Why is Apple so vulnerable to a trade war with China?

  • Apple closes down almost 6% on Monday after news of a major escalation in the U.S.-China trade war.
  • The company assembles iPhones in China, making it vulnerable to price increases if a tariff were to be placed on Chinese exports.
  • It also sells a lot of iPhones in China, making it sensitive to Chinese consumer confidence.
GP: Tim Cook China Development Forum 2019 In Beijing
CEO of Apple Tim Cook attends China Development Forum 2019 at the Diaoyutai State Guesthouse on March 23, 2019 in Beijing, China.
VCG | Getty Images

Apple closed down nearly 6% on Monday after news of a major escalation in the U.S.-China trade war.China said on Monday that it decided to raise tariffs on some U.S. goods after President Donald Trump threatened to further raise tariffs on Chinese imports last week.

The trade war is affecting a lot of different stocks, but Apple seems to be hit harder than most. The Dow Jones Industrial index dropped 2.6%, and the Nasdaq Composite dropped 3.5%.Apple is especially vulnerable to a trade war with China for two primary reasons.First, it assembles its iPhones primarily in China. Although it has a lot of American suppliers — it spent $60 billion on American suppliers in 2018 — iPhone assembly is done in mainland China.Whenever new tariffs are announced, investors must keep an eye on the details because it’s possible that some of Apple’s products could get caught in the crossfire.Morgan Stanley analyst Katy Huberty estimates that a 25% tariff on the iPhone could lead to a price increase of $160 for the iPhone XS. Or Apple could eat the tax, which could lead to a 23% decrease in earnings per share in 2020.

“Apple has one of the most significant exposures to Chinese exports to the US in our IT Hardware coverage group, given final assembly for many of its consumer electronic devices is located in China,” Huberty wrote in a note last week.“And given the reliance on China’s established, low-cost labor force and expertise in manufacturing/tooling, a large-scale move out of the country would not only be costly, but could take multiple years to complete, potentially raising the odds of execution risk, in our view,” the note continued.Last fall, a draft list of one of Trump’s round of China tariffs would have affected the Apple Watch and Apple AirPods, for example, although the final list did not affect Apple’s products.The other reason is that Apple, unlike other big tech companies, makes a substantial amount of its money by selling its products to Chinese consumers.Apple reported $51 billion in revenue in 2018 from “Greater China,” which includes Hong Kong and Taiwan. That’s Apple’s third-biggest region, after the Americas and Europe. Apple’s total revenue for the year was $265.6 billion.When Apple said earlier this year that its holiday quarter revenue would be significantly less than it had previously said to expect, it blamed a bad economic climate in China.“It’s clear that the economy began to slow there for the second half and what I believe to be the case is the trade tensions between the United States and China put additional pressure on their economy,” Apple CEO Tim Cook said in an interview with CNBC in January.“One of the reasons Apple CEO cited for China improvement was increased consumer confidence due to easing of US-China trade tensions,” UBS analyst Timothy Arcuri wrote in a note last week.“However, in recent days, trade tensions have escalated and it bears watching whether this affects China consumer sentiment,” the note continued.Apple has consistently opposed Trump’s proposed tariffs, and Cook has personally told Trump that Apple does not support implementing taxes on imports from China.Apple stock is up 24.9% since Jan. 1.
CEO of Apple Tim Cook attends China Development Forum 2019 at the Diaoyutai State Guesthouse on March 23, 2019 in Beijing, China.
VCG | Getty Images

Apple closed down nearly 6% on Monday after news of a major escalation in the U.S.-China trade war.China said on Monday that it decided to raise tariffs on some U.S. goods after President Donald Trump threatened to further raise tariffs on Chinese imports last week.

The trade war is affecting a lot of different stocks, but Apple seems to be hit harder than most. The Dow Jones Industrial index dropped 2.6%, and the Nasdaq Composite dropped 3.5%.Apple is especially vulnerable to a trade war with China for two primary reasons.First, it assembles its iPhones primarily in China. Although it has a lot of American suppliers — it spent $60 billion on American suppliers in 2018 — iPhone assembly is done in mainland China.Whenever new tariffs are announced, investors must keep an eye on the details because it’s possible that some of Apple’s products could get caught in the crossfire.Morgan Stanley analyst Katy Huberty estimates that a 25% tariff on the iPhone could lead to a price increase of $160 for the iPhone XS. Or Apple could eat the tax, which could lead to a 23% decrease in earnings per share in 2020.

“Apple has one of the most significant exposures to Chinese exports to the US in our IT Hardware coverage group, given final assembly for many of its consumer electronic devices is located in China,” Huberty wrote in a note last week.“And given the reliance on China’s established, low-cost labor force and expertise in manufacturing/tooling, a large-scale move out of the country would not only be costly, but could take multiple years to complete, potentially raising the odds of execution risk, in our view,” the note continued.Last fall, a draft list of one of Trump’s round of China tariffs would have affected the Apple Watch and Apple AirPods, for example, although the final list did not affect Apple’s products.The other reason is that Apple, unlike other big tech companies, makes a substantial amount of its money by selling its products to Chinese consumers.Apple reported $51 billion in revenue in 2018 from “Greater China,” which includes Hong Kong and Taiwan. That’s Apple’s third-biggest region, after the Americas and Europe. Apple’s total revenue for the year was $265.6 billion.When Apple said earlier this year that its holiday quarter revenue would be significantly less than it had previously said to expect, it blamed a bad economic climate in China.“It’s clear that the economy began to slow there for the second half and what I believe to be the case is the trade tensions between the United States and China put additional pressure on their economy,” Apple CEO Tim Cook said in an interview with CNBC in January.“One of the reasons Apple CEO cited for China improvement was increased consumer confidence due to easing of US-China trade tensions,” UBS analyst Timothy Arcuri wrote in a note last week.“However, in recent days, trade tensions have escalated and it bears watching whether this affects China consumer sentiment,” the note continued.Apple has consistently opposed Trump’s proposed tariffs, and Cook has personally told Trump that Apple does not support implementing taxes on imports from China.Apple stock is up 24.9% since Jan. 1.
Apple closed down nearly 6% on Monday after news of a major escalation in the U.S.-China trade war.China said on Monday that it decided to raise tariffs on some U.S. goods after President Donald Trump threatened to further raise tariffs on Chinese imports last week.

The trade war is affecting a lot of different stocks, but Apple seems to be hit harder than most. The Dow Jones Industrial index dropped 2.6%, and the Nasdaq Composite dropped 3.5%.Apple is especially vulnerable to a trade war with China for two primary reasons.First, it assembles its iPhones primarily in China. Although it has a lot of American suppliers — it spent $60 billion on American suppliers in 2018 — iPhone assembly is done in mainland China.Whenever new tariffs are announced, investors must keep an eye on the details because it’s possible that some of Apple’s products could get caught in the crossfire.Morgan Stanley analyst Katy Huberty estimates that a 25% tariff on the iPhone could lead to a price increase of $160 for the iPhone XS. Or Apple could eat the tax, which could lead to a 23% decrease in earnings per share in 2020.

“Apple has one of the most significant exposures to Chinese exports to the US in our IT Hardware coverage group, given final assembly for many of its consumer electronic devices is located in China,” Huberty wrote in a note last week.“And given the reliance on China’s established, low-cost labor force and expertise in manufacturing/tooling, a large-scale move out of the country would not only be costly, but could take multiple years to complete, potentially raising the odds of execution risk, in our view,” the note continued.Last fall, a draft list of one of Trump’s round of China tariffs would have affected the Apple Watch and Apple AirPods, for example, although the final list did not affect Apple’s products.The other reason is that Apple, unlike other big tech companies, makes a substantial amount of its money by selling its products to Chinese consumers.Apple reported $51 billion in revenue in 2018 from “Greater China,” which includes Hong Kong and Taiwan. That’s Apple’s third-biggest region, after the Americas and Europe. Apple’s total revenue for the year was $265.6 billion.When Apple said earlier this year that its holiday quarter revenue would be significantly less than it had previously said to expect, it blamed a bad economic climate in China.“It’s clear that the economy began to slow there for the second half and what I believe to be the case is the trade tensions between the United States and China put additional pressure on their economy,” Apple CEO Tim Cook said in an interview with CNBC in January.“One of the reasons Apple CEO cited for China improvement was increased consumer confidence due to easing of US-China trade tensions,” UBS analyst Timothy Arcuri wrote in a note last week.“However, in recent days, trade tensions have escalated and it bears watching whether this affects China consumer sentiment,” the note continued.Apple has consistently opposed Trump’s proposed tariffs, and Cook has personally told Trump that Apple does not support implementing taxes on imports from China.Apple stock is up 24.9% since Jan. 1.

https://www.cnbc.com/2019/05/13/why-is-apple-so-vulnerable-to-a-trade-war-with-china.html

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More Voters Thinks Country Better off with Trump than Clinton

Democrats and Hillary Clinton made much of the former presidential candidate’s popular vote victory in the 2016 election, but it turns out a plurality of American voters would rather have President Donald Trump in office after all.

According to a Rasmussen poll released Tuesday, 42% of likely U.S. voters believe the country would be better off if Clinton were president. But 48% of voters disagree, believing the country is better off with Trump as president. Rounding out the poll, 11% of respondents were undecided.

Since Trump upset the former Secretary of State in the 2016 election, Clinton has consistently touted her popular vote victory as reflective of the true feelings of the majority of Americans.

Clinton suggested Saturday, while speaking with husband Bill as part of the “Evening with the Clintons” tour, that the 2016 election had been “stolen” from her.

“I think it’s also critical to understand that, as I’ve been telling candidates who have come to see me, you can run the best campaign, you can even become the nominee, and you can have the election stolen from you,” she told a Los Angeles crowd.

https://pluralist.com/more-voters-think-country-better-off-with-trump-than-clinton/

Mob Battles With Bats, Crowbars in UK Neighborhood

A mob of men were filmed brutally beating each other with bats and crowbars while yelling in Punjabi in Manchester, U.K., according to local media.

Videos of the melee shared to social media depict at least 10 combatants brawling in broad daylight as a bystander proclaims, “Ramadan is on Monday.”

“The brawl continues for several minutes with the men hurling abuse at each other in Punjabi and swearing,” the Bolton News reports.

“One of those involved in the fighting says in Punjabi ‘I am going to sort this out — my shoulder is dislocated,’ as well hurling further insults.”

The men continue to assault one another with weapons including baseball and cricket bats, crowbars, and golf clubs.

At one point, a man body slams another onto the hood of a car trapped in the intersection.

“Police received reports of a disturbance at 2:55 pm,” a Greater Manchester police spokesman told local media.

“When police arrived there was no fighting ongoing. Minor injuries have been reported from people believed to be involved. Enquiries are ongoing, no arrests were made.”

https://europe.infowars.com/punjabi-mob-battles-with-bats-crowbars-in-uk-neighborhood/

HHS Extends Contract to Make ‘Humanized Mice’ With Aborted Baby Parts for Another 90 Days

The Department of Health and Human Services says it has granted a second 90-day extension to a contract it has with the University of California at San Francisco that requires UCSF to make “humanized mice.”

These creatures are made by implanting mice with human tissues taken from late-term aborted babies.

The HHS’s multi-million-dollar contract with UCSF that requires the construction of these “humanized mice” creates a demand–driven by federal tax dollars–for tissue taken from late-term aborted babies. According to an estimate it has published on its website, the National Institutes of Health (which is a division of HHS) will spend $95 million this fiscal year alone on research that–like UCSF’s “humanized mouse” contract–uses human fetal tissue.

Under the new 90-day extension, the contract—which the government calls “Humanized Mouse Models for HIV Therapeutics Development”–will run through June 5.

HHS also is still in the process of conducting the “comprehensive review” it announced last September “of all research involving fetal tissue.”

That review was initiated to ensure that all federally funded research using human fetal tissue is consistent “with statutes and regulations governing such research, and to ensure the adequacy of procedures and oversight of this research in light of the serious regulatory, moral, and ethical considerations involved.”

“The UCSF contract has been issued another extension,” HHS said on Friday in response to questions from CNSNews.com about the contract and the review.

“We will provide an update on the review once it has concluded and as appropriate,” HHS said.

As CNSNews.com first reported on Oct. 17, 2018, the National Institutes of Health, which is part of HHS, originally signed its “humanized mouse” contract with UCSF on Dec. 6, 2013. The contract was for a one-year period and gave the government the option of renewing it for up to six additional one-year periods through Dec. 5, 2020.

According to contract information published on the Federal Procurement Data System, the new three-month extension will pay UCSF $521,082—bringing the total payments the federal government has made to UCSF for this contract to $10,596,960.

If the government continues renewing the contract through Dec. 5, 2020, HHS would end up paying UCSF a total of $13,799,501.

The contract specifically requires researchers at UCSF to make two different types of “humanized mice” both of which are “engrafted with human fetal liver and thymus.”

The “Statement of Work” in the original contract solicitation said that the contractor would be required to make one “cohort” of “up to 50” mice per month of the first type of humanized mouse and another cohort of “up to 40” mice per month of the second type. The statement said each of these two cohorts of “humanized mice” should be made “with tissue from a single donor”—meaning a single aborted baby.

The Statement of Work for the “Humanized Mouse Models for HIV Therapeutics Development” contract says the contractor shall make one “cohort” per month of two types of humanized mice. Each of these (one numbering up to 50 mice and the other up to 40) will be made with human fetal thymus and liver tissue taken from “a single donor.”

The Statement of Work for this federal contract specifically charged the contractor with the obligation to “[o]btain the necessary human fetal tissues for use under the contract.”

An article published in the Jan. 12, 2016 issue of Stem Cell Reports, which discussed research funded by the contract, described humanized mice that were created by engrafting them with human fetal bone marrow, liver and thymus taken from babies who were 20-to-24 weeks in gestational age.

Another article discussing research under the contract was published in the Feb. 27, 2017 issue of Pathogens. This article described another type of humanized mouse that was engrafted with “fetal gut tissues” taken from babies at 18-to-24 weeks in gestational age.

On Dec. 4, 2018, one day before the contract’s most recent one-year extension was set to expire, HHS gave UCSF an initial 90-day extension on the contract—rather than a full one-year extension. That 90-day extension was set to expire on March 5. But with the new 90-day extension signed on Feb. 19, the contract is now set to run through June 5.

On Dec. 5, 2018, HHS published a statement in response to a story that the Washington Post published about the UCSF contract that cited an unnamed “virologist” and an unnamed “university spokeswoman” in reporting that the NIH had informed the contract’s principal investigator that the government was ending the contract.

“According to the virologist, the principal investigator was told in a telephone conversation with an NIH employee last Wednesday that the AIDS division was exercising its discretion to discontinue the contract,” the Post reported then.

“A university spokeswoman, speaking on condition of anonymity because she had no authorization to discuss the matter, confirmed the university was informed last week the contract was not being extended,” the Post said.

But HHS refuted this story.

“No decision has been made on the extension of a University of California San Francisco contract with the NIH regarding research involving fetal tissue,” HHS said in a Dec. 5 statement responding to the Post’s report.

“A decision will be made when the contract has been reviewed, pursuant to the ongoing audit/review process,” the HHS statement said.

HHS also released at that time the full text of a statement by HHS Spokesperson Caitlin Oakley that HHS said it had given to the Post. Oakley’s statement said:

“In September, HHS issued a statement announcing an audit would be conducted of all acquisitions involving human fetal tissue to ensure conformity with procurement and human fetal tissue research laws and regulations. In addition, HHS has initiated a comprehensive review of all research involving fetal tissue to ensure consistency with statutes and regulations governing such research, and to ensure the adequacy of procedures and oversight of this research in light of the serious considerations involved. Regarding the extension on the UC San Francisco contract, no final decision has been made. A decision will be made when the contract has been reviewed, pursuant to the ongoing audit/review process. There is a provision for continuity of work while the contract is being reviewed.”

On Jan. 10, CNSNews.com published a story about the initial 90-day extension that HHS had granted UCSF’s humanized mouse contract on Dec. 5.

“The contract remains on the 90-day extension to ensure continuity of service until the audit is completed and a final decision can be made about the contract,” the NIH said in response to questions from CNSNews.com at that time.

“During the 90-day extension,” the NIH said then, “the NIH Contracting Officer Representative can instruct UCSF to produce new mouse cohorts, obtain or engraft new fetal tissue, and/or start new in vitro or humanized mouse studies that are not already planned, if deemed scientifically necessary.”

FOLLOW THE LINK FOR THE FULL REPORT – JR

https://www.cnsnews.com/news/article/terence-p-jeffrey/hhs-extends-contract-make-humanized-mice-aborted-baby-parts-another

Update: City welcome sign with islamist woman in hijab shot to pieces by enraged Swedes

An image of a Muslim woman wearing a hijab was recently published on a digital advertising board at the entrance to the Swedish City of Gävle.

“It is true that the board was vandalised on Friday, and completely destroyed during the weekend”, says Johan Adolfsson, director of communications at Gävle Municipality.

“We select people who have been nominated by the residents to represent those who live in Gävle. Suzan Hindi is one of the 100 Gävle residents nominated for the campaign”.

“There have been lots of reactions to the advertisement. People express that it’s wrong, that Islam is a threat and that there are big problems with the hijab, says Johan Adolfsson.”

“We received hundreds of emails and phone calls over the weekend. It is unpleasant because the insults are directed towards me and Suzan Hindi personally.

Read more

FOLLOW THE LINK FOR THE FULL REPORT – JR

https://www.infowars.com/update-city-welcome-sign-with-islamist-woman-in-hijab-shot-to-pieces-by-enraged-swedes/

Labor Market Crisis: Wages Not Rising With Inflation

As we reported last week, a record 7 million Americans have fallen 90 days or more behind on their auto loan payments.

That’s 1 million more than the previous peak in auto loan delinquencies in 2010. But as Wolf Street points out, there is a big difference between then and now.

“Serious auto-loan delinquencies are now on par with Q2 2009 when millions of people had lost their jobs and when the economy was in free-fall. But today unemployment is low and the economy appears to be humming. What gives? “

Currently, there is about $1.3 trillion in auto loans outstanding. Looking at auto loan delinquencies in terms of a percentage of the total outstanding, the number hit 4.5% at the end of 2018. This is the same percentage as in the second quarter of 2009 as the economy was feeling the full effect of the 2008 crash.

Wolf Richter of Wolf Street highlighted some of the reasons for the surge in auto loan delinquencies in a recent episode of the Wolf Street Report.

In the first place, a lot of Americans are struggling with their jobs.

“While the unemployment rate is at around 4% and has been as low as 3.7%, there are many pockets of weakness in the labor market. A lot of people have gig work. A lot of people are underpaid. Their wages have not gone up with inflation. People have been discouraged and they’re not participating in the labor force anymore, and so they don’t show up in unemployment figures. So, there are many weaknesses in this labor market.”

Even so, Richter said it’s still the “cleanest dirty shirt of the labor market” we’ve had in a number of years, so the labor market itself cannot completely explain the surge in auto loan delinquencies.

A second issue is the rapidly rising cost of new cars. The average price of a new vehicle is now around $36,000. This represents a significant increase in the cost of vehicles and there has not been a corresponding rise in wages. Subprime borrowers face a double whammy. They not only have to pay the higher price; they also get hit with a higher interest rate.

A third, and according to Richter probably the most significant issue, is the number of subprime lenders who have plowed into the auto business over the last 10 years. This is an extremely profitable business for the lender, but an extremely risky position for the borrower.

“These are precisely the kind of customers who can’t afford those payments, and cannot afford to make those payments based on high-interest rates, and they can’t even afford that expensive of a car.”

The auto business actually looks a lot like the subprime housing market we saw blow up in the years leading up to the 2008 crash. These companies make risky loans. They use sloppy underwriting techniques. And then they package the loans together in auto loan-backed securities and sell them.

By 2018, the air was coming out of the auto bubble. A number of these specialized subprime auto lenders had already collapsed. Richter said now we’re starting to see many of these companies curtail their lending.

Of course, it’s not just specialized companies making subprime loans. According to Richter, about 25% of the auto loans on the books of big banks are subprime. Credit unions have also gotten into the business.

The big difference between the subprime auto loan market today and the subprime housing market in the years before the crash is one of scale. A collapse in the subprime auto market will cause some pain, but it won’t likely bring down financial institutions.

(Photo by Mussi Katz, Flickr, Public Domain)

But that doesn’t mean this isn’t extremely problematic. The real question is how will the looming credit crunch affect the auto industry – an important part of the US economy? Richter says we’re already seeing the impact.

In 2015 and 2016, US automakers experienced record years. Since then, we’ve seen a downturn. As default ratios spike, lenders become more careful and that squeezed more and more potential customers out of the market.

“As auto-loan delinquencies continue to surge, as those losses are spreading, underwriting will continue to tighten and will make it more difficult for an entire layer of customers to buy new vehicles.”

And this is the rosy scenario. The real question is what happens if the economy goes into recession? What happens if we see growing job losses?

This gives us a glimpse of the underlying rot in the US economy. The Federal Reserve flooded the country with easy money. That blew up all kinds of bubbles, including the auto lone bubble. The simple truth is economies built on debt aren’t sustainable.

FOLLOW THE LINK FOR THE FULL REPORT – JR

https://www.infowars.com/labor-market-crisis-wages-not-rising-with-inflation/

Hate Hoax – Jussie Smollett Rehearsed Fake Hate Attack With Two Pretend Attackers

Chicago investigators continue to share stunning evidence about the hate-crime hoax carried out by actor Jussie Smollett with the assistance of two brothers. It appears the trio even rehearsed the attack.

FOLLOW THE LINK FOR THE FULL REPORT – JR

https://www.infowars.com/hate-hoax-jussie-smollett-rehearsed-fake-hate-attack-with-two-pretend-attackers/

Aborted babies’ BODY PARTS fused with mice to ‘humanise’ them for grim ‘Frankenstein’ experiments in US labs

The use of aborted baby body parts and stems cells has sparked anger among anti-abortion groups in the United States and it has been dubbed “Frankenstein” science.

And shocking undercover footage has led to the Donald Trump administration to reassess if the practice should be continued at all.

Clinics are supposed to ask if they would like to donate tissue but it is unclear whether the parents are aware their dead children’s bodies are being used in this way.

But what is known is that abortion clinics are supplying the fetal body parts, although they are not allowed to sell them.

Phelim McAleer, who has produced the film Gosnell, about a rogue abortionist, told Fox News: “Aborted babies bodies are a very valuable commodity in today’s America.

“Research institutions, elite universities, medical centers pay a lot of money for baby parts.”

Aborted babies bodies are a very valuable commodity in today’s America — research institutions, elite universities, medical centres pay a lot of money for baby parts

Phelim McAleerFilm-Maker

FOLLOW THE LINK FOR THE FULL REPORT – JR

https://www.thesun.co.uk/news/8367760/aborted-baby-body-parts-sewn-mice-experiments-us-labs/

CBS State of Union Poll: 72% of Viewers Agree With President Trump Ideas on Immigration

It is going to be harder for Nancy Pelosi and Chuck Schumer to work against funding border security after tonight.

President Donald Trump’s State of The Union speech was measured by CBSafter delivery. The results were initally tweeted:

♦ 76 percent of CBS viewers approved of what they heard in President Trump’s speech;

♦ 72 percent of CBS viewers said they approved of President Trump’s SOTU ideas for immigration.

[FULL POLL RESULTS HERE]

https://www.infowars.com/cbs-state-of-union-poll-72-of-viewers-agree-with-president-trump-ideas-on-immigration/

With Cash Handouts, India Takes Step Toward Universal Basic Income

India unveiled huge handouts for farmers, setting the stage for an election-year spending spree, a possible prelude to implementing a universal basic income in an effort to deal with widespread poverty.

India’s budget for the year starting April 1, which was released Friday, doubled the income at which people have to start paying taxes, while promising payouts to help small farmers. The moves are aimed at shoring up support for Prime Minister Narendra Modi’s party, which hopes to retain control of the world’s largest democracy in elections scheduled to start before May. They could also trigger a bidding war for support at the ballot box.

The planned spending, along with previous handouts, forced the country to miss its fiscal deficit target. It was supposed to hit 3.3% of gross domestic product in the year ending March, but instead will rise to 3.4% of GDP. Next year’s target is also 3.4%, rather than around 3.1%, where it would have been without all the farm aid, said interim Finance Minister Piyush Goyal.

FOLLOW THE LINK FOR THE FULL REPORT – JR

https://www.wsj.com/articles/with-cash-handouts-india-takes-step-toward-universal-basic-income-11549020444