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Quantamize Afternoon Market Update March 21

Mar 21, 2018

US Midday Review

US equities are broadly higher at midday. Much of the sentiment driving news today revolves around the release of economic data. The US current account widened slightly more consensus estimates in 4Q ($128.2 billion vs. $125 billion). Existing home sales for the month of February rose 3.0%, which is much higher than consensus estimates (0.5%). The FOMC announcement regarding rate hikes is scheduled for 2:00 p.m.  

The S&P 500 is up 0.41%. The rotation into energy (+2.63%) continues. Returns in energy equipment & services (+3.47%) are lifting the sector. Materials (+1.54%) are the next best performing sector, led higher by strong returns in metals & mining (+2.30%) and chemicals (+1.61%). Consumer staples (-1.02%) have underperformed today. This is largely due to declines in food product (-2.65%) stocks as well as the continuation of falling tobacco (2.39%) stocks. Real estate (-0.60%) is modestly lower as well, and along with consumer staples are the only two sectors providing negative returns in the S&P 500.

Russell 2000 stocks are 0.73% higher in today’s trading.  As with large-cap energy, Russell 2000 energy (+4.02%) is the best performing sector. Increases in crude oil (+4.85% ) and oil well equipment (+4.54%) stocks are driving the sector higher. Materials (+1.49%) advanced with a contribution from precious metals and miners +4.47%. Consumer staples (-0.24%) was the only sector to post negative returns in the Russell 200 with declines in agriculture, fishing, and ranching (-0.73%) stocks being a factor.

Stocks Trending in the News

DEUTSCHE BANK (DBK.GR) fell 5.10% today. CFO James von Moltke said that a strong euro and higher funding costs will reduce securities revenue by €450 million euros in 1Q 2018. 

Mark Zuckerberg, the CEO of Facebook (FB), is planning to speak out regarding the issues surrounding the company. Facebook shares are up 2.08%.

General Mills (GIS) shares are 8.00% lower today after a poor earnings release. General Mills noted that cost pressures are hurting the company’s bottom-line and future outlooks.

US Airlines are falling today after SOUTHWEST AIRLINES (LUV) reduced its forecast. Southwest noted higher competition and a decrease in travel demand. Southwest shares are down 4.99%.

VIVENDI SA (VIV.FR) is selling its 27 %stake in UBISOFT ENTERTAINMENT SA (UBI.FR) for €2.01 billion. TENCENT (TCEHY) is set to acquire a 5% stake in Ubisoft. Vivendi closed up 0.93%, Ubisoft Vivendi closed up 3.38%, and Tencent shares are down 2.98%.

S&P 500 Gainers

  • RRC +5.70%
  • CMG +5.45%
  • MRO +5.24%
  • HP +5.11%
Russell 2000 Gainers
  • DXPE +21.00%
  • PRTA +13.83%
  • ARNA +17.30%
  • AKAO +11.64%
S&P 500 Laggards
  • GIS -8.59%
  • LUV -5.9%
  • SJM -3.85%
  • K -3.60%
Russell 2000 Laggards
  • ALDR -12.13%
  • GAIA -5.76%
  • XNCR -4.80%
  • ATU -4.43%
Rates & Commodities Review

US Bonds are mostly flat at midday as the 10-Year, 2.901%, and the 30-Year, 3.128% are little changed from yesterday’s close. Investors are waiting for Jerome Powell’s commentary following the Federal Reserve’s monetary policy decision. A rate hike has been priced into the markets, however, investors will be digesting Powell’s commentary to get a sense of direction from the Fed going forward. As of now, there is uncertainty whether the US will hike a total of 3 times this year or 4 given current economic conditions. US central bankers have hinted that if economic data surprises to the upside, then 4 rate hikes are certainly possible. The USD$ (90.18), is weaker against major G10 pairs as a risk-on sentiment is slightly felt in the global markets. US Trade Representative, Robert Lighthizer, made announcements today regarding NAFTA & global trade. He stated that the US will aggressively pursue more free-trade deals, certain nations can get tariff exemptions through talks with the US, and that the China intellectual property tariff decision will be made in the immediate future by President Trump. Regarding Europe, Lighthizer said that the US’ trade deficit is a big problem. Following USD$ weakness and negative drawdowns in Crude stockpiles by the US in EIA’s data release today, WTI Crude is trading at $65.13/barrel, up 250bps on the day. This is the first time WTI has traded above $65/barrel since January 26th. Despite equities being higher on the day, investors are buying precious metals as gold (1324 USD$/ounce), silver (16.48 USD$/ounce), platinum (949.73 USD$/ounce) and palladium (993.26 USD$/ounce) are extending gains from earlier this morning.

Cryptocurrency Review

Cryptocurrencies are mixed at midday with Ripple, Bitcoin Cash, Iota, Ethereum Classic, VeChain & Qtum giving back gains from this morning. Most other cryptos have held onto their gains from this morning or have traded even higher. Both Twitter & Square CEO, Jack Dorsey, said today that he sees Bitcoin as the world’s and internet’s single future currency as reported by The Times. Alternatively, Snap has confirmed that they will follow the lead of Facebook, Google, & Twitter in banning ICO ads. Advertisements for cryptocurrencies in general will still be allowed though. The Organization for Economic Co-Operation and Development (OECD), has called for an agreement on new frameworks for the taxation of emerging technologies such as cryptocurrenices. A major event in Asia today was the start of the Token 2049 Hong Kong conference. Even though China has outright banned ICO’s and trading on exchanges, there has been a lot of underground, modified ICO activity in China, said Jack Lu, founder and CEO of Wanchain. According to Lu, China now has a credibility crisis: blockchain technology in the form of private, tokenless deployments is welcome in China, said Lu, whose firm is working on interoperability between such networks.