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Morning Brief

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

Economic clouds bring chance of storms for global stocks today as US futures are dropping

Mar 27, 2019

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Market data as of 7am EST

 

US Stocks Preview Ahead of the Open

  • US stocks index futures are drifting lower pre-market, with front-month Dow Jones minis -0.22%, S&P 500 minis -0.21% and Nasdaq 100 minis -0.09%
  • US-China trade talks ramp-up today with US Treasury Secretary Steve Mnuchin and Trade Rep Robert Lighthizer will be in China Thursday and Friday for talks with Chinese Vice Premier Liu He will travel to the US next week 
  • European Central Bank President Mario Draghi said the ECB may need further measures to mitigate the effect of its negative interest rate policy, as banks' complaints grow that it is eating into profits
  • UK Prime Minister Theresa May is gaining support from some conservative lawmakers for her Brexit plan and will address an influential group of Tory lawmakers today to sell her plan
  • The VIX is moving up this morning and is currently at 16.48 after closing at 14.68 yesterday
  • SPDR S&P Regional Banking ETF (KRE) May 2019 OTM Puts, SPDR S&P 500 ETF Trust (SPY) March 29 OTM Calls & Puts and Coty (COTY) May OTM Calls & Puts2019 are the most actively traded options contracts in US pre-market trading this morning. 
  • US 10-Year Treasury Bonds are higher with yields down -5.48 basis points to 2.3682%
  • The US Treasury 2s-10s Spread has widened 2.54 basis points to 0.18%
  • WTI Crude is currently up 1.99% to USD$59.94/bbl with the Brent-WTI spread down USD$-2.29 to USD$7.12/bbl
  • Gold is currently little changed 0.22% to USD$1318.6/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

  • Carnival Corp. (CCL) shares fell the most intraday in 2019 after the cruise line cut its top-end FY2019 EPS guidance to USD$4.55/share from previously offered guidance of USD$4.80/share. Analysts had expected EPS of USD$4.76 from Carnival in FY2019 prior to the announcement. Carnival cited fuel costs and currency fluctuations as reasoning for the guidance cut. Carnival is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Consumer Discretionary Global Top Stock Ideas.
  • Ford (F) announced it will close 2 of its 3 in Russia as part of its overhaul of international operations.  The 2 plants being close produce cars and that which will not be closed produces commercial vehicles.  The third plant will be turned over to its local partner as Ford exits the country.  Ford will take of charge of USD$450-500 million as part of the closings.  Ford was a pioneer in Russia and once saw it as a key to its growth strategy.  Ford  is rated “Top Short” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Consumer Discretionary Global Top Stock Ideas.
  • Kinder Morgan (KMI) was downgraded to neutral from buy at Citi.  Kinder Morgan’s price target was maintained at USD$20.  The downgrade was based on valuation given the recent performance of the stock and not any fundamental change it the story.  The average price target for Kinder Morgan is USD$21.  Kinder Morgan is rated “Neutral” in our US Large-Cap Global Top Stock Ideas.
  • JC Penny (JCP) announced it has found a new CFO, 6 months after starting its search.  JC Penny will welcome Bill Wafford as its new CFO on April 8th.  JC Penny has struggled to revive lagging sales in the competitive retail sector.  JC Penny recently reported a 9.5% drop in sales in the fourth quarter.  JC Penny is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Top Short” in our US Consumer Discretionary Global Top Stock Ideas.
  • Tesla’s (TSLA) new CEO Robyn Denholm said she things Elon Musk’s use of tweets to communicate is part of the regular routine of many executives these days, saying she thinks “he uses it wisely.”  Musk ’s tweets have drawn the ire of the SEC and regulators continue to threaten further action if his tweets cross their line.  Musk was forced to give up the CEO role because of his tweets.  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

Global Information Technology and Communication Services Stocks Trending in the News

  • Adobe (ADBE) announced the launch of the Experience Platform, a new platform that looks to pull together all the services from acquisitions in the past year and integrate it with third-party apps.  Adobe wants to offer a platform similar to what Salesforce.com (CRM) offers, a hub for data with software offerings to analyze that data.  Adobe is looking to emulate the success Salesforce.com and the ecosystem based on data is has successfully created.  Adobe is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Information Technology Global Top Stock Ideas.  Salesforce.com is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Information Technology Global Top Stock Ideas.
  • Apple (AAPL) launched its much anticipated streaming service and a number of other initiatives.  Apple will offer Apple TV+, a subscription service with original content and other pay services; Apple News, a subscription service allowing access to 300+ magazines and Apple Arcade, a subscription service giving access to 100+ exclusive video games.  For the first time Apple’s Apple TV app will work on many platforms, not just its own.  Apple also launched the Apple Card, a credit card, with Goldman Sachs (GS).  Apple is seeking to expand beyond hardware and deeper into services with the softening of sales of its flagship iPhone.  Apple gave a price of $9.99 for its news service but did not give pricing for the other services announced, raising a few eyebrows.  Apple is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Information Technology Global Top Stock Ideas.
  • Nvidia (NVDA) will not pursue any mergers or acquisitions for the remainder of the year after the company purchased Mellanox Technologies (MLNX). According to a Reuters report, Nvidia CEO Jensen Huang made comments at a conference in Tel Aviv on Tuesday expressing that the company is, “going to save money for a while.” 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 Technologies is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Information Technology Global Top Stock Ideas.
  • Paychex (PAYX) reported fiscal third quarter EPS of 89 cents, a touch above 88 cents consensus.  Paychex reported fiscal third quarter revenue of USD$1.1 billion, beating USD$1.04 billion consensus.  Reported results do not include impact of the Oasis deal.  Paychex is rated “Top Buy” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Information Technology Global Top Stock Ideas.

Global Industrials Stocks Trending in the News

  • Boeing (BA) has a plan to restore confidence in its 737 Max jetliner that is presently grounded.  Boeing is calling customers and news organizations to explain the update to its software that is designed to be much simpler to operate for pilots.  At about the same time the FAA will brief lawmakers on how it is overseeing these changes from Boeing.  Boeing is rated “Top Short” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Industrials Global Top Stock Ideas                                                                                                                                 
  • Equifax (EFX) and Fair Isaac Corp (FICO) announced they will work together to sell consumer data to banks.  Fair Isaac is the creator of the widely used FICO score for credit scores.  Both companies already sell data to banks, but this initiative will see each other’s salespeople offering the other’s products together with their own.  Equifax has the data while Fair Isaac has the software to analyze it.  Banks are looking to make more loans and the firms will offer their combined services to help banks in that expansion.  Equifax is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Unattractive” in our US Industrials Global Top Stock Ideas.  Fair Isaac is rated “Top Buy” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Information Technology Global Top Stock Ideas.
  • Southwest Airlines (LUV) will see a USD$150 million hit to its first quarter results due to the grounding of the 737 Max.  Southwest is the largest operator of 737 aircraft with 34 aircraft.  The USD$150 million hit is in addition to the USD$60 million hit from the US government shutdown earlier.  Southwest has also suffered from bad weather in the quarter.  Southwest is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Industrials Global Top Stock Ideas.

Global Health Care Stocks Trending in the News

  • Centene Corp (CNC) announced it will acquire WellCare Health Plans (WCG) in a USD$17 billion deal.  WellCare shareholders will receive 3.83 shares of Centene plus USD$120 per share in cash, giving WellCare a total enterprise value of USD$305.39 per share.  Once the deal closes Centene shareholders will own 71% of the combined company.  Centene will find the deal with over USD$8 billion in borrowing.  Centene is rated “Top Buy” in our US Large-Cap Global Top Stock Ideas.  WellCare is rated “Attractive” in our US Large-Cap Global Top Stock Ideas

Global Commodities & Energy Stocks Trending in the News

  • Vale (VALE) Vale reported fourth quarter iron output of 101 million tons, well within its guidance.  Vale had deferred some sales to the first quarter, so sales should exceed production then; the full effect of the shutdown will be felt only second quarter.  Ramping production will be slow as inspections continue.  Both Santander and BTG reiterate buy ratings in the wake of the production news.  Vale is rated “Neutral” in our Brazil All-Cap Global Top Stock Ideas.

 

 

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International Stock Markets Recap

  • The Euro Stoxx 600 is currently down -0.32%, the FTSE 100 is down -0.31%, the DAX is down -0.25%, and the CAC 40 is down -0.36%
  • Utilities (-1%), Banks (+0.03%), and Basic Resources (+0.33%) stocks are the top performers in the Euro Stoxx 600 today
  • Retail (-0.28%), Health Care (-0.75%), and Construction & Materials (+0.27%) 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 0.77x
  • 44 stocks in the Euro Stoxx 600 are at 4-week highs while 94 stocks are at 4-week lows
  • 39 stocks in the Euro Stoxx 600 are overbought while 14 stocks are oversold according to the 16-day RSI Measure
  • The Nikkei 225 finished down --0.23%, the Hang Seng ended up +0.56%, the Hang Seng China Enterprise up +0.66%, and the CSI 300 was +1.16%
  • Investor sentiment for Japanese stocks finished negative with the advance/decline ratio for the Nikkei 225 closing at 0.38x
  • 37 stocks in the Nikkei 225 hit 4-week highs while 3 stocks reached 4-week lows
  • 10 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 positive with the advance/decline ratio for the Hang Seng closing at 1.78x
  • 1 stock in the Hang Seng hit 4-week highs while 9 stocks reached 4-week lows
  • 1 stock 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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