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Tariff Delay Makes the Red Go Away: Trump to Delay EU & Japan Auto Tariffs, US Stocks Rising Midday

May 15, 2019

 

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Market data as of 12:15pm EST

US Market Snapshot

  • US stocks are posting gains midday on news the Trump administration will delay 25% tariffs on EU and Japanese auto imports to focus on China
  • The S&P 500 is currently up 0.61%, Nasdaq Composite is up 0.93%, and Russell 2000 is up 0.25%
  • President Trump and President Xi are due to meet and talk at the G-20 Summit next month in Japan while the US prepares additional tariffs on $300 billion in Chinese imports
  • Buying the Dip seems to be alive with Bank of America seeing the biggest inflow since December from clients last week despite the market volatility.   Inflows last week totaled nearly USD$4.7 billion. 
  • According to an analysis by Bloomberg, the ratio of performance between an equally weighted S&P 500 defensive index vs. cyclicals index is at the highest levels since early January.  In plain terms, this would suggest defensive stocks are outperforming cyclicals over the past 3 to 4 weeks.  We take a different tact and suggest this is part of the low beta rotation we were calling for in late April.  This performance is a confirmation of that trend.
  • More on US-China: Sabers Rattle and Tariffs Fly - The latest in the US-China trade fight
  • China's economy lost steam before the trade war heated up, Bloomberg notes today, adding more stimulus is expected to come given the overall softening being seen there
  • Retail sales in April fell 0.2%, well below consensus of 0.2% growth and down from 1.6% in March
  • Retail sales ex-auto and gas in April grew just 0.1%, well below consensus of 0.7% growth and down from 1.2% in March
  • Industrial production fell 0.5% in April, worse than the 0% growth expected
  • Interest rate cuts: Multiple Fed Funds Cuts Coming in 2019? Futures Say Yes, But...
  • What Fed Officials are saying: What are Fed Officials saying as the Trade War Heats Up?
  • Top Technicals Stocks: Sky High RSI: The Most Oversold TOP BUY Stocks you need NOW!
  • Top Low Vol Stocks: TOP LOW VOLATILITY STOCKS for what has lately felt like a high volatility market
  • Top SMID-Cap Stocks: TOP SMID-CAP STOCKS: Big Opportunity in a Not So Big Package, The Perfect Size For Your Portfolio
  • The International Energy Agency cut its oil demand forecast for 2019 due to weak fuel consumption in China, Japan and Brazil
  • Telecom (+1.68%), Real Estate (+0.89%), and Tech (+0.84%) stocks are the top performers in the S&P 500 today
  • Materials (+0.21%), Industrials (+0.08%), and Financials (-0.16%) 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 2.62x
  • 43 stocks in the S&P500 are at 4-week highs while 41 stocks are at 4-week lows
  • 11 stocks in the S&P 500 are overbought while 48 stocks are oversold according to the 16-day RSI Measure
  • 76 stocks in the Nasdaq Composite are at 4-week highs while 192 stocks are at 4-week lows
  • 181 stocks in the Nasdaq Composite are overbought while 389 stocks are oversold according to the 16-day RSI Measure
  • The VIX is currently little changed at 18.36 from yesterday's close of 18.06

Stocks Trending in the News

Click name for Q-Factor rating and financials data.

Global Consumer Stocks Trending in the News

  • Macy’s (M) reported total same store sales growth of +0.7% beating consensus of +0.3%.  Macy’s reported same stores sales growth at company owned stores of +0.6% while consensus was for a drop of 0.1%.  Macy’s adjusted EPD of 44 cents beat 32 cents consensus.  Total sales of $5.5 billion matched consensus.  Macy’s is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Consumer Discretionary Global Top Stock Ideas
  • Restaurant Brands (QSR) is under pressure from investors to improve performance, the WSJ is highlighting today.   Restaurant Brands, the owner of Burger King, Popeyes, and Tim Hortons, saw years of strong growth after Brazil’s 3G Capital acquired it.  But growth is stalling and recent promotions have failed to spark sales growth, irking investors seeking better performance.  Restaurant Brands is rated “Top Buy” in our Canada All-Cap Global Top Stock Ideas.
  • Tata Motors (BSE: 500570) shares traded lower after Jaguar Land Rover CEO Ralf Speth said that he could not confirm if there were ongoing discussions between Tata Motors and PSA Group, the French maker of Peugeot cars. In the past, Tata Motors has made clear their desire to build towards electric vehicles. Tata Motors is not rated in our Global Top Stock Ideas.
  • The Children's Place (PLCE) shares edged higher after the company announced strong quarterly financial results and guidance ahead of analyst consensus. Children’s Place generated adjusted earnings of $0.36/share while analysts expected a loss of $0.49/share. Children’s Place also offered FY2019 adjusted EPS guidance of between $5.75 and $6.25, the midpoint of which is largely ahead of consensus of $5.58. Children’s Place is rated “Top Short” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Consumer Discretionary Global Top Stock Ideas. 
  • The Stars Group (TSX: TSGI) announced quarterly financials that contained an adjusted EPS that missed the average analyst estimate. Stars Group observed adjusted earnings of $0.38/share while analysts had expected $0.41/share. Stars Group’s revenue during the first quarter of $580.4 million came well below analyst expectations of $613.1 million. Stars Group is rated “Neutral” in our Canada All-Cap Global Top Stock Ideas.

Global Information Technology Stocks Trending in the News

  • Alibaba (BABA) reported earnings and revenue that beat consensus.  Alibaba posted revenue of 93.5 billion yuan, beating consensus of 91.7 billion yuan.  Adjusted earnings per share of 8.57 yuan well above consensus of 6.50 yuan.  Alibaba provided revenue guidance for the year of 500 billion yuan, trailing the 509 billion yuan.  Alibaba said its recommendation-based advertising is working well and driving revenue growth.  Full year revenue grew 51% to 376.8 billion yuan.  Core commerce business grew 54% to 78.9 billion yuan and cloud revenue grew 76% to 7.7 billion.  Alibaba is rated “Top Buy” in our China All-Cap Global Top Stock Ideas
  • Applied Materials (AMAT) was upgraded at Susquehanna to positive from neutral.  Applied Materials saw its price target hiked to $60 from $34.  Susquehanna said through its channel checks it sees “major wins” for Applied Materials in memory design and that should put it on track for EPS of $5 in the second half of 2019.  Applied Materials is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Information Technology Global Top Stock Ideas.  
  • Facebook (FB) said it will not allow people who recently posted terrorist propaganda to use its live streaming service.  Facebook said it will have a “one strike” rule with these types of infractions.  This is the most concrete move Facebook has made to potentially limit use of its live stream service since the massacre in New Zealand that was streamed live on Facebook.  Facebook is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Information Technology Global Top Stock Ideas.  
  • Microsoft (MSFT) warned a bug in an older version of Windows that it has patched could be used as super-bug.  Microsoft said it could be used globally to wreak havoc much in the way the WannaCry worm did 2 years ago.  Microsoft added it has not seen anyone use the flaw maliciously yet but now that it has brought it to the public’s attention it expects someone will.  Microsoft is rated “Top Buy” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Information Technology Global Top Stock Ideas.  
  • Scout24 (XTRA: G24) shares recouped yesterday’s loss after Liberum analysts wrote to clients that yesterday’s bid rejection by shareholders was the right decision. Liberum does not believe that the offer proposed by Helman & Friedman and Blackstone accurately reflected the true value of the company. As a result of voting down the attempted bid, Liberum upgraded Scout24 shares from hold to buy. Scout24 is rated “Attractive” in our European SMID-Cap Global Top Stock Ideas.
  • Tencent (TCEHY, SEHK:700) reported quarterly earnings that beat expectations.  Tencent reported net income of 27.21 billion yuan well above 19.4 billion consensus.  Net income included 11.1 billion yuan in gains from investee companies.  Tencent’s fintech unit saw sales grow 44% to 21.8 billion yuan, this is the first time the company is breaking out those results.  Revenue from its online games and messaging unit grew just 4.5% given the lack of approvals for new games from Chinese authorities over the last year.  Tencent is rated “Top Buy” in our China All-Cap Global Top Stock Ideas
  • Walt Disney (DIS) confirmed that the next installments of “Star Wars,” after the Skywalker installments, will be scripted by the creators of “Game of Thrones.”  David Benioff and DB Weiss, creators of “Game of Thrones,” will lead the effort for a film to debut in 2022.  With the last season of “Game of Thrones” being met with mixed reviews, the decision to choose them for the next Star Wars films seems like less of a good idea that it would have a few months ago.  The last Skywalker-themed film will be released this December.  Walt Disney is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Information Technology Global Top Stock Ideas. 

Global Financials Stocks Trending in the News

  • Citigroup (C) is joining with India’s digital payments start-up Paytm to issue the start-up’s first physical credit card.  Paytm has 350 million users and is the leader in digital payments in India.  Citigroup has been looking for ways to boost its consumer business and partnering with digital start-ups is key to its strategy.  Citigroup is rated “Neutral” in our US Large-Cap Global Top Stock Ideas

Global Industrials Stocks Trending in the News

  • Boeing (BA) was left to do the final safety assessment of the flight control systems on the 737 Max certification, it has been learned.  It is the flight control system that has been implicated in the 2 crashes of the 737 Max.  Boeing did not include the MCAS flight control system in the list of critical systems that could cause a catastrophic failure on the plane.   Boeing is rated “Top Short” in our US Large-Cap Global Top Stock Ideas and “Unattractive” in our US Industrials Global Top Stock Ideas.  
  • General Electric (GE) won the most orders in the first quarter for its gas-fired power plants.  GE won 6 orders for its advanced HA-class turbines, according to a Reuters report.  No other manufacturer won as many in the quarter.  GE also won three additional orders that were not included in earnings.  General Electric is rated “Top Short” in our US Large-Cap Global Top Stock Ideas and “Top Short” in our US Industrials Global Top Stock Ideas.  

Global Healthcare Stocks Trending in the News

  • Agilent Technologies Inc. (A) shares fell by the most intraday in 11 years after the company announced fiscal second quarter financial results that missed the average analyst estimate while lowering FY2019 guidance. Agilent Technologies generated adjusted earnings of $0.71/share in the fiscal second quarter while consensus was for $0.72/share. Agilent also lowered FY2019 revenue guidance from between $5.09 billion and $5.13 billion to between $5.15 billion and $5.19 billion. Agilent Technologies is rated “Neutral” in our US Large-Cap Global Top Stock Ideas.
  • Takeda Pharmaceutical (TSE: 4502) and Frazier Healthcare Partners have announced a deal to jointly launch Phatom Pharmaceuticals, a venture that will focus on novel treatments for GI diseases and related disorders. As a part of the venture, Takeda will grant licenses to Phatom for the development and commercialization rights of vonoprazan in the US, Europe, and Canada in exchange for cash, equity, and future cash milestones and royalties. Takeda Phamaceuticals is rated “Top Buy” in our Japan Large-Cap Global Top Stock Ideas.
  • Tilray (TLRY) reported first quarter revenue that beat consensus.  Tilray reported first quarter revenue of $23 million, beating consensus of $21.4 million.  Tilray reported a first quarter loss of 32 cents per share.  Tilray sold 3,012 total kilograms in the first quarter.  Tilray is not rated in our Global Top Stock Ideas.

 

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US Treasuries

  • US 2-Year Treasury Notes are higher with yields down -3.49 basis points to 2.16%
  • US 5-Year Treasury Bonds are higher with yields down -3.84 basis points to 2.14%
  • US 10-Year Treasury Bonds are higher with yields down -3.54 basis points to 2.37%
  • The US Treasury 2s-5s Spread has narrowed 0.35 basis points to -0.01%
  • The US Treasury 2s-10s Spread has narrowed 0.04 basis points to 0.21%
  • US Treasury 5s-10s Spread has widened 0.3 basis points to 0.23%

Currencies

  • EUR€ is currently little changed against the USD$ at 1.1204
  • GBP£ is currently down 0.302% against the USD$ to 1.2866
  • CHF is currently little changed against the USD$ at 0.9911
  • JPY¥ is currently little changed against the USD$ at 109.47

Commodities

  • WTI Crude is currently up 0.78% to USD$62.26/bbl with the Brent-WTI spread up USD$0.99 to USD$10.63/bbl
  • Gold is currently little changed 0.06% to USD$1297.71/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
Coty Inc Consumer Staples 7.31 5.49%            1,837,214
Progressive Corp/The Financials 61.9 5.05%                296,871
Take-Two Interactive Software Inc Communication Services 106 4.83%                401,878
Applied Materials Inc Information Technology 33.7 3.87%            1,909,428
Alphabet Inc Communication Services 1087 3.33%                357,954
 
Underperformers Sector Price 1D % Chg Volume
Agilent Technologies Inc Health Care 70.6 -11.63%                936,645
TransDigm Group Inc Industrials 350 -4.03%                  40,925
Gap Inc/The Consumer Discretionary 24.9 -2.89%                409,642
Mylan NV Health Care 29.3 -2.74%            1,528,125
Charles Schwab Corp/The Financials 44.2 -2.46%                826,989
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