Today's Must Read
Morgan Stanley (MS) Streamlining Plans to Aid Profitability
GE (GE) Continues Portfolio Restructuring to Combat Operating Risks
Monday, October 3, 2016
The major indexes started October's first trading session on a down note, after finishing September effectively unchanged. The flat September finish notwithstanding, Q3 was overall positive for stocks, with the S&P 500 index gaining in excess of 3%, largely on the back of strength in the tech sector which took leadership away from utilities and telecom stocks. The tech move is a net positive for the market as it likely is reflective of market participants' willingness to take on extra risk.
On the data front, the focus this week is on the September non-farm payroll report coming out on Friday, with consensus expectations of 168K vs. 151K in August. The recent run of low weekly jobless claims numbers is prompting some analysts to look for a much stronger number - something north 200K - that could add to pressures on the Fed. This morning's factor sector ISM survey surprised to the upside, with the index going back above the 50 line.
Today's Research Daily features new research reports on 16 major stocks, including Chevron (CVX), Morgan Stanley (MS) and General Electric (GE).
Chevron shares have responded more positively to the recent oil-price momentum than Exxon and some of its other super-major peers given the company's oilier asset base. Strong Buy rated Chevron's current oil and gas development project pipeline is among the best in the industry, boasting large, multi-year projects. The company has remained competitive by embarking on aggressive cost reduction initiatives, exiting unprofitable markets and streamlining the organization. (You can read the full research report on Chevron here>>)
Morgan Stanley struggled this year as a result of the tough environment for financial firms as a whole, but it has nevertheless fared better than Goldman Sachs and others given its less reduced reliance on trading and greater focus on investment management in addition to its core investment banking franchise. The analyst likes the company’s efforts to offload its non-core assets to lower balance-sheet risks, control expenses and shift focus toward less capital-intensive businesses. Estimates ahead of the company's October 19th earnings release have ticked up modestly. (You can read the full research report on Morgan Stanley here>>)
General Electric shares have lagged the market this year on concerns about the conglomerate's order backlog and continued weakness in the energy end-market. This issue notwithstanding, the company has done an excellent job of its plan to reduce its exposure to finance and get back to its industrial and engineering roots. To that end, it is enjoying strong momentum in the power and aviation end markets, partly offset by continued weakness in the energy space. (You can read the full research report on General Electric here>>)
Other noteworthy reports we are featuring today include Microsoft (MSFT), Tesla (TSLA) and Amazon (AMZN).
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Director of Research
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