CAPIS Morning Note – 08/29/23: Stocks Modestly Lower On Drug Price Negotiations (Control) For Medicare Introduced By The Biden Administration

Overnight Summary: The S&P 500 closed Monday higher by 0.63% at 4433.31 from Friday higher by 0.67% at 4405.71. It was the first back-to-back winning day on the S&P 500 for August. Overnight ranges saw the high hit at 4454.25 at 3:35 a.m. EDT while the low was hit at 4437.75 at 5:05 a.m. EDT. The…

Overnight Summary: The S&P 500 closed Monday higher by 0.63% at 4433.31 from Friday higher by 0.67% at 4405.71. It was the first back-to-back winning day on the S&P 500 for August. Overnight ranges saw the high hit at 4454.25 at 3:35 a.m. EDT while the low was hit at 4437.75 at 5:05 a.m. EDT. The range overnight was 17 points. The 10-day average of the overnight range is at 23.60 from 26.10 yesterday.  The average for May/June/July average was 18.81 from 19.94 in May/June. Currently, the S&P 500 is flats and by +0.00% at 7:20 a.m. EDT.

Earnings Out After The Close: 

  • Beats: HEI +0.01 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:
    • Ross Acquisition II (ROSS) receives NYSE notice for delayed Form 10-Q filing.
  • Secondaries Priced: None of note.
  • Notes Priced of note: None of note.
  • Common Stock filings/Notes:
    • BTG: Filed Form F-3.. 129,693,690 Common Shares dividend reinvestment plan.
    • ONFO: Launches 506(c) Series A Preferred Share OfferingOnfolio seeks to raise $10 million from accredited investors interested in investing in Onfolio’s diversified portfolio of online businesses with a Series A Preferred Share Offering
    • SCTL: Announces Closing of $8.3 Million Public Offering of Common Stock.
    • TCBP: Form F-1 Filed .. Up To 9,900,990 Ordinary Shares And Up To 9,900,990 Pre-funded Warrants To Purchase Up To 9,900,990 American Depositary Shares.
  • Direct Offering: None of note.
  • Selling Shareholders of note:
    • CAAP: Filed Form F-3.. U.S.$250,000,000 Common Shares and 7,022,471 Common Shares Offered by the Selling Shareholder.
    • MGRM: Files 6,500,000 shares of common stock by selling shareholder.
  • Private Placement of Public Entity (PIPE): None of note.
  • Mixed Shelf Offerings: None of note.
  • Debt/Credit Filing and Notes: None of note.
  • Tender Offer: None of note.
  • Convertible Offering & Notes Filed:
    • FFIE: Filed Form S-3.. 1,033,175 Shares of Class A Common Stock Up to 16,110,607 Shares of Class A Common Stock Issuable Upon Conversion of the Notes and Exercise of the Warrants.

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: GSHD +8%, JXN +8% of note.
    • Trading Down: HEI -5%  of note.
  • News Items After the Close:
    • Scoop: Senator Schumer to host Musk, Zuckerberg for AI forum. [META] (Axios)
    • Google (GOOGL) to begin selling maps data to companies building solar products, hopes to generate $100 million in first year. (CNBC)
    • Tech IPOs are coming back — now they have to perform. (CNBC)
    • We believe the Nvidia (NVDA) guidance (despite the modest sell off post print) speaks to a tidal wave of AI driven spending on the horizon for the tech sector over the coming years. We see tech stocks rallying into year-end as the new tech bull markets powers through Fed worries. (Ives WEDBUSH)
    • All the megacaps except Google (GOOGL) and Nvidia (NVDA) have the same charts. I think that both Google, ahead of the NFL ticket, and Nvidia, which had an amazing quarter, are both ready to run. (Cramer CNBC)
  • Exchange/Listing/Company Reorg and Personnel News:
    • Index Changes:
      • Goosehead Insurance (GSHD) will replace NuVasive (NUVA) in the S&P SmallCap 600.
      • Jackson Financial (JXN) will replace NexTier Oilfield Solutions (NEX) in the S&P SmallCap 600.
    • Americold Realty Trust (COLD) appoints Bryan Verbarendse as COO for North America.
    • Blue Water Biotech, Inc. (BWV) Announces Notification From Nasdaq Related to Delayed Quarterly Report on Form 10-Q.
    • Charge Enterprises (CRGE) Announces Leadership Change.
    • Kubient (KBNT) receives Nasdaq notice of non-compliance.
    • MNK – Delisting proceedings.
    • NexGen Energy (NXE) appoints Ben Salter as CFO.
    • OKYO Pharma Limited (OKYO) Regains Compliance with Nasdaq Listing Minimum Market Value Rule.
    • Omega Therapeutics (OMGA) announced that Chris Schade has been appointed as Chairman of the Board.
    • Sallie Mae (SLM) announces Pete Graham as next CFO.
    • SIFCO Industries (SIF) receives NYSE notice for non-compliance.
    • Tingo Group (TIO) Receives Nasdaq Notification Relating to its Delayed Quarterly Report on Form 10-Q Filing.
    • TSR, Inc. (TSRI) Board of Directors Announces Exploration of Strategic Alternatives.
  • Buyback Announcements or News:  
    • FinVolution Group (FINV) Announces Third Share Repurchase Program of up to US$150 million.
    • Lloyds Banking (LYG) competes GBP2 billion share buyback program.
    • OP Bancorp (OPBK) Announces New Stock Repurchase Program.
    • William Penn Bancorporation (WMPN) Announces Sixth Stock Repurchase Program.
  • Stock Splits or News: 
    • DMS trading r/s price.
    • Faraday Future (FFIE) Expects Ability to Finance Future Growth with Reverse Stock Split and the Registration Statements on Form S-3.
  • Dividends Announcements or News: 
    • LifeVantage (LFVN) Declares Special Cash Dividend of $0.40 Per Share.
  • Insider Sales Of Note: None of note.

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

S&P 500 -3, Dow Jones -31,  NASDAQ -14, and Russell 2000 -3.  (as of 7:57 a.m. EDT).  Asia and Europe are higher this morning. VIX Futures are at 16.40 from 16.95 yesterday.  Gold, Silver and Copper higher this morning. WTI Crude Oil and Brent Crude Oil higher with Natural Gas lower. US 10-year Treasury sees yields at 4.22% from 4.235% yesterday. The U.S. Dollar is higher versus the Euro, higher versus the Pound and higher against the Yen. Bitcoin is at $25,992 from $25,946 yesterday, lower by -0.01%.

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

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

Major U.S. stock indexes kicked off the week with gains, rising for a second consecutive session and recouping some losses from the August stock-market slide.   The gains were broad-based, with 10 of the S&P 500’s 11 sectors closing in positive territory. The S&P 500 notched its first back-to-back gain of the month after edging lower for much of August.   The index rose 0.6%, while the tech-heavy Nasdaq Composite added 0.8%. The Dow Jones Industrial Average added 213 points, or 0.6%.  Monday’s moves continue a remarkable stretch of calm for major indexes during the summer months. The S&P 500 hasn’t notched a one-day move of 2% in either direction in more than six months, the calmest stretch since 2018 and one of the longest of the past 25 years, according to research firm Asym 500. (WSJ – edited by QPI)

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

  • Tuesday After the Close: 

  • Wednesday Before the Open:

Earnings of Note This Morning:

  • Beats: PDD +3.17, BIG +0.87, MBUU +0.68, SJM +0.19, BBY +0.16 of note.
  • Flat: DCI of note.
  • Misses: BMO (0.35), NIO (0.32), CLTL (0.02), BNS (0.01) of note.
  • Still to Report: AMWD of note.

Guidance:

  • Positive Guidance: DCI, NIO of note.
  • Negative Guidance: None of note.

Erlanger Research Advance/Decline Chart:

Gap Ups & Down In Early Pre-Market:

  • Gap Up: PDD +13%, GSHD +11%, TIGR +8%, JXN +7%, LIAN +5%, BORR +4% of note.
  • Gap Down: HEI -5% of note.

Insider Action: No stock sees Insider buying with dumb short selling.  SEAC, ACRS 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: China Banks to Cut Rates on Mortgages, Deposits. (Bloomberg)
  • Bloomberg Most Shared Story: Citadel Vets 69,000 Intern Applicants to Find Next Math Geniuses (Bloomberg) 
  • US Futures waver as traders await deluge of data: Market Wrap. (Bloomberg)
  • UK Flight delays will take days to fix after a glitch causes travel chaos. (CNBC)
  • Biden Administration unveils first 10 drugs subject to Medicare negotiations. (CNBC)
  • Hurricane Idalia barrels north as Florida girds for disaster. (Bloomberg)
  • Best Buy (BBY) scales back sale outlook as results top expectations. (CNBC)
  • Eliquis (BMY PFE) and Jardiance (LLY) were among the first drugs picked for Medicare price negotiations. (NYT)
  • NPR Marketplace: It’s a big week for job data, including reports on the quits rate, private payrolls, layoff announcements and employment numbers. The Federal Reserve will be keeping a close eye on wage growth, and today we see indications that pay gains might be cooling. Then, the Texas power grid is strained by rising temps and growing cities, and companies invest in passenger rail. (Podcast)
  • BBC Global News: Luis Rubiales resignation demanded by Spanish football leaders. (Podcast) 
  • NY Times The Daily: A marriage, a secret and Chinese increasing restrictions. (Podcast)
  • Bloomberg: Odd Lots: This is what we learned in Jackson Hole. (Podcast)
  • Wealthion: Toxic Combo to disrupt markets? Available at 10:00 a.m. EDT. (Podcast)

Moving Average Update:

  • The score continues to improve from 40% to 62%.

Geopolitical: 

  • President’s Public Schedule:
    • Press Briefing by Press Secretary Karine Jean-Pierre, 1:00 p.m. EDT
    • The President delivers remarks at an event on lowering health care costs; The Vice President participates, 2:00 p.m. EDT
    • The President holds a bilateral meeting with President Rodrigo Chaves Robles of Costa Rica, 3:45 p.m. EDT

Economic: 

  • Redbook Sales 8:55 a.m. EDT
  • FHFA House Price Index 9:00 a.m. EDT
  • June Case-Schiller Home Price Index is due out at 9:00 a.m. EDT and is expected to rise to 0.9% from -1.7%.
  • August Consumer Confidence is due out at 10:00 a.m. EDT and is expected to fall to 116 from 117.
  • July JOLTS is also due out at 10:00 a.m. EDT and came in last month at 9.824 million.
  • API Crude Oil Data 4:30 p.m. EDT

Federal Reserve / Treasury Speakers:

  • Federal Reserve Vice Chair for Supervision Michael S. Barr 3:00 p.m. EDT.

M&A Activity and News:

  • e.l.f. Beauty (ELF) signed a definitive agreement to acquire Naturium for $355 million in a combination of cash and stock.
  • NRx Pharmaceuticals (NRXP) Announces Definitive Purchase Agreement for Preferred Shares at $0.40 per share.

Meeting & Conferences of Note:

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: