Morning Preview: August 23, 2022

Early Look

Tuesday, August 23, 2022









S&P 500










U.S. stock futures are pointing to a modest rebound after significant selling pressure throughout Monday, as the Nasdaq slipped for the 4th time in the last 5-days, the dollar jumped, and yields rose ahead of this week’s Fed Chairman Powell commentary at the Jackson Hole Fed meeting. The euro fell to the lowest level in almost 20 years (extending losses this morning) as investors shunned risky bets. Europe’s currency tumbled on growing concern about its economic prospects, while power prices in the region surge – overnight, weaker PMI data showing growing concerns for a recession overseas. The yield on the benchmark US Treasury 10-year climbed above 3% for the first time in a month. The tech-heavy Nasdaq underperformed while the S&P 500 fell further away from the 200-day moving average, after testing and failing to break the level last. The S&P 500 fell -2.1% in its largest drop since June 16th and its first back-to-back 1% losses since June. The Dow fell 1.91% and the Nasdaq plunged 2.55%. In Asian markets, The Nikkei Index fell -341 points to 28,452, the Shanghai Index was little changed at 3,276, and the Hang Seng Index slid -153 points to 19, 503. In Europe, the German DAX is up about 25 points to 13,258, while the FTSE 100 is down about -25 points, just above 7,500. Overnight the US dollar index (DXY) rose to 109.27 before paring gains, back near fresh 20-year highs as the euro slips further below parity to 0.993 vs. the dollar (also a 2-decade low). Natural gas prices hit $10 per mln Btus for the first time since 2008. U.S. data today includes the August PMI, consumer confidence, new home sales and the Richmond Fed manufacturing index. U.S. mortgage applications are also released. Bond yields are little changed after advancing again on Monday, with the 10-year yield holding above 3%. Note the U.S. bond market is on pace for its worst year in history with a loss of 10%. Entering the year, the 2.9% decline for bonds in 1994 was the largest ever.

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -90.49 points, or 2.14%, to 4,137.99

·     The Dow Jones Industrial Average fell -643.13 points, or 1.91%, to 33,063

·     The Nasdaq Composite tumbled -323.64 points, or 2.55%, to 12,381.57

·     The Russell 2000 Index declined -41.60 points, or 2.13% to 1,915.74


Economic Calendar for Today

·     7:45 AM ET          ICSC Weekly Retail Sales

·     8:55 AM ET          Johnson/Redbook Weekly Sales

·     9:45 AM ET          S&P Global Manufacturing PMI, Aug-F…est. 52.0

·     9:45 AM ET          S&P Global Services PMI, Aug-F…est. 49.2

·     10:00 AM ET        New Home Sales M/M for July…est. 575K

·     10:00 AM ET        Richmond Fed Index for August…prior flat

·     1:00 PM ET           US Treasury to sell $45B in 2-yeasr notes

·     4:30 PM ET           API Weekly Inventory Data


Earnings Calendar:

·     Earnings Before the Open: DKS M PYCR RGS SJM

·     Earnings After the Close: AAP AVNW CAL INTU JWN LZB SCSC TOL URBN


Other Key Events:

·     Davidson Big Sky Tech Summit, 8/21-8/22 in Montana

·     Piper Annual MedTech & Diagnostics California Bus Tour, 8/23-8/25, in CA

·     Seaport Global Annual Summer Investor Conference (virtual), 8/23-8/24

·     Truist Texas Bank Summit, 8/22-8/23, in Dallas, TX

·     Fed’s Kashkari speaks in Q&A at 7:00 PM





















10-Year Note





World News

·     Euro area August Services PMI falls to 50.2 vs. prior 51.2 and below forecast of 50.5; Eurozone PMI Composite Output Index at 49.2 vs. July 49.9 (18-month low); Eurozone Flash-Aug Manufacturing PMI at 49.7 vs. July 49.8 (26-month low)

·     U.K services PMI actual: 52.5 vs 52.6 previous; est. 51.6; UK Flash PMI Composite Index at 50.9 below July 52.1 (an 18-month low); UK Services PMI Business Activity Index at 52.5 vs. 52.6 prior (an 18-month low); UK Manufacturing PMI at 46.0 a 27-month low) and below July 52.1

·     Japan’s manufacturing activity growth slowed to a 19-month low, as new orders continue to decline’ Flash Manufacturing Purchasing Managers’ Index (PMI) fell to a seasonally adjusted 51.0 in August, down from July’s final of 52.1.

·     Germany Manufacturing PMI increased to 49.8 in August of 2022 from 49.3 in the previous month and above market expectations of 48.2, flash estimates showed

·     Australia’s main composite PMI fell to 49.8 and a 7-month low (prev. 51.1). Driving that composite PMI lower was a fall in the services PMI to 49.6 (also a 7-month low). The manufacturing PMI at 54.5 eased from 55.7


Sector News Breakdown


·     XPeng (XPEV) Q2 total revenues reached RMB7,436.3 million, a 97.7% increase y/y; Q2 vehicle deliveries reached 34,422, a 98% increase y/y; Q2 gross margin was 10.9%, a decrease of 100 basis points year-over-year; says on track for official launch of our flagship G9 SUV in September

·     Grocery Outlet (GO) downgraded to Underweight from Equal Weight at Morgan Stanley

·     AutoWeb Inc (AUTO) downgraded to Hold from Buy at Ascendiant Capital Market saying, lower car inventory has reduced demand for AUTO’s lead generation products and for its car advertising to consumers


Energy, Industrials and Materials

·     U.S. court upheld a World Bank tribunal’s $8.75B award to ConocoPhillips (COP) over the expropriation of the company’s Venezuelan oil assets, granting a default judgment in the case on Friday.

·     Flexsteel Industries (FLXS) 4Q adj EPS $0.41 vs est. $0.43 on revs $124.5Mm vs est. $119.4Mm; comments, “While our long-term growth outlook remains promising, there are a few market headwinds which we are navigating in the short-term that may create pressure on our first half profit results for fiscal 2023.”



·     Bank of Nova Scotia (BNS) Q3 Non-GAAP EPS of C$2.09 vs. est. C$2.11 on revs C$7.8B (+0.5% Y/Y) vs. est. C$8.13B; Q3 return on equity (ROE) on reported basis of 15.3% vs 15.0%; Q3 return on equity on adjusted basis of 15.4%, compared to 15.1%; Q3 net interest income $4,676 mln vs $4,217 mln

·     Dlocal Ltd. (DLO) 2Q EPS $0.10 vs est. $0.10 on revs $101.2Mm vs est. $98.5Mm; qtrly total payment volume $2.4B +67%; adj EBITDA $38.2Mm vs est. $35.3Mm

·     Yandex (YNDX) said it had agreed to sell its news aggregator and homepage to state-controlled rival VK, a move that will likely further limit Russians’ access to independent media

·     Chinese developer Shimao Group has proposed a two-class restructuring plan to offshore creditors to repay $11.8 billion over a period of three to eight years, according to two sources with direct knowledge of the matter and a document seen by Reuters.



·     Alcon (ALC) to acquire Aerie Pharma (AERI) for $770M at $15.25 per share; deal is a premium of 37% to Aerie’s last closing price of $11.15 a share on Monday

·     Cano Health (CANO) rises after investor Own Creek Asset Management, which owns 8.69 million shares, or a 3.75% stake, urged the company to pursue strategic alternatives, including a possible sale

·     Bausch Health Cos. (BHC) has retained advisers to help it map out its future after the company lost a major patent dispute and has drawn controversy over the recent spinoff of its eye-care business, according to a report in the WSJ


Technology, Media & Telecom

·     Palo Alto (PANW) shares rose 6%; announced a 3 for 1 stock split; 4Q adj EPS $2.39 vs est. $2.28 on revs $1.6B vs est. $1.5B; guides 1Q billings $1.68-1.70B, revs $1.535-1.555B vs est. $1.537B and adj EPS $2.03-2.06 vs est. $2.03

·     Zoom Media (ZM) Q2 adj EPS $1.05 vs. est. $0.92 and revs rose 7.6% y/y to $1.1B vs. est. $1.12B; cut Fy23 revenue guidance to $4.39B-$4.4B from prior $4.53B-$4.55B (est. $4.54B) and guides year EPS $3.66-$3.69 from $3.70-$3.77 and guided Q3 EPS and revs below views; customers contributing more than $100,000 in trailing 12 months revenue 3,116, +37% y/y

·     Twitter (TWTR) has major security problems that pose a threat to its own users’ personal information, to company shareholders, to national security, and to democracy, according to an explosive whistleblower disclosure obtained exclusively by CNN and The Washington Post.

·     Elon Musk’s lawyers sent a subpoena to Twitter (TWTR) co-founder Jack Dorsey ahead of the trial surrounding the stalled $44 billion takeover of the social media platform. Musk is seeking evidence from Dorsey about fake accounts on the site, the key reason Musk has been trying to back out of the deal.

·     World Semiconductor Trade Statistics lowered its market outlook to 13.9% growth this year from a previous 16.3%. In 2023, it sees chip sales rising just 4.6%, the weakest pace since 2019 – Bloomberg

·     Marin Software Inc. (MRIN) rises after the company said its flagship platform can now optimize Snap Inc.’s (SNAP) social media’s advertisement campaigns.

·     An ex-Apple (AAPL) engineer admits stealing automotive trade secrets – TechCrunch reported. A case concerning Apple’s driving trade secrets which started in 2018 has ended. Xiaolang Zhang, a former Apple employee, pleaded guilty to stealing confidential information from Apple

·     Apple Inc (AAPL) plans to start making the iPhone 14 in India about two months after its release out of China, in a move that will narrow the gap from the typical six to nine months for previous launches, Bloomberg News reported

·     Fortinet (FTNT) will jointly build secure 5G networks for communication service providers as part of a global agreement with NEC, the cybersecurity firm announced on Tuesday.

·     Infosys (INFY) downgraded on valuation, margin concerns at JPMorgan


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.