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Morning Brief

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Global stocks are mixed as US index futures advance on improving European macro data

Mar 05, 2019

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Market data as of 7am EST

 

US Stocks Preview

  • US stocks index futures are advancing following better than expected economic data from Europe with front-month Dow Jones minis +0.11%, S&P 500 minis +0.08%, and Nasdaq 100 minis +0.03% 
  • The SPDR S&P 500 ETF Trust (SPY) saw positive net inflows of USD$1.47 billion yesterday.  Total assets under management (AUM) is now up to USD$263.8 billion, the highest levels since November 30, 2018. 
  • Bloomberg analysts are warning that the write-down at Kraft Heinz (KHC) is a sign that there may be growing risks associated with intangible assets at S&P 500 companies.  According to Bloomberg analysis, goodwill now represents a third of assets for 20% of constituents in the S&P 500.  Additional write-downs to intangible assets could be a threat to the outlook for S&P 500 earnings. 
  • According to strategists at Credit Suisse, lower stock market volatility is the primary driver in the post-Christmas rally in the S&P 500.  The VIX, a measure of options-based volatility, closed at 14.65 yesterday after peaking at 36.07 on December 24, 2018. 
  • Eli Lilly (LLY) Match 15 OTM Calls & Puts, Elanco Animal Health (ELAN) March 15 OTM Calls & Puts, SPY March 6/8/15/29 OTM Calls & Puts are some of the most heavily traded options in the US pre-market this morning. 
  • US 10-Year Treasury Bonds are lower with yields up 1.27 basis points to 2.735%
  • The US Treasury 2s-10s Spread has narrowed 0.36 basis points to 0.18%
  • WTI Crude is currently up 1.42% to USD$56.59/bbl with the Brent-WTI spread down USD$-1.08 to USD$8.45/bbl
  • Gold is currently little changed -0.06% to USD$1285.93/oz

Stocks Trending in the News

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

Global Consumer Stocks Trending in the News

  • Bed, Bath & Beyond (BBBY) was downgraded today by Barclay’s to underweight from equal-weight.  Barclay’s cut its price target for Bed, Bath & Beyond to USD$13 from USD$15, implying it sees 22% downside for the stock.  Barclay’s no longer believes in the turnaround plans of Bed, Bath & Beyond.  Bed, Bath & Beyond is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Consumer Discretionary Global Top Stock Ideas.  
  • Kohl’s (KSS) fourth quarter EPS of USD$2.24 beating consensus of USD$2.18.  Kohl’s delivered same store sales growth of 1.0%, beating consensus of 0.2%.  Target fourth quarter revenue of USD$6.54 in line with consensus of USD$6.56.  Target affirmed 2019 EPS guidance of USD$5.80-6.15.  Kohl’s is rated “Attractive” in our US Large-Cap and “Attractive” in our US Consumer Discretionary Global Top Stock Ideas.   
  •  Softbank (TSE:9984) has raised a USD$3 billion loan to cover commitments as Softbank waits for funds committed to its Vision Fund.  Softbank has raised over USD$100 billion in what it calls the world’s largest pool of money to fund tech investments.  Softbank’s Vision Fund has stakes in over 70 tech companies worldwide.  Softbank is rated “Neutral” in our Japan Large-Cap Global Top Stock Ideas. 
  • Target (TGT) fourth quarter EPS of USD$1.53 matches consensus of USD$1.53.  Target delivered same store sales growth of 5.3%, beating consensus of 5.1%.  Target fourth quarter revenue of USD$22.98 matched consensus of USD$22.96.  Target affirmed 2019 EPS guidance of USD$5.75-6.05.  Target is rated “Neutral” in our US Large-Cap and “Top Buy” in our US Consumer Discretionary Global Top Stock Ideas
  • The Children's Place (PLCE) had its price target cut today at B. Riley to USD$122 from USD$167 while maintaining its buy rating.  B Riley sees the heavy promotional and sales initiatives that weighed on results continuing into 2019 and likely to further weigh on financial performance.  Children’s Place is rated “Neutral” in our US Large-Cap and “Unattractive” in our US Consumer Discretionary Global Top Stock Ideas.  

Global Information Technology & Communication Services Stocks Trending in the News

  • Align Technology (ALGN) shares rebounded following Pipper Jaffray’s analyst Matt O’Brien defense of the stock in a note to clients. O’Brien told investors to, “buy the pullback,” that resulted from news that Align Technology will close its Invisalign Stores by April 3, 2019. Align Technology is rated “Neutral” in our US Large-Cap Global Top Stock Ideas.  
  • Altice Europe NV (ENXTAM: ATC) shares fell after they were downgraded from equal-weight to underweight at Barclays. Barclays also slashed its price target for Altice Europe NV shares from 2.80 euros/share to 1.50 euros/share, which implies a 27% downside from Monday’s closing price. Altice Europe NV is rated “Neutral” in our European SMID-Cap Global Top Stock Ideas.  
  • Juniper Networks (JNPR) announced its intent to buy Mist Systems for USD$405 million.  Mist Systems is a leader in the use of AI in the management of wireless cloud networks.  Juniper has made expansion into cloud-management of wireless network a priority.  Juniper expects the deal to close in the second quarter.  Juniper Network is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Information Technology Global Top Stock Ideas.
  • Ctrip.com International (CTRP) shares posted their largest intraday gains in over three years after reporting stronger-than-expected CY4Q2018 results. Six analysts, including Citigroup, upgraded Ctrip.com shares on the news. Ctrip.com is rated “Neutral” in our China All-Cap Global Top Stock Ideas.  
  • Papa John’s Pizza (PZZA) announced that its founder, Joh Schnatter, will be quitting the board as part of his settlement with the company he founded.  Papa John’s said Schnatter will help the board find a suitable replacement for him on the board.  The recent tension comes after Starboard Value LP mounted an activist campaign to improve performance along with its USD$200 million investment in the company.  Papa John’s Pizza is rated “Top Short” in our US Large-Cap and “Unattractive” in our US Consumer Discretionary Global Top Stock Ideas.   
  • Salesforce.com (CRM) reported fourth quarter adjusted EPS of USD$0.70 beating consensus of USD$0.55.  Salesforce.com reported first quarter 2019 adjusted revenue of USD$3.6 billion in line with consensus of USD$3.54 billion.  Salesforce.com Inc gave first quarter EPS guidance of 60-61 cents per share.  Salesforce.com Inc is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Information Technology Global Top Stock Ideas. 
  • YY (YY) reported fourth quarter EPS of 12.86 yuan beating consensus of 12.66 yuan.  YY delivered fourth quarter gross margin of 35.1%, a touch better than 35.0% expected.  YY fourth quarter revenue of 4.64 billion yuan a touch better than consensus of 4.47 billion yuan.  YY affirmed first quarter revenue guidance of 4.01-4.16 billion yuan.  YY is rated “Neutral” in our China All-Cap Global Top Stock Ideas.  

Global Industrials Stocks Trending in the News

  • Alaska Air (ALK) has lowered revenue guidance for the first quarter.  Alaska Air sees revenue growing just 1-2% in the first quarter, down from 3-4% earlier.  Poor winter weather has dampened demand early in the quarter and is the main reason for the cut to guidance.  Alaska Air is rated “Neutral” in our US Large-Cap and “Top Buy” in our US Industrials Global Top Stock Ideas 
  • Hertz Global Holdings Inc. (HTZ) shares tumbled after top shareholder Carl Icahn slashed his holdings overnight. Icahn sold about 5mm Hertz shares at about USD$19.60/share yesterday, nearly a 2% discount to the last closing price of Hertz. Icahn still, however, owns about 24mm Hertz shares. Hertz is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Unattractive” in our US Industrials Global Top Stock Ideas.  
  • JetBlue (JBLU) has improved guidance somewhat, now seeing RASM down 1.5% to 3.5%, an improvement over previous guidance of a 2% to 4% drop.  JetBlue also cut its capacity growth guidance to 6.5%, down 0.5%   JetBlue affirmed 2019 EPS guidance of USD$2.50-3.00.  JetBlue is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Industrials Global Top Stock Ideas.  

Global Commodities & Power Stocks Trending in the News

  • Vale (VALE) changed the inspection company that was inspecting the dam that collapsed after the initial inspectors would not affirm the dam was safe, according to the Wall Street Journal today.  Vale rehired a past inspection company that gave the dam a passing grade, the dam that eventually collapsed killing 186 people, mostly Vale employees.  There are still 122 people missing.  Vale is rated “Neutral” in our Brazil All-Cap Global Top Stock Ideas.

Global Health Care Stock Trending in the News

  • Eli Lilly (LLY) announced it is launching an authorized generic version of its best-selling insulin Humalog that will have a list-price of 50% below Humalog.  Insulin prices have soared and have been the spotlight of much negative press for drug makers.  Humalog is a 20-year old drug and critics complain its price has only continued to rise.  Eli Lilly is rated “Neutral” in our US Large-Cap Global Top Stock Ideas.

 

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International Markets Recap

  • Markit Eurozone Composite PMI (final reading) came in at 51.9 versus a forecast of 51.4 and 51.4 in January. 
  • Chinese officials lowered their target for economic growth.  In Premier Li Keqiang’s annual report to the National People’s Congress, the target range for CY2019 GDP was set to 6.0% to 6.5% vs. 6.5% in CY2018. 
  • In addition to a lower GDP target for CY2019 (vs. CY2018), Chinese officials also announced a major tax cut.  The top bracket of the value-added tax (VAT) rate was dropped 3 percentages points, in an attempt to help the manufacturing sector.  The VAT cut translates to approximately RMB800 billion or USD$119 billion. 
  • The Euro Stoxx 600 is currently down -0.18%, the FTSE 100 is higher by +0.25%, the DAX is down -0.13%, and the CAC 40 is down -0.21%
  • Utilities (-0.12%), Banks (-0.43%), and Basic Resources (-0.11%) stocks are the top performers in the Euro Stoxx 600 today
  • Retail (-0.51%), Health Care (-0.01%), and Construction & Materials (-0.43%) stocks are the worst 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 0.52x
  • 190 stocks in the Euro Stoxx 600 are at 4-week highs while 15 stocks are at 4-week lows
  • 94 stocks in the Euro Stoxx 600 are overbought while 7 stocks are oversold according to the 16-day RSI Measure
  • The Nikkei 225 finished down --0.44%, the Hang Seng ended up +0.01%, the Hang Seng China Enterprise up +0.06%, and the CSI 300 was +0.58%
  • Investor sentiment for Japanese stocks finished negative with the advance/decline ratio for the Nikkei 225 closing at 0.4x
  • 64 stocks in the Nikkei 225 hit 4-week highs while 5 stocks reached 4-week lows
  • 13 stocks in the Nikkei 225 closed overbought while 0 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
  • 13 stocks in the Hang Seng hit 4-week highs while 1 stock reached 4-week lows
  • 5 stocks in the Hang Seng closed overbought while 0 stocks closed oversold according to the 16-day RSI Measure

 

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

 

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