morning-quant-ride

Morning Brief

Wake up to the Morning Quant Ride, your global markets update every morning!

Index futures are little changed ahead of US Fed decision this afternoon

Mar 20, 2019

Actionable and Transparent Quantitative ResearchActionable and Transparent Quantitative Research
Actionable and Transparent Quantitative ResearchActionable and Transparent Quantitative Research

 

 

Market data as of 7am EST

 

US Stocks Preview Ahead of the Open

  • The 2-day Federal Open Market Committee (FOMC) finishes today with a decision over whether to raise interest rates expected at 2pm EST.  Currently, Fed Funds futures are pricing in a “no raise” scenario.  Investors will be closely following the forward dot-plot expectations graph as well as comments about inflation.   
  • Bullishness of stocks newsletter writers rises to a 5-month high.  The Investors Intelligence reading has risen 10 out of the last 11 weeks, currently sitting at 53.9%.  It is now at the highest level since the second week of October.   
  • While stocks investors are hoping the US Fed continues to pursue a soft tightening strategy for raising interest rates, gross margin trends for S&P 500 companies may cause the US Fed to rethink their strategy.  Gross margin, on a trailing 12-month basis, continues to tick up and suggests many companies continue to have pricing power.  The big takeaway is that inflation may be “stickier” than what the US Fed would like if it were to pursue a dovish monetary strategy. 
  • US shipping industry data is pointing to a deceleration in global growth.  The Cass Freight Shipments Index, a measure of freight payment processing, dropped 2.1% in February, the biggest single month drop since July 2016. 
  • According to a recent presentation, the Norwegian sovereign wealth fund, Norges Bank Investment Management, is underweight US stocks by USD$100 billion.  The fund has decided to go overweight European stocks given Norway’s trade exposure with the region. 
  • The VIX is little changed this morning and is currently at 13.1 after closing at 13.56 yesterday
  • Coty (COTY) May 2019 OTM Calls & Puts and iShares Emerging Markets (EEM) April 18 & May 2019 OTM Puts are the most actively traded options contracts in US pre-market trading this morning.
  • US 10-Year Treasury Bonds are higher with yields down -1.62 basis points to 2.5961%
  • The US Treasury 2s-10s Spread has narrowed 0.78 basis points to 0.14%
  • WTI Crude is currently little changed -0.1% to USD$59.03/bbl with the Brent-WTI spread down USD$-0.46 to USD$7.91/bbl
  • Gold is currently little changed -0.13% to USD$1304.87/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

  • Altria (MO) shares suffered in the wake of San Francisco announcing a proposal to ban e-cigarette companies from occupying city-owned property.  There is also a proposal to ban the shipment of e-cigarettes to San Francisco stores.   For the time, these are just proposals.  Altria is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Consumer Staples Global Top Stock Ideas.
  • BMW (DB:BMW) issued another profit warning, saying earnings will fall “well below” last year.  BMW has launched a 12 billion euros efficiency drive to battle the effects of trade conflicts and greater electric vehicle use.  BMW will cut down its model offerings, cut development time on new models and hold its employee count steady.  BMW expects pre-tax profit to fall more than 10% this year.  BMW is rated “Unattractive” in our European Large-Cap Global Top Stock Ideas.
  • General Mills (GIS) reported fiscal third quarter adjusted EPS of 83 cents, beating consensus of 69 cents.  General Mills reported fiscal third quarter revenue of USD$4.20 billion in line with USD$4.19 billion consensus.  General Mills reported organic volume growth of 5% and sees full year EPS growing 0-1%, up from a drop in sales of up to 3% originally expected.  General Mills is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Consumer Staples Global Top Stock Ideas.
  • Monster Beverage (MNST) was downgraded at Goldman Sachs to neutral from buy.  Monster Beverage also said its price target cut to USD$59 from USD$67.  Goldman sees a 2019 “softer than expected” for Monster Beverage which it expects to pressure earnings, saying he has been “a meaningful deceleration” in sales trends internationally.  Monster Beverage is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Consumer Staples Global Top Stock Ideas.
  • Walt Disney (DIS) has completed its acquisition of the major asset of 21st Century Fox (FOXA) in a USD$71.3 billion transaction.  In the wake of the deal, Disney will control Fox’s movie and television production studios, the FX cable channel, Fox Searchlight and National Geographic properties.   The combination of these assets is designed to provide the heft needed to effectively compete in the new media landscape.  Walt 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.  21st Century Fox is not rated in our Global Top Stock Ideas.

Global Information Technology & Communication Services Stocks Trending in the News

  • Alphabet’s (GOOG.L) Google launched a new video game streaming service called Stadia.  Stadia is a platform upon which developers can develop streaming games that can be accessed over the web, bypassing gaming consoles.  Google also introduced its own gaming controller.  Alphabet is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Information Technology Global Top Stock Ideas.
  • Facebook (FB) announced it will no longer include age, gender and zip code targeting with ads on its site, as part of a settlement to settle five discrimination lawsuits filed by advocacy groups.  Facebook will also pay just under USD$5 million.  Facebook COO Cheryl Sandberg said, “There is a long history of discrimination in the areas of housing, employment and credit, and this harmful behavior should not happen through Facebook ads.”  Facebook is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Information Technology Global Top Stock Ideas.
  • Nvidia (NVDA) said it is on track to clear out the inventory it built up anticipating cryptocurrency mining demand that did not materialize.  Nvidia maintained guidance for flat revenue in fiscal 2020 as it completes its inventory draw down, delivering guidance better than the 4% drop in revenue expected by analysts.  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.

Global Financials Stocks Trending in the News

  • UBS’ (SWX:UBSG) CEO said the first quarter of 2019 has been dismal, one of the toughest environments he has ever seen.  With little M&A activity or IPOs outside of the US, investment banking revenue is down over a third in the first quarter.  His comments indicate the situation is getting even worse than what he described in recent comments.  Global wealth management revenue is down 9% so far this year.  UBS is rated “Neutral” in our European Large-Cap Global Top Stock Ideas.

Global Industrial Stocks Trending in the News

  • Fedex (FDX) issued its second profit warning in the last three months.  Fedex is seeing slowing economic activity globally and is dealing with the digestion of its most recent acquisition in Europe.  Fedex has expected a softer start to the year but sees things developing even worse than initially expected.  Fedex is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Industrials Global Top Stock Ideas.
  • Rockwell Automation (ROK) was downgraded to neutral from buy at UBS.  Rockwell Automation also had its price target cut to USD$182 from USD$190.  UBS sees a decelerating growth environment for Rockwell Automation and at this point sees a balanced risk/reward scenario, a primary reason for the downgrade.  Rockwell Automation is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Industrials Global Top Stock Ideas.

Global Commodities & Power Stocks Trending in the News

  • Vale (VALE) received a favorable court decision in its quest to restart some of its shuttered mining operations in Brazil.  A judge has ruled Vale can restart its Brucutu mine, which would restore 30 million of the 80 million tons of production it was ordered to shutter in the wake of its dam disaster.  Vale still needs the OK from the environmental authorities in the state of Minas Gerais and Vale said inform investors when it has that.  Vale is rated “Neutral” in our Brazil All-Cap Global Top Stock Ideas.

Global Health Care Stocks Trending in the News

  • Bayer (DB:BAYN) lost the first phase of its most recent court case alleging its RoundUp weed killer causes cancer.  Analysts are describing the loss as a major blow, as the company was confident it would win the case.  Analysts commented there should remain a significant overhang on the stock given the loss in the case and the chance for further losses.  Bayer is rated “Unattractive” in our European Large-Cap Global Top Stock Ideas.

 

Better Data for Better Investment DecisionsBetter Data for Better Investment Decisions
Better Data for Better Investment DecisionsBetter Data for Better Investment Decisions

International Stock Markets Recap

  • The Euro Stoxx 600 is currently down -0.33%, the FTSE 100 is higher by +0.02%, the DAX is down -1.22%, and the CAC 40 is down -0.02%
  • Telecommunications (+0.43%), Personal & Household Goods (+0.35%), and Real Estate (+0.31%) stocks are the top performers in the Euro Stoxx 600 today
  • Automobiles & Parts (-1.75%), Basic Resources (-1.67%), and Oil & Gas (-0.97%) 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 0.69x
  • 207 stocks in the Euro Stoxx 600 are at 4-week highs while 8 stocks are at 4-week lows
  • 115 stocks in the Euro Stoxx 600 are overbought while 3 stocks are oversold according to the 16-day RSI Measure
  • The Nikkei 225 finished up +0.2%, the Hang Seng ended down -0.49%, the Hang Seng China Enterprise declined -0.53%, and the CSI 300 was +0.04%
  • Investor sentiment for Japanese stocks finished positive with the advance/decline ratio for the Nikkei 225 closing at 1.68x
  • 27 stocks in the Nikkei 225 hit 4-week highs while 14 stocks reached 4-week lows
  • 11 stocks in the Nikkei 225 closed overbought while 2 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 0.39x
  • 18 stocks in the Hang Seng hit 4-week highs while 1 stock reached 4-week lows
  • 6 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

 

 

Stock Model PortfoliosMulti-factor quantitatively optimized portfolios risk-adjusted to provide investors an ATTRACTIVERISK/RETURN TRADE-OFF
Stock Model PortfoliosMulti-factor quantitatively optimized portfolios risk-adjusted to provide investors an ATTRACTIVERISK/RETURN TRADE-OFF