CAPIS Morning Note – 02/22/23: Stocks Rebound Modestly From Tuesday’s Selling As Federal Reserve St. Louis President James Bullard Positive On Economy

Overnight Summary: The S&P 500 closed Tuesday lower by -2.00% at 3997.34 while Friday was lower by -0.28% at 4079.09.  The overnight high of 4015.75 was hit at 10:00 p.m. EST. The low was hit at 3995.50 at 6:40 a.m. EST, a range of ~20 points high to low.  At 7:20 a.m. EST, the S&P…

Overnight Summary: The S&P 500 closed Tuesday lower by -2.00% at 3997.34 while Friday was lower by -0.28% at 4079.09.  The overnight high of 4015.75 was hit at 10:00 p.m. EST. The low was hit at 3995.50 at 6:40 a.m. EST, a range of ~20 points high to low.  At 7:20 a.m. EST, the S&P 500 (mini) was higher by +2.75 points which is +0.07%.

Breaking News: Federal Reserve St. Louis President James Bullard was interviewed on CNBC this morning and said the economy was stronger than many think and could avoid a recession. (CNBC)

Earnings Out After The Close: 

  • Beats: CHK +1.32, CRSP +0.86, GFL +0.41, ALIT +0.37, TOL +0.31, PANW +0.27, UFPI +0.27, LZB +0.25, SBAC +0.23, MED +0.19, PSA +0.19, WK +0.18, ZIP +0.17, KEYS +0.17, MATX +0.14, KAR +0.12, RBA +0.09, ATRC +0.09, FLS +0.09, MTDR +0.08, EXAS +0.06, O +0.06, SPT +0.05, BCC +0.03, CSGP +0.03, PEB +0.03, GMED +0.03, FANG +0.02, VNOM +0.02, SKT +0.02, CWAN +0.01, HALO +0.01, IAA +0.01, ESI +0.01, CW +0.01 of note.
  • Flat: TWNK, STAA of note.
  • Misses: COIN (1.05), PTCT (0.61), CZR (0.44), VTLE (0.30), RIG (0.29), KW (0.28), NHI (0.24), CWH (0.23), PUMP (0.20), IOSP (0.20), ABCL (0.09), UNVR (0.06), QTWO (0.06), APLS (0.05), WSC (0.03), AGR (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:
    • Cummins (CMI) files IPO for its Filtration business, Atmus Filtration Technologies. (MarketWatch)
  • New SPACs launched/News: None of note.
  • Secondaries Priced: None of note.
  • Notes Priced of note: None of note.
  • Common Stock filings/Notes:
    • APLS: Announces Proposed Public Offering of $300 million Common Stock and Pre-Funded Warrants.
    • ESPR: Filed Form 424B5.. Up to $70,000,000 of Shares Common Stock.
  • Direct Offering:
    • RGCO: Filed Form 8-K.. At Market Issuance Sales Agreement.
  • Selling Shareholders of note: None of note.
  • Private Placement of Public Entity (PIPE):
    • PHGE: Announces $7.5 Million Private Placement.
  • Mixed Shelf Offerings:
    • FR: Files mixed securities shelf offering.
    • SGMO: files $500M mixed securities shelf.
  • Debt Filing/Notes: None of note.
  • 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: 
    • Trading Up: UFPI +8%, ONEM +8%, PANW +7%, SKT +6%, TWNK +5%, SPT +4%, SBRA +4% of note.
    • Trading Down:  CSGP -14%, ZIP -14%, MED -9%, KEYS -8%, QTWO -5%, STAA -5%, MATX -5%, KAMN -4%, PUMP -4% of note.
  • News After The Close:   
    • Stocks making the biggest moves after hours: PANW, COIN, TOL, CZR, CSGP, CWH, RIG, LZB, TWNK  (CNBC)
    • Bank of Japan Announces Unscheduled Bond Buying Operation -Offers To Buy JPY300Bln Of 5-10 Year JGBs -Offers To Buy JPY100Bln Of 10-25 Year JGBs.
    • Bed Bath & Beyond (BBBY) Says It Will Make Delayed Interest Payments. (Bloomberg) (See Company Reorg below)
    • FTC Won’t Challenge Amazon’s (AMZN) $3.49 Billion One Medical Deal. (Bloomberg)
    • AMC (AMC) shareholders sue company over vote to add shares. (Reuters)
    • TOL CEO: “Since the start of the calendar year, we have seen a marked increase in demand beyond normal seasonality as buyer confidence appears to be improving“
    • President Biden Eyes New Rules to Deter Border Crossings After Title 42. (Bloomberg)
    • Pet-care firm Wag (PET) shares jump 30% on boosted outlook — and management expects return to office to pad financials. (MarketWatch)
    • La-Z-Boy’s (LZB) stock climbs on earnings beat. (MarketWatch)
    • Parsons (PSN) awarded a position on a $49 million indefinite-delivery multiple award contract by the United States Army Corps of Engineers Mobile District South Atlantic Division.
    • ICF International (ICFI) awarded a $31 million health risk assessment contract by EPA.
  • Exchange/Listing/Company Reorg and Personnel News:
    • Bath & Body Works (BBBY) appoints Steve Voskuil to Board of Directors.
    • Lam Research (LRCX) Announces New Executive Appointments to Extend Innovation Leadership and Position the Company for Long-Term Growth.
    • Nova (NVMI) Announces Leadership Changes.
    • SBA Communications Corporation (SBAC) Announces CEO Succession Plan.
    • STLA announces EUR 1.5 Billion share buyback.
    • SelectQuote (SLQT) Names Ryan Clement as Chief Financial Officer.
    • TripAdvisor (TRIP) appoints Kristen Dalton to COO.
    • U.S. Global Investors (GROW) Receives Expected Nasdaq Notice Regarding Late Filing of Form 10-Q.
    • WeWork (WE) Chief Legal Officer, Chief Compliance Officer Jared DeMatteis will be leaving to pursue other opportunities.
    • Workiva (WK) Announces Julie Iskow as Chief Executive Officer.
  • Buyback Announcements or News:
    • Baidu (BIDU) Announces $5 Billion Share Buyback.
    • Installed Building Products (IBP) authorizes $200 million buyback program. (See Dividends)
    • National Health (NHI) Board of Directors approved a stock repurchase plan for up to $160 million of the Company’s common stock.
    • Stellantis (STLA) Board approved program to buyback company shares for a value of up to €1.5 billion. (See Dividends)
    • The TJX Companies, Inc. (TJX) Plans Buy Back $2.0 to $2.5 Billion of Stock in FY24. (See Dividends)
  • Stock Splits or News: 
    • Amesite (AMST) announces 1-for-12 reverse stock split.
    • GMBL trading reverse split price.
  • Dividends Announcements or News:
    • Assured Guaranty (AGO) increases quarterly dividend $0.03 to $0.28 per share.
    • CVR Energy (CVI) Announces a Cash Dividend of 50 cents per Share.
    • Element Solutions (ESI) Board of Directors of the Company declared a cash dividend of $0.08 per outstanding share of its common stock.
    • Fresh Del Monte (FDP) Board of Directors declared a quarterly cash dividend of $0.15 per share.
    • FIS Goes ex div tomorrow for $0.52.
    • Genuine Parts (GPC) increases quarterly cash dividend to $0.95 per share, a 6% bump.
    • Gildan Activewear (GIL) Board of Directors has approved a 10% increase in the amount of the current quarterly dividend and has declared a cash dividend of $0.186 per share.
    • Installed Building Products (IBP) increases dividend by 5% and approves variable annual dividend.
    • Intel (INTC) cuts dividend 66% to $0.125  announced this morning. (MarketWatch)
    • Silgan (SLGN) Increases Dividend by 12.5 Percent and Declares Quarterly Dividend; Dividend Increased for 19th Consecutive Year Since Initiation.
    • Stellantis (STLA) €4.2 billion ordinary dividend corresponding to €1.34 per share to be paid.
    • CVR Partners (UAN) Announces a Cash Distribution of $10.50.
    • The TJX Companies, Inc. (TJX) Plans to Increase Dividend by 13%.

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

S&P 500 +11, Dow Jones +78,  NASDAQ +55, and Russell 2000 +6. (as of 8:01 a.m. EST).  Asia and Europe are lower. VIX Futures are at 22.70 from 22.25 yesterday.  Gold and Silver higher with Copper lower.  WTI Crude Oil and Brent lower with Natural Gas lower. US 10-year Treasury sees yields at 3.925% from 3.89% yesterday. The U.S. Dollar is higher versus the Euro, higher versus the Pound and lower against the Yen. Bitcoin is at $24,217 from $24,536 yesterday, lower by  -1.14%.

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

  • Daily Positive Sectors:  None of note.
  • Daily Negative Sectors: Consumer Cyclical, Technology, Communication Services, Industrials, Real Estate of note.
  • One Month Winners:  Technology, Consumer Cyclical, Industrials of note.
  • Three Month Winners: Consumer Cyclical, Technology, Basic Materials  of note.
  • Six Month Winners: Basic Materials, Energy, Financial of note.
  • Twelve Month Winners: Energy, Utilities, Industrial of note.
  • Year to Date Winners: Consumer Cyclical, Technology, Communication Services of note.

U.S. stock indexes suffered their worst session of the year Tuesday, dragged down by a disappointing forecast from Home Depot and growing concerns that the Federal Reserve will keep interest rates higher for longer.   The S&P 500 declined 81.75 points, or 2%, to 3997.34 on Tuesday but bottomed near 4,000 on the S&P 500. The Dow Jones Industrial Average fell 697.10 points, or 2.1%, to 33129.59, erasing its gains for the year and is the only equity index in the red. The technology-focused Nasdaq Composite dropped 294.97 points, or 2.5%, to 11492.30. (WSJ – edited by QPI)

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)

  • Wednesday After the Close: 

  • Thursday Before the Open:

Earnings of Note This Morning:

  • Beats: BIDU +2.78, BRY +0.72, WIX +0.51, FDP +0.50, IONS +0.49, HEES +0.41, SBGI +0.31, AVA +0.27, PRG +0.25, IBP +0.24, CRL +0.23, ALLE +0.22, BCO +0.22, GRMN +0.18, SMP +0.13, RGEN +0.10, LIVN +0.08, TNL +0.08, EVBG +0.08, FVRR +0.08, SHO +0.07, PK +0.05, IART +0.04, NI +0.03, DRVN +0.01 of note.
  • Flat: DOC, TJX, WWW, PGTI, ROCK, GEL of note.
  • Misses: UTHR (2.54), GLBE (0.27), THRM (0.15), CSTM (0.07), EDIT (0.07), ONEM (0.04), GIL (0.03), VRT (0.03), OSTK (0.02) of note.
  • Still to Report: WING of note.

Guidance:

  • Positive Guidance: SPT, GFL, WIX, VRT, GIL, PGTI of note.
  • Negative Guidance: ATRC, HALO, KEYS, CSGP, MED, PEB, GMED, KAR, QTWO, FVRR, SMP, IART, WWW, DRVN, IONS, CRL, GRMN, ROCK, SBGI, TJX, RGEN of note.

Erlanger Research Advance/Decline Chart:

Gap Ups & Down In Early Pre-Market:

  • Gap Up: AMRS +11%, PANW +9%, ONEM +8%, BIDU +7%, UFPI +6%, LZB +6%, VTLE +5%, FOXF +5%, KNTE 5%, WIX +5%, FVRR +4%, ORGN +4%, IAA +4% of note.
  • Gap Down: CSGP -17%, ZIP -16%, KEYS -7%, OSTK -7%, AU -6%, MED -6%, MTDR -5%, RIG -5%, STAA -5%, QTWO -5%, KAMN -4%, FDP -4%, PTCT -4 of note.

Insider Action: FIS 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 Pre-Market Moves: COIN, PANW, TOL, KEYS, LOGI, AA, INTC, STLA, CSGP, LZB (CNBC)
  • 5 things to know before the stock market opens Wednesday. (CNBC)
  • 5 Things You Need to Know to Start Your Day. (Bloomberg)
  • Bloomberg Lead Story: China Urges State Firms to Drop Big Four Accounting Auditors on Data Risk. (Bloomberg)
  • Bloomberg Most Read Story: How Much Do Investors Say They Need To Retire? At Least Three Million.  (Bloomberg)
  • Futures are stable after Tuesday’s rout. (Reuters)
  • Fed Minutes to show support level for larger hikes, higher peak in rates. (Bloomberg)
  • McKinsey plans to layoff 2,000 jobs in one of its biggest rounds of cuts. (Bloomberg)
  • Goldman says hedge funds primed to gain from stock picking. (Bloomberg)
  • Intel (INTC) cuts dividend 66% to $0.125  announced this morning. (MarketWatch)
  • Starbucks (SBUX) launches Olive Oil coffee drinks as will be rolled out in California first. (Bloomberg)
  • Fresh Del Monte (FDP) beats on estimates from a year ago. (MarketWatch)
  • A massive coast-to-coast winter storm picks up strength today. (CNN)

Moving Average Update:

  • Slip to 37% from 42%.

Geopolitical: 

  • President’s Public Schedule:
    • The President greets with U.S Embassy staff (1:30 PM Local), 7:30 a.m. EST
    • The President meets with the leaders of the Bucharest Nine , a group of our eastern flank NATO Allies, and with NATO Secretary General Jens Stoltenberg to reaffirm the United States’ unwavering support for the security of the Alliance (2:45 PM Local), 8:45 a.m. EST
    • The President departs en route Warsaw Chopin International Airport, Warsaw, Poland (4:45 PM Local), 10:45 a.m. EST
    • The President departs Warsaw, Poland en route Joint Base Andrews (5:15 PM Local), 11:15 a.m. EST
    • The President arrives at Joint Base Andrews, 8:40 p.m. EST
    • The President arrives at the White House, 9:00 p.m. EST

Economic:

  • MBA Mortgage Applications 7:00 a.m. EST
    • 30-YEAR MORTGAGE RATE ACTUAL: 6.62% VS 6.39% PREVIOUS
    • MORTGAGE APPLICATIONS (WOW) ACTUAL: -13.3% VS -7.7% PREVIOUS
    • Composite: -13.3% Purchase: -18.1% ReFi: -2.2%
  • Redbook Sales 8:55 a.m. EST
  • Federal Reserve Open Market Committee (FOMC) Minutes are due out at 2:00 p.m. EST from its meeting on January 31st and February 1st..
  • API Crude Oil Data 4:30 p.m. EST

Federal Reserve / Treasury Speakers:

  • Federal Reserve New York President John Williams 5:30 p.m. EST

M&A Activity:

  • INDUS Realty Trust (INDT) to be acquired by Centerbridge Partners and GIC Real Estate for $67 per share.
  • Trend Micro (TMICY) to acquire Anlyz.

Meeting & Conferences of Note:

  • Sellside Conferences:

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: