Bottom-fishing bazaar: Investors scoop up bargains after Trump softens tone on trade, global stocks rising
May 24, 2019
Market data as of 7am EST
US Stocks Preview Ahead of the Open
- Global stocks and US futures are higher on President Trump's softer tone with China, front-month Dow Jones minis are +0.66%, S&P 500 minis +0.67% and Nasdaq 100 minis +0.58%
- President Trump indicated the ban on Huawei could be included in any eventual trade deal, sparking hopes for a path to the end of trade hostilities
- President Trump announced $16 billion in aid to US farmers to help those suffering from the trade war
- Oil is higher this morning with WTI 1.4% higher at $58.72
- US Prime Minister Theresa May announced she will step down after failing to deliver a Brexit solution
- We posted the following yesterday:
- The VIX is little changed this morning and is currently at 16.31 after closing at 16.92 yesterday
- SPDR S&P Oil & Gas Exploration & Production ETF (XOP) Sept 20 OTM Puts SPDR S&P 500 ETF Trust (SPY) May 24 OTM Puts and Energy Select Sector SPDR Fund (XLE) May 31 OTM Calls are the most actively traded options in today's pre-market
- US 10-Year Treasury Bonds are lower with yields up 0.88 basis points to 2.3273%
- The US Treasury 2s-10s Spread has narrowed 0.73 basis points to 0.17%
- WTI Crude is currently down -5.73% to USD$57.71/bbl with the Brent-WTI spread up USD$6.85 to USD$10.76/bbl
- Gold is currently little changed -0.13% to USD$1281.73/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) shares could be worth $3,000 according to a new report from Piper Jaffray. Amazon could reach that level in two to three years, which would be a 65% rise from current levels, the report notes. Amazon could reach this level without any acquisition and at that level, its market cap would approach $1.5 trillion. 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.
- Big Lots (BIG) was downgraded to neutral from overweight at Piper Jaffray. Big Lots’ price target was slashed to $31 from $44 as well. Big Lots imports 21% of the merchandise it sells from China and the ongoing tariffs will hurt profitability. Big Lots is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Consumer Discretionary Global Top Stock Ideas.
- Casino (ENXTPA:CO) and parent company Rallye (ENXTPA:RAL) were placed under credit protection as both struggle under an enormous debt load. Credit protection is a feature of French law allowing a company 6 months to present a restructuring plan. Shares of both were suspended Thursday as the news was published and will resume trading Friday. Casino is rated “Neutral” in our European SMID-Cap Global Top Stock Ideas. Rallye is rated “Neutral” in our European SMID-Cap Global Top Stock Ideas
- Foot Locker (FL) reported first quarter adjusted earnings and same store sales that missed consensus. Foot Locker first quarter adjusted EPS of $1.53 trailed consensus of $1.60. Same store sales grew 4.6%, also trailing consensus of 5.5%. Foot Locker first quarter revenue of $2.08 billion came in line with $2.11 billion consensus. Foot Locker is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Consumer Discretionary Global Top Stock Ideas.
- Natura (NATU3) was placed on “negative watch” by Fitch ratings after announcing it will acquire Avon Products (AVP). Avon Products came to a final agreement with Brazil’s Natura (NATU3) that will see it acquired in a deal valued at more than $2 billion. Fitch is concerned that the combined entity will be very exposed to the declining direct sales business. Natura previously acquired The Body Shoppe chain. Natura is rated “Attractive” in our Brazil All-Cap Global Top Stock Ideas.
- Nissan Motor (TSE:7201) had its credit rating cut by Moody’s. Nissan’s rating was cut to A3 from A2, with Moody’s cited dropping profit and margins over the last 2 years. The downgrade comes in the wake of Nissan being placed in credit watch in February. Nissan is suffering from slumping sales in the US and recently cut its guidance for the year. Nissan Motor Co. is rated “Top Buy” in our Japan Large-Cap Global Top Stock Ideas.
- Tesla (TSLA) shares continue to slide as the downgrades pile up. Earlier in the week, Morgan Stanley gave a bear case scenario for Tesla that included a $10 price target. Its previous bear case target was $97. A number of other brokers have downgraded or written negative comments since, and the stock is down over 7% just this week. Weak demand, saturated market, insufficient capital and a flood of competing models about to hit the market are among the concerns cited. Tesla is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Consumer Discretionary Global Top Stock Ideas.
- Twitter (TWTR) has banned well-known anti-Trump members Brian and Ed Krassenstein. Twitter permanently banned both of them, saying they operated fake accounts and paid for fake interactions. A Twitter spokesman said “Twitter rules apply to everyone” adding that the allegations are grounds for the ban. Twitter is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Information Technology Global Top Stock Ideas
- Yum! Brands (YUM) is planning a large expansion of its Taco Bell unit in India as it seeks new avenues of growth. Taco Bell will add 600 location over the next decade. Yum Brands has 35 Taco Bells in India today. The expansion in India will help Taco Bell grow from 7,500 location today to 9,000 by 2022. Yum Brands is rated “Unattractive” 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
- Facebook (FB) removed a record 2.2 billion fake account in the first quarter of 2019. For comparison, in the fourth quarter of 2018, Facebook removed just over 1 billion. The accounts removed are done so as soon as they are created so they are not captured in official new accounts statistics. Facebook is making a concerted effort to remove fake accounts as it comes under growing criticism. 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) removed Huawei products from its Azure products website. The move by Microsoft comes a week after the US government moved to ban Huawei from the US tech sector. Huawei made a number of products for Microsoft’s Azure Stack products and all have been removed from their catalog. Microsoft has not commented on other moves it will make in relation to the Huawei ban. 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
- Spire Inc (SR) was downgraded today to market perform from outperform at Wells Fargo Securities Spire saw its price target of $92 maintained. With Spire’s recent move higher, the risk/reward scenario at these level is not attractive, hence the downgrade. Any pullback in the stock could be reason to review the rating. Spire is rated “Neutral” in our US Large-Cap Global Top Stock Ideas.
Global Industrials Stocks Trending in the News
- Maersk (CPSE:MAERSK B) said its guidance is subject to “considerable uncertainties” in the face of the ongoing trade hostilities. Maersk said it still expects ebitda of about $5 billion while consensus is $5.5 billion. Maersk expects its volume growth to be in line with the market at 1-3%. Maersk said it has seen a decline in volume in the Pacific and said that could worsen with more tariffs. Maersk is rated “Neutral” in our European Large-Cap Global Top Stock Ideas.
International Stock Markets Recaps
- The Euro Stoxx 600 is currently up +0.8%, the FTSE 100 is higher by +0.72%, the DAX has risen +0.89%, and the CAC 40 is up +0.91%
- Technology (+0.85%), Insurance (+1.25%), and Basic Resources (+1.42%) stocks are the top performers in the Euro Stoxx 600 today
- Telecommunications (+1.04%), Travel & Leisure (-0.01%), and Health Care (+0.59%) stocks are the worst performers in the Euro Stoxx 600 today
- Investor sentiment for European stocks is positive with the advance/decline ratio for the Euro Stoxx 600 currently at 5.32x
- 16 stocks in the Euro Stoxx 600 are at 4-week highs while 231 stocks are at 4-week lows
- 18 stocks in the Euro Stoxx 600 are overbought while 58 stocks are oversold according to the 16-day RSI Measure
- The Nikkei 225 finished down --0.16%, the Hang Seng ended up +0.32%, the Hang Seng China Enterprise up +0.43%, and the CSI 300 was +0.28%
- Investor sentiment for Japanese stocks finished neutral with the advance/decline ratio for the Nikkei 225 closing at 1.16x
- 14 stocks in the Nikkei 225 hit 4-week highs while 50 stocks reached 4-week lows
- 6 stocks in the Nikkei 225 closed overbought while 51 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 2.33x
- 1 stock in the Hang Seng hit 4-week highs while 32 stocks reached 4-week lows
- 1 stock in the Hang Seng closed overbought while 15 stocks closed oversold according to the 16-day RSI Measure
*Data in Price Return and Updated Real-Time (with a delay), Source: StockDio