Morning Preview: June 21, 2022

Early Look

Tuesday, June 21, 2022









S&P 500










U.S. stock futures are looking at a sharply higher open, with the S&P 500 rising 1.8% or 65 points to 3,742, with investors returning from the long 3-day weekend. The S&P 500 dropped 5.8% last week for its biggest weekly loss since March 2020, dipping deeper into bear market territory (and down 23% from its record high from early January). The S&P and Nasdaq each suffered their 10th losing week in 11 on fears that the central bank will continue to hike rates aggressively to tame inflation at the risk of causing an economic downturn. The Dow Jones Industrial Average slid 4.8% last week, falling below 30,000 for the first time since January 2021 last week. The tech-heavy Nasdaq Composite slipped 4.8% last week, down 33% from its record high. In Asian markets, The Nikkei Index gained 475 points to 1.84% to 26,246, the Shanghai Index slid -8 points to 3,306, and the Hang Seng Index rose 395 points to 1.87% to 21,559. In Europe, the German DAX is up 1% to 13,400, while the FTSE 100 also gains 1% to 7,193.


Last week, the Fed led a host of global central banks in ratcheting up monetary policy tightening efforts aimed at turning back an inflationary wave that risks steam-rolling the world economy. The Fed posted an increase of 75-bps with another 75-bps expected at the July meeting while the Swiss National Bank surprised with a 50-bps hike. Note Fed Chair Jerome Powell will testify before Congress Wednesday and Thursday on monetary policy and the economy.


More volatility this weekend in the land of crypto currency as Bitcoin (BTC) prices are up 3% back above $21,000 after dropping below the key $20,000 level, falling as much as 15% to $17,787 on Saturday afternoon, before rebounding above $20,000. Bitcoin is still off 70% from the all-time high of $67,802 seen in November, which preceded the Fed’s aggressive rate hike cycle that threatens to drain liquidity from markets. Oil prices are edging higher early, while President Biden said this weekend, he is considering the idea of a federal gas tax holiday.

Market Closing Prices Yesterday

·     The S&P 500 Index edged higher 8.07 points, or 0.22%, to 3,674.84

·     The Dow Jones Industrial Average fell -38.29 points, or 0.13%, to 29,888.78

·     The Nasdaq Composite jumped 152.25 points, or 1.43%, to 10,798.35

·     The Russell 2000 Index advanced 15.86 points, or 0.96% to 1,665.69


Economic Calendar for Today

·     7:45 AM ET          ICSC Weekly Retail Sales

·     10:00 AM ET        Existing Home Sales M/M for May

·     3:30 PM ET           Fed’s Barkin Speaks in Richmond


Earnings Calendar:

·     Earnings Before the Open: LEN

·     Earnings After the Close: LZB


Other Key Events:

·     Goldman Sachs Business Services, Transport & Leisure Conference, 6/20-6/22, in London

·     Piper Upper Midwest Bank Tour (virtual), 6/21-6/22





















10-Year Note





World News

·     ECB President Christine Lagarde reaffirmed Monday a commitment to avoid fragmentation — a yield spread widening which might hamper the transmission of monetary policy across the euro area – Reuters

·     Chinese banks kept their main lending rates unchanged on Monday; the one-year loan prime rate was left at 3.7%, in line with most forecasts

·     Larry Summers said the U.S. needs 5% Jobless Rate for Five Years to Ease Inflation ‘; “We need five years of unemployment above 5% to contain inflation — in other words, we need two years of 7.5% unemployment or five years of 6% unemployment or one year of 10% unemployment,” said Summers said in a speech – Bloomberg


Sector News Breakdown


·     Spirit Airlines (SAVE) rises 12% as JetBlue Airways (JBLU) sweetens its takeover offer by $2 per share to $33.50 per share as it attempts to fend off rival Frontier Airlines’ (ULCC) proposal and represents a 68% premium to Frontier’s cash-and-stock

·     Lennar (LEN) Q2 EPS $4.49 vs. est. $3.98; Q2 revs $8.36B vs. est. $8.11B; Q2 new orders increased 4% to 17,792 homes; new orders dollar value increased 20% to $9.1B; backlog increased 16% to 28,624 homes; backlog dollar value increased 33% to $14.7B; sees Q3 deliveries 17,000-18,500 and sees Q3 new orders 16,000-18,000

·     Tesla (TSLA) is cutting its total headcount by up to 3.5%, with plans to reduce its salaried workforce by about 10% and add hourly staff numbers in the latest round of layoffs that will occur over the next three months, said Elon Musk

·     EasyJet plc (EJTTF) said it expected to fly about 90% of its pre-pandemic capacity in July, August, and September, down from the 97% it had scheduled last month; also warned the ongoing operational disruption would lead to higher crew costs and airport charges.

·     Macau casino stocks fell in Hong Kong after the gambling region saw its first COVID-19 outbreak in eight months. The city reported 21 preliminary-positive cases in the local community as of Sunday evening (watch shares of MGM, WYNN, MLCO)

·     Mondelez International (MDLZ) announced an agreement to acquire Clif Bar & Company, maker of energy bars with organic ingredients, for $2.9 billion with additional contingent earnout considerations

·     Under Armour (UAA) downgraded to Market Perform from Outperform at Cowen



·     President Biden is considering the idea of a federal gas tax holiday and “hopes to have a decision based on the data I’m looking for by the end of the week.” Any suspension of the 18.4c a gallon tax would require action from Congress and would be unprecedented.

·     Diamondback Energy (FANG) board approved increase to its return of capital commitment to at least 75% of Free Cash Flow from at least 50%.

·     Exxon Mobil (XOM) upgraded to Outperform from Neutral at Credit Suisse

·     Exxon Mobil Corp. (XOM) said global oil markets may remain tight for another three to five years, largely because of a lack of investment since the pandemic began – Bloomberg

·     SunPower (SPWR) downgraded to Sell from Neutral (tgt to $13 from $19) and Sunnova Energy (NOVA) downgraded to Neutral from Buy (tgt to $24 from $31) at Goldman Sachs, while the firm lowered price targets on RUN to $36 from $40, and raised SHLS to $22 from $19



·     Crypto rebounding after tumbling this weekend: Prices have tumbled in recent weeks following several developments including: collapse of Terra in May (UST-USD), a dollar-pegged algorithmic stablecoin project, insolvency fears after crypto lending firm Celsius paused all withdrawals last week/transfers between accounts, crypto hedge fund Three Arrows Capital failed to meet margins calls from lenders and several firms including Coinbase and BlockFi announced layoffs.

·     Citigroup Inc. (C) is the cheapest of the big banks, at 0.5x book value according to Barron’s. Even a little good news could send the stock higher. To compare: JPMorgan Chase & Co. (JPM) trades at 1.3x, Bank of America Corp. (BAC) at 1.1x and Goldman Sachs Group Inc. (GS) trades at book value, which “has historically been a good level at which to buy the stock,” Barron’s says

·     Asset-management stocks such as BlackRock Inc. (BLK), T. Rowe Price Group Inc. (TROW), Invesco Ltd. (IVZ), AllianceBernstein Holding LP (AB) and Franklin Resources Inc. (BEN), are “extremely cheap” versus fair-value estimates, Greggory Warren, a Morningstar analyst, told Barron’s



·     AstraZeneca PLC (AZN) said that Eplontersen met co-primary and secondary endpoints in a phase 3 trial for hereditary transthyretin-mediated amyloid polyneuropathy. Eplontersen will be jointly developed and commercialized with Ionis (IONS) in the U.S. and developed and commercialized in the rest of the world by AstraZeneca.

·     Acadia Pharmaceuticals Inc. (ACAD) failed to win backing from the US Food and Drug Administration panel for its new drug in treating patients with Alzheimer’s disease psychosis


Industrials & Materials

·     ABB (ABB) again delayed the initial public offering (IPO) of its electric vehicles charging business saying recent market conditions have made it challenging to proceed with a planned share offering in the second quarter of 2022

·     Canadian National Railway Co. (CNI) said its shipments throughout Canada and the U.S. haven’t been interrupted after its Canadian signal and communication workers walked off the job Saturday following months of contract negotiations.

·     Virgin Galactic (SPCE) initiated with an underperform and $4 tgt at Wells Fargo

·     FMC Corporation (FMC) files automatic mixed securities shelf


Technology, Media & Telecom

·     Twitter Inc. (TWTR) said its board of directors unanimously recommends stockholders vote “for” the adoption of the merger agreement; board recommends stockholders vote for compensation that will or may become payable by to its named executives in connection with merger

·     NetEase Inc. (NTES) will postpone the original June 23 China launch of Diablo Immortal — the mobile game it co-developed with Activision Blizzard Inc. — to an unspecified date, the Chinese gaming giant says in a Sunday statement

·     Adobe (ADBE) downgraded to equal-weight at Morgan Stanley and given Street-low $362 target from $591 on expectation of a slowing structural growth profile

·     The Trade Desk (TTD) announced a partnership with Albertsons Media Collective, the retail media arm for Albertsons Companies


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.