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Global growth concerns weigh on sentiment, sending US stocks lower today; WTI below $51

Jan 14, 2019

 

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US Markets End of Day Snapshot

  • Growth worries returned to the fore after China reported weak trade data, sending US stocks lower today
  • The S&P 500 finished down 0.53%, Nasdaq Composite is down 0.94%, and Russell 2000 is down 1.01%
  • Chinese exports dropped 4.4% Y/Y while imports fell 7.6% Y/Y in December -- the worst results since CY2016 fueling worries about the impact of the ongoing trade dispute between the US and China on Chinese growth (and global growth) 
  • Oil fell again today, with WTO crude falling below $51, over 2%, trading at $50.21
  • The partial US government shutdown is the longest in modern history and continues to weigh on investor sentiment 
  • JP Morgan speculates that the current cuts to oil production by OPEC+ is meant to create a USD$60/barrel floor for global oil; WTI is trading at $51.26, down 0.64% today
  • EU industrial prodution contracted 1.7% in December, worse than the 1.5% contraction expected
  • The Brexitr vote in the UK Parliament will be tomorrow and is expected to fail, the EU again would not agree to any time limit on a backstop if Brexit fails
  • Financials (+0.73%), Industrials (-0.03%), and Energy (-0.19%) stocks were the top performers in the S&P 500 today
  • Tech (-0.92%), Healthcare (-1.16%), and Utilities (-2.23%) stocks were the worst performers in the S&P 500 today
  • Investor sentiment for US stocks finished negative with the advance/decline ratio for the S&P 500 closing at 0.51x
  • 139 stocks in the S&P 500 hit 4-week highs while 2 stocks reached 4-week lows
  • 4 stocks in the S&P 500 closed overbought while 2 stocks closed oversold according to the 16-day RSI Measure
  • 85 stocks in the Nasdaq Composite hit 4-week highs while 16 stocks reached 4-week lows
  • 592 stocks in the Nasdaq Composite closed overbought while 29 stocks closed oversold according to the 16-day RSI Measure
  • The VIX closed up 0.88 points today to 19.07  after closing at 18.19 last week

Stocks Trending in the News

Click name for Q-Factor rating and financials data.
 

  • Citigroup (C ) reported weak 4Q18 results, with fixed-income trading  revenue dropping 21% y/y to USD$1.94 billion while USD$2.4 billion was expected.  Citigroup’s largest trading unit saw its weakest revenue quarter since 2011.  Citigroup net income came at USD$4.3 billion, total revenue of USD$17.1 billion came below consensus of USD$17.5 billion.    CEO Michael Corbat said that after the volatile 4Q and its weak results, the main focus for 2019 will be to boost profitability.  Citigroup is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas.
  • Continental AG (DB: CON) provided guidance a bit below consensus estimates.  Continental expects 2019 sales of 45-47 billion euros while consensus is 46.6 billion euros.  Continental sees 2019 ebitda margin 8-9% while present consensus is for 9.5%.  Continental is rated “Top Short” in our European Large-Cap Global Top Stock Ideas.
  • Delta Airlines (DAL) had its rating cut at Merrill Lynch to neutral from buy.   Merrill Lynch cut its Delta Airlines rating because it does not sees any near term earnings catalysts.   The near-term wind headwinds for Delta Airlines make it unlikely to see any margin expansion any time soon.  Delta Airlines’ price target was cut to USD$51 from USD$62.  Delta Airlines is rated “Top Buy” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Industrials Global Top Stock Ideas. 
  • Embraer (ERJ) said part of the proceeds from the sale of its commercial aviation business to Boeing (BA) will be paid as a special dividend.  Embraer expects to yield ~US$3 billion from the sale, net of transaction costs.  Embraer has not decided how much of the USD$3 billion will be paid as a dividend and how much will be retained as working capital.  Embraer is rated “Neutral” in our Brazil All-Cap Global Top Stock Ideas.  Boeing is rated “Top Buy” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Industrials Global Top Stock Ideas.
  • Ensco Plc (ESV) has raised its offer for Rowan Companies Plc (RDC) by 17%.  Ensco is offering 2.6 shares for each Rowan share, up from its original offer of 2.215 shares.  The original offer had no premium and an advisory group recommended not accepting it.  This revised offer includes a slight premium.  Ensco is not rated in our Global Top Stock Ideas.  Rowan is rated “Top Short” in our US Large-Cap Global Top Stock Ideas.
  • MNG Enterprises has offered to buy Gannett Corp (GCI) for USD$1.36 billion.  MNG Enterprises is offering USD$12 per share, a 23% premium to Friday’s close.  MNG Enterprises owns over 90 newspapers and is looking to add scale to its operations.  Gannett is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Consumer Discretionary Global Top Stock Ideas. 
  • Gymboree (GYMB) is close to a bankruptcy filing, according to the Wall Street Journal.  Gymboree is lining up bankruptcy financing in anticipation of a filing, the paper is reporting.  Gymboree will close all of its 900 stores, it is being reported.  Gymboree is not rated in our Global Top Stock Ideas.
  • Infosys (NSEI:INFY) was upgraded today at Susquehanna to neutral from negative.  Susquehanna raised the Infosys price target to USD$11 from USD$7.50.  Infosys raised guidance for 2019 and announced its second share buy back in 13 months.  Infosys is rated “Attractive” in our India All-Cap Global Top Stock Ideas.
  • JD Sports (LSE: JD) hiked guidance for full year today.  JD Sports sees revenue for the full year to be at the upper end if its 325-352 million pounds range.  JD Sports said full year same-stores sales are growing ~5% after growing only 3% in the first half.  Total sales are growing ~15%  thus far for the year.  JD Sport is rated “Attractive” in our United Kingdom All-Cap Global Top Stock Ideas.
  • Lululemon (LULU) increased guidance for fourth quarter results.  Lululemon said fourth quarter comparable-store sales grew in the high-single to low double-digits.  Lululemon also expects total sales and adjusted profit to both come above previous guidance.  Lululemon expects total sales of US$1.14-1.15 billion in the quarter that ends February 3rd.  Lululemon is rated “Top Buy” in our US Large-Cap Global Top Stock Ideas.
  • Newmont Gold (NEM) will acquire its rival Goldcorp (TSX: G) in a USD$10 billion deal.  The deal will create a gold mining behemoth.  A statement from Newmont Gold said, “The combination will create the world’s leading gold business.”   The combination of Newmont Gold and Goldcorp will be a company producing 7.9 million ounces of gold per year.  Goldcorp is rated “Top Short” in our Canada All Cap Global Top Stock Ideas.  Newmont Gold is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas. 
  • Northrop Grumman (NOC) was upgraded to outperform from neutral by Credit Suisse today.  Credit Suisse sees improving margins this year and cited this as a reason for the upgrade.  Northrop Grumman should see organic sales growth 2-3% in the coming quarter.  Northrop Grumman is rated “Top Buy” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Industrials Global Top Stock Ideas.
  • Pandora (CPSE:PNDORA) suffered 2 downgrades, with both Morgan Stanley and Carnegie cutting their price targets.  Morgan Stanley cut Pandora’s target by 10% to DKK335.  Morgan expects a disappointing 4Q results when Pandora reports February 3rd.  Carnegie also cut its price target to DKK335 and maintains a hold rating.  Pandora is rated “Neutral” in our European Large-Cap Global Top Stock Ideas.
  • PG&E(PCG) has informed employees it will seek bankruptcy protection on or about January 29th.  PG&E must inform with a 15-day notice which it is doing.  PG&E’s CEO quit over the weekend and its CFO will take over for now.  PG&E is rated “Attractive” in our US Large-Cap Global Top Stock Ideas.
  • Snap (SNAP) was upgraded today at Citi to neutral from sell with a USD$7 reiterated.  Citi sees growth potential and an attractive valuation and cited both in its upgrade.  Snap will introduce an upgrade to its app shortly and that should improve user engagement, the report highlights.  Snap is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Information Technology Global Top Stock Ideas
  • Bloomberg is reporting that Telecom Italia (BIT: TIT) has made an offer for the Italian business of BT Group (LSE: BT.A).  The report says the bid is non-binding and there have been other expressions of interest.  BT Group is in the midst of a global restructuring and with a new CEO starting next month, is anxious to shed the assets in Italy.  Telecom Italia is rated “Neutral” in our European Large-Cap Global Top Stock Ideas.  BT Group is rated “Neutral” in our United Kingdom All-Cap Global Top Stock Ideas.
  • Viacom (VIAB) is in talks to sell a majority stake in its China operations, according to a report in Bloomberg today.  Viacom is in talks with a Chinese entity to purchase the stake, without citing the potential buyer.  The sale talk comes as Viacom struggles to scale its operations in China.  Viacom is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Consumer Discretionary Global Top Stock Ideas.
  • Vocera (VCRA) was downgraded today at Dougherty & Company to neutral from buy.  In its downgrade report, Dougherty & Company said clients should “move to the sidelines”. Vocera’s 2019 EPS estimate was cut to 78 cents from 85 cents on a lack of clarity in forecasts for its wearable communications device.  Vocera is rated “Neutral” in our US SMID-Cap Global Top Stock Ideas.
  • Volkswagen (DB: VOW) is announcing an expanded alliance with Ford (F) tomorrow, according to a report from Bloomberg.  The companies are discussing expanding collaboration in a number of areas with the Volkswagen board due to vote on moving ahead today.  Volkswagen’s CEO said today that they company is not, however, committed to joining with Ford to work on electric cars.  Volkswagen is rated “Neutral” in our European Large-Cap Global Top Stock Ideas.  Ford is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Consumer Discretionary Global Top Stock Ideas.
  • Western Digital (WDC) was downgraded today by Evercore ISI to underperform from in-line.  Evercore ISI also cut its price target to USD$30 from USD$35.  Evercore sees risk to its dividend with its USD$11 billion debt load, saying Western Digital would be “hard pressed” to maintain its dividend at current levels, if at all.  Western Digital is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Information Technology Top Stock Ideas.
  • XPO Logistics (XPO) was downgraded by KeyBanc to sector weight from overweight.  KeyBanc cited the increased competition in the last mile of deliveries as well as continuing uncertainty in Europe in its downgrade of XPO.  XPO Logistics is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Industrials Global Top Stock Ideas.
  • Yeti (YETI) delivered preliminary 2018 results well above estimates, saying 2018 EPS will come 88-90 cents; previously Yeti guided 79-82 cents.   Yeti said it expects total sales to grow over 19%, well above consensus ~15%, with preliminary sales of USD$241.2 million versus USD$226.6 million estimate.  Yeti is rated “Neutral” in our US SMID-Cap Global Top Stock Ideas.
     

 

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US Treasuries

  • US 2-Year Treasury Notes are higher with yields down -0.82 basis points to 2.53%
  • US 5-Year Treasury Bonds are higher with yields down -0.51 basis points to 2.52%
  • US 10-Year Treasury Bonds are lower with yields up 0.17 basis points to 2.70%
  • The US Treasury 2s-5s Spread has widened 0.31 basis points to -0.01%
  • The US Treasury 2s-10s Spread has widened 0.99 basis points to 0.17%
  • US Treasury 5s-10s Spread has widened 0.68 basis points to 0.18%
     

Currencies

  • EUR€ is little changed 0% against the USD$ in after hours to 1.1469
  • GBP£ is up 0.187% against the USD$ in after hours to 1.2868
  • CHF is up 0.246% against the USD$ in after hours to 1.0192
  • JPY¥ is down 0.286% against the USD$ in after hours to 108.17
     

Commodities

  • WTI Crude is down -2.09% to USD$50.51/bbl with the Brent-WTI spread down USD$-0.42 to USD$7.8/bbl
  • Gold is little changed 0.12% to USD$1291.79/oz
     

 

*Data in Price Return and Updated Real-Time (with a delay), Source: StockDio

S&P 500 Sector ETFs - End of Day

*Data in Price Return and Updated Real-Time (with a delay), Source: StockDio

Russell 1000 Factor ETFs - End of Day

*Data in Price Return and Updated Real-Time (with a delay), Source: StockDio

 

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S&P 500 Movers

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Outperformers Sector Price 1D % Chg Volume
Citigroup Inc Materials 51.8 3.95%            9,127,603
Goodyear Tire & Rubber Co/The Consumer Staples 20.2 2.73%            1,607,450
State Street Corp Utilities 63.2 2.13%                750,594
Cabot Oil & Gas Corp Financials 23.8 2.01%            1,378,032
Cimarex Energy Co Information Technology 62 1.97%                272,261
 
Underformers Sector Price 1D % Chg Volume
PG&E Corp Information Technology 23.6 -52.36%          14,473,892
Newmont Mining Corp Information Technology 35 -8.89%            4,639,345
Western Digital Corp Real Estate 36.9 -4.92%            3,896,153
Wynn Resorts Ltd Health Care 98.1 -4.80%            1,341,133
Qorvo Inc Industrials 60.4 -3.94%                425,640

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