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Morning Brief

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

Look up! That's earnings raining down on you...global stocks mixed this morning amid the deluge

Apr 23, 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

  • Global stocks are mixed this morning with investors digesting an onslaught of earnings, US futures are mixed with front-month Dow Jones minis +0.08%, S&P 500 minis -0.04% and Nasdaq 100 minis -0.08%
  • Oil is higher again this morning in the wake of US efforts to stop all Iranian oil exports, read more: Closing the Export Door: US aims to push Iranian exports to zero, eliminating all sanctions waivers
  • Is the rally in US stocks getting ahead of the current profit outlook for stocks?  For the year, the S&P 500 is up 16.7% while for the month of April, it is up 2.7%.  Earnings growth for 1Q obviously doesn’t support the move in April but rather it is the fact that expectations are so low.  Remember, we highlighted a few weeks ago that quarterly earnings expectations for 1Q were cut the most in over 3 years.  In other words, we are in a beat and raise scenario which is good for stocks. 
  • Is it time to really begin zeroing in on stocks who exhibit high scores in our quality value factor group? While there is a general focus on the “value” factor, “quality” is just as important a factor in our opinion.  Companies that have high quality factor scores typically have healthier balance sheets and strong cash flow generation.  In addition, companies that exhibit high “quality” scores typically also screen out well as “low volatility” plays. 
  • A statement from China's Politburo is being interpreted as an indication that the massive stimulus seen in the first quarter may not be maintained, potentially negative for Chinese equities
  • Our CIO on CNBC: Let's Trade Earnings! Our CIO discusses trading Facebook and Amazon earnings on CNBC's "Trading Nation" 
  • We know investors are SMART: "Dumb Money" is not so Dumb, a New Study of Vanguard Clients Finds
  • UK PM Theresa May is due to present her withdrawal agreement bill to Parliament by next week as she seeks to move Brexit ahead, this as rival plot to force her removal 
  • The VIX is higher this morning and is currently at 13.21 after closing at 12.42 yesterday
  • General Electric (GE) May 31 OTM Calls & Puts, Ford (F) June 21 OTM Calls and General Motors (GM) June 21 OTM Calls are the most actively traded options contracts in US pre-market trading this morning
  • US 10-Year Treasury Bonds are higher with yields down -0.72 basis points to 2.5813%
  • The US Treasury 2s-10s Spread has narrowed 0.53 basis points to 0.2%
  • WTI Crude is currently up 2.66% to USD$65.7/bbl with the Brent-WTI spread down USD$-2.24 to USD$7.97/bbl
  • Gold is currently little changed -0.16% to USD$1272.89/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

  • Asos Plc (AIM:ASC) owner and CEO Anders Holch Polsen, Denmark’s richest man, lost 3 of his 4 children in the terrorist attacks in Sri Lanka.   A statement confirmed 3 of is children were killed but not which 3.  It was also not clear in which blast they were killed as there were multiple blasts in multiple locations as part of the attacks.  Asos Plc is rated “Unattractive” in our United Kingdom All-Cap Global Top Stock Ideas 
  • Coca-Cola (KO) reported first quarter earnings that beat expectations.  Coca-Cola reported first quarter ESP of 48 cents ahead of 46 cents consensus.  Coca-Cola saw unit case volume growth of 2%.  Coca-Cola sees full year organic revenue growth of about 4% in 2019.  Water and sports drinks were the stars of the quarter growing 6%.  Coca-Cola is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Consumer Staples Global Top Stock Ideas
  • Hasbro (HAS) reported a profit in the first quarter, a surprise as consensus was for a loss.  First quarter EPS of 21 cents came well above the 11 cents per share loss that was expected.  Hasbro first quarter revenue of $732.5 million was well above $662.7 million expected.  Hasbro saw a 9% rise in franchise brands revenue in the first quarter.  Hasbro continues to expect $50 to $55 million in cost savings in 2019.  Hasbro is rated “Top Short” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Consumer Discretionary Global Top Stock Ideas
  • Lululemon (LULU) is set to host its first analysts day since 2014.  Lululemon is slated to lay out its strategy for the next few years.  Lululemon reported its fast sales growth in 6 years in March and investors are keen to know how the company will maintain its momentum.  Lululemon is due to hit its $4 billion revenue target before its 2020 deadline and its plans to take the company to the next level will be the focus.  Lululemon is expected to announce a loyalty program.  Lululemon is rated “Top Buy” in our US Large-Cap Global Top Stock Ideas
  • Polaris (PII) reported first quarter earnings and full year guidance above consensus.  Polaris first quarter adjusted EPS of $1.08 beatings consensus if $0.91.  First quarter sales of $1.50 billion matched consensus.  Polaris provided 2019 adjusted EPS guidance of $6.05 to $6.30 while consensus if $6.06.  Polaris said dealer inventory dropped 1% in the first quarter.  Polaris is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Consumer Discretionary Global Top Stock Ideas
  • Proctor & Gamble (PG) reported fiscal third quarter core earnings ahead of consensus.  Proctor & Gamble third quarter EPS of $1.06, ahead of $1.03 expectations.  Fiscal third quarter revenue of $16.46 billion, also ahead of $16.36 billion consensus.  Proctor & Gamble saw organic revenue growth of 5% in the fiscal third quarter.  Proctor & Gamble reiterated full year guidance for core EPS growth of 3-8% with sales growth of 1%.  Proctor & Gamble 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
  • Whirlpool (WHR) reported first quarter adjusted that beat expectations.  Whirlpool reported first quarter EPS of $3.11 beating $2.86 consensus.  First quarter net sales of $4.80 billion was in line with consensus of $4.83 billion.  Whirlpool saw first quarter organic revenue growth of 3%.  Whirlpool reiterated EPS guidance for 2019 of $14.00 to $15.00, in line with consensus of $14.62 and sees $800 million in free cash flow in 2019.  Whirlpool is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Consumer Discretionary Global Top Stock Ideas

Global Information Technology Stocks Trending in the News

  • Twitter (TWTR) reported first quarter sales that beat expectations.  Twitter reported first quarter revenue of $787 million, up 18% y/y and ahead of $775 million consensus.  Twitter reported active users grew to 134 million daily active users beating consensus of 128.6 million.  Twitter gave revenue guidance for the second quarter of $770 million to $830 million.  Adjusted EPS of 9 cents trailed consensus of 14 cents.  Twitter is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Information Technology Global Top Stock Ideas.    
  • Verizon (VZ) reported first quarter adjusted EPS that beat consensus.  Adjusted EPS came at $1.20 while consensus was $1.17.  Verizon operating revenue in the first quarter was $32.13 billion, in line with $32.15 billion consensus.  Verizon added 61,000 wireless subscribers, well below the 206,000 expected.  Verizon is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Information Technology Global Top Stock Ideas.    

Global Financial Stocks Trending in the News

  • Fifth Third Bancorp (FITB) reported first quarter adjusted earnings that beat consensus.  Fifth Third Bancorp first quarter adjusted EPS of 63 cents came above the 59 cents consensus.  Fifth Third Bancorp reported a common equity Tier 1 ratio of 9.65% with a net interest margin of 3.28%.  Loan loss provisions totaled $89 million, below the $97 million expected.  Fifth Third Bancorp is rated “Neutral” in our US Large-Cap Global Top Stock Ideas

Global Industrial Stocks Trending in the News

  • Jet Blue (JBLU) reported first quarter adjusted EPS that beat consensus.  Adjusted EPS came at 16 cents while consensus was 12 cents.  Jet Blue operating revenue in the first quarter was $1.87 billion, in line with $1.87 billion consensus.  Jet Blue provided second quarter guidance for available seat miles, seeing that grow 4.5% to 6.5%.  Jet Blue sees revenue per seat mile growing 1% to 4% in the second quarter.  Jet Blue is rated “Unattractive” 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

  • Steel Dynamics (STLD) said it sees healthy demand for steel now and for the rest of 2019 on its earnings conference call.  Steel Dynamics expects overall steel demand to grow 2% y/y over 2019.  The company also expects steel-scrap prices to remain stable.  Steel Dynamics reported first quarter EPS of 91 cents which trailed the 93 cents consensus.  Revenue of $2.80 billion came in line with US$2.83 billion consensus.  Steel Dynamics 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 down -0.27%, the FTSE 100 is higher by +0.32%, the DAX is down -0.25%, and the CAC 40 is down -0.23%
  • Automobiles & Parts (-0.66%), Technology (-0.24%), and Media (-0.21%) stocks are the top performers in the Euro Stoxx 600 today
  • Health Care (+0.5%), Retail (-0.53%), and Oil & Gas (+1.91%) 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 0.7x
  • 152 stocks in the Euro Stoxx 600 are at 4-week highs while 34 stocks are at 4-week lows
  • 156 stocks in the Euro Stoxx 600 are overbought while 7 stocks are oversold according to the 16-day RSI Measure
  • The Nikkei 225 finished up +0.19%, the Hang Seng ended up 0%, the Hang Seng China Enterprise declined -0.32%, and the CSI 300 was -0.16%
  • Investor sentiment for Japanese stocks finished positive with the advance/decline ratio for the Nikkei 225 closing at 2x
  • 23 stocks in the Nikkei 225 hit 4-week highs while 43 stocks reached 4-week lows
  • 12 stocks in the Nikkei 225 closed overbought while 8 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 0.67x
  • 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

 
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