US EARLY MORNING: US equity futures are mixed; NDX lags after AAPL disappointment; US jobs data ahead

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  US PRE-MARKETS: Overnight, APAC stocks were up, tracking advances in global peers and ignoring disappointing China Caixin Services PMI data. Tech giant Apple (APPL) slipped by over 3% afterhours following the publication of its Q4 earnings report, where it saw its first FY revenue decrease since 2019 as Q4 earnings slumped (the China sales fall is capturing a lot of attention) despite record iPhone and services revenue, and as investors remained concerned over the outlook for hardware. European stocks have opened with a constructive bias on Friday, and are on course to book their strongest weekly rally in a year. US equity futures are mixed, though are not too far off neutral, and on a weekly basis, remain on course to mitigate last week’s losses. Treasury yields are a little higher across the curve, with underperformance seen along the front end. Much of how we close out the week will depend on today’s jobs report for October (preview below) as well as the ISM services report due shortly afterwards.


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  NFP PREVIEW: Headline NFP is expected to rise by 180k, easing from the prior 336k, with analyst forecasts ranging between 125-285k. The unemployment rate is seen maintaining a 3.8% pace, while M/M wages are expected to accelerate to 0.3% from 0.2%, with the Y/Y rate seen easing to 4.0% from 4.2%. With the market largely pricing in that the Fed is done with rate hikes, attention will shift further out the curve to help determine how long it needs to keep rates at a restrictive level for, while the Fed will be using it to help determine if rates are sufficiently restrictive or not. Although the market is largely pricing rates are already at peaks, Powell on Wednesday did keep the door open to more hikes if needed. Nonetheless, with the next SEPs due at the December meeting, this data will also help shape expectations for those. However, as always, this data release will only tell part of the story in terms of helping to gauging future Fed expectations, with plenty of other data due before now and the December FOMC. (Full Newsquawk Preview here)


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  WEEKLY FLOWS: BofA's weekly flows data saw its Bull & Bear Indicator drop to 1.4, the lowest since November 2022, giving a contrarian “buy” signal for a third week; within the data, US equities saw a third week of inflows (USD 500mln), EMs saw a fourth week of outflows (USD 2.8bln), while Europe saw its 34th week of outflows (USD 1bln). In Fixed Income, IG saw its first inflows for three weeks (500mln), while US Treasuries saw the 38th week of inflows (USD 6.7bln).

TODAY’S AGENDA:

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  DAY AHEAD: In Europe, final Services PMI data out of the UK are expected to be unrevised. The Eurozone jobless rate is seen steady at 6.4%. The main focus of the day will be the release of the US jobs data for October (our preview is below); Canadian jobs data will be released at the same time. After the cash equity day has begun, S&P Global will release final services and composite PMI data ahead of the ISM Services report, with the latter expected to ease slightly at the headline level. On the energy front, Baker Hughes will release weekly rig count data. Today’s speaker’s slate includes Fed’s Barr, who will speak on the Community Reinvestment Act; Fed’s Kashkari (2023 voter) is also due to make remarks today in wake of the Wednesday FOMC rate decision. On the CRA slate, Fitch will review Switzerland, and Moody’s may review Norway.


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  PREVIEW - US NONFARM PAYROLLS (12:30GMT/08:30EDT): Headline NFP is expected to rise by 180k, easing from the prior 336k, with analyst forecasts ranging between 125-285k. The unemployment rate is seen maintaining a 3.8% pace, while M/M wages are expected to accelerate to 0.3% from 0.2%, with the Y/Y rate seen easing to 4.0% from 4.2%. With the market largely pricing in that the Fed is done with rate hikes, attention will shift further out the curve to help determine how long it needs to keep rates at a restrictive level for, while the Fed will be using it to help determine if rates are sufficiently restrictive or not. Although the market is largely pricing rates are already at peaks, Powell on Wednesday did keep the door open to more hikes if needed. Nonetheless, with the next SEPs due at the December meeting, this data will also help shape expectations for those. However, as always, this data release will only tell part of the story in terms of helping to gauging future Fed expectations, with plenty of other data due before now and the December FOMC. (Full Newsquawk Preview here)

EQUITY NEWS:

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  Apple (AAPL) - Apple’s shares fell over 3% afterhours following the publication of its Q4 earnings report, where it saw its first FY revenue decrease since 2019, with Q4 earnings slumping despite record iPhone and services revenue, as it fails to dispel worries over the outlook for hardware and China sales slip. Q4 EPS 1.46 (exp. 1.39), Q4 revenue USD 89.5bln (exp. 89.3bln); Q4 iPhone revenue +2.8% Y/Y at USD 43.81bln (exp. 43.73bln), Q4 Products revenue -5.3% Y/Y at USD 67.18bln (exp. 67.82bln), Q4 Service revenue +16% Y/Y at USD 22.31bln (exp. 21.37bln), Q4 Mac revenue -34% Y/Y at USD 7.61bln (exp. 8.76bln), Q4 iPad revenue -10% Y/Y at USD 6.44bln (exp. 6.12bln), Q4 Wearables, home and accessories -3.4% Y/Y at USD 9.32bln (exp. 9.41bln). By region, Greater China sales were -2.5% Y/Y at USD 15.08bln (exp. 17.01bln). CEO Tim Cook said that iPhone 15 Pro and 15 Pro MAX models supply was constrained, and does expect to reach supply demand balance during current quarter. Expects Mac sales to improve in current quarter. Cook said he expects services revenue to grow at a similar double-digit rate in fiscal Q1 as in fiscal Q4, sees Q1 gross margins between 45%-46%. Sees fiscal Q1 sales for both iPad and wearables segments to decelerate significantly from the September quarter.


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  A.P. Moeller-Maersk (AMKBY) - Q3 earnings were slightly above expectations, and it maintained its FY outlook, but sees FY operating profits at lower end of guidance range. Will cut 10k jobs. Q3 EBITDA 1.9bln (exp. 1.81bln), EBIT 538mln (exp. 653mln), EPS 31 (exp. 28). Sees global container volume growth of -2% to -0.5% (prev. guided -4% to -1%). Said weak demand for Europe’s manufacturing exports and flat domestic demand were dragging down growth in China, consumers remained hesitant amid weak confidence, high youth unemployment and economic uncertainty; said it saw strong import growth in Africa, Europe, India, Middle East and LatAm, with weakness in imports seen in North America and East Asia; it said gap between demand and supply growth remained wide in Q3, adding that slowing global economy, risks of financial stress, geopolitical tensions can wipe out any improvements expected in Q4 2023 and FY 2024 volumes. 


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  Atlassian (TEAM) - Q1 EPS -0.12 (prev. -0.05 Y/Y), Q1 revenue USD 977.8mln (prev. 807.4mln Y/Y). Sees Q2 revenue between USD 1.01-1.03bln (exp. 1.01bln), and sees Q2 cloud revenue growth between +25.5-27.5% Y/Y, and data centre revenue growth is seen approximately 33% Y/Y. For FY24, TEAM reiterates cloud revenue growth view of +25-30%, while data centre revenue growth seen around +31% Y/Y.


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  Bill (BILL) - Q1 adj. EPS 0.54 (exp. 0.50), Q1 revenue USD 305mln (exp. 297.9mln). CFO John Rettig promoted to President, a newly created role. Sees Q2 adj. EPS between 0.35-0.44 (exp. 0.48), Q2 revenue seen between USD 293-303mln (exp. 318.8mln). Lowers FY24 adj. EPS outlook to between 1.64-1.97 (exp. 1.95, prev. saw between 1.82-1.97), and lowers its FY24 revenue outlook to between 1.205-1.245bln (exp. 1.3bln, prev. saw 1.29-1.31bln).


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  Block Inc (SQ) - Block shares jumped 16% after earnings topped expectations, and it raised FY guidance. Q3 2023 EPS 0.55 (exp. 0.47), Q3 revenue USD 5.62bln (exp. 5.44bln), but ex-BTC sales +16% to USD 3.19bln; Q3 Gross Payment Volume +10% Y/Y at USD 60.08bln (exp. 61.04bln). Sees Q4 EBITDA of USD 440mln (exp. 400mln), and sees FY24 EBITDA around USD 2.4bln (exp. 1.97bln).


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  BMW (BMWYY) - Reported higher margins in Q3, and stuck to its annual forecast. Q3 PBT EUR 4.063bln (prev. 4.10bln Y/Y), Revenue EUR 38.458bln (prev. 37.176bln Y/Y), EBIT Margin 9.8% (prev. 8.9% Y/Y), Deliveries +5.8% Y/Y at 621,699 units. Guides FY23 EBT "decrease significantly", Adj. EBT "higher Y/Y".


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  Booking Holdings (BKNG) - Topped profit estimates on strong summer travel spend, but shares were lower by almost 5% in extended trading. Q3 2023 adj. EPS 72.32 (exp. 67.61), Q3 revenue USD 7.30bln (exp. 7.26bln); Q3 marketing expense USD 2.02bln (exp. 2.02bln), Q3 Gross bookings USD 39.81bln (exp. 38.22bln), Q3 Gross merchant booking 22.27bln (exp. 19.65bln), Q3 Room nights sold +14.9% to 276mln (exp. 269mln), Q3 Rental Car days sold +20% to 20mln (exp. 19.55mln), Q3 Airline tickets sold +56.6% to 9mln (exp. 8.92mln). While events in Israel impaced travel trends, exec said it was encouraged to see global room night growth improve towards the end of October. Adds that it continues to see resiliency in global leisure travel demand, and sees strong Q1 growth.


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  Carvana (CVNA) - Shares gained over 2% after hours after earnings topped expectations. Q3 adj. EBITDA USD 148mln (exp. 59.7mln), Q3 revenue USD 2.77bln (exp. 2.78bln), Q3 gross profit per unit USD 6k (exp. 5.5K). Sees Q4 gross profit for unit above $5K (exp. 5.083k).


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  Cloudflare (NET) - Q3 adj. EPS 0.16 (exp. 0.10), Q3 revenue USD 335.6mln (exp. 330.5mln). Sees Q4 adj. EPS at 0.12 (exp. 0.10), and sees Q4 revenue between USD 352-353mln (exp. 356.3mln). Lifts FY23 EPS outlook to between 0.45-0.46 (exp. 0.37, prev. saw 0.37), and lifts FY23 revenue outlook to between USD 1.286-1.287bln (exp. 1.29bln, prev. saw between 1.283-1.287bln).


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  Coinbase (COIN) - Q3 EPS -0.01 (exp. -0.54), Q3 revenue 0.674bln (exp. 0.65bln), Trading Volume 76bln (exp. 80.48bln). Sees Q4 Subs & Service Revenue "flat vs Q3". Targets "meaningfully positive EBITDA" for the FY (exp. 700mln).


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  DraftKings (DKNG) - Q3 EPS -0.35 (exp. -0.69), Q3 revenue USD 0.79bln (exp. 0.71bln). Raises its 2023 revenue guidance mid-point to USD 3.695bln and EBITDA guidance midpoint to USD 105mln. Sees FY24 sales at USD 4.65bln (exp. 4.3bln), and FY24 EBITDA of USD 400mln (exp. 260mln).


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  Dropbox (DBX) - Q3 EPS 0.56 (exp. 0.49), Q3 revenue USD 633mln (exp. 627.9mln), Q3 total ARR USD 2.525bln (exp. 2.511bln). Q4 sales seen between USD 629-632mln (exp. 632.3mln), and expects lower net new paying users in Q4, and reduced level of billings. However, raises FY23 revenue outlook to between 2.496-2.499bln (exp. 2.49bln, prev. saw 2.487-2.497bln).


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  Expedia Group (EXPE) - Q3 adj. EPS 5.41 (exp. 4.93), Q3 revenue USD 3.929bln (exp. 3.86bln), Q3 bookings USD 25.685bln (exp. 25.87bln). Exec said B2B business continued to demonstrate strong Y/Y growth, while B2C revenue growth accelerated over 400bps sequentially. Announced a USD 5bln buyback. Reiterated its FY guidance.


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  Five9 (FIVN) - Q3 EPS 0.52 (exp. 0.43), Q3 revenue USD 230.1mln (exp. 224.4mln), Q3 LTM subscription revenue +28% Y/Y. Q4 EPS seen between USD 0.47-0.49 (exp. 0.47), and Q4 revenue seen between USD 237.1-238.1mln (exp. 243.7mln). FY23 EPS seen between USD 1.91-1.93 (exp. 1.82), FY23 revenue seen between USD 0.9085-0.9095blb (exp. 0.9094bln).


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  Ford Motor (F) - Autoworkers at Michigan Assembly Plant voted 82% in favour of a tentative contract with Ford, AP reports. The deal is for four years and eight months. More Ford union members will continue voting until November 17th.


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  Fortinet (FTNT) - Fortinet stock prices fell 18% afterhours after it reported a slowdown in firewall sales. Q3 adj. EPS 0.41 (exp. 0.36), Q3 revenue USD 1.33bln (exp. 1.35bln). FY Adj. EPS view 1.54-1.56 (exp. 1.51), Cuts FY Revenue view 5.27-5.33bln from 5.35-5.45bln (exp. 5.4bln). Exec said that the Secure Networking market was experiencing slower growth as product demand returns to normal levels following two years of elevated growth.


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  GoDaddy (GDDY) - Q3 EPS 0.89 (exp. 0.71), Q3 revenue USD 1.07bln (exp. 1.07bln). Sees Q4 revenue growth of +6% Y/Y, and EBITDA margin at 29% (exp. 28%). Said it will unveil more about its newly launched AI experience, GoDaddy Airo, at an upcoming Investor Dinner in November.


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  Live Nation Entertainment (LYV) - Live Nation saw record sales in the quarter and record attendance amid surging concert demand. Q3 2023 EPS 1.78 (exp. 1.27), Q3 revenue USD 8.2bln (exp. 6.99bln). Concert revenues +32% to USD 6.97bln (exp. 6.06bln), ticketing sales +57% to USD 832mln (exp. 592mln). Exec said it was on pace for a record 2023, driven by the acceleration of structural growth in the live entertainment industry.


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  Microchip Technology (MCHP) - Q2 adj. EPS 1.61 (exp. 1.62), Q2 revenue USD 2.25bln (exp. 2.27bln). Raises dividend +33.8% Y/Y to USD 0.439/shr. Exec said that given the broader economic landscape characterised by decelerating economic activity and escalating business ambiguity, along with its proactive measures to assist clients in managing inventory positions and backlog, anticipates net sales in the December quarter to be down 15-20% sequentially. Q3 revenue seen between USD 1.80-1.92bln (exp. 2.11bln), and Q3 Adj. EPS seen between 1.09-1.17 (exp. 1.44).


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  Monster Beverage (MNST) - Q3 2023 EPS 0.43 (exp. 0.40), Q3 revenue USD 1.86bln (exp. 1.87bln). Exec said gross profit margins in the quarter improved significantly Y/Y as a result of pricing actions, decreased freight-in costs and decreased aluminium can costs.


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  Motorola Solutions (MSI) - Q3 adj. EPS 3.19 (exp. 3.03), Q3 revenue USD 2.6bln (exp. 2.54bln). Q3 backlog flat Q/Q at USD 14.3bln. Sees Q4 adj. EPS between USD 3.60-3.65 (exp. 3.58), and sees Q4 revenue growth around +4% Y/Y (exp. 2.8bln). Lifts FY24 adj. EPS outlook to between USD 11.65-11.70 (exp. 11.50, prev. saw 11.40-11.48).


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  Paramount Global (PARA) - Q3 adj. EPS 0.30 (exp. 0.10), Q3 revenue USD 7.13bln (exp. 7.1bln); Q3 ARPU +16%, Q3 direct-to-consumer revenue USD 1.69bln (exp. 1.64bln) and exec now expects DTC losses in 2023 will be lower than 2022 Y/Y, Q3 Filmed Entertainment revenue USD 891mln (exp. 843mln); Paramount+ added 2.7mln subs in Q3 (exp. +2.02mln).


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  Pioneer Natural Resources (PXD) - Q3 adj. EPS 5.83 (exp. 5.55), Q3 average production 721k BPD (exp. 718k), Q3 average oil production 377k BPD (exp. 375k), average NGL production 182k BPD (exp. 182k). Lowered FY23 CapEX guidance for exploration, environmental and other capital to USD 150mln.


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  Skyworks (SWKS) - Q4 adj. EPS 2.20 (exp. 2.10), Q4 revenue USD 1.22bln (exp. 1.22bln). Sees Q1 adj. EPS midpoint at 1.95 (exp. 2.31), and sees Q1 sales between USD 1.175-1.225bln (exp. 1.29bln). Ahead, exec expects mobile business to demonstrate momentum, while in broad markets, expects to continue to digest excess inventory in select segments, affecting its revenue outlook.


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  Starbucks (SBUX) - Starbucks plans to expand its global store footprint, double the number of rewards members and generate billions in savings, Axios reported.


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  Stellantis (STLA) - Stellantis will invest USD 3.2bln in a new battery plant and USD 1.5bln in a truck factory in Illinois as part of a UAW labour agreement, Reuters reports. Workers will get better pay, benefits, and a car lease programme. The agreement is pending worker approval.


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  Stryker Corp (SYK) - Q3 adj. EPS 2.46 (exp. 2.43), Q3 revenue USD 4.90bln (exp. 4.86bln). Revises up FY guidance, now sees organic sales growth of +10.0-10.5% (prev. saw +9.5-10.5%), and sees FY EPS between 10.35-10.45 (prev. saw 10.25-10.45).


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  Yelp (YELP) - Q3 EPS 0.79 (exp. 0.35), Q3 revenue USD 345mln (exp. 340.6mln). Exec said it continues to see strong momentum from its product-led strategy. Revises FY EBITDA view up to between USD 319-324mln (exp. 318mln).

03 Nov 2023 - 08:35- Research Sheet- Source: Newsquawk