Pre-Market Update

01/11/2023

Airline Stocks Tumble As Outage Grounds All Flights in U.S.

Wall Street futures were higher ahead of the U.S. inflation data and major bank earnings due this week. European shares rose on bets of less aggressive interest rate hikes. Japan's Nikkei closed at its highest in two weeks, as shares in robotics companies jumped. Gold prices were up and the dollar held its ground on expectations of slower Fed rate hikes. Oil prices were broadly steady as market participants were pulled in different directions by an unexpected build in U.S. crude and fuel inventories, global economic uncertainty and China reopening its economy.

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U.S. futures extend their push higher, rising into tomorrow’s CPI inflation reading and pushing closer to its 200-day moving average around the 4,000 level. So far in 2023, there has been lots of one-way direction trades which are the reverse of 2022 such as a lower dollar (after rising 10% last year), gold outperforms, energy the worst performing sector (vs. being the best in 2022) and leaders being communications (+6.7% vs. -30%+ in 2022) and discretionary (+4.1% vs. -30%+ in 2022) while overall stocks open the year higher. Markets appear to be “basing” into tomorrow’s CPI, where the consensus estimate is +6.5% (overall US CPI YoY in December), down from 7.1% in November and the 40-year high of 9.1% last June. The M/M Dec CPI figures are expected to be flat (core prices y/y est. +5.7% and m/m to rise +0.3%). DoubleLine Capital chief executive Jeffrey Gundlach said on CNBC last night that right now there’s a gap between where the bond market says interest rates are heading, and where Federal Reserve officials say they’re going — and the so-called bond king says investors should put their faith in markets. Fed officials over the last month have been hawkish following a year that saw 400-bps in interest rate hikes, but investors are anticipating a slowing of rates, a pause, and then a potential pivot by the end of 2023 – despite several Fed members saying a pivot is unlikely – we will see. The job market has remained strong (an area the Fed is closely watching), this despite mass layoffs especially in the technology sector since October: Twitter has laid off 75% of employees, Amazon 17,000 employees, Meta 13% of its workforce, Coinbase 20% of employees, Intel about 20% of employees, and doesn’t include hiring freeze at Apple. In Asian markets, The Nikkei Index rose 270 points to 26,446, the Shanghai Index fell -7 points to 3,161, and the Hang Seng Index gained 104 points to 21,436. In Europe, the German DAX is up 150 points to 14,922, while the FTSE 100 gains 40 points to 7,738.

Market Closing Prices Yesterday:

·The S&P 500 Index gained 27.32 points, or 0.70%, to 3,919.41

·The Dow Jones Industrial Average rose 187.90 points, or 0.56%, to 33,705.55

·The Nasdaq Composite jumped 106.98 points, or 1.01%, to 10,742.63

·The Russell 2000 Index advanced 26.74 points, or 1.49% to 1,822.65

U.S. flights were slowly beginning to resume departures after Federal Aviation Administration (FAA) scrambled to fix a system outage overnight that impacted thousands of flight.

The FAA had earlier it had ordered airlines to pause all domestic departures after its pilot alerting Notice to Air Missions system went out. The FAA said departures were resuming at Newark and Atlanta airports "due to air traffic congestion in those areas. We expect departures to resume at other airports at 9 a.m. ET."

•WFC: Wells Fargo said the bank is exiting the Correspondent business and plans to reduce the size of its Servicing portfolio to sharpen its focus towards its mortgage business.

•WWE Corp.’s (WWE) Stephanie McMahon has resigned as co-CEO and chairman of the board, the company announced Wednesday. Vince McMahon returns as executive chairman of its board. Nick Khan will continue as CEO, company says

•Coinbase (COIN) downgraded to Underperform at Bank America

TSLA: Calls above 124.50 : Target 128.62

TSLA: Puts below 114.60 : Target 110

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Earnings Before the Bell:

Earnings After the Bell:

• BLD: Deutsche Bank Upgrades to Buy from Hold - PT $227 (from $201)

• BX: Wells Fargo Upgrades to Overweight from EqualWeight - PT $95 (from $88)

• BZUN: JPMorgan Upgrades to Overweight from Neutral - PT $10 (from $9)

• CC: BofA Securities Upgrades to Buy from Neutral - PT $40 (from $37)

• CTVA: BofA Securities Upgrades to Neutral from Underperform - PT $68 (from $64)

• DOW: BofA Securities Upgrades to Neutral from Underperform - PT $59 (from $48)

• EMN: BofA Securities Upgrades to Buy from Neutral - PT $108 (from $98)

• EURN: Jones Trading Upgrades to Buy from Hold

• EVR: Goldman Sachs Upgrades to Buy from Neutral - PT $125

• EXPE: Oppenheimer Upgrades to Outperform from Perform - PT $120

• GLPI: Truist Securities Upgrades to Buy from Hold - PT $60 (from $54)

• IBP: Deutsche Bank Upgrades to Buy from Hold - PT $124 (from $90) • JKS: Roth Capital Upgrades to Buy from Neutral - PT $70 (from $50)

• JKS: Roth Capital Upgrades to Buy from Neutral - PT $70 (from $50)

• LEN: BofA Securities Upgrades to Neutral from Underperform - PT $102 (from $92)

• LTHM: BofA Securities Upgrades to Buy from Neutral - PT $26 (from $27)

• PAAS: RBC Capital Upgrades to Outperform from Sector Perform - PT $22 (from $19)

• PHM: BofA Securities Upgrades to Buy from Neutral - PT $60 (from $46)

• ALBO: Jefferies Downgrades to Hold from Buy - PT $42 (from $49)

• ALGT: Susquehanna Downgrades to Neutral from Positive - PT $90

• CHRW: JPMorgan Downgrades to Neutral from Overweight - PT $90 (from $103)

• COIN: BofA Securities Downgrades to Underperform from Neutral - PT $35 (from $50)

• CRM: Bernstein Downgrades to Underperform from Market Perform - PT $119 (from $134)

• CUTR: Cantor Fitzgerald Downgrades to Neutral from Overweight - PT $33 (from $85)

• DCT: Barclays Downgrades to Equalweight from Overweight - PT $19 (from $14)

• ELME: BTIG Downgrades to Neutral from Buy

• EQR: BTIG Downgrades to Neutral from Buy

• FBIN: Deutsche Bank Downgrades to Hold from Buy - PT $61 (from $65)

• JEF: Goldman Sachs Downgrades to Neutral from Buy - PT $40

• KEYS: Goldman Sachs Downgrades to Neutral from Buy - PT $189 (from $196)

• KMX: JPMorgan Downgrades to Underweight from Neutral - PT $60

• LEVI: Citi Downgrades to Neutral from Buy - PT $17 (from $19)

• LUV: Susquehanna Downgrades to Neutral from Positive - PT $40

• MAS: Deutsche Bank Downgrades to Sell from Hold - PT $43 (from $52)

• MC: Goldman Sachs Downgrades to Sell from Neutral - PT $37

• META: : OTR Global Downgrades to Mixed from Positive

• MLNK: Barclays Downgrades to Underweight from Equalweight - PT $14 (from $17)

• MSI: Credit Suisse Downgrades to Neutral from Outperform - PT $270 (from $300)

• ROIC: BTIG Downgrades to Neutral from Buy

• RRR: Truist Securities Downgrades to Hold from Buy - PT $45 (from $46)

• RXO: Stifel Downgrades to Hold from Buy - PT $17 (from $20)

• SABR: BofA Securities Downgrades to Underperform from Buy - PT $7 (from $11)

• SITE: Deutsche Bank Downgrades to Hold from Buy - PT $126 (from $144)

• STM: Goldman Sachs Downgrades to Sell from Neutral • WTS: Deutsche Bank Downgrades to Hold from Buy - PT $150 (from $155)

• XPEV: JPMorgan Downgrades to Neutral from Overweight - PT $9 (from $11)

• XPO: JPMorgan Downgrades to Neutral from Overweight - PT $42 (from $44)

·7:00 AM ET MBA Mortgage Applications Data

·10:30 AM ET Weekly DOE Inventory Data

·1:00 PM ET US Treasury to sell $32B in 10-year notes

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