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Like a cyclist pedaling in the pouring rain, investors have turned cautious as quarter-end approaches

Mar 28, 2019

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Market data as of 7am EST

 

US Stocks Preview Ahead of the Open

  • US stocks index futures are flat this morning pre-market, with front-month Dow Jones minis -0.04%, S&P 500 minis -0.03% and Nasdaq 100 minis -0.08%
  • US-China trade talks are underway with cabinet-level talks to start today, this as the US has been more assertive over the last 2 weeks in the geopolitical matter, sailing through the Taiwan Strait with warships and criticizing travel restrictions in Tibet, actions that in the past China warned the US against
  • These moves come as President Trump has indicated a willingness to sell fighter jets to Taiwan for the first time in over 30 years
  • TIPS, the inflation-protected treasuries, have outperformed this year and should continue to in the environment of tight labor markets and no rate hikes 
  • The United States will announce initial jobless claims for the week ending 3/23/2019 at 8:30 AM today. Economists expect initial jobless claims of 220,000 compared to 221,000 reported in the prior period. 
    The United States will also announce its third revision to 4Q2018 GDP at 8:30 AM today.
  • The UK Parliament voted down 8 options for Brexit strategy that were brought to a vote late yesterday
  • The VIX is moving up this morning and is currently at 16.48 after closing at 15.15 yesterday
  • iShares MSCI Emerging Markets ETF May 2019 OTM Calls & Puts, SPDR S&P 500 ETF Trust (SPY) March 29 OTM Calls & Puts and Coty (COTY) May OTM Calls & Puts are the most actively traded options contracts in US pre-market trading this morning. 
  • US 10-Year Treasury Bonds are lower with yields up 0.87 basis points to 2.3752%
  • The US Treasury 2s-10s Spread has narrowed 1.12 basis points to 0.16%
  • WTI Crude is currently down -0.88% to USD$59.41/bbl with the Brent-WTI spread little changed USD$0.15 to USD$7.25/bbl
  • Gold is currently little changed -0.24% to USD$1306.39/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

  • Amazon (AMZN) announced it will hire 800 tech engineers in Austin, Texas.  This is Amazon’s first big expansion since cancelling its planned headquarters in New York.  These 800 hires are part of the 25,000 jobs that were to go to New York and now will be distributed among other Amazon sites in the US.  Amazon will hire software and hardware engineers to work with the research staff there.  Amazon is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Consumer Staples Global Top Stock Ideas.
  • Daimler (DB:DAI) and Geely Automotive (SEHK:175) announced they are deepening their cooperation with a new joint venture focused on electric vehicles.  The idea is to take Daimler’s Smart brand into a global all electric model.  This JV is the first fruit to come from the companies closer cooperation in the wake of Geely acquiring 10% of Daimler.  Daimler said the 2 will work to create the next generation of electric cars.  Daimler is rated “Unattractive” in our European Large-Cap Global Top Stock Ideas.  Geely Automotive is rated "Neutral" in our China All-Cap Global Top Stock Ideas.
  • Five Below (FIVE) reported fourth quarter EPS of USD$1.59 in line with USD$1.58 consensus.  Five Below posted fourth quarter revenue of USD$602.7 million in line with USD$601.4 million consensus.  Five Below gave first quarter EPG guidance of 32-35 cents, below 39 cents consensus.  Full year sales are expected to be USD$1.87-1.89 billion, in line with consensus.  Five Below is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Consumer Discretionary Global Top Stock Ideas.
  • Lululemon (LULU) reported bullish EPS guidance for 2019, saying it expects them to come in the range of USD$4.48-4.55, above present consensus of USD$4.41.  Lululemon expects 2019 revenue of USD$3.7-3.74 billion, in line with consensus.  Lululemon reported fourth quarter adjusted EPS of USD$1.85, beating consensus of USD$1.74.  Same store sales grew 7%, trailing the 8.3% consensus.  Lululemon is rated “Top Buy” in our US Large-Cap Global Top Stock Ideas.
  • Manchester United Plc (MANU) has decided to give its caretaker manager Ole Gunnar Solskjaer the job full-time.  Solskjaer was appointed manager in December after the team ousted Jose Mourinho.  Solskjaer then went on to win 14 of his first 19 games.  Manchester United is not rated in our Global Top Stock Ideas.

Global Information Technology and Communication Services Stocks Trending in the News

  • Facebook (FB) said it would start blocking content on its site that praises or represents white nationalism and white separatism.  The efforts will begin next week.  Facebook is taking the action in the wake of global criticism for allowing this type of content on its platforms.  The pressure on Facebook grew in the wake of the massacre in New Zealand by a white nationalist that was live-steamed on Facebook.  Facebook is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Information Technology Global Top Stock Ideas.
  • Infineon Technologies (XTRA:IFX) slashed its revenue forecast for 2019, now expecting revenue to grow just 5.3% to 8 billion euros, down from 9% growth.  Infineon said it is cutting its forecast due to “continued global economic uncertainties and weaker end-market demand.”  Margin expectation falls to 16% from 17.5%.  Infineon added that “business indicators point to a slower demand recovery than expected thus far.”  Infineon is rated “Neutral” in our European Large-Cap Global Top Stock Ideas. 

Global Financials Stocks Trending in the News

  • Deutsche Bank (DB:DBK) may raise 3-10 billion euros in fresh equity as part a of deal with Commerzbank (DB:CBK), FT reports.  Deutsche Bank responded to the report saying, “it’s much too early at this stage of the credible assessment to know if there is any capital need at all.”  FT reports that the German government wants Deutsche to raise as much capital as it needs to avoid returning to the market for more after any deal closes.  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

  • Fedex (FDX) was downgraded at Susquehanna to neutral from positive.  Susquehanna cuts the price target on Fedex to USD$192 from USD$211.  Susquehanna sees a challenging near-term scenario for Fedex and cited that a main reason for the downgraded.  Fedex is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Industrials Global Top Stock Ideas.
  • Hawaiian Airlines (HA) saw its price target cut at Imperial Capital to $36 from $40.  Its outperform rating was maintained for Hawaiian Airlines.  The entrance of Southwest Airlines (LUV) into the Hawaiian market is the main reason for the lower price target.  While Hawaiian Airlines has adjusted prices lower in anticipation of Southwest there is still expected to be intense pricing competition near-term.  Imperial expects 2019 is “likely to represent trough earnings.”   Hawaiian Airlines is rated “Neutral” in our US SMID-Cap Global Top Stock Ideas and “Neutral” in our US Industrials Global Top Stock Ideas.  Southwest Airlines Southwest Airlines
  • Lyft (LYFT) has increased its price range for its IPO.  Lyft upped the range to USD$70 to USD$72, up from USD$62 to USD$68.  Rest assured, the bankers are smiling.  The hike is indicative of strong demand for the shares as the IPO approaches.  The new range values Lyft at USD$23 billion.  The IPO is set to price this Friday and aims to raise USD$2.2 billion.  Lyft is not yet rated in our Global Top Stock Ideas.
  • ZF Friedrichshafen (known simply as ZF), of Germany,  announced it will acquire Wabco (WBC) of the US in a USD$7 billion deal.  ZF is paying USD$136.50 per share for Wabco, a 6.5% discount to yesterday’s close.  Wabco shares have risen recently on news of talks with ZF.  ZF is a private company.  ZF acquired TRW in 2015, thrusting it into the global club of giant auto parts manufacturers.  Wabco is not rated in our Global Top Stock Ideas.

Global Health Care Stocks Trending in the News

  • Bayer (DB: BAYN) suffered a significant loss in court as a jury in California awards USD$80 million in a case claiming that Roundup caused cancer in the plaintiff.  The jury ruled that Monsanto-now part of Bayer-was negligent when it failed to adequately warn customers of the danger associated with Roundup.  Analysts expected a large jury award in this case after already finding that the weedkiller caused the plaintiff’s non-Hodgkin’s lymphoma.  Bayer is rated “Unattractive” in our European Large-Cap Global Top Stock Ideas.
  • Johnson & Johnson (JNJ) settled its most recent talc-asbestos case in Oklahoma.  The suit involved allegations from a 77 year old woman related to her rare cancer.  Johnson & Johnson was cleared in a New Jersey case yesterday that involved very similar allegations.  2 weeks ago a jury in California awarded a woman USD$29 million in another talc case.  The most recent case ended with a confidential settlement sealed to the public.  Johnson & Johnson is rated “Neutral” in our US Large-Cap Global Top Stock Ideas.

 

 

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International Stock Markets Recap

  • The Euro Stoxx 600 is currently up +0.18%, the FTSE 100 is higher by +0.57%, the DAX has risen +0.38%, and the CAC 40 is up +0.13%
  • Utilities (-0.69%), Banks (-0.59%), and Basic Resources (+0.96%) stocks are the top performers in the Euro Stoxx 600 today
  • Retail (+0.35%), Health Care (+0.73%), and Construction & Materials (+0.08%) 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 1.93x
  • 49 stocks in the Euro Stoxx 600 are at 4-week highs while 62 stocks are at 4-week lows
  • 29 stocks in the Euro Stoxx 600 are overbought while 16 stocks are oversold according to the 16-day RSI Measure
  • The Nikkei 225 finished down --1.61%, the Hang Seng ended up +0.16%, the Hang Seng China Enterprise declined -0.09%, and the CSI 300 was -0.4%
  • Investor sentiment for Japanese stocks finished negative with the advance/decline ratio for the Nikkei 225 closing at 0.03x
  • 20 stocks in the Nikkei 225 hit 4-week highs while 23 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 positive with the advance/decline ratio for the Hang Seng closing at 1.78x
  • 4 stocks in the Hang Seng hit 4-week highs while 5 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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