CAPIS Morning Note – 10/31/22: Stocks Lower To Start The Week

Overnight Summary: The S&P 500 closed Friday at 3901.06 (higher by 2.46%) from Thursday at 3807.30 (lower by -0.61%).  The overnight high of 3914.75 was hit at 6:05 p.m. EDT. The low was hit at 3884 at 4:55 a.m. EDT, a range of 31 points high to low which is below the recent range of…

Overnight Summary: The S&P 500 closed Friday at 3901.06 (higher by 2.46%) from Thursday at 3807.30 (lower by -0.61%).  The overnight high of 3914.75 was hit at 6:05 p.m. EDT. The low was hit at 3884 at 4:55 a.m. EDT, a range of 31 points high to low which is below the recent range of 45.  At 7:25 a.m. EDT, the S&P 500 was down -11.50  points which is -0.29%.  

Earnings Out After The Close: 

  • Beats: None of note.
  • Flat: None of note.
  • Misses: None of note.

Capital Raises:

  • IPOs Priced or News: None of note.
  • New SPACs launched/News:
    • Provident Acquisition (PAQC) completes combination with Perfect Corp., will change name and ticker; to begin trading on NYSE as Perfect Corp. (PERF) on Oct 31.
  • Secondaries Priced:
    • QNGY: Announces Pricing of $16.7 Million Upsized Underwritten Public Offering.
  • Notes Priced of note: None of note.
  • Common Stock filings/Notes:
    • DBGI: Filed Form S-3.. 677,419 shares.
    • NUVL: Commenced an underwritten public offering of $200.0 million of its shares of Class A common stock.
    • PCVX: Closing of $690 Million Public Offering Including Full Exercise of Underwriters’ Option to Purchase Additional Shares.
    • RZLT: Filed Form S-3.. 3,244,736 Shares of Common Stock.
    • VWE: Filed Form S-3.. Up to 37,405,239 Shares of Common Stock.
  • Pricing of Over-Allotment/Notes: None of note.
  • Direct Offering: None of note.
  • Selling Shareholders of note: None of note.
  • Private Placement of Public Entity (PIPE):
    • TXMD: Announces Additional $7 Million Private Placement.
  • Mixed Shelf Offerings:
    • DATS: Filed Form S-3.. $25Million Mixed Shelf.
    • GBCI: Filed Form S-3ASR.. Mixed Shelf.
    • HLX: Filed Form S-3ASR.. Mixed Shelf Offering.
    • KO: Filed Form S-3ASR.. Mixed Shelf Offering.
    • NYCB: Filed Form S-3ASR.. Mixed Shelf Offering.
    • QUBT: Filed Form S-3.. $100Million Mixed Shelf.
  • Debt Filing/Notes: None of note.
  • Tender Offer: None of note.
  • Convertible Offering & Notes Filed:
    • CCL: Extends Maturity of an Additional $87 million of Convertible Notes.

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 Week:

  • Weekly Wrap Up: Best and Worst performing large cap stocks:
    • Trading Up: AIMC 56.7%, VAPO 56.6%, CYH 46.8%, CPS 43.0%, MEDP 40.3%, HLX 36.8%, GBX 33.8%, PI 33.6%, CGC 31.4%, UHS 30.0%, OII 30.0%, CAR 29.0%, NBR 28.8%, EGHT 25.5%, DXCM 25.3%, APPF 24.3%, TUSK 24.2%.
    • Trading Down: GDS -34.7%, LRN -28.1%, FORM -24.7%, DVA -20.9%, HBNC -20.8%, BRFS -19.8%, AXDX -19.2%, CCK -18.4%, FCN -18.0%, CLF -18.0%, TRS -17.2%, PTCT -17.1%, AZUL -16.9%, CS -16.7%, PBR -16.6%, EW -16.3%.
  • News Items After the Close:
    • Meta (META) stock suffers steepest weekly drop on record amid ‘colossal’ spending plans. (MarketWatch)
    • Sonic Automotive (SAH) discloses in 10-Q that it identified a material weakness in certain internal controls at a single dealership acquired in Dec 2021.
    • Lockheed Martin (LMT) awarded a $111 million modification to a previously awarded US Navy contract.
  • News Items Over the Weekend:
    • Stocks That Defined the Week: META, BBBY, TWTR, MCD, CAT, CS, XOM. (WSJ)
    • The Week in Business: Twitter Enters a New Era  (NYT)
    • Rate Squeeze Punishes Once-Triumphant Tech Stocks. (WSJ)
    • Goldman Research: “We are adding another 25bp hike to our own forecast—which now calls for hikes of 75bp in November, 50bp in December, 25bp in February, and 25bp in March—and now see the funds rate peaking at 4.75-5%.” (CNBC)
    • Kansas City Fed  President Esther George: Household savings buffers “may allow them to continue to spend in a way that keeps demand strong.” “That suggests to me we may have to keep at this for a while.” “You may see the terminal fed-funds rate higher and have to stay there longer.” (Nick Timiraos WSJ)
    • GM temporarily suspends advertising on Twitter following Elon Musk takeover. (CNBC)
    •  Barron’s:
      • Positive View: + on VBTX, AEIS, AIR, PTEN, CHX, KAR, FLS, HON, URI, RTX, ROP, PLD, SRE, PAYX, ASML
      • Cautious View: META of note.
      • Mixed View: None of note.
  • Erlanger Type 1 Short Squeezes and Type 4 Long Squeezes reporting earnings this week:

  • Exchange/Listing/Company Reorg and Personnel News:
    • Akso Health Group (AHG) Receives Nasdaq Notification Regarding Minimum Bid Price Deficiency.
    • Adient (ADNT) announces appointment of Jerome Dorlack as company’s executive vice president and chief financial officer.
    • Bull Horn Holdings Corp. (BHSE): Coeptis Therapeutics announces completion of combination with BHSE; Coeptis to begin trading under “COEP” today.
    • Brooge Energy Ltd (BROG) Engages Grant Thornton as Independent Advisor to Provide Fairness Opinion on Proposed Go-Private Transaction.
    • Loews Corp (L) CEO Jonathan Tisch will assume the role of Executive Chairman and Alex Tisch will become President and Chief Executive Officer.
    • Mannkind (MNKD) CTO duties and responsibilities will be reduced such that he will no longer function in the same position.
    • Skeena (SKE) Announces Senior Management & Board Appointments.
    • TuSimple (TSP) Announces Termination of Chief Executive Officer and the Initiation of a Search for a New Chief Executive Officer.
  • Buyback Announcements or News:
    • Align Tech (ALGN) entered into an accelerated share repurchase agreement to repurchase $200 million of Align’s common stock authorized under the $1.0 billion stock repurchase program.
    • LSB Industries (LXU) announces increase to stock repurchase authorization up to $175 million.
    • Thermo Fisher (TMO) announces $1.0 billion share repurchase program for 4Q22.
  • Stock Splits or News:
    • Quotient Limited (QTNT) Announces Intent to Effect Reverse Stock Split.
  • Dividends Announcements or News:
    • Vistra Energy (VST) increases quarterly dividend to $0.193, up $0.009.

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

S&P 500 -16, Dow Jones -127,  NASDAQ -67, and Russell 2000 -5. (as of 8:12 a.m. EDT). Europe is higher ex France and Asia is lower ex Japan.  VIX Futures are at 27.10 from 27.85 yesterday morning and the VIX closed at 25.75 from 27.28 Friday. Gold, Silver and Copper lower. WTI Crude Oil and Brent Oil Futures lower with Natural Gas higher. $ is higher vs Euro, higher vs Pound and higher vs Yen. US 10-year Treasury sees yields at 4.042% from  4.006% yesterday. Bitcoin is at $20,740 from $20,180 Friday morning and is higher by  0.34% this morning.

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

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

U.S. stocks ended sharply higher Friday, capping a volatile week that saw Big Tech shares hammered after a series of disappointing earnings reports while industrials and defensive stocks soared. The Dow Jones Industrial Average DJIA, +2.59% ended with a gain of around 828 points, or 2.6%, near 32,861, according to preliminary figures, leaving the blue-chip gauge with a weekly gain of 5.7% and on track for a monthly advanced of 14.4%. That monthly rise would be the Dow’s biggest since January 1976 and the largest October rise on record if it holds up through Monday’s close. The S&P 500 SPX, +2.46% rose around 94 points, or 2.5%, to close near 3,901, for a weekly gain of 2.5%. And the tech-heavy Nasdaq Composite COMP, +2.87% bounced higher by around 310 points, or 2.9%, finishing near 11,102, swinging to a weekly gain of 2.2%. (MarketWatch)

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)

  • Monday After the Close: SYK, WMB, NXPI, AFL, ANET, SBAC, AWK, CINF, HOLX, RRX, CAR, LSCC, CHE, CIVI, SON, VAC, TREX, AMKR, RHP, VNO, LEG, OGS, AXNX, FLS, GT, RMBS, VRNS, OTTR, BCC, HLF, CNO, KMT, HTLF, PSMT, NTB, ADUS, HLIT, DHT, KFRC, IMAX, PLOW of note.
  • Tuesday Before the Open: LLY, PFE, BP, MPC, ETN, UBER, EPD, TRI, PSX, ECL, SYY, KKR, SPG, NEM, MPLX, IDXX, AME, WEC, SIRI, IT, XYL, WAT, CNP, WAB, FOXA, INCY, ZBRA, LDOS, CTLT, ABMD, BEN, TECH, NBIX, TAP, HSIC, RGEN, AGCO, SEE, SOFI, IPGP, LPX, CIGI, PINC, AJRD, ETRN, TRTN, HLNE, BPMC, AVA, STNG, CVLT, LCII, NPO, LGIH, HAYW, ARCB, SAFE, MYGN, DEA, ECVT, ICPT, ESPR, PBI, HSC of note.

Earnings of Note This Morning:

  • Beats: JELD +0.27, CNA 0.19, EMR +0.14, ON +0.14, XPO +0.10, PEG +0.04, AIMC +0.01.
  • Flat: GPN, HWM.
  • Misses: SAIA (0.84).
  • Still to Report: NSP.

Guidance:

  • Positive Guidance: BLMN, GWW, EMR, NOMD of note.
  • Negative Guidance: HWM of note.

Erlanger Research Advance/Decline Chart: 

Gap Ups & Down In Early Pre-Market:

  • Gap Up: ATNM +23%, MSEX +5%.
  • Gap Down: YMAB -37%, TSP -17%, FOLD -6%.

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: WYNN PBR HBI PARA EMR CAT KDP XPO (CNBC)
  • Five Things to Know This Morning. (CNBC)
  • Five Things You Need to Know to Start Your Day. (Bloomberg)
  • Bloomberg Lead Story: Lula Edges Out Bolsonaro to Win Presidency of Divided Brazil. (Bloomberg)
  • Bloomberg Most Read Story: Brazil Election Live Results. (Bloomberg)
  • Russia suspends grain deal with Ukraine. (NYT)
  • GOP holds leads heading into Mid Terms next week. (FT)
  • Apple (AAPL) iPhone sales fell 27% last week in China. (Bloomberg)
  • Disney (DIS) Shanghai shuts down over Covid. (Reuters)
  • Elon Musk invokes job cuts at Twitter now that he is in control. (NYT)

Moving Average Update:

  • Score jumps to 77% from 54%.  $INDU clears all moving averages……BUT look what happened the past 2xs it accomplished this.

Geopolitical: 

  • President’s Public Schedule:
    • The President receives the Presidential Daily Briefing, 8:00 a.m. EDT
    • The President departs New Castle, Delaware en route New York, New York, 9:05 a.m. EDT
    • The President arrives in New York, New York, 9:50 a.m. EDT
    • The President departs John F. Kennedy International Airport, 10:00 a.m. EDT
    • The President arrives at Wall Street Landing Zone, 10:15 a.m. EDT
    • The President and The First Lady attend a private memorial service, 11:00 a.m. EDT
    • The President and The First Lady depart Wall Street Landing Zone, 12:55 p.m. EDT
    • The President and The First Lady depart New York, New York en route Joint Base Andrews, 1:20 p.m. EDT
    • The President and The First Lady arrive at Joint Base Andrews, 2:10 p.m. EDT
    • The President and The First Lady depart Joint Base Andrews en route the White House, 2:20 p.m. EDT
    • The President and The First Lady arrive at the White House, 2:40 p.m. EDT
    • The President and The First Lady host local children of firefighters, nurses, police officers, and members of the National Guard at the White House for trick-or-treating, 5:15 p.m. EDT

Economic: 

  • Chicago PMI 9:45 a.m. EDT  
  • Dallas Fed Mfg Survey 10:30 a.m. EDT
  • Farm Prices 3:00 p.m. EDT

Federal Reserve / Treasury Speakers:

  • We enter a blackout period for the Fed – No speakers until  Fed Announcement on November 2nd.

M&A Activity:

  • Emerson Electric (EMR) to sell a piece of its company, climate tech unit, to Blackstone (BX).
  • Verisk Analytics (VRSK) To Sell Wood Mackenzie To Veritas Capital, Deal Valued At $3.1 Billion.
  • Vishay (VSH) acquires MaxPower Semiconductor for $50 million.

Meeting & Conferences of Note:

  • Sellside Conferences:
    • Gabelli 46th Annual Automotive Aftermarket Symposium 2022 (10/31/22-11/03/22)
    • Bank of America Securities China Conference 2022 (10/31/22-11/11/22)
    • Goldman Sachs China Conference 2022 (10/31/22-11/04/22)
      • Previously posted and ongoing conferences:
        • None of note.
  • Company Meetings: None of note.
  • Fireside Chat: None of note.
  • Investor/Analyst Day/Calls: CRTO, MREO, WOLF
  • Update: None of note.
  • R&D Day:
    • Cyclacel (CYCC)R&D Day 2022.
  • Company Event: None of note.
  • Industry Meetings:
    • America’s Physician Groups Colloquium 2022 (10/31/22-11/02/22)
    • Vascular InterVentional Advances (VIVA) Annual Conference 2022 (10/31/22-11/03/22)

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: