Mid-Morning Look: December 10, 2021

Mid-Morning Look

Friday, December 10, 2021






DJ Industrials




S&P 500








Russell 2000






U.S. stocks are firmly higher, with the S&P 500 back to the 4,700-resistance level after sliding late Thursday, and the Nasdaq jumping as well, led by large cap tech strength (AAPL, MSFT, ORCL, NVDA, GOOGL) as investors ignore another high inflation reading. Consumer Prices for November rose 6.8% in November to its highest level since 1982, matching consensus views, while on a month-over-month basis rose +0.8%, slightly above consensus. Despite the spike, and ahead of the Federal Reserve meeting next week (where a possible quickening of asset taper is expected), treasury yields have tumbled yet again (-10-yr to 1.46%) while the U.S. dollar is only modestly higher. In Covid related news, Moderna (MRNA) offers mixed trial data news today, while New York Governor says masks will be required indoors unless businesses or venues implement a COVID-19 vaccine requirement. Overall, a nice rebound for major averages with the S&P, Nasdaq and Dow are all on track for weekly gains of over 3% and the Smallcap Russell 2000 looking at a 2.75% advance as investors took the last 2-week market pullback as an opportunity to add to positions. Energy and telecom sectors lagging.


Economic Data

·     Consumer Price Index (CPI) MoM for November rises +0.8% vs. est. +0.7% while on a year-over-year basis rises 6.8% (highest since June 1982) and was in-line with estimates. On a core level (CPI ex: food & energy rose +0.5%, in-line with estimates and on a YoY rose an in-line 4.9%; CPI energy +3.5%, gasoline +6.1%, new vehicles +1.1%

·     University of Michigan surveys of consumers sentiment Prelim Dec 70.4 (above consensus 67.1) and vs final Nov 67.4; current conditions index prelim Dec 74.6 (vs. consensus 71.0) vs final Nov 73.6; consumers expectations index prelim Dec 67.8 (consensus 62.0) vs final Nov 63.5.







WTI Crude















10-Year Note





Sector Movers Today

·     Asset managers with monthly AUM data: AB preliminary assets under management decreased to $759 billion during November 2021 from $765B at the end of October; BEN reported preliminary month-end assets under management of $1,546.8B at November 30, 2021, compared to $1,561.7B at October 31, 2021; IVZ preliminary month-end assets under management of $1,572.5B, a decrease of 1.3% versus previous month-end; LAZ reports preliminary AUM approximately $267.4B as of November 30; the month’s AUM included market depreciation of $5.8B, foreign exchange depreciation of $3.4B and net outflows of $3.1B; TROW preliminary month-end assets under management of $1.63 trillion as of November 30, 2021. Client transfers from mutual funds to other portfolios, including trusts and separate accounts, were $1.1B; VRTS preliminary assets under management (AUM) as of November 30, 2021 of $184.5B; VCTR reported assets under management (AUM) of $160.5B as of November 30, 2021.

·     Consumer Staples; UTZ approved an annual dividend increase from $0.20 to $0.216 per share; FIZZ results missed consensus expectations specifically on earnings as the company has been hit hard primarily by aluminum cost and sales decelerated as LaCroix faced a difficult top-line comparison, and increasingly stronger competitive headwinds; BYND slips after Taco Bell cancels test of Beyond Meat product after disliking samples in October, as per Bloomberg; for grocers (ACI, KR, SFM), Bank America said aggregated card data showed grocery spend in Nov. slowed to -4.3% y/y (vs. Oct. -1.2%) & +5.1% vs. 2019 (vs. Oct. +12.3%); in tobacco, (PM, MO), DJ reported Democrat senators removed the provision for a tax on nicotine from the reconciliation package of the Build Back Better bill that would have impacted vaping and nicotine pouches (reduces some risk as these products would have become more costly than cigarettes)

·     Casinos, Gaming, Lodging & Leisure sector; in pools, LESL shares rise as Q4 net sales and gross profit dollar results exceed expectations, and said 2022 sales growth outlook (+10-12%) incorporates mid-single digit inflation; MTN EBITDA -$108m (in-line) but season pass sales +47%/+21% Y/Y in units/dollars, an acceleration from September’s +42% /+17% while guidance maintained noting pass sales “significantly outperformed” expectation and lodging bookings are ahead of last year, but snowfall is running behind normal levels in the early season; RCL upgraded to Hold at Berenberg in the cruise sector; AMC slips as chairman, president, and CEO Adam Aron disclosed the sale of 312,500 common shares on December 7 at $30.867 per share for $9.65M; EVP & CFO, Sean Goodman disclosed sale of 18,316 common shares on Dec. 07 at $30.862

·     REITs; IRM agrees to acquire 80% of outstanding shares of ITRenew, a data center lifecycle management solutions company on a cash- and debt-free basis for ~$725M in cash, with the remaining 20% acquired within three years of close for a value of $925M; Truist raising tgt for STOR to $35 from $34, MAC to $20 from $16, FRT to $130 from $125, KIM to $27 from $25, and REG to $82 from $75; in apartment REITs, BMO Outperform rated on AVB (which they upgrade to Outperform), EQR, ESS, UDR, while downgraded CSR due to valuation and strong performance YTD – said AVB has attractive rent growth in 2022 (14%) driven by LTL of 14.0% (3Q21) and 7.2% market rent growth



·     AI +5%; after announced last night it has established a new five-year “Production–Other Transaction Agreement” with the U.S. DoD. The agreement provides an accelerated process vs. standard government procurement procedures for all branches of the DoD to purchase up to $500M in C3 products and services

·     ASO +2%; Q3 results easily top views at $1.75 vs. est. $1.12 on better sales $1.59B while Q3 comp sales rose +17.9% topping est. +10% and raises year EPS view to $6.75-$6.85 from $5.45-$5.80)

·     AVGO +9%; reported strong Q4 results, raised dividend by 14%, and announced a $10B buyback and guided to a strong JanQ at $7.6B (~5%+ above ests)

·     CF +5%; raises FY21 adjusted EBITDA view to $2.65B-$2.85B from prior view of $2.2B-$2.4B which reflects continued strong global nitrogen market conditions that have supported higher-than-expected realized pricing for products

·     CNC +4%; provided official ’22 guidance ahead of its Investor Day today, with revenues ahead street ($135.9B to $137.9B vs. $133B cons) and EPS bracketing ($5.30 to $5.50 vs. $5.37 cons), though notably the ’22 guidance includes still pending deals

·     CNTX +10%; after saying its experimental drug, ONA-XR, significantly increased the suppression of tumor cells in a window-of-opportunity trial in patients with a type of breast cancer; study, conducted by Spanish cancer research group SOLTI, enrolled 10 patients

·     EPAY +9%; is working with Deutsche Bank to explore a sale and consider options, Bloomberg reported; according to people with knowledge of the matter, Bottomline has attracted interest from private equity firms. https://bloom.bg/3ELrcL1

·     LESL +7%; as Q4 net sales and gross profit dollar results exceed expectations, and said 2022 sales growth outlook (+10-12%) incorporates mid-single digit inflation

·     ORCL +16%; after earnings beat and higher forecast as sees Q3 EPS between $1.19-$1.23 on revs $10.7B-$10.9B above est. $1.16 and $10.56B while Q2 cloud revenue rose 22% to $2.7B



·     AMC -8%; chairman, president, and CEO Adam Aron disclosed the sale of 312,500 common shares on December 7 at $30.867 per share for $9.65M; EVP & CFO, Sean Goodman disclosed sale of 18,316 common shares on Dec. 07 at $30.862.

·     ANGN -25%; as Phase II PoC for ANG-3777 failed to meet the primary creatinine endpoint and most secondaries, though the most relevant endpoint of MAKE90 demonstrated positive trend

·     AOUT -12%; after top and bottom line Q2 miss (Q2 adj EPS $0.58 vs. est. $0.76; Q2 revs $70.8m vs. est. $82.23M) and guides year EPS and revs below views – revenue miss was driven by the timing of orders from its traditional retail customers

·     CHWY -7%; falls on larger Q3 EPS loss with in-line revs of $2.21B while lowers the top end of year rev outlook to $8.9B-$8.94B vs. prior view $8.9B-$9B; 3Q21 gross margin of 26.4% declined increased 90 bps y/y and was 70 bps worse than the consensus forecast of 27.1%

·     EVBG -45%; after the company announced the resignation of CEO Meredith and offered an initial outlook of 20-23% growth in 2022, which came in below street expectations

·     MRNA -9%; on mixed data – after providing its initial Phase 1 data for its mRNA Flu vaccine program, where weakness is being driven by lower-than-expected GMT rises (sub 4-fold) in two of the four flu strains among both age cohorts

·     PTON -2%; downgraded to Neutral at Credit Suisse and cut tgt to $50 saying higher mobility, a shift in consumer spending, and the return of in-person fitness are demand headwinds after a breakneck F21

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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.