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Directionless markets close little changed with few drivers for US stocks today

Mar 14, 2019

 

Better Research, Better Investments.Better Research, Better Investments.
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US Markets End of Day Snapshot

  • US stocks close flat in a day of directionless trading with few drivers to move markets today
  • The S&P 500 finished down 0.09%, Nasdaq Composite is down 0.16%, and Russell 2000 is down 0.4%
  • With the passage of a US-China trade deal largely priced into the market, investors are nervous with any news that it may not materialize as expected
  • Initial Jobless Claims for week of March 9th were 229,000, in line with 225,000 consensus and last week's 223,000
  • New Home Sales fell 6.9% in January, coming below the 0.2% gain expected 
  • JP Morgan cut its Fed Funds rate cut expectation to zero cuts in 2019, it had previously expected a  
  • According to news reports, a meeting between US President Donald Trump and Chinese President Xi Jinping has been pushed back to the end of April.  There was hope that both leaders would meet in March following a trip to Europe by Chinese President Xi.   
  • Despite yesterday’s rally in the S&P 500, the benchmark US index failed to break above 2,815 which is a technical resistance level that formed since October 2018.  The S&P 500 has rallied 20% since hitting lows in December 2018 but the 2,815 appears to be a level where worries about decelerating global growth overwhelm any enthusiasm for US large-cap stocks 
  • Following the 2008 housing market collapse, US homeowners are finally seeing the equity in their houses surpassing mortgage debt.  The trend started in 2011 with home equity values nearly doubling since hitting a lot in 1Q of CY2011. 
  • JP Morgan argues that greater institutional coverage of small-cap stocks will help drive higher valuations and lower volatility.  Higher coverage should lead to higher liquidity. 
  • Financials (+0.41%), Tech (+0.2%), and Energy (+0.06%) stocks were the top performers in the S&P 500 today
  • Industrials (-0.35%), Telecom (-0.4%), and Materials (-0.79%) 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 0.86x
  • 115 stocks in the S&P 500 hit 4-week highs while 10 stocks reached 4-week lows
  • 69 stocks in the S&P 500 closed overbought while 2 stocks closed oversold according to the 16-day RSI Measure
  • 162 stocks in the Nasdaq Composite hit 4-week highs while 69 stocks reached 4-week lows
  • 274 stocks in the Nasdaq Composite closed overbought while 185 stocks closed oversold according to the 16-day RSI Measure
  • The VIX finished flat at 13.6 after closing at 13.41 yesterday

 

Stock Ideas for You:

 

Stocks Trending in the News

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Global Consumer Stocks Trending in the News

  • Casino (ENXTPA:CO) announced it has increased its asset disposal plan to at least 2.5 billion euros by the first quarter of 2020.  Casino completed it original 1.5 billion euro plan ahead of schedule and said it received additional indications of interest that led it to increase the size of the plan. Casino guided it looks to open 300 premium and convenience stores by 2021 and increase e-commerce sales to 30% of sales in 2021 up from 18% today.  Casino is rated “Unattractive” in our European SMID-Cap Global Top Stock Ideas.
  • Dollar General (DG) reported fourth quarter EPS of USD$1.84 just a touch below USD$1.88 consensus.  Dollar General reported same store sales growth of 4% beating consensus of 2.6%.  Its quarterly dividend was hiked to 31 cents per share from 29 cents.  Dollar General gave fiscal 2019 EPS guidance of USD$6.30-6.50, below consensus of USD$6.65.  Dollar General is rated “Top Buy” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Consumer Discretionary Global Top Stock Ideas.
  • Tenneco (TEN) shares slide by double-digits after the company announced CY4Q2018 earnings that missed analyst estimates. Tenneco reported an adjusted EPS of USD$1.30 in CY4Q2018 while consensus called for USD$1.41. Tenneco also announced revenue of USD$4.27bn in CY4Q2018, edging past consensus of USD$4.28bn. Tenneco is rated “Attractive” in our US SMID-Cap Global Top Stock Ideas and “Neutral” in our US Consumer Discretionary Global Top Stock Ideas.
  • Volkswagen (XTRA:VOW3) increased its electric vehicle (EV) sales guidance by 50%.  On March 12th Volkswagen said it will launch 70 EV models and produce 22 million vehicles by 2028, up from 50 models and 15 million vehicles from its previous guidance.  For comparison, Volkswagen sold 80,000 EVs in 2018.  Volkswagen is rated “Neutral” in our European Large-Cap Global Top Stock Ideas.

Global Information Technology & Communication Services Stocks Trending in the News

  • Adobe (ADBE) Oracle reported fiscal first quarter 2019 EPS of USD$1.71 beating consensus of USD$1.62.  Oracle reported fiscal first quarter 2019 revenue of USD$2.60 billion beating consensus of USD$2.55 billion.  Adobe gave second quarter EPS guidance of around USD$1.77.  Adobe is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Information Technology Global Top Stock Ideas.
  • Apple (AAPL) was rated buy at Cowen in its initiation report on the stock.  Apple’s growth in services should propel it higher, with that unit being described as “an annuity.”   While acknowledging there exist challenges around its mature iPhone business Cowen sees many opportunities to grow revenue with value-added services.  Apple is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Information Technology Global Top Stock Ideas.
  • AT&T’s (T) is hiking the price of its TV service for the second time since January.  AT&T told a judge that prices would fall if it were allowed to buy Time Warner during an antitrust case last year.  But here were are with prices rising again, with many critics complaining that regulators are not protecting customers.  AT&T is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Information Technology Global Top Stock Ideas.
  • Cloudera Inc. (CLDR) shares fell intraday by the most in nearly a year after the company announced guidance for a loss and weaker-than-expected sales in its next fiscal year. Cloudera told investors that it expects FY2020 revenue between USD$835mm and USD$855mm and a loss per share of between USD$0.32 and USD$0.36. Cloudera Inc. is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Top Short” in our US Information Technology Global Top Stock Ideas.
  • Facebook (FB) suffered large-scale outages for its Facebook and Instagram networks yesterday, with users unable to use the site for up to 11 hours in various regions of the world. Sporadic outages still appear to be happening but mostly the site seems to be back to normal.  Facebook has already mentioned the possibility of refunding advertisers whose advertisement that were paid for were never broadcast.  It is very unusual for such a mature site to be down so long.  Facebook is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Information Technology Global Top Stock Ideas.
  • Microsoft (MSFT) announced it is working with Oxford Biomedica Plc (LSE:OXB) on developing better ways to repair genes in those with life-threatening diseases.  Microsoft will contribute its Azure cloud and machine learning software to help Oxford increase the productivity and purity of the viruses it uses in the repair of malformed genes.  The initial collaboration is for 2 years with the option to extend it.  Microsoft is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Information Technology Global Top Stock Ideas.  Oxford Biomedica Plc is not rated in our Global Top Stock Ideas.
  • MongoDB Inc. (MDB) shares spiked to record levels after the company announced a far better-than-expected revenue outlook. The guidance initiated a slew of price target hikes, upgrades, and bullish commentary from analysts at Morgan Stanley, Rosenblatt Securities, and other Wall Street firms. Shares traded as much as 28% higher on the news while the stock is now 80% higher from its January low. MongoDB is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Unattractive” in our US Information Technology Global Top Stock Ideas.
  • Oracle (ORCL) reported fiscal third quarter 2019 EPS of 87 cents beating consensus of 84 cents.  Oracle reported fiscal third quarter 2019 revenue of USD$9.62 billion in line with consensus of USD$9.59 billion.  Oracle increased its quarterly dividend to 24 cents per share from 19 cents.  Oracle is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Information Technology Global Top Stock Ideas.
  • Snap Inc. (SNAP) shares surged to their highest levels since September 2018 after BTIG announced a Street-high price target of USD$15/share. In a note to clients, BTIG analyst Rich Greenfield wrote, “Virtually everything that could go wrong for Snapchat over the past couple years since going public has gone wrong.” Greenfield believes that overseas advertisers will take advantage of Snap Inc.’s relatively low bid prices for ad inventory in the US, driving a stronger FY2019 than the previous year. Snap Inc. is rated “Top Short” in our US Large-Cap Global Top Stock Ideas and “Unattractive” in our US Information Technology Global Top Stock Ideas.
  • Spotify’s (SPOT) CEO commented today his company has suffered greatly from the restrictions Spotify alleges Apple has placed on it.  These alleged restrictions are the reason Spotify complained to the EU, demanding an investigation of Apple’s business practices.  He added that one of the biggest complaints from customers is their inability to get Spotify to work on Apple’s products.  The EU antitrust regulator said it would take the complaint seriously.  Spotify is not rated in our Global Top Stock Ideas.  Apple is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Information Technology Global Top Stock Ideas.
  • Take Two Interactive Software (TTWO) shares spiked on Wednesday following rumors that the company’s board is in high-level talks to be acquired by Sony Interactive Entertainment (TSE: 6758). Sony has since rebuked rumors with spokesman Hirotaka Fukushima saying on the phone that there is, “no truth,” behind the reports. Take Two is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Information Technology Global Top Stock Ideas. Sony is rated “Attractive” in our Japan Large-Cap Global Top Stock Ideas.

Global Financials Stocks Trending in the News

  • Brookfield Asset Management Inc. (TSX: BAM.A) has agreed to purchase a majority stake in Oaktree Capital Group LLC (OAK), a combination that will rival Blackstone Group LP (OAK) as the world’s largest alternative asset manager. Brookfield will pay USD$4.7bn for a ~62% stake in Oaktree Capital Group. Combined, the firms will have roughly USD$475bn of assets under management that generates about USD$2.5bn of fee-related revenue. Brookfield Asset Management is rated “Unattractive” in our Canada All-Cap Global Top Stock Ideas. Oaktree Capital Group is rated “Attractive” in our US SMID-Cap Global Top Stock Ideas.  Blackstone Group LP is rated “Unattractive” in our US SMID-Cap Global Top Stock Ideas.
  • Commerzbank’s (DB:CBK) potential merger with Deutsche Bank (DB:DBK) is opposed by the top employee representative at Commerzbank.  The deputy chairman of the board at Commerzbank made the comment about how the workers’ council at the bank is opposed to any merger.  Earlier in the week labor leaders at Deutsche Bank expressed the same opposition to any merger with Commerzbank.   Commerzbank is rated “Unattractive” in our European Large-Cap Global Top Stock Ideas.  Deutsche Bank is rated “Unattractive” in our European Large-Cap Global Top Stock Ideas.

Global Industrials Stocks Trending in the News

  • Boeing (BA) has seen all of its 737 Mac aircraft around the world grounded.  It has USD$600 billion in a backlog of orders for the model and buyers are already suggesting they may cancel and opt for Airbus (AIR) models instead.  There have not been any cancelations yet, though a number of buyers have expressed the potential for canceling.    Boeing is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Industrials Global Top Stock Ideas.
  • Embraer (ERJ) reported fourth quarter revenue of USD$1.67 billion, matching consensus; with ebitda of USD$1.8.1 million.  Embraer reaffirmed 2019 guidance and said 2019 will be a year of operational break-even.  Embraer added that Boeing’s (BA) problems with the 737 Max will not affect Embaer’s JV with Boeing.  Embaer is rated “Unattractive” in our Brazil All-Cap Global Top Stock Ideas.  Boeing is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Industrials Global Top Stock Ideas.
  • General Electric (GE) said it will burn through USD$2 billion in cash over the coming year as it works to turnaround the company.  CEO Larry Culp said the “Challenges are complex but clear” and highlighted that performance in 2020 and 2021 will be noticeably better than 2019.  GE has seen USD$170 billion in market cap evaporate since its problems started.  General Electric is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Unattractive” in our US Industrials Global Top Stock Ideas.

Global Commodities & Power Stocks Trending in the News

  • ExxonMobil (XOM) said today it intends to lower the cost of pumping oil in the Permian Basin to USD$15 per barrel.  For comparison, that is a low cost that can only be found in the huge fields of the Middle East.  The Permian Basin total production is close to 4 million barrels per day, equal to all the production in Iraq today.  ExxonMobil is deploying 55 rigs there by 2024 and total production there is expected to double by that time.  ExxonMobil is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas.
  • K+S AG (DB: SDF) shares soared after the company forecasted an earnings surge in FY2019 following a 110mm euro loss in profit in FY2018 due to an inability to dispose process water into German rivers because of a drought. K+S sees operating profit growing by as much as 40% in FY2019 to as high as 850mm euros. K+S is rated “Unattractive” in our European SMID-Cap Global Top Stock Ideas.
  • Legacy Reserves Inc. (LGCY) shares tanked after the company announced that it is reviewing all strategic options, including a sale. Legacy Reserves has reached out to Tudor Pickering & Hold L.P. and Perella Weinberg Partners L.P. as financial advisors for its next strategic choice. Legacy Reserves is rated “Unattractive” in our US SMID-Cap Global Top Stock Ideas.

 

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Actionable and Transparent Quantitative ResearchActionable and Transparent Quantitative Research

US Treasuries

  • US 2-Year Treasury Notes are higher with yields down -0.41 basis points to 2.46%
  • US 5-Year Treasury Bonds are higher with yields down -0.17 basis points to 2.42%
  • US 10-Year Treasury Bonds are lower with yields up 0.72 basis points to 2.62%
  • The US Treasury 2s-5s Spread has widened 0.24 basis points to -0.03%
  • The US Treasury 2s-10s Spread has widened 1.13 basis points to 0.17%
  • US Treasury 5s-10s Spread has widened 0.89 basis points to 0.2%

Currencies

  • EUR€ is down 0.203% against the USD$ in after hours to 1.1304
  • GBP£ is down 0.772% against the USD$ in after hours to 1.3235
  • CHF is little changed 0% against the USD$ in after hours to 0.9963
  • JPY¥ is up 0.477% against the USD$ in after hours to 111.7

Commodities

  • WTI Crude is up 0.6% to USD$58.61/bbl with the Brent-WTI spread down USD$-1.3 to USD$8.07/bbl
  • Gold is down -0.99% to USD$1296.17/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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Get Unbiased Quantitative Investment Research from Advanced AI Machine Learning Technology and Maximize your ReturnsGet Unbiased Quantitative Investment Research from Advanced AI Machine Learning Technology and Maximize your Returns

S&P 500 Movers

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Outperformers Sector Price 1D % Chg Volume
TechnipFMC PLC Energy 22.7 4.98%                750,472
Lam Research Corp Information Technology 140 3.59%                540,094
General Electric Co Industrials 8.72 2.79%          25,500,678
Northern Trust Corp Financials 86.9 2.74%                681,973
Discovery Inc Communication Services 25.1 2.07%                747,623
 
Underformers Sector Price 1D % Chg Volume
Dollar General Corp Consumer Discretionary 112 -7.49%                736,254
Take-Two Interactive Software Inc Communication Services 106 -3.75%            1,232,386
Nektar Therapeutics Health Care 44.5 -3.56%                532,342
L Brands Inc Consumer Discretionary 26.6 -3.14%            1,226,538
Assurant Inc Financials 94.5 -3.04%                209,169
Morning BriefA quick GLOBAL RECAP TO START YOUR DAY
Morning BriefA quick GLOBAL RECAP TO START YOUR DAY