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Amazon vs Apple: 11% increase in revenue vs flat
8% rally in extended trading for Amazon as spending was reduced at the same time the e-commerce business demonstrated strong revenue growth (BBG).
Apple (down approx 2%) posted its third straight quarterly sales decline and forecast a similar performance going forward as consumer demand for iphones, tablets and computers wains.
Apple's EPS grew mostly because the company is reducing its share count with buybacks (Source FT: Not all big tech is the same).
Assets stabilised into yesterday's US equity close with ESA / QQQ recovering early losses as the aggressive steepening from the Treasury curve lost momentum. Weakness in ISM services report (MishTalk) helped neutralise the aggressive weakening in US fixed income but am sure investors with one eye on NFP were also happy to take some cards off the table. Many will remember last month's ADP (excessive) beat failing to feed into the BLS employment data.
The consolidation continued overnight in APAC as core stock indices traded sideways ahead of the major data release.
NFP Preview: we've been through this rodeo before.. stellar ADP (can't get any better than last month's 497k), peak Fed rates on the ADP print only for BLS Jobs report not to show the same strength... Will this month match last month's price action?
The crucial difference to last month when 10yr real rates failed to hold a break above 2%, with the mkt then focused on goldilocks (strong but not overheating labour mkt and expectations of a continued softening in inflation) is the uncertainty over next week's headline inflation. In early July, the mkt was selling USD, buying 10s after an inline NFP, but today becomes harder because of the apparent upside risk to next week's gas/oil fuelled potential rise in headline CPI.
The risk of a local bottom in inflation, increased issuance as well as stronger GDP (probability of a recession decreasing) has US10s sitting close to the Nov highs, unwinding all 2023 gains heading into today's NFP print. Yield curve inversion has also been stark, with a 30bps sell off in a week from -104 to -75. A soft/inline NFP will sooth market fears into the weekend with the risk of a resilient to strong number accelerating the probability of a Sept hike. It is only one data print along JPow's checklist, but the data dependent Fed has heightened the volatility around each point as bets/wagers are placed as to when we will finally see peak Fed rates via peak labour mkts and subsequently when we will start to need cuts priced back into the 24 curve. (Make America AAA Again ... I wish I had thought of that one)
After being battered and bruised all week by the spike in Vix, rising core Yields, RBA pause, lack of detail from the Chinese Politburo and negative seasonals ... finally, some good news overnight for the AUD as WSJ: China Scraps Tariffs on Australian Barley
Brexit: sigh, the conversion to Brussels rather than diversion continues as the UK Government have announced the extension of CE mark recognition for business Link.
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ING: ISM surveys point to softer US jobs and growth numbers ahead
Bloomberg Odd Lots: The Chinese EV Maker That's Selling More Cars Than Tesla
Inflation Guy (Mike Ashton): Three Colliding Macro Trends
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All times in British Summer Time (BST)
EZ (8:30): HCOB Construction PMI
UK (9:30): S&P Construction PMI
UK (12:15): BoE Pill briefs regional agents about the CB's decision
US (13:30): NFP (200k), UER (3.6%), AHE (0.3%)
CA (13.30): Unemployment
CA (15:00): Ivey PMI
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