CAPIS Morning Note – 02/07/23: All Eyes On Federal Reserve Chairman Powell Who Will Speak at Lunch Time, Will He Walk Back or Emphasis Comments?

Overnight Summary: The S&P 500 closed Monday lower by -0.61% at 4111.08. Friday lower by -1.36% at 4136.48.  The overnight high of 4136.25 was hit at 8:35 p.m. EST. The low was hit at 4113 at 3:15 a.m. EST, a range of ~23 points high to low.  At 7:15 a.m. EST, the S&P 500 (mini)…

Overnight Summary: The S&P 500 closed Monday lower by -0.61% at 4111.08. Friday lower by -1.36% at 4136.48.  The overnight high of 4136.25 was hit at 8:35 p.m. EST. The low was hit at 4113 at 3:15 a.m. EST, a range of ~23 points high to low.  At 7:15 a.m. EST, the S&P 500 (mini) was higher by 3.75 points which is +0.09%.

Earnings Out After The Close: 

  • Beats: SKY +0.52, SSD +0.33, DIOD +0.09, SAVE +0.09, KMT +0.05, BRBR +0.05, ACM +0.04, ZI +0.04, VRNS +0.04, FN +0.03, CHGG +0.02, NOV +0.02, SPG +0.02, POWI +0.02, KFRC +0.01, PINS +0.01 of note.
  • Flat: UDR of note.
  • Misses: ARWR (0.52), ATVI (0.38), RMBS (0.33), AOSL (0.21), LEG (0.09), TTWO (0.07), SWKS (0.01), CINF (0.01), TFII (0.01) of note.

Unusual Options Activity:

Daily Screen in Erlanger Chartroom that highlights unusual Call and Put Options activity.  It looks for volume outliers relative to the Open interest in Calls or puts.  Usually, the stock price activity reflects the outlier situation (earnings/buyout/announcement), but once in a while, you can uncover stocks prior to a pop or drop.

 

Capital Raises:

  • IPOs Priced or News:
    • TXO: Announces Closing of Exercise of IPO Underwriters’ Over-Allotment Option to Purchase Additional Common Units.
  • New SPACs launched/News: None of note.
  • Secondaries Priced:
    • ACI: Announces Pricing of Its Senior Notes Offering.
    • BLNK:  Announces Pricing of its Upsized Public Offering of Common Stock. 8,333,333 shares priced @$12.
  • Notes Priced of note:
    • NOC: Northrop Grumman Prices $2.0 Billion Debt Offering.
  • Common Stock filings/Notes:
    • BLNK: Proposed Public Offering of Common Stock — $75 Million. (BCS Bookmanager)
    • CVAC: Proposed Public Offering of Common Shares.. $200 Million. (GS, Jefferies and SVB Bookmanagers)
    • MAIA: Filed Form S-1.. 2,430,000 shares.
    • VERA: Announces Closing of Upsized Public Offering and Full Exercise of Underwriters’ Option to Purchase Additional Shares in Public Offering of Class A Common Stock.
  • Direct Offering:
    • EBET: Announces Closing of Approximately $6.5 Million Registered Direct Offering Priced At-The-Market Under Nasdaq Rules.
    • VS: Announces Closing of $2.25 Million Registered Direct Offering.
  • Selling Shareholders of note: None of note.
  • Private Placement of Public Entity (PIPE): None of note.
  • Mixed Shelf Offerings:
    • J: Files mixed securities shelf offering.
    • ME: Filed Form S-3 .. $500 Million Mixed Security Shelf.
  • Debt Filing/Notes:
    • TMUS: Agrees to Sell $3.0 Billion of Senior Notes.
  • Tender Offer:
    • IDCC: Increases Price Range for Tender Offer to Repurchase up to $200 Million of its Common Stock.
  • Convertible Offering & Notes Filed:
    • BBBY: Announces Proposed Offering of Series A Convertible Preferred Stock and Warrants.
    • COLL: Proposed Convertible Senior Notes Offering.
    • LVO: Debt Holders Exchange $21 Million for Preferred Shares Convertible at $2.10 per Share.
    • MFH: Issues an Unsecured Convertible Promissory Note in the Amount of $9 Million.

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: 
    • Trading Up: VLD +8%, SKY +5%, KMT +4% of note.
    • Trading Down: BBBY -28%, CHGG -21%, AOSL -13%, COLL -10%, HLLY -9%, LEG -7%, ZI -7%, BLNK -6%, CVAC -5% of note.
  • News After The Close:   
    • Stocks making the biggest moves after hours: PINS, CHGG, TTWO, SAVE, ZI, SWKS, LEG (CNBC)
    • Pinterest (PINS) shares slip on fourth-quarter revenue miss and weak forecast. (CNBC)
    • Chegg (CHGG) stock dives more than 20% as forecast calls for another year of shrinking sales. (MarketWatch)
    • Bed Bath & Beyond (BBBY) Plans Share Sale in Bid to Avoid Bankruptcy. (Bloomberg)
    • CVS Nearing $10.5 Billion Deal for Primary-Care Provider Oak Street Health. (WSJ)
    • Google (GOOGL) is ready to roll out its ChatGPT rival, ‘Bard’. (MarketWatch)
    • Around 180,000 People In The U.S. Were Paying For Subscriptions To Twitter, Including Twitter Blue, As Of Mid-January. (TheInformation)
    • Curtiss-Wright (CW) has been awarded a ten-year, $287 million firm-fixed-price indefinite delivery.
    • Boeing (BA) To Slash About 2,000 White-Collar Jobs In Finance And HR. (SeattleTimes)
  • Exchange/Listing/Company Reorg and Personnel News:
    • Bed Bath & Beyond Inc (BBBY): Appointed Holly Etlin As Company’s Interim Chief Financial Officer.
    • Coffee Holding Co., Inc. (JVA) Receives Notice from Nasdaq Regarding Delayed Annual Report.
    • EAR: Nasdaq Confirms Eargo’s Minimum Bid Price Deficiency is Cured.
    • Evotec SE (EVO) gets new finance chief.
    • FWBI regains compliance with Nasdaq requirement.
    • Genworth (GNW) Announces Update to Leadership Structure.  They will separate the roles of CFO and CIO in early March.
    • Heliogen (HLGN) Announces New Chief Executive Officer to Drive Next Phase of Growth.
    • Holley Inc. (HLLY) CEO Tom Tomlinson to retire and resign from Board.
    • Pinterest (PINS) CFO to depart.
    • WeWork (WE) Announces New SoftBank Appointment, David Tolley, to Board of Directors.
  • Buyback Announcements or News: 
    • BP CEO: “announced $11.25 Billion of share buybacks”.
    • CNH Industrial (CNHI) commences a second tranche of its $300 million share buyback program. (see Dividends)
    • Kforce (KFRC) increases quarterly dividend by 20%; increases share buyback authorized to $100 million. (see Dividends)
    • Pinterest (PINS) also announced its board of directors’ authorization to repurchase up to $500 million of its Class A common stock over the next 12 months.
    • PGTI Announces $250 Million Share Repurchase Program.
    • Skyworks (SWKS) Announces New $2 Billion Stock Repurchase Program.
  • Stock Splits or News: None of note.
  • Dividends Announcements or News:
    • ADM Goes ex div tomorrow for $0.45.
    • BP raises dividend by ~10% to $0.3966 per ADS.
    • Carlyle Group (CG) raised its annual dividend to $1.40 per share, up from $1.30 per share.
    • CONSOL Energy (CEIX) Announces Dividend of $1.10 per share.
    • CNH Industrial (CNHI) announces preliminary details for annual dividend ex-dividend and payment dates.
    • Kforce (KFRC) increases quarterly dividend by 20%.
    • KKR to increase regular annualized dividend $0.04 to $0.66 per share.
    • Northern Oil & Gas (NOG) increases quarterly cash dividend $0.04 to $0.34 per share.
    • PEAK Goes ex div tomorrow for $0.30.
    • Virgin Mobile USA (VM) increases quarterly cash dividend $0.05 to $0.70 per share.

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

S&P 500 +4, Dow Jones -36,  NASDAQ +47, and Russell 2000 +1. (as of 7:59 a.m. EST).  Asia is lower ex the Kospi and European markets are trading lower ex the FTSE. VIX Futures are at 20.95 from 19.65  Monday.  Gold and Silver higher with Copper lower.  WTI Crude Oil and Brent are higher with Natural Gas lower. US 10-year Treasury sees yields at 3.645% from 3.6028% yesterday. The U.S. Dollar is higher versus the Euro, higher versus the Pound and lower against the Yen. Bitcoin is at $23,000 from $22,857 Monday, higher by  0.00%.

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

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

U.S. stocks fell Monday, continuing their decline after strong jobs data last week raised the prospect of additional interest-rate increases by the Federal Reserve.  The S&P 500 dropped 25.40 points, or 0.6%, to 4111.08, after falling 1% Friday. The Dow Jones Industrial Average slipped 34.99 points, or 0.1%, to 33891.02. The technology-heavy Nasdaq Composite declined 119.50, or 1%, to 11887.45.  Treasurys also sold off Monday, pushing the yield on the 10-year note up to 3.632% from 3.531% Friday. The yield on the two-year note, which is more sensitive to Fed rate moves, climbed to 4.454% from 4.299% on Friday, its highest 3 p.m. ET settle in more than two months.  (WSJ)

Click here for a video explanation of Erlanger Value Lines.

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

  • Tuesday After the Close: 

  • Wednesday Before the Open:

Earnings of Note This Morning:

  • Beats: IT +1.12, AGCO +0.40, TDG +0.28, LIN +0.27, RCL +0.22, MBUU +0.17, XYL +0.13, DD +0.11, NVT +0.08, BV +0.08, KKR +0.07, HAIN +0.07, ARCC +0.07, PINC +0.06, J +0.06, INCY +0.05, CG +0.05, OMF +0.05, HAE +0.03, FSV +0.03, HTZ +0.02, CNC +0.02, ARMK +0.01, MAC +0.01, GPK +0.01 of note.
  • Flat: CARR, OCSL, FISV of note.
  • Misses: SPR (1.22), MSGS (0.48), HLNE (0.38), VVV (0.06), DCPH (0.04), ADNT (0.02), CTS (0.02), CTLT (0.02), BP (0.01) of note.
  • Still to Report: SCSC of note.

Guidance:

  • Positive Guidance: KMT, VRNS, FN, VLD, HAE, LIN, CARR, ADNT, XYL of note.
  • Negative Guidance: ON, AOSL, POWI, SWKS, KFRC, ZI, LEG, CHGG, TTWO, SPG, HLLY, DD of note.

Erlanger Research Advance/Decline Chart:

Gap Ups & Down In Early Pre-Market:

  • Gap Up: VLD +6%, SKY +5%, BP +4% of note.
  • Gap Down: BBBY -31%, CHGG -23%, HLLY -19%, COLL -15%, AOSL -13%, ZI -11%, RMBS -8%, SSL -7%, BLNK -7%, BLNK -7%, CVAC -5%, DD -4%, J -4% of note.

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

  • Stocks making the biggest moves premarket: CHGG, BIDU, BBBY, HTZ, OSH, ZI, SAVE, SWKS, ATVI, PINS, DD, LEG (CNBC)
  • 5 things to know before the stock market opens. (CNBC)
  • 5 Things You Need to Know to Start Your Day. (Bloomberg)
  • Bloomberg Lead Story: Biden to Address Nation Under Shadow of China, Debt Tensions. (Bloomberg)
  • Bloomberg Most Read Story: Quake Total Hits 4,000 in Turkey and Syria as Overseas Aid Flows. (Bloomberg)
  • Turkey declares 3 month state of emergency for quake hit regions. (CNBC)
  • President Biden to call for Billionaire Tax, Levy on Stock Buybacks in State of the Union speech tonight. (Bloomberg)
  • Federal Reserve Minneapolis President Neel Kashkari spoke this morning and said central bank has not made enough progress, more to go on rates. (CNBC)
  • BP posts record earnings joining other oil companies with big earnings. (CNBC)
  • DuPont (DD) forecasts downbeat full year results on weaker demand. (Reuters)
  • Aramark (ARMK) beat forecasts on profits and sales, on strength in food and support services. (MarketWatch)

Moving Average Update:

  • Score gets a chink in the armor pulling back to 80% from 97%. “It’s just a flesh wound.”

Geopolitical: 

  • President’s Public Schedule:
    • The President receives the Presidential Daily Briefing, 9:00 a.m. EST
    • The President departs the White House en route the United States Capitol, 8:25 p.m. EST
    • The President addresses the peoples’ representatives in Congress at the State of the Union, 9:00 p.m. EST
    • The President arrives at the White House, 10:40 p.m. EST

Economic: 

  • International Trade in Goods 8:30 a.m. EST
  • Redbook Sales 8:55 a.m. EST
  • Consumer Credit 3:00 p.m. EST
  • API Crude Oil Data 4:30 p.m. EST

Federal Reserve / Treasury Speakers:

  • Federal Research Chair Jerome Powell 12:40 p.m. EST
  • Federal Reserve Vice Chair for Supervision Michael S. Barr 2:00 p.m. EST

M&A Activity:

  • CVS, the health insurer and retail pharmacy chain, has a $10.5 billion deal to buy Oak Street Health (OSH) and its collection of doctor’s offices.
  • Lantheus (LNTH) Announces Acquisition of Cerveau Technologies, Inc., Expanding Imaging Pipeline into Alzheimer’s Disease.
  • MSG Entertainment (MSGE) exploring potential sale of its majority interest in Tao Group Hospitality.
  • Univar (UNVR) acquires ChemSol Group fro undisclosed amount.

Meeting & Conferences of Note:

  • Sellside Conferences:
    • BMO Capital Markets Industrial Private Company Conference
      Piper Sandler Biopharma Mogul Ski Summit
      Stifel Transportation & Logistics Conference (02/07/23-02/08/23)
    • KeyBanc Hosted Company Meetings at AHR Expo
      • Previously posted and ongoing conferences:
        • Stifel Biotech Ski Summit.
  • Company Meetings: BEN, EMR, RH, ROK, WINT
  • Fireside Chat:
    • Bank of America Securities Bottom Line Matters CFO Series with IBM.
  • Investor/Analyst Day/Calls: GOOS, SMMNY
  • Update: None of note.
  • R&D Day: None of note.
  • Company Event: None of note.
  • Industry Meetings:

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 it 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: