CAPIS Morning Note – 01/19/24: Afternoon Rally Has Legs.

Overnight Summary: The S&P 500 closed Thursday higher by 0.88% at 4780.94 from Wednesday lower by -0.56% at 4739.21. The overnight high was hit at 4835.75 at 6:50 a.m. EST while the overnight low was hit at 4806.50 at 4:05 p.m. EST. The range overnight was 29 points as of 7:15 a.m. EST. The 10-day…

Overnight Summary: The S&P 500 closed Thursday higher by 0.88% at 4780.94 from Wednesday lower by -0.56% at 4739.21. The overnight high was hit at 4835.75 at 6:50 a.m. EST while the overnight low was hit at 4806.50 at 4:05 p.m. EST. The range overnight was 29 points as of 7:15 a.m. EST. The 10-day average of the overnight range is at 25.50 from 23.70.  The average for May-December average was 20.87 from 21.43 during May-November. Currently, the S&P 500 is higher by +22.25 points at 7:20 a.m. EST.
Executive Summary: Stocks rallied in the late afternoon on a Tweet from Wall Street Journal Reporter Nick Timiraos on CPI, PPI and PCE inflation levels (@NickTimiraos). That rally continues this morning just as the Fed goes into its quiet period. Well played Mr. Chairman.
  • December Existing Home Sales is due out at 10:00 a.m. EST and is expected to come in at 3.80 million from 3,82 million.
  • January University of Michigan Consumer Sentiment is due out at 10:00 a.m. EST and is expected to drop to 68.80 from 69.70.
  • Federal Reserve Vice Chair for Supervision Michael S. Barr 1:00 p.m. EST
  • Federal Reserve San Francisco President Mary Daly 4:15 p.m. EST
  • FOMC Blackout period begins this weekend January 20 – Jan 31st

Earnings Out After The Close: 

  • Beats: OZK +0.04, PPG +0.04, FNB +0.03, BANF +0.02 of note.
  • Flat: None of note.
  • Misses: JBHT (0.30) of note.

Capital Raises:

  • IPOs Priced or News: None of note.
  • New SPACs launched/News:
    • Bowen Acquisition Corp (BOWN) enters into merger agreement with Shenzhen Qianzhi BioTech Company.
  • Secondaries Priced:
    • ASTS: Prices offering of 32,258,064 shares of Class A Common Stock at $3.10 per share.
    • BECN: Prices secondary offering of 5,218,134 shares of Beacon’s common stock.
    • ESPR: Prices offering of 56.7 million shares of common stock at $1.50 per share.
  • Notes Priced of note:
    • WGO: Prices $300 million offering of 3.250% convertible senior notes due 2030 for refinancing 2025 maturities.
  • Common Stock filings/Notes:
    • ADTX: Form S-1.. Up to 3,785,569 Shares of Common Stock
    • ASTS: Launch of Offering of $100,000,000 of Class A Common Stock. (UBS and BCS Bookmanagers)
    • ESPR: Proposed Public Offering of Common Stock. (Jefferies Bookmanager)
    • UAVS: Filed Form S-1.. up to 16,319,165 shares of common stock.
    • XIN: Board of the Directors of the Company had resolved to issue common shares equal to no more than 10% of the total outstanding common shares to potential investors, including the management of the Company.
  • Direct Offering: None of note.
  • Selling Shareholders of note:
    • BECN: Announces secondary offering of 5,218,134 shares of common stock by CD&R Boulder Holdings, L.P., an entity affiliated with Clayton, Dubilier & Rice. (RBC Underwriter)
  • Private Placement of Public Entity (PIPE): None of note.
  • Mixed Shelf Offerings: None of note.
  • Debt/Credit Filing and Notes:
    • AORT: Obtains $350 Million in Senior Secured Credit Facilities.
    • BTU: New $320 Million Revolving Credit Facility.
  • Tender Offer: None of note.
  • Convertible Offering & Notes Filed: None of note.

Capital Raise Summary From The TradeXchange, bringing traders and investors real time news and Squawk Box, and other sources.

News After The Close :

  • After Hours Movers: 
    • MESA: +78% Enters New Agreements with United Airlines for Improved Operating and Financing Terms and Provides Update on CRJ-900 Asset Sale Program
    • SMCI: +9% PRELIM 2Q ADJ EPS $5.40 TO $5.55, EST. $4.55
    • AXGN: +5% Positive Topline Results from REPOSE
    • JBHT: +3.5% Earnings
    • IRBT: -39% EU Commission Intends To Block Amazon’s iRobot Acquisition
    • ESPR: -19% Proposed Public Offering of Common Stock
    • UAVS: -12% Filed Form S-1.. up to 16,319,165 shares of common stock
    • ASTS: -8% Offering of $100,000,000 of Class A Common Stock
  • News Items After the Close:
    • Stocks making the biggest moves after hours: IRBT, SMCI, JBHT, PPG, WEN (CNBC)
    • Super Micro’s (SMCI) blowout numbers are latest bit of good news for chip industry. (MarketWatch)
    • iRobot (IRBT) Stock Plunges as Its Takeover by Amazon Likely Is Dead. (Barrons)
    • YouTube (GOOGL) and Spotify (SPOT) Won’t Launch Apple (AAPL) Vision Pro Apps, Joining Netflix (NFLX). (Bloomberg)
    • EU Commission Intends to Block Amazon’s (AMZN) iRobot (IRBT) Acquisition. (WSJ)
    • Macy’s (M) plans to cut approximately 3.5% of its workforce, includes 13% of corp staff. (WSJ)
    • Truist Financial (TFC) cuts 1,000 jobs to trim costs and beats revenue estimate. (MarketWatch)
    • Wendy’s (WEN) names Kirk Tanner as new CEO, was formerly exec at PepsiCo.
      • Things that make you go hmmmm…….PepsiCo (PEP) announces retirement of North America Beverages CEO Kirk Tanner on Feb 2; appoints Ram Krishnan CEO of PepsiCo Beverages North America.
    • House passes spending bill to fund government through March 8 after the Senate passed the measure earlier today. (NYTimes)
    • White House announces nearly $5 billion in additional student debt cancellation for 74,000 borrowers.
    • Parsons (PSN) has been awarded a $28 million ceiling-value Battlespace Command and Control Center integration task order under the Air-Base Air-Defense (ABAD) contract.
  • Exchange/Listing/Company Reorg and Personnel News:
    • American Coastal Insurance Corporation (ACIC) appoints Svetlana Castle as CFO.
    • Cambium Networks (CMBM) CFO to step down.
    • GitLab (GTLB) appoints Sabrina Farmer as Chief Technology Officer; joins GitLab after a 19-year career at Google (GOOG) where she most recently served as vice president of engineering, core infrastructure.
    • Liquidia Corporation (LQDA) Announces Updates to Operations Leadership.
    • Natura & Co (NTCO) announced last night intention to end secondary listing on NYSE.
  • Buyback Announcements or News: 
    • Qiagen (QGEN) completes synthetic share repurchase plan to return up to approximately $300 million that combines a direct capital repayment to shareholders with a reverse stock split.
    • Reverse split stocks for today CLEU 1/15 CNEY 1/30
  • Stock Splits or News:
    • Datasea (DTSS) Announces 1-for-15 Reverse Stock Split to Regain Compliance with Nasdaq Minimum Bid Requirement.
    • Qiagen (QGEN) – See Buybacks.
  • Dividends Announcements or News: 
    • Con Edison (ED) increases quarterly cash dividend to $0.83 per share from $0.81 per share.
    • SLB raises dividend by 10%.
    • Targa Resources (TRGP) intends to recommend to its Board of Directors an increase to its common dividend to $0.75 per share in Q1 versus $0.50 per share in Q4.
    • Valero Energy (VLO) increases its quarterly dividend 4.9% to $1.07 per share; 3.4% annual yield.
  • Insider Sales Of Note:
    • Airbnb (ABNB) CEO and other executives sell more stock. (Recent add to Model Consumer and Model Short as a “Type 4” Erlanger Classification [weak technicals/low short Interest])

What’s Happening This Morning: Futures value reflects the change with fair value.

S&P 500 +24, Dow Jones +195 , NASDAQ +133, and Russell 2000 +7.  (as of 7:59 a.m. EST).  Asia and Europe are higher this morning. VIX Futures are at 14,65 from 15.15 this morning.  Gold, Silver and Copper are higher this morning. WTI Crude Oil and Brent Crude Oil are lower with Natural Gas lower as well. US 10-year Treasury sees its yield at 4.134% from 4.086% yesterday morning. The U.S. Dollar is lower versus the Euro, higher versus the Pound and lower against the Yen. Bitcoin is at$41,295 from $42,354 higher by +0.92% this morning.

Sector Action – (1/3/6/12/YTD Updated Weekly with Monday release):  

  • Daily Positive Sectors: Technology, Communication Services, Industrials, Consumer Cyclical, Basic Materials of note.
  • Daily Negative Sectors: Utilities, Real Estate of note.
  • One Month Winners: Healthcare, Communication Services, and Real Estate of note.
  • Three Month Winners: Real Estate, Technology, and Financial of note.
  • Six Month Winners: Communication Services, Financial, and Technology of note.
  • Twelve Month Winners: Technology, Communication Services, Consumer Cyclicals and Industrials of note.
  • Year to Date Winners:  Healthcare, Communication Services, and Consumer Defensive of note.

Rising technology shares powered major indexes higher on Thursday.  The S&P 500 rose 0.9%, while the Nasdaq Composite gained 1.3%. The Dow Jones Industrial Average advanced 0.5%, or 202 points, snapping a three-session losing streak.  Major indexes are little changed so far in January, after posting a furious rally to end 2023. (WSJ – edited by QPI)

Upcoming Earnings Of Note: (From Chartroom Software – sorted by market cap, highest to lowest with most visible names)

  • Friday After the Close: None of note.
  • Monday Before the Open:

Earnings of Note This Morning:

  • Beats: TRV +1.93, CMA +0.56, FITB +0.22, STT +0.21, HBAN +0.15, SLB +0.02, ALLY +0.01 of note.
  • Flat: None of note.
  • Misses: RF (0.07) of note.
  • Still to Report: None of note.

Company Earnings Guidance:

  • Positive Guidance: MATX, SMCI, SAVE of note.
  • Negative Guidance: CMBM, PPG, PEB of note.

Erlanger Research Advance/Decline Chart:  

Gap Ups & Down In Early Pre-Market:

  • Gap Up: MESA +58%, SMCI +12%, MESO +10%, VSTM +8%, CHRS +5%, SAVE +5% of note.
  • Gap Down: IRBT -38%, ESPR -24%, ASTS -20%, NTCO -4%, CMBM -4% of note.

Insider Action: No stock sees Insider buying with dumb short selling.  No stock sees Insider buying with smart short sellers.

Rags & Mags: Repeated stories from prior days never listed, i.e. “rehashed news”. Sorted by Global, U.S. and stock specific.

  • What You Need To Know To Start Your Day. (Bloomberg)
  • 5 Things To Know Before the Stock Market Opens Today. (CNBC)
  • Bloomberg Lead Story: Houthis Fire Missiles at Another U.S. Owned Ship in the Red Sea. (Bloomberg)
  • Bloomberg  Most Shared Story: JP Morgan lifts CEO Jamie Dimon;s pay yo $36 million for 2023. (Bloomberg)
  • US Futures gain as Chipmakers extend rally: Markets Wrap. (Bloomberg)
  • China’s $6.3 Trillion Stock Selloff is getting uglier by the day. (Bloomberg)
  • Davos Wrap-Up: Global Economy settles into stranger new dynamic. (Bloomberg)
  • Wayfair (W) to lay off 13% of workforce. (CNBC)
  • Spirit Airlines (SAVE) jumps +17% as raises fourth-quarter forecast. (CNBC)
  • Bloomberg Big Take:  Wall Street donors are sitting out the primaries. (Podcast)
  • NPR Marketplace:  How the C-Suite sees AI, what’s next for CRISPR and health tech needs better marketing. (Podcast)
  • NY Times Daily:  The fisherman who could end federal regulation as we know it. (Podcast)
  • Wealthion: Recession worse than anything since 1929. (Podcast)

Moving Average Update:  Score rebounds to 74% from 57%.

Geopolitical: 

  • President’s Public Schedule:
    • The President receives the Presidential Daily Briefing, 10:00 a.m. EST
    • Press Briefing by Press Secretary Karine Jean-Pierre and NSC Coordinator for Strategic Communications John Kirby, 1:30 p.m. EST
    • The President welcomes bipartisan mayors attending the U.S. Conference of Mayors Winter Meeting to the White House by, 3:45 p.m. EST
    • The President departs the White House en route to Rehoboth Beach, Delaware, 5:45 p.m. EST
    • The President arrives in Rehoboth Beach, Delaware, 6:40 p.m. EST

Economic:

  • December Existing Home Sales is due out at 10:00 a.m. EST and is expected to come in at 3.80 million from 3,82 million.
  • January University of Michigan Consumer Sentiment is due out at 10:00 a.m. EST and is expected to drop to 68.80 from 69.70.
  • Baker Hughes Rig Count 1:00 p.m. EST

Federal Reserve / Treasury Speakers: 

  • Federal Reserve Vice Chair for Supervision Michael S. Barr 1:00 p.m. EST
  • Federal Reserve San Francisco President Mary Daly 4:15 p.m. EST
  • FOMC Blackout period begins this weekend January 20 – Jan 31st

M&A Activity and News: None of note.

Meeting & Conferences of Note:

  • Sellside Conferences: None of note.
    • Previously posted and ongoing conferences:
      • None of note.
  • Top Shareholder Meetings: EAC, EMLD, NTIC, PPI
  • Fireside Chat: None of note.
  • Investor/Analyst Day/Calls: CLRB, NGVC, OSPN
  • Update: None of note.
  • R&D Day: None of note.
  • Company Event: None of note.
  • Industry Meetings: None of note.
    • Previously posted and ongoing conferences:
      • World Economic Forum Annual Meeting

Top Tier Sell-side Upgrades & Downgrades:

The recommendations listed below in this “Upgrade/Downgrade” section are compiled from what we believe are Tier I, II and III firms. Recommendations posted are taken from a variety of sources each day and we only post upgrades or significant initiations as well as downgrades to underweight or sell. The purpose of this posting is to make the reader aware of market-moving recommendations. None of these recommendations should be interpreted as actual recommendations from CAPIS or its employees.

Today’s Upgrades and Downgrades:

Previous Day’s Upgrades and Downgrades: