CAPIS Morning Note – 10/11/23: Israel & Terrorist Attack Continues, Exxon to Buy Pioneer Natural Resources. Stocks Higher.

Overnight Summary: The S&P 500 closed Tuesday higher by 0.52% at 4358.24 from Monday higher by 0.63% at 4335.66. The overnight high was hit at 4406.50 at 7:30 a.m. EDT while the low was hit at 4388. at 2:30 a.m. EDT. The range overnight was 19 points as of 7:20 a.m. EDT. The 10-day average of…

Overnight Summary: The S&P 500 closed Tuesday higher by 0.52% at 4358.24 from Monday higher by 0.63% at 4335.66. The overnight high was hit at 4406.50 at 7:30 a.m. EDT while the low was hit at 4388. at 2:30 a.m. EDT. The range overnight was 19 points as of 7:20 a.m. EDT. The 10-day average of the overnight range is at 27.40 from 27.80  down from a peak of 31.50 on 8/15 but getting close to retaking that high.  The average for May-September average was 20.96 from 21.10 in May through August and the September average was 19.87. Currently, the S&P 500 is higher by +14 points which is +0.32% at  7:30 a.m. EDT.

Short Interest Release (www.goodmorningwallst.com): Bi-Weekly release as of 09/26/23 close.

 

Earnings Out After The Close: 

  • Beats: AZZ +0.19 of note.
  • Flat: None of note.
  • Misses: None of note.

Capital Raises:

  • IPOs Priced or News:
    • Birkenstock Prices IPO at $46 a Share. (WSJ)
  • New SPACs launched/News:
    • EF Hutton Acquisition Corporation I (EFHT) Signs Definitive Securities Purchase Agreement in Connection With Planned Business Combination With Humble Imports, Inc d/b/a ECD Auto Design.
    • Big Tree Cloud Enters into Definitive Merger Agreement with Plutonian Acquisition Corp. (PLTN).
  • Secondaries Priced:
    • BNGO: Announces Pricing of $80.0 Million Registered Offering and Concurrent Private Placement of Senior Secured Convertible Notes and Warrants.
    • NOG: Pricing of Public Offering of Common Stock 6,500,000 shares. (Citi bookmanager)
    • SNX: Pricing of Secondary Public Offering of Common Stock and Concurrent Share Repurchase. (GS and JPM bookmanagers)
  • Notes Priced of note:
    • CIVI: Announces Pricing of $1,000 Million of New Senior Notes Due 2030. (see also Selling Shareholders)
    • PD: PagerDuty Announces Pricing of $350 Million Convertible Senior Notes Offering.
  • Common Stock filings/Notes:
    • ALLR: Filed Form S-3.. Up to 4,877,778 Shares of Common Stock.
    • ALXO: Closing of Public Offering, Including Full Exercise of Underwriters’ Option to Purchase Additional Shares.
    • BNRE: Announces Commencement of Exchange Offer.
    • DNN: US$55 Million Bought Deal Offering.
    • HOFV: Announces Proposed Public Offering of Common Stock and Warrants.
    • IRON: Enters into an agreement with Jefferies to sell up to $59.7 million of its common stock.
    • NOG: Public Offering of Common Stock,, 6.5Million shares. (Citi bookmanager)
    • NVFY: Filed Form RW.
    • OBIO: Filed Form S-1.. Up to 22,221,440 Shares of Common Stock Up to 1,932,841 Shares of Common Stock Issuable Upon the Exercise of Warrants Up to 750,000 Warrants.
    • RGF: Commencement of Public Offering of its Class A Common Stock. (B. Riley Bookmanager)
    • SNX: Launch of Secondary Public Offering of Common Stock and Concurrent Share Repurchase.. 6,750,000 shares of its common stock. (GS and JPM bookmanagers)
    • SYTA: Filed Form F-1.. Maximum of $5,000,000 of Common Shares and/or Pre-Funded Warrants to Purchase Common Shares.
  • Direct Offering: None of note.
  • Selling Shareholders of note:
    • CIVI: Files for 13,538,472 shares of common stock by selling shareholders.
    • SNX: Filed Form S-3ASR.. to an aggregate of 44,961,612 shares by selling shareholders.
  • Private Placement of Public Entity (PIPE): None of note.
  • Mixed Shelf Offerings:
    • FRZA: Filed Form S-3.. $100,000,000 Mixed Shelf.
    • MOB: Files for $50 million mixed securities shelf offering.
    • PSNY: Filed Form F-3..$1,000,000,000 Mixed Shelf.
  • Debt/Credit Filing and Notes:
    • GRPU: C$400 Million Green Bond Offering and Closing of New €70 Million Term Loan.
    • NCLH: Announces Proposed Offering of Senior Secured Notes.
    • TPX: Announces that it has successfully completed the closing of its $1.65 billion senior secured credit facilities, which include a $1.15 billion revolving credit facility and a $500 million term loan facility.
  • 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: VOXX +10%, SANA +5%, AZZ +4% of note.
    • Trading Down: SILK -34%, ETWO -12%, DVA -12%, MOB -11%, HYLN -8%, PSNY -7% of note.
  • News Items After the Close:
    • Adobe (ADBE) CEO Shantanu Narayen on CNBC: Business continues to be strong, expects strong end to its fiscal year.
    • Exxon (XOM) Is Said In Talks To Pay More Than $250 per share For Pioneer (PXD)
    • Banks Got $280 Billion Boost From Rising Rates, McKinsey Says. (Bloomberg)
    • UAW Says Members At General Dynamics (GD) Vote To Authorize A Strike.
    • Federal Reserve San Francisco President Mary Daly: Decline In Goods Inflation Has Been An Easy Win, And Not Largely Due To The Fed’s Rate Hikes – We Have More Work To Do, Inflation Is Still High – In Future Could See The Nominal Neutral Rate To Go To 2.5%-3% –  I Don’t Manage Markets; I Watch Them For Information – If Bond Yields Are Tight, That Could Be Equivalent To Another Rate Hike – The Risks Of Over And Under Tightening Are Roughly Balanced
    • Assets Under Management – Monthly Reporting:
      • AB $669 billion from $694 billion.
      • APAM $136.5 billion
      • BEN $1.37 trillion vs. $1.42 trillion.
      • IVZ $1.487 billion – down 2.6%.
      • LAZ $228.3 billion – down $5.9 billion.
      • VCTR $153.5 billion – down 5.2%.
      • VRTS $162.5 billion.
  • Exchange/Listing/Company Reorg and Personnel News:
    • Alliance Entertainment (AENT) Announces Receipt of Notice from Nasdaq Regarding Late Filing of Annual Report on Form 10-K.
    • Ambow Education (AMBO) Receives Notice of NYSE American Continued Listing Deficiency.
    • Bank of Montreal Capital Markets (BMO) CEO Dan Barclay to retire.
    • Cisco (CSCO) appoints Dan Schulman, who most recently held position of President and CEO of PayPal Holdings (PYPL), to its Board of Directors. (MarketWatch)
    • E2open (ETWO) Announces Executive Transition.
    • Ericsson (ERIC) announces the appointment of Chris Houghton to Chief Operating Officer (COO) and Åsa Tamsons to Head of Business Area Enterprise Wireless Solutions
    • Femasys Inc. (FEMY) Regains Compliance with Nasdaq Listing Requirements.
    • Global System Dynamics, Inc (GSD) Receives Notice of Non-compliance with NASDAQ’s Listing Rule 5550(b)(2).
    • Humana (HUM) has named health care industry veteran Jim Rechtin as President and Chief Operating Officer of Humana.
    • Lifecore Biomedical (LFCR) provides update on its delayed filings; to delay 10-Q filing.
    • Presto (PRST) Announces Extended Shareholder Lock-ups, and a new Interim CFO.
    • Pulmonx (LUNG) Announces CFO Transition.
    • PolyPid (PYPD) Regains Compliance with Nasdaq Minimum Closing Bid Price Rule.
    • Sherwin-Williams (SHW) Board of Directors elects Heidi Petz as CEO effective January 1, 2024.
    • Silk Road Medical (SILK) Announces Retirement of CEO Erica Rogers. (MarketWatch)
    • Walgreens Boots Alliance (WBA) Appoints Tim Wentworth as Chief Executive Officer. (Bloomberg)
  • Buyback Announcements or News: None of note.
  • Stock Splits or News: None of note.
  • Dividends Announcements or News:
    • HP Inc. (HPQ) Raises Annual Dividend by 5% to $1.10 per Share. (MarketWatch)
    • Thor Industries (THO) increases its quarterly dividend approximately 7% to $0.48/share; 2.1% annual yield. (MarketWatch)
  • 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 +101,  NASDAQ +73, and Russell 2000 +4.  (as of 7:58 a.m. EDT).  Asia is higher while Europe is higher ex the CAC this morning. VIX Futures are at 17.45 from 18.92 yesterday.  Gold and Silver higher with Copper lower this morning. WTI Crude Oil and Brent Crude Oil are lower with Natural Gas higher. US 10-year Treasury sees yields at 4.558% from 4.703% yesterday. The U.S. Dollar is higher versus the Euro, lower versus the Pound and higher against the Yen. Bitcoin is at $27,225 from$27,551 yesterday, lower by -0.59%.

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

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

Stocks rose for a third straight session and bonds had their best day since August, after optimism built that the Federal Reserve’s campaign to raise interest rates is winding down. The S&P 500 rose 0.5%, while the Nasdaq Composite gained 0.6%. The Dow Jones Industrial Average advanced 0.4%, or 135 points. 10 of the S&P 500’s 11 sectors rose, after all 11 closed higher on Monday. Several top Fed officials have recently suggested that they could be done raising short-term interest rates if long-term rates remain near their recent highs. The 10-year Treasury yield settled at 4.654%, down from 4.783% on Friday, marking the largest one-session drop since Aug. 23. The two-year yield fell to 4.982% from 5.077% on Friday, its lowest level since Sept. 8. Bond markets were closed 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: None of note.
  • Thursday Before the Open: FAST, DAL, WBA, DPZ, CMC

Earnings of Note This Morning:

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

Company Earnings Guidance:

  • Positive Guidance: LUNG of note.
  • Negative Guidance: MAXN, ETWO, SILK, LXFR of note.

Erlanger Research Advance/Decline Chart:

Gap Ups & Down In Early Pre-Market:

  • Gap Up: VOXX +11%, TECH +7%, SHLS +6%, IMRN +5%, ALLY +5%, INCY +4%, AZZ +4%, STRO +4% of note.
  • Gap Down: SILK -38%, HYLN -34%, MOB -17%, ETWO -17%, FMS -17%, DVA -16%, BAX -9%, PSNY -7%, NOG -4% of note.

Insider Action: No stock sees Insider buying with dumb short selling.  No stock 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.

  • Stocks making the biggest moves premarket: PLUG, XOM, PXD, TKR, DVA, HUM (CNBC)
  • 5 Things Need To Know to Start Your Day. (Bloomberg)
  • 5 Things to Know Before the Stock Market Opens. (CNBC)
  • Bloomberg Lead Story: Israel Latest Hezbollah and Israel trade fire on Lebanon border. (Bloomberg)
  • Bloomberg Third Most Shared Story: Hamas got around Israel’s intelligence by going dark. (Bloomberg)
  • U.S. Treasuries gain as Middle East conflict boils: Market Wrap. (Bloomberg)
  • “No electricity, no food, no water, no fuel” into Gaza Strip. (NYT)
  • White House announces new efforts to crack down on junk fees. (CNBC)
  • Adjustable rate mortgage demand spiked last week. (CNBC)
  • What we do and don’t know about the effects of remote work. (NYT)
  • NPR Morning Report Marketplace:  San Francisco is becoming a tech hub again. (Podcast)
  • NY Times The Daily:  Israel’s plan to destroy Hamas. (Podcast)
  • BBC Global News:  Hamas attack on Israel is “pure evil”, Biden.  (Podcast) 
  • Bloomberg:  The Devasting Hamas Attack. (Podcast)

Moving Average Update:

  • Score improves to 65% from 57%.

Geopolitical: 

  • President’s Public Schedule:
    • The President delivers remarks announcing new actions to protect consumers from hidden junk fees and put more money back in the pockets of hardworking Americans, 11:45 a.m. EDT
    • Press Briefing by Press Secretary Karine Jean-Pierre and NSC Coordinator for Strategic Communications John Kirby, 1:00 p.m. EDT
    • The President receives the Presidential Daily Briefing, 2:00 p.m. EDT
    • President Biden Delivers Remarks On Israel Today, 4:15 p.m. EDT (White House)

Economic:

  • MBA Mortgage Applications 7:00 a.m. EDT
    • MBA Mortgage Applications: Composite: +0.6%, Purchase: +0.7%, ReFi: +0.3%
    • U.S MBA 30-Year Mortgage Rate Actual: 7.67% VS 7.53% Previous
    • U.S MBA Mortgage Applications (WOW) Actual: 0.6% VS -6.0% Previous
  • September PPI is due out at 8:30 a.m. EDT and is expected to come in at 0.3% after popping 0.7% last month.
  • Atl. Fed Inflation Exp. 10:00 a.m. EDT
  • Federal Reserve Open Market Committee (FOMC) Minutes from the last meeting are due out at 2:00 p.m. EDT.
  • The latest monthly Treasury Budget is also due out at 2:00 p.m. EDT and came in last month at $89.20 billion.
  • API Crude Oil Data 4:30 p.m. EDT

Federal Reserve / Treasury Speakers:  

  • Federal Reserve Board of Governors Michelle Bowman 4:15 a.m. EDT
    • US Policy Rate May Need To Rise Further — Monitoring Effects Of Non-performing CRE Loans In CMBS- Treasury Markets Are Functioning But Risks – Monitoring Effects Of Higher Rates For Bank Risk remain
  • Federal Reserve Board of Governors Christopher Waller 10:15 a.m. EDT
  • Federal Reserve Atlanta President Raphael Bostic 12:15 p.m. EDT
  • Federal Reserve Boston President Susan M. Collins 4:30 p.m. EDT

M&A Activity and News: 

  • XOM/PXD: The merger is an all-stock transaction valued at $59.5 billion, or $253 per share, based on ExxonMobil’s closing price on October 5, 2023. Under the terms of the agreement, Pioneer shareholders will receive 2.3234 shares of ExxonMobil for each Pioneer share at closing. The implied total enterprise value of the transaction, including net debt, is approximately $64.5 billion. (Bloomberg)
  • Spin Master to Acquire Melissa & Doug, a Trusted Brand in Early Childhood Play for $950 million.
  • Central Valley Bancorp (CVCY) and Community West Bancshares (CWBC) to merge.

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: