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July 21, 2016, 1:38 p.m. EDT

The whale of a trade that investors could be about to miss out on

Critical information ahead of the U.S. market open

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By Barbara Kollmeyer, MarketWatch


AFP/Getty Images
The one that didn’t get away.

Just when things were looking a little dull, a central bank has gone and spiced it up.

BOJ Governor Haruhiko Kuroda told BBC Radio 4 that there is no need for or possibility of helicopter money, and that’s sent the yen soaring. Our Chart of the Day provides a closer look at the damage inflicted on dollar/yen so far.

Stock futures are stepping back just a little, and it remains to be seen how investors will cope with the stimulus rug potentially being pulled from Japan.

The Dow and S&P 500 closed at fresh record highs on Wednesday. Whether markets can stay on track for another win may depend on today’s crop of earnings, and there are plenty of those. Around 14% of S&P 500 companies have reported results, and 64% of those have beaten views.

Surprises in this market are the name of the game — as are the blink-and-you-miss-it kind of stuff that burns investors at times. This group of tourists on a whale-watching trip in Australia, who looked one way as Mother Nature paid a huge visit, could probably relate:

Our call of the day is offering up what could be the next big move for markets. Get ready to throw one popular group of stocks overboard in favor of a bunch that haven’t been as popular.

Key market gauges

Dow  and S&P 500  futures are in the red now, but techs are looking at a slightly positive start. In Asia /zigman2/quotes/211618636/realtime XX:ADOW +0.40% , Hong Kong stocks neared bull-market territory, and the Nikkei closed higher before Japan’s central banker started speaking. The yen /zigman2/quotes/210561789/realtime/sampled USDJPY +0.0121%  is lording it over everything. (See Chart of the Day below.)

European stocks /zigman2/quotes/210599654/delayed XX:SXXP -0.04%  are holding losses after the ECB kept rates unchanged. Airlines fell after warnings linked to terror attacks. Oil prices /zigman2/quotes/209725580/delayed CLQ26 0.00%  have turned lower. Gold  is tipping south as well.

The chart

Here’s a closer look at dollar/yen this morning after Kuroda’s comments.

The call

It’s time to go long on value stocks, say Khuram Chaudhry, Dubravko Lakos-Bujas and team at J.P. Morgan.

“Our regional (USA, Europe & Asia Pac/EM) Quant Macro Indices — QMI are all pointing to the ‘recovery’ phase of the cycle. Globally and across the regions, our strongest style conviction during this phase is to be overweight value stocks,” they say in a note to clients.

On the other hand, time’s up for momentum and low-volatility stocks, which they say are “overall unattractive based on lofty valuations, extreme investor positioning and less negative macro signals.” Particularly pricey are stocks in the U.S. and Europe. Stateside, Amazon /zigman2/quotes/210331248/composite AMZN +1.05%   and Facebook /zigman2/quotes/205064656/composite FB -0.86%  get the thumbs down.

Value stocks are cheap by comparison, both on a historical basis, and relative to momentum and volatility, they say.


J.P. Morgan

Some of the stocks on that cheap value list are Valero Energy /zigman2/quotes/200735463/composite VLO -5.24% , Xerox /zigman2/quotes/201169674/composite XRX -5.12% , United Continental /zigman2/quotes/205037281/composite UAL -5.63% , General Motors /zigman2/quotes/205226835/composite GM -4.77% (reporting Thursday) and Hewlett-Packard /zigman2/quotes/203461582/composite HPQ -3.34% .

As always, there are detractors to any view, and Wednesday’s column talked about how biotech stocks, one player in the growth-stock arena, have never been cheaper.

Also check out: Dow, S&P 500 are overheating — and Wall Street is freaking out

/zigman2/quotes/211618636/realtime
XX : Dow Jones Indices
3,216.48
+12.76 +0.40%
Volume: 0.00
July 9, 2020 10:56a
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/zigman2/quotes/210561789/realtime/sampled
US : Tullett Prebon
107.2710
+0.0130 +0.0121%
Volume: 0.0000
July 9, 2020 10:56a
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/zigman2/quotes/210599654/delayed
XX : STOXX
366.34
-0.14 -0.04%
Volume: 0.00
July 9, 2020 4:41p
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/zigman2/quotes/209725580/delayed
US : U.S.: Nymex
$ 47.73
0.00 0.00%
Volume: 0.00
July 8, 2020 5:08p
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/zigman2/quotes/210331248/composite
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$ 3,113.46
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Volume: 1.69M
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P/E Ratio
149.07
Dividend Yield
N/A
Market Cap
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/zigman2/quotes/205064656/composite
US : U.S.: Nasdaq
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N/A
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US : U.S.: NYSE
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US : U.S.: NYSE
$ 14.63
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Rev. per Employee
$303,395
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/zigman2/quotes/205037281/composite
US : U.S.: Nasdaq
$ 30.70
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N/A
Market Cap
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/zigman2/quotes/205226835/composite
US : U.S.: NYSE
$ 23.75
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Volume: 5.31M
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0.00%
Market Cap
$35.69 billion
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/zigman2/quotes/203461582/composite
US : U.S.: NYSE
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P/E Ratio
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4.32%
Market Cap
$23.95 billion
Rev. per Employee
$1.07M
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