Morning Preview: March 20, 2023

Early Look

Monday, March 20, 2023









S&P 500










U.S. equity futures bounce following a flurry of financial related headlines this weekend, including UBS’ proposed $3.2B takeover of Credit Suisse and coordinated action by central banks to boost liquidity in U.S. dollar swap arrangements. Bond markets concerned after holders of Credit Suisse’s $17.3 billion AT1 bonds suffered a complete wipeout following the merger news. Stocks adding to last week’s gains ahead of this week’s crucial two-day FOMC meeting. Fed Fund futures trading late Friday implied a 74.5% probability of a 25-basis point rate hike by the Fed and a 25.5% chance of no hike at all. The odds for a 50-point hike are now effectively off the table after being a betting favorite just a few weeks ago given the recent banking turmoil that saw two of the three biggest bank failures occur over the last week and Credit Suisse being acquired by rival UBS last night amid its financial situation. The S&P 500 is currently down a little more than 1% since this banking “crisis” began on March 8th, incredible resiliency as markets again celebrates a massive injection of liquidity in just a week and expectations of a lower terminal rate by the Fed by year end. @charliebilello tweeted Friday: The “Fed Put” is back with assets on their balance sheet increasing $297 billion over the last week, the largest spike higher since March 2020. Thus, nearly half of the Quantitative Tightening since last April was undone in a single week. Stocks fell Friday as investors pulled back from positions regional bank shares amid lingering concerns over the state of the U.S. banking sector. With rates moving lower, the Fed and other banks adding liquidity, market concerns are allayed for the time being with money back into riskier assets (Bitcoin) and mega cap technology. For the week, the S&P rose 1.43%, the Dow lost 0.16%, the Nasdaq gained 4.41%. Microsoft closes with biggest weekly gain since 2015, up 12%. Financials the big drag as the KBW bank (BKX) index closes 5.3% lower, capping two-week rout of 28%. Tech a leader as the Nasdaq 100 (QQQ) ends week up 5.8% for biggest weekly gains since November. In Asian markets, The Nikkei Index dropped -388 points to 26,945, the Shanghai Index slipped -15 points to 3,234, and the Hang Seng Index tumbled -517 points or 2.65% to 19,000. In Europe, the German DAX is up 35 points to 14,800, while the FTSE 100 is down slightly at 7,330. Bitcoin rises +5.3% to $28.250, while Ethereum +2.3% at $1,785 as crypto adds to last week gains.


Market Closing Prices Yesterday

·     The S&P 500 Index dropped -45.34 points, or 1.10%, to 3,916.64.

·     The Dow Jones Industrial Average fell -384.57 points, or 1.19%, to 31,861.98.

·     The Nasdaq Composite slipped -86.76 points, or 0.74%, to 11,630.51.

·     The Russell 2000 Index declined -45.34 points, or 2.56% to 1,725.90.


Economic Calendar for Today

·     No Major U.S. Economic Data released.


Earnings Calendar:

·     Earnings Before the Open: FL MOVE NVGS RVLP

·     Earnings After the Close: DFLI FTK SMTI XGN


Other Key Events:

·     Piper Annual Energy Conference, 3/20-3/22, in Las Vegas

·     NVIDIA will host its Spring GTC this week.





















10-Year Note





World News

·     Goldman Sachs economist David Mericle forecast the Federal Reserve will not lift interest rates at this week’s meeting due to banking system stress. “While policymakers have responded aggressively to shore up the financial system, markets appear to be less than fully convinced that efforts to support small and midsize banks will prove sufficient,” he said in a note.

·     China’s President Xi said “China Is Prepared to defend World Order alongside Russia in accordance with International Law” – Tass reports.

·     YTD Performance: S&P: +2.01%, Nasdaq: +11.12%, Dow: -3.89%, Small caps: +9.82%, Gold +5.30%, US dollar 0.80%, Oil: -14.84%, Bitcoin +50.68%


Sector News Breakdown


·     Foot Locker (FL) Q4 adj EPS $0.97 vs. est. $0.51; Q4 sales fell -0.3% y/y to $2.33B vs. est. $2.16B; sees comparable sales growth 3% to 4% for fiscal 2024 through 2026; sees adj. eps growth low- to mid-twenties for fiscal 2024 through 2026.


Energy, Industrials and Materials

·     Oil prices slump nearly 3%, with WTI Crude down $1.88 trading below $65 per barrel.

·     Newmont Mining (NEM) mentioned positively in Barron’s saying the stock is still worth buying as gold shines again. It’s taken a while, but gold miner Newmont has finally started doing what Barron’s thought it would-and it isn’t too late to buy.



·     UBS will buy Credit Suisse (CS) for 3 billion francs ($3.25 billion), or 0.76 francs per share, in an all-stock deal, the bank announced. That compares to Credit Suisse’s closing price of 1.86 francs on Friday. UBS said it benefits from 25 billion francs of downside protection from the transaction to support marks, purchase price adjustments and restructuring costs, and additional 50% downside protection on non-core assets. The Swiss financial regulator said Credit Suisse’s AT1 securities, worth 16 billion francs, will be entirely written down.

·     Silicon Valley Bank failed after rising interest rates reduced the value of its assets and worried customers scrambled to withdraw uninsured deposits. In a new study, economists said they found 186 banks that may be prone to similar risks – WSJ Friday

·     The Federal Deposit Insurance Corporation entered into a purchase and assumption agreement for substantially all deposits and certain loan portfolios of Signature Bridge Bank (SBNY) by Flagstar Bank, a wholly owned subsidiary of New York Community Bancorp (NYCB).

·     First Republic Bank (FRC) shares slide again after S&P Global Inc. cut its credit rating again and the emergency sale of Credit Suisse Group AG to UBS Group AG failed to assuage fears over the banking system’s health.

·     American Equity (AEL) announces $200 million accelerated share repurchase agreement.



·     Karuna Therapeutics (KRTX) announces positive results from Phase 3 EMERGENT-3 Trial of KarXT in Schizophrenia; third positive registrational trial met its primary endpoint, with KarXT demonstrating an 8.4-point reduction in PANSS total score compared to placebo at Week 5.


Technology, Media & Telecom

·     Microsoft (MSFT) is preparing to launch a new app store for games on iPhones and Android smartphones as soon as next year if its $75bn acquisition of Activision Blizzard is cleared by regulators, according to the head of its Xbox business.

·     Pinduoduo (PDD) Q4 adjusted EPS $1.21, in-line with consensus and revs $5.77B below consensus $5.95B; Operating profit in the quarter was RMB9,113.7 million (US$1,321.4 million), an increase of 32% from RMB6,907.0 million y/y.


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.