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Easy Money: Global markets rise on hopes for central banks stimulus this week

Jun 18, 2019

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Market data as of 7am EST

 

US Stocks Preview Ahead of the Open

  • Hopes for easy money are sending global markets and US futures higher this morning, front-month Dow Jones minis are +0.42%, S&P 500 minis +0.45% and Nasdaq 100 minis +0.85%
  • President Trump complained that both the EU and China are weakening their currencies to gain economic advantage
  • European Central Bank officials are considering a rate cut as their first stimulus action if it is warranted, Bloomberg reports
  • The Federal Reserve meets this week and despite all the talk over an interest rate cut, a cut is not expected on Wednesday
  • Central Bank decisions will also come in Japan, England, Brazil, Norway, Taiwan, and Indonesia
  • A Bank of America Merrill Lynch survey shows money managers are as pessimistic as ever, with stock allocations recently dropping the most ever and cash holdings the highest since 2011
  • German economic confidence outlook sunk much more than expected in June to -21.1 as the German Central Bank predicts the eocnomy will contract this quarter
  • Home builders' sentiment unexpectedly fell in JuneBuilders Getting Bummed Out: Home Builders Sentiment unexpectedly drops in June, defying expectations for improvement
  • Ready for downside? How well are stock investors positioned for downside? Better than it appears... 
  • US Housing Starts for May is due today and growth of 0.4% is expected
  • US Building Permits for May is due today and growth of 0.2% is expected
  • The Chief Executive of Hong Kong personally apologized for the unrest there but will not resign, read more: Hong Kong "suspends," but doesn't scrap, proposed extradition law; over a quarter of the residents take to streets in protest
  • iShares MSCI Emerging Markets ETF (EEM) June 21 OTM Calls & Puts, Facebook (FB) June 21 OTM Calls and iShares MSCI Brazil ETF (EWZ) July 21 OTM Calls are the most actively traded options in today's pre-market
  • The VIX is little changed this morning and is currently at 15.62 after closing at 15.35 yesterday
  • US 10-Year Treasury Bonds are higher with yields down -4.33 basis points to 2.0509%
  • The US Treasury 2s-10s Spread has narrowed 1.43 basis points to 0.21%
  • WTI Crude is currently down -1.1% to USD$51.93/bbl with the Brent-WTI spread up USD$0.48 to USD$8.86/bbl
  • Gold is currently up 0.45% to USD$1345.64/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

  • Lennar (LEN) saw its stock downgraded to market perform from outperform at Raymond James.  Lennar also saw its price target cut to $55 which implies just 4% upside.  The unexpected drop in homebuilders sentiment on Monday was cited in the downgrade of Lennar.  Lennar is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Consumer Discretionary Global Top Stock Ideas.
  • Sotheby’s (BID) is being acquired and taken private by media billionaire Patrick Drahi in a $2.7 billion deal.  Drahi is paying $57 to acquire the 275-year-old firm.  The offer for Sotheby’s is a 60% premium to Friday’s close.  Sotheby’s will now join auction house Christie’s as a private company, with both in the hands of French billionaires.  Sotheby’s is rated “Attractive” in our US SMID-Cap Global Top Stock Ideas and “Neutral” in our US Consumer Discretionary Global Top Stock Ideas.
  • Tesla (TSLA) is revamping its Asian structure to focus more on China.  Tesla will get rid of its Asia Pacific unit and create a new division focused on greater China.  China is key to Tesla’s future as it prepares to start manufacturing cars in China.  Tesla’s factory in Shanghai is due to start production later in the year.  Tesla is rated “Top Short” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Consumer Discretionary Global Top Stock Ideas.

Global Information Technology Stocks Trending in the News

  • Apple (AAPL) saw its revenue estimates cut at KeyBanc Capital Markets which cited “ongoing softness” in iPhone sales.  KeyBanc now expects iPhone sales growth of only 2% in 2020, down from 5%.  KeyBanc said it sees iPhone demand that has stabilized but has serious doubts about any time in 2020.  iPhones accounted for about 60% of Apple’s revenue n 2018.  Apple 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) officially unveiled plans for its own cryptocurrency called Libra.  Facebook is promising a secure blockchain-based system backed by hard assets and designed for mainstream use.  Facebook has teamed up with a number of large companies to launch the coin.  Facebook will create a regulated subsidiary called Clariba for this new business, separating the social and financial data within the company.  Calibra will create a crypto wallet to pay for things and send money using Libra.  Facebook is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Information Technology Global Top Stock Ideas.  Fox is not rated in our Global Top Stock Ideas.
  • MoneyGram International (MGI) saw blockchain-technology company Ripple take a stake in it with options to buy more.  Ripple invested $30 million with warrants to buy $20 million more.  MoneyGram will use Ripple’s xRapid as part of its cross-border international payment system.  The initial contract is for a two-year term.  MoneyGram is rated “Neutral” in our US SMID-Cap Global Top Stock Ideas and “Neutral” in our US Information Technology Global Top Stock Ideas.  
  • Oracle (ORCL) saw its stock downgraded at Macquarie to neutral from outperform ahead of reporting results Wednesday.  Macquarie said that through its channel checks it sees softening demand toward the end of the quarter.  Also, Oracles’s $10 billion per quarter stock buybacks are due to end within a quarter or two and it is not clear how much in buybacks there will be after that.  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.  

Global Industrials Stocks Trending in the News

  • Boeing (BA) exited its plane order drought with a new order for 787s.  Korean Air (KOSE:A003490) placed an order for 20 787s at the Paris Air Show ending Boeing’s 2-month dry spell for orders.  Boeing has not received any orders as it dealt with its 737 Max grounding over the last 2 months.  Boeing is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Unattractive” in our US Industrials Global Top Stock Ideas.   
  • Embraer (ERJ) announced a $1.9 billion jet order from United Airlines (UAL) at the Paris Air Show.  United is buying 20 firm aircraft with the option for 19 more.  United is replacing older regional jets with this order and expects to start receiving deliveries soon.  Embraer has won over 80% of all orders in the 70-76 seat category since 2013.  Embraer is rated “Neutral” in our Brazil All-Cap Global Top Stock Ideas.  United Airlines is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Industrials Global Top Stock Ideas
  • FedEx (FDX) will offer package drop-off services at Dollar General (DG) stores starting late summer.  FedEx will initially offer the service at 1,500 Dollar General stores and later expand it to all 8,000 stores.  Once in all Dollar General stores, 90% of Americans will be within 5 miles of a FedEx retails location.  FedEx is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Industrials Global Top Stock Ideas.  Dollar General is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Consumer Discretionary Global Top Stock Ideas.

Global Financial Stocks Trending in the News

  • Prosperity Bancshares (PB) has agreed to acquire LegacyTexas Financial Group (LTXB) in a cash and stock transaction valued at $2.1 billion.  LegacyTexas has 42 locations in Texas and the deal will create the second largest bank in Texas.  Prosperity said its greater size will allow it to better serve customers.  Prosperity’s CEO said the bank is very much in the “M&A game” now and that could see it sitting on either side of the table, meaning acquirer or acquiree.  Prosperity Bancshares is rated “Neutral” in our US Large-Cap Global Top Stock Ideas.  LegacyTexas Financial Group is rated “Neutral” in our US SMID-Cap Global Top Stock Ideas.

Global Healthcare Stocks Trending in the News

  • Teva Pharmaceuticals (TEVA) had its price target cut at Bernstein to $11 from $17.  Bernstein writes that there is no reason to own the stock at this point.  Teva needs to resolve its legal issues first before investors should consider owning the stock, at 13x FCF the stock is not cheap, in Bernstein’s view.  Teva is not rated in our Global Top Stock Ideas.

 

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International Stock Markets Recaps

  • The Euro Stoxx 600 is currently up +0.93%, the FTSE 100 is higher by +0.72%, the DAX has risen +1.08%, and the CAC 40 is up +1.41%
  • Utilities (+2.04%), Health Care (+1.55%), and Personal & Household Goods (+1.3%) stocks are the top performers in the Euro Stoxx 600 today
  • Banks (-0.12%), Travel & Leisure (+0.04%), and Automobiles & Parts (+0.26%) 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 3x
  • 91 stocks in the Euro Stoxx 600 are at 4-week highs while 35 stocks are at 4-week lows
  • 32 stocks in the Euro Stoxx 600 are overbought while 15 stocks are oversold according to the 16-day RSI Measure
  • The Nikkei 225 finished down --0.72%, the Hang Seng ended up +1%, the Hang Seng China Enterprise up +0.76%, and the CSI 300 was +0.35%
  • Investor sentiment for Japanese stocks finished negative with the advance/decline ratio for the Nikkei 225 closing at 0.27x
  • 13 stocks in the Nikkei 225 hit 4-week highs while 12 stocks reached 4-week lows
  • 2 stocks in the Nikkei 225 closed overbought while 3 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 7.33x
  • 4 stocks in the Hang Seng hit 4-week highs while 2 stocks reached 4-week lows
  • 1 stock in the Hang Seng closed overbought while 0 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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