by Chris Becker
Looks like we’re reliving the GFC all over again with interconnectedness so high that global currency and stock markets are going to crash because some single Chinese youths are not buying as many iPhones as they should.
Apple announced a near 10% reduction in its forward guidance, releasing this report:
While we anticipated some challenges in key emerging markets, we did not foresee the magnitude of the economic deceleration, particularly in Greater China. In fact, most of our revenue shortfall to our guidance, and over 100 percent of our year-over-year worldwide revenue decline, occurred in Greater China across iPhone, Mac and iPad.
China’s economy began to slow in the second half of 2018. The government-reported GDP growth during the September quarter was the second lowest in the last 25 years. We believe the economic environment in China has been further impacted by rising trade tensions with the United States. As the climate of mounting uncertainty weighed on financial markets, the effects appeared to reach consumers as well, with traffic to our retail stores and our channel partners in China declining as the quarter progressed. And market data has shown that the contraction in Greater China’s smartphone market has been particularly sharp.
In other words, consumer saturation has crept in. Is this a “blip” or a significant change in the way Apple operates its hardware or do you care and wonder why such a report is pushing the Aussie dollar down nearly 4 cents against the Greenbank in the last hour?
Local stocks are loving the lower dollar – the ASX is up over 1% in the first half hour of trade. Swings and roundabouts, but it pays to have protection right now.