Wall Street calls ‘bullshit’ on Trump’s tariff deal

Posted Tuesday by Bess Levin on Vanity Fair:

Wall Street analysts almost immediately began issuing notes to clients calling bulls–t on the president’s “incredible” deal.

Goldman Sachs, for one, noted that “the actual amount of concrete progress made at this meeting appears to have been quite limited.” Morgan Stanley pointed out that Trump essentially “agreed to pause tariffs without any meaningful concessions on the toughest negotiating points.” And JPMorgan all but called the president a liar and a fraud, writing: “It doesn’t seem like anything was actually agreed to at the dinner and White House officials are contorting themselves into pretzels to reconcile Trump’s tweets (which seem if not completely fabricated then grossly exaggerated) with reality.”

My take:  Lucy and the football.

7 Comments

  1. Fred Stein said:

    Agree. I love your Lucy metaphor.

    Xi plays the long game and that is part of an older broader strategy by China for a long time, as outlined in a previous Apple 3.0 post featuring Benedict Evans. Trump has no understanding of this.

    1
    December 4, 2018
  2. Gregg Thurman said:

    With all the hand-wringing over the prospect of punitive tariffs against China (as they relate to Apple). I thought it would be nice to calculate WS’s forecasting accuracy with data provided by Estimize.com.

    During the period FQ1/2017 through FQ4/2018 Estimize shows WS’s revenue forecast 3 ways:
    High
    Low
    Consensus

    Using that data I calculated the degree of variance from Actual results for each.
    High 0.32%
    Low 3.12%
    Consensus 1.65%

    I don’t know about the rest of you, but I would trust the smaller variation before I would any of the others.

    Currently, WS’s High revenue forecast is $93.014 Billion, suggesting actual results of $93.312 Billion revenue for the December quarter. Applying the Low variance to WS’s Low revenue forecast indicates actual results of $93.360 Billion in revenue creating a rather tight range of $93.312 Billion to $93.360 Billion.

    Consensus variation indicates actual results of $93.437 Billion.

    My forecast is (and has been since the day after earnings report and guidance for the December quarter) $93.235 Billion (5.60% YoY revenue growth).

    I did this because, above all others, I trust Maestri’s guidance for the period.

    2
    December 4, 2018
    • Gregg Thurman said:

      Performing the same exercise on Maestri’s guidance I get the following:

      Variance from High revenue guidance 0.17%
      Variance from Low revenue guidance 3.94%

      Indicated range of Actual performance based on Maestri’s guidance $92.507 Billion to $93.156 Billion.

      Because Maestri’s guidance range has varied from $2 Billion to $3 Billion during the period I have calculated the percentage of the guidance range achieved and applied that to this quarter’s guidance. This led to my $93.235 Billion revenue forecast, which, not surprisingly, is very close to WS’s implied results.

      I’ll bet all the noise about not reporting units is a red herring. WS doesn’t really care, but it is handy to have something (including tariff noise) to harp on that might convince retail accounts to sell their shares, even after a 20% decline, filling WS’s coffers with cheap shares in the process.

      Bottom line is that I think, at the minimum, Apple is going to report revenues higher than its High revenue guidance.

      2
      December 4, 2018
    • Mark Visnic said:

      Good stuff Gregg. Thanks.

      0
      December 5, 2018
  3. Rick Raphael said:

    Anyone who’s followed Trump for the past 30 years has learned that when cornered he always folds. The tariffs on Chinese products under discussion in Argentina were due to start at the height of the Christmas-Asian shipping season and would have created chaos in the in the US ports of entry. It was absolutely predictable a week ago that Trump would lose. And Trump will never win on trade because he doesn’t understand what a winning hand is and his team is not behind this folly.

    2
    December 4, 2018

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