Premarket: Apple is red, but not as red as the S&P 500

From “Stock futures fall after Trump warns of ‘painful two weeks’” on Yahoo Finance:

premarket apple red 4-1Stocks futures fell Wednesday morning, signaling more selling after the Dow posted its worst quarterly drop since 1987.

In the U.S., officials’ outlooks around the coronavirus outbreak have grown increasingly somber, as the case count topped 189,000 – comprising around one-fifth of known global cases – and the death toll rose about 3,000. During a White House briefing Tuesday evening, President Donald Trump said Americans should prepare for what is going to be “a very painful two weeks” as the pandemic paces toward a peak in the U.S. Based on new White House projections, the death toll could reach up to 240,000 domestically.

My take: Apple will look like a relatively safe haven during these painful two weeks.

4 Comments

  1. Jerry Doyle said:
    One can get a feel which companies will survive this crisis. It’s all about their existing balance sheets and liquidity.

    Government loans and bailouts to these companies add further debts (to an already laden debt burden) and lack of liquidity. This is why Apple is a sure bet as an investment. Apple sits with close to $300B pile of cash and little debt.

    One company whose credit card I use owes me a cash dividend, but is not paying it to members now.

    Other companies are not honoring their dividends and/or benefits to members and clients during this period. These are major companies with global recognition. Amazing!

    I remember Steve Jobs always was against buybacks and dividends preferring instead to hoard cash. This is how Apple started out with so much cash on hand years ago. A legacy left over from the Steve Jobs era. Steve adopted this behavior after Apple came close to going under for lack of liquidity and cash on hand. Tim Cook in recent years has loosen the policy to reward shareholders because Apple was piling up a monumental amount of cash on hand. Apple is a cash machine that keeps giving.

    Currently Apple is at approximately $275-300 billion cash on hand, still an eye-popping amount. So, no one needs to worry about Apple during this crisis. Your money is safe!

    Concomitantly, many well known brands are in trouble, and the longer this crisis continues some well known companies will go under along with thousands of smaller companies and hundreds of thousands of small businesses of mom and pops. They will not survive a prolong crisis for many of them already are debt laden.

    The virus will keep circulating as we witness now in China, South Korea, and Japan where once again we see the virus ramping up in those countries’ populations. The virus will recirculate back to the US, too, and the economic recession may possibly become an economic depression. The only method of stopping such recirculating is to do what we are doing now through “lock downs” of borders, thus continuing to disrupt companies’ supply chains.

    We are approaching a point in time where the cure for the problem the virus holds may be worse than the virus itself in terms of destroyed livelihoods, loss jobs, loss savings, families torn apart, a complete societal disruption verses what could have been a lessen impact through a “herd immunity” approach.

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    April 1, 2020
  2. Steven Philips said:
    Just one of those twinkle in the eye thoughts from Jerry’s post: I wonder if anyone has calculated where Apple’s cash horde would be if it had continued to follow Steve’s approach!
    (I’m not disagreeing with Tim’s current approach.)
    Could Apple have owned the world? 🙂

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    April 1, 2020
    • Jerry Doyle said:
      @Steven Philips: It is interesting you make your observation. I, too, ask myself similarly. You see, Steve feared dire and ominous economic clouds that now confront the nation, and in fact, that confront the world of nations. Apple now definitely is a global company.

      Joseph Bland would know that figure better than most of us. Based on buybacks and dividend payouts over the years I place the cash horde in the area of $1,000,000,000,000. Apple could continue to pay its employees and all its contractors while never missing a beat.

      There will be more pandemics in the future. Covid-19 is a Game Changer in more ways than one. I wonder if Apple even is doing buybacks now, and if this crisis will cause Apple to revisit its current program of buybacks and dividends based not only on this crisis, but also based on Washington’s political sentiments against companies’ buybacks and dividends to shareholders.

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      April 1, 2020

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