US Morning Wrap 230409

Morning all,

Having Apple and Ebay recording 1Q profits that beats the analyst estimates, and taking cues from the currency market with the Euro gaining against the dollar, we see the market is currently fuelling some sense of optimism to another day, speculating the pick up in the consumption market signals a bottoming of the recession. This sees the futures for both DJIA and S&P500 pointing up to confirm such view. Based on this, we believe US may open higher, however we will see such optimism fading away given the increasing initial jobless claims rising to 640,000 last week, pointing, again, towards a weak economy.

We may see the financials to open up taking cues from Barclay's and Credit Suisse's result, however, given the continual market jitters over consumption credit worsening and banks may be required to disclose capital needs after stress-test results, we believe financials shall head down south during the session.

The auto industry will also take a hit after GM is requested by treasury to continual writedown, while a loss into the market share to the foreign competitors will take the autos into the reds. This may also spook the optimism in the commodities throughout the day, and take the crude and industrial metals into the reds.

On our ends, we recommend trade today as follows, with a theme to favour the defensives and precious metal plays:

1. Continual sell on Citigroup (C) and JP Morgan (JPM) given the bank's exposure in the credit card business.
2. Dive2Blue suggests a buy on GSK as he believe Pharmaceutical has been overly sold off.
3. Buy Spdr Gold
4. Buy into Walmart (WMT) for the defensive play.
5. Buy Spdr Consumer Staples Fund
6. Sell Spdr Financial Fund

Happy trading!

ongy out.