Tesla Tops Expectations With Apple, Microsoft & Google Next

Okay, very good morning, Tuesday, 27th of July. Hope you're doing well. In this briefing, we'll talk about the record high close on Wall Street again. We'll talk about Tesla earnings. I'm going to talk about the regulatory crackdown in China, UK COVID, pound outperforming yesterday and why. And then also we're going to have a look at a preview for a couple of the metrics to look out for with Apple, Microsoft, and Alphabet or Google reporting after market tonight. So quick look at the charts to kick things off, and as Europe is coming into the market, just seeing a bit of a pickup in the dollar index, which is testing up in the Dixie at around 92.67, which was the high that we saw pretty much on the US exit last night. And so as such, seeing a bit of downward pressure just being exhibited in the major currency pairs. EURUSD just coming down towards its pivot level, um, respecting then a relative kind of range that we've been looking at of late over recent sessions. Cable just breaking some of the price action that was seen as we were going in from the extension of gains into the European close yesterday. Um, quite a nice trend line there just being respected in the short term from the overnight Asia-Pac session. We're just fading down, probably keeping an eye on that low that we saw going into late US trading hours yesterday at 1:3813. Looking at Sterling futures. Decent move yesterday actually in Sterling, managing to, to break out of that downward trend line, finding some support and a decent area at 1.3743, and really taking a bit of a lift. Just while we're on Sterling, a quick word on the COVID front. This was quite an interesting piece that came out in the overnight Telegraph release. So first off, UK is reportedly considering easing restrictions from the US and, um, the EU. And in other news, The Telegraph leaked data from the UK showed that over half of COVID hospitalizations were patients who only tested positive after admission, which suggests that large numbers were being classified as hospitalized by COVID when actually they were admitted with other ailments. While experts noted it meant that national statistics may greatly overstate the levels of pressure on the NHS, which of course is one of the main fears. So this would obviously paint a more positive picture on the already developing numbers. And you might have seen I tweeted— if you want these graphics I'm showing right now— some COVID updates from the FT. And this is the kind of week-on-week change in daily cases we've been seeing. Of course, we've had some consecutive declines of a rather rapid fashion of COVID cases in the UK, which is somewhat against expectations of what the market was very much prepping up for, kind of us moving north towards that 100K marker. And that's not to say we still might not see some upside pressure, of course, as we start to see the effects of Freedom Day start to filter in. But as you can see, that rolling average has been declining but has been getting more shallow of late, so definitely warrants watching. But one of the positive things here is that hospital admissions have been tracking cases one week earlier. And of course then that means that we could see admissions flatten and begin to fall in the coming days. And if you layer in the fact that perhaps then, according to The Telegraph, a lot of these people were actually admitted for other ailments, not actually COVID, well then if there is some kind of data methodology update to these numbers, then that's— the effect's going to be even more kind of positive in terms of a lower hospitalization rate. The other thing then is, you know, why is it declining, that, that case rate? And the FT article last night was quite interesting because this is a graphic literally mapping daily new cases among men aged 20 to 34, and it's looking at the corresponding pickups then that were seen in the spiking cases around each of the England Euro group stage and subsequent up to the final where against Italy you saw the biggest outbreak where of course you probably would have seen those scenes that, that were happening at Wembley and around London at the time and so now that the Euros is gone that sex gap has now completely disappeared so how much of the case rises that we were seeing that kind of very sharp growth rates and acceleration in cases were down to to the euros, evidently quite a lot. And so that, with school ending and other factors as well, um, we'll continue to look at this quite keenly. But as I said, the pound seeing a bit of upside opportunity yesterday, and Brexit still a bit of a standoff on that Northern Irish Protocol, but that's pretty much a side order for the time being as that continues to just roll over. I don't think anyone's expecting a a solution to that anytime soon. So yeah, just a bit of a pullback here, a bit of a dollar pickup worth keeping an eye on this morning. And as we move further down here in, in KBOD, keep an eye on that low seen yesterday, yesterday evening in the US session, and scaling that back down then for those subsequent highs that were seen on the way up would be my way of just monitoring that chart from a technical perspective. Okay, elsewhere, yeah, US equities record highs as I mentioned briefly Yesterday, here's just a quick look at the S&P 500. So just been looking at this, just continued rise. Obviously we had this very momentary spook pretty much this time last week when the markets got a bit apprehensive about the COVID global situation. But ever since we hit that low last Monday, the markets just continue to trade higher and we fleshed out fresh highs going into the futures market to the close yesterday. And so a couple of technical levels just be keeping an eye on here. So going back from that high that we had back on the 16th, the high that we saw towards the end of last week, and that overnight high being respected. And on the way up, I'm just looking at this trend line as well that's been respected on 3 occasions. So as we've pulled back here, a little bit of light profit taking, nothing more than that, I would say. And we're just finding a bit of support around the overnight APAC high, which was that previous all-time resistance point back on, um, Thursday last week. Got the pivot just under there, then the trend line would come in. So it's kind of technically how I'm looking at that market. Nothing really too obvious to speak of right now, but obviously a big day for corporate earnings, of course, and we'll talk about those, um, right now. And so corporate earnings side. Well, actually, before I go to that, let's just talk about equities in the US then, finishing with a fairly positive footing. You can see here the NASDAQ pretty much respecting a range, but right back up there, all-time high territory in the cash market. The S&P and the Dow were up about a quarter percent, the NASDAQ was up about one-tenth. Um, China, not so good. China's still suffering on the lingering concerns about regulatory crackdowns, really The key concern now is whether regulators will do more and expand the crackdown to other sectors. We've seen this very prevalent for technology and more recently education, and actually property sector got hit as well overnight. Um, the Hang Seng Tech Index was down another 4% overnight, and that means then that it's lost about 13% in 3 days, as you can see here, uh, stated by Bloomberg. Um, the Hang Seng broader index underperformed the region. It was down about 2%. The rest of the region was down marginally, if not trading pretty much unchanged. You did have industrial profits coming out as well from China overnight, year on year for June, 20% was the, was the reading, down from a previous 36.4%. So a few things there, China-related going on. But on the earnings side, just mentioning Tesla then, Tesla had their numbers last night. Their Q2 2021 adjusted EPS at $1.45 against expectations of $0.98. Revenues $11.96 billion above the expected $11.3 billion. They confirmed a forecast for 50% growth in deliveries over a multi-year horizon, but added, in some years we may grow faster, which we expect to be the case for 2021. So pretty positive on the outlook. Net income grew 10x year on year and exceeded $1 billion. $354 million was from regulatory credits, and that's the first time in history that they're profitable with the exclusion of those regulatory credits. So their shares did see a little bit of fluctuation on the upside last night. They were— they did move up initially as much as 3%, but actually they're settling down with a gain of around 1% in aftermarket hours for for Tesla. Um, that does lead us on then. We might as well cover off the other big mega-cap tech names. Today's a big day, as you can see from the logos: Apple, Microsoft, Alphabet. This is actually General Electric as well. And again, between those three plus Facebook and Amazon, you're talking about a quarter of the entire S&P 500 from an index weighting point of view. So this really is the meaningful week as far as that is concerned for, for corporate earnings. So definitely after market today, we'd want to be keeping an eye out for those names and looking at the tech names in particular. So what can we expect from some of these? Well, I did issue a note, you can access it on my Twitter, which goes into more detail on the Amplify Live community and what to expect by the numbers. But just to give you a bit of a top-level summary, so for Apple, We're looking at an EPS earnings per share of $1.01, up from $0.65 a year earlier. According to Estimize, which basically crowdsources projections from hedge funds, academics, and others, so quite often uses a bit of a benchmark for what a type of whisper number might be, their average expectation is for $1.16 for the EPS, so well above the Street estimate of $1.01. Revenues are expected to be $73.26 billion overall, but on a segment level, obviously the key one which we'll be keeping a close eye on is the iPhone revenue. Um, 7.1— well, the iPhone revenue is projected at $34.19 billion. They're anticipating to see around $7 and $8 billion respectively between iPad and iMac revenues, and $16.26 billion in services revenue which is the other big now staple of their kind of revenue generation. Some reports I was reading last night were talking about the fact specifically with the iPhone being a kind of key revenue point of interest, it could have reaped rewards of an unusually high promotional wireless industry that we've seen from, I think, Verizon Wireless and AT&T and some of the others during the last quarter. Watch out as well for the Apple Mac and iPads. They were popular purchases during the pandemic, and as things start to reopen in America, it's going to be interesting to see whether or not the company can sustain momentum in those particular products after they really saw some, some good movement in those numbers. And as ever, their outlook and commentary around its September quarter revenue will be seen to hold clues potentially as what the company expects in the early days of its next smartphone launch, which will be closely watched as well. So that's Apple. As far as Alphabet is concerned, looking at an earnings per share of $19.24, analysts expecting a $56.2 billion second quarter revenues, traffic acquisition costs estimated at $10 billion. Google then has been encircled by a lot of regulatory focus of late. Across the US and Europe, but analysts don't really seem to be too fussed that's going to really have impeded their bottom line at this point. And then Microsoft, the final big one, analysts are looking very much towards their cloud empire. Earnings per share then expected at $1.92 and revenues at $44.25 billion. Bank of America analyst has said last night that expects a 2% to 3% upside to Microsoft's total Q4 revenue estimates based on sustained Azure and Office 365 strength. So again, much like with Amazon later on in the week with AWS, looking at the cloud numbers for Microsoft is going to be quite, quite key for anticipating their post-market reaction. So yeah, that's all, all of the earnings really. So a few other points to mention then. Bitcoin, I think, I think Bloomberg having a a bit of a stretch to say Bitcoin has tumbled. I don't think it's quite tumbled. Um, we're trading in the futures around $37,000. We did peak briefly above the $40K mark in the futures, trading around $40,580 yesterday. And so it's backed off the initial spike high, but putting it into context, we were trading around $30,000 mark just a few sessions ago. And the reason for the pullback predominantly is based on one of the reasons what shot the, the price higher, as much as a short squeeze was talk about Amazon entering the crypto space. I think perhaps a little bit over, um, over-exaggerated. That job advert was very much talking about the, the internal Amazon crypto ecosystem and their own kind of exposure and dealings with technology in that area, rather than so much explicit on timings and Bitcoin. And so Amazon have denied basically that the job posting for digital currency executive meant that they will accept the token for payments this year. So they have actually come out and said that, and, and thus it's put a bit of a short-term cap to prices. It's the latest there. A quick look then at the calendar for today. So particularly quiet as far as the morning is concerned. So really we, we start to focus in on the Durable Goods Report coming out the US at 1:30. According to analysts at ING, Boeing experienced a huge jump in aircraft orders in June, 219 in fact versus 73 that were seen in May. And, and this will lift durable good orders more broadly, while the ex-aircraft numbers still look good based on the fact of what we've seen as anecdotal evidence in the ISM report more recently. Otherwise, as far as the rest of the US session is concerned, You've got US consumer confidence, um, for July. Expect to see a slight drop-off from the previous 127.3 to 124.1. You've also got Richmond Fed coming out as well at the same time, and then the API oil inventory is due after market. Fixed income supply, you've got a 2026 gilt auction in the UK DMO, and then $61 billion of a 5-year note auction coming out of the US as well. The earnings you can see here, but we've covered off those those mega-cap tech names, which, um, I'll be updating. So the Ampfire Live community, I'll be sharing on Twitter as well, um, the, the aftermarket reactions and, and the rationale behind why that happened later on tonight. So that is it. Um, I will wish you guys a good day ahead. Any questions at all, feel free to drop me a comment, more than happy to help, and I'll catch you guys tomorrow. Take care.