CAPIS Morning Note – 07/01/22: Stocks Negative To Start Second Half Of Year, But Off Lows.

Overnight Summary: The S&P 500 closed Thursday at 3785 (lower by -0.88%) from 3818.83 (lower by -0.07%) on Wednesday, now down 4 days in a row.  Futures are trading lower in the premarket session but off the lows The overnight high of 3794 was hit at 4:05 p.m. EDT. The low was hit at 3744…

Overnight Summary: The S&P 500 closed Thursday at 3785 (lower by -0.88%) from 3818.83 (lower by -0.07%) on Wednesday, now down 4 days in a row.  Futures are trading lower in the premarket session but off the lows The overnight high of 3794 was hit at 4:05 p.m. EDT. The low was hit at 3744 at 3:05 a.m. EDT, a range of 50 points high to low which is slightly above the range of late with 45 the average range. At 7:10 a.m. EDT the current price is 3773 which is -0.42% and -15.75 points.

Earnings Out After The Close:

  • Beats: MU +0.14, SJR +0.03.
  • Flat: None of note.
  • Misses: ACCD (4.49).

Capital Raises:

  • IPOs Priced or News: None of note.
  • New SPACs launched/News:
    • Fintech Acquisition (FTCV) ticks lower on report that co and online brokerage EToro plan to let deadline for merger pass without closing the deal.
    • Isleworth Healthcare Acquisition (ISLE) terminates previously announced merger with Cytovia Holdings.
    • North Atlantic Acquisition Corp. (NAAC) Announces Termination of Business Combination Agreement with TeleSign, Inc.
    • USHG Acquisition Corp. (HUGS) and Panera Brands Will Not Extend Partnership. (MarketWatch)
  • Secondaries Priced: None of note.
  • Notes Priced of note:
    • CYTK: Prices offering of of $450.0 million of 3.50% convertible senior notes due 2027.
    • EVA: Prices $250 Million in Tax-Exempt Green Bonds.
  • Common Stock filings/Notes:
    • EVLO: Filed Form 424B5.. Up to $75,000,000 Common Stock .
  • Pricing of Over-Allotment/Notes: None of note.
  • Direct Offering: None of note.
  • Selling Shareholders of note:
    • ATEX: Filed Form S-3.. 500,000 Shares of Common Stock to be Offered by the Selling Stockholder.
  • Private Placement of Public Entity (PIPE): None of note.
  • Mixed Shelf Offerings:
    • ACRE: Filed Form S-3.. $1.25 Billion Mixed Shelf.
    • HSON: Filed Form S-3.. $100 Million Mixed Security Shelf.
    • LULU: Filed Form S-3ASR.. Mixed Shelf Offering.
    • ZKIN: Filed Form F-3.. $200,000,000 Mixed Shelf.
  • Convertible Offering & Notes Filed:
    • XFOR: $55 Million Private Placement Financing and Debt Facility Amendment Extending Interest-Only Period by up to 12 Months.

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: None of note.
    • Trading Down: None of note.
  • News Since The Close:
    • Markets Post Worst First Half of a Year in Decades. (WSJ)
    • Ford Motor (F) ticks lower on report it is recalling more than 63,000 Bronco SUVs and Ranger pickup trucks for windshield issue.
    • Apple (AAPL) former corporate secretary and director of corporate law admits engaging in an insider trading scheme. (DOJ)
    • JetBlue (JBLU) Extends Tender Offer for Spirit Airlines, Inc. (SAVE) to July 29, 2022.
    • Lockheed Martin (LMT) awarded $307 million Army contract for repair and recertification of Phased Array Tracking Radar.
    • BAE Systems (BAESY) awarded $299 million Army modification to previous contract.
  • Exchange/Listing/Company Reorg and Personnel News:
    • Amplitude (AMPL) announced the appointment of Thomas Hansen as its first President.
    • Clearway Energy, Inc. (CWEN) Announces CFO Transition.
    • Nektar Therapeutics (NKTR) promotes Jillian B. Thomsen to CFO.
    • PureCycle (PCT) Announces Key Leadership Changes, New Chief Executive Officer.
    • Skillz (SKLZ) Hires Blackstone Executive Jason Roswig as President and CFO.
    • Tailwind International Acquisition (TWNI) CEO Pierre Denis has voluntarily resigned; Philip Krim named as new CEO.
    • Trip.com (TCOM) Group Announces Changes in Board Composition.
    • View, Inc. (VIEW) Receives Confirmation Letter from Nasdaq Affirming the Company Regains Compliance.
  • Buyback Announcements or News: None of note.
  • Stock Splits or News:
    • ABEO 1 for 25 reverse split announced.
    • Western Asset Mortgage Capital Corporation (WMC) Board Approves 1-for-10 Reverse Stock Split Ratio.
  • Dividends Announcements or News:
    • CBL & Assoc (CBL) re-establishes regular quarterly dividend at $0.25 per share.
    • The First Bancorp (FNLC ) increases quarterly dividend to $0.34 per share, a 6.25% boost.
    • Lindsay Corporation (LNN) Increases Quarterly Cash Dividend.

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

S&P 500 -21, Dow Jones -146, NASDAQ -85, and Russell 2000 -9. Europe and Asia lower.  VIX Futures are at 29.05 from 29.30 yesterday morning and the VIX closed at 28.71 from 28.16 yesterday. Gold, Silver and Copper lower. WTI Crude Oil  and Brent Oil Futures higher and Natural Gas higher. $ is higher vs Euro, higher vs Pound and lower vs Yen. US 10 year Treasury sees yields at 2.946% from 3.046% yesterday morning. Bitcoin is at $19,151 from $19,064 yesterday morning and is higher by 1.07% this morning. As of 8:03 a.m. EDT.

Sector Action – 06/30/22 Close (1/3/6/12/YTD Updated Weekly with Monday release):   

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

A roller coaster day dropping initial followed by a slow regain close to positive only to close lower.  UNG down 13% closing at $19.  NASDAQ down the most of the major indexes at down -1.33%. Updated 06/30/22 close.

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

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

Earnings of Note This Morning:

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

Guidance:

  • Positive Guidance: none of note.
  • Negative Guidance: ACCD, MU, KSS of note.

Erlanger Research Advance/Decline Chart: Updated through 06/30/22 close.

Gap Ups & Down In Early Pre-Market:

  • Gap Up: None of note.
  • Gap Down: MU -5%, WDC -4%.

Insider Action: PEB, RMAX sees Insider buying with dumb short selling.  CAMP, TCDA sees Insider buying with smart short sellers. 06/30/22 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: KSS, MU, AAPL, MGM, CZR, META  (CNBC)
  • Five Things You Need to Know to Start Your Day (Bloomberg)
  • 5 things to know before the stock market opens Friday. (CNBC)
  • Bloomberg Lead Story:  Goldman warns risk of stock selloff still high. (Bloomberg)
  • Bloomberg Most Read Story:  U.S. will face high gas prices as long as it takes notes President Biden. (Bloomberg)
  • Stocks have worst first half since 1970. (CNBC)
  • Chinese President Xi notes that Hong Kong will be prosperous due to its loyalty to rest of China. (WSJ)
  • Chinese car sales on fire as Nio (NIO) reports strong numbers. (CNBC)
  • Eurozone inflation hits record, rate hike is imminent there. (CNBC)
  • President Biden’s wish to change filibuster rules dead on arrival as Senators Manchin (D-WV) and Sinema (D-AZ) will not support a change. (Reuters)
  • Apple (AAPL) increases price of iPhone in Japan by 20%. (Reuters)
  • Kohl’s (KSS) ends sale talks with Franchise Group and lowers outlook. (CNBC)
  • American Airlines (AAL) to offer pilots a 17% raise. (CNBC)
  • Meta (META) reduces hiring target for engineers. (Reuters)
  • California passes lithium tax which will hurt EV makers, noted this earlier in the week. (Reuters)
  • TSMC (TSM) is seeing clients scale back their orders. (Digitimes)
  • Robinhood Snacks looks at Supreme Court limit on EPA power, other agencies could be next. Crypto decentralized decision making organizations may not be so decentralized.

Moving Average Update:

  • Score drops to just 2%……one lonely green square.  Updated 06/30/22 close.

Geopolitical: 

  • President’s Public Schedule:
    • The President receives the President’s Daily Brief, 9:45 a.m. EDT
    • The President convenes a virtual meeting with Governors to discuss efforts to protect access to reproductive health care, 1:00 p.m. EDT
    • The President departs the White House en route Camp David, 2:30 p.m. EDT

Economic: 

  • PMI Mfg Final 9:45 a.m. EDT
  • June ISM Manufacturing Index is due out at 10:00 a.m. EDT and is expected to fall to 55% from 56.1%.
  • May Construction Spending is due out at 10:00 a.m. EDT and is expected to rise to 0.4% from 0.2%.           
  • Baker Hughes Rig Count 1:00 p.m. EDT 
  • Bond Market Early Close 1:00 p.m. EDT 

Federal Reserve / Treasury Speakers:

  • None of note.

M&A Activity:

  • Brown & Brown, Inc., (BRO) completes the acquisition of Patrick Quinlan Insurance by O’Leary Insurance Ltd.
  • Francisco Partners Completes Acquisition of IBM’s (IBM) Healthcare Data and Analytics Assets; Launches Healthcare Data Company Merative.
  • HighPeak Energy, Inc. (HPK) Announces Closing of Hannathon Acquisition and Increase to the Company’s Borrowing Base.
  • Hillenbrand (HI) to Acquire Herbold Meckesheim, Expanding Customer Offering for Complete Recycling Solutions.
  • JBT Corporation (JBT) Acquires Alco-food-machines.
  • KNOT Offshore Partners (KNOP) announces acquisition of Synnøve Knutsen.
  • Pennsylvania American Water (AWK) Completes Acquisition of Upper Pottsgrove Wastewater System.
  • Regeneron (REGN) Completes Purchase of Sanofi’s Stake in Libtayo.
  • SailPoint (SAIL) Stockholders Approve Acquisition by Thoma Bravo.

Meeting & Conferences of Note:

  • Sellside Conferences:
    • None of note.
      • Previously posted and ongoing conferences:
        • None
  • Company Meetings: FUV 
  • Fireside Chat: None of note.Investor/Analyst Day/Calls: MRK 
  • Update: None of note.
  • R&D Day: None of note.
  • Company Event: None of note.
  • Industry Meetings:
    • European Academy of Allergy and Clinical Immunology (EAACI) Hybrid Congress 2022. (07/01/22-07/03/22)
      • Previously posted and ongoing conferences:
        • None

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: