We Need a Distraction Like Tiger at the Masters: Taking Stock
(Bloomberg) -- Stock futures are modestly higher after what turned out to be an almost unthinkable recovery yesterday. The headlines will read that China tariff fears are subsiding, and the action in our favorite trade war proxy, Boeing, jibes with that notion.
BA shares are up 0.8% pre-market, after being the worst performer on the Dow yesterday, and has come close to erasing all of the prior day’s loss (Morgan Stanley likes risk-reward here). As one Deutsche strategist notes: "We’re at an important point in the phony trade war that’s currently playing out between the US and China."
Amidst all the violent swings and the relentless noise over tariffs, we continue to consolidate above the 200-day moving average (currently 2,592 on S&P cash) -- a measure tested almost every day for a week and a half. As for resistance, keep an eye on ~2,650 as we’ve hit this level three times in six sessions before another pullback.
The Tiger Distraction
What this market needs is a distraction, badly, since it seems as though every egregious headline, media scoop or tweet is turning into an immediate buy or sell order on the trading desk. This makes for wild swings -- great for commissions and for day traders, but not for a healthy stock market.
Perhaps Tiger Woods making a huge run at the Masters can be that distraction, at least for the next two days until we find something else to tide us over before earnings season starts. Tee time is 10:42am today (Tiger is tied as the favorite in Vegas with 10-1 odds) and maybe just a few birdies, a couple long putts and a fist pump here and there is enough for traders to turn away from their screens for an extended period of time and take their itchy fingers off the keyboards to avoid any rash decisions based on a seemingly enormous tweet or headline.
And to further keep you on the sidelines, here is a great read on Tiger’s comeback in Sports Illustrated from the co-creator of "Billions."
Tech Research Bonzanza
Big calls out from the sell-side this morning, especially on the semiconductors where UBS (ex-Cowen analyst) initiated the space -- lifting names like MRVL +2.4% and hitting MU -0.9% -- while Stifel is out with an upgrade of AMD +2.9% and a downgrade of INTC -0.8%.
Elsewhere in tech, FB is up ~3% after Zuckerberg’s call with the media (though the real grilling will likely happen next week at separate congressional hearings) and Deutsche saying they are "cautiously optimistic that the bottom is in." SPOT is up over 3% on two buy initiations and AAPL is higher with Citi talking up the company’s capital return opportunity.
All of this comes after an amazing bounce -- at one point, a 76-handle trough-to-peak move in the S&Ps yesterday, marking the sixth intraday reversal of at least 1% since January (the total of the past two years) -- which was especially impressive considering how grim things looked in early morning futures trading after an escalation of tit-for-tat tariff noise.
But it seems like these jitters continue to ebb and flow depending on the headline of the moment, whether related to China or Nafta. Or perhaps the huge ADP beat, which got buried in the heat of the pre-market selloff, got some traction as the day wore on. The net takeaway should make one more optimistic about the most important economic data point of the week: Friday’s jobs print.
- Goldman: Wednesday’s economic data, including ISM Services, Factory Orders, and ADP, point to "a still-strong labor market which may be giving investors confidence in putting on a bit more risk ahead of Friday’s March Payrolls report"
- Bloomberg Intelligence: "Strength in the ADP report since the end of last year is notable and has been matched in the official payrolls numbers from the BLS as of late."; Bloomberg Economics still expects an above-consensus reading of 210k in the month.
Another positive was strong orders and gross margins out of Lennar, which propelled the stock to a 10% gain and lifted the rest of the homebuilders. In fact, three of the top four in the S&P 500 were homebuilders, and the entire index was led by LEN.
Tick-by Tick Guide to Today’s Actionable Events
- 8:00am -- MON earnings
- 8:00am -- SBBP investor day
- 8:30am -- Initial Jobless Claims, Trade Balance
- 8:30am -- LW, SCHN earnings
- 8:30am -- NTAP analyst day
- 10:30am -- EIA natgas storage
- 10:42am -- Tiger Woods tees off at the Masters
- 1:00pm -- Fed’s Bostic speaks on financial literacy
- 4:00pm -- PSMT earnings
- 4:05pm -- WDFC earnings
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