Day Traders Diary

3/11/19

The S&P 500 futures trade eight points, or 0.3%, above fair value, trying to recoup some of the benchmark index's 2.2% loss from last week. On the other hand, the Dow Jones Industrial Average futures trade 0.5% below fair value with Boeing (BA 387.98, -34.56, -8.2%) shares taking a hit following another deadly plane crash involving its new 737 MAX 8 on Sunday.

The plane, operated by Ethiopian Airlines, crashed shortly after takeoff from Addis Ababa, Ethiopia, killing all 157 on board. China and Indonesia have subsequently grounded all of their domestic 737 MAX 8 planes. Boeing's stock has dropped 8.2% in pre-market trading, although it was already up 31.0% this year.

Separately, Fed Chair Jerome Powell, in a 60 Minutes interview Sunday, repeated the Fed's patient stance on interest rate policy. Mr. Powell said the Fed would like to wait and see how the conditions of a slowing global economy evolve before deciding to make any changes to interest-rate policy. 

On the data front, investors will receive Retail Sales for January (Briefing.com consensus -0.1%) at 8:30 a.m. ET and Business Inventories for December (Briefing.com consensus 0.6%) at 10:00 a.m. ET.

U.S. Treasuries have edged lower this morning, pushing yields higher across the curve. The 2-yr yield is up four basis points to 2.48%, and the 10-yr yield is up two basis points to 2.65%. The U.S. Dollar Index is unchanged at 97.30. WTI crude is up 0.8% to $56.51/bbl.

In U.S. Corporate news:

• Boeing (BA 387.98, -34.56): -8.2%% following another deadly crash involving its new 737 MAX 8, which was operated by Ethiopian Airlines. China and Indonesia have grounded all of their domestic 737 MAX 8 planes. 
• Mellanox Technologies (MLNX 119.50, +10.02): +9.2% after announcing that it will be acquired by NVIDIA (NVDA 148.75, -1.89, -1.3%) for $125 per share, or approximately $7 billion, in cash.
• Oracle (ORCL 51.56, -1.21): -2.3% after Nomura downgraded the stock to 'Reduce' from 'Buy' and lowered its price target to $42.
• Apple (AAPL 175.78, +2.87): +1.7% after being upgraded to Buy from Neutral at Bank of America/Merrill Lynch; target raised to $210.

Reviewing overnight developments:

• Equity indices in the Asia-Pacific region began the week on a mostly higher note. Japan's Nikkei +0.5%, Hong Kong's Hang Seng +1.0%, China's Shanghai Composite +1.9%, India's Sensex +1.0%, South Korea's Kospi UNCH, Australia's ASX All Ordinaries -0.4%.
  • In economic data:
    • China's February CPI +1.0% month-over-month (expected 0.7%; last 0.5%); +1.5% year-over-year, as expected (last 1.7%). February PPI +0.1% year-over-year (expected 0.2%; last 0.1%). February M2 Money Stock 8.0% year-over-year (expected 8.4%; last 8.4%) and New Loans CNY885.80 billion (expected CNY975.00 billion; last CNY3.32 trillion).
    • New Zealand's February Electronic Card Retail Sales +0.9% month-over-month (expected 0.3%; last 1.8%); +3.4% year-over-year (last 3.5%)
    • Singapore's Q4 Unemployment Rate 2.2% (last 2.2%)
  • In news:
    • Chinese February loan creation (actual CNY885.80 billion; expected CNY975.00 billion) missed expectations following a big surge in January (CNY3.23 trillion) while auto sales in February fell nearly 14.0%.
    • Yonhap reported that Kia may halt production at its Chinese plant in Jiangsu due to weak sales. People's Bank of China Governor Yi Gang acknowledged the presence of downward pressure on the global economy and said that China will never devalue its currency to boost exports.

• Major European indices trade just above their flat lines while the UK's FTSE (+0.5%) outperforms. STOXX Europe 600 +0.3%, Germany's DAX +0.3%, UK's FTSE 100 +0.5%, France's CAC 40 +0.2%, Italy's FTSE MIB  +0.3%, Spain's IBEX 35 +0.1%.
  • In economic data:
    • Germany's January Industrial Production -0.8% month-over-month (expected 0.5%; last 0.8%). January trade surplus EUR18.50 billion (expected EUR21.20 billion; last EUR19.90 billion). January Imports +1.5% month-over-month (expected 0.2%; last 0.7%) and January Exports 0.0% month-over-month (expected -0.5%; last 1.5%)
    • Spain's January Retail Sales +0.8% year-over-year (expected 0.9%; last 0.6%)
  • In news:
    • The British parliament will hold another vote on Prime Minister Theresa May's Brexit deal tomorrow. Barring any last-minute changes, the vote is not expected to pass, meaning it will be followed by a vote for a no-deal Brexit on Wednesday. A vote against a no-deal exit would be followed by a vote on extending Article 50 on March 14.
    • It is worth noting that EU officials are expected to request an increase to the separation payment in the event of an extension.
    • Germany reported a 0.8% month-over-month decrease in Industrial Production in January, though the December reading was revised up to show growth of 0.8% from a previously-reported 0.4% contraction.
    • The German government has reportedly lowered its GDP growth forecast for 2019 to 0.8% from 1.0%.
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• Headlines provided by Briefing,com