Thursday 6/13/19=DJIA +102 NASDAQ +44
First, a wrap-up of Wednesday…
- Stocks fell for a second straight day, weighed by declines in energy, financial and tech shares, although high hopes for the Fed to signal for a rate cut at next week’s policy meeting – bolstered by soft inflation data released today – kept losses in check.
- The S&P energy sector (-1.4%) was the day’s biggest loser, with U.S. WTI crude oil plunging 4% as data showing higher inventories reinforced worries about slowing global demand.
- The financials sector (-1%) was hurt by lower Treasury yields and by a drop in Wells Fargo after the bank warned its 2019 net interest income would come in at the low end of prior guidance.
- U.S. Treasury prices rose, sending the two-year down 4 bps to 1.89% and the benchmark 10-year yield a basis point lower to 2.13%.
- Tech shares (-0.5%) were tripped up by semiconductor stocks, which were pressured after Evercore ISI said a recovery in the space likely would be pushed back to H2 2020.
Big rebound in oil.
- An oil price surge has given a boost to U.S. stock index futures, which were in the red overnight before attacks on two tankers off the coast of Iran.
- Dow futures are indicating a positive open of 70 points, while futures on the S&P and Nasdaq were 0.4% and 0.8% higher, respectively.
- Also boosting sentiment: President Trump declined to set a deadline on levying new tariffs on another $325B of Chinese goods, while data yesterday showed the nation’s inflation was weaker than expected, boosting chances of a Fed rate cut.
- Oil is up 2.9% at $54.64/bbl, gold is 0.3% lower at $1341/ounce and the 10-year Treasury yield is down 2 bps to 2.11%.
Here is why. Do you think that Iran and Russia had anything to do with this incident?
- Just hours ago, oil prices were flashing red as they neared the $50 level, but overnight attacks on two tankers in the Gulf of Oman have sparked a sudden turnaround.
- WTI futures are now ahead by 2.9% to $52.60/bbl, while Brent contracts jumped 3.1% to $61.82/bbl.
- The incident comes one month after four tankers were sabotaged in the Gulf of Oman off the UAE port of Fujairah, in an attack the U.S. linked to Iran.
- Update: An oil tanker owned by Norway’s Frontline (NYSE:FRO) was struck by a torpedo, according to shipping newspaper Tradewinds. The second ship has been identified as the Kokuka Courageous, managed by BSM Ship Management.
Jobless claims remain low.
Argentina’s market perks up.
- Argentina-based stocks enjoy a boost after Pres. Macri chose a moderate senator as his vice presidential candidate in the October elections; polls have showed Macri narrowly trailing the main opposition ticket.
- Macri became president in 2015, and Miguel Pichetto helped reach a final deal with holders of Argentine sovereign bonds, which was key to loosening up access to international financial markets.
Plan “B” for Huawei.
- China’s Huawei has applied to trademark its “Hongmeng” operating system in at least nine countries and Europe, in a sign it may be deploying a back-up plan in key markets as U.S. sanctions threaten its business model.
- The move comes after the Trump administration put Huawei on a blacklist last month that barred it from doing business with American tech companies like Alphabet, whose Android OS is currently used on Huawei phones.
- Plan “B” for Huawei.
Netflix pushing its way into gaming.
- Part of an ongoing push into the video game industry, Netflix (NASDAQ:NFLX) will release a mobile game in 2020 based on hit original series Stranger Things.
- The game will be in the style of a 1980s Saturday morning cartoon and will integrate Google Maps so players can “explore The Upside Down hidden around them in their daily travels and work with fellow fans to fight back its emerging evils.”
- The company made the announcement at the E3 gaming conference, but made no reference to a rumored expansion into video game streaming.
Square beating Paypal.
- “Upbeat May download data bodes well for SQ,” as Venmo’s Y/Y growth “dramatically” slowed, writes Nomura Instinet analyst Dan Dolev in a note.
- Square (NYSE:SQ) Cash App downloads increased by 2.2M in May, up from 2M in April, exceeding the monthly averages of 2.1M in 2019 and 1.9M last year.
- Meanwhile PayPal’s (NASDAQ:PYPL) Venmo download count was 1.7M in May, similar to April and matching its 2019 monthly average; Y/Y growth of 35% retreated from 54% in April and 47% in March.
- Square rises 1.0% in premarket trading; PayPal +0.7%.
- Dolev reiterates his buy rating for Square.
- Quant Rating Neutral for Square; SA Authors’ average rating Neutral (1 Very Bullish, 1 Bullish, 3 Neutral, 1 Bearish)
- Quant Rating Neutral for PayPal; SA Authors’ average rating Bullish (4 Bullish, 1 Neutral, 1 Bearish)
More bad news for Facebook.
- Facebook (NASDAQ:FB) has uncovered emails that seem to connect CEO Mark Zuckerberg to knowledge of questionable privacy practices, The Wall Street Journal reports.
- That could present a new public-relations snafu (at least) for a company that’s endured a string of them in the past few years. Shares have legged down and are now -2% on the day.
- Sources tell the WSJ that the potential impact of the mails has pushed the company toward a quick settlement of its FTC investigation. The mails sent around the time of a 2012 FTC consent decree suggest that Zuckerberg and fellow senior execs didn’t make complying with the decree a priority.
- Facebook (NASDAQ:FB) used a now-defunct app to gather personal and sensitive device data on about 187,000 users, TechCrunch reports.
- The bulk of those were users in India, according to a letter to lawmakers that TechCrunch saw. But the hoard included data on 31,000 U.S. users, including 4,300 teenagers.
- That information — which could include Web browsing histories, encrypted messages and mobile app activity — came via Facebook’s Research app, which was banned from the App Store earlier this year.
- The issue is tied to misuse of enterprise developer certificates that were issued by Apple only for internal company use.
A hot new IPO to keep your eye on. I added it to my Best Stocks Now App.
- CrowdStrike (NASDAQ:CRWD) pops 87% to $63.50 on the open of its first trading day.
- Shares were priced at $34, above the $28 to $30 range.
- CrowdStrike raised $612M in the IPO.
What was Warren Buffet thinking? He is a major shareholder.
- Teva Pharmaceutical Industries (TEVA -4.2%) slumps on modestly higher volume. Shares are now exchanging hands at the lowest prices in 19 years. The stock continues to fight pricing headwinds, the continued erosion of Copaxone sales (down 56% in Q1) and its potential exposure from opioid litigation.
- Other generic players are also in the red.
How good is Jim Cramer’s advice? Sales of his “action alerts” have been decreasing dramatically over the years.
- TheStreet’s (TST +6.5%) $16.5M sale to TheMaven (MVEN +0.3%) wraps up the end of a yearlong strategic review that had already seen the company shed its business-to-business operation, which was generating about half the company’s revenues.
- It likely means a transformation of the most visible part of the company, including a probable exit of Jim Cramer.
- The company once had a market cap of $1.7B after going public in 1999, but has of late struggled to maintain profits.
- TheStreet sold RateWatch in June 2018 (to S&P Global for $28.2M), and this year closed on sales of TheDeal and BoardEx to Euromoney for about $87.3M. CEO David Callaway exited with the latter deal, with CFO Eric Lundberg stepping up to the chief executive job.
- That also resulted in a cash distribution to shareholders of about $94.3M (about $1.77/share at the time); the company executed a 1-for-10 reverse split in late April, leaving 5.3M shares outstanding.
- Before those deals, the company then known as Tronc considered a buyout when TheStreet’s market cap was just under $70M.
- And it’s doubtful that TheStreet’s biggest public face, co-founder Jim Cramer, will remain with the company. This week he terminated his employment agreement, and so has 30 days to exit or set a new agreement.
- Now TheMaven — used by small and mid-sized brands as a digital platform — talks about how its new acquisition could be the core of a new financial vertical, with a “powerful and important voice delivering market-leading financial insights.”
Nice report from LULU. I am long the stock in my Ultra Growth Portfolio.
- Lululemon Athletica (NASDAQ:LULU): Q1 GAAP EPS of $0.74 beats by $0.04.
- Revenue of $782M (+20.4% Y/Y) beats by $26.08M.
- Shares +2.3%.
- Lululemon (NASDAQ:LULU) rallies in AH trading after lifting its full-year profit view.
- The company anticipates FY revenue of $3.73B to $3.77B vs. $3.70B to $3.74B prior and $3.77B consensus. EPS of $4.51 to $4.58 is anticipated vs. $4.48 to $4.55 prior and $4.62 consensus.
- Comparable sales were up 16% in Q1 off broad-based momentum to smash the consensus expectation for an 11% increase. The store-only comp was +8%.
- LULU +2.61% AH to $175.32.