Mid-Morning Look: April 11, 2022

Mid-Morning Look

Monday, April 11, 2022






DJ Industrials




S&P 500








Russell 2000






U.S. stocks gap lower to start the week following another spike in Treasury yields and as traders position themselves ahead of the earnings season start this week. S&P futures dropped below last weeks’ low of 4,444.50 (4,438 low) before paring losses as the S&P and Nasdaq fall for the 4th time in 5 days. Financials and Industrials rallied hard off the open (among last week top drags), while last week leaders Energy, Utilities, and Health Care have fallen, and Tech opened down with no bounce to this point as surging yields/rising inflation/rate hikes weigh on growth stocks again (QQQ was down over 3% last week). Big week of economic/inflation data in only four days (market closed Friday) as CPI data out Tuesday, PPI the day after, while commodity disruptions still driven by the Russia/Ukraine war and China’s Covid-19 lockdowns remain the market drivers. Top concerns for markets heading into the week remain rising/rates and inflation amid the aggressive Fed, geopolitical risk as well as a prolonged economic slowdown (recession fears) and recent market volatility. China CPI came in at 1.5% YoY, above expectations of 1.2% and China PPI came in at 8.3%, above expectations of 7.9%. Mixed start early on lighter volumes with bond markets down again and the dollar at new 2-year highs.







WTI Crude















10-Year Note





Sector Movers Today

·     Bank movers; banks coming off another awful week, but looking to rebound ahead of earnings this week from the big banks (JPM, Citi, WFC); tons of analyst weigh in with changes ahead of results: 1) CFG, STT, TFC, USB downgraded to Neutral from Buy and upgrade WFC to buy at Citigroup saying expectations for a rapid increase in rates can be problematic for some banks in the near-term; 2) at Wells Fargo, KEY upgraded to overweight tgt $27 given benefits from Main St banking while RF also upgraded to overweight on valuation – firm expects a muted 1Q22, as what is a seasonally slow loan growth qtr is made worse by plummeting mortgage volumes and fears of a potential recession…said would be buyers of value names ASB, FNB, SNV and BPOP into 1Q, as well as continued buyers of SBNY which remains our overall Top Pick. We remain underweight FRC, given its reliance on mortgages and weaker asset sensitivity; 3) KEY was downgraded to Hold from Buy at Jefferies saying the rapid transition to a higher rate environment could bring less revenue/ earnings upside for KEY vs. other large regional peers.

·     Auto sector; China auto sales plunged in March as the country’s curbs to rein in COVID-19 outbreaks took their toll (shares of LI, XPEV, NIO fall), while TSLA was among automakers feeling the pain of limits on production; NIO suspended production on Saturday after China’s measures to contain the recent surge of COVID-19 cases disrupted operations at its suppliers; TSLA China sales tumbled 11.7% in March from a year earlier to 2.23 mln vehicles – its first decline in three months, according to the China Association of Automobile Manufacturers; HYZN sells 18 trucks to Hylane GmbH, subsidiary of major German motor insurance provider DEVK Versicherung

·     Consumer Finance; JPMorgan with several changes into earnings as they lower price tgts by 18%, on average, due to increased economic uncertainty reducing our confidence in forward estimates and an increased probability of recession – the firm downgraded AXP from Overweight to Neutral, as believe the company’s valuation already incorporates a relatively positive base case, and NAVI from Neutral to Underweight, as the extension of the “student loan pause” limits consolidation opportunity and the company’s long-term growth drivers remain unclear. They upgrade ESNT from Neutral to Overweight, as we view a non-fundamental driven pull-back as creating an opportunity to own a best-in-class PMI at a trough multiple

·     Transports: the Baltic Exchange’s dry bulk sea freight index slipped for a 13th straight session, down 24 points, or about 1.2%, to 2,031 points, its lowest since Feb. 18 as Capesize rates hit their lowest level in more than two-months (slipped 49 points, or 3.4%, to 1,395 points), its lowest level since early February. Average daily earnings for capesizes, which typically transport 150,000 tonne cargoes such as iron ore and coal, decreased by $413 to $11,566; JBLU said it would reduce flights in May and throughout the summer due to staffing limitations, after canceling more than 300 flights over the weekend; JBLU upgrade from Sell to Neutral w/ $13 PT at MKM as believe much of the bad news is now baked into the stock; Cowen said on truckers its latest survey results seen as a net negative as pricing expectations declined sequentially as carriers expect rate increases of +5.8%, but down -20bps from our 4Q survey (CVLG, KNX, LSTR).



·     AFMD +14%; updated on a Phase 1/2 study of AFM13 precomplexed with cord blood-derived natural killer cells in lymphoma; said data showed a 100% ORR and improvement in the rate of complete responses from 38% to 62% after a second cycle in 13 patients

·     BILI +8% NTES +7%; rise after Bloomberg reported that the Chinese government has approved the first group of video game licenses since July 2021

·     MSP +20%; agreed be acquired by software-maker Kaseya in a $6.2 billion all-cash deal, where Datto stockholders will receive $35.50 per share, a nearly 24% premium https://bit.ly/3JsUDmz

·     SAIL +29%; agreed to a $6.9 billion buyout from private-equity group Thoma Bravo, where holders to receive $65.25 a share in cash https://on.mktw.net/3rgGMcQ

·     SHOP +1%; announced a 10-for-1 stock split

·     VERU +40%; says an interim analysis showed its oral drug candidate, sabizabulin, led to a 55% reduction in deaths vs placebo in hospitalized moderate-to-severe COVID-19 patients in a late-stage study

·     WBD +4%; upgraded at Atlantic Securities and Evercore/ISI after Discovery closed its merger with WarnerMedia after the close on Friday 8th April and will begin trading as Warner Bros. Discovery on Monday 11th April



·     BCRX -3% extends losses after plunging Friday after the company paused enrollment in BCX9930 clinical trials; downgraded at Bank America today

·     BCYC -31%; after interim data from a Phase 1 clinical trial for its urothelial-cancer treatment as its experimental therapy, BT8009, had a 50% ORR, and one of the eight patients enrolled in the study who received the smallest dose of the therapy reported a complete response.

·     CCCC -20%; extends losses after falling -50% on Friday after CFT7455 (IKZF1/3 degrader) first clinical data negatively surprised with dose-limiting, on-target toxicities in the first dose cohort tested – prompts analyst downgrades/tgt cuts

·     COIN -2%; amid weakness in Bitcoin prices today falling around 4% to $41K, while Raymond James said 1Q22 trading volumes for Coinbase were softer on both a y/y and sequential basis and are expected to finish below their forecast for the quarter

·     NVDA -4%; pacing the declines in semiconductor sector after analyst downgrade; the broader SOX index falls near March lows below 3,050 on slowdown in consumer and PC demand

·     OXY -5%; after leading the S&P last week, energy stocks taking a breather today as oil prices fell as low as $93 per barrel; APA, FANG, COP among early decliners

·     TSLA -2%; China sales tumbled 11.7% in March from a year earlier to 2.23 mln vehicles – its first decline in three months, according to the China Association of Automobile Manufacturers

·     XPEV -4%; along with weakness in NIO, LI as China auto sales plunged in March as the country’s curbs to rein in COVID-19 outbreaks took their toll


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.