QPI Note - 12/05/23: Moody’s Cuts China Credit Rating Over Debt Concerns, Stocks Lower.

Overnight Summary: The S&P 500 closed Monday lower by -0.54% at 4569.78 from Friday higher by 0.59% at 4594.63. The overnight high was hit at 4577.75 at 4:05 p.m. EST while the low was hit at 4556.50 at 2:30 a.m. EST. The range overnight was 21 points as of 6:35 a.m. EST. The 10-day average of the overnight range is at 15.70 from 15.  The average for May-October average was 22.06 from 20.96. Currently, the S&P 500 is lower by -15 points which is -0.33% at 6:35 a.m. EST.

Executive Summary:Overnight Moody's downgraded Chinese credit over debt concerns. Asia is lower. Surprisingly, Europe is higher ex the FTSE. U.S. futures are lower. Bloomberg leads with a story about how the stock market got ahead of itself. It is amazing how market sentiment can turn on the flip of the calendar. Be careful here.

• November ISM Non-Manufacturing PMI is due out at 10:00 a.m. EST and is expected rise to 52.4% from 51.80%.

• Watch Gold and GLD to see if they can take out 2020 and 2022 highs or if they pull back. We are in the camp of the latter.

• Watch the yield on the 10-year to see if it moves back above 4.30%.

Unusual Options Activity:

Daily Screen in Erlanger Chartroom that highlights unusual Call and Put Options activity in the S&P 500.  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 a while, you can uncover stocks prior to a pop or drop.

Earnings Out After The Close: 

• Beats: GTLB +0.10 of note.

Capital Raises:

• IPOs Priced or News:

  • Birkenstock (BIRK) Finally Tops IPO Price While Other Entrants Struggle. (Bloomberg)

• New SPACs launched/News:

  • Acropolis Infrastructure Acquisition Corp. (ACRO) Will Redeem Its Public Shares and Will Not Consummate an Initial Business Combination.

  • Jupiter Acquisition Corporation (JAQC) Announces Intent to Convene and Adjourn its Special Meeting of Stockholders to December 12, 2023.

• Secondaries Priced:

  • IAS: Pricing of Secondary Offering of Common Stock by Selling Stockholders 11,000,000 shares @$14. (GS Underwriter)

  • IBIO: Announces Pricing of $4.5 Million Public Offering.

  • MFH: $6 million offering at $.421 per share with warrants at $1.00.

  • SWTX: Pricing of Upsized Public Offering of Common Stock @$29. (GS, JPM, Cowen and Guggenheim bookmanager)

• Notes Priced of note:

  • AVB: Prices $400 Million Senior Notes Offering.

  • CCI: Pricing of Senior Notes Offering.

  • EVRG: Prices $1.2 bln of of its convertible notes due 2027.

  • HASI: Upsizes and Prices Private Offering of $550 Million of Green Senior Unsecured Notes to Invest in Near-Term Opportunities at Attractive Yields.

  • KNTK: Prices $500 Million Sustainability-Linked Senior Notes Offering Due 2028.

  • NEP: Pricing of $750 million of 7.25% senior unsecured notes due 2029.

• Common Stock filings/Notes:

  • DELL: Discloses unregistered sales of equity securities.

  • DLPN: Announces Partial Exercise and Closing of Over-Allotment Option in Connection with its Underwritten Public Offering.

  • EYPT: Commences $175 million public offering of its common stock; subsequent repurchase of $26.25 million.

  • PTN: Filed Form S-1.. Up to 2,476,416 Shares of Common Stock.

  • SWTX: Announces proposed public offering of $250 million of common stocks.

  • XENE: Announces Closing of $345.0 Million Upsized Public Offering Including Full Exercise of the Underwriters’ Option to Purchase Additional Shares.

• Selling Shareholders of note:

  • ATAT: Files Class A ordinary share offering, including ADSs by Legend Capital.

  • IAS: Announces launch of secondary offering of 11 mln common stocks by investment funds affiliated with Vista Equity Partners.

• Private Placement of Public Entity (PIPE): None of note.

• Mixed Shelf Offerings: None of note.

• Debt/Credit Filing and Notes:

  • CRGY: Announces Offering of $150 Million Private Placement of Additional 9.250% Senior Notes Due 2028.

  • OMEX: Secures Strategic Debt Financing Deal.

  • WMT: Filed Form S-3ASR.. Debt Securities.

• Tender Offer:

  • Dell Technologies Inc (DELL) - Unit Commenced Cash Tender Offers For Up To $500.0 Mln Of Debt Securities

• Convertible Offering & Notes Filed:

  • CZOO: To Complete Exchange Offer with 100% of Noteholders.

  • EVH: announces proposed offering of $350.0 million of convertible senior notes due 2029 to pay down senior term loan.

  • MMSI: Announces Proposed Private Placement of $550 Million of Convertible Senior Notes.

  • SPHR: Announces private offering of $225 million of convertible senior notes.

  • TGL: Signs Agreement to Retire Convertible Debt Notes.

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 Movers: 

  • NRSN: +41% to Report Phase 2b ALS Topline Primary Safety and Tolerability & Secondary Clinical Efficacy Endpoints on December 5, 2023

  • GTLB: +16.5% Earnings

  • AMRN: +13.5% Sarissa Capital Believes Amarin Stock Is Meaningfully Undervalued and Has Increased Its Ownership

  • TVTX: +9% Successful pre-NDA Meeting for FILSPARI in IgAN; Provides Regulatory Updates for both IgAN and FSGS

  • ERIC: +6% AT&T, Ericsson to Collaborate on Open Radio Access Network Deployment in US

  • MMSI: -6.5% Proposed Private Placement of $550 Million of Convertible Senior Notes

  • IAS: -6% Launch of Secondary Offering of Common Stock by Selling Stockholders

  • SWTX: -5% Proposed Public Offering of Common Stock

• News Items After the Close:

  • Stocks making the biggest moves after hours:  (CNBC)

  • Tesla (TSLA) faces class action for overcharging insurance with fake crash warnings. (Electrek)

  • TTWO: Rockstar Games publishes Grand Theft Auto trailer early after it was leaked on X. (CNBC)

  • GitLab (GTLB) shares soar as company posts first adjusted operating profit. (CNBC)

• Exchange/Listing/Company Reorg and Personnel News:

  • ADDvantage Technologies (AEY) Regains Compliance with Nasdaq Minimum Bid Price Requirement.

  • Beacon Roofing Supply (BECN) CFO Frank Lonegro departing.

  • BorgWarner (BWA) Announces CFO Succession Plan.

  • Enovis (ENOV) announces Brady R. Shirley, current President and COO, to retire.

  • Forge Global (FRGE) Announces Transitions to its Board of Directors.

  • Endeavour Silver (EXK) announces the appointment of Elizabeth Senez as the Company’s CFO.

  • Hayward Holdings (HAYW) announced today the promotion of John Collins to Chief Commercial Officer (CCO).

  • Hycroft (HYMC) Regains Compliance with Nasdaq Listing Requirements.

  • Landstar System (LSTR) names Frank Lonegro as president and CEO.

  • Maxeon Solar (MAXN) COO will immediately step down from his role and will remain with the Company in a transitional capacity.

  • NextPlay Technologies (NXTP) Receives Notice from Nasdaq.

  • PPG announces leadership changes in aerospace coatings business.

  • Sonic Foundry (SOFO) Announces Delisting from Nasdaq.

  • Trinity Place Holdings Inc. (TPHS) Discloses Communication from NYSE American.

  • trivago (TRVG) Supervisory Board designated Robin Harries, with an effective date of April 1, 2024, as a temporary member of the management board and chief financial officer.

  • Xometry (XMTR) appoints Fabio Rosati as Chair of the Board; succeeds current Chair George Hornig who is retiring.

• Buyback Announcements or News:

  • El Pollo Loco Holdings, Inc. (LOCO) Announces $12.6 Million Repurchase Agreement.

  • Victory Capital (VCTR) Announces New $100 Million Share Repurchase Program.

• Stock Splits or News:

  • Essential Properties Realty Trust, Inc. (EPRT) Increases Quarterly Dividend to $0.285 per Share, a 1.8% Increase Over Prior Quarter.

  • PAVmed (PAVM) Announces Dividend of Lucid Diagnostics (LUCD) Common Stock and Reverse Stock Split.

  • Science 37 Holdings, Inc. (SNCE) Announces 1-for-20 Reverse Stock Split effective December 8, 2023.

• Dividends Announcements or News: 

  • The Buckle, Inc. (BKE) Announces a $2.50 Per Share Special Cash Dividend, a $0.35 Per Share Quarterly Dividend.

  • Essential Properties Realty Trust (EPRT) increases quarterly cash dividend to $0.285 per share from $0.28 per share.

  • Hanover Insurance (THG) increases quarterly cash dividend 5% to $0.85 per share from $0.81 per share.

  • Kinder Morgan (KMI) expects to raise dividend in 2024.

  • See PAVM note in Splits

  • Stryker (SYK) increases quarterly dividend to $0.80 per share from $0.75 per share.

• Insider Sales Of Note: None of note.

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

S&P 500 -14, Dow Jones -76,  NASDAQ -63, and Russell 2000 -4.  (as of 8:14 a.m. EST).  Asia is lower while Europe is higher ex the FTSE  this morning. VIX Futures are at 13.90 from 13.95  this morning.  Gold is higher with Silver and Copper lower this morning. WTI Crude Oil and Brent Crude Oil are higher with Natural Gas higher as well. US 10-year Treasury sees yields at 4.243% from 4.251% yesterday. The U.S. Dollar is higher versus the Euro, lower versus the Pound and lower against the Yen. Bitcoin is at $41,697 from $41,814 lower by -0.30% this morning.

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

• Daily Positive Sectors: Real Estate, Healthcare of note.

• Daily Negative Sectors: Basic Materials, Communication Services, Technology, Energy of note.

Stocks, bonds and precious metals retreated Monday, reversing course after markets last week extended a monthlong stretch of gains into December.  Higher bond yields weighed on shares of large technology companies, pressuring the broader stock market. The tech-focused Nasdaq Composite lost 0.8%, and the benchmark S&P 500 dropped 0.5%. The Dow industrials slipped 0.1%, or 41 points, snapping a four-day win streak. Shares of Nvidia (NVDA), the darling of the artificial-intelligence boom, fell 2.7% Monday as chip stocks declined. Microsoft (MSFT)  shares slid 1.4%. Amazon.com (AMZN) declined 1.5%. A recent ascent in bond prices halted as yields rose. The 10-year Treasury yield climbed to 4.286% from 4.225% Friday. The yield on the 2-Year Treasury, which is sensitive to federal-funds rate expectations, also rose after recording its biggest weekly yield decline since March.   (WSJ - edited by QPI)

Short Interest in the stocks mentioned above.  Video on what Short Ratio and Short Intensity means" CLICK HERE

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

• Tuesday After the Close:

• Wednesday Before the Open:

Earnings of Note This Morning:

• Beats: AZO +0.98, GIII +0.72, SIG +0.06, FERG +0.04 of note.

• Misses: CNM (0.01) of note.

• Still to Report: CRMT of note.

Company Earnings Guidance:

• Positive Guidance: GTLB, KMI, CVS of note.

• Negative Guidance: DBI, JNJ of note.

Erlanger Research Advance/Decline Chart:

Gap Ups & Down In Early Pre-Market:

• Gap Up: GTLB +14%, TVTX +12%, VNDA +7%, OPAL +6% of note.

• Gap Down: DBI -22%, ATHE -21%, SWTX -7%, NOK -7%, IAS -6%, MMSI -4% of note.

Insider Action: ECL sees Insider buying with dumb short selling.  OPAL, PLSE, GDRX 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.

• What You Need To Know To Start Your Day. (Bloomberg)

• 5 Things To Know Before the Stock Market Opens on Tuesday. (CNBC)

• Bloomberg Lead Story: Did Markets Go Too Far, Too Fast? (Bloomberg)

• Bloomberg Second Most Shared Story:  Bitcoin surges past $42,000.(Bloomberg)

• Stocks slip as doubt rises over soft landing: Market Wrap. (Bloomberg)

• Moody's cuts China credit outlook on rising debt risks. (CNBC)

Moving Average Update:

• Down to 82% from 100%.

Geopolitical: 

• President’s Public Schedule:

  • The President departs the White House 9:55 a.m. EST en route to Joint Base Andrews arriving in Boston, Massachusetts at 11:45 a.m. EST

  • The President participates in a campaign reception at the residence of Alan D. Solomont, Weston, MA, 1:45 p.m. EST

  • The President participates in a campaign reception Boston, MA, 4:15 p.m. EST

  • The President participates in a campaign reception Shubert Theatre, Boston, 7:00 p.m. EST

  • The President departs Boston, Massachusetts en route to Joint Base Andrews, 8:05 p.m. EST

  • The President departs Joint Base Andrews en route the White House, 9:40 p.m. EST

  • The President arrives at the White House, 9:50 p.m. EST

Economic:

• Redbook Sales 8:55 a.m. EST

• PMI Composite Final 9:45 a.m. EST

• November ISM Non-Manufacturing PMI is due out at 10:00 a.m. EST and is expected rise to 52.4% from 51.80%..

• JOLTS 10:00 a.m. EST

• API Crude Oil Report 4:30 p.m. EST

Federal Reserve / Treasury Speakers:  

• Fed Blackout Period.

M&A Activity and News: 

• Franklin Electric (FELE) acquires the assets of Action Manufacturing & Supply, Inc.

• IAMGOLD (IAG) annouonces agreement to acquire Vanstar Resources.

• Ryerson (RYI) Acquires Hudson Tool Steel Corporation.

Meeting & Conferences of Note:

• Sellside Conferences:

  • BMO Growth and ESG Conference

  • Capital One Securities Energy Conference

  • Credit Suisse Climate Tech Conference

  • Goldman Sachs Financial Services Conference

  • Janney Clean Energy Investment Symposium

  • Jefferies Cybersecurity Summit

  • JMP Securities Hematology and Oncology Summit

  • RBC Capital Markets Forest Products Conf

  • Scotiabank Global Technology Conference

  • TD Cowen Liquid Biopsy Summit

  • Wells Fargo Midstream and Utility Symposium

    • Previously posted and ongoing conferences:

      • Bank of America Home Care Conference

      • Jefferies Real Estate Conference

      • Morgan Stanley Global Consumer & Retail Conference

      • Mizuho Power Energy & Infrastructure Conference

      • Noble Capital Markets Emerging Growth Equity Conference

      • Raymond James TMT & Consumer Conference

      • UBS Global Media and Communications Conference

      • Wolfe Research Inaugural Reshoring Conf

• Top Shareholder Meetings: ANY, HSTO, RAVE, SHOT, XELA

• Investor/Analyst Day/Calls: BLDR, CNTX, CVS, DLX, ED, ESAB, GPAK, INFA, KRMD, MIRA, NBIX, NRSN, OCUP, PBR, RCEL, SHOT, STN

• Industry Meetings:

  • Nasdaq Investor Conference

  • San Antonio Breast Cancer Symposium

    • Previously posted and ongoing conferences:

      • AES Annual Meeting

      • Med-Cannabis 2023 Conference

Top Tier Sell-side Upgrades & Downgrades: