APPL

Having once accounted for nigh on a quarter of the S&P 500, the dominance of the mighty FAANG cohort has taken it square in the chops this year, as the fastest set of rate hikes in history took a size-10 to investor sentiment and pandemic fuelled valuations. All bar Apple that is, a stock roughly equal in market capitalisation to the GDP of EM powerhouse, India. Apple remains, then, the last great Galactico standing in the tech brouhaha of 2022, and left sitting on a velvet covered multiple is a stock that is likely to hold significant influence on the direction of markets into the cold, bitter winds of next year’s now fast-approaching – albeit largely consensual – recession. Intuitively an energy driven cost-of-living crisis is not good context for those selling £1,000 products into a saturated market, but such is the power of the brand and the reach of the ecosystem, if anyone can, Apple can. That said, the videos on social media emanating out of Foxconn’s factory in Zhengzhou of late, should be a cause for concern. Whilst it is hard to get a clear picture, Reuters report today that production could be hit by 30% post the current bout of worker unrest. The person with ‘direct knowledge’ may or may not have any knowledge, such is the trust in mainstream media, but either way, going into the critical holiday season build, such a hit to production may well see analysts start to acting. Start taking a cheese grater to their numbers. If they don’t then the person with ‘direct knowledge’ of the matter, has been telling porkies. Either that, or the troupe of analysts that follow APPL have already got the clutch in on a forgettable year for year-end bonuses, and haven’t heeded what looks like – if true – a fairly stark warning. If there is one earnings report that is likely to matter in the new year, it’s this one.