Mid-Morning Look: April 07, 2021

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Mid-Morning Look

Wednesday, April 07, 2021






DJ Industrials




S&P 500








Russell 2000






Stocks bounce to highs after opening lower, rebounding after yesterday’s late day slide snapped a modest 3-day win streaks for the S&P and Nasdaq Comp as Bespoke noted heading into this week the S&P 500 was the most overbought on a short-term basis in over 4 years. Treasury yields are edging higher, but off morning highs as again Fed speakers downplay the rally in rates (Evans this morning). Commodity prices little changed as the dollar is flat. In vaccine news, the U.S. National Institutes of Health said it had begun a mid-stage study to determine the risk of allergic reactions to COVID-19 vaccines made by Moderna and Pfizer Inc, while European regulators said AZN’s Covid-19 vaccine was linked to blood clots, but still believe the benefits of the vaccine outweigh its risks. Volumes have dried up over the last few days (following Easter holiday), as yesterday was the slowest trading day YTD in 2021 as volume on US exchanges slipped below 10 billion shares for the first time this year. The Federal Reserve will release the minutes of its March meeting at 2 PM ET. CNBC highlighting all morning bullish market comments by JPM CEO Jamie Dimon who said he sees the U.S. economic boom running into 2023 citing excess savings, new stimulus savings, huge deficit spending, more QE, a new potential infrastructure bill, a successful vaccine, and euphoria around the end of the pandemic.


Economic Data

·     The U.S. trade deficit widened to a record high in February as economic activity rebounded more quickly than global rivals ahead of massive fiscal stimulus. The Commerce Department said the trade gap increased 4.8% to a record (-$71.1B) in February vs. est. deficit of (-$70.5B) and -$67.8B prior (revised from -$68.2B).







WTI Crude















10-Year Note





Sector Movers Today

·     Housing & Building Products; U.S. mortgage market index falls 5.1% in week ended April 2 according to the MBA, while mortgage purchase index falls 4.6% and the mortgage refinancing index decreases 5.3% – 30-yr mortgage 3.36%, highest since June; LGIH tgt raised to $135 from $110 at Wedbush after LGI’s F1Q21 closings exceeding their forecast and what appears to be a positive inflection in LGI’s community count during the quarter (announced it closed 1,147 homes in March 2021, up from 795 homes closed in March 2020); JPMorgan said believe the home builders are poised for a pullback this earnings season, as the stocks appear to anticipate strong 1Q results without any signs of weakness (long/short ideas this earnings season feature DHI and CCS as longs and MTH and LGIH as short ideas – and among the building product names, highlight MAS and FBHS as longs and WHR and MHK as short ideas)

·     REITs; Bank of America upgraded EPR, EPRT, NNN to Buy from Underperform and downgraded WPC to Underperform from Buy; RBC says coastal REITs (AVB, ESS, EQR) could see the largest benefit as more people rent vs buy; KeyBank sees emerging green shoots of a recovery in SKT during its CEO transition and with its liquidity limiting downside risk, but they say fundamentals are yet to stabilize and occupancy is unlikely to meaningfully recover until later in the year, and they lowered 2021-22 FFO estimates after the recent equity issuance; GEO suspended its dividend to maximize cash flows to repay debt and the board has begun to evaluate its corporate structure as a REIT; CXW files prospectus supplement related to offering of $400 mln senior notes due 2026

·     Retailers; ANF (tgt to $46 from $31), GIL (tgt to $43 from $35), KTB (tgt to $74 from $53) and LB (tgt to $96 from $54) all upgraded to Buy from neutral at UBS saying these stocks have strong long-term growth prospects which they believe are not priced in; CASY was downgraded at Raymond James as the stock is now trading above their prior target price of $215; Piper raised its tgt on TPR to $54 on the heels of their 41st semi-annual taking stock with teens survey and also raised tgt on RVLV to $53 from $45; for WMT, RBC Capital remains bullish on its strategic positioning/ability to grow EBIT as 2020/2021 volatility fades

·     Media & Telecom movers; DISCA price target hiked to $60 from $35 at Deutsche Bank as improved growth outlook warrants a higher valuation; FOXA upgraded from Underweight to Equal Weight and raise tgt to $41 from $27 at Wells Fargo saying they now see the new NFL deal as a clearing event with our out-year TV estimates moving up significantly; VIAC was upgraded to Outperform at Wolfe Research saying risk/reward attractive with underlying ad trends solid, a seemingly reasonable consensus streaming sub target, the likelihood of a distribution partner(s) in the coming months, and implied streaming value of ~$5B at current levels

·     Casinos and Gaming; Oppenheimer and Bank America noted DKNGFanDuel, RSI and Bet365 remains well positioned as NY approves online sports betting – but are uncertain if operators PointsBet and PENN/Barstool, who have second-skin agreements will be included. Overnight, New York approved a hybrid limited-operator online sports betting (OSB) model as part of its 2022 budget.



·     AKBA +3%; after competitor FGEN’s regulatory update on Roxadustat disappointed – note Akebia recently submitted NDA seeking approval for Vadadustat for treatment of anemia due to CKD

·     BB +5%; after Volvo Group selects BlackBerry QNX for its Dynamic Software Platform

·     CCL +6%; Q1 2021 ended with $11.5 bln of cash and short-term investments; cash burn rate in q1 of 2021 was better than expected – said cumulative advanced bookings for full year 2022 are ahead of a very strong 2019, despite minimal advertising or marketing

·     HIMX +7%; reports prelim Q1 revs of $309M, topping the $184.9M Refinitiv estimate and said for Q2, the demands remain robust

·     SGH +7%; on beat and raise as Q2 EPS 87c vs. est. 80c; Q2 revs $304.0M vs. est. $295.38M; sees Q3 EPS $1.00-$1.20 topping est. 90c and sees Q3 revenue $400M-$430M above consensus $314.01M

·     TMDX +2%; said that after reviewing its clinical evidence, the Circulatory Systems Device Advisory Panel convened by the U.S. FDA has issued a favorable vote in support of approval of the OCS Heart System to the FDA’s Office of Health Technology

·     XL +21%; announced that XL Fleet is electrifying Apex’s vehicle fleet as part of a comprehensive effort to reduce its carbon emissions

·     ZM +1%; after Facebook said it is adding Zoom and GoToMeeting to its portal tv device



·     AZN -1%; Covid-19 vaccine linked to blood clots, but European regulators still believe the benefits of the vaccine outweigh its risks, the announcement will likely raise questions about its use in some populations

·     FGEN -37%; as the FDA said it has tentatively scheduled a cardiovascular and renal drug advisory committee on July 15 to review the new drug application for Roxadustat, which is intended to be used for the treatment of anemia of chronic kidney disease (downgraded at Mizuho)

·     GEO -14%; said it has immediately suspended its dividend, and will evaluate its structure as a REIT while said it plans to maximize the use of cash flows to repay debt and internally fund growth

·     GNW -2%; said it has exercised its right to terminate its $2.7 bln merger agreement with China Oceanwide Holdings Group Co., Ltd. as of April 6, 2021

·     LW -2%; Q3 adj EPS 45c misses the 54c estimate on sales $896M vs. est. $820M

·     MAXN -12%; posted Q4 adj EPS of $0.11 while saying elevated costs for glass, solar cells, freight and other items may persist well into H2 2021; guides for Q1 revenues of $160M, below the $232.7M estimate


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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