Mid-Morning Look: March 13, 2023

Mid-Morning Look

Monday, March 13, 2023






DJ Industrials




S&P 500








Russell 2000






U.S. stocks slide, but rebound off morning lows on rising expectations the Fed will do “less” next week at their policy meeting regarding interest rate hikes after three bank failures over the last week. Investors piled into the safety of government bonds and gold after regulators moved this weekend to limit the impact of the collapse of Silicon Valley Bank. In the last few days, we witnessed the 2nd and 3rd largest bank failures in US history as SIVB (had roughly $200B in assets at time of failure) was closed by the FDIC Friday and SBNY (roughly $118B in assets at time of failure) was closed by State authorities on Sunday. Treasury yields tumbled as the 10-year U.S. Treasury note fell to 3.49%, from 3.694% Friday and shorter term 2-year yields fell nearly 50-bps to 4.11% after hitting pre-mkt lows of 3.99% (and down nearly 100-bps off last week high of 5.07%). The move comes as Fed swaps price in 50-bps of rate cuts by year end and reduced expectations of rate hikes next week (last week was as high as 70% chance of 50-bps hike next week by FOMC and no cuts by year end). Meanwhile the Cboe Volatility Index (VIX) or “fear index” jumped to its highest in five months topping 30-pre-mkt. Shares of regional banks/brokerage pressured this morning, with big losses early for likes of FRC, WAL, PACW, SCHW, BOH, TFC and many others. Going overlooked two M&A deals in the Healthcare sector (SNY acquired PRVB and PFE buys SGEN), while all eyes on tomorrows consumer price (CPI) February reading. A pullback in inflation could help ease market fears, giving the Fed ample room to hold off on rate hikes going forward, while a “hotter” reading will raise serious questions for the Fed in their ongoing battle to slow inflation, while now facing a new banking concern. Defensive sectors stronger early along with gold/bonds as Consumer Staples, Healthcare and utilities rise. Large cap tech (AAPL, MSFT, GOOGL) also strong early while Small Cap Russell 2000 falls for 5th time in 6-days.


More on banking news this weekend: Investors are digesting the ramifications of regional bank failures and regulators’ efforts to stabilize the financial system. The Treasury Department, the Federal Reserve and the Federal Deposit Insurance Corp. guaranteed all deposits of SVB, which collapsed after an attempt to raise capital led to a bank run. Regulators also said they had taken control of Signature Bank, which serves many cryptocurrency companies. The moves initially appeared to shore up wavering confidence in the American banking system, before selling intensified in European trading.








WTI Crude















10-Year Note





Sector Movers Today

·     Banks the story again as State authorities closed NY-based Signature Bank (SBNY) on Sunday, after Silicon Valley Bank (SIVB) was shut down by regulators on Friday in the biggest bank failure since the 2008 financial crisis. All depositors of both banks will be made whole, according to a joint statement by the Department of the Treasury, Federal Reserve and FDIC. But that has not eased fears in other regional banks with massive declines early in FRC, CMA, ZION, KEY, FITB, TFC, WAL, BOH, SCHW and the list goes on as investors shoot first and ask questions later.

·     Shares of U.S. oil and gas companies followed crude prices lower as the collapse of Silicon Valley Bank (SIVB) raised fears of a fresh financial crisis. Both Brent and WTI crude each fell as much as 5%, sinking majors XOM, CVX as well as E&P and refiners. U.S. approves COP Alaska oil drilling project -interior department’s bureau of land management document.

·     In Healthcare research: at Wells Fargo they upgraded AMGN to Overweight as think the pessimism related to co post HZNP deal has caused weakness, & now see the stock trading ~7-8% below the worst case scenario. Firm downgraded MRK to Equal Weight as think with the recent appreciation of stock, MRK seems fairly valued at ~16x 2023 PE. There is also a lack of near-term catalysts and Keytruda LOE issues persist, potentially capping the valuation. Lastly, they upgraded LLY to Overweight as recent weakness creates a buying opportunity and think fundamentals of the company remain the same, and at current levels risk / reward into donanemab Alzheimer’s trial may be skewed to the upside.



·     AMAT ; announces new $10 billion share buyback plan, hikes dividend.

·     CALT +37%; announces primary endpoint successfully met in phase 3 Nefigard trial evaluating Nefecon in Iga Nephropathy.

·     COIN +15%; as crypto related assets see inflow of buying as Bitcoin jumps 15% back above $23K as investors seek other assets outside of financials (crypto, gold, bonds surge).

·     ILMN +14%; on reports activist investor Carl Icahn is gearing up for a proxy fight, planning to nominate three people to Illumina’s board, saying they could help resolve the company’s attempted takeover of Grail https://on.wsj.com/3ZHnlJx

·     MRNA +5%; upgraded to Outperform at Cowen and raise tgt to $180 from $150 saying MRNA will be a leader in RSV, and they expect flu A VE data by month’s end to be superior.

·     NEM +5%; gold miners among early leaders given spike in gold in flight to haven assets.

·     PRVB +261%; SNY to acquire PRVB, adding to portfolio TZIELD, the first disease-modifying treatment for the delay of Stage 3 T1D; holders to receive $25 per share in cash in deal valued at $2.9B, a 273% premium to Friday’s close. https://on.mktw.net/3Fku8AR

·     SGEN +18%; PFE to acquire SGEN for $229 per share in cash in $43B deal; proposed combination enhances Pfizer’s position as a leading company in oncology (SGEN closing price Friday was $172.61) https://on.mktw.net/3FishfE



·     FRC -65%: contagion fears in banking sector hitting handful of stocks after SIVB, SBNY closures; FRC said it has access to more than $70 billion in unused liquidity after new support from the Federal Reserve and JPMorgan Chase (WAL, PACW other shares tumble – nearly all top decliners in the S&P are in the financial sector = KRE down -16%).

·     MRSN -7%; shares slide after the FDA put on hold an early-stage trial testing company’s experimental cancer drug after the death of a participant.

·     RIVN -6%; WSJ reported that RIVN and largest shareholder AMZN are in talks to end the exclusivity part of their electric van deal, citing people familiar with the matter. https://on.wsj.com/3ywbdiD

·     XOM -1%; broad weakness in energy stocks as WTI crude fell as much as 5% earlier.


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.