Wall Street Ends Sharply Lower in Broad Sell-Off

The Nasdaq fell to its lowest level in about a month, and Microsoft Corp, Alphabet Inc, Amazon.com Inc, Apple Inc, Facebook Inc and Tesla Inc were among the biggest drags on the index as well as the S&P 500.

All 11 major S&P 500 sectors were lower, with economically sensitive groups like energy down the most.

Investors also were nervous ahead of the Federal Reserve’s policy meeting this week.

The banking sub-index dropped sharply while U.S. Treasury prices rose as worries about the possible default of Evergrande appeared to affect the broader market.

“You kind of knew that when there was something that caught markets off guard, that it was going to lead to probably a bigger sell-off and you didn’t know what the reason would be,” said Sameer Samana, senior global market strategist at Wells Fargo Investment Institute.

“I guess it’s the China news but… it’s not altogether surprising given how bullish people were.”

Wednesday will bring the results of the Fed’s policy meeting, where the central bank is expected to lay the groundwork for a tapering, although the consensus is for an actual announcement to be delayed until the November or December meetings.

Unofficially, the Dow Jones Industrial Average fell 620.22 points, or 1.79%, to 33,964.66, the S&P 500 lost 75.28 points, or 1.70%, to 4,357.71 and the Nasdaq Composite dropped 325.95 points, or 2.17%, to 14,718.02.

The S&P 500 is down sharply from its intra-day record high hit on Sept. 2 and is on track to snap a seven-month winning streak.

Strategists at Morgan Stanley said they expected a 10% correction in the S&P 500 as the Fed starts to unwind its monetary support, adding that signs of stalling economic growth could deepen it to 20%.

The CBOE volatility index, known as Wall Street’s fear gauge, rose.

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Caroline Valetkevitch in New York; additional reporting by Devik Jain and Sagarika Jaisinghani in Bengaluru and by Noel Randewich in San Francisco; Editing by Sriraj Kalluvila and Lisa Shumaker)

Universal Music Valued Around $39 Billion Ahead of Stock Market Debut

France’s Vivendi is spinning off Universal and on Monday set a reference price for the listing at 18.5 euros per share, according to a statement issued by Euronext.

Universal Music Group’s (UMG) listing will be Europe’s largest this year and will hand 60% of shares to Vivendi shareholders.

Universal is betting that a boom in streaming led by Spotify that has fuelled royalty revenue and profit growth for several years still has a long way to run, in a music industry it dominates along with Warner and Sony Music, part of Sony Group Corp.

Its flotation carries high stakes for Canal+ owner Vivendi, which hopes to rid itself of a conglomerate discount. However, the listing raises questions about Vivendi’s strategy once it parts ways with its cash cow, in which it will retain only a 10% stake.

Several high-profile investors have also already snapped up large Universal stakes, banking in part on the group’s back catalogue, which includes the likes of Bob Dylan and the Beatles. They also hope deals with ad-supported software and social media platforms such as Alphabet Inc’s YouTube and TikTok will sustain its performance and valuation.

U.S. billionaire William Ackman suffered a setback when his attempt to invest in Universal via a special purpose acquisition vehicle (SPAC) hit a snag with regulators and investors. However, Ackman still got a 10% stake via his Pershing Square hedge fund. China’s Tencent owns 20% of Universal.

One winner in the listing will be Vincent Bollore, the French media tycoon who is Vivendi’s controlling shareholder. He will receive Universal shares worth 6 billion euros at Monday’s price.

Bollore has been an aggressive consolidator in France’s media and publishing landscape, and he has a long-held ambition to build up a southern European media powerhouse.

Vivendi itself may suffer in the short run, however, and shares are expected to fall Tuesday as they begin trading without Universal.

BNP Paribas, Natixis, Credit Agricole, Morgan Stanley and Societe Generale are the lead financial advisers on the deal, out of 17 banks in total — an unusually large total.

The fee pot is expected to be below standard listings as no fresh cash is being raised as part of the spin-off.

Universal said in its prospectus that the overall expenses to be paid in relation to the Universal deal would not go beyond 0.5% of the total amount of the share distribution.

The listing is the latest win for Euronext in Amsterdam, which has grown as a financial centre in the wake of Britain’s departure from the European Union. Before Universal, Amsterdam had attracted a record 14 IPOs so far this year, of which 10 were SPACs.

But the only Amsterdam listing of a size comparable to Universal in recent history was the 95 billion euro listing of technology investor Prosus, also a spin-off, in September 2019.

For a look at all of today’s economic events, check out our economic calendar.

($1 = 0.8524 euros)

(Additional reporting by Toby Sterling; Writing by Sarah White; Editing by David Evans and Lisa Shumaker)

India Antitrust Probe Finds Google Abused Android Dominance, Report Shows

Alphabet Inc’s Google reduced “the ability and incentive of device manufacturers to develop and sell devices operating on alternative versions of Android,” says the June report by the Competition Commission of India’s (CCI) investigations unit.

The U.S. tech giant told Reuters in a statement it looks forward to working with the CCI to “demonstrate how Android has led to more competition and innovation, not less.”

Google has not received the investigation report, a person with direct knowledge of the situation told Reuters.

The CCI did not respond to a request for comment on the report. Senior CCI members will review the report and give Google another chance to defend itself, before issuing a final order, which could include penalties, said another person familiar with the case.

Google would be able to appeal any order in India’s courts.

Its findings are the latest antitrust setback for Google in India, where it faces several probes in the payments app and smart television markets. The company has been investigated in Europe, the United States and elsewhere. This week, South Korea’s antitrust regulator fined Google $180 million for blocking customised versions of Android.

‘VAGUE, BIASED AND ARBITRARY’

Google submitted at least 24 responses during the probe, defending itself and arguing it was not hurting competition, the report says.

Microsoft Corp, Amazon.com Inc, Apple Inc, as well as smartphone makers like Samsung and Xiaomi, were among 62 entities that responded to CCI questions during its Google investigation, the report says.

Android powers 98% of India’s 520 million smartphones, according to Counterpoint Research.

When the CCI ordered the probe in 2019, it said Google appeared to have leveraged its dominance to reduce device makers’ ability to opt for alternate versions of its mobile operating system and force them to pre-install Google apps.

The 750-page report finds the mandatory pre-installation of apps “amounts to imposition of unfair condition on the device manufacturers” in violation of India’s competition law, while the company leveraged the position of its Play Store app store to protect its dominance.

Play Store policies were “one-sided, ambiguous, vague, biased and arbitrary”, while Android has been “enjoying its dominant position” in licensable operating systems for smartphones and tablets since 2011, the report says.

The probe was triggered in 2019 after two Indian junior antitrust research associates and a law student filed a complaint, Reuters reported.

India remains a key growth market for Google. It said last year it would spend $10 billion https://www.reuters.com/article/us-google-india-idINKCN24E0YL in the country over five to seven years through equity investments and tie-ups, its biggest commitment to a key growth market.

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Aditya Kalra in New Delhi; Editing by William Mallard)

Google Stock Hits -1.618% Fibonacci Target and Expects Pullback

The Alphabet Stock (GOOG) has had a tremendous bull run for more than 1.5 years. The price has doubled in the last 1 year – since September 2020.

Today’s Elliott Wave and price analysis reviews why a bearish correction is needed. But also why an uptrend is expected to continue after the pullback.

Price Charts and Technical Analysis

The GOOG stock price has reached the distant -1.618% FIbonacci target of the wave 1-2 (purple). This is a spot where the wave 3 (purple) could be completed:

  1. An uptrend is clearly visible when viewing the long-term moving averages.
  2. But a divergence pattern has also appeared (purple line).
  3. Also the resistance of the strong -1.618% Fibonacci target could start a pullback.
  4. The confirmation of a retracement is a break (orange arrows) below the 21 ema zone.
  5. A head and shoulders reversal chart pattern could take place (red boxes)
  6. The main target of the pullback is the support zone (blue box).
  7. An uptrend continuation (green arrows) is expected after price action completes wave 4 (purple) and starts wave 5 (purple).

On the 4 hour chart, price action is close to challenging the support trend line (green):

  1. A bearish breakout could first aim at the 23.6% Fibonacci level (orange arrows).
  2. A bullish bounce could finish wave A (pink) and create a wave B (pink).
  3. Another bearish leg (orange arrow) could complete wave C (pink) within wave 4 (purple).
  4. A bullish bounce could occur at the 38.2% Fibonacci level (blue arrow).

Good trading,

Chris Svorcik

The analysis has been done with the indicators and template from the SWAT method (simple wave analysis and trading). For more daily technical and wave analysis and updates, sign-up to our newsletter

 

El Salvador’s World-First Adoption of Bitcoin Hits Snags

The Chivo digital wallet became available on the app platforms hosted by Apple and Huawei shortly before midday local time Tuesday, after President Nayib Bukele, who pushed for adoption of the cryptocurrency and has promised $30 of bitcoin for each user, railed against the tech giants for not carrying the application.

The government purchased an additional 150 bitcoins on Tuesday, worth around $7 million, and McDonalds began accepting the cryptocurrency in its restaurants in El Salvador.

Bukele said using bitcoin will help Salvadorans save $400 million a year on commissions for remittances, while giving access to financial services to those with no bank account.

Carlos Garcia, who went to a booth giving out advice on the new currency at a shopping mall on Tuesday to learn about how transactions would work, said he was excited about the opportunities bitcoin could provide.

“El Salvador is taking a great step forward today,” he said.

However, the poorest may struggle to access the technology needed to make bitcoin work in El Salvador, where nearly half the population has no internet access and many more only have sporadic connectivity.

“I’m going to continue suffering with or without bitcoin,” said sweets seller Jose Herrera, who said he had trouble accessing a mobile phone.

Over a thousand people protested against the implementation of bitcoin around noon, marching to the Supreme Court building, burning a tire and setting off fireworks.

Some say the move may fuel money laundering and financial instability. It has already muddied the outlook for more than $1 billion in financing that El Salvador is seeking from the International Monetary Fund (IMF).

Bukele, 40, scores highly in opinion polls but has been accused of eroding democracy, not least by the administration of U.S. President Joe Biden.

Last week, top judges appointed by his lawmakers ruled that he could serve a second term, breaking away from a constitutional rule that forbade consecutive terms.

Earlier on Tuesday, Salvadorans trying to download the Chivo digital wallet had found it was unavailable on the main app stores. Bukele said the government had temporarily unplugged it, in order to connect more servers to deal with demand.

Bukele blamed Apple Inc, Alphabet’s Google and Huawei’s app download platforms for the delay.

“Release him! @Apple @Google and @Huawei,” Bukele wrote in a tweet, which was accompanied by a red-faced ‘angry’ emoji. The wallet was later available from Huawei and Apple.

Google and Apple did not immediately respond to requests for comment.

PRICE SLIDE

Polls indicate Salvadorans are wary of the volatility of the cryptocurrency, which can shed hundreds of dollars in value in a day.

Ahead of the launch, El Salvador bought 400 bitcoins worth around $20 million, Bukele said, helping drive the price of the currency above $52,000 for the first time since May. Hours later, bitcoin had weakened and last traded down 8.84% at $47,327.32.

Ethereum, another crypto currency, fell 10.52% to $3,537.62, while crypto exchange Coinbase Global slid 3.96% after reporting delays in some transactions on its platform.

The change means businesses should accept payment in bitcoin alongside the U.S. dollar, which has been El Salvador’s official currency since 2001 and will remain legal tender.

It remains unclear whether businesses will be penalized if they do not accept bitcoin.

In the run-up to the launch, the government installed ATMs that allow bitcoin to be converted into dollars and withdrawn without commission from the digital wallet, called Chivo.

“Like all innovations, El Salvador’s bitcoin process has a learning curve,” Bukele said in a tweet. “Not everything will be achieved in a day, or in a month.”

“We must break the paradigms of the past. El Salvador has the right to advance towards the first world,” he wrote.

In barely two years in office, Bukele has taken control of almost all levers of power. But although he has promised to clean up graft, the Biden administration recently put some of his close allies on a corruption blacklist.

Analysts fear that the adoption of bitcoin, whose transaction records are distributed across the internet, beyond the reach of national jurisdictions, could fuel money laundering.

After the bitcoin law was approved, the ratings agency Moody’s downgraded El Salvador’s creditworthiness, while its dollar-denominated bonds have also come under pressure.

The World Bank reiterated on Tuesday that it could not help El Salvador in its process of adopting bitcoin as legal tender “given environmental and transparency shortcomings,” a World Bank spokesperson told Reuters.

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Anthony Esposito in Mexico City and Nelson Renteria in San Salvador; Additional reporting by Wilfredo Pineda in El Zonte, El Salvador and Frank Jack Daniel; Editing by Alistair Bell and Rosalba O’Brien)

Introduction to the Major Fundamental Influences on Forex Prices

When most individuals think of trading, they think of stocks and futures. This is probably because of the long-term history of these investment vehicles. Some may even think of cryptocurrencies because of their huge popularity with a younger generation of investors.

What they may not realize, however, that in terms of market value, there is one asset class that dwarfs them all and, in fact, some may not have even realized that they’ve already speculated in it when they’ve traveled internationally or bought something from a foreign country.

This huge investment class is the foreign exchange market, also known as FOREX. In the FOREX market, an estimated $6 trillion is traded on a daily basis. To put this in perspective, the U.S. stock market trades around $257 billion a day; quite a large sum, but only a fraction of what FOREX trades.

For a novice trader, there is a lot to learn about trading in the foreign exchange market because it lacks the familiarity of stocks like Apple, IBM and Google, as well as the glamor of gold and silver futures.

Before even attempting to trade or invest in the FOREX market, individuals have to become aware of the macro-economic and geo-political factors that help drive the price action in this trading vehicle.

Table of contents

What is FOREX?

Simply stated, the word FOREX is derived by combining parts of foreign currency and exchange. It is also referred to as FX trading.

Foreign exchange is the process of changing one currency into another for a variety of reasons, usually for commerce, trading, finance or tourism. FOREX markets tend to be the largest and most liquid asset markets in the world.

Briefly, Forex markets exist as spot (cash) markets as well as derivatives markets, offering forwards, futures, options, and currency swaps.

Market participants use Forex to hedge against international currency and interest rate risk, to speculate on geopolitical events, and to diversify portfolios, among other reasons.

What is a FOREX Pair?

In foreign exchange, currencies trade against each other as exchange rate pairs. For example, EUR/USD is a currency pair for trading the Euro against the U.S. Dollar.

A FOREX pair or currency pair is simply the quotation of the value of a given currency against another. The first is termed the base currency and is the currency being sold, while the second is known as the quote currency and is the currency being bought.

For example, the quotation EUR/USD = 1.0700 would mean 1 Euro is exchanged for $US1.07.

What are the Factors Affecting Forex Pairs?

If you desire to become a successful FOREX trader then you have to develop an understanding of the fundamentals that drive the price action. This is the information that will help you to establish an informed hypothesis about whether a particular FOREX pair is being fairly valued at present and what potential upsides or downsides might be from current price levels.

These include: central bank policy, interest rates, inflation, economic growth, trade data, and political/government factors.

How Does Central Bank Policy Influence FOREX Prices?

The major central banks influence Forex prices by controlling open market operations and interest rate policies. They are responsible for fixing the price of its domestic currency on Forex.

Any action taken by a central bank in the FOREX market is done to stabilize or increase the competitiveness of that country’s economy. A central bank may weaken its own currency by creating additional supply during periods of long deflationary trends, which is then used to purchase foreign currency. This effectively weakens the domestic currency, making exports more competitive in the global market.

Central banks use these strategies to calm inflation. Their doing so also serves as a long-term indicator for FOREX traders.

How Do Interest Rates Influence FOREX Prices?

Interest rates have a significant influence on currency movements. So much so that a currency pair will often spike up or down following a central bank announcement.

The main reason for the volatility is the so-called carry trade, where investors borrow at lower interest rates in one currency and invest at higher interest rates in another.

Basically, investors tend to chase yields so when a central bank raises rates, it tends to make that country’s currency a more attractive investment.

How Does Inflation Influence FOREX Prices?

Central banks raise and lower interest rates to control inflation. Therefore, movement in the inflation rate can impact currency prices. For example, if a country’s central bank believes inflation is rising too quickly, it may raise interest rates to lift the cost of borrowing and to take money out of the system. This action is designed to slow the economy.

For this reason, the national consumer price index (CPI) is one of the most closely watched pieces of information for FOREX traders.

How Does Economic Growth Influence FOREX Prices?

Economic growth is tied directly to the inflation rate, which relates to interest rates. When a country’s economy is growing quickly as measured by the Gross Domestic Product (GDP), for example, the rate of inflation will typically start to rise. This usually means the central bank will need to lift interest rates to slow the rate of growth.

This is why the currency of a country showing strong economic growth will often appreciate against those of other countries showing slow or negative growth.

How Does Trade Data Influence FOREX Prices?

Balance of Trade data, which is based on the relationship between a country’s imports and exports, also has an impact on the direction of a currency’s prices. Trade figures can also be seen by some as a sign of the strength of the economy, which in turn has implications for inflation and interest rates, and therefore the domestic currency.

If a country is exporting more goods than it imports, for example, it increases demand for its currency as the money used to pay for those exports ultimately needs to be converted into the domestic currency.

How Does Political/Government Factors Influence FOREX Prices?

Government policy can have profound implications on FOREX prices especially if it influences the inflation rate.

A government could decide to trim spending and pay down debt, which may end up causing the economy to slow.

Following the pandemic of 2020, many governments flooded their economies with fiscal stimulus. As this money trickled through the economy, it caused inflation which is fueling a response from central banks in the form of interest rate hikes.

In response, Forex markets have experienced heightened volatility as the major central banks race to stem runaway inflation by raising rates. Investors will become more attracted to the currency of the country that raises interest rates more aggressively.

Other Factors to Consider When Trading FOREX

Although fundamental data and daily news events play a major role in the price action of a currency, it is important to note that an estimated 90% of the daily FOREX volume is fueled by speculators (traders). So in addition to knowing the major fundamental influences on the long-term direction of currencies, traders will also need to learn about the technical factors that play a major role in the movement of currency prices.

Nasdaq Ekes Out Record Finish as Wall St Ends Higher

The energy sector rose, reversing most of the losses suffered during the first three days of the week. Thursday’s performance was fueled by U.S. crude prices jumping 2% on a sharp decline in U.S. inventories and a weaker dollar.

Cabot Oil & Gas Corp and Occidental Petroleum Corp were among the largest risers, with oil majors Exxon Mobil and Chevron Corp also posting solid gains.

The technology index slipped into negative territory, as some of the industry’s largest companies saw their recent upward momentum stall.

Amazon.com Inc, Microsoft Corp, Facebook Inc and Google-owner Alphabet Inc were all under water. A notable exception was Netflix Inc, which hit an all-time high intraday.

U.S. stocks have regularly hit record highs over the past few weeks as a solid corporate earnings season and hopes of continued central bank support underpinned confidence as data showed the country’s post-pandemic economic growth was beginning to slow.

Data on Thursday showed the number of Americans filing new claims for jobless benefits fell last week, although the focus will be on the Labor Department’s monthly jobs report on Friday to set the stage for the Fed’s policy meeting later this month.

The report is likely to show job growth slowed to 750,000 in August from 943,000 the previous month.

“You have to see very wide beats or misses in this data to really change people’s minds,” said Greg Boutle, U.S. head of equity and derivative strategy at BNP Paribas.

“Investors are either in this renormalization camp that thinks inflation will not happen, or they believe there will be some persistence to inflation. Really, it will be a collection of beats or misses that will move the needle for investors and the Fed, rather than a single data point.”

Unofficially, the S&P 500 gained 12.92 points, or 0.29%, to end at 4,537.01 points, while the Dow Jones Industrial Average  gained 129.38 points, or 0.37%, to 35,441.91. The Nasdaq Composite  rose 21.15 points, or 0.14%, to 15,330.53.

Despite deadly flash floods in New York City, trading on Wall Street was operating normally.

Wells Fargo rose after three straight sessions of losses. The lender had been weighed by a report it could face further regulatory sanctions over the pace of compensating victims of a years-long sales practice scandal.

Contracting services company Quanta Services Inc jumped to a record high after saying it would buy privately held Blattner Holding Company in a deal valued at about $2.7 billion.

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Shashank Nayar in Bengaluru and David French in New York; Editing by Aditya Soni and Lisa Shumaker)

Google Intends To Insert Its Own Chips In Chromebook laptops By 2023

Google is working on its own chips and intends to start inserting them in its Chromebook laptops from 2023, a move that could affect some of the leading chip manufacturers in the world.

Google Is Developing Its Chips

US tech giant Google is currently working on its chips and intends to roll them out by 2023. This is according to an earlier report by Nikkei Asia, citing people familiar with the matter. According to the report, Google is developing its central processors for its tablet and notebook computers.

This latest development implies that Google considers in-house chip development as a crucial component for the company to remain competitive. The chips are key to the function of any device. They operate as the brains, ensuring that every aspect of a device runs as expected.

At the moment, Google utilizes chips manufactured by other tech giants like Intel and AMD to power its tablet and notebook computers. However, the Google chip currently in design is based on a design by British chip designer Arm.

Google considers the move to be crucial as other leading tech companies, including Amazon, Facebook, Microsoft, Tesla, Baidu and Alibaba Group Holding, are working towards developing their own semiconductors to use for their cloud services and electronic products.

The report added that Google is also working on building mobile processors for its Pixel smartphones. The tech giant was inspired by Apple’s success in developing its own semiconductor components for its iPhones. Apple is also looking to replace Intel chips with its own CPUs for cloud services and electronic products.

Google Outperforms Several Tech Companies

Google has been one of the best performing tech stocks in the market, seeing its price surge by more than 60% year-to-date. GOOGL started 2021 trading at $1,722 per share but has gained more than 60%.

GOOGL stock chart. Source: FXEMPIRE

GOOGL is currently trading at $2,923 per share, up by 1% over the past 24 hours. The company’s performance has also been reflected in its earnings and revenue over the past few months.

Wall Street Boom or Bubble? Don’t Blame It All on the Fed: Jamie McGeever

It is undeniable that trillions of dollars of asset purchases and years of official interest rates of zero and 10-year bond yields barely above 1% have boosted stock prices.

But the significance of Fed actions are overstated.

The tech-heavy composition of Wall Street, which benefits more from low interest rates and plain old stronger economic growth, are adding fuel to the U.S. stock surge. And the Fed’s large balance sheet expansion is nowhere near the European Central Bank or Bank of Japan’s.

Look no further than Wall Street: The S&P 500 has more than doubled from its COVID low of March last year, chalking up 51 record highs this year.

According to Ryan Detrick, chief market strategist at LPL Financial in Charlotte, North Carolina, only 1964 and 1995 had more than 50 new highs by the end of August. He reckons the S&P 500 could make 78 new highs this year, eclipsing the all-time record of 77 set in 1995.

On a 12-month forward earnings valuation basis, the S&P 500 earlier this year was its most expensive since 1999, just before the tech bubble burst. This price/earnings ratio has since drifted lower. But it is still above 20, which is unfamiliar territory for most of the last two decades.

Official interest rates and ultra-low benchmark bond yields make investing in profitable, cash-generating companies an attractive proposition. To some investors desperate for return, riskier stocks are a no-brainer.

Many argue there is a natural consequence of the Fed doubling the size of its balance sheet to $8.3 trillion since the pandemic outbreak.

As a share of GDP, that is now around 40%.

With stocks and other financial assets mostly in the hands of society’s better off, critics say U.S. monetary policy is widening the gap between rich and poor and directly exacerbating wealth inequality.

The world’s second and third largest central banks, meanwhile, have also ramped up their pandemic-fighting asset purchases. Their balance sheets, as a share of GDP, are far bigger than the Fed’s. Yet stock markets and valuations in the euro zone and Japan are nowhere near as high.

“The commonly held narrative centers on the Fed, and if everyone believes that, then it is self-reinforcing,” said Meb Faber, co-founder and chief investment officer at Cambria Investments in El Segundo, California.

“But there is a limit as to how far you can extrapolate that.”

The ECB has grown its balance sheet to $9.5 trillion since the outbreak of the pandemic. The ECB’s balance sheet is now worth more than 60% of euro zone GDP.

Similarly, the Bank of Japan has grown its balance sheet by $1.4 trillion since March 2020 to $6.6 trillion, around 120% of GDP.

Yet the euro Stoxx 50 is up ‘only’ around 65% from the COVID low, and is still 23% below its record high from March 2000. Euro stocks’ 12-month forward price/earnings ratio is around 16.

Japan’s Topix is up 55% from the COVID low and has a forward multiple of around 13.

Both figures, again, are significantly below their U.S. equivalents, suggesting factors other than central bank largesse are behind Wall Street’s surge.

For one, the U.S. equity market is far more tech- and digital-heavy than its global peers.

A world of zero interest rates benefits tech companies disproportionately because a low discount rate inflates future cash flows for companies where cutting edge innovation is likely to fuel faster growth. By any measure, the big five tech ‘FAANG’ stocks – Facebook, Amazon, Apple, Netflix and Google – dominate Wall Street. They have risen more than three times the broader S&P 500 in the last five years and their $7 trillion market cap is 21% of the whole index.

Another is good old-fashioned economic growth.

Some of the more bullish U.S. forecasts have been trimmed recently, but the International Monetary Fund expects 7.0% GDP growth in the United States this year, 4.6% in the euro zone, and just 2.8% in Japan.

On top of that, Corporate America is motoring along nicely.

LPL Financial’s Detrick notes that some 85% of S&P 500 companies posted second quarter earnings beats. And 2021 consensus earnings per share estimates are for a 43% jump from last year.

“The Fed backstop helps explain why people are willing to pay higher multiples. But higher earnings are higher earnings, and that justifies a lot. Investors still see better opportunity in the U.S., and are willing to pay that premium,” he said.

For a look at all of today’s economic events, check out our economic calendar.

(By Jamie McGeever; Editing by Edward Tobin)

How Options Are Fueling The Markets

First, let’s look at the covid crisis and how it played a role. As a result of the shutdowns, the FED took a really aggressive stance with its quantitative easing measures.  Lots of money printing to pay for massive stimulus payouts.  The worse news we hear historically is that the markets will react sharply to the downside.

In this market, they did the opposite because many in the market viewed the bad news as a sign the FED will keep its foot on the gas with their aggressive quantitative easing.  The markets love this as they see it as huge economic growth with less risk, even when things were shut down.  Many people were at home and had nothing to do but spend their stimulus money.  The markets loved this.  That is why we saw massive growth in AMZN, FB, GOOGL, and MSFT.  Other stocks favored from staying at home were ZM, NFLX, and TTD.

Now how do options fuel the markets?  Well, when an underlying stock has options there is a secondary derivative market that has its own supply and demand outside of the stock.  This can cause market makers to balance those demands.  How do they do this?

They do this by taking the difference of the total contracts bought and sold and adjust accordingly.  So for example let’s look at SPX.  In the below picture you can see Put volume is roughly half the call volume.  In this case, the market maker would engage in an activity called delta hedging where they would buy shares of stock to offset the difference between the Put and Call contract volume.  Since the market maker is only interested in the arbitrage between the bid and ask of these contracts, they want to stay delta neutral or, in other words, not be affected by stock price movement.

When they buy to offset, this can drive the price of an underlying stock up.  This is one reason why so many traders watch unusual options activity.

Every day on  Options Trading Signals we do defined risk trades that protect us from black swan events 24/7.  Many may think that is what stop losses are for.  Well, remember the markets are only open about 1/3 of the hours in a day.  Therefore, a stop loss only protects you for 1/3 of each day.  Stocks can gap up or down.  With options, you are always protected because we do defined risk in a spread.  We cover with multiple legs which are always on once you own.

Enjoy your day!

For a look at all of today’s economic events, check out our economic calendar.

Chris Vermeulen
Founder & Chief Market Strategist
www.TheTechnicalTraders.com

 

Cryptocurrency Companies Can Now Run Google Ads Again As New Policy Goes Into Effect

Google’s new policy went into effect yesterday, allowing cryptocurrency exchanges and wallet providers to run adverts on its search engine.

Google Now Allows Crypto Companies To Run Ads

Search engine giant Google is running cryptocurrency-related ads again after the company’s updated financial products and services policy came into full effect yesterday, August 3. This latest development will see cryptocurrency exchanges and wallet service providers run adverts on Google again.

Google first laid out its crypto ad revision plans in June, stating that advertisers offering crypto exchanges and wallets targeting United States customers can advertise their products and services once they meet certain requirements.

This latest development is expected to boost Google’s advertising revenue. However, it might not have too much impact considering Alphabet, Google’s parent company, generates over $145 billion in advertising revenue annually.

The strict requirements put in place by Google are to eliminate shady advertising and blatant crypto scams. For cryptocurrency companies to qualify to run ads on Google, they must register with the Financial Crimes Enforcement Network (FinCEN), indicating that they are a money service business. The companies must also have at least one state as a money transmitter, or they should be a federal or state-chartered bank entity.

ICO, DeFi And Promotion Of Trading Not Allowed

The search engine giant said initial coin offerings (ICO) and similar ventures are still not allowed to advertise on Google. Furthermore, Google said it would not allow decentralized finance (DeFi) protocols to advertise their services.

DeFi protocols have become popular within the cryptocurrency space, but the sector remains largely unregulated, with numerous scams. Hence, it is understandable that Google doesn’t want to allow them to advertise their products yet. Also, Google said it wouldn’t allow the promotion of cryptocurrency trading activities, with celebrity endorsements also banned on the search engine platform.

BTC/USD chart. Source: FXEMPIRE

Bitcoin and the other cryptocurrencies are still in consolidation mode after last week’s performance. BTC is currently down by 2.5% in the past 24 hours and is trading just below the $38k mark.

Google To Ditch Qualcomm And Develop Its Own Smartphone Processors This Year

Search engine giant Google has announced that it would no longer be using Qualcomm’s processors on its smartphones as it would start building its own processors this year.

Google To Start Building Its Processors This Year

Tech giant Google revealed earlier today that it would start building its own smartphone processors this year. According to its announcement, the processor would be called Google Tensor, and it will serve its new Pixel 6 and 6 Pro phones set to be released later this year.

This latest development means that Google will no longer be using chips manufactured by Qualcomm. However, Qualcomm pointed out that it would continue to work with the search engine giant on existing and future products based on its Snapdragon platform.

The Google Tensor processor is expected to power the company’s new flagship phones, which are expected to be launched in October. The Pixel 6 and 6 Pro phones will see Google move away from offering affordable smartphones to high-end products. Google is looking to compete with Apple and Samsung by offering more high-end products to its customers.

GOOGL stock chart. Source: FXEMPIRE

The move by Google is similar to that of Apple. The iPhone manufacturer ditched Intel and began manufacturing its own processors. Similar to Apple, Google will use Arm-based architecture for its processors. Arm processors are usually lower power and are mostly used across the industry for mobile devices, such as phones, tablets and laptops.

Qualcomm And Google Shares All Up As The Market Opens

The shares of Qualcomm and Google are both up as the United States market opens today. QCOM is up by 0.05% today despite the news that Google will no longer be using its smartphone processors. Year-to-date, QCOM has remained rather flat as it began the year trading at $150, and it is now trading at $149.90 per share.

QCOM stock chart. Source: FXEMPIRE

GOOGL, on the other hand, is up by 0.08% so far today. Google is one of the best-performing stocks this year, up by 53% year-to-date. Google began 2021 trading at $1,752 per share, but an extended rally has seen it gone up by nearly $1,000 as it is now trading at $2,696.

Week In Review: Market Caution, China Crackdown, Dovish Fed

On Tuesday, market sentiment remained shaky as investors kept a close eye on China following the multiple crackdowns. It was a big day for big tech as Apple, Microsoft and Alphabet released their quarterly earnings. Earnings and revenues from the tech titans crushed market expectations.

In the currency space, we set our sights on the dollar ahead of the Federal Reserve policy meeting. There were other key data points such as second-quarter GDP and core PCE inflation that were likely to influence the currency’s performance.

Our trade of the week for the Social media index which tracks the overall performance of social media companies via Twitter, Facebook, Snap, and Alphabet all in equal weights.

It was all about the Federal Reserve policy meeting on Wednesday. As widely expected, the central bank left monetary policy unchanged and maintained a dovish stance. Anyone who was expecting a hawkish surprise was left empty-handed after Chair Powell stated that rate increases were “a ways away”. A cautious Fed dealt a heavy blow to the dollar while injecting equity bulls with a renewed sense of confidence.

In fact, stocks across the continent were painted green on Thursday thanks to the Fed’s dovish message overnight. The US Senate voting to move ahead on the $1.2 trillion infrastructure plan and robust earnings in Europe also supported the risk-on mood.

One of the major talking points near the end of the week for the US GDP report for Q2. The largest economy in the world grew at a 6.5% annualised rate in the second quarter of 2021. Although this was below the 8.5% expectations, it was still the biggest increase in growth seen since the third quarter of 2020.

Caution was the name of the game on Friday as China’s regulatory crackdown continued to spook investors. U.S stocks fell, registering losses for the week after e-commerce giant Amazon late Thursday reported disappointing quarterly results. Nevertheless, the S&P 500 has ended July with another month of gains.

In other news, the core PCE which is the Fed’s favoured measure of inflation edged higher to 3.5% in June from 3.4% in May – its biggest increase since July 1991.

Looking at commodities, gold found itself under pressure at the end of the week thanks to a strengthening dollar. However, the precious metal was able to end July with a monthly gain. Renewed signs that the Federal Reserve may not taper anytime soon may sweeten appetite for the precious metal in the new month. With prices back below the 200-day Simple Moving Average, bears could steal return to the scene.

By Lukman Otunuga, FXTM Senior Research Analyst

For more information, please visit: FXTM

Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.

Today’s Market Wrap Up and a Glimpse Into Wednesday

A winning streak on Wall Street came to a screeching halt today after all three of the major indices finished in the red. The Dow Jones Industrial Average, S&P 500 and Nasdaq all ended the day lower after Monday’s record session.

The Nasdaq fell more than 1% as tech stocks tumbled. Investors appear to be taking some profits after five days of gains.

Technology leaders reported their earnings after the closing bell, including Google parent Alphabet, Microsoft and Apple. All three companies shined in different areas, while revenues were strong all around.

Durable Goods orders for items such as vehicles and appliances increased last month, the latest data show, in yet another sign that the economic recovery is in full swing. Supply-chain constraints continue to be a problem, however.

The results buoyed General Electric shares, which climbed 1% higher. GE also reported Q2 earnings, and its aviation division is poised to benefit from a rebound in the travel industry.

The FOMC began a two-day meeting today. And while inflation will no doubt be at the center of the discussions, economists are not expecting any surprises. Stock index futures are under pressure, with the Dow Jones, S&P 500 and Nasdaq all moving lower. Dow futures are down nearly 100 points on Tuesday evening.

Stocks to Watch

  • Apple’s earnings were better than expected, while iPhone sales increased 50% vs. year-ago levels to USD 39.6 billion. The stock is down more than 1% in extended-hours trading as investors worry if Apple can keep the good times rolling, especially in light of chip supply issues.
  • Microsoft just flipped green in after-hours trading with the stock up 1%. The company outperformed analyst estimates on the top and bottom lines. Fourth-quarter revenues soared more than 20% to USD 46.2 billion. Microsoft has a market cap of USD 2.15 trillion.
  • Google parent Alphabet far exceeded Wall Street estimates and benefited from robust online advertising sales.

Look Ahead

The earnings parade is far from over, with Facebook, PayPal, McDonald’s and more all on tap for Wednesday. In addition, Dow stock Boeing will unveil its Q2 results before the opening bell. The company is widely expected to report a loss as it continues to grapple with 787 jet airliner setbacks.

Google Parent Alphabet Leaves Wall Street Analysts in the Dust

Investors were skittish ahead of earnings out of big tech companies. All eyes have been on technology earnings, as the sector has been helping to fuel the market higher and investors want to know if it can last.

Google parent Alphabet has just reported its Q2 results, and the tech giant didn’t disappoint. After the stock fell 2% in the regular session, shares are up approximately 3% in extended-hours trading.

Beat the Street

Investors are celebrating Alphabet for beating estimates on the top and bottom lines. The company reported EPS of USD 27.26 vs. estimates of USD 19.34. Meanwhile, revenue came in at USD 61.88 billion while Wall Street analysts were calling for about USD 56 billion.  With a massive market cap of USD 1.79 trillion, Google/Alphabet is growing at a pace that is akin to a tech unicorn.

Google and Alphabet CFO Ruth Porat stated:

“Our strong second-quarter revenues of USD 61.9 billion reflect elevated consumer online activity and broad-based strength in advertiser spend.” 

Ad Revenue Race Is On

Online advertising is booming as businesses spend on internet ads with a vengeance now that the economy has officially reopened. Companies like Snap Inc. already reported robust ad revenue for Q2, teeing up Alphabet to take the baton. Now the race is on.

Google’s online ad revenue soared nearly 70% in Q2 vs. year-ago levels to USD 50.4 billion. YouTube’s ad revenue alone came in at USD 7 billion, soaring 84% YoY and topping Wall Street estimates.

Google Cloud revenue came in at USD 4.63 billion, also better than expected. Google has been investing in artificial intelligence and the cloud. Alphabet also recently got the green light for a USD 50 billion share repurchase program of Class A and Class C shares.

If tech stocks continue to work their magic, they could potentially carry the market higher on Wednesday and beyond.

The gains in Alphabet’s shares come on the heels of a bullish performance in which the stock has advanced 50% so far this year. Meanwhile, tech giants Microsoft and Apple also reported earnings after the bell, but both stocks are moving lower in after-hours trading.

Investors might want to take note that the strong online ad sales market is expected to persist. GroupM is reportedly predicting global ad sales will be USD 749 billion in 2021, up by a double-digit percentage vs. year-ago levels. Tech stocks such as Alphabet could potentially continue to benefit from this trend.

Today’s Market Wrap Up and a Glimpse Into Tuesday

Stocks started off the week strong, with all three of the major indices finishing at all-time highs. The gains are an extension of last week’s rally and demonstrate a vote of confidence among investors in corporate America’s earnings results. While the Dow Jones Industrial Average, S&P 500 and Nasdaq were up just fractionally, it was enough to send them all into record territory.

In the cryptocurrency markets, the bitcoin price crossed the USD 40,000 level for the first time in over a month, but the gains slowly faded away. Reports previously suggested that Amazon.com was on the brink of accepting bitcoin payments this year. The e-commerce giant, however, reportedly quashed those rumors despite maintaining that it is looking into crypto.

Stocks to Watch

Tesla’s highly anticipated Q2 earnings are out, and Elon Musk didn’t disappoint. The EV maker surpassed Wall Street estimates on earnings and revenue as Tesla continues to hit on all cylinders. Net income crossed over into the billion-dollar territory, which was a first for the company, while revenue came in at USD 11.9 billion vs. estimates of USD 11.3 billion.

Tesla, which delivered more than 200K vehicles in Q2, said it’s on track to produce its Model Y vehicles in Berlin and Austin, Texas this year. The Cybertruck will also be produced in Austin, Texas “subsequent to Model Y.”

Tesla’s stock is inching higher in extended-hours trading after gaining 2% in the regular session. Tesla also noted it “recorded a bitcoin-related impairment of USD 23 million.” The bitcoin price nosedived 40% in the second quarter of 2021.

F5 Networks is rallying in after-hours trading, with shares up more than 5%. Investors rewarded the technology company for its fiscal Q3 results, which came in better than Wall Street expected.

Cryptocurrency exchange Coinbase saw shares fall close to 2% in extended hours, perhaps in sympathy with bitcoin after the air was let out of the Amazon-fueled rally.

Look Ahead

Major technology companies are queued to report earnings on Tuesday, including Apple, Google parent Alphabet and Microsoft. Snap and Twitter’s quarterly results last week revealed a strong online advertising market that is likely to have benefited Alphabet as well.

On the economic front, Durable Good Orders for the month of June come out at 10 a.m. ET on Tuesday. Wells Fargo economists predict that this indicator increased 2.3% last month fueled in part by orders for Boeing aircraft.

EU Gives Google 2 Months to Improve Hotel, Flight Search Results

By Foo Yun Chee

The world’s most popular internet search engine has long faced scrutiny from antitrust enforcers and consumer groups around the world over its business practices, which in some cases have landed it with hefty fines.

The latest grievance centres on the prices of its services Google Flights and Google Hotels.

The final prices for these should include fees or taxes that can be calculated in advance, while reference prices used to calculate promoted discounts should be clearly identifiable, the EU executive and national consumer watchdogs, led by the Dutch agency and the Belgian Directorate General for Economic Inspection, said in a joint statement.

“EU consumers cannot be misled when using search engines to plan their holidays. We need to empower consumers to make their choices based on transparent and unbiased information,” EU Justice Commissioner Didier Reynders said.

The agencies also told Google to revise the standard terms of its Google Store because some cases showed that traders have more rights than consumers.

If Google’s proposals are not sufficient, the agencies will discuss the issue further with the company and may impose sanctions.

Google said in a statement: “We welcome this dialogue and are working closely with consumer protection agencies and the European Commission to see how we can make improvements that will be good for our users and provide even more transparency.”

(Reporting by Foo Yun Chee; editing by Barbara Lewis)

Alphabet Could Scale to Fresh Record High on Upbeat Q2 Earnings; Target Price $3,000

The parent of Google and the world’s largest search engine that dominates internet search activity globally, Alphabet, is expected to report its second-quarter earnings of $19.33 per share, which represents year-over-year growth of about 90% from $10.13 per share seen in the same quarter a year ago.

The Mountain View, California-based internet giant would post revenue growth of more than 45% to around $56.16 billion. It is worth noting that the company, on average, has delivered an earnings surprise of over 43% in the last four quarters.

Alphabet’s better-than-expected results, which will be announced on Tuesday, July 27, would help the stock hit new all-time highs. Alphabet shares surged more than 50% so far this year. On Friday, the stock closed at a fresh record high at $2,660.30, up 3.57%.

Analyst Comments

Alphabet dominates the online search market with Google’s global share above 80%, via which it generates strong revenue growth and cash flow. We expect continuing growth in the firm’s cash flow, as we remain confident that Google will maintain its leadership in the search market. We foresee YouTube contributing more to the firm’s top and bottom lines, and we view investments of some of that cash in moonshots as attractive. Whether they will generate positive returns remains to be seen, but they do present significant upside,” noted Ali Mogharabi, Senior Equity Analyst at Morningstar.

“Our fair value estimate is $2,925 per share, equivalent to a 2021 enterprise value/EBITDA ratio of 21. We expect revenue growth to accelerate in 2021 as the economy recovers from the COVID-19 pandemic, helped by greater revenue contribution from YouTube and cloud and the acquisition of Fitbit. While new offerings will pressure gross margin, we look for operating leverage improvement during the next five years. Our model represents a five-year compound annual growth rate of nearly 19% for total revenue and a five-year average operating margin of 26%.”

Alphabet Stock Price Forecast

Eleven analysts who offered stock ratings for Alphabet in the last three months forecast the average price in 12 months of $2,743.00 with a high forecast of $2,900.00 and a low forecast of $2,510.00. The average price target represents a -0.48% change from the last price of $2,756.32. All of those 11 analysts rated “Buy”, none rated “Hold” or “Sell”, according to Tipranks.

Morgan Stanley gave the stock price forecast of $2,575 with a high of $3,060 under a bull scenario and $1,800 under the worst-case scenario. The firm gave an “Overweight” rating on the internet giant’s stock.

Google Websites growth is likely to rebound in ’21 as we believe there are several underappreciated products driven by mobile search, strong YouTube contribution, and continued innovation, such as Maps monetization. Continued expense discipline leads to operating leverage and upward revisions on EPS estimates,” noted Brian Nowak, equity analyst at Morgan Stanley.

Several other analysts have also updated their stock outlook. Alphabet had its price objective hoisted by stock analysts at Credit Suisse to $3,350 from $2,755. The brokerage currently has an “outperform” rating on the information services provider’s stock.

Barclays boosted their target price to $3,000 from $2,500 and gave the stock an “overweight” rating. Susquehanna Bancshares lifted their price target to $3,100 from $3,000 and gave the stock a “positive” rating.

Check out FX Empire’s earnings calendar

Monstrous Earnings Week Ahead: Tesla, Google, Microsoft, Apple, Facebook and Amazon in Focus

Earnings Calendar For The Week Of July 26

Monday (July 26)

IN THE SPOTLIGHT: TESLA, LOCKHEED MARTIN

TESLA: The California-based electric vehicle and clean energy company is expected to report its second-quarter earnings of $0.94 per share, which represents year-over-year growth of over 113% from $0.44 per share seen in the same quarter a year ago.

The high-performance electric vehicle manufacturer would post revenue growth of about 90% to around $11.4 billion. The electric vehicle producer has beaten earnings three times in the last four quarters.

“A double-fly-wheel. We believe Tesla can leverage its cost leadership in EVs to aggressively expand its user base, over time generating a higher % of revenue from recurring/high-margin services revenue. Services drives the upside. We forecast Tesla’s network services EBITDA as a % of total TSLA EBITDA to reach 11% by 2025, ~18% by 2030 and ~35% by 2040. Tesla Service revenue includes automated driving, infotainment, upgrades, supercharging, maintenance, telematics, etc,” noted Adam Jonas, equity analyst at Morgan Stanley.

“Valuation supportive vs. tech. Including Network Services, Energy & Insurance to our core auto fcst, at $900 Tesla trades at ~29x EV/EBITDA in 2025 and ~6x 2025 sales. Expensive vs. auto but not vs. software/tech comps.”

LOCKHEED MARTIN: The Bethesda, Maryland-based global security and aerospace company is expected to report its second-quarter earnings of $6.53 per share, which represents year-over-year growth of about 13% from $5.79 per share seen in the same quarter a year ago.

The world’s largest defense contractor would post revenue growth of over 4% to around $16.9 billion. It is worth noting that the aerospace company has beaten earnings in all last eight quarters.

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE JULY 26

Ticker Company EPS Forecast
PSON Pearson £8.40
LMT Lockheed Martin $6.53
PHG Koninklijke Philips $0.47
CHKP Check Point Software Technologies $1.56
LII Lennox International $4.39
RPM RPM International $1.26
BOH Bank of Hawaii $1.31
DORM Dorman Products $1.04
TSLA Tesla $0.94
KOF Coca Cola Femsa Sab De Cv $14.53
ARE Alexandria Real Estate Equities $0.62
AMP Ameriprise Financial $5.20
SUI Sun Communities $0.57
BRO Brown & Brown $0.40
UHS Universal Health Services $2.69
PKG Packaging Of America $1.77
FFIV F5 Networks $2.46
AGNC American Capital Agency $0.65
ACC American Campus Communities -$0.07
AMKR Amkor Technology $0.45
CR Crane $1.39
ADC Agree Realty $0.47
SSD Simpson Manufacturing $1.61
AXTA Axalta Coating Systems $0.46
TNET TriNet $0.81
HXL Hexcel $0.01
RRC Range Resources $0.25
PCH Potlatch $2.55
JJSF J&J Snack Foods $0.76
IBTX Independent Bank $1.31
CATY Cathay General Bancorp $0.83
AIN Albany International $0.73
CALX Calix $0.27
IBA Industrias Bachoco Sab De Cv $1.22
ARI Apollo Commercial Real Est Finance $0.36
PPERY PT Bank Mandiri Persero TBK $0.18
CDNS Cadence Design Systems $0.76
OTIS Otis Worldwide Corp $0.72
RYAAY Ryanair -$1.46
HAS Hasbro $0.48
WWD Woodward $0.98
ACKAY Arcelik ADR $0.46
GT Goodyear Tire & Rubber $0.16
TTM Tata Motors -$0.31
CBU Community Bank System $0.80
SANM Sanmina $0.91
BDN Brandywine Realty $0.01
FRME First Merchants $0.91

Tuesday (July 27)

IN THE SPOTLIGHT: GOOGLE (ALPHABET), MICROSOFT, APPLE

GOOGLE (ALPHABET): The parent of Google and the world’s largest search engine that dominates internet search activity globally is expected to report its second-quarter earnings of $19.33 per share, which represents year-over-year growth of about 90% from $10.13 per share seen in the same quarter a year ago.

The Mountain View, California-based internet giant would post revenue growth of more than 45% to around $56.16 billion. It is worth noting that the company, on average, has delivered an earnings surprise of over 43% in the last four quarters.

Alphabet’s better-than-expected results, which will be announced on Tuesday, July 27, would help the stock hit new all-time highs. Alphabet shares surged more than 50% so far this year. On Friday, the stock closed at a fresh record high at $2,660.30, up 3.57%.

MICROSOFT: The Redmond, Washington-based global technology giant would report its fiscal fourth-quarter earnings of $1.91 per share, which represents year-over-year growth of over 30% from $1.46 per share seen in the same quarter a year ago. The world’s largest software maker would post revenue growth of over 15% to around $44.1 billion, up from the $38.03 billion a year earlier.

“Channel work and our CIO survey point to building momentum across the Cloud, Hybrid and On-premise portfolio, which should power a solid Q4. While investors seek reassurances margin expansion continues into FY22, our model suggests durable high-teens EPS growth and upside in the shares,” noted Keith Weiss, equity analyst at Morgan Stanley.

Microsoft’s better-than-expected results, which will be announced on Tuesday, July 27, would help the stock hit new all-time highs. Microsoft shares have surged more than 30% so far this year.

APPLE: The consumer electronics giant would post its fiscal third-quarter earnings of $1.01 per share, which represents year-over-year growth of over 55% from $0.65 per share seen in the same quarter a year ago.

The iPhone manufacturer would post revenue growth of over 20% to around $73.3 billion up from $59.69 billion a year earlier. It is worth noting that the company has beaten earnings in all last eight quarters.

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE JULY 27

Ticker Company EPS Forecast
SIRI Sirius XM $0.07
IEX IDEX $1.62
PCAR PACCAR $1.40
MMM 3M $2.29
MSCI Msci $2.31
ENPH Enphase Energy $0.42
LSXMK Liberty Media SiriusXM C $0.36
LSXMA Liberty Media SiriusXM A $0.48
CVLT Commvault Systems $0.52
LOGI Logitech Internationalusa $0.90
MXIM Maxim Integrated Products $0.85
ST Sensata Technologies $0.88
CNC Centene $1.22
UPS United Parcel Service $2.79
TRU TransUnion $0.91
SHW Sherwin-Williams $2.67
IVZ Invesco $0.70
FELE Franklin Electric $0.80
LW Lamb Weston Holdings Inc $0.42
IQV IQVIA Holdings Inc $2.07
RTX Raytheon Technologies Corp $0.93
ENTG Entegris $0.79
LECO Lincoln Electric $1.48
FISV Fiserv $1.28
DTE DTE Energy $1.36
GE General Electric $0.03
ROK Rockwell Automation $2.09
WM Waste Management $1.19
SWK Stanley Black & Decker $2.88
ADM Archer-Daniels Midland $1.02
HUBB Hubbell $2.16
PNR Pentair Ordinary Share $0.79
BSX Boston Scientific $0.37
ECL Ecolab $1.21
PPBI Pacific Premier Bancorp $0.71
GPK Graphic Packaging $0.28
PHM PulteGroup $1.73
AWI Armstrong World Industries $1.05
RGEN Repligen $0.52
SFNC Simmons First National $0.52
SSTK Shutterstock $0.68
ABG Asbury Automotive $4.60
MPWR Monolithic Power Systems $1.69
CHRW C.H. Robinson Worldwide $1.33
MANH Manhattan Associates $0.43
GOOG Alphabet $19.33
CB Chubb $3.00
AMD Advanced Micro Devices $0.54
PGRE Paramount Group -$0.05
SBUX Starbucks $0.77
CAKE Cheesecake Factory $0.72
EGP EastGroup Properties $0.67
AXS Axis Capital $1.42
WSBC WesBanco $0.75
HIW Highwoods Properties $0.33
STAG STAG Industrial $0.12
VIST Vista Oil Gas $0.15
NAVI Navient $0.85
EHC Encompass Health Corp $0.98
OMAB Grupo Aeroportuario Del Centro Nort $11.31
NOV National Oilwell Varco -$0.13
V Visa $1.34
GOOGL Alphabet $19.24
BXP Boston Properties $0.57
AAT American Assets $0.11
MSFT Microsoft $1.91
JNPR Juniper Networks $0.39
BYD Boyd Gaming $0.90
MASI Masimo $0.90
MTDR Matador Resources $0.75
CSGP CoStar $0.23
FIBK First Interstate BancSystem $0.72
OLN Olin $1.44
EQR Equity Residential $0.19
EXR Extra Space Storage $1.06
EPR EPR Properties $0.06
USNA USANA Health Sciences $1.72
THG Hanover $2.38
UMBF UMB Financial $1.75
CHE Chemed $4.29
SYK Stryker $2.13
MDLZ Mondelez International $0.65
MAT Mattel -$0.06
PFG Principal Financial $1.52
AAPL Apple $1.01
TER Teradyne $1.75
VIV Telefonica Brasil $0.13
ASH Ashland $1.31
GLW Corning $0.51
PII Polaris Industries $2.15
JBLU JetBlue Airways -$0.74
RDY Drreddys Laboratories $0.55
XRX Xerox $0.40
CIT CIT $0.86
SID Companhia Siderurgica Nacional $0.86
RNST Renasant $0.77

Wednesday (July 28)

IN THE SPOTLIGHT: FACEBOOK

The world’s largest online social network is expected to report its second-quarter earnings of $3.04 per share, which represents year-over-year growth of about 70% from $1.80 per share seen in the same quarter a year ago. The Menlo Park, California-based social media conglomerate would post revenue growth of over 49% to around $28.0 billion.

“Monetization Potential: We are positive on FB’s monetization roll-out of Instagram as well as FB’s ability to continue to innovate and improve its monetization (Canvas Ads, Dynamic Ads, video). Combined with the high and growing engagement we see monetization upside going forward,” noted Brian Nowak, equity analyst at Morgan Stanley.

“Investing from Position of Strength to Drive Faster Long-Term Growth: We are modeling ~33% GAAP opex (excl. one-time items) growth in 2021, implying an incremental ~$18bn in opex. Our base case model implies opex per employee moderates in ’21 while FB hiring remains roughly flat on an absolute basis. We believe FB will grow EPS at a ~39% CAGR (2019-2022).”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE JULY 28

Ticker Company EPS Forecast
PTC PTC $0.63
URI United Rentals $4.90
ENSG Ensign $0.88
ALKS ALKERMES $0.12
TYL Tyler Technologies $1.63
AMG Affiliated Managers $3.85
SF Stifel Financial $1.38
FIX Comfort Systems USA $0.91
MSA MSA Safety $1.04
CBD Companhia Brasileira De Distrib $0.04
ALGT Allegiant Travel $2.55
GD General Dynamics $2.55
HES Hess $0.11
PFE Pfizer $0.97
QCOM Qualcomm $1.68
HP Helmerich & Payne -$0.56
UMC United Microelectronics $0.14
BA Boeing -$0.81
EQIX Equinix $1.87
DB Deutsche Bank $0.33
RJF Raymond James Financial $2.27
SAN Banco Santander $0.13
HNP Huaneng Power International $0.86
LRCX Lam Research $7.59
APH Amphenol $0.55
EVR Evercore Partners $2.71
PPC Pilgrim’s Pride $0.52
R Ryder System $1.38
NSC Norfolk Southern $2.97
FORM FormFactor $0.33
SHOO Steven Madden $0.31
SCI Service International $0.67
ADP ADP $1.14
MNRO Monro Muffler Brake $0.52
SLAB Silicon Laboratories $0.93
BXMT Blackstone Mortgage $0.60
PAG Penske Automotive $2.76
ROL Rollins $0.18
BCS Barclays $0.54
CAJ Canon $0.33
XLNX Xilinx $0.78
HUM Humana $6.82
AVY Avery Dennison $2.05
NYCB New York Community Bancorp $0.30
SCL Stepan $1.84
GSK Glaxosmithkline $0.55
CME CME $1.61
TEVA Teva Pharmaceutical Industries $0.59
MCD McDonalds $2.11
BSBR Banco Santander Brasil $0.20
EXP Eagle Materials $2.07
DT Dynatrace Holdings $0.15
EEFT Euronet Worldwide $0.65
SPOT Spotify -$0.38
OC Owens Corning $2.14
FMX Fomento Economico Mexicano Sab $14.29
BMY Bristol-Myers Squibb $1.89
VRTS Virtus Investment Partners $8.11
GRMN Garmin $1.26
SIX Swiss Exchange -$0.22
CCJ Cameco USA -$0.05
TDY Teledyne Technologies $2.70
IART Integra LifeSciences $0.66
GNRC Generac $2.30
MCO Moody’s $2.77
VRT Veritas Pharma $0.24
EPD Enterprise Products Partners $0.50
GIB CGI Group USA $1.08
TMO Thermo Fisher Scientific $5.47
TEL TE Connectivity $1.58
SLGN Silgan $0.83
PB Prosperity Bancshares $1.39
ODFL Old Dominion Freight Line $2.17
BG Bunge $1.62
LFUS Littelfuse $2.24
CNMD CONMED $0.62
CP Canadian Pacific Railway USA $1.00
AVB AvalonBay Communities $0.74
ALGN Align Technology $2.52
AM Antero Midstream Partners $0.19
CNO CNO Financial Group $0.54
CINF Cincinnati Financial $0.99
SSNC SS&C Technologies $1.14
MTH Meritage Homes $3.28
TTEK Tetra Tech $0.88
MKSI MKS Instruments $2.95
ROIC Retail Opportunity Investments $0.06
SIGI Selective $1.23
VAC Marriottacations Worldwide $0.89
PDM Piedmont Office Realty $0.05
IRBT Irobot $0.32
UDR UDR $0.01
EXAS Exact Sciences -$0.75
MOH Molina Healthcare $3.39
EQT EQT $0.04
MXL MaxLinear $0.50
IR Ingersoll Rand $0.42
AGI Alamos Gold $0.11
MAA Mid-America Apartment Communities $0.55
KGC Kinross Gold USA $0.13
ESRT Empire State Realty -$0.01
BSMX Santander Mexico Fincl Gp Sab Decv $0.17
CRUS Cirrus Logic $0.39
MUSA Murphy USA $3.21
RE Everest Re $8.58
VALE Vale $1.47
DRE Duke Realty $0.19
PYPL PayPal $1.12
NOW ServiceNow $1.21
CCS Century Communities $2.84
NLY Annaly Capital Management $0.27
TROX Tronox $0.52
XPO XPO Logistics $1.66
SAVE Spirit Airlines -$0.86
PAC Grupo Aeroportuario Del Pacifico $1.14
CHX ChampionX Corp $0.10
NUVA NuVasive $0.44
FBHS Fortune Brands Home Security $1.39
NOVA Nova Mentis Life Science Corp -$0.24
FB Facebook $3.04
ACGL Arch Capital $0.84
CONE CyrusOne $0.04
AR Antero Resources $0.20
AEM Agnico Eagle Mines USA $0.59
RBC Regal Beloit Corporation $2.07
PEGA Pegasystems -$0.18
AFL Aflac $1.28
PKI PerkinElmer $2.44
CHDN Churchill Downs $2.51
PEB Pebblebrook Hotel -$0.65
CTSH Cognizant Technology Solutions $0.96
HOLX Hologic $1.12
KRC Kilroy Realty $0.29
ALSN Allison Transmission $0.93
F Ford Motor -$0.04
ASGN On Assignment $1.29
HIG Hartford Financial Services $1.34
ORLY O’Reilly Automotive $7.51
ISBC Investors Bancorp $0.31

Thursday (July 29)

IN THE SPOTLIGHT: AMAZON.COM

The eCommerce leader for physical and digital merchandise is expected to report its second-quarter earnings of $12.24 per share, which represents year-over-year growth of about 19% from $10.3 per share seen in the same quarter a year ago.

The Seattle, Washington-based multinational technology giant would post revenue growth of about 29% to around $115 billion. The company has beaten earnings per share (EPS) estimates at all times in the last four quarters.

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE JULY 29

Ticker Company EPS Forecast
RLGY Realogy $1.08
VSTO Vista Outdoor $0.90
AGCO AGCO $2.20
PCG PG&E $0.28
MATX Matson $2.96
PRFT Perficient $0.79
NATI National Instruments $0.05
GPI Group 1 Automotive $7.59
CFX Colfax $0.53
CMS CMS Energy Corporation $0.46
LYG Lloyds Banking $0.14
MHK Mohawk Industries $3.59
EBS Emergent BioSolutions $1.41
TXT Textron $0.65
AUOTY AU Optronics $0.56
CMCSA Comcast $0.66
VLO Valero Energy $0.17
CG Carlyle $0.60
ABEV Ambev $0.02
NLSN Nielsen $0.36
MTD Mettler Toledo International $7.62
ADS Alliance Data Systems $3.68
FTNT Fortinet $0.88
FTV Fortive Corp $0.60
ASX Advanced Semiconductor Engineering $0.16
LKQ LKQ $0.75
ERJ Embraer -$0.26
TFX Teleflex $2.87
CARR Carrier Global Corp $0.55
CX Cemex Sab De Cv $0.16
ORAN Orange $0.18
CVE Cenovus Energy USA $0.26
MT Arcelormittal $2.52
MA Mastercard $1.74
KBR KBR $0.50
HOCPY Hoya Corp $0.85
YUM Yum Brands $0.96
EIX Edison International $1.02
EME EMCOR $1.58
AGIO Agios Pharmaceuticals -$1.35
KPELY Keppel Corporation $0.18
BUD Anheuser-Busch $0.87
CS Credit Suisse $0.22
DANOY Danone PK $0.45
SNY Sanofi $0.77
AZN Astrazeneca $0.45
TEF Telefonica $0.14
STM Stmicroelectronics $0.37
GRFS Grifolsbarcelona $0.26
THRM Gentherm $0.65
WWW Wolverine World Wide $0.49
CNX Consol Energy $0.24
CBRE CBRE Group Inc $0.77
TAP Molson Coors Brewing $1.35
VC Visteon $0.05
KEX Kirby $0.14
TREE LendingTree -$0.63
SAH Sonic Automotive $1.38
HSY Hershey $1.42
AMT American Tower $1.27
TW Towers Watson $0.39
OSK Oshkosh $2.25
MAS Masco $1.04
MO Altria $1.18
TROW T. Rowe Price $3.19
CTXS Citrix Systems $1.22
SPGI S&P Global Inc $3.26
BAX Baxter International $0.75
ICE Intercontinental Exchange $1.16
SO Southern Co. $0.79
NTCT Netscout Systems $0.18
GOL Gol Linhas Aereas Inteligentes -$0.91
CFR Cullen/Frost Bankers $1.56
CWT California Water Service $0.41
FSS Federal Signal $0.45
AER AerCap $1.37
COLB Columbia Banking System $0.66
COR CoreSite Realty $0.45
WEX WEX $1.95
TMHC Taylor Morrison Home $0.96
XEL Xcel Energy $0.56
FLEX Flextronics International $0.38
SAIA Saia $2.05
OSTK Overstock $0.67
IDA IdaCorp $1.21
FCN FTI Consulting $1.52
LAWS Lawson Products $0.60
WST West Pharmaceutical Services $1.74
MLM Martin Marietta Materials $3.85
MTSI MACOM Technology Solutions $0.53
LH Laboratory Of America $5.62
EXLS ExlService $1.01
BSAC Banco Santander Chile $0.50
AOS A.O. Smith $0.65
TPX Tempur Sealy International $0.56
HBAN Huntington Bancshares $0.32
WAB Westinghouse Air Brake Technologies $0.96
NOC Northrop Grumman $5.83
MMP Magellan Midstream Partners $1.02
HLT Hilton Worldwide $0.39
KDP Keurig Dr Pepper $0.37
OMCL Omnicell $0.82
BC Brunswick $2.14
MRK Merck & Co $1.40
TRP Transcanada USA $0.77
KIM Kimco Realty $0.12
IP International Paper $1.06
MDC MDC $1.99
PRLB Proto Labs $0.44
SGEN Seattle Genetics -$0.61
CPT Camden Property $0.34
SIMO Silicon Motion Technology $1.25
CUBE CubeSmart $0.21
DLB Dolby Laboratories $0.28
BIO Bio-Rad Laboratories $2.66
CC Chemours Co $0.94
ZEN Zendesk $0.16
FWRD Forward Air $0.97
AJG Arthur J. Gallagher $1.08
SPSC SPS Commerce $0.40
ROG Rogers $1.89
ERIE Erie Indemnity $1.51
CUZ Cousins Properties $0.20
WELL Welltower Inc $0.15
PTCT PTC Therapeutics -$1.81
AUY Yamana Gold USA $0.06
LPLA LPL Financial $1.67
WWE World Wrestling Entertainment $0.25
WRE Washington Real Estate Investment -$0.04
TXRH Texas Roadhouse $0.98
ATR AptarGroup $0.97
GLPI Gaming And Leisure Properties $0.57
OFC Orate Office Properties $0.14
RSG Republic Services $0.95
TEX Terex $0.60
X United States Steel $3.08
LBTYA Liberty Global Class A Ordinary Shares $0.46
KLAC KLA-Tencor $3.99
SWKS Skyworks Solutions $2.14
DXCM Dexcom $0.44
HUBG HUB $0.70
VCYT Veracyte -$0.25
POWI Power Integrations $0.75
LGND Ligand Pharmaceuticals $1.38
FHI Federated Hermes Inc $0.66
FSLR First Solar $0.55
CWST Casella Waste Systems $0.24
DLR Digital Realty $0.24
MTX Minerals Technologies $1.25
VRTX Vertex Pharmaceuticals $2.37
PFPT Proofpoint $0.49
ESS Essex Property $0.88
GILD Gilead Sciences $1.73
WERN Werner $0.87
MMSI Merit Medical Systems $0.45
LBTYK LIBERTY GLOBAL $0.46
AMZN Amazon $12.24
QGEN Qiagen $0.65
EW Edwards Lifesciences $0.55
NRZ New Residential Investment $0.31
MSTR Microstrategy $0.81
SM SM Energy -$0.26
SWN Southwestern Energy $0.21
TMUS T-Mobile Us $0.51
DECK Deckers Outdoor -$0.15
CORT Corcept Therapeutics $0.17
TWOU 2U -$0.16
SBH Sally Beauty $0.62
MPW Medical Properties $0.29
CACC Credit Acceptance $10.36
SJW SJW $0.64
SHEN Shenandoah Telecommunications $0.86
ES Eversource Energy $0.80
KMPR Kemper $1.33
WRI Weingarten Realty Investors $0.10
OPK Opko Health $0.02
SU Suncor Energy USA $0.39
APELY Alps Electric $0.11
ACI AltaGas Canada $0.69
EXPO Exponent $0.42

Friday (July 30)

Ticker Company EPS Forecast
KMTUY Komatsu $0.40
VFC VF $0.11
ABR Arbor Realty $0.42
PEXNY PTT Exploration & Production $0.16
LAZ Lazard $0.89
HRC Hill-Rom $1.35
XOM Exxon Mobil $1.00
COG Cabot Oil Gas $0.29
MFG Mizuho Financial $0.08
GCTAY Siemens Gamesa ADR $0.02
TU Telus USA $0.21
JCI Johnson Controls $0.83
CL Colgate-Palmolive $0.80
BAH Booz Allen Hamilton $0.97
TOTDY Toto $0.25
ASEKY Aisin Seiki Co $1.13
BBVA Banco Bilbaoizcaya Argentaria $0.06
E ENI $0.33
FMS Fresenius Medical Care $0.48
SMFG Sumitomo Mitsui Financial $0.21
SBGSY Schneider Electric SA $0.63
PG Procter & Gamble $1.09
CHD Church Dwight $0.70
ALNPY ANA Holdings ADR -$0.20
CVX Chevron $1.58
BNPQY BNP Paribas ADR $1.07
NMR Nomura $0.17
CHT Chunghwa Telecom $0.34
HUN Huntsman $0.81
LIN Linde PLC $2.55
AON AON $1.85
PNM PNM Resources $0.46
CAT Caterpillar $2.41
CPRI Capri Holdings Ltd $0.79
BLMN Bloomin’ Brands $0.66
CHTR Charter Communications $4.79
DAN Dana $0.50
ITW Illinois Tool Works $2.09
GWW Grainger $4.59
CERN Cerner $0.76
NWL Newell Brands Inc $0.45
POR Portland General Electric $0.37
ENB Enbridge USA $0.45
LYB LyondellBasell Industries $5.30
ABBV AbbVie $3.08
SHLX Shell Midstream Partners $0.35
WPC W. P. Carey $0.56
AVNT Avient Corp $0.81
WY Weyerhaeuser $1.37
IDXX Idexx Laboratories $2.02
BCPC Balchem $0.82
For a look at all of today’s economic events, check out our economic calendar.

Australian Regulator to Probe Amazon, Ebay Among Online Markets

By Byron Kaye

The Australian Competition and Consumer Commission (ACCC), which previously slapped the world’s toughest content licencing rules on Facebook Inc and Alphabet Inc’s Google, said it was now looking at retail as part of a wider examination of so-called Big Tech.

“Online marketplaces are an important and growing segment of the economy so it is important that we understand how online marketplaces operate and whether they are working effectively for consumers and businesses,” ACCC Chair Rod Sims said in a statement.

“We want to be sure that the rules that apply to traditional retail are also complied with in the online context.”

The ACCC would take submissions until mid-August with a final report due in March 2022, the regulator said.

An Amazon spokesperson said the company looked “forward to engaging with the ACCC on these important topics in the coming months”, while an eBay representative was not immediately available for comment.

The Australian regulator said it would examine the relationships between large online markets and third-party sellers and shoppers, including competition impacts and handling of data, complaints and reviews.

Amazon has not reached the market dominance in Australia since launching in 2017 that it experiences elsewhere, but still doubled sales in calendar 2020, the ACCC said.

Overall, Australian online purchases jumped 57% in 2020 for a record $50.5 billion spend amid a series of coronavirus lockdowns, it added.

The ACCC said it had received wide-ranging complaints, including the “quality of goods sold on marketplaces, the timeliness of payment remittance to sellers, how goods are put on display on marketplaces, and the level of support provided by marketplaces to consumers when disputes arise”.

The ACCC has been conducting a series of investigations in recent months as part of a broader Digital Platform Services Inquiry.

($1 = 1.3609 Australian dollars)

(Reporting by Byron Kaye; editing by Jane Wardell and Michael Perry)