Mid-Morning Look: September 15, 2022

Mid-Morning Look

Thursday, September 15, 2022






DJ Industrials




S&P 500








Russell 2000






U.S. stocks attempted bounce early fails, as markets slip, failing to build on yesterday’s rally and remain down sharply for the week ahead of the FOMC monetary policy meeting next Tuesday/Wednesday. Oil prices slide over 3% after overly weaker-than-expected economic data, with over six data points released this morning (details below). Markets breathe a sigh of relief after tentative rail agreement reached overnight, avoiding a strike that could have impacted the economy. Markets are completely pricing in a rate hike of at least 75 bps by the Fed at its policy meeting next week, with a 20% chance of an outsized 100 basis point hike. Several high-profile strategists, investors, hedge fund managers over the last few days have expressed extreme caution about the market and economy as the Fed remains on the path of aggressive rate hikes (75-bps expected next week after back-to-back 75-bps hikes in recent months), including Doubleline’s Gundlach, Bridgewater’s Dalio, and Guggenheim’s Minerd. The dollar dips, gold prices fall and Treasury yields remain elevated near multi-year highs.


Economic Data

·     August retail sales rose +0.3% m/m vs. -0.1% est. and (-0.4%) in prior month (rev down from 0.0%); but retail sales ex-autos fell (-0.3%) vs. +0.4% prior; sales ex-autos and gasoline rose +0.3% vs. +0.3% prior (rev down from +0.7%)

·     Weekly Jobless Claims fell to 213K from downwardly revised 22K last week and below consensus 226: the 4-week moving average fell to 224K from 232K prior; continued claims rose to 1.403M from downwardly revised 1.401M (est. 1.475M) and US insured unemployment rate unchanged

·     NY Fed’s empire state current business conditions index -1.5 in September vs estimate -13 and vs. -31.3 in August; orders index +3.7 in September vs -29.6 in August; prices paid index +39.6 in September, lowest since December 2020, vs +55.5 in August; employment index at +9.7 in September vs +7.4 in August; six-month business conditions index +8.2 in Sept vs +2.1 in August

·     Aug export prices fell (-1.6%) vs. est. (-1.2%) and vs. July (-3.7%); Aug import prices fell (-1.0%) vs. est. (-1.2%) and vs. July (-1.5%); Aug year-over-year import prices +7.8%, export prices +10.8%; Aug non-petroleum import prices -0.2% m/m and -year +4.3%

·     Industrial output fell (-0.2%) in August vs. est. +0.1% and vs July +0.5% and Capacity utilization rate at 80.0% vs. est. 80.3% and July 80.2%; U.S. Aug industrial output ex cars/parts -0.1%

·     Philly Fed Business Index Actual reported -9.9 vs. forecast 2.25, and previous 6.2







WTI Crude















10-Year Note





Sector Movers Today

·     Retailers: DECK was upgraded to Outperform and added to Best Ideas List at Wedbush while raise tgt to $410 from $320 saying amidst an extremely challenging retail environment, DECK was a standout last EPS season as one of the only companies in our coverage to actually raise guidance; at Jefferies, JWN assumed/upgraded from Hold to Buy and up tgt to $24 saying the higher income consumer base is a structural advantage during economic downturns and excess inventory in the industry could benefit Rack merch issues more than expected; KSS was assumed/downgraded from Buy to Hold at Jefferies and cut tgt to $29 PT as would like to see the sales trend and margins stabilize before becoming more constructive; in mattress sector (TPX, SNBR, PRPL, LEG), Piper said Aug PSC Mattress Retailer Survey showed a y/y decline of -11% to -12%, in-line with July and slightly better than May/June and says the worst seems to be in the rearview mirror

·     Consumer Finance: monthly credit card NCO and delinquency data out today, showing rising trends on missed payments from consumers: COF reported charge-offs for August rose to 2.02% vs. 1.54% y/y, while Delinquencies jumped 2.76% vs. 1.79% y/y; SYF monthly net charge-offs for August of 2.63% vs. 2.51% m/m and delinquencies steady at 1.6% m/m; JPM reported charge-offs for August of 1.15% and delinquencies 0.66%; BAC credit card charge-off rate was 1.23% in August vs 1.27% in July and delinquency rate was 0.88% at August end vs 0.85% at July end

·     Insurance: CRBG 80M share IPO priced at $21.00, the low end of $21-$24 range with proceeds going to AIG announces brand implemented auto rate increases totaled $777M in August and $2.5B year-to-date, as for Aug alone, rate increases of 14.5% across 8 locations; HIG is a compelling investment opportunity in the insurance sector according to Wells Fargo, especially given its valuation as shares are trading at 7.8x our 2023 EPS estimate, which stands out; PGR August net premiums written $4.08 bln vs $3.89 bln

·     Casinos, Gaming, Lodging & Leisure sector; in casinos, WYNN upgraded to Outperform at Credit Suisse as think Wynn is one of the more compelling stories in gaming and see potential upside to the stock amid upside to Vegas trends, think Macau sentiment is near a and says valuation is compelling; in lodging, online travel, BTIG cautious on ABNB as sees risk to ’23 ests; while checks are not pointing to any material divergence from guidance on 3Q room nights, the underlying trend raises some questions on the 2023 outlook; in lodging sector, Berenberg upgraded shares of MAR (tgt to $185 from $165), Hyatt (H) tgt to $105 from $85, and HLT (tgt to $152 from $140) all to Buy from Hold saying the accelerating recovery in lodging has yet to be reflected and expect strong RevPAR increases in 2023 across the sector



·     DECK +5%; upgraded to Outperform and added to Best Ideas List at Wedbush while raise tgt to $410 from $320

·     DHR +3%; announced that it is spinning off its Environmental & Applied Solutions (EAS) segment into a standalone public company and said Q3 core revenue growth is expected to be above the Company’s prior guidance range

·     HUM +7%; introduces mid-term adjusted EPS Target of $37 in 2025 and raises full year 2022 adjusted EPS financial guidance to ‘approximately $25′ at investor day

·     NFLX +4%; upgraded to Outperform from In Line at Evercore/ISI with a price target of $300, up from $245 saying the company’s advertising supported tier and password sharing revenue opportunities constitute catalysts that can drive a “material reacceleration” in revenue growth

·     STOR +20%; signed a definitive deal where the real estate giants GIC and Blue Owl’s Oak Street have agreed to acquire Store Capital for $14B in all-cash transaction, with shareholders to receive $32.25 per share in cash, representing a 20.4% premium https://bit.ly/3S7Mo46

·     UNP +2%; along with gains in CSX and NSC after White House said it had reached a tentative agreement to avoid a potential railway strike

·     WYNN +7%; upgraded to Outperform at Credit Suisse as think Wynn is one of the more compelling stories in gaming and see potential upside to the stock



·     ADBE -14%; confirmed a prior Bloomberg report that it will acquire one of its competitors, online design company Figma for about $20B in cash and stock (price tag of deal seen rich by analysts)

·     AFRM -2%; and SQ slide after U.S. Consumer Financial Protection Bureau (CFPB) says planning to regulate “buy-now, pay-later” (BNPL) companies as agency to issue guidance or a rule to align sector standards with those of credit card companies

·     ARNC -9%; after lower guidance cut on ops setbacks, increased energy costs & EU demand as sees FY adj EBITDA $715M-$765M, below est. $826.6m and guides FY revs $9.2B-$9.5B below prior view of $9.6B-$10.0B

·     CVI -8%; Wolfe Research with a handful of changes in refiner sector as CVI and PSX downgraded to Peer Perform from Outperform while upgraded DK and PBF to OP from PP

·     ELOX -42%; combination therapy of its experimental drug ELX-02 to treat cystic fibrosis did not achieve statistically significant results when compared with placebo in a mid-stage study

·     IDYA -8%; public offering of 7.6 mln common shares priced at $10.50 per share, roughly 16% discount from last sale

·     IRNT -45%; after two analyst downgrades (BTIG, Jefferies) after results that included ARR of $26.5M vs consensus $31.9M

·     SPB -7%; and was then halted after the U.S. Justice Department sued to block Assa Abloy AB from acquiring Spectrum’s door hardware unit.


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.