Apple’s Earnings Warning Could Rock Markets Today, And Impact U.S.-China Trade Talks
Aside From That, Surprisingly Little Surprising Is Happening Despite The Government Shutdown…
President Trump held his first Cabinet Meeting of the year, which as has become the case turned into a rambling news conference of sorts. This time around — among other things — Trump bashed recently departed Defense Secretary James Mattis, continued to lie about why the “DACA for wall” deal he once had on the table died (as we pointed out last week, it wasn’t because of a 9th Circuit court ruling), and most inexplicably defended Russia’s invasion of Afghanistan in 1979, and in his telling, that’s what caused the Soviet Union to fall. When it came time for all the Cabinet members to go around the table and praise Trump, acting Attorney General Matthew Whitaker was clearly the best prepared, praising the President for foregoing his planned Mar-a-Lago Christmas/New Year’s vacation. The Washington Post has a comprehensive wrap-up. You can also watch or browse through the whole 90-minute sideshow here, if you want:
Trump then had a bunch of Senators and Representatives from both parties over for a closed door meeting that was described as a “briefing” on plans for a border wall, during which little progress was apparently made. Republicans saying that was at least partly due to the fact that Senate Minority Leader Chuck Schumer kept interrupting, which seems plausible. Anyway, Trump’s inviting them all back up to the White House Friday.
Afterwards, incoming Speaker of the House Nancy Pelosi promised to quickly pass bills to reopen the government when the now Democrat-controlled House opens for business today. And she emphasized (as we did yesterday), those bills will be completely based on what Republicans proposed and already passed in the Senate, but then Trump refused to sign. She also emphasized Democrats are willing to negotiate with Trump on border security, but he doesn’t need to keep much of the federal government closed to make that happen. Here’s Pelosi explaining:
The real surprise however, coming from Apple. The company saying its sales and profits are falling well short of projections, mostly because of disappointing sales in China. In a letter to investors, Apple CEO Tim Cook explaining:
“We believe the economic environment in China has been further impacted by rising trade tensions with the United States. As the climate of mounting uncertainty weighed on financial markets, the effects appeared to reach consumers as well, with traffic to our retail stores and our channel partners in China declining…”
This is definitely unexpectedly bad news for one of the U.S.’ most powerful companies. At the same time it could also put pressure on the Trump Administration to accelerate trade negotiations with China, as this demonstrates concretely the toll Trump’s trade war is taking. And it also underscores weakness in China’s economy, which might create some impetus on that side too. We’ll see.
Here’s an interview with Apple CEO Tim Cook from CNBC:
And one side note that has nothing to do with trade wars but we found interesting: Apple also blamed its program to inexpensively replace batteries in older iPhones as another reason for slumping sales. (That program, in fact, just expired.) Saying sales were hurt by: “some customers taking advantage of significantly reduced pricing for iPhone battery replacement”. With new batteries, people are holding onto their phones longer and not upgrading to new more expensive iPhones as much. Which is interesting because that battery replacement program was triggered in part by allegations Apple was deliberately slowing the performance of older iPhones after a while, precisely to get people to buy new iPhones, something the company has always vehemently denied was a deliberate strategy.