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No oil for you! US stocks and oil rising after Russia affirms crude production cuts

Mar 26, 2019

 

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Market data as of 12:15pm EST

US Market Snapshot

  • US stocks are rising midday, led energy shares rising on strong oil prices, in the wake of Russia's affirmation of crude oil production cuts
  • Oil has been rising all morning and traded through $60, WTI Crude is currently up 1.82% to USD$59.84/bbl 
  • The S&P 500 is currently up 0.76%, Nasdaq Composite is up 0.9%, and Russell 2000 is up 0.9%
  • Oil bulls argue that the S&P 500 needs to hold above the technical resistance level of 2,800 for crude oil prices to hold above USD$60/bbl.  
  • US Building Permits fell 1.6% in February, coming worse than the 0.9% drop consensus
  • US Housing Starts fell 8.7% in February, worse than the 1.6% consensus
  • Richmond Fed Manufacturing Index came at 10 for March, matching consensus and down fro 16 in February
  • Goldman Sachs is telling clients, together with a number of other Wall Street banks, that the inversion of the US yield curve seen on Friday, while usually an indication of a coming recession, is not reason to worry this time
  • We take a closer look at Apple's announcement: Apple Takes a Bigger Bite out of Services, Hoping to Avoid the Worms
  • The 50-day moving average for the S&P 500 is moving towards its 200-day moving average, which would be a technical bullish signal.  A break above the 200-day moving average by the 50-day moving average is called a “Golden Cross” and is viewed s aa major “buy” signal by technical analysts. 
  • According to Credit Suisse, while net long/short exposures for hedge funds on its prime broker platform are near the lowest levels since 2017, they are seeing an uptick in the number of net shorts.  The recent deceleration in the rally in US stocks, combined high dispersion levels (and lower correlations) support greater payoffs from shorting stocks. 
  • US-China trade talks continue with little news of progress so far
  • Oil bulls argue that the S&P 500 needs to hold above the technical resistance level of 2,800 for crude oil prices to hold above USD$60/bbl.  
  • Energy (+1.5%), Healthcare (+1.05%), and Tech (+0.91%) stocks are the top performers in the S&P 500 today
  • Industrials (+0.53%), Real Estate (+0.3%), and Materials (+0.11%) stocks are the worst performers in the S&P 500 today
  • Investor sentiment for US stocks is positive with the advance/decline ratio for the S&P 500 currently at 6.81x
  • 24 stocks in the S&P500 are at 4-week highs while 102 stocks are at 4-week lows
  • 34 stocks in the S&P 500 are overbought while 23 stocks are oversold according to the 16-day RSI Measure
  • 81 stocks in the Nasdaq Composite are at 4-week highs while 207 stocks are at 4-week lows
  • 98 stocks in the Nasdaq Composite are overbought while 718 stocks are oversold according to the 16-day RSI Measure
  • The VIX is currently little changed at 16.48 from yesterday's close of 16.33

Stocks Trending in the News

 

Click name for Q-Factor rating and financials data.

Global Consumer Stocks Trending in the News

  • Avon (AVP) could be worth a takeout price of USD$3.80-4.70 if a deal were to close with Natura (NATU3) of Brazil, according to DA Davidson.  Natura has confirmed it is in preliminary discussions with Avon.  DA Davison comments that with its leveraged balance sheet of over USD$2 billion of debt, or 4.3x debt to ebitda, a deal for Natura would be challenging and would need to include the use of shares.  Natura is rated “Top Buy” in our Brazil All-Cap Global Top Stock Ideas.  Avon is not rated in our Global Top Stock Ideas.
  • Bed, Bath & Beyond (BBBY) is about to see a proxy fight from three activist hedge funds that want to replace the entire 12-person board of the company.  Legion Partners, Macellum Advisors and Ancora Advisors claim management at Bed, Bath and Beyond has not adapted to the changing tastes and habits of shoppers and the company needs a change.  The three funds control over 5% of the company and are working together to force change.  Bed, Bath and Beyond is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Consumer Discretionary Global Top Stock Ideas.
  • Carnival Corp. (CCL) shares fell the most intraday in 2019 after the cruise line cut its top-end FY2019 EPS guidance to USD$4.55/share from previously offered guidance of USD$4.80/share. Analysts had expected EPS of USD$4.76 from Carnival in FY2019 prior to the announcement. Carnival cited fuel costs and currency fluctuations as reasoning for the guidance cut. Carnival is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Consumer Discretionary Global Top Stock Ideas.
  • LVMH Moet Hennessy Louis Vuitton SE (ENXTPA: MC) shares edged higher after HSBC raised the stock’s price target from 355 euros/share to 375 euros/share. HSBC explained to clients that LVMH offers a, “rare profile combining robust growth with defensive aspects.” LVMH is rated “Attractive” in our European Large-Cap Global Top Stock Ideas.
  • McCormick (MKC) reported first quarter 2019 adjusted EPS of USD$1.12 beating consensus of USD$1.04.  McCormick reported first quarter 2019 revenue of USD$1.23 billion matching consensus of USD$1.24 billion.  McCormick gave full year sales growth guidance of 1-3% and EPS guidance of USD5.17-5.27.  McCormick is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Consumer Staples Global Top Stock Ideas.
  • McDonald’s (MCD) announced the acquisition of Dynamic Yield Ltd., an Israeli digital start-up, for USD$300 million. Dynamic Yield developed an in-store ordering system that changes real-time depending on factors such as weather, to suggest items to customers.  McDonald’s will start to use the system on its drive-thru.  It is McDonald’s first acquisition in a few years and the largest in over 20 years.  McDonald ’s is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Consumer Discretionary Global Top Stock Ideas.
  • News Corp (NWSA) is joining Apple's (AAPL) new news service, eight years after attempting to launch a version of its WSJ on the then-new iPad.  The effort eight years ago was a complete failure, but News Corp is much more confident of success this time.  “It’s going to get our journalism in the hand of millions of Americans who otherwise might not have access to it,” said Journal publisher William Lewis.  News Corp is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Consumer Discretionary 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.
  • Nike (NKE) was the victim of extortion by Michael Avenatti, the California lawyer, who was arrested today on those charges Avenatti told Nike he would cancel a press conference that was to be critical of the company if it paid an unidentified client of his USD$1.5 million.  Additionally, he demanded up to USD$25 million to conduct an internal investigation of Nike.  Avenatti was charged in both New York and California in connection with the case.  Nike has not released a comment.  Nike is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Consumer Discretionary Global Top Stock Ideas.

Global Information Technology and Communication Services Stocks Trending in the News

  • Apple (AAPL) launched its much anticipated streaming service and a number of other initiatives.  Apple will offer Apple TV+, a subscription service with original content and other pay services; Apple News, a subscription service allowing access to 300+ magazines and Apple Arcade, a subscription service giving access to 100+ exclusive video games.  For the first time Apple’s Apple TV app will work on many platforms, not just its own.  Apple also launched the Apple Card, a credit card, with Goldman Sachs (GS).  Apple is seeking to expand beyond hardware and deeper into services with the softening of sales of its flagship iPhone.  Apple gave a price of $9.99 for its news service but did not give pricing for the other services announced, raising a few eyebrows.  Apple is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Information Technology Global Top Stock Ideas.
  • Merck KGaA (DB:MRK) has formally made a tender offer for Vesum Material (VSM), looking for it to step away from the offer from Entergris  (ENTG).  Merck had tried to negotiate with management of Versum but was rebuffed multiple times.  Merck then decided to go directly to shareholders with a formal tender offer.  Merck is offering USD$48 per share, touting its cash offer as superior to the all share offer from Entegris.  Merck KGaA is rated “Neutral” in our European Large-Cap Global Top Stock Ideas. Entegris is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Information Technology Global Top Stock Ideas.  Versum is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Information Technology Global Top Stock Ideas.
  • Nintendo Co. (TSE: 7974) shares traded higher by the most in nearly 8 months following a Wall Street Journal report that the gaming company plans to unveil two new Switch console models as early as this summer. According to the Wall Street Journal, the first Switch model will include enhanced features to appeal to avid gamers while the second Switch model will target more casual players. Nintendo is not rated in our Global Top Stock Ideas.
  • Nvidia (NVDA) will not pursue any mergers or acquisitions for the remainder of the year after the company purchased Mellanox Technologies (MLNX). According to a Reuters report, Nvidia CEO Jensen Huang made comments at a conference in Tel Aviv on Tuesday expressing that the company is, “going to save money for a while.” Nvidia is rated “Top Short” in our US Large-Cap Global Top Stock Ideas and “Unattractive” in our US Information Technology Global Top Stock Ideas. Mellanox Technologies is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Information Technology Global Top Stock Ideas.
  • Samsung (KOSE: A005930) warned analysts that CY1Q2019 financials will fall short of expectations, although the company expects a pickup in demand for memory chips to emerge later in 2019. Samsung’s announcement sent ripples throughout chipmaker stocks as investors hope for a rebound in chip demand. Last week, rival chipmaker Micron Technology (MU) told investors that it expects chip demand to return later in 2019. Samsung is not rated in our Global Top Stock Ideas. Micron is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Information Technology Global Top Stock Ideas.
  • Spectris (LSE: SXS) shares fell the most since July 2018 after Goldman Sachs downgraded the stock from neutral to sell and set a Street-low price target. Goldman Sachs’s price target of 2,200p/share is the lowest among 14 analyst forecasts. Spectris maintains an average price target of 2,777.73p/share, implying an 11% upside from its last closing price. Spectris is rated “Unattractive” in our United Kingdom All-Cap Global Top Stock Ideas.
  • Trade Desk, Inc. (TTD) has launched a programmatic ad buying platform in China. Trade Desk’s new platform, which has been in beta since late 2018, is being launched in partnership with notables such as Baidu Exchange Services and Tencent Marketing Solutions. Trade Desk is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Information Technology Global Top Stock Ideas.
  • Wirecard AG (XTRA: WDI) shares soared by the most intraday in over a decade after an external investigation into fraud allegations in Asia found only non-material irregularities. While the company acknowledged several oversights within its operations, they were not significant. Wirecard is rated “Neutral” in our European Large-Cap Global Top Stock Ideas.

Global Financials Stocks Trending in the News

  • Citigroup (C) was fined 133 million yen (USD$1.2 million) by Japan’s security regulator for manipulating prices of Japanese debt.  The regulator said Citigroup placed bids for bond futures contracts at the Osaka Exchange for fake orders, a process known as spoofing.  This follows Citigroup’s well-known problems in Hong Kong.  Citigroup is rated “Neutral” in our US Large-Cap Global Top Stock Ideas.

Global Industrials Stocks Trending in the News

  • Airbus (ENXTPA:AIR) secured a USD$35 billion aircraft order from China for 300 jets.  China will buy 290 A320 and 10 A350 airliners from Airbus, dealing a huge blow to Boeing (BA).  The order placed is twice the size of what French President Macron pitched to China in 2018.  Boeing continues to struggle with its 737 Max being grounded and this announcement hit Boeing a tough time.  Airbus is rated “Neutral” in our European Large-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.
  • Nordex SE (XTRA: NDX1) shares traded at a 2-year high after the wind-turbine maker issued FY2019 sales growth guidance of about 30%. Nordex observed a strong order book and increased installations in FY2018, driving sales guidance of between 3.2bn euros and 3.5bn euros in FY2019, ahead of prior analyst consensus for 3bn euros. Nordex is rated “Neutral” in our European SMID-Cap Global Top Stock Ideas.

Global Health Care Stocks Trending in the News

  • AbbVie (ABBV) was downgraded at Argus Research to hold from buy.   Argus downgrades AbbVie mainly due to concern over its flagship Humira drug and its expectation for declining sales.  Overseas are especially vulnerable given the biosimilars entering the market.  Argus says of Humira, it no longer appears “invulnerable in the face of competition from biosimilars.”  AbbVie is rated “Attractive” in our US Large-Cap Global Top Stock Ideas.
  • Cronos Group Inc. (TSX: CRON) shares dipped after the cannabis company announced revenue that missed the lowest analyst estimate. Cronos generated revenue of CAD$7.05mm in CY4Q2018, missing analysts’ consensus of CAD$8.95mm by over 21%. Cronos also reported an adjusted loss per share of CAD$0.06 in CY4Q2018, missing consensus for a loss per share of CAD$0.02. Cronos Group is rated “Unattractive” in our Canada All-Cap Global Top Stock Ideas.

Global Commodities & Energy Stocks Trending in the News

  • Royal Dutch Shell (ENXTAM:RDSA) and Energy Transfer (ET) announced plans to convert an LNG import facility in Louisiana to an export terminal.  Both companies see a bright future for shale gas exports with the US now the largest producer of oil and gas in the world.  Both companies are seeking to sell their gas outside the US where prices are considerably higher.  Royal Dutch Shell is rated “Top Buy” in our European Large-Cap Global Top Stock Ideas and “Top Buy” in our United Kingdom All-Cap Global Top Stock Ideas.  Energy Transfer is rated “Top Short” in our US Large-Cap Global Top Stock Ideas.
  • Vale (VALE) has a very consequential week ahead, with the Tuesday release of production data, the first report since its dam disaster.  Vale traditionally gives full-year production guidance at that time and investors are keen to see of the tradition is maintained.  Wednesday fourth quarter results are set to be released followed by its conference call with investors on Thursday.   With iron ore prices 11% higher since the disaster, the market is very interested to hear from Vale before building expectations for the rest of 2019.  Vale is rated “Neutral” in our Brazil All-Cap Global Top Stock Ideas.
 

 

 

 

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US Treasuries

  • US 2-Year Treasury Notes are lower with yields up 4.74 basis points to 2.28%
  • US 5-Year Treasury Bonds are lower with yields up 4.17 basis points to 2.22%
  • US 10-Year Treasury Bonds are lower with yields up 3.71 basis points to 2.43%
  • The US Treasury 2s-5s Spread has narrowed 0.57 basis points to -0.07%
  • The US Treasury 2s-10s Spread has narrowed 1.03 basis points to 0.15%
  • US Treasury 5s-10s Spread has narrowed 0.46 basis points to 0.22%

Currencies

  • EUR€ is currently down 0.221% against the USD$ to 1.1287
  • GBP£ is currently little changed against the USD$ at 1.3211
  • CHF is currently down 0.159% against the USD$ to 1.006
  • JPY¥ is currently up 0.518% against the USD$ to 110.54

Commodities

  • WTI Crude is currently up 1.82% to USD$59.84/bbl with the Brent-WTI spread down USD$-0.81 to USD$7.43/bbl
  • Gold is currently down -0.59% to USD$1314.05/oz
     

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

S&P 500 Sector ETFs - Intraday

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

Russell 1000 Factor ETFs - Intraday

*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
Viacom Inc Communication Services 30 9.73%            1,252,875
CBS Corp Communication Services 47.8 5.14%                344,929
Biogen Inc Health Care 337 4.04%                645,425
IPG Photonics Corp Information Technology 126 3.79%                  81,064
Anadarko Petroleum Corp Energy 47.5 3.69%                513,208
 
Underperformers Sector Price 1D % Chg Volume
Carnival Corp Consumer Discretionary 52.9 -8.14%            1,340,341
ABIOMED Inc Health Care 325 -4.17%                175,787
Mosaic Co/The Materials 31.4 -2.67%                311,836
WellCare Health Plans Inc Health Care 256 -2.43%                  37,748
Centene Corp Health Care 125 -2.42%                313,032
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