Apple iPhone Event Looms; CBS CEO Les Moonves Out

Dow Jones futures rose modestly Sunday evening, along with S&P 500 futures and Nasdaq futures. Last week growth stocks sold off, with the Nasdaq composite falling 2.55%, the S&P 500 index 1% and the Dow Jones 0.2%. On Wednesday, new Apple iPhone handsets will be unveiled. Apple stock fell after warning Friday that President Donald Trump’s escalating China trade war would affect many of its products. Trump says Apple (AAPL) should manufacture in the U.S. Meanwhile, Tesla (TSLA) is reeling after a wild month for Elon Musk. Finally, CBS (CBS) CEO and Chairman Les Moonves resigned as six more women accused him of sexual harassment or worse.


Dow Jones Futures Today

Dow Jones futures rose 0.2% vs. fair value. S&P 500 futures were up 0.2%. Nasdaq 100 futures climbed 0.2%. Keep in mind that Dow Jones futures and other overnight action often doesn’t translate into actual trading in the next regular session. Futures did not indicate that the Nasdaq composite would fall significantly over the last three sessions.

New Apple iPhone Handsets, Trump Trade War Impact

On Wednesday Apple will unveil several products. The headliners are new Apple iPhone models, refreshing the iPhone X that debuted last fall. They are expected to include expensive 5.8-inch and 6.5-inch iPhone Xs with OLED screens as well as a cheaper 6.1-inch Apple iPhone. Average Apple iPhone prices continue to rise, as the company tries to tap higher margins in a generally stagnant smartphone market. Apple also should showcase new Apple Watch models and iPad Pro.

Meanwhile, on Friday afternoon Apple said that the Trump trade war threat to impose tariffs on all Chinese imports would hit many of its products. Trump tariffs could fall at any time on a further $200 billion of Chinese goods, with Trump threatening another $267 billion worth in the near future.

“Our concern with these tariffs is that the U.S. will be hardest hit, and that will result in lower U.S. growth and competitiveness and higher prices for U.S. consumers,” Apple said in its letter to the Office of the U.S. Trade Representative.

Apple stock, which had been slightly higher, closed down 0.8% on Friday. The stock market averages settled near session lows. Apple stock is a member of the Dow Jones industrial average, S&P 500 index and Nasdaq composite.

For the week, Apple stock fell 2.8%, outpacing the major averages. But the Apple stock chart looks healthy. Shares hit a record high Wednesday and surged nearly 20% in August.

Trump responded Saturday, reviving his longstanding call for Apple to make products in the U.S. But Apple, if it did decide to shift production from China, might go to other low-cost areas.

Trade Trade War To Hit Consumers Directly

More broadly, by targeting all Chinese imports, the Trump trade war will have a direct impact on a wide range of consumer products, rather than just industrial goods and components. The U.S. imports a huge amount of cell phones, laptops, toys, video game consoles and many more. Americans may not see the connection between steel tariffs and their pocketbook, but hike the cost of handsets and laptops by 25% and they’ll notice.

Elon Musk Takes Tesla Stock On Strange Trip

From Aug. 7 to Sept. 7, Elon Musk took Tesla stock on a strange trip. On Aug. 7, Musk announced that he was mulling a go-private move for Tesla, with “funding secured.” It quickly became clear that there was nothing close to secured funding. After a few weeks of going through the motions, Tesla called it off. But the episode triggered an SEC probe, shareholder lawsuits and a disturbing New York Times interview. Musk also has continued to accuse a Thai cave rescuer of being a pedophile. And to put an exclamation point on this span, Musk smoked pot on a podcast on as Tesla said two more top executives left, including the chief accountant after less than a month.

Tesla stock has plunged 32% from its near-record Aug. 7 peak of 387.46. It’s about 26% below where it was just before Musk’s go-private tweet intraday Aug. 7.

Elon Musk announced a Tesla staff shakeup late Friday, including promoting Jerome Guillen as its new president of automotive operations. Many observers have long urged Tesla to hire a chief operating officer or manufacturing chief to get production numbers and quality up. Even assuming Guillen is the right person to do so, will Musk step back from day-to-day micromanaging and haphazard decision-making?

There were also signs Tesla demand may be peaking. Tesla encouraged Model 3 reservation holders to come to the Fremont, California, plant over the weekend to pick up a vehicle, even if wasn’t one they had specifically wanted. That includes people holding out for a base $35,000 Tesla Model 3.Doing so would help boost Q3 delivery figures.

Stepping back from Elon Musk and Tesla the company, Tesla stock is in terrible shape. At Friday’s close of 263.24, it’s actually below its February 2014 peak. Shares are close to their April low of 244.59. Worse, the relative strength line, which tracks a stock’s performance vs. the S&P 500 index, is at a 20-month low and not far from hitting a four-year low.

CBS Les Moovnes Out

CBS CEO Les Moonves resigned Sunday, with COO Joseph Ianniello serving as acting CEO for now. Talks heated up Sunday as The New Yorker reported six more women accusing him of sexual misconduct. Les Moonves had been in line to get a severance package of $100 million or more. For now, CBS and Moonves “will donate $20 million to one or more organizations that support the #MeToo movement and equality for women in the workplace.” Moonves will only get the rest of his severance if he’s cleared in a probe of the sexual harassment and assault claims.

Les Moonves’ ouster is part of a broader settlement with controlling CBS shareholder National Amusements. National Amusements, owned by Sumner Redstone and his daughter Shari, will not push a CBS merger with Viacom (VIAB) for 18 months. National Amusements also is the controlling shareholder in Viacom stock. The CBS board also gets a major revamp, with six new independent directors replacing five independent directors and one tied to National Amusements.

CBS investors likely will be glad to have the Moonves saga over and a Viacom merger on hold, but that may already be priced in. CBS stock rose 5.7% last week on reports that the parties were working on a broad settlement. Viacom stock fell 1%.


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Originally posted 2019-09-19 23:20:06.


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