Mid-Morning Look: March 14, 2022

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Mid-Morning Look

Monday, March 14, 2022






DJ Industrials




S&P 500








Russell 2000






U.S. stocks struggling for direction early before pushing higher, coming into the day down 6 of the last 7-days and the Dow riding a 5-week losing streak after stocks posted hefty declines last week heading into an FOMC meeting and developments overseas. The S&P 500 and the Dow rose initially amid reports of progress in Russia-Ukraine peace talks, while bank stocks gained, tracking surging Treasury yields (10-year yield hits above 2.1% to highest level since July 2019) ahead of a Federal Reserve meeting where they are widely expected to raise interest rates. U.S. listed Chinese stocks (BABA, BIDU, PDD, NTES, etc.) tumbling as Mainland China is facing its worst Covid-19 outbreak since the height of the pandemic in 2020 as China has partially locked down the cities of Shanghai and Shenzhen for a week as Covid-19 cases rise. Huge week for U.S. stocks given the FOMC meeting and hopeful peaceful developments in Europe as oil prices slide (now 25% off recent 14-year highs above $130 per barrel), while gold and bonds tumble. Nasdaq a drag for stocks early after its supplier Hon Hai Precision Industry Co Ltd, known as Foxconn, suspended operations in China’s Shenzhen amid rising COVID-19 cases. No major U.S. economic data today, but monthly producer price (PPI) inflation data expected tomorrow morning. Early on, seeing an unwind of recent winners as commodity prices tumble on peace talk hopes in Ukraine – energy, coal (BTU), metals NEM), fertilizers (MOS) all rolling lower.







WTI Crude















10-Year Note





Sector Movers Today

·     Energy stock movers; energy stocks fall early as oil futures fell with a morning low below $103 with a focus on Ukraine-Russia talks and China lockdowns amidst rising Covid cases. E&P and Majors; Warren Buffett’s BRK and its subsidiaries boosted their stake in OXY by another $1.5B billion over the past week in addition to some $3B of stock bought less than two weeks ago; Morgan Stanley downgraded CVX and OXY to Equal-Weight; Wells upgraded CDEV to EW an downgraded SWN to UW and NOG to EW after updating their estimates and models; Seaport upgraded HP to Buy with a $50 PT on a higher land drilling rig demand and day rate outlook while also raising estimates on WTTR and LBRT

·     Internet; sharp weakness in U.S. listed Chinese stocks BZ, BIDU, BABA, JD, NTES, PDD on rising COVID-19 infections in China and latest tech regulations as China’s cyberspace regulator issued a new set of draft measures aimed at protecting minors, demanding online gaming, livestreaming, audio and video platforms to set up a “youth mode” for minors (shares of BABA, BIDU, JD among many others downgraded at JPMorgan today)

·     Bank movers; banking (WFC ) and insurance stocks among outperformers following the surge in Treasury yields ahead of the FOMC meeting this week, with a 25-bps hike widely anticipated, which can help lending margins for financial institutions. On Monday, the gap between yields of two- and 10-year Treasury note was about 25 bps – narrower curve. Wells Fargo and Raymond James both said that Friday’s selloff in SBNY was overdone on a rumor the bank was added to the FDIC Problem Bank List that both believe is false; DB is ceasing all operations in Russia, reversing course from Thursday’s decision to remain operational in the country

·     Media & Telecom movers; Advertising stocks IPG, OMC, WPP, PUBGY all downgraded to Equal weight from Overweight at Barclay’s and lower price tgts; NOK upgraded at Raymond James to Outperform based on its improving competitive position and market opportunities that exceed expectations; IPGP was downgraded at Raymond James given view that just about every demand and cost input indicator has turned negative over the last couple of months with little chance of meaningful improvement for IPGP in CY22; PARA outperforms in media space

·     Casinos, Gaming, Lodging & Leisure sector; Macau casinos tumble overnight as China locks down technology hub Shenzhen as Covid cases jump; shares of WYNN, MLCO, LVS, MGM volatile (52-week lows for many of the casino names); LAZY said its board has rejected an unsolicited bid for from B. Riley Financial of $25 a share saying the offer meaningfully undervalues the company and is not in the best interests of shareholders



·     MRNA +13%; said that the first participant has been dosed in a clinical trial of an experimental human immunodeficiency virus trimer mRNA vaccine.

·     RF +4%; strength across the board in large cap and regional banks following the spike in Treasury yields, with 10-year hitting highest since July 2019 ahead of Fed meeting this week

·     SWX +2%; as Carl Icahn’s Icahn Enterprises L.P. is raising its tender offer to acquire the co to $82.50 a share, from the previous offer price of $75 a share

·     TRQ +32%; as RIO said that it has made a nonbinding proposal to acquire the remaining 49% shareholding in the company for $2.7B

·     VOLT +95%; has agreed to be acquired by Vega Consulting Inc. for $6 a share, the companies said



·     AAPL -1%; falling below the $153.60 200-day Moving average

·     AFRM -5%; said it sees Q3 revs at least $335M and at least $1.3B of rev for FY 2022, both high-end of prior guidance, citing strong QTD performance. AFRM decided to delay $500M asset-backed securities (ABS) sale citing heightened levels of rates volatility

·     BILI -11%; along with weakness in other U.S. listed Chinese stocks BZ, BIDU, BABA, JD, NTES, PDD on rising COVID-19 infections in China and latest tech regulations as China’s cyberspace regulator issued a new set of draft measures aimed at protecting minors, demanding online gaming, livestreaming, audio and video platforms to set up a “youth mode” for minors

·     DHI -3%; homebuilders seeing weakness initially as surging Treasury yields and rising rates by the Fed likely to push mortgage rates higher

·     DVN -4%; Energy stocks are declining as crude futures turn lower

·     ELMS -31%; as announced the termination of a consulting agreement with former CEO James Taylor, in addition, the company announced a delay in production of the Urban Delivery Vehicle and updated its financial position

·     MLCO -2%; along with weakness in other Macau related casinos (WYNN) as cases surge in China’s Guangdong province and Hong Kong right as China looks to dial back its zero-covid policy

·     NKTR -49%; after the company said a combination of its experimental therapy bempegaldesleukin in combination with BMY Opdivo failed as a treatment for melanoma; said its phase 3 PIVOT IO-001 trial failed to meet primary endpoints

·     YUMC -4%; said China same store sales down about 20% first 2 weeks March and same store sales down about 4% in January, February


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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