Tuesday 7/9/19=DJIA -23 NASDAQ +43
3M hurt the DJIA, but the Nasdaq had a pretty good day overall. Many Best Stocks Now had a very good day-PLAN, AMD, AMZN, EVBG, EXAS, FB, SQ, WDAY, & ZEN. I also sent out six buys to Live-Trading Subscribers today.
First, here was that news that impacted the market on Monday.
Rosenblatt cuts Apple to Sell, seeing ‘fundamental deterioration’
• Rosenblatt has cut Apple (AAPL -2.6%) to Sell from Neutral, looking for “fundamental deterioration” over the next 6-12 months.
• Specifically, new iPhone sales will be disappointing and iPad sales growth will slow in the second half, and sales from other products (HomePod, AirPod, Watch) may not be meaningful to total revenue growth, analyst Jun Zhang writes. Services sales growth won’t be any help there either, Zhang says.
• The firm’s keeping its price target at $150, now implying 24.6% downside after Apple’s recent run up (shares have gained 15% since a near-term low of $173.30 on June 3).
• Meanwhile, most sell-side analysts are at Outperform on average, while Seeking Alpha authors are Bullish and the stock has a Quant Rating of Very Bullish.
Now for today’s news…
This is yet another shot across China’s bow by Trump.
State Department clears $2.2B arms sale to Taiwan
• The U.S. has put on its plans for higher Chinese tariffs on hold, but raised the political pressure in other ways overnight with the approval of a major arms sale to Taiwan.
• It includes 108 General Dynamics (NYSE:GD) M1A2T Abrams tanks, 250 Stinger missiles and related equipment at an estimated value of $2.2B.
• Chinese foreign ministry spokesman Geng Shuang said the deal was a serious violation of international law and a “crude interference in China’s internal affairs, harming China’s sovereignty and security interests.”
I do not expect rate cut this month.
Full slate of Fedspeak
• Jerome Powell is heading into the batter’s box, with speeches over the next three days ranging from comments at the Boston Fed to his semiannual monetary policy testimony to Congress.
• Today, he’s scheduled to give opening remarks at a conference discussing the effectiveness of bank stress tests as the U.S. central bank considers changes to its critical post-financial crisis tool. Also on watch are addresses by Fed policymakers Raphael Bostic, James Bullard and Randal Quarles.
• While traders have priced in a 100% probability of a Fed rate cut in July, expectations for a more aggressive cut have been tempered by the strong jobs report released Friday.
Can you believe this?
European junk yields head below zero
• We now have another story that could alternatively be titled, “Why Treasury Bond Bears Keep Getting It Wrong.”
• Bloomberg’s Laura Benitez and Tasos Vossos note that sub-zero yields have spread to the European junk-bond market. A full 14 high-yield issues now sport negative yields, they write. It hardly needs to be said (or maybe it does), but that’s up from zero at the start of the year.
• The U.S. 10-year Treasury yield this morning hovers at 2.06%. That compares to -0.36% in Germany, -0.13% in Japan, and 0.37% in Spain. Winter is coming.
• Previously: Long-dated Treasurys still looking good at 2% (June 21)
Mastercard continues to make new highs. I remain long.
Mastercard closes on deal to boost cross-border payment network
• Mastercard (NYSE:MA) completes its acquisition of Transfast, a global payments company with a significant cross-border network.
• Mastercard says the deal builds on its strength in payments and drives improved transparency and certainty in cross-border transactions, enabling people and businesses to send and receive money beyond borders with greater speed and ease.
• The agreement to acquire Transfast was originally announced in March 2019.
New all-time highs for AutoZone too!
New high for AutoZone with buy signs all around
• AutoZone (NYSE:AZO) is up another 1.1% and carved out a new high of $1,142.91 earlier in the session.
• The company continues to fall on to the radar of investors of looking for stocks in the retail sector with growing comparable sales and expanding margins, while also being insulated somewhat from Amazon and tariffs. On Seeking Alpha, the Quant Rating on AutoZone is flashing Very Bullish and the SA Authors’ rating is Bullish.
I agree. Square had a huge day!
Argus sees upside on Square
• Argus starts off coverage on Square (NYSE:SQ) with a Buy rating and price target of $94.
• The firm’s PT reps +25% upside potential for shares and is well-above the sell-side average PT of $81.03. The Seeking Alpha Authors’ rating and Seeking Alpha Quant Rating on Square both stand at Neutral.
• Shares of Square have traded in a range of $49.82 to $101.15 over the last 52 weeks.
Keep your eye on this one…
Soliton up 25% ahead of shockwave data in cellulite
• Soliton (SOLY +25%) is up on 34% higher volume in apparent response to its announcementthat will will release cumulative 26-week patient data from its proof-of-concept study evaluating its acoustic shockwave device for the potential treatment of moderate-to-severe cellulite on Monday, July 15.
• According to President and co-founder Chris Capelli, the initial results are promising.
• A pivotal trial should launch later this summer.
Another very good day for Facebook, despite all the bad press.
Barclays affirms buying Facebook before earnings
• Facebook (NASDAQ:FB) bull Barclays says the time to buy shares is now, before upcoming earnings that it expects will reflect strong demand for key products.
• The shares are “too cheap to keep ignoring,” the firm says, reiterating an Overweight rating ahead of results to come on July 24. “As the conversation moves away from putting out privacy fires and back toward innovation, we think FB shares can continue to move higher.”
• It expects daily active users to grow to 1.57B, a 7% growth rate.
• Barclays has a price target of $240, implying 22.6% upside. Shares are down 0.4% premarket.
• Sell-side analysts rate Facebook at Outperform on average, while Seeking Alpha authors are Bullish overall and the stock has a Quant Rating of Neutral.
New cannabis ETF to launch tomorrow
• Innovation Shares LLC announces the launch of The Cannabis ETF (NYSEARCA:THCX), what it says is the first passively managed pure-play ETF for cannabis investors. The ETF will track the Innovation Labs Cannabis Index of 35 stocks involved with hemp and legal marijuana.
• Trading will commence tomorrow, July 9.
• Fitch says the crop science division has deteriorated during the past year due to the debate surrounding glyphosate (branded as Roundup), and sees risk that the company’s deleveraging from the post-acquisition peak of 2018 may be delayed after 2020.
• Negative outlook reflects an increased risk of potentially material payouts in connection to the glyphosate litigation.