Earnings Watch: Amazon earnings: Top-line growth is in focus for the seco…









Fresh off of Prime Day, Amazon.com Inc. is scheduled to report second-quarter earnings after the closing bell on Thursday and JPMorgan analysts think it’s time to shift focus to revenue after a string of quarters with blockbuster profit.

“We believe the key driver of Amazon’s share price over the past ~12-to-18 months has been its significant profit outperformance (+300 basis points operating income margin expansion in 2018 with ~$1 billion-plus profit beats in four of the last five quarters), which has outweighed revenue deceleration concerns and ongoing regulatory and antitrust scrutiny,” wrote JPMorgan in a July note.

Amazon’s












AMZN, -0.68%










  first-quarter earnings marked the fourth consecutive quarter that the e-commerce giant reported record profits.

“Looking forward, we expect the Amazon narrative to shift back more toward top-line growth in the second half of 2019, which in our view is important as Amazon remains a growth story and it’s too early for the company to be in harvest mode,” JPMorgan said.

Read: It’s Amazon’s Prime Day but other big retailers also benefit

Analysts led by Doug Anmuth think one-day shipping could drive revenue acceleration though they would be “surprised” at any “significant” profit beat given the cost of cutting the Prime shipping time down from two days.

Amazon said it would spend $800 million in the second quarter to cut the Prime shipping time in half.

JPMorgan rates Amazon stock overweight with a $2,200 price target. Amazon is one of the group’s top picks, and occupies a space on its U.S. Analyst Focus List.

See: Amazon Prime Day sales surpass Black Friday and Cyber Monday combined

Amazon has an average buy stock rating and average target price of $2,254.38, according to 47 analysts polled by FactSet.

Here’s what else to expect from Amazon’s earnings:

Earnings: FactSet expects Amazon to report earnings per share of $5.56, up from $5.07 last year.

Amazon has beaten FactSet EPS expectations for the last seven quarters.

Estimize, which crowdsources estimates from analysts, fund managers and academics, expects EPS of $6.15.

Revenue: Amazon is expected to report revenue of $62.48 billion, according to FactSet, up from $52.89 billion last year.

Amazon has beaten the FactSet revenue consensus the last two quarters.

Estimize is guiding for revenue of $63.19 billion.

Stock price: Amazon shares have rallied nearly 31% for 2019 to date, outpacing the S&P 500












SPX, -0.62%










 , which is up nearly 19%, and the Dow Jones Industrial Average












DJIA, -0.25%










 , which is up 16.5% for the period.

What analysts are saying:

Don’t miss: On Amazon Prime Day, searches for e-Bay, Best Buy, Walmart, and Target soared 255%

-Amazon has set its sights on a new category.

Instinet analysts led by Simeon Siegel highlighted Amazon’s launch of a Professional Beauty Store in its June 24 note.

In March, the company launched its private-label skincare brand, Belei. And it has since gotten into the celebrity makeup game, making Lady Gaga’s brand Haus Laboratories available for preorder during the Prime Day event, ahead of its September launch. Haus Laboratories will be available on Amazon exclusively.

“It remains to be seen whether this is actually going to trigger change or whether it is simply another of Amazon’s many press releases – many products are already widely available online, and on Amazon specifically,” said Instinet in June. “That said, beauty has largely been outside of Amazon’s share grab thus far, so a decision to make a broader push into the category shouldn’t be ignored.”

Also: Amazon Prime Day will showcase one-day delivery

-Customers still don’t go to Amazon for the big stuff

KeyBanc Capital Market’s second-quarter consumer survey found that while customers will purchase consumer electronics, clothes and toys from Amazon, they still won’t buy big items like mattresses and appliances. Groceries are also on the list of things shoppers are least likely to buy.

Still, the survey found that nearly two-thirds of U.S. households have a Prime member, and younger shoppers are adopting Prime at high rates.

-Prime one-day delivery is going to drive sales

Also: Facebook earnings seem immune to the Big Tech backlash – for now

Cowen analysts think the move from two-day shipping to one is going to make a big difference for Amazon sales, as much as $1.9 billion to $3.7 billion incremental U.S. gross merchandise volume (GMV) and ~$1.1 billion to $2.0 billion in incremental U.S. revenue in 2019.

“The impetus for the sensitivity is derived from 32% if U.S. Prime households suggesting they abandon units in their carts because they will not be delivered in a timely fashion per our proprietary survey data (which we haircut to ~22% based on ratio of total responses),” Cowen wrote.

Cowen rates Amazon stock outperform with a $2,500 price target.























Tonya Garcia is a MarketWatch reporter covering retail and consumer-oriented companies. You can follow her on Twitter @tgarcianyc. She is based in New York.


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Market Extra: Iran seizes British-flagged oil tanker — here’s what you ne…









A narrow waterway in the Middle East that marks the most sensitive transportation choke point for global oil supplies remained in focus Friday after Iran’s Islamic Revolutionary Guard said it seized a British-flagged tanker in the Strait of Hormuz, and another vessel lost contact with its owners and was reported to have abruptly changed course for Iran.

Read: Iran seizes British oil tanker

The action was the latest in a series of incidents in the region that have seen tensions rise between the U.S. and Iran following the Trump administration’s decision to withdraw from a 2015 nuclear deal and reimposed sanctions on Tehran. It also marks rising tensions between Iran and the U.K. after British authorities detained an Iranian oil tanker accused of breaching sanctions on Syria.

And it comes a day after President Donald Trump said a U.S. Navy ship destroyed an Iranian drone in the strait — an incident Iran has denied occurred.

See: Trump says U.S. warship destroyed an Iranian drone

The risk of a U.S.-Iran military conflict has been seen on the rise since spring. Last month, Iran shot down a U.S.-operated drone near the strait. Trump weighed retaliation but said he called off a strike at the last minute due to worries the fatalities wouldn’t be proportional to the loss of an unmanned aircraft.

Oil prices rose Friday following reports of the tanker seizure, but suffered steep weekly declines on signs of growing supplies and worries about the global demand outlook. Crude was also pressured earlier this week as U.S. and Iranian officials signaled scope for new negotiations, though the seizure of the tanker and the drone incident subsequently served to undercut those expectations.

West Texas Intermediate crude












CLQ19, +1.46%










the U.S. benchmark, ended 33 cents higher Friday at $55.63 a barrel, a 0.6% rise. Brent crude












BRNU19, +1.15%










 , its global counterpart, rose ,

Here’s a look at the Strait of Hormuz and why it’s a key concern for oil traders:

Where is the Strait of Hormuz?

The Strait of Hormuz is a narrow waterway that links the Persian Gulf with the Gulf of Oman and the Arabian Sea.

At its narrowest point, the waterway is only 21 miles wide, and the width of the shipping lane in either direction is just 2 miles, separated by a two-mile buffer zone.

Why is it important?

Oil tankers carrying crude from ports on the Persian Gulf must pass through the strait. Around 21 million barrels of oil a day flowed through it in 2018, equivalent to roughly a third of global seaborne oil trade and about 21% of global petroleum liquids consumption, the U.S. Energy Information Administration said last month.

Can the strait be bypassed?

Not easily. Saudi Arabia and the United Arab Emirates operate the only pipelines capable of shipping crude outside the Persian Gulf and the additional pipeline capacity to circumvent the strait, the EIA said. At the end of 2018, the total available crude-oil pipeline capacity for both countries combined was estimated at 6.5 million barrels a day. With 2.7 million barrels a day moving through the pipelines that year, around 3.8 million barrels a day of unused capacity would have been available to bypass the strait, the EIA said (see table below).
















Energy Information Administration


Could Iran close the strait?

The presence of the U.S. Navy’s Bahrain-based Fifth Fleet has long cast doubt on Iran’s ability to close the waterway, analysts said. In addition, the U.S. in May announced it was sending an aircraft carrier group, bombers and a Patriot antimissile battery to counter what the Trump administration said were “clear indications” that Iran and its proxies were preparing to possibly attack U.S. forces in the region.

The U.S. military presence would make it extremely difficult for Iran to choke off traffic, but the country “has the strategic depth to stage one-off attacks on vessels, not just in the critical chokepoints but also in the region’s relatively open waters,” said Helima Croft, global head of commodity strategy at RBC Capital Markets said, in a May research note.

Indeed, Friday’s action appeared to underscore Iran’s ability to disrupt traffic through the region.























William Watts is MarketWatch’s deputy markets editor, based in New York. Follow him on Twitter @wlwatts.


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Buy This, Not That: The best window unit ACs for $275 or less









These ACs are hot deals.

It’s getting hot in here — particularly if you live in the northeast or midwest. “Heat and humidity began building across a wide swath of the nation on Friday as dozens of cities declared heat emergencies and excessive heat warnings and advisories were posted by the National Weather Service,” AccuWeather wrote Friday. “However, the most extreme days in the heat wave are likely to be on Saturday and Sunday for many areas.”

With that in mind, MarketWatch looked at the window-unit ACs that the pros at Consumer Reports and Wirecutter tested and recommended, then found the ones that won’t give you sticker shock. Here are four for about $275 or less.


















Amana AC with remote control, $190

Consumer Reports recommends this highly affordable AC unit, giving it a 74 out of 100 rating with an “excellent” rating in terms of reliability. This model offers 6,000 BTU (the brand also offers units with BTUs up to 24,000 at slightly higher price points), three cooling speeds and a 5.9-ft. power cord. It can cool a 250-sq-ft room.


















Emerson Quiet Kool AC with remote control, about $200

This is another Consumer Reports-recommended pick, scoring 73 out of 100. The 6,000 BTU AC (which also comes in higher BTU levels) can cool a room up to 250 sq ft, has three speed choices and electronic temperature control from 62-86F. It’s also an Energy Star appliance so it could help you save a bit of loot on your cooling bill.


















Frigidaire Mini-Compact AC with Temperature-Sensing Remote Control, about $250

This is one of Wirecutter’s picks. It calls this 8,000 BTU AC a “capable performer” and notes that it can be easier to install than other ACs because it tends to be smaller and lighter. It’s an Energy Star appliance, can quickly cool rooms up to 350 sq ft and has a clean air ionizer that may remove pollen and impurities from the air.


















LG LW8016ER, with Remote Control, about $275

This is Wirecutter’s No. 1 pick for a window unit AC. They write: “This 8,000 Btu unit cools as efficiently and effectively as any model with an equal Btu rating and runs at a lower volume and deeper pitch than others at this price.” It is also an Energy Star appliance, so may help you save money, and offers three cooling and fan speeds.























Catey Hill is MarketWatch’s senior content strategist. She writes about how to upgrade your life, and helps readers find great deals on products and services. Follow her on Twitter @CateyHill.


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Metals Stocks: Gold loses steam after tapping fresh 6-year highs









Gold futures lost steam on Friday, ending lower for the session as the dollar strengthened. Prices, however, gained for the week after logging their first intraday climb above $1,450 an ounce in six years.

“Some of the hot money driving prices higher in futures and options has clearly closed out the week by taking profit,” said Adrian Ash, director of research at BullionVault. “Big picture, the switch to weaker interest rates and new stimulus looks set to keep gold on the boil.”

August gold trading












GCQ19, +0.03%










 fell by $1.40, or 0.1%, to settle at $1,426.70 an ounce, after touching an intraday high of $1,454.40. Friday’s intraday high and Thursday’s settlement were the loftiest for a most-active contract since mid-May 2013, according to Dow Jones Market Data.

Gold tallied a weekly gain of 1% based on its July 12 close, which represented its sharpest advance since the week ended June 21, FactSet data show.

On Friday, the U.S. dollar












DXY, +0.33%










was up 0.3% at 97.104 and headed higher for the week on Friday as gold futures settled, putting some pressure on dollar-denominated prices of the precious metal, while the 10-year Treasury note












TMUBMUSD10Y, +2.01%










was yielding 2.0494%.

Comments from New York Fed President John Williams, which have since been moderated by a Fed spokesman, were interpreted as endorsing an aggressive interest-rate cut at the Federal Reserve’s policy meeting later this month and sent bond yields and the dollar lower. Both of those market conditions are seen as supportive for gold gains.

“Markets took this as a signal that the Fed will act with force in July and deliver easing that is over and above what is expected, sending the implied probability for a 50 [basis point] cut soaring,” wrote Marios Hadjikyriacos, investment analyst at brokerage XM.com in a Friday note.

“Accordingly, the dollar fell with US bond yields, as stocks and gold roared higher. Yet, in what seemed like an exercise in damage control, the New York Fed quickly came out to clarify that Williams’ speech was not a signal about July, but an ‘academic’ view instead,”

Still, expectations for a decisive cut to rates was still seen as a strong possibility by markets.

Commodity experts and investors also have pointed to some $13 trillion dollars in sovereign debt that have negative yields, meaning lenders parking money receive less than their original investment, have helped to burnish gold’s appeal as a haven.

Meanwhile, increasing tension in the Middle East have added to the bullish theme for precious metals. On Thursday, news of the U.S. Navy shooting down an Iranian drone always added fuel to gold’s price moves; however, Iran has since denied that its drone was shot down.

“Summer 2019’s moonshot has finally found new interest from private investors in physical bullion,” said Ash. “Gross demand on BullionVault jumped 37% this week from the prior 52-week average. But profit-taking remains stronger, with gross selling 45% ahead of the prior 1-year average.”

Looking ahead, “the thin summer markets ahead could bring some big moves over late July and August,” Ash said.

Gold’s sister metal, silver saw its September contract












SIU19, -0.02%










 settled nearly a half cent lower at $16.195 an ounce after finishing at its highest since June 29, 2018 in the prior session. The metal marked a weekly gain of 6.3% based on last week’s settlement, which would represent the biggest weekly gain since a 10.1% weekly surge at the period ended July 1, 2016, according to FactSet data.

Read: Silver rallies to its highest in over a year, plays ‘catch up’ to gold’s gains

Among other metals, September copper












HGU19, +1.55%










 settled at $2.7525 a pound, up 4.3 cents, or 1.6%, for the session, ending 2.2% higher on the week. October platinum












PLV19, +0.32%










 rose $2.20, or 0.3%, to $852.10 an ounce, for a weekly rise of 2.1%, while September












PAU19, -0.13%










 shed $3.60, or 0.2%, to $1,508.30 an ounce, paring its weekly loss to 2.2%.

Read: Platinum is a bargain hidden behind the rally in palladium and gold

Exchange-traded fund SPDR Gold Shares












GLD, -1.71%










 fell 1.5% in Friday dealings, but traded up 0.7% for the week.
























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AUD/USD technical analysis: Aussie trading at daily lows after peaking at…

  • AUD/USD is retreating from the 2-month highs.
  • The level to beat for bears are 0.7030 followed by 0.7015.

AUD/USD daily chart

The Aussie is trading in a bear trend below the 0.7000 handle and the 200-day simple moving average (DSMA).


AUD/USD 4-hour chart

AUD/USD is pulling back down as the market is trading above its main SMAs. Bulls are losing steam as they need to reclaim the 0.7060 resistance in order to reach the 0.7100 handle.

 

AUD/USD 30-minute chart

 

AUD/USD is trading at daily lows as the market is testing the 100 SMA near 0.7040. The market is correcting down and a break through 0.7040 can lead to 0.7030 and 0.7015 support, according to the Technical Confluences Indicator.

Additional key levels

 

 

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The Fed: Trump piles on Fed after Williams slip-up










Bloomberg News/Landov


President Donald Trump and Fed Chairman Jerome Powell in the White House Rose Garden.

President Donald Trump on Friday kicked the Federal Reserve when it was down by highlighting a communication snafu from New York Fed President John Williams late Thursday afternoon.

In his remarks and subsequent walk-back, Williams seemed initially to support aggressive easing, only to have a spokesman try to downplay his comments.

In his speech, Williams argued that his research on the “zero lower bound” showed the Fed should act to cut interest rates at the first sign of illness and not wait for a disease to spread with benchmark interest rates are low.

Read: Fed’s wisest strategy is to cut rates at first sign of trouble

Investors took the comments as evidence the New York Fed President supported a half-point rate cut at the Fed’s next meeting on July 30-31. Fed funds futures quickly priced in greater than 50% chance of a 50 bp move.

After the sharp reaction, the New York Fed put out a statement trying to walk back the comments.

A New York Fed spokesman said Williams’s comments were “academic” and not about the current policy.

Trump tweeted Friday that he liked Williams’s initial stance and not the reversal.























Trump has been urging the Fed to cut interest rates all year. He has often bemoaned the fact that Chinese leaders have complete control over their central bank.

Ethan Harris, head of global economics research at Bank of America, called Williams’s remarks “very bad communication.”

In an interview on Bloomberg Television, Harris said Williams’s comments were not about a quarter-point or half-point move, but markets hear what they want and it is up to Williams to explain to the public what he was talking about, he added.























Greg Robb is a senior reporter for MarketWatch in Washington. Follow him on Twitter @grobb2000.


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EUR/JPY back below 121.00 on EUR-selling

  • EUR/JPY loses the grip and recedes to sub-121.00 levels.
  • Rising jitters on Italian politics weigh on EUR.
  • US Consumer Sentiment next of relevance.

The renewed selling bias around the European currency is now forcing EUR/JPY to abandon the 121.30 region and retreat to the sub-121.00 area.

EUR/JPY offered on Italian politics

The cross is extending the negative performance for the sixth session in a row on Friday, leaving behind the initial optimism that pushed it to as high as the 121.30 region, or 2-day lows.

EUR has given away its daily gains after the re-emergence of political concerns in Italy, where rumours of a government crisis involving Lega Nord and M5S have picked up pace as of later along with the probability of early elections.

In the meantime, the Japanese currency stays on the defensive on the back of the rebound in US yields, particularly after FOMC’s J.Bullard ruled out a large rate cut at this month’s meeting.

Data wise today, another poor print in the German docket saw Producer Prices coming in below expectations during last month. In the US, the advanced gauge of the US Consumer Sentiment for the current month is next on tap.

EUR/JPY relevant levels

At the moment the cross is receding 0.04% at 120.94 and a breakdown of 120.78 (low Jun.3) would expose 119.33 (low Feb.8 2017) and then 118.82 (2019 low Jan.3). On the upside, the initial hurdle aligns at 121.82 (21-day SMA) seconded by 122.32 (high Jul.10) and then 123.35 (monthly high Jul.1).

UK: A diminishing war chest – ING

James Knightley, chief international economist at ING, notes that the UK government borrowing increased more than expected in June thanks to both higher spending and weaker tax revenues.

Key Quotes

“In fact, this is the largest June budget deficit for four years and is nearly twice as big as what economists expected. Excluding banking groups, public sector net borrowing came in at £7.2bn and although the May deficit was revised down, cumulative borrowing for fiscal year 2019/2020 is £17.9bn – tracking nearly one third, or £4.5bn above the same period for fiscal year 2018/19.”

“The details show spending was up 7.2% year on year due to more outlays, but also higher borrowing costs. Rising retail price inflation has meant the interest paid on index-linked gilts has risen. Unfortunately, receipts rose just 1.5% YoY with corporation tax revenues actually falling, which underlines the rather weak state of the UK economy right now.”

AUD/USD on a steady decline to 0.7050 ahead of US data

  • Dollar strength, souring risk sentiment weighs down on the Aussie.
  • Rally in oil, copper prices slows the fall, as focus shifts to US Consumer Sentiment data.

The AUD/USD pair is on a gradual decline so far this Friday, extending the correction from three-month tops of 0.7082 reached in early Asia.

The spot is seen meandering near daily lows just below the midpoint of the 0.70 handle, as the demand for US dollar when compared to its main rivals remains undisputed, in the wake of less aggressive calls for a July rate cut by the Fed officials.

Moreover, a lack of substantial details about the telephonic conversation between the US and Chinese trade teams combined with no updates on the likely in-person trade meeting left investors in limbo, as they preferred taking profits off the table heading into the key US data and weekly closing.

Despite the corrective move lower, the commodity continues to derive support from the rally in oil and copper that helped slow the pace of declines. Looking ahead, the risk remains to the downside, as the US dollar recovery is likely to strengthen further, with the US Michigan Consumer Sentiment Index seen higher at 98.5 in July vs. 98.2 previous.

Also, any fresh developments around the US-China trade spat and Fedspeak will have a major influence on the price action.

Levels to watch