Now what? Futures lower this morning as risk-appetite wanes amid Trump-induced trade war uncertainties
May 15, 2019
Market data as of 7am EST
US Stocks Preview Ahead of the Open
- US futures and European stocks are not following Asia's lead higher and US futures are lower pre-market with front-month Dow Jones minis -0.22%, S&P 500 minis -0.19% and Nasdaq 100 minis -0.14%
- President Trump and President Xi are due to meet and talk at the G-20 Summit next month in Japan while the US prepares additional tariffs on $300 billion in Chinese imports
- Buying the Dip seems to be alive with Bank of America seeing the biggest inflow since December from clients last week despite the market volatility. Inflows last week totaled nearly USD$4.7 billion.
- According to an analysis by Bloomberg, the ratio of performance between an equally weighted S&P 500 defensive index vs. cyclicals index is at the highest levels since early January. In plain terms, this would suggest defensive stocks are outperforming cyclicals over the past 3 to 4 weeks. We take a different tact and suggest this is part of the low beta rotation we were calling for in late April. This performance is a confirmation of that trend.
- More on US-China: Sabers Rattle and Tariffs Fly - The latest in the US-China trade fight
- China's economy lost steam before the trade war heated up, Bloomberg notes today, adding more stimulus is expected to come given the overall softening being seen there
- What Fed Officials are saying: What are Fed Officials saying as the Trade War Heats Up?
- Top Low Vol Stocks: TOP LOW VOLATILITY STOCKS for what has lately felt like a high volatility market
- Top SMID-Cap Stocks: TOP SMID-CAP STOCKS: Big Opportunity in a Not So Big Package, The Perfect Size For Your Portfolio
- The German economy rebounded in the first quarter of 2019-finally!-growing 0.4%
- The International Energy Agency cut its oil demand forecast for 2019 due to weak fuel consumption in China, Japan and Brazil
- The VIX is little changed this morning and is currently at 18.38 after closing at 18.06 yesterday
- Microsoft May 17 OTM Calls, SPDR S&P Oil & Gas Exploration & Production ETF (XOP) May 17 OTM Puts and SPDR S&P 500 ETF Trust (SPY) May 15 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 -2.66 basis points to 2.3838%
- The US Treasury 2s-10s Spread has narrowed 0.4 basis points to 0.21%
- WTI Crude is currently up 1.21% to USD$61.78/bbl with the Brent-WTI spread down USD$-0.69 to USD$10.21/bbl
- Gold is currently little changed 0.1% to USD$1298.21/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
- Macy’s (M) reported total same store sales growth of +0.7% beating consensus of +0.3%. Macy’s reported same stores sales growth at company owned stores of +0.6% while consensus was for a drop of 0.1%. Macy’s adjusted EPD of 44 cents beat 32 cents consensus. Total sales of $5.5 billion matched consensus. Macy’s is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Consumer Discretionary Global Top Stock Ideas
- Restaurant Brands (QSR) is under pressure from investors to improve performance, the WSJ is highlighting today. Restaurant Brands, the owner of Burger King, Popeyes, and Tim Hortons, saw years of strong growth after Brazil’s 3G Capital acquired it. But growth is stalling and recent promotions have failed to spark sales growth, irking investors seeking better performance. Restaurant Brands is rated “Top Buy” in our Canada All-Cap Global Top Stock Ideas.
Global Information Technology Stocks Trending in the News
- Alibaba (BABA) reported earnings and revenue that beat consensus. Alibaba posted revenue of 93.5 billion yuan, beating consensus of 91.7 billion yuan. Adjusted earnings per share of 8.57 yuan well above consensus of 6.50 yuan. Alibaba provided revenue guidance for the year of 500 billion yuan, trailing the 509 billion yuan. Alibaba said its recommendation-based advertising is working well and driving revenue growth. Full year revenue grew 51% to 376.8 billion yuan. Core commerce business grew 54% to 78.9 billion yuan and cloud revenue grew 76% to 7.7 billion. Alibaba is rated “Top Buy” in our China All-Cap Global Top Stock Ideas
- Applied Materials (AMAT) was upgraded at Susquehanna to positive from neutral. Applied Materials saw its price target hiked to $60 from $34. Susquehanna said through its channel checks it sees “major wins” for Applied Materials in memory design and that should put it on track for EPS of $5 in the second half of 2019. Applied Materials is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Information Technology Global Top Stock Ideas.
- Facebook (FB) said it will not allow people who recently posted terrorist propaganda to use its live streaming service. Facebook said it will have a “one strike” rule with these types of infractions. This is the most concrete move Facebook has made to potentially limit use of its live stream service since the massacre in New Zealand that was streamed live on Facebook. Facebook is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Information Technology Global Top Stock Ideas.
- Microsoft (MSFT) warned a bug in an older version of Windows that it has patched could be used as super-bug. Microsoft said it could be used globally to wreak havoc much in the way the WannaCry worm did 2 years ago. Microsoft added it has not seen anyone use the flaw maliciously yet but now that it has brought it to the public’s attention it expects someone will. Microsoft is rated “Top Buy” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Information Technology Global Top Stock Ideas.
- Tencent (TCEHY, SEHK:700) reported quarterly earnings that beat expectations. Tencent reported net income of 27.21 billion yuan well above 19.4 billion consensus. Net income included 11.1 billion yuan in gains from investee companies. Tencent’s fintech unit saw sales grow 44% to 21.8 billion yuan, this is the first time the company is breaking out those results. Revenue from its online games and messaging unit grew just 4.5% given the lack of approvals for new games from Chinese authorities over the last year. Tencent is rated “Top Buy” in our China All-Cap Global Top Stock Ideas
- Walt Disney (DIS) confirmed that the next installments of “Star Wars,” after the Skywalker installments, will be scripted by the creators of “Game of Thrones.” David Benioff and DB Weiss, creators of “Game of Thrones,” will lead the effort for a film to debut in 2022. With the last season of “Game of Thrones” being met with mixed reviews, the decision to choose them for the next Star Wars films seems like less of a good idea that it would have a few months ago. The last Skywalker-themed film will be released this December. 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 Financials Stocks Trending in the News
- Citigroup (C) is joining with India’s digital payments start-up Paytm to issue the start-up’s first physical credit card. Paytm has 350 million users and is the leader in digital payments in India. Citigroup has been looking for ways to boost its consumer business and partnering with digital start-ups is key to its strategy. Citigroup is rated “Neutral” in our US Large-Cap Global Top Stock Ideas
Global Industrials Stocks Trending in the News
- Boeing (BA) was left to do the final safety assessment of the flight control systems on the 737 Max certification, it has been learned. It is the flight control system that has been implicated in the 2 crashes of the 737 Max. Boeing did not include the MCAS flight control system in the list of critical systems that could cause a catastrophic failure on the plane. Boeing is rated “Top Short” in our US Large-Cap Global Top Stock Ideas and “Unattractive” in our US Industrials Global Top Stock Ideas.
- General Electric (GE) won the most orders in the first quarter for its gas-fired power plants. GE won 6 orders for its advanced HA-class turbines, according to a Reuters report. No other manufacturer won as many in the quarter. GE also won three additional orders that were not included in earnings. General Electric is rated “Top Short” in our US Large-Cap Global Top Stock Ideas and “Top Short” in our US Industrials Global Top Stock Ideas.
Global Healthcare Stocks Trending in the News
- Tilray (TLRY) reported first quarter revenue that beat consensus. Tilray reported first quarter revenue of $23 million, beating consensus of $21.4 million. Tilray reported a first quarter loss of 32 cents per share. Tilray sold 3,012 total kilograms in the first quarter. Tilray is not rated in our Global Top Stock Ideas.
International Stock Markets Recaps
- The Euro Stoxx 600 is currently down -0.28%, the FTSE 100 is down -0.04%, the DAX is down -0.51%, and the CAC 40 is down -0.4%
- Basic Resources (-1.31%), Retail (+0.12%), and Automobiles & Parts (-1.66%) stocks are the top performers in the Euro Stoxx 600 today
- Real Estate (+0.54%), Utilities (-0.19%), and Travel & Leisure (+0.46%) 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 0.49x
- 30 stocks in the Euro Stoxx 600 are at 4-week highs while 122 stocks are at 4-week lows
- 12 stocks in the Euro Stoxx 600 are overbought while 49 stocks are oversold according to the 16-day RSI Measure
- The Nikkei 225 finished up +0.58%, the Hang Seng ended up +0.52%, the Hang Seng China Enterprise up +0.37%, and the CSI 300 was +2.25%
- Investor sentiment for Japanese stocks finished positive with the advance/decline ratio for the Nikkei 225 closing at 1.5x
- 9 stocks in the Nikkei 225 hit 4-week highs while 152 stocks reached 4-week lows
- 3 stocks in the Nikkei 225 closed overbought while 82 stocks closed oversold according to the 16-day RSI Measure
- Investor sentiment for Hong Kong stocks finished positive with the advance/decline ratio for the Hang Seng closing at 1.38x
- 4 stocks in the Hang Seng hit 4-week highs while 44 stocks reached 4-week lows
- 1 stock in the Hang Seng closed overbought while 12 stocks closed oversold according to the 16-day RSI Measure
*Data in Price Return and Updated Real-Time (with a delay), Source: StockDio