Thursday 6/27/19=DJIA -10 NASDAQ +58
There was a very nice surge in the tech sector today. The Nasdaq was up 58 points. The DJIA, on the other hand, was down mostly because of Boeing. My biggest winners today were COUP, TREE, SHOP, and PAYC.
Here was the mood of the market as we began a new day in the market.
DJIA futures turn lower
• Following solid overnight gains in Asia, U.S. futures are suggesting the first positive session in five for the S&P 500, though the DJIA turned lower by 90 points as shares of Boeing weighed on the index.
• The FAA on Wednesday said it found a new issue with the 737 Max that the planemaker must address before it lifts the national grounding order. BA shares fell 5% premarket on the news.
• President Trump further announced that a bilateral meeting with his Chinese counterpart could lead to a trade deal, but warned that he was prepared to impose tariffs on virtually all remaining Chinese imports if talks once again faltered.
Asian stocks advance on trade truce optimism
• Japan +1.19%.
• Hong Kong +1.42%.
• China +0.69%.
• India -0.03%.
• London -0.25%.
• Paris -0.04%.
• Frankfurt +0.15%.
I am not so sure that China setting the terms of the deal are going to fly with the current occupant of the oval office. But, we do learn China’s sore spots that dealing them the most pain. It would seem that Huawei and the tariffs sting the most. What will they be able to concede to us to make the pain go away?
Terms for settling U.S.-China trade deal
• Ahead of their G20 meeting in Osaka, President Xi plans to present President Trump with a set of terms the U.S. should meet before China is ready to settle their market-rattling trade confrontation, WSJ reports.
• Among the preconditions, Beijing is insisting that Washington remove its ban on the sale of American technology to Huawei and also wants the U.S. to lift all punitive tariffs.
• China also wants the Trump administration to drop efforts to get China to buy even more U.S. exports than Beijing said it would when the two leaders last met in December.
Can we ever trust Huawei?
How deep are Huawei, China military links?
• Huawei Technologies worked on at least 10 research projects with Chinese armed forces personnel over the past decade, according to Bloomberg, including collaborations on AI research and radio communications.
• The information was gathered by looking at publicly available research papers whose authors were identified as Huawei employees.
• Responding to the report, Huawei said it does not have any company-sanctioned projects cooperating with China’s military and doesn't customize products for use by the country’s armed forces.
The Democratic Presidential candidates are not very business friendly.
Big business targeted during Democratic debates
• Senator Elizabeth Warren of Massachusetts led the anti-corporate charge early in the first Democratic presidential debate last night, vowing to break up monopolies and saying the U.S. economy was skewed toward the rich.
• Asked about Warren’s plan to force Facebook, Amazon and Google to sell companies they had purchased, Senator Cory Booker of New Jersey said he did not disagree, and also called out firms like Halliburton and Amazon, saying it was time to change the fact they "pay nothing in taxes."
• "General Motors got a tax cut. General Motors got a bailout. And then they have the audacity to move a new car that they’re going to produce to Mexico," Representative Tim Ryan from Ohio added later in the debate.
• Washington state Governor Jay Inslee said he also supported unions, noting the huge disparity in wages between chief executives and line workers.
The healthcare sector ebbs and flows with the latest polls. It’s worst fear is a single-payer healthcare system run by the government.
Healthcare stocks under pressure ahead of Dem debate
• Medical stocks are largely in the red in early trade, extending their near-term selloff ahead to tonight's first debate between Democratic presidential hopefuls in Miami. All have proposed various schemes for extending healthcare coverage and corralling drug price increases.
In the meantime, the economy seems to be working for this in the labor force.
Jobless claims stay range bound
• Initial Jobless Claims +10k at 227K vs. +218K consensus, 217K prior (revised).
• Continuous Claims: +22K to 1.688M vs. 1.665M consensus, 1.666M prior (revised).
Here is the final read on Q1 GDP growth. It was very good.
Q1 GDP growth stays at 3.1%
• GDP Q1: +3.1% vs. +3.1% consensus, +3.1% previous estimate.
Just when things were starting to look better for Boeing…
UBS: Sentiment surrounding 737 MAX is improving
• Boeing (NYSE:BA) shares were down 5.1% earlier on the latest 737 MAX troubles, but they have now clawed back losses to 2.2% after some favorable comments from UBS.
• Analyst Myles Walton kept his Buy rating and $500 PT on BA shares, telling investors that a survey conducted by UBS Evidence Lab recorded "some improvement in sentiment around consumers' willingness to fly on a 737 MAX."
They go worse!!!
FAA identifies new potential risk on Boeing 737 MAX - Reuters
• Boeing (BA +1.6%) pared gains into the close following a Reuters report that the Federal Aviation Administration has found a "potential risk" that the company must fix before the 737 MAX can return to service.
• The risk was discovered during a simulator test last week, which likely will prevent BA from running a certification test flight until at least July 8, according to the report.
• Update: BA discloses the FAA has asked it to address a specific condition of flight not covered by planned software changes; the company says it is working on the required software to address the FAA's request.
Piper Jaffray like Netflix, so do I.
Piper Jaffray sees huge mobile potential for Netflix
• Piper Jaffray sees the potential for Netflix (NASDAQ:NFLX) to record even more dramatic international growth than anticipated in the coming years as the firm factors in global mobile-only users into the total addressable market for the streaming service.
• PJ reiterates an Overweight rating on Netflix and keeps a price target of $440 vs. the sell-side average PT of $400.08. The all-time for NFLX high is $419.77.
• Shares of Netflix are up 0.22% premarket to $363.00.
KeyBanc like Coupa, so do I. I am long in my Emerging Growth Portfolio.
Coupa target boosted after Inspire event
• KeyBanc maintains an Overweight rating on Coupa Software (NASDAQ:COUP) and lifts the target from $127 to $136.
• Analyst Brent Bracelin sees "robust underlying demand fundamentals" following the annual Inspire user event.
• Bracelin taps Coupa Pay as a potential growth driver in 2020.
• Coupa shares are up 0.9% pre-market to $120.
• COUP has an Outperform average Sell Side rating.
I remain bullish on AMD also. Big position here.
Wedbush starts AMD as a bull
• Wedbush starts AMD (NASDAQ:AMD) at Outperform with a $35 target, a 17% upside.
• AMD shares are up 0.3% after hours to $30.02.
• AMD has an Outperform average Sell Side rating.
• Update with more details from the note:
• Analyst Matthew Bryson says AMD's reemergence in CPUs (and to a smaller extent in GPUs) is "one of the likely major shifts in both the PC and data center markets."
• Bryson expects "more modest" GPU benefits from the transition to leading TSMC nodes.
I like Planet Fitness too. I am long in my Ultra Growth Portfolio.
Raymond James positive on Planet Fitness
• Raymond James starts off coverage on Planet Fitness (NYSE:PLNT) with an Outperform rating.
• "Importantly, we believe PLNT's differentiated business model and compelling unit economics prove advantageous. Store expansion, increased Black Card membership penetration, and rising royalty rates serve as key growth catalysts that should, in our view, effectively augment PLNT’s sales and profitability," notes the firm in its morning note.
This report provides general information and is not an offer to buy or sell any security. It is the sole opinion of the author, Bill Gunderson. Bill is Gunderson is President of Gunderson Capital Mgt. Inc. located at 2072 Willbrook Lane, Mount Pleasant, South Carolina, 29466. (855)611-BEST.
Bill Gunderson is also the editor of the weekly Best Stocks Now Newsletter. Information in this newsletter comes from independent sources believed to be reliable, but accuracy is not guaranteed.
Bill Gunderson or Gunderson Capital Mgt. Inc. had not verified the accuracy of the information published by independent sources.