CAPIS Morning Note – 08/09/23: China Economy Continues To Struggle, European Stocks Rebound and U.S. Futures Up 0.28%

Overnight Summary: The S&P 500 closed Tuesday lower by -0.42% at 4499.48 from Monday higher by 0.90% at 4518.44. Overnight ranges saw the high hit at 4536.25 at 5:15 a.m. EDT while the low was hit at 4515.50 at 6:35 p.m. EDT. The range overnight was 21 points. The 10-day average of the overnight range is…

Overnight Summary: The S&P 500 closed Tuesday lower by -0.42% at 4499.48 from Monday higher by 0.90% at 4518.44. Overnight ranges saw the high hit at 4536.25 at 5:15 a.m. EDT while the low was hit at 4515.50 at 6:35 p.m. EDT. The range overnight was 21 points. The 10-day average of the overnight range is at 29.40 unchanged from yesterday.  The average for May/June/July average was 18.81 from 19.94 in May/June. Currently, the S&P 500 is higher by +7 points and by 0.16% at 7:25 a.m. EDT.

Earnings Out After The Close: 

  • Beats: DNLI +1.99, CMP +1.13, EDR +1.01, LGND +0.84, BHF +0.74, FRG +0.64, SMCI +0.60, AXON +0.49, CDNA +0.36, RIVN +0.35, VTLE +0.34, BOOM +0.31, VVX +0.30, DOOR +0.29, ARRY +0.29, DUOL +0.28, MODG +0.25, TWLO +0.24, KLIC +0.23, CELH +0.21, PETQ +0.20, IPAR +0.19, LYFT +0.17, LPSN +0.17, OSCR +0.15, AZTA +0.15, UPST +0.13, PODD +0.13, MRTX +0.13, BL +0.12, CDRE +0.12, MODN +0.11, HALO +0.11, IRBT +0.09, ESE +0.09, ACCO +0.09, AKAM +0.08, TTGT +0.08, PUBM +0.08, BROS +0.07, RPD +0.07, ZIP +0.06, HCAT +0.06, PRA +0.06, GO +0.06, FNV +0.06, APPS +0.05, DOCS +0.05, FATE +0.05, PCVX +0.04, BLNK +0.04, TMCI +0.04, AZEK +0.04, IOVA +0.03, CTOS +0.03, BIRD +0.03, VUZI +0.03, VCYT +0.03, CPNG +0.03, FLT +0.02, LAZR +0.02, TWNK +0.02, DIOD +0.02, RXT +0.02, ICHR +0.02, SOUN +0.02, CRCT +0.01, HRT +0.01, QGEN +0.01, USPH +0.01, BMBL +0.01, JAMF +0.01, VZIO +0.01, MTTR +0.01, DHT +0.01 of note.
  • Flat: RLAY +0.00, FLYW +0.00, AMPL +0.00, LPRO +0.00, LZ +0.00, EGHT +0.00, IOSP +0.00 of note.
  • Misses: CUTR (0.96), EBS (0.41), LNW (0.35), IAC (0.34), STR (0.27), SUPN (0.23), JXN (0.20), EXFY (0.19), TOST (0.18), RVNC (0.17), TTWO (0.16), TALO (0.12), RVMD (0.10), ME (0.08), TWOU (0.08), BBAI (0.06), SLF (0.04), NHI (0.03), DAR (0.03), BW (0.03), QDEL (0.02), MASI (0.02), WES (0.02), FNF (0.02), VTEX (0.02), VRDN (0.01), HNST (0.01), ANGI (0.01), MQ (0.01), AGTI (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: None of note.
  • New SPACs launched/News:
    • Golden Falcon Acquisition Corp. (GFX) and MNG enter Termination of Business Combination Agreement .
  • Secondaries Priced:
    • BNTC: Announces Pricing of $30 Million Underwritten Public Offering.
    • DFH: Prices $300M private offering.
    • GTES: Announces Pricing Of Secondary Offering pricing of the previously announced secondary offering of 15,000,000 ordinary shares by certain selling stockholders affiliated with Blackstone Inc. (BX) at a public offering price of $11.75 per share.
    • MRTX: Pricing of Upsized Public Offering @$27.80. (GS Bookmanager)
    • NS: Announces Pricing of Upsized Equity Offering of Common Units.
  • Notes Priced of note:
    • CCO: Announces Pricing Of Offering Of Senior Secured Notes Due 2028.
    • NNN: Prices Offering of $500 Million of 5.600% Senior Unsecured Notes Due 2033.
  • Common Stock filings/Notes:
    • GTES: Announces Secondary Offering Of 15,000,000 Ordinary Shares.
    • MRTX: Announces Proposed $250 million Public Offering.
    • NS: Announces Public Offering of Common Units.
    • PSTL: Form 424B5.. Up to $150,000,000 Class A Common Stock.
    • QS: Announces Closing of Public Offering of Class A Common Stock.
    • RMBL: Announces Planned $100 Million Fully Backstopped Rights Offering.
  • Direct Offering: None of note.
  • Selling Shareholders of note:
    • RYI: Closing of Secondary Offering of Common Stock by a Significant Shareholder.
  • Private Placement of Public Entity (PIPE): None of note.
  • Mixed Shelf Offerings:
    • ABCB: Filed Form S-3ASR Mixed Shelf.
    • BFLY: Files $300 million mixed shelf securities offering.
    • CASA: Filed Form S-3.. $100,000,000 Mixed Shelf.
    • CWEN: Filed Form S-3ASR Mixed Shelf.
    • MCRB: Filed Form S-3.. $300,000,000 Mixed Shelf.
    • PKST: Filed Form S-3ASR Mixed Shelf.
  • Debt/Credit Filing and Notes:
    • BMO: To Redeem U.S. $850,000,000 4.338% Subordinated Notes (Non-Viability Contingent Capital (NVCC)).
    • CCL CUK: Carnival Corporation & plc Announces Closing of $500 Million 7.00% First-Priority Senior Secured Notes Offering and Upsized $1.3 Billion Senior Secured First Lien Term Loan B Facility to Repay Existing Term Loan.
    • CROX: Announces Refinancing of Term Loan B Facility in Leverage-Neutral Transaction.
    • OPRT: Closes $400 Million Whole Loan Flow Sale Agreement with Castlelake, L.P. to Fund Personal Loan Production.
    • RNG: Announces Proposed Private Offering of $400 Million of Senior Unsecured Notes Due 2030.
  • 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 and Over the Holiday:

  • After Hours: 
    • Trading Up: PENN +17%, SOUN +16%, MQ +16%, BOOM +15%,  SCPL +15%, CELH +13%, TOST +13%, AZTA +12%, ARRY +12%, VUZI +11%, RPD +10%, AXON +9%, LPSN +9%, PETQ +8%, TWLO +8%, BIRD +8%, CTOS +7%, AMPL +7%, MRTX +7%, AKAM +6%, VCYT +6%, DUOL +6%, LGND +6%, CDNA +5%, FLYW +4%, GO +4%, TMCI +4%, SKLZ +4%, RKLB +4%, CPNG +4%, HALO +4% of note.
    • Trading Down: DOCS -22%, UPST -20%, ASLE -17%, ANGI -16%, BLFS -13%, GRND -12%, PUBM -11%, IAC -10%, ZIP -9%, MODG -9%, SMCI -9%, DIOD -8%, TWOU -8%, ATRO -7%, LPRO -7%, GTES -7%, LZ -6%, EGHT -6%, LYFT -6%, CRCT -6%, CUTR -5%, PDFS -5%, BARK -5%, JAMF -5%, NS -5%, RVNC -5%, ACCO -5%, DXPE -5%, SUPN -4% of note.
  • News Items After the Close:
    • Stocks making the biggest moves after hours: PENN, SMCI, RIVN, AXON, TWLO, LYFT, BMBL (CNBC)
    • U.S. Set to Limit Scope of China Investment Ban With Revenue Rule. (Bloomberg)
    • Federal Reserve Board provides additional information on its program to supervise novel activities in the banks it oversees. (Link) (MarketWatch)
    • PENN Entertainment (PENN) and ESPN (DIS) Enter into Long-Term Exclusive Strategic Alliance for U.S. Online Sports Betting. Sells Barstool back to its founder David Portnoy. (MarketWatch)
    • IAC stock falls after results miss estimates. (MarketWatch)
    • Topgolf Callaway (MODG) stock drops 6% after Q2 revenue miss (MarketWatch)
    • Rivian raises 2023 EV production guidance, posts narrower-than-expected quarterly loss (CNBC)
    • 23andMe (ME) approves workforce reduction of approximately 11%.
    • Doximity (DOCS) announces plans to reduce workforce by approximately 10%.
    • Kopin (KOPN) Receives Additional $12.8 Million Order for Thermal Weapon Sight Program.
    • Monthly Assets Under Management Reporting: CNS $82.3 billion (+1.8bln mom)
  • Exchange/Listing/Company Reorg and Personnel News:
    • ACCO Brands (ACCO) appoints President and COO Thomas Tedford as CEO.
    • BeautyHealth (SKIN) Names Michael Monahan Chief Financial Officer.
    • Clearwater Paper (CLW) appoints Sherri Baker as CFO effective August 14.
    • Dutch Bros (BROS) transitioning President Christine Barone to CEO.
    • European Wax Center (EWCZ) Announces CEO Succession Plan.
    • Flywire (FLYW) CFO Michael Ellis departing in 2024.
    • LivePerson (LPSN) Appoints John Collins as Interim Chief Executive Officer.
    • MRTX: Announces Departure of Chief Executive Officer David Meek.
    • Microvast (MVST) Appoints Zach Ward as President to Drive Ongoing U.S. Expansion.
    • Nano Dimension (NNDM): Murchinson Could Not Find Board Nominees to Join Them.
    • Oscar Health (OSCR) Chief Transformation Officer, R. Scott Blackley, to transition to CFO.
    • Paypal (PYPL) Chief Strategy, Growth Officer Auerbach To Depart.
    • Riverview Bancorp Board (RVSB) voted to terminate, without cause, the employment of President/CEO Kevin J. Lycklama.
    • VIA Optronics AG (VIAO) Announces Planned CEO Transition and Business Update.
    • Valvoline (VVV): CEO Sam Mitchell to retire effective Sept. 30, 2023; Retail Services President Lori Flees to replace Mitchell as CEO.
  • Buyback Announcements or News:
    • Genworth Financial (GNW) announces $350 million share repurchase program expansion.
    • International Seaways (INSW) Board authorized $50 million increase to co’s buyback authorization.
    • Laboratory Corp (LH) entered into $1 billion of accelerated share repurchase agreements.
    • Xponential Fitness (XPOF) entered into $50 million accelerated share repurchase agreement.
  • Stock Splits or News:
    • SYTA trading r/s price.
  • Dividends Announcements or News:
    • First Advantage Corp. (FA) declares special one-time dividend of $1.50 per share.
    • Sitio Royalties Corp (STR) Board of Directors declared a cash dividend of $0.40 per share of Class A Common Stock.
  • Insider Sales Of Note: None of note.

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

S&P 500 +12, Dow Jones +68,  NASDAQ +50, and Russell 2000 +7.  (as of 7:57 a.m. EDT).  Asia higher ex Japan and Europe higher this morning. VIX Futures are at 16.27 from 17.25 yesterday.  Gold and Silver lower with Copper higher this morning. WTI Crude Oil and Brent Crude Oil higher with Natural Gas higher as well. US 10-year Treasury sees yields at 4.042% from 3.99%  yesterday. The U.S. Dollar is lower versus the Euro, higher versus the Pound and higher against the Yen. Bitcoin is at $29,812 from $29,320  yesterday, lower by -0.25%.

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

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

Weak Chinese export data, a dimmer financial outlook from United Parcel Service UPS -0.88%decrease; red down pointing triangle and a credit downgrade for 10 smaller U.S. banks sent stock indexes down on Tuesday.  The S&P 500 lost 0.4% and the Dow Jones Industrial Average declined about 0.5%, or 159 points. The Nasdaq Composite lost 0.8%. The declines mostly negated Monday’s blue-chip-driven gains and resumed the slide stocks have been on since the start of August.  Government bond prices climbed, pushing yields down. The benchmark 10-year U.S. Treasury yield dipped below 4% but ended at 4.024%, down from 4.076% Monday.  (WSJ – edited by QPI)

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: ANIP +0.61, INSW +0.56, IONS +0.28, ODP +0.22, ATMU +0.15, SLVM +0.14, TBLA +0.11, VVV +0.07, PENN +0.07, XMTR +0.06, DCPH +0.05, VSH +0.05, KRNT +0.05, CRL +0.05, SSYS +0.04, EVRI +0.04, REYN +0.04, NOMD +0.03, OLK +0.03, WRBY +0.02, FA +0.02, DIBS +0.01, GDRX +0.01, WEN +0.01 of note.
  • Flat: SHCR +0.00, VERX +0.00, OGE +0.00, of note.
  • Misses: LL (0.87), ZNTL (0.82), BCO (0.15), BERY (0.09), CEVA (0.09), AVNS (0.06), LFST (0.05), NVEI (0.05), SKIN (0.02), DDD (0.01) of note.
  • Still to Report: BLDP , CAE , EBIX , JACK , RBLX of note.

Guidance:

  • Positive Guidance: AKAM, LGND, HALO, GO, LYFT, LZ, TOST, AZEK, BL, VTEX, AZTA, FLYW, BLNK, AMPL, PETQ, MODN, VCYT, CTOS, MEG, SONY, NOMD, ANIP, VERX, ATMU of note.
  • Negative Guidance: SMRT, DOCS, LAZR, CUTR, UPST, TTWO, POD, QGEN, DIOD, MASI, CDNA, BIRD, JAMF, ZIP, HRT, AGTI, EGHT, LPRO, PUBM, MTTR, ESE, MARA, GNW, APPS, MODG, LPSN, EBS, NHI, BLFS, BARK, GDRX, BERY, KRNT, AVNS, VSH, XMTR, NVEI of note.

Erlanger Research Advance/Decline Chart:

Gap Ups & Down In Early Pre-Market:

  • Gap Up: CELH +17%, SCPL +15%, BOOM +14%, MQ +14%, AZTA +14%, ARRY +14%, TOST +13%, LPSN +13%, PENN +13%, RPD +12%, VUZI +11%, AXON +10%, DUOL +9%, PETQ +9%, ICVX +9%, SOUN +8%, EDR +8%, RKLB +8%, CDNA +8%, TWLO +8%, AMPL +7%, GATO +7%, MRTX +6%, VCYT +6%, AKAM +5%, DNLI +5%, GO +5%, CTOS +5%, CDRE +5%, VZIO +5%, FLYW +4%, SKLZ +4%, BLNK +4%, MEG +4%, LGND +4%, BW +4%, HALO +4%, FNF +4%, OSCR +4% of note.
  • Gap Down: DOCS -30%, PUBM -22%, UPST -18%, EXFY -18%, ANGI -18%, ASLE -18%, ZIP -15%, TWOU -13%, BLFS -13%, GRND -12%, SMCI -12%, IAC -9%, HBM -9%, MODG -8%, GTES -8%, CUTR -8%, LYFT -7%, DXPE -7%, EGHT -7%, NS -6%, LL -6%, ATRO -6%, AGTI -6%, LZ -6%, CRCT -6%, JAMF -5%, SUPN -5%, PDFS -5%, MTTR -4%, VTEX -4% of note.

Insider Action: MAA sees Insider buying with dumb short selling.  No stocks 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 Tuesday. (CNBC)
  • 5 Things to Know to Start Your Day. (Bloomberg)
  • Bloomberg Lead Story: China slides into deflation, signaling a worsening outlook. (Bloomberg)
  • Bloomberg Most Shared Story: WeWork tumbles after raising “substantial doubt” about its future. (Bloomberg)
  • Italy leads a relief rally in stocks; Euro gains. Market Wrap. (Bloomberg)
  • Target (TGT) implements curbside pickup of Starbucks (SBUX) at its curb to jolt sales. (CNBC)
  • Mortgage demand drops again after FHA loan interest rate hits 21-year high. (CNBC)
  • NYSE and NASDAQ battle for new stock listings. (WSJ)
  • NPR Marketplace:  It’s been nearly five months since the collapses of Silicon Valley Bank and Signature Bank sparked upheaval in the banking industry. But this week, Moody’s cut the credit ratings of several regional banks, citing problems related to rising interest rates and troubled loan portfolios. Plus, California trucking companies go electric, and a decline in China’s exports hints at a global spending slowdown. (Podcast)
  • BBC Global News: Breakthrough at landmark Amazon summit in Brazil. (Podcast) 
  • NY Times The Daily: Looks at Elon Musk’s Starlink. (Podcast)
  • Bloomberg Podcasts of Note: Climate change pushes Kenya close to the edge. (Podcast)

Moving Average Update:

  • Score flops back to 48% from 60%.

Geopolitical: 

  • President’s Public Schedule:
    • The President receives the Presidential Daily Briefing, 11:00 a.m. EDT
    • The President delivers remarks on how Bidenomics and his Investing in America agenda are unleashing a clean energy and manufacturing boom just one year after the Inflation Reduction Act and CHIPS Act were signed into law, 3:00 p.m. EDT
    • The President departs Albuquerque, New Mexico en route to Salt Lake City, Utah, 4:55 p.m. EDT
    • The President arrives in Salt Lake City, Utah, 6:30 p.m. EDT

Economic:

  • MBA Mortgage Applications 7:00 a.m. EDT
    • MBA Mortgage Applications: Composite: -3.1%, Purchase: -2.7%, ReFi: -4%
    • U.S MBA 30-YEAR MORTGAGE RATE ACTUAL: 7.09% VS 6.93% PREVIOUS
    • U.S MBA MORTGAGE APPLICATIONS (WOW) ACTUAL: -3.1% VS -3.0% PREVIOUS
  • EIA Petroleum Report 10:30 a.m. EDT
  • The latest NYSE and NASDAQ Short Interest from July 12th through July 31st is due out after the close. During the collection period, the S&P 500 rose by 1.46%

Federal Reserve / Treasury Speakers: None of note.

M&A Activity and News:

  • AG Mortgage Investment Trust (MITT) and Western Asset Mortgage Capital Corporation (WMC) Announce Definitive Merger Agreement.
  • Cegeka to Acquire CTG for $10.50 Per Share, Enhancing Value to Customers Across North America and Europe.
  • Glacier Bancorp, Inc. (GBCI) Announces Acquisition Of Community Financial Group, Inc. In Spokane, Washington.
  • Regeneron (REGN) to Acquire Decibel Therapeutics (DBTX) at a price of $4.00 per share of common stock payable in cash at closing.

Meeting & Conferences of Note:

  • Sellside Conferences:
    • BAC Securities SMID Cap Ideas Conference
    • J.P. Morgan Auto Conference (08/09/23-08/10/23)
    • Wells Fargo FinTech Information & Business Services Forum (08/09/23-08/10/23)
    • William Blair Insurance Banking and Wealth Tech Conference
      • Previously posted and ongoing conferences:
  • Top Shareholder Meetings: MRZM
  • Fireside Chat: None of note.
  • Investor/Analyst Day/Calls: ATHX, AYRO, CUE, K, GBCI, MDNA, MEGI, RICK, RWLK, SKYX, WIX
  • 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 is 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: