Market 2018-01-18 (China, Lithium, IBM, and more)

The market is taking a breath today while all three indices have mild pullback. There is still no sign of budget bill as the deadline to avoid Government Shutdown is tomorrow.

"Investors are positioned for an upside acceleration in equities that has become increasingly difficult to support given the weakness in credit,” says Goldman strategist John Marshall. Therefore he suggests to buy puts to hedge.

Crude -0.33% to $63.76. Gold -0.94% to $1,326.60.

China 2017 GDP growth 6.9%, better than expected. A new Gallup poll shows that China is considered as "World Leader" (31%). The votes for US slide from 48% in 2016 to 30% after Trump took the office. I believe Chinese Tech stocks are still very attractive even after the recent rally.

Winners

WYN +4.8%, as the company announces that it acquired La Quinta's (LQ +3.7%) hotel franchise and hotel management businesses for $1.95B in cash.

GNC +51.6%, huge short-squeeze, as the company reports same store sales for domestic company-owned stores increased 5.7% in Q4. EPS in the range of $0.24 to $0.25 vs. $0.23 consensus.

FB +1.2% finally bounces back a little. Hold tight.


Losers

GE down another 3.3% today to finish @ $16.77. Sitfel's Robert McCarthy yesterday added his voice to that contingent, assigning zero value to GE Capital in light of "seemingly permanent" suspension of dividends as it funds another $15B of reserves over the next five years. He figures fair value for GE share of $18.

BA -3.1% amid profit-taking.

AA -7% after the ER miss yesterday.

Juniper Networks (JNPR -3.5%) downgraded by Barclay from Equal Weight to Underweight with $25 PT.

KMI -2.9% despite earnings beat: Q4 EPS of $0.21 beats by $0.03. Revenue of $3.63B (+7.1% Y/Y) beats by $130M.

Lithium producers including FMC Corp. (FMC -3.9%) and Albemarle (ALB -7.1%) are sharply lower after Chilean peer SQM (SQM -0.9%) ended its dispute with regulator Corfo over royalties of the battery metal. Wells Fargo and Credit Suisse call the selloff overdone. Meanwhile, Deutsche Bank upgrades SQM to Buy and raises its stock price target to $70 from $52. LIT -3.8%.

Earnings AH

International Business Machines (IBM): Q4 EPS of $5.18 beats by $0.01. Revenue of $22.54B (+3.5% Y/Y) beats by $490M. They finally start to grow revenue again after years decline. Share -4.2%, WTF.

Having recently partnered with shipping colossus Maersk on a joint venture to apply blockchain software, IBM hopes to establish an efficient "global trade network" of manufacturers, shippers, freight forwarders and others, Schroeter  (IBM senior VP) said.

American Express (AXP): Q4 EPS of $1.58 beats by $0.04. Revenue of $8.84B (+10.2% Y/Y) beats by $120M. The growth is impressive. Q4's $2.6B tax ding also hit the company's capital ratios, so buybacks will be suspended in H1 to rebuild those numbers. Dividends will continue. Share -1.8%.

 I would suggest to buy the dip in both IBM and AXP.

Mellanox Technologies (MLNX): Q4 EPS of $0.82 beats by $0.14. Revenue of $237.58M (+7.2% Y/Y) beats by $2.11M. Share +5.1%.

My Trades Today

Added LIT @ $38.2

Added NTES @ $318

Bought FRC @ $86.2

Added GE @ $16.8

Comments

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