In Awe of Apple's Huge Week and Europe Bank Whiffs: Taking Stock

(Bloomberg) -- Stock futures are slightly lower, 10-year yields are pressing lows at ~2.93%, and the dollar is higher ahead of the jobs and wage data. Nothing game-changing has come out of the China talks yet, so those nerves remain for now (and likely into the weekend). Meanwhile, eco data in Europe continues to come in weaker, with retail sales and PMIs missing the mark today.

Apple is up more than 1% pre-market (and poised for a 10% gain on the week) after Buffett said Berkshire bought 75m more shares in the quarter, which would make it the third largest holder; we'll have TOPLive coverage for Berkshire's annual meeting tomorrow morning.

We've had another rough morning for earnings, as has been the case for much of this week, with a slew of overseas banks tumbling on a host of concerns: HSBC falling ~3% in London on rising costs, while BNP Paribas dropped as much as 3.5% in Paris and SocGen plunged more than 7% on disappointing trading income figures. Watch for the potential spillover to the U.S. bank stocks today, especially with yields heading lower.

Air France, Swiss Re and BMW are also lower this morning after results, while BASF is up ~1% on a slight beat. In the U.S., we've seen a few positive reactions in names like Pandora +13%, Shake Shack +11%, and CBS up ~2%, though the big Kahuna in Alibaba is what we're all waiting for.

Fearing ‘Good' Data

There's been a lot of talk about whether whether a "good" result in the jobs/wage data will be bad for stocks, i.e., if the payrolls are significantly above estimates, will stocks turn south as expectations for rate hikes get ratcheted up? If we get a scorching hot wage number, will 10-year yields shoot back up to 3% on inflation fears and spook stocks off a cliff (flashback from the early Feb meltdown in the markets)?

The numbers you need to know:

• April payrolls estimate 192k (vs Bloomberg Economics est. 215k), and it'll be key that this print doesn't come close to the weak March number of 103k
• April average hourly earnings y/y of 2.7%, the same figure we saw in March
• April unemployment rate 4.0%, which would be a smidge below the 4.1% level in March and the lowest reading since December 2000

About Yesterday Morning's Selloff

At the risk of sounding like a broken record, we had yet another session of negatives that hit the market. Things looked extremely ugly early on, when the S&P 500 was down more than 40 handles, but we bounced decisively off the 2,600 level (and the 200-day moving average at ~2,615) to eke out a minor loss on the day. Here are some of the worries from the day:

• We added to a string of crippling sessions for earnings, where names like Tesla, Spotify, Fitbit, NXP Semi, AIG, Intercontinental Exchange, Avis, Huntington Ingalls, Apache and Cardinal Health all got slammed
• Another business sentiment data point that missed the mark, with the ISM Non-Manufacturing coming in at 56.8 versus estimate 58.0, which follows ISM Manufacturing from earlier the week that disappointed
• Weak financials tape with banks underperforming on the yield dip and insurers having another brutal session on earnings with S5INSU now down over 4% in two days
• No concrete headlines out of the China talks that changed the narrative; one White House economist alluded to a "fairly positive" first day, but what is any trader supposed to do with that?
• Escalating geopolitical tensions after Iran ratcheted up its criticism of Trump's stance on the nuke deal and said the Islamic Republic wouldn't renegotiate the accord; also this story: "Israel and Iran on Path to War as Mideast Tinderbox Awaits Spark"
• Dollar strength in the morning, which nearly eclipsed Wednesday's high (the peak of 2018), and parts of the afternoon

Notes From the Sell Side

The biggest call by far is New Street Research rolling out coverage of the technology infrastructure space, with ex-Sanford Bernstein analyst Pierre Ferragu now the biggest bull on Tesla (too bad this wasn't before the earnings call on Wednesday night!), with a fat price target of $530, or upside of more than 85% to the last close. His price targets are also the highest on the Street for Nvidia, Broadcom, and Palo Alto Networks, while he is more subdued on market perform-rated Apple. Ferragu is scheduled to appear on Bloomberg TV at 9:30am to discuss.

Tick-by Tick Guide to Today's Actionable Events

• Today -- PTLA Pdufa for AndexXa resubmitted NDA
• 7:00am -- GOGO, RUTH earnings
• 7:30am -- CBOE, CELG earnings; BABA earnings call
• 8:00am -- AXL, LNG, AGIO earnings
• 8:00am -- NCLH investor conference
• 8:30am -- Nonfarm Payrolls, Hourly Earnings, Unemployment Rate
• 8:30am -- CBOE earnings call
• 12:00pm -- Fed's Dudley speaks with Bloomberg's Matt Winkler
• 3:00pm -- Fed's Williams speaks at Hoover Institution Policy conference
• 5:30pm -- Fed's Quarles speaks on liquidity regulation, Fed balance sheet
• 8:00pm -- Fed's George, Bostic, and Kaplan speak at Hoover conference
• Tomorrow -- Berkshire Hathway annual meeting at 9:45am

To contact the reporter on this story: Arie Shapira in New York at ashapira3@bloomberg.net.

To contact the editors responsible for this story: Chris Nagi at chrisnagi@bloomberg.net, Steven Fromm

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