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Stay Home! China tells US no interest in talks now, accusing US of "Tricks to Disrupt the Atmosphere"; futures falling

May 17, 2019

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Market data as of 7am EST

 

US Stocks Preview Ahead of the Open

  • Trade tension is ramping back up today with China's declaration and futures are lower with front-month Dow Jones minis -0.53%, S&P 500 minis -0.53% and Nasdaq 100 minis -0.67%
  • China state media said it has little interest in further talks with the US at this time, saying without meaningful moves from the US, there is no reason for anyone to come to China 
  • China also said it will step up stimulus for its economy in response to the tariffs from the US 
  • China accused the US of "tricks to disrupt the atmosphere" with its latest moves
  • Iron Ore traded above $100 this morning as the present supply crunch is not expected to improve any time soon, read more: The Ore Score: What in the World is going on with Iron Ore? 
  • Check out Quantamize on CNBC discussing why we love ALPHABET (GOOGL): click here for video
  • Buybacks for everyone: No Stoppin' It Now! S&P 500 Stock Buybacks Continue at Rapid Pace
  • Options trading: Day Traders are Back! Options Trading is Increasingly their Weapon of Choice
  • University of Michigan Sentiment Index for May prints today and consensus is 97.2
  • SPDR S&P 500 ETF Trust (SPY) May 17 OTM Calls & Puts and Apple (AAPL) May 17 OTM Puts are the most actively traded options in today's pre-market
  • The VIX is moving up this morning and is currently at 16.41 after closing at 15.29 yesterday
  • US 10-Year Treasury Bonds are higher with yields down -1.41 basis points to 2.3803%
  • The US Treasury 2s-10s Spread has widened 0.06 basis points to 0.2%
  • WTI Crude is currently up 1.37% to USD$62.87/bbl with the Brent-WTI spread down USD$-1.14 to USD$11.19/bbl
  • Gold is currently little changed -0.11% to USD$1285.25/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

  • Amazon (AMZN) is becoming one of the biggest investors in UK delivery company Deliveroo.  Amazon led the most recent $575 million round of financing.  Deliveroo competes with Uber’s (UBER) Eats delivery service in London and a number of other European markets.  Deliveroo has raised a total of $1.53 billion but did not disclose a valuation.  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.  Uber is not yet rated on our Global Top Stock Ideas.
  • Dillard’s (DDS) reported first quarter net sales that trailed consensus.  Dillard’s posted first quarter net sales of $1.47 billion while consensus was for $1.5 billion.  First quarter EPS of $2.99 beat consensus of $2.89.  Dillard’s delivered same store sales growth of 0%, behind the 2% expected, while total sales grew 1%, also trailing consensus of 2%.  Dillard’s is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Consumer Discretionary Global Top Stock Ideas
  • Tesla (TSLA) CEO Elon Musk sent an email to all Tesla employees saying that he and its new CFO will now personally examine all expense in a “hardcore” effort to cut costs.  The aggressive moves come in the wake of huge losses last quarter.  Musk noted that the $2.2 billion cash balance Tesla has will only last 10 months at its current burn rate requiring a focus on containing costs like never before.  Tesla is rated “Unattracative” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Consumer Discretionary Global Top Stock Ideas.  Uber is not yet rated on our Global Top Stock Ideas.
  • Walmart (WMT) was upgraded to accumulate from hold at Gordon Haskett.  Walmart’s price target was raised to $115 from $99.  Walmart is executing well with an e-commerce strategy that is showing results.  Walmart is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Consumer Staples Global Top Stock Ideas.  Uber is not yet rated on our Global Top Stock Ideas.

Global Information Technology Stocks Trending in the News

  • Applied Materials (AMAT) was upgraded to buy from neutral at B. Riley FBR.  Applied Materials saw its price target hiked to $54 from $46 as well.   B. Riley sees increased confidence that near-term stability for Applied Materials has arrived and that the overall situation is improving.  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.  
  • Baidu (BIDU) reported its first quarterly loss since its IPO in 2005.  Baidu posted a 327 million yuan loss in the quarter.  Baidu also provided guidance that trails consensus, saying it expects revenue in the coming quarter to be 25.1 billion to 26.6 billion yuan, well below consensus of 29.3 billion yuan.  Baidu is facing multiple headwinds as it faces a slowing China.  Baidu is rated “neutral” in our China All-Cap Global Top Stock Ideas
  • Hewlett Packard Enterprise (HPE) announced it agreed to acquire Cray Inc in a $1.4 billion deal.  Cray (CRAY) shareholders will receive $35 per share, a 17% premium to yesterday’s close.  Cray is a maker of supercomputers that Hewlett Packard Enterprise is acquiring to bolster its position in the market as it focuses on artificial intelligence and distributed computing.  This is Hewlett Packard Enterprise’s biggest deal since it was created in 2015 from the breakup of Hewlett Packard.  Hewlett Packard Enterprise is rated “Top Short” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Information Technology Global Top Stock Ideas.  Cray Inc is rated “Neutral” in our US SMID-Cap Global Top Stock Ideas and “Neutral” in our US Information Technology Global Top Stock Ideas.  
  • Nvidia (NVDA) reported first quarter revenue and earnings that beat consensus.  Nvidia reported first quarter EPD of 88 cents, beating 81 cents consensus.  Revenue of $2.22 billion came ahead of $2.19 billion.  Nvidia provided second quarter revenue guidance of $2.5 billion to $2.6 billion while consensus is presently $2.53 billion.  Nvidia is rated “Top Short” in our US Large-Cap Global Top Stock Ideas and “Unattractive” in our US Information Technology Global Top Stock Ideas.  

Global Industrials Stocks Trending in the News

  • Air Canada (TSX:AC) announced that it is in exclusive talks to acquire Transat Airlines (TSX:TRZ) for $387 million.  Air Canada said it is offering a 23% premium for Transat.  Air Canada’s offer is over twice the price that Transat was trading at on April 30th when it announced it was in talks with a potential suitor.  Air Canada is rated “Neutral” in our Canada All-Cap Global Top Stock Ideas.  Transat Airlines is not rated in our Global Top Stock Ideas.
  • Boeing (BA) has completed the software development and updated the software used on the 737 Max.  Boeing has flown 207 flights for a total of 360 hours of flight time.  Boeing is providing the FAA with additional requested data as the FAA reviews updated training materials.  Boeing is hoping to schedule certification flights soon with the FAA.  Boeing is rated “Top Short” in our US Large-Cap Global Top Stock Ideas and “Unattractive” in our US Industrials Global Top Stock Ideas.  
  • Deere & Co. (DE) reported earnings that missed consensus and cut its guidance as trade tension starts to be felt further.   Fiscal second quarter EPS of $3.52 trailing consensus of $3.62.  Deere net sales in the second quarter was $11.34 billion, ahead of $10.18 billion.  Deere provided full year sales growth guidance of 5%, a cut from previous 7% guidance.  Deere sees full year net income of $3.3 billion, down from $3.56 billion.  Deere & Co. is rated “Top Short” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Industrials Global Top Stock Ideas.  

Global Commodity Stocks Trending in the News

  • Vale (VALE) alerted authorities that another of its tailings dams could collapse as soon as next week.  Vale informed that a tailings dams at a mine in Barao de Cocais in southeast Brazil could collapse due to instability at a nearby inactive mine.  Vale said residents in the vicinity of the 280-foot high dam have been evacuated.  This comes in the wake of Vale’s dam collapse a few months ago in which 270 people were killed.  Vale is rated “Neutral” in our Brazil All-Cap Global Top Stock Ideas. 

 

 

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International Stock Markets Recaps

  • The Euro Stoxx 600 is currently down -0.63%, the FTSE 100 is down -0.24%, the DAX is down -0.88%, and the CAC 40 is down -0.46%
  • Chemicals (-0.6%), Technology (-0.87%), and Insurance (-0.8%) stocks are the top performers in the Euro Stoxx 600 today
  • Automobiles & Parts (-1.77%), Travel & Leisure (-0.09%), 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 0.22x
  • 91 stocks in the Euro Stoxx 600 are at 4-week highs while 42 stocks are at 4-week lows
  • 41 stocks in the Euro Stoxx 600 are overbought while 25 stocks are oversold according to the 16-day RSI Measure
  • The Nikkei 225 finished up +0.89%, the Hang Seng ended down -1.16%, the Hang Seng China Enterprise declined -1.14%, and the CSI 300 was -2.54%
  • Investor sentiment for Japanese stocks finished positive with the advance/decline ratio for the Nikkei 225 closing at 2.26x
  • 11 stocks in the Nikkei 225 hit 4-week highs while 40 stocks reached 4-week lows
  • 4 stocks in the Nikkei 225 closed overbought while 73 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 0.11x
  • 4 stocks in the Hang Seng hit 4-week highs while 10 stocks reached 4-week lows
  • 0 stocks in the Hang Seng closed overbought while 8 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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