Mid-Morning Look: August 08, 2023

Mid-Morning Look

Tuesday, August 08, 2023






DJ Industrials




S&P 500








Russell 2000






U.S. stocks are sharply lower as several factors weighing on market sentiment, erasing much of Monday’s gains. Futures dropped overnight on several developments including: 1) Chinese exports fell 14.5% in July from the year-ago period, the biggest decline in more than three years and imports fell 12.4%, far worse than the 5.4% drop expected by analysts polled by FactSet. The data pressured metals and mining stocks as well as energy prices. 2) Financials decline as Moody’s downgraded its debt ratings on several small and midsize U.S. and said it may downgrade the credit ratings on six major U.S. banks, including U.S. Bancorp and State Street. 3) European markets slid after the Italian government approved a surprise 40% windfall tax on banks’ profits. Italy’s Deputy Prime Minister Matteo Salvini said the funds from the one-off tax for 2023 would be used to help families and businesses impacted by the increase in interest rates. 4) Lastly, package delivery giant UPS reported weaker Q2 revenues and lowered its yearly outlook, but shares are already paring morning losses. Note all three indexes rallied Monday, with the Dow notching its first gain in four days as investors looked ahead to Thursday’s inflation data. On a positive note, shares of LLY and NVO jump in healthcare space after earnings and drug data.


The U.S. dollar strengthens against all FX majors as Chinese tech shares lead Asian equities lower. Euro and pound both a touch lower; yen weakens above 143-handle as Japan’s wage growth unexpectedly slows in June. Treasury yields tumbling early, with the 10-year yield down below 4%, falling nearly 8-bps while oil prices decline -1.5% to $80.72 per barrel after China’s trade data disappoints.


Economic Data

·     The U.S. trade deficit fell -4% in June to -$65.5 billion due to declining imports, reflecting a shift in consumer spending habits as well as a slump in global manufacturing. The trade gap dropped $2.8 billion from -$68.3 billion in May. U.S. June exports -0.1% vs May -0.5%, imports -1.0% vs May -2.3% – exports $247.48 bln vs May $247.83 bln, imports $312.98 bln vs May $316.12 bln.

·     June wholesale inventories revised to -0.5% vs. consensus -0.3% and from -0.3%; U.S. June wholesale sales -0.7% (consensus +0.1%) vs May -0.5% (prev -0.2%); U.S. June stock/sales ratio 1.41 months’ worth vs May 1.40 months.







WTI Crude















10-Year Note





Sector Movers Today

·     In Metals & Mining: shares of copper (FCX, SCCO), aluminum (AA, CENX), gold miners (NEM, GOLD), energy names (XLE, OIH), iron ore and steel (X, CLF, NUE) after weaker than expected Chinese import data overnight weighed on sentiment. China outbound shipments fell 14.5% from a year earlier in July, compared with the 12.4% decline in June, and Chinese imports declined 12.4% from a year earlier.

·     In Media: PARA results were above expectations for both revenue and EBITDA, partially benefiting from the timing of content licensing deals, with advertising trends worse than expected while subscription/affiliate trends were better. Also announced asset divestment of Simon & Schuster to reduce leverage, slower than expected recovery in TV Media advertising; FOXA authorized a $7 billion stock repurchase program and raised dividend after better Q4 results; WBD will create a new sports tier in association with its Max streaming product where users can watch games for an added cost.

·     In telecom & Satellite: DISH and SATS to combine in an all-stock deal, confirming a report by the Wall Street Journal late Monday where EchoStar shareholders will receive 2.85 DISH shares for each share of SATS common stock and 2.85 shares of DISH Network Class B common stock. https://tinyurl.com/yasnkm8v . TDS upgraded from Neutral to Overweight at JPMorgan and raised tgt to $38 from $14 after recent news that USM/TDS are exploring strategic alternatives for US Cellular. TDS owns ~82% of US Cellular, and that stake represents most value at TDS.

·     In REITs: CXW reported 2Q23 results that were in-line with consensus and raised its FY23 guidance. MAC sees FY FFO per share $1.78-$1.84, vs. prior $1.79 to $1.89. MPW guides FY EPS 0.33-$0.37, below prior $0.83-$0.98 view and consensus $0.77; NSA downgraded to Hold at Stifel and its TP to $35, because of an operating environment that deteriorated faster than it expected and higher for longer rates.

·     In Autos: ACVA delivered strong 2Q results, beating consensus estimates for revenue and adjusted EBITDA by 4% and 59%, respectively. Following the strong quarter, management raised its full-year outlook on both the top and bottom lines, driving shares higher. LCID Q2 EPS ($0.40) vs est. ($0.33) on revs $150.9Mm vs est. $175Mm disappoints but kept unchanged its 2023 production outlook despite weaker quarterly sales. PTRA shares sink after saying it voluntarily filed for chapter 11 bankruptcy in Delaware on Monday to strengthen its financial position “through a recapitalization or going-concern sale.” WKHS reported a big Q2 rev miss ($3.97B vs. est. $14.8M) and slashed its full-year outlook as revenue guidance range to between $65M-$85M from prior $75M-$125M saying longer-than-expected certification testing may delay the W56 production launch by about 45 days.



·     AXSM +3%; upgraded to Neutral w/ $81 PT from $59 at Bank America given the Auvelity Major Depressive Disorder launch is tracking ahead of its expectations; AXSM was also upgraded to Overweight and $90 tgt at Piper.

·     CHGG +8%; reported better 2Q revenue and EBITDA results, beating expectations by $6M and $5M, respectively, and issued more in-line 3Q guidance.

·     FOX +5%; authorized a $7B stock repurchase program and raised dividend after better Q4 results.

·     LLY +15%; Q2 revenue $8.31B vs. est. $7.58B; Q2 adj EPS $2.11 vs. est. $1.98; 2023 revenue guidance increased by $2.2B to range of $33.4 to $33.9B; also benefits after NVO SELECT trial data showing 20% reduction in CV events.

·     NVAX +13%; reports Q2 EPS of $0.58 vs. est. loss (-$6.53) y/y and consensus loss of (-$1.37) helped by $285.2M in sales of Covid vaccine but lowers FY23 revenue view to $1.300B-$1.500B from $1.400B-$1.600B (est. $1.44B) and filed to sell up to $500M of common stock.

·     NVO +16%; obesity drug Wegovy cut the risk of major heart complications by 20% in a closely watched trial, results that could streamline insurance coverage and spur even greater demand.

·     TLRY +19%; said it had agreed to buy eight beer and drink brands from Anheuser-Busch InBev — including Shock Top, Redhook Brewery and Widmer Brothers Brewing.



·     AYX -18%; as reported a second disappointing quarter in a row as deals pushed out of the quarter; posts Q2 ARR shortfall ($14M miss driven by a shift in customer behavior) and sees FY revs $930-940Mm vs est. $983.92Mm.

·     BYND -21%; as Q2 revs $102.1M vs. est. $108.4M; Q2 adj Ebitda (-$40.8M) vs. est. (-$42M); says unlikely to meet cash flow positive target in timeframe; forecast FY23 revs between $360M-$380M, below prior view $375M-$415M.

·     DDOG -20%; drags software names lower as Q2 EPS/rev top views but issues weaker Q3 rev guidance of $521-525M vs $534.5M and lower year rev’s view of $2.05-2.06B vs $2.09B est.

·     FIVN -11%; beat Q2 across the board, although top line beat not as good as prior quarters and 2023 guidance was raised, but by less than the Q2 beat and Q3 rev guidance was below Street.

·     IFF -18%; reported disappointing 2Q23 results and reduced its 2023 sales and adjusted EBITDA guidance by 7% and 18%, respectively, each at the midpoint as miss and lowered guidance largely reflects ongoing customer destocking, hurting volumes.

·     MRC -20%; as Q2 revenue misses on weaker U.S. business and management lowers 2023 guidance driven by softness in Gas Utilities Sector.

·     PTRA -67%; after saying it voluntarily filed for chapter 11 bankruptcy in Delaware on Monday to strengthen its financial position “through a recapitalization or going-concern sale.”

·     RNG -13%; as reported an in-line quarter, with lower guidance and announced a CEO transition with Hewlett Packard CFO Tarek Robbiati appointed as CEO.

·     SEE -6%; after Q2 EPS beat but revenues miss and lowers FY23 EPS view to $2.75-$2.95 from 3.50 to $3.80 and now expects net sales in the range of $5.4-$5.6B vs. prior outlook of $5.85B-$6.1B.

·     UPS -2%; reports Q2 adj EPS $2.54 vs. est. $2.50 on weaker revs $22.1B, below consensus $23.1B; cuts FY23 revenue view to about $93B from about $97B and well below consensus $96.77B and updates operating margins lower to 11.8% from 12.8% prior.


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.