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Morning Brief

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Global stocks drift lower to start week as Friday’s momentum fades

Jan 07, 2019

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Market data as of 7am EST

 

US Stocks

  • US stocks index futures are drifting lower to start the week with front-month Dow Jones minis +0.03%, S&P 500 minis -0.11%, and Nasdaq 100 minis -0.30%
  • According to Fundstrat’s Tom Lee, the number of stocks in the S&P 500 with P/Es south of 15.0x outnumbers those that are valued more than 25.0x with the spreading have increased nearly 15 points since the end of CY2017 – Lee suggests that US stocks are offering “real value” for investors for the first time in years 
  • Strategists at French investment bank SocGen believe earnings growth in the US and Europe will be flat in CY2019 with risks coming from semiconductors and capital goods stocks.  SocGen favors pharmaceutical and HPC stocks within the “defensive” healthcare and consumer staples sectors. 
  • JP Morgan stock strategists disagree with strategists at SocGen and suggest record levels for stocks buybacks, best in world earnings growth, and an acceleration in top-line growth point to continued support for US stocks valuation  
  • The SPDR S&P 500 ETF Trust (SPY) experienced positive inflows of USD$2.1 billion last week 
  • Emerging Markets ETFs experienced their 12th straight week of inflows last week with inflows to emerging markets stock ETFs +USD$1.01 billion
  • The VIX is  moving up this morning and is currently at 22.15 after closing at 21.38 yesterday
  • Fiat Chrysler (FCAU) February 15 OTM Puts, HYG March 19 OTM Puts, EEM February 15 OTM Calls and SPY January 11 OTM Calls are some of the most actively traded options contracts in the US pre-market this AM
  • US 10-Year Treasury Bonds are higher with yields down -2.49 basis points to 2.6428%
  • The US Treasury 2s-10s Spread has narrowed 1.47 basis points to 0.16%
  • WTI Crude is currently up 2.5% to USD$49.18/bbl with the Brent-WTI spread up USD$0.84 to USD$9.86/bbl
  • Gold is currently up 0.45% to USD$1291.82/oz
  • Today’s move, if it holds, would be the sixth consecutive advance for WTI crude oil and would be the highest price level for WTI in 3 weeks

Stocks Trending in the News

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

  • Alphabet Inc. (GOOGL) was upgraded to buy from hold at Pivotal Research Group while its price target for the tech giant was raised from USD$1,010/share to USD$1,240/share. Pivotal cited that Google’s parent company, “remains the dominant player in digital advertising,” as reasoning for the upgrade. Alphabet is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Information Technology Global Top Stock Ideas.
  • Alstom SA (ENXTPA: ALO) shares are trading lower after Les Echos reported that the European Union (EU) is unlikely to approve the rail business’ merger with Siemens AG (DB: SIE). The merger will reportedly not be approved because of a competitive threat from China. Alstom is rated “Top Buy” in our European Large-Cap Global Top Stock Ideas. Siemens is rated “Neutral” in our European Large-Cap Global Top Stock Ideas.
  • Anheuser-Busch InBev (BUD) was downgraded by Goldman Sachs today to neutral from buy.  Anheuser-Busch InBev, like a number of players in the sector, is likely to have a tough 2019 as demand is expected to be less than originally expected.  Anheuser-Busch InBev is rated “Top Short” in our European Large-Cap Global Top Stock Ideas.
  • Apple Inc. (AAPL) and Samsung (KOSE: A005930) have announced a deal that will see the iPhone maker offer iTunes movies and TV shows on its rival’s TV sets. The move by Apple displays a shift towards developing its tech and media services business as product sales continue to wane for the company. Apple is rated “Top Buy” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Information Technology Global Top Stock Ideas. Samsung is not rated in our Global Top Stock Ideas. 
  • Six current and former BASF SE (DB: BAS) engineers have been arrested in Taiwan for allegedly accepting bribes and sharing the German company’s technology with China’s Jiangyin Jianghua Microelectronics Materials Co. (SHSE: 603078). The employees were reportedly offered 40mm yuan (USD$5.8mm).  BASF SE is rated “Top Short” in our European Large-Cap Global Top Stock Ideas. Jiangyin Jianghua Microelectronics Materials is not rated in our Global Top Stock Ideas.
  • CBS News  (CBS) has named its first female president of the company.  CBS News named Susan Zirinsky, the producer of “48 Hours”, as its new president.  CBS news has suffered ratings weakness and the loss of key anchors and its new president will be tasked with turning the division around.  CBS Corp. is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Consumer Discretionary Global Top Stock Ideas.
  • Dollar Tree (DLTR) has Starboard Value as a shareholder, with a 1.7% stake, according to the Wall Street Journal.  Dollar Tree is being pushed to sell its Family Dollar division and to make changes to its pricing model.  Starboard Value has also named seven candidates for Dollar Tree’s board.  Dollar Tree is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Consumer Discretionary Global Top Stock Ideas.
  • Eli Lilly (LLY) is acquiring Loxo Oncology (LOXO) for USD$235 per shares, or about USD$8 billion.  Eli Lilly is expanding its cancer treatment business with the acquisition.  The companies will hold a press conference this morning to go over the details of the deal.  Eli Lilly is rated “Attractive” in our US Large-Cap Global Top Stock Ideas.  Loxo Oncology Nvidia is rated “Top Short” in our US Large-Cap Global Top Stock Ideas.
  • General Motors Company (GM) was upgraded to outperform from market perform by GMO while its price target for the automobile manufacturer was raised from USD$38/share to USD$41/share. BMO cited a strong outlook and better catalysts from GM in 2019 for the upgrade. GM is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Consumer Discretionary Global Top Stock Ideas.
  • Nvidia (NVDA) introduced a new gaming chip, the GeForce RTX 2060 chip, last night at a CES event.  The RTX 2060 is 60% faster than prior generation chips and according to the company, puts Turing architecture within reach of many more PC gamers worldwide.  Nvidia is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Information Technology Global Top Stock Ideas.
  • Norwegian Air Shuttle ASA (OB: NAS) shares are gaining after Pareto said that the firm’s December yield was ahead of its estimate while the firm’s load factor was below its estimate. Additionally, Pareto said that, while Norwegian Air’s hedging loss of NOK2bn adds pressure on its book equity, there is no covenant breach expected in FY4Q2018. Norwegian Air is rated “Top Short” in our European SMID-Cap Global Top Stock Ideas.
  • PG&E (PCG) is considering whether to file bankruptcy protection, according to a report in Bloomberg.  PG&E is looking to the state of California to help it with legislation as it faces billions and billions of dollars in liabilities over the fire.  PG&E has not made any decision yet as to how it will proceed.  PG&E is rated is “Attractive” in our US Large-Cap Global Top Stock Ideas.
  • Tesla (TSLA) today broke ground on its new factory in China.  Tesla calls the newest factory Gigafactory 3 and is located in Shanghai.  Tesla’s factory will be the first production facility of its type that is fully owned by a foreign company.  Tesla expects to build the factory in record time.  Tesla is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Consumer Discretionary Global Top Stock Ideas.
     

 

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European Stocks

  • European stocks are declining this morning with the surge in investor optimism from last Friday loses momentum 
  • The Euro Stoxx 600 is currently down -0.46%, the FTSE 100 has declined -0.57%, the DAX has fallen -0.57%, and the CAC 40 is lower by -0.61%
  • According to UBS, European stocks valuations are implying at 18% cut to CY2019 ESP estimates (assuming a return to a 14.5x long-term forward 12-month P/E) -- according to the analysis, nearly 22 out of the 29 major European sectors imply double-digit reductions to forecaster EPS 
  • EPS growth is now forecasted to be +7.8% for CY2018, down from +9.1% at the end of November.  
  • Investor sentiment for European stocks is negative with the advance/decline ratio for the Euro Stoxx 600 currently at 0.99x
  • Utilities (-0.27%), Banks (-0.5%), and Basic Resources (+0.66%) stocks are the top performers in the Euro Stoxx 600 today
  • Retail (+0.26%), Health Care (-0.76%), and Construction & Materials (-0.52%) stocks are the worst performers in the Euro Stoxx 600 today
  • 81 stocks in the Euro Stoxx 600 are at 4-week highs while 23 stocks are at 4-week lows
  • 3 stocks in the Euro Stoxx 600 are overbought while 5 stocks are oversold according to the 16-day RSI Measure
  • VSTOXX, the European stocks equivalent of the VIX, is  moving up this morning and is currently at 21.08 after closing at 20.48 yesterday
  • EUR€ is currently up +0.412% against the USD$ to 1.1442
  • GBP£ is currently up +0.244% against the USD$ to 1.2754
  • CHF is currently up +0.523% against the USD$ to 1.0183
  • UK 10-Year GILTs are higher with yields down -4 basis points to 1.236%

Asian Stocks

  • Asia stocks start the week positive ahead of US-China trade negotiations, playing catch-up with the rally in US stocks on Friday
  • The Nikkei 225 finished up +2.44%, the Hang Seng ended up +0.82%, the Hang Seng China Enterprise up +0.94%, and the CSI 300 was +0.61%
  • Investor sentiment for Japanese stocks finished positive with the advance/decline ratio for the Nikkei 225 closing at 14x
  • 1 stock in the Nikkei 225 hit 4-week highs while 34 stocks reached 4-week lows
  • 0 stocks in the Nikkei 225 closed overbought while 24 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 3.55x
  • 4 stocks in the Hang Seng hit 4-week highs while 17 stocks reached 4-week lows
  • 0 stocks in the Hang Seng closed overbought while 4 stocks closed oversold according to the 16-day RSI Measure
  • Japan 2-Year Government Bonds are lower with yields up 1.3 basis points to -0.165%
  • Japan 10-Year Government Bonds are lower with yields up 2.8 basis points to -0.01%
  • JGBs 2s-10s Spread has widened 1.5 basis points to 0.16%
  • JPY¥ is currently down -0.184% against the USD$ to 108.31

 

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

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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
Apple Inc 158 2.29 -9 -23 -8.49% -8.99%
BlackRock Inc 150 4.86 -5 -1 -1.52% -6.25%
Netflix Inc 140 4.43 -3 -8 -1.41% -3.97%
Microsoft Corp 128 3.71 -2 29 0.11% 4.64%
Morgan Stanley 124 3.43 -3 3 -2.3% 2.57%

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 150 4.86 -5 -1 -1.52% -6.25%
Netflix Inc 140 4.43 -3 -8 -1.41% -3.97%
Starbucks Corp 36 4.14 4 1 -0.29% 4.56%
Celgene Corp 24 4.14 -1 19 -0.46% 2.49%
PepsiCo Inc 12 4 -1 -18 -0.27% -0.33%

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 19.19 90.08% 19.35 93.25% 1.01 31.35% -11.23 3.57% -6.33 5.95%
QQQ 26.73 92.06% 25.45 94.84% 0.95 26.79% -11.79 5.95% -9.63 0.4%
IWM 22.95 90.08% 22.88 94.84% 1 37.1% -7.42 4.37% -4.55 4.76%
FEZ 19.08 83.33% 19.3 90.48% 1.01 50.0% -2.78 19.05% -0.81 31.35%
EEM 21.84 70.63% 23.08 90.48% 1.06 78.57% 0.75 59.33% -2.91 13.1%

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

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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
MARRIOTT VACATIONS WORLDWIDE VAC Consumer Discretionary Hotels, Restaurants & Leisure 7.29% 7.49% -60.43%
ROBERT HALF INTL INC RHI Industrials Professional Services 5.86% -0.09% 2.09%
WEX INC WEX Information Technology IT Services 5.32% 1.4% -0.07%
MOODY'S CORP MCO Financials Capital Markets 5.08% 2.35% -0.9%
VULCAN MATERIALS CO VMC Materials Construction Materials 4.99% 3.33% -25.18%
 
Losers Ticker Sector Industry 1D Return 5D Return YTD
CBOE GLOBAL MARKETS INC CBOE Financials Capital Markets 0.12% -0.12% -15.56%
KLX INC KLXI Industrials Aerospace & Defense 0.03% 0.35% -9.68%
HERSHEY CO HSY Consumer Staples Food Products -0.15% -0.05% -2.74%
FORTINET INC FTNT Information Technology Software -0.98% -5.07% 41.12%
EXPRESS SCRIPTS HOLDING CO ESRX Health Care Health Care Providers & Services -3.69% -6.92% 20.48%

Source: S&P Capital IQ, StockDio

Top Short Winners and Losers

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Winners Ticker Sector Industry 1D Return 5D Return YTD
ESPERION THERAPEUTICS INC ESPR Health Care Biotechnology -6.31% -4.73% -46.6%
ALLAKOS INC ALLK Health Care Biotechnology -4.31% -9.27% 41.36%
GAP INC GPS Consumer Discretionary Specialty Retail -1.52% -2.87% -26.33%
HERON THERAPEUTICS INC HRTX Health Care Biotechnology -0.12% 10.26% 34.26%
FOREST CITY REALTY TRUST INC FCE.A Real Estate Equity Real Estate Investment Trusts (REITs) 0.0% 0.2% 5.43%
 
Losers Ticker Sector Industry 1D Return 5D Return YTD
BLOOM ENERGY CORP-REDH BE Industrials Electrical Equipment 12.21% 7.64% -74.82%
ROKU INC ROKU Consumer Discretionary Household Durables 11.39% 10.2% -43.42%
REGENXBIO INC RGNX Health Care Biotechnology 10.39% 8.93% 26.49%
CALIFORNIA RESOURCES CORP CRC Energy Oil, Gas & Consumable Fuels 9.59% 10.28% -3.25%
LAREDO PETROLEUM INC LPI Energy Oil, Gas & Consumable Fuels 8.63% 7.01% -102.14%

Source: S&P Capital IQ, StockDio

Cryptos

  • Cryptocurrencies generally rallied over the weekend as Bitcoin (BTC) is trading higher by 3.79% since end of day Friday to USD$4,032. Litecoin (LTC) was the best performing major coin this weekend, up 14.53% since end of day Friday to USD$38.22. Ethereum (ETH), meanwhile, lagged the broad crypto market, falling 4.27% over the weekend to USD$153.31. Total cryptocurrency market capitalization added USD$3.3bn since end of day Friday and currently sits at USD$136.2bn.  
  • A bipartisan bill introduced to the floor of the Colorado State Senate would effectively exempt cryptocurrencies from some securities laws in the state, as per official documents released January 4th. The, “Colorado Digital Token Act,” introduced by Republican Jack Tate and Democrat Steve Fenberg aims to offer the cryptocurrency industry more freedoms in an effort to define the industry’s local landscape. A summary of the proposals reads, “The bill provides limited exemptions from the securities registration and securities broker-dealer and salesperson licensing requirements for persons dealing in digital tokens.” 
  • Bitcoin (BTC) median transaction fees recently reached a 3-year low of just USD$0.029 per transaction, according to data on BitInfoCharts. As discussed by cryptocurrency researcher Kevin Rooke on Twitter, the BTC network is processing 75% more transactions since October 2015, but doing so in a more efficient matter. BTC transaction capabilities have been aided by scaling solutions like Segregated Witness (SegWit), a technological development that decreases the data size of a transaction, and the Lightning Network, a two-layer network with a current total capacity of over 557BTC (USD$2.26mm).  
  • Japan’s Financial Services Agency (FSA) is considering the approval of Bitcoin (BTC) exchange-traded funds (ETFs), according to a report by Bloomberg that cites an anonymous source. The Japanese regulator is reportedly fielding the interest for a BTC ETF with a possibility of granting approval for the instrument to trade on domestic markets. Additionally, the Bloomberg report highlights that Japanese regulators are against BTC futures trading, explaining that the FSA concludes that, “such products would achieve little besides stoke speculation.” 

Cryptocurrencies Today

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

High Machine Learning Accuracy Rates for CryptocurrenciesHigh Machine Learning Accuracy Rates for Cryptocurrencies

Events Calendar

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Helen of Troy Limited HELE 1/8/2019 Earnings Release Date US Large-Cap: B, US Consumer Discretionary: B
Bed Bath & Beyond Inc. BBBY 1/8/2019 Estimated Earnings Release Date US Large-Cap: D, US Consumer Discretionary: D
MSC Industrial Direct Co., Inc. MSM 1/8/2019 Estimated Earnings Release Date US Large-Cap: C, US Industrials: C
Acuity Brands, Inc. AYI 1/9/2019 Earnings Release Date US Large-Cap: D, US Industrials: C
Lennar Corporation LEN 1/9/2019 Earnings Release Date US Large-Cap: B, US Consumer Discretionary: C
Constellation Brands, Inc. STZ 1/9/2019 Earnings Release Date US Large-Cap: B, US Consumer Staples: C
KB Home KBH 1/9/2019 Earnings Release Date US Large-Cap: C, US Consumer Discretionary: C
Delta Air Lines, Inc. DAL 1/9/2019 Estimated Earnings Release Date US Large-Cap: A, US Industrials: A
SYNNEX Corporation SNX 1/10/2019 Earnings Release Date US Large-Cap: C, US Information Technology: C
Johnson Electric Holdings Limited SEHK:179 1/13/2019 Estimated Earnings Release Date #N/A
Citigroup Inc. C 1/14/2019 Earnings Release Date US Large-Cap: D
India Globalization Capital, Inc. IGCC 1/14/2019 Estimated Earnings Release Date US Large-Cap: --
JPMorgan Chase & Co. JPM 1/15/2019 Earnings Release Date US Large-Cap: D
Synovus Financial Corp. SNV 1/15/2019 Earnings Release Date US Large-Cap: C
UnitedHealth Group Incorporated UNH 1/15/2019 Earnings Release Date US Large-Cap: B
First Republic Bank FRC 1/15/2019 Earnings Release Date US Large-Cap: A
Wells Fargo & Company WFC 1/15/2019 Earnings Release Date US Large-Cap: D
Morgan Stanley MS 1/15/2019 Estimated Earnings Release Date US Large-Cap: D
Pinnacle Financial Partners, Inc. PNFP 1/15/2019 Estimated Earnings Release Date US Large-Cap: C
The Charles Schwab Corporation SCHW 1/15/2019 Estimated Earnings Release Date US Large-Cap: C
SLM Corporation SLM 1/15/2019 Estimated Earnings Release Date US Large-Cap: C

Source: S&P Capital IQ

 

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