14 BARRON’S September 16, 2019
27,219.
Dow Industrials:+422.
Dow Global Index:+5.
1.90%
10-year treasury note:+0.
APPLE INTRODUCES THE IPHONE 11
Warming Trade Winds
Stocks soared in a sudden trade thaw.
China said it would exempt 16 U.S.
products from tariffs. President Trump
then agreed to delay levies on some
Chinese imports, and China tossed
pork and soybeans into the no-tariff
basket. The White House then put a
damper on a deal. Still, for the week the
Dow industrials rose 1.6%, to 27,219.52;
the S&P 500 was up 1%, to 3,007.39;
and the Nasdaq Composite edged up
0.9%, to 8176.71.
Trump and the Taliban
After a U.S. soldier was killed in
Afghanistan by a car bomb, Trump
tweeted that he was canceling a secret
meeting with the Taliban at Camp
David to complete a peace treaty. On
Monday, he declared the talks dead.
By Tuesday, Trump’s third national
security adviser, John Bolton, who
criticized the meeting, was either fired
by tweet or resigned.
Draghi’s Swan Song
In his last major act as president of the
European Central Bank, Mario Draghi
pushed through rate cuts and restarted
quantitative easing. Trump used the
ECB’s actions to criticize the Fed,
which meets this week, and call for
negative rates. He also called Fed offi-
cials “boneheads.”
WeWork Sweats an IPO
The initial public offering of We Co.,
the parent of WeWork, staggered
along.SoftBank Group,whichmade
$2 billion investment in the start-up at
a $47 billion valuation, urged it to post-
pone the IPO, which may give it a valu-
ation below $20 billion. The company
was also mulling governance changes.
Meanwhile,SmileDirectClubthud-
ded 28% after its debut on Thursday,
but rose on Friday. And J.P. Morgan
leads a group of banks underwriting
the big IPO of Saudi Aramco, Saudi
Arabia’s state-owned oil company.
Elliott and AT&T
Activist investor Elliott Management
took a $3.2 billion stake inAT&Tand
immediately pressed the company to
sell off units and refocus on telecom.
Elliott says its plan would bring AT&T
stock to $60. AT&T says it is already
working on a restructuring plan and
had hired Goldman Sachs for defense.
Brexit Follies
Opposition in Parliament outmaneu-
vered United Kingdom Prime Minister
Boris Johnson, blocking his attempt to
call a snap election and passing a law
banning the U.K. from leaving the Eu-
ropean Union without a deal. Scotland’s
highest civil court also said the PM’s
suspension of Parliament was illegal.
Annals of Regulation
Trump said the administration plans to
ban fruit-flavored e-cigarettes after
lung problems emerged. The California
legislature neared passage of a bill
ordering gig-economy companies like
LyftandUberto reclassify its drivers
as contract employees. And the Sackler
family, owner of OxyContin maker
Purdue Pharma, agreed to pay $3 bil-
lion to settle lawsuits.
It’s All About
The Camera
GiveApplesome credit. To build a company worth
nearly $1 trillion, you need to think a few steps ahead.
And that’s exactly what Apple demonstrated at Tues-
day’s fall launch event.
Heading into the event, the conventional wisdom was
that this would be an off year for the iPhone. The world
would largely ignore the new iPhone 11, while awaiting
the first Apple 5G phones, expected to debut a year from
now. Investors have fretted about slowing iPhone sales
and have focused instead on Apple driving revenue via
peripheral devices (AirPods and Apple Watches) and
services (Apple Card, iCloud, and Apple Music).
But leave it to Apple to cut right when everyone ex-
pected it to cut left. Apple argued that while the world is
zeroed in on having more bandwidth with 5G, its focus
should be on images. Almost the entire discussion
around the phones centered on their ability to produce
professional quality images and video. The new higher-
end Pro models feature three separate lenses, including
wide angle and telephoto, and nifty new tools, like the
ability to take a video while shooting still photos by
holding down the shutter button. And get ready to hear
about the front-facing camera’s slow-motion capability.
People are already psyched to take “slowfies.”
A few years ago, Apple realized that health and fitness
apps were the best reason to switch from analog watches
to Apple Watches. Apple knows any phone can make calls
or run apps; what differentiates its phones are their ability
to capture images. You could upload them faster with 5G;
but faster won’t make the images better.—Eric J. Savitz
$63 K
U.S. household median income
in 2018, up 0.9% over 2017, and
adjusted for inflation, the same
as peaks in 1999 and 2007
- 8%
Increase in spending for per-
sonal insurance and pensions in
- Total household spending
grew 1.9%
27.5 M
Number of Americans without
health insurance in 2018, an
increase of 7.4% over 2017.
47 %
Increase in price of pork in
China after a bout of African
swine fever
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THE NUMBERS
HE SAID
“I haven’t been
this alarmed
since before the
financial crisis....
The probability
of a recession
beginning at the
end of next year is
just below 50%.”
Harvard economics professor and
former Treasury Secretary
Lawrence Summers
Mark Kauzlarich/Bloomberg (Summers)REVIEW