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Hit the BUY button! US stock futures rally after JP Morgan results beat pre-market

Apr 12, 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

  • US stock futures are rallying pre-market after JP Morgan (JPM) reports strong first quarter results with front-month Dow Jones minis +0.62%, S&P 500 minis +0.52% and Nasdaq 100 minis +0.48%
  • China saw credit growth in March that exceeded all estimates, with 1.69 trillion yuan of new loans while consensus was for 1.25 trillion yuan
  • The US 10-year bond yield has climbed over 2.54% in overnight trading
  • Uber announced it will go public at a $100 billion valuation, seeking to raise $10 billion in its IPO 
  • We are sure you have already seen our video talking about shorting KRE, the SPDR S&P Regional Bank ETF using Put Spreads, "Time to Short Bank Stocks! We Show You How"  Earlier this week we published a commentary about flows in the XLF, the Financials Select Sector SPDR ETF.  Now, XLF has more exposure to the money banks that will do well if the stock market moves, etc., while KRE is a regional bank ETF.  In the current environment, with rates on hold (with downward pressure), expectations for NIM will need to be revised downwards.  We are beginning to worry about asset quality too given the growth in loan books over the last few years with rates so cheap.  Haven’t really heard anyone speaking about these 2 ETFs.  Looking like an amazing long-short pair, long XLF and Short KRE.
  • Check out these short  SCREAMING BUY videos on stocks you need to check out NOW:
  • We show you how to raise your rates: FORGET THE FED! These US Large-Cap Top Buy HIGH DIVIDEND YIELD STOCKS will raise your rates! 
  • A look at flows into growth vs. valueThe Growth vs Value Debate – Which one does Mr. Market love more? 
  • Check out our Top US Consumer BUYS: SHOP TIL YOU DROP! US Consumer Stocks to BUY NOW for maximum gains in your portfolio!
  • The VIX is little changed this morning and is currently at 13.27 after closing at 13.02 yesterday
  • SPDR S&P500 ETF (SPY) April 12 OTM Calls & Puts, and May 17 OTM Calls & Puts and Apple (AAPL)  April 12 OTM Calls are the most actively traded options contracts in US pre-market trading this morning
  • US 10-Year Treasury Bonds are lower with yields up 4.65 basis points to 2.5435%
  • The US Treasury 2s-10s Spread has widened 1.32 basis points to 0.16%
  • WTI Crude is currently down -1.59% to USD$63.58/bbl with the Brent-WTI spread up USD$2.58 to USD$7.75/bbl
  • Gold is currently little changed 0.16% to USD$1294.53/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

  • Alibaba (BABA) founder Jack Ma told employees he does not need workers looking for a 9 to 5 workday.  Jack Ma endorsed the 996 work culture-9am to 9pm, 6 days a week.  “To be able to work 996 is huge bliss,” Ma told employees.  He added, “If you want to join Alibaba, you need to be prepared to work 12 hours a day otherwise why even bother.”  Alibaba is rated “Top Buy” in our China All-Cap Global Top Stock Ideas
  • Campbell Soup (CPB) is preparing to sell its fresh food division Bolthouse Farms to a group led by the executive that ran the unit, according to the WSJ.  Campbell will fetch $500 million for the unit, much less than it paid for the division 7 years ago.    Fresh food is ending up being much more difficult to deal with than the packaged food Campbell is known for, and Campbell is refocusing on packaged food as it seeks to turn around its business.  Campbell is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Consumer Discretionary Global Top Stock Ideas.
  • Geely Automotive (SEHK:175) said its Volvo Cars division will start to build its XC40 SUV in Luqiao, China.  Volvo will build the cars in a facility that already builds a model from Lynk, its sister company.  Polestar, another sister company focused on EVs and performance cars, will start production of its first EV model at the same plant, in the coming months.  Shortly, Geely will be building 3 models from 3 different brands on the same production line, using the same architecture underpinning all of them.  Geely Automotive is rated “Neutral” in our China All-Cap Global Top Stock Ideas.
  • Weight Watchers International Inc. (WTW) shares slid after JPMorgan pulled-back its earnings forecast for the company as the number of daily active users using the company’s application has, “tracked even worse,” than expected. According to JPMorgan analyst Christina Brathwaite, the decline in app users during the first 3 months of 2019 suggest that overall subscribers will fall 18% y/y. Weight Watchers is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Unattractive” in our US Consumer Discretionary Global Top Stock Ideas.

Global Information Technology Stocks Trending in the News

  • Walt Disney (DIS) announced that its new streaming service will launch November 12th with a $7 monthly cost, a bet that it can undermine Netflix will a considerably cheaper charge.  Netflix’s most popular plan costs $11.  Disney’s service will be full of its original movies, plus content from its Star Wars, Marvel and Pixar franchises.  Disney expects the service to break even within 5 years.  Wal 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.

Global Financials Stocks Trending in the News

  • JP Morgan (JPM) reported first quarter results that beat consensus pretty much across the board.  Revenue of $29.85 billion beat $28.36 expectation adjusted EPS of $2.60 beat the $2.35 consensus.  First quarter stock trading revenue of $1.74 billion beat $1.73 billion consensus while investment banking revenue of $1.75 billion beat the $1.63 billion expectation.  JP Morgan reported assets under management of $2.1 trillion.  JP Morgan provided full year guidance of $58 billion for interest income, sees adjusted expenses of $66 billion with net charge-offs of $5.5 billion.  JP Morgan is rated “Neutral” in our US Large-Cap Global Top Stock Ideas
  • PNC Financial (PNC) reported first quarter results that matched consensus.  First quarter EPS of $2.61 matched consensus of $2.61.  First quarter loans of $323.3 billion compares to $226.3 a year earlier.  NIM on a tax equivalent basis came at 2.98%, in line with 2.97% consensus.  PNC Financial is rated “Neutral” in our US Large-Cap Global Top Stock Ideas
  • Wells Fargo (WFC) reported a solid first quarter result with revenue of $21.6 billion beating consensus.  First quarter EPS of $1.20 beat $1.09 consensus.  Expenses fell 7.3% to $13.9 billion, proof that the cost-cutting program is bearing fruit.  The first quarter efficiency ratio came at 64.4%, worsening from 63.6%.  Analysts have reacted positive to the results.  Wells Fargo is rated “Neutral” in our US Large-Cap Global Top Stock Ideas

Global Industrials Stocks Trending in the News

  • Fastenal (FAST) delivered first quarter EPS of 68 cents, beating the 67 cents consensus.  Fastenal first quarter sales of $1.31 billion matched consensus.  Fastenal saw daily sales growth of 12.2% in the quarter and a gross margin of 47.7%.  Analysts note Fastenal has been able to execute in a challenging environment for industrial distributors.  Fastenal is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Consumer Discretionary Global Top Stock Ideas.  
  • Northrop Grumman (NOC) was chosen to develop prototypes of sensing capabilities using undersea organisms.  The US Defense Advanced Research Projects Agency (DARPA) Biological Technology Office chose Northrop Grumman for its PALS-Persistent Aquatic Living Sensors-program that would detect threats under water.  Northrop Grumman will develop the hardware that will use artificial intelligence to detect threats using living organisms.  Northrop Grumman is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Industrials Global Top Stock Ideas

Global Power & Commodities Stocks Trending in the News

  • Chevron (CVX) has agreed to acquire all of Anadarko Petroleum (APC) in a $33 billion deal.  Chevron will pay a 39% premium, $65 per share for Anadarko, to acquire all of the company.  The acquisition will give Chevron acreage in the Permian Basin plus access to the LNG market which is expected to see strong export led growth.  Chevron expects the deal to add to free cash flow and earnings within a year.  Chevron is rated “Neutral” in our US Large-Cap Global Top Stock Ideas.  Anadarko Petroleum is rated “Top Short” in our US Large-Cap Global Top Stock Ideas.
  • Newmont Mining (NEM) shareholders approved the $10 billion acquisition of Canada-based Goldcorp (TSX:G).  Newmont shareholders had to approve 2 measures, the first allows for the increase in common shares.  The second measure allows for the issuance of those shares to complete the deal.  The measures passed with 75% and 98% approval, respectively.  Newmont shareholders will receive a special dividend of 88 cents per share on May 1st.  Newmont Mining is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas.  Goldcorp is rated “Top Short” in our Canada All-Cap Global Top Stock Ideas.
  • Petrobras (PBR) said it is reversing a previously announced diesel price hike.  The Brazilian government has been under pressure from truckers who have been protesting about the diesel price hike coming. Officially, Petrobras said it reviewed its hedge position and decided it did not need to hike the price of diesel, saying it is maintaining parity with international prices.  As Petrobras is a government-controlled company, most don’t buy that story.  Petrobras is rated “Attractive” in our Brazil All-Cap Global Top Stock Ideas.

 

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International Stock Markets Recap

  • The Euro Stoxx 600 is currently up +0.07%, the FTSE 100 is higher by +0.37%, the DAX has risen +0.52%, and the CAC 40 is up +0.29%
  • Automobiles & Parts (+1.87%), Travel & Leisure (+0.37%), and Banks (+1.51%) stocks are the top performers in the Euro Stoxx 600 today
  • Basic Resources (+1.17%), Utilities (-0.86%), and Health Care (-1.43%) 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 1.73x
  • 130 stocks in the Euro Stoxx 600 are at 4-week highs while 26 stocks are at 4-week lows
  • 55 stocks in the Euro Stoxx 600 are overbought while 4 stocks are oversold according to the 16-day RSI Measure
  • The Nikkei 225 finished up +0.73%, the Hang Seng ended up +0.24%, the Hang Seng China Enterprise up +0.36%, and the CSI 300 was -0.22%
  • Investor sentiment for Japanese stocks finished negative with the advance/decline ratio for the Nikkei 225 closing at 0.53x
  • 15 stocks in the Nikkei 225 hit 4-week highs while 50 stocks reached 4-week lows
  • 3 stocks in the Nikkei 225 closed overbought while 5 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 1.94x
  • 4 stocks in the Hang Seng hit 4-week highs while 3 stocks reached 4-week lows
  • 4 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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