Amazon & Apple Earnings Disappoint

Okay, very good morning to you, Friday the 1st of May, and welcome to the briefing. A few things I just wanted to mention quickly before I begin the normal session. One is, if you're watching this and you're not subscribed to the channel, I'd really appreciate it if you would just hit that subscribe button and you'll get the morning briefing updates every morning. There's also when you get a moment, some other interesting videos that you might enjoy as well in the Insights Series and other playlists. So do like and subscribe. And the other thing is, for those who are not aware of this program, we do lots of Intense and now online, given the COVID situation, more one-to-one and small group training. But we also have an e-learning portal which is more on-demand And I did just update this yesterday, so I'm kind of showing it again, but this is a kind of a rolling subscription service that we have, and it's an accredited Level 4 professional qualification. 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The reason for that is it would normally be the same, a bank holiday, the early May Day bank holiday today. But because of the VE Day, uh, 75th anniversary that is on the 8th, so next Friday, that's when they had already shifted the public holiday in the UK to that day in order to have extended celebrations for VE Day. So that's next Friday. You're gonna have to hold on for, for another week if you're based in the UK. But that does have a meaningful impact then in terms of the overall volumes likely to be seen today. Uh, and then as I'm going to discuss, I can run you through some of the news headlines, and there's certainly a few things to catch up on from some aftermarket earnings last night, which has kind of dampened the sentiment a little bit, and what otherwise was a pretty phenomenal equity performance in the US indices throughout the month of April. So we'll also have a look at that as well. But yeah, as I said, Apple and Amazon, the two kind of tech giants, coming out and disappointing Um, from a kind of a top level, the, uh, the first Amazon, they warned of a possible second quarter loss, while Apple omitted from basically issuing their earnings forecast for the first time in more than a decade. And we'll look at those numbers more shortly. But as you can see, the S&P on the right, uh, down about 50 at the moment, the NASDAQ down just over 200, the Dow— I've swapped here where I'd normally have the DAX— is down about 380. Otherwise though, interestingly, the equity move, I do think you need to put into context. And let's just have a quick look at that before we really drill down into those corporate earnings into a little bit more detail. And here's, here's the context, I guess, of the price action that we have seen over the last week or so. And, you know, we're back to quite a key level, and, and actually you know, it's quite incredible. If you were to X out the oil negative shock that we had back on the 21st of April, and then if you were to X out the earnings, the Fed meeting, and the Gilead information that we've had, we are basically net zero. We were trading around 2850, we're now trading at 2850. So despite seeing quite a large degree of fluctuation, of course, I mean, this range here from the 21st to the high that we've You know, that is nearly 10%, that move, which is quite incredible. But here we are back at quite a key technical point. You can see that support level that had held some of the price action through the 28th and the overnight session going into the 29th. We just broken through there now, so just getting a little heavy as Europe is coming to market, probably just digesting those corporate earnings from yesterday. You can see here I've marked up the Amazon Apple earnings created an aftermarket downward move, obviously a little bit more pronounced in, in the NASDAQ, but dropping, gapping down, running down to those lows which we've just retested and broken through. And it looks like we've just gone through the respective S1 here, um, just now as well in the future. So if we continue to, to push down, obviously I've already got these, these levels kind of marked up from, from yesterday. The previous high that we had here would be a target on the 27th at the opening dip that we had on the open of Wall Street, kind of coinciding around that spike as well we had on the 26th in the overnight trade. Uh, so that would come in at 28, uh, 43 and 3/4. Uh, anything below there, then 35 would be the next area I'd look at, and that was the high that we had on the run-up of price activity shortly after the open on the 23rd. So that's the, the kind of equity story. I mean, one thing is look at it on a, on a broader perspective. This is what it looks like here on a daily continuation. And despite obviously the, the kind of negative setup in the equity space this morning, um, we are in fact, or have done, have seen the S&P 500 surge almost 13% for the best month, month since 1987. Granted, it does come after March was down 12.5%, so, you know, the harder they fall, the faster they rise in that respect. But yeah, quite incredible. And obviously backstopping a lot of this has been this recovery, the slowdown in coronavirus infections. Lots of countries now talking about their plans to loosen those measures, or at least the pathway to reopening the economy gradually. We've had massive stimulus initiatives in action by both central banks and governments. Of course, we've had some pretty, pretty decent large-cap earnings as well, despite those two names I just mentioned. Alphabet, Microsoft, Facebook all were positive in terms of their share price reaction, helping Gilead Sciences with their experimental COVID-19 therapy potentially being a bit of a breakthrough. And all of these have been positive catalysts And so a little bit, just pull, a pull-off going into month end probably isn't too surprising. And on that notion of month end, I did want to just point out a couple things. Just taking a look at the euro here, and, you know, let me just remove some of these ellipses where we were just looking at that range yesterday. And if you were to tell me, like, why is the euro dollar popped like that you know, if you weren't looking at the chart in terms of the, uh, the time at the bottom, you'd probably say, well, what, the ECB must have said something? Well, actually, the ECB was happening here, and so this wasn't an ECB-related move. And it was quite interesting because, you know, with our guys on the advanced and professional program who are going through our training, we have basically a morning call and an end-of-day review when we're all— we all jump on Zoom we basically discussed the day, review trades as a group discussion. And this was going into 4 o'clock, and this move was going into 4 o'clock, you know, this particular very extreme candle here. And just explaining the idea about— obviously 4 o'clock is a very meaningful time in the FX markets because it's the London fix. And generally then what you, you tend to see is a little bit of a potentially erratic movement. And yesterday, of course, as we had heard throughout the week, there was a lot of month-end models flagging dollar selling into month end. And certainly that became very pronounced at that period of time, and you saw quite a coordinated move there where all dollar-related pairs were seeing a similar type of pop. You can see that evident as well in cable at around a similar time frame. So definitely, um, you know, the FX Fix Obviously, you've probably read in the FT even a week or two ago, is being investigated about some unusual suspect activity that was happening specifically in the euro-dollar currency in the moments up to the fix. And that does happen from time to time, but also it almost gets exacerbated when you have, let's say, a month-end, a quarter-end situation from a seasonal perspective. But then also as well, you're going into a European holiday as well on Friday. And so I think it was just a matter of that in combination with some technical breaches as well that just helped promote that kind of movement. You can see here as well that kind of range higher that we had in euro through the course of really the last couple of sessions, just breaking as well, just helping some of the momentum there. Um, otherwise elsewhere, the other interesting charts here from an overall longer-term perspective— I say longer, medium-term— gold, despite the equity move that we've had you know, we have come off and we're down this morning, but obviously in the context of things, we're still heavily up over the course of the last couple of weeks. And so gold continues to kind of fade a little. I'm just looking here on a, on a 120 candlestick where we've just broken through technically that low that we were printing on the 21st. That was an area that held some of the price action up on the 20th, and you can see has been an area as well in focus over the period of late March and early April. The move down here to the S1, probably worth keeping an eye on today around that area of 1673.75 in the futures, does encapsulate some of the, the closing of the candlestick lows that we were seeing on the 21st. And that also was a support area on the 9th, 8th and 9th and also resistance back on the 26th and 29th of March. So quite sure to see how gold's going to react today actually. Um, if we were to break through those levels, um, obviously our target down at the, the spike low that we had back on the 21st, that comes in at 66. But I don't see any much reason why we wouldn't very rapidly get down to 56 if we were to get breakthrough uh, these, these near-term levels here of support. Beyond that point, um, and quite close proximity to that S2, you've got 54, which was those previous highs you can see there on the 6th, that I'd also be monitoring. So it's going to be quite interesting there. And again, don't forget, Europe out of the market, so generally speaking volumes can be low. And as much as that can lead to perhaps more range-bound more technically led sessions than, you know, definitely within the lack of real calendar events today as well. It can also exacerbate conditions if liquidity generally is more thin. So definitely more toward the US session, probably I'll be keeping an eye on that. And then in the oil market, we're just continuing to bounce here. I mean, it's just phenomenal really. I mean, if you think about it, that doesn't look much on a chart, albeit it looks fairly you know, strong in terms of the, uh, the bid tone. I mean, if I'm just having a look here, I'd probably be keeping an eye on just generally the price activity now as we continue to move higher in that kind of channel. But if you think about this from a percentage point of view, and if we go from the low that we printed this week, you know, it's only a couple of days ago, to where we got to the high um, that was yesterday. You know, we're up 104% in oil. It's just, it's just unreal. But obviously the percentage is somewhat warped by the fact that, you know, we're trading at these such low levels. But, you know, here, this is going to mark then the first positive week that we've had, um, in what otherwise has been a really tough month for oil. And again, Helping accelerate the upside has been some touted book squaring into month end. We've also had some tentative signs of the cutting of production really starting to kick in. Those OPEC cuts officially do start as of today as well, 1st of May. So oil up about 50 cents. So again, one thing when I look at the, uh, the setup generally for this morning, um, the news that is in play is relatively old, and by that I mean its earnings that came out last night. And so at the moment you've got equities a little softer, but gold is also down, oil is up, T-notes flat, and the Dixie is not really doing a great deal. I mean, it's flat essentially, and that's reflected in the major currency pairs. So for me, when I, you know, come in fresh slate and and I'm looking at the news, I'm looking at the charts. Technically, you can see technically a couple of interesting things I'm looking at. Fundamentally, I would say I am absolutely neutral about this morning. I have no preconceived idea about how I think today is going to play out. And I think that is an important point for any new traders. You know, it's absolutely fine to be in that situation. For me then, I don't really want to do anything, not unless I see A, an unexpected fundamental catalyst occur, or B, you start to see— and what I think will probably play out today— a lot more of a technically led session, and then definitely with a US twist given the fact that most of mainland Europe is out the market. So a degree of conservatism probably warranted for this morning, and then maybe look for any opportunity later when the US come in. Because really there's not a great deal on the docket today. Quick run through then some of the headlines just to wrap up. Um, we have had a few different things from Apple and Amazon. We'll kick off with Apple then. Uh, they reported quarterly revenues that were 13— or grew, excuse me, 1%, but they didn't provide a forecast for the first time in more than a decade. Um, it's quite unbelievable really how Apple can get away with this. They kind of went through that period over the last 12 months where they started to stop reporting on their unit sales for their iPhone, for example, because they wanted to kind of withdraw investors' focus away from that, um, and so they could try and attempt to improve their kind of product mix with services and applications rather than just the, the physical phone, which has always been the dominant generator of the company's revenue. But now they've said they're not going to provide a forecast. And quite unusual, as it says, it's the first time many years that's happened. Uh, Tim Cook, um, in the commentary where he spoke over the earnings or post, he said it was— there was some very depressed period in late March and early April, but they saw a pickup in the second half of the month. Um, the company has raised its dividend. They've expanded their share buyback plan by $50 billion. In late January, don't forget those, we were looking at Q1. In late January, the company was also affected by what was going on in China. So don't forget the very depressed period they've had in late March and early April. That was really when the global pandemic kicked in. But Apple, if you think about it, has many of its Asian-based suppliers and manufacturers that were grounded to a halt, um, and that was part of the efforts obviously in mainland China to control, contain, and delay the outbreak of the virus. And that also resulted in shipping delays for devices and supply constraints. So Apple have had a, a really tough quarter in that respect. But that, you know, unless there's a massive stock market rout more broadly on a potential second wave in the second quarter on the virus, you know, I would probably expect then the company to have a much better Um, well, there's, I guess, less risk of a kind of repeat of that happening, albeit they've got to, they've got to navigate the stormy waters of the economic reality of the fact that obviously mass unemployment in America, for example. But yeah, interesting to see. Obviously they're getting their shops reopened as well, quite key for, for the consumer to have that touch and feel before making these large purchases it's going to be quite important for them as well going forward. So their shares were down about 3% after market yesterday. And then the other company, of course, is Amazon. Now Amazon, their profit shrank. They said it may incur a loss in the current quarters. It boosted its spending in order to keep logistics running smoothly during this pandemic. A couple of stats here: the coronavirus effort included spending on personal protective equipment, enhanced cleaning of warehouses and stores, operational changes to promote social distancing. They did go on a hiring binge basically in the run-up to this in mid-March, knowing the lockdown is coming. There was a temporary $2 an hour hazard pay raise for its hundreds of thousands of warehouse workers. So when multiplied like that, it is the second largest private employer in America. Behind, I think, Walmart. So that cost them an extra $700 million as well just to facilitate that, even though it's only $2 an hour per person. So yeah, the company, uh, it's just— they're basically operating expenses is what's hurt them. Although they've managed to have an okay performance, if you actually check out what that operating expenses look like. Here's the operating income in black, as you can see, going back to second quarter 2017, and then it's looking at their forecast range here in blue for Q2 of 2020. So yeah, I mean, for, for me, and I'm sure for you, Amazon has been an absolute lifesaver during this, this lockdown, but that comes at a cost for the company. The one thing I would say though, much more long-term, of course, when we've, when when we've got over this pandemic situation in the next 6, 12 months. I do think though that the world has changed. You know, talking quite top level, I think that, you know, it's been quite liberating for a lot of companies to see that working from home is actually a viable alternative in terms of productivity. I think a lot of companies traditionally very nervous of that outside of say the tech world. In that sense. And I do think that consumers' behavior has changed a lot, you know, out of necessity, people using, let's say, Amazon services. And they have been, in my opinion, very dependable in terms of whether, you know, household goods as well as other services as well. Then is this going to help promote and accelerate the long-term trend in favor of what Amazon is best positioned for, which is online shopping? Away from those traditional brick-and-mortar companies which already have been suffering as Amazon has become such a phenomenal success story, uh, over recent years. So yeah, definitely remain, um, quite positive for the company specifically given the, the situation that they're in, um, and how they're positioned for the long term. So yeah, some hard times now. Their shares were down fairly heavy actually about 5% in aftermarket trade. And that's why we did have the sell-off that you can see in the overnight session, and what's dampened then the open for this morning in terms of— in the, in the equity market more broadly for US index futures as Europe have come in. Calendar for today, what have we got? As I said, it's really quiet. There's obviously nothing coming out of Europe for the holiday. For the UK, mortgage lending and approvals, but this sort of stuff's not really going to move the pound. Um, looking at the manufacturing PMI, final reading for the UK coming out 9:30. Uh, you've then got the US equivalent coming out this afternoon. Again, these are all final readings, with the US manufacturing PMI at 3 PM London time expected to be depressed. But like all the other figures that we've seen, I think people are kind of over The kind of the lowball figures that we're seeing, I think, can be quite easily digested by the market without too much of a, of a fear at this point. Baker Hughes rig count, the operational rig count, is interesting at the moment because that's a key component for how quickly naturally North American production is going to be decreasing. And this coming amid all those other cuts that have been planned now from that OPEC+ agreement. So worth keeping an eye on that. And then from an earnings perspective, you have got in chronological order some of the more larger market cap names. You've got Honeywell International at 11:30. You've then got Colgate-Palmolive, they're coming at just ahead of midday London. ExxonMobil 12:30 and Chevron at 1:30 are probably two oil majors to keep, keep on your radar. Um, how are Exxon and Chevron going to perform? Well, I mean, it's been a tumultuous time in the oil market, of course, and question mark there is, is that, you know, oil prices move in real time, and as do the company share prices. And so how much of that is already reflected in the share price, you know, these negative numbers or loss of potential profit and uncertainty about the future? Probably a lot of it. Um, you know, you saw that in BP, who rallied despite their bad numbers. A few days ago. Both have already suspended their initial 2020 guidance in the wake of COVID So yeah, I don't think it's going to be a great deal of a shock, to be, to be quite honest. But just as I'm talking, I can see equity markets just having another little look on the downside. So the S&P, again, my kind of view here is just looking to just follow the existing trends really in the market unless something else changes. So here is the S&P comes down, um, looking a bit more heavy. There you go, there's the test on that level. And this is the way I think the day is really going to play out. And if we just sit here now, this is the European push in reaction to some of the news overnight. Uh, perhaps this level holds, we wait till the US come in. We are in May now, so whether or not it kind of unleashes the shackles a little bit off of the idea of that book squaring going into month end If we were to move lower down, as I said, I'd be keeping an eye on that 2835 level. Any move beyond that point and a deeper move, you've got the S2, and then 2812.75 would be the low on the 24th. I'd be watching. All right, that is it, guys. So have a good session ahead, have a great weekend. I think the weather's going to be a bit better, so hopefully you can get out for some exercise or, or your daily walk. And I wish you all the best. Alright guys, take care.