Mid-Morning Look: October 11, 2021

Mid-Morning Look

Monday, October 11, 2021






DJ Industrials




S&P 500








Russell 2000






A strong start for U.S. equities after overnight futures were pointing to a lower open initially. U.S. bond markets are closed for the Columbus Day holiday, after the 10-year yield touched its highest levels since mid-June last Friday at 1.61%. Asian equities rallied overseas as the Hang Seng rises as much as 2.3% as tech recovery continues. Chinese stocks jumped on easing concern about the internet crackdown. China’s coal futures reached a record after flooding shuttered mines. Goldman Sachs trimmed its forecasts for U.S. growth over the weekend, but not impacting markets today. Stand out strength early in metals and mining stocks, specifically copper and aluminum stocks along with another spike in energy stocks as oil prices at fresh 7-year highs above $81 on rising demand views. In currencies, the Japanese yen drops to weakest since 2018. U.S. stocks unphased by the big jobs report miss on Friday, as it helped bolster investment hopes that the Fed will delay its asset tapering timeframe. Earnings season around the corner with bank banks kicking off results this Wednesday.







WTI Crude















10-Year Note

Bond mkt is




Sector Movers Today

·     Auto sector; MGA downgraded, ALV upgraded in auto-suppliers at Barclays while saying they are looking for underperformance at the key GM exposed suppliers/says while Ford underperformed overall NA LVP in 2Q, and hence drove weakness at the Ford suppliers (e.g. VC, BWA), GM bore the brunt of its production stoppages this quarter (GM NALVP -46%, vs. total NA -23%)/still expect misses from the key GM suppliers, e.g. MGA, LEA, and to a lesser extent AXL and APTV downgraded to Sell from neutral at UBS on expectations of a slower and more costly ramp-up for the electric-power provider; APTV guided FY21 sales to $15.1B-$15.5B, down 6% at the midpoint vs. prior range of $16.1B-$16.4B on lower margin view of 7.6%-8.4% vs. prior 9.9%-10.2%; CVNA upgraded at Wedbush citing the company’s recent share-price underperformance, as well as strength in its retail and finance units

·     Industrial & Machinery; HON raised its business outlook for jet deliveries as travel restrictions ease as they now see 7,400 new business jet deliveries worth $238 bln over the next 10 years, up 1% from the same 10-year forecast a year ago; most DE workers voted against a six-year labor contract that was tentatively agreed with the United Auto Workers (UAW) earlier this month, the U.S. tractor maker said; EMR to own 55% of AZPN following $11B transaction as Aspen holders will receive $87 per share in cash and 0.42 shares of the new AspenTech, implying a total consideration of $160 a share https://on.mktw.net/3Byj135

·     Software movers; ZUO assumed/upgraded from Hold to Buy with $24 tgt at Needham as believe Zuora will accelerate billings growth thanks to changes to its go-to-market and product strategy; Wells Fargo said top 2H picks are CRM, WDAY, PLAN, TWLO and FIVN as expect volatility to persist into Q3 as questions around peak growth and sustainability of margin profiles loom, recommend investors lean into large cap; KPLT announced it has become an Accelerate partner in the Adobe Exchange Program; NET downgraded at Piper; FORG with at least six, Buy rated related initiations today on Wall Street with Cowen high tgt at $45

·     Bank movers; financials and banks hit new highs last week as bond yields closed the week at its highest levels since mid-June (10-yr 1.611%), but focus turns to earnings with JPM, BLK kicking off earnings this Wednesday (10/13), BAC, C, MS, USB, WFC on Thursday (10/14) and GS, PNC, SCHW, TFC on Friday 10/15; KKR named Joe Bae and Scott Nuttall as co-CEOs of the 45-year-old private equity firm, effective immediately as founders Henry Kravis and George Roberts step down, but will remain involved with the firm as executive co-chairmen; in research, Citigroup provides Q3 EPS preview for brokers as remain broadly overweight Retail B/Ds and Asset Managers (A/M), while move up Traditionals and demote the Alts adding RJF to its U.S. Focus List, removing AMG; open a 30-Day positive catalyst watch on BEN ahead of earnings; shutter a 90- Day Positive Catalyst Watch on SCU.



·     AA +5%; aluminum stocks (CENX and other industrial metals (FCX) outperform as Reuters noted aluminum prices jump to the highest since 2008 as a deepening power crisis squeezes supplies of the energy

·     ADMS +71%; to be acquired by SUPN through a tender offer for $8.10 per share in cash (or an aggregate of approximately $400M), payable at closing plus two non-tradable contingent value rights (CVR) collectively worth up to $1.00 per share in cash (or about $50M), for a total consideration of $9.10 per share in cash (or about $450M). https://bit.ly/2X43Y2g

·     AZPN +8%; EMR to own 55% of AZPN following $11B transaction as Aspen holders will receive $87 per share in cash and 0.42 shares of the new AspenTech, implying a total consideration of $160 a share https://on.mktw.net/3Byj135

·     BABA +3%; another strong bounce in U.S. listed Chinese stocks after tumbling the last few months on stricter government regulatory issues

·     FLXN +69%; to be acquired by PCRX for roughly $427.5M, to gain access to co’s non-opioid pain treatment as FLXN holders to receive $8.50 per share, a 47% premium to their last closing price and the deal also includes a “contingent value right” where Flexion holders will get up to $8 per share, based on if co’s drug Zilretta achieves certain sales milestones

·     PTGX +82%; said the FDA has lifted its clinical hold on its blood cancer drug Rusfertide, allowing trials using the drug to resume as no other unexpected safety signals surfaced from the review that followed

·     WYNN +2%; casino stocks (LVS, MLCO) outperform after positive analyst comments (Jefferies and Deutsche Bank) despite data showing disappointing Golden Week traffic



·     ARE -1%; defensive REITs among the early decliners in the S&P (EQR, UDR)

·     CMCSA -2%; space mentioned negatively again as Raymond James downgraded CHTR and CMCSA to Market Perform from Outperform as believe two forces are going to keep cable multiples from expanding over the next few years: 1) competitive expansion, 2) regulatory encroachment

·     HAS -1%; said company CEO Brian Goldner will take a leave of absence for medical care

·     HYLN -13%; downgraded to Sell from neutral at UBS on expectations of a slower and more costly ramp-up for the electric-power provider.

·     LUV -2%; canceled more than 1,000 flights on Sunday (after over 800 on Saturday), which the company blamed on air-traffic control issues and disruptive weather (company cancelled another 350 today as well with over 500 delayed)

·     SRPT -5%; after the company highlighted new analysis and data from multiple studies of its Duchenne muscular dystrophy (DMD) treatment SRP-9001 saying it showed sustained functional improvements in multiple studies of patients with DMD, the company said.

@media only screen and (max-width: 500px) {
td p.MsoNormal {
text-indent: 0!important;
margin: 0!important;
div[class*=WordSection]>p {line-height: inherit !important;}div[class*=WordSection] a:not([href]) {color: inherit !important;}


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.