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Where's that melt-up? Global meltdown rolls on as trade tension grows; VIX surging further, up over 60% this week

May 08, 2019

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Market data as of 7am EST

 

US Stocks

  • Global stocks continue to sell off this morning with risk-off continuing to driven by trade fears; it's yet another morning of risk-off in pre-market trading with front-month Dow Jones minis -0.57%, S&P 500 minis -0.63% and Nasdaq 100 minis -0.76%
  • Chinese negotiators have confirmed they are coming for trade talks over the coming days though it is not clear what could come from these talks
  • Chinese exports unexpectedly fell 2.7%  while they were expected to rise 3%; imports unexpectedly grew 4% while a drop was expected
  • The weak Chinese export data may be driving China to come for more talks this week despite President Trump's barrage of complaining tweets
  • More on US-China: Trump Launched Tweet Barrage at China after they Changed Their Tune on Agreed-to Trade Deal
  • JP Morgan (JPM) CEO Jamie Dimon said interest rates are "extraordinarily low" and added, "4 percent when you are having fairly good growth is not a bad number." 
  • More strong employment data today: JOLTS Jobs Jamboree!! Most Job Openings in a Year, 2.3% Quit Rate Shows Strong Confidence in Economy 
  • German Industrial Production fell less than expected, growing just 0.5% in March while consensus was for a 0.5% fall
  • The VIX is  moving up this morning and is currently at 20.86 after closing at 19.32 yesterday; the VIX closed at 12.86 Friday
  • SPDR S&P 500 ETF Trust (SPY) May 8 OTM Calls & Puts and June 21 OTM Calls & Puts, Financial Select Sector SPDR Fund (XLF) June 21 OTM Puts and iShares China Large-Cap ETF (FXI) May 17 OTM Puts are the most actively traded options contracts in US pre-market trading this morning
  • Wells Fargo strategists are out arguing that yesterday’s sell-off forced volatility-targeting strategies to decrease their exposure to US stocks from 44% to 41%.  This translates to a reduction of USD$10 billion in portfolio value. 
  • The VIX’s jump above 20 is the 16th time since 1991 it has closed above 20 with the S&P 500 holding above its 200-day moving average according to analysis by Bloomberg.  If history is any guide, US stocks should shrug off the recent volatility and resume their upward climb.
  • US 10-Year Treasury Bonds are higher with yields down -2.87 basis points to 2.4279%
  • The US Treasury 2s-10s Spread has narrowed 0.43 basis points to 0.17%
  • WTI Crude is currently down -1.37% to USD$61.4/bbl with the Brent-WTI spread up USD$1.03 to USD$8.63/bbl
  • Gold is currently up 0.42% to USD$1289.87/oz

Stocks Trending in the News

 

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Global Consumer Stocks Trending in the News

  • Coty (COTY) reported net revenue that missed consensus.  Coty fiscal third quarter net revenue of $1.99 billion trailed $2.06 billion.  Fiscal third quarter adjusted EPS of 13 cents came a touch ahead of 12 cents consensus.  Coty reaffirmed guidance for fiscal 2019 of adjusted operating income moderately below fiscal 2018.  Coty is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Consumer Discretionary Global Top Stock Ideas.
  • Office Depot (ODP) reported full year adjusted ebitda that beat consensus.  Office Depot sees full yar adjusted ebitda of $525 million to $550 million while consensus is $525 million.  Full year sales are expected to be between $10.8 billion and $10.9 billion.  Office Depot reported first quarter adjusted EPS of 7 cents, beating 6 cents consensus.  Office Depot is rated “Neutral” in our US SMID-Cap Global Top Stock Ideas and “Neutral” in our US Consumer Discretionary Global Top Stock Ideas.    

Global Information Technology Stocks Trending in the News

  • Electronic Arts (EA) reported profit that beat consensus.  Electronic Arts fiscal fourth quarter adjusted EPS of $1.31 beat consensus of 96 cents.  Revenue of $1.36 billion beat consensus of $1.21 billion.  Electronic Arts gave fiscal first quarter guidance of a 5 cents per share loss, much better than the 23 cents per share loss that is present consensus.  Electronic Arts Arts gave fiscal full year EPS guidance of $5.37, well above $4.51 consensus.  Electronic Arts is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Information Technology Global Top Stock Ideas.  
  • Facebook (FB) COO Sheryl Sandberg spent today meeting with Senators on Capitol Hill as the company awaits news on up to a $5 billion fine from the Federal Trade Commission.  The meetings were set up a long time ago, Facebook said, and have nothing to do with the impending fine.  Sandberg is meeting with members of both parties and Congress discusses whether new privacy and data regulations.  Facebook is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Information Technology Global Top Stock Ideas.
  • New York Times (NYT) reported adjusted earnings that beat consensus.  NY Times first quarter adjusted EPS of 20 cents beat consensus of 9 cents.  Revenue in the quarter was $439 million, in line with $436 million consensus.  NY Times saw 2323,000 net new digital subscribers, with a total of 4.5 million subscribers.  NY Times is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Information Technology Global Top Stock Ideas. 
  • Oracle (ORCL) is alleging that Amazon (AMZN) offered 2 Department of Defense employees jobs while they were working on the $10 billion cloud contract, these allegations are included in its lawsuit.  Oracle says these employees designed the project to be favorable to Amazon’s chances of winning the contract and later were offered a lucrative employment and bonus package.  Oracle has since been eliminated from the competition the winner of which is expected to be announced in July.  Oracle is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Information Technology Global Top Stock Ideas.    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.  
  • Softbank (TSE:9984) stands to reap a huge windfall in the wake of Uber’s IPO due this week.  Softbank could see up to a $3 billion gain in just a matter of 16 months, WSJ highlights.  Softbank bought 15% of Uber for $7.7 billion in early 2018 with its Vision Fund when Uber was valued at $48 billion, it is expected to seek a valuation between $80 billion and $90 billion in its IPO.  This would be Softbank’s Vision Fund’s biggest gain yet.  Softbank is rated “Top Buy” in our Japan Large-Cap Global Top Stock Ideas
  • Walt Disney (DIS) updated its film release schedule in the wake of its acquisition of 21st Century Fox entertainment assets.  The biggest change was Disney moving “Avatar 2” to 2021 from 2020; it was to be its biggest film in 2020.  Additional sequels will also be pushed back with “Avatar 5” coming out in 2027.  Disney informed that the next Star Wars episodes, after “The Rise of Skywalker” in December, will hit theaters in December 2022 and December 2024.  Walt Disney is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Information Technology Global Top Stock Ideas.  
  • Zayo (ZAYO) is being acquired by the funds Digital Colony and EQT Infrastructure fund.  The funds are paying $35 per share, a 32% premium to Tuesday’s close.  The deal values Zayo at $14.2 billion and will see the company taken private.  Zayo reported fiscal third quarter EPS of 15 cents at the same time, while 17 cents was consensus.  Zayo is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Information Technology Global Top Stock Ideas.

Global Industrials Stocks Trending in the News

  • Lyft (LYFT) reported a 95% growth in revenue when it reported its first quarterly results.  Lyft reported $776 million in revenue in the first quarter of the year, a 95% hike that was greater than many analysts expected.  Lyft posted a $1.1 billion loss due to heavy stock-based compensation.  Its adjusted loss was $211.5 million, much better than the $274 million loss expected.  Lyft also announced an expanded partnership with Alphabet’s (GOOGL) Google unit Waymo to work more closely on self-driving cars.  Alphabet is rated “Top Buy” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Information Technology Global Top Stock Ideas.  

Global Commodities & Energy Stocks Trending in the News

  • Marathon Petroleum (MPC) said its MPLX LP is buying Andeavor Logistics in a $9 billion deal.  Marathon Petroleum also said it is not going ahead with the expansion of the Garyville Coker 3 project.  Marathon report a 1 cent per share loss in the first quarter.  Revenue of $28.82 billion trailed $29.5 billion consensus.  First quarter refinery utilization as at 95%, up from 93% a year ago.  Marathon Petroleum is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas
  • Vale (VALE) reported a steep drop in iron ore production in the first quarter.  Vale saw iron ore production drop to 72.9 million tons from 82 million tons a year ago.  The drop reflects the sharp curtailing of production in the wake of its tailings dam disaster.  Vale removed 93 million ton of annual production to focus on safety, most of which has not fully returned.  Vale is rate “Attractive” in our Brazil All-Cap Global Top Stock Ideas. 

Global Healthcare Stocks Trending in the News

  • Regeneron Pharmaceuticals (REGN) reported a huge miss with first quarter adjusted earnings.  Regeneron reported first quarter adjusted EPS of $4.45 while consensus was $5.71.  Revenue of $1.71 billion trailed $1.79 billion consensus.  Regeneron’s CEO said the company will continue to invest in a broad immune-oncology portfolio.  Regeneron Pharmaceuticals is rated “Top Buy” in our US Large-Cap Global Top Stock Ideas

 

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European Stocks

  • The Euro Stoxx 600 is currently down -0.3%, the FTSE 100 is down -0.24%, the DAX is down -0.03%, and the CAC 40 is down -0.15%
  • Real Estate (-0.77%), Utilities (-0.98%), and Telecommunications (-0.14%) stocks are the top performers in the Euro Stoxx 600 today
  • Oil & Gas (+0.11%), Banks (-0.81%), and Chemicals (-0.39%) 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
  • 50 stocks in the Euro Stoxx 600 are at 4-week highs while 161 stocks are at 4-week lows
  • 23 stocks in the Euro Stoxx 600 are overbought while 26 stocks are oversold according to the 16-day RSI Measure
  • The Nikkei 225 finished down --1.46%, the Hang Seng ended down -1.23%, the Hang Seng China Enterprise declined -1.45%, and the CSI 300 was -1.43%
  • Investor sentiment for Japanese stocks finished negative with the advance/decline ratio for the Nikkei 225 closing at 0.08x
  • 26 stocks in the Nikkei 225 hit 4-week highs while 96 stocks reached 4-week lows
  • 4 stocks in the Nikkei 225 closed overbought while 10 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 0.16x
  • 1 stock in the Hang Seng hit its 4-week high while 5 stocks reached 4-week lows
  • 0 stocks in the Hang Seng closed overbought while 3 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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