Mid-Morning Look: December 13, 2022

Mid-Morning Look

Tuesday, December 13, 2022






DJ Industrials




S&P 500








Russell 2000






U.S. stocks surge on the open following another sign of decelerating inflation, with the Consumer Price Index (CPI) falling on a m/m and y/y basis from Oct and come in below economist estimates. Stock futures jumped with nearly 4% gains for the Nasdaq while today’s spike following the “tamer” CPI data, saw the S&P 500 once again moved above its 200-day moving average resistance of roughly 4,035 (S&P futures hit overnight highs of 4,145 right after the CPI report). Stocks have since pared gains a bit, expressing some caution ahead of the FOMC policy meeting. While the CPI was below estimates, its still noteworthy that headline CPI was still 7.1%, a far cry from the 2% level the Fed wants to see, and markets await Fed Chair Powell comments tomorrow after the Fed is expected to still hike rates by 50-bps. Treasury yields tumbled on the data as did the US dollar – the yield on the benchmark 10-year Treasury note slid to 3.483% in recent trading from 3.611% the day before. In the other big news today in the crypto world, the SEC charged Samuel Bankman-Fried with orchestrating a scheme to defraud equity investors in FTX Trading Ltd, the crypto trading platform he co-founded and headed until it collapsed spectacularly in recent weeks – the news came after his arrest last night in the Bahamas.


Economic Data

·     Softer inflation reading as Consumer Price Index (CPI) for November rose +0.1% M/M vs. est. +0.3% (prior month +0.4%) and headline y/y rises a smaller +7.1% vs. est. +7.3% and down from prior month +7.7%. On a core basis, CPI m/m rises +0.2% vs. est. +0.3% and y/y rises +6.0% vs. est. +6.1% (down from prior month +6.3%).







WTI Crude















10-Year Note





Sector Movers Today

·     Bank movers: weakness in online brokers with SCHW and IBKR lower; lower interest rate hikes generally negative for financials, but big banks (XLF) outperform. Financial Times reported banks, trading firms and brokers are bracing for the biggest overhaul of US stock trading in almost two decades with the release on Wednesday of plans designed primarily to lower costs for small investors; in research, analysts cautious as JPMorgan said they remain bearish for SMID banks given earnings vulnerability as they downgraded KEY, HBAN, LOB to Underweight while upgraded FHB assumed coverage with Neutral at Citi and $10 tgt as see a mixed outlook from here given potential headline risk from upcoming SEC market structure proposals, a cautious equity market outlook, and potential fallout from FTX impacting crypto trading

·     Airlines: UAL said it would buy 100 wide-body jets from Boeing; sees 2024 adj CAPEX about $11B and sees 2023 adj CAPEX about $9B; ALK sees 4Q capacity down 7%-9% vs 2019, load factor 84% to 86%, saw 83% to 86% prior, and Q4 total revs up 13%-14% vs 2019, vs. prior up 12%-15%; SAVE said due to effects of hurricane Nicole, company has reduced its Q4 capacity guide from up 24.5% to up 24.1% compared to q4 2019; JBLU said its Q4 revenue will take a hit from December travel demand levels that have paced below expectations – now expects revenue per available seat mile for the current quarter to be at the low-end of its prior guidance range

·     Metals & Materials: gold miners (NEM, AEM, GOLD) get a boost on spike in the precious metal as the dollar tumbles on softer inflation reading; BHP is facing a 5 billion pound-plus ($6 billion-plus) lawsuit brought by 200,000 Brazilians at London’s High Court over the collapse of the Fundao dam; in research, RIO and BHP both downgraded to Sell at UBS saying the stock has moved too far, too fast and the macro backdrop is still fragile with global growth slowing & China’s reopening challenging; in steel sector (NUE, X, STLD), U.S. spot HRC prices increased over the past two weeks as mills pushed through an attempted $60/st price increase, with prices up 8.1% or $50/st to $670/st (-55.3% since April), marking the first increase in spot prices since mid-September; CCK enters into cooperation agreement with Icahn Enterprises; Icahn to support all crown nominees for election at 2023 annual meeting

·     FinTech & Payments: AFRM and SYF downgraded to Neutral at Bank America and DFS downgraded to Underperform on risks around lower-income consumer and credit. Firm noted COF’s mid-quarter update on 11/15/22 suggested weakening credit conditions among U.S. consumers. With unemployment likely to rise, and interest rates still increasing, we believe these general pressures will intensify over the next few quarters; Piper assumed SQ w/ Overweight Rating and $93 Price Target as sees tremendous room for revenue and income growth; assumes PYPL Neutral and $85 tgt saying is in transitional period and AXP assumed Neutral



·     CCK +3%; enters into cooperation agreement with Icahn Enterprises; Icahn to support all crown nominees for election at 2023 annual meeting

·     FSLR +4%; to replace FBHS in S&P 500 at open on 12/19 and FBHS to replace FSLR in the S&P 400 Index

·     MGTA +23%; released a positive update on clinical trial data for a drug called MGTA-117 treating acute myeloid leukemia patients

·     MRNA +21%; said the combination of its personalized cancer vaccine and MRK’s Keytruda cancer immunotherapy reduced patients’ risk of relapse or death by about 44%, versus Keytruda alone, in the 150-volunteer study

·     ORCL +4%; better results as 2Q adj EPS $1.21 vs est. $1.18 on revs $12.3B vs est. $12.1B, adj op mgn 41%; Q2 total cloud revenue $3.8B

·     PINS +12%; upgraded to overweight from neutral at Piper and raise tgt to $30, noting multiple tailwinds heading into 2023 that are separate from the health of the ad market

·     WVE +15%; and GSK enter strategic collaboration to advance oligonucleotide therapeutics, including Wave’s preclinical RNA editing program targeting alpha-1 antitrypsin deficiency



·     CI -2%; weakness in defensive healthcare stocks (CNC, MCK, ELV) as investors rotate money into more interest rate sensitive sectors such as technology and discretionary on weaker CPI

·     JOAN -6%; suspended its dividend to preserve capital and reported Q3 results which missed on EBITDA margin

·     LEV -11%; 19.69M share Spot Secondary priced at $2.54

·     LLY -1%; after announced 2023 earnings guidance below expectations as sees 2023 EPS $8.10-$8.30, below ests for $9.16 but revs above at $30.3B-$30.8B vs. est. $30.2B

·     SCHW -2%; weakness in online brokers with IBKR also lower; lower interest rate hikes generally negative for financials, but big banks outperform

·     SI -7%; crypto levered banks SI, SBNY remain weak given further fallout of FTX bankruptcy

·     TRMB -6%; downgraded to Market Perform at Raymond James following its announced acquisition of Transporeon for €1.88B ($1.97Billion) on view that it is inopportune timing to consummate a deal, pay full freight and significant premium to peers

·     TSLA -2%; trades to fresh 2022 lows

·     UAL -4%; weakness early in airline stocks


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.