US stock index futures tumble on Apple’s China warning

8
1050

… from Press TV, Tehran

[ Editor’s Note: The news below shows the growing potential storm, where no specific dispute is enough to trigger a worldwide recession, but a group of them at the same time could.

President Tweet, as always, is playing both sides of the street, where if he is right, he claims all the credit, and if wrong, someone else is responsible and gets fired. We have all been here before.

A perfect example was when the market was tanking in December, Trump was hanging that all around the Fed Chairman’s neck for raising interest rates a quarter of a percent, a move that had been telegraphed by the Fed for months. Now Trump is quoted below as attributing the market decline to “glitch”, also a reflection of his limited vocabulary. A more experienced, high-level hustler usually spreads their contradicting positions out a bit more, but not the Donald.

Everyone will be nervously watching for any negative momentum developing. The Apple news, which had an obvious ripple effect, was a given, but the same can happen if the number of industries affected in the tit-for-tat US-China trade war moves continues.

The US travel warning on China is another momentum example. This taking business people as hostages in trade wars is going to slow down the big trade convention business, with companies not wanting to risk having their people grabbed as spies for a barter chip.

The new US acting Pentagon chief has already shifted the “big threat” focus onto China, obviously something that was handed to him to push, just as we go into the second month of the 90-day time-out box for the US and Peking to try to iron out a new trade deal.

So could some of the increased pressure be tied to one side muscling the other for some benefit, or is it just the gang that can’t shoot straight chaos thing? Trump said today that the China negotiations were going wonderfully. Color me suspicious that that is far from the truth.

Add to that the twists and turns on the Korean Peninsula controversy. North and South Korea are moving ahead with major economic moves, while Trump sits as the man on the mountain repeating that all US sanctions will remain until Kim does everything that Trump wants first – hardly a stance that will produce a solution.

Kim is now saying that if Trump will not do a step-by-step deescalation, he will have to take a “new path”. My bet is this thing will get worse before it gets better. I hope I am wrongJim W. Dean ]


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Are we nearing a tipping point to trigger a recession, out of stupidity?

– First published … January 01, 2019

US stock index futures fell sharply on Thursday after Apple Inc stunned investors with its first sales warning in more than a decade, deepening fears about a slowdown in China’s economy and its impact on corporate profits.

Apple’s shares tumbled 8.8 percent in pre-market trading after the iPhone maker slashed its holiday-quarter revenue outlook due to slowing iPhone sales in China, sparking fresh concerns over the fallout from the Sino-US trade war ahead of the US earnings season.

“This provides solid evidence of how slowing economic growth and a trade war make the best death cocktail for sentiment,” said Naeem Aslam, chief market analyst at Think Markets UK Ltd in London.

At 6:26 am ET, Dow e-minis were down 371 points, or 1.59 percent. S&P 500 e-minis were down 41.25 points, or 1.64 percent and Nasdaq 100 e-minis were down 172.75 points, or 2.71 percent.

The warning from Apple, whose stock is a member of all the three major indexes, is a gloomy omen for Wall Street bulls hoping for an early gift in 2019 following December’s steep selloff.

Though the recent sell-off has lowered the S&P 500’s valuation, to 14 times expected earnings from 18 times a year earlier, earnings estimates have also been sharply lowered.

Analysts on average expect S&P 500 companies to increase their earnings per share by nearly 7 percent this year, down from a forecast of 10 percent growth at the start of October and far below their expectations of 24 percent EPS growth for 2018, according to the most recent estimate from Refinitiv’s IBES.

Apple’s warning on China has the potential to weigh heavily on a wide variety of companies. Chipmakers, which count both Apple and China as major revenue generators, led the decliners in early pre-market trading, while trade bellwethers Boeing Co and Caterpillar Inc dropped over 2 percent.

The United States and China are about one month into a 90-day tariff ceasefire, and President Donald Trump said on Wednesday that negotiations “are coming along very well”.

Trump also called the stock market’s drop at the end of 2018 a “glitch” and said the market would again go up once various trade deals are settled.

Apple’s warning follows data earlier this week that showed a deceleration in factory activity in China and the euro zone, indicating the ongoing trade dispute was taking a toll on global manufacturing.

The impact on US activity will be clear later on Thursday. The Institute of Supply Management is expected to report a fall in its index of US factory activity to a reading of 57.9 for December, from a reading of 59.3 in November.

Also on tap is the ADP National Employment Report, which is expected to show US private payrolls rose by 178,000 jobs in December. The report comes ahead of the more comprehensive non-farm payrolls report on Friday.


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8 COMMENTS

  1. Perception drives the Market and stock values can go from being over valued to worthless in an hour. Whomever controls perception is able to loot the Market’s vast conglomeration of wealth and there is an entire industry of sources of stock information and investment methods, most of it owned by the same people. If you want to get rich, find out where these purveyors of stock data are taking the Market.

  2. What does one expect with the Fed and the government interfering with business? The government has no business trying to control business. Only free market uninhibited by the government and the Fed will be the key to prosperity. When the government and the Fed gets involved you only have boom and bust periods. The worst one being in 1929-1945. The fact the government got so heavily involved after the crash of 1929 actually deepened and prolonged the depression. And the war DID NOT bring the country out of the depression.
    So with tRump’s meddling along with everybody else in Washington and New York, the economy will naturally become bumpier and bumpier until the whole charade collapses.
    End the tariffs, end the sanctions and let business do business. tRump’s policies are responsible for all this.
    An economic lunatic as David Stockman so stated.

  3. This is a place where insiders run prices to the sky with low interest rates and then take their profits off the top on the way down while most ordinary players get the shaft.

    • The real reason for low interest rates is so government interest payments on their massive trillion dollar debt are as low as possible. However these low rates shaft senior citizens out of safe income from life savings at rates of about 10% and encourage them to take high risks.

    • Your monstrous federal government is not the caring compassionate “friend” you have been told it was by the lying media. All they care about is numero uno.

  4. Gorgonzola cheese steamed to a melt on top of a medium ribeye, but before the cheese, layer the mushrooms, sautéed in butter and soy sauce, on top of the steak, previously poked with soy sauce and Montreal Steak seasoning,…. pan fried or grilled,.. and it goes from there.
    The transition from uber wealthy to middle class, is going to flare up as OMG. Apple stock lost value !!!
    But what is really happening, is wealth returning to the middle. Don’t fall for their dramatic theatrics where their wealth affects the masses. It doesn’t. keep track. The same things can be seen in the military sector, after reductions in budget. Which haven’t been seen for some time. Can’t have steak every night. Not on the public dole.

    • “But what is really happening, is wealth returning to the middle”

      i dont think you are eating…..i think you are just smoking

    • The era of super billionaires is over. It is an unsustainable model. The wealthy always threaten to tank the markets when their hoarding is about to be slimmed down. Perhaps it is premature to say, wealth is moving to the middle, but this is what the beginning of the movement looks like. Wait till they get a whiff of the end of Citizens United, … the screams heard round the world.

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