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Morning Brief

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Morning Quant Ride

Jul 11, 2018

US Stocks

  • Last night, the US government announced plans to begin the process of imposing tariffs on another USD$200bn in imports from China
  • The announcement of plans to impose tariffs on another USD$200bn in imports from China is in addition to plans to impose additional tariffs on USD$16bn in imports from China: the total combined tariffs (including the tariffs on USD$34bn in imports from China that was instituted a few weeks ago) would raise prices on nearly half off everything the United States buys from China
  • Global stocks are declining on this news with US stocks index futures pointing to a negative open in NY: Dow Jones minis -0.83%, S&P500 minis -0.66% and Nasdaq 100 minis -0.77%
  • The VIX is currently at 13.80 after closing at 12.64 yesterday
  • XRT July 27 OTM Puts, SPY OTM July 20 Calls , QQQ August 17 OTM Puts, and Apple (AAPL) July 20 and August OTM Puts are the most heavily traded options contracts in the US pre-market
  • The yield on the US 10-year government bond is little changed at 2.840%
  • Global sovereign bonds don’t appear to in synch with the risk-off mood in global stocks as the average move on 10-year sovereign yields in the range of 1 to 2 basis points
  • The USD$ Index (DXY) is +0.20% with a weakening EUR€ (-0.34% to 1.1704), GBP£ (-0.24% to 1.3243) and JPY¥ (-0.21% to 111.23) driving strength in the greenback
  • CNY-USD is down 0.64% to 6.6768% on the news about escalating Sino-US trade tensions
  • Global oil prices are declining this morning on a combination of fears that global growth maybe impacted by Sino-US trade disputes and news that Libya’s national oil company lifted supply constraints after regaining control of key ports: WTI -0.89% to USD$73.47/bbl and Brent -2.41% to USD$76.95/bbl
  • The Brent-WTI spread now sits at USD$2.3926/bbl, the lowest level since mid-CY2017

International Stocks

  • European stocks are selling off this AM, snapping a 6-day winning streak, over rising Sini-US trade tensions: Euro Stoxx 600 -1.12%, FTSE 100 -1.15%, DAX -1.24%, and CAC 40 -1.19%
  • Materials, autos and tech stocks are leading the drop in European stocks this AM
  • VSTOXX, the European stocks equivalent of the VIX, is at 14.1934 after closing at 12.9935 yesterday
  • Asian stocks closed lower following news that the US government is moving forward with plans to impose 10% tariffs on another SUD$200bn in imports from China: Nikkei 225 -1.19%,  CSI 300 -1.73%, HSI -1.29% and Hang Seng China Enterprise -1.54%
  • Investors continue to favor Chinese stocks that are exposed to China’s middle class and should be resilient to external trade fights: stocks in both consumer and healthcare sectors.

Cryptos

  • Malta based blockchain company, Palladium, is launching the world’s first initial convertible coin offering (ICCO). The launch began yesterday at the Malta Stock Exchange. Palladium’s mission is to provide customers with a unified platform to manage multiple asset classes – both in fiat, and cryptocurrency. The press release mentions that the tokenized convertible warrant has been approved by the Malta Financial Services Authority (MFSA) and will be subject to EU rules. Investors will have the opportunity to convert their tokens to shares of Palladium after three years.
  • Bitfinex has chosen Market Synergy as a platform for its institutional offering. Market Synergy has reportedly built a bespoke network for Bitfinex for institutional investors. The platform will provide outsourced connectivity and hosting services as well as a FIX feed and ISP link to the digital asset gateway.
  • A private web browser for Android, Opera, will include a built-in crypto wallet. Opera’s web and mobile browser include anti-cryptojacking software. The crypto wallet will support Ethereum Web3 API, which will be the first major browser to open to Web 3.0 according to project manager Charles Hamel. Opera currently has 3.5% usage for all browsers globally according to June 2018 data.

*Data in Total Return; Source: S&P Capital IQ

S&P 500 Sector Performance

*Data in price return.

Conviction Buy Laggards From Yesterday We Are Watching Today

Click name for Q-Factor rating and financial data.

B&G Foods, Inc. - 21.01% off its 52wkH on 12/04/2017, reports earnings on 08/02/2018

Expeditors International of Washington, Inc. - 6.63% off its 52wkH on 06/12/2018, reports earnings on 08/07/2018

Louisiana-Pacific Corporation - 9.78% off its 52wkH on 04/17/2018, reports earnings on 08/01/2018

Malibu Boats, Inc. - 7.06% off its 52wkH on 06/15/2018, reports earnings on 09/07/2018

MCBC Holdings, Inc. - 7.07% off its 52wkH on 05/18/2018, reports earnings on 09/07/2018

The Greenbrier Companies, Inc. - 4.46% off its 52wkH on 07/09/2018, reports earnings on 10/25/2018

Stocks Trending in the News

Click name for Q-Factor rating and financial data.

  • Airbus SE (AIR.FR) and Boeing CO (BA) will split an order for 19 jets from Singapore Airlines Ltd (SIA.SP). Singapore Airlines will buy 14 A320neo jets from Airbus, and six Boeing 787-9 Dreamliners, with the total deal worth $3.1 billion  
  • Alphabet’s (GOOGL) Google subsidiary may be facing a multi-billion dollar fine from EU antitrust regulators over the company’s abuse of market position against Android OS
  • Conn’s Inc (CONN) has been upgraded to buy from a neutral rating at Stifel, citing credit segment improvement as the driver for the upgrade. Shares of Conn’s Inc are up 3.06% to $37.00 before the open
  • MSC Industrial Direct (MSM) reported 3Q2018 EPS that was relatively in-line with expectations ($1.41 vs $1.40 projected) but provided 4Q2018 EPS guidance that was lower than forecasted ($1.26-$1.32 vs $1.36 anticipated). Shares of MSC Industrial are down 2.59% to $82.45 pre-market
  • Netflix (NFLX) has been given a neutral rating a Nomura, with a price target set at $370. Shares of Netflix are down 0.71% to $412.67 following this development
  • Pfizer Inc (PFE) announced after the market close yesterday that it will be deferring drug price increases, following CEO Ian Read’s meeting with President Trump. 
  • Tencent’s (SEHK: 700) price target has been cut a Nomura, from HK$520 to HK$492, with disappointing mobile gaming revenue being the catalyst for the downgrade. Shares of Tencent traded 1.9% lower today 
  • Twenty-First Century Fox (FOXA) has secured a $32.5 billion deal to acquire Sky PLC, rivaling Comcast Corp’s (CMCSA) offer for the British media network

Cryptocurrencies Today

Data in Total Return as of Previous Day's EOD, Source: S&P Capital IQ

Stock Movers

Conviction Buy Winners and Losers

On Mobile/Tablet scroll to the right

Winners  Ticker Sector Industry 1 Day Return 5 Day Return  YTD
Ollie's Bargain Outlet Holdings, Inc. OLLI Consumer Discretionary General Merchandise Stores 3.30% 3.23% 41.22%
Micron Technology, Inc. MU Information Technology Semiconductors 2.63% 5.49% 35.55%
The Procter & Gamble Company PG Consumer Staples Household Products 2.52% 0.77% -13.13%
Church & Dwight Co., Inc. CHD Consumer Staples Household Products 1.91% 0.29% 8.57%
AbbVie Inc. ABBV Healthcare Biotechnology 1.85% 4.61% 2.20%
Losers Ticker Sector Industry 1 Day Return 5 Day Return  YTD
The J. M. Smucker Company SJM Consumer Staples Packaged Foods and Meats -1.60% -1.36% 1.54%
McCormick & Company, Incorporated MKC Consumer Staples Packaged Foods and Meats -1.47% -0.17% 1.58%
Zoetis Inc. ZTS Healthcare Pharmaceuticals -1.45% 0.08% 1.21%
Fortive Corporation FTV Industrials Industrial Machinery -0.98% -0.09% -0.06%
Chemed Corporation CHE Healthcare Healthcare Services -0.010363014 -0.0043133 -0.002921

Source: S&P Capital IQ

Conviction Short Winners and Losers

On Mobile/Tablet scroll to the right

Winners Ticker Sector Industry 1 Day Return 5 Day Return  YTD
Global Blood Therapeutics, Inc. GBT Healthcare Biotechnology -6.56% -5.25% -10.18%
Loxo Oncology, Inc. LOXO Healthcare Biotechnology -5.51% -6.12% 1.36%
DocuSign, Inc. DOCU Information Technology Internet Software and Services -5.38% -4.12% -1.10%
Esperion Therapeutics, Inc. ESPR Healthcare Biotechnology -5.27% -5.76% 6.02%
Spark Therapeutics, Inc. ONCE Healthcare Biotechnology -4.62% -0.38% 6.48%
Losers Ticker Sector Industry 1 Day Return 5 Day Return  YTD
Longfin Corp. LFIN Financials Financial Exchanges and Data 7.59% 38.21% -84.90%
Pluralsight, Inc. PS Information Technology Application Software 2.83% -8.38% 0.00%
United States Steel Corporation X Materials Steel 2.81% 4.43% 3.81%
Coty Inc. COTY Consumer Staples Personal Products 2.34% 1.91% -27.40%
Sage Therapeutics, Inc. SAGE Healthcare Biotechnology 2.12% 3.25% -0.54%

Source: S&P Capital IQ

Events Calendar

On Mobile/Tablet scroll to the right

Company Name Ticker Event Date Event Type Q-Factor Score
Fastenal Company FAST 7/11/2018 Earnings Release Date US Large-Cap: B, US Industrials: B
Bank of the Ozarks OZRK 7/11/2018 Earnings Release Date US Large-Cap: C
Delta Air Lines, Inc. DAL 7/11/2018 Estimated Earnings Release Date US Large-Cap: C, US Industrials: B
Commerce Bancshares, Inc. CBSH 7/12/2018 Earnings Release Date US Large-Cap: B
Cintas Corporation CTAS 7/12/2018 Estimated Earnings Release Date US Large-Cap: A, US Industrials: B
YUM! Brands, Inc. YUM 7/12/2018 Estimated Earnings Release Date US Large-Cap: C, US Consumer Discretionary: B
JPMorgan Chase & Co. JPM 7/13/2018 Earnings Release Date US Large-Cap: B
The PNC Financial Services Group, Inc. PNC 7/13/2018 Earnings Release Date US Large-Cap: C
Citigroup Inc. C 7/13/2018 Earnings Release Date US Large-Cap: B
Wells Fargo & Company WFC 7/13/2018 Earnings Release Date US Large-Cap: D
First Republic Bank FRC 7/13/2018 Earnings Release Date US Large-Cap: C
PacWest Bancorp PACW 7/15/2018 Estimated Earnings Release Date US Large-Cap: B
The Charles Schwab Corporation SCHW 7/15/2018 Estimated Earnings Release Date US Large-Cap: C
HK Electric Investments and HK Electric Investments Limited SEHK:2638 7/15/2018 Estimated Earnings Release Date China All-Cap: B
Bank of America Corporation BAC 7/16/2018 Earnings Release Date US Large-Cap: C
BlackRock, Inc. BLK 7/16/2018 Earnings Release Date US Large-Cap: A
Netflix, Inc. NFLX 7/16/2018 Earnings Release Date US Large-Cap: C, US Consumer Discretionary: B
The Progressive Corporation PGR 7/16/2018 Estimated Earnings Release Date US Large-Cap: A
J.B. Hunt Transport Services, Inc. JBHT 7/16/2018 Estimated Earnings Release Date US Large-Cap: B, US Industrials: A
Johnson & Johnson JNJ 7/16/2018 Estimated Earnings Release Date US Large-Cap: C
Omnicom Group Inc. OMC 7/16/2018 Estimated Earnings Release Date US Large-Cap: B, US Consumer Discretionary: B
Altaba Inc. AABA 7/16/2018 Estimated Earnings Release Date US Large-Cap: A, US Information Technology: B
Prologis, Inc. PLD 7/16/2018 Estimated Earnings Release Date US Large-Cap: C
Comerica Incorporated CMA 7/17/2018 Earnings Release Date US Large-Cap: A
UnitedHealth Group Incorporated UNH 7/17/2018 Earnings Release Date US Large-Cap: A