morning-quant-ride

Morning Brief

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

It's a gusher! Oil prices surging to start the week on news US to force end to Iranian oil exports by cutting export waivers to zero

Apr 22, 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

  • Oil is surging over 2% this morning on news of potentially lower Iranian oil exports and stock futures are lower with front-month Dow Jones minis -0.24%, S&P 500 minis -0.27% and Nasdaq 100 minis -0.32%
  • 155 companies of the S&P 500, or 31% of the index, as well as 40% of the Dow Jones Industrial Average, will report earnings this week
  • The US will announce existing home sales data for March at 10:00 AM today. Economists expect 5.30 million existing home sales in March compared to 5.51 million in the prior month.  
  • The US is expected to announce the end of all waivers for Iranian oil exports in its effort to drive exports to zero, exerting further upward pressure on the price of oil 
  • European markets are closed for the Easter holiday today
  • A quick first quarter earnings update, so far: S&P 500 Communication Services Stocks Post Strong Earnings While Energy Stocks Lag
  • South Korean exports dropped 8.7% so far this month with a 12% drop in exports to China; fueling fear of further Asian trade slowdown
  • The VIX is moving up this morning and is currently at 13.2 after closing at 12.09 last week
  • Invesco Senior Loan ETF (BKLN), October 18 OTM Puts,  SPDR S&P 500 ETF (SPY) April 22 OTM Calls & Puts, iShares MSCI Emerging Markets ETF (EEM) May 17 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 0.9 basis points to 2.5686%
  • The US Treasury 2s-10s Spread has widened 0.68 basis points to 0.19%
  • WTI Crude is currently up 0.38% to USD$64/bbl with the Brent-WTI spread up USD$1.61 to USD$8.87/bbl
  • Gold is currently up 0.3% to USD$1279.36/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

  • Bed, Bath & Beyond (BBBY) announced changes to its board meant to appease activist investors that have been insisting on changes.  5 new independent members will join Bed, Bath & Beyond’s board with 5 currents members leaving.  Among those leaving are its co-founders and co-chairmen.  Its board will now contain 10 members, 9 of which are independent and 6 of which are women.  Bed, Bath & Beyond has been talking with the activist investors clamoring for change and expects these moves to satisfy their demands.  Bed, Bath & Beyond is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Consumer Discretionary Global Top Stock Ideas.
  • Kimberley-Clark (KMB) reported first quarter adjusted that beat expectations.  Kimberley-Clark reported first quarter EPS of $1.66 beating $1.54 consensus.  First quarter net sales of $4.63 billion also beat consensus of $4.53 billion.  Kimberley-Clark saw first quarter organic revenue growth of 3%.  Kimberley-Clark said it attained $115 million in cost savings in the quarter and returned $510 million to shareholders.  Kimberley-Clark provided EPS guidance for 2019 of $6.50 to $6.70, in line with consensus of $6.62.  Kimberley-Clark is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Consumer Discretionary Global Top Stock Ideas
  • Kroger (KR) has continued to struggle in adapting to the new grocery delivery dynamics of its sector, according to a WSJ report highlighting its challenges.  Kroger is known as a very conservative company and critics say this has severely limited its ability to adapt to the new supermarket environment.  Kroger has taken a long time to come up with a new approach as the landscape changes drastically.   Kroger’s CEO admitted, “There’s no doubt we were behind.”  Kroger believes it now has a plan to succeed.  Kroger is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Consumer Staples Global Top Stock Ideas.
  • Sketchers (SKX) provided second quarter guidance that was well below consensus.  Sketchers expects second quarter EPS in the range of 30-35 cents while present consensus is 38 cents.  First quarter results came in line with EPS of 71 cents and revenue of $1.28 billion.  Same store sales grew 0.7% at company owned stores.  Sketchers is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Consumer Discretionary Global Top Stock Ideas.  
  • Tesla (TSLA) has scheduled a presentation for investors and the press to show off its driverless car technology.  The event, curiously, is 2 days before Tesla is expected to report a quarterly loss.  Tesla was initially expected to report a gain, but difficulty in delivering cars overseas has caused the company problems.  Critics complain the event is simply a way to distract investors.  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

  • Samsung (KOSE:A005930) has abruptly canceled 2 Galaxy Fold prelaunch events.  The events were in Hong Kong and mainland China and come in the wake of malfunctioning Galaxy Fold models. A tech reporter from the WSJ posted photos on social media of a broken and peeling screen and that was followed by other pre-launch models breaking under testing.  Despite the cancellation, Samsung is reportedly sticking to the launch of the new phone in the US this Friday.  Samsung is the largest maker of cell phones in the world.  Samsung is not rated in our Global Top Stock Ideas.
  • Sprint’s (S) litigation against AT&T’s (T) “5G Evolution” ads will get its first hearing today and tomorrow with a ruling to follow shortly thereafter.  Sprint alleges AT&T’s use of the “5GE” symbol and ads is deceptive since the service does not meet international 5G standards.  The service is actually an enhanced 4G service, according to Sprint, and AT&T should stop deceiving customers because 5G service has still to be rolled out nationally.  Sprint is rated “Top Short” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Information Technology Global Top Stock Ideas.  AT&T 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

  • Ally Financial (ALLY) reported first quarter earnings and revenue ahead of consensus.  First quarter EPS of 80 cents beat consensus of 78 cents.  Ally first quarter revenue of $1.6 billion beat $1.58 billion consensus.  Ally net interest margin in the first quarter was 2.67%, while return on equity was 11.1%.  Ally Financial is rated “Attractive” in our US Large-Cap Global Top Stock Ideas. 
  • Wells Fargo (WFC) will be holding its annual meeting this week and investors were hoping for some news on efforts to revive its performance.  The exit of its CEO makes any news on that subject to be very unlikely.  Since the exit of the CEO, the bank and has rescinded guidance on expenses and regulatory relief, further clouding the way forward for investors.  Wells Fargo is rated “Neutral” in our US Large-Cap Global Top Stock Ideas

Global Industrial Stocks Trending in the News

  • Grainger (GWW) reported first quarter earnings ahead of expectations.  First quarter EPS of $4.51 beat $4.44 consensus.  Revenue in the first quarter of $2.80 billion trailed the $2.88 billion consensus.  Grainger provided sales growth guidance for 2019 of 4-8%.  Grainger is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Industrials Global Top Stock Ideas
  • Lennox International (LII) reported first quarter earnings that beat and guidance that matched consensus.  First quarter adjusted EPS from continuing operations of $1.68 came ahead of $1.48 consensus.  First quarter sales of $790.3 million beat $749.6 million consensus.  Lennox provided 2019 EPS of $12.00 to $12.60, while consensus is $12.32.  Lennox International is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Industrials Global Top Stock Ideas
  • Snap-On (SNA) first quarter earnings beat consensus, with adjusted EPS of $3.01 beating $2.90 consensus.  Snap-On first quarter revenue of $921.7 million trailed $933.3 million consensus.  Snap-On’s CEO said they see “continuing improvements in our US franchise network.”  Snap-On is rated “Top Buy” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Industrials Global Top Stock Ideas

Global Commodity & Power Stocks Trending in the News

  • Halliburton (HAL) reported first quarter results that beat consensus.  Halliburton reported first quarter revenue of $5.74 billion, ahead of $5.52 billion consensus.  Operating income for the first quarter came at $426 million beating consensus of $415 million.  Halliburton EPS from continuing operations was 17 cents.  Revenue was higher than expected in all regions Halliburton operates.  Halliburton is rated “Neutral” in our US Large-Cap Global Top Stock Ideas

 

 

Better Data for Better Investment DecisionsBetter Data for Better Investment Decisions
Better Data for Better Investment DecisionsBetter Data for Better Investment Decisions

International Stock Markets Recap

  • Euroean markets are closed for Easter holiday
  • The Nikkei 225 finished up +0.08%, the Hang Seng ended down -0.54%, the Hang Seng China Enterprise declined -0.68%, and the CSI 300 was -2.31%
  • Investor sentiment for Japanese stocks finished negative with the advance/decline ratio for the Nikkei 225 closing at 0.91x
  • 27 stocks in the Nikkei 225 hit 4-week highs while 46 stocks reached 4-week lows
  • 15 stocks in the Nikkei 225 closed overbought while 16 stocks closed oversold according to the 16-day RSI Measure
  • 6 stocks in the Hang Seng hit 4-week highs while 7 stocks reached 4-week lows
  • 3 stocks in the Hang Seng closed overbought while 1 stocks closed oversold according to the 16-day RSI Measure

 

*Data in Price Return and Updated Real-Time (with a delay), Source: StockDio

 

Stock Model PortfoliosMulti-factor quantitatively optimized portfolios risk-adjusted to provide investors an ATTRACTIVERISK/RETURN TRADE-OFF
Stock Model PortfoliosMulti-factor quantitatively optimized portfolios risk-adjusted to provide investors an ATTRACTIVERISK/RETURN TRADE-OFF