US Stocks
- Global stocks are declining to start the week after rising tensions between the United States and Saudi Arabia escalated over the weekend
- US stocks index futures are dropping ahead of the open in NY with the Dow Jones minis –0.40%, S&P500 minis –0.50% and Nasdaq 100 minis –0.81%
- Tensions between Washington and Beijing continue to escalate following comments by US President Trump that the US may impose further tariffs while China ambassador to the US, Cui Tiankai, suggests China has no option but to respond US escalations
- US Treasury Secretary Steven Mnuchin is looking for a currency clause that prevents a competitive devaluation to be included in trade discussion with Japanese officials
- According to Consensus at the IMF World Economic Council, the global economy is hitting a plateau with CY2020 growth expected to be notably weaker
- The VIX is little changed this morning and is currently at 22.24 after closing at 21.31 on Friday
- SPY November 02 OTM Calls & October 18 OTM Puts, Bank of America (BAC) October 19 OTM Calls, EEM December 2018 OTM Puts and KRE November 16 OTM Puts are the most heavily traded options contracts in the US pre-market
- US 10-Year Treasury Bonds are higher with yields down -1.31 basis points to 3.1482%
- The US Treasury 2s-10s Spread has narrowed 0.08 basis points to 0.31%
- WTI Crude is currently up 0.52% to USD$71.34/bbl with the Brent-WTI spread little changed USD$0.22 to USD$10.13/bbl
- Gold is currently up 1.11% to USD$1230.61/oz
- Global oil prices are surging following a response by Saudi Arabia that it would retaliate against punitive measures related to the disappearance of Saudi journalist and government critic Jamal Kashoggi
Stocks Trending in the News
- Apple (AAPL) shipped new phones with battery life problems, according to a report in Forbes. The article highlights a raft of problems that were shipped with the newest iPhones, most of which have since been fixed, but not the battery performance. Apple’s newest iPhones were tested in a controlled environment and its batteries performed terribly in the Forbes tests. Apple is rated is rated ‘Top Buy’ in our US Large-Cap Global Top Stock Ideas and ‘Neutral’ in our US Industrials Global Top Stock Ideas.
- Bank of America (BAC) reported 3Q earnings of 66 cents per share with FICC ex-DVA trading coming at USD$2.1bn versus USD$2.08bn expected. Bank of America is flat in pre-market trading after reporting total revenue of USD$22.93bn versus USD$22.67bn expected. Bank of America is rated ‘Neutral’ in our US Large-Cap Global Top Stock Ideas.
- Deutsche Boerse (DB1 GR) suffered technical glitches today and saw its market open with a 1-hour delay. Deutsche Boerse had technical problems with its Xetra T7 protocol, this is the second time this year Deutsche Boerse has had technical problems with its exchange. Deutsche Boerse is trading 0.50% lower at 109.80. Deutsche Boerse is rated ‘Attractive’ in our European Large-Cap Global Top Stock Ideas.
- Harris Corp (HRS) and L3 Technologies (LLL) have combined to create the sixth largest defense contractor in the US. The combined company will be focused on defense communication and technology, both Harris and L3 presently get two-thirds of its revenue from the US Government. The new company’s scale will allow it to better compete. Harris is rated ‘Attractive’ in our US Large-Cap Global Top Stock Ideas and ‘Neutral’ in our US Industrials Global Top Stock Ideas, L3 is rated ‘Attractive’ in our US Large-cap Global Top Stock Ideas and ‘Unattractive’ in our US Industrials Global Top Stock Ideas.
- JP Morgan (JPM) CEO Jamie Dimon is the latest CEO to cancel his appearance at Saudi Arabia’s “Davos in the Desert” conference. The JP Morgan CEO canceled in the wake of questions surrounding the murder of Turkish journalist Jamal Khashoggi. While JP Moran has canceled its appearance, the US Treasury Secretary Steve Mnuchin has yet to cancel. JP Morgan is rated ‘Neutral’ in our US Large-cap Global Top Stock Ideas.
- Sears (SHLD) has formally filed for bankruptcy in court in White Plains, NY. Sears’ bankruptcy is the end of long drama that saw Sears shrink in size and scope. Sears’ largest shareholder ESL Investments has offered to buy a large portion of its stores. Sears is 125 years old and was once the dominant retailer in the US. Sears is rated ‘Unattractive’ in our US Large-Cap Global Top Stock Ideas and ‘Top Short’ in our US Consumer Discretionary Global Top Stock Ideas.
- Softbank (9984 JP) shares fell 7.3% to close at 9251 yen in the wake of the polemic situation in Saudi Arabia. Softbank has the kingdom of Saudi Arabia as the biggest outside investor in its USD$100bn Vision Fund which has backed many a well-known start-up. Softbank was pledged USD$45bn for the existing Vision Fund and the same amount for the next, making Softbank particularly dependent of Saudi Arabia. Softbank is rated ‘Attractive’ in our Japan Large-cap Global Top Stock Ideas.
- Tencent (700 HK) is pausing its plans for an IPO for its Tencent Music unit, according to a report in the Wall Street Journal today. The global sell-off in tech shares has given Tencent pause, the story notes. Tencent will wait until at least November to reconsider. Tencent closed 2% lower at HKD$282.80. Tencent is rated ‘Attractive’ in our China All-Cap Global Top Stock Ideas.
- Tesco (TSCO LN) is planning to sell euro-denominated bonds in the near future after returning to investment grade recently. Tesco has its rating upped by Fitch and will likely soon be upgraded by Moody’s. News reports say that Tesco will sell 5-years Eurobonds to be used to retire existing euro- and sterling-denominated debt. Tesco is rated ‘Neutral’ in our United Kingdom All-Cap Global Top Stock Ideas.
- Tesla (TSLA) opened a large charging stating in Hong Kong for its cars after a cut in tax breaks caused a fall in sales. Tesla opened a 50-spot destination charging facility where drivers can charge up in a few hours. Tesla believes more charging stations are the key to increased sales. Tesla is rated ‘Unattractive’ in both our US Large-Cap and US Consumer Discretionary Global Top Stocks Ideas.
European Stocks
- European stocks are mixed this morning, off intra-day lows after the Euro Stoxx 600 dropped to levels not seen December 2016 (a 22-month low)
- The Euro Stoxx 600 is currently down -0.27%, the FTSE 100 has declined -0.07%, the DAX has advanced +0.19%, and the CAC 40 is lower by -0.28%
- Investor sentiment for European stocks is negative with the advance/decline ratio for the Euro Stoxx 600 currently at 0.45x
- Telecommunications (+1%), Oil & Gas (+0.41%), and Health Care (+0.07%) stocks are the top performers in the Euro Stoxx 600 today
- Industrial Goods & Services (-1.01%), Financial Services (-0.9%), and Technology (-0.84%) stocks are the worst performers in the Euro Stoxx 600 today
- 5 stocks in the Euro Stoxx 600 are at 4-week highs while 153 stocks are at 4-week lows
- 1 stock in the Euro Stoxx 600 is overbought while 253 stocks are oversold according to the 16-day RSI Measure
- VSTOXX, the European stocks equivalent of the VIX, is little changed this morning and is currently at 19.97 after closing at 20.21 yesterday
- EUR€ is currently up +0.329% against the USD$ to 1.1598
- GBP£ is currently little changed against the USD$ at 1.3159
- CHF is currently up +0.734% against the USD$ to 1.015
- Generic Euro 10-Year Bonds are higher with yields down -0.5 basis points to 0.493%
- German 10-Year Bunds are higher with yields down -0.5 basis points to 0.493%
- UK 10-Year GILTs are higher with yields down -3 basis points to 1.603%
Asian Stocks
- Asian stocks resumed their downward trend to begin the week, with major stock markets across the region falling
- The Nikkei 225 finished down –1.87%, the Hang Seng ended down -1.38%, the Hang Seng China Enterprise declined -1.5%, and the CSI 300 was -1.4%
- Consumer stocks dragged down indices in Hong Kong and Shanghai following an economic report that showed a dropped in purchases of passenger vehicles and online appliances in September
- The Shanghai Composite is now at its lowest level since November 2014
- Investor sentiment for Japanese stocks finished negative with the advance/decline ratio for the Nikkei 225 closing at 0.09x
- 0 stocks in the Nikkei 225 hit 4-week highs while 100 stocks reached 4-week lows
- 0 stocks in the Nikkei 225 closed overbought while 7 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 0.25x
- 2 stocks in the Hang Seng hit 4-week highs while 18 stocks reached 4-week lows
- 0 stocks in the Hang Seng closed overbought while 3 stocks closed oversold according to the 16-day RSI Measure
- Japan 10-Year Government Bonds are higher with yields down -0.6 basis points to 0.144%
- JGBs 2s-10s Spread has narrowed 0.4 basis points to 0.26%
- JPY¥ is currently down -0.392% against the USD$ to 111.77
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