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Strong economic data and easing trade tension propel US stocks higher; WTI rallies over 3%

Jan 18, 2019

 

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US Markets End of Day Snapshot

  • US stocks rose on a combination of strong economic data and better trade sentiment, coupled with further soothing words from a Fed official
  • The S&P 500 finished up 1.1%, Nasdaq Composite up 1.03%, and Russell 2000 up 0.89%
  • China said it would seek to increase imports by USD$1 trillion by 2024 at which point it would aim to have the trade gap eliminated, according to a Bloomberg report
  • US stocks gained further support after Chicago Fed President Charles Evans said the American economy is doing well, and that the Fed "can easily be patient", further evidence that the number of Fed hikes in 2019 is likely to be less than originally expected
  • US Industrial Production grew 0.3% in December above the 0.2% consensus
  • US Manufacturing Production grew 1.1% in December well above the 0.3% consensus
  • The University of Michigan Consumer Sentiment Index for December came at 90.7, well below the 96.8 consensus
  • Oil is surging today with WTI crude up over 3% trading at $53.80 
  • Strategists at GMO suggest the current positive moves in stocks still points to the bursting of a “stock market bubble”.  The length and magnitude of the price correction in 4Q for stocks, pushing valuations back down to their long-term averages, is consistent the bursting of the technology stocks bubble in 2000 and the 1929 stock market crash.  GMO continues to preach caution towards US stocks in spite of the fact that US stocks are on pace for their fourth weekly gain in a row. 
  • Energy (+1.93%), Industrials (+1.86%), and Financials (+1.71%) stocks were the top performers in the S&P 500 today
  • Telecom (+0.52%), Real Estate (+0.31%), and Utilities (+0.12%) stocks were the worst performers in the S&P 500 today
  • Investor sentiment for US stocks finished positive with the advance/decline ratio for the S&P 500 closing at 8.43x
  • 244 stocks in the S&P 500 hit 4-week highs while 1 stocks reached 4-week lows
  • 12 stocks in the S&P 500 closed overbought while 2 stocks closed oversold according to the 16-day RSI Measure
  • 110 stocks in the Nasdaq Composite hit 4-week highs while 19 stocks reached 4-week lows
  • 722 stocks in the Nasdaq Composite closed overbought while 54 stocks closed oversold according to the 16-day RSI Measure
  • The VIX closed down 0.14 points today to 17.92 after closing at 18.06 yesterday
     

Stocks Trending in the News

Click name for Q-Factor rating and financials data.

  • Amazon (AMZN), along with a number of other US tech companies, has been accused of in a series of privacy complaints, of not fully responding to users’ inquiries to access data.  Many tech companies use automated systems to respond to these requests and the complaints allege these systems often do not provide everything requested.   The complaints against Amazon and others revolves around the new EU data protection rules.  Amazon is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Consumer Discretionary Global Top Stock Ideas.
  • American Express (AXP) reported 4Q18 EPS of USD$2.32 while USD$1.80 was consensus.  American Express 4Q18 revenue of USD$10.50 billion came in line with USD$10.57 billion consensus.  American Express saw loan loss provision grow 14% in the quarter to USD$954 million  American Express gave full year 2019 revenue guidance of USD$7.85-8.35 billion.  American Express is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Consumer Discretionary Global Top Stock Ideas.
  • Apple (AAPL) supplier Foxconn has cut 50,000 seasonal jobs at its factory in China.  The jobs are renewed monthly from August until January, but this year there has not been the need for these workers given lower handset sales expected.  Apple is rated “Top Buy” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Information Technology Global Top Stock Ideas.
  • Citizens Financial (CFG) reported 4Q18 EPS of 98 cents above 94 cents consensus.  Citizens Financial 4Q18 revenue of USD$1.59 billion came in line with USD$1.60 billion consensus.  Citizens Financial NIM was 3.27% with total write-offs of USD$85 million.  Citizens Financial an is rated “Neutral” in our US Large-Cap Global Top Stock Ideas
  • First Horizon (FHN) reported financials that slightly missed analyst expectations. First Horizon generated an adjusted EPS of USD$0.35/share in CY4Q2018 while analysts’ consensus called for USD$0.36/share. Additionally, First Horizon’s net interest margin of 3.38% in CY4Q2018 was slightly below analyst expectations of 3.41%. First Horizen is rated “Neutral” in our US Large-Cap Global Top Stock Ideas.
  • Immunomedics (IMMU) shares plunged as much as 36% on news that the Food and Drug Administration rejected its application of its lead drug, sacituzumab govitecan. Jefferies is reporting that they still see the drug ultimately getting approval, but it could take 12 months or longer. Immunomedics is rated “Neutral” in our US Large-Cap Global Top Stock Ideas. 
  • J.B. Hunt Transport (JBHT) reported 4Q18 EPS of 81 cents while USD$1.24 was consensus, though a change in reporting does not make the numbers comparable.  J.B. Hunt Transport 4Q18 operating revenue of USD$2.32 billion came in line with USD$2.30 billion consensus.   Intermodal revenue was USD$1.26 billion while dedicated contract solutions revenue was USD$595.8 million.  J.B. Hunt Transport is rated “Neutral” in our US Large-Cap Global Top Stock Ideas.  J.B. Hunt Transport is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Industrials Global Top Stock Ideas.
  • Kansas City Southern (KSU) reported 4Q18 adjusted EPS of USD$1.56/share while consensus was for USD$1.53/share.  Kansas City Southern generated CY4Q18 revenue of USD$694.0mm while analysts expected USD$685.2mm.  Kansas City Southern's operating ratio of 63.1% in CY4Q2018 was slightly below consensus for 64%.  Kansas City Southern is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Industrials Global Top Stock Ideas.
  • Nautilus (NLS) shares fell over 40% after reporting preliminary 4Q18 revenue of USD$395-397 million.  Analyst comments in the wake of the results were resoundingly negative, with a lack of clarity cited as a primary concern.  DA Davidson cut its rating to neutral from buy while cutting its price target to USD$9 from USD$18.  Nautilus is not rated in our Global Top Stock Ideas.
  • Netflix (NFLX) reported 4Q18 EPS of 30 cents while 24 cents was consensus.  Netflix 4Q18 revenue of USD$4.19 billion came in line with USD$4.21 billion consensus.  Netflix added 8.8 million new subscribers, below the consensus of  9.4 million.  Netflix gave 1Q19 revenue guidance of USD$4.49 billion while present consensus is USD$4.60 billion.  Netflix said it has no plans to cut The Bird Box despite cries from critics to remove the film.  Netflix is rated “Neutral” in our US Large-Cap Global Top Stock Ideas.
  • Regions Financial (RF) reported 4Q18 EPS of 37 cents while 38 cents was consensus.  Regions Financial 4Q18 revenue of USD$1.44 billion came in line with USD$1.48 billion consensus.  Regions Financial common equity Tier 1 ratio 9.9%, NIM 3.5%.  Regions Financial an is rated “Neutral” in our US Large-Cap Global Top Stock Ideas.
  • Ryanair Holdings plc (ISE: RY4C) cut its full-year profit guidance for the second time in just 3 and a half months. Ryanair lowered full-year profit guidance from between 1.1bn euros and 1.2bn euros to between 1.0bn euros and 1.1bn euros. Ryanair is also considering cuts to air fares and it is warning of another potential cut to guidance if Brexit adversely impacts yields by the end of March. Ryanair is rated “Unattractive” in our European SMID-Cap Global Top Stock Ideas.
  • Schlumberger (SLB) reported 4Q18 EPS of 36 cents in line with 35 cents consensus.  Schlumberger 4Q18 revenue of USD$8.2 billion came in line with USD$8.04 billion consensus.  Schlumberger sees 2019 capex dropping to USD$1-5-1.6 billion, down from USD$2.1 billion in 2018.  Schlumberger is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas.
  • Sears (SHLD.Q) creditors do not want to see ESL Investments, its main shareholder, win the auction selling Sears off as part of its bankruptcy.  The group of creditors asked the judge for permission to sue ESL and its President Eddie Lambert-also the CEO of Sears.  The creditor group accuses ESL and Mr. Lambert of slowly stripping Sears of all its best assets only to reacquire it in the auction.  Sears is not rated in our Global Top Stock Ideas. 
  • Sophos Group Plc (LSE: SOPH) shares plummeted after a 3Q update raised concerns of the company’s growth. Sophos Group told investors that its constant currency billings increased 2% in the quarter which will result in a, “modest decline,” in its full-year growth. Sophos Group is rated “Top Short” in our United Kingdom All-Cap Global Top Stock Ideas. 
  • SunTrust (STI) reported 4Q18 EPS of USD$1.50 above USD$1.43 consensus.  SunTrust 4Q18 revenue of USD$2.39 billion came in line with USD$2.36 billion consensus.  SunTrust common equity Tier 1 ratio 9.21%, NIM 3.27%.  SunTrust is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas.
  • Telecom Italia SpA (BIT: TIT) management warned investors of a slowdown in the company’s home market that will negatively impact profits. Telecom Italia is citing tough competition in 2018 as reasoning for a projected decline in FY2018 ebitda -- prior, the company forecasted a gain in ebitda. Telecom Italia is rated “Neutral” in our European Large-Cap Global Top Stock Ideas. 
  • Tesla (TSLA) is cutting 7% of its staff in a cost-cutting move.  Tesla is looking to cut costs in an effort to keep the cost of the Model 3 a slow as is possible in the wake of the federal tax credit expiring.  CEO Elon Musk said, “The road ahead is very difficult”.  Tesla is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Consumer Discretionary Global Top Stock Ideas.
  • Tiffany and Co. (TIF) is reporting that its FY2018 net earnings will likely come in at the lower end of its previous guidance between USD$4.65/share and USD$4.80/share. CEO Alessandro Bogliolo is attributing underwhelming holiday sales performance and lower sales in foreign markets, primarily China. Tiffany’s is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Consumer Discretionary Global Top Stock Ideas.
  • VF Corp (VFC) reported fiscal 3Q18 EPS of USD$1.16 above USD$1.08 consensus.  VF Corp fiscal 3Q18 revenue of USD$3.94 billion rose 7% y/y.  VF Corp raised 2019 EPS guidance to USD$3.52-3.57.  VF Corp is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas.
  • Walmart (WMT) and CVS Health Corp (CVS) have reached a resolution concerning their disagreement over pricing. The disagreement drove Walmart to cut some ties with CVS Health Corp earlier in the week. In a joint statement Friday, the companies informed that Walmart will allow its stores to participate in CVS Health Corp’s pharmacy networks. Walmart is rated “Top Buy” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Consumer Staples Global Top Stock Ideas. CVS Health Corp is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas

 

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US Treasuries

  • US 2-Year Treasury Notes are lower with yields up 5.02 basis points to 2.61%
  • US 5-Year Treasury Bonds are lower with yields up 5.07 basis points to 2.62%
  • US 10-Year Treasury Bonds are lower with yields up 3.38 basis points to 2.78%
  • The US Treasury 2s-5s Spread has widened 0.04 basis points to 0.01%
  • The US Treasury 2s-10s Spread has narrowed 1.64 basis points to 0.17%
  • US Treasury 5s-10s Spread has narrowed 1.69 basis points to 0.16%
     

Currencies

  • EUR€ is down 0.211% against the USD$ in after hours to 1.1365
  • GBP£ is down 0.909% against the USD$ in after hours to 1.2868
  • CHF is little changed 0.149% against the USD$ in after hours to 1.0044
  • JPY¥ is up 0.421% against the USD$ in after hours to 109.72
     

Commodities

  • WTI Crude is up 3.32% to USD$53.8/bbl with the Brent-WTI spread down USD$-0.71 to USD$8.3/bbl
  • Gold is down -0.86% to USD$1280.96/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
PG&E Corp Utilities 6.95 14.39%      6,610,840.00
VF Corp Consumer Discretionary 72.1 12.26%            1,470,877
Schlumberger Ltd Energy 41.6 8.07%            6,020,550
Western Digital Corp Information Technology 37.7 7.29%            3,405,403
JB Hunt Transport Services Inc Industrials 97.1 5.92%                779,960
 
Underformers Sector Price 1D % Chg Volume
Netflix Inc Communication Services 354 -4.07%            6,109,236
CarMax Inc Consumer Discretionary 64.4 -3.89%                699,491
Fortinet Inc Information Technology 74.6 -3.10%            1,301,324
Eli Lilly & Co Health Care 117 -2.42%            1,330,169
LKQ Corp Consumer Discretionary 26.7 -2.38%            1,559,619

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