October 23, 2023

Hey traders! It's Michael here with the Stock Dork Cheat Sheet: Premarket Report, your go-to guide for the day's biggest trading news and hottest premarket stocks!

Happy Monday! It's October 23rd. I hope you have a great weekend.

Now, let's get ready to trade!

WHAT'S HAPPENING

Stocks stumbled into the weekend, with the Nasdaq selling off for 1.5% on Friday. The S&P 500 lost 1.2%, and the Dow outperformed with only a 0.8% loss. The small-cap Russell 2K matched the Nasdaq's 1.2% sell-off.

Today, futures are in the red again. S&P 500 contracts are down by a half-point in early premarket trading.

📈 10-Year Treasury Yield Tops 5%

The 10-year U.S. Treasury yield has soared above 5%, a level not seen since July 2007. What's behind the move? The Federal Reserve's aggressive interest rate hikes to tackle inflation, and a ballooning U.S. government debt.

Zooming In:

Yields and bond prices are like a seesaw; when one goes up, the other goes down. This yield sets the stage for everything from mortgage to student loan rates. If it holds, we're looking at a major financial milestone.

The Bottom Line:

Yields crashed to a low of 0.5% at the height of the pandemic and have been climbing ever since, thanks to Fed actions and increased U.S. borrowing.

If it closes the day above 5%, it could signal a turning point for borrowing costs across the board.

What's Next?

Keep a close watch on those yields, especially if you have loans or are planning on borrowing. A sustained yield above 5% could have ripple effects throughout the economy.

Renting Looks Like a Bargain in this Market

If you thought stepping onto the property ladder was tough, the numbers are here to prove it. Buying a home today?

Your monthly mortgage payment could be 52% higher than average apartment rent. If you're keeping track, that's the most extreme this figure has been since 1996.

Why It Matters

Buy or rent, that's the eternal question. Turns out, neither is a walk in the park right now. The cost gap between these options is only widening. A 30-year mortgage on a $430,000 home with a 10% down payment now requires about $3,200 in monthly payments.

That's 60% more than what you'd have paid just three years ago. On the flip side, rents have also shot up by 22% in the same time frame.

What's Driving This?

Blame it on rising debt costs and a pandemic-induced housing boom. Interest rates on a 30-year mortgage have hit 8%, and high demand for domestic space is pushing home prices through the roof.

Most homeowners are sitting tight with mortgage rates locked in at under 5%, making it tough for first-time buyers to find available properties.

Final Thoughts

While rising home prices might give current owners a reason to smile, they're a thorn in the side for first-time buyers and renters alike. If you're in the market for a new home, brace yourself for a wild ride.

TODAY'S TOP STOCKS

Walgreens Boots Alliance [WBA] - Last Close: $21.26

Walgreens Boots Alliance may be bottoming out.

The beleaguered retail pharmacy stock is bouncing back after a round of analyst upgrades following some recent news.

Last week., Walgreens agreed to pay $192.5 million to resolve a class action suit regarding its bid to acquire Rite Aid [RAD] in 2015.

Shortly after the news broke, analysts from JPMorgan upgraded the stock from "neutral" to "overweight" and raised its price target by more than 10%.

WBA is leading the S&P 500 and Dow with a 3.2% gain in today's premarket.

My Take: WBA's chart shows prices may have just come off a double-bottom, a technical pattern which often precedes a major rebound. Volume has also been elevated over the past few weeks. Keep an eye on this one.

Textainer [TGH] - Last Close: $34.15

Textainer is soaring after announcing a take-private deal.

The shipping container leaser has agreed to be acquired and taken private by Stonepeak investment firm in an all-cash deal valued at roughly $7.4 billion.

TGH shareholders will receive $50 in cash for each share of common stock, representing a 46% premium to the stock's Friday closing bid.

The transaction is subject to customary closing conditions, as well as approval from regulators and shareholders.

The deal includes a 30-day "go shop" period, but it is expected to close in Q1 2024 if all goes according to plan.

TGH is one of this morning's top stocks with a 42.6% gain.

My Take: TGH is trading for pretty close to its acquisition price, but this deal has some uncertainties that need to be accounted for.

Lumiradx [LMDX] - Last Close: $0.0892

Lumiradx is soaring after teaming up with a Big Pharma powerhouse.

The tiny healthcare firm announced a new strategic collaboration with Astrazeneca [AZN] to bring a heart & lung screening hub to England.

The Everton Football Club's community branch will run the effort, which was made possible by an Astrazeneca grant.

The LumiraDx NT-proBNP test is the only NT-proBNP test currently available that can be used with a simple fingerstick sample.

LMDX is leading the premarket with a 332.0% gain in the premarket.

My Take: It doesn't seem like LMDX is actually getting much support from AZN, so I am not sure why the stock is experiencing such a sudden spike. This could be a pump-and-dump in progress, lads, so tread carefully.

Akumin [AKU] - Last Close: $0.1412

Akumin is rallying after... filing for bankruptcy?

Over the weekend, the tiny outpatient diagnostic imaging services company filed for voluntary Chapter 11 bankruptcy.

In the filing, Akumin listed assets ranging from $100 million to $500 million, with liabilities ranging from $1 billion to $10 billion.

The stock is also set to be delisted from the Nasdaq on Oct. 26th, 2023.

The company also announced a deal with Stonepeak that would allow it to become a private company.

AKU is one of this morning's top performers with a 47.4% gain.

My Take: AKU is in bad shape, but it could offer some short-term opportunities in its dying throes. It's not for the faint of heart, but the volatility could be lucrative if you play your cards right.

HOT STOCKS

Gainers

Ault Alliance [AULT] >> +47.46%
Alkaline Water [WTER] >> +32.5%
Apollomics [APLM] >> +30.4%

Decliners

Odyssey [OMEX] >> (34.9%)
e.GO [EGOX] >> (35.5%)
Revolution Medicine [RVMD] >> (31.2%)

FEATURED EARNINGS

Brown & Brown [BRO] ... PM
W.R. Berkley Corporation [WRBD] ... PM
Alexandria Real Estate Equities [ARE] ... PM
Packaging Corporation Of America [PKG] ... PM
Crown Holdings [CCK] ... PM
Cleveland-Cliffs [CLF] ... PM
Medpace Holdings [MEDP] ... PM
RLI [RLI] ... PM
Simpson Manufacturing Company [SSD] ... PM
Hexcel Corporation [HXL] ... PM

ECONOMY

None scheduled

Thanks for reading! Don't forget, I'm always eager to hear from you. Reply to this email with your questions, comments, or general feedback, and I'll get back to you as soon as I can.

Wishing you big returns on your investments this week, as always!

- Michael "The Stock Dork" Taylor

Disclaimer