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Morning Brief

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Global Stocks Neutral as Investors Shift Focus to Strongest Quarterly Earnings Season in 8 Years

Aug 09, 2018

US Stocks                                                                                                                                                                           Start Your Free Trial Today

  • Global stocks are moderately positive this AM with a continued strong 2Q earnings seasons for global stocks overshadowing US-Sino trade tensions
  • US stocks index futures are pointing to a moderately positive open again in NY with the Dow Jones minis +0.05%, S&P500 minis +0.10% and Nasdaq 100 minis +0.10%
  • FAANG stocks dominance of the S&P 500 continues, contrary to investor commentary, with Facebook (FB), Amazon (AMZN), Apple (AAPL), Netflix (NFLX) and Alphabet (GOOGL) (plus Microsoft (MSFT)) contributing close to 38% of the S&P 500 gains since the benchmark index hit its 2018 low on February 8
  • The VIX is little changed this morning and is currently at 10.64 after closing at 10.85 yesterday
  • Fiat Chrysler Automobiles (FCA) September 21 OTM Puts, XLF October 2018 OTM Puts, QQQ August 17 and September 21 OTM Puts, and SPY August 10 OTM Calls are the most heavily traded options contracts in the US pre-market
  • US 10-Year Treasury Bonds are higher with yields down -0.33 basis points to 2.9567%
  • The US Treasury 2s-10s Spread has narrowed 0.13 basis points to 0.29%
  • Crude oil prices have fallen to a 7-week low over worries about escalating trade rhetoric between the US and China irreparably impacting global growth
  • WTI Crude is currently down -3.22% to USD$66.94/bbl with the Brent-WTI spread up USD$3.28 to USD$4.39/bbl
  • Gold is currently little changed 0.05% to USD$1214.5/oz

International Stocks

  • European stocks are neutral this AM with large-cap oil stocks weighing on stocks indices following comments by Beijing officials that China will retaliate against the latest US tariffs
  • The Euro Stoxx 600 is currently down -0.31%, the FTSE 100 is down -0.71%, the DAX is down -0.21%, and the CAC 40 is down -0.44%
  • Basic Resources (+0.31%), Telecommunications (-0.68%), and Real Estate (-0.1%) stocks are the top performers in the Euro Stoxx 600 today
  • Investor sentiment for European stocks is negative with the advance/decline ratio for the Euro Stoxx 600 currently at 0.57x
  • VSTOXX, the European stocks equivalent of the VIX, is little changed this morning and is currently at 12.98 after closing at 12.87 yesterday
  • EUR€ is currently down -0.172% against the USD$ to 1.159
  • GBP£ is currently little changed against the USD$ at 1.2888
  • CHF is currently little changed against the USD$ at 1.0067
  • German 10-Year Bunds are higher with yields down -0.7 basis points to 0.391%
  • UK 10-Year GILTs are flat with yields little changed 0 basis points to 1.313%
  • Asian stocks closed their trading sessions mixed as strong corporate earnings overshadowed investor worries about an escalating trade war between the United States and China
  • The Nikkei 225 finished down --0.2%, the Hang Seng ended up +0.88%, the Hang Seng China Enterprise up +1.09%, and the CSI 300 was +2.5%
  • Investor sentiment for Japanese stocks finished negative with the advance/decline ratio for the Nikkei 225 closing at 0.53x
  • 43 stocks in the Nikkei 225 hit 4-week highs while 15 stocks reached 4-week lows
  • 14 stocks in the Nikkei 225 closed overbought while 10 stocks closed oversold according to the 16-day RSI Measure
  • Investor sentiment for Hong Kong stocks finished positive with the advance/decline ratio for the Hang Seng closing at 2.13x
  • 7 stocks in the Hang Seng hit 4-week highs while 3 stocks reached 4-week lows
  • 0 stocks in the Hang Seng closed overbought while 0 stocks closed oversold according to the 16-day RSI Measure
  • Japan 10-Year Government Bonds are lower with yields up 0.2 basis points to 0.115%
  • JGBs 2s-10s Spread has widened 0.6 basis points to 0.22%
  • JPY¥ is currently little changed against the USD$ at 111.13

Cryptos

  • Barclays is hosting a hackathon next month that pits rival blockchain technologies against each other in an attempt to disrupt the global derivatives market.  Participants will be asked to use the ISDA Common Domain Model (CDM) and apply it to distributed ledgers to model post-trading processing of derivatives contracts.
  • Collie, a coal-mining town in Australia, could possibly see the first solar-powered bitcoin mining farm.  Data center operator DC Two, DC Two’s subsidiary D Coin and solar farm builder Hadouken are hoping to build the first bitcoin mining facility powered by solar power in Collie.  The first phase of the build-out is expected to supply 4 megawatts and will be launched in 2019 (assuming no regulatory hiccups).
  • Dan Morehead, CEO of Pantera Capital, believes crypto traders are overreacting to news that the SEC decided to defer its decision about the VanEck-SolidX ETF.  In an interview with CNBC, Morehead argues for investors to take a long-term view and offers a very interesting observation: the last asset class to be approved for ETF certification was copper and copper has been on earth for 10,000 years.
  • 90 companies are joining IBM and Maersk to participate in their new blockchain platform.  The new blockchain platform being developed by IBM and Maersk, now formally called TradeLens, has been attracting interest for a diverse number of companies: port operators, customs authorities, logistics companies and ocean-going carriers.
  • A study by Yale Researchers Aleh Tsyvinski, a professor in the economics department and Yukun Liu, a Ph.D. candidate in the Department of Economics are suggesting a new system of factors to predict price trends in major cryptocurrencies.  While typical factors used in stocks are ineffective in predicting price moves in cryptocurrencies, the study suggests traders consider time-series momentum effects.

*Data in Total Return; Source: S&P Capital IQ

S&P 500 Sector Performance

Light green is month to date, dark green is year to date

Data in Total Return as of Previous Day's EOD, Source: S&P Capital IQ

Russell 1000 Factor Performance

Light green is month to date, dark green is year to date

Data in Total Return as of Previous Day's EOD, Source: S&P Capital IQ

Stocks Trending in the News

Click name for Q-Factor rating and financial data.

  • Adidas (ADS GR) posted 2Q 10% revenue growth as the World Cup fueled results, a record number of jerseys were sold by Adidas during the tournament.  Adidas was helped by the fact that teams they sponsor dominated the World Cup
  • China Mobile (941 HK) posted 1H18 net income growth of 4.7% with 65.6bn yuan, 63.4bn was expected. 4G users grew 4.5%.  An interim payout of HK$1.826 per share is a record as a regular dividend for China Mobile.
  • Deutsche Telekom (DTE KR) increased full year guidance for adjusted earnings to 23.4bn euros (up 100mn euros).  2Q sales and revenue both came above consensus and the company said it expects to hear feedback on its planned acquisition of Sprint (S) via its T-Mobile (TMUS) unit this month.
  • HNA Group reported that US authorities have questioned the company about a building they own at 850 Third Ave in NYC.  HNA said there are “unique facts and circumstances” around the building they caused the inquiry without getting more specific.
  • Netease (NTES) reported 2Q adjusted earnings of US$3.15 per ADS while consensus was US$2.75, revenue came at US$2.46bn, US$2.41bn was expected.  Results were better than the most optimistic estimates
  • Rite Aid (RAD) and Albertsons (ABS) are scrapping their US$24bn merger deal on the eve of a shareholder vote.  Both retail and institutional investors were critical of the deal and its termination will not result in any breakup fee.
  • Softbank (9984 HK) is not interested in financing Tesla (TSLA) according to a report in the Financial Times.  The article states that Softbank believes Tesla is overvalued and has no interest in getting involved.
  • Tencent (700 HK) agreed to purchase an 8.5% stake in Bluehole taking its participation to ~10% after the deal.  Bluehole is the creator of PlayerUnknown’s Battlegrounds and Tencent will be paying 650,000 won per share while stock has been trading ~500,000 won.
  • Tesla (TSLA) has received an inquiry from the SEC regarding Elon Musk’s tweet about taking the company private.  The WSJ is reporting the inquiry requests information on the truthfulness of his tweet and asks why Twtter was used as opposed to more traditional methods of informing shareholders
  • Walmart (WMT) and JD.com (JD) are investing US$500mn in Dada-JD Daojia, the online goods delivery service formed from the merger of JD’s delivery unit and Dada Nexus.

Cryptocurrencies Today

*Source: Stockdio

Stock Movers

Top Buy Winners and Losers
WINNERS TICKER SECTOR INDUSTRY 1 DAY RETURN 5 DAY RETURN YTD
DOMINO'S PIZZA INC DPZ Consumer Discretionary Hotels, Restaurants & Leisure 3.36% 5.95% 43.29%
COMMERCE BANCSHARES INC CBSH Financials Banks 1.14% 3.19% 22.9%
STERLING BANCORP STL Financials Banks 1.12% 0.99% -7.65%
NEXSTAR MEDIA GROUP NXST Consumer Discretionary Media 1.11% 4.53% 0.9%
TJX COMPANIES INC TJX Consumer Discretionary Specialty Retail 1.0% 3.39% 27.13%
LOSERS TICKER SECTOR INDUSTRY 1 DAY RETURN 5 DAY RETURN YTD
LIGAND PHARMACEUTICAL INC LGND Health Care Biotechnology -3.59% 7.13% 54.17%
MARRIOTT VACATIONS WORLDWIDE VAC Consumer Discretionary Hotels, Restaurants & Leisure -2.58% 0.79% -13.91%
DISNEY (WALT) CO DIS Consumer Discretionary Media -2.24% 0.89% 2.73%
VULCAN MATERIALS CO VMC Materials Construction Materials -1.62% 0.47% -14.15%
GLOBAL PAYMENTS INC GPN Information Technology IT Services -1.61% 3.74% 15.45%

On Mobile/Tablet scroll to the right.  Source: S&P Capital IQ

Top Short Winners and Losers
WINNERS TICKER SECTOR INDUSTRY 1 DAY RETURN 5 DAY RETURN YTD
PENUMBRA INC PEN Health Care Health Care Equipment & Supplies -17.54% -15.05% 32.18%
FOSSIL GROUP INC FOSL Consumer Discretionary Textiles, Apparel & Luxury Goods -12.36% -12.67% 98.87%
ALLAKOS INC ALLK Health Care Biotechnology -8.02% -10.74% 16.29%
HERTZ GLOBAL HOLDINGS INC HTZ Industrials Road & Rail -7.55% 17.91% -24.29%
SNAP INC SNAP Information Technology Software -7.02% -1.22% -20.08%
LOSERS TICKER SECTOR INDUSTRY 1 DAY RETURN 5 DAY RETURN YTD
TENABLE HOLDINGS INC TENB Information Technology Software 7.97% 12.87% 11.54%
PLAINS ALL AMER PIPELNE  -LP PAA Energy Oil, Gas & Consumable Fuels 6.53% 6.57% 26.67%
PTC THERAPEUTICS INC PTCT Health Care Biotechnology 6.15% 7.63% 84.68%
PLAINS GP HOLDINGS LP PAGP Energy Oil, Gas & Consumable Fuels 4.96% 5.73% 18.46%
HERON THERAPEUTICS INC HRTX Health Care Biotechnology 3.87% 5.59% 75.98%

On Mobile/Tablet scroll to the right.  Source: S&P Capital IQ