An Apple A Day Moves Markets Everyday

In this issue of the Peel:

• Apple's fall launch for this year, taglined “Wonderlust,” focused generally on products dropping in the next year or so
• Casey's General Stores and the Energy sector had a ripe day, while Oracle and Advance Auto Parts suffered some losses
• The NFIB Small Business Optimism Index has been reigning in signs of negativity, sitting below its 49-year average for the past 20 months

Market Snapshot

Happy Wednesday, apes.

An apple day keeps the doctor away (allegedly), but what happens when the day itself is Apple? Well, that’s essentially what happened on Wall Street yesterday, so let’s find out below.

For starters, we can say that an Apple a day does not keep the losses away. The company making up ~7% of the S&P 500 dragged down the rest of the market with it despite blowing minds, hearts, and wallets at yesterday’s WWDC.

Every major U.S. index fell with the Nasdaq digging the deepest, losing 1.04%. Energy’s 2.4% up day was one of the few bright spots in equities yesterday, which is almost never a good sign for everything else.

Amid the usual chaos of equity markets, the “mature” traders among us in the fixed-income world didn’t have much to say. Yields didn’t see much of a change by close despite the 2-year moving higher towards 5.05% while the 10-year mostly bounced between 4.275% and 4.30%. Currency movements were quiet too, with the Dollar following in the footsteps of the two aforementioned and mostly vibing for the day.

Let’s get into it.

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Macro Monkey Say

USB-C or Bust

Everyone in the business/finance/investing media likes to compare everything and anything they can to the Super Bowl. It makes you sound relevant, cool, athletic, and all that, but it’s pretty much always just a cover for something inevitably boring.

That said, yesterday was the Super Bowl for Apple’s new line of products. This year's fall launch, taglined “Wonderlust,” focused generally on products dropping in the next year or so. Hosted right at Apple Park in Cupertino, CA on Tuesday with a big response to the iPhone 15, it was safe to say that civilians were loving it, but investors...

"This year’s Wonderlust was certainly more exciting than others."

Some years are bigger than others. It’s kind of like iOS updates in the sense that some updates change the whole user interface while others are more annoying to install than anything else.

This year’s Wonderlust was certainly more exciting than others. Centered around the upcoming iPhone 15, Apple announced:

• The entire lineup of new iPhones, starting at $799 and going up to $1,199
• Apple Watch Ultra 2 with the company’s “most powerful” chip yet
• Updated AirPods fit with USB-C charging
• Satellite roadside assistance, meaning you can call for help even without a signal
• Oh yeah, almost forgot to mention, but all those iPhone 15 models now have USB-C charging

I couldn’t believe it either. From forcing us to buy dongles from them (lol) in order to listen to music on their own f*cking product, Apple has gone full simp and bent knee to the mighty USB-C charging standard.

I mean, they kind of had to. The European Council passed legislation set to take effect on December 28, 2024 that requires electronic devices to have USB-C eligibility.

Clearly, they’re just getting ahead of the curve here, or feel free to take the company’s own explanation that “USB-C has become a universally accepted standard, so we’re bringing it to iPhone.” Suuure.

Regardless, the switch to USB-C could very well over the coming years become a boon to Apple's device sales.

"... the switch to USB-C could very well, over the coming years, become a boon to Apple's device sales."

They stopped reporting units sold for iPhones a few years back as this was garnering almost all of investor attention, given the iPhone’s centricity in the Apple money-hoarding ecosystem along with hitting the alleged “peak iPhone” or most ever sales in a single period.

Now, USB-C could over the next few years basically force every charger in the world to be USB-C compatible, leading customers to seek more devices that are too… like the new iPhone. Plus, more charger sales, so LFG.

But with the focus of most analysts both internal and external shifting towards Apple’s recurring-revenue services business, the predicted uptick might not even make a dent.

Regardless, at 7% of the S&P 500’s weighting, as Apple goes, so goes the market. Hence, the stock’s dip yesterday on the back of all these announcements dragged down the rest of the market’s vibe, too.

Cheer up, Apple. You’ll get back to $3tn someday… maybe.

What's Ripe

Casey's General Stores (CASY) ↑ 11.16% ↑

• I know, I know; what the hell is this company, right? If you’re in the mid-Atlantic, you have Wawa and Sheetz while the Northeast suffers with Cumberland Farms and the South and Southwest boast the absolute GOAT Buc-ee’s. In the Midwest and Southeast, there’s Casey's.
• That might be a gross oversimplification of the convenience store war debates raging across college campuses, but nonetheless, Casey's danced in the competition yesterday. Shares surged thanks to this retailer actually retaining its ability to deliver this quarter. Target, Dick’s, and the rest could learn something.
• Casey's reported EPS of $4.52/sh, up 11% annually, while sales still took a fat 13% hit and fell to $3.87bn, roughly in line with estimates. Strong pizza sales were largely responsible, but there’s no word yet on how Dave Portnoy rates the chain’s slice.
• While most retailers are worried about shrinking, Casey's is only growing with plans to add 150 locations in the next year. Hopefully, that goes better than Casey when he was at the Bat .

Energy Stocks (XLE) ↑ 2.36% ↑

• Like that nerd in high school who always reminded the teacher to assign homework, Energy stocks feel their best when everyone else is miserable.
• It was no different yesterday. Oil prices spiked early in the day, largely in response to an agreement from Saudi Arabia, Russia, and other OPEC+ haters of cheap gas to extend supply cuts.
• At the same time, signs that the Chinese economy might not crumble to pieces along with continued strength out of nowhere from the U.S. contributed to the IEA’s prediction that 2023 will boast the largest annual oil demand figures on record. Supply down, demand up, price go boom. Is macro really that hard?

What's Rotten

Oracle (ORCL) ↓ 13.50% ↓

• We all have bad days once in a while (not me, obviously), but Oracle’s day yesterday was way more than bad. It was the worst in more than two decades.
• That’s longer than a lot of you apes have been alive, so it had to be earnings. Despite the beat on the bottom line reported by the most boring tech company around, sales missed and guidance was weaker than SpongeBob when he tried to get into the Salty Spitoon.
• Oracle raked in $1.19/sh on $12.45bn vs. estimates for $1.15/sh on $12.47bn. Cost-cutting is clearly going well, but the whole “selling things” that businesses generally like to do must not have been the company’s vibe last quarter. But obviously, they had to shout out AI, saying that should basically save the firm’s cloud business.
• As a result, Founder and CTO Larry Ellison saw his net worth fall ~$18bn on the day. The guy was already only the 4th-richest person in the world with his measly little $140bn, but now, we just hope he’s able to find something to eat tonight.

Advance Auto Parts (AAP) ↓ 8.12% ↓

• Failing to advance on the day, shares in this auto parts stock suffered mightily thanks to their decision to apparently follow in Oracle’s footsteps.
• The company that, before right this second, I was convinced was called “Advanced” Auto Parts delivered disgusting earnings that made traders sick and Ford cry. Wall Street wanted a nice $1.69/sh with $156mn in operating income on $2.7bn. AAP said, “The best I can do is $1.43 with $134mn… but we’ll get your $2.7bn.”
• Basically, the takeaway here is that, apparently, consumers do not have infinite money to constantly waste on car upgrades. If that means fewer engine-revving douchebags trying to be the most obnoxious person in a 10-mile radius, we’re here for it.
• But not if we’re auto shareholders. The company cut guidance as well, citing weaker demand for discretionary purchases as a bad omen to car makers like Ford, GM, and whatever the hell the other non-Tesla ones are.

Data Peel

Thought Banana

Stay Negative

For an index built on optimism, there wasn’t a whole lot of it to go around last month, at least for small businesses.

As that fast-talking, what’s-his-name that always pops up on YouTube Shorts says, facts don’t care about your feelings. But today, we’re going to talk about the feelings of small businesses.

The NFIB Small Business Optimism Index is a monthly indicator seeking to measure the optimism (or lack thereof) of small businesses across the country through a survey inquiring on 10 seasonally adjusted components including:

Source

"... onlookers were somewhat taken aback by the magnitude, falling to 91.3 from 91.9."

Last month, optimism fell for the first time since the spring and below economists' expectations. While it’s no surprise that economists got something wrong, given that this was the first drop since March, onlookers were somewhat taken aback by the magnitude, falling to 91.3 from 91.9.

Now, for the past 20 months, the index has sat below the 49-year average reading of 98. Inflation continues to be the biggest problem for these troopers, but at the same time, apparently, we’re not qualified enough for them.

Small businesses, as measured by size, independence, ownership, geographic focus, and entrepreneurial nature (whatever that means) employ roughly 50% of the U.S. workforce. Becoming an even larger problem for them is finding qualified employees. Better start working on those forklift certifications, apes.

While survey-based, this is one of those rare surveys that might actually have some value. Economic outcomes are often dependent on plans made weeks, months, and years before.

"In August, clearly, the optimism was lacking. Negativity reigned as we got our last little bit of summer travel and other pandemic-delayed demand out of the way ..."

Plans are made based on expectations, so asking businesses, the ones actually making those future investments, how they expect that future will be might give us a bit more of a glimpse into the future that we’re used to from surveys.

In August, clearly, the optimism was lacking. Negativity reigned as we got our last little bit of summer travel and other pandemic-delayed demand out of the way, so going forward, expectations aren’t great. Ironic what a pandemic can do to you, huh?

The big question: Will small businesses slow their hiring and help JPow actually win this war against inflation?

Banana Brain Teaser

Yesterday —

If you flip 5 coins and they all come up heads, what is the probability that the 6th coin will be heads?

Answer

1/2. The other flips have nothing to do with the 6th coin flip.

Today —

14,500 people are sitting in a stadium. One of them is picked out. What are the chances that that person's birthday is on a Sunday?

Shoot us your guesses at [email protected] .

Wise Investor Says

“The desire for constant action, regardless of underlying conditions, is responsible for many losses in Wall Street.” — Jesse Livermore

How would you rate today’s Peel?

All the bananas

Decent

Rotten AF

Happy Investing,

Patrick & The Daily Peel Team