Apple's Decline Worries Market Participants

Economic data

- (US) Goldman Economist Chain Store Sales w/e Aug 1st w/w: -0.5%; y/y: +1.5%
- (BR) Brazil Jun Industrial Production M/M: -0.3% v -0.7%e; Y/Y: -3.2% v -5.0%e
- (US) Weekly Redbook Sales w/e Aug 1st: +1.7% y/y, July MTD m/m: +0.2%; July MTD y/y: +1.3%
- (EU) Weekly ECB Forex Reserves w/e July 31st: €261.9B v €262.1B prior
- (MX) Mexico May Gross Fixed Investment: 2.3% v 2.5%e
- (RU) Russia July CPI M/M: 0.8% v 0.9%e; Y/Y: 15.6% v 15.8%e; CPI YTD: 9.4% v 9.5%e
- (RU) Russia July CPI Core M/M: 0.4% v 0.5%e; Y/Y: 16.5% v 16.6%e
- (CA) Canada July RBC Manufacturing PMI: 50.8 v 51.3 prior
- (US) July ISM New York: 68.8 v 63.1 prior
- (US) Aug IBD/TIPP Economic Optimism: 46.9 v 47.6e
- (US) Jun Factory Orders: 1.8% v 1.8%e; Factory Orders Ex Trans: 0.5% v 0.1% prior

The rollercoaster Shanghai Composite gained 3.7% earlier today, although there has not been much in the way of follow-through to European or US equity trading. Note that all three leading US equity indices are in the red even as the 10-year UST sells off a bit, with the yield up 2.3 bps to trade around 2.171%. The DJIA is down 0.11%, the S&P500 is down 0.03% and the Nasdaq is off 0.20%.

The gains in Shanghai are helping certain commodities. Crude prices are bouncing higher, with WTI up nearly 1.8% to trading around $46 and Brent up 1.3%, back above the psychologically important $50 threshold. After touching a six-month low on the LME yesterday, copper is also moving higher.

Shares of Apple have lost nearly 6% since the open of trading on Monday morning, and have fallen below the 200-day moving average for the first time since September of 2013. There were reports out yesterday that Apple Watch shipments declined in June (and could rise in Q3). In addition, a Canalys report asserted that in Q2 Apple moved to third place for China smartphone market share, with Xiaomi in first place and Huawei in second. Apple component suppliers Skyworks Solutions, Avago and Qorvo have seen accelerating losses over the last three sessions, with SWKS down 11% since last Friday, QRVO off 6% and AVGO down 4%.

Shares of insurance giants AIG and Allstate are weighing on indices this morning, with AIG down 5% and ALL down 12%. Allstate's second quarter earnings widely missed expectations as operating income fell 41% y/y as lower auto insurance margins and seasonally high catastrophe losses resulted in a small underwriting loss. AIG's quarter was not too shabby, but Allstate's bad showing seems to be pulling down the shares. In other earnings, Sprint is up 5%, well off its premarket highs, after the company turned in a profit on a big gain in margins and saw healthy net adds growth.

Shire disclosed this morning that back in mid-July, offered to acquire Baxter spin-off Baxalta for $45.23/shr in stock, in total deal valued around $30B. Baxalta shareholders were offered 0.1687 Shire ADRs for each Baxalta share. Baxalta, which only completed the spin-off from Baxter a month ago, declined to engage in substantive discussions regarding the proposal. At this valuation, the deal would be the fifth-largest of the year, just behind the Broadcom acquisition.

Looking Ahead

- 16:30 (US) Weekly API Oil Inventories
- 17:00 (KR) South Korea July Foreign Reserves: No est v $374.8B prior
- 17:00 (CO) Colombia July PPI Domestic M/M: No est v 0.9% prior; Y/Y: No est v 2.1% prior
- 18:45 (NZ) New Zealand Q2 Unemployment Rate: 5.9%e v 5.8% prior
- 19:01 (UK) July BRC Shop Price Index Y/Y: No est v -1.3% prior
- 20:30 (TW) Taiwan July CPI Y/Y: -0.6%e v -0.6% prior; WPI Y/Y: -9.4%e v -9.3% prior
- 21:00 (PH) Philippines July CPI M/M: 0.2%e v 0.1% prior; Y/Y: 0.8%e v 1.2% prior; CPI Core Y/Y: 1.9%e v 2.0% prior
- 21:35 (JP) Japan July PMI Services: No est v 51.8 prior; PMI Composite: No est v 51.5 prior
- 21:45 (CN) China July Caixin PMI Services: No est v 51.8 prior; PMI Composite: No est v 50.6 prior
- 22:15 (SG) Singapore July PMI Services: No est v 51.1prior
- 22:30 (HK) Hong Kong July PMI Services: No est v 49.2 prior
- 22:35 (CN) China to sell CNY30B in 10-Year Bonds