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Morning Brief

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Global Stocks Rallying On Potential US-China Trade Tension Deescalation

Aug 16, 2018

US Stocks                                                                                                                                                                           Start Your Free Trial Today

  • Global stocks are rallying this morning following news that US and Chinese officials are set to meet again regarding US-Sino trade disputes after the Chinese Vice Commerce Minister says he will visit the US in late August 
  • US stocks index futures are pointing to a positive open in NY with the Dow Jones minis +0.66%, S&P500 minis +0.51% and Nasdaq 100 minis +0.71% 
  • The VIX is little changed this morning and is currently at 13.69 after closing at 14.64 yesterday
  • SPY August 17 OTM Calls & Puts, XOP October 2018 & November 2018 OTM Puts, EEM September 21 OTM Puts are the most heavily traded options contracts in the US pre-market 
  • US 10-Year Treasury Bonds are lower with yields up 2.17 basis points to 2.884%
  • The US Treasury 2s-10s Spread has widened 0.12 basis points to 0.26%
  • WTI Crude is currently down -3.03% to USD$65.01/bbl with the Brent-WTI spread up USD$3.1 to USD$4.94/bbl
  • Gold is currently up 0.31% to USD$1178.51/oz

European Stocks

  • European stocks are bouncing back this AM following the announcement that the US and China will renew trade discussions 
  • Technology (+1.11%), Insurance (+0.99%), and Basic Resources (+0.85%) stocks are the top performers in the Euro Stoxx 600 today
  • Investor sentiment for European stocks is positive with the advance/decline ratio for the Euro Stoxx 600 currently at 4x
  • 26 stocks in the Euro Stoxx 600 are at 4-week highs while 177 stocks are at 4-week lows
  • 7 stocks in the Euro Stoxx 600 are overbought while 53 stocks are oversold according to the 16-day RSI Measure
  • VSTOXX, the European stocks equivalent of the VIX, is  moving down this morning and is currently at 16.67 after closing at 18.48 yesterday
  • EUR€ is currently up +0.167% against the USD$ to 1.1364
  • GBP£ is currently little changed against the USD$ at 1.2695
  • CHF is currently little changed against the USD$ at 1.006
  • German 10-Year Bunds are lower with yields up 1.4 basis points to 0.318%
  • UK 10-Year GILTs are lower with yields up 1.8 basis points to 1.243%

Asian Stocks

  • Asian stocks finished their trading sessions negative again with Tencent’s (SEHK: 700) weak earnings yesterday weighing on tech stocks and weakening investor sentiment 
  • The Nikkei 225 finished down --0.05%, the Hang Seng ended down -0.82%, the Hang Seng China Enterprise declined -0.53%, and the CSI 300 was -0.46%
  • Banks (+0.68%), Securities & Commodity Futures (+0.54%), and Electronic Power & Gas (+0.52%) stocks were the top performers among Japanese stocks today
  • Oil & Coal Products (-3.01%), Nonferrous Metals (-1.67%), and Chemicals (-1.44%) stocks were the worst performers among Japanese stocks today
  • Investor sentiment for Japanese stocks finished negative with the advance/decline ratio for the Nikkei 225 closing at 0.65x
  • 11 stocks in the Nikkei 225 hit 4-week highs while 48 stocks reached 4-week lows
  • 2 stocks in the Nikkei 225 closed overbought while 17 stocks closed oversold according to the 16-day RSI Measure
  • Investor sentiment for Hong Kong stocks finished negative with the advance/decline ratio for the Hang Seng closing at 0.61x
  • 2 stocks in the Hang Seng hit 4-week highs while 20 stocks reached 4-week lows
  • 0 stocks in the Hang Seng closed overbought while 8 stocks closed oversold according to the 16-day RSI Measure
  • Japan 10-Year Government Bonds are lower with yields up 0.1 basis points to 0.102%
  • JGBs 2s-10s Spread has widened 0.8 basis points to 0.22%
  • JPY¥ is currently little changed against the USD$ at 110.9
  • The Chinese Yuan is +0.51% against the USD$ to CNY6.8997 following news that the US and China will continue to talk about their trade disagreements 

Cryptos

  • Coinbase, following its acquisition of startup Distributed Systems, is stating that it will be moving towards a customer identification framework that will let customers prove their identity without making a copy of their state indentification cards. 
  • Ethereum Classic is +18% this morning after crypto’s inclusion into the Coinbase index fund after being added to the Coinbase Pro trading platform.  At the moment, Ethereum Classic has a 0.91% allocation in the fund.   
  • The Foreshadow Vulnerability, a bug impacting SGX microprocessors from manufacturers like Intel, is negatively impacting new innovation in the cryptocurrency ecosystem that want to use the SGX technology for security and privacy overalys.  SGX putatively offers a highly secure section of the microprocessor chip which can be used to sore sensitive data like bank accounts, etc. 
  • Pantera Capital announces it has raised USD$71mm for a third cryptocurrency fund.  Calling it Venture Fund III, Pantera has already begun to make investments following an allocation to cryptocurrency trading platform Bakkt (that has a JV with ICE). 
  • Jeremy Light, vice president of European Union Strategic Accounts at Ripple Labs, stated during an interview with CNBC that the company is considering entering the Chinese market to help improve the speed of international transactions with distributed ledger technology cross-border payments. However, unlike other markets where it has expanded, Ripple Labs should expect to see heavy competition from domestic competitors like Tencent and Ant Financial (Alibaba) in addition to close scrutiny by the Chinese regulators who control all international transactions. 

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

S&P 500 Sector Performance

Data in Price Return as of Previous Day's EOD, Source: Stockdio

Russell 1000 Factor Performance 

Data in Total Return as of Previous Day's EOD, Source: Stockdio

Stocks Trending in the News

Click name for Q-Factor rating and financial data.

  • Aegon (AGN NA) CFO Matthew Rider said the company remains interested in acquiring Anbang Insruance Group’s Vivat unit though he confirmed no formal process has begun in that respect.
  • Amazon (AMZN) is reportedly in the running to acquire the Landmark movie theater chain. If completed, this deal would further expand Amazon’s brick-and-mortar presence in the cinema industry. Amazon shares are up 1.08% to $1903.00
  • Atlantia SpA (ATL IM) lost a quarter of its market cap in the wake of the collapse of the Genoa bridge where the company operated a concession.  Italy has begun the process of revoking Atlantia’s toll road concession further pressuring the stock.
  • Bayer (BAYN GR) are trading lower today after the company was unable to get the California Supreme Court to block the classification of Roundup, its Monsanto unit’s wildly popular herbicide, as a known carcinogen by the state.
  • China Res Power (2380 HK) reported 1H18 net income of HK$2.96bn on sales of HK$39.3bn.  The company sees power consumption growth at a somewhat slower rate than in the first half of the year.
  • Cisco (CSCO) gave a bullish outlook saying fiscal 1Q sales will rise 5-7% indicating revenue of ~US$13bn.  Demand for the company’s products remains strong globally and guidance provided was above consensus.  The stock rallied 7% post-market yesterday.
  • Henkel AG (HEN3.GY) has lowered its FY2018 EPS growth guidance to a range of 3% to 6%, down from an earlier projected range of 5% to 8% growth. Shares of Henkel are down 0.33% today
  • JD.com (JD) reported 2Q adjusted earnings of 33 RMB cents per ADS while the market was expecting 70, net revenue came in line at 122.29bn yuan.  The company provided 3Q revenue guidance of 104.5-109bn yuan, below consensus of 190bn yuan
  • Lenovo (SEHK:992) reported F1Q2019 net income that was higher than forecasted ($77.0 4mm vs $66.2mm projected). Lenovo stock traded 3.38% higher today following these results
  • NetApp (NTAP) reported F1Q2019 EPS that was higher than expected ($1.04 vs $0.80). NetApp stock is down 6.63% to $77.00 before today’s open, but projected F2Q2019 revenue and EPS that just matched midpoint estimates. Shares of NetApp are down 6.63% to $77.0 before today’s trading
  • Sunny Optical (2382 HK) saw its rating and price targets cut at Goldman Sachs (GS) reflecting its lowered outlook.  Goldman cut its profit forecast by 20-30% each year for 2018-20.  Price target dropped from HK$188 to HK$136.
  • Tesla (TSLA) has received a subpoena from the SEC inquiring about his recent tweets about taking the company private, according to the WSJ.  The subpoena seeks information from each director on the company’s board.
  • Vodaphone (VOD LN) was downgraded to sell by DZ Bank with price target lowered to 1.50 pounds from 2.5.  The price target implies a 15% drop in the stock is expected.
  • Walmart (WMT) stock is up 10.01% to $99.25 reported F2Q2018 EPS that was above expectations ($1.29 vs $1.22 projected), and also posted F2Q2018 comps that were higher than anticipated (+4.5% Y/Y vs +2.2% Y/Y estimated).
  • WH Group (SEHK:288) has been forced to close a slaughterhouse over concerns about the spread of Swine Fever. The closing of the slaughterhouse has raised questions regarding the impact on WH Group’s supply chain. Shares of WH Group fell 7.45% today

Implied Volatility Data For Liquid Macro Index ETFs 

ETF 30D IV 30D IV Percentile 90D IV 90D IV Percentile 90D/30D IV 90D/30D IV Percentile 30D IV-20D HV 30D IV-20D HV Percentile 90D IV-60D HV 90D IV-60D HV Percentile
SPY 10.42 62.9% 11.43 62.7% 1.1 36.71% 2.87 85.71% 2.76 64.88%
QQQ 14.69 59.33% 16.29 65.87% 1.11 65.28% 1.29 56.75% 3.26 75.79%
IWM 13.13 50.79% 13.4 29.76% 1.02 18.06% 1.26 41.47% 2.21 44.44%
FEZ 16.37 87.3% 16.21 86.11% 0.99 19.84% 1.6 51.59% -0.23 32.54%
EEM 20.72 89.68% 19.26 82.14% 0.93 4.76% 1.34 54.76% 1.71 48.61%

Cryptocurrencies Today

Stock Movers From Our US Large-Cap Model

Top Buy Winners and Losers

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WINNERS TICKER SECTOR INDUSTRY 1 DAY RETURN 5 DAY RETURN YTD
HERSHEY CO HSY Consumer Staples Food Products 1.84% 2.78% -9.61%
MCCORMICK & CO INC MKC Consumer Staples Food Products 1.67% 2.27% 21.33%
CONSOLIDATED EDISON INC ED Utilities Multi-Utilities 1.6% 2.53% -1.86%
PUBLIC SERVICE ENTRP GRP INC PEG Utilities Multi-Utilities 1.47% 2.92% 5.31%
PG&E CORP PCG Utilities Electric Utilities 1.46% -1.42% -2.32%

 

 

LOSERS TICKER SECTOR INDUSTRY 1 DAY RETURN 5 DAY RETURN YTD
ADOBE SYSTEMS INC ADBE Information Technology Software -2.18% -1.31% 34.34%
EAGLE MATERIALS INC EXP Materials Construction Materials -2.07% -4.09% -20.6%
FIRSTCASH INC FCFS Financials Consumer Finance -2.0% -1.35% 16.27%
BLACKBAUD INC BLKB Information Technology Software -1.98% -0.66% 2.28%
MASTERCARD INC MA Information Technology IT Services -1.8% -1.3% 28.05%

Source: S&P Capital IQ

Top Short Winners and Losers

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WINNERS TICKER SECTOR INDUSTRY 1 DAY RETURN 5 DAY RETURN YTD
CALIFORNIA RESOURCES CORP CRC Energy Oil, Gas & Consumable Fuels -11.17% -17.98% 36.13%
BLOOM ENERGY CORP-REDH BE Industrials Electrical Equipment -10.75% -20.6% -8.73%
WHITING PETROLEUM CORP WLL Energy Oil, Gas & Consumable Fuels -9.37% -7.44% 47.16%
PENNEY (J C) CO JCP Consumer Discretionary Multiline Retail -9.12% 1.25% -37.31%
OASIS PETROLEUM INC OAS Energy Oil, Gas & Consumable Fuels -8.94% -7.99% 30.79%

 

LOSERS TICKER SECTOR INDUSTRY 1 DAY RETURN 5 DAY RETURN YTD
GREENSKY INC GSKY Information Technology IT Services 3.32% -13.23% -44.27%
GLOBAL BLOOD THERAPEUTICS GBT Health Care Biotechnology 3.29% 2.96% 14.21%
HEALTHCARE TRUST OF AMERICA HTA Real Estate Equity Real Estate Investment Trusts (REITs) 2.48% 2.52% -0.21%
HEALTHCARE REALTY TRUST INC HR Real Estate Equity Real Estate Investment Trusts (REITs) 1.99% 2.56% -0.32%
PATTERSON COMPANIES INC PDCO Health Care Health Care Providers & Services 1.22% 2.76% -46.31%

Source: S&P Capital IQ

Events Calendar

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Company Name Ticker Event Date Event Type Q-Factor Score
JD.com, Inc. JD 8/15/2018 Earnings Release Date China All-Cap: D
RISE Education Cayman Ltd REDU 8/16/2018 Earnings Release Date China All-Cap: C
21Vianet Group, Inc. VNET 8/16/2018 Earnings Release Date China All-Cap: C
Walmart Inc. WMT 8/16/2018 Earnings Release Date US Large-Cap: C, US Consumer Staples: B
58.com Inc. WUBA 8/16/2018 Earnings Release Date China All-Cap: B
J. C. Penney Company, Inc. JCP 8/16/2018 Earnings Release Date US Large-Cap: F, US Consumer Discretionary: F
The Madison Square Garden Company MSG 8/16/2018 Earnings Release Date US Large-Cap: C, US Consumer Discretionary: B
NVIDIA Corporation NVDA 8/16/2018 Earnings Release Date US Large-Cap: B, US Information Technology: B
Cree, Inc. CREE 8/16/2018 Estimated Earnings Release Date US Large-Cap: F, US Information Technology: D
Deere & Company DE 8/16/2018 Earnings Release Date US Large-Cap: C, US Industrials: C
Coty Inc. COTY 8/21/2018 Earnings Release Date US Large-Cap: D, US Consumer Staples: C
Cheetah Mobile Inc. CMCM 8/19/2018 Earnings Release Date China All-Cap: C
Huami Corporation HMI 8/19/2018 Earnings Release Date China All-Cap: F
Fanhua Inc. FANH 8/20/2018 Earnings Release Date China All-Cap: B
Tarena International, Inc. TEDU 8/20/2018 Earnings Release Date China All-Cap: D
The Estée Lauder Companies Inc. EL 8/20/2018 Earnings Release Date US Large-Cap: C, US Consumer Staples: D
Nordson Corporation NDSN 8/20/2018 Earnings Release Date US Large-Cap: --, US Industrials: C
Jack Henry & Associates, Inc. JKHY 8/20/2018 Earnings Release Date US Large-Cap: A, US Information Technology: B

Source: S&P Capital IQ