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Afternoon Note

Turkey Comes to Roost

By Willie Walker, Senior Research Analyst
8/10/2018 1:35 PM
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Equity markets in the U.S. opened down, pressured by Europe where equity markets traded lower.  Financials with exposure to Turkey lead Europe bourses lower.  Banco Bilbao Vizcaya Argentina, UniCredit (Italy), UniCredit and BNP Paribas (France) are cited as having significant exposure to Turkey.   

Geopolitical tensions between the U.S. and Turkey have the Turkish lira spiraling lower versus the U.S. dollar (USD).  President Trump is taking advantage of the recent weakness in the lira to drive his point home.  The President authorized the doubling of tariffs on steel and aluminum from Turkey.  The Treasury Department sanctioned Turkey at the beginning of the month for Turkey’s long-time detainment of Pastor Andrew Brunson.  Turkey is the eighth largest crude steel producing country.  

Semiconductor are under pressure after GS downgraded INTC to Sell from Neutral and lowered its price target to $44 from $49 due to manufacturing concerns related to 10nm. This follows yesterday’s downgrade of the entire sector by Morgan Stanley.  The PHLX Semiconductor Index, SOX, is trading lower by 2.35%.    

Ruth’s Chris (RUTH), which was mentioned in our morning Hotline Report on 8/7/2018, is having a good day.  After reporting earnings that saw a 1.4% increase in average check and lower expenses due to a 10% decline in beef costs. RUTH is making new highs, up over 12% @ $32.30. 

https://www.wstreet.com/admin/hotlineView.asp?con_id=43097 

Baker Hughes showed a total of 13 U.S. rigs added last week.  Oil add 10 to 869, which is 101 rigs higher than the prior year, and this is the highest level since March 2015.  Gas added 3 to 186.   Oil is up on the day as Iran sanctions and U.S.-China tariff disputes continue to add angst to the market.  WTI is currently up 1.14% to $67.57, but is down from last Friday's $68.50. 

Equity markets rebounded after Europe closed.  The Dow is trading approximately 77 points higher than its intraday low.   

Breadth: Negative


 

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