IB Traders Insight


NEW - IB Traders' Insight Daily Commentary Videos View Videos

1 2 3 4 5 2 1566


Stocks

Dow Jones Technology Coverage


EXCLUSIVE ANALYSIS AND NEWS BEATS

In This Issue:
  • Market-moving news: the FCC doesn’t expect to review the AT&T-TimeWarner deal; Canadian satellite company MacDonald Dettwiler is in talks to buy DigitalGlobe. 
  • Exclusive news: Elon Musk launches a company to connect your brain to a computer; Google’s Waze expands its ride-sharing; Disney severs ties with a YouTube star; and more.   
  • Unique analysis on high-speed price changes at Amazon, Facebook’s rush in to live video, and how immigration uncertainty is threatening U.S. tech companies.  
 
Market-Moving News
 
 
FCC Chairman: Don’t Expect Agency to Review the AT&T-Time Warner Deal
In an interview with The Wall Street Journal, Federal Communications Commission Chairman Ajit Pai said he doesn’t expect the agency to have a role in reviewing the $85 billion takeover of Time Warner Inc. by AT&T Inc. 
 
According to the story by Thomas Gryta, the agency does not see a role for FCC review since there is no airwave license transfer with the deal.
 
The Department of Justice would be left as the sole federal agency reviewing the transaction.
 
Shares of Time Warner Inc. rose after our headlines ran. 
 
The Dow Jones scoop was picked up by Bloomberg, Reuters, The Verge and other news outlets. 
 
Canadian Satellite Co. MacDonald Dettwiler Is In Talks to Buy DigitalGlobe
 
 
Dana Mattioli broke the news that Canadian satellite company MacDonald Dettwiler & Associates is in advanced talks to buy U.S. satellite-imaging provider DigitalGlobe Inc.
 
MacDonald Dettwiler has more 70 satellites in orbit for consumer services such as television, satellite radio and broadband.
 
DigitalGlobe uses its own satellites to provide imaging services to the defense community and others.
 
Its images are also used by tech companies along with the U.S. government.
 
Shares of DigitalGlobe spiked after our headlines ran.
 
Bloomberg, CNBC, Reuters, The New York Times and others outlets cited Dow Jones for the scoop.
 
Exclusive News
 
Elon Musk Launches Neuralink to Connect Brains with Computers
 
  • Rolfe Winkler was first to report that Elon Musk, founder and chief executive of Tesla Inc., has launched a new company called Neuralink Corp.  to connect brains with computers, according to sources.
  • The new technology, named “neural lace” will implant tiny brain electrodes that may one day upload and download thoughts.
  • Mr. Musk may play a significant leadership role in the company.
  • He has discussed financing Neuralink primarily himself, including with capital borrowed against equity in his other companies, according to a person briefed on the plans.
  • The news was picked up by Bloomberg, Reuters and other outlets. 
 
Google’s Waze Plans Expansion of Ride-Sharing Services
 
Jack Nicas was first to report that Google is planning to expand a ride-sharing service on its navigation app, Waze, in several U.S. cities and Latin America over the next several months.
 
  • Waze’s carpool service growth puts the tech giant in a position to directly compete with other companies in the ride-sharing industry.
  • The company has been testing in Israel and the San Francisco Bay Area.
  • CNBC, Consumerist, Reuters and other media picked up the scoop.
 
More Exclusive News
 
Find these exclusive articles by searching on P/PMDM and either a company code or a keyword related to the scoop of interest.
 
March 27—Amazon delays convenience store opening to work out kinks.
March 8—Amazon CEO Bezos’s space company Blue Origin  to launch satellite for OneWeb.
March 2—Lyft seeking at least $500 million in new funding.
March 2—Snap set to price IPO at $17 a share.
Feb. 24—Disney lays off about 80 from Maker Studios, Digital Publishing Unit.
Feb. 21—Verizon, Yahoo agree to cut merge price by as much as $350 million.
Feb. 21—Qualcomm to invest in Softbank’s giant new technology fund.
Feb. 16—Theranos had $200 million in cash left at year-end.
Feb. 16—Snap sets valuation at $19.5 billion to $22.2 billion.
Feb. 8—Viacom to narrow focus to six key cable TV channels.
Feb. 1—Facebook developing an app for TV set-top boxes.
 
Unique Analysis
 
The High-Speed Trading Behind Your Amazon Purchase
 
Christopher Mims looked in to the hidden algorithms behind Amazon’s pricing… by trying to buy mini marshmallows. 
  • Amazon gave people and companies the ability to sell on Amazon.com in 2000. 
  • It now represents 49% of the goods Amazon ships.
  • A business-intelligence firmed described Amazon’s retail business as a “slowed-down stock exchange.”
  • Vendors are updating their prices multiple times a day to remain competitive.
  • There are more sophsisticated systems that use artifitical intelligence to monitor market dynamics.
  • The result is that customers don’t always get the best price.
Facebook, Rushing Into Live Video, Wasn’t Ready for Its Dark Side
 
Facebook went all out to get Facebook Live launched, with Mark Zucerberg making a snap decision and bringing it to market in just two months. Deepa Seetharaman wrote about the problems that had to be ironed out later. 
 
  • People have used Facebook Live to broadcast at least 50 acts of violence, including murder, suicides and beating. 
  • The company was critizied in 2016 for removing live video showing a man dying after being shot by a poloce officer. The video was later restored.
  • Facebook’s CEO acknowledged that the complexity of the issues they were seeing outstripepd their processes for governing the community.
  • More positive videos exist, such as “Chewbacca Mom” which has been viewed 166 million times. 
  • In early trials, seventy percent of users were college- or high-school-aged, and a large number were African-American teenagers.
  • After this article was published, video was published of a murder on Facebook, highlighting this issue again. The Facebook CEO expressed his condolences and promised to do “all  we can” to review its protocols for monitoring this kind of media.
How Immigration Uncertainty Threatens America’s Tech Dominance
 
Christopher Mims wrote about the uncertainty surrounding President Donald Trump’s immigration policy, triggering anxiety amongst tech companies.
  • President Trump has frequently critizied U.S. companies that employ foreign workers.
  • A draft executive order proposes re-examining how the goernment issues H-1B visas for skilled workers.
  • Venture capitalists argue that impeding free movement will deprive the country of revenue and employment.
  • Mims argues that the biggest loss would be the best-in-the-world minds that coalesce in a tech hub like Silicon Valley. Talent may go elsewhere while instabity exists.
  • Microsoft, Apple, Google, Facebook, Cisco and dozens of other large U.S. tech companies have established offices in Canada, partly in relation to the policies.
About This Newsletter
 
This newsletter covers Central Banks, Deals, Resources and Technology topics on a rotating basis. Next issue: Central Banks.
 
If you have questions about Dow Jones and The Wall Street Journal, visit us online or email service@dowjones.com.  
 
If you have questions about the content of this newsletter, email Henry Williams at henry.williams@wsj.com.  

 

About Dow Jones

Dow Jones & Company is a global provider of news and business information, delivering content to consumers and organizations via newspapers, Web sites, apps, video, newsletters, magazines, proprietary databases, conferences, and radio.

Dow Jones Newswires delivers premium business news, commentary and insight in real time and with unquestionable accuracy and depth. Built on a renowned global reporting network of nearly 2,000 journalists, Dow Jones Newswires publishes more than 16,000 daily news items – including exclusive content from The Wall Street Journal, Barron’s and MarketWatch – covering every asset class and key regions and markets worldwide.

This article is from Dow Jones & Company (Dow Jones) and is being posted with Dow Jones' permission. The views expressed in this article are solely those of the author and/or Dow Jones and IB is not endorsing or recommending any investment or trading discussed in the article. This material is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.


13014




Macro

We All Live In A Brave New World


Regarding technology sector earnings, here is the BRAVE new world we all live in.

Implied option volatility for Microsoft’s (MSFT) earnings release is higher than Amazon (AMZN), Facebook (FB), Google (GOOGL) and Apple (AAPL).

Notably, there is nothing uniquely controversial this quarter for Microsoft (MSFT).

Additionally, in the case of AMZN and FB, the options market is saying that their stock price will move half what it normally does.

Here is what AMZN, FB, GOOGL, and AAPL earnings implied volatility being this low means to us.

 

Sight Beyond Sight® is a global macro trading newsletter written daily by Neil Azous. With close to two decades of institutional experience across asset classes, Neil interprets the day-to-day economic, policy and strategy developments and provides actionable trading ideas for investors. We invite clients of Interactive Brokers to sign up for a free trial in Account Management. If you are not a client of IB, you can sign up for a free trial by visiting our website.

This article is from Rareview Macro and is being posted with Rareview Macro’s permission. The views expressed in this article are solely those of the author and/or Rareview Macro and IB is not endorsing or recommending any investment or trading discussed in the article. This material is for information only and is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad-based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation by IB to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.

 


13013




Technical Analysis

Small-Caps have Become a Crowded Short, Key Barometer moving Forward


Strategas Research Partners' Institutional Investor-ranked Research Team works to identify the major themes with broad implications for global financial markets. Strategas covers the broad investment landscape, with published reports discussing Investment Strategy, Economics, Washington Policy, Quantitative and Fixed Income research. The team's thematic and macro-driven approach relies on empirical data as well as fundamental and technical research to provide readers with an integrated investment strategy for a variety of time horizons.

Here’s what is most important to start the week...

The S&P has been consolidating for the better part of the last two months, and it’s reflected with inconsistent breadth and risk appetite.  With futures suggesting a strong post-French election response today, it will be important for a) internals to firm / reaccelerate, and b) macro charts like the 2/10 curve, USDJPY, Copper, and the Transports start to turn more supportive.  We’ve also been watching small-caps vs. large-caps in this context which have already shown signs of improving over the last few weeks.  From a positioning perspective, small-caps have actually become a crowded short lately and broadly reflect a tepid sentiment environment vs. just a few months back.  Globally, it’s important to emphasize that price action is still playing out in the context of uptrends.  

IMPORTANT FOR MOMENTUM TO REACCELERATE

4 CHARTS WE’RE WATCHING…

RUSSELL 2000 HAS ALSO BECOME A VERY CROWDED SHORT

This article is from Strategas Research Partners and is being posted with Strategas Research Partners’ permission. The views expressed in this article are solely those of the author and/or Strategas Research Partners and IB is not endorsing or recommending any investment or trading discussed in the article. This material is for information only and is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad-based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation by IB to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.


13011




Macro

Disruption's Next Target: Cars


Key points

  • Technological disruption is cutting across sectors, with the auto industry a key example. We see risks for traditional auto players.
  • Centrist Emmanuel Macron became the clear front-runner for French president, reducing perceived European political risk.
  • Earnings season will be well underway in the U.S. and Europe this week. The yen will be a focus for Japanese earnings.

Technological disruption is becoming a key market theme, with its impact most clearly seen in the traditional consumer sector. The auto industry is no exception - hardly a day goes by without a headline on self-driving or electric vehicles (EVs).

Profit and cost breakdown of selected industries, 2016

Sources: BlackRock Investment Institute, MSCI and Bloomberg, April 2017.

Notes: Automobile and auto component companies are constituents of the MSCI ACWI Automobiles and Components Index. Technology hardware, software and services, and semiconductor companies are constituents of the MSCI ACWI Information Technology Index. The aggregate is based on the latest available full-year data. Profit is based on earnings before interest and taxes.

Traditional automakers and part suppliers are faced with serious challenges given that automation and electrification of vehicles require financial muscle and expertise that many currently lack. They generally have lower profit margins than the technology companies disrupting the auto industry, as the chart shows.

Cars and beyond

The tech sector has outperformed global equities this year, whereas consumer discretionary stocks have lagged. Now disruption is accelerating in the auto industry. We see advanced driver assistance systems (ADAS) shaking up the landscape in the near term. Semiconductor and software suppliers will be among the biggest winners, in our view, as many ADAS and EV components become the value-added parts of the vehicle. See our Future of the vehicle report for details.

We see implications beyond the auto industry. EV development should boost demand for metals such as cobalt and copper, underpinning an ongoing cyclical upturn. Rapid ADAS adoption could further reduce the value of used vehicles, pressuring leveraged auto lenders and leasing companies. Longer term, we see EVs and shared autonomous vehicles eroding oil demand and even shaking up the real estate landscape by reducing the demand for parking spaces.

Bottom line: For every winner that arises from disruption there will be many losers. We see most traditional automakers in a long-term structural decline, though those focused on luxury cars and emerging markets could do better. We are overweight technology, and see selected software and semiconductor companies as long-term winners in the transformation of the auto industry.

This material is prepared by BlackRock and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed are as of April 17, 2017, and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and nonproprietary sources deemed by BlackRock to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by BlackRock, its officers, employees or agents. This material may contain “forward-looking” information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader. 

The information provided here is neither tax nor legal advice. Investors should speak to their tax professional for specific information regarding their tax situation. Investment involves risk including possible loss of principal. International investing involves risks, including risks related to foreign currency, limited liquidity, less government regulation, and the possibility of substantial volatility due to adverse political, economic or other developments. These risks are often heightened for investments in emerging/developing markets or smaller capital markets.

©2017 BLACKROCK, Inc. All Rights Reserved. BLACKROCK is a registered trademark of BlackRock, Inc. or its subsidiaries in the United States and elsewhere. All other trademarks are those of their respective owners.

Prepared by BlackRock Investments, LLC,member FINRA.

Not FDIC Insured | May Lose Value | No Bank Guarantee

20170417-139767-383701

This article is from BlackRock and is being posted with BlackRock’s permission. The views expressed in this article are solely those of the author and/or BlackRock and IB is not endorsing or recommending any investment or trading discussed in the article. This material is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.


13012




Stocks

Weekly Market Recap


Weekly Market Recap

The week in review

Housing starts fell to 1,215k

Industrial production increased 0.5%

Flash Markit mfg. PMI fell to 52.8

The week ahead

Consumer confidence

New & pending home sales

1Q GDP

Thought of the week

Stocks have rallied since the election in a “reflation trade,” which can be broadly defined as an expectation of both higher inflation and stronger real economic growth. However, investors have recently started to doubt these themes with data on both fronts showing some weakness. First quarter GDP numbers this week could show growth below 1%, largely reflecting weaker consumer spending. In addition, following an oil-driven surge in CPI inflation to 2.8% year-over-year in February, March CPI inflation retreated to 2.4% year-over-year, well below expectations. Lower actual inflation numbers have also seeped into market expectations with the difference between 10-year nominal Treasury yields and 10-year TIPs falling from a post-election high of 2.07% to just 1.86%, as we show in this week’s chart. While a stalling-out in the oil price rally and cautious consumers are responsible for some current weakness in economic data, the reflation theme is also being challenged by disagreement in Washington, which has created uncertainty around the likelihood and extent of both tax cuts and government spending increases. Even without fiscal stimulus, both growth and inflation could rebound in the months ahead. However, for now, the U.S. economic environment seems neither as positive for equities nor as negative for fixed income as has generally been assumed since election day.

Global Investment Management

J.P. Morgan Asset Management (Investment Management) is a leading investment manager of choice for institutions, financial intermediaries and individual investors, worldwide. With a heritage of more than two centuries, a broad range of core and alternative strategies, and investment professionals operating in every major world market, we offer investment experience and insight that few other firms can match.

  • A clear focus on managing client assets and delivering strong risk-adjusted returns
  • More than 1,200 investment professionals providing strategies spanning the full spectrum of asset classes, including equity, fixed income, cash liquidity, currency, real estate, hedge funds and private equity
  • Leadership positions in the U.S., U.K., Continental Europe, Asia, and Japan

J.P. Morgan Asset Management is the marketing name for the investment management businesses of JPMorgan Chase & Co. and its affiliates worldwide.

This article is from J.P. Morgan Asset Management (JPMAM) and is being posted with JPMAM’s permission. The views expressed in this article are solely those of the author and/or JPMAM and IB is not endorsing or recommending any investment or trading discussed in the article. This material is for information only and is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad-based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation by IB to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.


13010




1 2 3 4 5 2 1566

Disclosures

We appreciate your feedback. If you have any questions or comments about IB Traders' Insight please contact ibti@ibkr.com.

The material (including articles and commentary) provided on IB Traders' Insight is offered for informational purposes only. The posted material is NOT a recommendation by Interactive Brokers (IB) that you or your clients should contract for the services of or invest with any of the independent advisors or hedge funds or others who may post on IB Traders' Insight or invest with any advisors or hedge funds. The advisors, hedge funds and other analysts who may post on IB Traders' Insight are independent of IB and IB does not make any representations or warranties concerning the past or future performance of these advisors, hedge funds and others or the accuracy of the information they provide. Interactive Brokers does not conduct a "suitability review" to make sure the trading of any advisor or hedge fund or other party is suitable for you.

Securities or other financial instruments mentioned in the material posted are not suitable for all investors. The material posted does not take into account your particular investment objectives, financial situations or needs and is not intended as a recommendation to you of any particular securities, financial instruments or strategies. Before making any investment or trade, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice. Past performance is no guarantee of future results.

Any information provided by third parties has been obtained from sources believed to be reliable and accurate; however, IB does not warrant its accuracy and assumes no responsibility for any errors or omissions.

Any information posted by employees of IB or an affiliated company is based upon information that is believed to be reliable. However, neither IB nor its affiliates warrant its completeness, accuracy or adequacy. IB does not make any representations or warranties concerning the past or future performance of any financial instrument. By posting material on IB Traders' Insight, IB is not representing that any particular financial instrument or trading strategy is appropriate for you.