The New iPhone is Here!!...with Marginal Upgrades for Only $2,000

Biggest Market News 💸

Apple and Qualcomm make sweet sweet love once again

AAPL- Monday close @ $179.36 (+0.62%)

QCOM- Monday close @ $110.28 (+3.9%)

Just ahead of the iPhone release, Apple struck a deal with longtime 5G chip supplier, Qualcomm. The deal lasts until 2026. Qualcomm gets a boost as their biggest client stays on, Apple accounted for 22% of the company’s revenue last year. Apple was expected to develop its own chip after purchasing Intel’s modem division for $1 billion in 2019. However, with Apple’s issues in China, they decide to play it safe and draw out their timeline of creating chips in-house.

Crunching Qualcomm numbers:

• $7.26 billion- Chips sold to Apple

• $2 billion- Licensing fees they earned from Apple in 2022

• $9.99- Wall Street’s adjusted Earnings Per Share (EPS) for QCOM by the end of 2025

WTF does this mean for you?

Assuming Apple bounces back and records a good number of pre-sales, keep an eye on Qualcomm to follow the trend. Having that unexpected revenue is obviously going to be helpful and the company can continue to grow, now with 3 years to fill Apple’s absence. Qualcomm’s current EPS is $1.60, so it’s safe to say that Wall Street approves. Additionally, talk of the town says Qualcomm is one of few quality 5G chip producers, and Apple may need even more time developing their own chip as the project is a massive and complex undertaking. I mean, they purchased the sector in 2019, so 3 more years may not be enough.

Quote of the Day… 💭 

“A bull market is like sex. It feels best just before it ends.” - Peter Bevelin

Things to Keep an Eye On 🔎

Inflation 

Data is coming out tomorrow with expectations of a month-over-month uptick of 0.8%. With so many unknowns coming out of Covid, markets are very sensitive to inflationary data, so any reading that is above that mark will likely mean more rate hikes from the Fed in November. We’ve already seen the street get more and more wary compared to last month.

Markets predicting a rate hike.

This month: 44% predicting hike

Last Month: 28% predicting hike

US deficit… it’s not looking good

We also need to keep a watch on the US deficit which is trending towards a whopping $2T. The deficit has never been this high outside of a recession.

Why you should care?

Well, in order to actually pay off their debt the US Treasury Department is forced to keep their T-bill rates high in the 4.25% - 4.5% to attract investors to give them money. So, despite unemployment and inflation coming down, the US deficit is playing a part in higher rates for longer than we want.