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Morning Brief

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

Out of bed and into the red: It's a red screen to start the week as trade fears dominate

May 13, 2019

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Market data as of 7am EST

 

US Stocks Preview Ahead of the Open

  • Global markets are lower this morning with the trade fears dominating sentiment, US futures are lower pre-market with front-month Dow Jones minis -1.28%, S&P 500 minis -1.36% and Nasdaq 100 minis -1.76%
  • President Trump warned China not to retaliate against the US trade sanctions, saying directly to President Xi, "...China will be hurt badly if you don't make a deal because companies will be forced to leave China for other countries."
  • White House Economic Adviser Larry Kudlow said China invited the US for more talks in China, though a firm date has yet to be set
  • Press reports indicate that the 2 leaders could meet at the G-20 summit in about a month to talk directly and try to finalize a deal 
  • Morgan Stanley is telling clients today that the US markets are priced for a  "Goldilocks" scenario in 2019 and, with that, the second half of the year may see all the positive developments of the first half reverse
  • Oil is higher this morning with WTI crude +1.3% in the wake of attacks on ships in the Persian Gulf, with both Saudi Arabia and United Arab Emirates reporting ships attacked, suffering damage; neither country has pointed fingers as to who is behind the attacks
  • The extremely tight labor market is pinching small US companies, with the smallest suffering the most, the WSJ reports today
  • The VIX is  moving down this morning and is currently at 13.21 after closing at 16.04 last week
  • Read more on the VIX: Why Did the VIX Drop After Tariffs Were Hiked? 
  • SPDR S&P 500 ETF Trust (SPY) May 17 OTM Puts,  iShares China Large-Cap ETF (FXI) May 17 OTM Puts and iShares iBoxx $ High Yield Corporate Bond ETF (HYG) August 16 OTM Puts are the most actively traded options contracts in US pre-market trading this morning
  • US 10-Year Treasury Bonds are higher with yields down -4.44 basis points to 2.4228%
  • The US Treasury 2s-10s Spread has widened 0.67 basis points to 0.21%
  • WTI Crude is currently little changed +1.3% to USD$62.66/bbl with the Brent-WTI spread up USD$1.05 to USD$10.65/bbl
  • Gold is currently little changed -0.2% to USD$1283.44/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

  • Marriott International (MAR) reported first quarter earnings that beat consensus.  Marriott posted first quarter EPS of $1.41, beating consensus of $1.34.  First quarter revenue of $5.01 billion trailed consensus of $5.13 billion.  Marriott gave EPS guidance for the second quarter of $1.52 to $1.58 while consensus is $1.62.  Full year EPS guidance of $5.97 to $6.19, consensus is $6.09.  Marriott International 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

  • Motorola Solutions (MSI) received a favorable court ruling related to patents.  The US Patent and Trademark Office upheld Motorola’s patents after Hytera Communications (SZSE:002583)challenged their validity with the Patent Office.  The Patent Office rejected all claims submitted by Hytera in its written ruling.  Motorola Solutions 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.  Hytera Communications is not rated in our Global Top Stock Ideas.
  • Nvidia (NVDA) saw its price target raised to $170 from $148 at Morgan Stanley.  Nvidia’s equal-weight rating was maintained.   Nvidia could deliver upside on its gaming chips business as the bar is set very low there.  Morgan Stanley writes that Nvidia has one of the better secular outlooks among chip stocks.  Nvidia is rated “Top Short” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Information Technology Global Top Stock Ideas.  
  • Walt Disney (DIS) again ruled the box office this past weekend with its “Avengers” film still #1 in ticket sales.  “Avengers” has hauled a total, so far, of $723 million in US ticket sales with a global total of $2.49 billion.  That total leaves it about $300 million behind the all-time top-grossing film, “Avatar.”  Walt Disney is rated “Attractive” 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

  • Boeing (BA) could see its 737 Max aircraft return to service as soon as this summer.  Boeing, however, will have a challenge convincing passengers and airlines that the plane.  Industry watchers agree this will be one of the greatest consumer-relations challenges in decades.   It is likely the grounding will be lifted in June with the planes returning to service later in the summer.  Boeing is rated “Top SHort” in our US Large-Cap Global Top Stock Ideas and “Unattractive” in our US Consumer Discretionary Global Top Stock Ideas.  
  • Linde Plc (LIN) saw positive moves by 2 banks, with Deutsche Bank raising its target and BMO upgrading the stock.  Deutsche Bank hiked its price target to $205 from $190, maintaining its buy rating, saying it sees a solid 2019 ahead.  BMO upgraded Linde to outperform from market perform.  BMO also hiked its price target to $210 from $178.  Linde is not rated in our Global Top Stock Idea
  • Lockheed Martin (LMT) said if India decides to buy its new F-21 fighter jet, Lockheed will not sell the jet to any other country, as it tries to win the mega-order for 114 planes.  Lockheed has said that if it wins the deal, Lockheed will help India to develop its defense industry together with local players.  Lockheed Martin is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Consumer Discretionary Global Top Stock Ideas.  

Global Financial Stocks Trending in the News

  • Citibank (C) is intensely focused on digital banking, convinced that is the best way for it to grow.  Citibank has been shrinking its footprint while other players have expanded.  Citibank added over $1 billion in the first quarter with the vast majority coming from new customers.  More importantly, over half came from people who did not live close to a bank branch, reinforcing its decision to focus on digital and not physical locations.  Citibank is rated “Neutral” in our US Large-Cap Global Top Stock Ideas

Global Commodities & Power Stocks Trending in the News

  • Royal Dutch Shell (LSE:RDSA) was upgraded to buy at HSBC.  Shell is set up for an extended period of growing free cash flow which should lead to greater cash distribution for shareholders.  HSBC is comfortable with Shell’s financial framework and likelihood for greater share buybacks.  Shell is rated “Top Buy” in our European Large-Cap Global Top Stock Ideas and “Attractive” in our United Kingdom All-Cap Global Top Stock Ideas
  • ThyssenKrupp (XTRA:TKA) has abandoned its plan to split itself, separating its steel and capital goods businesses.  Since its announcement in September its stock has fallen 45%, reaching a 15-year low.   ThyssenKrupp is considering a listing of its prized asset, its elevator business.  ThyssenKrupp expects to make a final decision about that listing in the coming months.  ThyssenKrupp is rated “Top Short” in our European Large-Cap Global Top Stock Ideas.
  • Vale (VALE) announced it will take two to three years to reach its 400 million tons target it originally set for 2019.  Vale shuttered 93 million tons of production in the wake of its mine disaster.  Vale indicated little of that production is likely to return this year, pressuring ore iron prices which are about 30% higher.  Vale reiterated its 2019 production target of 307 to 332 million tons of production.  Vale is rated “Attractive” in our Brazil All-Cap Global Stock Ideas

Global Healthcare Stocks Trending in the News

  • Teva (TEVA) is lower after 44 Attorneys General have filed a lawsuit against the company.  Teva is alleged to have artificially inflated prices on generic drugs.  Teva is the largest generic drug maker in the US and the lawsuit alleges it manipulated the prices on over 100 different medications.  The lawsuit was filed in Connecticut and the AG there said the investigation unearthed evidence that implicated 20 companies.  Teva is not rated in our Global Top Stock Ideas.

 

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International Stock Markets Recaps

  • The Euro Stoxx 600 is currently down -0.53%, the FTSE 100 is down -0.07%, the DAX is down -0.78%, and the CAC 40 is down -0.55%
  • Chemicals (-0.38%), Utilities (+0.24%), and Industrial Goods & Services (-0.91%) stocks are the top performers in the Euro Stoxx 600 today
  • Automobiles & Parts (-1.74%), Travel & Leisure (-0.41%), and Personal & Household Goods (-0.52%) 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 0.23x
  • 44 stocks in the Euro Stoxx 600 are at 4-week highs while 121 stocks are at 4-week lows
  • 11 stocks in the Euro Stoxx 600 are overbought while 47 stocks are oversold according to the 16-day RSI Measure
  • The Nikkei 225 finished down --0.72%, the Hang Seng ended up +0.84%, the Hang Seng China Enterprise up +0.79%, and the CSI 300 was -1.65%
  • Investor sentiment for Japanese stocks finished negative with the advance/decline ratio for the Nikkei 225 closing at 0.53x
  • 10 stocks in the Nikkei 225 hit 4-week highs while 131 stocks reached 4-week lows
  • 2 stocks in the Nikkei 225 closed overbought while 63 stocks closed oversold according to the 16-day RSI Measure
  • Hong Kong markets are closed today

 

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

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