Photo: Marcio Jose Sanchez Associated Press
On Wednesday evening, the Apple boss, Tim Cook, has announced that sales of the tech giant would not be as good as expected and has further reduced the forecast had already been considered shy.
Alarm Signal of Apple’s manufacturing sector, which marks the not, the panic in the stock market : the improvement in the u.s. economy would reach a peak pointing to a slowdown ?
More bad news still have to go Thursday to the stock Exchange on Wall Street, already extremely volatile for the past three months.
On Wednesday evening, the Apple boss, Tim Cook, has thrown a cat among the pigeons by announcing that sales of the tech giant would not be as good as expected and a further reduction of the forecasts that had already been judged to be shy.
He attributed this situation to the global slowdown and the rise in the us dollar that affect the sales of iphones, particularly in China, but most importantly, it has pointed to the trade war conducted by Donald Trump, against Beijing in particular, which adds to the uncertainties of chinese consumers.
“We believe that the economic environment in China has been impacted more by rising trade tensions with the United States,” said Tim Cook, expressing concern that a decrease in the attendance of the distributors of the iPhone in this country.
Unsurprisingly, this bad omen has once again plunged Wall Street into the red. And u.s. markets soon after widened their losses with the release of a key indicator darkening the prospects of the manufacturing industry in the United States.
A “small snag” disturbing
The ISM manufacturing index registered in December, its biggest fall in over one month since the financial crisis of 2008, a decline of 5.2 percentage points compared to November, to 54.1 %.
Even if the activity in this sector — and costly to the government Trump, who promotes the ” made in America ” — continues to move forward, this is its weakest growth in two years.
“Manufacturing activity has slowed much more than expected in December,” said Gregory Daco, of Oxford Economics.
“We expected a gradual slowdown of this sector, given the headwinds that represent the uncertainty related to the trade, the end of the stimulus of the tax cuts, global activity is lower, but the risks of faster deceleration has increased “, warned the economist.
Before the panic of the markets — what Donald Trump the day before had called “a little snag” in promising a rebound when a trade agreement will occur —, one of his economic advisers, Kevin Hassett, has lobbied Thursday on Beijing, and on the negotiations between the two powers.
Referring to the warning on results from Apple, it has made it on CNN an explanation that may do little to reassure the markets : “This is not just Apple, there are number of companies that sell in China, and which will see their earnings deteriorate […] until we get an agreement” with Beijing.
“It puts a lot of pressure on China to conclude an agreement,” he assured, mentioning even the possibility of a “recession” for the world’s second largest economy.
Washington and Beijing are in full iron arms trade blows customs duties punitive damages on billions of dollars of goods. A truce in the one-upmanship of their retaliation has been declared by the government Trump until 2 march to lead negotiations, currently in progress.
Look to the Fed
For the economist of FTN Financial’s Chris Low, the signs of a braking of the american economy — including growth in the 4th quarter would be largely lowered below 3 %, according to the barometer of the industry in Atlanta of the american central bank (Fed) — should now be taken into account by the monetary Committee of the Fed that sets interest rates.
“The release of the manufacturing sector in the United States, the weakness of the main components, such as the order book, associated with a global slowdown is even more marked and the fall of core inflation, argue definitely in favor of a pause in the increase of interest rates,” americans, he says.
The Fed once again raised interest rates in December, to the despair of Donald Trump who does not fail to criticize this higher cost of credit. For the moment, the institution is planning to do it even two times in 2019.
Friday, the boss of the Fed’s Jerome Powell may give clues to his reading of the activity when he is invited to a discussion with its two predecessors, Janet Yellen and Ben Bernanke.
Despite the partial closure of the federal administrative services, which adds to the disruption in Washington, the government will also publish the official figures of employment for December, which should remain good, as the unemployment rate is the lowest since almost 50 years.
Apple hit Scholarships
The north american equity markets ended lower on Thursday, pulled down by the warning from Apple regarding its sales for the fourth quarter, which has revived fears of investors vis-à-vis the economic slowdown in China. In New York, the index SP 500 has sold 2.5% to 2447,89 points, while the composite index SP/TSX index of the Toronto stock Exchange has recorded a decline of almost 1 % to end the session with 14 212,75 points. The action of Apple is dipped, for 10 %.
According to Mike Archibald, a portfolio manager associate at Investment AGF, market movements, in particular the strong fluctuations from one day to the other, indicate that the sentiment remains fragile. “I think this is probably the first significant degradation due to the results of the fourth quarter, although I assume that this is not the last,” he observed. According to him, the least good prospects for China and weak figures about the manufacturing industry released on Thursday will encourage the presidents of the two largest economies in the world to conclude a trade agreement more quickly to put an end to the economic uncertainty.