CAPIS Morning Note – 05/12/23: Stocks Look Past Inflation Data and Will Focus on Debt Ceiling Next Week, Stocks Higher

Overnight Summary: The S&P 500 closed Thursday at 4130.62 down -0.17% from Wednesday at 4137.64 up 0.45%. The overnight high of 4164.50 was hit at 5:10 a.m. EDT. The low was hit at 4141.25 at 4:25 p.m. EDT, a range of ~23 points high to low which is a mid-vol night, same as Wednesday morning. …

Overnight Summary: The S&P 500 closed Thursday at 4130.62 down -0.17% from Wednesday at 4137.64 up 0.45%. The overnight high of 4164.50 was hit at 5:10 a.m. EDT. The low was hit at 4141.25 at 4:25 p.m. EDT, a range of ~23 points high to low which is a mid-vol night, same as Wednesday morning.  At 7:20 a.m. EDT, the current price was 4160.50 which is 0.40% and 16.75 points. As we move into mid-May we will use a 10-day moving average of overnight ranges.

Earnings Out After The Close: 

  • Beats: ARLO +0.06, NWSA +0.05, SANM +0.04, DICE +0.04, GEN +0.02, EGHT +0.02, HROW +0.01, INDI +0.01, SLF +0.01 of note
  • Flat: RCEL of note.
  • Misses: HRTX (0.07), VTYX (0.03) 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: None of note.
  • Secondaries Priced:
    • ANIP: Announces Pricing of $75 Million Public Offering of Common Stock.
    • DTC: Prices secondary offering of 11,304,348 shares of common stock at $5.25 per share.
    • MIR: Prices offering of 7.0 million shares of common stock by certain selling stockholders at $7.65 per share.
  • Notes Priced of note:
    • BE: Prices offering of $550.0 million of 3.00% green convertible senior notes due 2028.
    • CTVA: Pricing of Senior Notes Offering.
    • TXN: prices $1.6 billion of investment grade notes.
  • Common Stock filings/Notes:
    • ANIP: Proposed Public Offering of Common Stock. (Guggenheim Bookmanager)
    • OUST: Filed Form S-3.. 3,631,429 shares of Common Stock.
    • RGLS: Filed Form S-3.. 16,698,236 shares of Common Stock.
  • Direct Offering: None of note.
  • Selling Shareholders of note:
    • MIR: Proposed Public Offering by Selling Stockholders .. 7,000,000 shares. (Citigroup)
  • Private Placement of Public Entity (PIPE): None of note.
  • Mixed Shelf Offerings:
    • ATXS: Filed Form S-3.. $250 Million Mixed Security Shelf.
    • EE: Filed Form S-3.. $500 Million Mixed Security Shelf.
    • NMM: Files $500 mln mixed shelf securities offering.
    • SMBK: Filed Form S-3.. $100 Million Mixed Security Shelf.
  • Debt/Credit Filing and Notes:
    • D: Filed Form S-3ASR.. Variable Denomination Floating Rate Demand Notes.
    • DAKT: Strengthens Financial Position by Securing $100 Million In Capital Commitments.
    • GVA: Announces Closing of $325 Million of Convertible Senior Notes due 2028 and Full Exercise of Initial Purchasers’ Option to Purchase Additional $48.75 Million of the Convertible Senior Notes.
    • HUMA: Oberland Capital announce funding arrangement totaling up to $160 million.
    • NET: Issued a notice to redeem all of its outstanding 0.75% Convertible Senior Notes.
  • 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: BLBD +26%, OUST +8%,AMLX +5%, NWSA +4% of note.
    • TradingDown: IONQ -12%, HROW -9%, ANAB -6%, WEST -6%, RCEL -6%, ANIP -6% of note.
  • News After The Close:
    • White House meeting between the Majority and Minority Leaders along with Biden has been postponed until next week. (Bloomberg)
    • BuzzFeed (BZFD) stock jumps 7% following forecast, AI blueprint announcement. (MarketWatch)
    • BA: US State Department approves potential sale of Chinook helicopters to Germany, Pentagon says. (Reuters)
    • News Corp (NWSA) stock rises as results beat, despite ‘clearly insipid’ advertising backdrop. (MarketWatch)
    • Fed Emergency Bank Loans rise to $92.4b from $81.1b prior week – Fed Discount-Window Loans $9.32b In Week Ended May 10 After $5.35b – Fed Bank Term Funding Loans $83.1b In Week Ended May 10 After $75.8b.
    • Bitcoin falls to its lowest level since March as thin liquidity, regulatory pressure hits crypto markets (CNBC)
  • Exchange/Listing/Company Reorg and Personnel News:
    • Arrow Financial (AROW) to delay 10-Q filing.
    • Biofrontera Inc. (BFRI) Announces Resignation of CEO.
    • Cadence Design (CDNS) announces that current Cadence board member, Mary Louise Krakauer, has assumed the role of chair of the board.
    • Catalent (CTLT) to delay 10-Q filing.
    • MBIA (MBI) elected current director Steven J. Gilbert as Chairman of the Board of Directors.
    • MDRX: to delay 10-Q filing.
    • Markforged (MKFG) Announces CFO Transition.
    • Sanmina (SANM) files to delay form 10-Q; discloses non-reliance on previously issued financial statements or a related audit report or completed interim review.
  • Buyback Announcements or News:
    • Ashland (ASH) announces $100 million share repurchase program. (see Dividends)
    • IEP authorizes $500M buyback. (Bloomberg)
    • Old Republic (ORI) Announces Share Repurchase Authorization of $450 million.
    • Sanmina (SANM) authorizes up to additional $200 million for share buyback program.
    • Marriott Vacations (VAC) announces increased share repurchase authorization.
  • Stock Splits or News: None of note.
  • Dividends Announcements or News: 
    • AGRO: Approved cash dividends of $35 million.
    • Ashland (ASH) increases quarterly dividend 15% to $0.385 per share.
    • ESAB increases quarterly cash dividend $0.01 to $0.06 per share.
    • Hamilton Beach (HBB) raises dividend by 5%.
    • Penske Auto (PAG) increases quarterly dividend $0.01 to $0.66 per share.
    • Sun Life (SLF) increased dividend to $0.75 per share.
    • Werner Enterprises (WERN) increases quarterly cash dividend $0.01 to $0.14 per share.
    • XOM Goes ex div on Monday for $0.91.

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

S&P 500 +12, Dow Jones +119,  NASDAQ +20, and Russell 2000 +6. (as of 8:00 a.m. EDT).  Asia is higher ex South Koread while Europe is higher. VIX Futures are at 20.35 from 20.75 yesterday.  Gold and Silver lower with Copper lower. WTI Crude Oil and Brent Crude Oil higher with Natural Gas lower. US 10-year Treasury sees yields at 3.42% from 3.40% yesterday. The U.S. Dollar is higher versus the Euro, lower versus the Pound and higher against the Yen. Bitcoin is at $26,377 from $27,448  yesterday, lower by -1.86%.

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

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

U.S. stocks ended mostly lower on Thursday, with the Dow booking a fourth day in a row of losses, as selling pressures returned to shares of regional banks. The Dow Jones Industrial Average shed about 221 points, or 0.7%, ending near 33,310. The S&P 500 index fell about 0.2%, while the Nasdaq Composite Index closed 0.2% higher. Disappointing earnings from Wal Disney Co. tied to its streaming business helped drag down the blue-chip Dow, while shares of PacWest Bancorp, fell more than 20% after it disclosed a 9.5% decline in deposits in recent weeks. Short-term rates remained volatile on Thursday as investors hoped for progress on the debt-ceiling stalemate in Washington D.C. The 2-year Treasury was pegged at 3.906%, up four of the past five trading days, according to Dow Jones Market Data. The 6-month Treasury bill was at 5.11%. (MarketWatch – edited by QPI)

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

  • Friday After the Close: None of note.
  • Monday Before the Open:

Earnings of Note This Morning:

  • Beats: EMBC +0.27 of note.
  • Flat: SPB of note.
  • Misses: None of note.
  • Still to Report: None of note.

Guidance:

  • Positive Guidance: BLBD, ARLO of note.
  • Negative Guidance: EGHT, SPB of note.

Erlanger Research Advance/Decline Chart:

Gap Ups & Down In Early Pre-Market:

  • Gap Up: BLBD +33%, OUST +10%, AMLX +9%, ERJ +5% of note.
  • Gap Down: HROW -9%, ANAB -8%, IONQ -8%, AU -7%, ANIP -6% of note.

Insider Action: NRDS, SCWX sees Insider buying with dumb short selling.  COMM, CPE, HHC, BRT 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: Yellen Says Only Good Outcome Is Congress Raising Debt Ceiling. (Bloomberg)
  • Bloomberg  Most Shared Story: The Plot to Steal The Other Secret Inside A Can of Coca Cola. (Bloomberg)
  • Cuts on the table now in the debt ceiling debate. (Newsmax)
  • Treasury Secretary Yellen to huddle with banking leaders next week in Washington over debt ceiling. (Politico)
  • Twitter CEO Elon Musk to cede control of the company to a new CEO in six weeks, rumors that Linda Yaccarino from NBCUniversal to take control. (CNBC)
  • Tesla (TSLA) recalls almost every car ever sold in China over the vehicle acceleration system. (Bloomberg)
  • Sarepta Therapeutics (SRPT) stock is halted ahead of FDA meeting today to decide the fate of its new Duchenne Muscular Dystrophy (DMD) treatment. (MarketWatch)

Moving Average Update:

  • Score goes back to 60% from 74%.

Geopolitical: 

  • President’s Public Schedule:
    • The President receives the Presidential Daily Briefing, 10:00 a.m. EDT
    • Press Briefing by Press Secretary Karine Jean-Pierre and Infrastructure Implementation Coordinator Mitch Landrieu, 1:00 p.m. EDT
    • The President holds a bilateral meeting with President Pedro Sanchez of the Government of Spain, 2:00 p.m. EDT

Economic:

  • Import and Export Prices 8:30 a.m. EDT
  • May University of Michigan Consumer Sentiment is due out at 10:00 a.m. EDT and expected to come in at 62.9 from 63.5.
  • Baker Hughes Rig Count 1:00 a.m. EDT

Federal Reserve / Treasury Speakers:

  • Federal Reserve Board of Governors Philip N. Jefferson 7:45 p.m. EDT

M&A Activity: None of note.

Meeting & Conferences of Note:

  • Sellside Conferences:
  • Top Shareholder Meetings: CL, MAR, PGR, WU, WY
  • Fireside Chat: None of note.
  • Investor/Analyst Day/Calls: ARAY, KOP, SCHW
  • 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: