US EARLY MORNING: Equity futures are a little lower; tech in focus after ORCL slides, AAPL iPhone launch ahead

US PRE-MARKETS: US equity futures are slightly red, Treasury yields are mixed but not too far off unchanged levels, while the Dollar Index is a little firmer, and crude futures are a touch higher. Focus is beginning to shift onto Wednesday's CPI data, which is not likely to change the dial too much for the Fed's September 20th meeting. But with that said, the NY Fed's gauge of consumer expectations this week highlighted that the path to lower inflation is unlikely to be linear, and has somewhat vindicated officials' stringent focus on price pressures even in the face of growth potentially falling off ahead. For today, however, the focus will likely be on tech given Oracle's (ORCL) 9% slide afterhours after some aspects of their quarterly earnings disappointed expectations. Additionally, Apple's (AAPL) highly anticipated product event will take place in the afternoon, where it is expected to unveil a new iPhone device (brief primer below).

PREVIEW - APPLE EVENT (13:00EDT/18:00BST): - Apple's iPhone 15 event is expected to unveil four new iPhone models, possibly with USB-C charging ports to comply with European regulations. Pro models may feature lighter titanium casings, and lower-end models could have a new design. Improvements in cameras and chips are anticipated. Apple Watch Series 8 and the high-end Ultra may receive updates, focusing on improved chips and health sensors. Accessories may shift to USB-C. iOS 17 will introduce features like a revamped caller ID, better autocorrect, a Journal app, and offline Apple Maps. Expect exciting changes in Apple's latest offerings. Watch the event here.

FUND MANAGER SURVEY: Bank of America's latest Fund Manager Survey revealed that investors are no longer extremely bearish, with equity allocation rising to a 17-month high. That said, fund managers are not yet bullish, with cash levels up to 4.9%. BofA notes a shift in relative exposures, with a record jump in US and a record fall in EM equities, as China growth optimism slumps. In terms of conviction views: 74% of fund managers said it was a "soft or no landing" environment; 75% say "short rates to fall"; none expect China growth to strengthen; Japan stocks see the largest overweight since December 2018; 77% are "long quality"; 55% think "US tech is most crowded trade". On the macro environment, a net -53% are pessimistic on global growth, but just 21% say hard landing is likely, while 27% expect no recession at all, BofA says. The survey finds that inflation expectations have jumped to highest since May 2022, and sticky inflation and hawkish central banks is still seen as the biggest "tail risk" according to 40% of those surveyed. On monetary policy, six out of 10 fund managers say the "Fed is done" (vs nine in ten in July), and 74% say first Fed rate cut will be in Q2 2024 or H2 2024. On China, just 15% expect a fiscal "bazooka" and investors see China real estate as the number one source for next global credit event.

TODAY’S AGENDA:

• 
  DAY AHEAD: Germany's ZEW survey data is expected to see economic sentiment and conditions slip in September. BoE's Mann, a hawk, will deliver remarks; on Monday she delivered hawkish comments, expressing a preference for more rate hikes than standing pat on policy. On the supply front, Germany will sell 2025 Schatz, while the UK will auction 2051 linkers. In the US, weekly RedBook data will be eyed ahead of this week's retail sales report. Afterhours, the API will publish its gauge of weekly energy inventory stocks. The US will sell 10yr notes in the afternoon. Our full interactive calendar can be accessed here; a downloadable pdf version can be accessed here.


• 
  PREVIEW - APPLE EVENT (13:00EDT/18:00BST): - Apple's iPhone 15 event is expected to unveil four new iPhone models, possibly with USB-C charging ports to comply with European regulations. Pro models may feature lighter titanium casings, and lower-end models could have a new design. Improvements in cameras and chips are anticipated. Apple Watch Series 8 and the high-end Ultra may receive updates, focusing on improved chips and health sensors. Accessories may shift to USB-C. iOS 17 will introduce features like a revamped caller ID, better autocorrect, a Journal app, and offline Apple Maps. Expect exciting changes in Apple's latest offerings. Watch the event here.


• 
  REVIEW - UK LABOUR MARKET DATA: UK employment declined by 207K in July, deeper than the expected decline of 185K. The report said that in May-July 2023, the number of unemployed people per vacancy was at 1.4, up from 1.2 in February to April 2023, showing a slight loosening of the labour market as the number of vacancies fell against an increase in unemployment. The unemployment rate ticked up to 4.3% from 4.2%. The wages metrics within the UK jobs data came in hot, with average weekly earnings +8.5% 3M Y/Y in June (exp. 8.2%, prev. 8.4%), stoked higher by the NHS and Civil Service one-off payments made in June and July 2023. Ex-bonus, the measure stood at 7.8% in June (exp. 7.8%, prev. 7.8%). Capital Economics said the strong wage growth suggests the Bank of England will raise rates further. "The Bank’s work is not yet done and supports our view that the Bank will raise interest rates by a further 25bps next week, and keep rates there until the second half of next year," CapEco wrote, adding that with that said, "August’s CPI inflation data due to be released next Wednesday could still shift the dial."

EQUITY NEWS:

TECH:

• 
  Apple (AAPL) - The world's largest iPhone factory has ramped up hiring efforts in China ahead of Apple’s launch of new handset, SCMP reports. Foxconn Zhengzhou has offered bonuses to workers as part of efforts to maintain headcount after labour shortages and disruption last year. The report added that Apple's iPhone 15 is coming to market amid a new set of challenges in one of the world's largest phone markets.


• 
  Oracle Corp (ORCL) - The software maker's shares slipped 9% afterhours following publication of results, where license and hardware revenue in the quarter fell short of expectations. Q1 adj. EPS 1.19 (exp. 1.15), Q1 revenue USD 12.50bln (exp. 12.47bln); Q1 cloud services and license support revenue +13% Y/Y to USD 9.55bln (exp. 9.43bln), Q1 cloud license and on-premise license revenue -11% Y/Y to USD 809mln (exp. 894.1mln), Q1 hardware revenue -6.4% Y/Y to USD 714mln (exp. 742.7mln), Q1 services revenue +1.6% Y/Y to USD 1.38bln (exp. 1.4bln). Said AI companies are in a pact to buy over USD 4bln of capacity in Gen2 cloud. Q2 EPS seen between USD 1.30-1.34 (exp. 1.25), Q2 revenue growth seen between +5-7% (exp. 13.3bln); sees Q2 cloud revenue growth of +29-31%, and expects positive currency impact on revenue and EPS in Q2. Exec said they were confident in revenue acceleration view for the year, and is focussing on building data centres speedily, adding that ORCL was firmly committed to its FY26 financial targets.


• 
  Nvidia (NVDA), Adeia (ADEA) - Nvidia and Adeia have resolved existing litigation between companies on confidential terms. Adeia exec said that having resolved these disputes, it is hopeful that the settlement will open the door for future technology collaborations with Nvidia. ADEA rose +11.5% after-hours following the news.


• 
  Stratasys (SSYS), 3D Systems (DDD) - 3D Systems delivered an enhanced proposal to Stratasys, in which each Stratasys share will convert into USD 7.00 cash and ownership of 46% of aggregate shares of the combined company. 3D Systems believes the new consideration is worth over USD 27/shr for Stratasys shareholders inclusive of synergies. Stratasys board has rejected further discussions based on "narrow focus" on current spot price of 3D Systems, and said it was not interested in any further discussions with or proposals from 3D Systems about a merger.

CONSUMER:

• 
  Automakers - UAW union has reportedly eased its wage demands with automakers as talks progress in Detroit, WSJ reports. The union has proposed a mid-30% wage increase, down from an initial demand of at least 40%, the Journal said.


• 
  Automakers - China will soon be the world's top car exporter, surpassing Japan, FT reports. However, China's car industry faces problems like making too many cars due to inaccurate predictions about electric vehicles and shared mobility. Despite this, Chinese car companies like BYD are selling well and expanding globally, the report adds.


• 
  Alibaba (BABA) - CEO reportedly tells staff that the two main strategic focuses going forward will be user first and AI-driven, while they will recalibrate operations around these two core strategies and reshape business opportunities.


• 
  Casey's General Stores (CASY) - Reports Q1 EPS of 4.52 (exp. 3.37), Q1 revenue USD 3.87bln (exp. 3.9bln), Q1 inside same-store sales +5.4% Y/Y, and +12.1% two-year stacked. Exec said that there was a more normalised macro operating environment in the quarter. Reiterats FY24 inside SSS view of +3-5%.

FINANCIALS:

• 
  PayPal (PYPL) - PayPall announced its Web3 Payments facility, with PayPal Off Ramps and PYUSD Stablecoin.

HEALTHCARE:

• 
  CVS Health Corp (CVS) - After surging over 4% in Monday's session, CVS shares fell as much as 1% in afterhours trading as the company reaffirmed FY23 adjusted EPS guidance range of between USD 8.50-8.70 (exp. 8.59).


• 
  GSK (GSK), Haleon (HLN LN) - GSK's shareholders and Haleon entered into a share purchase deed, according to an SEC filing.

INDUSTRIALS:

• 
  UPS (UPS) - The parcel delivery company said that the US Teamster union cost will increase at a 3.3% compound annual growth rate over the life of the agreement, and 46% of labour cost increase will come in the first year. Costs in H2 2023 are about USD 500mln more than the Co. expected.

ENERGY:

• 
  Chevron (CVX) - Chevron said it welcomes the directions made in the fair work commission, which provides a clear path forward for all parties to resolve an agreement. CVX remains committed to an agreement which achieves market competitive outcomes, and will continue to take steps to maintain safe/reliable operations in the scenario of facilities disruptions. Australia union, however, said it wants industrial action to continue until it secures a union-negotiated deal at Australian LNG facilities. Western Australia State Government says they have no current plans to engage with the Fair Work Commission in the Chevron (CVX) dispute, at this stage there has been no disruption to Western Australia domestic gas supply.


• 
  Woodside Energy (WDS) - Woodside Energy signs non-binding MOU with three Japanese companies to enable studies of a potential carbon, capture and storage value chain between Japan and Australia.

12 Sep 2023 - 09:30- Research Sheet- Source: Newsquawk