Traders Market Weekly: Short Squeezes and Bond Markets

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    Monday – January 9

    Earnings- Jefferies (JEF), PriceSmart (PSMT), and Tilray (TLRY) are the most notable companies due to report. Options trading implies a 13% swing for Accolade (ACCD) after it discloses earnings.

    All day – Companies in the retail sector due to present at the ICR Conference include Macy’s (M), Five Below (FIVE), Jack in the Box (JACK), First Watch (FWRG), and Boot Barn (BOOT). Guidance updates are expected to pour in during the conference.

    All day – Companies in the healthcare sector due to present at the JPMorgan Healthcare Conference include Bristol-Myers Squibb (BMY), Centene (CNC), Merck (MRK), and Walgreens Boots Alliance (WBA).

    All day – Arrowhead Pharmaceuticals (ARWR) will present topline data from the Sequoia Phase 2 study evaluating fazirsiran and provide an outline of a Phase 3 study that was co-developed with and will be run by Takeda.

    4:30 p.m. Sutro Biopharma (STRO) will host a conference call and webcast to present data from its Phase 1 dose-expansion trial and a registrational path forward for STRO-002, an ADC being developed for the treatment of advanced ovarian cancer.


    Tuesday – January 10

    Earnings – Albertsons (ACI) is the most notable company due to report. Also watch for potential fireworks with Bed, Bath & Beyond (BBBY) even though results have been pre-announced.

    All day – Companies in the retail sector due to present at the ICR Conference that could also issue guidance Crocs (CROX), Urban Outfitters (URBN), Shake Shack (SHAK), Dutch Bros. (BROS), and Planet Fitness (PLNT). Guidance updates are anticipated to pour in during the conference.

    All day – Companies in the healthcare sector due to present at the JPMorgan Healthcare Conference include Halozyme Therapeutics (HALO), BioCryst Pharmaceuticals (BCRX), and AbbVie (ABBV).

    8:00 a.m. Genius Group Limited (GNS) will host a virtual investor meeting to provide an update on the business and its subsidiaries.

    8:00 a.m. Intel (INTC) will host a launch event for its 4th Gen Intel Xeon Scalable processors and the Intel Xeon CPU Max Series, as well as the Intel Data Center GPU Max Series for high performance computing and AI.

    12:00 p.m. The U.S. Energy Information Administration will release its monthly Short-Term Energy Outlook.


    Wednesday – January 11

    Earnings – KB Home (KBH) is the most notable company due to report.

    All day – Companies in the healthcare sector due to present at the JPMorgan Healthcare Conference include Veeva Systems (VEEV), Viatris (VTRS), and Clover Health (CLOV).


    Thursday – January 12

    All day – Companies in the healthcare sector due to present at the JPMorgan Healthcare Conference include bluebird bio (BLUE), Cryoport (CYRX), and TELA Bio (TELA).

    All day – Federal Reserve speakers during the day include Philadelphia President Patrick Harker and St. Louis President James Bullard.

    All day – Shareholders with Jack Creek Investment Corp. (JCIC) will vote on the SPAC deal to take Bridger Aerospace public. The aerial firefighting company is expected to be called Bridger Aerospace Group Holdings and be listed on the NASDAQ Capital Market under the ticker symbol BAER.

    All day – Semtech’s (SMTC) deal to acquire Sierra Wireless (SWIR) is expected to close.

    8:30 a.m. The consumer price report will drop to expectations for the headline CPI reading for December to cool to +6.7% from +7.1% in November and be up 0.1% on a month-over-month comparison. Core CPI is forecast to be up 5.6% year-over-year and increase 0.2% month-over-month. Bank of America expects both core goods and energy prices to have declined again in December, but food inflation and core services inflation to have remained stickier.


    Friday – January 13

    Earnings watch – Notable companies due to report include UnitedHealth Group (UNH), JPMorgan Chase (JPM), Bank of America (BAC), Wells Fargo (WFC), Blackrock (BLK), Citigroup (C), Bank of New York (BK), and Delta Air Lines (DAL). Options trading implies a 8% swing up or down when First Republic Bank (FRC) reports.

    All day – Reports from Robinhood Markets (HOOD) on operating data and from Caterpillar (CAT) on quarterly machines deliveries are due in around this date. Also watch for the monthly videogames sales report from NPD Group.


    Top S&P 500 Gainers
    Warner Bros. Discovery (WBD) +20%. Western Digital (WDC) +18%. Wynn Resorts (WYNN) +15%. Carnival Corporation & plc (CCL) +14%. Paramount Global (PARA) +13%.

    Top S&P 500 Losers
    Enphase Energy (ENPH) -12%. Molina Healthcare (MOH) -9%. Constellation Brands (STZ) -9%. Cigna (CI) -8%. The AES (AES) -8%.


    OpenAI, the developer behind artificial intelligence bot ChatGPT, was reported by multiple sources to be in discussions to raise capital at a valuation of $29B.

    Venture capitalists are rushing in to profit from the viral technology, including firms like Thrive Capital and Peter Thiel’s Founders Fund. The transaction is being structured as a tender offer, where investors buy shares from existing holders, and would be double the $14B valuation the company received in 2021.

    The deal is making waves in Silicon Valley, where many startups have prepared or seen big cuts to their valuations as investors pull back from new deals. The tender offer comes just a month after OpenAI released the newest form of its GPT-3.5 software. Following its launch, ChatGPT amassed 1M users in just five days, making headlines in the tech industry, just weeks after releasing image generation program Dall-E 2.

    Microsoft (MSFT) is also eager to get some skin in the game (remember Tay from 2016?), holding advanced talks to increase its investment in OpenAI. In 2019, Microsoft even poured $1B into the startup and became its preferred partner for commercializing new technologies. Reports this week also suggested that it’s working on a version of Bing that uses the artificial intelligence software behind ChatGPT to close the gap with search engine leader Google (GOOG, GOOGL).


    What is Generative AI?

    OpenAI is a leader in the field, which uses artificial intelligence to generate new original content, rather than analyzing or acting on existing data. Its product called ChatGPT uses natural language processing to generate responses to a user’s input, and can handle a wide range of queries. Examples include anything from essays and cover letters to lyrical music writing and solving complex math problems.


    Equity indices in the Asia-Pacific region began the week on a higher note while Japan’s Nikkei was closed for a holiday.

    —Equity Markets—

    Japan’s Nikkei: CLOSED
    Hong Kong’s Hang Seng: +1.9%
    China’s Shanghai Composite: +0.6%
    India’s Sensex: +1.4%
    South Korea’s Kospi: +2.6%
    Australia’s ASX All Ordinaries: +0.6%


    Japan will conduct coronavirus tests on visitors arriving from Macau while Thailand reversed its plan to test visitors.
    Hong Kong’s financial regulators indicated that tech start up listings will resume this year.
    Ant Group announced that Jack Ma does not hold a controlling interest in the company any longer.
    China’s December FX Reserves $3.128 trln (expected $3.154 trln; last $3.117 trln)
    Australia’s November Building Approvals -9.0% m/m (expected -1.0%; last -5.6%) and Private House Approvals -2.5% m/m (last -2.2%)


    Major European indices trade on a mostly higher note.

    —Equity Markets—

    STOXX Europe 600: +0.5%
    Germany’s DAX: +0.8%
    U.K.’s FTSE 100: +0.1%
    France’s CAC 40: +0.3%
    Italy’s FTSE MIB: +0.6%
    Spain’s IBEX 35: UNCH


    The British government is working on legislation to restrict strike action among workers in the public sector.
    Bank of England policymaker Mann said that caps on the price of energy could be fueling inflation in other sectors due to higher consumer spending.
    The French government is expected to announce an overhaul of its pension system in the coming days.
    Eurozone’s November Unemployment Rate 6.5%, as expected (last 6.5%) and January Sentix Investor Confidence -17.5 (expected -18.0; last -21.0)
    Germany’s November Industrial Production 0.2% m/m (expected 0.1%; last -0.4%)
    France’s November trade deficit EUR13.80 bln (expected deficit of EUR11.30 bln; last deficit of EUR11.60 bln)
    Italy’s November Unemployment Rate 7.8%, as expected (last 7.9%)
    Swiss December Unemployment Rate 1.9% (expected 2.1%; last 2.0%)


    CureVac (CVAC 10.46, +2.20, +26.6%): announces positive data on joint COVID-19 and Flu mRNA vaccine development programs
    lululemon athletica (LULU 288.59, -40.67, -12.4%): provides mixed guidance ahead of ICR Conference
    Visa (V 220.30, +2.55, +1.2%) and Mastercard (MA 373.50, +5.83, +1.6%): upgraded to Overweight from Sector Weight at KeyBanc
    Uber (UBER 27.13, +0.73, +2.8%): upgraded to Overweight from Neutral at Piper Sandler
    Macy’s (M 21.00, -1.13, -5.1%): provides Q4 guidance ahead of its ICR Conference; reiterates EPS outlook, expects to reach low-end to mid-point of revenue guidance; says it believes the consumer will continue to be pressured in 2023
    CinCor Pharma (CINC 27.31, +15.53, +131.8%): to be acquired by AstraZeneca (AZN) for $26.00 per share in cash plus a non-tradable CVR of $10.00 per share in cash payable upon a specified regulatory submission of a baxdrostat product.
    Albireo Pharma plc (ALBO 42.80, +19.98, +87.6%): to be acquired by Ipsen (IPSEY) for $42.00 per share plus CVR of $10.00 per share related to the U.S. FDA approval of Bylvay in biliary atresia
    Amryt Pharma (AMYT 14.51, +7.50, +107.0%): plc to be acquired by Chiesi Farmaceutici S.p.A. for $14.50 per ADS
    Life Time (LTH 12.34, -0.47, -3.7%): sees Q4 revs below consensus


    Dow +130.56 at 33761.10, Nasdaq +159.54 at 10728.75, S&P +32.54 at 3927.62

    The S&P 500 opened above the 3,900 level and continues to climb.

    Strength in the mega cap space is bolstering index level performance.

    The Vanguard Mega Cap Growth ETF (MGK) is up 1.6% versus a 0.8% gain in the S&P 500 and a 0.6% gain in the Invesco S&P 500 Equal Weight ETF (RSP).

    The S&P 500 sectors reflect mega cap leadership.

    The information technology (+1.9%) and consumer discretionary (+1.7%) sectors exhibit the biggest gains thanks to gains in their respective mega cap components like Microsoft (MSFT 228.47, +3.58, +1.6%) and Tesla (TSLA 121.53, +8.51, +7.5%).

    Only two sectors trade in negative territory, health care (-0.3%) and consumer staples (-0.1%).


    Treasury yields lower.

    The 2-yr note yield is down three basis points to 4.24% and the 10-yr note yield is up one basis point to 3.58%.

    Energy complex futures are moving higher.

    WTI crude oil futures are up 2.9% to $75.92/bbl and natural gas futures are up 2.7% to $3.49/mmbtu.

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