Mid-Morning Look: December 09, 2021

Mid-Morning Look

Thursday, December 09, 2021






DJ Industrials




S&P 500








Russell 2000






U.S. stocks sliding after three straight days of market gains (strong), with the S&P 500 pulling back below the 4,700 level after closing slightly above Wednesday (4 other prior closes just above 4,700, but hasn’t meaningfully topped), as financials, energy, technology, and industrials among the top decliners along with a sharp pullback in Smallcaps. The Russell 2000 on track to snap its 3-day winning streak (hasn’t risen 4-straight since August). Weekly jobless claims fell to a 52-year low at 184,000, well below consensus views, further raising the prospect the Fed will get more aggressive in asset tapering and potential rate hikes in 2022 to stave off inflation further denting the economy. Oil, gold, Bitcoin, Treasury yields and stocks all under pressure this morning in a broad-based sell-off. Inflation data tomorrow in the form of CPI expected and FOMC meeting next week possible market catalysts.


Economic Data

·     Weekly jobless claims fell to 184,000 (a 52-year low) and was well below the 215,000 estimate and the upwardly revised 227,000 from 222,000; the 4-week moving average fell to 218,750 from 240,000; continued claims rose to 1.992M from 1.854M (est. 1.9M); U.S. insured unemployment rate rose to 1.5%

·     U.S. wholesale inventories increased a bit more than initially thought in October, accelerating 2.3%, instead of 2.2% as estimated last month while sales at wholesalers increased 2.2% in October after rising 1.7% in September.







WTI Crude















10-Year Note





Sector Movers Today

·     Media & Telecom movers; broadband sector remains under pressure, with analysts getting more cautious; ATUS was downgraded to Neutral at JPMorgan following recent comments by the co which guided to residential broadband net losses of 5-10k in 4Q21 vs. prior expectations for growth (and our prior +2k) as losses in Fios overlap territories persist; Morgan Stanley downgraded both CHTR and LSXMA to Equal-weight (CHTR tgt to $740 from $810, LSXMA to $56 from $57) and also lowered tgts on CMCSA (to $65) and LBRDK (to $172) saying broadband is a great business, but it’s maturing and attracting competition, putting pressure on cable net adds and they expect the post-pandemic hangover for net adds to continue in ’22; LUMN lands U.S. Army reserve network contract; 11-year task order, which has an initial term of one year with 10 one-year options, is worth $23M; WMG 4.16M share Block Trade priced at $41.50

·     Insurance; RBC downgraded CINF to Sector Perform as they have increased their exposure to catastrophe risk in recent years and on industry-wide pressures on loss trends in the company’s personal lines book, and they also downgraded MMC so Sector Perform as they believe multiples across the insurance broker segment have become extended and see little room for further multiple expansion; Wells downgraded ALL to UW and remain UW on PGR as they are cautious on the personal auto sector given they don’t believe enough price is going through the system just yet and the next two quarters are going up against tough comps; Truist initiated WRB with a Buy rating and $105 target since the company has hit its topline growth stride, which ought to be preparatory to margin expansion from expense leverage as well as accelerating reserve gains

·     Metals & Mining; Morgan Stanley with a handful of changes as they upgraded RIO to Overweight saying operating setbacks, iron ore prices, and rising capex have led to RIO underperforming ASX200 materials and BH, but now see all negative news largely priced in; firm also upgraded VALE to Overweight from Equal Weight and SCCO to Equal Weight from Underweight; KGC announced to acquire Great Bear Resources for C$29 per share or C$1.8B; MP announced an agreement with GM to supply U.S. sourced and manufactured rare earth alloy and magnets to power more than dozen models

·     Consumer Staples; in food, HRL posted better earnings and sales in Q1, topping Wall Street’s expectations as sales were $3.45B, up from $2.42B YoY and ests $3.22B; IPAR guides FY net sales $840M, above prior view of about $810M; NAPA posted meaningful beats across metrics and reiterated FY’22 guidance; in tobacco (PM, MO, BTI), New Zealand plans to raise the legal smoking age by one year every year, effectively banning the sale of tobacco to people born after 2008

·     Industrial & Machinery; general weakness early; TGLS tumbled after a negative short report from Hindenburg Research saying they have no faith in TGLS financials given management’s background and the irregularities they uncovered and encourage its auditor to do a full review of its customer transactions and outstanding balances; in research, ALSN was downgraded to Underweight and lower tgt to $30 from $37 at Morgan Stanley saying its automatic transmission markets face headwinds as MD & HD trucks transition to zero-emissions, while the firm upgraded URI to Equal Weight from Underweight with a $395 PT saying the confluence of inflecting Non-Resi spending & an infrastructure uplift in 2023+ results in a more optimistic top-line outlook



·     CIEN +14%; board of directors authorized repurchase of up to $1.0B of stock while reporting in-line Q4 results while mi-point if year rev guidance tops views ($870M-$910M vs. est. $881.2M)

·     CVS +4%; to buy back up to $10B shares; boosts dividend and raises FY21 revenue view to at least $290.3B from $286.5B-$290.3B vs. consensus $288.93

·     DKS +4%; after filing showed Chairman Stack bought 227K shares valued ta $25M purchase

·     EVGO +4%; after JPMorgan initiated at Overweight and $20 tgt as anticipate the company driving outsized revenue growth on rapidly increasing fleet adoption and higher utilization

·     EW +1%; tgt raised by several analysts after investor meeting where the co reaffirmed its FY ‘21 guidance, provided initial 2022 guidance, and gave several pipeline updates

·     NVEI +6%; reaffirmed its financial outlook and called yesterday’s short report from Spruce Point ‘intentionally misleading’ and was also upgraded to Outperform at BMO

·     RH +8%; after reported 3Q results that topped expectations on the top line (with sales increasing 19% vs. consensus’ 16%) and handily beat on margins (of 27.7% vs. consensus’ 26.5%)

·     TWTR +2%; after investor Ark Invest’s Cathie Wood tells CNBC that Twitter might play bigger role with non-fungible token (NFT)



·     CURV -20%; as revenue fell short of consensus and management issued a more cautious near-term outlook as it manages supply chain headwinds.

·     GME -5%; after posting a larger quarterly EPS loss of (-$1.39) vs. est. loss (-$0.52) and revealed it was issued subpoena by U.S. securities regulator in August for documents on an investigation into its share trading activity

·     PNM -3%; after the New Mexico Public Regulation Commission rejected the merger agreement between them and AGR, as the NMPRC voted 5-0 to reject the parties’ agreements reached in the merger proceedings

·     RETA -42%; after the company received a negative opinion from a FDA advisory committee for its new drug application for bardoxolone methyl

·     RNG -11%; announced the departure of President and COO Anand Eswaran and the elevation of Chief Accounting Officer Vaibhav Agarwal to interim CFO beginning January 1, 2022

·     TGLS -40%; after a negative short report from Hindenburg Research saying they have no faith in TGLS financials given management’s background and the irregularities they uncovered

·     UBER -1%; after the European Commission announced draft rules for gig workers saying companies that set pay and standards of conduct for workers will have to classify them as employees

·     XAIR -23%; after saying based upon ongoing communications with the FDA, the Company no longer believes that the U.S. commercial launch of LungFit PH will take place prior to Dec 31st.

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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.