Happy Friday eve, team. Phil Rosen here, reporting from Los Angeles.
Something to note right off the bat: The Fed released minutes from its December meeting yesterday, and policymakers seem concerned that bullishness from investors could make fighting inflation harder.
Basically, if markets rally in part because of expectations for cooling inflation, the opposite could become true.
Asset prices could rocket higher again if investors believe the central bank is about to pull back. This has been shown in the speedy decline of US Treasury yields, which in part reflects investors’ outlook on further rate hikes.
While the meeting minutes don’t tell us exactly what the Fed will do next month, generally they are worth paying attention to for hints into the thinking of central bankers.
For now though, let’s turn to the mightiest tech stock in the world.
1. Apple is coming off a rotten year, shedding $846.34 billion in value in 2022.
Shares fell further on Tuesday and Wednesday after a Nikkei report said demand for MacBooks, AirPods, and Apple Watches is weakening.
The tumble brought the tech giant’s market cap below $2 trillion. It was the last company standing above that threshold.
But Loup Funds’ Gene Munster said Apple stock should be worth double its current value, given that it’s one of the world’s greatest companies.
He said December weakness isn’t something that will last because customers are loyal to the brand.
“Ultimately consumers may delay for three, six, nine months, but they’re going to come back, they’re going to be upgrading iPhones, Macs, iPads [and] I think that’s something investors can lean into,” Munster said.
Over at Wedbush Securities, Apple got its price target slashed by almost 13%.
It maintained its outperform rating, but analysts said supply chain checks in Asia remain suspect heading into the coming quarters, reflecting a softening consumer environment.
Still, Wedbush’s Dan Ives noted that demand for the core iPhone 14 Pro looks to be more stable than feared, which will make the overall landscape more resilient than Wall Street expects.
“[W]e believe baked into the stock is a massive amount of bad news ahead,” Ives wrote, adding that Apple is still a tech-favorite.
Still, there are more than 200 million iPhone units that haven’t been upgraded in four years, and that’s a key part of Apple’s underlying demand story.
Ives pointed out, too, that the next iPhone model is expected to come out alongside an augmented reality headset, dubbed “Apple Glasses,” which should help the company remain a “Rock of Gibraltar name into 2023.”
In other news:
2. US stock futures are seesawing early Thursday, as investors weigh just how hawkish the Fed was in the minutes from its last meeting. Here are the latest market moves.
3. On the docket: Constellation Brands, Walgreens Boots Alliance, and Helen of Troy, all reporting.
4. RBC recommends buying these 30 stocks right now. This batch of names are poised for returns in the first quarter of 2023. Strategists also broke down why it’s safe to bet on Facebook parent Meta this year.
5. Sam Bankman-Fried’s $470 million Robinhood stake is set to be seized by US authorities, an attorney said. The move would likely temporarily halt a four-way battle for the FTX founder’s stake. Read the full report.
6. Russia’s war revenue dropped by $15 million during the last week of 2022. Crude exports also fell to the lowest mark of the year in a sign that sanctions are having an impact on President Vladimir Putin’s warring nation.
7. Tesla stock is at a “fork in the road.” Wedbush analyst Dan Ives said Elon Musk must lead the EV maker through weakness in demand. He said that the stock has been “way oversold,” but Musk must outline a path as competition rises.
8. The president of a real-estate firm shared her predictions for mortgage rates in 2023. She also broke down which regions will see the steepest price corrections and the type of properties that will have the largest spike in demand.
9. Goldman Sachs recommends buying stocks in these 15 emerging markets. In the firm’s view, these countries offer upside for 2023 — and are set to outperform the US as earnings weaken in the new year.
10. “Everything is going down.” This hedge fund manager has returned 163% over the last year, and he’s anticipating more pain to come for stocks. This is how he’s laying bets for a rocky 2023.