Global stocks are edging down this this AM as stock markets around the globe take a breather after yesterday’s sharp rally and ahead of the release of the minutes of the most recent US Fed meeting
US stocks index futures are dropping ahead of the open in NY with the Dow Jones minis –0.30%, S&P500 minis –0.24% and Nasdaq 100 minis –0.24%
Meeting minutes of the most recent US Fed meeting will be released at 2pm today
The VIX is little changed this morning and is currently at 17.85 after closing at 17.62 last week
HYG November 6 OTM Puts, SPY October 19 OTM Puts, EEM November 08 OTM Calls and Electronic Arts (EA) March 2019 OTM Puts are the most heavily traded options contracts in the US pre-market
US 10-Year Treasury Bonds are lower with yields up 0.76 basis points to 3.1709%
The US Treasury 2s-10s Spread has narrowed 0.09 basis points to 0.3%
WTI Crude is currently little changed 0.2% to USD$71.92/bbl with the Brent-WTI spread down USD$-0.78 to USD$9.28/bbl
Gold is currently little changed 0.08% to USD$1225.96/oz
Global oil prices are declining as traders make sense of contradicting reports about crude oil inventories in the United States — American Petroleum Institute says inventories dropped 2.13mm barrels while a Bloomberg survey points to a 2.5mm barrels increase
Oil traders will be closely following the Department of Energy report this morning which will give clarity into whether crude oil inventories actually increased for the week ending October 12 — the report is expected this morning at 10:30am
Stocks Trending in the News
ASML (ASML NA) reported 3Q results beating estimates and upping 4Q guidance above consensus. ASML stock is trading 4.7% higher at 162.30 euros on the news. ASML sees 4Q revenue at 3 billion euros, above 2.9 billion euros consensus. ASML would deliver 11 billion euros in 2018 if the guidance comes to fruition, a record for ASML. ASML 3Q sales of 2.78 billions euros came a touch above 2.75 billion euros. ASML is rated ‘Neutral’ in our European Large-Cap Global Top Stock Ideas.
Danone (BN FP) reported the weakest 3Q growth in sales in more than 10 years and the stock is trading 3% at 63.07 euros. Danone said Chinese baby food revenue fell 20% and, while there was solid growth in its yogurt unit, was not sufficient to offset Danone’s woes in Chinese baby formula business. Danone saw only 1.4% growth in total revenue, down from 4% over the first half of the year. Danone is rated ‘Neutral’ in our European Large-Cap Global Top Stock Ideas.
Fresenius (FME GR) reported an unexpected profit warning and the stock is trading 12.2% lower at 60.54 euros. Fresenius said that both growth in both sales and net income will come at the low of the guidance range giving investors an indication of the weakness of its hospital unit and dialysis unit. Fresenius’ weakness comes from emerging markets and North American weakness. Fresenius is rated ‘Neutral’ in our European Large-Cap Global Top Stock Ideas.
IBM (IBM) misses 3Q estimates on revenue, reporting a 2.1% decline in revenue to USD$18.8 billion. Estimates for IBM’s 3Q revenue were USD$19.1 billion. Cloud revenue, a key growth engine for IBM, grew 10%, down from 20% in 2Q. IBM saw revenue growth that past 3 quarters after 6 years of falling sales. IBM is rated ‘Neutral’ in both our US Large-cap and US Information Technology Global Top Stock Ideas.
Infosys (INFO IN) reported quarterly sales and net income that beat expectations. Infosys reported a 17% jump in revenue as its move into higher margin digital products starts to bear fruit, its fastest growth in over 2 years. Infosys’ net income of 41.1 billion rupees was up from 40.5 billion rupees. Infosys is rated ‘Attractive’ in our India All-Cap Global Top Stock Ideas
M&T Bank (MTB) reported 3Q results above market consensus with 3Q EPS of USD$3.56 beating consensus of USD$3.35. M&T Bank delivered USD$2.21 a year ago, evidencing strong growth over the past year — M&T Bank 3Q revenue of USD$1.48 billion was USD$20mm below consensus. M&T Bank is rated ‘Top Buy’ in our US Large-Cap Global Top Stock Ideas
Netflix (NFLX) beat expectations for subscriber additions by a long shot, adding 6.96mm new subscriber compared with 5.09mm expected. Netflix earnings were also well above expected coming at 89 cents per share versus 68 cents consensus. Most of the Netflix subscriber growth came from overseas as it launched a record amount of new programming in the quarter. Bloomberg called its results “dazzling”, an apt description. Netflix is trading 11% higher in pre-market trading to $380. Netflix is rated ‘Neutral’ in our US Large-Cap Global Top Stock Ideas and ‘Neutral’ in our US Consumer Discretionary Global Top Stock
Roche (ROG SW) saw growth in China in its older drugs, helping it beat 3Q revenue estimates. Roche’s 3 top selling drugs are now being reimbursed in China, helping to fuel growth of the 3, which are seeing waning sales in Europe. Roche is facing competition to these from biosimilar drugs from other players, making the growth in China particularly important for Roche. Despite the news, Roche is trading 1% lower at 238.10 francs. Roche is rated ‘Attractive’ in our European Large-Cap Global Top Stock Ideas.
Tesla (TSLA) signed an agreement for land to open a factory in China, its first factory outside of the US. The Tesla “Gigafactory” will be the first in China fully owned by a foreign player and is central to Tesla’s effort to gain a better foothold in Asia. Tesla’s CEO Elon Musk also had his settlement with the SEC approved by a federal judge. Tesla is trading 0.50% higher in premarket trading. Tesla is rated ‘Neutral’ in both our US Large-cap and US Consumer Discretionary Global Top Stock Ideas.
US Bancorp (USB) reported 3Q results that beat estimates. US Bancorp reported 3Q EPS of USD$1.06 versus USD$1.04 consensus. US Bancorp delivered 3Q net interest margin of 3.15% matching consensus of the same. Charge-offs came below expectations at USD$328mm while USD$343.8nm was expected. US Bancorp is indicated 0.4% higher in pre-market trading. US Bancorp is rated ‘Attractive’ in our US Large-Cap Global Top Stock Ideas.
Volkswagen’s (VOW GR) Audi Group is being fined 800mm euros by the Munich prosecutor related to “deviation from regulatory requirements” with some of its V6 and V8 diesels engines. Volkswagen said the fine will “directly affect” 2018 financial guidance of the group. Volkswagen is rated ‘Neural’ in our European Large-Cap Global Top Stock Ideas.
European stocks are declining this morning, paring earlier gains following commentary from Goldman Sachs that the C3Q2018 will prove to have been a challenging quarter for the major auto manufacturers
The Euro Stoxx 600 is currently down -0.21%, the FTSE 100 is higher by +0.08%, the DAX has fallen -0.49%, and the CAC 40 is lower by -0.18%
Investor sentiment for European stocks is neutral with the advance/decline ratio for the Euro Stoxx 600 currently at 0.97x
Real Estate (+1.16%), Technology (+0.78%), and Basic Resources (+0.56%) stocks are the top performers in the Euro Stoxx 600 today
Automobiles & Parts (-1.72%), Travel & Leisure (-1.17%), and Food & Beverage (-1.07%) stocks are the worst performers in the Euro Stoxx 600 today
Goldman Sachs is cautioning investors about the potential for negative earnings revisions for auto suppliers after warning about 3Q earnings for European auto manufacturers
European stocks are expected to report earnings growth of +13.6% for C3Q2018 according to Refinitiv (formerly Thomson Reuters)
12 stocks in the Euro Stoxx 600 are at 4-week highs while 75 stocks are at 4-week lows
4 stocks in the Euro Stoxx 600 are overbought while 83 stocks are oversold according to the 16-day RSI Measure
VSTOXX, the European stocks equivalent of the VIX, is little changed this morning and is currently at 16.58 after closing at 16.83 yesterday
EUR€ is currently little changed against the USD$ at 1.156
GBP£ is currently down -0.303% against the USD$ to 1.3141
CHF is currently down -0.178% against the USD$ to 1.0076
German 10-Year Bunds are higher with yields down -1.5 basis points to 0.476%
UK 10-Year GILTs are higher with yields down -1.5 basis points to 1.594%
Asian stocks finished positive overnight as the rally in US markets boosted sentiment in Asia
The Nikkei 225 finished up +1.29% and the CSI 300 was +0.56%
Hong Kong markets were closed for the Chung Yeung Festival holiday
Investor sentiment for Japanese stocks finished positive with the advance/decline ratio for the Nikkei 225 closing at 5.25x
0 stocks in the Nikkei 225 hit 4-week highs while 69 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
Japan 10-Year Government Bonds are flat with yields little changed 0 basis points to 0.148%
JGBs 2s-10s Spread has widened 0.1 basis points to 0.26%
JPY¥ is currently little changed against the USD$ at 112.23