US Stocks
- US stocks index futures are hovering near pre-market lows following EU and Bank of England corporate profit warnings with front-month Dow Jones minis –0.60%, S&P 500 minis –0.61% and Nasdaq 100 minis –0.54%
- Canaccord stocks strategists are out arguing this morning that while earnings growth is expected to decelerate in CY2019, growth will be “enough” to support further gains in stocks. Their argument is built on the observation that is there is direct positive correlation between the direction of earnings and (directional) price moves in the US stock market.
- According to the American Association of Individual Investors, individual traders are becoming increasingly more bullish according to their proprietary surveys
- The VIX is little changed this morning and is currently at 16.3 after closing at 15.38 yesterday
- EEM February 15 & April 2019 OTM Calls, HYG March 15 & April 2019 OTM Puts and Apple (AAPL) February 8 OTM Calls are some of the most heavily traded options contracts in the US pre-market
- MIAX Options is launching options on SPIKES Index, a low-cost competitor/alternative to the CBOE VIX index. Unlike the VIX, whose value is derived from 30-day options on the S&P 500, the SPIKES Index is calculated using 30-day options on the SPDR S&P 500 ETF (Ticker: SPY).
- US 10-Year Treasury Bonds are higher with yields down -2.3 basis points to 2.6716%
- The US Treasury 2s-10s Spread has narrowed 0.67 basis points to 0.16%
- WTI Crude is currently up 0.65% to USD$54.01/bbl with the Brent-WTI spread down USD$-0.65 to USD$8.13/bbl
- Gold is currently little changed 0.03% to USD$1307.02/oz
Stocks Trending in the News
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- Anadarko Petroleum (APC) reported fourth quarter EPS of USD$0.38 missing consensus of USD$0.63. Anadarko Petroleum fourth quarter revenue came at USD$339.5 million, matching consensus of USD$341.8 million. Anadarko Petroleum is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas.
- Chipotle (CMG) reported third quarter 2019 adjusted EPS of USD$1.72 beating consensus of USD$1.39. Chipotle third quarter 2019 revenue came at USD$1.23 billion matching consensus of USD$1.19 billion. Chipotle same store sales grew at 6.1%, well above consensus of 4.5%. Chipotle is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Consumer Discretionary Global Top Stock Ideas.
- GoPro (GPRO) reported fourth quarter adjusted EPS of USD$0.26, in line with consensus of USD$0.26. GoPro fourth quarter revenue came at USD$377 million beating consensus of USD$374 million by a touch. GoPro is rated “Neutral” in our US SMID-Cap Global Top Stock Ideas and “Unattractive” in our US Consumer Discretionary Global Top Stock Ideas.
- Marathon Petroleum Corp. (MPC) announced CY4Q2018 adjusted EPS of USD$1.35 missing consensus of USD$1.96. Marathon Petroleum Corp. reported revenue of USD$32.54 billion in CY4Q2018 while analysts expected USD$32.68 billion. Marathon Petroleum Corp. is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas.
- Prudential Financial (PRU) reported fourth quarter adjusted operating EPS of USD$2.44 missing consensus of USD$2.78. Prudential Financial fourth quarter assets under management came at USD$1.38 trillion, matching consensus. Prudential Financial hiked its quarterly dividend to USD$1, above 95 cents consensus. Prudential Financial is rated “Neutral” in our US Large-Cap Global Top Stock Ideas.
- Sun Trust Bank (STI) and BB&T (BBT) announced they are merging in an all stock deal. The merger will be a USD$66 billion deal that will create the 6th largest bank in the US. The banks said in a joint statement that the merger will deliver USD$1.6 billion in annual cost savings by 2022. The banks are merging as equals. Sun Trust is rated “Attractive” in our US Large-Cap Global Top Stock Ideas. BB&T is rated “Attractive” in our US Large-Cap Global Top Stock Ideas.
- WR Grace (GRA) announced fourth quarter adjusted EPS of USD$1.14 while consensus was for USD$1.04. WR Grace reported revenue of USD$520 million in the fourth quarter while analysts expected USD$498 million. WR Grace is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Consumer Discretionary Global Top Stock Ideas
European Stocks
- European stocks are trading at session lows after the EU cut its growth outlook for Euro region
- The Euro Stoxx 600 is currently down -0.66%, the FTSE 100 has declined -0.27%, the DAX has fallen -1.33%, and the CAC 40 is lower by -0.67%
- The European Union (EU) slashes its growth forecasts for the major economies of Europe and warns that BREXIT and the deceleration in Chinese economic growth are threats to make the economic outlook for Euro region economies worse
- The Bank of England (BOE) cut its growth forecast for the UK economy after warning about the damage to the UK domestic economy from BREXIT and warns of a drop in investment
- 4Q results for European corporates raises worries about mounting corporate profit risk in CY2019 as analysts are observing that reported earnings growth of +5.7% would be 35% lower if the energy sector is removed. Just as a point of reference, energy stocks make up little less than 6% of the broad market STOXX Europe 600.
- Investor sentiment for European stocks is negative with the advance/decline ratio for the Euro Stoxx 600 currently at 0.27x
- Oil & Gas (-0.57%), Telecommunications (-1.8%), and Basic Resources (-1.16%) stocks are the top performers in the Euro Stoxx 600 today
- Automobiles & Parts (-2.5%), Food & Beverage (+0.2%), and Utilities (-0.64%) stocks are the worst performers in the Euro Stoxx 600 today
- 231 stocks in the Euro Stoxx 600 are at 4-week highs while 10 stocks are at 4-week lows
- 68 stocks in the Euro Stoxx 600 are overbought while 0 stocks are oversold according to the 16-day RSI Measure
- VSTOXX, the European stocks equivalent of the VIX, is moving up this morning and is currently at 15.09 after closing at 13.62 yesterday
- German 10-Year Bunds are higher with yields down -3.4 basis points to 0.128%
- UK 10-Year GILTs are higher with yields down -2.9 basis points to 1.187%
Asian Stocks
- Japanese stocks closed down with disappointing earnings results weighing on investor sentiment
- Most major regional stock exchanges remain closed for the Lunar New Year
- The Nikkei 225 finished down –0.59%, the Hang Seng ended up +0.21%, the Hang Seng China Enterprise declined -0.25%, and the CSI 300 was +1.43%
- The overnight fall in the Japanese Topix was the largest single-day drop in over a month
- Investor sentiment for Japanese stocks finished negative with the advance/decline ratio for the Nikkei 225 closing at 0.15x
- 65 stocks in the Nikkei 225 hit 4-week highs while 14 stocks reached 4-week lows
- 5 stocks in the Nikkei 225 closed overbought while 5 stocks closed oversold according to the 16-day RSI Measure
- Japan 2-Year Government Bonds are lower with yields up 0.2 basis points to -0.157%
- Japan 10-Year Government Bonds are lower with yields up 0.5 basis points to -0.008%
- JGBs 2s-10s Spread has widened 0.3 basis points to 0.15%
- JPY¥ is currently little changed against the USD$ at 109.82