Deal or No Deal?

By Hoda Mehr Mon, Jun 3, 2019

Happy Monday. So much for a trade deal! Instead, the heat dial on the trade war oven is being turned up a few degrees this week. Trump’s threat to open a trade war with Mexico has wall street sweating it out, with auto stocks among the hardest hit being sent straight to the scrap yard.

Ford (F) was gapping down into oversold territory Friday, below 9.50 in mid day trading. The stock, like an increasing number of stocks on the SP500, is on path to test its 200 DMA around 9.12.

General Motors (GM) gapped down as well, below angular support. GM has been trading under its 200 DMA for awhile, which has the bulls turning their noses up at the Detroit auto-maker.

Europe were already nervous that the US would hit Mexico next with the trade war hammer.

DJT announced the news in his favorite way on Twitter Friday. The world was informed that tariffs on all goods coming from Mexico would be introduced and increased until the country curbs illegal immigration into the US.

The tweet was followed up with a White House statement giving more details. The plan is to start June 10th with a 5% tariff and would steadily rise to 25%.

Jesús Seade, Mexico’s top diplomat for North America, said the proposed tariffs would be “disastrous”. And naturally, Wall Street has been speculating that the measure may be the fuse on the bomb that goes off and triggers the global economy into the R word (yep, that R word…Recession)…

From A to Z Amazon picks up the phone

Reports that Amazon (AMZN) is giving thoughts to entering the cell service world through a deal that one analyst says would help pave the way for regulatory approval for the merger of T-Mobile (TMUS) and Sprint (S). AT&T (T) and Verizon (VZ) investors did not take the news well. as both stocks opened with a gap down and were down around 3% in midday Friday. This was one of the trade setups we gave in the swing trade room on Friday morning. After Verizon bounced off lows, retested a technical daily trend line, it faded another 1% before closing at lows.

• Gold Gets Going: Gold futures were on fire Friday. Apparently, the sell-off in the market has traders looking for a hedge, and gold bugs are not complaining. Not to mention, Fed rate cut talks have people wondering about inflation. The consolidation breakout and roll over in the USD had traders flowing into options bets in ETFs like GDX at three times the normal volume.
• Marijuana Stocks: Buzz kill? Cannabis Stocks got bummed out as the FDA casts a Debbie downer style outlook on CBD-Infused Foods.Pot stocks fell sharply on Friday after the Federal Drug Administration said it was not sure how safe cannabinoids found in marijuana is for people to eat…Independent experts disagree.Tilray (TLRY) fell 3% Friday, while Aurora Cannabis (ACB), Cronos Group (CRON) and Canopy Growth Corp (CGC) fell 4%.

The FDA has started its first public hearing on cannabidiol Friday, which has cannabis stock bulls paying attention. The hearing is focused on Cannabidiol, which is one of the most common (and useful) chemical compounds found in weed. Of course, the Cannabis lobby was there and gave their all to convince the FDA to permit the sale of cannabis-derived dietary supplements and foods products. Of course, there will be other powerful lobbyists (We’re looking at you pharmaceutical industry) talking in the other ear of the FDA against it.

ISM Manufacturing PMI at 10:00 
Monday we get ISM data, last month, we missed. This reports important because it looks at a lot of data of over 400 companies and their numbers.

FOMC Speakers at 12:40 and 1:35
Fed speakers will be making comments on the economy and giving insight on what the Feds game plan is for the Federal Funds Interest Rate.

Earnings today look on the quiet side. But let’s take a look a relatively small company, Box Inc (BOX) Thee company is known for providing a cloud-based, mobile friendly solutions to organizations of all sizes. The stock had good earnings Q1, surprising by 150%. But they lowered guidance, and hence, the box has been a little banged up in transit on the NYSE. It’s been trading at the lower end of its range since last quarter, prime for a bounce of support. Be on the lookout for an earnings beat, and raised guidance to get the bulls excited again. The company reports after the bell today.

Wait, rate cuts, already? Looks like the Fed might have to walk back interest rates again…That’s what a growing number of economists and investors said last Friday, at least. It looks to be that escalating tariffs news hitting the air waves without warning has upped the risk level to the world’s economy and increased the likelihood the Fed will have to dip the interest rates already. It seems like they just started raising them because the economy was strong, but now a cut? What kind of a hand signal is the fed making by going this route? Hmmm…

OK, raise your hand if you remember The Dark Crystal? Well, Netflix (NFLX)has revived the classic 80s film with a new Series that is a prequel to the movie. The Dark Crystal: ‘The Resistance’ airs in late August.

The new theme within a theme park, which cost over 1 billion to make is called “Star Wars: Galaxy’s Edge,” And it’s one of the largest expansions in the history of Disney (DIS). It covers 14 acres and will feature two rides and more than a dozen shops and restaurants that are sure to leave you walking away with a new lightsaber and a lighter wallet.

If you were that kinda kid that was into star wars, Lord of the Rings, or comics growing up, chances are you remember the Dark Crystal movie. It’s one of the late, great, Jim Henson’s cult masterpieces. The movie had stunning visuals, and was incredibly well done in the puppetry department that Jim was well known for. But what made it extra special was that the film had an extremely dark vibe when compared to Jim’s other work.

The official Netflix trailer for the movie is pretty epic, and has over 4.3 million views in only a few days. Netflix has been killing it with content. In 2018 they spent 13 billion and in 2019 they are on pace to spend about 15 billion. Will it pay off for the streaming kingpin? Netflix has been banking on it.

Here are the upbeat numbers from last quarter’s earnings:

• Earnings per share: 76 cents, vs. 57 cents expected.
• Revenue: $4.52 billion, vs. $4.50 billion expected.
• Domestic paid subscriber additions: 1.74 million, vs. 1.61 million.
• International paid subscriber additions: 7.86 million, vs. 7.31 million.

Netflix revenue rose 22.2% year over year, reporting $4.52 billion compared with $3.70 billion a year earlier. Earnings per share climbed from 64 cents in Q1 2018 to 76 in the same quarter this year, marking an 18.8% increase. The numbers don’t lie. Netflix continues to draw more subscribers into its platform to hopefully “Netflix and stay”.

The only thing worrying for Netflix bulls looking ahead is the light guidance issued for the second quarter, coming up July 16th. The company estimated Q2 earnings per share of 55 cents compared with the 99 cents analysts were expecting. The bears ate the bulls lunch since earnings, and the stocks been trading below its 50 Daily Moving Average, but above its 200 Day Moving Average. Chances are investors and speculators are waiting for net earnings, or a technical level before going long, or taking profit.

About the Author

The authors of this Scoop are the editorial team at Stock Card, led by Hoda Mehr. Hoda Mehr is CEO and Co-founder of Stock Card and the host of Renegade Investors podcast. She runs a community of 40,000 stock market investors and manages Stock Card's successful flagship portfolio, Roll with Our CEO, on Stock Card Portfolio Store. Hoda is an Economist with an MBA from Concordia, John Molson School of Business. She applies behavioral economics, data journalism, and storytelling to all aspects of her work. Before starting Stock Card, Hoda worked as a strategy and insights lead at technology companies including Symantec, Aimia and Sony. Create a free account to do your stock market research easily and mistake-free: Stock Card Stock Card