Morning Quant Ride Feb 1, 2018

Feb 01, 2018

February 1, 2018

Traders’ Corner

Today we reset our Multi-Factor Quantitative models to reflect market moves this past January (2018). Be on the lookout for our new A-rated and F-Rated stocks by mid-morning!

Asian markets traded mostly higher overnight following gains in the US on Wednesday.  While most focused on the FOMC meeting little from that event impacted share prices on Asia.  European markets were mostly higher midday though often their intraday highs.  Data across the continent was mixed with little in the way of drivers.

US markets closed slightly higher yesterday following two straight days of losses. This morning, our attention will be on our A-rated healthcare stocks; healthcare stocks under-performed the S&P500 yesterday, with the sector closing down 1.45%. Concerns from Tuesday's Amazon/Berkshire/JP Morgan announcement may be overstated.

Yesterday's Fed commentary suggests inflation expectations are for inflation to accelerate this year and reach 2% in the “medium-term”, which is in-line with the Fed's long term target. Fed funds futures, currently, are pricing in three rate hikes this year.

In this environment, where rates are rising concurrently with the potential for expansionary fiscal policy (infrastructure stimulus), investors may want to consider allocations to low beta sectors as high beta sectors significantly outperformed low beta sectors in January 2018. The out-performance was likely a follow-through from the tax reform bill passed in December 2017. Low beta sectors tend to be more defensive than high beta sectors: lower return with lower volatility (and typically higher dividend yields). The current macro environment coupled with the S&P500 5.73% return since the beginning of 2017 does not point to such a dispersion in performance between low beta and high beta sectors. Expect some reversion to the mean over the next few weeks.

S&P 500 January Sector Returns

S&P 500

5.73%

S&P 500 / Consumer Discretionary -SEC

9.34%

S&P 500 / Consumer Staples -SEC

1.59%

S&P 500 / Energy -SEC

3.81%

S&P 500 / Financials -SEC

6.48%

S&P 500 / Health Care -SEC

6.65%

S&P 500 / Industrials -SEC

5.31%

S&P 500 / Information Technology -SEC

7.63%

S&P 500 / Materials -SEC

4.14%

S&P 500 / Real Estate - SEC

-1.89%

S&P 500 / Telecommunications Services -SEC

0.55%

S&P 500 / Utilities -SEC

-3.07%

Our Top Picks in the News

Click headline for story
A Very Strong Earnings Picture (Zacks)
The Investors’ After-Party (Barron's)
The S&P 500's January to Remember Could Make This a Year to Remember (Barron's)

Alibaba (BABA)

Alibaba reports Q3 adjusted EPS $1.63, consensus $1.67 (TheFly)
See more on our Alibaba QuantShot company report from December 5th 

Boston Scientific Corporation (BSX)

Boston Scientific Sees Q1 adj. EPS 30c-32c, consensus 32c (The Fly)

Facebook (FB)

Facebook (FB) PT Raised to $250 at Susquehanna (Street Insider)
See more on our Facebook QuantShot company report from January 10th 

Cigna (CI)

Cigna Issues Upbeat FY18 Outlook- Quick Facts (RTT News)

MasterCard (MA)

MasterCard selected by Bass Pro Shops and Cabela's for co-brand portfolio (The Fly)

Alphabet (GOOGL)

Google's G Suite is no Microsoft killer, but still winning converts (Reuters)
See more on our Alphabet QuantShot company report from January 11th

The Morning Recap

Global Indices

Index

Price

1 Day Return

5 Day Return

MTD

YTD

S&P 500

$ 2,823.81

0.00%

-0.54%

0.00%

5.62%

Russell 2000

$ 1,574.98

0.00%

-1.67%

0.00%

2.57%

DJ Industrial Average

$ 26,149.39

0.00%

-0.92%

0.00%

5.79%

NASDAQ Composite Index

$ 7,411.48

0.00%

0.00%

0.00%

7.36%

CBOE Market Volatility Index

13.40

-

-

-

-

Germany DAX (TR)

€ 13,175.10

-0.11%

-0.82%

-0.12%

2.10%

France CAC 40

€ 5,493.22

0.21%

0.01%

0.20%

3.19%

Japan Nikkei 225

¥ 23,486.11

1.68%

-2.41%

1.68%

1.46%

Hang Seng Index

¥ 32,642.09

-0.75%

0.71%

-0.75%

9.92%

Hang Seng China Enterprises

¥ 13,434.14

-0.94%

1.30%

-0.94%

15.82%

S&P ASX 200

AUD 6,090.10

0.87%

-0.20%

0.87%

-0.45%

Source: FactSet          

Line for QuantShots

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