The three-day win streak looks threatened this morning despite solid results from Alphabet (GOOGL). Fresh comments from President Trump sounded hawkish, as he told TIME magazine that 20% to 50% tariffs on imported goods would be a "total victory." It's unclear if that's a negotiating ploy, but White House pronouncements often move the market these days. Trump also said he's spoken to China's President Xi Jinping, but China denied talks have occurred, CNBC reported.
"While there have been initial talks with countries like India, Italy and Japan, no deals have been announced," said Michael Townsend, managing director, legislative and regulatory affairs at Schwab. "And while the president has said he is open to talks with China and even to pre-emptively reduce the 145% tariff on imports from China, there's no clarity on when that will happen. Members of Congress have been getting an earful in their home districts over the last couple of weeks from companies and voters upset about the tariffs, so they are eager to have some good news to share on that front."
Turning to other news, Treasury yields retreated after a slide yesterday helped lift stocks, including info tech. Pressure reflected dovish comments from two Federal Reserve policy makers. "Fed Chair Powell has generally pushed back on the idea of premature easing since inflation is still a problem, but some officials have suggested that they would favor rate cuts if the labor market did in fact deteriorate," said Collin Martin, director, fixed income strategy at the Schwab Center for Financial Research. "We expect the Fed to cut rates this year, but not until the second half."
Source: Schwab Center for Financial Research
Morning Rush
The 10-year U.S. Treasury yield (TNX) is lower by ~4 basis points to 4.27%.
The U.S. Dollar Index ($DXY) is higher by 0.18 at 99.56.
WTI Crude Oil (/CL) is higher by 0.62% to $63.18/barrel.
Gold prices continue to slip from record high territory and have traded in a range of $3,274.80-$3,384.10, last seen trading lower by 1.57% to $3,296.10/oz.
Natural Gas prices have traded in a range of $2.87-2.98 and were last seen trading lower by 0.41% to $2.92.
Bitcoin (BTC) is higher by ~1.63% to $95,506.00.
Today's Bullish Activity
Shares of Alphabet Inc. (GOOGL + $5.19 to $164.47) are trading higher this morning after the Google and YouTube parent reported Q1 earnings-per-share of $2.81, well above the $2.01 FactSet consensus estimate. Revenues rose 12.0% year-over-year to $90.23 billion, north of the expected $89.18 billion. GOOGL said search saw continued momentum and it surpassed 270 million paid subscriptions, driven by YouTube and Google One, while its cloud business grew rapidly with significant demand for its services. Calls are outnumbering puts ~2:1 with the April 25th 165.00 call seeing the most action from traders (volume is 59,786).
Also trading to the upside this morning is Boston Beer Company Inc. (SAM + $7.55 to $249.95) after the beer maker reported Q1 earnings-per-share of $2.16, easily exceeding the $0.56 FactSet estimate, with revenues growing 6.5% year-over-year to $453.9 million, north of the anticipated $435.6 million estimate. The company said its Q1 performance reflects a solid start to the year as it increased its market share and significantly expanded gross margin. SAM reiterated its full-year guidance but noted that the macroeconomic climate continues to be challenging. Calls are outnumbering puts ~10:1 with the May 16th 280.00 call seeing the most action from traders (volume is 1,365).
New 52-week highs (33 new highs today): Brookfield Wealth Solutions Ltd. (BNT - $0.07 to $52.91), Deutsche Bank Ag (DB + $0.25 to $25.45), Relx PLC ADR (RELX + $0.35 to $53.52)
Notable Call Activity
Some unusual call activity (~28:1 calls over puts) is being seen in shipping company Frontline PLC (FRO + $0.10 to $16.39) which is primarily being driven by activity on the June 20th 18.00 call (volume is 9,845), with a bulk of the activity consisting of a 7,000 contact block that was bought for $0.50 when the bid/ask spread was $0.40 x $0.55. Open interest is 257 so we can assume we have some fresh positioning with bullish intent since the trade took place above the midpoint of the bid/ask price.
Today's Bearish Activity
Intel Corporation (INTC - $1.63 to $19.86) is trading lower this morning with the markets appearing to focus on the semiconductor's Q2 outlook that came in below expectations. The company said it expects Q2 earnings-per-share to come in flat, compared to the FactSet consensus estimate of $0.07, and revenue of $11.2-$12.4 billion, versus expectations of $12.8 billion. INTC said, "The current macro environment is creating elevated uncertainty across the industry, which is reflected in our outlook." The guidance is overshadowing its Q1 results which topped analysts' estimates on earnings and revenues. Calls are slightly outnumbering puts, but the July 18th 16.00 put is seeing the most action from traders (volume is 45,356).
Also trading to the downside this morning is Skechers U.S.A. Inc. (SKX - $2.98 to $47.51) after the footwear company withdrew its full-year guidance, citing macroeconomic uncertainty stemming from global trade policies. The announcement accompanied its Q1 earnings report where earnings-per-share came in at $1.34 ($0.17 beat), and revenues rose 7.1% year-over-year to $2.41 billion, slightly below the expected $2.43 billion. Puts are outnumbering calls ~2:1 with the May 16th 45.00 put seeing the most action from traders (volume is 545).
New 52-week lows (41 new lows today): Avantor Inc. (AVTR - $2.55 to $12.95), Churchill Downs Inc. (CHDN - $0.41 to $87.58), Saia Inc. (SAIA - $85.32 to $268.90)
Notable Put Activity
Some unusual put activity (~3:1 puts over calls) is being seen in Digital Realty Trust Inc. (DLR + $5.67 to $159.42) which is primarily being driven by activity on the September 19th 140.00 put for this real estate investment trust (REIT). Volume is 5,266 compared to open interest of 351, so we can assume we have fresh positioning here. The activity is being driven by various-sized blocks being traded at various times, notably a 1,770 contract block that traded at $5.90 when the bid/ask spread was $4.50 x $6.20. Since the trade took place above the midpoint of the bid/ask spread, we can assume the block trader has bearish intent.
Volume Signals
Select Medical Holdings Corp. (SEM + $0.95 to $17.53): Option volume is running over 5,000x the daily average on this hospital operator which is primarily being driven by activity on the May 16th 17.50 call. Volume on this contract is 2,502 versus open interest of 201, so we know that the majority of the volume represents fresh positioning. Almost all the activity was driven by a 2,000 contract block that was bought for $1.40, suggesting bullish intent since the trade took place at the ask price.
Progress Software Corp. (PRGS - $0.07 to $59.00): Option volume is running at ~304x the daily average on this technology company primarily driven by activity on the September 19th 57.50 call. Volume is 2,320 versus open interest of 23, so we know we have fresh positioning here. Almost all of the volume consisted of a 2,300 contract block that traded at $6.30 when the bid/ask spread was $0.00 x $6.60. We can assume the intent is bullish since the trade was executed well above the midpoint of the bid/ask spread.
Canadian Solar Inc. (CSIQ + $1.52 to $10.80): Option volume is running at ~6x the daily average on this maker of solar energy and battery energy storage products which is being driven by activity on the May 2nd 11.00 call. Volume on this contract is 2,241 versus open interest of 7, so we know we have fresh positioning here. The bulk of the activity was driven by various-sized blocks that were bought around the same time at the ask prices of $0.15 - $0.20, suggesting bullish intent.
Gauging Volatility
The Cboe Volatility Index (VIX - 1.27 to 25.20) has been in positive and negative territory today (intraday range is 27.20-24.85), as equity markets are mixed around the midday mark (DJI - 68, SPX + 25, COMPX + 160). VIX option volume is below average today as the index is missing from the "Top Volume by Underlying" list. The volume put/call ratio is currently 0.58, with the highest volume contract being the May 21st 75.00 call (volume is 83,816 vs. open interest of 243,457).
