US EARLY MORNING: Equity futures are a little higher; US jobs report later expected to show cooling payrolls growth, but labour market proxies suggest scope for upside vs consensus

US PRE-MARKETS: US equity futures are trading a little higher after heavyweight earnings from Apple (AAPL) and Amazon (AMZN) afterhours on Thursday; the former disappointed expectations with declining sales for the third straight quarter, and fell just over 2% in extended trade (AAPL has a 7.5% weighting in the SPX, and a 11.6% weight in the NDX); the latter reported sales and revenue which topped expectations, and issued upbeat guidance (AMZN has a 3.0% weighting in the SPX, and a 5.1% weight in the NDX). Today's focus shifts onto economic data, with the key US jobs report due - it is expected to show a cooling rate of payrolls growth, but whispers and other proxies (like the unreliable ADP data series, for instance) suggest some potential for an upward surprise; our preview is below. Elsewhere, the OPEC JMMC meeting will take place; recent reports have suggested that the Saudis are likely to roll-over their voluntary supply curbs through the end of September (our preview is here). Treasury yields are mixed, with the short-end seeing yields up a couple of basis points, while the long-end is seeing yields decline by a couple of basis points. The Dollar Index is slightly above neutral.

PREVIEW - US NONFARM PAYROLLS (13:30BST/08:30EDT): The rate of payroll growth is expected to slow in July, while measures of wage growth are seen cooling further. Analyst whisper numbers and gauges of the US labour market strength are supportive of a decent reading: ADP's gauge of payrolls surprised to the upside once again, though many analysts dismiss the data series as a reliable forecaster for the NFP data; weekly claims data has trended lower relative to the June survey week; PMI surveys allude to healthy labour market conditions, and consumers have confidence in the outlook for the labour market. And tracking estimates are also above what the consensus predicts. Ahead, payroll additions are expected to ease further, but Fedwatchers still suggest that a print in July that is in line with the consensus would still likely keep the prospect of another FOMC rate rise in play. (Newsquawk)

WEEKLY FLOWS: BofA's weekly flows report saw its Bull & Bear indicator rise to 4.1 from 4.0, with the upward trend over the last six weeks driven by EM stock inflows, improved credit technicals and bullish hedge fund positioning. US equities have now seen inflows for the past two weeks (USD +0.3bln in the latest week), Europe has seen outflows for the past 21 weeks (+3.3bln in the latest week), Japan inflows recommenced this week (+1.0bln), while EM has now seen inflows for the last four weeks (+4.1bln this week). In fixed income, investment grade inflows have now been registered for the past two weeks (5.9bln this week), Treasury inflows have been seeing inflows for the past 25 weeks (2.5bln latest), while EM debt saw its first outflows in the last three weeks (of 0.9bln this week). 

TODAY'S AGENDA:

• Our interactive calendar can be accessed here; a pdf version can be found here.


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  EUROPE DAY AHEAD: Eurozone retail sales are expected to rise in June. Construction PMI data from the bloc will be released over the course of the morning. In wake of the BoE's +25bps rate hike on Thursday, BoE Chief Economist Pill will to give remarks to businesses on the central bank's latest decision and new economic forecasts. Afterhours, the CRA DBRS may review Sweden's Sovereign Debt Rating (currently AAA).


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  NORTH AMERICA DAY AHEAD: The US jobs data is the key highlight (preview above), and the Canadian equivalent will be released at the same time. Elsewhere, the Ivery PMI will be released after the open.


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  US CORPORATE EARNINGS: Today's corporate earnings includes LYB, D. Our Daily US Earnings Estimates sheet can be accessed here.

EQUITY NEWS:

TECH:

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  Apple (AAPL) - Although EPS and sales topped estimates, AAPL shares declined by around 2% afterhours as revenues fell for third straight quarter. Q3 EPS 1.26 (exp. 1.19), revenue USD 81.80bln (exp. 81.69bln). Products revenue  USD 60.58bln (exp. 60.67bln); Service revenue USD 21.21bln (exp. 20.77bln), and Apple Services had over 1bln paid subscriptions; iPhone revenue USD 39.67bln (exp. 39.8bln), and iPhone sales grew by double digits in China during fiscal Q3, while the iPhone reached all-time revenue record in India; Mac revenue USD 6.84bln (exp. 6.37bln); iPad revenue USD 5.79bln (exp. 6.33bln); Wearables, home and accessories USD 8.28bln exp. 8.38bln). CEO said it has been researching generative AI for years and work on generative AI is among drivers of increased research and development spending, is continuing to invest in technologies such as generative AI to improve its products. Expects revenue performance for September quarter to be similar to the June quarter. Expects gross margin to be between 44-45% for the September quarter. iPad and Mac revenue is expected to decline double digits in Q4, while iPhone and services revenue is seen accelerating from Q3.


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  Microchip Technology (MCHP) - Q1 EPS 1.21 (exp. 1.64), revenue USD 2.29bln (exp. 2.29bln).


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  Motorola Solutions (MSI) - Motorola Solutions Q2 EPS 2.65 (exp. 2.51), Q2 revenue USD 2.403bln (exp. 2.36bln). Exec said it continued to see strong demand in all technologies and regions, and had record Q2 orders and record ending backlog. Momentum entering H2 is strong, and it is raising its guidance: Q3 EPS seen between 2.99-3.04 (exp. 3.00); FY23 EPS seen between 11.40-11.48 from 11.21-11.29 (exp. 11.29).


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  Block (SQ) - Q2 adj. EPS 0.39 (exp. 0.36), revenue USD 5.53bln (exp. 5.1bln). Processed USD 59.01bln in GPV in Q2, +12% Y/Y.


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  Cirrus Logic (CRUS) - Q1 EPS 0.67 (exp. 0.41), Q1 revenue USD 317mln (exp. 287.2mln). Sees Q2 revenue between USD 430-490mln (exp. 437.2mln)


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  Fortinet (FTNT) - Q2 adj. EPS 0.38 (exp. 0.34), revenue USD 1.29bln (exp. 1.3bln). FY23 EPS view 1.49-1.53 (exp. 1.46), FY revenue view lowered to 5.35-5.45bln (exp. 5.47bln).


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  Atlassian (TEAM) - Q4 EPS 0.57 (vs 0.27 Y/Y), Q4 revenue USD 939.1mln (vs 759.8mln Y/Y). Chief Revenue Officer Cameron Deatsch will leave at the end of December. Sees Q1 revenue between USD 950-970mln (exp. 945.1mln), sees Q1 cloud revenue growth of +25-27% Y/Y. Sees FY24 cloud revenue growth of +25-30% Y/Y.


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  GoDaddy (GDDY) - Q2 EPS 0.54 (exp. 0.57), Q2 revenue USD 1.05bln (exp. 1.06bln), Q2 gross merchandise volume +20% Y/Y at USD 33bln. Sees Q3 revenue between USD 1.055-1.075bln (exp. 1.09bln).

CONSUMER:

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  Amazon (AMZN) - Rose almost 9% afterhours as it beats on the top- and bottom-lines, and issues upbeat guidance. Q2 EPS 0.65 (exp. 0.35), revenue USD 134.4bln (exp. 131.5bln); AWS net sales USD 22.14bln (exp. 21.71bln); Online stores net sales USD 52.97bln (exp. 52.45bln), Physical Stores net sales USD 5.02bln (exp. 4.96bln), Third-Party Seller Services net sales USD 32.33bln (exp. 31.2bln),  Subscription Services net sales USD 9.89bln, +14% y/y (exp. 9.79bln) , Advertising services sales USD 10.683bln (prev. 8.757bln Y/Y). Exec said AWS growth stabilized, continued to add to meaningful leadership position in cloud with a slew of generative AI releases in the quarter. Sees strong demand for ad services as team keeps innovating for brands. Continued lowering costs to serve in fulfillment network, while providing prime customers with fastest delivery speeds AMZN has recorded. Sees Q3 revenue between USD 138-143bln (exp. 138.25bln). CFO said third party sellers accounted for 60% of units sold in Q2, shipping costs were growing at a slower pace than unit growth, and the company is encouraged by strength of the cloud customer, as cloud growth stabilised and is continuing into Q3. CFO said consumer behaviour was similar to earlier this year, with shoppers trading down to generic brands. CEO said Whole Foods was growing at a healthy clip, meaningfully improved profitability last year. Expects capital investment for FY23 to be slightly more than USD 50bln compared to USD 59bln in 2022. Is working to grow business-to-business commerce to USD 100bln in yearly gross sales from current USD 35bln. Capex forecast includes a significant amount in cloud for generative AI and and large language models.


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  Automakers - UAW demands a +40% pay increase in labour talks with Detroit automakers, according to the WSJ.


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  Booking Holdings (BKNG) - Q2 adj. EPS 37.62 (exp. 28.80), revenue USD 5.5bln (exp. 5.17bln). Adj. EBITDA USD 1.78bln (exp. 1.47bln),  adj. EBITDA margin 32.6% (exp. 28.4%), gross merchant bookings USD 21.12bln (exp. 18.15bln), room nights sold 268mln (exp. 266mln), rental car days sold 20.0mln (exp. 19.3mln), airline tickets sold 9.00mln (exp. 7.94mln).


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  Volkswagen (VWAGY) - Commenting on Fremantle Highway fire, said its cars were insured and will not result in financial damage, added those vehicles can no longer be delivered to clients.


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  Salvatore Ferragamo (SFRGY) - H1 net EUR +22.5mln (exp. -39mln; prev. +61.6mln), revenue EUR 600mln (exp. 598mln; prev. 630mln). H1 APAC sales -12.9%, which execs said was penalised by the weak performance in Korea and in the Travel Retail channel, while the performance of retail in Greater China was positive, and the CEO said it has not seen sales in China slow in the last few weeks.; Japan -11.4%; EMEA +10.8%; North America -17.3%, with the wholesale channel underperforming more than proportionally, mainly as a consequence of the network rationalisation; Central & South America +0.4%.


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  Airbnb (ABNB) - Q2 EPS 0.98 (exp. 0.76), revenue USD 2.48bln (exp. 2.42bln). Said Q2 nights and experiences booked +11%, to 115.1mln (exp. 117.6mln).


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  Monster Beverage (MNST) - Q2 EPS 0.39 (exp. 0.39), Q2 revenue USD 1.85bln (exp. 1.87bln). Exec said it was seeing sustained growth in the energy drink market in the US and internationally.


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  Post Holdings (POST) - Q3 EPS 1.52 (exp. 0.93), Q3 revenue USD 1.86bln (exp. 1.82bln). Lifts FY23 adj. EBITDA outlook range to between USD 1.18-1.2bln.


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  Figs (FIGS) - Q2 EPS 0.02 (exp. 0.01), Q2 revenue USD 138.1mln (exp. 133.2mln). Sees FY23 revenue growth of between +5.5-7.5% Y/Y, sees FY23 adj. EBITDA margin growth of +12.5-13.5%.


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  DraftKings (DKNG) - Q2 EPS -0.17 (exp. -0.25), Q2 revenue USD 875mln (exp. 760mln). Monthly Unique Players 2.1mln (exp. 2.07mln). ARPU +33% Y/Y to USD 137 (exp. 123). Raises FY guidance: FY sales view USD 3.46-3.54bln from 3.135-3.235bln; FY23 adj. EBITDA view to losses between 190-220mln.

INDUSTRIALS:

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  A.P. Moeller-Maersk (AMKBY) - Q2 EBIT USD 1.6bln (exp. 0.89bln), Q2 EBITDA USD 2.9bln (exp. 2.4bln). Q2 ocean unit cost at fixed bunker -1.0% Y/Y, driven by lower network and container handling costs. For FY23, forecasts global container volume growth in a -4% to -1% range (prev. saw -2.5% to +0.5%), based on the continued destocking. EBITDA seen between USD 9.5-11.0bln (prev. 8.0-11.0bln, exp. 9.75bln), EBIT seen between USD 3.5-5.0bln (prev. 2.0-5.0bln, exp. 3.87bln), FCF above USD 3.0bln (prev. 2.0bln), and sees CapEx at the lower-end of its previously communicated USD 9.0-10.0bln range.


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  Air Lease (AL) - Said that 20 aircraft previously included in its owned fleet were still detained in Russia. It received a further incremental delay notice from Boeing (BA) on our MAX deliveries. Said it was watching Airbus (AIR FP) deliveries carefully in face of RTX's announcement last week. CEO sees continued strengthening of lease rates and more lease extensions. Continues to see multifaceted developments in supply chain health impacting entire aircraft manufacturing process, likely to persist for several years ahead. Would not be directly impacted in any case due to RTX engine issues. Prelim indications are that only 8 engines out of our fleet are impacted across 4 airline customers due to the Pratt and Whitney engine issues.


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  Airbus (EADSY) - Delivered 65 airplanes in July (vs 72 in June), according to Reuters.

ENERGY:

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  EOG Resources (EOG) - Q2 Adj. EPS 2.49 (exp. 2.32), revenue USD 5.57bln (exp. 5.31bln). Said resilient demand for fuel and higher production offset a decline in oil and gas; production averaged at 970,300 barrels of oil equivalent per day (boepd) during the quarter, rising from 920,700 boepd y/y; said its realised price for oil averaged USD 74.97 per barrel.


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  Bloom Energy (BE) - Q2 adj. EPS -0.17 (exp. -0.14), Q2 revenue USD 301.1mln (exp 313.8mln). Reiterates FY23 revenue outlooked for sales between USD 1.4-1.5bln (exp. 1.47bln)

MATERIALS:

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  Lanxess (LNXSY) - Q2 revenue EUR 1.78bln (exp. 1.74bln); Exec said demand was weak from the construction and chemical industries in particular, adding that there was currently no sign of a recovery in demand anticipated for the second half of the year.

FINANCIALS:

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  JPMorgan (JPM) - JPM said that if deposit insurance fund rule was finalised, it estimates that it would need to  recognise an expense of about USD 3bln pre-tax in the quarter in which it was finalised in.


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  KKR (KKR) - KKR is in advanced talks to buy book publisher Simon & Schuster for around USD 1.65bln, WSJ reports.


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  Coinbase (COIN) - Q2 EPS -0.42 (exp. -0.77), revenue USD 0.663bln (exp. 0.63bln). Maintains goal to improve FY adj. EBITDA in absolute Dollar terms Y/Y. Q3 subscription and services revenue seen "at least" USD 300mln.


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  Commerzbank (CRZBY) - Q2 net income EUR 565mln (exp. 567.7mln), NII EUR 2.13bln (exp. 1.92bln). Raises FY23 NII outlook to at least EUR 7.8bln (prev. about EUR 7bln); is to apply for a further share buybacks. CET1 ratio increased to 14.4% (vs 14.2% in Q1) – Bank to apply to ECB and German Finance Agency for approval of further share buyback. Cost-income ratio in the first half of the year at 61% (H1 2022: 64%).


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  Credit Agricole (CRARY) - Q2 revenue EUR 6.68bln (exp. 5.89bln), net income EUR 2.04bln (exp. 1.43bln), CIB Revenue EUR 1.91bln (exp. 1.82bln); Q2 Underlying Revenue in Capital Markets and Investment Banking -4.9% Y/Y, FICC revenue -1.1% Y/Y. Said  inflows remained at a good level in the Asset gathering and Large customers division. Retail banking, loan production was down compared with the second quarter of 2022 in a declining market, but the level of outstanding loans continued to rise across all business lines. Revenues driven by dynamic business, notably in Insurance across all business lines, with continued strong net inflows in unit-linked products. Corporate and Investment Banking posted good performance this quarter, especially in structured financing activities (up 20.4% compared with the second quarter of 2022) and good commercial activity in capital markets, particularly in financing solutions (repo, primary credit and securitisation).


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  Rocket Companies (RKT) - Q2 adj. EPS -0.02 (exp. -0.04), Q2 adj. revenue USD 1.0bln (exp. 0.99bln). Sees Q3 adj. revenue between USD 0.85-1.0bln (exp. 1.01bln).

REAL ESTATE:

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  Redfin (RDFN) - Q2 EPS -0.25 (exp. -0.31), Q2 revenue USD 275.6mln (exp. 275.7mln). Expects to break-even on an adj-EBITDA over the next 12 months, rather than in 2023, which is exec said was a setback; still projects adj. EBITDA will this year improve by more than USD 140mln. Said it lost market share due to one-time setbacks from agent layoffs and the closure of RedfinNow, but expects to return to Q/Q gains in H2. Sees Q3 revenue between USD 265-279mln (exp. 288.2mln).


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  Opendoor Technologies (OPEN) - Q2 EPS 0.03 (exp. -0.38), Q2 revenue USD 1.98bln (exp. 1.84bln). Sees Q3 revenue between 0.95-1.00bln (exp. 1.36bln).

HEALTHCARE:

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  AstraZeneca (AZN), Sanofi (SNY) - The US CDC Advisory Committee on Immunization Practices voted unanimously to recommend routine use of Sanofi/AstraZeneca’s Beyfortus (nirsevimab-alip) for the prevention of respiratory syncytial virus lower respiratory tract disease for newborns and infants below 8 months of age born during or entering their first RSV season.


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  Amgen (AMGN) - Q2 adj. EPS 5.00 (exp. 4.49), revenue USD 6.99bln (exp. 6.68bln). Raised FY adj. EPS view to USD 17.80-18.80 from 17.60-18.70 (exp. 17.78), raised FY revenue view to 26.6bln-27.4bln from 26.2bln-27.3bln (exp. 27.05bln).


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  Walgreens Boots Alliance (WBA), AmerisourceBergen Corporation (ABC) - WBA sells shares of AmerisourceBergen Corporation for USD 1.85bln, further cutting its stake to around 16%. Walgreens will use the proceeds to pay down debt and for general corporate purposes.


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  Gilead (GILD) - Q2 adj. EPS 1.34 (exp. 1.64), revenue USD 6.60bln (exp. 6.44bln). Lowers FY Adj. EPS outlook to USD 6.45-6.80 from 6.60-7.00 (exp. 6.73), but raises FY product sales view to USD 26.3bln-26.7bln from 26bln-26.5bln (exp. 26.2bln).


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  Bio-Rad Laboratories (BIO) - Q2 EPS 3.00 (exp. 2.68), Q2 revenue USD 681.1mln (exp. 698mln). Lowers FY23 revenue growth view to +0.8% (prev. saw +4.5%).


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  Stryker (SYK) - Q2 adj. EPS 2.54 (exp. 2.38), revenue USD 5bln (exp. 4.82bln).

COMMUNICATIONS:

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  WPP (WPP) - H1 sales net 204.3mln (prev. 419mln YY), H1 revenue GBP 7.22bln (prev. 6.67bln Y/Y). Cuts FY23 LFL adj. revenue growth guidance to 1.5-3.0% (prev. 3.0-5.0%).


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  Yelp (YELP) - Q2 EPS 0.21 (exp. 0.15), Q2 revenue USD 337mln (exp. 325.4mln). Net revenue reached a new high driven by record advertising revenue across categories. Self-serve and multi-location accounted for more than half of its advertising revenue for the first time.

04 Aug 2023 - 09:30- Research Sheet- Source: Newsquawk