Market Review: March 12, 2021

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Closing Recap

Friday, March 12, 2021





DJ Industrials




S&P 500








Russell 2000





Equity Market Recap

·     U.S. stocks end the day mixed, but post strong results for the week as a third round of stimulus fiscal policy measures in the form of $1.9 trillion helped boost the Dow Jones Industrials, and Dow Transports to record highs, along with all-time bests for the Russell 2000 as investors bet on a further pick-up in economic activity. The S&P 500 was little changed after record highs the day prior. Industrials, materials, energy, financials and reopen sectors surging on signs of an economic recovery while the tech heavy Nasdaq lagged, though finished well off the lows. The February Producer Price Index (PPI) data did little to ease inflation concerns, falling from prior month readings (PPI increased for the 10th month in a row to headline of +2.79% Y/Y which is the highest level since October 2018), but still elevated, pushing the yield on the 10-and 30-year to respective highs on the week/year, but didn’t truly impact stocks. U.S. consumer sentiment improved in early March to its strongest in a year as the University of Michigan said its consumer sentiment index rose to 83.0 in the first half of this month from a final reading of 76.8 in February. Europe’s Stoxx 600 up 3.5% for the week; best weekly gain since November as the European banks sector index records sixth straight weekly gain. On the day, the German Dax down 0.5%, Britain’s FTSE 100 up 0.4%, France’s CAC 40 up 0.2%, and Spain’s ibex up 0.7%.

·     Stock/sector movers; new highs for financials on Treasury surge this week (WFC, C, FITB, USB) as regional banks (KRE) touch record highs; some record gains in reopen names/sectors such as restaurants (DRI), retailers (LB), airlines (AAL), autos (GM), steel/material names (NUE) as well, amid lots of pent up demand expectations for when we reach herd immunity due to vaccine rollout. Industrials such as CAT, BA, MMM extend gains for the record setting Dow Jones Industrials, while Dow Transports and Russell 2000 also seeing record highs for a second straight time. Lagging sectors included defensive and technology, but not bad after touching correction territory last week. Housing stocks drop (MTH, LEN, KBH) following the jump in yields (rollover into mortgage rates) and as two analyst downgrade stocks today given rally in space.

Economic Data

·     Inflation data in-line: Producer Price Index (PPI) February headline rose 0.5% in-line with estimates and down from 1.3% in January, while core PPI rose 0.2%, also in-line with ests. PPI YoY final demand rose 2.8% vs. est. 2.7% and core PPI YoY for Feb rose 2.5% vs. est. 2.6%

·     University of Michigan surveys of consumers sentiment prelim March 83.0 well above consensus of 78.5 (back to highest levels since last March) and above Feb 76.8; the current conditions index prelim March 91.5 vs. final Feb 86.2 and expectations index prelim March 77.5 vs. final Feb 70.7


Commodities, Currencies and Treasury’s

·     Oil prices slip $0.41 or 0.62% to settle at $65.61 per barrel, ending the week down roughly -0.7%, pulling back from recent 22-week highs as markets look for more signs of increased demand. Prices have jumped this year on accommodative OPEC+ headlines and an improving economy, but prices dipped this week on larger than expected weekly crude inventory data. The weekly U.S. oil rig count was down 1 to 309 according to Baker Hughes, the gas rig count unchanged at 92 and total rig count 402.

·     Gold prices edge lower, down -$2.80 or 0.2% to settle at $1,719.80 an ounce, but bounced off lows around the $1,700 level, snapping a 3-day win streak. For the week, gold prices ended higher by about 1.3% despite a bounce in the dollar and Treasury yields. A pullback in the dollar this week helped propel precious metals prices.

·     Treasury yields were firmly higher on Friday, as the 10-year touched highs above 1.64% before closing above the 1.6% (highs of the week) and the long-bond 30-year yield surpassed its late February highs to trade around the 2.40% mark. Global yields have been inching higher, raising inflation concerns as economies heat up with an influx of monetary and fiscal policy. Just this week, the Biden Administration added another $1.9 trillion package to help Americans. Recent price spikes in lumber, oil and copper prices boost fears.






WTI Crude















10-Year Note





Sector News Breakdown


·     Retailers; LB boosted its Q1 EPS view to 55c-65c from prior 35c-40c citing strong sales, margin results quarter-to-date, authorized the repayment of $1.035B of debt through a call of two outstanding bond issues, announced a new $500M share repurchase plan and reinstated its quarterly dividend; POSH delivered a Q4 beat on EPS/sales despite higher cancellations leading to a lower take rate, while shares slip on Q1 guidance as guides Q1 revs $75.5M-$77.5M vs. est. $80.1M and adj Ebitda $1M-$2M; HAYW 40.278M share IPO priced at $17.00; FNKO posted Q4 top and bottom line beat (24c/$226.5M vs. est. 14c/$195.6M) and adj Ebitda rose 29% to $33.2M; JOAN opens at $11.75, after IPO priced at $12 per share

·     Auto sector; in the electric vehicle sector, RIDE mentioned negatively by Hindenburg Research, calling it an electric vehicle SPAC with no revenue and no sellable product, which they believe has misled investors on both its demand and production capabilities; in charging space, CHPT slides after Q4 earnings fall short of views, while guides Q1 revenue of $35M to $40M and full-year revenue of $195M to $205M and said expects its growth to be fueled by dozens of new electric vehicle models anticipated in 2021 across a wide range of segments and price points; LAZR was upgraded to Outperform at Northland with $38 tgt after the company unveiled a new full-stack software solution in partnership with Volvo subsidiary Zenseact

·     Housing & Building Products; homebuilders got hit on the day given the rise in Treasury yields which in turn boost mortgage rates; in housing, LEN was downgrade from Outperform to Sector Perform at RBC Capital as see a balanced risk/reward following its strong YTD performance and with expectations elevated ahead of 1Q results; MDC was downgraded to underperform at Bank America as believes that the year-to-date run-up in the stock has factored in the positives; in home improvement/tools, SWK upgraded to Buy from Neutral at Bank America on its view that estimates are likely going up and the demand environment for tools is still robust

·     Consumer Staples; in beauty sector, ULTA posted a material revenue & margin beat for Q4, but was overshadowed by the news that CEO Mary Dillon is stepping aside, along with conservative FY guidance ($8.85-$9.30 EPS vs. est. $10.61) and softer Q4 comp sales down (-4.8%); defensive food stocks such as KR, SJM, POST, K, CAG saw strength on the day

·     Restaurants; LOCO Q4 EBITDA beat but QTD comp sales disappoint (-0.2% with Co -3.0%, Franchised 1.8%), but restrictions are likely easing next week in LA County; DENN upgraded to Overweight saying now that we are nearing the end of the deepest pandemic impacts, it is time to get off the sidelines; for DPZ, Stephens said with shares trading in-line with one- and three-year averages, the stock looks fairly attractive, especially given the strength of its position

·     Cruise lines (CCL, NCLH, RCL), Truist said March Demand & Price Survey show strong ‘22 booking pace, mostly w/ luxury – notes while YTD sales through early March are still deeply negative (down almost 60%) vs. the same time in 2019 (pre-Covid) due to a combination of 2021 looking more & more like a minimal sail year at best and 2020 and 2021 cancelled cruise vacations being rebooked for 2022, initial demand statistics for 2022 look encouraging

·     Leisure movers; in theme parks: FUN said it plans to hire 45,000 seasonal employees this year, with a goal to reopen all of its amusement parks. The company said it will host a national hiring event virtually on March 13. Wedbush raised their price targets from $54 to $61 (+23% from current levels) for FUN, from $42 to $43 (-12%) for SIX, and from $45 to $48 (-5%) for SEAS based on a painstaking review of the most recent reopening guidance, operating calendars, and management commentary from the three-theme park companies; ski resort MTN rises after Q2 results as EPS of $3.62 was well above $2.31 estimate on better sales ($684M vs. $644M)



·     Energy stock movers; In MLPS, JPMorgan upgraded WES to OW on its flourishing FCF yield and discounted valuation, downgraded MMP to Neutral given their lack of near-term catalysts and less beta to oil recovery than others, and CQP to UW on valuation and as the MLP with the lowest beta to WTI prices, and they are now more bullish on the sector than before and see the recent upswing as the start of a new commodity super-cycle and list WES, PAA, EPD, TRGP as their top picks; Goldman downgraded MMP to Neutral and AM to Sell; Bernstein says the market is dismissing and discounting the trading operations of Outperform-rated BP and RDS, and see about $10B of upside from the operations; Wells increased their pt on PBF to $16 from $14 and kept their Equal-Weight rating and they believes there exists a clear path for the company to reduce leverage, raise its equity multiple, and deliver better share performance; Bank of America sees further upside in energy even after its recent outperformance, and names PSX, MPC as their top picks on valuation upside and their dividend yields around 4%; NOG Q4 adj EPS 64c, adj EBITDA $94.3M (-17% YoY) vs est. $89.6M, revs $50.1M vs $59M YoY, production 35,738 Boe/d, and sees FY21 production 37,750 – 42,750 Boe/d



·     Bank movers; large cap banks, regionals, and insurance names all among top gainers on the day following the jump in Treasury yields, as JPM, GS, AXP, TRV top gainers in the Dow; SCHW said core net new assets of $51.4B in February increased 50% M/M and 111% Y/Y; CG 3M share Block Trade priced at $36.10; in Consumer Finance; MA tgt raised to $400 from $380 at Wedbush and on Visa (V) to $250 from $200 as expect upward revisions to 2HCY21’s Street expectations, reflecting the benefits of the $1.9T stimulus, recovery of high-margin cross-border travel (bookings uptick; pent up demand), as well as B&M credit-driven volume recovery. REITs; Mizuho cut targets across our Data Center REIT coverage but believe the YTD stock sell-off is overdone. We thus remain positive on the sector and reiterate our BUY ratings on EQIX, DLR, and QTS



·     Biotech movers; NVAX jumps after saying a completed late-stage clinical study showed that its vaccine candidate NVX–CoV2373 was 96.4% effective against “mild, moderate, and severe disease caused by the original COVID-19 strain; CFRX wins U.S. contract for exebacase study —-contract award for up to $86.8 million from the Biomedical Advanced Research and Development Authority (BARDA); NLSP enters into a license agreement with NVS to obtain, on an exclusive basis in the U.S., all of the available data referred to and included in the original NDA for Sanorex; CYCC 1.807M share Secondary priced at $7.00; MRKR 28.572M share secondary priced at $1.75; ICPT was upgraded to neutral from underweight and $21 tgt at HC Wainwright

·     Healthcare services and providers; LSPD announced an agreement to acquire Vend (Private), a cloud-based point-of-sale (POS) software provider to multi-location retailers; GDRX reported Q4 adj EPS 8c vs. est. 7c; Q4 revenue $153.5M vs. est. $147.8M; sees Q1 revenue $158M-$161M vs. est. $161.98M; sees Q1 adjusted EBITDA margin roughly 30%; CAH signed a definitive agreement to sell its Cordis business to global private equity firm Hellman & Friedman for about $1B

·     MedTech and Equipment; SIEN guide CY21 below consensus and CFO resigns, weighing on shares; KeyBanc noted QDEL ignited concerns with its report of antigen testing volumes declining 30-40% while ACLA data shows PCR volumes declining 51% from December. With 1Q volumes likely to be down about 10%, our COVID-related estimates assume sequential declines of 13% at PKI, 1.1% at TMO, and 12% at Danaher – says would buy DHR on weakness; DGX upgraded its long-term growth outlook for revenue (excluding COVID-19 testing) and adjusted EPS to 4 – 5% and 7 – 9%, respectively, but Baird downgraded shares on valuation


Industrials & Materials

·     Transports, Industrial & Machinery; Another day, another record high for the Dow Transport index above 14,100 led by gains across the sector (airlines, rails, truckers, cargo) as economic recovery continues; APO has made a bid for AEGN, a pipeline-services company that last month agreed to be taken private by New Mountain Capital, according to people with knowledge of the matter – Bloomberg

·     Aerospace & Defense; BA rises early after private investment firm 777 Partners agrees to buy 24 737 MAX jets with an option to purchase an additional 60 and said plans to lease the 737-8s to its affiliated operating ultra-low-cost carriers; POWW 20M share Secondary priced at $5.00; Boeing suppliers saw strength today following orders above, SPR

·     Metals & Materials; FCX said the copper surge isn’t a spike, but supported by fundamentals and that the rally has “degree of an echo” with 2010-11 according to the CEO today; FNV was upgraded to equal-weight from underweight at Barclay’s saying the return to target is now less negative – and notes while the stock is slightly rich, it has fallen over 30% from its July highs (vs S&P 500 up over 20%) – firm says prefer the gold miners to copper miners and see the most upside to Overweight rated GOLD, KGC and OGC; gold miners down (NEM, AEM) as gold prices tumble with spike in Treasury yields and the dollar; VALE downgraded to Underperform from Outperform at Exane BNP Paribas

·     Steel stocks; sector saw strength on positive optimism of materials/industrials as the economy rebounds, while Morgan Stanley raises its r US steel industry view to Attractive as believe China’s push to cut emissions in the steel industry will prove to be a game changer for steel prices globally, materially improving the medium-term outlook for US steel equities. Overweight-rated STLD, Ternium, and Gerdau are their top and would use any pullback in the near term to turn more constructive on other names – raise tgt prices on STLD to $53 from $44, NUE to $71 from $60, X to $24 from $18


Technology, Media & Telecom

·     Internet; online travel names (EXPE, BKNG, TRIP) outperform broader tech, as Truist raised TRIP tgt to $62 to reflect revised expectations, which assume a modest uptake for the newly launched TripAdvisor Plus (TA+); large cap Internet players saw weakness today with broader tech pullback as AMZN, FB, GOOGL, NFLX and AAPL among decliners

·     Software movers; DOCU slides despite beat-and-raise quarter after shares have more than tripled in the past year and jumped almost 6% yesterday into earnings; BSY announced the acquisition of Seequent, a global leader in software for geological and geophysical modeling, for ~$1.05B; ZUO reported smaller than expected Q4 loss of (2c) on better revs of $79.3M, but shares slip with broader software slide and mixed FY22 guidance (better revs, weaker EPS); MDB as upgraded to Buy at Argus with $406 tgt as believe that the recent tech industry selloff provides a favorable entry point for investors

·     Media & Telecom movers; TMUS at its analyst day provided greater merger synergies than expected, higher long-term guidance, a more aggressive expansion into rural markets, a more aggressive in-home broadband push, a strategy to alter network perception, offset by de-emphasizing leasing handsets and the loss of Tracfone revenues, as per Truist; AT outlines growth plans at investor day: said it aiming to achieve 120M-150M HBO Max and HBO subscribers by 2025; expects HBO Max and HBO to finish 2021 with 67M-70M world-wide subscribers (had 61M end of 2020); expects to increase its fiber-connectivity network to reach 3 million new customers by the end of this year, said it plans to spend $6B-$8B on C-band deployment, mostly between 2022 and 2024 – and restated previous 2021 rev guidance; media names outperform again, led by VIAC as well as FOXA, DISCA (momentum trades); VIAC now up 132% YTD and has jumped 336% over the past 12 months – Citi points to various attributes of the run, including the fact that about 20% of the float is short


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.

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