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Morning Brief

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

Like a surfer dwarfed by a cresting wave, investors await a sea of earnings to wash over them this week

Apr 15, 2019

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Market data as of 7am EST

 

US Stocks Preview Ahead of the Open

  • Global stocks are drifting higher this morning in anticipation of additional positive earnings reports this coming week with front-month Dow Jones minis +0.08%, S&P 500 minis +0.09% and Nasdaq 100 minis +0.04%
  • China is considering shifting some agricultural tariffs to other items to allow President Trump to claim help for farmers ahead of the 2020 elections; part or all of the tariffs on $50 billion in US goods that were retaliatory could be changed, according to Bloomberg
  • President Trump renewed his attacks on the Federal Reserve this weekend, saying the stock market would be "5,000 or 10,000 points higher" if the Fed had not raised interest rates
  • The S&P 500 is within 2% of its all-time high, driven by a rally in tech and consumer discretionary stocks.  We have been telling our community members and followers to buy tech and consumer discretionary since the beginning of the year.  At this point, we are now looking at underperforming sectors like Consumer Staples and Healthcare stocks to find hidden gems with lower betas. 
  • The EU voted today to start trade talks with the US in an effort to eliminate industrial goods tariffs
  • The United States will announce Empire Manufacturing data for April at 8:30 AM today. Economists expect 8.0 to be reported for April Empire Manufacturing compared to 3.7 in the prior period.  
  • The VIX is moving up this morning and is currently at 12.35 after closing at 12.01 last week
  • Volatility for ALL asset classes is dropping across the board as we enter the 1Q earnings season.  Obviously, low volatility is typically associated with upward moves in stocks but things are THAT calm to warrant a VIX around 12.  Remember, our thesis for a rally out of earnings season is that estimates have been cut too much but if options markets are already pricing that in, we would be worried we don’t see the upward pop. 
  • SPDR S&P Regional Bank ETF (XLF) May 17 & 18 OTM Calls, SPDR S&P 500 ETF (SPY) April 18 OTM Calls and Coty (COTY) April 17 Calls & 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 -0.54 basis points to 2.5597%
  • The US Treasury 2s-10s Spread has narrowed 1.17 basis points to 0.16%
  • WTI Crude is currently up 0.49% to USD$63.89/bbl with the Brent-WTI spread down USD$-1.1 to USD$6.72/bbl
  • Gold is currently down -0.3% to USD$1286.53/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

  • Jumia Technologies (JMIA) debuted Friday and rose 54%.  Jumia is called the Amazon (AMZN) of Africa though is based in Berlin.  Jumia is a 7-year old online retailer that raised $196 million in its IPO.  Jumia has 4 million customers in 14 countries and hopes to expand aggressively post-IPO.  Jumia is not rated on our Global Top Stock Ideas.
  • Tesla (TSLA) CEO Elon Musk tweeted another production forecast while he is in the middle of negotiation with the SEC over his tweeting of relevant company information.  Musk tweeted that Tesla will produce 500,000 cars over the next 12 months,  2 months ago a similar tweet started his problems with the SEC.  Analysts have commented he chose a strange time to tweet this information out given his ongoing talks with the SEC.  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 Stocks Trending in the News

  • Publicis Groupe (ENXTPA:PUB) Is acquiring Alliance Data System’s (ADS) Epsilon unit for $4.4 billion.  Epsilon is said to add 13% to Publicis’ earnings in the first year.  Epsilon is focusing on data management, identity resolution on loyalty programs.  Publicis expects to see $60 million in cost savings by 2022.  Publicis expects to expand the reach of Epsilon upon its acquisition.  Publicis Groupe is rated “Unattractive” in our European Large-Cap Global Top Stock Ideas.  Alliance Data Systems is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Information Technology Global Top Stock Ideas.  
  • 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 Financial Stocks Trending in the News

  • Goldman Sachs (GS) reported first quarter results that beat expectations, with investment banking coming better and trading trailing a bit.  First quarter EPS of $5.71 handily beat $4.97 consensus.  Net income of $2.25 billion came in line while revenue for the quarter fell 13% to $8.81 billion.  Investment banking revenue of $1.84 billion came above the $1.7 billion expected.  Fixed income trading revenue of 1.84 billion beat the $1.78 billion expected.  Stock trading revenue of $1.77 billion trailed the $1.83 billion expected.  Goldman increased its quarterly dividend to 85 cents per share, up from 80 cents.  Goldman Sachs is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas.

Global Industrials Stocks Trending in the News

  • American Airline (AAL) has joined Southwest Airline (LUV) in canceling its 737 Max flights into the summer.  American canceled all flights with the 737 Max until August 19th.  The 2 airlines are canceling 275 flights per day until mid-August.  Southwest Airlines operates the largest 737 fleet in the US with American the second largest.  Airlines had hoped for a quick return of the jet but now they are anticipating being without it for most of the summer.  American Airlines is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Industrials Global Top Stock Ideas.  Southwest Airline is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Industrials Global Top Stock Ideas
  • Waste Management (WM) is nearing a deal to buy its rival Advanced Disposal Service (ADSW) in a $2.9 billion deal, according to the WSJ.  It is being reported that Waste Management will pay $33.15 per share for its rival, paying a 22.1% premium to Friday’s close. Including debt, the deal is worth about $5 billion.  Waste Management is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Industrials Global Top Stock Ideas.  Advanced Disposal Service is rated “Attractive” in our US SMID-Cap Global Top Stock Ideas and “Attractive” in our US Industrials Global Top Stock Ideas.  

Global Health Care Stocks Trending in the News

  • CVS Health (CVS) is attractive and it is time to buy, according to Barron’s.  Barron’s says despite the recent weakness in the stock, CVS’ assets leave it well-positioned for a future when consumers have more control over their own healthcare decisions.  CVS Healthcare 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 +0.26%, the FTSE 100 is higher by +0.12%, the DAX has risen +0.25%, and the CAC 40 is up +0.23%
  • Banks (+0.85%), Media (+0.84%), and Insurance (+0.72%) stocks are the top performers in the Euro Stoxx 600 today
  • Basic Resources (-0.48%), Real Estate (-0.25%), and Oil & Gas (-0.16%) 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 2.39x
  • 172 stocks in the Euro Stoxx 600 are at 4-week highs while 42 stocks are at 4-week lows
  • 91 stocks in the Euro Stoxx 600 are overbought while 6 stocks are oversold according to the 16-day RSI Measure
  • The Nikkei 225 finished up +1.37%, the Hang Seng ended down -0.33%, the Hang Seng China Enterprise declined -0.24%, and the CSI 300 was -0.33%
  • Investor sentiment for Japanese stocks finished positive with the advance/decline ratio for the Nikkei 225 closing at 9.23x
  • 23 stocks in the Nikkei 225 hit 4-week highs while 36 stocks reached 4-week lows
  • 4 stocks in the Nikkei 225 closed overbought while 9 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 0.35x
  • 0 stocks in the Hang Seng hit 4-week highs while 5 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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