Mid-Morning Look: December 14, 2021

Auto PostDaily Market Report

Mid-Morning Look

Tuesday, December 14, 2021






DJ Industrials




S&P 500








Russell 2000






U.S. stocks are mixed with the Dow and Russell 2000 outperforming early along with gains in transports while high growth tech stocks and the S&P 500 index post early losses following another high inflation reading, leading to bets the Fed will become more aggressive in actions on rates ahead of their FOMC meeting results tomorrow. CNBC noted that citing a global fund managers survey, biggest market risks are rate hikes (42%), inflation (22%) and COVID only 15%. The Nasdaq is faring the worst among the major averages, but off the worst levels as stocks pretty much shrugged off a hotter-than-expected November PPI, even though wholesale inflation came in at an annual level of 9.6%. Growth names weak given the surging inflation readings this morning with PPI coming in at highest levels on record as software stocks, which have already tumbled well-off record highs in the summer, hit hard again today along with analyst downgrades (JPM several cuts). Covid infections remain a market concern as well as the BBB plan out of Washington and debt ceiling concern, but major U.S. averages are still just a few points off record closing highs just a few days back. Commodity prices are lower (gold and oil) following the inflation data and subsequent rebound in the U.S. dollar.


Economic Data

·     Producer Price Index (PPI) Final Demand MoM rises +0.8%, above ests +0.5% and on a YoY basis surges +9.6% vs. +9.2% est. (and prior 8.6%) – record high readings. On a core basis (ex food & energy), PPI MoM rose +0.7% vs. est. +0.4% and on YoY basis surges +7.7% vs. est. +7.2%







WTI Crude















10-Year Note





Sector Movers Today

·     Aerospace & Defense; GD upgraded to buy from Neutral and raise tgt to $245 from $220 at UBS while the firm downgraded LHX to Neutral from Buy saying as aero makes steps toward positive EPS/FCF in ’22, they believe optimism at the start of ’22 should prove more durable as COVID moves from a pandemic to an endemic stage (says leaning into commercial aero in 2022); LDOS estimates cut at Cowen saying growth goal looks realistic but cy22 guide may disappoint; Wells Fargo said it’s A&D survey indicated maintenance activity has increased, which is positive for aftermarket/TDG is the most exposed; RKLB announced the acquisition of SolAero in an $80M all-cash transaction. SolAero is a best-in-class manufacturer of spacecraft solar power systems, including solar cells, panel substrates and solar cell assemblies.

·     Industrial & Machinery; NEOG shares jumped after combining with MMM, where 3M will separate its food safety business and simultaneously combine it with Neogen in a $9.3B transaction that is expected to be tax-efficient to 3M and its holders; Barnes (B) said it now expect full year revenues to be up approximately 12% over the prior year, with organic sales growth of 10% while adj operating margin is now forecasted to be approximately 12%; in research, AME upgraded from PP to OP at Wolfe Research as prefer increasing quality/long-cycle exposure as we move deeper into the economic recovery, and AME checks both boxes., while firm downgrade VRT from OP to PP rating as believe the re-rating story has played out as much as it can in lieu of further progress on core OMX initiatives

·     Software movers; JPMorgan issued upgrades to Overweight for CRWD and AVLR on compressed valuation, SSNC as its M&A strategy could lead to significant synergies if deals can close, and MODN as they see its organic growth returning to double-digit growth over the next couple of years, upgraded PRO to Neutral on improved 2022 outlook and more balanced risk-reward, and downgraded ADBE, AKAM, DDOG, NET, PTC, SWI, ZS, DOCS, DOX, BCOR, SPNS due to a combination of limited upside to price targets, valuation in light of risk that interest rates rise in 2022, adj discount rates for the current rate environment, re-evaluating reasonable cash flow expectations; Morgan Stanley upgraded Unity (U) and APP to OW and initiated IS at OW as emerging mobile ad networks are set to benefit from the growth in consumer time/money spent on mobile apps; Needham initiated MSP with a Buy rating and $29 target

·     Media & Telecom movers; YouTube said now in negotiations with DIS to continue distributing their content on YouTube tv; says deal with Disney expires on Friday, December 17, and if unable to reach a deal by Friday, will decrease our monthly price for YouTube tv by $15, from $64.99 to $49.99; Macquarie with several changes as they downgraded CMCSA from Outperform to Neutral w/ $52 PT (down from $65) and downgraded LGF from Outperform to Neutral w/ $17 PT (from $20), while cut tgt prices on AMCX from $57 to $42, DIS from $195 to $185, maintains Outperform, VIAC from $40 to $32 and FOX from $40 to $37; Vox Media said it agreed to acquire Group Nine Media Inc., a deal that unites two of the biggest players in digital publishing. Under the terms of the stock deal, Vox Media will have 75% ownership of the combined company, with the remaining 25% going to Group Nine Media, WSJ reported



·     AA +5%; will move to the S&P MidCap 400, replacing HRC effective at the start of trading on Dec. 20 (HRC being acquired by BAX)

·     BYND +3%; upgraded to neutral from underweight at Piper saying a U.S. nationwide launch in McDonald’s appears to be coming late in the first quarter of 2022, earlier than they anticipated

·     CNC +2%; reaches a deal with activist investment firm Politan Capital Management, under which five new directors to join co’s board and CEO Michael Neidorff to retire next year

·     FLR +8%; said its nuclear energy unit NuScale Power plans to go public by merging with a blank-check firm in a deal that values the combined entity at $1.9 billion, including debt

·     NEOG +7%; after combining with MMM, where 3M will separate its food safety business and simultaneously combine it with Neogen in a $9.3B transaction that is expected to be tax-efficient to 3M and its holders

·     TMX +21%; as Rentokil Initial agreed to acquire the pest control company in a cash-and-stock deal valued at $55 per share or an aggregate of $6.7 billion

·     UBER +5%; after saying at UBS conference last week was the best week ever as a public company and company looks to monetize non-strategic stakes in other companies, including China’s didi, over time



·     ADGI -77%; after saying that the Omicron variant led to over 300-fold reduction in neutralizing activity in ADG20, the company’s experimental monoclonal antibody (mAb) for COVID-19

·     CABA -67%; after reports top-line biologic activity data from two lowest dose cohorts in Descartes™ trial in patients with mucosal pemphigus vulgaris

·     MESO -17%; announced that NVS has terminated the agreement with the company on the development of remestemcel-L in COVID-19-induced ARDS

·     PRPL -8%; sees FY21 revenue, adjusted EBITDA at low end of prior view as updated its outlook for the calendar year 2021; Robert T. DeMartini succeeds Joseph B. Megibow, who is stepping down as CEO

·     RUN, NOVA -11%; after yesterday’s California proposal for a monthly grid participation charge of $8/kW, more punitive than consensus $3/kW, though BMO said they would be buyers on additional weakness even as the overhang could persist for months as they expect the final order to be better than this initial proposal

·     WB -2%; after Chinese authorities said they have fined the social-media giant millions of dollars for a string of infractions, the second time in two weeks that Beijing has announced the punishment of a major internet platform amid a further tightening of controls online.


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.

Live Trading

Open an Account

Paper Trading