US Stocks
- Global stocks are declining this morning with bond yields inching up higher as traders await the release of September’s payrolls data
- US stocks index futures are pointing to a neutral open in NY with the Dow Jones minis +0.11% S&P500 minis +0.08% and Nasdaq 100 minis –0.01%
- US Non-farm payrolls for September will be released this morning at 8:30am – this will be a closely followed jobs numbers as traders assess the health of the US economy and the probability of a more definitive move up in interest rates
- There continues to be concerns among traders that the US economy is overheating and that higher interest rates are needed to “cool” the economy
- The VIX is moving down this morning and is currently at 11.78 after closing at 14.22 yesterday
- General Electric (GE) November 2018 OTM Puts, EEM November 2018 & December 2018 OTM Calls, SPY October 05 OTM Puts, XLF November 2018 OTM Calls, and HYG November 2018 OTM Puts are the most heavily traded options contracts in the US pre-market
- US 10-Year Treasury Bonds are lower with yields up 1.73 basis points to 3.2043%
- The US Treasury 2s-10s Spread has widened 0.44 basis points to 0.32%
- US bond yields are hovering around a 7-year high as bond traders away the 8:30am release of September’s payrolls data
- WTI Crude is currently down -2.72% to USD$74.33/bbl with the Brent-WTI spread up USD$2.41 to USD$10.48/bbl
- Gold is currently little changed 0.17% to USD$1201.97/oz
- Global oil prices are climbing following comments by US National Security Adviser John Bolton who said the goal of the US sanctions on sales of Iranian crude oil exports is to bring sales to near zero
Stocks Trending in the News
- Apple (AAPL) vigorously denied the report Bloomberg published yesterday about Chinese hackers and malicious chips. Apple said nothing reported is accurate and “Apple has never found malicious chips, “hardware manipulations” or vulnerabilities purposely planted in any server”. The other tech companies cited in the report have responded similarly. Apple is rated ‘Top Buy’ in our US Large-Cap Global Top Picks and “Attractive’ in our US Information Technology Global Top Picks
- Constellation Brands (STZ) closed 5.3% at $222.10 after reporting results that beat expectations and provided strong guidance. Constellation Brands posted record beer earnings and indicated it will be hiking prices again. It described its investment in Canopy Growth as ‘Potentially one of the most significant growth opportunities in the next decade”. Constellation Brands is rated ‘Neutral’ in our US Large-Cap Global Top Picks and ‘Attractive’ in our US Consumer Staples Global Top Picks
- Costco (COST) reported 2Q results that were in line with consensus but the focus was on its statement about an IT-related problem. Costco said it expects to report “material weakness in an internal control” related to access to its financial reporting systems. Access was granted mistakenly to certain persons. An outside firm has been hired to evaluate. Initial checks do not indicate any problems but further investigation in needed. Costco traded 5% lower in after-hours trading. Costco is rated ‘Attractive’ in both our US Large-Cap and US Consumer Staples Global Top Picks
- Danske Bank (DANSKE DC) is trading 9% lower at 144.30 krona after Dutch regulators ordered it to hold more capital in anticipation of significant fines to come. Danske Bank has lost 41% of its market value this year thus far. A local broker estimates Danske bank Could face USD$1.8bn in fines. Danske Bank is rated ‘Top Short’ in our European Large-Cap Global Top Picks
- Lenovo (992 HK) shares closed down 15.1% at HKD$5.06 in the wake of the Bloomberg report yesterday about Chinese hackers gaining access to the production line of a US manufacturer. While Lenovo was not implicated in the report, Chinese tech companies in general suffered overnight. Lenovo is rated ‘Top Buy‘ in our China All-Cap Global Top Picks
- Royal Mail (RMG LN) s falling 2.3% after Citi downgraded the stock to sell. Royal Mail is still expensive compared to its peers according to the report and goes on to say “…near-term risks for Royal Mail outweigh the opportunities.” Royal Mail is rated ‘Unattractive’ in our United Kingdom All-cap Global Top Picks
- Tesla (TSLA) CEO Elon Musk went on a twitter storm last night sending 15 tweets mocking the SEC in the wake of his settlement with them. He called them the ‘Shortseller Enrichment Commission” as he complained about how he was treated. Many found his tweets ill-advised given that his settlement in not yet final. Tesla closed yesterday 4.4% lower at $281.83. Tesla is rated ‘Unattractive’ in both our US Large-Cap and US Consumer Discretionary Global Top Picks
- Unilever (UNA NA) has scrapped it plan to simplify its corporate structure into one entity. The process is needed for Unilever to be able to execute any M&A transactions. Analysts have generally been positive on the cancellation and expect a new plan at some future point. Unilever is trading 0.10% higher at 46.78 euros. Unilever is rated ‘Attractive’ in our European Large-Cap Global Top Picks
European Stocks
- European stocks are declining this morning, on pace for the biggest weekly loss in a month as traders await releases of the US payrolls data for September
- The Euro Stoxx 600 is currently down -0.43%, the FTSE 100 has declined -0.57%, the DAX has fallen -0.59%, and the CAC 40 is lower by -0.34%
- Investor sentiment for European stocks is negative with the advance/decline ratio for the Euro Stoxx 600 currently at 0.33x
- Media (+0.24%), Real Estate (+0.13%), and Telecommunications (-0.02%) stocks are the top performers in the Euro Stoxx 600 today
- Basic Resources (-1.8%), Technology (-1.4%), and Automobiles & Parts (-0.86%) stocks are the worst performers in the Euro Stoxx 600 today
- 48 stocks in the Euro Stoxx 600 are at 4-week highs while 145 stocks are at 4-week lows
- 18 stocks in the Euro Stoxx 600 are overbought while 54 stocks are oversold according to the 16-day RSI Measure
- VSTOXX, the European stocks equivalent of the VIX, is moving down this morning and is currently at 14.23 after closing at 16.02 yesterday
- EUR€ is currently little changed against the USD$ at 1.1498
- GBP£ is currently little changed against the USD$ at 1.3037
- CHF is currently down -0.238% against the USD$ to 1.006
- German 10-Year Bunds are lower with yields up 1.8 basis points to 0.549%
- UK 10-Year GILTs are lower with yields up 1.2 basis points to 1.681%
Asian Stocks
- Asian stocks finished the last day of trading in the red, after tech stocks plunged across the region on escalating tensions between the US and China
- Chinese markets remain closed for Golden Week
- The Nikkei 225 finished down –0.8%, the Hang Seng ended down -0.19%, the Hang Seng China Enterprise declined -0.16%, and the CSI 300 was +1.04%
- The Hang Seng is now at its lowest level in almost a month, losing 4.4% for the week — the biggest weekly drop since February 2018
- Investor sentiment for Japanese stocks finished negative with the advance/decline ratio for the Nikkei 225 closing at 0.45x
- 27 stocks in the Nikkei 225 hit 4-week highs while 4 stocks reached 4-week lows
- 42 stocks in the Nikkei 225 closed overbought while 1 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 0.67x
- 0 stocks in the Hang Seng hit 4-week highs while 14 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 -0.4 basis points to 0.155%
- JGBs 2s-10s Spread has widened 0.7 basis points to 0.27%
- JPY¥ is currently little changed against the USD$ at 113.92
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