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Dow futures dropping in pre-market trading following news that a Boeing 737 Jet crashed, killing 157 people

Mar 11, 2019

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Market data as of 7am EST

 

US Stocks

  • Boeing (BA) shares are dropping in pre-market trading, dragging down Dow Jones futures, following news that an Ethiopian Airlines Boeing 737 crashed, killing 157 people yesterday.  This would be the second crash for a Boeing 737 jet in 5-months.  Since then, Indonesia and China have both asked domestic airlines to ground Boeing 737 Jets until further notice.  Boeing shares are up 31% YTD before today’s pre-market fall.  Boeing makes up 11.3% of the Dow Jones index 
  • US stocks index futures are mixed in in pre-market trading with front-month Dow Jones minis –0.62% with S&P 500 minis +0.08% and Nasdaq 100 minis +0.23% 
  • Retail sales for January is set to be released this morning at 8:30am.  Retail sales ex Auto & Gas is expected to have grown +0.60% in January after dropping 1.7% in December. 
  • The S&P 500 finished Friday’s trading session below its 200-day moving average, a bearish technical signal for the benchmark US stocks index.  The drop below its long-term moving average may point to a near-term price correction for the S&P 500. 
  • Amazon.com (AMZN) and the S&P 500 multi-line retail index are now in-line for the year, +8% YTD, after Amazon.com dropped 3.1% last week on news that it plans to closed pop-up stores and continued chatter by liberal members of Congress about a potential breakup of the eCommerce behemoth. 
  • The number of net shorts on VIX futures increased for a 5th straight week, reaching levels not seen since October 2018.  The growth in net shorts has increased in spite of the VIX dropping 37% YTD.    
  • The VIX is little changed this morning and is currently at 16.31 after closing at 16.05 last week
  • Eli Lilly (LLY) March 15 OTM Calls & Puts and SPDR S&P Oil & Gas E&P ETF (XOP) June 2019 & September 2019 OTM 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 2.16 basis points to 2.6501%
  • The US Treasury 2s-10s Spread has widened 0.54 basis points to 0.17%
  • WTI Crude is currently down -1.04% to USD$56.07/bbl with the Brent-WTI spread up USD$1.61 to USD$9.46/bbl
  • Gold is currently little changed -0.17% to USD$1296.11/oz
  • Saudi Arabia is poised to extend its deep cuts to oil production into April.  Allegedly, the “Oil Kingdom” is cutting its oil productions even more than agreed upon at the most recent OPEC meeting as The Kingdom attempts to regain control of global oil markets.  At the moment, Saudi Arabia is on a production pace below 10 million bbls/day, well below the agreed upon level of 10.31 million barrels/day. 

Stocks Trending in the News

 

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Global Consumer Stocks Trending in the News

  • Pandora (CPSE: PNDORA) was cut at Carnegie to sell from hold.  Carnegie also cuts its price target to DK325 from DK360.  Carnegie added, however, that Pandora could trade well below that price target if the coming results confirm a further slowdown in China.  Pandora is rated “Neutral” in our European Large-Cap Global Top Stock Ideas.
  • Tesla (TSLA) is in talks about potentially ordering batteries from Contemporary Amperex Technologies (SZSE:300750) according to press reports.  Tesla reported in its last annual report that it only had one battery supplier and was looking for more.  The batteries would power the Model 3s that Tesla plans to start building at its new factory in China.  Telsa is rated “Top Short” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Consumer Discretionary Global Top Stock Ideas.  Contemporary Amperex Technologies is not rated in our Global Top Stock Ideas.

Global Information Technology & Communication Services Stocks Trending in the News

  • Alibaba (BABA) continues its push into delivery and logistics.  Alibaba is acquiring a 49% stake in China’s largest delivery company STO Express.  Alibaba will not control the company but as a strategic investor will participate in decision making.  STO Express is one of the 5 largest private logistics companies in China.  Alibaba has invested in 4 of those 5, STO included.  Alibaba is rated “Top Buy” in our China All-Cap Global Top Stock Ideas.
  • Alphabet (GOOG.L)Facebook (FB). Amazon (AMZN) and other large tech companies should be broken up by the government because they have become too powerful, according to a report released by Senator Elizabeth Warren today.  She proposed designating these companies “platform utilities” and the creation of regulators to assure small business are not harmed by these companies.  Alphabet is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Information Technology Global Top Stock Ideas.  Amazon is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Consumer Discretionary Global Top Stock Ideas.  Facebook is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Information Technology Global Top Stock Ideas.
  • Apple (AAPL) was upgraded today at Bank of America to buy from neutral.  Apple also saw its price target raised to USD$210 from USD$180.  Apple’s average price target in the market today in USD$176.62.  Apple is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Information Technology Global Top Stock Ideas.
  • Disney (DIS) has the first blockbuster movie of 2019 with the release of “Captain Marvel”.  Disney saw the film earn USD$145 million in the US and USD$453 million in global ticket sales.  2019 has been weak for films so far so this is a welcome arrival for Disney.  Disney is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Consumer Discretionary Global Top Stock Ideas.
  • Nvidia (NVDA) is close to making an offer to acquire Mellanox Technologies (MLNX), according to a report in Bloomberg today.  Mellanox is focused on the technology that speeds data throughout a data center.  Bloomberg reports the deal would be valued at USD$5.9 billion.  Mellanox is based in Israel.  Nvidia is rated “Top Short” in our US Large-Cap Global Top Stock Ideas and “Unattractive” in our US Information Technology Global Top Stock Ideas.  Mellanox is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Information Technology Global Top Stock Ideas.
  • Oracle (ORCL) was downgraded 2 notches as Nomura to reduce from buy.  Nomura also cut Oracle’s price target to USD$42 from USD$53.  Nomura notes that Oracle is spending on share buybacks at the expense of investing in R&D.  Nomura expects Oracle will return to its average of USD$3 billion per quarter from its present USD$10 billion per quarter, calling its present rate “unsustainable”.  Oracle is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Information Technology Global Top Stock Ideas.

Global Financials Stocks Trending in the News

  • Deutsche Bank (DB:DBK)  CEO Christian Sewing is reportedly dropping his resistance to a merger with Commerzbank (DB:CBK)  this year.  Informal talks between the companies have intensified in recent days, though a formal mandate has yet to be declared.  The German Finance Ministry favors a merger between the 2 as opposed to a merger with a foreign player. Deutsche Bank is rated “Unattractive” in our European Large-Cap Global Top Stock Ideas.  Commerzbank is rated “Unattractive” in our European Large-Cap Global Top Stock Ideas.

Global Industrials Stocks Trending in the News

  • Boeing (BA) is under pressure after China grounded all 96 737-800s in the country in the wake of the Ethiopian Airlines crash of a 737-800 over the weekend.  China broke with normal protocol of the past in which the country that certified the jet-the US-is the first to make the call to ground.  A few other countries have followed China’s lead while most are not, yet.  This crash comes 5 months after the Lion Air crash of a 737-800 in which is feared to have been caused by sensors the plane pushing its nose down.  Boeing is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Industrials Global Top Stock Ideas.
  • General Electric (GE) was in talks to offload its insurance business before the talks were derailed, according to a report by Melius Research today.  GE recently reported it needed to put USD$15 billion into loss reserves for the unit as it continues to look for a buyer for it.  General Electric is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Unattractive” in our US Industrials Global Top Stock Ideas.

 

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International Stocks Recap

  • The Euro Stoxx 600 is currently up +0.34%, the FTSE 100 is higher by +0.8%, the DAX has risen +0.26%, and the CAC 40 is up +0.24%
  • Basic Resources (+0.98%), Banks (+0.86%), and Financial Services (+0.45%) stocks are the top performers in the Euro Stoxx 600 today
  • Utilities (-0.16%), Technology (-0.05%), and Food & Beverage (+0.04%) stocks are the worst 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 2.55x
  • 42 stocks in the Euro Stoxx 600 are at 4-week highs while 96 stocks are at 4-week lows
  • 26 stocks in the Euro Stoxx 600 are overbought while 10 stocks are oversold according to the 16-day RSI Measure
  • The Nikkei 225 finished up +0.47%, the Hang Seng ended up +0.97%, the Hang Seng China Enterprise up +1.08%, and the CSI 300 was +1.98%
  • Investor sentiment for Japanese stocks finished positive with the advance/decline ratio for the Nikkei 225 closing at 2.95x
  • 7 stocks in the Nikkei 225 hit 4-week highs while 84 stocks reached 4-week lows
  • 3 stocks in the Nikkei 225 closed overbought while 10 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 2.85x
  • 1 stock in the Hang Seng hit 4-week highs while 8 stocks reached 4-week lows
  • 2 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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