Mid-Morning Look: January 20, 2022

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Mid-Morning Look

Thursday, January 20, 2022






DJ Industrials




S&P 500








Russell 2000






U.S. stocks in rebound mode after a brutal start to 2022 (including a mass plunge late day yesterday), with the S&P 500 down over 4% YTD coming into the day, the Nasdaq down over 8% YTD (and over 11% from Nov highs – correction territory), and the Russell 2000 down over 8% YTD. However, a strong start Thursday with many high growth names seeing buying with most sectors higher led by Info tech, Financials, Healthcare and Consumer Discretionary while Materials and Consumer Staples lag. Economic data was softer as weekly jobless claimed surged to 286K from 231K, the highest number since the week of October 15th, 2021, but not impacting equity markets, along with weaker existing home sales but better Philly Fed data. After falling to start the year, crypto assets seeing a rebound with markets in early “risk-on” mentality and Bitcoin moves back above the $43K level (having held $40K lately). Earnings season beginning to pick up steam with Netflix results due after the close (shares down over 13% YTD). Markets looking good to start, reclaiming key technical levels (S&P back above 4,577 100-day MA).


Economic Data

·     Weekly jobless claims rose to 286K in latest week, well above the 22K estimate, while prior week revised to 231K from 230K; the 4-week moving average rose to 231K from 211K, while continued claims rose to 1.635M in latest week from 1.551M prior; the U.S. insured unemployment rate rose to 1.2% from 1.1% prior

·     Philly Fed Survey for January rose to 23.2 vs. +20 consensus, and +15.4 prior month as current shipments index increased 6 points to 20.8; prices paid index increased 6 points to 72.5; and the current prices received index declined 4 points to 46.4.

·     Existing Home Sales for Dec fell -4.6% at 6.18M unit rate below est. 6.44M and Nov 6.48M; Dec inventory of homes for sale 910,000 units, 1.8 months’ worth; U.S. Dec national median home price for existing homes $358,000, +15.8% from Dec 2020







WTI Crude















10-Year Note





Sector Movers Today

·     Transports; airlines with earnings as AAL 4Q adj EPS ($1.42) ex items vs est. ($1.48) on in-line revs $9.4B, qtrly load factor 80.2 vs 64.1%, RASM 13.72 cents vs 9.6, sees 1Q capacity down 8-10% with revs down about 20-22% vs 1Q19, and expects to return to profitability this year; UAL Q4 adj EPS ($1.60) was a narrower loss than est. ($2.11) on revs $8.2B vs est. $7.96B, sees Q1 capacity down 16-18% and revenue down 20-25% vs 1Q19, said Omicron’s impact on bookings has bottomed out and expects to be profitable again in Q2; UPS upgraded to Neutral at Exane; Bank of America upgraded CHRW to Buy with a $125 target from $108 as a value opportunity in an expected volatile year for transports; in rails, UNP 4Q EPS $2.66 vs est. $2.61 on revs $5.7B vs est. $5.6B; says although uncertainty remains around covid variants and supply chain disruptions, see a positive demand environment in 2022

·     Chemicals; HUN named catalyst Buy at Deutsche Bank saying with the company engaged in a proxy contest with activist shareholder Starboard Value ahead of the upcoming March 25 annual meeting they believe Huntsman will pull out all stops in delivering Q4 earnings and providing strong Q1 and ’22 earnings guidance; Keybanc said they are tactically more cautious on ethylene/PE producers DOW and LYB, following a strong rally in shares over the last 30 days despite U.S. PE prices falling $0.20/lb since cycle highs; FUL reported F4Q21 adjusted EBITDA of $134M, above Street at $130M on and revs of $897M were in line at 15% organic growth that included over $100M of realized pricing initiatives ASH downgraded to Equal Weight from Overweight at Wells Fargo and tgt cut to $110 from $120 to reflect another earnings reduction for FY21 and FY22 , which reflects 13.5x our lowered 2022 EBITDA estimate

·     Paper & Containerboard sector: BLL downgraded from Overweight to Equal weight and trim tgt to $100 from $110 at Morgan Stanley as see greater risk of multiple contraction at Ball given its premium valuation to peers, offsetting continued strong earnings growth, while upgraded SEE from Equal weight to Overweight w/ $79 PT up from $61 as believe has been executing well in an inflationary environment and is best positioned to outperform as resin prices moderate; in paper, Bank America downgraded IP and WRK to Neutral while keep PKG at Buy in the containerboard sector after the stocks have lifted a bit in 2022 (up 5-10% relative) on a cyclical/value rotation saying early responses from their latest Survey show further deceleration

·     Utilities & Solar; Guggenheim said New ’22 Best Idea: PCG moved to Best Ideas list, replacing CNP but retaining BUY rating; downgrading to SJI, SR to Neutral, upgrading to Neutral from Sell shares of HE, NWN and downgrading to Sell ED; AQUA upgraded from Perform to Outperform at Oppenheimer as recent trading weakness (-23.8% vs. LTM high, -19.5% YTD vs. XLI -2.2%) appears overdone on a compelling long-term ESG story; JPMorgan trimmed their price targets on all the alt energy names they cover to factor in a valuation re-rating from expected higher interest rates, though long-term investors interested in the decarbonization theme are being offered an attractive entry point and their top picks remain RUN, NOVA, ARRY



·     AA +3%; reported better-than-expected 4Q21 results and indicated similar 1Q22 expectations at current prices (albeit including a meaningfully positive change in intersegment eliminations)

·     BABA +4%; US listed Chinese stocks such as BABA, BIDU, DIDI, PDD, NTES jumped after China’s cyberspace regulator denied issuing a document with new guidelines requiring the country’s major internet cos to seek approval for new investments and fundraising, as per Reuters

·     BKR +4%; Q4 adj EPS of $0.25 misses the $0.27 est on slightly better revs of $5.52B vs. est. $5.48B – Orders from its turbomachinery and process services segment were up 62%, to $2.97 billion

·     BYND +4%; after MCD’s expands test of beyond meat McPlant burger

·     EH +8%; announced that AirX Inc., a leading Japanese air mobility digital platform company, has placed a pre-order for 50 units of the EH216 AAV, marking the biggest pre-order EHang has received in Japan.

·     ETSY +5%; upgraded to Overweight at Keybanc as First Look Data has pointed to stable to improving q/q trends

·     LAZR +14%; following partnership with Mercedes-Benz to accelerate the development of future highly automated driving technologies for Mercedes passenger cars.

·     SOFI +11%; extends yesterday gains, rises another 11% after CEO states on Mad Money that SoFi’s goal is to be a “one-stop shop” for all financial needs

·     TRV +2%; as Q4 earnings easily top consensus at $5.20 vs. est. $3.80 9and above $4.91 YoY) as net written premiums climb 10%, growing in all three segments from a year ago and Q4 net investment gains were $58M pretax vs. $50M in Q4 2020.



·     AMD -1%; and NXPI downgraded to neutral at Piper citing concerns about a growth slowdown

·     F ; downgraded to Hold from Buy at Jefferies while raise tgt to $25 saying it is premature to re rate legacy OEMs for their EV progress since earnings remain mostly driven by cyclical shortages

·     MRNA -1%; makes a -26.5% slide since last Monday 1/10 as vaccine names tumble

·     RF -4%; Q4 EPS $0.43 vs. est. $0.48

·     TASK -13%; as short-seller Spruce Point Capital Management issues “Strong Sell” opinion with 25% – 50% downside risk after conducting a forensic financial and accounting review

·     UAL -1%; adj EPS ($1.60) was a narrower loss than est. ($2.11) on revs $8.2B vs est. $7.96B, sees Q1 capacity down 16-18% and revenue down 20-25% vs 1Q19


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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