More and more companies are confirming that President Trump’s trade war is slowing down the worldwide economy.
On Wednesday, Apple (AAPL) shocked markets when it said revenue in its holiday quarter would miss expectations.
This news sent Apple shares down the maximum amount as 7% after hours and confirmed the market’s biggest fear about the worldwide economy — that trade is slowing down businesses round the globe.
“While we anticipated some challenges in key emerging markets, we didn't foresee the magnitude of the economic deceleration, particularly in Greater China,” Apple CEO Tim Cook said during a letter to investors published after the market close on Wednesday.
“In fact, most of our revenue shortfall to our guidance, and over one hundred pc of our year-over-year worldwide revenue decline, occurred in Greater China across iPhone, Mac and iPad.”
Apple now expects revenue will total $84 billion in its fiscal half-moon , below its initial guidance for revenue of $89-$93 billion the corporate gave Wall Street back in November
Tim Cook, Chief military officer of Apple, speaks as President Donald Trump listens during an American Technology Council roundtable within the State Dinning Room of the White House, Monday, June 19, 2017, in Washington. (AP Photo/Alex Brandon)
Cook added to the gloomy view of China’s economy on Wednesday, adding, “China’s economy began to slow within the last half of 2018. The government-reported GDP growth during the September quarter was the second lowest within the last 25 years. We believe the economic environment in China has been further impacted by rising trade tensions with the us .
“As the climate of mounting uncertainty weighed on financial markets, the consequences seemed to reach consumers also , with traffic to our retail stores and our channel partners in China declining because the quarter progressed. And market data has shown that the contraction in Greater China’s smartphone market has been particularly sharp.”
Slowing earnings growth, higher interest rates from the Federal Reserve System , and slowing economic process within the U.S. and round the world have all been cited as contributing to a fourth-quarter stock exchange decline that was the worst since the financial crisis.
But recent business surveys and commentary from corporate America has began to outline an economic environment which makes clear that trade tensions and President Donald Trump’s ongoing trade fight with China are at the basis of the foremost acute stresses within the global economy.
In late December, FedEx (FDX) executives told investors that its international business had “weakened significantly since we last talked with you during our earnings call in September.” the corporate added that, “China's economy has weakened due partially to trade disputes.” FedEx cut its outlook for 2019 as a result.
And while Apple’s poor holiday quarter had been telegraphed by its suppliers which consistently cut forecasts over the ultimate months of 2018, the company’s long-winded and really public denunciation of the economic situation in China and round the world may be a wakeup call to any investors that also think trade wars are literally good and straightforward to win.
Manufacturing data out of China released Wednesday showed a contraction in activity to finish 2018 as new orders hit their lowest levels since June 2016. JP Morgan’s global manufacturing PMI hit its lowest level since September 2016 in December, and business confidence within the survey hit rock bottom within the series’ history.
Survey data about business conditions can sometimes be a fickle source of commentary about the economy. The world’s biggest public company, however, goes to be more measured and deliberate when discussing the pressure its business is under.
“We can’t change macroeconomic conditions, but we are undertaking and accelerating other initiatives to enhance our results,” Cook said Wednesday.
With billions of dollar of money on its record and tens of many iPhones still being sold each quarter, Apple features a large menu of options it can deploy to engineer strong results for investors within the quarters ahead. And with shares of the corporate already down almost 40% from their all-time hit earlier this year, the market has priced a good amount of disappointment into the company’s stock.
But what Apple is telling investors about the worldwide economy can't be ignored. And it'll confirm for several investors that we remain on the trail to what they need come to fear most — a trade-induced recession.
SHARE THIS POST
0 comments:
Post a Comment