CAPIS Morning Note – 10/19/22: Stocks Fade Overnight Gains And Are Now Lower With S&P 500 Down -20. Investors Try To Figure Out Rally Off Recent Lows.

Overnight Summary: The S&P 500 closed Tuesday at 3719.98 (higher by 1.14%) from Monday at 3677.95 (higher by 2.65%).  The overnight high of 3774.25 was hit at 9:40 p.m. EDT. The low was hit at 3721.50 at 4:30 a.m. EDT, a range of 52.75 points high to low which is above the recent range of…

Overnight Summary: The S&P 500 closed Tuesday at 3719.98 (higher by 1.14%) from Monday at 3677.95 (higher by 2.65%).  The overnight high of 3774.25 was hit at 9:40 p.m. EDT. The low was hit at 3721.50 at 4:30 a.m. EDT, a range of 52.75 points high to low which is above the recent range of 45.  At 7:15 a.m. EDT, the S&P 500 was up +4 points which is +0.11%.  

Breaking News:  

Earnings Out After The Close: 

  • Beats: NFLX +0.93, UAL +0.52, WTFC +0.14, IBKR +0.13, JBHT +0.12, ISRG +0.07, OMC +0.06, FNB +0.03, FHN +0.01, FULT +0.01, HWC +0.01, PNFP +0.01.
  • Flat: UCBI +0.00.
  • Misses: None of note.

Capital Raises:

  • IPOs Priced or News: None of note.
  • New SPACs launched/News:
    • LMF Acquisition Opportunities (LMAO) stockholders approve previously announced business combination with SeaStar Medical.
  • Secondaries Priced:
    • SILK: Pricing of Public Offering.. 2,325,582 shares @$43.
  • Notes Priced of note:
    • CCL: Carnival Corporation & plc Announces Upsizing and Pricing of $2.03 Billion Senior Priority Notes due 2028 to be Issued by Carnival Holdings (Bermuda) Limited for Refinancing.
  • Common Stock filings/Notes:
    • BHVN: Launch of Public Offering of Common Shares 20 Million shares. JPM bookmanager.
    • DNLI: Proposed Offering of Common Stock.. $250 million. GS, JPM and Jefferies bookmanager.
    • NUWE: Closing of $11.04 Million Underwritten Public Offering Including Full Exercise of Overallotment Option.
    • SIEN: Proposed Public Offering. CragHallum bookmanager.
    • RUM: Filed Form S-1. (These guys are punch drunk…..)
      • 8,050,000 Shares of Class A Common Stock Underlying Warrants.
      • 333,568,989 Shares of Class A Common Stock by the Selling Holders.
      • 550,000 Warrants to Purchase Class A Common Stock by the Selling Holders.
    • SIEN: Proposed Public Offering. CragHallum bookmanager.
  • Pricing of Over-Allotment/Notes: None of note.
  • Direct Offering: None of note.
  • Selling Shareholders of note:
    • LIDR: Filed Form S-3.. Up to 32,157,892 Shares of Common Stock Offered by the Selling Stockholders.
    • RUM (see above in Common Stock)
  • Private Placement of Public Entity (PIPE): None of note.
  • Mixed Shelf Offerings:
    • CATC: Filed Form S-3.. $100,000,000 Mixed Shelf.
    • MTP: Filed Form F-3.. $25,000,000 Mixed Shelf.
  • Debt Filing/Notes: None of note.
  • 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:

  • After Hours: 
    • Trading Up: NFLX +14%, ISRG +11%, UAL +7%, LBRT +4%, SPNE +4%.
    • Trading Down: OLPX -39%, PTCT -14%, DNLI -11%, BHVN -9%, LPI -5%.
  • News Since The Close:
    • Stocks making the biggest moves after hours: NFLX, UAL, ADBE, IBKR, ISRG, JBHT (CNBC)
    • Netflix (NFLX) adds more than 2.4 million subscribers, reveals details about password-sharing crackdown. (CNBC)
    • United Airlines (UAL) says travel demand is stronger than recession pressures; shares rally. (MarketWatch)
    • Goldman (GS) Shuffle Aims to Reduce Reliance on M&A. (WSJ)
    • President Biden Will Announce 15 Million Additional Barrels for Delivery From SPR in December, Extending Initial Timeline and Completing 180 Million Commitment.(WSJ)
    • Fed Can’t Pause Rate Hikes With Core Inflation Accelerating,  Federal Reserve Minneapolis President Neel Kashkari Says. (Bloomberg)
    • California Home Sales Drop 30% as Higher Rates Hit Costly Market. (Bloomberg)
    • UK PM Truss May Abandon Pensions Triple Lock. (Telegraph)
  • Exchange/Listing/Company Reorg and Personnel News:
    • Gaming and Leisure Properties (GLPI) promotes Brandon Moore to the role of COO and promotes Desiree Burke to role of CFO.
    • Nuwellis (NUWE) Announces Appointment of Chief Financial Officer.
    • Woodward (WWD) Announces New Organizational Structure and Leadership Changes to Enhance Customer Experience, Simplify Operations and Increase Profitability Through Improved Execution.
    • ZY Halt – Additional Information Requested by NASDAQ.
  • Buyback Announcements or News: None of note.
  • Stock Splits or News: None of note.
  • Dividends Announcements or News: 
    • Brown & Brown (BRO) increases its quarterly dividend to $0.1150 per share, a 12% increase.
    • Helmerich & Payne (HP) establishes 2023 supplemental shareholder return plan; projected to provide approximately $100 million in additional cash returns in the form of additional dividends.
    • Liberty Energy (LBRT) authorizes the reinstatement of a quarterly cash dividend of $0.05 per share.
    • Lincoln Electric (LECO) Board Approves 14.3% Dividend Increase.
    • Nasdaq (NDAQ) Announces Quarterly Dividend of $0.20 Per Share.
    • Pinnacle Financial’s (PNFP) Board of Directors approved a quarterly cash dividend of $0.22 per common share.
    • Prosperity Bancshares (PB) increases quarterly common stock dividend to $0.55 per share, a $0.03 increase

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

S&P 500 -11, Dow Jones -54, NASDAQ -31, and Russell 2000 -13. (as of 8:10 a.m. EDT). Europe higher and Asia higher ex Shanghai.  VIX Futures are at 30.27 from 31.12  yesterday morning and the VIX closed at 31.37 from 32.02 yesterday. Gold, Silver and Copper lower. WTI Crude Oil and Brent Oil Futures higher with Natural Gas flat. $ is higher vs Euro, higher vs Pound and higher vs Yen. US 10-year Treasury sees yields at 4.088% from 3.994% yesterday. Bitcoin is at $19,170 from $19,533.05 yesterday morning and is lower by -0.07% this morning.

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

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

The positive gap open was interrupted as the 10 year yield flirted with the 4% mark.  Indexes pulled back from highs in the 2% range to finish ~100bps up.  UNG was down 3.84%.  TLT ended at 98.32 – still below that 100 mark.

Click here for a video explanation of Erlanger Value Lines.

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

  • Wednesday After the Close: TSLA, IBM, CCI, LRCX, KMI, LVS, PPG, EFX, STLD, REXR, KNX, AA, SEIC, FR, LSTR, RLI, UMPQ, CVBF, TCBI, CNS, LBRT, PACW, SLG, WDFC, KALU of note.
  • Thursday Before the Open: DHR, PM, UNP, BX, T, MMC, ABB, FCX, NUE, NOK, FITB, TSCO, GPC, ERIC, DOV, KEY, DGX, NVR, POOL, SNA, WSO, EWBC, WBS, AAL, IRDM, SNV, ALK, HOMB, MSM, WNS, MAN, HRI, PPBI, BKU, AUB, COLB, LNN, SAFE, SASR, BHLB, BANC of note.

Earnings of Note This Morning:

  • Beats: ASML +0.82, TRV +0.60, SCL +0.40, ELV +0.38, WGO +0.30, ABT +0.21, MKTX +0.07, CMA +0.03, NDAQ +0.03, CFG +0.03, PG +0.02, BKR +0.01.
  • Flat: None of note.
  • Misses: LAD (0.82), ALLY (0.61), MTB (0.43), HCSG (0.07), NTRS (0.02).
  • Still to Report: BMI , PLD , UNF.

Guidance:

  • Positive Guidance: ELV of note.
  • Negative Guidance: NFLX, ADBE, OLPX, GNRC of note.

Erlanger Research Advance/Decline Chart: 

Gap Ups & Down In Early Pre-Market:

  • Gap Up: NFLX +14%, ISRG +10%, UAL +7%, ASML +6%, LBRT +4%.
  • Gap Down: OLPX -44%, GNRC -14%, PTCT -12%, DNLI -7%, BHVN -6%, FNB -6%, LPI -6%, SPNE -5%, FULT -5%, PNFP -5%.

Insider Action:  PINE 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: PG TRV NDAQ GNRC ADBE NFLX JBHT UAL ISRG IBKR ASML. (CNBC)
  • Five Things to Know This Morning. (CNBC)
  • Five Things You Need to Know to Start Your Day. (Bloomberg)
  • Bloomberg Lead Story:  President Biden Reopens the SPR to New Sales To Drop Prices. (Bloomberg)
  • Bloomberg Most Read Story: Nintendo dispute with lead actor in Bayonetta 3 are complicated. (Bloomberg)
  • Ukraine battles to retake Kherson from Russia as citizens told to flee. (CNBC)
  • U.K. Inflation hits 40 year high. (CNBC)
  • Amazon (AMZN) to offer home insurance to U.K. customers. (Bloomberg)
  • Three words from Fed insiders point to much higher rates. (Bloomberg)
  • Fed officials are united on a 75 basis point raise on November 2. (NYT)
  • Mortgage demand drops to a 25 year low. (CNBC)
  • Procter & Gamble (PG) beats estimates as higher pricing offsets drop in volume. (CNBC)
  • Treasury yields climb to 4.088% on the 10 year. (CNBC)

Moving Average Update:

  • A little improvement to 54% from 42%.  Lets get after it green and keep it going.

Geopolitical: 

  • President’s Public Schedule:
    • The President receives the President’s Daily Brief, 10:45 a.m. EDT
    • Press Briefing by Press Secretary Karine Jean-Pierre, 12:15 p.m. EDT
    • The President delivers remarks on additional actions to strengthen energy security and lower costs, 1:15 p.m. EDT
    • The President delivers remarks on the Bipartisan Infrastructure Law; The Secretary of Energy attends, 3:00 p.m. EDT

Economic: 

  • MBA Mortgage Applications 
    • 30-YEAR MORTGAGE RATE Actual: 6.94% VS 6.81% Previous
    • Composite: -4.5% VS -2.0% Previous
    • Purchase: -3.7%
    • ReFi: -6.8%
  • September Housing Starts are due out at 8:30 a.m. EDT and expected to come in at 1,465,000 from 1,575,000.
  • EIA Petroleum Report 10:30 a.m. EDT
  • The Latest Federal Reserve Beige Book is due out at 2:00 p.m. EDT.

Federal Reserve / Treasury Speakers:

  • Federal Reserve Minneapolis President Neel Kashkari 1:00 p.m. EDT
  • Federal Reserve Chicago President Charles Evans 6:30 p.m. EDT
  • Federal Reserve St. Louis President James Bullard 6:30 p.m. EDT

M&A Activity:

  • Advaxis and Ayala Pharmaceuticals (AYLA) Enter into Merger Agreement.
  • City Holding Co (CHCO) agrees to acquire Citizens Commerce Bancshares.
  • Momentive Global (MNTV) shares higher by 11% following report that company has received takeover interest.

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 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: