Mid-Morning Look

Monday, November 18, 2024

U.S. stocks are mixed early, with early strength in the Nasdaq and S&P but modest weakness in the Dow as major averages look to bounce back from their worst weekly decline since early September. Gold prices rebounding over 1.7% after falling 6-straight days after a resurgence of the US dollar and Treasury yields. NYSE more than 1.5:1 lead for advancers over decliners early; XLY Discretionary +1.55% XLE Energy +0.67% and XLP Staples +0.7% leading. Economic data slows up this week, with today only showing a better housing data point. Early leaders for stocks include TSLA on reports Trump team planning self-driving vehicle regulations; NVDA slips on reports its Blackwell chip overheats; dollar stories higher (DG, DLTR); retailers in focus with WMT, TGT, LOW, TJX among earnings results expected this week, healthcare lagging again after falling over 5% last week. Oil prices rose on news on Monday that output at Norway’s giant Johan Sverdrup oilfield has been halted, adding to earlier gains stemming from escalation in the Russia-Ukraine war.

• In Insurance: GL authorizes $1.8B stock repurchase (replaces prior $1.3B authorization); MBI was upgraded to Outperform from Market Perform at KBW Inc. with a price target of $9, up from $6.50 post the Q3 earnings and last week’s news that the First Circuit denied the request for a rehearing regarding the PREPA lien appeal, effectively upholding the June favorable PREPA ruling that established the bondholders’ lien on $8.5B of net revenues (up from $2.5B previously determined by a lower court). UFCS was upgraded to Neutral from Underweight at Piper as believe the company’s efforts to improve underwriting and catastrophe risk management are coming to fruition, and we believe this trend will continue.
• In Transports: Goldman Sachs initiates coverage of two railcar leasing companies as they continue to look for strong lease rate growth and robust secondary market activity as North America manufacturing rebounds amidst a declining rates environment. Buy GATX and initiate Neutral on TRN as we prefer GATX’s exposure to international railcar lease fleet, aircraft spare engine lease fleet, and lower non-lease business exposure vs. TRN. In rental car, CAR was downgraded to Neutral from Buy at Northcoast. In airlines, SAVE filed for bankruptcy.

• FOUR +4%; will replace RCM in the S&P MidCap 400 effective prior to the opening of trading on Wednesday, November 20. TowerBrook Capital Partners and Clayton, Dubilier & Rice will acquire R1 RCM in a transaction expected to be completed on or about November 19
• HOOD +6%; was upgraded to Buy from Hold at Needham with $40 tgt saying Donald Trump’s election win stands to materially benefit the company, primarily via changes at the SEC.
• LBRT +2%; shares rise after President-elect Donald Trump tapped longtime fracking advocate Chris Wright to be secretary of Energy Wright, the CEO of oilfield services group Liberty Energy. Reuters noted he is a defender of fossil fuel use and is expected to support Trump’s plan to maximize production of oil and gas.
• MBI +10%; was upgraded to Outperform at KBW Inc. with a price target of $9, up from $6.50 post the Q3 earnings and last week’s news that the First Circuit denied the request for a rehearing regarding the PREPA lien appeal
• SMCI +9%; on reports of submitting a plan to Nasdaq on how it plans to regain compliance with listing requirements.
• TSLA +8%; after Bloomberg reported that members of President-elect Donald Trump’s transition team have told advisers they plan to make a federal framework for fully self-driving vehicles one of the Transportation Department’s priorities. https://tinyurl.com/5brsj68e
• WOLF +5%; after announces Gregg Lowe terminated as President & CEO and as a Member of the Board and names current Chairman Thomas Werner Appointed Executive Chairman as they search to identify Permanent CEO.

• CMAX -55%; filed for Chapter 11 bankruptcy in Texas on Sunday; listed debts of $693M and assets of $390M.
• LLY -4%; as obesity (NVO, VKTX) and healthcare related names extend last week losses
• MARA -6%; announces proposed private offering of $700M of convertible senior notes.
• NGNE -35%; discontinued further development of a high dose of its gene therapy for Rett syndrome after a patient reported a potentially life-threatening side effect.
• PLTR -9%; extends losses, down over 9% (came into day top S&P sector performer YTD).
• UBER -6%; along with LYFT on the media reports Trump team planning self-driving vehicle regulations