Apple is the stock to trade if you know in advance what Trump will tweet

I suspect, but cannot prove, that no stock moves more sharply than Apple when the President tweets about tariffs.

From my weekly “Apple trading strategies” posts, starting two months ago:

Click to enlarge.

My take: Good thing nobody in Trump’s inner circle is crooked enough to be front-running trades.

See also:

UPDATE:

Aug 18 (Reuters) – U.S. President Donald Trump said on Sunday that he has spoken with Apple Inc’s Chief Executive Tim Cook about the impact of U.S. tariffs on Chinese imports as well as competition from South Korean company Samsung Electronics Co Ltd.

Trump said Cook “made a good case” that tariffs could hurt Apple given that Samsung’s products would not be subject to those same tariffs. Tariffs on an additional $300 billion worth of Chinese goods, including consumer electronics, are scheduled to go into effect in two stages on Sept. 1 and Dec. 15.

Apple was green in pre-market trading Monday.

4 Comments

  1. Gregg Thurman said:
    “Good thing nobody in Trump’s inner circle is crooked enough to be front-running trades.”

    Given that most of Trump’s tweets occurred over a weekend (unable to trade) they don’t have to be honest, unless they knew on Friday what he was going to tweet over the weekend. But I’ll wager not even Trump knows what he is going to tweet that far in advance.

    3
    August 19, 2019
  2. Fred Stein said:
    It seems that none of Trump’s advisors could tell him that tariffs on sophisticated consumer electronics can only more manufacturing to another country adjacent to China and not to the US. It is a good thing that Tim is ‘at the table’ as he puts it.

    2
    August 19, 2019
    • Turley Muller said:
      Especially when it’s just assembled in China- except for a few basic, generic parts that are made there. The value components come from the US, Europe, Japan, Korea, Taiwan, and others and are shipped to China to be assembled. The labor on Phone assembly is low single digit % of its value, but the tariff applies to the full value. That seems unfair being that China accounts for such a small fraction.

      Those assembly jobs are not what we want in America. They are for workers with no education or job skills that have to get a start somewhere, and China had had a rural population that fits that description. Wages have risen drastically as unskilled labor is becoming scarce. Eventually those jobs will move out of China to a less developed labor economy. Hon Hai has hinted it is looking into lower-cost markets.

      Assembly could be automated, but it doesn’t work with short-product cycles, especially when a huge production ramp is needed. They might have 200K workers assembling iPhones at launch, but that number might be half of that after 3 months, and then even less several months later. Doesn’t make sense to invest in equipment that will only be used for such a short time.

      The idea that the iPhone isn’t “made” in the US is inaccurate. The value majority of the value captured in the iPhone is from the software, design, and other IP. Anybody can make a smartphone. Anyone can assemble one.There is a stark difference between the iPhone and cheaper handsets- and that difference is made in America. So. I get real frustrated when Trump says Apple should make iPhones in the US. And for display and chip manufacturing- that’s an environmental nightmare. We don’t want that here. We already have hard enough time responsibly disposing of the end products, I couldn’t imagine dealing with raw materials, emissions, and manufacturing waste.

      Lastly, the president wants to move all these jobs back to the US but who is going to fill them? We need more labor, not jobs. Unemployment is at a multi-decade low and there are twice as many job openings are there are job seekers. I am all for high paying jobs, but this guy is crying over the lowest of the low in terms of job quality.

      2
      August 19, 2019
  3. Turley Muller said:
    “My take: Good thing nobody in Trump’s inner circle is crooked enough to be front-running trades.”

    Or too busy making license plates down on D Block.

    Honestly, I bet half the time it’s an impulse decision that hasn’t been discussed with anybody. You can bet though that when he doesn’t get his way, such as only getting 25bps rate cut, there will be something market rattling coming down the twitter pipe.

    0
    August 19, 2019

Leave a Reply