CAPIS Morning Note – 12/13/22: Merck and Moderna Attack Cancer. Fed Starts Meeting Today. Stocks Higher Before CPI

Overnight Summary: The S&P 500 closed Monday at 3990.56 (higher 1.43%) from Friday at 3934.36 (lower by -0.73%).  The overnight high of 4048.50 was hit at 6:55 a.m. EST. The low was hit at 4017.50 at 11:10 p.m. EST, a range of ~31 points high to low.  At 7:15 a.m. EST, the S&P 500 (mini)…

Overnight Summary: The S&P 500 closed Monday at 3990.56 (higher 1.43%) from Friday at 3934.36 (lower by -0.73%).  The overnight high of 4048.50 was hit at 6:55 a.m. EST. The low was hit at 4017.50 at 11:10 p.m. EST, a range of ~31 points high to low.  At 7:15 a.m. EST, the S&P 500 (mini) was up +18.50.

Earnings Out After The Close: 

  • Beats: ORCL +0.04.
  • Flat: None of note.
  • Misses: FLNC (0.04).

Unusual Options Activity:

Daily Screen in Erlanger Chartroom that highlights unusual Call and Put Options activity.  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 awhile you can uncover stocks prior to a pop or drop.

 

Capital Raises:

  • IPOs Priced or News: None of note.
  • New SPACs launched/News:
    • Aurora Technology Acquisition Corp. (ATAK) and DIH Technology Ltd. Announce Letter of Intent for a Business Combination.
    • ZyVersa Therapeutics Inc. and Larkspur Health Acquisition Corp. (LSPR) Close Business Combination; ZyVersa Expected to Begin Trading on Nasdaq December 13, 2022 (Ticker “ZVSA”).
  • Secondaries Priced:
    • Lion Electric (LEV) to issue 19.7M units at $ 2.54 per unit.
  • Notes Priced of note: None of note.
  • Common Stock filings/Notes:
    • LEV: Launch of Overnight Marketed Public Offering of Units. (B. Riley and National bookmanagers)
    • PEV: Filed Form S-1.. Up to $10,000,000 Phoenix Motor Inc. Common Stock.
  • Direct Offering: None of note.
  • Selling Shareholders of note: None of note.
  • Private Placement of Public Entity (PIPE):
    • MRKR: Lincoln Park Capital Enter into a Common Stock Purchase Agreement for up to $25 Million.
    • NXPL: $8.0 Million Private Offering of Common Stock and Warrants Priced Above Market.
    • PBYI: Entered into a Securities Purchase Agreement with Alan H. Auerbach, the Company’s President, Chief Executive Officer and Chairman of the Board.
  • Mixed Shelf Offerings:
    • ASPS: Files $100 million mixed securities shelf offering.
  • 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: KOPN +4%, DEN +4%.
    • Trading Down: LEV -12%, JOAN -6%, TRMB -4%, BMO -4%, QDEL -4%.
  • News Since The Close:
    • Stocks making the biggest moves after hours: ORCL, BMO.CA, TRMB (CNBC)
    • Damian Williams: Earlier this evening, Bahamian authorities arrested Samuel Bankman-Fried at the request of the U.S. Government, based on a sealed indictment filed by the SDNY. We expect to move to unseal the indictment in the morning and will have more to say at that time. — US ATTORNEY SDNY.
    • Meta (FB) unplugs Connectivity division, home of satellite and drone internet experiments (TechCrunch)
    • New York Times’ (NYT) CFO, Roland Caputo, plans to retire next year.
    • Assets Under Management: AB $658 Billion, +5%, IVZ $1,437.9 billion, +5.7%.
  • Exchange/Listing/Company Reorg and Personnel News:
    • Index Changes:
      • FSLR to Join  S&P 500.
      • Fortune Brands Innovations (FBIN) will replace First Solar in the S&P MidCap 400.
      • MasterBrand (MBC) will replace Conn’s (CONN) in the S&P SmallCap 600.
      • Diamondback Energy (FANG) Added to the Nasdaq – 100 Index
      • CoStar Group (CSGP) to join NASDAQ 100 Index.
    • Alexander & Baldwin (ALEX) promotes COO Lance Parker to President.
    • American Airlines (AAL) announces that Devon May has been named Chief Financial Officer.
    • Ascent Solar Reports (ASTI) Inducement Grant to New CFO Paul Warley Jr.
    • Bright Health Group (BHG) Receives Continued Listing Standard Notice from NYSE.
    • Gold Fields (GFI) CEO steps down; Martin Preece appointed interim CEO.
    • Holley Inc. (HLLY) announces appointment of Jesse Weaver as CFO.
    • Hut 8 Mining (HUT) replaces CFO Shane Downey, effective immediately.
    • InMed (INM) Announces Appointment of Interim Chief Financial Officer and Change of Auditor.
    • Intercontinental Hotels Group (IHG) appoints Michael Glover as CFO.
    • Jack in the Box Inc. (JACK) Announces Departure of CFO Tim Mullany.
    • Lee Enterprises (LEE) files to delay its 10-K.
    • New York Mortgage Trust (NYMT) names Nicholas Mah as President.
    • Planet Fitness (PLNT) appoints Edward Hymes as CFO and President.
    • QuidelOrtho (QDEL) separates Chairman and CEO roles; Douglas Bryant to continue as CEO.
    • Quotient Limited (QTNT) Announces Intent to Voluntary Delist from the Nasdaq Global Market.
    • Rockley Photonics (RKLY) Announces Promotion of Richard A. (Randy) Meier to Chief Executive Officer.
    • Secoo (SECO) Regains Compliance with Nasdaq’s Minimum Bid Price Requirement.
    • Uranium Energy (UEC) files to delay its 10-Q.
  • Buyback Announcements or News:
    • Alaska Air (ALK) plans to resume share repurchase in early 2023.
    • Gladstone Commercial (GOOD) authorizes repurchase program for up to $20 mln of each of the Company’s 6.625% Series E Cumulative Redeemable Preferred Stock and 6.00% Series G Cumulative Redeemable Preferred Stock.
    • LL Flooring Holdings (LL) Recommence share repurchases in 2023 under its existing share repurchase program.
    • Raytheon Technologies (RTX) Board of Directors Authorizes $6 Billion Share Repurchase Program.
  • Stock Splits or News: 
    • IMV: Commences Trading on the TSX and Nasdaq Post-Reverse Stock Split.
  • Dividends Announcements or News:
    • AMGN declares $2.13 per share dividend. 10% increase.
    • Applied Materials (AMAT) Announces Cash Dividend.
    • New Fortress Energy (NFE) provides update to dividend policy, plan to return significant capital to shareholders.
    • Pentair (PNR) increases dividend 5% to $0.22 per share.

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

S&P 500 +26, Dow Jones +222,  NASDAQ +82,  and Russell 2000 +11. (as of 7:52 a.m. EST).  Asian markets are higher today ex Shanghai.  Europe markets are trading higher. VIX Futures are at 24.81 from 25.02. Gold, Silver and Copper higher.  WTI Crude Oil and Brent higher with Natural Gas higher. $ barely down. US 10-year Treasury sees yields at 3.584% from 3.534%. The U.S. Dollar is lower versus the Euro, lower versus the Pound and lower against the Yen. Bitcoin is at $17,440 from $16,943.

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

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

U.S. stocks closed sharply higher Monday, bouncing from last week’s losses ahead of a highly-anticipated reading on inflation for November. The Dow Jones Industrial Average DJIA, +1.58% ended up more than 500 points, or 1.6%, while the S&P 500 SPX, +1.43% gained 1.4% and the Nasdaq Composite COMP, +1.26% advanced 1.3%.  (MarketWatch)

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

  • Tuesday After the Close: ABM, BRZE of note.
  • Wednesday Before the Open: REVG, WEBR of note.

Earnings of Note This Morning:

  • Beats: PLAB +0.12, CNM +0.10.
  • Flat: None of note.
  • Misses: None of note.
  • Still to Report: None of note.

Guidance:

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

Erlanger Research Advance/Decline Chart: 

Gap Ups & Down In Early Pre-Market:

  • Gap Up: MRTX +14%, FLNC +7%, PGEN +5%, CSV +5%, NRIX +5% of note.
  • Gap Down: LEV -15%, IHG -5%, TRMB -4% of note.

Insider Action: ITW 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: ORCL BA MRNA FSLR MRTX PINS GFI FVR AFRM. (CNBC)
  • 5 things to know before the stock market opens. (CNBC)
  • Five Things You Need to Know to Start Your Day. (Bloomberg)
  • Bloomberg Lead Story: SEC Says Sam Bankman-Fried Defrauded Investor of $1.8 Billion. (Bloomberg)
  • China postponed an economic policy meeting due to Covid-19 case spike. (Bloomberg)
  • China is working on $143 billion in support for the Semiconductor Industry. (Reuters)
  • Binance temporarily halts withdrawals of stablecoin USDC. (CNBC)
  • Bloomberg Most Read Story: U.S. says Scientists Made Breakthrough on Nuclear Fusion Energy. (Bloomberg)
  • United Airlines (UAL) buys 100 787 Boeings (BA) betting on long haul. (Bloomberg)
  • Tesla (TSLA) stock has never been this cheap. (Bloomberg)
  • Moderna (MRN) teams up Merck’s cancer treatment Keytruda cut the risk of skin cancer recurrence by 44% compared with a treatment of only Keytruda.

Moving Average Update:

  • Score jumps to 54% from 22%.

Geopolitical: 

  • President’s Public Schedule:
    • The President receives the Presidential Daily Briefing, 9:00 a.m. EST
    • Press Briefing by Press Secretary Karine Jean-Pierre, 2:15 p.m. EST
    • The President will host a ceremony on the South Lawn to sign the Respect for Marriage Act; The Vice President, The First Lady, and The Second Gentleman attend, 3:30 p.m. EST

Economic: 

  • November NFIB Small Business Optimism is due out at 6:00 a.m. EST and came in last month at 91.30.
    • US NFIB Small Business Optimism Nov: 91.9 (est 90.5; prev 91.3)
  • November CPI is due out at 8:30 a.m. EST and is expected to come in at 0.3% from 0.4%.
    • CPI y/y: Expecting 7.3%, CPI Core y/y: Expecting 6.1%, CPI Core m/m: Expecting 0.3%
  • Redbook Sales 8:55 a.m. EST
  • The Federal Reserve Open Market Committee (FOMC) begins a two-day meeting.
  • API Crude Oil Data 4:30 p.m. EST

Federal Reserve / Treasury Speakers:

  • Blackout Period.

M&A Activity:

  • Trimble (TRMB) to Acquire Transporeon to Strengthen and Accelerate Connect & Scale Strategy.

Meeting & Conferences of Note:

  • Sellside Conferences:
    • D.A. Davidson Southeastern Bank Summit 2022
    • Deutsche Bank db access AutoTech Conference 2022 (12/13/22-12/15/22)
    • Janney Energy Transition Forum (12/13/22-12/14/22)
    • NYC Summit
    • Oppenheimer 5G Summit: Wireless and Cloud Convergence Begins 2022
    • Roth Capital Partners Investor Forum
    • Seaport Research Annual Airlines Corporate Access Day
    • Susquehanna Semiconductor Showcase Virtual Event 2022 (12/13/22-12/14/22)
    • Vertical Research Partners Infrastructure and Reshoring Summit
      • Previously posted and ongoing conferences:
  • Company Meetings: BTRS, DAVE, MSFT, PANW, WGO
  • Fireside Chat: WWR.
  • Investor/Analyst Day/Calls: ATGE, AJG, CHTR, CSV, CYTK, DLHC, ENS, EVBG, FREQ, GHC, HTGM, LGND, LLY, MASI, QDEL, TEX, YUM
  • Update: NFE, NVS, TRMB (see M&A).
  • R&D Day: CLLS, MGTA, MGTX
  • Company Event: None of note.
  • Industry Meetings:
    • None of note.
      • Previously posted and ongoing conferences:
        • American Society of Hematology (ASH) Annual Meeting & Exposition 2022 (12/10/22-12/13/22)
        • 76th Annual Scientific Meeting and Showcase of the Society of Cosmetic Chemists (SCC) 2022 (12/12/22-12/14/22)

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: