blog

Latest from the Quantamize Blog

I need my risk and I need it now!...US stocks surge as risk-appetite builds with encouraging global data

Apr 01, 2019

 

Better Research, Better Investments.Better Research, Better Investments.
Better Research, Better Investments.Better Research, Better Investments.

US Markets End of Day Snapshot

  • US stocks surge today, closing higher in an environment of risk-on with global data pointing to economic strength, not slow down
  • The S&P 500 finished up 1.16%, Nasdaq Composite up 1.29%, and Russell 2000 up 1.06%
  • ISM Manufacturing PMI in March came at 55.3above the 54.5 consensus and 54.2 in February
  • PMIs across Asia printed better than expected, in Japan, China and South Korea readings came better than expected, indicating generally improving economic conditions
  • US Retail Sales fell 0.2% in Febrauary, coming much worse than the 0.2% growth expected and down from 0.2% in January
  • Markit US Manufacturing PMI was 52.4 in March, in line with the 52.5 consensus and 52.5 in January
  • Construction Spending rose 1.0% in Februarymuch better than the 0.2% drop expected and below the 1.3% rise in January 
  • The President of the Minneapolis Fed Neel Kashkari said it is not time to raise interest rates - he is known as a consistent opponent of interest rate hikes
  • The spring home-buying season is starting off in a very good spot, with falling interest rates putting 4% mortgage rates within reach for some
  • Goldman Sachs and Morgan Stanley both lowered their 2019 expectation for US 10-year Treasury yield to 2.35% and 2.25%, respectively
  • Morgan Stanley European Quants are out arguing that investors should buy value stocks over quality stocks.  They argue the valuation for quality stocks is in the 99th percentile while stocks with high dividend yields are in the bottom decile.  As a result, you may get a better “payoff” buying stocks with higher payouts. 
  • UBS is out arguing that global consumer discretionary stocks are set to outperforming utilities stocks.  The ratio between the two sectors has dropped 15% since hitting an all-time high back in June 2018.  A long-short pairing of the two is a way to play to reacceleration in global growth.  Not sure we would recommend that though Consumer Discretionary has been one of our favorite sectors in US markets so far this year! 
  • We are focused on Germany in our Data Daily series this weekMacro Monday: Comparing Key Data Points of the German Economy 
  • Check out our Book of the Week: Broke Millennial: Stop Scraping By and Get Your Financial Life Together, by Erin Lowry 
  • Financials (+2.42%), Industrials (+2.07%), and Materials (+1.5%) stocks were the top performers in the S&P 500 today
  • Consumer Staples (-0.21%), Real Estate (-0.28%), and Utilities (-0.71%) 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 3.59x
  • 100 stocks in the S&P 500 hit 4-week highs while 7 stocks reached 4-week lows
  • 49 stocks in the S&P 500 closed overbought while 3 stocks closed oversold according to the 16-day RSI Measure
  • 100 stocks in the Nasdaq Composite hit 4-week highs while 89 stocks reached 4-week lows
  • 248 stocks in the Nasdaq Composite closed overbought while 226 stocks closed oversold according to the 16-day RSI Measure
  • The VIX closed down 0.31 points today to 13.40 after closing at 13.71 last week

 

Stocks Trending in the News

Click name for Q-Factor rating and financials data.

Global Consumer Stocks Trending in the News

  • CarMax (KMX) was upgraded to overweight from equal-weight at Stephens  CarMax has nice tailwind from its new omni-channel strategy with Stephens highlighting that CarMax saw double-digit sales growth where this completely on-line process has been introduced.  CarMax saw its price target hiked to $93 from $83 together will the upgrade.  Stephens has seen strong growth in March in its own channel-checks, reinforcing its bullish call on CarMax.  CarMax is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Consumer Discretionary Global Top Stock Ideas.
  • Coty (COTY) was dubbed a top short idea at JP Morgan today, saying the tender offer from majority share owner JAB will continue to put downward pressure on the shares.  JP Morgan does not see any good news for the stock near-term as passive funds rebalance, selling the shares.  Coty is rated “Top Short” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Consumer Staples Global Top Stock Ideas.
  • Galaxy Entertainment (SEHK:27) shares surged after China’s Gaming Inspection & Coordination Bureau said Macau’s casinos’ revenue fell just 0.4% in March, coming much better than the 3% drop that was expected.   While better, casino revenue remains subdued as high rollers have yet to return to the casinos in strength.  The soft revenue is expected to persist.  Galaxy Entertainment is rated “Neutral” in our China All-Cap Global Top Stock Ideas.
  • Hertz (HTZ) is seeking to claw back at least $70 million in compensation from its ex-CEO and other senior executives.  Hertz claims these executives pressured employees to use fraudulent accounting practices to inflate income and earnings.  Hertz was forced to restate years of financials statements in the wake of these alleges misdeeds and incurred $200 million in costs.  Hertz filed the lawsuit because the executives have refused to voluntarily return the compensation.  Hertz is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Unattractive” in our US Industrials Global Top Stock Ideas.
  • Kellogg (K) said it has agreed to sell its cookies and fruit brands to Ferrero SpA for $1.3 billion.  Kellogg is selling these brands as it seeks to focus on its faster growing brands.  Kellogg’s CEO said, “It was not easy to sell these brands” but that it allow for simpler operations and more focus on existing brands.  Giovanni Ferrero, CEO of Ferrero, said the acquired brands fit well in their existing lineup.  Kellogg is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Consumer Staples Global Top Stock Ideas.  
  • Lyft (LYFT) shares plummeted in the second day of trading, closing well below its IPO price.  As research reports begin to emerge on the stock, analysts are questioning its growth strategy and the likelihood of a slowdown.  Of seven initiations of coverage, 5 are holds and only 2 are buys.  Lyft is not yet rated in our Global Top Stock Ideas.
  • Walt Disney (DIS) has a disappointing weekend with its debut of the live-action version of Dumbo.  Disney’s Dumbo earned just $45 million in ticket sales over the weekend, a weak opening for the film.  Dumbo cost $170 million to produce and this is Disney’s first flop of the year.  Disney 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) announced the cancellation of its AirPower wireless charging mat, in a rare move for the tech giant.  Apple announced the AirPower in late 2017 with its iPhone X, with the product set to go on sale in 2018.   Apple has almost never simply canceled a product it already announced.  Apple is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Information Technology Global Top Stock Ideas.
  • Comscore (SCOR) said both its CEO and President are resigning the company, prompting the stock to lose over a quarter of its value.  The announcement also caused a wave of downgrades as both executives were on the job barely a year.  CEO Bryan Wiener said he and the board “had irreconcilable differences on how to execute the company’s strategy.”  Comscore is rated “Neutral” in our US SMID-Cap Global Top Stock Ideas and “Neutral” in our US Information Technology Global Top Stock Ideas.
  • EasyJet (LSE:EZJ) warned investors that the holiday season is not likely to be as strong as the company has expected.   Brexit and the associated uncertainty is dampening demand for air travel, the company advised.  “We had hoped for a little more clarity and certainty at this point,” said CEO Johan Lundgren.  The combination of Brexit woes plus a slowing economy is taking its toll on EasyJet shares recently.  EasyJet is rated “Neutral” in our United Kingdom All-Cap Global Top Stock Ideas.
  • Facebook (FB) CEO Mark Zuckerberg called for additional regulation and oversight of the internet.  Critics of Facebook got a chuckle from Zuckerberg’s comments given the multitude of missteps Facebook has made on this subject.  Zuckerberg called for regulation of four broad areas-harmful content, election integrity, privacy and data portability.  Facebook is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Information Technology Global Top Stock Ideas.
  • Softbank (TSE: 9984) announced the largest local bond sale ever in Japan.  Softbank will offer 500 million yen in bonds targeting individual investors.  The bonds are expected to be priced on April 12.  Softbank controls the $100 billion Vision Fund.  Softbank is rated “Neutral” in our Japan Large-Cap Global Top Stock Ideas.
  • Versum Materials (VSM) has opened the possibility for a deal with Merck KGaA (DB:MRK) of Germany after initially rejecting its $5.9 billion bid.  Members of both companies met this week to discuss a potential deal.  Merck’s initial offer was for $48 per share.   In this meeting the CEO of Merck indicated there is room to increase its offer.  Versum Materials 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 is rated “Neutral” in our European Large-Cap Global Top Stock Ideas.  

Global Industrials Stocks Trending in the News

  • Boeing (BA), like the rest of the world, will not see a preliminary report from regulators on the crash of the Ethiopian Airlines 737 Max.  Ethiopia’s Transport Ministry said the report will not be released Monday as had been reported widely in the press after Ethiopia’s Foreign Ministry said that it would be.  Initial reports are that the black box shows that the anti-stall system engaged but investigators are still looking for a part to explain why that happened.  Boeing is rated “Top Short” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Industrials Global Top Stock Ideas
  • DSV (CPSE:DSV) has agreed to acquire Panalpina Welttransport Holding ( PWTN), after the board of Panalpina agreed to the previously announced deal.  The deal will create $4.6 billion logistic and cargo player than will be the largest in the world.  The offer is for 196 Swiss francs per share which was a 43% premium when announced on January 15th. The merged entity will have 60,000 employees, $17.8 billion in revenue and be active in 90 countries.  DSV is rated “Top Buy” in our European Large-Cap Global Top Stock Ideas.  Panalpina Welttransport Holding is rated “Neutral” in our European SMID-Cap Global Top Stock Ideas.
  • Norfolk Southern (NSC) was upgraded by Bank of America Merrill Lynch to buy.  Bank of America also hiked the price target of Norfolk Southern to $205 from $190.  Norfolk Southern posts “continued gains” in its performance metrics of its Precision Schedule Rail division.  There is room for further upside improvement there, Bank of America notes.  Norfolk Southern traded at its highest level since July 1980.  Norfolk Southern is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Industrials Global Top Stock Ideas.

Global Financial Stocks Trending in the News

  • Wells Fargo (WFC)  was downgraded to market perform from outperform at KBW.  Wells Fargo’s price target was cut to $50 from $58.  Wells Fargo will have “tough sailing” without a CEO and finding a new one will not be easy.  Senator Elizabeth Warren, however, is smiling.  KBW fears it is not clear where Wells Fargo is headed.  Wells Fargo is rated “Neutral” in our US Large-Cap Global Top Stock Ideas.

Global Health Care Stocks Trending in the News

  • Celgene (CELG) was downgraded at Atlantic Equities to neutral from buy.  Celgene’s price target was lowered to $101 from $103.  The market the average price target of Celgene is $99.50.  The downgrade is based on valuation with the recent rise in the stock price.  Celgene is rated “Top Buy” in our US Large-Cap Global Top Stock Ideas.
  • Cresco Labs (CNSX:CL) is acquiring Origin House (CNSX:OH) in a C$1.1 billion all stock deal.  Origin House shareholders will receive 0.8428 shares of Cresco Labs.  Cresco is paying a 26% premium to the average price over the last 30 days.  Origin House shareholders will hold around 20% of the resulting company.  Cresco said it sees its brands in Origin’s 725 dispensaries upon completion of the deal.  Neither Cresco Labs nor Origin House is rated in our Global Top Stock Ideas.
  • Novartis (SWX:NOVN) will acquire the outstanding shares of IFM Tre, a unit of IFM Therapeutics.  Novartis will pay $310 million up front and eligible for up to $1.265 billion in additional milestone payments.  IFM Tre drug is able to fine-tune a person’s immune system and Novartis is keen to acquire its drug pipeline.  Novartis is rated “Top Buy” in our European Large-Cap Global Top Stock Ideas.

Global Commodities Stocks Trending in the News

  • Vale’s (VALE) curtailed mining operations is being felt more broadly as Brazil’s Ministry of Mines and Industry reports fell to 22.18 tons in March from 29.95 tons a year ago.  Vale had been whittling away at its inventory but going forward the lack of production will begin to be felt more.  Goldman Sachs raised its expectation for iron ore to $85 per ton.  Vale ha shuttered over 90 tons of production and for now is focused on safety and not restoring production.  Vale is rated “Neutral” in our Brazil All-Cap Global Top Stock Ideas.

 

Actionable and Transparent Quantitative ResearchActionable and Transparent Quantitative Research
Actionable and Transparent Quantitative ResearchActionable and Transparent Quantitative Research

US Treasuries

  • US 2-Year Treasury Notes are lower with yields up 6.86 basis points to 2.32%
  • US 5-Year Treasury Bonds are lower with yields up 8.18 basis points to 2.31%
  • US 10-Year Treasury Bonds are lower with yields up 9.41 basis points to 2.49%
  • The US Treasury 2s-5s Spread has widened 1.32 basis points to -0.01%
  • The US Treasury 2s-10s Spread has widened 2.55 basis points to 0.17%
  • US Treasury 5s-10s Spread has widened 1.23 basis points to 0.18%

Currencies

  • EUR€ is little changed 0.071% against the USD$ in after hours to 1.121
  • GBP£ is up 0.629% against the USD$ in after hours to 1.3117
  • CHF is down 0.398% against the USD$ in after hours to 1.0007
  • JPY¥ is up 0.46% against the USD$ in after hours to 111.37

Commodities

  • WTI Crude is up 2.41% to USD$61.59/bbl with the Brent-WTI spread down USD$-0.32 to USD$7.33/bbl
  • Gold is down -0.4% to USD$1287.23/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

 

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
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

On Mobile/Tablet scroll to the right.

Outperformers Sector Price 1D % Chg Volume
Wynn Resorts Ltd Consumer Discretionary 108 8.40%                594,249
IPG Photonics Corp Information Technology 126 6.79%                134,474
Lincoln National Corp Financials 55.8 5.50%                525,940
BorgWarner Inc Consumer Discretionary 39.5 5.49%                533,031
Microchip Technology Inc Information Technology 75 5.42%            1,145,017
 
Underformers Sector Price 1D % Chg Volume
ABIOMED Inc Health Care 325 -2.74%                104,821
Monster Beverage Corp Consumer Staples 54.7 -2.38%            1,685,465
Kellogg Co Consumer Staples 59.3 -2.37%                844,391
American Tower Corp Real Estate 163 -2.31%                729,295
Hormel Foods Corp Consumer Staples 43.4 -2.19%                628,914
Morning BriefA quick GLOBAL RECAP TO START YOUR DAY
Morning BriefA quick GLOBAL RECAP TO START YOUR DAY