Mid-Morning Look: October 07, 2021

Mid-Morning Look

Thursday, October 07, 2021






DJ Industrials




S&P 500








Russell 2000







U.S. markets looking strong, with major averages surging around 1.5% after two negative catalysts were lifted (for now), as the energy crisis in Europe eases with Russia inserting itself as an energy power broker all but guaranteeing increased NG deliveries to the region – and in the U.S., Sen McConnell to offer a short-term hike to the nation’s borrowing limit that should last through November and will allow emergency debt limit extension into December. This morning, Senator Schumer said a deal was indeed reached on a short-term deal to avert debt crisis. U.S. listed China stocks also showing strength while large cap tech names (MSFT, AMZN, GOOGL) among those moving back above key technical levels given the recent 3-day bounce. The monthly nonfarm payroll report is also tomorrow, hoping to build on the strong ADP private payroll report yesterday. U.S. Treasury yields rise ahead of the employment data, while volatility at the shortest end of the curve eased in the wake of a potential plan to avoid a default on government debt this month. The benchmark 10-year yield was last up 3 bps at 1.5537%. Broad based rally this morning except for energy as oil prices pull back from 7-year highs.


Economic Data

·     Weekly jobless claims fell to 326K in the latest week, below the 348K estimate and down from upwardly revised 364K (from 362K) the prior week; the 4-week moving average rose to 344,000 from 340,500 prior week and continued claims fell to 2.714M from 2.811M prior week; the U.S. insured unemployment rate fell to 2.0% from 2.1% prior







WTI Crude















10-Year Note





Sector Movers Today

·     E&P and Majors; HES announces increase in recoverable resource estimate for Stabroek block and significant discovery at Cataback, offshore Guyana saying the increase in gross discovered recoverable resource estimate for Stabroek block to about 10 bln barrels of oil equivalent; in research, Truist increased 4Q21-2023 oil price deck by >6%; natural gas liquids by >22% and natural gas by >34% as expect supply/demand will likely remain constrained for months to come and raised ests and tgts on several names (CLR, NOG, WLL, OAS, APA, DVN, OVV, EOG, MRO, MUR, OXY, BCEI, PDCE, MGY, CPE, CDEV, ESTE, FANG, MTDR, PXD, REI, ARCRK, EQT, GDP, GPOR); in oil services, SLB upgraded to Overweight and raise tgt to $37 from $28 at JPMorgan which reflects the company’s advantaged portfolio that is poised to deliver strong earnings growth from the global recovery in upstream spending and further margin expansion; SLCA said to explore strategic alternatives for industrial & specialty products (ISP) segment

·     Auto sector; in auto dealers, Guggenheim said despite weaker-than-expected new car volumes, amid historically tight inventory levels, they are increasing our 3Q estimates above consensus and remain BUY-rated on LAD (raising PT to $542 from $523) and give it our Best Idea designation and remain BUY rated on AN (raising PT to $167 from $143) given its compelling capital allocation strategy (focused on buybacks and standalone used car store expansion) and potential for positive strategic change under a new CEO; NIO was upgraded to Buy at Goldman Sachs with an unchanged price target of $56 and raises 2021-23 revenue forecasts by 2% and 7%, respectively, to reflect the differentiated ET7 product launch, but maintains profit estimates and valuation; NKLA and TRP announced a deal to collaborate on large-scale hydrogen hubs

·     Bank movers; In mid-cap, Wells upgraded EWBC to OW and raised its target to $95 from $80 as its credit performance through the pandemic gives increased confidence that it will be able to maintain mid-double digit TBV growth, FIBK to OW as it has capitalized on the strong currency and excess capital with the acquisition of Great Western expanding the footprint to eight new states, said SBNY remains its top pick and upped its target to $390, and also likes PACW into earnings; UBS lifted its PT on CBOE to $127 from $124 and raised its estimates on better volume and pricing; Wolfe downgraded BAC to Peer-perform on rich valuation vs peers and their view that consensus fee income forecasts appear too aggressive, upgraded NTRS to Peer-perform as its P/E multiple has finally converged with Wealth peers given YTD underperformance, and said STT screens too cheaply with shares not reflecting improving organic growth and higher asset sensitivity from BBH deal; Raymond James upgraded COLB to OP, downgraded CAC to MP, and LOB, FHN, PPBI to OP from Strong Buy

·     Retailers; COST reported net sales $19.50B (+15.8% YoY) for the five weeks ended October 3, 2021, total comparable sales +14.3%, E-Commerce sales +10.6%, and Cowen raised their price target to $520 from $440 after the report; LEVI Q3 results beat expectations with adj EPS 48c vs est. 37c on revs 1.5B vs est. $1.48B, adj EBIT $222M vs est. $198M, raised its FY EPS forecast to $1.43-1.45 from $1.29-1.33 and above est. $1.33, and authorized a $200M buyback; LULU said it will offer its interactive at-home gym, Mirror, in 40 Canadian stores starting November 22; HELE Q2 adj EPS $2.65 vs est. $2.17 on sales $475.2M vs est. $430M, raised FY22 outlook for core EPS to $7.68-8.11 from $6.60-7.28, adj EPS to $11.26-11.56 from $10.46-10.97, and sales to $2.02-2.07B from $1.93-1.98B; BKE Sept. comp sales +17.8%, net sales $111.2M (+17% y/y); Morgan Stanley upgraded FIVE to OW on discounted valuation as its unchanged $230 PT as meetings with management provided more comfort around supply chain headwinds



·     AZPN +8%; on reports EMR is in talks to merge its software assets with the industrial software company, Bloomberg News reported citing people with knowledge of the matter. https://bloom.bg/3AlySkj

·     BABA +6%; along with gains in other U.S. listed China stocks as concerns around U.S/China trade relations and Evergrande’s debt crisis appeared to ease

·     BBIG +14%; as Vinco Ventures and ZASH Global Media and Entertainment, through their joint venture ZVV Media Partners, agreed to acquire digital marketing firm AdRizer for $108 million.

·     FCX +7%; top gainer in the S&P as metals rebound

·     LEVI +7%; results beat expectations with adj EPS 48c vs est. 37c on revs 1.5B vs est. $1.48B, adj EBIT $222M vs est. $198M, raised its FY EPS forecast

·     MDP +6%; as IAC reached a roughly $2.7B deal in cash to buy MDP’s digital and magazine publishing business, which includes publications like People, InStyle and Real Simple. As a result of the deal, Meredith will become part of DotDash, IAC’s digital-publishing division.

·     MRUS +37%; after presents early clinical data on MCLA-158 and preclinical data on zenocutuzumab at the AACR-NCI-EORTC virtual international conference on molecular targets and cancer therapeutics

·     PENN +5%; receives approval from the Minister of Canadian Heritage under the Investment Canada Act for the acquisition of sports-betting firm SCR

·     UAA +3%; retailers among top leaders in the S&P 500 after better LEVI results and improving sentiment into holiday season (shares of PVH, HBI, VFC among leaders)



·     BMY -2%; after a phase 2 study of its deucravacitinib for severe ulcerative colitis failed to meet primary and secondary endpoints

·     CTXS -2%; downgraded to Neutral at Citigroup following the sudden departure of CEO David Henshall announced last night (also issued Q3 rev guidance below views)

·     DVN -1%; early weakness in energy stocks as oil slips and investors take profits after the sector led markets the last week with oil hitting 7-year highs

·     LW -8%; after reporting net Q1 sales $984M, missing the average analyst estimate of 41B on weaker earnings and said it sees FY22 revenue above low-to-mid single digits and 2022 net, adjusted ebitda under pressure

·     PNW -5%; pressured after Guggenheim downgraded to Sell with $58 tgt and Wells Fargo cutting ests below consensus following a 3-day rate hearing in Arizona



·     Life Time Group (LTH) 39M share IPO priced at $18.00

·     Osmotica Pharmaceuticals (OSMT) 14M share Spot Secondary priced at $2.50

·     Theseus Pharmaceuticals (THRX) 10M share IPO priced at $16.00

·     Tricon (TCN) 36M share IPO priced at $12.40

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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.