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Morning Brief

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Global stocks rebound after yesterday’s drop – US stocks declining ahead of November Jobs Report

Dec 07, 2018

 

 

Market data as of 7am EST

 

US Stocks

  • US stocks index futures are declining ahead of the US jobs report today at 8:30am with front-month Dow Jones minis –0.53%, S&P500 minis –0.60%, and Nasdaq 100 minis -0.69% 
  • Change in Non-farm Payrolls is set to be released at 8:30am – market expectations are for 198k in November vs. +250k in October 
  • Overall market volatility, measured through a cross asset volatility index across stocks, bonds, currencies and gold, continues to remain muted in spite of the volatility in stocks 
  • Sanford Bernstein is advising clients to buy low volatility stocks with a flattening yield curve a headwind for momentum stocks
  • The VIX is moving higher this morning and is currently at 22.34 after closing at 21.19 yesterday
  • SPY December 07 OTM Calls & Puts, SPY December 21 OTM Puts and SPY December 31 OTM Calls are some of the most actively traded options contracts in the US pre-market
  • US 10-Year Treasury Bonds are higher with yields down -0.92 basis points to 2.8863%
  • The US Treasury 2s-10s Spread has narrowed 1.33 basis points to 0.12%
  • WTI Crude is currently flat at USD$51.49/bbl with the Brent-WTI spread up USD$1.08 to USD$8.90/bbl
  • Gold is currently up 0.36% to USD$1242.28/oz
  • OPEC, allegedly, is unable to come to a unanimous consensus to cut production as Iranian energy officials are rejecting a Saudi proposal to cut production – the proposal calls for a cut in production of 1 million barrels/day with OPEC shouldering a cut in 650k barrels/day  
  • Traders are speculating that the recent rally in Gold is only the beginning as market expectations for future rate hikes by the US Fed re-adjust downwards and the amount of global negative-yielding debt rises
     

Stocks Trending in the News

Click name for Q-Factor breakdown, latest price details, more financial info and sentiment data.
 

  • Airbus (AIR FP) confirmed an order for 100 single-aisle aircraft from Avalon, the Chinese aircraft leasing company owned by China’s HNA Group.  The order is valued at USD$11.5 billion before any discounts.  The planes are due to be delivered starting in 2023.  Airbus is rated “Neutral” in our European Large-Cap Global Top Stock Ideas.
  • Altria Group (MO) has announced the purchase of a 45% equity stake in Canadian cannabis company Cronos (TSX: CRON) for USD$1.8bn. The USD$1.8bn price tag for a 45% equity stake in Cronos represents a per share price of CAD$19.00. Altria will be allowed to nominate four directors to Cronos’ board while Altria maintains an option to increase its stake in Cronos to 55%. As part of the deal, Altria will make Cronos its exclusive partner for pursuing cannabis ventures across the globe. Shares of other cannabis companies like Aurora Cannabis (TSX: ACB) and Tilray (TLRY) are trading higher on the news. Altria is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Consumer Staples Global Top Stock Ideas. Cronos, Aurora Cannabis, and Tilray are not rated in our Global Top Stock Ideas.
  • Big Lots (BIG) provided guidance well below consensus and below the lowest estimate.  Big Lots see 4Q EPS USD$2.20-3.40 while present consensus is in a range of USD$2.87-2.96.  Big Lots sees comparable sales growth of 0-2%.  Full year EPS is expected to come USD$3.55-3.75.  Big Lots is rated “Top Short” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Consumer Discretionary Global Top Stock Ideas.
  • Boeing (BA) and Brazil’s Embraer (ERJ) had their deal halted by a federal judge in Sao Paulo.  The injunction was a surprise to both parties.  The judge said no deal can be finalized during the judicial recess in Brazil around the year-end holidays.  The ruling does not kill the deal between Boeing and Embraer, it just does not allow it to be concluded until the courts reopen in Brazil after the year-end recess.  Boeing is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Industrials Global Top Stock Ideas.  Embraer is rated “Neutral” in our Brazil All-Cap Global Top Stock Ideas.
  • Broadcom (AVGO) gave the market something it hasn’t seen much from a tech company-guidance above estimates.  Broadcom’s fiscal 2019 forecast of revenue is ~USD$24.5 billion, present consensus is for USD$22.45 billion.  Broadcom did not provide updated guidance for fiscal 2018.  Broadcom is rated “Top Buy” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Information Technology Global Top Stock Ideas.
  • Chevron (CVX) announced it is increasing its spending budget by 9.3%, its first hike since 2014.  Chevron is hiking spending even in the face of falling oil prices.  Chevron will spend USD$20 billion this coming year as it doubles down on shale.  Chevron will increase its footprint in the Permian Basin in the coming year.  Chevron is the first of the supermajor oil producers to provide spending guidance.  Chevron is rated “Attractive” in our US Large-Cap Global Top Stock Ideas
  • Fresenius Medical Care (FME GR) issued its second profit warning in the last 2 months.  Fresenius said it will not meet its previously provided guidance until at least 2020.  Fresenius said it will increase investments in its domestic hospital division in Germany, where growth has been sluggish.  Fresenius said it is “cautious” on growth prospects for its Kabi unit, which it sees as one of its main growth drivers.  Fresenius is rated “Neutral” in our European Large-Cap Global Top Stock Ideas.
  • Lululemon (LULU) posted strong same store sales growth but indicated it expects growth to slow.  Lululemon saw 3Q same store sales growth of 18%, well above 13.6 % consensus.  Lululemon said it expects growth to slow to high to middle single-digit growth.  Lululemon saw e=commerce sales rise 46%.  Lululemon is rated “Neutral” in our US Large-Cap Global Top Stock Ideas
  • Momo Inc. (MOMO) is being downgraded at Morgan Stanley from overweight to equal-weight. In a note to clients, Morgan Stanley cited that Momo faces slowed economic growth from its top customers and intense competition as reasons for the downgrade. Additionally, Morgan Stanley slashed its price target for Momo by more than half, from USD$61/share to USD$30/share. Momo is rated “Neutral” in our China All-Cap Global Top Stock Ideas.
  • Sino Biopharmaceutical’s (SEHK: 1177) is down nearly 30% over the last two days, its largest two-day slide since 2005, as investors are concerned that the Chinese government is driving generic drug prices lower through its centralized procurement program. Sino Biopharmaceutical is one of the most affected companies in the sector by this, with 31 of their drugs seeing an average price decrease of 45%. In the last two days, the MSCI China Health Care Index is down 16% while CSPC Pharmaceuticals (SEHK: 1093) is down nearly 20%. Sino Biopharmaceutical is rated “Top Buy” in our China All-Cap Global Top Stock Ideas. CSPC Pharmaceuticals is rated “Top Buy” in our China All-Cap Global Top Stock Ideas. 
  • Softbank (9984 JP), in the middle of the IPO of its telecom unit, had its cellular network go down overnight.  Softbank has previously said the entire USD$23 billion it is seeking to sell had already been sold.  Softbank is holding an emergency meeting with IPO buyers to explain what is happening with its network.  Softbank is rated “Neutral” in our Japan Large-Cap Global Top Stock Ideas. 
     

 

European Stocks

  • European stocks are bouncing back this morning after the worst trading day in 2 years 
  • The Euro Stoxx 600 is currently up +1.24%, the FTSE 100 is higher by +1.52%, the DAX has advanced +0.71%, and the CAC 40 has risen +1.45%
  • Investor sentiment for European stocks is positive with the advance/decline ratio for the Euro Stoxx 600 currently at 9.17x
  • Retail (+2.12%), Personal & Household Goods (+2%), and Travel & Leisure (+1.91%) stocks are the top performers in the Euro Stoxx 600 today
  • Health Care (+0.47%), Automobiles & Parts (+0.85%), and Banks (+0.91%) stocks are the worst performers in the Euro Stoxx 600 today
  • 2 stocks in the Euro Stoxx 600 are at 4-week highs while 278 stocks are at 4-week lows
  • 1 stock in the Euro Stoxx 600 are overbought while 98 stocks are oversold according to the 16-day RSI Measure
  • VSTOXX, the European stocks equivalent of the VIX, is lower this morning  and is currently at 21.37 after closing at 24.61 yesterday
  • EUR€ is currently little changed against the USD$ at 1.1378
  • GBP£ is currently little changed against the USD$ at 1.2766
  • CHF is currently little changed against the USD$ at 1.0069
  • German 10-Year Bunds are lower with yields up 1.8 basis points to 0.254%
  • UK 10-Year GILTs are lower with yields up 2.3 basis points to 1.269%
     

Asian Stocks

  • Asia stocks finished mixed in overnight trading as the late afternoon rally in US stocks yesterday helped risk sentiment across the region
  • The Nikkei 225 finished up +0.82%, the Hang Seng ended down -0.35%, the Hang Seng China Enterprise declined -1.06%, and the CSI 300 was 0%
  • The Hang Seng finishes the week down 1.7% following the previous day’s 2.47% drop 
  • The Shanghai Stock Exchange is moving closer to launching its NASDAQ cone in 1HCY2019 with the focus of the new Board centered on tech and biopharmaceutical stocks
  • Investor sentiment for Japanese stocks finished positive with the advance/decline ratio for the Nikkei 225 closing at 1.27x
  • 1 stock in the Nikkei 225 hit 4-week highs while 69 stocks reached 4-week lows
  • 1 stock in the Nikkei 225 closed overbought while 12 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 0.56x
  • 1 stock in the Hang Seng hit 4-week highs while 6 stocks reached 4-week lows
  • 0 stocks in the Hang Seng closed overbought while 2 stocks closed oversold according to the 16-day RSI Measure
  • Japan 2-Year Government Bonds are higher with yields down -0.4 basis points to -0.141%
  • Japan 10-Year Government Bonds are higher with yields down -0.5 basis points to 0.059%
  • JGBs 2s-10s Spread has narrowed 0.1 basis points to 0.2%
  • JPY¥ is currently little changed against the USD$ at 112.78

 

*Data in Price Return and Updated Real-Time (with a delay), Source: StockDio

Stock Sentiment

Top Stocks by 7-day News Volume

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Name 7 Day News
Volume
7 Day Average
News Buzz
1M EPS Net
Revisions
3M EPS Net
Revisions
1M EPS
% Chg
3M EPS
% Chg
Alphabet Inc 2140 7.29 0 8 0.05% 2.58%
Morgan Stanley 584 5.71 1 3 -0.02% 3.62%
Microsoft Corp 574 6.43 -1 30 -0.02% 4.79%
Goldman Sachs Group Inc/The 508 6.43 -2 18 -0.15% 2.78%
Bank of America Corp 486 8.29 -3 8 -0.04% 1.72%

Note: Please see our General FAQs to learn how we define and measure News Volume

Top Stocks by 7-Day Average News Buzz

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Name 7 Day News
Volume
7 Day Average
News Buzz
1M EPS Net
Revisions
3M EPS Net
Revisions
1M EPS
% Chg
3M EPS
% Chg
BlackRock Inc 461 9.14 -3 3 -1.99% -5.48%
Citigroup Inc 463 8.57 1 10 0.14% 5.6%
Bank of New York Mellon Corp/The 150 8.57 -1 3 -0.56% -0.06%
Visa Inc 121 8.57 -2 3 0.02% 4.64%
Bank of America Corp 486 8.29 -3 8 -0.04% 1.72%

Note: Please see our General FAQs to learn how we define and measure News Buzz

Implied Volatility Data For Liquid Macro Index ETFs

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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 18.33 93.65% 17.86 94.84% 0.97 14.29% -3.59 19.44% -1.21 35.71%
QQQ 23.88 87.3% 22.9 94.44% 0.96 25.79% -6.95 17.86% -5.18 20.63%
IWM 22.5 95.63% 21.19 98.41% 0.94 14.29% -2.59 18.65% -0.8 26.19%
FEZ 22.34 98.41% 19.9 98.41% 0.89 9.72% 2.31 72.22% 2.36 76.19%
EEM 23.7 86.11% 22.9 96.03% 0.97 27.38% -1.79 31.35% -1.69 29.76%

Note: Please see our Options FAQs to learn more about Implied Volatility and other advanced options volatility measures

S&P 500 Sector Performance

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

Russell 1000 Factor Performance

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

Stock Movers From Our US Large-Cap Model

Top Buy Winners and Losers

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Winners Ticker Sector Industry 1D Return 5D Return YTD
SUN COMMUNITIES INC SUI Real Estate Equity Real Estate Investment Trusts (REITs) 3.07% 5.08% 18.86%
NORTHROP GRUMMAN CORP NOC Industrials Aerospace & Defense 2.83% -1.9% -15.65%
VULCAN MATERIALS CO VMC Materials Construction Materials 2.78% -4.33% -23.36%
FORTINET INC FTNT Information Technology Software 2.77% 2.58% 53.12%
COSTAR GROUP INC CSGP Industrials Professional Services 2.6% 0.1% 23.51%
 
Losers Ticker Sector Industry 1D Return 5D Return YTD
MARRIOTT VACATIONS WORLDWIDE VAC Consumer Discretionary Hotels, Restaurants & Leisure -3.21% -5.81% -58.27%
JEFFERIES FINANCIAL GRP INC JEF Financials Diversified Financial Services -2.77% -11.8% -29.46%
PG&E CORP PCG Utilities Electric Utilities -2.73% -5.35% -53.6%
HUMANA INC HUM Health Care Health Care Providers & Services -2.56% -3.92% 23.37%
S&P GLOBAL INC SPGI Financials Capital Markets -2.35% -5.44% 4.18%

Source: S&P Capital IQ, StockDio

Top Short Winners and Losers

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Winners Ticker Sector Industry 1D Return 5D Return YTD
CALIFORNIA RESOURCES CORP CRC Energy Oil, Gas & Consumable Fuels -11.3% -16.98% 5.26%
SUPERIOR ENERGY SERVICES INC SPN Energy Energy Equipment & Services -8.77% -29.64% -79.18%
BRIGHTHOUSE FINANL INC BHF Financials Insurance -8.02% -12.18% -47.62%
ROWAN COMPANIES PLC RDC Energy Energy Equipment & Services -7.78% -14.44% -25.95%
OASIS PETROLEUM INC OAS Energy Oil, Gas & Consumable Fuels -7.58% -7.44% -22.26%
 
Losers Ticker Sector Industry 1D Return 5D Return YTD
TENABLE HOLDINGS INC TENB Information Technology Software 5.26% 4.26% -3.33%
MADRIGAL PHARMACEUTICALS INC MDGL Health Care Biotechnology 4.67% 4.89% 21.39%
PTC THERAPEUTICS INC PTCT Health Care Biotechnology 4.39% 3.31% 72.05%
DISCOVERY INC DISCA Consumer Discretionary Media 4.1% -7.15% 23.22%
HEALTHCARE TRUST OF AMERICA HTA Real Estate Equity Real Estate Investment Trusts (REITs) 4.03% 4.03% 1.42%

Source: S&P Capital IQ, StockDio

Cryptos

  • Cryptocurrencies plummeted overnight as the price of Bitcoin (BTC) is down 9.77% in the last 24 hours to USD$3,432.05. Most major cryptocurrencies are observing double-digit losses this morning with Bitcoin SV (BSV) being the outlier, up 14.20% in the last 24 hours to USD$105.85. Gains by BSV paired with a 12.10% rout in Bitcoin Cash ABC (BCH) have caused BSV to overtake BCH for the spot as the sixth largest cryptocurrency by market capitalization. Among major cryptocurrencies, EOS (EOS) is the worst performer, down 21.39% in the last 24 hours to USD$1.71.  
  • A consortium of international banks, including Commerzbank, ING, Natixis, and Rabobank, have completed a live commercial paper transaction based on R3’s Corda blockchain platform, according to a report by news outlet Finextra. The commercial paper transaction saw Natixis issue 100,000 euro notional with Rabobank acting as the investor and ING serving as the dealer and escrow agent. The commercial paper transaction was completed on R3’s Corda-based Euro Debt Solution.  
  • The United States Securities and Exchange Commission (SEC) is postponing its decision on nine Bitcoin (BTC) exchange-traded fund (ETF) application, as per an official release by the regulator. For its decision on the BTC ETF applications submitted by investment firm VanEck and blockchain company SolidX, the SEC has set a deadline for February 27th, 2019. “The Commission finds it appropriate to designate a longer period within which to issue an order approving or disapproving the proposed rule change so that it has sufficient time to consider this proposed rule change,” the official release reads. 
  • United States’ cryptocurrency regulation needs a, “more nuanced approach,” according to two university professors who conducted academic research into the space. Carol Goforth from Oxford University and Clayton N. Little from Arkansas School of Law believe that the problem with the US’ cryptocurrency regulation comes from three separate regulatory bodies, the US Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC), and the Internal Revenue Service (IRS), trying to govern cryptocurrencies, but each from a different perspective. “Because different agencies in the US have different regulatory powers and responsibilities, each agency has tended to classify the very same assets differently in order to assert jurisdiction,” claims the academic paper. 
     

Events Calendar

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Company Name Ticker Event Date Event Type Q-Factor Score
Big Lots, Inc. BIG 12/7/2018 Earnings Release Date US Large-Cap: F, US Consumer Discretionary: C
Vail Resorts, Inc. MTN 12/7/2018 Earnings Release Date US Large-Cap: B, US Consumer Discretionary: C
SCUD Group Limited SEHK:1399 12/7/2018 Estimated Earnings Release Date China All-Cap: F
China Merchants Port Holdings Company Limited SEHK:144 12/7/2018 Estimated Earnings Release Date China All-Cap: C
Hingtex Holdings Limited SEHK:1968 12/7/2018 Estimated Earnings Release Date China All-Cap: D
China New Higher Education Group Limited SEHK:2001 12/7/2018 Estimated Earnings Release Date China All-Cap: D
E-House (China) Enterprise Holdings Limited SEHK:2048 12/7/2018 Estimated Earnings Release Date China All-Cap: C
China Minsheng Financial Holding Corporation Limited SEHK:245 12/7/2018 Estimated Earnings Release Date China All-Cap: F
China Xinhua Education Group Limited SEHK:2779 12/7/2018 Estimated Earnings Release Date China All-Cap: D
Tracker Fund Of Hong Kong SEHK:2800 12/7/2018 Estimated Earnings Release Date China All-Cap: D
China Shineway Pharmaceutical Group Limited SEHK:2877 12/7/2018 Estimated Earnings Release Date China All-Cap: C
China High Speed Transmission Equipment Group Co., Ltd. SEHK:658 12/7/2018 Estimated Earnings Release Date China All-Cap: D
EPI (Holdings) Limited SEHK:689 12/7/2018 Estimated Earnings Release Date China All-Cap: D
Tianneng Power International Limited SEHK:819 12/7/2018 Estimated Earnings Release Date China All-Cap: D
Casey's General Stores, Inc. CASY 12/9/2018 Earnings Release Date US Large-Cap: B, US Consumer Staples: A
Stitch Fix, Inc. SFIX 12/10/2018 Earnings Release Date US Large-Cap: F
Grand Baoxin Auto Group Limited SEHK:1293 12/10/2018 Estimated Earnings Release Date China All-Cap: C

Source: S&P Capital IQ