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Beat on the Street! Earnings beats pre-market send global stocks higher as earnings deluge begins

Apr 16, 2019

Actionable and Transparent Quantitative ResearchActionable and Transparent Quantitative Research
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Market data as of 7am EST

 

US Stocks Preview Ahead of the Open

  • Strong earnings results early are animating investors this morning with global markets rising and front-month Dow Jones minis +0.55%, S&P 500 minis +0.42% and Nasdaq 100 minis +0.38%
  • White House Economic Adviser Larry Kudlow made positive comments on trade negotiations with China, saying talks on predatory technology practices are going very well
  • The CEO of BlackRock (BLK), Larry Fink, said most investors are under-invested in the markets and the risk is of a melt-up, not a melt-down
  • The United States will announce March industrial production data at 9:15 AM today. Economists forecast a 0.2% m/m change in US industrial production ini March compared to a 0.1% change in the prior period.  
  • Chicago Fed President Charles Evans, after saying he expects rates to stay stable through 2020, said rates may need to be cut if inflation does not pick up
  • European Central Bank officials have made clear they have little interest in updating their negative interest-rate tool 
  • Check out ETFs you need to ownThe Top ETF Ideas for the Week You Need: Momentum Stocks and Small-Caps Stand Out
  • Chinese new-home prices edged up 0.61% last month, up from the 0.53% rise in February as credit conditions continue to ease
  • China said sponsors of IPOs on its new tech listing venue must hold a 5% stake in companies being listed at least 24 months after listing, a rule unheard of in global markets
  • The VIX is little changed this morning and is currently at 12.95 after closing at 12.32 yesterday
  • SPDR S&P 500 ETF (SPY) April 26 OTM Calls and Coty (COTY) May 17 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 0.9 basis points to 2.5633%
  • The US Treasury 2s-10s Spread has widened 0.68 basis points to 0.17%
  • WTI Crude is currently down -0.77% to USD$63.4/bbl with the Brent-WTI spread up USD$0.32 to USD$7.2/bbl
  • Gold is currently down -0.32% to USD$1283.84/oz

Stocks Trending in the News

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Global Consumer Stocks Trending in the News

  • Zalando (DB:ZAL) unexpectedly posted a profit in the first quarter, beating analysts expectations for a loss.  Zalando posted a slight profit in the quarter while consensus was for a loss of 10 million euros.  Zalando has pledged to vastly increase its size over the next 5 years as it seeks to become a major European retailer, more profitable than the others in Europe.  Zalando has risen 84% over the last 12 months with investors seeming to believe they can deliver.  Zalando is rated “Unattractive” in our European Large-Cap Global Top Stock Ideas.  

Global Information Technology Stocks Trending in the News

  • YouTube, part of Alphabet’s (GOOGL) Google unit, mistakenly labeled live streaming video of the Notre Dame Cathedral fire with a text box as it were footage of the 9/11 attack.  YouTube algorithms assign text boxes to some video clips on YouTube and the machines made a mistake with the Cathedral fire.  YouTube introduced these text boxes in an effort to dispel conspiracy theories related to many things, including 9/11.  Alphabet is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Information Technology Global Top Stock Ideas.  

Global Financial Stocks Trending in the News

  • Bank of America (BAC) reported solid first quarter, with increased income from its consumer unit being offset by lower trading volume.  Net interest income climbed 9.7% in the quarter while trading revenue fell 13%.  Net interest margin rose to 2.51% from 2.42% a year ago.  Consumer loans rose 5% as Bank of America’s CFO said the bank sees no signs of a recession in the near future.  Bank of America is rated “Neutral” in our US Large-Cap Global Top Stock Ideas
  • BlackRock (BLK) reported first quarter EPS of $6.61, handily beating consensus of $6.13.  BlackRock saw assets under management rose to $6.52 trillion.  BlackRock saw inflows in the quarter, reversing the outflow challenges it saw last year among its institutional clients.  Institutional inflows were $29.1 billion in the quarter while its iShares ETFs saw $81 billion in inflows.  BlackRock is rated “Neutral” in our US Large-Cap Global Top Stock Ideas
  • Charles Schwab (SCHW) reported first quarter EPS of 69 cents beating 66 cents consensus.  First quarter revenue of $2.72 billion beat consensus of $2.68 billion.  Charles Schwab reported a return on equity in the first quarter of 20%.  Charles Schwab has 3.59 trillion client assets in accounts, 11.8 million active brokerage accounts with 418k revenue trades per day.  Charles Schwab is rated “Attractive” in our US Large-Cap Global Top Stock Ideas
  • Comerica (CMA) reported first quarter results that beat consensus.  Comerica reported first quarter adjusted EPS of $2.08, beating consensus of $1.93.  Comerica’s NIM on a tax-equivalent basis was 3.79% with an efficiency ratio of 50.8%.  Comerica provided guidance of 2-4% loan growth, 1-2% deposit growth and a 3% decline in non-interest expenses.  Comerica is rated “Attractive” in our US Large-Cap Global Top Stock Ideas
  • Goldman Sachs (GS) had its price target cut to a market-low of $170 at Societe Generale as it reiterates its sell rating.  Goldman Sachs “almost completely lost out on the recent bull market rally,” SocGen notes in its report.  Goldman suffers from a litany of challenges and SocGen believes Goldman has been late to address all of them.  Flat earnings and a focus on less profitable areas have left Goldman in a terrible spot with a clouded future, SocGen highlights.  Goldman Sachs is rated “Neutral” in our US Large-Cap Global Top Stock Ideas
  • Progressive (PRG) reported first quarter results that handily beat expectations.  First quarter EPS of $1.83 was well above the $1.36 consensus.  Progressive first quarter net premiums earned was $8.46 billion while net premiums written was $9.24 billion.  Progressive’s combined ratio was 88.8% in the first quarter.  Personal policies in force grew 11% in the quarter.  Progressive is rated “Attractive” in our US Large-Cap Global Top Stock Ideas

Global Industrials Stocks Trending in the News

  • JB Hunt (JBHT) reported first quarter EPS of $1.09 matching consensus.  JB Hunt first quarter revenue of $2.09 billion trailing consensus of $2.2 billion.  JB Hunt operating income of $169 million was flat year-on-year due to a number of higher costs.  JB Hunt is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Industrials Global Top Stock Ideas  

Global Health Care Stocks Trending in the News

  • HCA (HCA) could suffer after Jefferies warned on the name.  “Investors should be a bit more cautious around HCA from here and through 2020,” Jefferies wrote in a note to clients.  The comments were made after seeing HCA run 33% over the last 33%, the best performer in the sector.  HCA is among the most owned hospital stocks and with the growing talk of a single-payer system they could see weakness near-term.  HCA is rated “Neutral” in our US Large-Cap Global Top Stock Ideas
  • Johnson & Johnson (JNJ) reported first quarter adjusted EPS of $2.10 ahead of $2.04 consensus.  First quarter revenue of $20.02 billion beat $19.61 billion consensus.  Its OptumRx unit saw a 10.6% growth in revenue to $17.6 billion.  Johnson & Johnson increased full year EPS guidance to $8.53-$8.63 up from $8.50-$8.65; present consensus is $8.59.    Johnson & Johnson is rated “Neutral” in our US Large-Cap Global Top Stock Ideas
  • UnitedHealth Group (UNH) reported first quarter adjusted EPS of $3.73 ahead of $3.60 consensus.  First quarter revenue of $60.31 billion beat $59.7 billion consensus.  UnitedHealth’s medical care ratio was 82% in the first quarter.  Its OptumRx unit saw a 10.6% growth in revenue to $17.6 billion.  UnitedHealth increased full year EPS guidance to $14.50-$14.75, up from $14.40-$14.65; present consensus is $14.65.  UnitedHealth Group is rated “Top Buy” in our US Large-Cap Global Top Stock Ideas

Global Power & Commodity Stocks Trending in the News

  • Entergy (ETR) has agreed to a post-shutdown sale of its 3 nuclear power plants Indian Point 1, 2 and 3 to Holtec International for decommissioning.  Entergy had committed to close the plants after NY State Governor Andrew Cuomo insisted on their closure.  The 3 plants provide 30% of metro New York City’s power.  With the closure, Entergy will have retired all of its nuclear power plants.  Entergy is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas

 

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International Stock Markets Recap

  • The Euro Stoxx 600 is currently up +0.19%, the FTSE 100 is higher by +0.33%, the DAX has risen +0.6%, and the CAC 40 is down -0.07%
  • Telecommunications (+0.2%), Retail (+0.55%), and Insurance (+0.7%) stocks are the top performers in the Euro Stoxx 600 today
  • Basic Resources (-0.09%), Real Estate (+0.54%), and Technology (+0.01%) 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 1.78x
  • 183 stocks in the Euro Stoxx 600 are at 4-week highs while 24 stocks are at 4-week lows
  • 112 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 +0.24%, the Hang Seng ended up +1.07%, the Hang Seng China Enterprise up +1.63%, and the CSI 300 was +2.77%
  • Investor sentiment for Japanese stocks finished negative with the advance/decline ratio for the Nikkei 225 closing at 0.44x
  • 59 stocks in the Nikkei 225 hit 4-week highs while 9 stocks reached 4-week lows
  • 12 stocks in the Nikkei 225 closed overbought while 7 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 1.5x
  • 7 stocks in the Hang Seng hit 4-week highs while 5 stocks reached 4-week lows
  • 3 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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