US EARLY MORNING: US equity futures are continuing lower, as yields continue higher

US PREMARKETS: US equity futures are continuing to the downside, yields continue to climb, helping the Dollar Index to continue adding to this week’s gains. Incoming data is supporting the Goldilocks narrative surrounding the US economy, where inflation continues to cool and activity remains chugging along at a respectable pace, giving Fed officials more scope to continue tightening monetary policy to manage price pressures which remain above target. This, however, is not being fully reflected in market-based pricing for the Fed’s rate hike trajectory; markets are currently pricing rates having peaked out, whereas the Fed’s recent forecasts have pencilled in another hike this year. The data slate over the coming days may help provide some near-term resolve, with the ISM services report due today, ahead of Friday’s key jobs data. Elsewhere, traders will note that there is a BoE rate decision today, where the G10 central bank is expected to lift rates by 25bps. Elsewhere, Apple (AAPL) and Amazon (AMZN) numbers are due after hours today, which can often help shape near-term equity sentiment post-release. 

TODAY'S AGENDA:

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


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  EUROPE DAY AHEAD: Final services and composite PMI data for July will be released in the morning, where the consensus looks for unrevised readings out of Eurozone, Germany, France, UK. Eurozone producer prices are due for release, and are expected to continue to show cooling inflationary pressures. The Bank of England will likely lift rates +25bps today (our preview is below), which will be followed by a press conference with Governor Bailey. Elsewhere, ECB's Panetta will speak on inflation. On the supply front, Spain will sell EUR 5-6bln of 2027, 2029, 2033 as well as EUR 0.25-0.75bln of 2027 linkers. France will sell between EUR 8-9bln 2033, 2038, 2060 debt.


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  BOE PREVIEW (12:00BST/07:00EDT): The MPC is expected to hike rates by 25bps (vs. prev. 50bps increase), bringing the Base Rate to 5.25%,as forecast by 42/62 economists surveyed by Reuters, an outcome that is anticipated by markets with a 75% probability. Expectations of a smaller hike than previous have stemmed from June’s CPI report showing a decrease in Y/Y inflation to 7.9% from 8.7%, matching the Bank’s May MPR forecast. Elsewhere, focus will be on how the Bank guides future rate expectations with forecasts in the accompanying MPR set to show inflation materially below target over the medium-term. (Newsquawk)


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  NORTH AMERICA DAY AHEAD: There are quite a few labour market releases ahead of the NFP report on Friday. Challenger's July job cuts data, weekly claims data (these do not coincide wit the survey period for the July BLS jobs data – our NFP preview is here), Q2 unit labour costs and productivity. There is also the services ISM (where the jobs components, as well as the inflation components will be eyed). Elsewhere, factory orders and durable goods revisions are due. On the speaker's slate, Fed's Goolsbee (2023), Barkin and Bostic (both vote in 2024) will speak.


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  US CORPORATE EARNINGS: Today's corporate earnings slate is heavy, and includes the heavyweights AAPL and AMZN; other notable companies reporting include CI, COP, AMGN, GILD, ABNB, SYK, BKNG. Our Daily US Earnings Estimates sheet can be accessed here.


• 
  ENERGY: EIA's weekly NatGas storage change data is expected to show a build of 17BCF vs last week's build of 16BCF.

EQUITY NEWS:

TECH:

• 
  Qualcomm (QCOM) - Q3 adj. EPS 1.87 (exp. 1.81), Q3 revenue USD 8.44bln (exp. 8.50bln). Exec said it will proactively implement additional cost actions in H1 2024. Exec said it expects additional restructuring actions to consist largely of workforce reductions, expects to incur most charges in Q4. Exec said Snapdragon will power Samsung Electronics new flagship Galaxy phones. Sees Q4 adj. EPS between 1.80-2.00 (exp. 1.94), and sees Q4 revenue between USD 8.1bln-8.9bln (exp. 8.79bln). Sees 2023 handset units down at least a high single digit percentage due to weak macro environment and slower China recovery.


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  Infineon (IFNNY) - Fell 9% at the start European trade after it announced results. Q3 revenue EUR 4.09bln (exp. 4.05bln), Q3 adj. EPS 0.68 (exp. 0.63), Q3 gross margin 46.2% (exp. 46.8%). CEO said electromobility, renewable energy and related application areas demand stayed high, but demand for consumer applications, such as PCs and smartphones remains low. Sees Q4 segment margin 25% (exp. 25.8%), sees Q4 revenue at EUR 4bln (exp. 4.13bln). For FY, sees revenue at EUR 16.2bln (exp. 16.23bln), and said that the outlook was presented without taking into account the planned acquisition of GaN Systems. Infineon will construct the world’s largest 200mm SIC power fab within Kulim, Malaysia. Will lead to total revenue potential of around EUR 7bln by the end of the decade. Expansion is backed by customer commitments of EUR 5bln, and around EUR 1bln of pre-payments.


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  Microsoft (MSFT) - Vice Chair Bradford Smith sold 50K shares on August 1st for a total USD 16.9mln.


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  Shopify (SHOP) - Q2 adj. EPS 0.14 (exp. 0.05), Q2 revenue USD 1.69bln (exp. 1.62bln); Q2 gross merchandise volume USD 55bln (exp. 53.43bln). Sees Q3 revenue growing at low-twenties percentage rate Y/Y.


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  Cognizant (CTSH) - Q2 adj. EPS 1.10 (exp. 0.99), Q2 revenue USD 4.9bln (exp. 4.8bln). Lifts FY23 adj. EPS outlook to 4.25-4.48 (exp. 4.27), reiterates FY23 revenue outlook between USD 19.2-19.6bln (exp. 19.45bln). Expands generative AI partnership with Google Cloud to create healthcare large language model solutions, bringing the potential of generative AI to a range of healthcare business challenges.


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  DXC Technology (DXC) - Q1 adj. EPS 0.63 (exp. 0.83), Q1 revenue USD 3.45bln (exp. 3.56bln). Q2 adj. EPS seen between 0.65-0.70 (exp. 0.92), and Q2 revenue seen between USD 3.43-3.46bln (exp. 3.6bln). FY adj. EPS seen between 3.15-3.40 (exp. 3.86), and FY revenue seen between USD 13.88-14.03bln (exp. 14.4bln).


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  HubSpot (HUBS) - Q2 adj. EPS 1.34 (exp. 0.99), Q2 revenue USD 529.1mln (exp. 505.3mln), Q2 average subscription revenue/customer was USD 11,432 (+2% Y/Y). Exec noted continued momentum. Sees Q3 adj. EPS between USD 1.22-1.24 (exp. 1.14), and sees Q3 revenue between USD 532-534mln (exp. 526.3mln). FY23 adj. EPS seen between USD 5.24-5.29 (exp. 4.84), and FY23 revenue seen between USD 2.116-2.122bln (exp. 2.09bln).

CONSUMER STAPLES:

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  AB InBev (BUD) - Q2 revenue USD 15.1bln (exp. 15.4bln), Q2 net USD 339mln (exp. 601mln), Q2 organic revenue +7.2% (exp. 7.1%), Q2 organic adj. EBITDA +5.5% (exp. +2.5%), Q2 organic volume growth -1.4% (exp. -0.7%). Notes US beer industry share has been stable since the last week of April.


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  Costco (COST) - July net sales +4.5% Y/Y at USD 17.60bln, and for the forty-eight weeks ending July 30th, net sales +4.6% Y/Y to USD 205.19bln.


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  Clorox (CLX) - Q4 adj. EPS 1.67 (exp. 1.18), Q4 revenue USD 2bln (exp. 1.88bln). Sees FY24 adj. EPS between USD 5.60-5.90 (exp. 5.63), while FY24 net sales growth seen flat to up 2% Y/Y, FY GM expected to rise 150-175bps due to the pricing, cost savings, supply chain optimisation, offset by continued cost inflation.

CONSUMER CYCLICAL:

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  BMW (BMWYY) - Q2 revenue EUR 37.22bln (exp. 36.73bln), Q2 EBIT EUR 4.38bln (exp. 4.23bln), Q2 automotive revenue EUR 21.63bln (exp. 32.01bln). Raises outlook for vehicle deliveries on strong EV demand. Said H1 benefited from the positive development in many automotive markets. Delivered total 1,214,864 vehicles to customers (vs 1,160,094 units Y/Y); volume of electrified models sold in Q2 increased significantly to 245,468 units (vs 184,468 Y/Y), while deliveries of fully-electric vehicles doubled to 152,936 units (vs 75,890 Y/Y).


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  Goodyear Tire (GT) - Q2 adj. EPS -0.34 (ex. 0.16), Q2 revenue USD 4.87bln (exp. 5.18bln). Exec said results were impacted by softer industry volume, ongoing effects of inflation, storm-related interruption of operations at Tupelo. Americas consumer replacement volume -13%, driven by strong comps, channel destocking, Tupelo storm. Commercial truck volumes -15%. Sees Q3 volumes improving due to favourable comps. Sees Q3 as the first quarter this year where the net effect of price/mix, raw material costs and inflation will be positive. Q3 unit volumes expected to be lower Y/Y, with replacement volumes down 3-4%.


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  Rivian (RIVN) - Former Waymo CEO John Krafcik has joined Rivian board of directors.


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  Zalando (ZLNDY) - Europe's biggest online fashion retailer reported Q2 profits of EUR 56.6mln (prev. 14mln Y/Y), adj. EBIT of EUR 144.8mln (prev. 77.4mln Y/Y), Q2 revenue EUR 2.60bln (prev. 2.62bln Y/Y). Narrows FY23 adj. EBIT outlook to between EUR 300-350mln, and sees revenue at the lower end of -1% to +4% range (prev. saw lower end of +1% to +7% range).


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  Adidas (ADDYY) - Q2 revenue EUR 5.34bln (exp. 5.14bln), Q2 net income EUR +95mln (exp. -100mln), Q2 EPS +0.48 (exp. -0.55). Greater China revenue +16% Y/Y, North America Revenue -16%. Inventories fell more than EUR 400mln; Said inventory position improved substantially vs Q1 to EUR 5.5bln; now up only 1% Y/Y. Expects revenues to decline Y/Y.


• 
  ETSY (ETSY) - Q2 EPS 0.45 (exp. 0.43), Q2 revenue USD 0.63bln (exp. 0.62bln), Q2 gross merchandise sales USD 3.01bln (exp. 3.01bln). Sees Q3 revenue between USD 610mln-645mln (exp. 633.2mln), and sees Q3 gross merchandise sales between USD 2.95bln-3.10bln (exp. 3.07bln).


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  MGM Resorts (MGM) - Q2 adj. EPS 0.59 (exp. 0.54), Q2 revenue USD 3.9bln (exp. 3.82bln); in the quarter, MGM China outperformed Macau market recovery, with adj. property EBITDAR and net revenues surpassing Q2 2019 levels.


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  DoorDash (DASH) - Q2 EPS -0.72 (exp. -0.41), Q2 revenue USD 2.1bln (exp. 2.06bln), Q2 total orders +25% Y/Y to 532mln, marketplace GOV +26% Y/Y to USD 16.5bln. Lifts FY23 adj. EBITDA outlook to USD 0.75-1.05bln from USD 600-900mln previously; lifts FY23 marketplace GOV outlook to between USD 64.2-65.2bln from USD 63-64.5mln.


• 
  Boot Barn (BOOT) - Q1 adj. EPS 1.11 (exp. 0.84), Q1 revenue USD 383.7mln (exp. 362.7mln). Q1 SSS -2.9% Y/Y. Q2 EPS seen between USD 0.84-0.90 (exp. 0.84), Q2 revenue seen between USD 372-379mln (exp. 365.4mln), Q2 SSS growth seen -5.5% to -3.5%. Lifts FY24 EPS outlook to between 5.05-5.35 (exp. 4.86), raises FY24 revenue outlook to between USD 1.715-1.748bln (exp. 1.71bln), sees FY24 SSS growth of -5% to -3%.


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  Cheesecake Factory (CAKE) - Q2 EPS 0.87 (exp. 0.64), Q2 revenue USD 866.2mln (exp. 685.6mln). Q2 comps +1.5% Y/Y, +14.1% vs Q2 2019. Lowers Q3 revenue view to around USD 3.5bln (exp. 3.5bln) from 3.55bln; lowers FY23 CapEx outlook to USD 160-170mln from USD 165-175mln. Q3 dividend seen at 0.27.


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  MercadoLibre (MELI) - Q2 EPS 5.22 (exp. 4.54), Q2 revenue USD 3.4bln (exp. 3.3bln); Q2 GMV 10.51bln (exp. 9.95bln).

MATERIALS:

• 
  Albemarle (ALB) - Q2 adj. EPS 7.33 (exp. 4.44), Q2 revenue USD 2.37bln (exp. 2.43bln). Raises FY adj. EPS view to 25.00-29.50 (exp. 23.31, prev. 20.75-25.75). Raises revenue to 10.4-11.5bln (exp. 10.12bln, prev. 9.8-11.5bln) citing rising lithium prices and vol.


• 
  CF Industries (CF) - Q2 EPS 2.70 (exp. 2.25), Q2 revenue USD 1.78bln (exp. 1.8bln). Q2 ammonia net sales 525mln (exp. 480.7mln), ammonia sales volumes by product tons 1.05mln (exp. 992,088), ammonia average selling price per product ton 499 (exp. 478.77). Q2 UAN net sales 548mln (exp. 549.7mln), UAN sales volume by product tons 1.81mln (exp. 1.69mln), UAN average selling price per product ton 303 (exp. 322.46).


• 
  FMC (FMC) - Q2 adj. EPS 0.50 (exp. 0.61), Q2 revenue USD 1.01bln (exp. 1.02bln). Lowers FY adj. EPS view to 5.86-6.80 (exp. 6.43).


• 
  BHP (BHP), Toyota Motors (TM) - BHP signs MOU with Toyota Australia to work on developing electric light vehicles for use in BHP's Australian operations.

ENERGY:

• 
  APA Corp. (APA) - Q2 adj. EPS 0.85 (exp. 0.75), Q2 revenue USD 1.96bln (exp. 1.71bln). Exec said global adjusted production was at the high end of expectations, led by above-guidance oil production growth in the Permian Basin. In Suriname, appraisal of the Krabdagu fairway is ongoing.


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  Marathon Oil (MRO) - Q2 adj. EPS 0.48 (exp. 0.46), Q2 revenue USD 1.51bln (exp. 1.52bln). Sees FY23 total company oil equivalent production trending above mid-point of guidance range.


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  Occidental Petroleum (OXY) - Q2 adj. EPS 0.68 (exp. 0.72), Q2 quarterly production 1,218 MBOED, exceeded midpoint guidance by 42 MBOED.

INDUSTRIALS:

• 
  Rolls Royce (RYCEY) - H1 revenue GBP 6.95bln (exp. 5.937bln). Operating profit GBP 673mln (exp. 698mln).  Gross profits 1.515bln (prev. 942mln Y/Y). Is starting to see the early impact of transformation in all businesses.


• 
  Ingersoll-Rand (IR) - Q2 adj. EPS 0.68 (exp 0.60), Q2 revenue USD 1.69bln (exp. 1.58bln). Exec said it momentum continued. Raises full year guidance. Now sees FY23 adj. EPS between 2.70-2.80 (exp. 2.72) from prior view of 2.64-2.74; raises FY23 revenue growth view to 12-14% from 7-9%.

FINANCIALS:

• 
  PayPal (PYPL) - Q2 adj. EPS 1.16 (exp. 1.16), Q2 revenue USD 7.30bln (exp. 7.27bln). Q2 total payment volume USD 376.54bln (exp. 372.48bln), Q2 transaction revenue USD 6.56bln (exp. 6.63bln), Q2 active customer accounts 431.0m (exp. 433.6mln). Sees Q3 adj. EPS between USD 1.22-1.24 (exp. 1.22), and sees Q3 revenue between USD 7.40bln (exp. 7.32bln). Said it was in the final stages of selecting a new CEO. Expects branded checkout volumes to strengthen throughout the back half of the year.


• 
  Robinhood Markets (HOOD) - Q2 EPS 0.03 (exp. -0.01), Q2 revenue USD 486mln (exp. 472mln); Q2 MAUs 10.8mln (exp. 11.7mln); Q2 net cumulative funded accounts 23.2mln (exp. 23.2mln), Q2 assets under custody USD 89bln (exp. 82.84bln), Q2 ARPU 84 (exp. 81.60).


• 
  ING Groep (ING) - Said the current interest rate environment drove income growth in both Retail and Wholesale Banking, with continued deposit inflows across our retail markets. Despite cooling economies, had another quarter with lending growth and higher fee income. Q2 net interest income EUR 4.06bln (exp. 4.41bln), Q2 net income EUR 2.16bln (exp. 1.72bln). PBT increases to EUR 3.035bln in Q2, CET1 ratio rises to 14.9%. Said it saw good interest income after a long period of negative rates. Operating expenses ex-regulatory costs were slightly lower Q/Q. Saw growth of 227k primary customers, saw an increase in net core deposits of EUR 17bln. Will pay an interim cash dividend of EUR 0.35/share.


• 
  LSE (LNSTY) - H1 revenue GBP 4.2bln (exp. 3.97bln), PBT GBP 662mln, Operating Profit GBP 729mln. Has returned GBP 400mln via buybacks in H1, up to GBP 750mln of directed buyback expected by April 2024.


• 
  MetLife (MET) - Q2 adj. EPS 1.94 (exp. 1.87), Q2 revenue USD 16.6bln (exp. 16.9bln). Exec said business momentum was driving strong underlying growth.


• 
  SocGen (SCGLY) - Q2 revenue EUR 6.29bln (exp. 6.41bln), Q2 net income EUR 900mln (exp. 778mln); launches share buyback programme for around EUR 440mln. Q2 net banking income -8.9% Y/Y in Q2, largely due to decline in net interest margins at French Retail Banking operations, a less conducive market environment in Global Banking and Investor Solutions activities and the booking of one-off items under Corporate Centre.


• 
  UBS Group (UBS) - Lays off Credit Suisse investment banking staff, Reuters reports; closes Credit Suisse office in Houston.


• 
  US Bancorp (USB) - US Bancorp announces debt/equity conversion with MUFG, where it plans to issue 24mln shares to MUFG affiliate for USD 936mln. Proceeds to be used to satisfy a portion of previously announced payment obligation to MUFG.


• 
  AXA (AXAHY) - H1 Net Income EUR 3.83bln (exp. 3.68bln), H1 Gross Written Premiums and other revenues EUR 55.70bln (exp. 55.86bln). End-June Solvency II ratio +20ppts vs end-Dec. On track to meet its underlying earnings target of above EUR 7.5bln.

REAL ESTATE:

• 
  Zillow Group (ZG) - Q2 revenue USD 506mln (exp. 472.1mln), Q2 residential revenue -3% Y/Y to USD 380mln, which exec said was as the company delivered a better-than-expected number of connections to Premier Agent partners, and had favourable relative housing macroeconomic tailwinds despite a challenging housing market. Sees Q3 revenue between USD 458-486mln (exp. 487.7mln). Exec said in Q3, its estimate for industry transaction dollar volume is for a decline between 15% and 20% Y/Y, and within residential revenue, expects Q3 Premier Agent revenue will decline between 4-9% Y/Y.


• 
  Simon Property (SPG) - Q2 FFO/shr 2.88 (exp. 2.92), Q2 revenue USD 1.37bln (exp. 1.25bln); raises Q3 quarterly dividend +8.6% Y/Y to 1.90 (prev. 1.75). Raises FY FFO/shr outlook to between 11.85-11.95 from 11.80-11.85 (exp. 11.91).


• 
  Equinix (EQIX) - Q2 EPS 2.21 (exp. 2.06), Q2 revenue 2.0bln (exp. 2.02bln).

COMMUNICATIONS:

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  Altice USA (ATUS) - Q2 EPS 0.17 (exp. 0.06), Q2 revenue USD 2.32bln (exp. 1.81bln).

HEALTHCARE:

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  Novo Nordisk (NVO), Eli Lilly (LLY) - Novo Nordisk and Eli Lilly accused of failing to warn patients of gastroparesis risk from their blockbuster diabetes/weight loss drugs, FT reports.


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  Merck (MKKGY) - Q2 revenue EUR 5.30bln (vs company exp. of 5.24bln), Q2 EBITDA EUR 1.45bln (co. exp. 1.50bln), Q2 EPS 1.62 (exp. 2.16). Organic net sales −1.1%, EBITDA −7.0%. Healthcare business sector saw higher net sales saw and earnings. Notes weaker market environment in Life Science and Electronics. Highlighted a negative FX impact, especially from USD and China's yuan. Lowers FY23 revenue guidance to between EUR 20.5-21.9bln (prev. 21.1-22.7bln) and cuts adj. EBITDA guidance to EUR 5.8-6.4bln (prev. 6.1-6.7bln).


• 
  McKesson (MCK) - Q1 adj. EPS 7.27 (exp. 5.87), Q1 revenue USD 74.5bln (exp. 70.28bln); approves 6bln increase to share buyback programme, raises quarterly dividend to 0.62 (prev. 0.54). Raises FY24 adj. EPS view to 26.55-27.35 (exp. 26.63).


• 
  Roche (RHHBY) - Expands Global Business Partnership Agreement with Sysmex.

03 Aug 2023 - 09:30- Data- Source: Newsquawk