Mid-Morning Look: July 14, 2022

Mid-Morning Look

Thursday, July 14, 2022






DJ Industrials




S&P 500








Russell 2000






U.S. stocks stumble out of the gate and extend losses, with the Nasdaq Comp falling a 4th straight day and the S&P and Dow a 5th straight as aggressive Fed hike fears (Fed fund futures now show high probability of 100-bps hike at July meeting) after “hotter” CPI inflation data yesterday and PPI data this morning, as well as earnings and revenue miss by Dow component/banking giant JPM weigh heavily on stock markets early. Comments by JPM and rival bank MS underscores concern about a sharp economic downturn caused by aggressive monetary policy tightening. While stocks falling grab headlines, the moves in currency, commodity and Treasury markets have been astounding. Crude oil falls to lowest since February (hit lows of $90.56, giving up its entire Ukraine-invasion premium). Treasury yields bouncing all over the place, up on the day currently but deep yield curve inversion continues, about 25 bps between 2s-10s (recessionary data point). Lastly, the U.S. dollar just non-stop strength, posting more than 1% moves against the Euro, British pound, Aussie dollar which is crushing commodity related names/prices early (gold, silver, oil). The euro back below parity, sterling lowest since March 2020 and dollar rises above 139 vs. yen (24-year highs). The aggressive FOMC stance lifting the dollar, as well as being used as a haven given the tumultuous situation in Europe with surging gas prices. No lift yet for major averages, as stock prices remain depressed with breadth overwhelmingly negative and all eleven S&P sectors lower, led by Energy, Financials, and Materials.


Economic Data

·     Weekly Jobless Claims rose to 244,000 in latest week, ahead of consensus 235K; the 4-week moving average rose to 235,750 in latest week from 232,500 prior; continued claims fell to 1.331 mln from 1.372 mln prior week; the US insured unemployment rate fell to 0.9%

·     Producer Price Index for June rises +1.1% vs. +0.8% consensus and +0.9% prior, while on a Y/Y basis, jumped +11.3% Y/Y vs. +10.8% consensus and +10.9% prior. Core PPI rises +0.4% M/M vs. +0.5% consensus and +0.6% prior and +8.2% Y/Y vs. +8.1% consensus and +8.3% prior.







WTI Crude















10-Year Note





Sector Movers Today

·     Semiconductors; TSM posted Q2 net income of $1.55 a share topping the $1.44 estimate, while revenue rose 43.5% Y/Y to $17.9 billion; forecast Q3 revenue of between $19.8B-$20.6B, ahead of the $18.6B estimate while warns of “excessive inventory” at its clients over the rest of the year and beyond; AMD upgraded to Outperform at BMO Capital and up tgt to $115 saying it is looking at AMD’s longer-term earnings power and expect AMD to continue to gain share vs. INTC; for HDD stocks (WDC, STX), Wells Fargo reducing forward estimates well below consensus ahead of Q4 results (now modeling W. Digital and Seagate 2HC2022 EPS at -37% and -20% vs. current street estimates); Citigroup said they expect DRAM makers to cut their WFE CAPEX next year, leading to 10% YoY decline in the industrywide DRAM WFE CAPEX in 2023E (MU impact)

·     Bank movers crushed; Dow component JPM disappoints as Q2 EPS $2.76 misses the $2.88 estimate on revs $31.63B vs. est. $31.97B and said provision for credit losses $1.10 billion while says temporarily suspended share buybacks – Q2 investment banking revs $1.35B below est. $1.92B while trading numbers better; MS reported a Q2 profit of $2.4B, or $1.39 per share, vs. $3.4B, or $1.85, a year earlier as revenue fell 11% to $13.1B missing the $13.33B estimate as equities trading revenue $2.96B; FRC reports Q2 EPS $2.16, consensus $2.09 on better revs

·     Energy stock movers: sector has absolutely been decimated after leading markets higher the first half of 2022 as oil prices fall to fresh 3-month lows. Prices have tumbled recently on recession concerns and a surging dollar, despite a drop in crude and refined products exports from Russia amid Western sanctions and supply disruption in Libya. President Biden is in the Middle East this week to discuss energy security with Saudi Crown Prince Mohammed bin Salman (MBS) and the members of the Gulf Cooperation Council (GCC). Biggest decliners early in energy APA, EOG, FANG, MRO, HAL, DVN in the S&P 500 index



·     AMD ; upgraded to Outperform at BMO Capital and up tgt to $115 saying it is looking at AMD’s longer-term earnings power and expect AMD to continue to gain share vs. INTC

·     COST +1%; upgraded from Hold to Buy at Deutsche Bank and up tgt to $579 from $525 calling it one of the most consistent operators in their group, with steady traffic gains and high membership renewal rates

·     EVGO ; GM announced a collaboration with Pilot Travel Centers LLC to build out a nationwide elective vehicle (EV) fast-charging network of 2,000 charging stalls – operated by EVGO

·     RBLX +1%; as Bank America raised bookings estimates for 4Q22 to 17% Y/Y from 12% Y/Y, and for FY22 to 4% Y/Y from 3% Y/Y

·     TBPH +7%; after RPRX said it agreed to acquire a royalty interest in TRELEGY ELLIPTA (Trelegy) from TBPH and INVA for $1.31 billion in cash up front and up to $300 million in additional payments contingent on milestones

·     TSM +1%; posted beat and raise quarter (HPC, IoT, Auto strength), and increased its CY22 revenue growth forecast to mid-30%s vs the company’s updated target of +30% offered just 5wks ago at a shareholder meeting



·        AA -6%; commodity prices and stocks hammered again as the U.S. dollar strength weighs heavily on sentiment; FCX, X, CLF, CVX, HES (energy and metals)

·        CAG -7%; lowers FY23 adj profit to increase by 1%-5% compared with estimates of a 8.3% rise, while volumes for Q4 fell 6.4% and sales missed estimates

·     CFRX -81%; as announces independent DSMB recommends exebacase phase 3 disrupt study be stopped for futility following interim analysis

·     ERIC -10%; as Q2 core earnings missed expectations as margins were hit by higher component and logistics costs

·     GOLD -6%; on gold price weakness dropping below $1,700 an ounce and after co said it sees lower realized copper prices in the second quarter

·     HMN -11%; guides FY22 core EPS $2.10-$2.30 below consensus $3.38 saying it experienced Q2 catastrophe losses well above the company’s 10-year historical average

·     JPM -4%; disappoints as Q2 EPS $2.76 misses the $2.88 estimate on revs $31.63B vs. est. $31.97B and said provision for credit losses $1.10 billion while says temporarily suspended share buybacks

·     NVAX -17%; U.S. health regulators authorized the use of its COVID-19 vaccine, but at a time when overall demand for vaccines and boosters is low, the Wall Street Journal reported


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.