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While President Trump likes to putt, traders are leaning into the Trump put. The “Trump put” was an idea that traders would lean on during his first term, and in essence, is rooted in the concept that Trump uses the stock market as something of a scoreboard. And now, some are saying that the “Trump put” is back, at least if you count the presidents latest actions in relation to the markets this past week. As the markets wobbled, and then cratered in response to the announcement of his tariff schedule, Trumpperhaps predictably, per the Trump put ideacanceled or paused most of what had previously been announced. In other words, the Trump put is the belief that when the markets start to fall, Trump will take action to turn them around. Thats exactly what he did this past weekmore or less confirming that theres something to the notion. Note, though, that there have been other variations of the Trump put over the years, too. For instance, theres been the Greenspan put, and even the Powell put. Again, the idea is that if the market falls too far, someone will step in and bail it out. More specifically this past week, however, Trump was likely swayed to reverse course on his wide-ranging tariff schedule due to action in the bond market. Bonds are typically considered something of a safe haven for investors, and the bond market itself is far less volatile than the equities market. But following Trumps announcements on tariffs, bond interest rates rapidly increased, which was a sign that investors were less confident in the strength of the economy going forward, and therefore, made it more expensive for the government and businesses to borrow money because theres more inherent risk. That was evidently enough to spook Trump who, despite his rhetoric, paused tariffs on most countries, although he dug in deeper against China. The question for traders and investors, going forward, is whether Trump will remain as susceptible to the whims of the market as he was during his first term. So far, hes shown more restraint, but as we learned this week, he has his limits.
Category:
E-Commerce
President Donald Trump’s administration has been predicting its barrage of tariffs targeting China will push Apple into manufacturing the iPhone in the United States for the first time.But that’s an unlikely scenario even with U.S tariffs now standing at 145% on products made in China the country where Apple has manufactured most of its iPhones since the first model hit the market 18 years ago.The disincentives for Apple shifting its production domestically include a complex supply chain that it began building in China during the 1990s. It would take several years and cost billions of dollars to build new plants in the U.S., and then confront Apple with economic forces that could triple the price of an iPhone, threatening to torpedo sales of its marquee product.“The concept of making iPhones in the U.S. is a non-starter,” asserted Wedbush Securities analyst Dan Ives, reflecting a widely held view in the investment community that tracks Apple’s every move. He estimated that the current $1,000 price tag for an iPhone made in China, or India, would soar to more than $3,000 if production shifted to the U.S. And he believes that moving production domestically likely couldn’t be done until, at the earliest, 2028. “Price points would move so dramatically, it’s hard to comprehend.”Apple didn’t respond to a request for comment Wednesday. The Cupertino, California, company has yet to publicly discuss its response to Trump’s tariffs on China, but the topic may come up on May 1 when Apple CEO Tim Cook is scheduled to field questions from analysts during a quarterly conference call to discuss the company’s financial results and strategy.And there is no doubt the China tariffs will be a hot-button issue given Apple’s stock price has dropped by 15% and lowered the company’s market value by $500 billion since Trump began increasing them on April 2.If the tariffs hold, Apple is widely expected to eventually raise the prices on iPhones and other popular products because the Silicon Valley’s supply chain is so heavily concentrated in China, India and other overseas markets caught in the crossfire of the escalating trade war.The big question is how long Apple might be willing to hold the line on its current prices before the tariffs’ toll on the company’s profit margins become too much to bear and consumers are asked to shoulder some of the burden.One of the main reasons that Apple has wiggle room to hold the line on its current iPhone pricing while the China tariffs remain in place is because the company continues to reap huge profit margins from the revenue generated by the subscriptions and other services tied to its product, said Forrester Research analyst Dipanjan Chatterjee. That division, which collected $96 billion in revenue during Apple’s last fiscal year, remains untouched by Trump’s tariffs.“Apple can absorb some of the tariff-induced cost increases without significant financial impact, at least in the short term,” Chatterjee said.Apple tried to appease Trump in February by announcing plans to spend $500 billion and hire 20,000 people in the U.S. through 2028, but none of it was tied to making an iPhone domestically. Instead, Apple pledged to fund a Houston data center for computer servers powering artificial intelligence a technology the company is expanding into as part of an industrywide craze.When asked this week about whether Trump believes Apple intends to build iPhones in the U.S., White House Press Secretary Karoline Levitt pointed to Apple’s investment promise as evidence that the company thinks it could be done. “If Apple didn’t think the United States could do it, they probably wouldn’t have put up that big chunk of change,” Leavitt said.U.S. Commerce Secretary Howard Lutnick also predicted tariffs would force a manufacturing shift during an April 6 appearance on a CBS news program. “The army of millions and millions of human beings screwing in little screws to make iPhones, that kind of thing is going to come to America,” Lutnick said.But during a 2017 appearance at a conference in China, Cook expressed doubt about whether the U.S. labor pool had enough workers with the vocational skills required to do the painstaking and tedious work that Lutnick was discussing.“In the U.S. you could have a meeting of tooling engineers and I’m not sure we could fill the room,” Cook said. “In China, you could fill multiple football fields.”Trump also tried to pressure Apple, to no avail, into shifting iPhone production to the U.S. during his first term as president. But the administration ultimately exempted the iPhone from the tariffs he imposed on China back then a period when Apple had announced a commitment to invest $350 billion in the U.S. Trump’s first-term tariffs on China also prompted Apple to begin a process that led to some of its current iPhones being made in India and some of its other products being manufactured in Vietnam.Cook also took the president on a 2019 tour of a Texas plant where Apple had been assembling some of its Mac computers since 2013. Shortly after finishing that our, Trump took credit for the plant that Apple had opened while Barack Obama was president. “Today I opened a major Apple Manufacturing plant in Texas that will bring high paying jobs back to America,” Trump posted on Nov. 19, 2019. Michael Liedtke, AP Technology Writer
Category:
E-Commerce
Alphabet’s Google laid off hundreds of employees in its platforms and devices unit, The Information reported on Friday, citing a person with direct knowledge of the situation. The cuts in the division, which houses the Android platform, Pixel phones and the Chrome browser among other applications, follow Google’s January buyout offers to employees in the unit, the report said. “Since combining the platforms and devices teams last year, we’ve focused on becoming more nimble and operating more effectively and this included making some job reductions in addition to the voluntary exit program that we offered in January,” a Google spokesperson told The Information. Google did not immediately respond to a Reuters request for comment. Big Tech players have been redirecting spending towards data centers and AI development, while scaling back investments in other areas of their business. Facebook-parent Meta laid off about 5% of its “lowest performers” in January while pushing ahead with the expedited hiring of machine learning engineers. Microsoft also trimmed 650 jobs in its Xbox unit in September. Amazon laid off employees in several units, including communications, while Apple eliminated about 100 roles in its digital services group last year, according to media reports. Bloomberg in February reported that Google had laid off employees in its cloud division, adding that the round of cuts impacted only a few teams. In January 2023, Alphabet had announced plans to cut 12,000 jobs, or 6% of its global workforce. Anusha Shah and Deborah Sophia, Reuters
Category:
E-Commerce
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