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Morning Brief

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Like a cyclist wearing a blindfold, caution rules; global stock markets drifting lower this morning

Apr 08, 2019

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Market data as of 7am EST

 

US Stocks

  • Global markets are sliding after last week's strength and US stocks index futures are following, drifting lower, with front-month Dow Jones minis -0.28%, S&P 500 minis -0.11% and Nasdaq 100 minis -0.09%
  • Earnings seasons begins this week, and with many companies lowering their outlooks last quarter, investors will be focused on the these earnings as stocks near record levels
  • The Federal Reserve will publish the minutes of its most recent meeting on Wednesday with investors anxious hear their comments after so many dovish words over the last 6 weeks
  • UK PM Theresa May will meet with Angela Merkel of Germany and Emmanuel Macron of France on Tuesday ahead of her summit in Brussles with EU leaders where she will make her case for her latest Brexit proposal
  • The UK announced plans for an industry-funded regulator to police internet sites for illegal activity and have the power to hold them accountable
  • After Turkish President Ergdogan's party lost local elections in Istanbul, he is demanding a recount, refusing to concede in what appeared to be a stinging defeat in the city
  • The VIX is little changed this morning and is currently at 13.48 after closing at 12.82 last week
  • SPDR S&P500 ETF (SPY) April 8 OTM Calls & Puts, General Electric (GE)  May 8 & 18 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 0.71 basis points to 2.5025%
  • The US Treasury 2s-10s Spread has widened 0.91 basis points to 0.17%
  • WTI Crude is currently up 1.58% to USD$63.08/bbl with the Brent-WTI spread down USD$-1.01 to USD$7.28/bbl
  • Gold is currently up 0.45% to USD$1297.58/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

  • Boston Beer (SAM) shares tumbled by the most in more than 6 months after Goldman Sachs downgraded the stock from neutral to sell. Goldman Sachs also slashed its price target for Boston Beer from USD$270/share to USD$245/share, implying a 7% downside as of Thursday’s close. Goldman explained that Boston Beer’s sales growth will likely deaccelerate as the company’s Twisted Tea brand observes slower growth. Boston Beer is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Unattractive” in our US Consumer Staples Global Top Stock Ideas.
  • Chipotle (CMG) published a statement saying none of its restaurants are implicated in the latest E. coli outbreak.   The statement was in response to the federal officials’ investigation of a multi-state outbreak of E. coli.  Officials said no specific focus exists yet and Chipotle said they have not been contacted by officials.  Chipotle is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Consumer Discretionary Global Top Stock Ideas.
  • Lyft (LYFT) is accusing Morgan Stanley (MS) of marketing products to help pre-IPO investors bet against the stock.  Lyft sent a letter to Morgan Stanley making the allegation and threatening a lawsuit if not.  Lyft asked Morgan Stanley to stop marketing those products if it is, in fact, doing so.  The investors being marketed too are subject to lock-up agreements, prohibiting sales of their shares.  Lyft is not yet rated in our Global Top Stock Ideas.  Morgan Stanley is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas.
  • Starbucks (SBUX) was downgraded to neutral from buy at UBS.  Starbucks’ saw its price target hiked to $78 from $72, the average price target in the market is $71.  The rating cut is due to UBS’ belief that the risk/reward situation is balanced at this time.  The hike in the price target is due to the previously announced $2 billion share repurchase program.  Starbucks is rated “Top Buy” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Consumer Discretionary Global Top Stock Ideas.  
  • Tesla (TSLA) had its delivery estimate and target lowered at Morgan Stanley today.  Telsa’s target was cut to $240 from $260.  Tesla is now expected to deliver 344,000 cars in total in 2019, down from 362,000 originally expected.  Morgan Stanley expects the 45% drop in Model X + S sees recently to continue through 2019.  Tesla 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

  • Facebook (FB) and other social media executives could be held personally liable for harmful content on their platforms in the UK, according to a report from Bloomberg.  Legislation may be presented as early as Monday with those provisions, the report notes.  UK ministers are unhappy with the rate of progress on self-regulation and are ready to craft government regulations for the space.  The recent massacre in New Zealand and the use of the Facebook platform before and during that incident gave new impetus for the regulations.  Facebook is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Information Technology Global Top Stock Ideas.
  • Intel (INTC) was downgraded to market perform from outperform at Wells Fargo Securities.  Intel’s price target was raised to $60 from $55.  Wells writes that the downgrade “reflects a more cautious view on the current semi demand and data points” with the close of the first quarter.  Wells is cautious about 2H19 demand with the potential for further weakness, seeing downside to its current expectations.  Intel is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Information Technology Global Top Stock Ideas.
  • Micron (MU) was downgraded market perform from outperform at Cowen.  Micron’s price target was cut to $45 from $46.  Cowen wrote in a note that Micron’s earnings are likely to fall this coming year and that is “a stark contrast to what is expected by most investors.”  Cowen highlighted the weak DRAM market and its expectation that it will stay weaker for longer than expected.  Micron is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Information Technology Global Top Stock Ideas.  
  • Versum Materials (VSM) has agreed to accept the Merck KGaA’s (DB:MRK) offer of $48 a share, an offer that had recently been increased.    Merck’s offer totals $5.8 billion for Versum.    Merck is seeking to beef up its performance materials division which today is the smallest of its three units.  Versum Materials is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Information Technology Global Top Stock Ideas.  Merck KGaA Materials is rated “Neutral” in our European Large-Cap Global Top Stock Ideas

Global Industrials Stocks Trending in the News

  • Boeing (BA) announced it is cutting 737 Max production as the plane remains grounded.  Boeing will cut production by 19% to around 42 planes per month as it cuts 737 production.  Boeing is attempting to restore confidence in the 737 Max in the wake of the initial investigation report indicating a sensor in the 737 Max was likely the cause of the accident.  Boeing is rated “Top Short” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Industrials Global Top Stock Ideas
  • General Electric (GE) saw a key analyst at JP Morgan turn bearish on the stock, cutting its rating to underweight from neutral.  JP Morgan cut its GE price target to $5, the lowest on The Street.  General Electric got a significant boost in December when JP Morgan upgraded the stock to neutral.   Since then, JP Morgan has turned negative on a number of divisions of GE, leading to the downgrade.  General Electric is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Unattractive” in our US Industrials Global Top Stock Ideas
  • Triumph Group (TGI) announced it hired bankers to help it filed alternatives for its Aerospace Structures business unit.  The announcement comes at the end of a 3-year restructuring effort.  Triumph could reap $00-500 million in a sale, according to analysts.  Triumph has limited potential buyers for the asset.  Triumph  is rated “Unattractive” in our US SMID-Cap Global Top Stock Ideas and “Top Short” in our US Industrials Global Top Stock Ideas.

Global Financials Stocks Trending in the News

  • JP Morgan (JPM) CEO Jamie Dimon commented on banks’ potentially limited ability to help during the next crisis situation.  He commented in his letter to shareholders that new regulations and liquidity requirements will not allow banks to respond as they did during the crisis.  JP Morgan is rated “Neutral” in our US Large-Cap Global Top Stock Ideas
  • Societe Generale SA (ENXTPA: GLE) shares edged lower after the company announced plans to cut up to 700 jobs in Paris and to eliminate 100s more at its London and New York locations. The slew of job cuts at Societe Generale comes after the firm’s investment bank observed a difficult CY1Q2019. Societe Generale is rated “Unattractive” in our European Large-Cap Global Top Stock Ideas.
  • TradeWeb Markets (TW) placed its IPO and started trading Thursday.  Shares were priced at $27 and the shares opened the day 27% higher at $34.26.  TradeWeb sold 40 million shares raising $1.1 billion in the sale and twice increased the size of the offering due to demand.  The IPO values TradeWed at $7.9 billion.  TradeWeb is not yet rated in our Global Top Stock Ideas.

 

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European Stocks

  • The Euro Stoxx 600 is currently down -0.04%, the FTSE 100 is higher by +0.05%, the DAX is down -0.33%, and the CAC 40 is up +0.07%
  • Health Care (+0.45%), Oil & Gas (+0.44%), and Utilities (+0.21%) stocks are the top performers in the Euro Stoxx 600 today
  • Construction & Materials (-0.6%), Travel & Leisure (-0.59%), and Financial Services (-0.53%) 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
  • 193 stocks in the Euro Stoxx 600 are at 4-week highs while 22 stocks are at 4-week lows
  • 92 stocks in the Euro Stoxx 600 are overbought while 1 stocks are oversold according to the 16-day RSI Measure
  • The Nikkei 225 finished down --0.21%, the Hang Seng ended up +0.47%, the Hang Seng China Enterprise up +0.87%, and the CSI 300 was -0.12%
  • Investor sentiment for Japanese stocks finished negative with the advance/decline ratio for the Nikkei 225 closing at 0.36x
  • 46 stocks in the Nikkei 225 hit 4-week highs while 11 stocks reached 4-week lows
  • 14 stocks in the Nikkei 225 closed overbought while 3 stocks closed oversold according to the 16-day RSI Measure
  • Investor sentiment for Hong Kong stocks finished neutral with the advance/decline ratio for the Hang Seng closing at 1.17x
  • 19 stocks in the Hang Seng hit 4-week highs while 0 stocks reached 4-week lows
  • 14 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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