Trump advisor says China stole Apple technology, but provides zero evidence

07 January, 2019, 06:15 | Author: Corey Lynch
  • Image Source Saim_Ray010 Reddit

The rare warning from Apple sent a shudder through markets and confirmed fears among investors that the world's second-largest economy was weakening.

In the US, futures put the tech-dominated Nasdaq Composite Index on course to rise 1.2% at the open, with the S&P 500 and the Dow Jones Industrial Average set to climb 0.9%.

Netflix in particular benefited from a bullish call Friday by Goldman Sachs, which reiterated its "buy" rating and told clients in a research note Friday the stock price could rally 50% in the next 12 months (with the Wall Street firm setting a price target of $400 per share). Technology companies took their biggest losses in seven years. The tensions have dragged on for almost a year, slowing business and dragging down stock indexes worldwide. Tariffs and other trade sanctions could add to their difficulties.

Earlier in the week, a key measure signaled a contraction in Chinese manufacturing - delivering another blow to investors after a turbulent 2018.

And Apple CEO Tim Cook offered some of the starkest evidence yet of the negative consequences of the US-China trade war.

Apple now expects to achieve sales turnover of approximately $84 billion in the final quarter of 2018 (Q4), compared with the company's earlier revenue forecasts of between $89 billion and $93 billion. That's US$7 billion less than analysts expected, according to FactSet. Japan's Nikkei 225 index fell 2.3 percent on its first day of trading in 2019 as technology and electronics makers slumped on Apple's report that Chinese iPhone sales were slipping. While usually Apple would be celebrating another successful holiday season, things didn't quite go to plan this time around. Although the specific reason is highly arguable, he is right at least on one point: the Chinese market is critically important to Apple. -China trade dispute, a strong report on the market and encouraging comments from the head of the Federal Reserve about the central bank's interest rate policy all combined to cheer investors. They criticize his tactics but echo USA complaints about Chinese industrial policy and market barriers.

The Institute for Supply Management's manufacturing index fell to 54.1 in December from 59.3 in November, marking a two-year low. U.S. government bond prices, gold and high-dividend stocks like utilities all rose. The company also recently announced that it would stop disclosing how many iPhones it sold each quarter, and many investors felt that suggested the company was trying to hide signs that its sales were cooling off. US stocks have tumbled since October as investors anxious that the nation's economy might slow down dramatically because of challenges including the U.S.

Cook's letter serves as a stark reminder of the company's new normal: If you want to believe in Apple now, it's no longer because of iPhone sales, but despite it.

The biggest fear for Apple investors, Ives said, is a customer base that stalls out, failing to grow over the next few years and triggering a "nightmare scenario decline". The Fed, for example, could slow the pace of its interest rate increases if markets continue to drop.

Apple's troubles in China did not come as a great surprise to a number of analysts, given the open trade war and economic indicators.

"It is a well-known fact that Trump perceives the markets as a true barometer of his presidency", said Piotr Matys, a strategist at Rabobank International.



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