CAPIS Morning Note – 03/22/23: Stocks Mixed Into FOMC Announcement at 2:00 p.m. EDT

Overnight Summary: The S&P 500 closed Tuesday higher by 1.03% at 4003 from Monday higher by 0.89% at 3951.57. The overnight high of 4041.50 was hit at 4:30 p.m. EDT. The low was hit at 4023 at 4:20 a.m. EDT, a range of ~18 points high to low.  At 7:00 a.m. EDT, the S&P 500 (mini)…

Overnight Summary: The S&P 500 closed Tuesday higher by 1.03% at 4003 from Monday higher by 0.89% at 3951.57. The overnight high of 4041.50 was hit at 4:30 p.m. EDT. The low was hit at 4023 at 4:20 a.m. EDT, a range of ~18 points high to low.  At 7:00 a.m. EDT, the S&P 500 (mini) was er by  points which is +0.%.

Earnings Out After The Close: 

  • Beats: GME +0.29, NKE +0.24, AIR +0.05, ARRY +0.03 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 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: None of note.
  • New SPACs launched/News:
    • BlueRiver Acquisition Corp. (BLUA) to Complete Transfer of Listing To NYSE American.
  • Secondaries Priced:
    • KRTX: Pricing of Public Offering of Common Stock.. 2,479,391 shares @$161.33.
  • Notes Priced of note:
    • EXR: Announces Pricing of $500 Million of 5.700% Senior Notes due 2028.
  • Common Stock filings/Notes:
    • FWBI: Filed Form S-3.. 3,069,054 Shares of Common Stock.
  • Direct Offering:
    • ACER: Announces $2.675 Million Registered Direct Offering Priced At-the-Market Under Nasdaq Rules.
  • Selling Shareholders of note: None of note.
  • Private Placement of Public Entity (PIPE):
    • DHHC: Announces PIPE investment. Investors have agreed to purchase $80,000,000 in original principal amount of convertible promissory notes and 744,588 shares of Class A common stock in connection with the previously announced business combination pursuant to which the Company will acquire GSH, and following which DHHC expects to be renamed United Homes Group, Inc. The aggregate gross amount of the PIPE Investment is $75,000,000.
    • VORB: Near deal to raise $200 million from Matthew Brown-term sheet. (Reuters)
  • Mixed Shelf Offerings:
    • BRCC: Files $500 million mixed shelf securities offering.
    • BZFD: Files $150 million mixed shelf securities offering.
    • CAMP: Filed Form S-3.. $150,000,000 Mixed Shelf.
  • Debt/Credit Filing and Notes:
    • HTGC: Increases its committed letter of credit facility with Sumitomo Mitsui Banking Corporation.
  • Tender Offer:
    • IFF: Recommends Stockholders Reject Mini-Tender Offer by TRC Capital Investment Corporation.
    • UBS: Issues announcement of tender offer of certain UBS Group AG senior unsecured bail-in notes
  • 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: GME +45%, SMLR +12%  of note.
    • Trading Down: AIR -6% of note.
  • News After The Close:   
    • Nike’s (NKE) holiday quarter plagued by bloated inventory, weak China sales. (CNBC)
    • First Republic Bank (FRC) Taps Lazard for Help With Review of Strategic Options. (WSJ)
    • GameStop (GME) stock soars 35% on surprise quarterly profit, higher sales. (MarketWatch)
    • Technology stocks like Microsoft (MSFT) and Apple (AAPL) are outperforming the S&P 500 by the widest margin in years. (MarketWatch)
  • Exchange/Listing/Company Reorg and Personnel News:
    • BlueLinx (BXC) elects Shyam Reddy as President and Chief Executive Officer.
    • City First Broadway (BYFC) Announces New Executives and Managerial Positions.
    • D-Wave (QBTS) Receives Notice of Non-Compliance with NYSE Trading Share Price Listing Rule.
    • Franklin BSP Realty Trust (FBRT) appoints Michael Comparato as President.
    • Papa John’s International (PZZA) CFO Ann Gugino To Step Down.
    • SBUX: Laxman Narasimhan Has Assumed Role Of CEO.
    • Sealed Air (SEE) appoints Dustin Semach as CFO designate.
    • Semler Scientific (SMLR) CEO Doug Murphy-Chutorian, M.D. to step down from position; company appoints Wayne T. Pan, M.D., Ph.D., M.B.A. as new CEO.
  • Buyback Announcements or News:
    • Ellington Financial (EFC) Announces $50 Million Common Stock Repurchase Program.
    • F&G Annuities & Life (FG) Announces New Three-Year, $25 Million Share Repurchase Program.
    • Kingsway Fin (KFS) authorizes up to $10 million for share repurchases; will have a one-year term.
    • Paysign, Inc. (PAYS) Announces New $5,000,000 Stock Repurchase Program.
    • Teekay Corporation (TK) Completes $30 Million Share Repurchase Program and Announces New Share Repurchase Program.
  • Stock Splits or News: None of note.
  • Dividends Announcements or News:
    • IFF Goes ex div tomorrow for $0.81.
    • JPM Declares Quarterly Dividend of $1 per share.
    • MO Goes ex div tomorrow for $0.94.

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

S&P 500 +0.63, Dow Jones +8.4,  NASDAQ -16.6, and Russell 2000 -0.14. (as of 7:55 a.m. EDT).  Asia higher and Europe lower ex Germany (DAX). VIX Futures are at 23.05 from 24.10  yesterday.  Gold, Silver and Copper higher. WTI Crude Oil and Brent lower with Natural Gas lower as well. US 10-year Treasury sees yields at 3.585% from  3.54% yesterday. The U.S. Dollar is higher versus the Euro, lower versus the Pound and lower against the Yen. Bitcoin is at $28,143 from $28,007 yesterday, lower by -0.41%.

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

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

The S&P 500 on Tuesday posted its highest close since the collapse of Silicon Valley Bank earlier this month, which sent shockwaves through financial markets and raised concerns about the stability of the U.S. banking system. The S&P 500 index closed up about 51 points, or 1.3%, ending near 4,003. That was its highest close since May 6, four days before the failure of Silicon Valley, the biggest bank collapse since the 2008 global financial crisis. The Dow Jones Industrial Average rose 1% Tuesday, while the Nasdaq Composite Index swept to a 1.6% gain. Banks and companies with heavy exposure to rate-sensitive assets, including property loans, have been under pressure since Silicon Valley Bank’s implosion.  (MarketWatch – 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: WGO +0.63. OLLI +0.05 of note.
  • Flat: None of note.
  • Misses: BZUN (0.52), WOOF (0.01) of note.
  • Still to Report: None of note.

Guidance:

  • Positive Guidance: SON, GBX, OLLI of note.
  • Negative Guidance: WOOF of note.

Erlanger Research Advance/Decline Chart:

Gap Ups & Down In Early Pre-Market:

  • Gap Up: GME +42%, SMLR +13%, KFS +6%, SSYS +5%, HQY +4% of note.
  • Gap Down: BZUN -5%, CAMP -4% of note.

Insider Action: PCB 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: Fed Caught Between Inflation and a Banking Crisis in Crucial Meeting.  (Bloomberg)
  • Bloomberg Most Read Story: SBV’s Loans to Insiders Tripled to $219 million before it failed.  (Bloomberg)
  • Stocks Waiver As Traders Await The Fed: Market Wrap. (Bloomberg)
  • U.K. Inflation Rate climbs to 10.4% after stretch of declines. (CNBC)
  • First Republic (FRC) Rescue may rely on U.S. backing to reach a deal. (Bloomberg)
  • China aligns with Russia against U.S., but hesitates on a big gas deal. (Bloomberg)
  • JP Morgan says treasuries coping amid worst liquidity since 2020. (Bloomberg)

Moving Average Update:

  • Score goes to 77% from 60%.

Geopolitical: 

  • President’s Public Schedule:
    • The President receives the President’s Daily Briefing, 9:00 a.m. EDT
    • Press Briefing by Press Secretary Karine Jean-Pierre, 3:00 p.m. EDT
    • The President and The First Lady host a reception celebrating Women’s History Month; The Vice President and The Second Gentleman also deliver remarks, 5:00 p.m. EDT

Economic:

  • MBA Mortgage Applications 7:00 a.m. EDT
    • MBA Mortgage Applications:  Composite: +3%  Purchase: +2.2%  ReFi: +4.9%
    • U.S MBA MORTGAGE APPLICATIONS (WOW) ACTUAL: 3.0% VS 6.5% PREVIOUS
    • U.S MBA 30-YEAR MORTGAGE RATE ACTUAL: 6.48% VS 6.71% PREVIOUS
  • EIA Petroleum Report 10:30 a.m. EDT

Federal Reserve / Treasury Speakers:

  • The latest Federal Reserve Open Market Committee (FOMC) decision is due out at 2:00 p.m. EDT and a press conference to follow at 2:30 p.m. EDT.

M&A Activity:

  • Quince Therapeutics (QNCX) Confirms Receipt of Unsolicited Acquisition Offer from Echo Lake Capital.
  • Stratasys (SSYS) Board of Directors Unanimously Rejects Unsolicited Proposal from Nano Dimension.

Meeting & Conferences of Note:

  • Sellside Conferences:
    • Bank of America EMEA Real Estate CEO Conference 2023 (03/22/23-03/24/23)
    • Emerging Growth Conference
    • HSBC 3rd Future Transport Week 2023 (03/22/23-03/23/23)
    • Sidoti Small-Cap Conference (03/22/23-03/23/23)
    • UBS Engineering, Infrastructure, and Construction Conf
      • Previously posted and ongoing conferences:
        • Credit Suisse Brazil Oil, Gas, Infrastructure & Transportation Conference
        • BAC Global Research Global Industrials Conf (03/21/23-03/23/23)
        • Berenberg UK Corporate Conference 2023 (03/21/23-03/23/23)
        • JP Morgan Napa Valley Biotech Forum (03/21/23-03/23/23)
        • KeyBanc Life Sciences & MedTech Investor Forum (03/21/23-03/22/23)
        • Piper Sandler Energy Conference (03/20/23-03/23/23)
        • SVB SoCal Biopharma Bus Tour
        • Macquarie Bright Ideas Consumer Conference

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: