Asia Open: Mega-Cap Disappointment, Apple/Amazon Results, Commodities Brief, Cryptos edge lower

Mixed mega-cap tech earnings won’t provide Asia with a boost. A lot went wrong for big-tech today; Apple’s holiday outlook underwhelmed, inflation pain is more noticeable, and unfavorable exchange rates will hurt future sales.  The news was not all terrible for Intel shares after posting solid results alongside the announcement of a cost-cutting plan that will save $10 billion by the end of 2028. 

The key theme across this round of mega-cap results is that an earnings slump is here as inflation cripples an already weak consumer.    

Apple

Apple shares pared losses after CFO Maestri’s optimistic comments about seeing strong demand for products.  Apple’s earnings weren’t terrible like Amazon or Meta’s results.  Apple did post record revenue and delivered a three-cent EPS beat.  Service revenue, iPad revenue, and sales in China disappointed.

Macro headwinds are not killing iPhone sales just yet, but the outlook is clearly deteriorating.  Strong Mac sales as kids returned to school helped compensate for soft iPhone sales. 

Amazon

Amazon shares plunged after their outlook showed that households and corporations are watching their budgets.  Poor sales guidance of revenue between $140 billion to $148 billion was much lower than the $155.5 billion analysts were expecting.  The macro backdrop appears a lot worse than what we were hearing from companies that reported at the start of earnings season.   

Commodities Brief:

Crude prices are softening ahead of massive oil giant earnings reports.  Right now, energy traders want to see if Exxon and Chevron are going to show they are willing to commit more money into new wells.  The Biden administration is hoping big oil can provide a boost to the economy by increasing production and sending prices down. 

The oil market has benefited from a weaker dollar and hope for a strong Chinese economic rebound, but now the focus is shifting towards recession risks that are dragging down the crude demand outlook forecasts for the rest of the year.   

Gold prices continue to consolidate as exhaustion after what looks like could be another solid week of gains.  A short-term peak for the dollar appears to be in place for the dollar and that is good news for gold. 

Cryptos

Bitcoin softens towards the $20,000 level as risk appetite struggles to find its footing.  The macro backdrop got a lot worse this week after a wild week of earnings and economic data. Cryptos will likely consolidate further until next week’s FOMC meeting, which means Bitcoin might give back the key $20,000 level.   

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