Mid-Morning Look: September 14, 2023

Mid-Morning Look

Thursday, September 14, 2023






DJ Industrials




S&P 500








Russell 2000






U.S. stocks off to a strong start following a bevy of macro related news items this morning, including a China reserve ratio cut, an ECB interest rate hike, slightly higher PPI inflation, and strong retail sales data for August. All eleven sectors opened to the upside, led by biggest gains in Energy and Utilities, but a rebound in the dollar and Treasury yields to post-PPI spike starting to same some of the “shine” off growth stocks as major averages pare gains. US retail sales and producer prices both rose in August by more than forecast on higher fuel costs, limiting other spending, and suggesting prices are pinching consumers and businesses. China’s central bank announced it would cut the reserve requirement ratio on most banks by 25 basis points from Sept. 15. as it continues to gradually boost its stuttering economy. The European Central Bank (ECB) raised its main refinancing rate by 25bps to 4.50%, its 10th consecutive hike from 4.25% and raises deposit facility rate by 25bps to 4.00%. The ECB said it sees 2024 inflation at 3.2% (above prior view 3%) and sees 2025 inflation at 2.1% (below prior view 2.2%). The 10-year Treasury yields at highs around 4.28% while the dollar index (DXY) rises +0.4%. Oil prices jumped on Thursday, with U.S. crude topping $90 a barrel for first time this year as tighter supply fears grew. Next up, earnings tonight from ADBE in technology/software and LEN in homebuilders, and markets await to see if Big Three auto makers strike tomorrow with deadline tonight.


Economic Data

·     The Producer Price Index (PPI) advanced 0.7% M/M in August, exceeding the 0.4% consensus and rising from 0.3% in July, while headline Y/Y rose +1.6% vs. est. +1.2% and above +0.8% in July. On a core basis (ex: food and energy), PPI M/M rose an in-line +0.2% and +2.2% Y/Y (also in-line with estimates), which was down from the 2.4% print prior.

·     August Retail Sales come in better, rising +0.6% M/M vs. +0.2% expected and +0.5% in July (revised from +0.7%), while core Retail Sales rose +0.6% M/M vs. +0.4% expected and +0.7% in July (revised from +1.0%). Ex-Auto & Gas: +0.2% M/M vs. +0.5% expected and +0.7% prior.

·     Weekly Jobless Claims rose to 220K from 217K prior week and vs. est. 225K; the 4-week moving average fell to 224,500 from 229,500 prior; continued claims rose to 1.688M from 1.684M prior (est. 1.695M) and the U.S. insured unemployment rate unchanged at 1.1%.

·     U.S. July inventory/sales ratio 1.39 months’ worth vs June 1.40 months; Business Inventories unchanged (consensus +0.1%) vs June -0.1% (prev unchanged); July business sales +0.6% vs June -0.2% (prev -0.1%). July retail inventories ex-autos revised to unchanged (prev +0.1%).







WTI Crude















10-Year Note





Sector Movers Today

·     In Transports: in airlines, DAL marked the 4th carrier to lower guidance in two days (joins AAL, ULCC, SAVE yesterday) as lowers Q3 EPS view to $1.85-$2.05, from prior $2.20-$2.50, though maintained its FY adj EPS $6-$7 (est. $6.58); DAL did say it sees Q3 revenue in the “upper half” of its forecast for 11% to 14% growth year over year.

·     In Cruise lines: CCL, NCLH both upgraded to Buy at Redburn with $23 and $25 tgts respectively saying the sector has exited intensive care, and the fundamental investment case of strong secular growth and margin opportunity is clear. Notes longer booking windows and travel restraints mean cruise pricing has lagged leisure hotels, and the ‘discount’ has increased.

·     In Casinos/Gaming: Bloomberg reported overnight that Apollo is among suitors for IGT’s global gaming division. Both CZR and MGM have been targeted by cyberattacks this week in a threat to operations as CZR paid roughly half of a $30 million ransom demanded by hackers after a recent cyberattack, the WSJ reported yesterday. GENI 20M share secondary offering priced at $5.35.

·     In Insurance: MET was upgraded from Hold to Buy at Jefferies and raised tgt to $72, consistent with their more constructive view of US life, saying YTD performance in this asset class has been stable. Jefferies also upgraded PRU to hold from Underperform and raise tgt to $93 saying biggest concern has had of late has been its view that PRU had limited financial flexibility based on excess risk-based capital and excess Holdco cash earlier in the year.



·     AMC +4%; successfully completes at-the-market equity offering, raising more than $325 million; sold 40M shares at about $8.14.

·     ARM shares indicated higher after 95.5M share IPO priced at $51, the high end of its range.

·     ETSY +2%; upgraded from Peer Perform to Outperform at Wolfe research with $100 tgt noting Etsy has been one of the significant underperformers under coverage universe, trading down -46% YTD vs WR Internet +37% and Nasdaq +32%.

·     NCLH +4%; CCL, NCLH both upgraded to Buy at Redburn with $23 and $25 tgts respectively saying the sector has exited intensive care, and the fundamental investment case of strong secular growth and margin opportunity is clear.

·     PFSW +48%; to be acquired by GXO for $7.50 per share in cash in a deal valued at about $181M, a 46% premium to the closing price of PFSW on Wednesday. https://tinyurl.com/4vuzn9yz

·     YUMC +5%; after saying it targets high-single to double-digit sales growth in the next three years on investor day.



·     ALNY -8%; as some analysts questioned its Onpattro (Patisiran) market potential after the drug won votes of support from an FDA advisory panel by a vote of 9-3 for a new use in the treatment of cardiomyopathy, a heart-muscle disease (FDA has set an action date of Oct. 8.)

·     HARP -18%; after announced that ABBV will not be exercising the Development and Option Agreement for Harpoon’s lead asset HPN217, a T-cell engager therapy targeting BCMA.

·     HPQ -3%; after last night’s filing showed that Warren Buffet’s Berkshire Hathaway sold 5.5M shares on Monday (though Berkshire remains the #1 inst. holder).

·     PCT -16%; after reporting its facility in Ironton, Ohio, is in the process of restarting following a series of problems since Aug. 7. It added that it is “unable to eliminate the risk that the restart will be unsuccessful.”

·     V -3%; after announced a proposal that would provide liquidity to Class B holders (banks from pre-IPO) by allowing them to convert half of the $96bn in Class B shares into Class C (which are tradable, but subject to lock-up provisions), Jefferies noted.

·     VTLE -5%; after saying it acquired three agreements for Permian Basin assets with a total transaction consideration of about $1.17B; and announces 2.5M share common stock offering


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.