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Morning Brief

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US stocks rallying head of US Fed interest rates decision

Dec 19, 2018

 

 

 

 

Market data as of 7am EST

 

US Stocks

  • US Index futures are jumping in pre-market this morning ahead of the US Federal Reserve interest rate announcement with front-month Dow Jones minis +0.97%, S&P 500 minis +0.91%, and Nasdaq 100 minis +0.91%
  • The US Federal Reserve is set to release its interest rate decision today at 2pm EST 
  • According to US Treasury Secretary Steven Mnuchin, US and Chinese trade officials continue to make progress in their talks about the trade impasse 
  • The price ratio of large-cap energy stocks to the S& 500 is back down to its lowest level since November 2001, when WTI was trading near USD$16-17/barrel 
  • While stocks have sold off the past few months, the US Fed model, a measure of what investors are “paid” to own stocks, suggests the payoff from US stocks has not materially increased 
  • The VIX is little changed this morning and is currently at 25.16 after closing at 25.58 yesterday
  • EEM December 21 OTM Puts, SPY December 21 OTM Puts, and QQQ January 18 OTM Puts are some of the most actively traded options contracts in the US pre-market 
  • US 10-Year Treasury Bonds are higher with yields down -0.55 basis points to 2.812%
  • The US Treasury 2s-10s Spread has narrowed 0.74 basis points to 0.17%
  • WTI Crude is currently down -7.3% to USD$46.24/bbl with the Brent-WTI spread up USD$8.15 to USD$9.38/bbl
  • Gold is currently little changed -0.09% to USD$1248.29/oz
  • Global oil prices have tumbled into oversold territory according to the 14-day RSI as worries about global growth and whether OPEC and its allies can offset a potential supply glut in CY2019 plagues crude oil valuations – global crude oil prices have collapsed nearly 40% since reaching a 4-year high in early October
     

Stocks Trending in the News

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

  • Brazil’s Finance Minister said he sees no restrictions to get in the way of the Boeing (BA) / Embraer (ERJ) joint venture in commercial aviation.  This comes in the wake of a labor court judge removing an injunction and sending the case back to standard courts.  The companies are close to completing the commercial aviation deal they have been working on.  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.  
  • Citigroup Inc. (C) reportedly may face as much as USD$180mm in losses from loans made to an Asian hedge fund. A hedge fund managed by a unit of GF Holdings lost significant funds in foreign currency investments and it will not be able to pay back the loan made by Citigroup. The situation has prompted board-level discussions at Citigroup and is resulting in more oversight in the firm’s FX prime brokerage unit. Citigroup is rated “Neutral” in our US Large-Cap Global Top Stock Ideas.
  • Deutsche Bank (DB: DBK) and JPMorgan Chase & Co. (JPM) lost a trial in a criminal case related to losses from financial products sold to the German city of Pforzheim. Pforzheim lost millions of euros related to swaps sold by Deutsche Bank and JPMorgan in 2004 and 2008, prompting the city to sue for 12mm euro (USD$13.7mm) in losses. Deutsche Bank is rated “Neutral” in our Europea Large-Cap Global Top Stock Ideas. JPMorgan is rated “Neutral” in our US Large-Cap Global Top Stock Ideas.
  • Embraer S.A. (BOVESPA: EMBR3) and Azul S.A. (BOVESPA: AZUL4) have signed a contract pertaining to a previously announced order of 21 E195-E2 jets. The contract is valued at USD$1.4bn and will be listed in Embraer’s 2018 4Q backlog. Embraer is rated “Neutral” in our Brazil All-Cap Global Top Stock Ideas. Azul is rated “Top Buy” in our Brazil All-Cap Global Top Stock Ideas.
  • FedEx (FDX) said demand for shipping services outside the US has been weak.  As a result, FedEx cut its profit forecast and is trimming international air freight capacity.  FedEx said adjusted earnings for 2019 no greater than USD$16.60 a share.  FedEx increased its profit outlook 3 months ago only to cut it yesterday.  FedEx is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Industrials Global Top Stock Ideas.  
  • General Electric (GE) has reportedly filed for an initial public offering (IPO) of its health-care unit in an effort to spin-off the business unit. The health care unit of General Electric is the conglomerate’s second-most profitable. The spin-off would follow a similar move by Germany-based Siemens AG (DB: SIE), which spun-off its Healthineers business in March -- Siemens Healthineers AG (XTRA: SHL) is up 32% since its IPO with a market capitalization of 37bn euro (USD$42bn). General Electric is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Unattractive” in our US Industrials Global Top Stock Ideas. Siemens AG is rated “Unattractive” in our European Large-Cap Global Top Stock Ideas. Siemens Healthineers AG is rated “Unattractive” in our European Large-Cap Global Top Stock Ideas.
  • GlaxoSmithKline (LSE: GSK) will combine its consumer business with that of Pfizer (PFE) to create a consumer products giant.  In the new company, GlaxoSmithKline will hold 68% and Pfizer will hold 32%.   The new company will have US$12.7 billion in annual sales.  The deal is expected to close in the second half of 2019.  Within 3 years the company is expected to be listed on the stock market.   GlaxoSmithKline is rated “Attractive” in our United Kingdom All-Cap Global Top Stock Ideas.  Pfizer is rated “Attractive” in our US Large-Cap Global Top Stock Ideas.  
  • Japan Post (TSE: 6178) will take a 7% stake in US insurer Aflac (AFL).  Aflac’s biggest market is Japan.  The 7% stake is valued at USD$2.4 billion with the total investment said to be USD$2.7 billion.  The shares will be bought in the open market or via private block trades.  Japan Post is rated “Neutral” in our Japan Large-Cap Global Top Stock Ideas.  Aflac is rated “Attractive” in our US Large-Cap Global Top Stock Ideas.
  • Micron (MU) provided a sales forecast that disappointed investors yesterday post-market.  Micron sees revenue in the present quarter coming USD$5.7-6.2 billion, well below consensus of USD$7.32 billion.   Micron cut its capex budget by USD$1.25 billion to USD$9-9.5 billion.  Analysts warn of further price competition that could weigh on the stock in the coming quarter.  Micron is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Information Technology Global Top Stock Ideas.
  • Siemens AG (DB: SIE) and Alstom S.A. (ENXTPA: ALO) have reportedly agreed to sell-off some of their older high-speed train and signaling technology in an effort to secure EU approval for their merger. The agreement concerns four specific sets of assets although the two companies warned that there is, “no certainty that the content of this package will be sufficient.” Siemens AG is rated “Unattractive” in our European Large-Cap Global Top Stock Ideas. Alstom is rated “Attractive” in our European SMID-Cap Global Top Stock Ideas. 
  • Softbank Corp (TSE: 9434), the telecom spin-off from Softbank Group (TSE: 9984), shares debuted overnight after closing its IPO and promptly fell over 14%.  Concerns over a telecom price war weighed on the shares.  Softbank Group raised USD$23.6 billion with the IPO of Softbank Corp.  Softbank Group is rated “Neutral” in our Japan Large-Cap Global Top Stock Ideas.  Softbank Corp is not rated in our Global Top Stock Ideas.
  • Twitter (TWTR) shows a bias towards Democrats, according to an allegation from President Trump.  The President complained about US tech companies overall and singled out Twitter in his complaint.  He said Twitter makes it hard for people to follow him, without offering specifics.  Twitter is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Information Technology Global Top Stock Ideas

 

 

European Stocks

  • European stocks are bouncing back this morning following 4 straight trading sessions of declines 
  • The Euro Stoxx 600 is currently up +0.45%, the FTSE 100 is higher by +0.95%, the DAX has advanced +0.65%, and the CAC 40 has risen +0.61%
  • The EU has decided against implementing sanctions against Italy following negotiations between EU officials and members of the Italian coalition government regarding Italy’s target budget deficit for CY2019  -- Italian banks are rallying on the news
  • Investor sentiment for European stocks is positive with the advance/decline ratio for the Euro Stoxx 600 currently at 2.73x
  • Oil & Gas (+0.15%), Telecommunications (+1.04%), and Basic Resources (+0.51%) stocks are the top performers in the Euro Stoxx 600 today
  • Automobiles & Parts (+1.07%), Food & Beverage (-0.12%), and Utilities (+1.06%) stocks are the worst performers in the Euro Stoxx 600 today
  • 10 stocks in the Euro Stoxx 600 are at 4-week highs while 191 stocks are at 4-week lows
  • 6 stocks in the Euro Stoxx 600 are overbought while 57 stocks are oversold according to the 16-day RSI Measure
  • VSTOXX, the European stocks equivalent of the VIX, is little changed this morning and is currently at 19.14 after closing at 20.04 yesterday
  • EUR€ is currently up +0.334% against the USD$ to 1.1399
  • GBP£ is currently little changed against the USD$ at 1.2641
  • CHF is currently little changed against the USD$ at 1.0063
  • German 10-Year Bunds are higher with yields down -0.5 basis points to 0.239%
  • UK 10-Year GILTs are higher with yields down -2.6 basis points to 1.254%

Asian Stocks

  • Asia stocks finished their trading sessions mixed ahead of the US Federal Reserve decision later today 
  • The Nikkei 225 finished down --0.6%, the Hang Seng ended up +0.2%, the Hang Seng China Enterprise declined -0.34%, and the CSI 300 was -1.19%
  • While December has been one of the roughest on record for US stocks, Asia stocks have held up relatively well as the discount of Asian stocks to US stocks is narrowing after reaching a record high earlier in the year 
  • SoftBank’s telecom unit (Softbank Corp, TSE: 9434), had a rough start to trading following its IPO, dropping 14.5% overnight as concern about a possible price war hit the share-price of Japan’s third largest telecom company
  • Investor sentiment for Japanese stocks finished negative with the advance/decline ratio for the Nikkei 225 closing at 0.53x
  • 3 stocks in the Nikkei 225 hit 4-week highs while 91 stocks reached 4-week lows
  • 0 stocks in the Nikkei 225 closed overbought while 21 stocks closed oversold according to the 16-day RSI Measure
  • Investor sentiment for Hong Kong stocks finished neutral with the advance/decline ratio for the Hang Seng closing at 1.17x
  • 3 stocks in the Hang Seng hit 4-week highs while 8 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 lower with yields up 0.4 basis points to -0.15%
  • Japan 10-Year Government Bonds are lower with yields up 0.9 basis points to 0.035%
  • JGBs 2s-10s Spread has widened 0.5 basis points to 0.19%
  • JPY¥ is currently down -0.16% against the USD$ to 112.34
     

 

*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
International Business Machines Corp 135 2.14 0 -1 0.23% 0.64%
BlackRock Inc 86 1.43 -6 1 -1.88% -5.43%
Johnson & Johnson 84 2.71 -2 12 -0.11% 1.69%
Apple Inc 72 0.29 -15 -22 -1.27% -0.65%
Microsoft Corp 63 1 -1 30 -0.12% 4.61%

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
Mastercard Inc 18 5.14 2 19 -0.05% 4.25%
Walt Disney Co/The 23 3.71 -3 -15 -0.94% -3.05%
UnitedHealth Group Inc 8 3.14 0 21 0.4% 5.17%
Caterpillar Inc 5 2.86 0 4 0.11% 2.75%
Target Corp 4 2.86 -8 -2 -0.17% 0.49%

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 21.5 97.62% 20.86 99.21% 0.97 14.68% -0.43 45.04% 0.83 46.03%
QQQ 27.8 98.02% 25.9 99.6% 0.93 19.25% -2.44 33.33% -3.41 28.17%
IWM 25.58 98.02% 24.06 99.6% 0.94 15.48% 0.73 46.63% 1.16 41.27%
FEZ 18.7 85.32% 19.09 93.65% 1.02 49.4% -0.67 40.08% 1.04 66.67%
EEM 24.23 88.49% 23.82 97.62% 0.98 33.53% 1.87 75.4% -1.01 41.07%

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
DARDEN RESTAURANTS INC DRI Consumer Discretionary Hotels, Restaurants & Leisure 4.89% 2.04% 10.26%
EPAM SYSTEMS INC EPAM Information Technology IT Services 2.75% -4.96% 8.01%
FORTINET INC FTNT Information Technology Software 2.65% -6.05% 45.74%
ADOBE SYSTEMS INC ADBE Information Technology Software 2.15% -8.13% 24.12%
SHERWIN-WILLIAMS CO SHW Materials Chemicals 1.96% -1.79% -6.63%
 
Losers Ticker Sector Industry 1D Return 5D Return YTD
PPL CORP PPL Utilities Electric Utilities -6.87% -8.66% -3.27%
PG&E CORP PCG Utilities Electric Utilities -5.99% -12.4% -65.89%
FACTSET RESEARCH SYSTEMS INC FDS Financials Capital Markets -4.33% -7.04% 9.79%
HUMANA INC HUM Health Care Health Care Providers & Services -3.76% -4.7% 15.39%
ANTHEM INC ANTM Health Care Health Care Providers & Services -2.79% -6.31% 14.95%

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 -10.72% -14.76% -11.27%
WHITING PETROLEUM CORP WLL Energy Oil, Gas & Consumable Fuels -8.55% -20.85% -12.31%
SAREPTA THERAPEUTICS INC SRPT Health Care Biotechnology -6.87% -14.6% 61.76%
BLOOM ENERGY CORP-REDH BE Industrials Electrical Equipment -6.06% -26.56% -73.4%
CHESAPEAKE ENERGY CORP CHK Energy Oil, Gas & Consumable Fuels -5.95% -19.25% -65.96%
 
Losers Ticker Sector Industry 1D Return 5D Return YTD
GREENSKY INC GSKY Information Technology IT Services 5.89% -0.89% -102.13%
CARVANA CO CVNA Consumer Discretionary Specialty Retail 5.87% 2.71% 64.07%
TENABLE HOLDINGS INC TENB Information Technology Software 5.06% -7.16% -21.04%
FITBIT INC FIT Information Technology Electronic Equipment, Instruments & Components 5.05% 2.39% -16.81%
PUMA BIOTECHNOLOGY INC PBYI Health Care Biotechnology 4.79% -4.57% -141.66%

Source: S&P Capital IQ, StockDio

Cryptos

  • Cryptocurrencies resumed their rally overnight as all but 2 of the top 100 cryptocurrencies are in the green and Bitcoin (BTC) is up 9.38% in the last 24 hours to USD$3,849.35. Bitcoin Cash (BCH) is leading the charge among major coins, up 32.27% to USD$116.88. Nearly all major coins are up double-digits in the last 24 hours, although Litecoin (LTC) lags behind, up just 6.82% to USD$30.83. Total cryptocurrency market capitalization has added USD$12.4bn in the last 24 hour and currently sits at USD$125.1bn.  
  • In an interview with Bloomberg published Tuesday afternoon, Galaxy Digital founder and ex-Goldman Sachs partner Mike Novogratz said that he does not expect the price of Bitcoin (BTC) to decline much further and that it will likely trading in between USD$3,000 and USD$6,000 in the foreseeable future. While appearing on Bloomberg Television, Novogratz discussed that, “We are entering a cool era for macro. Crypto is less exciting now versus macro. Macro got quite boring for many years, and crypto was really exciting.” Since Novogratz’s interview, BTC has rallied steadily and is up 9.38% in the last 24 hours to USD$3,849.35.  
  • Coincheck, the Japanese cryptocurrency exchange the was hacked for USD$532mm of NEM tokens last January, has been granted a cryptocurrency exchange operating license by Japan’s Financial Services Agency (FSA), according to news outlet Nikkei. While neither party have confirmed the license, Nikkei is reporting that an official announcement is set for the end of the year. Coincheck has responded to the report, saying, “It is not the exchange’s official announcement and we haven’t confirmed the fact yet.” 
  • Mike Kayamori, CEO of Japan-based cryptocurrency exchange platform Quinone, interviewed on Blomberg TV on Tuesday and predicted that the price of Bitcoin (BTC) will reach an all-time high by the end of 2019. Kayamori went on to cite a lack of catalysts to propel the market forward in discussing the current state of the cryptocurrency market. When asked about where he thought BTC would bottom, Kayamori responded, “I don’t know. No one does. However, when you look at historical patterns and where things are going, I think the bottom is near.”
     

Cryptocurrencies Today

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

Events Calendar

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Company Name Ticker Event Date Event Type Q-Factor Score
General Mills, Inc. GIS 12/19/2018 Earnings Release Date US Large-Cap: A, US Consumer Staples: A
Paychex, Inc. PAYX 12/19/2018 Earnings Release Date US Large-Cap: B, US Information Technology: C
Zai Lab Limited ZLAB 12/19/2018 Estimated Earnings Release Date China All-Cap: D
iKang Healthcare Group, Inc. KANG 12/20/2018 Earnings Release Date China All-Cap: C
Walgreens Boots Alliance, Inc. WBA 12/20/2018 Earnings Release Date US Large-Cap: B, US Consumer Staples: B
Carnival Corporation CCL 12/20/2018 Earnings Release Date US Large-Cap: B, US Consumer Discretionary: A
Conagra Brands, Inc. CAG 12/20/2018 Earnings Release Date US Large-Cap: C, US Consumer Staples: B
NIKE, Inc. NKE 12/20/2018 Earnings Release Date US Large-Cap: D, US Consumer Discretionary: B
Cintas Corporation CTAS 12/20/2018 Earnings Release Date US Large-Cap: A, US Industrials: B
Adobe Inc. ADBE 12/20/2018 Estimated Earnings Release Date US Large-Cap: A, US Information Technology: C
Sanderson Farms, Inc. SAFM 12/20/2018 Estimated Earnings Release Date US Large-Cap: F, US Consumer Staples: C
Prada S.p.A SEHK:1913 12/20/2018 Estimated Earnings Release Date China All-Cap: C
CarMax, Inc. KMX 12/20/2018 Earnings Release Date US Large-Cap: C, US Consumer Discretionary: C
Greentown Service Group Co. Ltd. SEHK:2869 12/20/2018 Estimated Earnings Release Date China All-Cap: C
SIG plc SHI 12/21/2018 Estimated Earnings Release Date China All-Cap: C
CLPS Incorporation CLPS 12/26/2018 Estimated Earnings Release Date China All-Cap: D

Source: S&P Capital IQ