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Speaker 3: Joining us for a closer look at Apple is Marabell Lopez,
Speaker 3: principal analyst at Lopez Research. So we had some gains
Speaker 3: in the after hours, so perhaps we can start from that.
Speaker 3: The stock was up around six percent in late training,
Speaker 3: albeit I'd imagine with fairly light light volumes and such.
Speaker 3: And we have maybe three things to talk about, the performance,
Speaker 3: the stock bypack, and the dividend. How do you think
Speaker 3: that sits with investors? And what was most important?
Speaker 1: I think everyone was surprised by the performance of the quarter.
Speaker 1: It was guided as a potentially weak quarter, so we
Speaker 1: were all expecting that. We had had many research reports
Speaker 1: that were coming out of China that said that Apple
Speaker 1: was losing tremendous share in that market. They frankly came
Speaker 1: into the call and said that they had done very
Speaker 1: well in mainline China, so I think that was a
Speaker 1: big surprise for one in a big win for Apple.
Speaker 1: In some ways, they didn't quite pull a rabbit out
Speaker 1: of the hat, which is always what one expects from Apple,
Speaker 1: but they did a very solid job of navigating the quarter.
Speaker 1: It was still a mixed bag.
Speaker 2: Yeah, Greater China revenue was better than expected. I think
Speaker 2: we can agree on that. It's still about one and
Speaker 2: a half billion below where we were a year ago,
Speaker 2: So the year over year, I think that's negative eight
Speaker 2: point one percent. Have we kind of seen an inflection
Speaker 2: point here where Apple and China are concerned.
Speaker 1: I don't believe.
Speaker 3: So.
Speaker 1: I think we are still in a very tenuous position
Speaker 1: for Apple in the China market. It's going to take
Speaker 1: us at least a couple of quarters to figure that out,
Speaker 1: to see if there's any leveling out of that. Huiawe
Speaker 1: had a very strong quarter, so that certainly gives pause.
Speaker 1: It's an extremely competitive market and many of us are
Speaker 1: waiting to see what happens in the coming weeks with
Speaker 1: the software announcements that are expected at WWDC, the Big
Speaker 1: Apple Show.
Speaker 3: Some might have had an inkling that the performance would
Speaker 3: not be so bad in that if you looked at
Speaker 3: Qualcom's earnings, and also Samsung the other day sort of
Speaker 3: spoke about you know, obviously returning to profit on semiconductors
Speaker 3: was the biggest thing for Samsung, but they also sort
Speaker 3: of indicated that smartphone sales were reasonably solid. So I'm
Speaker 3: wondering whether or not, you know, investors here are waiting
Speaker 3: on the next big thing, or if they're just waiting
Speaker 3: for us to see gradual recovery in the smartphone market.
Speaker 1: I think we're the smartphone market have the same hit
Speaker 1: that the PC market did, but it certainly had everyone
Speaker 1: at some point in time experiencing some softness, and really
Speaker 1: a lot of that is timed to their releases, when
Speaker 1: they have their big flagship releases, and if they're a
Speaker 1: little earlier or a little later. So I do expect
Speaker 1: and even Apple, when they gave their guidance, expected they'd
Speaker 1: be up. They did not give guidance specifically on iPhone,
Speaker 1: but if they're expecting growth, iPhones are such a huge
Speaker 1: portion of the Apple revenue that we have to imagine
Speaker 1: that they're at least expecting some leveling. And they gave
Speaker 1: some good guidance in the emerging markets. The emerging markets
Speaker 1: have always been a bit of a wild card. It's
Speaker 1: the growth market for everybody in the smartphone business, and
Speaker 1: the issue is really in emerging markets, will people buy
Speaker 1: premium flagship phones, which is the market that Apple really
Speaker 1: tries to address.
Speaker 2: The other thing that was better than forecast was the
Speaker 2: revenue for Apple services. I think about six hundred million
Speaker 2: of of what the street was looking for. Is it
Speaker 2: a problem for this company when we begin, as one analyst,
Speaker 2: to put it to focus on the services side at
Speaker 2: the and maybe put the hardware in the back or
Speaker 2: in the rear view a little bit.
Speaker 1: I actually don't think so. I think that that is
Speaker 1: the nature of a diversified portfolio. Even if you look
Speaker 1: at Nvidia at their last GtC conference, you know, obviously
Speaker 1: a strong GPU hardware focused company spent a tremendous amount
Speaker 1: of time talking about building a software stack and creating
Speaker 1: a software revenue stream. So I think that that is
Speaker 1: a good portion of where Apple expects to see its
Speaker 1: long range growth. That doesn't mean that the smartphone market
Speaker 1: will fade. It also indicates, you know, we're talking about services,
Speaker 1: but really a lot of what's happening in smartphones now
Speaker 1: is not hardware based. Everybody has their chips. Everybody has
Speaker 1: a solid smartphone portfolio, with the exception there may be
Speaker 1: some of their full some that aren't. So a lot
Speaker 1: of the areas they're differentiating in right now happen to
Speaker 1: be around the AI software that runs on the device.
Speaker 1: So Apple already has AI capable chips in their device. Now.
Speaker 1: The question is, and that's what everybody's waiting for in
Speaker 1: the next coming weeks, are they going to make a
Speaker 1: big play that says that they're using a lot of
Speaker 1: AI to do things like help people take better photos
Speaker 1: with their camera.
Speaker 3: Right, you've got the WWDC, the Worldwide Developers Conference coming
Speaker 3: up from Apple. I suppose they couldn't really say too
Speaker 3: much in this earnings report about what might be coming.
Speaker 3: Do you expect something kind of shocking and strong or
Speaker 3: just on the incremental in advancement.
Speaker 1: I expect Apple to come in with on par features
Speaker 1: that are AI driven at WWDC, which is one of
Speaker 1: the things that they've been giving a lot of flak on.
Speaker 1: And frankly, if they come in with on par or
Speaker 1: slightly better, they'll actually do very well. They have a
Speaker 1: strong loyal base. The iOS base is actually doesn't move
Speaker 1: that much really, so this is one of the things
Speaker 1: that if they can just keep pace with innovation, they
Speaker 1: could do very well in the market.
Speaker 2: It's kind of interesting Microsoft, you know, kind of works
Speaker 2: with open Ai. Then you've got Amazon and Alphabet together
Speaker 2: working with Anthropic. Has Apple kind of missed an opportunity
Speaker 2: here now very quickly Marble not to have partnered with
Speaker 2: an AI firm outside of the company.
Speaker 1: It's still extremely early days. There are many large language
Speaker 1: models or foundation models being built every day. There's still
Speaker 1: billions that need to be invested in those guys to
Speaker 1: keep them going. So I still think Apple has a
Speaker 1: play yet there to announce.
Speaker 3: Marble, thanks so much for joining us, Marble. Lopez, Principal
Speaker 3: analyst at Lopez Research. Well the end touched the three
Speaker 3: week high against the greenback in overnight trading, the currency
Speaker 3: really lifting its gains against the green back, the currency
Speaker 3: likely facing some official support and to discuss this, we're
Speaker 3: joined by Michael Wilson, Bloomberg FX rates market reporter and
Speaker 3: strategist to join us here on the program. So we've
Speaker 3: moved from about one sixty this past weekendto one fifty
Speaker 3: three and this range now one fifty two one fifty
Speaker 3: three could be a key level I suppose, because it
Speaker 3: was seen as resistance before. So how do we see
Speaker 3: it moving here in the short term and how much
Speaker 3: do we know about whether or not there has actually
Speaker 3: been intervention?
Speaker 4: Hi, Matte, thanks for having me. Well, the first things first,
Speaker 4: I think that the move today we actually made a
Speaker 4: new load down there one fifty two eighty eight not
Speaker 4: far from there right now, And I think the market
Speaker 4: has probably given up the ghost on the week in
Speaker 4: terms of taking it higher, just as buy the dip mentality.
Speaker 4: I think that the the price action itself with it
Speaker 4: without confirmation of intervention is enough to scare away dollar
Speaker 4: bulls for the moment, even heading into a non farm
Speaker 4: payroll number to nine. But you're quite right that a
Speaker 4: little bit further down that one fifty two level, which
Speaker 4: was previous resistance, that was also around about the level
Speaker 4: back on April tenth, twenty US hot CPI print landed,
Speaker 4: and that's when you know it all really started, I suppose.
Speaker 4: I know it's been building up for a while, but
Speaker 4: that was the catalyst, as it were, to really get
Speaker 4: those dollar bulls going and pushed up above that one sixty.
Speaker 4: You know, on Thursday we saw a nasty move again
Speaker 4: after Powell spoke in his press conference, and again the
Speaker 4: short priced favorite is intervention. Looking at the at the
Speaker 4: current account balances, I think they the contention is that
Speaker 4: they sold another twenty three billion dollars worth of yen
Speaker 4: that in that moment we won't obviously won't find out
Speaker 4: to the end of the month. But you know, if
Speaker 4: it walks like a duck and quacks like a duck,
Speaker 4: well probably is so. And what's been quite surprising just
Speaker 4: of late is that most of the commentary that you read,
Speaker 4: we get everything, as you know, from all the banks
Speaker 4: around the world, they've just they're casually just expressing that
Speaker 4: it was intervention. They're not hiding behind you know, possible
Speaker 4: maybes or rumored or any sort of qualifying phray, so
Speaker 4: just you know, calling it out as intervention, which is
Speaker 4: actually surprising because you know, we're very careful about those
Speaker 4: things ourselves, when most of the banks are too. But
Speaker 4: they resigned to the fact that that's probably the only
Speaker 4: thing that could have done or could have caused what happened.
Speaker 2: It's kind of an interesting week, Mike, because there's been
Speaker 2: this this spurt of volatility that began during the holiday
Speaker 2: on Monday in the Japanese session in terms of dollar yen.
Speaker 2: Is volatility something that we've got to be dealing with
Speaker 2: a lot more now than let's say we've had in
Speaker 2: the recent past.
Speaker 4: Well, it's the overnight volatility was bid all week around
Speaker 4: about twenty four twenty five volst just under thirty vold,
Speaker 4: which is a lot for dolly and does have this
Speaker 4: seasonal spike that happens for say a non farm payroll
Speaker 4: or Bank of Japan meeting, but only this week, only
Speaker 4: like this this morning post New York has overnight volatively
Speaker 4: come off, which is actually unusual in itself in that
Speaker 4: we're just ahead of a nonfold non farm payroll print.
Speaker 4: But I do think the market's probably unless it's a
Speaker 4: really wild result there, I think the market's resigned to
Speaker 4: the fact that, you know, they're not initiating any new risk,
Speaker 4: they just want to get the weekend started, because normally
Speaker 4: that volatility would be north of twenty But I think
Speaker 4: it's down around fourteen now, so it's down five ticks
Speaker 4: since New York close, and that probably speaks to the
Speaker 4: event of the market's probably surrendering a little bit to
Speaker 4: the Bank of Japan or whoever is out there.
Speaker 2: Well, it's a holiday in Japan today too. That may
Speaker 2: account for some of the pullback, right, it is.
Speaker 4: And it is a start of Golden Wake, which is
Speaker 4: like four or five holidays in a row. And I
Speaker 4: think that that's one of the drivers of the Bank
Speaker 4: of Japan that they wanted to get this thing down
Speaker 4: and sorted before you know, the market's got very thin
Speaker 4: for the next few days.
Speaker 3: Yeah, because Monday is a holiday too, and it is Japan,
Speaker 3: so yeah, it really does look like you know, it's
Speaker 3: hard to figure here. I still think the dollar is
Speaker 3: really driving this, right, because you had a big drop
Speaker 3: in the dollar, and a lot of that was tied
Speaker 3: to a kind of dubbish fed meeting and comments from
Speaker 3: from your own pal and at least at the moment,
Speaker 3: as long as the dollar is weakening, yeah, why why
Speaker 3: get out there and you know, and try to bet
Speaker 3: on weakness.
Speaker 4: In the end, I think you're right. I think that
Speaker 4: they were if they were in on the Thursday after Powell,
Speaker 4: that was very opportunistic on their part. They timed it
Speaker 4: well and they got a lot of bang for their buck.
Speaker 4: But if we get a fundamental, good fundamental from let's
Speaker 4: say a soft print tonight, it's best to let the
Speaker 4: fundamentals work their way through the market. You know, we
Speaker 4: might wake up and see Dolly in nearer to one fifty,
Speaker 4: you know, by about Tuesday when Japan returns, treasuries reopen.
Speaker 4: In Asia, there's no treasury market right now, or no
Speaker 4: cash treasuries. So I think that, you know, we've got
Speaker 4: ourselves a good catalyst to trade off tonight, and you know,
Speaker 4: hopefully that suits the boj and they, you know, just
Speaker 4: stand aside and let the market lick its wounds for now.
Speaker 2: Give me your take on the Korean one, because I
Speaker 2: see it strengthening quite a bit. I mean, obviously, intervention
Speaker 2: is not the story in South Korea, although they've been
Speaker 2: dealing with kind of the same effect on their currency
Speaker 2: that Japan has, and again it's the result of just
Speaker 2: this amazing dollar strength. What do you think is happening
Speaker 2: with the Korean one right now? As strong as it is.
Speaker 4: I think that it's I wouldn't say it's a collective
Speaker 4: effort or coordinated bony measure, but there is certainly a
Speaker 4: They're just every bit as vigilant, I suppose as Bank
Speaker 4: of Japan, and I think that maybe the Bank of
Speaker 4: Korea is probably leveraging off that and using the sentiment
Speaker 4: as it were, where there's like this newfound respect for
Speaker 4: central banks to maybe not take them on. And but
Speaker 4: there is that by the dip mentality in dollar Korean
Speaker 4: as much as there is in dolly In. So you know,
Speaker 4: if the you know, I'm not as close to say
Speaker 4: that Japanese the Korean economy as the Japanese, but if
Speaker 4: the the Korean economy does turn around, you know, and
Speaker 4: any any time, say the next quarter, you might see
Speaker 4: this that high of fourteen hundred, It might be, you know,
Speaker 4: the equivalent of the one sixty for dolly In, and
Speaker 4: we might not see there be there for a few days,
Speaker 4: a few weeks.
Speaker 3: Thank you, Michael. Michael Wilson joining US Bloomberg FX and Rates,
Speaker 3: Markets Reporter and Strategies. Cherry Spath, Founder and Chief investment
Speaker 3: Officer of Zoomo Wealth. Terry, great to have you on
Speaker 3: the program. It seems like earnings and a patient fed
Speaker 3: are enough, at least at the moment, to keep the
Speaker 3: plate spinning here in markets. Not everyone agrees of course,
Speaker 3: but the market has shrugged off this many correction that
Speaker 3: we've had, and it's hard to argue with the markets.
Speaker 3: I suppose, how would you characterize, you know, your arguments
Speaker 3: on the path forward.
Speaker 5: Yeah, thanks for having me on lots so on path
Speaker 5: of that question, we are constructive on the US stock
Speaker 5: market kind of as a broad statement, where I would
Speaker 5: say definitely more constructive on large cap stocks versus small caps.
Speaker 6: It's just been, you know, a large and in charge.
Speaker 5: Kind of market, and you know, a lot of that,
Speaker 5: as you pointed out, has been driven by earnings. We've
Speaker 5: had some very strong earnings reports so far in Q one,
Speaker 5: particularly in the tech sector as well as some of
Speaker 5: the other sectors out there. I do think that you
Speaker 5: need the bond, you know, the Federal reserve to be accommodative.
Speaker 5: I don't think earnings quite enough to overcome you know,
Speaker 5: some of these spears that have been floating around about
Speaker 5: potential FED rate hikes. We don't think that's going to happen.
Speaker 5: We're quite positive it's not. But that doesn't mean that
Speaker 5: it's not a risk out there, and it's not a concern.
Speaker 5: But overall, I mean, I think we're seeing really strong earnings.
Speaker 5: We were going to continue to see strong earnings. We're
Speaker 5: seeing a breath widening in large cap side of the
Speaker 5: US stock market, and so you know, we'll have to
Speaker 5: keep watching the Fed as we have been for a
Speaker 5: long time now as investors.
Speaker 2: Yeah, yesterday Chair Powell seem to take the notion of
Speaker 2: a rate hike off the table, which is not the
Speaker 2: same thing as saying that we may not get a
Speaker 2: rate cut this year. Would that if the Fed doesn't
Speaker 2: adopt a policy easing stance before the end of the year, Well, yeah.
Speaker 6: It would. I mean, I do think it's time to.
Speaker 5: Take a little off and to trim a little bit
Speaker 5: from these you know, two decade highs that we've seen
Speaker 5: very quickly.
Speaker 6: In interest rates.
Speaker 5: On an absolute level, the interest rate level is still fine,
Speaker 5: but it's it went up so sharply and such a
Speaker 5: level that hasn't been seen, you know, twenty years, that
Speaker 5: that is going to play through in the economy, and
Speaker 5: and I think sometimes it can take a little bit
Speaker 5: longer than people expect it to. But I do think
Speaker 5: that that we'll see cuts this year. And it's not
Speaker 5: just you know, Terry sort of you know, putting that
Speaker 5: out there. I mean, when you look at the yield curve,
Speaker 5: it is still inverted, meaning that the short end of
Speaker 5: the yeal curve, ninety day treasuries are paying higher level
Speaker 5: than ten year treasuries and even two year and when
Speaker 5: that that's what that's saying to us pretty loudly, is
Speaker 5: that we're going to see a cut, and we'll probably
Speaker 5: see it.
Speaker 6: You know, I would be.
Speaker 5: Very surprised if we don't see a couple of cuts
Speaker 5: by the end of this year. We're still we're still
Speaker 5: expecting that. We think the data supports it, and certainly
Speaker 5: the yell curve is telling us that as well.
Speaker 3: I think it's a really interesting environment because you have
Speaker 3: almost in equal parts here people who think the Fed
Speaker 3: should cut to get out in front of a weakening economy,
Speaker 3: and that's versus those who sort of like the idea
Speaker 3: of keeping rates steady, and then you have those who
Speaker 3: think higher rates are absolutely needed to find inflation. I'm
Speaker 3: not sure if it says more about well, it's always
Speaker 3: hard to predict the future, or if it says more
Speaker 3: about this complicated environment that we seem to have gotten into.
Speaker 3: What do you think?
Speaker 5: Yeah, I think that's really interesting debate, and I think
Speaker 5: it's a you know, it's a complicated issue. When you
Speaker 5: look at inflation, it's it's above what the FEDS has
Speaker 5: you know, clearly said is there two percent target, and
Speaker 5: that's there, you know, I don't think it's quite their mandate,
Speaker 5: but they publicly said a lot, very long.
Speaker 6: Time that two percent is their target.
Speaker 5: We're above that, we're you know, a three percent. And
Speaker 5: you know, as you mentioned leading up to this show,
Speaker 5: you're gonna be looking for our you know, at the
Speaker 5: earnings at average hourly earnings in the jobs report tomorrow
Speaker 5: because that's going to give us some good insight as to,
Speaker 5: you know, our how far above this two percent level
Speaker 5: are we And as much as it's important to the
Speaker 5: Fed to get inflation down to two percent, I think
Speaker 5: that they can cut before kind of you know, they
Speaker 5: actually see that print. And so I don't think they
Speaker 5: need to keep raising rates. I don't think there's areas
Speaker 5: of clear overheating anywhere in the market. I don't think
Speaker 5: the labor markets are overheating. And I think when you
Speaker 5: have interest rates go up as sharply as they have recently,
Speaker 5: that's going to slam the brakes.
Speaker 6: So, you know, we do think that.
Speaker 5: Inflation's in control and it's moving in the right direction.
Speaker 5: There's no areas of overheating, and so it's safe to
Speaker 5: certainly to keep rates where they are and to you know,
Speaker 5: just give a little bit back to to investors.
Speaker 2: So if the economy slows down and the Fed has
Speaker 2: leeway to begin easing as you expect. I'm wondering why
Speaker 2: the bond market is not a buy here. You're saying,
Speaker 2: perhaps it's not the best opportunity to go into the
Speaker 2: bond market here. I mean, I'm wondering why.
Speaker 5: Yeah, I think that's a good question, and it's one
Speaker 5: that we've been wrestling with. I mean kind of you know,
Speaker 5: at the start of the year, we did a lot
Speaker 5: of pencil to paper to do we want a lengthen
Speaker 5: duration in what meaning specifically, do we want to kind
Speaker 5: of lock in these rates that we're seeing now because
Speaker 5: a year from now, two years from now, we're going
Speaker 5: to look back and say, you know, wasn't that grand
Speaker 5: back when we could get five percent?
Speaker 6: Now we can't get it anymore.
Speaker 5: What we really are doing in the bond market is
Speaker 5: just looking at what the market is telling us right
Speaker 5: now and where we're seeing the best opportunity is still
Speaker 5: in the very short end, and you know, keeping that
Speaker 5: five percent just kind of constantly rolling that over and
Speaker 5: over again and not taking any risk in our portfolios
Speaker 5: in terms of the fixed income side of things. So
Speaker 5: that's really why we haven't been, I guess, backing up
Speaker 5: the drug and buying duration and looking for gains there.
Speaker 3: On the intellectual level, what do you make of Bill
Speaker 3: Gross's comments about the sort of total return approach that
Speaker 3: he championed for so long of buying bonds is now defunct.
Speaker 3: Basically he says that yields draw it lower and it
Speaker 3: doesn't give you really all that much room for price appreciation.
Speaker 5: Your thoughts quickly, Oh, I think that there can be
Speaker 5: room for price appreciation, but that's just not really where
Speaker 5: we want to take risk in the portfolios. And I
Speaker 5: think that, you know, the bond market is saying that clearly,
Speaker 5: and that's how we've got things positioned. You know, you're
Speaker 5: going to make money and on the large cap tech
Speaker 5: side of things on energy right now and then keep
Speaker 5: some fixed income safe for the bad days and the
Speaker 5: bad weeks.
Speaker 3: All right, Terry, thanks so much for joining us. Terry Spath,
Speaker 3: founder and chief investment officer of Zoomawealth.
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