Stocks fell for the 3rd session in a row on Tuesday, with the S&P losing .92%, with most of the losses happening after the 3pm hour. Asia markets closed mixed overnight while Europe indexes are in the red this morning. U.S. futures are pointing to a lower open as I write this, the Dollar and Yields are lower while Oil and Gold are higher.
The much anticipated CPI numbers came out this morning and they were higher than expectations, coming it at 9.1% vs. 8.8%. Futures fell after the news while the Dollar soared. Have to think some will start saying a 1% rate hike is on the table at the July Fed meeting. This data, coupled with the strong June Jobs reports, gives the Fed enough excuses to be aggressive. Guess the topic of peak inflation will have to wait another month. The SPY is back under that $380 handle. Would want to see a close over that somehow today or those $360s look to be next:
I added some speculative/lotto NOW puts yesterday with the stock falling after the CEO was on CNBC the previous night with cautious comments. It continued to fall after I added the puts, with my position up over 50% before it reversed course into there $430s. I did not want to lose money on the trade so I closed the puts out nearly flat. It did fall back into the $420s and closed at $427.94. Will be looking to re-enter if market fails to find footing today as this likely will trade south of $400 if stock continues to be pressured:
As outlined in yesterdays watchlist, I went and added some IMND calls. The company was one of the few to raise guidance in this current environment. Think this trades north of $30 in the coming weeks. I also think CUTR could be a nice sympathy trade and may look to add some calls there for a move past $40 in the coming days:
CUTR:
As I have mentioned in the past, the current environment should be bullish Gold - or at least that is what the Gold bugs would say. Inflation, geopolitical issues, recession concerns, ect. If there was a script written for Gold to soar, it is happening right now. Instead, the shiny stuff is selling off. I have said for many years I think Golds place as a store of value is in Jeopardy or at least does not warrant the same valuation it used to. Will be eyeing some DUST/JDST calls today and possibly some GLL calls. Gold looks like it will fall into the $1600s and possibly lower in the coming weeks:
U announced an acquisition this morning, while also announcing a $2.5 bil stock buyback to offset dilution. The stock is getting pummeled in the pre-market. If it holds $32 or so I may look for some calls into next week fo play for a bounce back above $35:
Here are the analyst changes of note for today:
| Lake Street 'aggressive buyers' of Bioceres amid current 'dislocation' |
| Lake Street analyst Ben Klieve notes that Bioceres' (BIOX) acquisition of Marrone Bio Innovations (MBII) was completed on July 12, a month ahead of schedule, but shares of both traded down by over 18% yesterday despite what he calls this "positive development." The shares of Bioceres are now at an 18-month low, on no fundamental news, and he would be an "aggressive buyer" on this "dislocation" as the stock action is "untethered to fundamentals" and the shares are "materially mispriced," Klieve tells investors. The analyst, who continues to identify Bioceres as his "highest conviction name in agriculture," reiterates a Buy rating and $25 price target on the shares |
Morgan Stanley disagrees with a few points in Hannon Armstrong short report |
| Morgan Stanley analyst Stephen Byrd notes Hannon Armstrong shares were down 19% yesterday in large part as a result of a short seller report in which the author alleges that the company provides misleading GAAP earnings. While he continues to assess the arguments raised, Byrd said that based on a preliminary review of the report that he disagrees with a few fundamental points raised given the underlying economics, and cash flows, of the company's business. An understanding of the fundamental economic attributes of mezzanine debt in the context of renewable financings helps to address several elements of the short seller report and one "important data point" supporting the credit strength in the sector is the underlying performance and lease default rate of the ABS debt related to U.S. rooftop solar projects, said Byrd. He has an Equal Weight rating and $55 price target on Hannon Armstrong shares |
| Musk's 'serious legal jeopardy' could drop Tesla shares by 68%, says GLJ |
| GLJ Research analyst Gordon Johnson, who has a Sell rating on Tesla (TSLA) and $67 price target, believes Twitter (TWTR) has Elon Musk "dead to rights" in relation to its lawsuit over the terminated buyout agreement. After speaking with a number of legal experts, the analyst believes many investors are underestimating the "serious legal jeopardy" Musk faces. Twitter is trading at a 37% discount to Musk's original offering price of $54.20 per share, Johnson points out. He notes that Tesla lost $124.8B in market capitalization on Musk's offloading of just $8.517B in share. Given Twitter lawyer Wachtell's contention in last night's filing, Musk remains personally responsible for $33.5B of the approximately $44B required to complete the transaction, says Johnson. The potential liability to Tesla shareholders "is, indeed, scary." Assuming Musk funds his $33.5B obligation with the sale of Tesla shares, the company's market cap could fall by $491B to $225.41 per share, or 68% downside from yesterday's closing price, contends the analyst. Existing Tesla shareholders "may be grossly underestimating the 'baggie' risk they are exposed to. Caveat emptor," writes Johnson |
| Helmerich & Payne price target lowered to $45 from $50 at Morgan Stanley |
| Morgan Stanley analyst Connor Lynagh lowered the firm's price target on Helmerich & Payne to $45 from $50 and keeps an Underweight rating on the shares. In Energy Services & Equipment, the market has "moved from discounting a multi-year bull market toward discounting at least some risk of global recession," said Lynagh, who sees an attractive entry point for longer-term investors with growth fears pushing stocks in the group down materially. He expects broadly in line Q2 results, but sees Q3 estimates biased higher. His estimate revisions ahead of earnings season are "generally positive," though he is lowering targets in his coverage by an average of 13% on higher recession-related capex and activity risks as well as the market-wide derating |
Intrepid Potash price target lowered to $40 from $64 at UBS |
| UBS analyst Joshua Spector lowered the firm's price target on Intrepid Potash to $40 from $64 and keeps a Sell rating on the shares as part of a broader research note on North American Chemicals/Packaging names. The analyst is updating his models to reflect the rising risks of a recession scenario, though he also believes that some stocks are now closer to pricing in a recession |
| Shake Shack price target lowered to $52 from $70 at Cowen |
| Cowen analyst Andrew Charles lowered the firm's price target on Shake Shack to $52 from $70 and keeps a Market Perform rating on the shares. The analyst said while Shake Shack is a reopening beneficiary, he continues to be concerned about a potential cut to the company's 18-22% long-term margin target given the inflationary pressures facing the industry. Over the longer term, he notes the need for average weekly sales to recover |
And here is what I am watching: NOW, DUST, JDST, GLD, GLL, SAGE, U, SPOT, ROKU, and CUTR.
Let's have a great day!
-JB