Apple Moves To More Aggressive Pricing Strategy

Okay, very good morning to everyone. Hope you're well. It's Wednesday the 11th of September 2019, live from the desk here at Amplify Trading in London. I'm just having a quick recap firstly of this calendar because I think it really does start to encapsulate a little bit of where we are this morning, but also what to expect from the day ahead, and then really what is gearing up for Thursday, which ultimately is one of the biggest days in in the calendar for this week. So if you actually look at Wednesday, uh, today, you don't really have a great deal of information coming out overall. You've got the US PPI numbers. There's absolutely nothing of significance really coming out in terms of eurozone or UK data. And this is very much a wait and see for the big event, which is of course the ECB interest rate and accompanying press conference, which we'll get tomorrow. We'll go into that in the briefing much more detail. on Thursday morning. But you've also got out of the US the likes of, well, let's just run through some of the highlights here. You've got some Chinese data overnight, trade balance. This was tentatively scheduled at the weekend, so we'll see whether that has been confirmed. Eurozone industrial production will be quite important. OPEC meeting commences in Abu Dhabi. This is not one of their semi-annual ones in Vienna. This is one of their more technical-led meetings to make sure that they're adhering to compliance levels. But of course, quite important given the new change of leadership at the oil ministry in Saudi Arabia, and interested to see how their relationship appears to be aligned or not with Russia. Then you've got the ECB, then you've got US CPI as well, and obviously still a key metric as to ascertain then the type of aggressiveness of how dovish or not the Fed are going to be next Wednesday on the, on the 18th. So I think that really kind of sums up the current state of play because just having a look across charts at the moment. Things are relatively quiet. There's not really a great deal of massive breaking news for me to go into. Two main subjects I'm going to discuss: the resignation of the National Security Advisor John Bolton in the US last night, and then also Apple's earnings, which came— or not earnings, excuse me, the, the new conference that they held to unveil their latest suite of products and how that impacted their stock price and and how we closed on Wall Street. So overall, European, US futures, I mean, US are basically flat. The DAX is up a touch, a little bit of resistance around the R1 on the daily pivot so far, which was also the overnight Asia-Pacific high. Currency markets pretty quiet. Both major pairs are basically flat, mimicking the dollar index, and pretty similar in the US 10-year and gold. So a fairly flat open, I would say, is kind of the description, with a lack of real top-level macro drivers at the moment as the market perhaps waits for bigger signals to come from the next big central bank decision we'll get from Europe tomorrow. But getting into a couple of headlines to get you up to speed, uh, if you weren't aware already, uh, bringing up the crude chart firstly and looking at a dip in price action that we saw yesterday late afternoon We moved from in WTI crude around $58.75, $80 all the way down to around $57.28. So decent over-dollar move and a pullback in oil. You remember in the briefing yesterday we were talking about the continuation of the upward moves that we had seen in crude. I mean, just to put it into a little bit of context, since what would be, what, Friday, we've rallied from below $55 all the way up to nearly $59. So A pretty decent move, and so a correction of sorts is probably warranted to just book some profits on those longs. The catalyst certainly coming from the headline that Donald Trump, the US president, has ousted John Bolton after a dispute over negotiating with Taliban. Now, what Trump was after here was he wanted to invite Taliban officials into Camp David for negotiations about the a truce, if you like, to push forward in Afghanistan in a positive fashion. However, John Bolton was against this. They had a big fallout, and then apparently that has led now to the president firing Bolton, or Bolton's point of view, him resigning because his position was untenable at that point. Now, interesting thing here, a bit of background. John Bolton is the third casualty of the National Security Advisor role. If you remember, Michael Flynn lasted a couple of weeks before then it got found out that he had had inappropriate dealings with the Russians in the build-up to the US presidential election in 2016. He has now pleaded guilty to withholding information to federal officials, and he's currently going through that process in the courts at the moment. You then had McMaster, was the next one, but again, he lasted about a year and now John Bolton has come and gone. Now the one thing about John Bolton to be aware of is that I think this move from Trump to get rid of him was kind of inevitable. If anything, I think Trump— a little bit of perhaps misjudgment because he's been very difficult for Trump to get a lot of domestic wins. I guess the corporate tax cut was the one major one he's got under his belt, but he's failed on so many other internal policies, um, the repeal of Obamacare, the border war, the border war, whether from funding to the execution of the actual program, uh, the banning of the movement of certain Islamic states within the borders of North America, and so on. The one thing that he, he was, or aiming to champion, was, um, some successes he could have had on the international, on the foreign policy scene, and obviously brokering things like the the original Korean peace deal was quite a meaningful one, and so on. But the problem that you had with John Bolton is that he is pretty much an uber-hawk when it comes to foreign policy. Here's a guy that was a big backer of the Iraq War. He even went as far as saying that Cuba had WMDs before. He is highly critical of North Korea. He is so far down that, that line that I think it was potentially just inevitable that this was going to happen, because what Trump needs is someone who is gonna appear with a tough stance but not follow through with the complete and utter conviction that John Bolton would have had on these issues. And hence then there's confrontation. Because Trump just wants a political win, not actually to go down these routes to the degree I think that Mr. Bolton would have, would have wanted. So I guess the read between the lines here is that, for one, Trump said he's going to nominate a replacement next week. Quite a lot of journalists' reports I've been reading last night were suggesting that he's going to find it pretty tough to fill that role. Given he's already gone through 3 people in 3 years and all of the issues that are ongoing with the US at the moment on the foreign policy front, who's going to want to put their hand up for that role? The other thing is he potentially is going to have probably another yes man, a kind of, as the press have quoted, a mini-me to come in and just basically do the willing or the bidding of what the president wants. And again, who wants to really take that take that position. It's going to get filled. We'll see. The deputy has stepped in in the interim period. But yeah, pullback in oil prices, absolutely, on the fast money move. I mean, if you were agile enough to get hold of some of that, obviously the removal of one of the ardent hawks for foreign policy in the US administration means that there's a lesser likelihood of confrontation with people like Iran. Iraq, just generally on the global front. And so that needs to have some of that risk premium priced out of oil. However, there's of course lots of other things that are driving oil prices at the moment, from the trade war to the OPEC supply agreement, which we'll be looking for an update on tomorrow. So a little bit of pullback, but not a huge amount. As I said, a $1.25, $1.50 move, and now we've just gravitated towards pivot. On the daily level. So I think that story is kind of done and dusted now. I don't— I wouldn't expect it to continue to move the price going forward for the rest of the session. The other news story, of course, that came out last night, um, yesterday evening before the close, and Apple shares were kind of— it was warmly received in terms of the announcement where Apple unveiled a new suite of products, typically this being their, their regular where they come out with the new updated iPhone. So we're now on the iPhone 11. They also released a new Series 5 watch. But the thing that people were talking about the most and what really underpins the rise in their share price was the pricing model, the aggressiveness of the device and services pricing. So with the devices, the iPhone 11 starts at $699 That's down from the XR's $750 price that we had last year. They have also released a kind of suite of Pro models which are slightly more expensive, the top end going for just over $1,000. But the main staple kind of flagship phone under that number 11 is cheaper. And I think that's a good learning lesson and adaptation of the strategy from Apple, because I really do think that with the iPhone X being such a disappointment, A lot of that was, to a certain degree, a lack of innovation in the phone in itself. Also increased competition for an improvement in other models, particularly some of the Chinese firms, but also the price point. It was almost like we'd gone— we'd hit and almost gone over that threshold that the consumer was willing to pay for an actual smartphone. So this, this seems like like a, like a good move from them. The market seemed to have agreed. The iPhone 8 from 2017 now costs just $450. That's had another $150 price cut. Um, and the other thing here, of course, is about the diversification of their revenue streams. As we know, if we cycle through a couple of these graphics, uh, this is a look at their market share over the period of the last 5 years. And as you can see, their market share tends to kind of spike whenever they unveil the new series of the phone, and then it falls off, uh, of course. And you can see we've come back down to the lowest point that we've been in many years at the moment. And that's because, as I said, their market share is being whittled down by continuous improvements of their rivals. I actually think from a technology point of view there's not actually a great deal that the iPhone does better than the other phones. But that's not really why people buy an iPhone. People buy an iPhone typically because of the— not only the operating system and its simplicity, but also because it's, it's viewed as a premium product. So what's quite interesting here is that by offering these more now low-cost competitive models, are now Apple looking to gobble up some of that market, or is this just purely to try and maintain some of its market share. The other thing, of course, this, this graphic is quite interesting. This is because Apple last night, Tim Cook unveiled a $4.99 monthly cost of Apple's upcoming TV+ video streaming service. Now that does undercut the likes of Netflix, of Disney, Amazon Prime. And so this as well is being seen as quite a strong move. Obviously Apple being more new to the space but coming in with some real firepower potentially with the amount of capital they could throw at this service. And they definitely, in this quest to diversify away from that singularity, from focus on the phone in terms of a revenue generator, this will be key for that model into pushing into the service sector. And as you can see here, this is looking— in the white line is net Netflix daily percentage change on the session, and they fell over 3% in yesterday's session. Disney were down over 2%, and remember, Apple shares were moving the opposite direction as this was coming out. So looking to really spice things up in that live streaming and TV subscription model space. So yeah, that was, that was Apple. Has that translated into much for the overall charts and sentiment? Not really. I would say, comparative to years gone by, their products are hardly setting the world on fire these days. They haven't done for a number of years. But again, I think what's very interesting here is that really Apple are shaking things up with their pricing strategy, which I think is the beginning of potentially something that will be continued out of necessity, not out of choice, if anything, over the long term. But should be a benefit to the firm overall. Final thing from a news perspective to talk about is we had the API oil inventories last night. This of course is the prelude to the, the DOE numbers we'll get this afternoon. And as you can see here, we had a very large drawdown, way larger than expected in the headline crude figure, drawdown of 7.25 million. Expectations were, excuse me, for a drawdown of just 2.8 million. So again, when we talk about the price of oil, we had that pullback on the, the resignation of John Bolton, but then we've had a recovery, and you can see where the recovery came. So if there was kind of two phases to this move led by the fundamental, um, catalysts— the downside move on the, on the John Bolton news, and then the rally came, which was really this move here where we've now gone into this range-bound price action um, which came after the numbers last night from the API. Cushing was a draw of 1.4 million, a little bit deeper than expected, helping that narrative. Gasoline likewise was a draw of 4.5 million, the largest drawdown we've had since April of this year. And distillates was a build of 600,000. So definitely on the balance, more bullish support for crude prices. As mentioned with the calendar Finally, it's very quiet this morning. There's not really a great deal going on, certainly out of UK and Europe. There's absolutely nothing happening. And later on in the afternoon, you get PPI as the kind of lead up into the US CPI, which we'll get tomorrow. All inventory data at 3:30, um, and that's about it. So unless you're trading fixed income futures where you've got the 10-year auction which will be then followed by the 30-year from the US, having had the 3-year note auction yesterday. Otherwise, that's it for the moment. Okay, let me hand you over to Sam. I wish you a good day ahead. I'll let him go over some of the setups that he's looking at from a technical perspective. Thanks very much.

Hi guys, yeah, good morning. We'll have a quick look over some of the the currency pairs to start off with. Bring in the pound to, to the picture here and just having a look. Let me put this on a 60-minute and having a start with the, the trend line from the, the low that we had of course on the, the 3rd of September, that multi-year low. Let's bring this, let's see, and just having a look at this, this trend line that has broken, uh, early hours this morning. We've you know, so you've got those, those 3 real tests— the 3rd, uh, the 9th, and the 10th. So the break of that, and, and also you can just see this morning, we put this on to 15 minutes, just how well it's been respected, uh, on the retest of that level. So we, we already know that people are looking at this, this, uh, trend line. So if we were to push to the upside, obviously keep an eye on that, really starting on the, the 3rd of September, uh, coming through there. Last few sessions, you know, despite that that trendline break. Have been relatively range-bound. If we just put a rectangle in, in that price action from the, from the high of the 9th, that's obviously the low yesterday. Yeah, you can see this marking up R1 and just below the S1 from today's session. Um, so worth having, uh, that on. But I think that the main point here to make is that that trendline really respected quite well. Just below where we're trading, obviously a key support area. From, uh, since really midday yesterday. You can see we've already had 1, 2, 3, perhaps looking for that 4th test of that around 1.2342 in the futures. So that could be an area where if that was to break, we get that drift lower. If it's to hold, we might get another test of that trend line which has been, you know, knocking once, twice, 3 times already, uh, to see what happens. Again, would be quite interesting. So those would be the, the level certainly shorter term I'd be focusing on for the pound. Euro, um, if I just put this back onto a 60-minute, you can just see how— and just make it a bit smaller— you can see we're really getting squeezed here in the euro over the last couple of days. That spike we had on the 5th to the upside, and then from the 9th you can see just how well this has been squeezed from both directions. And we're actually literally just testing that lower part now. So worth keeping an eye on there. Obviously, as we were saying yesterday, 24 hours ago, how it's not too surprising to be contained within this ahead of the ECB, of course. But worth keeping an eye what happens really now. Actually, the dollar just trying to break out its, its range of the, the last few hours, and obviously to keep an eye what happens here. If it closes the half hour below 8:30, you might get a further push down. But you can already see a couple of times it's attempted to break through with not much luck. But you can see here, euro getting squeezed really from both directions. And ahead of the ECB, no harm in sort of staying out of that unless we were to get a big push, a big push. Aussie dollar, um, interesting I guess here, and I'm just going to take the, the pivots off. Um, obviously helped by the fact the, the China-US situation has, uh, has got better. And, uh, I, I think there could be a decent short coming here for, for the Aussie. The high that we had yesterday, uh, not too far away from what was— has been a pretty key level, uh, in previous trade. If we just mark up these lows here from the 21st of June and the 9th, 10th of July, before we had that breakdown to the back end just before August. I would be interested to see what happens around there as well. So 6921 on the, on the futures. Yeah, we're still 50 ticks away, but that would be certainly an area I'd be quite interested in to look for that medium-term short. We did spike higher yesterday and then just found a bit of resistance. You have another area of interest, I guess, at 68.92. But Aussie dollar certainly on my radar to look for a move to the downside again after being on such a strong run. Uh, the yen moving over, just to wrap up the, the currencies. You can see here the, just the low that we made yesterday. You've got another key area just below there that you'd be aware of, and then also these, these highs from the 28th and 30th before we broke through on the 1st of August. And then even looking— I put these, the pivots back on for today— you can just see what's happened each time we kind of break through a low, we come back, retest. And again, we made this low here, we come back, we retest. We then broke through this low, and we haven't quite come back, I guess to properly retest it, uh, like these, uh, previous goes at doing so. So we're keeping a watch on what happens around that area just below the pivot today. And well, basically what was the low, you want to be looking at the, the low of yesterday morning Asian session. So I'd have that marked up just the way this, this, uh, pair has been moving, uh, looks to act a pretty good resistance into the afternoon session as well. S&P yesterday, post-cash open, we, we got a brief, uh, move lower, uh, before the recovery into the back end of the session. And here, looking again at the, the 240, you can see unless we really get a retest of that 2950 area, uh, it seems a bit no man's land between this and, and 3000, which you can see obviously being the round number, but also an area we broke down on the, the last couple of days of July. So it'd be interesting to see what of course happens on a test of either 3,000 or 2,945, 2,950. But at the moment it seems just a bit choppy, bit range-bound in those areas. You can see S2 providing quite good support and obviously helped by Apple, you know, into the close. That market did drift higher. For me personally, I'll be, you know, waiting to see what happens for a bigger move around 3029.45. Just maybe more intraday, you can see we're just getting a test of the, the third, or the third test of this trend line from yesterday's lows. So from an intraday perspective, sure, it's worth keeping an eye on. And today's R1 matching up at the, the high of the month as well. So you've got a couple of obviously key points to have marked up more intraday, but the, the main move I'd expect, 2945 or 3000, uh, to ignite things. Gold, 1500, uh, trading at the moment just a touch below, a couple of, uh, cent. Obviously after its big move has, has, uh, come down a fair bit. The high on the futures up at 15 66. Haven't quite made that spike lower that we had on the, on the 13th, so that's an area to, to keep an eye on. Uh, this, this drift lower, uh, you can see as well, probably similar to that S&P and the, the trend line from those lows. We're just testing it now. Of course, you want to see what happens here on, uh, whether we get confirmed, uh, the third test or not. But, uh, certainly the way gold can move just like it did the, uh, previous— a couple of previous sessions ago on the break of those trends. Uh, worth keeping an eye what happens around that area. I think for gold and certainly still there's better markets to focus on for now. It does seem pretty, you know, it's just consolidating after that move lower and relatively choppy. I'll be, you know, waiting for these little patterns to, to take place and you can see see again last night. This is more 8 o'clock, helped by obviously stocks going higher. But this is when you get those real nice moves, clean moves on the breaks of these patterns. And that would be probably how I'd be looking to, to trade gold, uh, later on. Oil, DOE coming out later, API. You can see a decent enough move towards that pivot, which has acted as pretty strong resistance, and $58, which has been a key level over the last, uh, well, I guess you could say since the time we're talking here, 10:30, so not far off 24 hours. That's a key level. Would you just be a bit careful above the pivot because you do have a breakdown area 8 cent above. So more of a zone, 50, well, the pivot to 58.08. And then to the downside, you could argue this little range could be expected to hold in the morning, 30 cent from 95 to 57. 65. Um, daily chart for, for oil. You can see, you know, we're talking yesterday how it's kind of broken out of that, uh, that trend line from those highs. Let me just put the trend on. Let me just bring this in. Uh, so we got that confirmed break. You didn't quite get the retest yesterday, but even though it was slightly choppy on, on the 5th of September, still something I would have marked up as well. We did yesterday as well, of course, get a decent enough test on that 31st of July high. So yes, the, the fundamental reason oil came down was, you know, to do with Bolton, but also really strong technical resistance up at that 31st of July. And we're perhaps now just waiting to see what happens between those two levels— retest of the trend line and up in that 31st high as well. Any questions, obviously please do let us know. The DAX is trading on the high at the moment, so worth keeping an eye on. The euro attempting to break out of that, uh, bottom trend line, uh, and oil coming down a touch from what has been a key resistance for the last part of the session. Any questions, please do let us know. I hope you all have a good trading day.