CAPIS Morning Note – 12/31/21: Selling Continues From Yesterday. Happy New Year!!

Overnight Summary:  It looks like Santa Claus caught the train and headed for the coast. Stocks are weak in the U.S. as yesterday’s late afternoon selloff continues this morning. China was higher leading Asian markets while Japan was closed for a holiday. Europe is trading now and is mixed. S&P 500 Futures peaked at 6:00…

Overnight Summary:  It looks like Santa Claus caught the train and headed for the coast. Stocks are weak in the U.S. as yesterday’s late afternoon selloff continues this morning. China was higher leading Asian markets while Japan was closed for a holiday. Europe is trading now and is mixed. S&P 500 Futures peaked at 6:00 p.m. EST around 4775 and the low came at 4750 at 7:30 p.m. EST. At 7:30 a.m. EST the Futures are at 4760.

Quick Comment on Yesterday: The market has struggled since Monday’s blastoff. Why? One reason is a huge collar unwind by J.P. Morgan’s Hedged Equity Fund JHEQX. The $20 billion fund made a hedging mistake selling S&P 500 calls at 4450 and then buying puts at 4000 as well as selling puts at 3340. The only piece of the trade that worked was the selling of the puts. The fund should be up 11% and is up only 4% due to this hedging misstep that has cost it 700 basis points for the quarter. The new hedge is put on at the end of each quarter and at the end of Q3 the S&P 500 lost 1.50% on that Friday. Today could be a volatile day as well.

Earnings Out After The Close:

  • Beats: None.
  • Flat: None.
  • Misses: None

Capital Raises:

  • IPOs Priced or News: None of note.
  • New SPACs launched:
    • Heliogen, Inc. (HLGN) Announces Completion of Business Combination with Athena Technology Acquisition Corp (ATHN).
  • Secondaries Priced: None of note.
  • Notes Priced of note: None of note.
  • Common Stock filings/Notes:
    • FSR: Filed Form 424B3.. Up to 81,830,360 Shares of Class A Common Stock.
    • JZXN: Filed Form F-1.. Issuance of up to 6.3 million Ordinary Shares.
    • SNAX: Filed Form S-1.. $25 million of shares of our Class A common stock.
    • WISA: Filed Form 424B5..Up to $4.5 million of Common Stock.
  • Pricing of Over-Allotment: None of note.
  • Direct Offering: None of note.
  • Selling Shareholders of note:
    • GRAB: Filed Form F-1.. 2,473,860,634 Class A Ordinary Shares by selling shareholders.
  • Private Placement of Public Entity (PIPE): None of note.
  • Mixed Shelf Offerings:
    • ANAB: Filed Form S-3.. $300 million Mixed Shelf.
    • FUV: Filed for $300 million Mixed Shelf.
    • MP: Filed Form S-3.. $2 billion Mixed Shelf.
    • SPRB: Filed Form S-3.. $200 million Mixed Shelf.
    • SRAX: Filed Form S-3..$100 million Mixed Shelf.
    • STRR: Filed Form S-1.. $28.5 million Mixed Shelf.
  • Convertible Offering & Notes Filed:
    • MP: files for $690 million green convertible senior notes offering.
  • Note Offerings 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: XERS +28%, LXRX +5%, ITRI +3%.
    • Trading Down: SPRB -7%, MP -4%, CFX -4%.
  • News Items After The Close:
    • Airlines Ask FCC to Delay 5G Wireless Rollout in Emergency Bid. (T, VZ, TMUS) (Bloomberg)
    • U.S. airline group seeks 5G wireless deployment delay near airports. (Reuters)
    • Boeing (BA) awarded $471 million contract for F-15 Japan Super Interceptor Program.
    • Tesla (TSLA) Recalls Vehicles Over Camera, Front Hood Faults (Wall Street Journal)
    • Exxon Mobil (XOM) publishes a list of factors that will impact Q4 from Q3.
    • Centene (CNC) and Magellan Health (MGLN) get approval to close pending acquisition.
    • Advanced Micro (AMD) and Xilinx (XLNX) push back close of deal into Q1 of 2022.
    • Xeris Biopharma (XERS) receives FDA approval for Recorlev for the treatment of endogenous hypercortisolemia in adults with Cushing’s syndrome.  Plans commercial launch in 1Q22.
  • Exchange/Listing/Company Reorg and Personnel News: 
    • Brooge Energy Ltd. (BROG) Announces Receipt of Nasdaq Non-Compliance Letter.
    • Markforged Holding Corp. (MKFG) co-founder and Board Member, Greg Mark, to resign effective December 29.
  • Buyback Announcements:
    • Medalist Diversified REIT (MDRR) Announces the Approval of a Common Stock Repurchase Program.
    • Tarena International, Inc. (TEDU) Announces Share Repurchase Program.
  • Stock Splits: 
    • Colfax (CFX) Announces Plans for Reverse Stock Split.
  • Dividends Announcements: 
    • Great Ajax Corp. (AJX) Announces Special Dividend of $0.10 per share.

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

S&P 500 -5 Dow Jones Industrial Average -53 NASDAQ -11.50 Russell 2000 -4.39. Asia higher ex Japan which was closed and Europe mixed. VIX Futures are at 19.90 from 19.70 yesterday morning. Gold, Silver and Copper lower. WTI Crude Oil and Brent Oil Futures lower. Natural Gas is higher. $ is lower vs Euro, higher vs Pound and higher vs Yen. US 10 year Treasury price is at $130.47 from $130.34 yesterday with yields at 1.505% from 1.534%  yesterday morning. Bitcoin at $48,024 from $47,611 yesterday morning and +1.34%. As of 8:12 a.m. EST.

Tuesday’s Action – 12/30 Close:  

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

Selling into the close brought the major indexes down for the day.  UNG pulled back 6.44%.  TLT bounced 0.83%.  Updated 12/30 close.

Upcoming Earnings Of Note: (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.
  • Flat: None.
  • Misses: None.
  • Still to Report: None.

Erlanger Research Advance/Decline Chart: Updated through 12/30 close.

Gap Ups & Down In Early Pre-Market:

  • Gap Up: XERS +18.5%.
  • Gap Down: SPRB -7%, MKFG -4.1%.

Insider Action: No stock sees Insider buying with dumb short selling and ISIG has smart short sellers with insider buys. 12/29 close

Rags & Mags: Highlighted Stories may be clicked through to the original story.  Repeated stories from prior days never listed, i.e. “rehashed news”.

  • Stocks Making the Biggest Moves: XOM, PFE, PTON, CFX, AMD, XLNX   (CNBC)
  • Columbia University researchers see a peak in Omicron for the U.S. in mid January. (The Washington Post)
  • South Africa says that it has passed its fourth wave of cases, and counts few added deaths. (New York Times)
  • White House recaps call yesterday with Russian President Putin.
  • CDC reports that Covid-19 vaccines for children rarely lead to problems in younger children. (The Boston Globe)
  • 30,000 people on the Colorado Front Range evacuate homes as a wild fire raged yesterday with many homes lost. (CNN)
  • Air Travel Is No Holiday as Covid and Storms Cancel Flights. (UAL, AAL, DAL, LUV, JBLU, SAVE, HA, ALK, JETS) (New York Times)
  • Tesla (TSLA) recalls some Model 3 and Model S vehicles in China. May recall 500,000 cars globally. (WSJ)
  • PFE: Oral covid-19 antiviral, Paxlovid, approved by UK regulator.

Moving Average Update:

  • Score dipped down to 83% from 93%. Updated 12/30 close.

Geopolitical: 

  • President’s Public Schedule:
    • The President and the First Lady will remain in Wilmington, Delaware. The President has no public events scheduled. Biden Residence, Wilmington.

Economic: 

  • The last trading day of the year sees normal market hours and does not close early.  Bond Market closes at 2:00 p.m. EST.
  • December Chicago PMI is due out at 9:45 a.m. EST and is expected to remain at 61.80.
  • Baker Hughes Rig Count 1:00 p.m. EST .

Federal Reserve Speakers:

  • None of note.

M&A Activity: 

  • Advanced Micro (AMD) and Xilinx (XLNX) push back the timing of acquisition close into 1Q22.

Meeting & Conferences of Note:

  • Sellside Conferences:  None of note. 
    • Previously Posted and Ongoing Conferences:
      • None
  • Company Meetings: None of note.
  • Fireside Chat: None of note.
  • Investor/Analyst Day/Calls: SBBP
  • Update: None of note.
  • R&D Day: None of note.
  • Company Event: None of note.
  • Industry Meetings: None of note.
    • Previously Posted and Ongoing Conferences:
      • None.

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:

Thursday’s Upgrades and Downgrades: