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Morning Brief

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

Time to hit snooze...weak earnings reports limit risk appetite, buyers go back to sleep this morning as global stocks drift lower

Apr 30, 2019

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Market data as of 7am EST

 

US Stocks Preview Ahead of the Open

  • Global stocks are drifting lower this morning with weak earnings reports over last 12 hours limiting risk appetite this morning, in pre-market trading front-month Dow Jones minis +0.06%, S&P 500 minis -0.01% and Nasdaq 100 minis -0.09%
  • The US and China are resuming trade talks today in Beijing, read more: US warships in Taiwan Straight can only mean one thing: US-China Trade Negotiations Resume this Week
  • US Small-Cap stocks have lagged large-cap stocks, the WSJ highlights today how a recent surge in the US dollar could help the Russell 2000 index which remains over 8% below its high while larger-cap indices are within 1% of a record
  • This week we like Small-Cap ETFsTop ETF Ideas for the Week: Models Continue Bias Towards US Small-Cap ETFs
  • WeWork, rebranded the We Company, filed for its IPO; it was valued at $47 billion in its most recent round of financing
  • We are recapping the first week of first quarter earnings so far: The Beats Go On! Earnings Continue to Beat Expectations, Consumer Staples Outperform While Utilities Lag
  • First quarter GDP in the EU grew 0.4%, above the 0.3% consensus and up from 0.2% last quarter
  • The VIX is little changed this morning and is currently at 13.21 after closing at 13.11 yesterday
  • VanEck Vectors Gold Miners ETF (GDX) OTM Calls, Coty (COTY) May 17 COTM Calls & Puts and General Electric (GE) May 3 OTM 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 0.18 basis points to 2.527%
  • The US Treasury 2s-10s Spread has widened 0.98 basis points to 0.24%
  • WTI Crude is currently up 0.32% to USD$63.5/bbl with the Brent-WTI spread up USD$0.91 to USD$8.98/bbl
  • Gold is currently up 0.41% to USD$1285.1/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

  • General Motors (GM) reported first quarter adjusted earnings that beat with revenue that trailed expectations.  General Motors first quarter EPS of $1.41 came ahead of $1.10 expected.  Revenue in the first quarter was $34.9 billion while $35.48 billion was expected.  GM’s Cruise unit, focused on self-driving cars, lost $169 million in the quarter and those losses will grow in 2019 as it gets ready to launch a robo-taxi service.  General Motors is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Consumer Discretionary Global Top Stock Ideas
  • Lumber Liquidators (LL) reported a first quarter loss that was worse than expected.  Lumber Liquidators first quarter loss per share was 17 cents, worse than the 13 cents expected.  Net sales for the first quarter came in line at $266.2 million while consensus was for $268 million.  Lumber Liquidators reaffirmed it full year 2019 forecast.  Lumber Liquidators is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Top Short” in our US Consumer Discretionary Global Top Stock Ideas
  • MGM Resorts (MGM) reported first quarter revenue that beat consensus but earnings that trailed.  First quarter adjusted EPS of 5 cents trailed consensus of 21 cents.  MGM first quarter revenue of $3.18 billion came ahead of $3.13 billion consensus.  MGM saw revenue drop a touch in Las Vegas while growing 23% in China.  MGM 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

  • Alphabet (GOOGL) reported first quarter 2019 results that trailed consensus.  Alphabet first quarter revenue ex-TAC of $29.48 billion trailed $30.04 billion consensus.  Adjusted EPS of $11.90 beat $10.65 consensus, the adjusted number does not contain the $1.7 billion EU fine.  The trends continue in the same direction for Alphabet’s Google-growing at a somewhat slower pace with earnings per clicking dropping, 19% in the most recent quarter.  Alphabet is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Information Technology Global Top Stock Ideas.
  • Apple (AAPL) is due to report after the close today.  Investors are keen to see if there is a reason for Apple to continue the 44% run from its low in January.  Investors were spooked by the demand outlook for Apple’s flagship iPhone.  Its foray deeper into services was well received and now investors will get a better idea of what’s to be expected for the rest of 2019.  Revenue is expected to come at about $30.5 billion.  Only 22 of 46 analysts have a buy rating on Apple, the lowest number in over 2 years.  Apple is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Information Technology Global Top Stock Ideas.  
  • Mastercard (MA) delivered first quarter revenue and earnings that beat expectations.  Mastercard first quarter revenue of $3.9 billion beat $3.85 billion consensus.  First quarter adjusted EPS of $1.78 beat $1.66 consensus.  Mastercard first quarter dollar volume and purchase volume both rose 12%.  Mastercard said it expects revenue to grow “in the low teens.”  Mastercard is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Information Technology Global Top Stock Ideas.  
  • McDonalds (MCD) reported first quarter same store sales well above consensus.  McDonald’s first quarter same store sales grew 4.5%, well above the 3% expected.  Total sales grew 5.4%, above 3.5% expected.  First quarter EPS of $1.72 trailed $1.75 expected by a touch.  First quarter revenue of $4.96 billion matched $4.95 billion consensus.  McDonald’s results were helped by strong breakfast sales and its delivery initiatives.  McDonald’s is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Consumer Discretionary Global Top Stock Ideas
  • Western Digital (WDC) reported fiscal third quarter earnings that trailed consensus with revenue in line.  Western Digital’s first quarter EPS of 17 cents was well below the 45 cents consensus.  Revenue of $3.67 billion matched $3.68 billion consensus.  Western Digital said it expands a strong demand environment for the rest of 2019.  Western Digital is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Information Technology Global Top Stock Ideas.

Global Industrial Stocks Trending in the News

  • Boeing’s (BA) problem continue to worsen with the news that an additional sensor on 737 Max aircraft was not working as airlines anticipated because of mistakes from Boeing.  There exists a separate sensor that was not working to back up the MCAS system that is believed to be involved in the 2 737 Max crashes so far.  Boeing put out a statement yesterday that indicated it either missed or overlooked the sensor problem when the plane was certified.  Boeing has not commented on what exactly happened, given the investigation that is underway.  Boeing is rated “Top Buy” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Industrials Global Top Stock Ideas
  • General Electric (GE) reported negative free cash flow from industrial operations that was better than expected.  General Electric reported adjusted negative free cash flow from industrial operations of $1.22 billion, much better than the $2.9 billion negative free cash flow expected.  First quarter adjusted EPS of 14 cents beat 9 cents consensus.  General Electric said, “Power’s better-than-expected performance was principally driven by timing.”  General Electric is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Unattractive” in our US Industrials Global Top Stock Ideas
  • Ingersoll-Rand (IR) reported first quarter earnings and revenue well above consensus.  Ingersoll-Rand said Gardner Denver will combine with Ingersoll-Rand’s industrial division.  Ingersoll-Rand first quarter EPS of 89 cents beat 80 cents expectations.  First quarter revenue of $3.58 billion beat $3.50 billion consensus.  Ingersoll-Rand provided full-year EPS to about $6.35.  Ingersoll-Rand is not rated in our Global Top Stock Ideas.

Global Power & Commodity Stocks Trending in the News

  • Transocean (RIG) reported first quarter results better than expected.  Transocean’s first quarter loss of 30 cents per share was better than the 32 cents loss expected.  Transocean reported a backlog of $12.1 billion, down from $12.5 billion a year ago.  Contract drilling revenue of $754 missed the $763 million consensus.  First quarter rig utilization of 56% was an improvement from 52% a year ago.  Transocean is not rated in our Global Top Stock Ideas

Global Healthcare Stocks Trending in the News

  • Eli Lilly (LLY) reported first quarter earnings and revenue that were largely in line with consensus.  Eli Lilly first quarter EPS of $1.33 came a touch above the $1.30 expectation.  First quarter revenue of $5.09 billion was in line with $5.13 billion consensus.  Eli Lilly gave full year revenue guidance of $22 billion to $22.5 billion.  Full year EPS guidance is $5.60 to $5.70 while present consensus is $5.63.  Eli Lilly is rated “Neutral” in our US Large-Cap Global Top Stock Ideas
  • Pfizer (PFE) reported first quarter earnings and revenue that beat consensus.  Pfizer first quarter EPS was 85 cents while consensus was 76 cents.  Pfizer reported revenue of $13.12 billion in the first quarter, ahead of $12.99 billion consensus.  Pfizer provided full year EPS guidance of $2.83 to $2.93, up from $2.82 to $2.92; consensus is $2.89.  Pfizer is rated “Attractive” in our US Large-Cap Global Top Stock Ideas
 
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International Stock Markets Recap

  • The Euro Stoxx 600 is currently down -0.13%, the FTSE 100 is down -0.17%, the DAX has risen 0%, and the CAC 40 is down -0.29%
  • Banks (-0.67%), Construction & Materials (-0.35%), and Health Care (+0.23%) stocks are the top performers in the Euro Stoxx 600 today
  • Oil & Gas (+0.56%), Retail (+0.29%), and Utilities (-0.02%) 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 0.79x
  • 102 stocks in the Euro Stoxx 600 are at 4-week highs while 45 stocks are at 4-week lows
  • 106 stocks in the Euro Stoxx 600 are overbought while 10 stocks are oversold according to the 16-day RSI Measure
  • The Hang Seng ended down -0.65%, the Hang Seng China Enterprise declined -0.82%, and the CSI 300 was +0.33%
  • Japan is closed for the week
  • Investor sentiment for Hong Kong stocks finished negative with the advance/decline ratio for the Hang Seng closing at 0.14x
  • 4 stocks in the Hang Seng hit 4-week highs while 7 stocks reached 4-week lows
  • 1 stock 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

 

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