Monday 9/9/19=DJIA +38 NASDAQ -16
A huge bout of profit taking takes place amongst the leaders!
Daily Wrap: The market saw heavy selling in the leading stocks today. The underlying market was much worse than the indexes would suggest. The software stocks were hit especially hard, along with many medical device stocks. I did not see any news. I would guess that some big firm was doing some sector rotation.
Trading: I did not do any buying or selling today.
Tweets: I was fairly active on Social Media today. I sent out tweets on CRK, BABA, ARDX, APLS, AMBA, and AAPL
CAN THE MARKET REMAIN CALM THIS WEEK?
WILL GOLD AND THE BOND MARKET CONTINUE TO SETTLE?
Dem Debate on Thursday
This was the mood of the market as we got ready to start a new week of trading.
- Heightened expectations of central bank stimulus is pointing to a positive open for Wall Street, with U.S. stock index futures starting the week up 0.2%.
- U.S. jobs growth slowed more than expected in August, while Jerome Powell reiterated that the Fed will continue to "act as appropriate" to sustain the U.S. economic expansion.
- Data overseas saw China's exports unexpectedly contract and the ECB is expected to unleash a barrage of stimulus measures this week to shore up economic growth.
- Crude oil is also on the rise, up 1% to $57.09/bbl, as Saudi Arabia signals OPEC cuts will continue under its new energy minister.
More bad news for China.
- China's exports unexpectedly shrunk in August, with sales to the U.S. tumbling amid the escalating trade war.
- Exports decreased 1% in dollar terms from a year earlier, while imports declined 5.6%, leaving a trade surplus of $34.84B.
- The Trump administration raised tariffs on Chinese goods at the start of the month, and is set to ratchet up levies further in October and again in December if there is no breakthrough in trade talks.
- Economic costs? The number of tourists visiting Hong Kong tumbled 40% Y/Y in August as protests gripped the city.
- That marked a sharp deepening of the 5% year-on-year decline in July, Hong Kong Financial Secretary Paul Chan wrote in a blog post.
- Last year, Hong Kong was one of the world's most visited cities, with 30M tourists.
According to Kudlow, the trade talks are going well.
- White House economic adviser Larry Kudlow tells CNBC that a phone call with China earlier this week "went very well."
- Kudlow was referring to a call Wednesday night between Treasury Secretary Steven Mnuchin, U.S. Trade Representative Robert Lighthizer, and Chinese Vice Premier Liu He. During the call, they agreed to meet in early October for another round of talks.
- "The phone lines have been open during this period and the negotiations have been proceeding," he said.
They are calling Dorian a “drive-by” hurricane here in the Charleston area.
- Insured losses from Hurricane Dorian are expected to total several billions of dollars, according to German reinsurer Munich Re.
- Board member Torsten Jeworrek, speaking at an industry conference, said that the estimate was a "rough guess" as damage was still to be tallied.
- Jeworrek, along with major competitor Swiss Re (OTCPK:SSREY), also said he expected reinsurance rates to rise further across the industry, stabilizing after years of declines.
Here was the stock of the day.
- An owner of $3.2B worth of AT&T (NYSE:T), Elliott Management sends a letter the board outlining steps to bring the stock price to $60 or more by the end of 2021 (65%+ upside).
- The four-part plan: Increased strategic focus, improved operational efficiency, formal capital allocation strategy, enhanced leadership and oversight.
- Shares +4% premarket to $37.70.
The Financial Sector continue to get hit by low rates.
- It's presentation season for the banks, and first up is Wells Fargo (NYSE:WFC). In slides just released for this week's Barclays Global Financial Services Conference, the company says full-year net interest income is expected to be down 6% from 2018, with 2019 H2 NII about $1.8B lower than that seen in H1 2019.
- At issue are the absolute level of interest rates, the flat yield curve, and the sale of some assets.
- Those same rates, however, should lead to a Q3 boost in mortgage originations (on top of a strong Q2). Servicing results, though, should be softer as lower rates boost prepays.
- Noninterest expenses are seen at the higher end of the hoped-for full-year range of $52B-$53B. Among the issues noted is continued high regulatory-related spending.
- CFO John Shrewsberry begins his presentation at 9 ET. Webcast here.
Things continue to go well for Dollar General.
- Dollar General (NYSE:DG) says it has new stores under construction in Washington and Wyoming.
- When completed, the new stores are expected will take the retailer's presence in the U.S. to 46 states.
- The new stores are scheduled for grand openings in the early part of FY20.
Here is the “behind the curve” story of the day.
- SunTrust Robinson Humphrey Matthew Thornton raises his Roku (NASDAQ:ROKU) target from $63 to $160.
- The analyst cites ROKU's recent Q3 report, noting that concerns over the company's 2019 outlook "incorrectly" kept SunTrust on the sidelines.
- Thornton has gained confidence in Roku's "execution, fundamentals, and strategic value."
- But SunTrust stays at a Hold rating due to valuation.
- Roku shares are up 1.4% pre-market to $172.30. The company has a Neutral Quant rating.
- Wedbush lifts Chipotle (NYSE:CMG) to an Outperform rating from Neutral.
- The firm sees Chipotle establishing a "digital moat" that could lead to a run of high single-digit comparable sales for several years.
- Wedbush hikes its price target to $980 vs. $780 prior and the sell-side average PT of $772.27.
- Shares of CMG are up 1.00% premarket to $844.68.
I agree here too.
- Baird maintains an Outperform rating on Shopify (NYSE:SHOP) and lifts the target from $370 to $410.
- Analyst Colin Sebastian says SHOP is "on track to exceed one million merchant customers by year-end" and could pass eBay to become North America's second-largest e-commerce platform, behind Amazon.
- SHOP shares are up 0.4% pre-market to $382. The company has an Outperform average Sell Side rating.