New records this week for US stocks? No end-game to upside in sight with strong earnings likely to continue
Apr 29, 2019
Market data as of 7am EST
- Global stocks are trading lower to start the week that will see another deluge of earnings reports, US futures are flat with front-month Dow Jones minis -0.04%, S&P 500 minis -0.06% and Nasdaq 100 minis -0.09%
- Crude oil continues its slide, WTI crude traded over $66 not long ago and is trading this morning close to $63
- Oil continues weak this morning after President Trump again called for lower prices and Russia said it expects to resolve its supply problem in the coming days
- Today the market will get US data on personal income and spending, PCE deflator and Dallas Fed activity survey
- The US and China will resume trade negotiations this week in Beijing with a number of issues to still unresolved, including intellectual property protections, forced technology transfers, agriculture, non-tariff barriers and services, among others, according to a White House press release
- Treasury Secretary Steve Mnuchin said the enforcement part of trade negotiations is close to complete
- Confidence in the EU economy dropped for the 10th month in a row, with the sentiment index falling to 104 from 105.4
- According to Bloomberg, volatility markets may be flashing a warning signal as the five-session correlation between the S&P 500 Index and VIX strengthened to levels not seen since mid-2018 -- the rare dynamic has often preceded a retreat in U.S. equities.
- The VIX is little changed this morning and is currently at 13.21 after closing at 12.73 last week
- Cenovus Energy (CVE) May 17 OTM Calls, SPDR S&P Oil & Gas Exploration & Production ETF (XOP) May 17 OTM Calls and SPDR S&P 500 ETF Trust (SPY) 29 April 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 0.72 basis points to 2.5054%
- The US Treasury 2s-10s Spread has widened 0.11 basis points to 0.22%
- WTI Crude is currently down -2.82% to USD$63.3/bbl with the Brent-WTI spread up USD$2.9 to USD$8.11/bbl
- Gold is currently down -0.37% to USD$1281.35/oz
Stocks Trending in the News
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Global Consumer Stocks Trending in the News
- Amazon (AMZN) announced with its results that it will be transitioning its Prime free 2-day shipping to 1-day shipping. Analysts estimate it will add $800 million in costs to transition to that service completely. Competitors are moaning as most now match Amazon’s 2-day delivery and few expected the 1-day announcement. Amazon is targeting many everyday items like toothpaste with its 1-day service, items it has had trouble competing in. Amazon is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Consumer Discretionary Global Top Stock Ideas
- Restaurant Brands (QSR) reported first quarter results that trailed consensus. Restaurant Brands reported same-store-sales at Tim Horton’s that fell 0.6%, well below the 1.9% growth expected. Restaurant Brands first quarter earnings of 55 cents per share missed consensus of 58 cents per share. There was no explanation for the miss at Tim Horton’s, which management said remains a strong franchise. Burger King saw same-store-sales growth of 2.2%, in line. Restaurant Brands is rated “Attractive” in our Canada All-Cap Global Top Stock Ideas
- Starbucks (SBUX) was downgraded at Wells Fargo Securities to market perform from outperform. Wells cut Starbucks’ price target to $80 from $83. Starbucks reported solid first quarter results and even upped EPS guidance at the same time. Wells, though, sees all of Starbucks growth opportunities priced into its present valuation, hence the downgrade. Starbucks 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
- Target (TGT) was upgraded to overweight from equal-weight at Barclays. Target saw its price target hiked to $115 from $85 as well. Barclays wrote that Target has the potential to gain market share from rivals, especially its weaker retail competitors. Barclays also cited Target’s strong traffic trends in its upgrade. Target 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 Information Technology Stocks Trending in the News
- Apple (AAPL) discussed buying Intel’s (INTC) smartphone-chip business, according to a report from the WSJ. Apple and Intel started conversations last summer and continued until Apple announced its settlement with Qualcomm (QCOM). Intel is discussions with other parties that have expressed interest, the report goes on to add. If Intel closes a deal, it could reap the company a few billion dollars, the report notes. Apple is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Information Technology Global Top Stock Ideas. Intel is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Information Technology Global Top Stock Ideas. Qualcomm is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Information Technology Global Top Stock Ideas
- Spotify (SPOT) reported it reached 100 million paid subscribers, close to the high end of expectations. Spotify reported a loss of 47 million euros in the first quarter, better than the 68 million. Revenue of 1.51 billion euros came a touch ahead of 1.47 billion expected. Spotify gave second quarter guidance of 107-111 million paid subscribers with revenue of 1.51 to 1.71 billion euros. Spotify is not rated in our Global Top Stock Ideas.
- Visa (V) and Mastercard (MA) have completed an agreement with EU regulators to resolve its investigation into credit card fees for non-European visitors in Europe. Visa and Mastercard will reduce fees charged as part of their settlement with EU regulators. Interregional fees on debit cards will be lowered to 0.2% from 0.3%, the same as credit cards. Online transactions will be charged 1.15% for debits cards and 1.5% on credit cards. Visa is rated “Top Buy” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Information Technology Global Top Stock Ideas. Mastercard is rated “Top Buy” 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
- American Express (AXP) was downgraded to neutral from buy at UBS. American Express saw its price target raised to $118 from $113 together with the downgrade. UBS sees a deceleration in growth at American Express and is cited as a key reason for the downgrade. UBS no longer sees upside to consensus EPS forecasts. American Express is rated “Attractive” in our US Large-Cap Global Top Stock Ideas
Global Industrial Stocks Trending in the News
- Parker Hannifin Corp (PH) agreed to acquire Lord Corp, the privately-held materials-sciences company, in a $3.68 billion deal. The deal is all cash. Parker Hannifin said it expects the deal to close within 4 to 6 months. The deal will allow Parker Hannifin to expand into the materials-sciences products for the aerospace industry. Parker Hannifin is rated “Top Buy” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Industrials Global Top Stock Ideas
Global Power & Commodity Stocks Trending in the News
- Anadarko (APC) prefers the offer from Occidental Petroleum (OXY), valued at $38 billion, over the offer from Chevron (CVX), according to a report in FT. Anadarko is “preparing to endorse” the offer from Occidental, the report notes. Anadarko’s board has determined the Occidental offer is superior and should announce so soon. Anadarko Petroleum is rated “Top Short” in our US Large-Cap Global Top Stock Ideas. Occidental Petroleum is rated “Neutral” in our US Large-Cap Global Top Stock Ideas. Chevron is rated “Neutral” in our US Large-Cap Global Top Stock Ideas.
Global Health Care Stocks Trending in the News
- Eli Lily (LLY) won an appeal court ruling today on the validity of a patent on its Alimta lung-cancer drug. The US Court of Appeals rejected claims from other manufacturers that wanted to sell lower-cost versions of the drug. Eli Lily is rated “Neutral” in our US Large-Cap Global Top Stock Ideas.
- The Euro Stoxx 600 is currently down -0.25%, the FTSE 100 is down -0.09%, the DAX is down -0.28%, and the CAC 40 is down -0.28%
- Media (-0.2%), Telecommunications (-0.09%), and Automobiles & Parts (-0.53%) stocks are the top performers in the Euro Stoxx 600 today
- Oil & Gas (-1%), Basic Resources (+0.03%), and Technology (-0.58%) 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 0.71x
- 96 stocks in the Euro Stoxx 600 are at 4-week highs while 44 stocks are at 4-week lows
- 115 stocks in the Euro Stoxx 600 are overbought while 8 stocks are oversold according to the 16-day RSI Measure
- Japan is closed today
- Hang Seng ended up +0.97%, the Hang Seng China Enterprise up +1.11%, and the CSI 300 was +0.28%
- Investor sentiment for Hong Kong stocks finished positive with the advance/decline ratio for the Hang Seng closing at 4x
- 3 stocks in the Hang Seng hit 4-week highs while 13 stocks reached 4-week lows
- 1 stocks in the Hang Seng closed overbought while 2 stocks closed oversold according to the 16-day RSI Measure
*Data in Price Return and Updated Real-Time (with a delay), Source: StockDio