance (to $177M-$187M from $170M-$190M) and forecast Q2 revenue below market estimates


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.