Mid-Morning Look: January 11, 2023

Mid-Morning Look

Wednesday, January 11, 2023






DJ Industrials




S&P 500








Russell 2000






U.S. stocks in cruise control higher, as investors showing zero fear into tomorrow’s consumer price index (CPI) inflation report with continued buying in high growth sectors, led by technology, discretionary and communications, while defensive staples and energy lags. Treasury yields down slightly into the data, while the dollar remains pressured (DXY just above 103). Economists anticipate a softening of prices for Thursday where the consensus estimate is +6.5% (overall US CPI YoY in December), down from 7.1% in November and the 40-year high of 9.1% last June. The M/M Dec CPI figures are expected to be flat (core prices y/y est. +5.7% from 6% prior and m/m to rise +0.3%). The bond market has been telling investors there is little fear of the Fed sticking with its aggressive rate hike posture the rest of 2023, with yields falling and the dollar sliding (lifting precious metals). Money market participants see a 77% chance the Fed will raise the benchmark rate by 25 basis points to 4.50%-4.75% in February and see rates peaking at 4.92% by June (while several Fed members have called for rates to end between 5%-5.5%). In stock news, the FAA lifted its ban on domestic flight departures across the U.S. following an overnight outage. “We continue to look into the cause of the initial problem,” the FAA said.







WTI Crude















10-Year Note





Sector Movers Today

·     In chemicals, CC and EMN upgraded to Buy from Neutral at Bank America while firm also raised LTHM to Buy from Underperform, and DOW and CTVA to Neutral from Underperform while downgraded UNVR and IFF to Underperform from Buy in chemicals. Some key themes for industry this year include negative earnings revision will end by spring 2023, raw material deflation should begin to accrue to downstream chemical businesses as destocking ends and the dollar will shift to a tailwind to forecasts by 3Q23

·     Airlines (AAL, ALK, DAL, UAL, JBLU, LUV) were the biggest story of the morning after the Federal Aviation Administration (FAA) said it suffered an outage of its system that alerts pilots and crew to advisories and information for flights, prompting a full grounding of planes until 9:30 AM this morning. Operations across the National Airspace System were affected – grounding was lifted just before 9:00 AM this morning, but not before impacting 3-hours of travel; LUV was downgraded to Neutral from Positive at Susquehanna

·     Semiconductor tgt changes at Keybanc, trimming ADI to $210 from $220, AMD to $80 from $85, CRUS raised to $110 from $100 and NVDA tgt cut to $220 from $230 saying quarterly supply chain findings are mostly negative and feedback indicates the correction in Asia is worsening as China reopens and is negatively impacting consumption, while end demand softens across most end markets including auto and industrials; ACLS sees 4Q EPS above $1.45 vs est. $1.05 and FY EPS above $5.00 vs est. $4.80; sees 4Q revs above $250Mm vs est. $234.5 and prior guide $232-240Mm; ICHR shares fall as the (small-cap semi equipment firm issued a downside pre for Q4 and guided Q1 below the street; sees 4Q revs $300-302Mm vs est. $335Mm, sees 1Q23 revs $210-240Mm vs est. $296.8Mm (LRCX, AMAT among biggest customers)

·     Homebuilders TOL, PHM upgraded to Buy from Neutral, LEN upgraded to Neutral from Underperform and NVR named top pick in homebuilders at Bank America saying they are cautious on housing demand especially in Q1 but see a more favorable setup for homebuilder stock performance saying: valuations have already priced in weak demand, mortgage rates have peaked & look to move lower, don’t see material risk to book value. BLD, IBP, POOL all upgraded to Buy from Hold in building products and downgraded FBIN, SITE, WTS to Hold from Buy and MAS to Sell from Hold at Deutsche Bank. Said cost deflation could prove a major opportunity for CNM and WMS; Residential new construction volumes and earnings should remain resilient.



·     AMZN +4%; strength in Internet related names (GOOGL, PINS, ETSY), while note yesterday UBS said its new BwP feature was serious threat to SHOP

·     AXNX +115; guides Q4 revs $85.6-86.0M vs consensus $74.6M; FY revs $342M vs street $327M

·     EXPE +3%; upgraded to Outperform at Oppenheimer with $120 tgt after a 48% decline last year

·     JKS +13%; upgraded from Neutral to Buy at Roth Capital and raise tgt from $50 to $70 given the recent UFLPA releases & the expected progress ahead

·     MASI +2%; after USITC rules Apple Watch infringes one Masimo blood-oxygen tech patent

·     PI +4%; positively preannounced Q4 results, saying it expects Q4 revs to exceed $76M, topping prior guidance of $71.5M-$73.5M

·     TEAM +9%; Mizuho noted the Co announced additional price increases relating to renewals of flagship on-premises products across Server and Data Center

·     VSCO +7%; announces new $250 mln share repurchase authorization and said expects Q4 net sales, operating income, and diluted EPS within range of previously communicated guidance



·     CVLT -16%; negatively preannounced F323 (FYE March) results, missing estimate by 4%, primarily due to weakening buying patterns and close rate execution in the last few weeks of December

·     HALO -10%; guides 2023 revenue modestly below consensus expectations at $815M-$845M (vs. ~$892M consensus and royalty revenue guidance is $445M-$455M (vs. ~$471M consensus)

·     ICHR -11%; issued a downside pre for Q4 and guided Q1 below the street; sees 4Q revs $300-302Mm vs est. $335Mm, sees 1Q23 revs $210-240Mm vs est. $296.8Mm

·     ISRG -3%; guides Q4 revs $1.66B, below consensus of $1.68B saying worldwide da Vinci procedures grew approximately 18% y/y, while expects worldwide da Vinci procedures to increase approximately 12% to 16% in 2023


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.