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Breakfast Bites - Wed Jul 26, 2023


Rise and shine everyone. Happy Fed Day!


The big news for today is the FOMC rate decision at 2pm ET followed by the

Fed Chair’s press conference at 2:30pm ET. We’re almost certain to see a 25bps hike but the question will be what happens next. I doubt that they will close the door on future hikes given that they have already signaled to two more.


In other news, Google got a warm reception to their earnings up 6.5% premarket today. Microsoft on the other hand didn’t impress - reporting lower cloud revenues and slower income from AI; the stock is down -3.5%.


Major earnings this morning, Boeing, Coca-cola and AT&T all reporting upside beats. We have META and Chipotle after the close.


US Equity Futures are trading lower this morning, along with Oil and Bitcoin. Gold slightly higher while the USD Index remains flat. The Yield Curve is at -0.99%.



Asia and Australia

  • Asian equities ended mixed Wednesday in cautious trading. Hong Kong and mainland China benchmarks gave up some of yesterday's gains but closed off their lows.

  • Sell-side warn of potential BOJ surprise, arguing it might well tweak policy of buying bonds to depress yields

  • RBA rate hike odds fall after inflation slows by more than expected. Australian Q2 headline inflation eased to 0.8% QoQ from 1.4% in Q1, below consensus 1.0%. On a YoY basis, inflation dropped to 6.0% from 7.0%, also below consensus 6.2%.

  • South Korea inflation expectations at 14-month low in July, consumer sentiment improves

  • New PBoC Governor appointed in China - Pan Gongsheng. But, the switch is unlikely to change the course of China's foreign policy.

  • BoT has warned Thailand's politicians over volatility in country's capital markets, saying corporate bonds issuers face higher risks of defaults amid increased volatility from domestic political uncertainty.

  • Japan's population fell by more than 800K in 2022 y/y to 122.4M, largest decline since original survey in 1968 and 14th consecutive year of contraction.


Europe, Middle East, Africa

  • European equity markets lower. France's CAC underperforms amid weakness in luxury goods names.

  • LVMH posted a disappointing Q2 on a sluggish US economy, but discussed the pace of Chinese spending picking up.

  • Eurozone bank Q2s in focus with some major lenders out with reports.

  • Germany's Deutsche Bank delivered strong Q2 beats across headline metrics (EPS, revenue, PBT) and improved CET1 ratio (fully loaded) 13.8% vs consensus 13.4%.

  • Italy’s UniCredit Q2 net income and revenue beat and group hiked FY 2023 guidance.

  • Spain's Santander delivered Q2 EPS and revenue beats with pretax income €4.23B ex-items vs consensus €4.07B. CET1 ratio also improved 12.2% vs year-ago 12.0%.

  • Eurozone M3 money supply growth continues to trend lower with June reading at +0.6% y/y versus consensus +1% and prior +1.4%.


The Americas

  • Visa fiscal Q3 results mostly better than expected and Q4 guidance largely in line with Street takeaways positive on upside surprise in cross-border volumes.

  • Snap's revenue at lower end of estimates amid continued softness in ad demand

  • Teamsters say they secured a $30B labor deal after UPS "blinked”

  • Google beat Q2 revenue by 2% while operating income was 9% ahead. Saw stabilization in ad demand as Search accelerated nearly 300 bp to +5% YoY, YouTube revenue jumped +4%, Cloud revenue growth of 28% YoY another bright spot.

  • Microsoft’s Azure came in at high end of guidance, growing 27% YoY, including a one-point tailwind from AI workloads. They noted the potential for AI to help drive a reacceleration in growth in 2H24. Guidance for capex increased sequentially in 1Q24 and increase further in FY24, weighing on FCF estimates. Lackluster Commercial bookings also received some attention


Calendars

(news taken from Reuters, FT, Bloomberg; Calendar from Benzinga Pro)






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