Apple beats now market awaits CB decisions

Okay, so very good morning, Wednesday, 1st of May. Hope you are well. Getting straight into the briefing then, a few things that we of course can discuss being, uh, quite an aggressive recovery that we saw on Wall Street. I was just looking at the S&P this morning and I must say I'm quite surprised having seeing the weakness initially at the open yesterday in the futures market, you know, solid recovery that we saw. I'm just looking at the kind of heat map of the close and the S&P 500 from yesterday, and obviously Google, uh, or Alphabet was the kind of the sore spot for the market, and that weighed on the NASDAQ futures ahead of the actual cash open. They did actually finish down about 7.5% following disappointing report that we had that we covered yesterday, but we've recovered nicely. And actually, just looking at the, the NASDAQ future here, uh, again, Sam will come on later and talk about the technicals in more detail, but you can see here that dip that we saw. So actually, we came off initially for the first hour of trade, um, as markets got underway, weighed on mainly by this, this Alphabet story, and that broke momentarily the low point that was seen in the, what would have been the previous week's end of week session low. That also running into an area of resistance you can see here back on the kind of overnight on the 22nd going into the 23rd of April. So an area of good technical support in that zone, if you like, and then just a really powerful recovery. And then to add kind of fuel to that move back. We saw this extension. So if I just zoom, make the chart a bit bigger, you can see quite a, a pop higher that came about half past 9 last night. So just as much as the, the NASDAQ has been— well, if you actually look at it here, quite interesting. If you look at, uh, the two candles, they almost are exactly to the tick where we started before Alphabet came out to where we were after Apple came out, it's pretty much tick for tick exactly where we are. If you actually look at the price of the NASDAQ here, it's almost as if, although this has been a, a bad story obviously for, for the Alphabet side and a positive one for Apple, net-net from an index point of view, we are almost absolutely bang on net neutral as far as the index pricing is concerned. That's just quite interesting, uh, having just got that up now. I didn't see that earlier, but yeah, S&P following in kind then with this recovery. So let's just jump into what was the biggest earnings report from last night, and of course this was Apple. So let me read you through a few of the highlights. Their shares were up 5% after market close yesterday. Service revenue, if you remember, that was the one that the market was closely watching as the focus now, and probably will continue in quarters and years to come, moves more away into diversification, and particularly this service revenue growth of the company. And that grew 16%. Obviously, this, this kind of new outline of digital subscription format, this kind of, what is it, $9.99 with various different publications that you would get on a monthly basis That's looking to push things forward. And also as well, the company announced a boost to its share buyback plan by $75 billion. Uh, so again, a kind of withdrawal of the amount of publicly available shares typically in the short term at least tends to elevate the share price. Uh, and they've also raised their quarterly dividend to shareholders by 5% as well. So a beat on the top and the bottom line. Service subscriptions up a decent amount in terms of reflective strong growth there. And as I'll discuss in a second, stabilization in the iPhone, at least in, in regard to the Far East, which has been important. And that net-net causing a positive reaction in their share price after market and consequently helping to mitigate the loss that was seen yesterday in the NASDAQ. A couple of numbers here to be aware of then, particularly their outlook, of course, is what a lot of people looking at. Their third, or fiscal third quarter revenue, will be between $52.5 to $54.5 billion, the company said. That was then above Street estimates. The market was only looking for $52.5 billion, so some pretty bullish outlook from the firm. Their revenues from iPhones did decline 17%, but if you remember, the Street was looking for similar type numbers, and in fact the company printed on the quarter iPhone revenue sales of $31 billion, and that exceeded expectations by about $500 million. The iPhone revenue slipping. Obviously, one of the main things here is not just about the, the kind of average selling price, the ASP of the phone, particularly with the premium models like the iPhone X, but also the fact that now people are holding on to their phones for longer. New contract terms are typically being extended because of the price of the phone. Obviously from 2 to 3 years, this meaning that the kind of refresh rate, if you like, has gone down to that respect. Also, slower economic growth having a bit of an impact on kind of consumer spending in a sense when we're talking about these premium models. And cheaper rivals, of course, in China also denting sales during that holiday period. And one thing I would say with this positive response in Apple, they had such a terrible Q4 and their holiday season was so disappointing, it's almost a kind of, uh, a net reaction function of the fact that expectations were quite low. I'd say the bar was quite low for Apple to beat, and consequently they have done so. One thing that has also helped on the iPhone side is promotions this year that's helped lower iPhone prices, particularly in the Chinese region where they face obviously stern competition from the likes of Huawei and so on. Um, and sales in China fell 22%, but in fact 22% is actually being seen by the street as a good number because it's mean then that the decline, which has been going like this in a staggered way south, has basically flatlined and stabilized, which is I guess a positive sign. Now the service revenue number was 11.45 billion slightly above expectations. iPad up 22% year over year in sales. The Mac was down 5%, but wearables, home, and accessories was up 30% year on year. If you think about it, if you start listing out the products, they've all been very much geared in this pursuit of diversification. Apple has launched Apple News Plus, new iPads, AirPods, iMac desktops, a new mid-range iPad, upgraded their AirPods with another contributing factor, of course, that's been particularly successful for the firm. So yeah, that's enough on Apple. But as you can see, definitely a couple of positive things to talk about. But I would say it's more byproduct of the fact as well of the bar being set relatively low. Typical kind of well-managed situation, I would say, by the company in order to exceed expectations. So yeah, that was one of the bigger things overnight because don't forget, um, obviously it's a Japanese holiday, things relatively quiet this morning of course because it's a mainland holiday in Europe for Labor Day. So much of the European continent is closed. This does include the likes of Italy, Spain, Germany, France, and so on. UK normal, US normal, but that does mean that the session is likely to be very quiet today. Even though we're going to discuss— you've got the Bank of England, largely a non-event. The FOMC is probably what most, at least proprietary or short-term intraday traders, will be sitting out the session and just wait to come in later on this evening to see what the Fed have got to say. So I do think— going to say it now, and I'm sure Sam will re-emphasize this point— you do need to kind of take in consideration the context of the day and actually adapt your your strategies to potentially be a lot more conservative, if anything at all, unless it presents itself quite clearly, because markets are probably going to be very sideways until the Fed speak later. Okay, a few things then to up— get you up to speed on this, and I will share this with you in the, the chat room. I'll tweet it and so on from my account later, but this is the, uh, the ING kind of crib sheet, if you like. And this is the easiest and cleanest way, I'd say, to look at a central bank decision, because it quite neatly looks at a kind of variety, if you like, of what this is looking at is the 4 main categories for the Bank of England interest rate decision today and the 4 things of which they're— the Bank of England are focused on. And the first one of, and of course, is Brexit, then growth then inflation and wages, and then the rate hike path— where the rates go and how do they provide forward guidance on upon that issue. So that's left to right. Uh, top to bottom would be most dovish to most hawkish, the orange being in this case ING, the bank's base case scenario. So let me talk you through the base case scenario because I absolutely agree with what they're saying here, and a few things to think about. So for one, on Brexit, continues to note Brexit uncertainty but limited commentary on an extension. So again, the main kind of summary of the Bank of England here, it is going to be largely a non-event. I would say expectations here are for 9-nil. A few murmurs about potentially a hawkish descent, whether that would be 1 or 2, uh, that could be, I guess, would create in the initial movement quite an aggressive spike higher, but then I would suggest that that might then revert back to the, the mean, if you like, given the fact that overall they're likely to sound that the political impasse over Brexit and the increased uncertainty being heaped upon the existing government at the moment just basically shackles their hands and means that they can't do anything. So even if you had a hawkish bullish to center. You might get a blip higher and then a kind of graduated pullback lower as the outlook still remains highly uncertain and dependent on the political outcome of Brexit. So on growth, likely to maintain lower near-term growth profile, Brexit uncertainty curbing investment. We've seen that materialize in the data. Business investment certainly is being put off to that extent. Wage growth to continue gradually to rise over the forecast period, a slack arose. And it's that real wage— it's not that we've got real pertinent inflation in the UK, but what we do have is a diminishing skilled workforce which is pushing up wages. And wages in the UK are kind of, uh, you know, the strongest they've been in the best part of a decade. And if that translates into its normal economic kind of process and the domino effect leads to then rising inflation, Does that give enough credibility for that hawkish argument to materialize? I would say for me, if I was an NPC member, I'd say no, because, you know, outside of that, there's a lot of, you know, demand that is outside of the employment situation that isn't quite there in the economy because of the lack of confidence over the situation politically. That's not to say, though, if we were to have a pretty swift resolution to the Brexit situation, which we all know is not going to be the case. That's the only way of which I think that on the balance you'll see a bit of a shift towards people becoming more hawkish. But as we're saying here, I don't think that that's going to be the case at all today. In terms of the rate hike path, the base case here from ING reiterates signal that gradual tightening likely to be required So again, they want to keep this kind of optionality on the table, if you like, because there are, as we said with the, the wage situation, some, some components of the economy that if Brexit were removed, we probably would be in this phase of, uh, of signaling or getting toward hiking rates. But obviously there's a big elephant in the room that's going to restrict that from happening. So I won't go over the other scenarios, but As always the case, and how I, you know, I tend to update you guys and get you ready for these big event, news-driven event moves, is I would strategize accordingly for each scenario. So even though the possibility of being outright hawkish or super dovish is incredibly low, it of course is a potential. So I would definitely pre-plan for all scenarios. So most dovish to most hawkish, slight dovish tilt to then the base case scenario. The base case scenario probably being then the least untradeable, because then it should and probably is already factored into prices and cause minimal movement. And if we got that low probability but high impact scenario, an outlying one, then that's when it potentially could be something to look at. But again, not expecting too much from the Bank of England today. As for the Federal Reserve, I'm not going to talk about the Fed at all right now because me and the team will be sticking around to cover the Fed in full this evening. The event is going to kick off at 6:30 PM, going to deliver that live via our YouTube channel, so make sure you subscribe to the channel, turn on notifications. You'll get an alert, 6:30, we'll get the show on the road. I'll give a full extensive preview at 6:30, release at 7:00. Sam will jump on, do a bit of a debrief about the kind of response technically, how he's traded it, and then the press conference will begin and we'll listen in on that as well. So join us then for the Fed. But one thing I did want to mention was, um, Donald Trump of course has been on Jerome Powell's back in the lead-up to the announcement. Let me just read out what Trump tweeted late yesterday. He said, China is adding great stimulus to its economy while at the same time keeping interest rates low. Our Fed has incessantly lifted interest rates even though inflation is very low and instituted a very big dose of quantitative tightening. We have the potential to go up like a rocket if we did some lowering of rates, like 1 point, and some quantitative easing. Yes, we are doing very well at 3.2% GDP, but with our wonderfully low inflation, we could be setting major records and at the same time make our national debts start to look small. Um, yeah, as much as, as an analyst, I have severe problems with what he's saying in terms of it being the appropriate course of action, I do have to applaud the man for managing public perception. Now don't get me wrong, Jerome Powell, the base case scenario here, he's going to stick to course, more largely or so. So no major kind of changes are expected. But what Donald Trump is doing here is what I feel is what he's done with his nominations, with the likes of Stephen Moore, for example, who has been hinting as an advocate of large interest rate cuts. So definitely a Trump yes-man for the policy that he would want to support the, the stock market, if anything. And so what Trump is doing here, in my mind, is he's basically covering, covering himself. It's almost like a trade that he's doing. So basically, if it works for Powell, there's no loss for Trump. Markets are stabilized, and if anything, push higher. It's good for him. If the markets fall out and by sticking the course, that's too much for the market and equities start to implode, now we're at these record levels, well, Trump can refer back to his tweets and go, I did tell you so, you just didn't listen, it's not my fault, it's your fault. And so either way, he's kind of covered himself, both sides of the argument. So yeah, again, I think from a self— a kind of self-preservation piece PR point of view, I think it's pretty well handled by Donald Trump. Particularly important, of course, because we're going into the election season coming up as the year progresses into 2020, of course. So Donald Trump using the, the language as well to resonate, you know, going up like a rocket, all these types of things, uh, usual marketing routine. But yeah, is this going to influence Powell? No, this is more political management in my mind of what Donald Trump does, and he's doing it well. All right, a few other things before people start thinking I'm the biggest Trump fanboy in the world. And this is update on the trade talks, because of course this is one of the big tail risk factors to this economic kind of performance that we're seeing at the moment, particularly in the equity market, having reinitiated record highs again. And this is what we're seeing: the White House says it's ready to walk if no China trade deal soon. So has the market blinked at these US threats? No. But again, it does go to show that, you know, the deal is not done until, you know, the bottom line is signed. And that's not intended to happen until the end of this month. So we got another 4 weeks potentially of this, these talks breaking down. Now, Steve Mnuchin and the US kind of contingency, they're the contingent, they're over in Beijing at the moment. So again, just be mindful potentially of looking out for any comments. For me, again, this is kind of political posturing just to keep the pressure on China and keep the ball rolling more than anything else. Interesting thing I saw, and And I think this actually is, as again, a bit of an olive branch on behalf of the Chinese government in order to get this trade deal over the line despite the kind of bullshiness of the US approach. And that's China unveils plans to further open up banking and insurance sectors. So if you actually think about it, and as this, this would suggest that China will further relax rules for foreign banks and insurers of all sizes to plan to invest in domestic industry. Again, the latest rounds of efforts to, to kind of conclude these trade talks. So again, things are moving in the right direction for these talks, but you just need to keep a half an eye out in case of any potential breakdown. Moving elsewhere, quick summary on Brexit. Obviously it's Wednesday, you get the PMQs, definitely worth watching in the context then of what we've had yesterday. About the grassroots kind of Tories looking on a localised level to heap new pressure on the leadership of Theresa May. So let's see how she stands up in Parliament today amid the usual scrutiny from opposition. And this— well, not just opposition, her own party in fact. And this comes after many are looking for what's the update on the cross-party talks. Now on that matter, May is reportedly seeking to end Brexit talks with Labour next week. Apparently a crunch summit on May 7th, 8th is set to decide the fate of talks. The government planning one last big meeting with Corbyn's team. So again, it's all kind of on the balance at the moment whether she can push this forward. The reason why she's pushing for a conclusion next week is she needs that to go through for all the necessary kind of parliament hearings and legislation process to be concluded in order that they do not have to take part in those European elections. Again, my base case and what I feel is the market is priced in is that she's not going to hit that deadline and we are going to participate in those elections. The next one then comes towards the latter part of June when it's do we actually sit in parliament in Brussels, and that's going to be the next kind of more formal deadline, I would say. So with all of this type of headlines, A, I don't think it changes the stance of Theresa May and her position of the Conservative Party leader. And then two, I don't think this May deadline really is a deadline. I think we're taking part at this point. Final things then, we did have the API crude oil inventories last night. I'm sure Sam will get up the the crude WTI futures chart. It has come off a little bit and is trading down 74 cents this morning, uh, closing in toward the $63 handle. We did have a sizable build, as you can see here in the crude headline, 6.81 million above expectations of 1.5. Cushing, a build of 1.3. Gasoline, though, was a draw, but as expected. Distillates, a draw of 2 million. So yeah, we'll recap those in ahead of the, the event later. But as I'm speaking, WTI crude at session lows, trading just through its Asia-Pacific low— or yesterday, I should say, low— which was around pivot. Pretty decent support for yesterday's session, and it's broken below there already this morning. So worth keeping an eye on. Final thing, if anyone's trading the Antipodean currencies, the New Zealand dollar slides overnight, dropped by as much as just over half a percent following negative jobs growth in the first 3 months of the year, pushing up expectations for a rate cut at the central bank's meeting, the RBNZ, next week. And this, of course, comes after— within that continent, it's looking more likely as the weeks go by that the RBA in Australia are also going to have to look to follow suit, tipping toward the rate cut kind of arena. Calendar-wise, again, just to reiterate and confirm, it is a holiday in mainland Europe. Obviously the, the kind of queue from Asia overnight relatively tame given Japan out all week for the Golden Week. Um, so with the Bank of England being largely a bit of a non-event, the Fed is the focus. So I'd expect today to be particularly quiet during the European morning. Things might start to pick up a touch in the US session. It is a normal day in the US, so if anything, I'd take a bit of a break this morning and, and review things this afternoon. You do have, of course, ADP employment that's coming out. That's the kind of precursor, if you like, to the payrolls report, of course, which we'll see on Friday. So that could be interesting. You've also got ISM manufacturing at 3 PM and the oil inventory numbers. So a couple of things to get your teeth into this afternoon before the main event this evening kicks off at 7 PM London time. UK-wise, head of the Bank of England, just so you're aware, you do have also the market manufacturing PMI number as well at 9:30. All right, guys, that's it from me. Let me just transition my screens and give Sam the nod, and then he can take you through some charts. More detail. But see you in the chat room, and hopefully I'll see you on YouTube later, 6:30, for the FOMC session with Sam, myself, and the rest of the team. Thanks very much.

Good morning everyone, happy FOMC day. Have a quick look over the, the equity markets, I think, to begin with. But like Anthony Cheung mentioned, it is going to be a relatively quiet morning, all things considered. So whether you'd want to get too deeply involved early on, uh, or not, I'm not too sure. I mean, that recovery in the NASDAQ yesterday was, was pretty, pretty strong. And, and just this evening— this morning, I should say— just breaking above that high, only to drift a bit lower, obviously going through, uh, that, that London open now. So keeping an eye on, uh, European equities, even though we have the Labor Day across mainland Europe. See if the DAX can do much. I mean, whether it will take a lead from that, not too sure this morning. But the recovery, uh, very strong, and now not too far away from that, that high that we made back on the, the 25th. Probably better to look at this later in the afternoon, but you can see if we just take a look at those highs from the 25th, and then the, the 29th, the beginning of this week, and to this morning. You can see that trend line acting quite well. So maybe looking for that continuation to the upside, as sentiment still does remain that way, really only waiting for that high and this trend line to break might be the, the best opportunity to, to get into, uh, the trade. From that point of view of, of the, the buy the dip, you can see acted quite well, um, initially on the area of support that we had, uh, well, resistance, I should say, on the 23rd to active support yesterday, albeit with a bit of a false break. If we were to come back down lower, a key area to be aware of just below the pivot would be that high that we made yesterday initially just after midday. And that with the pivot, you expect to see some sort of support, uh, to, to come in. The S&P continued to push on, hasn't it? And you can see similar level would be around its pivot, although that would have quite some way to go to get down there. Again, probably preferring to look at this later in the, the afternoon as well. The high that we had of this year back on the 29th, late in the evening, that hasn't really been retested tested. So 2951 would be another level that I'd be looking to, to identify as an area to get long. As JP Morgan was saying yesterday about how their clients want to buy the dip, and we were— a couple of guys were talking in the office yesterday about where that good opportunity could be. And I think if we could, just from a really good level of support, get down to 65, 2865, that would be pretty attractive to, to look to get in. But it does seem that that may not come in for quite some time. I would have a bit of a trend line on from these lows as well. We got that false break that we saw on the 30th, but as long as we stay above here for now, I think it's a, a market that's just going to keep pushing higher. And now, well, what we're trading at now on the futures, 2958. So not completely a million miles away, 42 points away from that 3000 level. The Dow Jones, the recovery is very similar to the NASDAQ and pushing on, and we have made that new high again, well, above yesterday's high this morning, only to just drift a bit lower. Key level to the upside, you can see just almost reaching it this morning. Morning. But I think afternoon, you've got that NASDAQ trend line, you've got the S&P potentially getting above that high, and the Dow, the same thing. 1, 2, 3 tests. Can you get that fourth one to see that breakthrough? And then it can extend itself. Currency-wise, the euro having broken through 2 days ago that trend line, you can see in the the late afternoon. Since then it has pushed on, and I know it was early on in the morning, the recover— uh, the recovery back down to the, the high of the 26th opened the door for a push higher. Uh, since then found some nice resistance at what was the high of the afternoon, the 24th. So that's a level I'd, I'd have in, but more than a level really, I'd have this as, as a zone. You've got the lows of the 18th in the mix there as well before we did come back to retest that. So that, the R1, yesterday's high, quite an important level, uh, in, you know, a market that does seem like it's just taken a bit of a breather to the downside. However, this isn't the first time we've seen that. I'm just going to make this chart a bit, uh, smaller, probably harder to see exactly, but you can see back here at the beginning of March we ground higher before pushing back lower. Same again beginning of April, uh, we ground higher before pushing back lower. And It could well be that we're starting to see that again for the euro. Obviously with the Fed later, we could be a lot higher or a lot lower, but for now the euro just pushing, pushing on. But key resistance level to be aware of just above where we are trading. The pound, super day yesterday, and that again is follows the sort of the weaker dollar this morning with the euro and pushed, pushed higher. However, really key level is just test 1.3089. On that longer-term chart, you can see the, the key level that we did break through around sort of 130.26 and 40 area, depending which key level that you are looking at. And that breakthrough has led to a further push, and similar trendline had broken there previously, which led to that, that push higher. But from an intraday perspective, just be keeping an eye on, on these highs around here before uh, it gets any higher, would have to get through that, and then just above that, 131 would be pretty key, uh, level to, to be aware of as well. Interesting market at the moment is, is the gold. And just kind of a quick look at this on, on a longer term chart, as we are starting to really get squeezed in. If I just bring that into the picture from those lows, let me just get the trend line out. So going back from that low that we had in, in August last year, and you can see it's, it's had that failed break, you know, a week and a bit ago. We are really starting to now get squeezed in from both directions. Um, the failure to, to close back above the, the really solid support it had been for a couple of months was pretty key. And then the last 2 days around 3 o'clock, you've had data releases that have come out, and we've spiked high only to ignite the selling. So you can see here on, uh, we've been Monday spiked higher for around 3 o'clock, then the data yesterday spiked high, so then come back down again. Selling pressure at the moment seems to be quite strong. I know the, uh, the trend, if you like, with the last few days is drifting higher, and that really is a key resistance level to be aware of. It does feel like we are going to get another test of that trend line. Key level, I mean, the, the S1 has already worked quite well, which was also the, the low of yesterday. That's, um, works as a good level of resistance. If that was to come up again, I'd be less sure about it. But if we were to get anywhere near 1284 in the futures, previous low of the overnight, and just a bit above that they got the pivot, a bit of an area where I'd expect some resistance for this market. Oil yesterday, I mean, fantastic opportunity on, uh, that resistance level which had been resistant previously before that breakthrough that we had last Friday on the 26th. Acted superbly as a resistance, and since then, since hitting that around, I think it was, yeah, 1, 1, 2 o'clock, has drifted lower. However, you are just coming to an area of support, so I wouldn't be too aggressive been getting short right now, uh, just below here. You've got the $63 handle, you've got the highs back from Monday as well. But if we were to get a significant break and then retest of this area, I mean, it could open the door, to be fair, to a further push lower. Probably worth having on though, this trend line, or potential trend line I should say, along with the, the S1 and the $63 handle to stop a real push to the downside. So unless of that was to go, I wouldn't be getting too aggressive in this market. To the upside, uh, just before the pivot, I'd be focusing on 6367. The futures, you had the low on the Friday, the breakdown. You had the highs on Monday and Tuesday, Monday evening, Tuesday morning, and good price action again yesterday before that breakdown, uh, overnight. Uh, DOE's, uh, later today as well, so you know, how much do these technicals really play when we come into 3:30. So just be a bit careful of that. But some key levels anyway, just to have marked up the chart in the event that they do come into play before that as well. Quick look over the overall pictures. So you've got the pound and the euro just pushing on, and gold doing so as well. So gold, I'll just be a bit careful on that S1. The, the dollar is slightly weaker. The S&P and NASDAQ and Dow, keeping on those resistance levels, especially that trend line in the, in the NASDAQ. I would say oil, it's gone through those levels there, but other than that, relatively quiet European equities, of course, with Labor Day. One market just to finish on, uh, we talked about this yesterday in the briefing on the Canadian dollar after the data. I wonder if we could get a retest of that trend that had broken, and that's not far away from coming in. Let me just update that trend— trend line, I should say. And we did get a hit, we got hit yesterday and this morning. Wouldn't surprise me at all if we see some good support around this point. So one to keep an eye on there for the Canadian dollar. Hope you all have a good, good morning, whether it be filled with opportunities or not. I wouldn't be too sure. The afternoon into the evening promises to be a bit more exciting. I hope you have a good trading day.