CAPIS Morning Note – 03/20/23: UBS to Buy Credit Suisse, Stocks Have a Wild Night and Fed On Deck

Overnight Summary: The S&P 500 closed Friday lower by -1.10% at 3916.64 from Thursday higher by 1.76%. The overnight high of 3978.25 was hit at 8:30 p.m. EDT. The low was hit at 3878.25 at 4:20 a.m. EDT, a range of ~94 points high to low.  At 7:25 a.m. EDT, the S&P 500 (mini) was higher…

Overnight Summary: The S&P 500 closed Friday lower by -1.10% at 3916.64 from Thursday higher by 1.76%. The overnight high of 3978.25 was hit at 8:30 p.m. EDT. The low was hit at 3878.25 at 4:20 a.m. EDT, a range of ~94 points high to low.  At 7:25 a.m. EDT, the S&P 500 (mini) was higher by 0.25 points which is +0.01%.

Earnings Out After The Close: 

  • Beats: None of note.
  • Flat: None of note.
  • Misses: DSEY (0.01) of note.

Unusual Options Activity:

Daily Screen in Erlanger Chartroom that highlights unusual Call and Put Options activity in the S&P 500.  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:
    • IZM: Closing of US$6 Million Initial Public Offering.
  • New SPACs launched/News:
    • TradeUP Acquisition Corp. (UPTD) Announces Extension of the Deadline for an Initial Business Combination.
  • Secondaries Priced: None of note.
  • Notes Priced of note: None of note.
  • Common Stock filings/Notes:
    • AULT: Plans to Initiate an Exchange Offer in Which It Would Offer Up to $50 Million in Preferred Shares With a Stated Value of $10.00 per Share (An Effective Price of $0.15 per Share of Common Stock).
    • NVTA: Filed Form S-3.. 111,627,888 Shares.
  • Direct Offering: None of note.
  • Selling Shareholders of note:
    • EXAS: Files for 5,171,577 share common stock offering by selling shareholders, relates to convertible notes offering.
    • SMMT: Filed Form S-3.. 19,720,291 Shares of Common Stock by selling shareholders.
  • Private Placement of Public Entity (PIPE):
    • PT: US$4 million Private Placement of Class A Ordinary Shares.
  • Mixed Shelf Offerings:
    • AGR: Filed Form S-3ASR – Mixed Shelf Offering.
    • CENX: Filed Form S-3.. $350,000,000 Mixed Shelf.
    • COLD: Filed Form S-3ASR – Mixed Shelf Offering.
    • DSGR: Filed Form S-3.. $500,000,000 Mixed Shelf.
    • HILS: Filed Form S-3.. $75,000,000 Mixed Shelf.
    • LADR: Filed Form S-3ASR – Mixed Shelf Offering.
    • NKTX: Filed Form S-3.. $350,000,000 Mixed Shelf.
    • NVCT: Filed Form S-3.. $150,000,000 Mixed Shelf.
    • VXRT: Filed Form S-3.. $200,000,000 Mixed Shelf.
  • Debt/Credit Filing and Notes:
    • ABR: Closes Offering of $95 Million of Senior Unsecured Notes due 2026.
  • Tender Offer: None of note.
  • Convertible Offering & Notes Filed:
    • PTRA: Reaches binding letter of intent with Cowen convertible note holders.

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: CRBP 197.66%, LE 28.70%, MGNX 25.19%, GFI 22.83%, SAND 21.25%, HMY 21.04%, AG 20.08%, IAG 18.31%, AMD 18.11%, KGC 17.86%, DOCU 17.81%, AU 17.69%, GRTS 17.37%, SMAR 17.17%, TQQQ 17.12%, TOUR 16.87%, CBAY 16.81%, SGEN 16.25%, ILMN 15.33%.
    • Trading Down: FRC -71.61%, ESPR -66.63%, CASA -62.67%, LPSN -55.49%, FFWM -35.79%, FRBK -30.89%, BKU -29.23%, GRPN -27.81%, KEY -27.11%, PACW -26.64%, FHN -26.41%, CMA -26.21%, CS -25.19%, UMBF -25.04%.
  • News Items After the Close:
    • UBS in talks to acquire Credit Suisse. (FinancialTimes)
    • Boeing (BA) was awarded a $1.95 billion modification to US Army contract for the Apache AH-64E.
    • First Republic (FRC) and Other Banks Seek to Attract Buyers. (NYT)
  • News Items Over the Weekend:
    • Stocks that Defined the Week:  FRC. SGEN, META, BZFD, UAL, TMUS, CS (WSJ)
    • The Week in Business: A Banking Crisis (NYT)
    • UBS Agrees to Buy Credit Suisse (CS) for More Than $3 Billion. (WSJ)
    • First Republic Bank (FRC) Looms Large for U.S. Regulators After Credit Suisse (CS) Sale. (WSJ)
    • Before Collapse of Silicon Valley Bank (SIVB), the Fed Spotted Big Problems. (NYTimes)
    • Bitcoin surges past $28,000 after UBS deal to buy Credit Suisse (CS). (MarketWatch)
    • Barron’s:
      • Positive View: JPM, C, BAC, WFC, GS, MS, BANF, TRVG, NEM, VIRT, LOB, AGM, DAR 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:
    • Delayed 10-k’s: KORE, BLFS, TTCF
    • Enerflex Ltd. (EFXT) Announces Succession Plan for Chief Financial Officer.
    • First Financial (FFBC) CFO James Anderson will become CFO and COO .
    • MOGU Announces Resignation and Appointment of Chief Executive Officer.
    • Ritchie Bros. (RBA) Chief Revenue Officer Kari Taylor will be leaving the company.
  • Buyback Announcements or News:
    • American Equity (AEL) Announces $200 Million Accelerated Share Repurchase Agreement
    • Arbor Realty Trust (ABR) approves share repurchase authorization up to $50 million.
    • Exelixis (EXEL) Announces $550 Million Share Repurchase Program.
    • Kanzhun Limited (BZ) announces $150 million share repurchase program.
    • Talos Energy Inc. (TALO) Announces $100 Million Share Repurchase Authorization.
  • Stock Splits or News:
    • BBBY Reverse split in the range of 1:5 to 1:10.
  • Dividends Announcements or News:
    • SRE Goes ex div tomorrow for $1.19.
    • STX Goes ex div tomorrow for $0.70.

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

S&P 500 -5, Dow Jones -37,  NASDAQ -17, and Russell 2000 +2. (as of 7:56 a.m. EDT).  Asia lower and Europe higher. VIX Futures are at 26.35 from 25.76 Friday.  Gold, Silver and Copper higher. WTI Crude Oil and Brent lower with Natural Gas higher. US 10-year Treasury sees yields at 3.367% from 3.50% Friday. The U.S. Dollar is lower versus the Euro, lower versus the Pound and lower against the Yen. Bitcoin is at $28,347 from $26,717 Friday, higher by 0.05%.

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

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

U.S. stocks finished lower on Friday as worries about banking-sector stability reemerged. But Friday’s pullback wasn’t large enough to stop both the S&P 500 and Nasdaq Composite from finishing the week in the green, while the Dow was the only major U.S. equity benchmark to finish lower. The S&P 500 shed 43.69 points, or 1.1%, to finish Friday at 3,916.59 according to preliminary closing data, reducing its weekly gain to 1.4%. The Dow Jones Industrial Average fell by 384.43 points, or 1.2%, to 31,862.12, for a weekly drop of 0.2%. The Nasdaq Composite declined by 86.76 points, or 0.7%, to 11,630.51, but still clinched a weekly gain of 4.4%. The Nasdaq managed to outperform the Dow by 4.6%, its widest weekly outperformance since the week ended March 20, 2020.   (MarketWatch – 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: None of note.
  • Tuesday  Before the Open:

Earnings of Note This Morning:

  • Beats: FL +0.47 of note.
  • Flat: None of note.
  • Misses: PDD (0.19) of note.
  • Still to Report: None of note.

Guidance:

  • Positive Guidance: GTLS of note.
  • Negative Guidance: FL, DNMR of note.

Erlanger Research Advance/Decline Chart:

Gap Ups & Down In Early Pre-Market:

  • Gap Up: NYCB +13%, PACW +5%, ABR +4% of note.
  • Gap Down: CS -58%, FRC -19%, PDD -14%, BBBY -13%, TTCF -5%, UBS -4% of note.

Insider Action: MTDR, ENVX, WMT, SWX 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: US Banks on a Bumpy Path as First Republic’s Troubles Persist. (Bloomberg)
  • Bloomberg Most Read Story: UBS to Buy Credit Suisse in $3.3 Billion Deal to End Crisis. (Bloomberg)
  • Morgan Stanley Strategist Mike Wilson says bank stress marks beginning of a painful and vicious end to bear market. (Bloomberg)
  • Goldman Sachs says that Federal Reserve will not hike rates this week due to banking stress. (CNBC)
  • First Republic (FRC) gets a credit downgrade and falls 18%. (CNBC)
  • Saudi National Bank loses over $1 billion on Credit Suisse investment. (CNBC)
  • Gold rises above $2,000 for the first time in a year. (Bloomberg)
  • NYC Jury may indict Former President Donald J. Trump on Tuesday. (NYT)

Moving Average Update:

  • Score pulls back to 42% from 57%.

Geopolitical: 

  • President’s Public Schedule:
    • The President receives the Presidential Daily Briefing; The Vice President attends, 10:25 a.m. EDT
    • The President and The First Lady host a reception celebrating Nowruz; The Vice President and The Second Gentleman, 1:00 p.m. EDT
    • The President and The First Lady welcome Jason Sudeikis and the cast of Ted Lasso to the White House to discuss the importance of addressing your mental health to promote overall well-being, 3:15 p.m. EDT

Economic: None of note.

Federal Reserve / Treasury Speakers: None of note.

M&A Activity:

  • Hewlett Packard Enterprise (HPE) to Acquire OpsRamp, Advancing Hybrid Cloud Leadership and Expanding HPE GreenLake into IT Operations Management.
  • New York Community Bancorp, Inc. (NYCB) Through Its Bank Subsidiary, Flagstar Bank, N.a., Acquires Certain Assets And Assumes Certain Liabilities Of Signature Bridge Bank From The FDIC.

Meeting & Conferences of Note:

  • Sellside Conferences:
    • Bank of America Electronic Payments Symposium (03/20/23-03/21/23)
    • Berenberg Energy Transition Conference
    • Capital Link International Shipping Forum
    • Credit Suisse Asian Investment Conference (03/20/23-03/21/23)
    • Goldman Sachs Chemical Intensity Days
    • Piper Sandler Energy Conference (03/20/23-03/23/23)
    • UBS Virtual Carbon Capture Huddle
      • Previously posted and ongoing conferences: None 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: