IS APPLE THE KEY TO THE NEXT MARKET MOVE?
DJIA: Last 8675.68 ?Change +450.02% Chg +1.18
S&P 500: Last 5127.79 Change +63.59% Chg: +1.26
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Gold Futures: Last 2310.10 Change: +0.50% Chg. +0.02
APPLE'S LATEST QUARTER WASN'T VERY GOOD. HERE ARE 3 REASONS INVESTORS STILL LOVED IT .
STOCK HAS A RELIEF RALLY. ?BUT BIG LONG-TERM ISSUES REMAIN .
Buffett Praises Apple After Berkshire Cuts Stake:
The legendary investor praised the iPhone maker on Saturday from the stage of his annual meeting in Omaha, Neb., even after revealing that Berkshire Hathaway BRK.B 0.07% increase; had slashed its stake in the first quarter.
Buffett told an arena of Berkshire shareholders that Apple is “an even better business” than American Express and Coca-Cola, two other big positions in his company’s massive stock portfolio.
A regulatory filing released Saturday morning showed that Berkshire sold about 13% of its mammoth stake in Apple in the first months of 2024, leaving it with $135.4 billion of the iPhone maker’s shares at the end of March.
Apple shares dropped 11% in the first quarter as iPhone sales slumped in China.
“Unless something really extraordinary happens we will own Apple, American Express and Coca-Cola when Greg takes over this place,” Buffett said.
Greg Abel, Buffett’s designated successor as chief executive of Berkshire, sat beside him on the stage, while Tim Cook, Apple’s CEO, watched from the crowd.
The Berkshire chairman and chief executive said it is “extremely likely” that Apple will remain the company’s largest stock position at the end of the year.
(By Karen Langley Updated May 4, 2024 11:41 am ET)
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TO MAKE THE MOST OUT OF TODAY'S MARKET: Let's talk about the Bull case first.
Inflation & the Fed: The outlook for inflation and what that means for Fed policy is the biggest point of difference between market bulls and bears at this point in time. The bulls see the inflation issue as headed towards a resolution to the central bank's satisfaction, with the recent run of seemingly unfavorable readings as nothing more than a passing phase reflective of seasonality and measurement issues.
The bulls saw inflation as primarily resulting from pandemic related factors, with the combination of elevated Covid-driven demand in a number of product and service categories and snarled supply chains showing up in higher prices. These factors were on course to normalize in the post-Covid period anyway, but the Fed's extraordinary tightening policy sped up the process by moderating demand.
The Fed question on the market's collective mind is about the timing of the first-rate cut and the number of subsequent cuts. In addition to direct Fed guidance, investors are looking at incoming economic data through the prism of what it tells them about inflation and growth. Recent signs of stalled progress on the inflation front has forced an evolution of the market's Fed outlook, with the easing cycle getting underway later than was initially expected. The bulls see this as nothing more than a few months delay in the start of the central bank's easing policy
.Let's see what the Bears have to say in response.
The Market's Fed Exuberance: At the start of the year, the consensus view reflected five to six rate cuts in 2024. But this view has shifted markedly after three back-to-back unfavorable inflation readings over the last three months. The expectation at present is for one or two rate cuts this year, with the first cut after the November elections.
The market's eagerness for Fed easing is at odds with the health of the U.S. economy, which appears to be doing just fine on the back of a tight labor market, keeping stable consumer-spending trends in place. This begs the question as to why the Fed needs to speed up monetary policy easing if there is no imminent threat to the U.S. economy's growth trajectory.
The Fed restored its credibility on the inflation question through its extraordinary tightening moves, which made up for its initial lethargy in changing course. Given this recent history, it will not be prudent for the central bank to risk its hard-won credibility by prematurely starting to ease policy, which they may have to reverse afterward in case inflation started misbehaving all over again.
THIS WEEKS INTERESTING SECTOR PIECE. THIS IS AN EXAMPLE ON WHY YOU CAN'T RIG MARKETS: https://www.wsj.com/news/author/chris-kornelis
There's bullishness in the air.
— Richie
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