Eq: Large Cap

(Washington)

The markets have been running scared all week. The Dow has lost over a 1,000 points, and much of the concern seems to be centered on global trade. One of the key reasons why is that President Trump is planning to raise tariffs on steel and aluminum. Trump sees trade wars as “good, and easy to win”. This view has investors worried about a disruption to status quo global trading patterns.


FINSUM: So Trump’s quote was not fully reported by most, and actually reads “When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win”. Frankly we think the US has gotten the raw end of many trade deals over the last few decades and can throw its weight around much more to get a better deal.

(New York)

All those worried that another bout of volatility is around the corner should definitely pay attention to Goldman’s latest announcement. The bank says stocks may drop 25% this year, but the call has one important caveat—Treasury yields would need to reach 4.5%. Goldman only thinks yields will rise to 3.25% by year-end, but a “stress test” scenario where they rise to 4.5% “would cause a 20 percent to 25 percent decline in equity price”, says Goldman’s research team. Some think stocks will rise until yields reach the 3.5 to 4% range.


FINSUM: Yields are not going to get anywhere close to that level unless the Fed goes crazy with hikes, which we highly doubt. There is a big pool of natural bond buyers in retirement age, and we think that will allow yields to rise only slowly.

(San Francisco)

Apple is set to release, not one, not two, but three new iPhones later this year. Bloomberg describes the phones this way, saying “the largest iPhone ever, an upgraded handset the same size as the current iPhone X and a less expensive model with some of the flagship phone’s key features”. The iPhone X has not sold as well as forecast, and there has been consumer pushback on price, which may have led to the change in lineup. “This is a big deal”, says a venture capitalist and Apple commentator, “When you have a measurable upgrade in screen size, people go to update their phone in droves. We saw that with the iPhone 6, and we think this is setting up to be a similar step up in growth”.


FINSUM: We think this is a smart strategy, but we are surprised that Apple is caving in on pricing.

Page 82 of 96

Contact Us

Newsletter

Subscribe

Subscribe to our daily newsletter

Top