Mid-Morning Look: September 08, 2022

Mid-Morning Look

Thursday, September 08, 2022






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U.S. stocks opened to the downside following a busy day of macro news moving markets early, as the European Central Bank (ECB) lifted key interest rates by 75 basis points and said more hikes were likely to come in response to inflation that remains “far too high” and “likely to stay above target for an extended period.” Analysts had debated whether the ECB would lift rates by 50 basis points or 75 basis points. The ECB also slashed its 2023 GDP growth outlook to 0.9% from 2.1%. Shortly after, Fed Chairman Powell reiterated that the central bank is “strongly committed” to controlling inflation, to prevent it from becoming entrenched as it did in the 1970s. Chairman Powell repeated the core themes of his speech at an annual central banking symposium in Jackson Hole, WY two weeks ago, which sunk U.S. markets on his aggressive stance on rates and inflation. Mr. Powell isn’t scheduled to speak again before the Fed’s Sept. 20-21 meeting. There was nothing overly surprising about Powell comments, reiterating recent hawkish stance, or the ECB hike, but path of least resistance for markets the last 4-weeks remains to the downside. Following the ECB and Powell comments, the dollar index spiked to high above 110.20 (red to green), Treasury yields bounce (10-yr highs 3.295%) and stocks slid. The Fed is widely expected to raise rates in 2-weeks by another 75-bps after having taken the benchmark federal-funds rate from near zero in March to a range between 2.25% and 2.5% in July. U.S. mortgage rates just hit their highest level since 2008, rising to around 5.9% (last year it hit an all-time low of 2.65%). Financials leading higher early along with Healthcare while Tech and Staples lag.


Economic Data

·     Weekly Jobless Claims fell to 222K in latest week from 228K prior and below consensus 240K; the 4-week moving average fell to 233K from 240,500 prior; continued claims rose to 1.473M from 1.437M prior and the US insured unemployment rate unchanged at 1.0%







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Sector Movers Today

·     Auto sector: TSLA sold 76,965 Chinese-made vehicles in August, nearly triple its sales from a month ago; exported 42,463 Model 3s and Model Ys from China last month, the China Passenger Car Association (CPCA) said. In July, it sold 28,217 vehicles and exported 19,756; CPRT reported F4Q22 sales modestly above consensus, but EBIT below, with the slight EPS beat driven by a lower tax rate and on top line, upside to vehicle sales offset modest downside to service revs; RIVN and Mercedes-Benz Vans signed a memorandum of understanding for a joint venture to produce electric vans in a factory in Central or Eastern Europe within the next few years

·     Transports: Shipping rates are still falling, in another sign that a global recession may be coming – CNBC reported. The World Trade Organization latest Goods Trade Barometer shows the volume of world merchandise trade has plateaued. Year-on-Year growth for Q1 slowed to 3.2%, down from 5.7% in the final quarter of 2021; KeyBanc lowers estimates on ODFL and SAIA to reflect August tonnage updates that materialized below their expectations. That said, yields ex-fuel were generally stable, with weight per shipment positive; UAL agreed to purchase 200 four-seat electric aircraft from EVE with options for 200 additional aircraft, and said will invest $15M; in airlines, ALGT upgraded to Outperform at Raymond James, downgraded MESA and SKYW to underperform as believe the pilot rates being established across the regional industry will diminish the earnings power of regional airlines

·     Finance, FinTech & Payments; financials in general getting a nice pop today, but in Fintech, Wells Fargo downgraded FIS and MQ to Underweight and PAY to Equal Weight and CDLX to Underweight in IT Services saying the message conveyed by Fed Chairman Jerome Powell at Jackson Hole on August 26, was decidedly negative for Fintech companies, in their view and expect the ‘pain’ Mr. Powell and the Fed see as required to drive inflation down to 2% — and then remain there — will negatively impact future growth in consumer and business spend



·     AMLX +66%; treatment for amyotrophic lateral sclerosis received the support of a panel of FDA advisers as the panel voted 7-2 to back approval of the treatment

·     ASAN Q2 results were solid as paid subscribers increased to >2.5M, generating revenue of $134.9M on 51% y/y growth. cRPO also remained healthy, growing 55% y/y, boosted its revenue guidance for the full year and CEO bought $350 million of shares in a private placement

·     GME +6%; posted mixed Q2 results with smaller loss than expected but revs miss, while announced a new partnership with crypto exchange FTX US

·     INTA +15%; posted a beat and raise quarter as key metric, cloud ARR, ended the year with 49% growth – sees FY revs $324.5M-$328.5M vs. est. $317.7M

·     REGN +15%; Aflibercept 8 mg meets primary endpoints in two global pivotal trials for DME and wAMD, with a vast majority of patients maintained on 12- and 16-week dosing intervals

·     RIVN +8%; and Mercedes-Benz Vans signed a memorandum of understanding for a joint venture to produce electric vans in a factory in Central or Eastern Europe within the next few years

·     RVNC +13%; after the company announced the FDA approval of Daxxify injection for the temporary improvement of moderate to severe frown lines; decision marks the RVNC’s first FDA approval and allows the company to access the growing U.S. market for facial injectables



·     AEO -9%; as 2Q results missed Street expectations with EPS of $0.04 missed the $0.14 consensus driven by higher markdowns which contributed 750 bps to the GPM decline y/y, EBIT margin was under meaningful pressure and revenue trends decelerated starting in mid-June

·     ALNY ; noted Patisiran helped patients with ATTR-CM as data was statistically significant, and it’s expected to be enough to win FDA approval – but analysts expected a bigger difference between Patisiran and placebo on the six-minute walk test

·     BEN -2%; downgraded to Underperform and cut its price tgt to $25 from $28 at Bank America saying the company’s net flows have deteriorated for two consecutive quarters and will decline again next quarter

·     CSIQ -5%; downgraded to Sell from Neutral and cut tgt to $38 from $43 at Goldman Sachs which also downgraded SHLS to Sell, but upgraded MAXN and FSLR to Buys

·     CURV -9%; Q2 EPS of $0.22 missed by 2c and Q2 same-store sales only rose 1% while cuts FY22 rev view to $1.26B-$1.3B from $1.3B-$1.365B

·     MCFT -14%; said it expects to report lower sales for 2023 as sees ending year with sales of $580M-$615M, which compares with reported sales of $707.9M the prior year

·     MKC -7%; guides Q3 prelim EPS $0.79 vs. est. $0.83; cuts FY22 adjusted EPS view to $2.63-$2.68 from $3.03-$3.08 (below est. $3.04) and cuts FY22 revenue view to flat to up 2% from up 5%-7%


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.