Morning Reads


  • Banks continue to draw on Fed for emergency cash funds (XLF). Bloomberg
  • Default insurance costs rise at Deutsche Bank (DB). Reuters
  • The Biden administration believes they do not have the authority to ban TikTok without congressional authorization (SNAPMETA). Washington Post
  • Utah becomes first state to pass law which prohibits social media companies from allowing users under 18 to have accounts without parental permission (META, SNAP, GOOG). NY Times
  • Treasury Secretary Janet Yellen says FDIC estimate of $2.5 bln loss related to Signature Bank (SBNY) is not the final determination. Reuters
  • New York nearing deal to ban gas stoves in buildings and homes statewide (WHR). Politico
  • Carl Icahn claims Illumina (ILMN) requested extra insurance related to Grail deal. FT
  • Canada Pension Plan mulling purchase of shares of ReNew Energy Global (RNW). Bloomberg
  • Citizens Financial (CFG) considers acquisition of Silicon Valley Bank's (SIVB) private bank. Reuters
  • Federal appeals court blocked President Biden's vaccine mandate for federal workers (PFE, MRNA, BNTX). ABC News
  • JP Morgan (JPM) gained customers amid banking issues. NY Post

Todays Open Interest Change




  • Truist upgraded Genuine Parts (GPC) to Buy from Hold with an unchanged price target of $186. Despite some potential weather-related headwinds in Q1, the firm notes the company reiterated its fiscal 2023 guidance. The firm says the upgrade is based on the combination of its continuing bullish view of the automotive aftermarket business, an "increasingly positive outlook" for the industrial segment given mix changes and onshoring/nearshoring momentum, along with the stock's 14% drop in the last month. These improve the risk/reward profile on Genuine Parts shares, according to the firm.
  • JP Morgan upgraded KB Home (KBH) to Neutral from Underweight with a price target of $42.50, up from $32.50. The firm cites an increased earnings outlook post the company's results for the upgrade. The firm notes KBH's valuation fairly reflects JPMorgan's relative fundamental outlook for fiscal 2023 and 2024, including modestly below average gross margins, in-line to below average operating margins and roughly average return on equity.


  • TD Cowen downgraded Coinbase (COIN) to Underperform from Market Perform with a $36 price target. The firm sees incremental risks to the company's operations from the SEC Wells Notice and crypto banking crackdown. The firm notes this will create an overhang on the shares and remove positive near-term catalysts, including Ethereum's Shapella upgrade and a U.S. derivatives launch. The firm says Coinbase's adjusted EBITDA quality "remains low" given the heavy reliance on stock-based compensation.
  • Jefferies downgraded UBS (UBS) to Hold from Buy. The firm notes the Credit Suisse (CS) deal maths are compelling on a three-year view, but risks and uncertainty are high in the next 12 months. The firm needs evidence that restructuring progresses, without hurting UBS's franchise much, to get confidence in the re-rating potential of the shares. As such, it switches a preference from UBS to BNP Paribas (BNPQY).
  • UBS downgraded Crane (CR) to Neutral from Buy with a price target of $120, down from $132. The firm thinks Crane's path to unlocking further shareholder value is "likely bumpier and slower in the near term." The firm sees a risk of "relatively subdued early standalone valuation" for NXT due to lack of clear comps and target investors, which could potentially bring a more attractive entry point post separation. The firm thinks a further multiple re-rating of Crane shares will largely hinge on future acquisition execution at both companies, as well as evidence of sustained outgrowth and margin improvement.
  • Atlantic Equities downgraded Block (SQ) to Neutral from Overweight with a price target of $70, down from $95. The firm notes the Hindenburg Research short report allegations focused on Cash App's predatory fees, fake user accounts, and links to criminal activity. The firm is less concerned about the high fees and user metrics, but says a significant proportion of Block's profits could be impacted longer term by improving risk controls to reduce illegal activity. In addition, Block's initial response "lacked the specific rebuttals against Hindenburg's arguments that we would have hoped for," the firm writes. With Block's valuation "remaining high," the firm believes it is prudent to turn Neutral pending "more comfort around sizing the exposure to these risk factors."


  • Rosenblatt initiated coverage of RingCentral (RNG) with a Buy rating and $35 price target. The firm views the stock's valuation as "fair" since the company's growth profile of 10% year-over-year falls below the 15% average of its peer group.
  • JMP Securities initiated coverage of Farfetch (FTCH) with a Market Perform rating and no price target. The firm notes Farfetch is a dominant platform within personal luxury retail, but "challenged upper funnel trends" and relatively low consumer savings rates may hinder the company's growth near-term. Additionally, as China drives the majority of the growth within the industry, the firm looks for more evidence that Farfetch is successfully growing its business in the country.
  • Citi opened a "30-day positive Catalyst Watch" on shares of Lululemon (LULU) into the company's Q4 results. While investors are bracing for weaker sales guidance, the firm notes management will likely guide sales in-line with the company's long-term algorithm of up mid-teens. The firm believes the stock setup into the print is favorable while keeping a Neutral rating on the shares with a $350 price target.


The U.S. government's moves against TikTok - the runaway-success short-form video social app owned by China's ByteDance (BDNCE) - have entered a new phase after a House hearing about the app's dangers on Thursday. The panel, which put TikTok CEO Shou Zi Chew in the hot seat, described the gathering as a "full committee hearing on TikTok’s consumer privacy and data security practices, how the platform affects children, and its relationship with the Chinese Communist Party." Restrictions could be a boon for American social media rivals, including Instagram Reels (META), YouTube Shorts (GOOGGOOGL) and Snapchat Spotlight (SNAP), but Netflix (NFLX) was the biggest gainer yesterday as the media-stock rally ripped higher.

How the grilling started: "TikTok collects nearly every data point imaginable - from people's location to what they type and copy, who they talk to, biometric data and more," Committee Chair Cathy McMorris Rodgers said in opening remarks. "We do not trust TikTok will ever embrace American values - values for freedom, human rights and innovation. TikTok has repeatedly chosen a path for more control, more surveillance and more manipulation. Your platform should be banned."

Former President Donald Trump already sought to ban TikTok and force a sale of its U.S. business to an American company, and while a transaction with Oracle (ORCL) almost went through in 2020, the lawsuits piled up and an injunction was granted to prevent the app from being outlawed. The Biden administration later revoked the planned ban, ordering a national security review in its place, but Chinese tensions and data privacy concerns eventually swept both sides of the aisle. Congress has passed a bill to outlaw the app on federal devices, as well as a probe from CFIUS and even proposed legislation to ban the app in the U.S. (note that all American social media networks are blocked in China). Check out Wall Street Breakfast's prior survey on whether TikTok should and will eventually be restricted.

SA commentary: "This ban, if it materializes, is more about tomorrow than today for the likes of Meta Platforms," wrote Tradevestor, in an article entitled, What A TikTok Ban Could Mean. Other SA contributors, like Bluesea Research, explore what competition or a ban would mean for Google (see Global Trends Provide A Massive Tailwind), as well as Julian Lin, Investing Group author of Best Of Breed Growth Stocks, on what effects recent developments are having on Snap (read Risks Are Rising But Stock Is Cheap). (66 comments)

Spillover risk

"Looking ahead, the longer that financial conditions remain tight, the greater the risk that stresses spread beyond the banking sector, unleashing greater financial and economic damage than we anticipated," Moody's wrote in its latest credit conditions report, while fresh trouble rocked Deutsche Bank (DB) in premarket action. A day earlier, Treasury Secretary Janet Yellen said regulators were prepared to take additional actions to ensure Americans' deposits are safe, after ruling out coverage of all uninsured deposits at U.S. banks. Meanwhile, emergency borrowing under the Fed's two backstop facilities (Discount Window Lending + Bank Term Funding Program) reached another whopping $163.9B this week, similar to the $164.8B recorded last week (borrowing under the weekly discount window is typically under $10B). (24 comments)

Short report

Block Inc. (SQ), formerly known as Square, closed the session off nearly 15% on Thursday after becoming the latest target of Hindenburg Research. The short-seller claimed the company "overstated" its user counts and "understated" customer acquisition costs, but SA contributor Muhammad Umair flagged the stock a week earlier, in a technical analysis piece that assigned a Sell rating to SQ. Block responded to Hindenburg's short report, calling it "factually inaccurate and misleading" and said it intends to work with the SEC to explore legal action. While the stock pared some losses on some analyst commentary, shares fell again in premarket trading, down 4.5% to $59 at the time of writing. (219 comments)

Difficult refill

It could take years for the U.S. to refill the Strategic Petroleum Reserve, despite previous plans by the Biden administration to buy oil back at under $72/bbl. Front-month Nymex crude (CL1:COM) for May delivery closed down 1.3% to $69.96/bbl on Thursday as uncertainty caused by the banking crisis weighed on crude prices. "This year it will be difficult for us to take advantage of this low price," Energy Secretary Jennifer Granholm told a congressional panel, pointing to another upcoming sale of 26M barrels from the SPR, as well as storage site maintenance. The SPR currently holds 372M barrels, the lowest since 1983, after last year's historic drawdown of 180M barrels. (64 comments)

Today's Markets

In Asia, Japan -0.1%. Hong Kong -0.7%. China -0.6%. India -0.7%.
In Europe, at midday, London -2%. Paris -2.3%. Frankfurt -2.4%.
Futures at 6:30, Dow -0.8%. S&P -0.7%. Nasdaq -0.3%. Crude -3.2% to $67.71. Gold +0.1% to $1997.10. Bitcoin +1.3% to $28,066.
Ten-year Treasury Yield -1 bps to 3.30%

Today's Economic Calendar

8:30 Durable Goods
9:30 Fed's Bullard: U.S. Economy and Monetary Policy
9:45 PMI Composite Flash
1:00 PM Baker-Hughes Rig Count

Companies reporting earnings today »

What else is happening...

JPMorgan (JPM), Citi (C) warn not to solicit clients from stressed banks.

Robinhood (HOOD) APY now exceeds U.S. average savings rate by 19x.

Charles Schwab (SCHW) says it could endure outsized deposit outflows.

Apple (AAPL) looking to spend $1B a year to release movies in theaters.

Accenture (ACN) to slash 19,000 jobs amid IT spending slowdown.

More cost cuts: Walmart (WMT) axes jobs at five fulfillment centers.

Micron (MU) climbs as anticipation for chipmaker's results grows.

Ford (F) expects electric vehicle business will lose $3B in 2023.

Crypto clampdown: Ex-Terraform Labs CEO Do Kwon is arrested.

SEC warns of 'significant' risk of loss for cryptocurrency investors

Known to most as Uranium Pinto Beans, Jason has more than 15 years under his belt of trading stocks, options and currencies. His expertise primarily lies in chart analysis, and he has a strong eye for undervalued stock. Because he’s got the ability to identify great risk/reward trades he usually enjoys taking the path less traveled and reaping the benefits from the adventure.

He is a co-founder of Option Millionaires, and he is best known for his weekly webinars with Scott, as well as his high level training webinars and charts found in the forums.

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