Stocks Yawn to ‘No Collusion’ With Focus on Growth: Taking Stock

(Bloomberg) -- Now that Special Counsel Robert Mueller has found no evidence that President Trump colluded with Russia in the 2016 presidential campaign, the question becomes how much of the news is already baked into markets.

Based on the immediate reaction -- U.S. futures are down 0.3% after falling as much as 0.7% overnight -- investors seem to be more focused on an array of concerns from growth to China trade tensions.

Whether this turns into a sell-the-news type of session is yet to be seen, although there’s little doubt that stocks would have fallen much more had the Mueller report found evidence of collusion. Markets would still love some reassurance that what they really care about -- economic and earnings growth -- are still strong.

We finished the week on a grim note, as German and the Eurozone’s manufacturing numbers came in short of expectations, just days after the Federal Reserve expressed concern about the pace of the economic expansion around the world. And the 10-year U.S. yield fell below the three-month rate for the first time since 2007. “Quality tilts to portfolios will be increasingly in demand,” says Bloomberg Intelligence analyst Peter Chung, “as economic uncertainty rises.”

Less Pain for U.S. Banks

This week is jam-packed with economic data that will provide more clarity on the state of the U.S. expansion, from housing starts to GDP to the consumer confidence index. The next five days will also be important as banks look to rebound from theirworst week in more than three years amid concerns that the Fed’s even-more dovish stance will pressure net interest margins, curb top-line growth and weaken loan demand. The SPDR S&P Bank ETF posted its ninth outflow in 10 weeks.

Bank stocks are rising in pre-market trading as Jefferies says banks look “oversold again” post-Fed correction and 10-year Treasury yields are up about 3 basis points.

An Apple a Day

Apple is expected to unveil streaming video and news subscriptions during an event today. Analysts don’t expect the news to be a game changer for Apple or its streaming competitors. The iPhone maker has secured deals with show business royalty such as Steven Spielberg, Oprah Winfrey and Reese Witherspoon to create a lineup of programming to compete with Netflix, Amazon and Walt Disney.

Notes From the Sell Side

• Texas Instruments and Analog Devices were both downgraded to market perform from outperform at Bernstein, which said it’s “increasingly nervous” about the semiconductor industry going into the second half of the year. The call comes a few days after the Philadelphia Semiconductor Index rallied to near-record levels. “We are not necessarily surprised by the fact that there was a rebound,” wrote Bernstein analyst Stacy Rasgon. “However, we have been somewhat surprised by the speed and magnitude of the snapback, especially given all the external noise around trade/tariffs, China slowdowns, and general malaise in many end markets.” The firm sees TXN and ADI as “more broadly exposed, and more expensive,” than other names in the sector, and wrote that they faced elevated inventories, high expectations, and less-favorable valuations going into the second half of the year.
• Akamai Technologies was downgraded to sell from hold at Deutsche Bank, which also cut its price target to a Street-low view of $58 from $64, a level that represents downside of nearly 20% from its Friday close. Analyst Vijay Bhagavath cited tough year-over-year comparisons and the potential for the company’s market share in both video streaming and gaming traffic to fall in the U.S. The firm also forecast “intensifying price competition” and the lack of major live events that could drive peak video traffic volumes in the near term. The shares are down 4.5% pre-market.

Your 63-Hour ICYMI

General Motors, Tesla and Lear are good bets for investors looking to get ahead of a dramatically changing auto industry, Wolfe Research’s Rod Lache says in Barron’s cover story; U.S. air-safety regulators have tentatively approved Boeing’s changes to software and pilot-training with regard to its grounded 737 MAX jets, the Wall Street Journal reported; Uber is said to be close to announcing a $3.1 billion deal to acquire its Dubai-based rival Careem Networks; Pinterest filed for an IPO after the bell Friday; some 1 million anti-Brexit protesters demanded another vote as reports surfaced that Theresa May is under increasing pressure to stand down; Jimmy Carter became the longest-living president in U.S. history on Friday; UCF was this close to ending Duke’s March Madness hopes; Rob Gronkowski is retiring from football at age 29; and New Jersey is bracing for a tight vote on legalization of recreational pot.

Tick-By-Tick to Today’s Actionable Events

• 8:00am -- CMCM earnings conference call
• 8:30am -- Goldman Sachs to speak at the Future of Market Technology Symposium
• 8:30am -- Chicago Fed National Activity Index
• 9:00am -- WGO earnings conference call
• 9:30am -- Dominion Energy holds investor meeting (first presentation)
• 10:30am -- Dallas Fed Manufacturing Activity
• 1:00pm -- Apple Special Event; follow our live blog
• 4:30pm -- Third Bridge Forum; Panel Discussion: Online Auto Sales – Market Overview (CARS, KMX, CVNA)
• Red Hat to report earnings after the close
• Ingersoll-Rand roadshow

--With assistance from Felice Maranz and Ryan Vlastelica.

To contact the reporter on this story: Elena Popina in New York at epopina@bloomberg.net

To contact the editors responsible for this story: Courtney Dentch at cdentch1@bloomberg.net, Catherine Larkin

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