The Daily Briefing For December 5th - Stocks Lower Despite China Continuing To Ease Covid Restrictions

by Geoff Garbacz | 12/05/2022 8:58 AM

Rebel Yell Morning Market Report

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The Daily Briefing For December 5th - Stocks Lower Despite China Continuing To Ease Covid Restrictions

Overnight Summary: The S&P 500 closed Friday at 4071.70 (lower by -0.12%) from Thursday at 4076,57 (lower by -0.09%).  The overnight high of 4075.75 was hit at 6:05 a.m. EST. The low was hit at 4053.25 at 4:15 a.m. EST, a range of ~22 points high to low.  At 7:20 a.m. EST, the S&P 500 (mini) was down -14.25.

Earnings Out After The Close: 

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

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:
    • AFTX: Withdraws IPO plans.
  • New SPACs launched/News:
    • Lakeshore Acquisition I Corp. (LAAA) shareholders approve previously announced business combination with ProSomnus Holdings.
    • FP Credit Partners II, L.P. and FP Credit Partners Phoenix II, L.P. commence tender offer for up to 7,500,000 Class A Ordinary shares of Pathfinder Acquisition Corporation (PFDR)
    • ROC Energy Acquisition Corp. (ROC) Announces Extension of Deadline to Complete Business Combination.
  • Secondaries Priced: None of note.
  • Notes Priced of note: None of note.
  • Common Stock filings/Notes:
    • NRXP: Filed Form 424B5.. $20 million of Common Stock.
    • TOPS: Announces Pricing of $13.5 Million Public Offering.
  • Direct Offering: None of note.
  • Selling Shareholders of note:
    • CMPX: Filed Form S-3.. 25,000,000 Shares of Common Stock by selling shareholders.
  • Private Placement of Public Entity (PIPE):
    • Solid Biosciences (SLDB) Announces Closing of Acquisition of AavantiBio and Concurrent $75 Million Private Placement..
  • Mixed Shelf Offerings:
    • ARWR: Filed Form S-3ASR.. Mixed Shelf.
    • AXSM: Files mixed securities shelf offering.
    • RCON: Filed Form F-3.. $200Million Mixed Security Shelf.
  • Debt Filing/Notes: None of note.
  • Tender Offer: None of note.
  • Convertible Offering & Notes Filed:
    • Aurora Cannabis (ACB) repurchases ~$103 million principal amount of convertible notes.
    • Marriott Vacations (VAC) to offer $500 mln convertible senior notes due 2027 in a private offering.

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: VAPO 114%, EHTH 71%, GDS 51%, TOUR 46%, MLCO 36%, RCUS 34%, HZNP 33%, SPB 32%, PDD 32%, UXIN 32%, SMAR 30%, NIO 29%, OKTA 29%, CTLT 26%.
    • Trading Down: GIII -40%, LE -32%, KNOP -27%, FTCH -25%, DLTH -24%, FG -24%, PBF -20%, OGS -18%, CBRL -16%, DAR -14%, DK -14%, CVI -14%, BRFS -13%, SBLK -13%, GCO -12%, CRK -12%, ALLO -12%, TRP -12%, GLT -12%.
  • News Items After the Close:
    • Exxon (XOM) board expands to 13 directors; airline, aerospace executives join. (MarketWatch)
    • Northrop Grumman (NOC) and the US Air Force Introduce the B-21 Raider, the World’s First Sixth-Generation Aircraft.
  • News Items Over the Weekend:
    • Stocks that Defined the Week: CSX, AMCX, CRM, JPM, DASH, ABNB, TSN (WSJ)
    • The Week in Business: Upheaval in China (NYT)
    • Dow Shines as Higher Rates Squeeze Nasdaq’s Tech Stocks (WSJ)
      • The blue-chip average is outpacing the S&P 500 this year by the widest margin since 1933
    • OPEC+ Keeps Oil Curbs Despite Russia Price Cap. (WSJ)
    • Apple Makes Plans to Move Production Out of China. (WSJ)
    • FTX Founder Sam Bankman-Fried Says He Can’t Account for Billions Sent to Alameda (WSJ)
    •  Barron’s:
      • Positive View: + on DHI, LEN, PHM, TOL, CCS, MTH, FBHS, MAS, WHR, BOOT, CDAY, HUBS, MGY, SAIA, SITE, TIPR, TROW of note.
      • Cautious View: None 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:
    • Index Changes:
      • Allegro Microsystems (ALGM) and Cubesmart (CUBE) Set to Join S&P 400.
      • Semtech (SMTC) and NuVasive (NUVA) will replace Diversified Healthcare Trust (DHC) and Tupperware (TUP) respectively in the S&P SmallCap 600.
      • Agiliti (AGTI), SJW Group (SJW) and Cushman & Wakefield (CWK) will replace LL Flooring (LL), The Cato Corp. (CATO) and Diebold Nixdorf (DBD) respectively in the S&P SmallCap 600.
    • Allegion (ALLE) has elected Kirk S. Hachigian as its next chairman
    • American Axle (AXL) promotes Michael Lynch to COO.
    • Boeing (BA) Announces New International Leaders.
    • CalAmp (CAMP) appoints Jikun Kim as CFO.
    • Cheetah Mobile (CMCM) Announces Appointment of New Auditor.
    • China Pharma (CPHI) Announces Receipt of Noncompliance Notice from NYSE American.
    • Copart (CPRT) Announces Hiring of New Chief Financial Officer and Chief Legal Officer.
    • Connect Biopharma (CNTB) Announces Receipt of NASDAQ Deficiency Notice Regarding Minimum Bid Price Requirement.
    • Establishment Labs (ESTA) names Paul Rodio as COO.
    • iBio (IBIO) Announces CEO Departure.
    • Momentus Inc. (MNTS) Announces Resignation of Jikun Kim.
    • Newpark Res (NR) Chairman of the Board Anthony J. Best to retire.
    • TFF Pharmaceuticals (TFFP) Announces Leadership Transition.
    • Vodafone PLC (VOD) CEO steps down; appoints Margherita Della Valle as interim CEO
    • WeWork (WE): Vikas Parekh of SoftBank Investment Advisers appointed to Board of Directors.
    • Yiren Digital (YRD) Successfully Regains Compliance with NYSE Minimum Share Price Listing Requirement.
  • Buyback Announcements or News: 
    • Rush Enterprises (RUSHA) authorizes a new stock repurchase program up to an aggregate of $150 million.
    • Tradeweb (TW) Announces $300 Million Share Repurchase Program.
  • Stock Splits or News:
    • SelectQuote, Inc. (SLQT) Announces Special Meeting to Approve Reverse Stock Split.
  • Dividends Announcements or News:
    • AEE Goes ex div tomorrow for $0.59.
    • AES approves a 5% increase in its quarterly dividend to $0.1659 per share.
    • PNM Resources (PNM) increases its annual dividend 5.8% to $1.47 per share.
    • PotlatchDeltic (PCH) Board Declares $0.95 Special Dividend and Increases Regular Distribution 2.3%.
    • Yumanity Therapeutics (YMTX) Declares Special Dividend In Connection with Proposed Asset Sale to Janssen and Merger with Kineta.

What’s Happening This MorningFutures value reflects the change with fair value.

S&P 500 -19, Dow Jones -137,  NASDAQ -47,  and Russell 2000 -6. (as of 7:58 a.m. EST).  Asia higher.  Europe is lower ex France.  VIX Futures are at 21.45 from 21.80. Gold and Silver lower with Copper higher. WTI Crude Oil and Brent higher with Natural Gas lower. $ is flat. US 10-year Treasury sees yields at 3.51% from 3.521%. The U.S. Dollar is lower versus the Euro, lower versus the Pound and higher against the Yen. Bitcoin is at $17,260 from $17,034 higher by +0.98%.

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

  • Daily Positive Sectors: Basic Materials, Consumer Defensive, Industrials, Healthcare of note.
  • Daily Negative Sectors: Technology, Utilities, Energy of note.
  • One Month Winners:  Industrials, Basic Materials, Financial Communication Services, Technology of note.
  • Three Month Winners:  Energy, Financials Basic Materials, Industrials, 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.

Major U.S. stock indexes ended a choppy session mixed Friday, while still posting weekly gains, after monthly jobs data showed the Federal Reserve’s rapid pace of interest rate hikes has yet to tame the roaring labor market. The Dow Jones Industrial Average rose about 33 points Friday, or 0.1%, ending near 34,428, after flipping between gains and losses. The S&P 500 index shed 0.1% and the Nasdaq Composite Index lost 0.2%, according to FactSet. The main benchmarks still booked a second weekly advance in a row. The Dow rose 0.2% for the week, the S&P 500 gained 1.1% and the Nasdaq closed the week up 2.1%. (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: SUMO of note.
  • Tuesday Before the Open: AZO, SIG, BASE, CONN of note.

Earnings of Note This Morning:

  • Beats: SAIC +0.17.
  • Flat: None of note.
  • Misses: None of note.
  • Still to Report: None of note.

Guidance:

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

Erlanger Research Advance/Decline Chart: 

Gap Ups & Down In Early Pre-Market:

  • Gap Up: SGML +7%, ALGM +5%, TXMD +5%, XPO +5%, CUBE +4%, WE +4% of note.
  • Gap Down: CMPX -4% of note.

Insider Action: No stock sees Insider buying with dumb short selling.   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: UAL SBUX SI JCI MGM MUR DPZ and Chinese Stocks rose as well on Covid easing of restrictions.(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:  Futures Slip as Yields Rise, China Optimism Fades. (Bloomberg)
  • Bloomberg Most Read Story: OPEC+ Pauses As Russia Cap and China Covid Rule Hit Crude Markets. (Bloomberg)
  • Russia will not comply with EU oil price cap. (NYT)
  • Dollar erases more than half of 2022 gains as Fed sets to temper rate hikes. (Bloomberg)
  • Democrat Raphael Warnock (D -GA) leads Republican Candidate Hershcel Walker in Georgia run off to be held tomorrow. (Politico)
  • North Carolina substation intentionally attacked, FBI joins the investigation. (CNN)
  • Vodafone (VOD) CEO Nick Read is ready to step down. (CNBC)
  • ASML is driving a wedge between the U.S. and the Netherlands over chip sales to China. (CNBC)
  • Delta (DAL) offers pilots a pay increase. (Reuters)
  • Foxconn (HNHPF) expects the plant impacted by Covid that produces iPhones to return to full output late this year. (Reuters)

Moving Average Update:

  • Score remains at 91% for the third day.

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, 2:00 p.m. EST
    • The President and The First Lady host the Congressional Ball, 6:30 p.m. EST

Economic: 

  • PMI Composite Final 9:45 a.m. EST
  • Factory Orders 10:00 a.m. EST
  • ISM Services Index 10:00 a.m. EST
  • Investor Movement Index 12:30 p.m. EST

Federal Reserve / Treasury Speakers:

  • Blackout Period.

M&A Activity:

  • E-Space Announces Definitive Agreement to Acquire CommAgility from the Wireless Telecom Group (WTT).

Meeting & Conferences of Note:

  • Sellside Conferences:
    • American Epilepsy Society
    • Arete Tech Conference (12/05/22-12/06/22)
    • Bank of America Securities Home Care Conference(12/05/22-12/06/22)
    • Bank of America Gas Utility Conference 2022
    • BMO Capital Markets Growth & ESG Conference 2022 (12/05/22-12/07/22)
    • Capital One Securities 17th Annual Energy Conference 2022 (12/05/22-12/07/22)
    • Goldman Sachs Industrials Conference 2022
    • Jefferies Bank Summit
    • JPM Crypto Economy Forum
    • Raymond James Technology Investors Conference (12/05/22-12/07/22)
    • The RHK Capital Disruptive Growth Conference hosted at ReedSmith 2022 (12/05/22-12/06/22)
      Susquehanna Freight Forum
    • UBS Global Media, Telecoms Communications, Technology (TMT) Conference 2022 (12/05/22-12/07/22)
    • Wolfe Research Virtual Consumer Growth Conference 2022 (12/05/22-12/06/22)
      • Previously posted and ongoing conferences:
        • None of note.
  • Company Meetings: AIKI, NUWE
  • Fireside Chat: LIFE.
  • Investor/Analyst Day/Calls: AMGN, BFRI, CTVA, MRNS, PAX, SLG
  • Update: None of note.
  • R&D Day: None of note.
  • Company Event: None of note.
  • Industry Meetings:

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:

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