Tuesday Morning Reads

Options, News, Charts, Reads, Earnings



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Following breakout Q1 results from General Electric (NYSE:GE) and Honeywell (NYSE:HON) on Friday, earnings from the industrial sector are kicking into high gear. Investors today will see scorecards from Caterpillar (NYSE:CAT), 3M (NYSE:MMM), United Technologies (NYSE:UTX) and Lockheed Martin (NYSE:LMT), while Boeing (BA) and other aerospace/defense firms will report later in the week. While the demand environment remains strong for industrials, input cost inflation and growing worries of a trade war pose risks.


It's another big step for the Belt and Road Initiative. The Shanghai Stock Exchange has signed an MoU with the UAE to open an international exchange alongside the Abu Dhabi Global Market. Specifics weren't given about which instruments the new venture would trade - or when it might open - but the platform intends to offer "endless opportunities" to support businesses and investors along the Belt and Road.

German business sentiment slipped further in April, suggesting the choppiness from the first quarter may be sticking around. The newly revamped Ifo business climate index, which now includes the services sector, fell to 102.1 from 103.3, marking the fifth straight decline in the monthly indicator. "The upbeat mood in Germany's executives' suites is evaporating," said Ifo President Clemens Fuest.

The U.S. Treasury Department on Monday gave American customers of Russia's Rusal (OTC:RUALF) more time to comply with sanctions and said it would consider lifting them if oligarch Oleg Deripaska cedes control of the company. Aluminum prices and companies plunged on the announcement, which gives Rusal longer to sell off large quantities of the metal it had been stockpiling.

Sohn Investment Conference 2018: Many hedge fund managers pitched stock ideas - ranging from online food ordering to homebuilders - that should benefit from the growing clout of the millennials (expected to become the largest generation in the U.S. in 2019). In a notable speech, Jeffrey Gundlach also recommended a short position in Facebook (NASDAQ:FB), which has come under pressure after the company acknowledged misuse of users' data.

Are U.S. markets able to support small-cap firms? That was the subject of roundtable discussion hosted by the SEC in Washington, which saw larger exchanges Nasdaq (NASDAQ:NDAQ) and NYSE (NYSE:ICE) spar with the smaller CBOE and IEX over liquidity vs. monopoly concerns. A proposal backed by the Trump administration would allow thinly-traded companies to restrict trading in their shares to the exchange where they are listed, instead of the 12 exchanges currently in operation.


Alphabet shares dipped slightly in after-hours trading on Monday as strong growth in ad sales on Google search and YouTube were not enough to offset a surge in costs in Q1. The results also came with regulators considering getting tougher on internet privacy. Net profit still jumped 73% to $9.4B, up from $5.4B in the same period a year ago, with Alphabet (GOOGGOOGL) getting a multibillion-dollar boost from the company's stakes in startups including UBER.

With the social network under scrutiny by investors fretting expensive new regulation, Facebook (FB) has publicly released 27 pages of its internal "community standards," showing how its 7,500 moderators are taught to police the site. Facebook said it will also launch an appeals process for people who feel their content has been taken down unfairly, building on a similar mode of action for suspended accounts, pages or groups.

European earnings roundup: Banco Santander (NYSE:SAN-1.5%premarket despite the eurozone's largest bank's net profit rising 10% in Q1, seeing synchronized growth in several key markets. Meanwhile, SAP rose 3.5%overnight amid a bullish outlook, as well as posting upbeat results and strong operating performance in the seasonally tough first quarter.

Eddie Lampert is once again carving up Sears Holdings (NASDAQ:SHLD) in a bid to save his retail empire. Unable to find buyers for the units, he has proposed his hedge fund purchase the Kenmore brand, as well as the Sears Home Improvement and Parts Direct businesses. "In our view, pursuing these divestitures now will demonstrate the value of Sears' portfolio of assets and will provide an important source of liquidity."

More from the retail space... Gap (NYSE:GPS) is making a big bet on Old Navy, adding 60 more stores across the U.S. this year, pushing its total to more than 1,000 locations. It is meanwhile trimming back its fleet of Gap and Banana Republic outlets, which haven't performed as well as Old Navy and Athleta of late. Same-store sales at Old Navy rose 9% Y/Y in Q4.

Focusing on its consumer-facing business, Whirlpool (NYSE:WHR) has agreed to sell its Embraco compressor business to Japan's Nidec (OTCPK:NJDCY) for $1.08B. The deal is not expected to have a material impact on its 2018 financial results. Whirlpool also said it expects to buy back up to $1B of stock through a tender offer at an anticipated price of $150 to $170 per share.

With new CEO Christian Sewing at the helm, Deutsche Bank (NYSE:DB) may announce changes in the strategy of its investment bank this Thursday along with quarterly earnings, Handelsblatt reports. The bank is weighing cuts to equities trading, its prime brokerage, as well as U.S. municipal bonds and parts of its Asia business. DB +3.6% premarket.

United Airlines CEO Oscar Munoz took home $9.6M last year, nearly half the pay he received in 2016, after recommending he shouldn't receive a bonus. United (NYSE:UAL) had faced a number of public relations disasters, including the violent dragging of a passenger off one of its flights, as well as several pet deaths. Chairman Robert Milton will also resign and be replaced with another independent board chief.

Ryanair has finalized an order for 25 additional high-capacity 737 MAX 8 airplanes, worth $3B at current list prices. The Irish low-cost carrier is the largest 737-800 customer in the world and the largest Boeing (NYSE:BA) operator in Europe. Last month, Ryanair (NASDAQ:RYAAY) took delivery of its 500th Next-Generation 737-800 and has now ordered more than 650 Boeing airplanes.

Looking to fend off rivals, Didi Chuxing (DIDI) has in recent weeks been in talks with bankers about an IPO, tapping the public markets for cash in the second half of 2018, WSJ reports. Didi - which operates China's largest ride-sharing platform and is expanding in Latin America and other parts of Asia - is hoping to fetch a valuation of at least $70B-$80B.

Amazon is working on robots for the home, according to Bloomberg, and has recently ramped up hiring for the secret project codenamed "Vesta." The effort is being overseen by Gregg Zehr, who runs Amazon's (NASDAQ:AMZN) Lab126 hardware research. Sources say the robots could be in employee homes by year's end and with consumers as early as 2019.

Media outlets are raising the alarm about the repeal of net neutrality, which took effect on Monday, as it marked 60 days since the rollback was published in the U.S. Federal Register. However, key parts of the proposal - like declassifying ISPs as public utilities - don't go into effect until a vote by the Office of Management and Budget, which is likely to take place in the next few weeks. Related stocks: ATUSCMCSACTLCHTRFTRTVZNFLXDISHCCOISTMUS

Monday's Key Earnings
Alphabet (NASDAQ:GOOG-0.2% AH following a surge in costs.
Barrick Gold (NYSE:ABX-0.5% AH narrowly beating estimates.
Halliburton (NYSE:HAL+0.2% amid higher N.America demand.
Kimberly-Clark (NYSE:KMB-1.5% despite raising guidance.
Today's Markets 
In Asia, Japan +0.9%. Hong Kong +1.3%. China +2%. India +0.5%.
In Europe, at midday, London +0.2%. Paris -0.1%. Frankfurt +0.2%.
Futures at 6:20, Dow -0.1%. S&P +0.1%. Nasdaq +0.1%. Crude -0.3% to $68.18. Gold -1% to $1325.20. Bitcoin +4% to $9291.
Ten-year Treasury Yield flat at 2.97%Today's Economic Calendar
8:55 Redbook Chain Store Sales
9:00 S&P Corelogic Case-Shiller Home Price Index
9:00 FHFA House Price Index
10:00 Consumer Confidence
10:00 New Home Sales
10:00 Richmond Fed Mfg.
10:00 State Street Investor Confidence Index
1:00 PM Results of $32B, 2-Year Note Auction

Known to most as Uranium Pinto Beans, Jason has more than 15 years under his belt of trading stocks, options and currencies. His expertise primarily lies in chart analysis, and he has a strong eye for undervalued stock. Because he’s got the ability to identify great risk/reward trades he usually enjoys taking the path less traveled and reaping the benefits from the adventure.

He is a co-founder of Option Millionaires, and he is best known for his weekly webinars with Scott, as well as his high level training webinars and charts found in the forums.

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