CAPIS Morning Note – 09/29/23: Will They Or Won’t They Shut Down The Government? Stocks Are Higher This Morning.

Overnight Summary: The S&P 500 closed Thursday higher by 0.59% at 4299.70 from Wednesday higher by 0.02% at 4274.51. The overnight high was hit at 4361.50 at 6:20 a.m. EDT while the low was hit at 4327.50 at 9:25 p.m. EDT. The range overnight was 34 points. The 10-day average of the overnight range is at…

Overnight Summary: The S&P 500 closed Thursday higher by 0.59% at 4299.70 from Wednesday higher by 0.02% at 4274.51. The overnight high was hit at 4361.50 at 6:20 a.m. EDT while the low was hit at 4327.50 at 9:25 p.m. EDT. The range overnight was 34 points. The 10-day average of the overnight range is at 24.50 from 22.10  down from a peak of 31.50 on 8/15.  The average for May-August average was 21.10 from 18.81 in May through July and the August average was 26.21. Currently, the S&P 500 is higher by +20.75 points which is +0.48% at  7:30 a.m. EDT.

Earnings Out After The Close: 

  • Beats: NKE +0.18, BB +0.03 of note.
  • Flat: None of note.
  • Misses: MTN (0.07) 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:
    • ANL: Prices 2.5 million ADSs at $23.00 per ADS
    • MDGL: Prices $500 Million offering. 1.24 Million shares + ~2 Million pre-funded warrants at $151.69.
    • OPRA: Prices secondary offering of 6,876,506 ADSs to be sold by a pre-IPO shareholder at $12.25 per ADS.
    • SWKH: Prices $29 Million offering.
    • SYBX: Announces Pricing of $21.0 Million Underwritten Public Offering.
    • TNXP: Announces Pricing of $4.5 Million Public Offering.
    • VCNX: Prices $9.6 Million equity.
  • Notes Priced of note: None of note.
  • Common Stock filings/Notes:
    • MDGL: Proposed Public Offering – $500 million in shares. (GS, Jefferies, TD, Evercore and Piper bookmanager)
    • OGE: Filed Form S-3ASR.. 5,000,000 Shares.
    • OPGN: Filed Form RW.
    • RNAZ: Announces Closing of $8.5 Million Public Offering.
    • TNXP: Proposed Public Offering. (Alliance Global Bookmanager)
  • Direct Offering:
    • CAPR: Announces $23 Million Registered Direct Offering.
    • HEPA: Announces $5.0 Million Registered Direct Offering and Concurrent Private Placement Priced At-The-Market under Nasdaq Rules.
    • PRTG: Announces $6.0 Million Registered Direct Offering.
  • Selling Shareholders of note:
    • GETY: Files for 397,045,769 share common stock offering by selling shareholders.
  • Private Placement of Public Entity (PIPE): None of note.
  • Mixed Shelf Offerings:
    • SJM: Filed Form S-3ASR .. Mixed Shelf.
  • Debt/Credit Filing and Notes:
    • AIRS: Made a voluntary partial debt pay down on its credit agreement with a syndicate of lenders.
    • BBY: Filed Form S-3ASR.. Debt Securities.
    • FBRT: Announces Closing of Approximately $900 Million CLO.
    • SF: entered into an unsecured credit agreement.
    • HLLY: Announces $25 Million Debt Paydown in Line With Stated Financial Priorities.
    • GPCR: Announces $300 Million Private Placement Equity Financing.
  • 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: NKE +8%, MDGL +4% of note.
    • Trading Down: GETY -6%, EBIX-4% of note.
  • News Items After the Close:
    • GameStop’s (GME) survival demands ‘extreme frugality,’ CEO Ryan Cohen tells employees. (CNBC)
    • Federal Reserve Richmond President Thomas Barkin: Too soon to know if another rate hike needed. Barkin spoke from 3:30 p.m. EDT into the close. (BloombergTV)
    • Nike (NKE) shares soar after earnings. Here’s why the athletic-gear giant expects the year to get better. (MarketWatch)
    • Novo Integrated (NVOS) stock more than doubles after hours on $1 billion collateral agreement. (MarketWatch)
    • GOLDMAN: “.. while recent large wage gains for union workers will directly boost overall wage growth a bit, the impact should be small because the unionized share of the workforce is modest .. we expect overall wage growth to continue to decelerate toward 3.5% ..” (Carl Q)
    • Northrop Grumman (NOC) awarded a $513 million modification to previously awarded US Navy contract.
    • RTX: Awarded a $305.6 million US Navy contract.
    • L3Harris (LHX) awarded a $112.7 million US Army contract for artificial intelligence and machine learning platform research and development
  • Exchange/Listing/Company Reorg and Personnel News:
    • Index Changes: (MarketWatch)
      • Veralto (VLTO) will join S&P 500 following spin off from Danaher; Vestis (VSTS) will be added to the S&P MidCap 400 following spin off from Aramark; Kohl’s (KSS) moving to S&P SmallCap 600 from S&P MidCap 400.
    • Astra Cures (ASTR) Bid Price Deficiency and Regains Compliance with Nasdaq Listing Standards.
    • AZEK Company (AZEK) Announces Peter Clifford to Take on Dual Role as Chief Operations Officer and Chief Financial Officer; Promotes Randy Herth to Chief Accounting Officer and Treasurer.
    • GrafTech (EAF) CEO and President Marcel Kessler to step down due to family reasons.
    • Installed Building Products (IBP) announces retirement of COO Jay Elliot and appointment of Brad Wheeler as successor.
    • Instructure (INST) Names Peter Walker as Chief Financial Officer; Reiterates Third Quarter and Full Year 2023 Guidance.
    • JFrog (FROG) Announces CFO Transition.
    • Jin Medical International Limited (ZJYL) Receives NASDAQ Notification Letter Regarding Noncompliance with Continued Listing Rule 5550(a)(3).
    • KXIN: Announces Receipt of Nasdaq Letter Regarding Regaining Compliance with Minimum Bid Price Requirement.
    • PeopleReady (TBI) Announces Two Senior Leadership Appointments.
    • Sterling Check Corp. (STER) CFO Peter Walker to step down.
    • Synopsys (SNPS) Appoints Ann Minooka as Chief Marketing Officer.
    • Teva (TEVA) Announces Changes to Executive Management Team.
  • Buyback Announcements or News:
    • Autoliv (ALV) Retires Repurchased Shares, Decreases Number of Issued Shares.
  • Stock Splits or News:
    • Fathom Digital Manufacturing (FATH) 1-for-20 Reverse Stock Split Becomes Effective.
    • MIND Technology (MIND) Announces Terms of Reverse Stock Split and Declaration of Preferred Stock Dividend
  • Dividends Announcements or News:
    • CenterPoint (CNP) increases quarterly cash dividend $0.01 to $0.20 per share.
    • Howmet Aerospace (HWM) increases quarterly cash dividend 25% to $0.05 per share.
    • Johnson Outdoors (JOUT) raises quarterly dividend to $0.33 per share, up $0.03.
    • MIND: see split above.
  • Insider Sales Of Note: None of note.

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

S&P 500 +14, Dow Jones +119,  NASDAQ +71, and Russell 2000 +6.  (as of 7:59 a.m. EDT).  Asia is lower ex South Korea while Europe is higher ex the FTSE this morning. VIX Futures are at 18.05 from 18.45 yesterday.  Gold, Silver and Copper are higher this morning reversing three days of selling. WTI Crude Oil and Brent Crude Oil are lower with Natural Gas lower as well. US 10-year Treasury sees yields at 4.647% from 4.503% yesterday. The U.S. Dollar is lower versus the Euro, lower versus the Pound and lower against the Yen. Bitcoin is at $26,486 from $26,555 yesterday, higher by +0.92%.

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

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

The rise in Treasury yields paused Thursday, helping stocks stage their biggest move higher in weeks. The benchmark S&P 500 advanced 0.6%, and the tech-focused Nasdaq Composite gained 0.8%, each notching their best day since Sept. 14. The Dow Jones Industrial Average edged up 0.3%.  Stocks’ gains were fairly broad-based, with utilities the only sector in the S&P 500 to retreat. Materials and Communications Services led the advancers. (WSJ – 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: None of note.

Earnings of Note This Morning:

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

Guidance:

  • Positive Guidance: None of note.
  • Negative Guidance: None of note.

Erlanger Research Advance/Decline Chart:

Gap Ups & Down In Early Pre-Market:

  • Gap Up: OPK +8%, NKE +8%, NBTX +6%, NAAS +6%, CCO +5%, PTCT +5% of note.
  • Gap Down: EBIX -7%, GETY -4%, HA -4% of note.

Insider Action: MCFT sees Insider buying with dumb short selling.  HHH 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 You Need to Know to Start Your Day. (Bloomberg) 
  • Stocks Making the Biggest Moves Before The Open: NKE APRN BUD EAT BLL BMBL (CNBC)
  • Bloomberg Lead Story: These Are The Seven Lawmakers To Watch in Shutdown Talks. (Bloomberg)
  • Bloomberg Second Most Shared Story: The Threat of the American Debt Crisis. (Bloomberg)
  • Stocks, Bonds Rebound After A Quarter of Losses: Market Wrap. (Bloomberg)
  • Automakers grow frustrated at UAW over the pace of negotiations. (CNBC)
  • Blackrock (BLK) CEO Larry Fink sees rates heading above 5% on 10 Year Yield. (Bloomberg)
  • Coinbase (COIN) CEO slam JP Morgan for banning crypto payments in UK, suggests government should act. (CNBC)
  • Investors fear data disruption with the government shutdown. (Reuters)
  • NPR Morning Report Marketplace:  California’s Delete Act could impact data brokering. (Podcast)
  • NY Times The Daily:  Why the government is about to shutdown. (Podcast)
  • BBC Global News: Gunman kills three in Rotterdam. (Podcast) 
  • Bloomberg: The real pain from rate hikes may still be on the way. (Podcast)
  • Wealthion:  Our currency is always sacrificed when crisis hits without exception. (Podcast)

Moving Average Update:

  • Score improves to 22% from 11% due to crosses above on 5 dma on $MID, $COMPQ, $NDX, and IWM.

Geopolitical: 

  • President’s Public Schedule:
    • The President receives the Presidential Daily Briefing, 9:00 a.m. EDT
    • The President, The Vice President, and The Second Gentleman depart the White House en route to Arlington, Virginia, 9:35 a.m. EDT

Economic:

  • International Trade in Goods 8:30 a.m. EDT
  • Wholesale Inventories 8:30 a.m. EDT
  • August Personal Income is due out at 8:30 a.m. EDT and is expected to rise by 0.5% from 0.2%.
  • August PCE Core is also due out at 8:30 a.m. EDT and is expected to remain at 0.2%.
  • September Chicago PMI is due out at 9:45 a.m. EDT and is expected to drop to 48.30 from 48.70.
  • September University of Michigan Consumer Sentiment is due out at 10:00 a.m. EDT and is expected to remain at 67.70.
  • Baker Hughes Rig Count 1:00 p.m. EDT
  • Farm Prices 3:00 p.m. EDT

Federal Reserve / Treasury Speakers:  

  • Federal Reserve New York President John Williams 12:45 p.m. EDT

M&A Activity and News: 

  • American Water Works (AWK) announces agreement to acquire Appalachian Utilities.
  • Cal-Maine Foods, Inc. (CALM) Announces Definitive Agreement to Acquire Egg Production Assets of Fassio Egg Farms, Inc.
  • Wonder to acquire Blue Apron (APRN) for $13.00 per share in $103 Million

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: