Stock Futures Up on China Trade Exemptions

Japan’s Nikkei was up almost 1.1%, hitting a four-month high on big gains for Yahoo Japan and SoftBank Group, while Hong Kong’s Hang Seng …

Dow Jones Industrial Average (DJI) futures are signaling a higher start, building on the momentum that sent the blue-chip index to its longest winning streak in 16 months yesterday. Upbeat trade headlines continue to drive the positive price action, with China’s Commerce Ministry saying earlier it will add pork and soybeans to a list of U.S. products exempt from additional tariffs. Wall Street is also digesting this morning’s retail sales data, which rose a more-than-expected 0.4% in August on robust auto sales. Futures on the S&P 500 Index (SPX) and Nasdaq-100 Index (NDX) are up, too, with stocks poised to close in on new record highs.

Continue reading for more on today’s market, including:

  • Caterpillar stock flashes warning signs.
  • RH call traders won big on a pre-earnings rally.
  • Plus, a bouncing drug stock; Etsy gets a big upgrade; and Baker Hughes is indicted.

us premarket trading on sept 13

5 Things You Need to Know Today

  1. The Cboe Options Exchange (CBOE) saw 1.10 million call contracts traded on Thursday, compared to 610,116 put contracts. The single-session equity put/call ratio rose to 0.55, while the 21-day moving average remained at 0.67.
  2. Catalyst Pharmaceuticals Inc (NASDAQ:CPRX) withdrew its plan for an eight-million share offering, representing around 8% of the drugmaker’s float, saying the “current market price of the common stock is not in the best interest of the company and its stockholders.” Initial news of the offering had CPRX stock settling at $6.13 on Thursday — down 20% from Wednesday’s record high of $7.67 — but the shares are up 10.6% ahead of the bell today.
  3. Wedbush upgraded Etsy Inc (NASDAQ:ETSY) to “outperform” from “neutral,” with the brokerage firm waxing optimistic over the online marketplace’s pre-holiday season launches of Etsy Ads and free shipping. ETSY stock is 3.8% higher in electronic trading, set to open around the $57 per-share mark — just below its Aug. 2 bear gap.
  4. Baker Hughes A GE Co (NYSE:BHGE) was indicted by a grand jury in Alaska on allegations the energy firm exposed workers to toxic chemicals, though the company denied the charges. BHGE stock closed last night at $22.64, off 8.5% since a recent rejection at its 200-day moving average.
  5. Import and export prices, consumer sentiment, and business inventories are due. This busy batch of economic data comes ahead of next week’s Fed meeting.

buzz stocks sept 13

U.K. Stocks Struggle as Pound Strengthens

The stimulus deal in Europe and easing tensions between the U.S. and China sent stocks in Asia higher today. Japan’s Nikkei was up almost 1.1%, hitting a four-month high on big gains for Yahoo Japan and SoftBank Group, while Hong Kong’s Hang Seng nearly eked out a 1% win on a boost from life insurance issue AIA. China’s Shanghai Composite and South Korea’s Kospi were both closed for holiday.

Stocks in Europe are mostly higher at midday, as bank stocks advance following yesterday’s European Central Bank (ECB) stimulus announcement. The French CAC 40 is up 0.3%, while the German DAX has added 0.6%. London’s FTSE 100 is hovering right below breakeven, however, off 0.03% as blue-chip stocks falter in the face of a strengthening pound.

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Wall Street Edges Higher Wednesday

On the other hand, Lee Ainslie (Trades, Portfolio) and Jim Simons (Trades, Portfolio)’ Renaissance Technologies sold out of the stock. Gainers.

U.S. stocks were in the green on Wednesday after China announced it will be suspending additional tariffs on some U.S. products. The Dow Jones Industrial Average gained 0.50% to 27,045, the S&P 500 Index rose 0.49% to 2,993 and the Nasdaq Composite Index swelled 0.81% to 8,149.

Shares of Dave & Buster’s Entertainment Inc. (NASDAQ:PLAY) fell more than 5% after announcing second-quarter results. The company posted earnings of 90 cents per share on revenue of $344.59 million. The company beat earnings estimates by 6 cents, but revenue was in line with expectations.

“We continue to deliver strong revenue and earnings per share growth – including record second quarter sales, Ebitda and EPS – while investing for the future and returning substantial capital to shareholders through dividends and share repurchases,” CEO Brian Jenkins said.

During the quarter, comparable store sales declined 1.8%, compared a decrease of 2.4% in the prior-year quarter, due to a 2% decrease in walk-in sales. Further, operating income rose 0.6% from the year-ago quarter to $46.2 million. As a percentage of total revenue, it decreased 100 basis points to 13.4%.

The earnings before interest, taxes, depreciation and amortization inched up 5.3% to $79 million from $75 million last year. As a percentage of total revenue, Ebitda decreased 60 basis points to 22.9%. The adjusted Ebitda increased 4.4% to $86 million. As a percentage of total revenue, it decreased 80 basis points to 25%.

Moreover, during the quarter, the company repurchased 3.4 million shares for $137 million.

Looking ahead to full fiscal 2019, the company expects total revenue to be between $1.338 billion and $1.359 billion and net income to range from $91 million to $100 million.

During the quarter ended June 30, Paul Tudor Jones (Trades, Portfolio) and Joel Greenblatt (Trades, Portfolio) established new positions in the stock. Steven Cohen (Trades, Portfolio) boosted his holding by 275% to 117,896 shares. On the other hand, Lee Ainslie (Trades, Portfolio) and Jim Simons (Trades, Portfolio)’ Renaissance Technologies sold out of the stock.

Gainers

  • CenturyLink Inc. (NYSE:CTL) + 4.7%

  • TripAdvisor Inc. (NASDAQ:TRIP) + 4.4%

  • Waters Corp. (NYSE:WAT) + 3.3%

  • Western Digital Corp. (NASDAQ:WDC) +2.6%

  • Newmont Goldcorp Corp. (NYSE:NEM) +1.9%

Losers

  • DaVita Inc. (NYSE:DVA) -3.6%

  • Take-Two Interactive Software Inc. (NASDAQ:TTWO) -2.9%

  • Cigna Corp. (NYSE:CI) -2.2%

  • Monster Beverage Corp. (NASDAQ:MNST) -1.9%

  • Xerox Holdings Corp. (NYSE:XRX) -1.2%

Global markets

The main European stock markets traded in the green. The U.K.’s FTSE 100 advanced 0.96%, France’s CAC 40 rose 0.44%, Germany’s Dax swelled 0.74% and Spain’s IBEX 35 dipped 0.21%.

In Asia, Japan’s Nikkei 225 gained 0.96%, India’s BSE Sensex rose 0.34%, Hong Kong’s Hang Seng climbed 1.78% and China’s Shanghai Composite slid 0.41%.

Disclosure:The author holds no positions in any stocks mentioned.

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Asia structured products house of the year: Societe Generale

The bank’s foreign exchange hedged indexes for equity-linked products, …. The Minsheng Macro 1 index consists of stock and bond futures in …

The Asian structured products market offer a timely example of Warren Buffet’s observation: “It’s only when the tide goes out that you learn who’s been swimming naked.”

The past year has seen Asian exotics desks lose several hundred million dollars, as equity-linked product portfolios blew up in the fourth quarter and dealers struggled to cope with market swings. Amid all this, Societe Generale has managed to not just hold its own but also come up with ideas that helped customers switch products in line with the market tide and create solutions that reduced risk.

The bank’s foreign exchange hedged indexes for equity-linked products, geometric dispersion notes, quantitative index solutions for China structured products and a restructured rates offering are some of the standout innovations that have benefitted clients and were quickly aped by competitors. These solutions are a testament to the bank’s product innovation capabilities and enhanced risk recycling that are complemented by strict product governance, increased digital trading, automation and expansion into markets such as Malaysia and Thailand.

The French bank, which is well known for its structured equity investment solutions, has built a cross-asset focus and expanded its offering to cover rates, credit and foreign exchange over the past two years. These products have contributed to an 11% increase in the value of traded notionals in the last 12 months.

“Today, we offer a very diverse offering to our clientele,” says Thomas Decouvelaere, head of structuring for Asia-Pacific at Societe Generale. “We have pioneered successful products across not just equities but fixed income too. We now show our clients 10 structures every day versus one or two a few years ago.”

All this has been made possible by building an onshore sales presence in markets from Australia to Malaysia, customising solutions for local markets and automation. The number of automated quotes climbed 48% last year and the number of automated trades rose 53%. The bank handled 35,000 requests for quotation on average every day last year, up from 20,000 the previous year.

Automated trades made up almost a third of the bank’s structured product volumes for the private banking business in Hong Kong and Singapore last year and is expected to increase to half with the next two years, says Decouvelaere.

A key to its success in Asia has been Societe Generale’s ability to constantly offer small tweaks to structures and payoffs, regularly come up with pioneering solutions.

Monitoring product lifecycle

The advisory setup of the bank allows it to monitor the product or solution from inception to maturity and adjust in line with changing market conditions.

For example back in 2016–17, the large insurers and pension fund clients were investing in long-term range accrual products, with 15-year tenors. These products offered investors a way to gain from the steepening US dollar rate curve.

Last year, those clients began to be concerned by the flattening of the rate curve and asked Societe Generale to come up with cross-asset solutions to mitigate the risk that could negatively impact the range accrual coupons.

The bank immediately responded by proposing to lengthen the product maturity by one or two years giving room to add additional bespoke exposures such as credit risk. While these would reduce the maximum possible coupons level, Societe Generale could propose safer range accrual barriers, even negative barriers.

“Our solution came to the fore when the curve actually inverted later,” says Decouvelaere “We are probably the only bank capable of mixing multiple exposures with very long-term and complex structures. Our flexibility has been helped by our increased local presence in markets.”

FX hedged index

Another product that speaks for Societe Generale’s structuring capabilities is a foreign exchange hedged index that mitigates the quanto risk for clients and dealers.

Societe Generale launched the index in December and offered it to wealthy investors through Hana Financial Investments, a South Korean securities house. The product has attracted about $1 billion in investment so far, the bank says.

The autocallable securities, which pay investors a competitive coupon linked to the worst-performing benchmark in the basket are denominated in won, but the options and futures that dealers use to hedge the issuance are denominated in the home currency of the index such as the US dollar for S&P 500 or Hong Kong dollars for HSCEI.

This leaves banks with forex risk to manage. Dealers that issue autocallables are short the foreign currency/won vega and gamma – the exposure to movements in volatility, and the rate of change of sensitivity to moves in the underlying, respectively – as they do not want the exchange rate to move. Dealers struggled to hedge this risk in HSCEI-linked Korean autocallables during the 2015 China Black Monday episode.

To take on this risk, dealers charge investors for smoothing currency gyrations, which is referred to as the quanto adjustment, and this is about 1% of the upfront value of a typical autocall contract. But by using forex-hedged indexes instead, dealers can offer a 0.5% to 1% increase in coupon per annum, or a 20% boost in yield.

The hedged index works by investing in one of the underlying benchmarks and adds a forex forward to it, which hedges the currency risk of the benchmark versus won. The index is rehedged on a monthly basis.

The forex forward is put in place monthly and the notional on which the forex forward is based is reset at the start of each month. As a result, the index level is hedged at the start of the month, but the additional intra-month performance will not be.

This means the gains or losses on the index during the month can be affected by currency moves until the position is rehedged at the end of the period. The impact though will be minor. For example, if the index went from $100 to $105, but the forex rate fell 2%, there would only be a 10 cent loss in value.

QIS solutions

Another index that Societe Generale introduced was a quant index-linked wealth management product in partnership with China Minsheng Bank.

The Minsheng Macro 1 index was launched by CMBC’s asset management unit in partnership with Societe Generale last December and has attracted $1 billion so far.

The multi-asset index uses a quantitative strategy to determine signals for when to trade. It is said to be one of the first so-called signal indexes underpinning a non-guaranteed wealth management product in China. A decline in lending rates has led Chinese investors to explore global assets and alternative structures to enhance yield. The product has returned 16.55% since inception.

The Minsheng Macro 1 index consists of stock and bond futures in developed markets including the US, Japan, Germany and Australia, as well as commodities. Societe Generale provides hedging services on the strategy. Each month, the French bank receives the global asset allocation instructions from CMBC’s asset management unit, and then hedges the options with relevant instruments. The volatility of the index is targeted at 5%, the French bank says.

Most of the investment in the product is linked to a fixed income portfolio – typically Chinese government or supranational bonds – that would generate a fixed payout of 4% a year. CMBC will retain a 1% coupon and use the other 3% to buy a call option on the index with Societe Generale. The maximum loss in the event of a default by Societe Generale is the premium spent on the option – 3% – as there is a 1% minimum coupon.

Societe Generale focuses on volatility control to achieve stable realised volatility for the index regardless of the investment manager’s decision to allocate to equity or fixed income, or a mix of bot. It recycles the volatility exposure through its trading book and other liquid derivatives such as listed or over-the-counter options.

The bank also thought out of the box to come up with geometric dispersion strategies as part of its risk recycling efforts. Given the bulk of the business in Asia is based on the worst-performing index, the business would be exposed to covariance risk. Societe Generale typically unloads Asian risks globally but has seen pick-ups in the interests of hedge funds in such products, says Decouvelaere.

Societe Generale proposed stocks as an alternative universe for geometric dispersion. A hedge fund manager says while he was keen on the geometric dispersion idea, he was worried about the risk of bankruptcy on specific equity stock.

The French bank came up with a solution wherein it managed to cancel the bankruptcy risk in the event of default of one equity in a basket of dispersion. When a stock drops below a certain percentage of the initial price then it is removed from the dispersion basket, thus protecting the client.

Societe Generale’s solution was not “only innovative but immediately solved the problem and this made the trade very appealing”, the hedge fund says.

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Wall Street Posts Losses on Tuesday

… Portfolio) reduced his holding by 17% to 57,961 shares and Jim Simons (Trades, Portfolio)’ Renaissance Technologies curbed its position by 20% to …

U.S. stocks were in the red on Tuesday, with electronic tech and commercial services stocks leading the decline. The Dow Jones Industrial Average fell 0.13% to 26,800, the S&P 500 index dipped 0.39% to 2,966 and the Nasdaq Composite Index slid 0.50% to 8,046.

Shares of Casey’s General Stores Inc. (NASDAQ:CASY) gained about 1.5% after announcing firstquarter results. The company posted earnings of $2.31 per share on $2.63 billion in revenue. The company beat earnings estimates by 25 cents and revenue expectations by $40 million.

“Quarterly results were positively impacted by our fuel price optimization initiative, store growth and a continued focus on controlling operating expenses,” President and CEO Darren Rebelez said.

For the quarter, the gross profit was $565.7 million, up 840 basis points year over year, and the gross margin expanded 130 points to 21.5%. Operating expenses increased 5.7% as a result of 76 more stores opened from the prior-year quarter.

By segment, grocery and other merchandise sales grew 6.7% to $687.9 million and same-store sales rose 3.2%. In the prepared food and fountain division, sales rose 5.3% to $295.9 million, while same-store sales jumped 1.6%.

Looking ahead, the company maintained its fiscal 2020 guidance.

During the quarter ended June 30, Mario Gabelli (Trades, Portfolio) reduced his holding by 17% to 57,961 shares and Jim Simons (Trades, Portfolio)’ Renaissance Technologies curbed its position by 20% to 24,472 shares. Robert Olstein (Trades, Portfolio) sold out of the stock and Joel Greenblatt (Trades, Portfolio) boosted his position by 53% to 11,561 shares.

Gainers

  • Nektar Therapeutics Inc. (NASDAQ:NKTR) +10.5%
  • LKQ Corp. (LKQ) +4.9%
  • Sealed Air Corp. (NYSE:SEE) +5.5%
  • Mosaic Co. (NYSE:MOS) +6.2%
  • Albemarle Corp. (NYSE:ALB) +4.5%

Losers

  • Chipotle Mexican Grill Inc. (NYSE:CMG) -7.0%
  • SBA Communications Corp. (NASDAQ:SBAC) -5.0%
  • Starbucks Corp. (NASDAQ:SBUX) -4.9%
  • Aon PLC (NYSE:AON) -3.9%

Global markets

The main European stock markets traded in the green. The U.K.’s FTSE 100 advanced 0.44%, France’s CAC 40 swelled 0.08%, Germany’s Dax rose 0.35% and Spain’s IBEX 35 advanced 0.75%.

In Asia, Japan’s Nikkei 225 gained 0.35%, India’s BSE Sensex climbed 0.44%, Hong Kong’s Hang Seng rose 0.01% and China’s Shanghai Composite slid 0.12%.

Disclosure:The author holds no positions in any stocks mentioned.

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What Are the Technicals Implying For CBOE Global Markets Inc (CBOE)

Tracking shares of CBOE Global Markets Inc (CBOE), we have seen that the Chaikin Oscillator reading is currently below zero. Traders following the …

The DAX managed a slight gain of 0.20%, while the FTSE 100 was underperforming after strong labor market data lifted yields. The index has lifted off lows, but remains down 0.42% on the day.

Stocks were struggling going into the Federal Reserve announcement, with markets still split on the risk of an accelerated rate path. US stock futures were moving sideways.

Asian markets initially moved higher, as energy related stocks got a boost from higher oil prices, but Hang Seng and CSI 300 lost earlier gains later in the session and closed with losses of 0.43% and 0.41%, respectively. Japan was closed for a holiday.

Tracking shares of CBOE Global Markets Inc (CBOE), we have seen that the Chaikin Oscillator reading is currently below zero. Traders following the stock may be on the lookout for possible bearish momentum.

New investors may be trying to figure out the best way to build a solid foundation with which to make future investing decisions. There are many different paths that an investor can take once they become familiar with the territory. Some investors will choose to study professional analyst research and recommendations. This can be very useful, but many investors may feel more comfortable doing their own research. Conducting stock research may involve looking at the fundamentals of a certain company. Understanding what kind of competitive advantage a company might have compared to others in their industry may help weed out some of the more undesirable stocks. Because there is no one way to properly conduct stock research, investors may need to try a few different methods in order to determine the best individual course of action.

CBOE Global Markets Inc (CBOE) currently has a 14-day Commodity Channel Index (CCI) of -59.63. Dedicated investors may choose to use this technical indicator as a stock evaluation tool. Used as a coincident indicator, the CCI reading above +100 would reflect strong price action which may signal an uptrend. On the flip side, a reading below -100 may signal a downtrend reflecting weak price action. Using the CCI as a leading indicator, technical analysts may use a +100 reading as an overbought signal and a -100 reading as an oversold indicator, suggesting a trend reversal.

Currently, the 14-day ADX for CBOE Global Markets Inc (CBOE) is sitting at 20.36. Generally speaking, an ADX value from 0-25 would indicate an absent or weak trend. A value of 25-50 would support a strong trend. A value of 50-75 would identify a very strong trend, and a value of 75-100 would lead to an extremely strong trend. ADX is used to gauge trend strength but not trend direction. Traders often add the Plus Directional Indicator (+DI) and Minus Directional Indicator (-DI) to identify the direction of a trend.

Tracking other technical indicators, the 14-day RSI is presently standing at 53.34, the 7-day sits at 39.80, and the 3-day is resting at 13.88 for CBOE Global Markets Inc (CBOE). The Relative Strength Index (RSI) is an often employed momentum oscillator that is used to measure the speed and change of stock price movements. When charted, the RSI can serve as a visual means to monitor historical and current strength or weakness in a certain market. This measurement is based on closing prices over a specific period of time. As a momentum oscillator, the RSI operates in a set range. This range falls on a scale between 0 and 100. If the RSI is closer to 100, this may indicate a period of stronger momentum. On the flip side, an RSI near 0 may signal weaker momentum. The RSI was originally created by J. Welles Wilder which was introduced in his 1978 book “New Concepts in Technical Trading Systems”.

Taking a peek at some Moving Averages, the 200-day is at 103.72, the 50-day is 115.34, and the 7-day is sitting at 119.21. The moving average is a popular tool among technical stock analysts. Moving averages are considered to be lagging indicators that simply take the average price of a stock over a specific period of time. Moving averages can be very useful for identifying peaks and troughs. They may also be used to help the trader figure out proper support and resistance levels for the stock.

CBOE Global Markets Inc (CBOE)’s Williams Percent Range or 14 day Williams %R presently is at -66.95. In general, if the reading goes above -20, the stock may be considered to be overbought. Alternately, if the indicator goes under -80, this may show the stock as being oversold. The Williams %R indicator helps show the relative situation of the current price close to the period being observed.

Diversification can be an important aspect of any investor’s portfolio. Investors may choose to spread out stock holdings between foreign stocks and stocks with different market capitalizations. Investors may have to first become aware of the risk associated with owning a wide variety of stocks. Owning stocks that belong to different industries may also be a help to the success of the portfolio. Often times, sectors may trade off being market leaders. Owning all one sector may leave too much risk exposed if the sector suddenly tanks and falls out of favor with investors. Investors may need to occasionally do a strategic review of the equity portion of the portfolio. Knowing exactly what is held may help the investor when the time comes to make some adjustments.

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