CAPIS Morning Note – 06/03/22: Stocks Lose Mojo From Thursday, Dollar Rebounds and Musk To Cut Jobs As Has “Super Bad” Feeling

Overnight Summary: The S&P 500 closed Thursday at 4176.82 (higher by 1.84%) from 4101.23 (lower by -0.75%) on Wednesday. Futures have trading lower overnight. The overnight high of 4189 was hit at 6:10 p.m. EDT. The low was hit at 4144 at 7:20 a.m. EDT, a range of 48 points high to low which is…

Overnight Summary: The S&P 500 closed Thursday at 4176.82 (higher by 1.84%) from 4101.23 (lower by -0.75%) on Wednesday. Futures have trading lower overnight. The overnight high of 4189 was hit at 6:10 p.m. EDT. The low was hit at 4144 at 7:20 a.m. EDT, a range of 48 points high to low which is near the range of late with 45 the average. At 7:15 a.m. EDT the current price is 4147.25 which is -0.67% and -28 points.

Earnings Out After The Close:

  • Beats: RH +2.45, STNE +0.12, CVGW +0.11, PHR +0.10, CRWD +0.08, OKTA +0.07, ASAN +0.06, LULU +0.05, PD +0.04.
  • Flat: None of note.
  • Misses: JOAN (0.30), COO (0.19), ZUMZ (0.09).

Capital Raises:

  • IPOs Priced or News: None of note.
  • New SPACs launched/News:
    • Biotech Acquisition Company (BIOT) and Blade Therapeutics Announce Postponement of Extraordinary Meeting of Shareholders to Approve Proposed Business Combination.
  • Secondaries Priced:
    • KREF: prices offering of 7.0 million shares of common stock.
    • AMT: Prices Public Offering of Common Stock 8,350,000 shares @$256.
    • TCBP: Announces Pricing of $4 Million Underwritten Public Offering.
  • Notes Priced of note:
    • JXN: Announces Pricing of $750 Million Senior Notes Offering.
      WMS: Pricing of $500 Million of 6.375% Senior Notes Due 2030.
  • Common Stock filings/Notes:
    • BTOG: Proposed Underwritten Public Offering of Ordinary Shares.. Univest Bookmanager.
      MMAT: Filed Form S-3..9,677,419 Shares of Common Stock.
  • Pricing of Over-Allotment/Notes: None of note.
  • Direct Offering: None of note.
  • Selling Shareholders of note:
    • DM: files for 112,202 share common stock offering by selling shareholders.
  • Private Placement of Public Entity (PIPE): None of note.
  • Mixed Shelf Offerings: None of note.
  • Convertible Offering & Notes Filed:
    • ACB: Repurchases US$20 Million of Convertible Notes..

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: STNE +21%, OKTA +16%, LOCO +11%, NX +9%, CHGG +8%.
    • Trading Down: JOAN -15%, ZUMZ -8%, HCP -8%, KSS -7%, ASAN -5%, KREF -4%.
  • News Since The Close:
    • Stocks making the biggest moves after hours: LULU, RH, ASAN, OKTA, CRWD  (CNBC)
    • Goldman Sachs (GS) Stock Sputters Despite Brisk Run of Business. (WSJ)
    • Rumor that Apple (AAPL) will launch a web search engine pops up again.  (AppleInsider) 
    • Lululemon (LULU) raises guidance for the year as earnings and sales beat expectations. (CNBC)
    • Walmart (WMT) plans to launch four new high-tech fulfillment centers.
    • Two bidders seek discount price to buy Kohl’s (KSS): report. (NY Post)
    • TSLA: Elon Musk In an email titled “pause all hiring worldwide,” Musk said he had a “super bad feeling” about the economy. (Reuters)
    • Coinbase (COIN) to will extend hiring pause for both new and backfill roles for the foreseeable future and rescind a number of accepted offers.
    • Blackrock (BLK) CEO Larry Fink Sees Elevated Inflation for Years Due to Supply Shocks. (Bloomberg)
    • Northrop Grumman (NOC) and Owl Cyber Defense awarded Missile Defense Agency contract with ceiling value of $249 million.
    • Russian/Ukraine News
      • Russian foreign ministry spokeswoman says Germany is remilitarising, this will provoke a further escalation of risks.
  • Exchange/Listing/Company Reorg and Personnel News:
    • ARAV: Announced the appointment of Rudy Howard as Chief Financial Officer.
    • Axon (AXON) promotes Joshua Isner to COO.
    • El Pollo Loco (LOCO) appoints Ira Fils as CFO.
    • FARO Technologies (FARO) announces election of Yuval Wasserman as Chairman.
    • Global Payments (GPN) appoints Josh J. Whipple to succeed Paul M. Todd as CFO.
    • OPTN: Announces Departure of Chief Financial Officer.
      PRVB: Announces Dr. Jeffrey Bluestone’s decision to step down as a director of the company’s Board.
  • Buyback Announcements:
    • AudioEye (AEYE) Announces $3 Million Stock Repurchase Program.
    • Chegg (CHGG) increases securities repurchase program by $1 billion.
    • RH Announces Increase to Share Repurchase Authorization of up to $2 billion.
  • Stock Splits: None of note.
  • Dividends Announcements: None of note.

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

S&P 500 -34, Dow Jones -198, NASDAQ -163, and Russell 2000 -14. Europe mixed and Asia mixed.  VIX Futures are at 25.87 from 26.35 yesterday morning and the VIX closed at 24.72 from 25.69  yesterday. Gold lower, Silver higher  and Copper lower. WTI Crude Oil  and Brent Oil Futures lower and Natural Gas lower. $ is higher vs Euro, higher vs Pound and higher vs Yen. US 10 year Treasury sees yields at 2.91% unchanged from yesterday morning. Bitcoin is at $29,885 from $29,995 yesterday morning and is lower by -0.98% this morning. As of 8:08 a.m. EDT.

Sector Action – 06/01/22 Close (1/3/6/12/YTD Updated Weekly with Monday release):   

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

“Not bad meaning bad, but bad meaning good!” (shout out Run DMC Peter Piper)  MSFT started us off on a negative tone today, but the bad vibes were washed away in a sea of green.  Bad news is good news!  Updated 06/02/22 close.

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

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

Earnings of Note This Morning:

  • Beats: DOOO +044.
  • Flat: None of note.
  • Misses: None of note.
  • Still to Report: None of note.

Guidance:

  • Positive Guidance: EB, TTC, OKTA, CRWD, LULU, PD, STNE, NX, IOT, ALK, R of note.
  • Negative Guidance: PROC, CIEN, MSFT, RH, ZUMZ, COO of note.

Erlanger Research Advance/Decline Chart: Updated through 06/02/22 close.

Gap Ups & Down In Early Pre-Market:

  • Gap Up: OKTA +17%, STNE +17%, IPHA +8%, NAPA +7%, NX +7%, KSS +6%, BIOT +6%, CHGG +6%, PHR +5.6%, LOCO +5%.
  • Gap Down: JOAN -19%, ZUMZ -8%, ASAN -5%, KREF -5%, CRWD -4%.

Insider Action: TELA, BBY, UNVR sees Insider buying with dumb short selling. CYH, RMBL  sees Insider buying with smart short sellers. 06/02/22 close.

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 Moves: TPTX LULU RH (CNBC)
  • Five Things You Need to Know to Start Your Day (Bloomberg)
  • 5 things to know before the stock market opens Friday. (CNBC)
  • Russia occupies 20% of Ukraine. (NYT)
  • Shanghai back to lockdown in some areas. (CNN)
  • Job growth seen as slowing but remaining strong. (WSJ)
  • Bloomberg Lead Story: President Biden pleads for gun control in speech last night. (Bloomberg)
  • Bloomberg Most Popular Story: Apple (AAPL) to make iPad more like a laptop and less like an iPhone. (Bloomberg)
  • WSJ Op/Ed: How far can shrinkflation go? (WSJ)
  • Tesla (TSLA) CEO Elon Musk to eliminate 10% of jobs as “super bad feeling” about U.S. economy. (Reuters)
  • Senate Democrats struggle on gun control legislation as Republicans present huge obstacles. (CNN)
  • 20% of states are 90% out of baby formula. (Bloomberg)
  • Robinhood Snacks looks at Ford (F) double down on EV. Amazon (AMZN) building its biggest warehouse yet even though has more space than knows what to do with.

Moving Average Update:

  • Status quo…again!  Is my calculations broken!!!!!  Score remains at 60% for 4th day in a row.  Updated 06/02/22 close.

Geopolitical: 

  • President’s Public Schedule:
    • The President receives the President’s Daily Brief, 9:30 a.m. EDT
    • The President delivers remarks on the May jobs report, 10:30 a.m. EDT

Economic: 

  • May Nonfarm Payrolls is due out at 8:30 a.m. EDT and is expected to fall to 325,000 from 428,000. The unemployment rate is expected to drop to 3.5% from 3.6%
  • PMI Composite Final 9:45 a.m. EDT
  • May ISM Non-Manufacturing Index is due out at 10:00 a.m. EDT and is expected to fall to 56.6% from 57.1%.
  • Baker Hughes Rig Count 1:00 p.m. EDT 

Federal Reserve Speakers:

  • Federal Research Board of Governors Lael Brainard 10:30 a.m. EDT

M&A Activity:

  • Bristol Myers Squibb (BMY) to Commence All-Cash Tender Offer to Acquire All Outstanding Shares of Turning Point Therapeutics (TPTX) for $76.00 per Share.
  • Bowman Consulting Group (BWMN) announces the purchase of Fabre Engineering.
  • CRH Agrees $1.9 Billion Acquisition of Barrette.
  • Landec Corporation (LNDC) Announces Sale of Curation Foods’ BreatheWay® Business for $3.2 Million in Cash.
  • Pinterest (PINS) to Acquire THE YES, an AI Powered Shopping Platform for Fashion
  • Sprague Resources (SRLP) Announces Agreement to be Acquired by Hartree Partners for $19 per unit all cash.
  • Turning Point Therapeutics (TPTX) to be bought by Bristol Myers Squibb (BMY) for $3.77 billion up 116% this morning.

Meeting & Conferences of Note:

  • Sellside Conferences:
    • UBS Future of 5G 2022
      • Previously Announced  Conferences:
        • Bank of America Securities Emerging Markets Debt & Equity Conference 2022 (06/01/22-06/03/22)
        • Bernstein 38th Annual Autonomous Strategic Decisions Conference 2022 (06/01/22-06/03/22)
        • Bank of America Securities 2022 Innovative China Conference(05/30/22-06/10/22)
        • Credit Suisse Brazil Tech Series: Fintechs
        • Wells Fargo West Coast MedTech Tour 2022 (05/31/22-06/03/22)
        • Wells Fargo Energy Conference 2022 (06/01/22-06/03/22)
  • Company Meetings: None of note.
  • Fireside Chat: None of note.
  • Investor/Analyst Day/Calls: CI, PNT, R, MRUS (06/05/22 @ ASCO).
  • Update: None of note.
  • R&D Day: Novo Nordisk (NVO)R&D Investor Event (06/05/22).
  • Company Event:
    • WMT: Wal-Mart Stores, Inc. The Associate Celebration 2022 and Walmart Q&A Session with the Investment Community 2022.
    • Candel Therapeutics, Inc. (CADL) investor event and webcast 2022 (06/04/22)
    • ILMN: Illumina Unlocking Precision Medicine: The Transformational Impact of Comprehensive Genomic Profiling Event (06/04/22)
  • Industry Meetings:
    • American Society of Clinical Oncology ASCO Annual Meeting 2022 (06/03/22-06/07/22)
    • American Diabetes Association (ADA) 82nd Scientific Sessions 2022 (06/03/22-06/07/22)
    • American Transplant Congress 2022 (ATC) (06/03/22-06/08/22)
    • AIHA Petrochemical Summit 2022 (06/05/22-06/07/22)
    • American Association of Airport Executives Conference & Exposition 2022 (06/05/22-06/08/22)
    • Epilepsy Pipeline Conference 2022 (06/05/22-06/06/22)
      • Previously Posted and Ongoing Conferences:
        • Crypto Valley Conference 2022 (06/02/22-06/03/22)
        • Louisiana Energy Conference 2022 (06/01/22-06/03/22)
        • American Society of Clinical Psychopharmacology (ASCP) Annual Meeting 2022 (05/31/22-06/03/22)
        • Texas Emergency Management Conference 2022 (05/31/22-06/03/22)

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: