blog

Latest from the Quantamize Blog

Inversion Perversion: US stocks hit 2-month low as yield curve inverts amid fears of protracted trade war

May 28, 2019

 

Great Trades. Great Data. Always FreeGreat Trades. Great Data. Always Free
Great Trades. Great Data. Always FreeGreat Trades. Great Data. Always Free

Market data as of market close

US Market Snapshot

  • US stocks continue the drift lower posting losses across the board as investors contemplate a long trade war with China, sending US Treasuries soaring
  • The S&P 500 finished down 0.84%, Nasdaq Composite is down 0.39%, and Russell 2000 is down 0.67%
  • While in Japan, President Trump said the US "is not ready" to make a trade deal with China
  • Trump added that tariffs "could go up very substantially, very quickly" as he commented he thinks China wishes it had closed a deal when the 2 countries were negotiating
  • A huge smile: Happy Consumers! Conference Board data soars, Goldilocks Economy sees Consumers even more ecstatic that expected
  • Iron ore remains on fireThe Ore Score: Triple Digits Iron Ore Futures Prices are the New Normal
  • Cluster Analysis: Silver Is More Correlated With US Dollar Than Other Commodities! A Multi-Asset AI Cluster Analysis
  • The behavior of the S&P 500 and the VIX over the past few weeks suggests investors are definitely discounting the prospects for an all-out trade war between China and the US.  Specifically, the VIX has remained range bound despite the pull-back in the S&P 500 which points to a relatively muted fear of further shock coming ongoing trade discussions.
  • The ETFs you need NOWTop ETF Ideas of the Week: Models Signal Time to Buy Small-Cap Stocks 
  • US 10-year Treasury yields touch the lowest levels since late 2017 with trade tensions not showing any sign of abating
  • The 10-year yield dropped below the 3-month yield today in a potentially ominous sign
  • Chinese authorities seized the first bank in over 2 decades, calling Baoshang Bank a "serious credit risk"
  • Options Trading: ULTA Options Among Most Expensive For Consumer Stocks Ahead of Earnings
  • Emerging Markets ETFs saw a fourth week of outflows, with $1.17 billion exiting this past week
  • Our Book of the Week: From Memorial Day's beginning: The Red Badge of Courage, the Book of the Week
  • Telecom (+0.17%), Tech (-0.33%), and Consumer Discretionary (-0.49%) stocks were the top performers in the S&P 500 today
  • Healthcare (-1.41%), Utilities (-1.61%), and Consumer Staples (-1.79%) 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 0.16x
  • 60 stocks in the S&P 500 hit 4-week highs while 50 stocks reached 4-week lows
  • 20 stocks in the S&P 500 closed overbought while 43 stocks closed oversold according to the 16-day RSI Measure
  • 66 stocks in the Nasdaq Composite hit 4-week highs while 276 stocks reached 4-week lows
  • 131 stocks in the Nasdaq Composite closed overbought while 374 stocks closed oversold according to the 16-day RSI Measure
  • The VIX closed up 1.65 points today to 17.5 after closing at 15.85 last week

    .

Stocks Trending in the News

Click name for Q-Factor rating and financials data

Global Consumer Stocks Trending in the News

  • Amazon (AMZN) shares could be worth $3,000 according to a new report from Piper Jaffray.  Amazon could reach that level in two to three years, which would be a 65% rise from current levels, the report notes.  Amazon could reach this level without any acquisition and at that level, its market cap would approach $1.5 trillion.  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.  
  • Constellation Brands (STZ) was downgraded at Morgan Stanley today to equal weight from overweight.   Constellation Brands saw its price target cut to $220 from $230 at the same time.  The risk-reward for the stock has tilted away from its favor at this point and better options exist at this point.  Constellation Brands is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Consumer Staples Global Top Stock Ideas.  
  • Fiat Chrysler (BIT:FCA) is in talks with Renault (ENTXPA:RNO) to merge operations.  Both companies have struggled recently and combining the two would create the world’s third largest manufacturer of automobiles.  The proposed deal has generally been well received by the market, with most agreeing each needed to make a move to short up their respective positions.  Fiat Chrysler is not rated in our Global Top Stock Ideas.  Renault Group is rated “Unattractive” in our European Large-Cap Global Top Stock Ideas.
  • Kraft Heinz Co. (KHC) stock was among the worst performers in the S&P 500 Consumer Staples Index today after Consumer Edge Research’s Jonathan Feeny told clients that scanner trends for the US Foods segment for the 4-week period ending May 19th worsened from the prior week. Specifically, Feeny said that Kraft’s sales were down 1.3% in the period. Four out of five of Kraft’s largest categories also lost dollar share in the period. Kraft Heinz is rated “Top Short” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Consumer Staples Global Top Stock Ideas.
  • Nio Inc. (NIO) shares surged after the clean energy automobile manufacturer posted better-than-expected loss during the first quarter. Nio generated an adjusted loss of 2.42 yuan/share that was ahead of the 2.89 yuan/share expected by analysts. Nio’s revenue of 1.63 billion yuan in the first quarter was also ahead of consensus expectations for 1.54 billion yuan. Nio expects to deliver between 2,800 and 3,200 vehicle units in the upcoming quarter. Nio is rated “Top Short” in our China All-Cap Global Top Stock Ideas. 
  • Walgreens Boots Alliance (WBA) is considering closing up to 200 stores in the UK, Skynews in reporting.  The plan being consider by Walgreens would see it close some stores when the lease us up and in other cases closes Boots stores in town with more than one.  Walgreens had no comment.  Walgreens Boots Alliance is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Consumer Discretionary Global Top Stock Ideas.  

Global Information Technology Stocks Trending in the News

  • Advanced Micro Drives (AMD) shares surged by double digits after CEO Lisa Su announced an array of new products during a keynote presentation at Taiwan’s Computex show. Among the new products announced by Advanced Micro Drives is a new generation of Ryzen desktop processors. According to Cowen, the announced products, “will drive above-consensus growth, [market] share gains, margin expansion, and AMD share appreciation.” Advanced Micro Drives is rated “Top Short” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Information Technology Global Top Stock Ideas.
  • Apple (AAPL) is launching a $199 iPod touch this week.  The new iPod features better performance using its A10 fusion chip.  The improved performance allows for immersive augmented reality and group facetime.  Apple is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Information Technology Global Top Stock Ideas        
  • FireEye (FEYE) announced it is acquiring Verodin, a leader in cyber security validation procedures.  FireEye is paying $250 million in cash and stock.  The acquisition is expected to be accretive immediately.  FireEye is rated “Top Short” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Information Technology Global Top Stock Ideas     
  • Global Payments (GPN) has agreed to acquired Total Systems Services (TSS) in a deal valued at $21.5 billion.  Total Systems holders will receive 0.8101 shares of Global Payments, with Global Payments holders holding 52% of the new company.  This is the third large merger in the payments industry this year.  The deal will combine the country’s largest merchant processor with the largest issuer processor.  Global Payments is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Information Technology Global Top Stock Ideas.  Total System Services is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Information Technology Global Top Stock Ideas        
  • Momo (MOMO) reported first quarter revenue and earnings that beat consensus.  Momo reported first quarter revenue of $554.7 million, beating consensus of $517.5 million.  First quarter adjusted EPS of 62 cents, beating 54 cents consensus.  Momo posted 114.4 million monthly active users.   Momo gave full year revenue guidance of 4 billion to 4.1 billion yuan.  Momo is rated “Attractive” in our China All-Cap Global Top Stock Ideas.
  • Netflix (NFLX) said it will pull its production out of the state of Georgia if its recently passed abortion law goes into effect.  The legislation will become law in 2020 if it survives and in the meantime,  Netflix will continue filming there.  Netflix said it will work with the ACLU and other groups to fight the law in court.  Netflix is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Unattractive” in our US Information Technology Global Top Stock Ideas     
  • Roku (ROKU) was downgraded to equal-weight from overweight at Stephen inc.  Roku saw its price target cut to $84 at the same time.  Stephens sees 12% downside for Roku from its present level.  Roku’s average price target is $78.33.  Roku is rated “Top Short” in our US Large-Cap Global Top Stock Ideas.
  • Yandex (YNDX) shares slid the most in 3 months following a newly proposed draft law in Russia that could make taxi businesses less profitable. According to Renaissance Capital analyst David Ferguson, “the proposed measures can affect the profitability of Yandex’s taxi business,”. The legislation proposes for taxi aggregators to only employ drivers with Russian citizenship and use cars no more than 7 years old. Yandex is rated “Neutral” in our European SMID-Cap Global Stock Ideas.

Global Industrials Stocks Trending in the News

  • Lockheed Martin (LMT) got good news from both Japan and Poland as both want to buy F-35 fighter planes.  Japan wants to buy 105 F-35s, a move highlighted by President Trump while visiting Japan this weekend.  Poland also indicated a desire to acquire 32 F-35s to replace aging Soviet planes.  Lockheed Martin is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Industrials Global Top Stock Ideas

Global Power & Commodities Stocks Trending in the News

  • Lonmin Plc (LSE: LMI) shared edged higher as investors are backing the platinum producer’s plan to takeover Sibanye Gold Ltd. (JSE: SGL) to form a platinum industry giant. 99% of votes casted at Sibanye backed the planned takeover of the company -- the required threshold was 75% of votes. Lonmin is not rated in our Global Top Stock Ideas. Sibanye is not rated in our Global Top Stock Ideas.
  • Vale’s (VALE) Brucutu mine will not open anytime soon, Brazilian prosecutors said.  Vale has not hired an external auditor yet to review safety concerns, prosecutors informed.  As such, the mine does not have any potential reopening data at this time.  Additionally, at its Gongo Seco mine, the tailings dam wall is moving much more than expected, and is likely to collapse soon.  Residents in the area have already been evacuated.  Vale has a total of 93 million tons of production out of service due to concerns over the safety of tailings dams.  Vale is rated “Attractive” in our Brazil All-Cap Global Top Stock Ideas.

Global Health Care Stocks Trending in the News

  • Centene (CNC) now has Third Point as a major shareholder.  Activist investor Third Point has a position worth $300 million, according to Bloomberg report.    The report adds that Third Point thinks that Centene should explore a sale of itself.  There are 2 other activist funds with positions in Centene that support the Third Point position.  Centene is rated “Top Buy” in our US Large-Cap Global Top Stock Ideas 
  • Pfizer (PFE) was initiated at Goldman Sachs with a buy rating.  Goldman writes that the convergence of large-cap pharma with the biotech sector is in its later stages.  Goldman expects Pfizer and other large-cap players do bolt-on deals and not mega-deals going forward.  Goldman is positive on the pharma sector overall.  Pfizer is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas
  • Teva Pharmaceuticals (TEVA) was downgraded to neutral from buy at UBS.  Teva saw its price target cut to $23 from $31 at the same time.  UBS sees heightened litigation risk with its price-fixing and opioid cases, saying to will likely take years for both to play out, weighing on the stock in the meantime.  Teva is not rated in our Global Top Stock Ideas.

 

 

Better Data for Better Investment DecisionsBetter Data for Better Investment Decisions
Better Data for Better Investment DecisionsBetter Data for Better Investment Decisions

US Treasuries

  • US 2-Year Treasury Notes are higher with yields down -3.76 basis points to 2.12%
  • US 5-Year Treasury Bonds are higher with yields down -5.19 basis points to 2.06%
  • US 10-Year Treasury Bonds are higher with yields down -5.44 basis points to 2.26%
  • The US Treasury 2s-5s Spread has narrowed 1.43 basis points to -0.06%
  • The US Treasury 2s-10s Spread has narrowed 1.68 basis points to 0.14%
  • US Treasury 5s-10s Spread has narrowed 0.25 basis points to 0.2%

Currencies

  • EUR€ is down 0.286% against the USD$ in after hours to 1.1162
  • GBP£ is down 0.205% against the USD$ in after hours to 1.2653
  • CHF is down 0.381% against the USD$ in after hours to 0.9924
  • JPY¥ is little changed 0.146% against the USD$ in after hours to 109.35

Commodities

  • WTI Crude is up 1.22% to USD$59.14/bbl with the Brent-WTI spread down USD$-1.55 to USD$10.64/bbl
  • Gold is down -0.41% to USD$1280.09/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

 

We Crunch the Numbers, You Make the Trade.We Crunch the Numbers, You Make the Trade.
We Crunch the Numbers, You Make the Trade.We Crunch the Numbers, You Make the Trade.

S&P 500 Movers

On Mobile/Tablet scroll to the right.

 

Outperformers Sector Price 1D % Chg Volume
Advanced Micro Devices Inc Information Technology 20.4 9.80%          31,706,777
Total System Services Inc Information Technology 84.7 4.75%            1,257,209
Activision Blizzard Inc Communication Services 46.8 2.86%            4,217,648
Discovery Inc Communication Services 27.1 2.80%            2,095,458
DISH Network Corp Communication Services 28.2 2.75%                864,732
 
Underperformers Sector Price 1D % Chg Volume
Kraft Heinz Co/The Consumer Staples 46.9 -6.59%            7,699,450
PG&E Corp Utilities 6.95 -5.84%            1,560,061
Perrigo Co PLC Health Care 45.1 -5.70%                608,684
Mylan NV Health Care 29.3 -5.69%            6,196,729
Nektar Therapeutics Health Care 44.5 -4.94%                907,977

 

OptionsQuantitatively derived options trades TRANSPARENT AND EASILY EXECUTABLE
OptionsQuantitatively derived options trades TRANSPARENT AND EASILY EXECUTABLE