US Stocks
- The rout in global stocks appears to be taking a breather heading into the US Thanksgiving holiday tomorrow
- US stocks index futures are advancing this AM and pointing to a bounce back in US stocks this morning with front-month Dow Jones minis +0.51%, S&P500 minis +0.61%, and Nasdaq 100 minis +0.77%
- SPDR S&P500 ETF (SPY) experienced net inflows of USD$2.18 billion yesterday, driving up total asserts 0.9% to USD$252.9 billion The S&P500 dropped to 10% below its September high yesterday with stocks strategists suggesting the current decline offers an attractive buying opportunity
- During the recent rout in US stocks, options traders have been reducing the use of Puts as protection against further declines in the IWM and SPY ETFs. Bloomberg reports that the Put open interest for both the SPY and IWM have dropped considerably since October.
- The VIX is lower this morning and is currently at 21.70 after closing at 22.84 yesterday
- Bank of America (BAC) November 23 OTM Calls, USO December 28 & January 2019 OTM Calls, SPYDecember 21 OTM Puts, and QQQ November 23 & December 12 OTM Puts are some of the most actively traded options contracts in the US pre-market
- US 10-Year Treasury Bonds are lower with yields up 1.27 basis points to 3.0755%
- The US Treasury 2s-10s Spread has widened 0.67 basis points to 0.27%
- WTI Crude is currently up 1.67% to USD$54.30/bbl with the Brent-WTI spread down USD$0.68 to USD$9.22/bbl
- Gold is currently little changed 0.16% to USD$1223.6/oz
- Saudi Arabia reports its oil production jumped to a record 11 million barrels/day with The Kingdom receiving greater-than-usual demand from clients hedging a potential disruption in Iranian supplies
- The recent sell-off in oil futures has been exacerbated by investment banks selling futures to hedge exposure to producer hedges – many of the international oil producer clients have bought put options (both vanilla and exotic) to hedge cash flows exposure
Stocks Trending in the News
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- Airbus (AIR FP) named Dominick Asam as its new CFO, joining from Infineon Technologies (IFX GR). Airbus also announced a new COO for its plane making unit, Michael Schollhorn. Both will take over in April after the present executives leave the company. Airbus is rated “Neutral” in our European Large-Cap Global Top Stock Ideas. Infineon is rated “Top Short” in our European Large-Cap Global Top Stock Ideas.
- Deere & Co (DE) reported FY4Q results that missed estimates. Deere reported 4Q adjusted EPS of USD$2.30 versus USD$2.45 expected. FY4Q net sales of USD$8.34 billion came below USD$8.64 billion expected. Deere expected fiscal 2019 net of USD$3.6 billion versus consensus of USD$3.6 billion. Deere is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Industrials Global Top Stock Ideas.
- Foxconn Technology Group (2317 TT) announced it is aiming to cut 20 billion yuan (USD$2.9 billion) in expenses 2019 according to an internal memo cited in a Bloomberg article. Foxconn is the largest assembler of iPhones for Apple (AAPL). The memo highlights Foxconn’s need to cut expenses in its iPhone assembly unit by 6 billion yuan as it will face “a very difficult and competitive year”. Foxconn will eliminate 10% of its non-technical staff as part of its cost cutting. The bad news surrounding iPhone demand has sent Apple down over 20% from its October peak, closing in bear territory yesterday. Foxconn is not rated in our Global Top Stock Ideas. Apple is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Information Technology Global Top Stock Ideas.
- Gap (GPS) reported 3Q same store sales that were flat while consensus was for growth of 1.1%. Gap also lowered guidance for full year earnings, now seeing USD$2.55-2.60 while previously guidance was USD$2.55-2.70. 3Q EPS of 69 cents came a touch above 68 cents expected. Gap said it is Neutral whether to close hundreds of stores as it seeks to turn the company around. Gap is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Consumer Discretionary Global Top Stock Ideas.
- Foot Locker (FL) shares are soaring in pre-market trading after reporting FY3Q2018 earnings that notably beat analyst expectations. Foot Locker generated an adjusted EPS of USD$0.95/share in FY3Q2018 while analysts’ consensus called for USD$0.92/share. Foot Locker also generated FY3Q2018 comparable sales growth of 2.9% while analysts’ consensus called for just 2.0%. Foot Locker’s earnings beat post-market sent shares of competitors Nike (NKE), Dick’s Sporting Goods (DKS), and Under Armour (UA) slightly higher in pre-market trading as well. Foot Locker is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Consumer Discretionary Global Top Stock Ideas. Nike is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Consumer Discretionary Global Top Stock Ideas. Dick’s is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Consumer Discretionary Global Top Stock Ideas. Under Armour is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Unattractive” in our US Consumer Discretionary Global Top Stock Ideas.
- Kingfisher PLC (LSE: KGF) shares are trading at their lowest level since September 2011 after announcing FY3Q2018 like-for-like sales that missed analyst expectations. In FY3Q2018, Kingfisher saw its Screwfix business generate like-for-like sales growth of 4.1% while analysts’ consensus called for 5.2%, its Brico Depot business generate like-for-like sales growth of 1.1% while analysts’ consensus called for 1.3%, and its Castorama business generate like-for-like sales growth of –7.3% while analysts’ consensus called for –3.0%. Kingfisher also announced a 50mm pound share buyback. Kingfisher is rated “Unattractive” in our United Kingdom All-Cap Global Top Stock Ideas.
- Samsung’s (5930 KS) new Galaxy S10 phone top model will have 6 cameras and a 6.7-inch screen according to a report in the Wall Street Journal. Samsung is planning a major update for the 10th anniversary of its flagship phone. The article discusses a top-secret plan to introduce 4 phones in total, 3 with screens between 5.8 and 6.4 inches and fourth top of the line model with 6 cameras-2 in the front, 4 in back. Samsung is following Apple (AAPL) with the 10th anniversary model, making a major update in an effort to spark sales, which have been slumping. Apple is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Information Technology Global Top Stock Ideas. Samsung is not rated on our Global Top Stock Ideas.
- Swatch (UHR SW) was downgraded at RBC today to sector perform from outperform. RBC does not see any near-term catalysts for Swatch. Additionally, RBC sees believes present consensus is too high for Swatch. A significant risk for Swatch is the growing market for used watches which may further eat into Swatch’s growth prospects. Swatch is rated “Neutral” in our European Large-Cap Global Top Stock Ideas.
- Tencent (700 HK) backed Tongcheng-Elong Holdings (780 HK) priced its IPO today in Hong Kong. Tongcheng-Elong Holdings, a Chinese online travel site, priced its IPO at the bottom of the range at HK$9.80, raising USD$180mn. Tongcheng-Elong Holdings originally intended to raise USD800mn-USD$1 billion. Tongcheng-Elong Holdings is not rated in our Global Top Stock Ideas. Tencent is rated “Attractive” in our China All-Cap Global Top Stock Ideas.
- Thyssenkrupp AG (TKA GR) said it expects profit next year to rise after reporting a fall in full year earnings. Thyssenkrupp full year net income dropped to 60 million euros after saying of November 8th it expected ~100mn euros. Fiscal full year ebit came at 1.55 billion euros, below 1.6 billion euros guidance from November 8th. Thyssenkrupp AG said it expects profit next year to rise after reporting a fall in full year earnings. Thyssenkrupp is rated “Top Short” in our European Large-Cap Global Top Stock Ideas.
- Walgreens Boots Alliance (WBA) and Humana (HUM) are in talks to potentially take equity stakes in each other according to a report in the Wall Street Journal. The companies have help talks about a variety of different ways to tie up, including expanding existing alliances. Walgreen’s CEO has made clear the desire to expand its business, lamenting recently that Walgreens had not bought an insurance company 4 years ago. Walgreens Boots Alliance is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Consumer Staples Global Top Stock Ideas.
European Stocks
- European stocks are rebounding to start the morning as stocks steady following the rout in global stocks
- Sentiment in Europe is improving following rumors that the Italian coalition government is open to revisions to its CY2019 budget with the EU taking the first steps to imposing a fine on Italy
- The Euro Stoxx 600 is currently up +0.37%, the FTSE 100 is higher by +0.71%, the DAX has advanced +0.64%, and the CAC 40 has risen +0.32%
- Investor sentiment for European stocks is positive with the advance/decline ratio for the Euro Stoxx 600 currently at 2.08x
- Telecommunications (+1.08%), Banks (+0.85%), and Basic Resources (+0.78%) stocks are the top performers in the Euro Stoxx 600 today
- Health Care (-0.15%), Food & Beverage (-0.13%), and Financial Services (-0.03%) stocks are the worst performers in the Euro Stoxx 600 today
- 19 stocks in the Euro Stoxx 600 are at 4-week highs while 200 stocks are at 4-week lows
- 9 stocks in the Euro Stoxx 600 are overbought while 108 stocks are oversold according to the 16-day RSI Measure
- VSTOXX, the European stocks equivalent of the VIX, is higher this morning and is currently at 18.64 after closing at 19.96 yesterday
- EUR€ is currently up +0.325% against the USD$ to 1.1407
- GBP£ is currently little changed against the USD$ at 1.2807
- CHF is currently little changed against the USD$ at 1.0065
- German 10-Year Bunds are lower with yields up 2.2 basis points to 0.372%
- UK 10-Year GILTs are lower with yields up 1.5 basis points to 1.398%
Asian Stocks
- Asia stocks erased early trading losses to finish mixed in overnight trading
- The Nikkei 225 finished down –0.35%, the Hang Seng ended up +0.51%, the Hang Seng China Enterprise up +0.19%, and the CSI 300 was +0.25%
- Japanese stocks finished down with global oil prices as energy-sensitive stocks dropped following the 6% decline in global oil prices in the previous NY trading session
- Analysis by Bloomberg suggests price volatility for Asian stocks has dropped below the S&P500 – the average daily move of the MSCI Asia Pacific has been less than the S&P500 for 8 months in CY2018
- Investor sentiment for Japanese stocks finished negative with the advance/decline ratio for the Nikkei 225 closing at 0.32x
- 21 stocks in the Nikkei 225 hit 4-week highs while 48 stocks reached 4-week lows
- 3 stocks in the Nikkei 225 closed overbought while 20 stocks closed oversold according to the 16-day RSI Measure
- Investor sentiment for Hong Kong stocks finished positive with the advance/decline ratio for the Hang Seng closing at 2.57x
- 7 stocks in the Hang Seng hit 4-week highs while 1 stock reached 4-week lows
- 0 stocks in the Hang Seng closed overbought while 0 stocks closed oversold according to the 16-day RSI Measure
- Japan 2-Year Government Bonds are higher with yields down -0.1 basis points to -0.141%
- Japan 10-Year Government Bonds are higher with yields down -0.7 basis points to 0.095%
- JGBs 2s-10s Spread has narrowed 0.6 basis points to 0.24%
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