Aug. 24, 2023 10:39 AM ET Apple Inc. (AAPL)
- We remain concerned over the adverse impact higher interest rates will have on demand for its iPhone, iPads and MacBooks in the US.
- We do not anticipate significant earnings growth for Apple for the remaining 2023 calendar year and we remain on the sideline.
- From a technical perspective, Apple’s long-term chart was at a significant resistance level. Apple giving us a 5-wave drop from the recent high is a big warning to the bulls.
The article discusses concerns about Apple Inc. (AAPL) in the face of rising interest rates and their potential impact on consumer demand. Key points from the article include:
- Rate Hike Impact: The article highlights the potentially adverse effects of higher interest rates on consumer demand for Apple’s products, particularly iPhones, iPads, and MacBooks in the United States. It argues that higher rates effectively lead to higher monthly payments for consumers, reducing the attractiveness of financing purchases.
- Previous Exits: The author mentions recent exits from positions in companies like Enphase and Tesla, attributing these moves to concerns about the impact of higher interest rates on consumer demand for their products. These concerns led to inventory accumulation in the channel and reduced margins.
- Apple’s US Market: The article notes that Apple’s performance in the Americas, primarily the US market, has seen declines, with factors such as cell phone penetration maturation and consumers holding off on upgrading contributing to these challenges.
- Promotional Activity: The article also mentions the promotional activity by major US carriers like AT&T, Verizon, and T-Mobile, which could impact consumer demand for iPhones, historically a significant market for Apple.
- Guidance and Expectations: Apple’s guidance for the September quarter suggests continued challenges in the US market. The article does not anticipate significant earnings growth for Apple for the remainder of 2023 and remains cautious.
- Technical Analysis: The article provides technical analysis, pointing out that Apple’s long-term chart was at a significant resistance level and that a 5-wave drop from the recent high is concerning. It presents two general counts: one suggesting a bear market and another suggesting a correction within an uptrend.
- Market Impact: The article highlights Apple’s significance in the market, stating that “the direction it goes, so goes the market.”
- Risk Management: The author suggests planning around the more bearish scenario (the “Blue count”) while remaining open to the possibility of a bounce and a move to new highs (the “Red count”).
In conclusion, the article emphasizes the potential risks posed by rising interest rates to Apple’s consumer-focused products and cites technical indicators and forecasts as reasons for caution regarding the stock.
