CAPIS Morning Note – 03/06/23: Powell To Hill For Semiannual Testimony, Stocks Start Week Mixed.

Overnight Summary: The S&P 500 closed Friday higher by 1.61% at 4045.64 from Thursday higher by 0.76% at 3981.25.  The overnight high of 4062.50 was hit at 9:45 p.m. EST. The low was hit at 4042 at 6:25 p.m. EST, a range of ~20 points high to low.  At 7:25 a.m. EST, the S&P 500…

Overnight Summary: The S&P 500 closed Friday higher by 1.61% at 4045.64 from Thursday higher by 0.76% at 3981.25.  The overnight high of 4062.50 was hit at 9:45 p.m. EST. The low was hit at 4042 at 6:25 p.m. EST, a range of ~20 points high to low.  At 7:25 a.m. EST, the S&P 500 (mini) was lower by -4 points which is -0.10%.

Earnings Out After The Close: 

  • Beats: None of note.
  • Flat: None of note.
  • Misses: None 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: None of note.
  • New SPACs launched/News:
    • VPC Impact Acquisition Holdings II (VPCB) Will Redeem Its Public Shares and Will Not Consummate an Initial Business Combination.
  • Secondaries Priced: None of note.
  • Notes Priced of note: None of note.
  • Common Stock filings/Notes:
    • BLPH: Form 8K.. On March 3, 2023, Bellerophon Therapeutics, Inc. suspended, and is not offering any shares of its common stock.
    • KALA: Filed Form S-3.. 5,391,213 Shares. (see Mixed Shelf too)
    • RNG: Filed Form S-1.. 1,265,456 Shares Class A Common Stock.
    • TVTX: Completion of Public Offering of Common Stock and Pre-Funded Warrants and Exercise in Full of Underwriters’ Option to Purchase Additional Shares.
  • Direct Offering: None of note.
  • Selling Shareholders of note:
    • DV: Launches offering of 12.5 million shares of common stock by Providence VII U.S. Holdings L.P. and Providence Butternut Co-Investment L.P.
    • ESMT: Announces Closing of Public Offering of Common Stock by Selling Stockholders.
    • HLMN: Closes Secondary Offering of Common Stock by Selling Stockholders; Underwriters Fully Exercise Overallotment Option.
    • ICUI: Files for 2.5 million share common stock offering by selling shareholder.
  • Private Placement of Public Entity (PIPE): None of note.
  • Mixed Shelf Offerings:
    • DVN: Filed Form S-3ASR. Mixed Shelf Offering.
    • KALA: Filed Form S-3. $350 Million Mixed Shelf Offering.
    • SNCE: Filed Form S-3 .. $100 Million Mixed Shelf.
    • UNH: Filed Form S-3ASR. Mixed Shelf Offering.
  • Debt Filing/Notes:
    • MDT: Filed Form S-3ASR.. Debt Security.
  • 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 and Over the Week:

  • Weekly Wrap Up: Best and Worst performing large cap stocks:
    • Trading Up: RETA 104.0%, DM 51.3%, OSPN 41.4%, MUX 34.5%, RRGB 33.1%, RYAM 30.8%, FSLR 29.6%, UVE 28.6%, CHS 26.9%, NGL 26.6%, BGS 26.5%, SRPT 26.2%, ARNC 25.7%, CVNA 25.3%, MYGN 25.2%, BPMC 24.7%, BGCP 24.6%, GPOR 21.4%.
    • Trading Down: EYE -42.1%, CDNA -37.6%, QRTEA -26.0%, PBYI -19.1%, NEWT -18.1%, EGLE -15.9%, EBS -14.7%, FHN -14.4%, MYE -14.1%, BOX -14.0%, PSTG -13.5%, CBD -13.4%, UHS -13.4%, FNKO -13.2%, NVAX -13.0%.
  • News Items After the Close:
    • Federal Reserve Richmond President Thomas Barkin:
      • I don’t understand the case for a pause in rate hikes now.
      • My strong hypothesis is that we will not have eased by this time next year.
      • I think it will take longer, and more, for us to get inflation under control
      • Changing the fed’s inflation target would be damaging.
    • Google (GOOGL) execs tell employees in testy all-hands meeting that Bard A.I. isn’t just about search. (CNBC)
    • Apple’s (AAPL) cloud chief to be replaced with iTunes creator. (MarketWatch)
    • META is slashing prices on VR headsets. (MarketWatch)
    • Lockheed (LMT) Wins $214.5 Million U.S. Navy Contract.
    • BAE Systems (BAESY) awarded a $245.6 million US Army contract for Armored Multi-Purpose Vehicles.
  • News Items Over the Weekend:
    • Stocks that Defined the Week: BBY, LLY, UNP, WEN, TSLA, CRM, SI  (WSJ)
    • The Week in Business: The Escalating Battle Over E.S.G. (NYT)
    • Tesla (TSLA) recalls 3,470 Model Y vehicles over loose bolts. (Reuters)
    • Second Norfolk Southern (NSC) Train Derails in Ohio in a Month – (Bloomberg)
    • Year 3 of a U.S. president’s term is bullish for stocks, but 2023’s gain is probably over by now. (MarketWatch)
    • Bars, Hotels and Restaurants Become the Economy’s Fastest-Growing Employers. (WSJ)
    • Federal Reserve San Francisco President Mary Daly: (MarketWatch)
      • I Am Committed To Bringing Economy Back To Balance As Softly As Possible.
      • Don’t See The Recovery In Labor Supply That We’ve Seen In Previous Expansions.
      • Further Policy Tightening, Maintained For A Longer Time, Will Likely Be Necessary. The Work On Inflation Is ‘far From Done.’ ‘Reshoring’ And The Continued Decline In Labor Force Participation Could Mean More Inflationary Pressures Ahead.
    •  Barron’s:
      • Positive View: TGT, CB, BOOT, DE of note.
      • Cautious View: None of note.
      • Mixed View: None of note.
  • Erlanger Type 1 Short Squeezes and Type 4 Long Squeezes reporting earnings this week:

  • Exchange/Listing/Company Reorg and Personnel News:
    • Index Changes:
      • Valaris (VAL) to replace FICO in S&P 400 at open on 3/20.
      • Lumen (LUMN) to replace Bed Bath & Beyond (BBBY) in S&P 600 at open on 3/20
      • Axalta Coating Systems (AXTA), Autoliv (ALV), Starwood Property Trust (STWD), SouthState (SSB), Chord Energy (CHRD), Advanced Drainage Systems (WMS), Hilton Grand Vacations (HGV), Hertz Global (HTZ), Aramark (ARMK) and US Foods (USFD) will replace SL Green Realty (SLG), Cracker Barrel (CBRL), ViaSat (VSAT), Washington Federal (WAFD), Dycom Industries (DY), Kennametal (KMT), JBG Smith (JBGS), Pebblebrook Hotel (PEB), Hanesbrands (HBI) and Tandem Diabetes (TNDM) respectively in the S&P MidCap 400. All constituents being removed from the S&P MidCap 400 will be added to the S&P SmallCap 600 replacing The Pennant Group (PNTG), Unisys (UIS), Organogenesis (ORGO), Surmodics (SRDX), Hersha Hospitality Trust (HT), Park Aerospace (PKE), Granite Point Mortgage (GPMT), Industrial Logistics Properties (ILPT), OptimizeRx (OPRX), and ZimVie (NASD:ZIMV), respectively.
      • Kennedy-Wilson (KW), Atlantic Union Bankshares (AUB), NexTier Oilfield (NEX) and Radian Group (RDN) will replace WW Intl (WW), Franklin Street Properties (FSP), Motorcar Parts of America (MPAA) and Universal Electronics (UEIC) respectively in the S&P SmallCap 600.
    • Bath & Body Works (BBWI) announces appointment of Thomas J. Kuhn to Board of Directors.
    • Community Healthcare (CHCT) Trust Chairman and CEO Timothy Wallace passed away.
    • Enstar Group (ESGR) names Paul Brockman as COO and Matthew Kirk as CFO.
    • Express, Inc. (EXPR) Announces Retirement of President & COO Matthew Moellering.
    • IAMGOLD (IAG) appointed Renaud Adams as the Company’s President and Chief Executive Officer.
    • Keurig Dr Pepper (KDP): Mondelēz (MDLZ) board designee Michael Call notified the Executive Chairman that he will resign from the Board effective immediately.
    • Local Bounti (LOCL) Receives Continued Listing Standard Notice from NYSE.
    • Ocugen (OCGN) announces the appointment of Quan A. Vu to Chief Financial Officer & Chief Business Officer.
    • Paymentus (PAY) appointed Sanjay Kalra as Senior Vice President and Chief Financial Officer of the Company.
    • PGT Inc. (PGTI) CFO John Kunz has stepped down.
    • Quest Diagnostics (DGX) elects CEO and President James Davis , to serve in the additional position of Chairman of the Board of Directors.
    • Construction Partners (ROAD) announced Greg Hoffman will succeed Alan Palmer as Chief Financial Officer.
    • Sallie Mae (SLM) CFO Steven McGarry to retire.
    • South State (SSB) enters into separation and transition agreement with Exec Chairman.
    • Vista Outdoor (VSTO) Vice Chairman Tig Krekel, retired from service.
    • Wejo (WEJO) Announces Resignation of Diarmid Ogilvy from Board of Directors.
  • Buyback Announcements or News:
    • Vistra Energy (VST) announced Energy Harbor (OTC: ENGH) will merge with and into a newly-formed subsidiary of Vistra; increases aggregate share repurchase authorization by $1 billion..
  • Stock Splits or News:
    • CPHI trading reverse split price.
    • IONM trading reverse split price.
  • Dividends Announcements or News:
    • Horace Mann (HMN) increases quarterly cash dividend $0.01 to $0.33 per share.
    • Wesco (WCC) declares inaugural quarterly dividend of $0.375 per share.

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

S&P 500 +1, Dow Jones -9,  NASDAQ +18, and Russell 2000 +1. (as of 7:56 a.m. EST).  Asia higher and Europe higher except for the FTSE. VIX Futures are at 19.55 from 20  yesterday.  Gold higher with Silver and Copper lower. WTI Crude Oil and Brent lower with Natural Gas lower. US 10-year Treasury sees yields at 3.921% from 4.015% since Friday. The U.S. Dollar is lower versus the Euro, higher versus the Pound and higher against the Yen. Bitcoin is at $22,395 from $22,333  yesterday, lower by  -4.94%.

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

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

U.S. stocks gained Friday after data on the U.S. services sector showed its strongest activity since the summer. The signs of economic resilience outweighed concerns about inflation and tighter global monetary policy that prompted selling earlier in the week.  The Nasdaq Composite jumped 226.02 points, or 2%, to 11689.01 as technology stocks recovered some of their losses from a dismal performance in February. The S&P 500 advanced 64.29 points, or 1.6%, to 4045.64 and the Dow Jones Industrial Average gained 387.40 points, or 1.2%, to 33390.97.   All three indexes finished higher for the week, snapping a four-week losing streak for the Dow. (WSJ – edited by QPI)

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

  • Monday After the Close: 

  • Tuesday Before the Open:

Earnings of Note This Morning:

  • Beats: CIEN +0.28 of note.
  • Flat: None of note.
  • Misses: AZUL (1.36), RIDE (0.21) of note.
  • Still to Report: SRRK of note.

Guidance:

  • Positive Guidance: None of note.
  • Negative Guidance: None of note.

Erlanger Research Advance/Decline Chart:

Gap Ups & Down In Early Pre-Market:

  • Gap Up: TCRR +42%, SSB +4% of note.
  • Gap Down: ESPR -22%, ADAP -15% 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.

  • 5 Things To Know Before The Stock Market Opens. (CNBC)
  • 5 Things You Need to Know to Start Your Day. (Bloomberg)
  • Bloomberg Lead Story: Credit Suisse Loses One Of Its Biggest Backers. (Bloomberg)
  • Bloomberg Most Read Story: Forget Peak Oil Demand: A Thirst For Barrels Puts $100 In View. (Bloomberg)
  • China Takes A Cautious Approach To Its Economy in 2023. (Bloomberg)
  • U.S. Futures Slip As China’s Growth Goal Disappoints. (Bloomberg)
  • Powell Set To Lay Groundwork for Higher Rates on Capital Hill In Semiannual Testimony This Week. (Bloomberg)
  • Tesla (TSLA) to build cars at Mexico plant next year. (NYT)
  • Esperion Therapeutics (ESPR) falls -22% this morning as cholesterol drug Nexletol failed to show lowering risk of a heart attack. (MarketWatch)

Moving Average Update:

  • Score jumps to % from 57%.

Geopolitical: 

  • President’s Public Schedule:
    • The President receives the Presidential Daily Briefing, 9:30 a.m. EST
    • The President departs the White House en route to the 2023 International Association of Fire Fighters Legislative Conference, 11:10 a.m. EST
    • The President headlines the 2023 International Association of Fire Fighters Legislative Conference, 12:15 p.m. EST
    • The President arrives at the White House, 1:10 p.m. EST
    • Press Briefing by Press Secretary Karine Jean-Pierre, 1:30 p.m. EST

Economic:

  • January Factory Orders are due out at 10:00 a.m. EST and expected to drop to -1.8% from 1.8%.
  • Investor Movement Index 12:30 p.m. EST

Federal Reserve / Treasury Speakers: None of note.

M&A Activity:

  • Adaptimmune Therapeutics (ADAP) and TCR² Therapeutics (TCRR) announce strategic combination.
  • Commercial Metals (CMC) acquires metal recycling company Roane Metals Group LLC.
  • MO to acquire NJOY Holdings for $2.75 Billion cash.

Meeting & Conferences of Note:

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: